e424b2
Filed Pursuant to Rule 424(b)(2)
Registration
No. 333-166324
PROSPECTUS SUPPLEMENT
(To Prospectus dated July 1, 2010)
$250,000,000
Graphic Packaging International,
Inc.
77/8% Senior
Notes due 2018
We are a leading provider of packaging solutions for a wide
variety of products to food, beverage and other consumer
products companies. Additionally, we are the largest
U.S. producer of folding cartons and hold leading market
positions in coated unbleached kraft paperboard, coated recycled
boxboard and multi-wall bags. Our customers include some of the
worlds most widely recognized companies and well-known
brands. We strive to provide our customers with packaging
solutions designed to deliver marketing and performance benefits
at a competitive cost by capitalizing on our low-cost paperboard
mills and converting plants, proprietary carton and packaging
designs and commitment to customer service.
We are offering $250.0 million aggregate principal amount
of our
77/8% senior
notes due 2018. The notes will mature on October 1, 2018.
We will use the net proceeds of this offering, together with
cash on hand, solely to refinance, through a tender offer,
$250.0 million aggregate principal amount of our
outstanding 9.50% senior subordinated notes due 2013.
We will pay interest on the notes semi-annually in cash in
arrears on April 1 and October 1 of each year,
beginning on April 1, 2011.
The notes will be guaranteed by Graphic Packaging Holding
Company and Graphic Packaging Corporation, as well as by certain
of our material domestic subsidiaries who have guaranteed our
obligations in respect of our senior credit facilities and our
existing 9.50% senior notes due 2017.
The notes and the guarantees will be general unsecured senior
obligations and will rank equally with our and the
guarantors senior unsecured obligations. The notes and the
guarantees will be effectively subordinated to all of our and
the guarantors existing and future secured debt to the
extent of the assets securing that secured debt. As of
June 30, 2010, we had consolidated total secured
indebtedness of approximately $1.9 billion. In addition,
the notes will be structurally subordinated to all of the
liabilities of our subsidiaries that are not guaranteeing the
notes. As of June 30, 2010, these non-guarantor
subsidiaries had liabilities of approximately $81.0 million.
The notes will not be listed on any securities exchange.
Currently, there is no public market for the notes.
The notes will be redeemable, in whole or in part, on or after
October 1, 2014 at the redemption prices specified under
Description of the NotesOptional Redemption.
At any time prior to October 1, 2014, we may redeem the
notes, in whole or in part, at a redemption price equal to 100%
of their principal amount plus a make-whole premium, together
with accrued and unpaid interest, if any, to the redemption
date. In addition, prior to October 1, 2013 we may redeem
up to 35% of the aggregate principal amount of the notes with
the net cash proceeds from certain equity offerings.
This investment involves risks. See Risk Factors
beginning on
page S-14
of this prospectus supplement.
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Per Note
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Total
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Public offering price
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100.00
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%
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$
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250,000,000
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Underwriting discount
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1.75
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%
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$
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4,375,000
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Proceeds, before expenses, to us
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98.25
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%
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$
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245,625,000
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The public offering price set forth above does not include
accrued interest, if any. Interest on the note will begin to
accrue on and must be paid by the
purchaser if the notes are delivered after September 29,
2010.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the adequacy or accuracy of this
prospectus supplement or the accompanying prospectus. Any
representation to the contrary is a criminal offense.
The underwriters expect to deliver the notes to investors on or
about September 29, 2010 only in book-entry form through
the facilities of The Depositary Trust Company.
Joint Book-Running Managers
The date of this prospectus supplement is September 15,
2010.
Prospectus
Supplement
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In this prospectus supplement, we, our,
us, GPHC, Graphic Packaging
and the Company means Graphic Packaging Holding
Company, including, unless the context otherwise requires or as
otherwise expressly stated, our subsidiary Graphic Packaging
International, Inc., the issuer of the notes offered hereby, and
our other subsidiaries. In addition, GPC means
Graphic Packaging Corporation and Altivity means
Altivity Packaging, LLC and its subsidiaries on a consolidated
basis. The Companys acquisition of Altivity, effective as
of March 10, 2008, is referred to as the Altivity
Transaction.
ABOUT
THIS PROSPECTUS SUPPLEMENT
This document is in two parts. The first part is the prospectus
supplement, which adds to and updates information contained in
the accompanying prospectus. The second part, the accompanying
prospectus, provides more general information, some of which may
not apply to this offering. Generally, when we refer to this
prospectus, we are referring to both parts of this document
combined. To the extent there is a conflict between the
information contained in this prospectus supplement, on the one
hand, and the information contained in the accompanying
prospectus, on the other hand, you should rely on the
information in this prospectus supplement.
S-i
Before purchasing any securities, you should carefully read this
prospectus supplement, the accompanying prospectus and any
free writing prospectus we authorize to be delivered
to you, together with the additional information described under
the heading Where You Can Find More Information in
this prospectus supplement.
This prospectus supplement does not constitute an offer to
sell, nor a solicitation of an offer to buy, any note offered
hereby by any person in any jurisdiction in which it is unlawful
for such person to make an offer or solicitation. Neither the
delivery of this prospectus supplement nor any sale made under
this prospectus supplement shall under any circumstances imply
that there has been no change in our affairs or the affairs of
our subsidiaries or that the information set forth herein is
correct as of any date subsequent to the date hereof.
You should rely only on the information contained or
incorporated by reference in this prospectus supplement, the
prospectus and any free writing prospectus, and any
documents summarized herein or summarized in any document
incorporated by reference herein that we authorize to be
delivered to you. We have not authorized anyone to provide you
with information different from that contained or incorporated
by reference in this prospectus supplement, the prospectus and
any free writing prospectus. You should not consider
the information contained or incorporated by reference in this
prospectus supplement, the prospectus and any free writing
prospectus, accurate as of any date other than their
respective dates, regardless of the time of delivery of this
prospectus supplement or of any sale of the notes. Our business,
financial condition, results of operations and prospectus may
have changed since those dates. The information contained, or
incorporated by reference, in this prospectus supplement is not
legal, business or tax advice.
SPECIAL
NOTE REGARDING NON-GAAP FINANCIAL MEASURES
The body of generally accepted accounting principles in the
United States is commonly referred to as GAAP. A non-GAAP
financial measure is generally defined by the Securities and
Exchange Commission, or the SEC, as one that purports to measure
historical or future financial performance, financial position
or cash flows but excludes or includes amounts that could not be
so adjusted in the most comparable GAAP measure. EBITDA and
Adjusted EBITDA, as presented in this prospectus supplement, are
supplemental measures of our performance, and net debt is a
supplemental measure of our financial position, that are not
required by, or presented in accordance with, GAAP. They are not
measurements of our financial performance or position under GAAP
and should not be considered as alternatives to net income, cash
flow or total debt or any other performance or financial
position measures derived in accordance with GAAP.
We define EBITDA as net (loss) income before income
tax expense; equity in net earnings of affiliates; interest
expense, net; and depreciation and amortization (including
noncash pension amortization). We define Adjusted
EBITDA as EBITDA adjusted to exclude charges associated
with the Altivity Transaction, loss on early extinguishment of
debt, other nonrecurring charges associated with the retirement
of equipment or the closing of facilities and the effect of
alternative fuel tax credits. We define net debt as
total debt less cash and cash equivalents. We caution investors
that amounts presented in accordance with our definitions of
EBITDA, Adjusted EBITDA and net debt may not be comparable to
similar measures disclosed by other issuers, because not all
issuers and analysts calculate EBITDA, Adjusted EBITDA or net
debt in the same manner. We present EBITDA, Adjusted EBITDA and
net debt and the ratios derived therefrom because we consider
them to be important supplemental measures of our performance
and financial position and believe they are frequently used by
securities analysts, investors and other interested parties in
the evaluation of companies. In the SummarySummary
Financial and Other Information section of this prospectus
supplement, we also include a quantitative reconciliation of
EBITDA and Adjusted EBITDA to the most directly comparable GAAP
financial performance measure, which is net loss. The most
directly comparable GAAP measure to net debt is total debt,
which is also presented in SummarySummary Financial
and Other Information.
S-ii
FORWARD-LOOKING
STATEMENTS
The statements we have made in this prospectus supplement or in
documents incorporated by reference herein which are not
historical facts are forward-looking statements.
These forward-looking statements are made based upon
managements expectations and beliefs concerning future
events impacting us and therefore involve a number of
uncertainties and risks. Therefore, the actual results of our
operations or our financial condition could differ materially
from those expressed or implied in these forward-looking
statements.
The discussions in our Risk Factors in this
prospectus supplement and our Managements Discussion
and Analysis of Financial Condition and Results of
Operations in our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, which we refer
to as our 2009
10-K, and
our Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010 highlight some of the more important risks identified by
our management, but should not be assumed to be the only factors
that could affect future performance. Other factors that could
cause the actual results of our operations or our financial
condition to differ from those expressed or implied in these
forward-looking statements include, but are not necessarily
limited to, our substantial amount of debt, inflation of and
volatility in raw material and energy costs, continuing pressure
for lower cost products, our ability to implement our business
strategies, including productivity initiatives and cost
reduction plans, currency movements and other risks of
conducting business internationally, and the impact of
regulatory and litigation matters, including those that impact
our ability to protect and use our intellectual property, and
other factors described in our filings with the SEC.
Except to the extent required by the federal securities laws, we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of new information, future
events or otherwise. The foregoing review of factors should not
be construed as exhaustive or as any admission regarding the
adequacy of our disclosures. Certain risk factors are detailed
from time to time in our various public filings. You are
advised, however, to consult any further disclosures we make on
related subjects in our filings with the SEC.
You can identify forward-looking statements by the fact that
they do not relate strictly to historic or current facts.
Forward-looking statements use terms such as
anticipates, believes,
continues, could, estimates,
expects, intends, may,
plans, potential, predicts,
will, should, seeks,
pro forma or similar expressions in connection with
any disclosure of future operating or financial performance.
These statements are only predictions and involve known and
unknown risks, uncertainties and other factors that may cause
our actual results of operations, financial condition, levels of
activity, performance or achievements to be materially different
from any future results of operations, financial condition,
levels of activity, performance or achievements expressed or
implied by such forward-looking statements. You should not place
undue reliance on these forward-looking statements.
INDUSTRY
AND MARKET DATA
This prospectus supplement includes industry data and statistics
that we obtained from periodic industry publications, including
Resource Information System Inc. (RISI), Paper
Shipping Sack Manufacturers Association, Inc.
(PSSMA) and Paperboard Packaging Council, as well as
our internal estimates. We believe data regarding the paperboard
packaging industry and our market position and market share
within the industry are inherently imprecise, but generally
indicate size and position and market share within the industry.
Industry publications generally state that the information
contained therein has been obtained from sources believed to be
reliable. Although we believe that the information provided by
third parties is generally accurate, we have not independently
verified any of the data from third-party sources nor have we
ascertained the underlying economic assumptions relied upon
therein. While we are not aware of any misstatements regarding
any industry data presented herein, our estimates, in particular
as they relate to our general expectations concerning the
paperboard packaging, multi-wall bag and specialty packaging
industries, involve risks and uncertainties and are subject to
change based on various factors, including those discussed under
the caption Risk Factors.
S-iii
SUMMARY
This summary highlights information about this prospectus
supplement and may not contain all of the information that may
be important to you. You should read the following summary
together with the more detailed information appearing elsewhere
in this prospectus supplement, as well as the financial
statements and related notes thereto and other information
included in or incorporated by reference in this prospectus
supplement.
Overview
We are a leading provider of packaging solutions for a wide
variety of products to food, beverage and other consumer
products companies. Additionally, we are the largest
U.S. producer of folding cartons and hold leading market
positions in coated unbleached kraft paperboard, coated recycled
boxboard and multi-wall bags. Our customers include some of the
worlds most widely recognized companies and well-known
brands. We strive to provide our customers with packaging
solutions designed to deliver marketing and performance benefits
at a competitive cost by capitalizing on our low-cost paperboard
mills and converting plants, proprietary carton and packaging
designs and commitment to customer service. For the
12 months ended June 30, 2010, our net sales, Adjusted
EBITDA and net income were $4.1 billion,
$568.7 million and $38.5 million, respectively. We
have approximately 12,900 employees.
On March 10, 2008, the businesses of Graphic Packaging and
Altivity were combined. Altivity was the largest privately-held
producer of folding cartons and a market leader in all of its
major businesses, including coated recycled boxboard, multi-wall
bag and specialty packaging. The combination of Graphic
Packaging and Altivity brought together two of the most
innovative, value-added paperboard packaging companies in the
global packaging market with expanded product offerings, market
reach and technology capabilities. As part of the integration
with Altivity, we have accelerated and achieved cost synergies
and operating efficiencies sooner than expected. We have
implemented steps that have resulted in approximately
$150 million in annualized run-rate synergies related to
the integration of Altivity. We expect to continue to benefit
from these actions as long as our run-rate continues at the
current level. We believe further opportunities exist to
optimize our manufacturing operations.
We report our results in three business segments: paperboard
packaging, multi-wall bag and specialty packaging, each of which
we describe briefly below. For a more detailed description, see
Business and Managements Discussion and
Analysis of Financial Condition and Results of Operations
Results of Operations included in our 2009
10-K and our
Quarterly Reports on
Form 10-Q
for the quarters ended March 31, 2010 and June 30,
2010.
Paperboard
PackagingNet sales for the 12 months ended
June 30, 2010 of $3.4 billion or 84% of total net
sales
Our paperboard packaging products deliver marketing and
performance benefits at a competitive cost. We supply paperboard
cartons and carriers designed to protect and contain products
while providing:
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convenience through ease of carrying, storage, delivery,
dispensing of product and food preparation for consumers;
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a smooth surface printed with high-resolution, multi-color
graphic images that help improve brand awareness and visibility
of products on store shelves; and
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durability, stiffness, wet and dry tear strength; leak, abrasion
and heat resistance; barrier protection from moisture, oxygen,
oils and greases; as well as enhanced microwave heating
performance.
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S-1
We make most of our packaging products from coated unbleached
kraft (CUK), coated recycled board (CRB)
and uncoated recycled board (URB) that we produce at
our mills. The remaining portion of packaging products are
produced from paperboard, primarily solid bleached sulfate
(SBS), purchased from external sources. We operate
an integrated, global network of 38 converting facilities
supported by seven mills (four CRB mills, one URB boxboard mill
and two CUK mills). We believe that the vertical integration
created by owning mills that produce various types of paperboard
as well as facilities that print, cut and glue
(convert) paperboard into folding cartons gives us
significant cost advantages over our nonintegrated competitors.
We believe that we are the largest U.S. producer of folding
cartons, we are the larger of two worldwide producers of CUK, we
are the largest producer of CRB in North America and we have one
of the lowest cost operations in North America with additional
cost reduction opportunities.
We convert our paperboard into folding cartons at our converting
plants and we design and manufacture specialized, proprietary
packaging machines that package bottles and cans and, to a
lesser extent, non-beverage consumer products. We also install
our packaging machines at customer plants and provide support,
service and advanced performance monitoring of the machines. We
believe that the use of such machines creates
pull-through demand for our cartons, which in turn
creates demand for our paperboard products. We continually seek
to increase our customers use of our integrated packaging
solutions in order to improve revenue opportunities, enhance
customer relationships, provide customers with greater packaging
line and supply chain efficiencies and overall cash benefits,
and expand opportunities for us to provide value-added support
and service. We enter into annual or multi-year carton supply
contracts with customers, which generally require the customer
to purchase a fixed portion of its carton requirements from us.
Our cartons use diverse structural designs and combinations of
paperboard, films, foils, metallization, holographics, embossing
and other characteristics that are tailored to the needs of
individual customers. Our research and development staff works
directly with our sales and marketing personnel to understand
long-term consumer and retailer trends and create new packaging
solutions. These innovative packaging solutions across our
growth platforms provide our businesses and customers with
differentiated packaging solutions. Our cartons are used by
customers that have prominent positions in industries that tend
to be more resilient to a downturn in the economy, including
food, beverage and other consumer products.
Multi-wall
BagNet sales for the 12 months ended June 30,
2010 of $464.2 million or 11% of total net
sales
We are the leading supplier of multi-wall bags in North America.
We operate 11 multi-wall bag plants that print, fold and glue
paper into bag packaging. We have made significant investments
to install
state-of-the-art
equipment at major plants to expand the businesss ability
to manufacture a full range of products. We also provide
multi-wall bag customers with value-added graphical and
technical support, customized packaging equipment solutions and
packaging workshops to help educate customers. Our multi-wall
bag facilities are strategically located throughout the U.S.,
allowing us to provide a high level of service to customers,
minimize freight and logistics costs, improve order turnaround
times and improve supply chain reliability. Furthermore, with
relatively comparable manufacturing lines in each of our major
facilities, we have the capacity and the flexibility to
manufacture all of our primary multi-wall bag product lines at
each location.
Our multi-wall bag business traditionally provided packaging for
low cost, bulk-type commodity products. However, with the
continuing evolution of materials management, bag construction
and distribution systems, we gained access to end markets in
which higher-value products are now being packaged in multi-wall
bags. Key end markets include food and agriculture, building
materials, chemicals, minerals and pet care. We provide
customers in a wide variety of end markets with high-end
graphical printing solutions.
S-2
Specialty
PackagingNet sales for the 12 months ended
June 30, 2010 of $203.0 million or 5% of total net
sales
Our specialty packaging business includes flexible packaging and
labels. Our flexible packaging business operates five modern and
technologically competitive manufacturing plants in North
America and produces products such as shingle wrap, batch
inclusion bags and film, retort pouches (such as meals ready to
go), medical test kits and transdermal patch overwraps,
multilayer laminations for
hard-to-hold
products (such as iodine) and plastic bags and films for
building materials (such as ready-mix concrete). Our flexible
packaging business has an established position in end markets
for food products, pharmaceutical and medical products, personal
care, industrial, pet food and pet care products, horticulture,
military and commercial retort pouches and shingle wrap.
Our label business focuses on two segments: heat transfer labels
and lithographic labels. We operate two dedicated label plants.
These facilities feature
state-of-the-art
lithographic, rotogravure, flexographic and digital printing,
including eight color sheet-fed and up to eleven color
roll-to-roll
equipment which produce
cut-and-stack,
in mold, roll-fed and heat transfer labels. The label business
provides customers with high quality labels utilizing multiple
technology applications, such as
DI-NA-CAL®.
The DI-NA-CAL heat transfer offering includes a full system
solution offering of both labels and the most advanced
application equipment manufactured today. We produce labels for
food, beverage, pharmaceutical, automotive, household and
industrial products, detergents, and the health and beauty
markets.
Competitive
Strengths
We believe our principal strengths include the following:
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Strong Market Positions across Multiple Product
Classes. We are the leading provider of
paperboard packaging solutions with significant scale, a broad
range of product offerings and innovative, value added
technological capabilities. As a result of the Altivity
Transaction we emerged as the leading folding carton supplier
with approximately 32% market share in the United States, and we
are the largest producer of CUK and CRB with an estimated 55%
and 31% market share, respectively, in the United States. Our
business is concentrated around the fastest growing markets in
the folding carton industry and we continue to increase our
market share in key end markets. We are also the largest
U.S. producer of multi-wall bags with an estimated 34%
market share.
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Further Cost Saving Opportunities. We operate
one of the lowest cost networks of mills and converting plants
in North America. We have programs in place that are designed to
further reduce costs, improve productivity and increase
profitability. We utilize a global continuous improvement
initiative that uses statistical process control to help design
and manage many types of activities, including production and
maintenance. This includes a Six Sigma process focused on
reducing variable and fixed manufacturing and administrative
costs. We have expanded our continuous improvement initiative to
include the deployment of Lean Sigma principles into
manufacturing and supply chain services. As we strengthen the
systems approach to continuous improvement, Lean Sigma
principles support our efforts to build a high performing
culture.
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Strong Free Cash Flow. We are focused on
optimizing our operations to maximize free cash flow. Our
business model allows us to generate significant operating cash
flow due to our strong operating margins and moderate capital
expenditures and working capital requirements. We generated
approximately $429.7 million of net cash from operating
activities (including $83.2 million for alternative fuel
tax credits, net of expenses) for the 12 months ended
June 30, 2010.
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Strong Relationship with Stable and Diversified Customer
Base. Our customers generally have prominent
market positions in the beverage, food and other consumer
products industries. We
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S-3
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have long-term relationships with major companies, including
Kraft Foods, Inc., AB InBev, General Mills, Inc., MillerCoors
Brewing Company, Nestlé Group, Kellogg Company, Unilever,
The Schwan Food Company, Perseco, Kimberly-Clark, Procter and
Gamble, Nestlé Purina PetCare Company, Purina Mills, LLC
and numerous
Coca-Cola
and Pepsi bottling companies. We also have long-standing
relationships with a number of major independent and integrated
converters who have agreed to purchase a significant portion of
their paperboard requirements from us, to assist us in customer
development efforts and who use our products to grow the market
for paperboard. Our multi-wall bag and flexible packaging
businesses have developed long-standing relationships with
customers ranging from small, regionally focused companies to
large blue-chip and industrial companies. During 2009, we did
not have any one customer represent 10% or more of our net sales.
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Consistent Demand from Stable End-Markets. We
sell our paperboard products to consumers primarily in the food
and beverage and non-durable consumer goods end markets. The
food and beverage sectors tend to be more recession-resistant
than other sectors. During an economic slowdown, processed food
production tends to be less affected by a contraction in
consumer spending, which enables us to experience more stable
revenues and generate more steady cash flows. Recently, we have
witnessed a trend of consumers preparing more meals at home
which compliments our focus on the food and take- home beverage
industry. We have been able to capitalize on this trend as
approximately 84% of our revenue for the 12 months ended
June 30, 2010 is derived from our core focus on paperboard
packaging and converted products, both of which are heavily used
for staples such as
ready-to-eat
cereals, cake mixes, breakfast foods, frozen dinners and
take-home beverages.
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Experienced Management Team with Track Record of Successful
Acquisition Integration. Our senior management
team has an average of 15 years of experience in the paper
and packaging industry. Our President and Chief Executive
Officer, David Scheible, has held various executive positions at
Graphic Packaging and our predecessors for more than ten years.
Additionally, our senior management team has a long-standing
record of successfully managing business integrations, including
the integration of Riverwood International Corporation and
Graphic Packaging Corporation in 2003 and Graphic Packaging and
Altivity in 2008. Our senior management team is continually
seeking to improve profitability, growth and cash flow
generation.
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Our
Strategy
As a leading provider of paperboard packaging, multi-wall bags
and specialty packaging, we believe that the global packaging
market presents significant growth opportunities. We believe
that we can continue to enhance our success by implementing the
following business strategies:
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Expand Market Share in Current Markets and Identify and
Penetrate New Markets. Our combination with
Altivity diversified our product line and provided us new
opportunities for top-line growth. The Altivity Transaction
provided us with opportunities to cross-sell products and to
deliver fully integrated packaging solutions to our customers.
We are also focused on the identification of new target markets
such as energy drinks, one of the fastest-growing categories in
the beverage industry, new distribution channels such as
warehouse clubs, one of the fastest-growing markets in the
retail industry, and international market penetration
opportunities.
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Develop and Market Innovative Products and
Applications. Our research, development and
engineering personnel work directly with our sales and marketing
personnel to understand consumer and retailer trends and develop
innovative packaging solutions. Our new packaging solutions
enable us to differentiate our products and provide
opportunities for additional revenue growth. Our development
efforts include, but are not limited to, extending the shelf
life of customers products, reducing production costs,
enhancing the heat-managing characteristics of
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S-4
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food packaging and refining packaging appearance through new
printing techniques and materials. Several of our award-winning
packaging solutions include our Fridge
Vendor®
carton, a horizontal beverage 12-pack that delivers cold
beverages while conserving refrigerator space, our
MicroRite®
carton, an even heating tray that is used for frozen entrees or
side dishes, and our patented
Z-Flute®
technology, a carton with the strength of a corrugated package
with the performance characteristics of a folding carton.
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Continue to Reduce Costs by Focusing on Operational
Improvements. In addition to realizing synergies
arising from the Altivity Transaction and optimizing our
manufacturing footprint, we remain diligent with our
day-to-day
cost saving initiatives by continuing to instill a culture of
continuous improvement throughout our organization. Two primary
vehicles for improving our operations include the implementation
of both Six Sigma and Lean Sigma initiatives. Going forward, we
are focused on driving further cost reductions throughout our
operations.
|
Tender
Offer
On September 15, 2010, we commenced an offer to purchase
for cash an aggregate principal amount of $250.0 million,
which we refer to as the tender cap, of our 9.50% senior
subordinated notes due 2013, which we refer to as the 2013 notes.
As of June 30, 2010, $390.1 million aggregate
principal amount of the 2013 notes were outstanding, without
giving effect to the redemption of $66.8 million aggregate
principal amount of the 2013 notes effective August 16,
2010. The total consideration payable for 2013 notes tendered
and accepted by us for purchase in the tender offer will be
$1,018.33 per $1,000 principal amount of the 2013 notes, which
total consideration includes an early tender premium of $30 per
$1,000 principal amount of notes tendered and not withdrawn
prior to 5:00 p.m., New York City time, on
September 28, 2010. 2013 notes tendered after
September 28, 2010 will receive consideration of $988.33
per $1,000 principal amount, which does not include an early
tender premium. Additionally, accrued and unpaid interest will
be paid on any notes accepted for purchase to the settlement
date.
The tender offer is being made on the terms and subject to the
conditions set forth in the offer to purchase, dated
September 15, 2010, relating to the tender offer (the
Offer to Purchase). The tender offer is being made
solely pursuant to, and is governed by, the Offer to Purchase.
The tender offer is not conditioned upon any minimum amount of
the 2013 notes being tendered, and we reserve the right to
increase or modify the tender cap. We intend to fund our
purchase of the 2013 notes from the net proceeds of this
offering. The tender offer is scheduled to expire at
8:00 a.m., New York City time, on October 14, 2010 and
is conditioned, among other things, on our receipt of proceeds
from one or more debt financing transactions, such as this
offering, sufficient to fund the purchase of the 2013 notes
pursuant to the tender offer. Net proceeds from this offering
not used to fund the tender offer will be used to redeem a
portion of the 2013 notes on a pro rata basis pursuant to the
terms of the indenture governing the 2013 notes. We cannot
assure you that the tender offer will be consummated in
accordance with its terms, or at all, or that a significant
principal amount of the 2013 notes will be retired and cancelled
pursuant to the tender offer. This offering is not conditioned
upon the successful consummation of the tender offer. For a
discussion of the terms of the 2013 notes, see Description
of Certain Other Indebtedness and the notes to the
financial statements incorporated by reference in this
prospectus supplement.
Corporate
Information
Graphic Packaging International, Inc. is a Delaware corporation
and, through Graphic Packaging Corporation, a wholly owned
subsidiary of Graphic Packaging Holding Company. Our executive
offices are located at 814 Livingston Court, Marietta, Georgia
30067, and our telephone number at that location is
(770) 644-3000.
Our website address is www.graphicpkg.com. The
information on our website is not a part of this prospectus
supplement.
S-5
The
Offering
The summary below describes the principal terms of the notes.
Certain of the terms and conditions below are subject to
important limitations and exceptions. The Description of
the Notes section of this prospectus supplement contains a
more detailed description of the terms and conditions of the
notes.
|
|
|
Issuer |
|
Graphic Packaging International, Inc. |
|
Guarantors |
|
Graphic Packaging Holding Company, Graphic Packaging Corporation
and certain of our material domestic subsidiaries who have
guaranteed our obligations in respect of our senior credit
facilities and our existing 9.50% senior notes due 2017. |
|
Notes Offered |
|
$250 million aggregate principal amount of our
77/8% Senior
Notes due 2018. |
|
Offering Price |
|
100.00%. |
|
Gross Proceeds to the Issuer |
|
$245,625,000. |
|
Maturity Date |
|
October 1, 2018. |
|
Interest |
|
Interest on the notes will be payable semi-annually in cash on
April 1 and October 1 each year, commencing
April 1, 2011. Interest will accrue from September 29,
2010. |
|
Optional Redemption |
|
We may redeem the notes, in whole or in part, at any time on or
after October 1, 2014 initially at 103.938% of their
principal amount, plus accrued and unpaid interest to the
redemption date, declining ratably to 100% of their principal
amount, plus accrued interest on or after October 1, 2016. |
|
|
|
At any time prior to October 1, 2014, we may redeem the
notes, in whole or in part, at a redemption price equal to 100%
of their principal amount plus a make-whole premium described in
Description of the NotesOptional Redemption,
together with accrued and unpaid interest to the redemption date. |
|
|
|
In addition, prior to October 1, 2013, we may redeem up to
35% of the aggregate principal amount of outstanding notes with
the proceeds from sales of certain kinds of our capital stock at
a redemption price equal to 107.875% of their principal, plus
accrued interest to the redemption date. We may make such
redemption only if, after any such redemption, at least 65% of
the aggregate principal amount of notes originally issued under
the indenture (including any additional notes) remains
outstanding. See Description of the NotesOptional
Redemption. |
|
Change of Control |
|
In the event of a change of control under the terms of the
indenture, each holder of the notes will have the right to
require us to purchase such holders notes at a price of
101% of their principal amount plus accrued interest, if any, to
the date of purchase. See Description of the
NotesChange of Control. |
S-6
|
|
|
Ranking |
|
The notes will be our general unsecured obligations and will
rank: |
|
|
|
equal in right of payment to all
of our existing and future unsecured indebtedness and other
obligations that are not, by their terms, expressly subordinated
in right of payment to the notes;
|
|
|
|
senior in right of payment to any
of our existing and future indebtedness and other obligations
that are, by their terms, expressly subordinated in right of
payment to the notes;
|
|
|
|
effectively subordinated to all of
our secured indebtedness and other secured obligations to the
extent of the value of the assets securing such indebtedness and
other obligations; and
|
|
|
|
structurally subordinated to all
indebtedness and other liabilities (including trade payables) of
our subsidiaries that do not guarantee the notes.
|
|
|
|
The note guarantee of each guarantor will be a general unsecured
senior obligation of that guarantor and will rank: |
|
|
|
equal in right of payment to all
existing and future unsecured indebtedness and other obligations
of that guarantor that are not, by their terms, expressly
subordinated in right of payment to the note guarantee;
|
|
|
|
senior in right of payment to any
future indebtedness and other obligations of that guarantor that
are, by their terms, expressly subordinated in right of payment
to the note guarantee; and
|
|
|
|
effectively subordinated to all
secured indebtedness and other secured obligations of that
guarantor to the extent of the value of the assets securing such
indebtedness and other obligations.
|
|
|
|
As of June 30, 2010, after giving effect to this offering
and the use of proceeds therefrom, we had consolidated total
indebtedness of approximately $2.8 billion, of which
approximately $1.9 billion was secured and therefore
effectively senior to the notes, and of which approximately
$423.5 million ranked equally in right of payment with the
notes. As of June 30, 2010, our non-guarantor subsidiaries
had liabilities of approximately $81.0 million, all of
which would be structurally senior to the notes. |
|
|
|
As of June 30, 2010, we had additional available borrowings
under the revolving portion of our senior credit facilities of
up to $365.2 million, all of which would be secured. We
also have additional available borrowings of up to
$8.9 million under credit facilities used to fund our
international subsidiaries, which would be structurally senior
to the notes. |
S-7
|
|
|
Certain Covenants |
|
The indenture governing the notes will contain covenants that,
among other things, limit our ability and the ability of our
restricted subsidiaries to: |
|
|
|
incur more debt;
|
|
|
|
pay dividends, redeem stock or
make other distributions;
|
|
|
|
make certain investments;
|
|
|
|
create liens;
|
|
|
|
transfer or sell assets;
|
|
|
|
merge or consolidate; and
|
|
|
|
enter into transactions with our
affiliates.
|
|
|
|
These covenants will be subject to important exceptions and
qualifications, which are described under Description of
the NotesCertain Covenants and Description of
the NotesMerger and Consolidation. |
|
Use of Proceeds |
|
We will use the net proceeds of this offering, together with
cash on hand, solely to refinance, through a tender offer,
$250.0 million aggregate principal amount of our
outstanding 9.50% senior subordinated notes due 2013. Net
proceeds from this offering not used to fund the tender offer
will be used to redeem a portion of the 2013 notes on a pro rata
basis pursuant to the terms of the indenture governing the 2013
notes. See Use of Proceeds. |
You should carefully consider all of the information in this
prospectus supplement, or incorporated by reference herein,
including the discussion under the caption Risk
Factors beginning on
page S-14
before investing in the notes.
S-8
Summary
Financial and Other Information
The following summary historical condensed consolidated
financial data of Graphic Packaging Holding Company, the
ultimate parent of Graphic Packaging International, Inc., as of
December 31, 2007, 2008 and 2009 and for each of the fiscal
years in the three-year period ended December 31, 2009 have
been derived from our audited consolidated financial statements
incorporated by reference into this prospectus supplement. The
following summary historical condensed consolidated financial
data for each of the six-month periods ended June 30, 2009
and 2010 have been derived from Graphic Packaging Holding
Companys unaudited condensed consolidated financial
statements incorporated by reference into this prospectus
supplement and are not necessarily indicative of the results for
the remainder of the fiscal year or any future period. The
following summary historical condensed consolidated financial
statements for the twelve-month period ended June 30, 2010
are derived from our audited consolidated financial statements
for the year ended December 31, 2009 and the unaudited
condensed consolidated financial statements for the six-month
periods ended June 30, 2009 and 2010. We believe that the
unaudited condensed consolidated financial data reflects all
normal and recurring adjustments necessary for a fair
presentation of the results for the interim periods presented.
On March 10, 2008, we combined our operations with those of
Altivity through a series of transactions. We have included the
results of Altivity in our financial statements since
March 10, 2008, the effective date of the combination. In
the opinion of management, all adjustments (consisting of normal
recurring items) necessary for the fair presentation of the
results for such period have been included. This information is
only a summary and should be read in conjunction with our
financial statements and the notes thereto incorporated by
reference into this prospectus supplement and the
Managements Discussion and Analysis of Financial
Condition and Results of Operations section contained in
our 2009
10-K and our
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Six Months
|
|
|
12 Months
|
|
|
|
December 31,
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(in millions)
|
|
|
Consolidated Statement of Operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
$2,421.2
|
|
|
|
$4,079.4
|
|
|
|
$4,095.8
|
|
|
|
$2,063.0
|
|
|
|
$2,040.6
|
|
|
|
$4,073.4
|
|
Cost of sales
|
|
|
2,089.4
|
|
|
|
3,587.1
|
|
|
|
3,567.2
|
|
|
|
1,794.6
|
|
|
|
1,746.0
|
|
|
|
3,518.6
|
|
Selling, general and administrative
|
|
|
188.4
|
|
|
|
306.9
|
|
|
|
314.6
|
|
|
|
163.6
|
|
|
|
155.8
|
|
|
|
306.8
|
|
Other (income) expense, net
|
|
|
(7.8
|
)
|
|
|
2.3
|
|
|
|
(15.6
|
)
|
|
|
(10.3
|
)
|
|
|
1.3
|
|
|
|
(4.0
|
)
|
Restructuring and other special charges (credits)
|
|
|
|
|
|
|
33.2
|
|
|
|
(53.1
|
)
|
|
|
(6.0
|
)
|
|
|
55.1
|
|
|
|
8.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from operations
|
|
|
151.2
|
|
|
|
149.9
|
|
|
|
282.7
|
|
|
|
121.1
|
|
|
|
82.4
|
|
|
|
244.0
|
|
Interest expense, net
|
|
|
(167.8
|
)
|
|
|
(215.4
|
)
|
|
|
(196.4
|
)
|
|
|
(104.7
|
)
|
|
|
(90.0
|
)
|
|
|
(181.7
|
)
|
Loss on early extinguishment of debt (1)
|
|
|
(9.5
|
)
|
|
|
|
|
|
|
(7.1
|
)
|
|
|
(6.1
|
)
|
|
|
(0.9
|
)
|
|
|
(1.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before income taxes and equity in net earnings of
affiliates
|
|
|
(26.1
|
)
|
|
|
(65.5
|
)
|
|
|
79.2
|
|
|
|
10.3
|
|
|
|
(8.5
|
)
|
|
|
60.4
|
|
Income tax expense
|
|
|
(23.9
|
)
|
|
|
(34.4
|
)
|
|
|
(24.1
|
)
|
|
|
(19.4
|
)
|
|
|
(18.8
|
)
|
|
|
(23.5
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income before equity in net earnings of affiliates
|
|
|
(50.0
|
)
|
|
|
(99.9
|
)
|
|
|
55.1
|
|
|
|
(9.1
|
)
|
|
|
(27.3
|
)
|
|
|
36.9
|
|
Equity in net earnings of affiliates
|
|
|
0.9
|
|
|
|
1.1
|
|
|
|
1.3
|
|
|
|
0.5
|
|
|
|
0.8
|
|
|
|
1.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from continuing operations
|
|
|
(49.1
|
)
|
|
|
(98.8
|
)
|
|
|
56.4
|
|
|
|
(8.6
|
)
|
|
|
(26.5
|
)
|
|
|
38.5
|
|
Loss from discontinued operations, net of taxes (2)
|
|
|
(25.5
|
)
|
|
|
(0.9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
$(74.6
|
)
|
|
|
$(99.7
|
)
|
|
|
$56.4
|
|
|
|
$(8.6
|
)
|
|
|
$(26.5
|
)
|
|
|
$38.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Six Months
|
|
|
12 Months
|
|
|
|
December 31,
|
|
|
Ended June 30,
|
|
|
Ended June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(in millions, except ratios)
|
|
|
Selected Business Segment Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paperboard Packaging
|
|
|
$2,340.6
|
|
|
|
$3,377.4
|
|
|
|
$3,423.5
|
|
|
|
$1,719.7
|
|
|
|
$1,702.4
|
|
|
|
$3,406.2
|
|
Multi-wall Bag
|
|
|
80.6
|
|
|
|
478.1
|
|
|
|
471.6
|
|
|
|
240.1
|
|
|
|
232.7
|
|
|
|
464.2
|
|
Specialty Packaging
|
|
|
|
|
|
|
223.9
|
|
|
|
200.7
|
|
|
|
103.2
|
|
|
|
105.5
|
|
|
|
203.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net sales
|
|
|
$2,421.2
|
|
|
|
$4,079.4
|
|
|
|
$4,095.8
|
|
|
|
$2,063.0
|
|
|
|
$2,040.6
|
|
|
|
$4,073.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Paperboard Packaging
|
|
|
$177.8
|
|
|
|
$220.9
|
|
|
|
$288.3
|
|
|
|
$141.4
|
|
|
|
$150.7
|
|
|
|
$297.6
|
|
Multi-wall Bag
|
|
|
6.3
|
|
|
|
25.9
|
|
|
|
3.9
|
|
|
|
1.4
|
|
|
|
2.3
|
|
|
|
4.8
|
|
Specialty Packaging
|
|
|
|
|
|
|
9.6
|
|
|
|
(1.4
|
)
|
|
|
6.1
|
|
|
|
8.9
|
|
|
|
1.4
|
|
Corporate
|
|
|
(32.9
|
)
|
|
|
(106.5
|
)
|
|
|
(8.1
|
)
|
|
|
(27.8
|
)
|
|
|
(79.5
|
)
|
|
|
(59.8
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total income from operations
|
|
|
$151.2
|
|
|
|
$149.9
|
|
|
|
$282.7
|
|
|
|
$121.1
|
|
|
|
$82.4
|
|
|
|
$244.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data (at period end):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$9.3
|
|
|
|
$170.1
|
|
|
|
$149.8
|
|
|
|
$160.6
|
|
|
|
$171.6
|
|
|
|
$171.6
|
|
Property, plant and equipment, net
|
|
|
1,376.2
|
|
|
|
1,935.1
|
|
|
|
1,797.4
|
|
|
|
1,870.0
|
|
|
|
1,683.4
|
|
|
|
1,683.4
|
|
Total assets
|
|
|
2,777.3
|
|
|
|
4,983.1
|
|
|
|
4,701.8
|
|
|
|
4,871.3
|
|
|
|
4,629.0
|
|
|
|
4,629.0
|
|
Total debt
|
|
|
1,878.4
|
|
|
|
3,183.8
|
|
|
|
2,800.2
|
|
|
|
3,068.3
|
|
|
|
2,765.7
|
|
|
|
2,765.7
|
|
Total shareholders equity
|
|
|
144.0
|
|
|
|
525.2
|
|
|
|
728.8
|
|
|
|
549.4
|
|
|
|
702.0
|
|
|
|
702.0
|
|
Other Financial Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
$141.7
|
|
|
|
$184.2
|
|
|
|
$502.9
|
|
|
|
$173.9
|
|
|
|
$100.7
|
|
|
|
$429.7
|
|
Net cash used in investing activities
|
|
|
(90.8
|
)
|
|
|
(143.8
|
)
|
|
|
(124.1
|
)
|
|
|
(57.1
|
)
|
|
|
(42.2
|
)
|
|
|
(109.2
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(50.0
|
)
|
|
|
119.8
|
|
|
|
(399.2
|
)
|
|
|
(126.3
|
)
|
|
|
(35.4
|
)
|
|
|
(308.3
|
)
|
Capital spending
|
|
|
95.9
|
|
|
|
183.3
|
|
|
|
129.9
|
|
|
|
66.4
|
|
|
|
39.7
|
|
|
|
103.2
|
|
Depreciation and amortization
|
|
|
189.6
|
|
|
|
264.3
|
|
|
|
305.4
|
|
|
|
151.8
|
|
|
|
147.6
|
|
|
|
301.2
|
|
EBITDA (3)
|
|
|
311.0
|
|
|
|
418.2
|
|
|
|
602.4
|
|
|
|
277.5
|
|
|
|
233.9
|
|
|
|
558.8
|
|
Adjusted EBITDA (3)
|
|
|
339.1
|
|
|
|
475.8
|
|
|
|
556.4
|
|
|
|
277.6
|
|
|
|
289.9
|
|
|
|
568.7
|
|
Net debt (4)
|
|
|
1,869.1
|
|
|
|
3,013.7
|
|
|
|
2,650.4
|
|
|
|
2,907.7
|
|
|
|
2,594.1
|
|
|
|
2,594.1
|
|
|
|
|
|
|
Selected Financial Ratios:
|
|
|
|
|
Ratio of Adjusted EBITDA to interest expense, net
|
|
|
3.13
|
x
|
Ratio of total debt to Adjusted EBITDA (3)
|
|
|
4.86
|
x
|
Ratio of net debt to Adjusted EBITDA (3)(4)
|
|
|
4.56
|
x
|
|
|
|
(1) |
|
Loss on early extinguishment of debt for the fiscal year ended
December 31, 2007 includes amounts related to the
Companys refinancing of our previous senior secured
revolving credit and term loan facilities, and for the six
months ended June 30, 2009 and twelve months ended
December 31, 2009 |
S-10
|
|
|
|
|
includes amounts related to the Companys retirement of its
8.50% senior notes due 2011, and for the six months ended
June 30, 2010 includes amounts related to the
Companys retirement of a portion of its 9.50% senior
subordinated notes due 2013. |
|
(2) |
|
Loss from discontinued operations, net of taxes relates to the
sale of Graphic Packaging International Holding Sweden AB, which
was sold on October 16, 2007. |
|
(3) |
|
The following table sets forth a reconciliation of net (loss)
income to EBITDA and Adjusted EBITDA. EBITDA is defined as net
(loss) income before income tax expense; equity in net earnings
of affiliates; interest expense, net; and depreciation and
amortization (including noncash pension amortization). Adjusted
EBITDA is defined as EBITDA further adjusted to exclude charges
associated with the Altivity Transaction, loss on early
extinguishment of debt, other non-recurring charges associated
with the retirement of equipment or the closing of facilities
and the effect of alternative fuel tax credits. We caution
investors that amounts presented in accordance with our
definitions of EBITDA and Adjusted EBITDA may not be comparable
to similar measures disclosed by other issuers, because not all
issuers and analysts calculate EBITDA and Adjusted EBITDA in the
same manner. We present EBITDA and Adjusted EBITDA and the
ratios derived therefrom because we consider them to be
important supplemental measures of our performance and believe
they are frequently used by securities analysts, investors and
other interested parties in the evaluation of companies. EBITDA
and Adjusted EBITDA have several limitations. The terms EBITDA
and Adjusted EBITDA are not defined under GAAP, and EBITDA and
Adjusted EBITDA are not a measure of net income, operating
income or any other performance measure derived in accordance
with GAAP, and are subject to important limitations. For
additional information regarding our use of EBITDA and Adjusted
EBITDA and limitations on their usefulness as an analytical
tool, see Special Note Regarding Non-GAAP Financial
Measures. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year Ended
|
|
|
Six Months Ended
|
|
|
12 Months
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
Ended June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
|
|
(in millions)
|
|
|
Net (loss) income
|
|
|
$(74.6
|
)
|
|
|
$(99.7
|
)
|
|
|
$56.4
|
|
|
|
$(8.6
|
)
|
|
|
$(26.5
|
)
|
|
|
$38.5
|
|
Add (subtract)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
23.9
|
|
|
|
34.4
|
|
|
|
24.1
|
|
|
|
19.4
|
|
|
|
18.8
|
|
|
|
23.5
|
|
Equity in net earnings of affiliates
|
|
|
(0.9
|
)
|
|
|
(1.1
|
)
|
|
|
(1.3
|
)
|
|
|
(0.5
|
)
|
|
|
(0.8
|
)
|
|
|
(1.6
|
)
|
Interest expense, net
|
|
|
167.8
|
|
|
|
215.4
|
|
|
|
196.4
|
|
|
|
104.7
|
|
|
|
90.0
|
|
|
|
181.7
|
|
Depreciation and amortization (a)
|
|
|
194.8
|
|
|
|
269.2
|
|
|
|
326.8
|
|
|
|
162.5
|
|
|
|
152.4
|
|
|
|
316.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
|
$311.0
|
|
|
|
$418.2
|
|
|
|
$602.4
|
|
|
|
$277.5
|
|
|
|
$233.9
|
|
|
|
$558.8
|
|
Charges associated with Altivity Transaction
|
|
|
|
|
|
|
42.1
|
|
|
|
71.7
|
|
|
|
47.0
|
|
|
|
55.1
|
|
|
|
79.8
|
|
Loss on early extinguishment of debt
|
|
|
9.5
|
|
|
|
|
|
|
|
7.1
|
|
|
|
6.1
|
|
|
|
0.9
|
|
|
|
1.9
|
|
Alternative fuel tax credits, net of expenses
|
|
|
|
|
|
|
|
|
|
|
(137.8
|
)
|
|
|
(55.3
|
)
|
|
|
|
|
|
|
(82.5
|
)
|
Asset impairment and shut down charges
|
|
|
18.6
|
|
|
|
15.5
|
|
|
|
13.0
|
|
|
|
2.3
|
|
|
|
|
|
|
|
10.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
|
|
|
$339.1
|
|
|
|
$475.8
|
|
|
|
$556.4
|
|
|
|
$277.6
|
|
|
|
$289.9
|
|
|
|
$568.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Includes noncash pension amortization for each of the fiscal
years in the two-year period ended December 31, 2009 and
for each of the six-month periods ended June 30, 2009 and
2010. |
S-11
|
|
|
(4) |
|
The table below sets forth the Companys net debt. We
define net debt as total debt minus cash and cash equivalents.
The Companys management believes that the presentation of
net debt provides useful information to investors because this
measure is an important measure that management uses in
assessing the Companys financial position. Net debt is a
financial measure not calculated in accordance with GAAP. Net
debt should be considered in addition to results prepared in
accordance with GAAP, but should not be considered a substitute
for or superior to GAAP results. In addition, our net debt may
not be comparable to similarly titled measures utilized by other
companies since such other companies may not calculate such
measures in the same manner as we do. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
|
June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
2009
|
|
|
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
(in millions)
|
|
|
Short-term debt and current portion of long-term debt
|
|
|
$6.6
|
|
|
|
$18.6
|
|
|
|
$17.6
|
|
|
|
$27.6
|
|
|
|
$27.1
|
|
Long-term debt
|
|
|
1,871.8
|
|
|
|
3,165.2
|
|
|
|
2,782.6
|
|
|
|
3,040.7
|
|
|
|
2,738.6
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
9.3
|
|
|
|
170.1
|
|
|
|
149.8
|
|
|
|
160.6
|
|
|
|
171.6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net debt
|
|
|
$1,869.1
|
|
|
|
$3,013.7
|
|
|
|
$2,650.4
|
|
|
|
$2,907.7
|
|
|
|
$2,594.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S-12
Ratios of
Earnings to Fixed Charges
Our ratios of earnings to fixed charges for the six months ended
June 30, 2010 and the five fiscal years ended
December 31, 2009 are set forth in the table below.
Earnings for the years ended December 31, 2005, 2006, 2007,
2008 and the six months ended June 30, 2010 were inadequate
to cover fixed charges by $67.9 million,
$75.6 million, $24.2 million, $64.1 million and
$8.1 million, respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
|
|
|
|
Year Ended December 31,
|
|
|
Ended
|
|
|
|
2005
|
|
|
2006
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
|
June 30, 2010
|
|
|
Ratio of Earnings to Fixed Charges (1)(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1.4
|
x
|
|
|
|
|
|
|
|
(1) |
|
For purposes of calculating this ratio, earnings
consists of income from continuing operations before income
taxes and income from equity affiliates plus (a) fixed
charges minus interest capitalized during the period,
(b) distributed income from equity affiliates and
(c) amortization of previously capitalized interest. Fixed
charges consist of interest expense, capitalized interest,
amortization of discount on indebtedness and an appropriate
portion of rental expense representative of the interest factor. |
|
(2) |
|
Currently, we have no shares of preferred stock outstanding and
thus have not paid any dividends on preferred stock in the
periods presented. Therefore, the ratio of earnings to combined
fixed charges and preference dividends is not shown because it
is not different from the ratio of earnings to fixed charges. |
S-13
RISK
FACTORS
You should consider carefully all of the information set
forth or incorporated by reference in this prospectus supplement
and, in particular, the following risks before you decide to
invest in the notes. If any of the following uncertainties or
risks actually occurs, our business, financial condition or
results of operations could be materially adversely affected.
The risks described below are not the only risks that may affect
your investment. Additional risks and uncertainties not
currently known to us or that we currently view as immaterial
may also materially and adversely affect our business, financial
condition or results of operations.
Risks
Relating to Our Business
Our
substantial indebtedness may adversely affect our financial
health, our ability to obtain financing in the future and our
ability to react to changes in our business.
As of June 30, 2010, we had an aggregate principal amount
of $2,698.9 million of outstanding debt, after giving
effect to this offering, the expected use of proceeds therefrom
and our redemption of $66.8 million principal amount of the
2013 notes on August 16, 2010. Because of our substantial
debt, our ability to obtain additional financing for working
capital, capital expenditures, acquisitions or general corporate
purposes may be restricted in the future. We are also exposed to
the risk of increased interest costs because approximately
$1.9 billion of our debt is at variable rates of interest.
A significant portion of our cash flow from operations must be
dedicated to the payment of principal and interest on our
indebtedness, thereby reducing the funds available for other
purposes. We expect interest expense to be between
$175 million and $180 million in 2010, including
$9 million of noncash interest expenses associated with
amortization of debt issuance costs.
Additionally, our Credit Agreement dated May 16, 2007, as
amended (the Credit Agreement), the indentures
governing our 9.50% Senior Notes due 2017 and
9.50% Senior Subordinated Notes due 2013 (the
Existing Indentures) and the indenture that will
govern the notes offered hereby contain covenants that prohibit
or restrict, among other things, the disposal of assets, the
incurrence of additional indebtedness (including guarantees),
payment of dividends, loans or advances and certain other types
of transactions. The Credit Agreement also requires compliance
with a maximum consolidated secured leverage ratio. Our ability
to comply in future periods with these covenants will depend on
our ongoing financial and operating performance.
Our substantial debt and the restrictions under the Credit
Agreement, the Existing Indentures and the indenture that will
govern the notes offered hereby could limit our flexibility to
respond to changing market conditions and competitive pressures.
Our material outstanding debt obligations and the restrictions
may also leave us more vulnerable to a downturn in general
economic conditions or our business, or unable to carry out
capital expenditures that are necessary or important to our
growth strategy and productivity improvement programs.
The breach of any of the covenants or restrictions contained in
our Credit Agreement, the Existing Indentures governing the
existing notes and the indenture that will govern the notes
offered hereby, or agreements governing our other indebtedness
could result in a default under the applicable agreement which
would permit the applicable lenders or noteholders, as the case
may be, to declare all amounts outstanding thereunder to be due
and payable, together with accrued and unpaid interest. In any
such case, we may be unable to make borrowings under our credit
facilities and may not be able to repay the amounts due under
our credit facilities, the existing notes and the notes offered
hereby. This could have serious consequences to our financial
condition and results of operations and could cause us to become
bankrupt or insolvent.
S-14
Our
access to the capital markets may be limited.
We are a highly leveraged company that may require additional
capital from time to time. The timing of any capital-raising
transaction may be impacted by unforeseen events, such as
strategic growth opportunities, which could require us to pursue
additional capital in the near-term. We may need to refinance
all or a portion of our indebtedness, including the notes, on or
before maturity. We cannot assure you that we will be able to
refinance any of our indebtedness, including our senior secured
credit facilities, our existing notes and the notes offered
hereby, on acceptable terms or at all. Our ability to obtain
capital and the costs of such capital are dependent on numerous
factors, including:
|
|
|
|
|
general economic and capital market conditions;
|
|
|
|
covenants in the Credit Agreement, the Existing Indentures, the
indenture governing the notes offered hereby and other
indebtedness;
|
|
|
|
credit availability from banks and other financial institutions;
|
|
|
|
investor confidence in us;
|
|
|
|
our consolidated financial performance;
|
|
|
|
our levels of indebtedness;
|
|
|
|
our maintenance of acceptable credit ratings;
|
|
|
|
our cash flow;
|
|
|
|
provisions of tax and securities laws that may impact raising
capital; and
|
|
|
|
our long-term business prospects.
|
We may not be successful in obtaining additional capital for
these or other reasons. An inability to access capital may limit
our ability to pursue development projects, plant improvements
or acquisitions that we may rely on for future growth and to
comply with regulatory requirements and, as a result, may have a
material adverse effect on our financial condition, results of
operations and cash flows, and on our ability to execute our
business strategy.
Significant
increases in prices for raw materials, energy, transportation
and other necessary supplies and services could adversely affect
our financial results.
Limitations in the availability and increases in the costs of
raw materials, including petroleum-based materials, energy,
wood, transportation and other necessary goods and services
could have an adverse effect on our financial results. We are
also limited in our ability to pass along such cost increases to
customers due to contractual provisions and for competitive
reasons.
There
is no guarantee that our efforts to reduce costs, or to maintain
current level run-rates for realized cost synergies and
operating efficiencies, will be successful.
We utilize a global continuous improvement initiative that uses
statistical process control to help design and manage many types
of activities, including production and maintenance. In
addition, we have accelerated and achieved cost synergies and
operating efficiencies resulting from the Altivity Transaction
S-15
sooner than expected. Our ability to implement successfully our
business strategies and to realize anticipated savings, in
addition to maintaining current level run-rates for these cost
synergies and operating efficiencies is subject to significant
business, economic and competitive uncertainties and
contingencies, many of which are beyond our control. If we
cannot successfully implement the strategic cost reductions or
other cost savings plans, or maintain current level run-rates
for realized cost synergies and operating efficiencies, we may
not be able to continue to compete successfully against other
manufacturers. In addition, any failure to generate the
anticipated efficiencies and savings could adversely affect our
financial results.
If we
issue a material amount of our common stock in the future,
certain of our stockholders sell a material amount of our common
stock, a material amount of interests in our direct or indirect
stockholders is sold or there are certain direct or indirect
acquisitions of our stock, our ability to use our net operating
losses to offset our future taxable income may be limited under
Section 382 of the Internal Revenue Code.
As of June 30, 2010, we had approximately $1.3 billion
of net operating losses (NOLs) available to offset
future income for U.S. federal income tax liability
purposes. Our ability to utilize previously incurred NOLs to
offset future taxable income would be reduced if we were to
undergo an ownership change within the meaning of
Section 382 of the Internal Revenue Code. In general, an
ownership change occurs whenever the percentage of
the stock of a corporation owned, directly or indirectly, by
5-percent stockholders (within the meaning of
Section 382 of the Internal Revenue Code) increases by more
than 50 percentage points over the lowest percentage of the
stock of such corporation owned, directly or indirectly, by such
5-percent stockholders at any time over the
preceding three years. Under certain circumstances, issuances of
our common stock, sales or other dispositions of our common
stock by certain significant stockholders, or certain
acquisitions of our common stock could trigger an
ownership change, and we will have limited control
over the timing of any such issuances, sales or other
dispositions or acquisitions of our common stock. Additionally,
under certain circumstances, issuances, sales or other
dispositions or acquisitions of interests in certain significant
stockholders could trigger an ownership change, and
we will have no control over the timing of any such issuances,
sales or other dispositions or acquisitions of interests in such
entities. Any such future ownership change could result in
limitations, pursuant to Section 382 of the Internal
Revenue Code, on our utilization of NOLs to offset our future
taxable income.
Although the Stockholders Agreement dated as of July 7,
2007 among us, the Coors family trusts and foundation, Clayton,
Dubilier & Rice Fund V Limited Partnership, Old
Town, S.A. (formerly known as EXOR Group, S.A.), Field Holdings,
Inc. and certain affiliates of TPG Capital L.P. contains certain
restrictions and limitations on purchasing additional shares of
our common stock or selling the shares of our common stock owned
by such significant stockholders as of the date of the
agreement, we have little control over changes in the ownership
interests of such significant stockholders.
More specifically, depending on prevailing interest rates and
our market value at the time of such future ownership change, an
ownership change under Section 382 of the Internal Revenue
Code would establish an annual limitation which might prevent
full utilization of the deferred tax assets attributable to
previously incurred NOLs against the total future taxable income
of a given year. If such an ownership change were to occur, the
annual limitation could result in a significant increase in our
future tax liability, which could adversely affect our ability
to make payments on the notes.
The magnitude of such limitations and their effect on us is
difficult to assess and depends in part on our value at the time
of any such ownership change and prevailing interest rates.
Our
earnings are highly dependent on volumes and contracts with our
customers.
Our operations generally have high fixed operating cost
components and therefore our earnings are highly dependent on
volumes, which tend to fluctuate. These fluctuations make it
difficult to predict our
S-16
results with certainty. In addition, while we have long-term
relationships with many of our customers, the underlying
contracts may be re-bid or re-negotiated from time to time, and
we may not be successful in renewing on favorable terms or at
all.
We may
not be able to adequately protect our intellectual property and
proprietary rights, and we may also have to defend against
charges that we infringe or misappropriate the intellectual or
proprietary rights of third parties, which in both circumstances
could harm our future success and competitive
position.
Our future success and competitive position depend in part upon
our ability to obtain and maintain protection for certain
proprietary carton and packaging machine technologies used in
our value-added products, particularly those incorporating the
Cap-Sac®,
DI-NA-CAL, Fridge Vendor,
IntegraPak®,
Kitchen
Master®,
MicroFlex®
Q, MicroRite, Peel
Pak®,
Quilt
Wavetm,
Qwik
Crisp®,
Soni-Lok®,
Soni-Seal®,
The Yard
Master®
and Z-Flute technologies. Failure to protect our existing
intellectual property rights may result in the loss of valuable
technologies or may require us to license other companies
intellectual property rights. It is possible that any of the
patents owned by us may be invalidated, rendered unenforceable,
circumvented, challenged or licensed to others or any of our
pending or future patent applications may not be issued within
the scope of the claims sought by us, if at all. Further, others
may develop technologies that are similar or superior to our
technologies, duplicate our technologies or design around our
patents, and steps taken by us to protect our technologies may
not prevent misappropriation of such technologies. Additionally,
we may and from time to time do, have to defend against others
who assert that our products and technologies infringe their
patents or other proprietary rights. Even if unsuccessful, such
charges are often costly and complicated to defend, may divert
managements attention and if any such dispute were to
escalate to litigation, may subject us to enhanced damages and
cause us to cease marketing the products or technologies that
are alleged to infringe such patents or proprietary rights. We
may be forced to redesign our products to avoid infringement of
such patents which may not be commercially feasible, or acquire
a license or rights under such patents or proprietary
technology, which may not be available at a competitive price if
at all.
We are
subject to environmental, health and safety laws and
regulations, and costs to comply with such laws and regulations,
or any liability or obligation imposed under such laws or
regulations, could have a material adverse affect on our
financial condition and results of operations.
We are subject to a broad range of foreign, federal, state and
local environmental, health and safety laws and regulations,
including those governing discharges to air, soil and water, the
management, treatment and disposal of hazardous substances, the
investigation and remediation of contamination resulting from
releases of hazardous substances, and the health and safety of
employees. Additionally, we cannot currently assess the impact
that future emission standards, climate control initiatives and
enforcement practices will have on our operations and capital
expenditure requirements. Environmental liabilities and
obligations may result in significant costs, which could
negatively impact our financial position, results of operations
or cash flows. See Managements Discussion and
Analysis of Financial Condition and Results of
OperationsEnvironmental Matters in our 2009
10-K and our
Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010.
Our
working capital, cash flow and profitability could be adversely
impacted by the current economic downturn, changes in
governmental regulations and the global consolidation of the
businesses of our customers.
Reduced availability of credit, lower profitability resulting
from economic downturns and increased costs as a result of
changes in governmental regulations may adversely affect the
ability of some of our customers and suppliers to obtain funds
for operations and capital expenditures. This could negatively
impact our ability to collect receivables in a timely manner and
to obtain raw materials and supplies. In addition, increased
global consolidation of our customer base could lead to
increased pressure on us to concede to less
S-17
favorable price and payment terms. Without our ability to
counter such customer concessions by obtaining favorable price
and payment term concessions from our own suppliers, our working
capital, cash flow and profitability could be negatively
impacted.
Our
operations outside the U.S. are subject to the risks of doing
business in foreign countries, including changes in currency
exchange rates.
We have several converting plants in six foreign countries and
sell our products worldwide. In 2009, before intercompany
eliminations, net sales from operations outside of the
U.S. represented approximately 9% of our net sales. Our
revenues from export sales fluctuate with changes in foreign
currency exchange rates. For the fiscal year ended
December 31, 2009, approximately 7% of our total assets
were denominated in currencies other than the U.S. dollar.
We have significant operations in countries that use the British
pound sterling, the Australian dollar, the Japanese yen or the
euro as their functional currencies. We cannot predict major
currency fluctuations. We pursue a currency hedging program in
order to limit the impact of foreign currency exchange
fluctuations on financial results.
We are also subject to the following significant risks
associated with operating in foreign countries:
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adverse political and economic conditions;
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compliance with and enforcement of environmental, health and
safety and labor laws and other regulations of the foreign
countries in which we operate;
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export compliance;
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imposition or increase of withholding and other taxes on
remittances and other payments by foreign subsidiaries; and
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imposition or increase of investment and other restrictions by
foreign governments.
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If any of the above events were to occur, our financial
position, results of operations or cash flows could be adversely
impacted, possibly materially.
Our
principal stockholders have substantial influence over us and
their exercise of that influence could be adverse to your
interests.
As of March 15, 2010, investment funds sponsored by TPG
Capital, Clayton, Dubilier & Rice and Old Town S.A.
beneficially owned approximately 38.5%, 10.0% and 10.0% of our
common stock, respectively, calculated on a fully diluted basis.
In addition, certain trusts established for the benefit of and
other entities controlled by the members of the Coors family
beneficially owned approximately 18.4% of our common stock. As a
result, these entities exercise significant influence over
matters requiring stockholder approval. In addition, we are a
party to a stockholders agreement, pursuant to which these
stockholders have the right to designate for nomination for
election, in the aggregate, six members of our board of
directors. Certain decisions concerning our operations or
financial structure may present conflicts of interest between
owners of our common stock and the holders of the notes. For
example, if we encounter financial difficulties or are unable to
pay our debts as they mature, the interests of the owners of our
common stock may conflict with those of the holders of the
notes. In addition, owners of our 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 notes.
S-18
The
reduced availability of credit may affect our business or that
of our customers.
The credit and securities markets exhibited extreme volatility
and disruption beginning in 2008 and continuing in 2010. We have
exposure to many companies in the financial services industry,
particularly commercial and investment banks who participate in
our revolving credit facilities and who are counterparties to
our interest rate swaps and natural gas and currency hedges. The
failure of these financial institutions, or their inability or
unwillingness to fund borrowings under our revolving credit
facility or fulfill their obligations under swaps and hedges
could have a material adverse affect on our liquidity position
and cash flow.
Reduced availability of credit may adversely affect the ability
of some of our customers and suppliers to obtain funds for
operations and capital expenditures. This could negatively
impact our ability to timely collect receivables and to obtain
raw materials and supplies.
Work
stoppages and other labor relations matters may make it
substantially more difficult or expensive for us to manufacture
and distribute our products, which could result in decreased
sales or increased costs, either of which would negatively
impact our financial condition and results of
operations.
Approximately 51% of our workforce is represented by labor
unions, whose goals and objectives may differ significantly from
ours. We may not be able to successfully negotiate new union
contracts covering the employees at our various sites without
work stoppages or labor difficulties. These events may also
occur as a result of other factors. A prolonged disruption at
any of our facilities due to work stoppages or labor
difficulties could have a material adverse effect on our net
sales, margins and cash flows. In addition, if new union
contracts contain significant increases in wages or other
benefits, our margins would be adversely impacted.
Our
pension and postretirement benefit plan obligations are
currently underfunded, and we may have to make significant cash
payments to some or all of these plans, which would reduce the
cash available for our businesses.
We have unfunded obligations under our domestic and foreign
pension and postretirement benefit plans. The funded status of
our pension plans is dependent upon many factors, including
returns on invested assets, the level of certain market interest
rates and the discount rate used to determine pension
obligations. Unfavorable returns on the plan assets or
unfavorable changes in applicable laws or regulations could
materially change the timing and amount of required plan
funding, which would reduce the cash available for our
businesses. In addition, a decrease in the discount rate used to
determine pension obligations could result in an increase in the
valuation of pension obligations, which could affect the
reported funding status of our pension plans and future
contributions, as well as the periodic pension cost in
subsequent fiscal years.
Under the Employee Retirement Income Security Act of 1974, as
amended, or ERISA, the Pension Benefit Guaranty Corporation, or
PBGC, has the authority to terminate an underfunded
tax-qualified pension plan under limited circumstances. In the
event our tax-qualified pension plans are terminated by the
PBGC, we could be liable to the PBGC for the underfunded amount
and, under certain circumstances, the liability could be senior
to the notes.
S-19
Risks
Related to The Notes
The
notes and the guarantees will not be secured by any of our
assets or the assets of the guarantors and therefore will be
effectively subordinated to our and their existing and future
secured indebtedness.
The notes and the guarantees will be general unsecured
obligations ranking effectively junior in right of payment to
all existing and future secured debt, including borrowings under
the Credit Agreement, to the extent of the collateral securing
such debt. In addition, our Credit Agreement and the Existing
Indentures permit, and the indenture governing the notes offered
hereby will permit, the incurrence of additional debt in certain
circumstances, some of which may be secured debt. In the event
that we are declared bankrupt, become insolvent or are
liquidated or reorganized, creditors whose debt is secured by
our and the guarantors assets will be entitled to the
remedies available to secured holders under applicable laws,
including the foreclosure of the collateral securing such debt,
before any payment may be made with respect to the notes or the
guarantees. As a result, there may be insufficient assets to pay
amounts due on the notes, and holders of the notes may receive
less, ratably, than holders of secured indebtedness. As of
June 30, 2010, the total amount of secured debt and other
secured obligations (excluding undrawn letters of credit of
$34.8 million) that we and the guarantors had outstanding
was $1.9 billion, with $365.2 million of additional
revolving loans available to be borrowed under the credit
agreement.
The
parent guarantors of the notes are holding companies with no
significant independent operations and no significant assets
except capital stock of their respective subsidiaries. As a
result, the parent guarantors of the notes would be unable to
meet their obligations if we fail to make payment of interest or
principal on the notes.
GPHC is a holding company with no independent operations and no
significant assets other than the capital stock of GPC. GPHC,
therefore, is dependent upon the receipt of dividends or other
distributions from GPC to fund any obligations that it incurs,
including obligations under our guarantee of the notes. GPC is
also a holding company with no independent operations and no
significant assets other than our capital stock. GPC, therefore,
is dependent upon the receipt of dividends or other
distributions from us to fund any obligations that it incurs,
including obligations under our guarantee of the notes. The
indenture governing the notes will not, however, permit
distributions from us to GPC or GPHC, other than for certain
specified purposes as described under Description of the
NotesCertain CovenantsLimitation on Restricted
Payments. Our Credit Agreement and the Existing Indentures
contain similar or more restrictive provisions. Accordingly, if
we should at any time be unable to pay interest on or principal
of the notes, it is highly unlikely that GPC or GPHC will be
able to distribute the funds necessary to enable GPC or GPHC to
meet their obligations under their parent guarantees.
The
notes will be structurally subordinated to the existing and
future liabilities of certain of our subsidiaries which are not
guaranteeing the notes.
Certain of our subsidiaries will not guarantee the notes. As a
result, the notes will be structurally subordinated to all
existing and future liabilities of such non-guarantor
subsidiaries. Our rights and the rights of our creditors to
participate in the assets of any non-guarantor subsidiary in the
event that such a subsidiary is liquidated or reorganized will
be subject to the prior claims of such subsidiarys
creditors. As a result, all indebtedness and other liabilities,
including trade payables, of our non-guarantor subsidiaries,
whether secured or unsecured, must be satisfied before any of
the assets of such subsidiaries would be available for
distribution, upon a liquidation or otherwise, to us in order
for us to meet our obligations with respect to the notes. To the
extent that we may be a creditor with recognized claims against
any non-guarantor subsidiary, our claims would still be subject
to the prior claims of such subsidiarys creditors to the
extent that they are secured or senior to those held by us.
Subject to restrictions contained in financing arrangements, our
non-
S-20
guarantor subsidiaries may incur additional indebtedness and
other liabilities, all of which would rank structurally senior
to the notes.
As of June 30, 2010, our non-guarantor subsidiaries had
approximately $81.0 million of total indebtedness and other
liabilities, including trade payables and accrued expenses, all
of which ranked structurally senior to the notes. For the year
ended December 31, 2009, before intercompany eliminations,
our foreign subsidiaries who will not be guarantors of the notes
represented approximately 9% of the Companys net sales,
and approximately 7% of our total assets. As of June 30,
2010, our international subsidiaries had additional available
borrowings of up to $8.9 million under credit facilities
used to fund them which would be structurally senior to the
notes.
Our
ability to repurchase the notes upon a change of control may be
limited.
We are required under the indenture that will govern the notes
offered hereby to make an offer to repurchase the notes and the
existing notes upon a change of control (as defined in the
Existing Indentures). A change of control (as defined in the
Existing Indentures), also would constitute a default under the
Credit Agreement. Therefore, upon the occurrence of a change of
control, the lenders under the Credit Agreement would have the
right to accelerate their loans, and if so accelerated, we would
be required to pay all of our outstanding obligations under such
facilities. We may not be able to pay you the required price for
your notes at that time because we may not have available funds
to pay the repurchase price. In addition, the terms of other
existing or future debt may prevent us from paying you. There
can be no assurance that we would be able to repay such other
debt or obtain consents from the holders of such other debt to
repurchase these notes. Any requirement to offer to purchase any
outstanding notes may result in us having to refinance our
outstanding indebtedness, which we may not be able to do. In
addition, even if we were able to refinance our outstanding
indebtedness, such financing may be on terms unfavorable to us.
In addition, certain important corporate events, such as
leveraged recapitalizations that would increase the level of our
indebtedness, would not constitute a Change of
Control under the indenture. See Description of the
NotesChange of Control.
Our
being subject to certain fraudulent transfer and conveyance
statutes may have adverse implications for the holders of the
notes.
If, under relevant federal and state fraudulent transfer and
conveyance statutes, in a bankruptcy or reorganization case or a
lawsuit by or on behalf of our unpaid creditors or the
guarantors, a court were to find that, at the time the notes
were issued by us or guaranteed by the guarantors:
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We issued or the guarantors guaranteed the notes with the intent
of hindering, delaying or defrauding current or future
creditors, we or the guarantors received less than reasonably
equivalent value or fair consideration for issuing or
guaranteeing the notes, as applicable; and
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We or the guarantors, as the case may be,
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were insolvent or were rendered insolvent by reason of the
incurrence or guarantee, as applicable, of the indebtedness
constituting the notes,
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were engaged, or about to engage, in a business or transaction
for which our assets constituted unreasonably small capital,
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intended to incur, or believed that we would incur, debts beyond
our ability to pay as such debts matured, or
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S-21
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were a defendant in an action for money damages, or had a
judgment for money damages docketed against us if, in either
case, after final judgment the judgment is unsatisfied,
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such court could avoid or subordinate the notes and the relevant
guarantee to presently existing and future indebtedness of us or
the guarantors, as the case may be, and take other action
detrimental to the holders of the notes, including, under
certain circumstances, invalidating the notes or the guarantees.
The measure of insolvency for purposes of the foregoing
considerations will vary depending upon the law of the
jurisdiction that is being applied in any such proceeding.
Generally, however, we or any guarantor would be considered
insolvent if, at the time we incur or guarantee, as the case may
be, the indebtedness constituting the notes, either:
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the sum of our debts, including contingent liabilities, is
greater than our assets, at a fair valuation; or
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the present fair saleable value of our assets is less than the
amount required to pay the probable liability on our total
existing debts and liabilities, including contingent
liabilities, as they become absolute and matured.
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We cannot give you any assurance as to what standards a court
would use to determine whether we or a guarantor, as the case
may be, were solvent at the relevant time, or whether, whatever
standard was used, the notes or guarantees would not be avoided
on another of the grounds described above.
We believe that at the time the notes are initially issued by us
and guaranteed by the guarantors, we and the guarantors will be:
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neither insolvent nor rendered insolvent thereby,
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in possession of sufficient capital to run our respective
businesses effectively,
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incurring debts within our respective abilities to pay as the
same mature or become due, and
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will have sufficient assets to satisfy any probable money
judgment against us in any pending action.
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In reaching these conclusions, we have relied upon our analysis
of cash flow projections, which, among other things, assume that
we will in the future realize certain selling prices and volumes
and favorable changes in product mix, and estimated values of
assets and liabilities. We cannot assure you, however, that a
court passing on such questions would reach the same conclusions.
An
active trading market may not develop for the notes and you may
not be able to resell your notes.
There is currently no public market for the notes. We do not
intend to list the notes on any securities exchange. We have
been informed by the underwriters that they intend to make a
market in the notes after this offering is completed. However,
they are not obligated to do so and may cease their
market-making activities at any time without notice. In
addition, such market-making activity will be subject to the
limits imposed by the Securities Act and the Exchange Act. In
addition, the liquidity of the trading market in the notes and
the market price quoted for the notes may be adversely affected
by changes in the overall market for debt securities and by
changes in our financial performance or in the prospects for
companies in our industry generally. As a result, you cannot be
certain that an active trading market for the notes will develop
or be sustained. If an active trading market for the notes fails
to develop or to be sustained, your ability to sell your notes
at a particular time or at favorable prices may be reduced.
S-22
USE OF
PROCEEDS
We anticipate that the estimated net proceeds from this offering
will be $245.6 million after deducting the
underwriters discount.
We will use the net proceeds of this offering, together with
cash on hand, solely to refinance, through a tender offer,
$250.0 million aggregate principal amount of our
outstanding 9.50% senior subordinated notes due August
2013. See SummaryTender Offer. To the extent
that there are net proceeds remaining, or if the tender offer is
not consummated, we intend to use the net proceeds of this
offering to redeem a portion of the 2013 notes on a pro rata
basis pursuant to the terms of the indenture governing the 2013
notes.
As of June 30, 2010, $390.1 million aggregate
principal amount of the 2013 notes were outstanding, without
giving effect to the redemption of $66.8 million aggregate
principal amount of the 2013 notes effective August 16,
2010. The total consideration payable for notes tendered and
accepted by us for purchase in the tender offer will be
$1,018.33 per $1,000 principal amount of the 2013 notes, which
includes an early tender premium of $30 per $1,000 principal
amount of notes tendered and not withdrawn prior to
5:00 p.m., New York City time, on September 28, 2010.
Additionally, accrued and unpaid interest will be paid on any
notes of each series accepted for purchase to the settlement
date. The amount of 2013 notes purchased in the tender offer
will be subject to the tender cap described under
SummaryTender Offer.
S-23
CAPITALIZATION
The following table sets forth our consolidated cash and cash
equivalents and capitalization as of June 30, 2010:
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on an actual basis;
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on an as adjusted basis giving effect to the redemption of
$66.8 million of our 9.50% senior subordinated notes
due 2013 and payment of the applicable redemption premium that
occurred on August 16, 2010; and
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on an as further adjusted basis also giving effect to the
issuance of the notes offered hereby and the use of proceeds
therefrom as described in Use of Proceeds.
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You should read this table in conjunction with
Managements Discussion and Analysis of Financial
Condition and Results of Operations and the unaudited
condensed consolidated financial statements and the notes
thereto, each incorporated by reference into this prospectus
supplement from our Quarterly Report on
Form 10-Q
for the six-month period ended June 30, 2010.
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As of June 30, 2010
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As Further
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Actual
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As Adjusted
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Adjusted
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(in millions)
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Cash and cash equivalents (1)
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$171.6
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$103.8
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$94.3
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Debt:
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Senior secured revolving credit facility (2)
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$
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$
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$
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Senior secured term loan facilities
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1,943.1
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1,943.1
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1,943.1
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New notes offered hereby
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250.0
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9.50% senior notes due 2017 (3)
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423.5
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423.5
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423.5
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9.50% senior subordinated notes due 2013 (4)
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390.1
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323.3
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73.3
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Other (5)
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9.0
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9.0
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9.0
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Total debt
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2,765.7
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2,698.9
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2,698.9
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Shareholders equity (6)
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702.0
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702.0
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702.0
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Total capitalization
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$
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3,467.7
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$
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3,400.9
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$
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3,400.9
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(1) |
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Adjusted for $66.8 million principal amount note redemption
of the 2013 notes and payment of the applicable redemption
premium that occurred on August 16, 2010, and further
adjusted for expenses to be incurred as set forth under
Use of Proceeds. |
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As of June 30, 2010, $34.8 million of standby letters
of credit were issued and $365.2 million of additional
borrowings were available under our senior secured revolving
credit facility. |
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$425 million face amount. |
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(4) |
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Adjusted for $66.8 million principal amount redemption on
August 16, 2010 and the consummation of the tender offer
for $250.0 million aggregate principal amount of the 2013
notes described under SummaryTender Offer. See
also Use of Proceeds. |
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Other debt includes $8.2 million outstanding under the
Companys international credit facilities and
$0.8 million of other indebtedness. |
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(6) |
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Shareholders equity excludes impact of the applicable
redemption premium paid in connection with the redemption of
$66.8 million principal amount of the 2013 notes that
occurred on August 16, 2010 and costs incurred as set forth
under Use of Proceeds. |
S-24
DESCRIPTION
OF CERTAIN OTHER INDEBTEDNESS
The following is a description of our material indebtedness
other than the notes offered hereby. The following summaries are
qualified in their entirety by reference to the Credit Agreement
and related documents and indentures to which each summary
relates, copies of which are filed as exhibits to our 2009
10-K.
Credit
Agreement
Graphic Packaging International, Inc. (GPII), as
borrower, is a party to the Credit Agreement for which Bank of
America, N.A. acts as administrative agent, that provides for
the following facilities:
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a $400 million revolving credit facility maturing on
May 16, 2013;
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a $1,055 million term loan B facility maturing on
May 16, 2014; and
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a $1,200 million incremental term loan C facility maturing
on May 16, 2014.
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A portion of the revolving credit facility is available in
alternative currencies from time to time in accordance with the
requirements of the Credit Agreement. As of June 30, 2010,
no loans were outstanding under the revolving credit facility
and $34.8 million of standby letters of credit were issued
thereunder.
The incremental term loan facility was entered into in March
2008 in connection with the Altivity Transaction.
Guarantees
and Security
The obligations under the Credit Agreement are guaranteed by
GPHC, GPC and certain of our domestic subsidiaries. The
obligations of the borrower and the guarantors under the Credit
Agreement are secured by a first priority security interest,
subject to specified permitted liens, over substantially all of
the assets of the borrower and the guarantors.
Interest
Interest on borrowings under the facilities is calculated at a
rate equal to a margin over adjusted LIBOR or the alternate base
rate, at our option. The margin applicable to revolving loans is
225 basis points for LIBOR loans and 125 basis points
for base rate loans; the margin applicable to term B loans is
200 basis points for LIBOR loans and 100 basis points
for base rate loans; and the margin applicable to incremental
term C loans is 275 basis points for LIBOR loans and
175 basis points for base rate loans.
Covenants
The Credit Agreement contains covenants that, among other
things, restrict the ability of the borrower and our
subsidiaries to incur additional indebtedness, dispose of
assets, incur guarantee obligations, prepay other indebtedness,
make dividends and other restricted payments, create liens, make
equity or debt investments, make acquisitions, modify terms of
the Existing Indentures, engage in mergers or consolidations,
change the business conducted by the borrower and our
subsidiaries, and engage in certain transactions with affiliates.
S-25
In addition, the Credit Agreement requires the borrower to
comply with a maximum consolidated secured leverage ratio (as
defined therein) of less than 4.75:1.00. As of June 30,
2010, the borrower was in compliance with the financial covenant
in the Credit Agreement.
Change of
Control
A change of control of the Company or any of the capital stock
of the borrower would constitute an event of default under the
Credit Agreement, permitting the lenders to accelerate the
indebtedness thereunder and terminate the facilities.
9.50% Senior
Subordinated Notes due 2013
On August 8, 2003, GPII issued $425.0 million in
aggregate principal amount of 9.50% senior subordinated
notes due 2013. The senior subordinated notes are guaranteed on
a senior subordinated basis by GPHC, GPC and all material
domestic subsidiaries that guarantee our obligations under the
Credit Agreement.
The obligations under the senior subordinated notes are senior
subordinated obligations and will rank subordinated in right of
payment to the notes offered hereby. The 2013 notes are the
subject of the tender offer described elsewhere in this
prospectus supplement. See SummaryTender Offer.
The indenture governing the senior subordinated notes places
restrictions on the ability of the issuer and our restricted
subsidiaries to incur additional indebtedness, including any
indebtedness expressly subordinated in right of payment to any
senior indebtedness of the issuer, unless such indebtedness
ranks pari passu in right of payment with, or is
subordinated in right of payment to, the 2013 notes, dispose of
assets, incur guarantee obligations, make dividends and other
restricted payments, create liens, make equity or debt
investments, make acquisitions, engage in mergers or
consolidations, and engage in certain transactions with
affiliates.
Upon a change of control, GPII would be obligated to offer to
purchase all of the outstanding senior subordinated notes at a
purchase price of 101% of the principal amount plus accrued
interest, if any.
9.50% Senior
Notes due 2017
On June 16, 2009 and August 20, 2009, GPII issued
$245.0 million and $180.0 million, respectively, in
aggregate principal amount of 9.50% senior notes due 2017.
The senior notes are guaranteed on a senior unsecured basis by
GPHC, GPC and all material domestic subsidiaries that guarantee
our obligations under the Credit Agreement.
The obligations under the senior notes are senior unsecured
obligations and will rank equally in right of payment to the
notes offered hereby. See SummaryThe
OfferingRanking.
The indenture governing the senior notes places restrictions on
the ability of the issuer and our restricted subsidiaries to
incur additional indebtedness, dispose of assets, incur
guarantee obligations, make dividends and other restricted
payments, create liens, make equity or debt investments, make
acquisitions, engage in mergers or consolidations, and engage in
certain transactions with affiliates.
Upon a change of control, GPII would be obligated to offer to
purchase all of the 2017 notes at a purchase price of 101% of
the principal amount plus accrued interest, if any.
S-26
International
Facilities
At June 30, 2010, the Company and our U.S. and
non-U.S. subsidiaries
had $8.2 million outstanding under our international
facilities with $8.9 million available for further
borrowings by subsidiaries that are not guarantors of the notes.
Other
Pursuant to the Guarantee and Collateral Agreement, dated as of
May 16, 2007, by GPC, the Company, certain of our
subsidiaries and Bank of America, N.A. and a separate letter
agreement with the Pension Benefit Guaranty Corporation (the
PBGC) dated May 14, 2007, the Company granted a
security interest in substantially all of our assets to the PBGC
to secure a portion of the unfunded liability of one of our
retirement plans, the Graphic Packaging Corporation Retirement
Plan (the Plan). The amount subject to the security
interest in favor of the PBGC is the lesser of
$35.4 million and the unfunded liabilities of the Plan (the
PBGC Amount). The unfunded liabilities of the Plan
are currently substantially greater than $35.4 million. The
PBGCs security interest is equal and ratable with the
security interest of the lenders under the Credit Agreement. The
Companys obligation to pay the PBGC Amount will be due and
owing to the PBGC on the earlier of the date of termination of
the Plan and the date of foreclosure or other enforcement action
against the collateral under the Guarantee and Collateral
Agreement.
S-27
DESCRIPTION
OF THE NOTES
The following description of the particular terms of the notes
offered hereby supplements the description of the general terms
and provisions of the debt securities set forth under the
heading Description of Debt Securities in the
accompanying prospectus. This description replaces the
description of the debt securities in the accompanying
prospectus, to the extent of any inconsistency. Terms used in
this prospectus supplement that are otherwise not defined have
the meanings given to them in the accompanying prospectus.
General
The Company will issue the notes offered hereby under an
indenture to be dated as of September 29, 2010 (the
Indenture) among itself, each Guarantor and
U.S. Bank National Association, as Trustee (the
Trustee). The Indenture will define your rights
under the Notes. In addition, the Indenture will govern the
obligations of the Company under the Notes.
The following is a summary of certain provisions of the
Indenture and the Notes. It does not purport to be complete and
is subject to, and is qualified in its entirety by reference to,
all the provisions of the Indenture, including the definitions
of certain terms therein and those terms to be made a part
thereof by the Trust Indenture Act of 1939, as amended (the
TIA). You may request a copy of the indenture from
us at the address provided under Where You Can Find More
Information. The term Company and the other
capitalized terms defined in Certain
Definitions below are used in this Description of
the Notes as so defined.
Brief
Description of the Notes and the Guarantees
The Notes and the Guarantees will be:
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unsecured Senior Indebtedness of the Company and the Guarantors;
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effectively subordinated to all secured Indebtedness of the
Company and the Guarantors to the extent of the value of the
assets securing such secured Indebtedness and to all
Indebtedness and other liabilities (including Trade Payables) of
the Companys Subsidiaries (other than Subsidiaries that
become Note Guarantors pursuant to the provisions described
below under Subsidiary Guarantees);
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pari passu in right of payment with all existing and
future Senior Indebtedness of the Company and the
Guarantors; and
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senior in right of payment to all existing and future
Subordinated Obligations of the Company and the Guarantors.
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Principal,
Maturity and Interest
The Notes will mature on October 1, 2018. Each Note offered
hereby will bear interest at a rate of 7.875% per annum.
Interest will be payable semiannually in cash to Holders of
record at the close of business on the March 15 or
September 15 immediately preceding the interest payment
date, on April 1 and October 1 of each year,
commencing April 1, 2011. Interest will be paid on the
basis of a
360-day year
consisting of twelve
30-day
months.
Additional securities may be issued under the Indenture in one
or more series from time to time (Additional Notes),
subject to the limitations set forth under Certain
CovenantsLimitation on Indebtedness, which will vote
as a class with the Notes and otherwise be treated as Notes for
purposes of the Indenture. The Notes offered hereby will be
issued in an aggregate principal amount of $250 million.
S-28
Principal of, and premium, if any, and interest on, the Notes
will be payable, and the Notes may be exchanged or transferred,
at the office or agency of the Company in the Borough of
Manhattan, The City of New York (which initially shall be the
corporate trust office of the Trustee), except that, at the
option of the Company, payment of interest may be made by check
mailed to the address of the registered Holders as such address
appears in the Note Register.
The Notes will be issued only in fully registered form, without
coupons, in minimum denominations of $2,000 and any integral
multiples of $1,000. No service charge will be made for any
registration of transfer or exchange of Notes, but the Company
may require payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection
therewith.
Optional
Redemption
The Notes will be redeemable, at the Companys option, in
whole or in part, and from time to time on and after
October 1, 2014 and prior to maturity at the redemption
prices set forth below. Such redemption may be made upon notice
mailed by first-class mail to each Holders registered
address, not less than 30 nor more than 60 days prior to
the redemption date. The Company may provide in such notice that
payment of the redemption price and the performance of the
Companys obligations with respect to such redemption may
be performed by another Person. Any such redemption and notice
may, in the Companys discretion, be subject to the
satisfaction of one or more conditions precedent, including but
not limited to the occurrence of a Change of Control. The Notes
will be so redeemable at the following redemption prices
(expressed as a percentage of principal amount), plus accrued
and unpaid interest, if any, to the relevant redemption date
(subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest
payment date), if redeemed during the
12-month
period commencing on October 1 of the years set forth below:
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Redemption
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Period
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Price
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2014
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103.938
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%
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2015
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101.969
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%
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2016 and thereafter
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100.000
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%
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In addition, at any time and from time to time on or prior to
October 1, 2013, the Company at its option may redeem Notes
in an aggregate principal amount equal to up to 35% of the
original aggregate principal amount of the Notes (including the
principal amount of any Additional Notes), with funds in an
aggregate amount (the Redemption Amount) not
exceeding the aggregate proceeds of one or more Equity Offerings
(as defined below) at a redemption price (expressed as a
percentage of principal amount thereof) of 107.875%, plus
accrued and unpaid interest, if any, to the redemption date
(subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest
payment date); provided, however, that an aggregate
principal amount of Notes equal to at least 65% of the original
aggregate principal amount of the Notes (including the principal
amount of any Additional Notes) must remain outstanding after
each such redemption. Equity Offering means a sale
of Capital Stock (x) that is a sale of Capital Stock of the
Company (other than Disqualified Stock), or (y) proceeds of
which in an amount equal to or exceeding the
Redemption Amount are contributed to the Company or any of
its Restricted Subsidiaries. The Company may make such
redemption upon notice mailed by first-class mail to each
Holders registered address, not less than 30 nor more than
60 days prior to the redemption date (but in no event more
than 180 days after the completion of the related Equity
Offering). The Company may provide in such notice that payment
of the redemption price and performance of the Companys
obligations with respect to such redemption may be performed by
another Person. Any such notice may be given prior to the
completion of the related Equity Offering, and any such
redemption or notice may, at the Companys discretion, be
subject to the satisfaction of one or more conditions precedent,
including but not limited to the completion of the related
Equity Offering.
At any time prior to October 1, 2014, the Notes may also be
redeemed or purchased (by the Company or any other Person) in
whole or in part, at the Companys option, at a price (the
S-29
Redemption Price) equal to 100% of the
principal amount thereof plus the Applicable Premium as of, and
accrued but unpaid interest, if any, to, the date of redemption
or purchase (the Redemption Date) (subject to
the right of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
Such redemption or purchase may be made upon notice mailed by
first-class mail to each Holders registered address, not
less than 30 nor more than 60 days prior to the
Redemption Date. The Company may provide in such notice
that payment of the Redemption Price and performance of the
Companys obligations with respect to such redemption or
purchase may be performed by another Person. Any such
redemption, purchase or notice may, at the Companys
discretion, be subject to the satisfaction of one or more
conditions precedent, including but not limited to the
occurrence of a Change of Control.
Applicable Premium means, with respect to a
Note at any Redemption Date, the greater of (i) 1.00%
of the principal amount of such Note and (ii) the excess of
(A) the present value at such Redemption Date of
(1) the redemption price of such Note on October 1,
2014 (such redemption price being that described in the first
paragraph of this Optional Redemption section) plus
(2) all required remaining scheduled interest payments due
on such Note through such date, computed using a discount rate
equal to the Treasury Rate plus 50 basis points, over
(B) the principal amount of such Note on such
Redemption Date. Calculation of the Applicable Premium will
be made by the Company or on behalf of the Company by such
Person as the Company shall designate; provided that such
calculation shall not be a duty or obligation of the Trustee.
Treasury Rate means, with respect to a
Redemption Date, the yield to maturity at the time of
computation of United States Treasury securities with a constant
maturity (as compiled and published in the most recent Federal
Reserve Statistical Release H. 15(519) that has become publicly
available at least two Business Days prior to such
Redemption Date (or, if such Statistical Release is no
longer published, any publicly available source of similar
market data)) most nearly equal to the period from such
Redemption Date to October 1, 2014; provided,
however, that if the period from the Redemption Date to
such date is not equal to the constant maturity of a United
States Treasury security for which a weekly average yield is
given, the Treasury Rate shall be obtained by linear
interpolation (calculated to the nearest one-twelfth of a year)
from the weekly average yields of United States Treasury
securities for which such yields are given, except that if the
period from the Redemption Date to such date is less than
one year, the weekly average yield on actually traded United
States Treasury securities adjusted to a constant maturity of
one year shall be used.
Selection
In the case of any partial redemption, selection of the Notes
for redemption will be made by the Trustee 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, although
no Note of $2,000 in original principal amount or less will be
redeemed in part. If any Note is to be redeemed in part only,
the notice of redemption relating to such Note shall state the
portion of the principal amount thereof to be redeemed. A new
Note in principal amount equal to the unredeemed portion thereof
will be issued in the name of the Holder thereof upon
cancellation of the original Note.
Parent
Guarantees
Holding and GPC will, as primary obligors and not merely as
sureties, irrevocably and fully and unconditionally Guarantee
(the Parent Guarantees, and each of Holding and GPC
in such capacity, a Parent Guarantor), on an
unsecured senior basis, the punctual payment when due, whether
at Stated Maturity, by acceleration or otherwise, of all
monetary obligations of the Company under the Indenture and the
Notes, whether for principal of or interest on the Notes,
expenses, indemnification or otherwise (all such obligations
guaranteed by each Parent Guarantor being herein called the
Parent Guaranteed Obligations). Each Parent
Guarantor, pursuant to its Parent Guarantee, will agree to pay,
in addition to the amount stated above, any and all reasonable
out-of-pocket
expenses (including reasonable counsel fees and expenses)
incurred by the Trustee or the Holders in enforcing any rights
under its Parent Guarantee.
S-30
Each Parent Guarantee shall be a continuing Guarantee and shall
(i) subject to the next two paragraphs, remain in full
force and effect until payment in full of the principal amount
of all outstanding Notes (whether by payment at maturity,
purchase, redemption, defeasance, retirement or other
acquisition) and all other applicable Parent Guaranteed
Obligations of the applicable Parent Guarantor then due and
owing, (ii) be binding upon such Parent Guarantor and
(iii) inure to the benefit of and be enforceable by the
Trustee, the Holders and their permitted successors, transferees
and assigns.
Each Parent Guarantor will automatically and unconditionally be
released from all obligations under its Parent Guarantee, and
its Parent Guarantee will thereupon terminate and be discharged
and of no further force of effect, (i) upon any merger or
consolidation of such Parent Guarantor with and into the Company
or the other Parent Guarantor, (ii) upon legal or covenant
defeasance of the Companys obligations under, or
satisfaction and discharge of, the Indenture, or
(iii) subject to customary contingent reinstatement
provisions, upon payment in full of the aggregate principal
amount of all Notes then outstanding and all other applicable
Parent Guaranteed Obligations of such Parent Guarantor then due
and owing.
Upon any such occurrence specified in the preceding paragraph,
the Trustee shall execute any documents reasonably required in
order to evidence such release, discharge and termination in
respect of the applicable Parent Guarantee. Neither the Company
nor either Parent Guarantor shall be required to make a notation
on the Notes to reflect either Parent Guarantee or any such
release, termination or discharge.
Subsidiary
Guarantees
The Company will cause each Significant Domestic Subsidiary that
guarantees payment by the Company or any Subsidiary of the
Company of any Bank Indebtedness of the Company or the Existing
Senior Notes to execute and deliver to the Trustee a
supplemental indenture or other instrument pursuant to which
such Subsidiary will guarantee payment of the Notes, whereupon
such Subsidiary will become a Subsidiary Guarantor for all
purposes under the Indenture. The Company will also have the
right to cause any other Subsidiary so to guarantee payment of
the Notes. Subsidiary Guarantees will be subject to release and
discharge under certain circumstances prior to payment in full
of the Notes. See Certain CovenantsFuture Note
Guarantors.
Ranking
The indebtedness evidenced by the Notes will be unsecured Senior
Indebtedness of the Company, will rank pari passu in
right of payment with all existing and future Senior
Indebtedness of the Company, including the Existing Senior
Notes, and will be senior in right of payment to all existing
and future Subordinated Obligations of the Company. The Notes
will also be effectively subordinated to all secured
Indebtedness and other liabilities (including Trade Payables) of
the Company, including obligations under the Senior Credit
Facility, to the extent of the value of the assets securing such
Indebtedness, and to all Indebtedness of its Subsidiaries (other
than any Subsidiaries that are or become Note Guarantors
pursuant to the provisions described above under
Subsidiary Guarantees). As of June 30,
2010, the total amount of secured debt that we had outstanding
was approximately $1.9 billion (excluding undrawn letters
of credit), with $365.2 million of additional revolving
loans available to be borrowed under the Senior Credit Agreement.
Each Note Guarantee in respect of the Notes will be unsecured
Senior Indebtedness of the applicable Note Guarantor, will rank
pari passu in right of payment with all existing and
future Senior Indebtedness of such Person and will be senior in
right of payment to all existing and future Guarantor
Subordinated Obligations of such Person. Such Note Guarantee
will also be effectively subordinated to all secured
Indebtedness of such Person to the extent of the value of the
assets securing such Indebtedness, and to all Indebtedness and
other liabilities (including Trade Payables) of the Subsidiaries
of such Person (other than any Subsidiaries that become Note
Guarantors pursuant to the provisions described above under
Subsidiary Guarantees).
S-31
A substantial part of the operations of the Company are
conducted through its Subsidiaries. Claims of creditors of such
Subsidiaries, including trade creditors, and claims of preferred
shareholders (if any) of such Subsidiaries will have priority
with respect to the assets and earnings of such Subsidiaries
over the claims of creditors of the Company, including Holders,
unless such Subsidiary is a Subsidiary Guarantor. As of the
Issue Date, the Significant Domestic Subsidiaries that have
guaranteed payment by the Company of any Bank Indebtedness of
the Company will be Subsidiary Guarantors. The Notes, therefore,
will be effectively subordinated to creditors (including trade
creditors) and preferred shareholders (if any) of Subsidiaries
of the Company (other than Subsidiaries, if any, that may become
Subsidiary Guarantors in the future with respect to the Notes).
Certain of the operations of a Subsidiary Guarantor may be
conducted through Subsidiaries thereof that are not also
Subsidiary Guarantors. Claims of creditors of such Subsidiaries,
including trade creditors, and claims of preferred shareholders
(if any) of such Subsidiaries will have priority with respect to
the assets and earnings of such Subsidiaries over the claims of
creditors of such Subsidiary Guarantor, including claims under
its Note Guarantee of the Notes. Such Note Guarantee, if any,
therefore, will be effectively subordinated to creditors
(including trade creditors) and preferred shareholders (if any)
of such Subsidiaries. As of June 30, 2010, our
non-guarantor subsidiaries would have had liabilities of
approximately $81.0 million, including indebtedness under
credit facilities to fund our international subsidiaries and
trade payables and accrued expenses, all of which is
structurally senior to the Notes. We also have additional
available borrowings of up to $8.9 million under our credit
facilities used to fund our international subsidiaries, which
would be structurally senior to the Notes. Although the
Indenture will limit the incurrence of Indebtedness (including
preferred stock) by certain of the Companys Subsidiaries,
such limitation will be subject to a number of significant
qualifications and exceptions.
Change of
Control
Upon the occurrence of a Change of Control (as defined below),
each Holder of the Notes will have the right to require the
Company to repurchase all or any part of such Holders
Notes at a purchase price in cash equal to 101% of the principal
amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on
the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that
the Company shall not be obligated to repurchase Notes pursuant
to this covenant in the event that it has exercised its right to
redeem all of the Notes as described under Optional
Redemption.
The term Change of Control means:
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(i)
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any person (as such term is used in
Sections 13(d) and 14(d) of the Exchange Act), other than
one or more Permitted Holders, becomes the beneficial
owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act), directly or indirectly, of more than
50% of the total voting power of the Voting Stock of the
Company, provided that (x) so long as the Company is
a Subsidiary of Holding, no person shall be deemed
to be or become a beneficial owner of more than 50%
of the total voting power of the Voting Stock of the Company
unless such person shall be or become a
beneficial owner of more than 50% of the total
voting power of the Voting Stock of Holding and (y) any
Voting Stock of which any Permitted Holder is the
beneficial owner shall not in any case be included
in any Voting Stock of which any such person is the
beneficial owner;
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(ii)
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the Company merges or consolidates with or into, or sells or
transfers (in one or a series of related transactions) all or
substantially all of the assets of the Company and its
Restricted Subsidiaries to, another Person (other than one or
more Permitted Holders) and any person (as defined
in clause (i) above), other than one or more Permitted
Holders, Holding or GPC, is or becomes the beneficial
owner (as so defined), directly or indirectly, of more
than 50% of the total voting power of the Voting Stock of the
surviving Person in such merger or consolidation, or the
transferee Person in such sale or transfer of assets, as the
case may be, provided that (x) so long as such
surviving or
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S-32
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transferee Person is a Subsidiary of a parent Person, no
person shall be deemed to be or become a
beneficial owner of more than 50% of the total
voting power of the Voting Stock of such surviving or transferee
Person unless such person shall be or become a
beneficial owner of more than 50% of the total
voting power of the Voting Stock of such parent Person and
(y) any Voting Stock of which any Permitted Holder is the
beneficial owner shall not in any case be included
in any Voting Stock of which any such person is the
beneficial owner; or
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(iii)
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during any period of two consecutive years (during which period
the Company has been a party to the Indenture), individuals who
at the beginning of such period were members of the board of
directors of the Company or Holding (together with any new
members thereof whose election by such board of directors or
whose nomination for election by holders of Capital Stock of the
Company or Holding was approved by one or more Permitted Holders
or by a vote of a majority of the members of such board of
directors then still in office who were either members thereof
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 such board of directors then in office.
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A recent Delaware court case has implied that the provisions in
clause (iii) above may be unenforceable on public policy
grounds. No assurances can be given that a court would enforce
clause (iii) as written for the benefit of Holders.
In the event that, at the time of such Change of Control, the
terms of the Bank Indebtedness restrict or prohibit the
repurchase of the Notes pursuant to this covenant, then prior to
the mailing of the notice to the Holders provided for in the
immediately following paragraph but in any event not later than
30 days following the date the Company obtains actual
knowledge of any Change of Control (unless the Company has
exercised its right to redeem all the Notes as described under
Optional Redemption), the Company shall
(i) repay in full all Bank Indebtedness subject to such
terms or offer to repay in full all such Bank Indebtedness and
repay the Bank Indebtedness of each lender who has accepted such
offer or (ii) obtain the requisite consent under the
agreements governing the Bank Indebtedness to permit the
repurchase of the Notes as provided for in the immediately
following paragraph. The Company shall first comply with the
provisions of the immediately preceding sentence before it shall
be required to repurchase Notes pursuant to the provisions
described below. The Companys failure to comply with such
provisions or the provisions of the immediately following
paragraph shall constitute an Event of Default described in
clause (iv) and not in clause (ii) under
Defaults below.
Unless the Company has exercised its right to redeem all the
Notes as described under Optional Redemption,
the Company shall, not later than 30 days following the
date the Company obtains actual knowledge of any Change of
Control having occurred, mail a notice to each Holder with a
copy to the Trustee stating: (i) that a Change of Control
has occurred or may occur and that such Holder has, or upon such
occurrence will have, the right to require the Company to
purchase such Holders Notes at a purchase price in cash
equal to 101% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of purchase (subject to the
right of Holders of record on a record date to receive interest
on the relevant interest payment date); (ii) the
circumstances and relevant facts and financial information
regarding such Change of Control; (iii) the repurchase date
(which shall be no earlier than 30 days nor later than
60 days from the date such notice is mailed); (iv) the
instructions determined by the Company, consistent with this
covenant, that a Holder must follow in order to have its Notes
purchased; and (v) if such notice is mailed prior to the
occurrence of a Change of Control, that such offer is
conditioned on the occurrence of such Change of Control.
The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any
other securities laws or regulations in connection with the
repurchase of Notes pursuant to this covenant. To the extent
that the provisions of any securities laws or regulations
conflict with provisions
S-33
of this covenant, the Company will comply with the applicable
securities laws and regulations and will not be deemed to have
breached its obligations under this covenant by virtue thereof.
The Change of Control purchase feature is a result of
negotiations between the Company and the Initial Purchaser. The
Company has no present plans to engage in a transaction
involving a Change of Control, although it is possible that the
Company would decide to do so in the future. Subject to the
limitations discussed below, the Company could, in the future,
enter into certain transactions, including acquisitions,
refinancings or recapitalizations, that would not constitute a
Change of Control under the Indenture, but that could increase
the amount of Indebtedness outstanding at such time or otherwise
affect the Companys capital structure or credit ratings.
In addition, the definition of Change of Control
under the Indenture may not correspond exactly to the definition
of change of control (or similar term) under the
Companys other indebtedness (including the Existing
Notes), and as a result, a change of control offer
may be made to holders of all or some of such other indebtedness
after a transaction that does not constitute a Change of Control
under the Indenture.
The occurrence of a Change of Control would constitute a default
under the Senior Credit Agreement. Agreements governing existing
or future Indebtedness of the Company may contain prohibitions
of certain events that would constitute a Change of Control or
require such Indebtedness (including the Existing Notes) to be
repurchased or repaid upon a Change of Control. The Senior
Credit Agreement prohibits, and the agreements governing future
indebtedness of the Company may prohibit, the Company from
repurchasing the Notes upon a Change of Control unless the
indebtedness governed by the Senior Credit Agreement or the
agreements governing such future indebtedness, as the case may
be, has been repurchased or repaid. Moreover, the exercise by
the Holders of their right to require the Company to repurchase
the Notes could cause a default under such agreements, even if
the Change of Control itself does not, due to the financial
effect of such repurchase on the Company. Finally, the
Companys ability to pay cash to the Holders upon a
repurchase may be limited by the Companys then existing
financial resources. There can be no assurance that sufficient
funds will be available when necessary to make any required
repurchases. As described above under Optional
Redemption, the Company will also have the right to redeem
the Notes at specified prices, in whole or in part, upon a
Change of Control.
The definition of Change of Control includes a phrase relating
to the sale or other transfer of all or substantially
all of the Companys assets. Although there is a
developing body of case law interpreting the phrase
substantially all, there is no precise definition of
the phrase under applicable law. Accordingly, in certain
circumstances there may be a degree of uncertainty in
ascertaining whether a particular transaction would involve a
disposition of all or substantially all of the
assets of the Company, and therefore it may be unclear as to
whether a Change of Control has occurred and whether the Holders
have the right to require the Company to repurchase such Notes.
Certain
Covenants
The Indenture will contain covenants, including, among others,
the covenants described below.
Limitation on Indebtedness. The Indenture will
provide as follows:
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(a)
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The Company will not, and will not permit any Restricted
Subsidiary to, Incur any Indebtedness; provided, however,
that the Company or any Subsidiary Guarantor may Incur
Indebtedness if on the date of the Incurrence of such
Indebtedness, after giving effect to the Incurrence thereof, the
Consolidated Coverage Ratio would be greater than 2.00:1.00.
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S-34
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(b)
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Notwithstanding the foregoing paragraph (a), the Company and its
Restricted Subsidiaries may Incur the following Indebtedness:
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(i)
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Indebtedness Incurred pursuant to any Credit Facility (including
but not limited to in respect of letters of credit or
bankers acceptances issued or created thereunder) and
Indebtedness of any Foreign Subsidiary Incurred other than under
the Senior Credit Facility, and (without limiting the
foregoing), in each case, any Refinancing Indebtedness in
respect thereof, in a maximum principal amount at any time
outstanding not exceeding in the aggregate the amount equal to
(A) $1,800 million, plus (B) the amount, if any,
by which (x) the Borrowing Base minus (y) the
aggregate principal amount of Indebtedness Incurred by a
Receivables Subsidiary and then outstanding pursuant to
clause (ix) of this paragraph (b) or by a Foreign
Subsidiary and then outstanding pursuant to clause (xi) of
this paragraph (b), exceeds $350 million, plus (C) in
the case of any refinancing of any Credit Facility or any
portion thereof, the aggregate amount of fees, underwriting
discounts, premiums and other costs and expenses incurred in
connection with such refinancing;
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(ii)
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Indebtedness (A) of any Restricted Subsidiary to the
Company or (B) of the Company or any Restricted Subsidiary
to any Restricted Subsidiary; provided that any
subsequent issuance or transfer of any Capital Stock of such
Restricted Subsidiary to which such Indebtedness is owed, or
other event, that results in such Restricted Subsidiary ceasing
to be a Restricted Subsidiary or any other subsequent transfer
of such Indebtedness (except to the Company or a Restricted
Subsidiary) will be deemed, in each case, an Incurrence of such
Indebtedness by the issuer thereof not permitted by this clause
(ii);
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(iii)
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Indebtedness represented by the Notes (other than Additional
Notes), the Existing Notes, any other Indebtedness (other than
the Indebtedness described in clauses (i) or
(ii) above) outstanding on the Issue Date and any
Refinancing Indebtedness Incurred in respect of any Indebtedness
described in this clause (iii) or paragraph (a) above;
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(iv)
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Purchase Money Obligations and Capitalized Lease Obligations,
and any Refinancing Indebtedness with respect thereto, in an
aggregate principal amount at any time outstanding not exceeding
an amount equal to 10% of Consolidated Tangible Assets;
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(v)
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Indebtedness consisting of accommodation guarantees for the
benefit of trade creditors of the Company or any of its
Restricted Subsidiaries, or represented by Guarantees consisting
of contracts for the purchase of wood chips in the ordinary
course of business;
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(vi)
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(A) Guarantees by the Company or any Restricted Subsidiary
of Indebtedness or any other obligation or liability of the
Company or any Restricted Subsidiary (other than any
Indebtedness Incurred by the Company or such Restricted
Subsidiary, as the case may be, in violation of the covenant
described under Limitation on Indebtedness),
or (B) without limiting the covenant described under
Limitation on Liens, Indebtedness of the
Company or any Restricted Subsidiary arising by reason of any
Lien granted by or applicable to such Person securing
Indebtedness of the Company or any Restricted Subsidiary (other
than any Indebtedness Incurred by the Company or such
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S-35
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Restricted Subsidiary, as the case may be, in violation of the
covenant described under Limitation on
Indebtedness);
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(vii)
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Indebtedness of the Company or any Restricted Subsidiary
(A) arising from the honoring of a check, draft or similar
instrument of such Person drawn against insufficient funds,
provided that such Indebtedness is extinguished within five
Business Days of its Incurrence, or (B) consisting of
guarantees, indemnities, obligations in respect of earnouts or
other purchase price adjustments, or similar obligations,
Incurred in connection with the acquisition or disposition of
any business, assets or Person;
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(viii)
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Indebtedness of the Company or any Restricted Subsidiary in
respect of (A) letters of credit, bankers acceptances
or other similar instruments or obligations issued, or relating
to liabilities or obligations incurred, in the ordinary course
of business (including those issued to governmental entities in
connection with self-insurance under applicable workers
compensation statutes), or (B) completion guarantees,
surety, judgment, appeal or performance bonds, or other similar
bonds, instruments or obligations, provided, or relating to
liabilities or obligations incurred, in the ordinary course of
business, or (C) Hedging Obligations, entered into for bona
fide hedging purposes in the ordinary course of business, or
(D) Management Guarantees, or (E) the financing of
insurance premiums in the ordinary course of business;
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(ix)
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Indebtedness of a Receivables Subsidiary secured by a Lien on
all or part of the assets disposed of in, or otherwise Incurred
in connection with, a Financing Disposition;
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(x)
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Indebtedness of any Person that is assumed by the Company or any
Restricted Subsidiary in connection with its acquisition of
assets from such Person or any Affiliate thereof or is issued
and outstanding on or prior to the date on which such Person was
acquired by the Company or any Restricted Subsidiary or merged
or Consolidated with or into any Restricted Subsidiary (other
than Indebtedness Incurred to finance, or otherwise Incurred in
connection with, such acquisition), provided that on the
date of such acquisition, merger or consolidation, after giving
effect thereto, the Company could Incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) above;
and any Refinancing Indebtedness with respect to any such
Indebtedness;
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(xi)
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Indebtedness of any Foreign Subsidiary in an aggregate principal
amount at any time outstanding not exceeding an amount equal to
the sum (determined as of the end of the most recently ended
fiscal quarter for which consolidated financial statements of
the Company are available) of (A) 90% of Receivables of all
Foreign Subsidiaries plus (B) 75% of Inventory of
all Foreign Subsidiaries plus
(C) $100 million; and
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(xii)
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Indebtedness of the Company or any Restricted Subsidiary in an
aggregate principal amount at any time outstanding not exceeding
an amount equal to 5% of Consolidated Tangible Assets.
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(c)
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For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred
pursuant to and in compliance with, this covenant, (i) any
other obligation of the obligor on such Indebtedness (or of any
other Person who
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S-36
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could have Incurred such Indebtedness under this covenant)
arising under any Guarantee, Lien or letter of credit,
bankers acceptance or other similar instrument or
obligation supporting such Indebtedness shall be disregarded to
the extent that such Guarantee, Lien or letter of credit,
bankers acceptance or other similar instrument or
obligation secures the principal amount of such Indebtedness;
(ii) in the event that Indebtedness meets the criteria of
more than one of the types of Indebtedness described in
paragraph (b) above, the Company, in its sole discretion,
shall classify such item of Indebtedness and may include the
amount and type of such Indebtedness in one or more of such
clauses; and (iii) 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 accordance with GAAP.
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(d)
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For purposes of determining compliance with any
Dollar-denominated restriction on the Incurrence of Indebtedness
denominated in a foreign currency, the Dollar-equivalent
principal amount of such Indebtedness Incurred pursuant thereto
shall be calculated based on the relevant currency exchange rate
in effect on the date that such Indebtedness was Incurred, in
the case of term Indebtedness, or first committed, in the case
of revolving credit Indebtedness, provided that
(x) the Dollar-equivalent principal amount of any such
Indebtedness outstanding on the Issue Date shall be calculated
based on the relevant currency exchange rate in effect on the
Issue Date, (y) if such Indebtedness is Incurred to
refinance other Indebtedness denominated in a foreign currency,
and such refinancing would cause the applicable
Dollar-denominated restriction to be exceeded if calculated at
the relevant currency exchange rate in effect on the date of
such refinancing, such Dollar-denominated restriction shall be
deemed not to have been exceeded so long as the principal amount
of such refinancing Indebtedness does not exceed the principal
amount of such Indebtedness being refinanced and (z) the
Dollar-equivalent principal amount of Indebtedness denominated
in a foreign currency and Incurred pursuant to the Senior Credit
Facility shall be calculated based on the relevant currency
exchange rate in effect on, at the Companys option,
(i) the Issue Date, (ii) any date on which any of the
respective commitments under the Senior Credit Facility shall be
reallocated between or among facilities or subfacilities
thereunder, or on which such rate is otherwise calculated for
any purpose thereunder, or (iii) the date of such
Incurrence. The principal amount of any Indebtedness Incurred to
refinance other Indebtedness, if Incurred in a different
currency from the Indebtedness being refinanced, shall be
calculated based on the currency exchange rate applicable to the
currencies in which such respective Indebtedness is denominated
that is in effect on the date of such refinancing.
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Limitation on Restricted Payments. The
Indenture will provide as follows:
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(a)
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The Company shall not, and shall not permit any Restricted
Subsidiary, directly or indirectly, to (i) declare or pay
any dividend or make any distribution on or in respect of its
Capital Stock (including any such payment in connection with any
merger or consolidation to which the Company is a party) except
(x) dividends or distributions payable solely in its
Capital Stock (other than Disqualified Stock) and
(y) dividends or distributions payable to the Company or
any Restricted Subsidiary (and, in the case of any such
Restricted Subsidiary making such dividend or distribution, to
other holders of its Capital Stock on no more than a pro rata
basis, measured by value), (ii) purchase, redeem, retire or
otherwise acquire for value any Capital Stock of the Company
held by Persons other than the Company or a Restricted
Subsidiary, (iii) voluntarily purchase, repurchase, redeem,
defease or otherwise voluntarily acquire or retire for value,
prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligations (other than a
purchase, repurchase, redemption, defeasance or
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S-37
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other acquisition or retirement for value in anticipation of
satisfying a sinking fund obligation, principal installment or
final maturity, in each case due within one year of the date of
such acquisition or retirement) or (iv) make any Investment
(other than a Permitted Investment) in any Person (any such
dividend, distribution, purchase, redemption, repurchase,
defeasance, other acquisition or retirement or Investment being
herein referred to as a Restricted Payment), if at
the time the Company or such Restricted Subsidiary makes such
Restricted Payment and after giving effect thereto:
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(i)
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a Default shall have occurred and be continuing (or would result
therefrom);
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(ii)
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the Company could not Incur at least an additional $1.00 of
Indebtedness pursuant to paragraph (a) of the covenant
described under Limitation on
Indebtedness; or
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(iii)
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the aggregate amount of such Restricted Payment and all other
Restricted Payments (the amount so expended, if other than in
cash, to be as determined in good faith by the Board of
Directors, whose determination shall be conclusive and evidenced
by a resolution of the Board of Directors) declared or made
subsequent to the Issue Date and then outstanding would exceed,
without duplication, the sum of:
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(A)
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50% of the Consolidated Net Income accrued during the period
(treated as one accounting period) beginning on July 1,
2009 to the end of the most recent fiscal quarter ending prior
to the date of such Restricted Payment for which consolidated
financial statements of the Company are available (or, in case
such Consolidated Net Income shall be a negative number, 100% of
such negative number);
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(B)
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the aggregate Net Cash Proceeds and the fair value (as
determined in good faith by the Board of Directors) of property
or assets received (x) by the Company as capital
contributions to the Company after the Issue Date or from the
issuance or sale (other than to a Restricted Subsidiary) of its
Capital Stock (other than Disqualified Stock) after the Issue
Date (other than Excluded Contributions) or (y) by the
Company or any Restricted Subsidiary from the issuance and sale
by the Company or any Restricted Subsidiary after the Issue Date
of Indebtedness that shall have been converted into or exchanged
for Capital Stock of the Company (other than Disqualified
Stock), plus the amount of any cash and the fair value (as
determined in good faith by the Board of Directors) of any
property or assets received by the Company or any Restricted
Subsidiary upon such conversion or exchange;
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(C)
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the aggregate amount equal to the net reduction in Investments
in Unrestricted Subsidiaries resulting from (i) dividends,
distributions, interest payments, return of capital, repayments
of Investments or other transfers of assets to the Company or
any Restricted Subsidiary from any Unrestricted Subsidiary, or
(ii) the redesignation of any Unrestricted Subsidiary as a
Restricted Subsidiary (valued in each case as provided in the
definition of Investment), not to exceed in the case
of any such Unrestricted Subsidiary the aggregate amount of
Investments (other than Permitted Investments) made by the
Company
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S-38
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or any Restricted Subsidiary in such Unrestricted Subsidiary
after the Issue Date; and
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(D)
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in the case of any disposition or repayment of any Investment
constituting a Restricted Payment (without duplication of any
amount deducted in calculating the amount of Investments at any
time outstanding included in the amount of Restricted Payments),
an amount in the aggregate equal to the lesser of the return of
capital, repayment or other proceeds with respect to all such
Investments received by the Company or a Restricted Subsidiary
and the initial amount of all such Investments constituting
Restricted Payments.
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(b)
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The provisions of the foregoing paragraph (a) will not
prohibit any of the following (each, a Permitted
Payment):
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(i)
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any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Capital Stock of the Company or
Subordinated Obligations made by exchange (including any such
exchange pursuant to the exercise of a conversion right or
privilege in connection with which cash is paid in lieu of the
issuance of fractional shares) for, or out of the proceeds of
the substantially concurrent issuance or sale of, Capital Stock
of the Company (other than Disqualified Stock and other than
Capital Stock issued or sold to a Subsidiary) or a substantially
concurrent capital contribution to the Company, in each case
other than Excluded Contributions; provided that the Net
Cash Proceeds from such issuance, sale or capital contribution
shall be excluded in subsequent calculations under clause
(iii)(B) of the preceding paragraph (a);
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(ii)
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any purchase, redemption, repurchase, defeasance or other
acquisition or retirement of Subordinated Obligations
(w) made by exchange for, or out of the proceeds of the
substantially concurrent issuance or sale of Indebtedness of the
Company or Refinancing Indebtedness Incurred in compliance with
the covenant described under Limitation on
Indebtedness, (x) from Net Available Cash to the
extent permitted by the covenant described under
Limitation on Sales of Assets and Subsidiary
Stock, (y) following the occurrence of a Change of
Control (or other similar event described therein as a
change of control), but only if the Company shall
have complied with the covenant described under
Change of Control and, if required, purchased
all Notes tendered pursuant to the offer to repurchase all the
Notes required thereby, prior to purchasing or repaying such
Subordinated Obligations or (z) constituting Acquired
Indebtedness;
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(iii)
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dividends paid within 60 days after the date of declaration
thereof if at such date of declaration such dividend would have
complied with the preceding paragraph (a);
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(iv)
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Investments or other Restricted Payments in an aggregate amount
outstanding at any time not to exceed the amount of Excluded
Contributions;
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(v)
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loans, advances, dividends or distributions by the Company to
Holding or GPC to permit Holding to repurchase or otherwise
acquire its Capital Stock (including any options, warrants or
other rights in respect thereof), or payments by the Company to
repurchase or otherwise acquire Capital Stock of Holding or the
Company (including any options, warrants or other rights in
respect thereof),
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S-39
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in each case from Management Investors, such payments, loans,
advances, dividends or distributions not to exceed since the
Issue Date an amount (net of repayments of any such loans or
advances) equal to (1) $20.0 million, plus
(2) $5.0 million multiplied by the number of calendar
years that have commenced since the Issue Date, plus the Net
Cash Proceeds received by the Company since the Issue Date from,
or as a capital contribution from, the issuance or sale to
Management Investors of Capital Stock (including any options,
warrants or other rights in respect thereof), to the extent such
Net Cash Proceeds are not included in any calculation under
clause (iii)(B)(x) of the preceding paragraph (a);
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(vi)
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the payment by the Company of, or loans, advances, dividends or
distributions by the Company to GPC or Holding to pay, dividends
on the common stock or equity of the Company, GPC or Holding
following a public offering of such common stock or equity in an
amount not to exceed in any fiscal year 6% of the aggregate
gross proceeds received by the Company, GPC or Holding in or
from such public offering;
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(vii)
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other Restricted Payments (including loans or advances) since
the Issue Date not to exceed $200.0 million (net of
repayments of any such loans or advances);
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(viii)
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loans, advances, dividends or distributions to Holding or GPC or
other payments by the Company or any Restricted Subsidiary
(A) to satisfy or permit Holding to satisfy obligations
under the Equity Agreements, or (B) to pay or permit
Holding or GPC to pay any Holding Expenses or any Related Taxes;
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(ix)
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payments by the Company, or loans, advances, dividends or
distributions by the Company to Holding to make payments, to
holders of Capital Stock of the Company or Holding in lieu of
issuance of fractional shares of such Capital Stock, not to
exceed $100,000 since the Issue Date;
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(x)
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dividends or other distributions of Capital Stock, Indebtedness
or other securities of Unrestricted Subsidiaries;
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(xi)
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in addition to the Restricted Payments permitted by the
preceding clauses (i) through (x), other Restricted
Payments (including loans or advances) since the Issue Date not
to exceed $100.0 million (net of repayments of any such
loans or advances), in each case so long as, at the time of and
after giving effect to the making of such Restricted Payment and
the consummation of all other related transactions, the
Consolidated Total Leverage Ratio would not exceed
3.75:1.00; and
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(xii)
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in addition to the Restricted Payments permitted by the
preceding clauses (i) through (xi),other Restricted
Payments (including loans or advances) since the Issue Date not
to exceed $100.0 million (net of repayments of any such
loans or advances), in each case so long as, at the time of and
after giving effect to the making of such Restricted Payment and
the consummation of all other related transactions, the
Consolidated Total Leverage Ratio would not exceed 3.25:1.00.
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S-40
provided that (A) in the case of clauses (iii),
(vi) and (ix), the net amount of any such Permitted Payment
shall be included in subsequent calculations of the amount of
Restricted Payments, (B) in the case of clause (v), at the
time of any calculation of the amount of Restricted Payments,
the net amount of Permitted Payments that have then actually
been made since the Issue Date under clause (v) that is in
excess of 50% of the total amount of Permitted Payments then
permitted under clause (v) shall be included in such
calculation of the amount of Restricted Payments, (C) in
all cases other than pursuant to clauses (A) and
(B) immediately above, the net amount of any such Permitted
Payment shall be excluded in subsequent calculations of the
amount of Restricted Payments and (D) solely with respect
to clauses (vii), (xi) and (xii), no Default or Event of
Default shall have occurred or be continuing at the time of any
such Permitted Payment after giving effect thereto.
Limitation on Restrictions on Distributions from Restricted
Subsidiaries. The Indenture will provide that the
Company will not, and will not permit any Restricted Subsidiary
to, create or otherwise cause to exist or become effective any
consensual encumbrance or restriction on the ability of any
Restricted Subsidiary to (i) pay dividends or make any
other distributions on its Capital Stock or pay any Indebtedness
or other obligations owed to the Company, (ii) make any
loans or advances to the Company or (iii) transfer any of
its property or assets to the Company, except any encumbrance or
restriction:
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(a)
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pursuant to an agreement or instrument in effect at or entered
into on the Issue Date, any Credit Facility, the Existing
Indentures, the Existing Notes, the Indenture or the Notes;
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(b)
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pursuant to any agreement or instrument of a Person, or relating
to Indebtedness or Capital Stock of a Person, which Person is
acquired by or merged or consolidated with or into the Company
or any Restricted Subsidiary, or which agreement or instrument
is assumed by the Company or any Restricted Subsidiary in
connection with an acquisition of assets from such Person, as in
effect at the time of such acquisition, merger or consolidation
(except to the extent that such Indebtedness was incurred to
finance, or otherwise in connection with, such acquisition,
merger or consolidation); provided that for purposes of
this clause (2), if another Person is the Successor Company, any
Subsidiary thereof or agreement or instrument of such Person or
any such Subsidiary shall be deemed acquired or assumed, as the
case may be, by the Company or a Restricted Subsidiary, as the
case may be, when such Person becomes the Successor Company;
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(c)
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pursuant to an agreement or instrument (a Refinancing
Agreement) effecting a refinancing of Indebtedness
Incurred pursuant to, or that otherwise extends, renews,
refunds, refinances or replaces, an agreement or instrument
referred to in clause (a) or (b) of this covenant or
this clause (c) (an Initial Agreement) or contained
in any amendment, supplement or other modification to an Initial
Agreement (an Amendment); provided, however,
that the encumbrances and restrictions contained in any such
Refinancing Agreement or Amendment are not materially less
favorable to the Holders of the Notes taken as a whole than
encumbrances and restrictions contained in the Initial Agreement
or Initial Agreements to which such Refinancing Agreement or
Amendment relates (as determined in good faith by the Company);
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(d)
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(A) that restricts in a customary manner the subletting,
assignment or transfer of any property or asset that is subject
to a lease, license or similar contract, or the assignment or
transfer of any lease, license or other contract, (B) by
virtue of any transfer of, agreement to transfer, option or
right with respect to, or Lien on, any property or assets of the
Company or any Restricted Subsidiary not otherwise prohibited by
the Indenture, (C) contained in mortgages, pledges or other
security agreements securing Indebtedness of a Restricted
Subsidiary to the extent restricting the transfer of the
property or assets subject thereto, (D) pursuant to
customary provisions restricting dispositions of real
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S-41
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property interests set forth in any reciprocal easement
agreements of the Company or any Restricted Subsidiary,
(E) pursuant to Purchase Money Obligations that impose
encumbrances or restrictions on the property or assets so
acquired, (F) on cash or other deposits or net worth
imposed by customers under agreements entered into in the
ordinary course of business, (G) pursuant to customary
provisions contained in agreements and instruments entered into
in the ordinary course of business (including but not limited to
leases and joint venture and other similar agreements entered
into in the ordinary course of business), (H) that arises
or is agreed to in the ordinary course of business and does not
detract from the value of property or assets of the Company or
any Restricted Subsidiary in any manner material to the Company
or such Restricted Subsidiary or (I) pursuant to Hedging
Obligations;
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(e)
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with respect to a Restricted Subsidiary (or any of its property
or assets) imposed pursuant to an agreement entered into for the
direct or indirect sale or disposition of all or substantially
all the Capital Stock or assets of such Restricted Subsidiary
(or the property or assets that are subject to such restriction)
pending the closing of such sale or disposition;
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(f)
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by reason of any applicable law, rule, regulation or order, or
required by any regulatory authority having jurisdiction over
the Company or any Restricted Subsidiary or any of their
businesses; or
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(g)
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pursuant to an agreement or instrument (A) relating to any
Indebtedness permitted to be Incurred subsequent to the Issue
Date pursuant to the provisions of the covenant described under
Limitation on Indebtedness (i) if the
encumbrances and restrictions contained in any such agreement or
instrument taken as a whole are not materially less favorable to
the Holders of the Notes than the encumbrances and restrictions
contained in the Initial Agreements (as determined in good faith
by the Company), or (ii) if such encumbrance or restriction
is not materially more disadvantageous to the Holders of the
Notes than is customary in comparable financings (as determined
in good faith by the Company) and either (x) the Company
determines that such encumbrance or restriction will not
materially affect the Companys ability to make principal
or interest payments on the Notes or (y) such encumbrance
or restriction applies only if a default occurs in respect of a
payment or financial covenant relating to such Indebtedness,
(B) relating to any sale of receivables by a Foreign
Subsidiary or (C) relating to Indebtedness of or a
Financing Disposition to or by any Receivables Entity.
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Limitation on Sales of Assets and Subsidiary
Stock. The Indenture will provide as follows:
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(a)
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The Company will not, and will not permit any Restricted
Subsidiary to, make any Asset Disposition unless:
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(i)
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the Company or such Restricted Subsidiary receives consideration
(including by way of relief from, or by any other Person
assuming responsibility for, any liabilities, contingent or
otherwise) at the time of such Asset Disposition at least equal
to the fair market value of the shares and assets subject to
such Asset Disposition, as such fair market value may be
determined (and shall be determined, to the extent such Asset
Disposition or any series of related Asset Dispositions involves
aggregate consideration in excess of $20.0 million) in good
faith by the Board of Directors, whose determination shall be
conclusive (including as to the value of all noncash
consideration),
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S-42
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(ii)
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in the case of any Asset Disposition (or series of related Asset
Dispositions) having a fair market value of $20.0 million
or more, at least 75% of the consideration therefor (excluding,
in the case of an Asset Disposition (or series of related Asset
Dispositions), any consideration by way of relief from, or by
any other Person assuming responsibility for, any liabilities,
contingent or otherwise, that are not Indebtedness) received by
the Company or such Restricted Subsidiary is in the form of
cash, and
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(iii)
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an amount equal to 100% of the Net Available Cash from such
Asset Disposition is applied by the Company (or any Restricted
Subsidiary, as the case may be) as follows:
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(A)
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first, either (x) to the extent the Company elects
(or is required by the terms of any Bank Indebtedness, any
Senior Indebtedness of the Company or any Note Guarantor, or any
Indebtedness of a Restricted Subsidiary that is not a Note
Guarantor), to prepay, repay or purchase any such Indebtedness
(in each case other than Indebtedness owed to the Company or a
Restricted Subsidiary) within 365 days after the later of
the date of such Asset Disposition and the date of receipt of
such Net Available Cash, or (y) to the extent the Company
or such Restricted Subsidiary elects, to reinvest in Additional
Assets (including by means of an investment in Additional Assets
by a Restricted Subsidiary with Net Available Cash received by
the Company or another Restricted Subsidiary) within
365 days from the later of the date of such Asset
Disposition and the date of receipt of such Net Available Cash,
or, if such reinvestment in Additional Assets is a project
authorized by the Board of Directors that will take longer than
such 365 days to complete, the period of time necessary to
complete such project;
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(B)
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second, to the extent of the balance of such Net
Available Cash after application in accordance with
clause (A) above (such balance, the Excess
Proceeds), to make an offer to purchase Notes and (to the
extent the Company or such Restricted Subsidiary elects, or is
required by the terms thereof) to purchase, redeem or repay any
other Senior Indebtedness of the Company or a Restricted
Subsidiary, pursuant and subject to the conditions of the
Indenture and the agreements governing such other
Indebtedness; and
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(C)
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third, to the extent of the balance of such Net Available
Cash after application in accordance with clauses (A) and
(B) above, to fund (to the extent consistent with any other
applicable provision of the Indenture) any general corporate
purpose (including but not limited to the repurchase, repayment
or other acquisition or retirement of any Subordinated
Obligations);
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provided, however, that in connection with any
prepayment, repayment or purchase of Indebtedness pursuant to
clause (A)(x) or (B) above, the Company or such Restricted
Subsidiary will retire such Indebtedness and will cause the
related loan commitment (if any) to be permanently reduced in an
amount equal to the principal amount so prepaid, repaid or
purchased.
Notwithstanding the foregoing provisions of this covenant, the
Company and the Restricted Subsidiaries shall not be required to
apply any Net Available Cash in accordance with this covenant
except to
S-43
the extent that the aggregate Net Available Cash from all Asset
Dispositions that is not applied in accordance with this
covenant exceeds $25.0 million. If the aggregate principal
amount of Notes and other Indebtedness of the Company or a
Restricted Subsidiary validly tendered and not withdrawn (or
otherwise subject to purchase, redemption or repayment) in
connection with an offer pursuant to clause (iii)(B) above
exceeds the Excess Proceeds, the Excess Proceeds will be
apportioned between such Notes and such other Indebtedness of
the Company or a Restricted Subsidiary, with the portion of the
Excess Proceeds payable in respect of such Notes to equal the
lesser of (x) the Excess Proceeds amount multiplied by a
fraction, the numerator of which is the outstanding principal
amount of such Notes and the denominator of which is the sum of
the outstanding principal amount of the Notes and the
outstanding principal amount of the relevant other Indebtedness
of the Company or a Restricted Subsidiary, and (y) the
aggregate principal amount of Notes validly tendered and not
withdrawn.
For the purposes of clause (ii) of paragraph
(a) above, the following are deemed to be cash:
(1) Temporary Cash Investments and Cash Equivalents,
(2) the assumption of Indebtedness of the Company (other
than Disqualified Stock of the Company) or any Restricted
Subsidiary and the release of the Company or such Restricted
Subsidiary from all liability on payment of the principal amount
of such Indebtedness in connection with such Asset Disposition,
(3) Indebtedness of any Restricted Subsidiary that is no
longer a Restricted Subsidiary as a result of such Asset
Disposition, to the extent that the Company and each other
Restricted Subsidiary are released from any Guarantee of payment
of the principal amount of such Indebtedness in connection with
such Asset Disposition, (4) securities received by the
Company or any Restricted Subsidiary from the transferee that
are converted by the Company or such Restricted Subsidiary into
cash within 180 days, (5) consideration consisting of
Indebtedness of the Company or any Restricted Subsidiary and
(6) any Designated Noncash Consideration received by the
Company or any of its Restricted Subsidiaries in an Asset
Disposition having an aggregate Fair Market Value, taken
together with all other Designated Noncash Consideration
received pursuant to this clause, not to exceed an aggregate
amount at any time outstanding equal to 3% of Consolidated
Tangible Assets (with the Fair Market Value of each item of
Designated Noncash Consideration being measured at the time
received and without giving effect to subsequent changes in
value).
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(b)
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In the event of an Asset Disposition that requires the purchase
of Notes pursuant to clause (iii)(B) of paragraph
(a) above, the Company will be required to purchase Notes
tendered pursuant to an offer by the Company for the Notes (the
Offer) at a purchase price of 100% of their
principal amount plus accrued and unpaid interest to the
Purchase Date in accordance with the procedures (including
prorating in the event of oversubscription) set forth in the
Indenture. If the aggregate purchase price of the Notes tendered
pursuant to the Offer is less than the Net Available Cash
allotted to the purchase of Notes, the remaining Net Available
Cash will be available to the Company for use in accordance with
clause (iii)(B) of paragraph (a) above (to repay other
Indebtedness of the Company or a Restricted Subsidiary) or
clause (iii)(C) of paragraph (a) above. The Company shall
not be required to make an Offer for Notes pursuant to this
covenant if the Net Available Cash available therefor (after
application of the proceeds as provided in clause (iii)(A) of
paragraph (a) above) is less than $25.0 million for
any particular Asset Disposition (which lesser amounts shall be
carried forward for purposes of determining whether an Offer is
required with respect to the Net Available Cash from any
subsequent Asset Disposition).
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(c)
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The Company will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other
securities laws or regulations in connection with the repurchase
of Notes pursuant to this covenant. To the extent that the
provisions of any securities laws or regulations conflict with
provisions of this covenant, the Company will comply with the
applicable securities laws and regulations and will not be
deemed to have breached its obligations under this covenant by
virtue thereof.
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S-44
Limitation on Transactions with
Affiliates. The Indenture will provide as follows:
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(a)
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The Company will not, and will not permit any Restricted
Subsidiary to, directly or indirectly, enter into or conduct any
transaction or series of related transactions (including the
purchase, sale, lease or exchange of any property or the
rendering of any service) with any Affiliate of the Company (an
Affiliate Transaction) unless (i) the terms of
such Affiliate Transaction are not materially less favorable to
the Company or such Restricted Subsidiary, as the case may be,
than those that could be obtained at the time in a transaction
with a Person who is not such an Affiliate and (ii) if such
Affiliate Transaction involves aggregate consideration in excess
of $15.0 million, the terms of such Affiliate Transaction
have been approved by a majority of the Disinterested Directors.
For purposes of this paragraph, any Affiliate Transaction shall
be deemed to have satisfied the requirements set forth in this
paragraph if (x) such Affiliate Transaction is approved by
a majority of the Disinterested Directors or (y) in the
event there are no Disinterested Directors, a fairness opinion
is provided by a nationally recognized appraisal or investment
banking firm with respect to such Affiliate Transaction.
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(b)
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The provisions of the preceding paragraph (a) will not
apply to:
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(i)
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any Restricted Payment Transaction,
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(ii)
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(1) the entering into, maintaining or performance of any
employment contract, collective bargaining agreement, benefit
plan, program or arrangement, related trust agreement or any
other similar arrangement for or with any employee, officer or
director heretofore or hereafter entered into in the ordinary
course of business, including vacation, health, insurance,
deferred compensation, severance, retirement, savings or other
similar plans, programs or arrangements, (2) the payment of
compensation, performance of indemnification or contribution
obligations, or any issuance, grant or award of stock, options,
other equity-related interests or other securities, to
employees, officers or directors in the ordinary course of
business, (3) the payment of reasonable fees to directors
of the Company or any of its Subsidiaries (as determined in good
faith by the Company or such Subsidiary), (4) any
transaction with an officer or director in the ordinary course
of business not involving more than $100,000 in any one case, or
(5) Management Advances and payments in respect thereof,
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(iii)
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any transaction with the Company, any Restricted Subsidiary, or
any Receivables Entity,
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(iv)
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any transaction arising out of agreements or instruments in
existence on the Issue Date, and any payments made pursuant
thereto,
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(v)
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any transaction in the ordinary course of business on terms not
materially less favorable to the Company or the relevant
Restricted Subsidiary than those that could be obtained at the
time in a transaction with a Person who is not an Affiliate of
the Company,
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(vi)
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any transaction in the ordinary course of business, or approved
by a majority of the Board of Directors, between the Company or
any Restricted Subsidiary and any Affiliate of the Company
controlled by the Company that is a joint venture or similar
entity, and
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S-45
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(vii)
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the Transactions, all transactions in connection therewith
(including but not limited to the financing thereof), and all
fees and expenses paid or payable in connection with the
Transactions.
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Limitation on Liens. The Indenture will
provide that the Company will not, and will not permit any
Restricted Subsidiary to, directly or indirectly, create or
permit to exist any Lien (other than Permitted Liens) on any of
its property or assets (including Capital Stock of any other
Person), whether owned on the date of the Indenture or
thereafter acquired, securing any Indebtedness (the
Initial Lien), unless contemporaneously therewith
effective provision is made to secure the Indebtedness due under
the Indenture and the Notes or, in respect of Liens on any
Restricted Subsidiarys property or assets, any Note
Guarantee of such Restricted Subsidiary, equally and ratably
with (or on a senior basis to, in the case of Subordinated
Obligations or Guarantor Subordinated Obligations) such
obligation for so long as such obligation is so secured by such
Initial Lien. Any such Lien thereby created in favor of the
Notes or any such Note Guarantee will be automatically and
unconditionally released and discharged upon (i) the
release and discharge of the Initial Lien to which it relates or
(ii) any sale, exchange or transfer to any Person not an
Affiliate of the Company of the property or assets secured by
such Initial Lien, or of all of the Capital Stock held by the
Company or any Restricted Subsidiary in, or all or substantially
all the assets of, any Restricted Subsidiary creating such
Initial Lien.
Future Note Guarantors. The Indenture will
provide as follows:
The Company will cause each Significant Domestic Subsidiary that
guarantees payment by the Company of any Bank Indebtedness of
the Company or any of the Existing Notes to execute and deliver
to the Trustee a supplemental indenture or other instrument
pursuant to which such Subsidiary will guarantee payment of the
Notes, whereupon such Subsidiary will become a Note Guarantor
for all purposes under the Indenture. In addition, the Company
may cause any Subsidiary that is not a Subsidiary Guarantor so
to guarantee payment of the Notes and become a Subsidiary
Guarantor.
Each Subsidiary Guarantor, as primary obligor and not merely as
surety, will jointly and severally, irrevocably and fully and
unconditionally Guarantee, on an unsecured senior basis, the
punctual payment when due, whether at Stated Maturity, by
acceleration or otherwise, of all monetary obligations of the
Company under the Indenture and the Notes, whether for principal
of or interest on the Notes, expenses, indemnification or
otherwise (all such obligations guaranteed by such Subsidiary
Guarantors being herein called the Subsidiary Guaranteed
Obligations). Such Subsidiary Guarantor will agree to pay,
in addition to the amount stated above, any and all reasonable
out-of-pocket
expenses (including reasonable counsel fees and expenses)
incurred by the Trustee or the Holders in enforcing any rights
under its Subsidiary Guarantee.
The obligations of each Subsidiary Guarantor will be limited to
the maximum amount, as will, after giving effect to all other
contingent and fixed liabilities of such Subsidiary Guarantor,
result in the obligations of such Subsidiary Guarantor under the
Subsidiary Guarantee not constituting a fraudulent conveyance or
fraudulent transfer under applicable law, or being void or
unenforceable under any law relating to insolvency of debtors.
Each such Subsidiary Guarantee will be a continuing Guarantee
and will (i) remain in full force and effect until payment
in full of the principal amount of all outstanding Notes
(whether by payment at maturity, purchase, redemption,
defeasance, retirement or other acquisition) and all other
applicable Subsidiary Guaranteed Obligations then due and owing
unless earlier terminated as described below, (ii) be
binding upon such Subsidiary Guarantor and (iii) inure to
the benefit of and be enforceable by the Trustee, the Holders
and their permitted successors, transferees and assigns.
Notwithstanding the preceding paragraph, any Subsidiary
Guarantor will automatically and unconditionally be released
from all obligations under its Subsidiary Guarantee, and such
Subsidiary
S-46
Guarantee shall thereupon terminate and be discharged and of no
further force or effect, (i) concurrently with any sale or
disposition (by merger or otherwise) of any Subsidiary Guarantor
or any interest therein in accordance with the terms of the
Indenture (including the covenant described under
Certain CovenantsLimitation on Sales of Assets
and Subsidiary Stock and Certain
CovenantsMerger and Consolidation) by the Company or
a Restricted Subsidiary, following which such Subsidiary
Guarantor is no longer a Restricted Subsidiary of the Company,
(ii) at any time that such Subsidiary Guarantor is released
from all of its obligations under all of its Guarantees of
payment by the Company of any Bank Indebtedness of the Company
and the Existing Notes, if applicable, (iii) upon the
merger or consolidation of any Subsidiary Guarantor with and
into the Company or another Subsidiary Guarantor that is the
surviving Person in such merger or consolidation,
(iv) concurrently with any Subsidiary Guarantor becoming an
Unrestricted Subsidiary, (v) upon legal or covenant
defeasance of the Companys obligations, or satisfaction
and discharge of the Indenture, or (vi) subject to
customary contingent reinstatement provisions, upon payment in
full of the aggregate principal amount of all Notes then
outstanding and all other applicable Guaranteed Obligations then
due and owing. In addition, the Company will have the right,
upon 30 days notice to the Trustee to cause any
Subsidiary Guarantor that has not guaranteed payment by the
Company of any Bank Indebtedness of the Company or the Existing
Notes, if applicable, to be unconditionally released from all
obligations under its Subsidiary Guarantee, and such Subsidiary
Guarantee shall thereupon terminate and be discharged and of no
further force or effect. Upon any such occurrence specified in
this paragraph, the Trustee shall execute any documents
reasonably required in order to evidence such release, discharge
and termination in respect of such Subsidiary Guarantee.
Neither the Company nor any such Subsidiary Guarantor shall be
required to make a notation on the Notes to reflect any such
Guarantee or any such release, termination or discharge.
SEC Reports. The Indenture will provide that,
notwithstanding that the Company may not be required to be or
remain subject to the reporting requirements of
Section 13(a) or 15(d) of the Exchange Act, the Company
will file with the SEC (unless such filing is not permitted
under the Exchange Act or by the SEC), so long as the Notes are
outstanding, the annual reports, information, documents and
other reports that the Company is required to file with the SEC
pursuant to such Section 13(a) or 15(d) or would be so
required to file if the Company were so subject. The Company
will also, within 15 days after the date on which the
Company was so required to file or would be so required to file
if the Company were so subject, transmit by mail to all Holders,
as their names and addresses appear in the Note Register, and to
the Trustee copies of any such information, documents and
reports (without exhibits) so required to be filed. The Company
will be deemed to have satisfied such requirements if Holding
files and provides reports, documents and information of the
types otherwise so required, in each case within the applicable
time periods, and the Company is not required to file such
reports, documents and information separately under the
applicable rules and regulations of the SEC (after giving effect
to any exemptive relief) because of the filings by Holding. The
Company also will comply with the other provisions of TIA
§ 314(a).
Merger
and Consolidation
The Indenture will provide that the Company will not consolidate
with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any Person, unless:
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(i)
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the resulting, surviving or transferee Person (the
Successor Company) will be a Person organized and
existing under the laws of the United States of America, any
State thereof or the District of Columbia and the Successor
Company (if not the Company) will expressly assume all the
obligations of the Company under the Notes and the Indenture by
executing and delivering to the Trustee a supplemental indenture
or one or more other documents or instruments in form reasonably
satisfactory to such Trustee;
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S-47
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(ii)
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immediately after giving effect to such transaction (and
treating any Indebtedness that becomes an obligation of the
Successor Company or any Restricted Subsidiary as a result of
such transaction as having been Incurred by the Successor
Company or such Restricted Subsidiary at the time of such
transaction), no Default will have occurred and be continuing;
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(iii)
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immediately after giving effect to such transaction, either
(A) the Successor Company could Incur at least $1.00 of
additional Indebtedness pursuant to paragraph (a) of the
covenant described under Certain
CovenantsLimitation on Indebtedness, or (B) the
Consolidated Coverage Ratio of the Successor Company would equal
or exceed the Consolidated Coverage Ratio of the Company
immediately prior to giving effect to such transaction;
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(iv)
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each applicable Note Guarantor (other than any party to any such
consolidation or merger) shall have delivered a supplemental
indenture or other document or instrument in form reasonably
satisfactory to the Trustee, confirming its Note
Guarantee; and
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(v)
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the Company will have delivered to the Trustee an Officers
Certificate and an Opinion of Counsel, each to the effect that
such consolidation, merger or transfer complies with the
provisions described in this paragraph, provided that
(x) in giving such opinion such counsel may rely on an
Officers Certificate as to compliance with the foregoing
clauses (ii) and (iii) and as to any matters of fact,
and (y) no Opinion of Counsel will be required for a
consolidation, merger or transfer described in the last
paragraph of this covenant.
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Any Indebtedness that becomes an obligation of the Company or
any Restricted Subsidiary (or that is deemed to be Incurred by
any Restricted Subsidiary that becomes a Restricted Subsidiary)
as a result of any such transaction undertaken in compliance
with this covenant, and any Refinancing Indebtedness with
respect thereto, shall be deemed to have been Incurred in
compliance with the covenant described under Certain
CovenantsLimitation on Indebtedness.
The Successor Company will succeed to, and be substituted for,
and may exercise every right and power of, the Company under the
Indenture, and thereafter the predecessor Company shall be
relieved of all obligations and covenants under the Indenture,
except that the predecessor Company in the case of a lease of
all or substantially all its assets will not be released from
the obligation to pay the principal of and interest on the Notes.
Clauses (ii) and (iii) of the first paragraph of this
Merger and Consolidation covenant will not apply to
any transaction in which (1) any Restricted Subsidiary
consolidates with, merges into or transfers all or part of its
assets to the Company or (2) the Company consolidates or
merges with or into or transfers all or substantially all its
properties and assets to (x) an Affiliate incorporated or
organized for the purpose of reincorporating or reorganizing the
Company in another jurisdiction or changing its legal structure
to a corporation or other entity or (y) a Restricted
Subsidiary of the Company so long as all assets of the Company
and the Restricted Subsidiaries immediately prior to such
transaction (other than Capital Stock of such Restricted
Subsidiary) are owned by such Restricted Subsidiary and its
Restricted Subsidiaries immediately after the consummation
thereof.
Defaults
An Event of Default will be defined in the Indenture as:
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(i)
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a default in any payment of interest on any Note when due,
continued for 30 days;
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S-48
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(ii)
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a default in the payment of principal of any Note when due,
whether at its Stated Maturity, upon optional redemption, upon
required repurchase, upon declaration or otherwise;
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(iii)
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the failure by the Company to comply with its obligations under
the first paragraph of the covenant described under
Merger and Consolidation above;
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(iv)
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the failure by the Company to comply for 30 days after
notice with any of its obligations under the covenant described
under Change of Control above (other than a
failure to purchase Notes);
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(v)
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the failure by the Company to comply for 60 days after
notice with its other agreements contained in the Notes or the
Indenture;
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(vi)
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the failure by any Subsidiary Guarantor to comply for
45 days after notice with its obligations under its Note
Guarantee;
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(vii)
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the failure by the Company or any Restricted Subsidiary to pay
any Indebtedness within any applicable grace period after final
maturity or the acceleration of any such Indebtedness by the
holders thereof because of a default, if the total amount of
such Indebtedness so unpaid or accelerated exceeds
$40.0 million or its foreign currency equivalent;
provided, that no Default or Event of Default will be
deemed to occur with respect to any such accelerated
Indebtedness that is paid or otherwise acquired or retired
within 20 Business Days after such acceleration (the cross
acceleration provision);
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(viii)
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certain events of bankruptcy, insolvency or reorganization of
the Company or a Significant Subsidiary, or of other Restricted
Subsidiaries that are not Significant Subsidiaries but would in
the aggregate constitute a Significant Subsidiary if considered
as a single Person (the bankruptcy provisions);
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(ix)
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the rendering of any judgment or decree for the payment of money
in an amount (net of any insurance or indemnity payments
actually received in respect thereof prior to or within
90 days from the entry thereof, or to be received in
respect thereof in the event any appeal thereof shall be
unsuccessful) in excess of $30.0 million or its foreign
currency equivalent against the Company or a Significant
Subsidiary, or jointly and severally against other Restricted
Subsidiaries that are not Significant Subsidiaries but would in
the aggregate constitute a Significant Subsidiary if considered
as a single Person, that is not discharged, or bonded or insured
by a third Person, if such judgment or decree remains
outstanding for a period of 90 days following such judgment
or decree and is not discharged, waived or stayed (the
judgment default provision); or
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(x)
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the failure of any applicable Note Guarantee by a Note Guarantor
that is a Significant Subsidiary to be in full force and effect
(except as contemplated by the terms thereof or of the
Indenture) or the denial or disaffirmation in writing by any
applicable Note Guarantor that is a Significant Subsidiary of
its obligations under the Indenture or any applicable Note
Guarantee, if such Default continues for 10 days.
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The foregoing will constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary
or involuntary or is effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body.
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However, a Default under clause (iv), (v) or (vi) will
not constitute an Event of Default until the Trustee or the
Holders of at least 25% in principal amount of the outstanding
Notes notify the Company of the Default and the Company does not
cure such Default within the time specified in such clause after
receipt of such notice.
If an Event of Default (other than a Default relating to certain
events of bankruptcy, insolvency or reorganization of the
Company) occurs and is continuing under the Indenture, the
Trustee by notice to the Company, or the Holders of at least a
majority in principal amount of the outstanding Notes by notice
to the Company and the Trustee, may declare the principal of and
accrued but unpaid interest on all Notes to be due and payable.
Upon the effectiveness of such a declaration, such principal and
interest will be due and payable immediately.
Notwithstanding the foregoing, if an Event of Default relating
to certain events of bankruptcy, insolvency or reorganization of
the Company occurs and is continuing, the principal of and
accrued interest on all Notes will become immediately due and
payable without any declaration or other act on the part of the
Trustee or any Holders. Under certain circumstances, the Holders
of a majority in principal amount of the outstanding Notes may
rescind any such acceleration with respect to the Notes and its
consequences.
Subject to the provisions of the Indenture relating to the
duties of the Trustee, in case an Event of Default occurs and is
continuing, the Trustee will be under no obligation to exercise
any of the rights or powers under the Indenture at the request
or direction of any of the Holders unless such Holders have
offered to the Trustee reasonable indemnity or security against
any loss, liability or expense. Except to enforce the right to
receive payment of principal, premium (if any) or interest when
due, no Holder may pursue any remedy with respect to the
Indenture or the Notes unless (i) such Holder has
previously given the Trustee written notice that an Event of
Default is continuing, (ii) Holders of at least 25% in
principal amount of the outstanding Notes have requested the
Trustee in writing to pursue the remedy, (iii) such Holders
have offered the Trustee reasonable security or indemnity
against any loss, liability or expense, (iv) the Trustee
has not complied with such request within 60 days after the
receipt of the request and the offer of security or indemnity
and (v) the Holders of a majority in principal amount of
the outstanding Notes have not given the Trustee a direction
inconsistent with such request within such
60-day
period. Subject to certain restrictions, the Holders of a
majority in principal amount of the outstanding Notes are given
the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. The
Trustee, however, may refuse to follow any direction that
conflicts with law or the Indenture or that the Trustee
determines is unduly prejudicial to the rights of any other
Holder or that would involve the Trustee in personal liability.
Prior to taking any action under the Indenture, the Trustee will
be entitled to indemnification satisfactory to it in its sole
discretion against all losses and expenses caused by taking or
not taking such action.
The Indenture provides that if a Default occurs and is
continuing and is known to the Trustee, the Trustee must mail to
each Holder notice of the Default within 90 days after it
occurs. Except in the case of a Default in the payment of
principal of, or premium (if any) or interest on, any Note, the
Trustee may withhold notice if and so long as a committee of its
Trust Officers in good faith determines that withholding
notice is in the interests of the Holders. In addition, the
Company is required to deliver to the Trustee, within
120 days after the end of each fiscal year, a certificate
indicating whether the signers thereof know of any Default
occurring during the previous year. The Company also is required
to deliver to the Trustee, within 30 days after the
occurrence thereof, written notice of any event that would
constitute certain Defaults, their status and what action the
Company is taking or proposes to take in respect thereof.
Amendments
and Waivers
Subject to certain exceptions, the Indenture may be amended with
the consent of the Holders of a majority in principal amount of
the Notes then outstanding and any past default or compliance
with any provisions may be waived with the consent of the
Holders of a majority in principal amount of the Notes then
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outstanding (including in each case, consents obtained in
connection with a tender offer or exchange offer for Notes).
However, without the consent of each Holder of an outstanding
Note affected thereby, no amendment or waiver may
(i) reduce the principal amount of Notes whose Holders must
consent to an amendment or waiver, (ii) reduce the rate of
or extend the time for payment of interest on any Note,
(iii) reduce the principal of or extend the Stated Maturity
of any Note, (iv) reduce the premium payable upon the
redemption of any Note, or change the date on which any Note may
be redeemed as described under Optional
Redemption above, (v) make any Note payable in money
other than that stated in such Note, (vi) impair the right
of any Holder to receive payment of principal of and interest on
such Holders Notes on or after the due dates therefor or
to institute suit for the enforcement of any such payment on or
with respect to such Holders Notes or (vii) make any
change in the amendment or waiver provisions described in this
sentence.
Without the consent of any Holder, the Company, the Trustee and
(as applicable) any Note Guarantor may amend the Indenture to
cure any ambiguity, omission, defect or inconsistency, to
provide for the assumption by a successor of the obligations of
the Company or a Note Guarantor under the Indenture, to provide
for uncertificated Notes in addition to or in place of
certificated Notes, to add Guarantees with respect to the Notes,
to secure the Notes, to confirm and evidence the release,
termination or discharge of any Guarantee or Lien with respect
to or securing the Notes when such release, termination or
discharge is provided for under the Indenture, to add to the
covenants of the Company for the benefit of the Holders or to
surrender any right or power conferred upon the Company, to
provide for or confirm the issuance of Additional Notes, to make
any change that does not materially adversely affect the rights
of any Holder, or to comply with any requirement of the SEC in
connection with the qualification of the Indenture under the TIA
or otherwise.
The consent of the Holders is not necessary under the Indenture
to approve the particular form of any proposed amendment or
waiver. It is sufficient if such consent approves the substance
of the proposed amendment or waiver. Until an amendment or
waiver becomes effective, a consent to it by a Holder is a
continuing consent by such Holder and every subsequent Holder of
all or part of the related Note. Any such Holder or subsequent
holder may revoke such consent as to its Note by written notice
to the Trustee or the Company, received thereby before the date
on which the Company certifies to the Trustee that the Holders
of the requisite principal amount of Notes have consented to
such amendment or waiver. After an amendment or waiver under the
Indenture becomes effective, the Company is required to mail to
Holders a notice briefly describing such amendment or waiver.
However, the failure to give such notice to all Holders, or any
defect therein, will not impair or affect the validity of the
amendment or waiver.
Defeasance
The Company at any time may terminate all its obligations under
the Notes and the Indenture (legal defeasance),
except for certain obligations, including those relating to the
defeasance trust and obligations to register the transfer or
exchange of the Notes, to replace mutilated, destroyed, lost or
stolen Notes and to maintain a registrar and paying agent in
respect of the Notes. The Company at any time may terminate its
obligations under certain covenants under the Indenture,
including the covenants described under Certain
Covenants and Change of Control, the operation
of the default provisions relating to such covenants described
under Defaults above, the operation of the
cross acceleration provision, the bankruptcy provisions with
respect to Subsidiaries and the judgment default provision
described under Defaults above, and the
limitations contained in clauses (iii), (iv) and
(v) under Merger and Consolidation above
(covenant defeasance). If the Company exercises its
legal defeasance option or its covenant defeasance option, each
Note Guarantor will be released from all of its obligations with
respect to its applicable Note Guarantee.
The Company may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option. If the Company exercises its legal defeasance option,
payment of the Notes may not be accelerated because of an Event
of Default with respect thereto. If the Company exercises its
covenant defeasance option, payment of the Notes may not be
accelerated because of an Event of Default specified in
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clause (iv), (v) (as it relates to the covenants described under
Certain Covenants above), (vi), (vii), (viii)
(but only with respect to events of bankruptcy, insolvency or
reorganization of a Subsidiary), (ix) or (x) under
Defaults above or because of the failure of the
Company to comply with clause (iii), (iv) or (v) under
Merger and Consolidation above.
Either defeasance option may be exercised to any redemption date
or to the maturity date for the Notes. In order to exercise
either defeasance option, the Company must irrevocably deposit
in trust (the defeasance trust) with the Trustee
money or U.S. Government Obligations, or a combination
thereof, sufficient (without reinvestment) to pay principal of,
and premium (if any) and interest on, the Notes to redemption or
maturity, as the case may be, and must comply with certain other
conditions, including delivery to the Trustee of 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 such
deposit and defeasance and will be subject to Federal income tax
on the same amount and in the same manner and at the same times
as would have been the case if such deposit and defeasance had
not occurred (and, in the case of legal defeasance only, such
Opinion of Counsel must be based on a ruling of the Internal
Revenue Service or other change in applicable Federal income tax
law since the Issue Date).
Satisfaction
and Discharge
The Indenture will be discharged and cease to be of further
effect (except as to surviving rights of registration of
transfer or exchange of the Notes, as expressly provided for in
the Indenture) as to all outstanding Notes when (i) either
(a) all Notes previously authenticated and delivered (other
than certain lost, stolen or destroyed Notes, and certain Notes
for which provision for payment was previously made and
thereafter the funds have been released to the Company) have
been delivered to the Trustee for cancellation or (b) all
Notes not previously delivered to the Trustee for cancellation
(x) have become due and payable, (y) will become due
and payable at their Stated Maturity within one year or
(z) have been or are to be called for redemption within one
year under arrangements reasonably satisfactory to the Trustee
for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company; (ii) the Company
has irrevocably deposited or caused to be deposited with the
Trustee money, U.S. Government Obligations, or a
combination thereof, sufficient (without reinvestment) to pay
and discharge the entire indebtedness on the Notes not
previously delivered to the Trustee for cancellation, for
principal, premium, if any, and interest to the date of deposit;
(iii) the Company has paid or caused to be paid all other
sums payable under the Indenture by the Company; and
(iv) the Company has delivered to the Trustee an
Officers Certificate and an Opinion of Counsel each to the
effect that all conditions precedent under the
Satisfaction and Discharge section of the Indenture
relating to the satisfaction and discharge of the Indenture have
been complied with, provided that any such counsel may
rely on any Officers Certificate as to matters of fact
(including as to compliance with the foregoing clauses (i),
(ii) and (iii)).
No
Personal Liability of Directors, Officers, Employees,
Incorporators and Stockholders
No director, officer, employee, incorporator or stockholder of
the Company, any Note Guarantor or any Subsidiary of any thereof
shall have any liability for any obligation of the Company or
any Note Guarantor under the Indenture, the Notes or any Note
Guarantee, or for any claim based on, in respect of, or by
reason of, any such obligation or its creation. Each Holder, by
accepting the Notes, waives and releases all such liability. The
waiver and release are part of the consideration for issuance of
the Notes.
Concerning
the Trustee
U.S. Bank National Association will be the Trustee under
the Indenture and will be appointed by the Company as Registrar
and Paying Agent with regard to the Notes.
The Indenture will provide that, except during the continuance
of an Event of Default, the Trustee will perform only such
duties as are set forth specifically in the Indenture. During
the existence of an Event of
S-52
Default, the Trustee will exercise such of the rights and powers
vested in it under the Indenture and use the same degree of care
and skill in its exercise as a prudent person would exercise
under the circumstances in the conduct of such persons own
affairs.
The Indenture and the TIA will impose certain limitations on the
rights of the Trustee, should it become a creditor of the
Company, 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 will be
permitted to engage in other transactions; provided that
if it acquires any conflicting interest as described in the TIA,
it must eliminate such conflict, apply to the SEC for permission
to continue as Trustee with such conflict, or resign.
Transfer
and Exchange
A Holder may transfer or exchange Notes in accordance with the
Indenture. Upon any transfer or exchange, the registrar and the
Trustee may require such Holder, among other things, to furnish
appropriate endorsements and transfer documents and the Company
may require such Holder to pay any taxes or other governmental
charges required by law or permitted by the Indenture. The
Company is not required to transfer or exchange any Note
selected for redemption or purchase or to transfer or exchange
any Note for a period of 15 Business Days prior to the day of
the mailing of the notice of redemption or purchase. The Notes
will be issued in registered form and the registered holder of a
Note will be treated as the owner of such Note for all purposes.
Governing
Law
The Indenture will provide that it and the Notes will be
governed by, and construed in accordance with, the laws of the
State of New York.
Certain
Definitions
Acquired Indebtedness means Indebtedness of a
Person (i) existing at the time such Person becomes a
Subsidiary or (ii) assumed in connection with the
acquisition of assets from such Person, in each case other than
Indebtedness Incurred in connection with, or in contemplation
of, such Person becoming a Subsidiary or such acquisition.
Acquired Indebtedness shall be deemed to be Incurred on the date
of the related acquisition of assets from any Person or the date
the acquired Person becomes a Subsidiary.
Additional Assets means (i) any property
or assets that replace the property or assets that are the
subject of an Asset Disposition; (ii) any property or
assets (other than Indebtedness and Capital Stock) to be used by
the Company or a Restricted Subsidiary in a Related Business;
(iii) the Capital Stock of a Person that is engaged in a
Related Business and becomes a Restricted Subsidiary as a result
of the acquisition of such Capital Stock by the Company or
another Restricted Subsidiary; or (iv) Capital Stock of any
Person that at such time is a Restricted Subsidiary acquired
from a third party.
Affiliate of any specified Person means any
other Person, directly or indirectly, controlling or controlled
by or under direct or indirect common control with such
specified Person. For the purposes of this definition,
control when used with respect to any Person means
the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms
controlling and controlled have meanings
correlative to the foregoing.
Asset Disposition means any sale, lease,
transfer or other disposition of shares of Capital Stock of a
Restricted Subsidiary (other than directors qualifying
shares, or (in the case of a Foreign Subsidiary) to the extent
required by applicable law), property or other assets (each
referred to for the purposes of this definition as a
disposition) by the Company or any of its Restricted
Subsidiaries (including any disposition by means of a merger,
consolidation or similar transaction), other than (i) a
disposition to the Company or a Restricted
S-53
Subsidiary, (ii) a disposition in the ordinary course of
business, (iii) the sale or discount (with or without
recourse, and on customary or commercially reasonable terms) of
accounts receivable or notes receivable arising in the ordinary
course of business, or the conversion or exchange of accounts
receivable for notes receivable, (iv) any Restricted
Payment Transaction, (v) a disposition that is governed by
the provisions described under Merger and
Consolidation, (vi) any Financing Disposition,
(vii) any fee in lieu or other disposition of
assets to any governmental authority or agency that continue in
use by the Company or any Restricted Subsidiary, so long as the
Company or any Restricted Subsidiary may obtain title to such
assets upon reasonable notice by paying a nominal fee,
(viii) any exchange of like property pursuant to
Section 1031 (or any successor section) of the Code, or any
exchange of equipment to be used in a Related Business,
(ix) any financing transaction with respect to property
built or acquired by the Company or any Restricted Subsidiary
after the Issue Date, including without limitation any
sale/leaseback transaction or asset securitization, (x) any
disposition arising from foreclosure, condemnation or similar
action with respect to any property or other assets,
(xi) any disposition of Capital Stock, Indebtedness or
other securities of an Unrestricted Subsidiary, (xii) a
disposition of Capital Stock of a Restricted Subsidiary pursuant
to an agreement or other obligation with or to a Person (other
than the Company or a Restricted Subsidiary) from whom such
Restricted Subsidiary was acquired, or from whom such Restricted
Subsidiary acquired its business and assets (having been newly
formed in connection with such acquisition), entered into in
connection with such acquisition, (xiii) a disposition of
not more than 5% of the outstanding Capital Stock of a Foreign
Subsidiary that has been approved by the Board of Directors, or
(xiv) any disposition or series of related dispositions for
aggregate consideration not to exceed $5.0 million.
Bank Indebtedness means any and all amounts,
whether outstanding on the Issue Date or thereafter incurred,
payable under or in respect of any Credit Facility, including
without limitation principal, premium (if any), interest
(including interest accruing on or after the filing of any
petition in bankruptcy or for reorganization relating to the
Company or any Restricted Subsidiary whether or not a claim for
post-filing interest is allowed in such proceedings), fees,
charges, expenses, reimbursement obligations, guarantees, other
monetary obligations of any nature and all other amounts payable
thereunder or in respect thereof.
Board of Directors means the board of
directors or other governing body of the Company or, if the
Company is owned or managed by a single entity, the board of
directors or other governing body of such entity, or, in either
case, any committee thereof duly authorized to act on behalf of
such board or governing body.
Borrowing Base means the sum (determined as
of the end of the most recently ended fiscal quarter for which
consolidated financial statements of the Company are available)
of (1) 60% of Inventory of the Company and its Restricted
Subsidiaries and (2) 85% of Receivables of the Company and
its Restricted Subsidiaries.
Business Day means a day other than a
Saturday, Sunday or other day on which commercial banking
institutions are authorized or required by law to close in New
York City.
Capital Stock of any Person means any and all
shares of, rights to purchase, warrants or options for, or other
equivalents of or interests in (however designated) equity of
such Person, including any Preferred Stock, but excluding any
debt securities convertible into such equity.
Capitalized Lease Obligation means an
obligation that is required to be classified and accounted for
as a capitalized lease for financial reporting purposes in
accordance with GAAP. The Stated Maturity of any Capitalized
Lease Obligation shall be the date of the last payment of rent
or any other amount due under the related lease.
Cash Equivalents means any of the following:
(a) securities issued or fully guaranteed or insured by the
United States Government or any agency or instrumentality
thereof, (b) time deposits, certificates of deposit or
bankers acceptances of (i) any lender under the
Senior Credit Agreement or (ii) any commercial
S-54
bank having capital and surplus in excess of $500,000,000 and
the commercial paper of the holding company of which is rated at
least A-1 or
the equivalent thereof by S&P or at least
P-1 or the
equivalent thereof by Moodys (or if at such time neither
is issuing ratings, then a comparable rating of another
nationally recognized rating agency), (c) commercial paper
rated at least
A-1 or the
equivalent thereof by S&P or at least
P-1 or the
equivalent thereof by Moodys (or if at such time neither
is issuing ratings, then a comparable rating of another
nationally recognized rating agency), (d) investments in
money market funds complying with the risk limiting conditions
of
Rule 2a-7
or any successor rule of the SEC under the Investment Company
Act of 1940, as amended and (e) investments similar to any
of the foregoing denominated in foreign currencies approved by
the Board of Directors.
CDR means Clayton, Dubilier & Rice,
Inc.
CDR Fund V means Clayton,
Dubilier & Rice Fund V Limited Partnership, a
Cayman Islands exempted limited partnership, and any successor
in interest thereto.
Code means the Internal Revenue Code of 1986,
as amended.
Commodities Agreements means, in respect of a
Person, any commodity futures contract, forward contract, option
or similar agreement or arrangement (including derivative
agreements or arrangements), as to which such Person is a party
or beneficiary.
Company means Graphic Packaging
International, Inc., a Delaware corporation, and any successor
in interest thereto.
Consolidated Coverage Ratio as of any date of
determination means the ratio of (i) the aggregate amount
of Consolidated EBITDA of the Company and its Restricted
Subsidiaries for the period of the most recent four consecutive
fiscal quarters ending prior to the date of such determination
for which consolidated financial statements of the Company are
available to (ii) Consolidated Interest Expense for such
four fiscal quarters; provided, that
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(1)
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if since the beginning of such period the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains
outstanding on such date of determination or if the transaction
giving rise to the need to calculate the Consolidated Coverage
Ratio is an Incurrence of Indebtedness, Consolidated EBITDA and
Consolidated Interest Expense for such period shall be
calculated after giving effect on a pro forma basis to such
Indebtedness as if such Indebtedness had been Incurred on the
first day of such period (except that in making such
computation, the amount of Indebtedness under any revolving
credit facility outstanding on the date of such calculation
shall be computed based on (A) the average daily balance of
such Indebtedness during such four fiscal quarters or such
shorter period for which such facility was outstanding or
(B) if such facility was created after the end of such four
fiscal quarters, the average daily balance of such Indebtedness
during the period from the date of creation of such facility to
the date of such calculation),
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(2)
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if since the beginning of such period the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged any
Indebtedness that is no longer outstanding on such date of
determination (each, a Discharge) or if the
transaction giving rise to the need to calculate the
Consolidated Coverage Ratio involves a Discharge of Indebtedness
(in each case other than Indebtedness Incurred under any
revolving credit facility unless such Indebtedness has been
permanently repaid), Consolidated EBITDA and Consolidated
Interest Expense for such period shall be calculated after
giving effect on a pro forma basis to such Discharge of such
Indebtedness, including with the proceeds of such new
Indebtedness, as if such Discharge had occurred on the first day
of such period,
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S-55
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(3)
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if since the beginning of such period the Company or any
Restricted Subsidiary shall have disposed of any company, any
business or any group of assets constituting an operating unit
of a business (any such disposition, a Sale), the
Consolidated EBITDA for such period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive)
attributable to the assets that are the subject of such Sale for
such period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such period and
Consolidated Interest Expense for such period shall be reduced
by an amount equal to (A) the Consolidated Interest Expense
attributable to any Indebtedness of the Company or any
Restricted Subsidiary repaid, repurchased, redeemed, defeased or
otherwise acquired, retired or discharged with respect to the
Company and its continuing Restricted Subsidiaries in connection
with such Sale for such period (including but not limited to
through the assumption of such Indebtedness by another Person)
plus (B) if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such
period attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing
Restricted Subsidiaries are no longer liable for such
Indebtedness after such Sale,
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(4)
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if since the beginning of such period the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise)
shall have made an Investment in any Person that thereby becomes
a Restricted Subsidiary, or otherwise acquired any company, any
business or any group of assets constituting an operating unit
of a business, including any such Investment or acquisition
occurring in connection with a transaction causing a calculation
to be made hereunder (any such Investment or acquisition, a
Purchase), Consolidated EBITDA and Consolidated
Interest Expense for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
related Indebtedness) as if such Purchase occurred on the first
day of such period, and
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(5)
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if since the beginning of such period any Person who became a
Restricted Subsidiary was merged or consolidated with or into
the Company or any Restricted Subsidiary, and since the
beginning of such period such Person shall have Discharged any
Indebtedness or made any Sale or Purchase that would have
required an adjustment pursuant to clause (2), (3) or
(4) above if made by the Company or a Restricted Subsidiary
during such period, Consolidated EBITDA and Consolidated
Interest Expense for such period shall be calculated after
giving pro forma effect thereto as if such Discharge, Sale or
Purchase occurred on the first day of such period.
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For purposes of this definition, whenever pro forma effect is to
be given to any Sale, Purchase or other transaction, or the
amount of income or earnings relating thereto and the amount of
Consolidated Interest Expense associated with any Indebtedness
Incurred or repaid, repurchased, redeemed, defeased or otherwise
acquired, retired or discharged in connection therewith, the pro
forma calculations in respect thereof (including without
limitation in respect of anticipated cost savings or synergies
relating to any such Sale, Purchase or other transaction) shall
be as determined in good faith by a responsible financial or
accounting Officer of the Company. If any Indebtedness bears a
floating rate of interest and is being given pro forma effect,
the interest expense on such Indebtedness shall be calculated as
if the rate in effect on the date of determination had been the
applicable rate for the entire period (taking into account any
Interest Rate Agreement applicable to such Indebtedness). If any
Indebtedness bears, at the option of the Company or a Restricted
Subsidiary, a rate of interest based on a prime or similar rate,
a eurocurrency interbank offered rate or other fixed or floating
rate, and such Indebtedness is being given pro forma effect, the
interest expense on such Indebtedness shall be calculated by
applying such optional rate as the Company or such Restricted
Subsidiary may designate. If any Indebtedness that is being
given pro forma effect was Incurred under a revolving credit
facility, the interest expense on such Indebtedness shall be
computed based upon the average daily balance of such
Indebtedness during the applicable period. Interest on a
Capitalized Lease Obligation shall be deemed to accrue at an
interest rate determined in good faith by a responsible
financial or accounting officer of the Company to be the rate of
interest implicit in such Capitalized Lease Obligation in
accordance with GAAP.
S-56
Consolidated EBITDA means, for any period,
the Consolidated Net Income for such period, plus the following
to the extent deducted in calculating such Consolidated Net
Income: (i) provision for all taxes (whether or not paid,
estimated or accrued) based on income, profits or capital,
(ii) Consolidated Interest Expense and any Receivables
Fees, (iii) depreciation, amortization (including but not
limited to amortization of goodwill and intangibles and
amortization and write-off of financing costs) and all other
non-cash charges or non-cash losses, (iv) any expenses or
charges related to any Equity Offering, Investment or
Indebtedness permitted by the Indenture (whether or not
consummated or incurred) and (v) the amount of any minority
interest expense.
Consolidated Interest Expense means, for any
period, (i) the total interest expense of the Company and
its Restricted Subsidiaries to the extent deducted in
calculating Consolidated Net Income, net of any interest income
of the Company and its Restricted Subsidiaries, including
without limitation any such interest expense consisting of
(a) interest expense attributable to Capitalized Lease
Obligations, (b) amortization of debt discount,
(c) interest in respect of Indebtedness of any other Person
that has been Guaranteed by the Company or any Restricted
Subsidiary, but only to the extent that such interest is
actually paid by the Company or any Restricted Subsidiary,
(d) non-cash interest expense, (e) the interest
portion of any deferred payment obligation and
(f) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers acceptance
financing, plus (ii) Preferred Stock dividends paid in cash
in respect of Disqualified Stock of the Company held by Persons
other than the Company or a Restricted Subsidiary and minus
(iii) to the extent otherwise included in such interest
expense referred to in clause (i) above, Receivables Fees
and amortization or write-off of financing costs, in each case
under clauses (i) through (iii) as determined on a
Consolidated basis in accordance with GAAP; provided that
gross interest expense shall be determined after giving effect
to any net payments made or received by the Company and its
Restricted Subsidiaries with respect to Interest Rate Agreements.
Consolidated Net Income means, for any
period, the net income (loss) of the Company and its Restricted
Subsidiaries, determined on a consolidated basis in accordance
with GAAP and before any reduction in respect of Preferred Stock
dividends; provided that there shall not be included in
such Consolidated Net Income:
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(i)
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any net income (loss) of any Person if such Person is not a
Restricted Subsidiary, except that (A) subject to the
limitations contained in clause (iii) below, the
Companys equity in the net income of any such Person for
such period shall be included in such Consolidated Net Income up
to the aggregate amount actually distributed by such Person
during such period to the Company or a Restricted Subsidiary as
a dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to
the limitations contained in clause (ii) below) and
(B) the Companys equity in the net loss of such
Person shall be included to the extent of the aggregate
Investment of the Company or any of its Restricted Subsidiaries
in such Person,
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(ii)
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any net income (loss) of any Restricted Subsidiary that is not a
Note Guarantor if such Restricted Subsidiary is subject to
restrictions, directly or indirectly, on the payment of
dividends or the making of similar distributions by such
Restricted Subsidiary, directly or indirectly, to the Company by
operation of the terms of such Restricted Subsidiarys
charter or any agreement, instrument, judgment, decree, order,
statute or governmental rule or regulation applicable to such
Restricted Subsidiary or its stockholders (other than
(x) restrictions that have been waived or otherwise
released, (y) restrictions pursuant to the Existing Notes,
the Notes, the Existing Indentures or the Indenture and
(z) restrictions in effect on the Issue Date with respect
to a Restricted Subsidiary and other restrictions with respect
to such Restricted Subsidiary that taken as a whole are not
materially less favorable to the Holders than such restrictions
in effect on the Issue Date), except that (A) subject to
the limitations contained in clause (iii) below, the
Companys equity in the net income of any such Restricted
Subsidiary for such period
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S-57
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shall be included in such Consolidated Net Income up to the
aggregate amount of any dividend or distribution that was or
that could have been made by such Restricted Subsidiary during
such period to the Company or another Restricted Subsidiary
(subject, in the case of a dividend that could have been made to
another Restricted Subsidiary, to the limitation contained in
this clause) and (B) the net loss of such Restricted
Subsidiary shall be included to the extent of the aggregate
Investment of the Company or any of its other Restricted
Subsidiaries in such Restricted Subsidiary,
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(iii)
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any gain or loss realized upon the sale or other disposition of
any asset of the Company or any Restricted Subsidiary (including
pursuant to any sale/leaseback transaction) that is not sold or
otherwise disposed of in the ordinary course of business (as
determined in good faith by the Board of Directors),
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(iv)
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any item classified as an extraordinary, unusual or nonrecurring
gain, loss or charge (including fees, expenses and charges
associated with the Transactions and any acquisition, merger or
consolidation after the Issue Date),
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(v)
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the cumulative effect of a change in accounting principles,
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(vi)
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all deferred financing costs written off and premiums paid in
connection with any early extinguishment of Indebtedness,
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(vii)
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any unrealized gains or losses in respect of Currency Agreements,
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(viii)
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any unrealized foreign currency transaction gains or losses in
respect of Indebtedness of any Person denominated in a currency
other than the functional currency of such Person,
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(ix)
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any non-cash compensation charge arising from any grant of
stock, stock options or other equity based awards, and
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(x)
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to the extent otherwise included in Consolidated Net Income, any
unrealized foreign currency translation or transaction gains or
losses in respect of Indebtedness or other obligations of the
Company or any Restricted Subsidiary owing to the Company or any
Restricted Subsidiary.
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In the case of any unusual or nonrecurring gain, loss or charge
not included in Consolidated Net Income pursuant to
clause (iv) above in any determination thereof, the Company
will deliver an Officers Certificate to the Trustee
promptly after the date on which Consolidated Net Income is so
determined, setting forth the nature and amount of such unusual
or nonrecurring gain, loss or charge. Notwithstanding the
foregoing, for the purpose of clause (a)(iii)(A) of the covenant
described under Certain CovenantsLimitation on
Restricted Payments only, there shall be excluded from
Consolidated Net Income, without duplication, any dividends,
repayments of loans or advances or other transfers of assets
from Unrestricted Subsidiaries to the Company or a Restricted
Subsidiary to the extent such dividends, repayments or transfers
are applied by the Company to increase the amount of Restricted
Payments permitted under such covenant pursuant to clause
(a)(iii)(C) or (D) thereof.
Consolidated Tangible Assets means, as of any
date of determination, the total assets less the total
intangible assets (including, without limitation, goodwill), in
each case shown on the consolidated balance sheet of the Company
and its Restricted Subsidiaries as of the most recent date for
which such a balance sheet is available, determined on a
consolidated basis in accordance with GAAP (and, in the case of
any determination relating to any Incurrence of Indebtedness or
any Investment, on a pro forma basis including any property or
assets being acquired in connection therewith); provided
that for purposes of paragraph (b) of
S-58
the covenant described in Certain
CovenantsLimitation on Indebtedness, the covenant
described under Certain CovenantsLimitation on
Sale of Assets and Subsidiary Stock and the definition of
Permitted Investment, Consolidated Tangible Assets
shall not be less than $2,409.0 million.
Consolidation means the consolidation of the
accounts of each of the Restricted Subsidiaries with those of
the Company in accordance with GAAP; provided that
Consolidation will not include consolidation of the
accounts of any Unrestricted Subsidiary, but the interest of the
Company or any Restricted Subsidiary in any Unrestricted
Subsidiary will be accounted for as an investment. The term
Consolidated has a correlative meaning.
Consolidated Total Debt means, as of any date
of determination, the total Indebtedness shown on the
consolidated balance sheet of the Company and its Restricted
Subsidiaries as of such date, determined on a consolidated basis
in accordance with GAAP.
Consolidated Total Leverage Ratio means, as
of any date of determination, the ratio of (i) Consolidated
Total Debt as of the last day of the most recent fiscal quarter
of the Company ending prior to the date of such determination
for which consolidated financial statements of the Company are
available to (ii) the aggregate amount of Consolidated
EBITDA of the Company and its Restricted Subsidiaries for the
period of the most recent four consecutive fiscal quarters
ending prior to the date of such determination for which
consolidated financial statements of the Company are available;
provided, that
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(1)
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if since the beginning of the period for which the Consolidated
Total Leverage Ratio is being calculated the Company or any
Restricted Subsidiary has Incurred any Indebtedness that remains
outstanding on such date of determination, then the Consolidated
Total Leverage Ratio shall be calculated after giving effect on
a pro forma basis to such Indebtedness as if such Indebtedness
had been Incurred immediately prior to the last day of such
period (except that in making such computation, the amount of
Indebtedness under any revolving credit facility outstanding on
the date of such calculation shall be computed based on
(A) the average daily balance of such Indebtedness during
such four fiscal quarters or such shorter period for which such
facility was outstanding or (B) if such facility was
created after the end of such four fiscal quarters, the average
daily balance of such Indebtedness during the period from the
date of creation of such facility to the date of such
calculation),
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(2)
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if since the beginning of the period for which the Consolidated
Total Leverage Ratio is being calculated the Company or any
Restricted Subsidiary has repaid, repurchased, redeemed,
defeased or otherwise acquired, retired or discharged any
Indebtedness that is no longer outstanding on such date of
determination (each, a Discharge) (in each case
other than Indebtedness Incurred under any revolving credit
facility unless such Indebtedness has been permanently repaid),
then the Consolidated Total Leverage Ratio shall be calculated
after giving effect on a pro forma basis to such Discharge of
such Indebtedness as if such Discharge had occurred immediately
prior to the last day of such period,
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(3)
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if since the beginning of the period for which the Consolidated
Total Leverage Ratio is being calculated the Company or any
Restricted Subsidiary shall have disposed of any company, any
business or any group of assets constituting an operating unit
of a business (any such disposition, a Sale), then
the Consolidated EBITDA for such period shall be reduced by an
amount equal to the Consolidated EBITDA (if positive)
attributable to the assets that are the subject of such Sale for
such period or increased by an amount equal to the Consolidated
EBITDA (if negative) attributable thereto for such period,
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(4)
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if since the beginning of the period for which the Consolidated
Total Leverage Ratio is being calculated the Company or any
Restricted Subsidiary (by merger, consolidation or otherwise)
shall have made an Investment in any Person that thereby becomes
a Restricted Subsidiary, or
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S-59
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otherwise acquired any company, any business or any group of
assets constituting an operating unit of a business, including
any such Investment or acquisition occurring in connection with
a transaction causing a calculation to be made hereunder (any
such Investment or acquisition, a Purchase),
Consolidated EBITDA for such period shall be calculated after
giving pro forma effect thereto (including the Incurrence of any
related Indebtedness) as if such Purchase occurred on the first
day of such period, and
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(5)
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if since the beginning of the period for which the Consolidated
Total Leverage Ratio is being calculated any Person who became a
Restricted Subsidiary was merged or consolidated with or into
the Company or any Restricted Subsidiary, and since the
beginning of such period such Person shall have Discharged any
Indebtedness or made any Sale or Purchase that would have
required an adjustment pursuant to clause (2), (3) or
(4) above if made by the Company or a Restricted Subsidiary
during such period, Consolidated EBITDA for such period shall be
calculated after giving pro forma effect thereto as if such
Discharge, Sale or Purchase occurred on the first day of such
period.
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For purposes of this definition, whenever pro forma effect is to
be given to any Sale, Purchase or other transaction, or the
amount of income or earnings relating thereto, the pro forma
calculations in respect thereof (including without limitation in
respect of anticipated cost savings or synergies relating to any
such Sale, Purchase or other transaction) shall be determined on
a basis consistent with Article 11 of
Regulation S-X
promulgated under the Securities Act.
Coors Stockholders means (i) Adolph
Coors, Jr. Trust dated September 12, 1969; Augusta
Coors Collbran Trust dated July 5, 1946; Bertha Coors
Munroe Trust dated July 5, 1946; Grover C. Coors Trust
dated August 7, 1952; Herman F. Coors Trust dated
July 5, 1946; Janet H. Coors Irrevocable Trust FBO
Frances M. Baker dated July 27, 1976; Janet H. Coors
Irrevocable Trust FBO Frank E. Ferrin dated July 27,
1976; Janet H. Coors Irrevocable Trust FBO Joseph J. Ferrin
dated July 27, 1976; Joseph Coors Trust dated
December 14, 1988; Louise Coors Porter Trust dated
July 5, 1946; May Kistler Coors Trust dated
September 24, 1965; and Adolph Coors Foundation;
(ii) a spouse or lineal descendant (whether natural or
adopted), sibling, parent, heir, executor, administrator,
testamentary trustee, lifetime trustee or legatee of Adolph
Coors, Jr. or the Persons named in clause (i) above;
(iii) any trust, the primary beneficiaries of which are
named in clause (i) or (ii) above; (iv) the
trustees or any Affiliates of any trust named in clause (i)
or (iii) above; (v) the beneficiary or beneficiaries
authorized or entitled to receive distributions from any trust
named in clause (i) or (iii) above; or (vi) any
corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which
include only the Persons named in clause (i) or
(ii) above; and any of their respective successors in
interest.
Credit Facilities means one or more of
(i) the Senior Credit Facility and (ii) other
facilities or arrangements designated by the Company, in each
case with one or more banks or other institutions providing for
revolving credit loans, term loans, receivables financings
(including without limitation through the sale of receivables to
such institutions or to special purpose entities formed to
borrow from such institutions against such receivables), letters
of credit or other Indebtedness, in each case, including all
agreements, instruments and documents executed and delivered
pursuant to or in connection with any of the foregoing,
including but not limited to any notes and letters of credit
issued pursuant thereto and any guarantee and collateral
agreement, patent and trademark security agreement, mortgages or
letter of credit applications and other guarantees, pledge
agreements, security agreements and collateral documents, in
each case as the same may be amended, supplemented, waived or
otherwise modified from time to time, or refunded, refinanced,
restructured, replaced, renewed, repaid, increased or extended
from time to time (whether in whole or in part, whether with the
original banks or other institutions or other banks or other
institutions or otherwise, and whether provided under any
original Credit Facility or one or more other credit agreements,
indentures, financing agreements or other Credit Facilities or
otherwise). Without limiting the generality of the foregoing,
the term Credit Facility shall include any agreement
(i) changing the maturity of any Indebtedness Incurred
thereunder or contemplated thereby, (ii) adding
Subsidiaries as additional borrowers or guarantors thereunder,
S-60
(iii) increasing the amount of Indebtedness Incurred
thereunder or available to be borrowed thereunder or
(iv) otherwise altering the terms and conditions thereof.
Currency Agreement means, in respect of a
Person, any foreign exchange contract, currency swap agreement
or other similar agreement or arrangements (including derivative
agreements or arrangements), as to which such Person is a party
or a beneficiary.
Default means any event or condition that is,
or after notice or passage of time or both would be, an Event of
Default.
Designated Noncash Consideration means the
Fair Market Value of noncash consideration received by the
Company or one of its Restricted Subsidiaries in connection with
an Asset Disposition that is so designated as Designated Noncash
Consideration pursuant to an Officers Certificate, setting
forth the basis of such valuation.
Disinterested Director means, with respect to
any Affiliate Transaction, a member of the Board of Directors
having no material direct or indirect financial interest in or
with respect to such Affiliate Transaction. A member of the
Board of Directors shall not be deemed to have such a financial
interest by reason of such members holding Capital Stock
of the Company or Holding or any options, warrants or other
rights in respect of such Capital Stock.
Disqualified Stock means, with respect to any
Person, any Capital Stock (other than Management Stock) that by
its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable or exercisable) or
upon the happening of any event (other than following the
occurrence of a Change of Control or other similar event
described under such terms as a change of control,
or an Asset Disposition) (i) matures or is mandatorily
redeemable pursuant to a sinking fund obligation or otherwise,
(ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock or (iii) is redeemable at the option of
the holder thereof (other than following the occurrence of a
Change of Control or other similar event described under such
terms as a change of control, or an Asset
Disposition), in whole or in part, in each case on or prior to
the final Stated Maturity of the Notes.
Domestic Subsidiary means any Restricted
Subsidiary of the Company other than a Foreign Subsidiary.
Equity Agreements means, collectively,
(1) the Stockholders Agreement, dated as of July 9,
2007, among Holding, the Coors Stockholders, CDR Fund V,
EXOR Group S.A., Field Holdings, Inc., and the TPG Entities,
(2) the Registration Rights Agreement, dated as of
July 9, 2007, among Holding, the Coors Stockholders, CDR
Fund V, EXOR Group S.A., Field Holdings, Inc., the TPG
Entities, and the other stockholders of Holding party thereto,
and (3) the Indemnification Agreement, dated as of
March 27, 1996, among the Company, Holding, GPC, CDR and
CDR Fund V, in each case as may be amended, supplemented,
waived or otherwise modified from time to time in accordance
with the terms thereof and of the Indenture.
Exchange Act means the Securities Exchange
Act of 1934, as amended.
Excluded Contribution means Net Cash
Proceeds, or the Fair Market Value of property or assets,
received by the Company as capital contributions to the Company
after the Issue Date or from the issuance or sale (other than to
a Restricted Subsidiary) of Capital Stock (other than
Disqualified Stock) of the Company, in each case to the extent
designated as an Excluded Contribution pursuant to an
Officers Certificate of the Company and not previously
included in the calculation set forth in subparagraph
(a)(iii)(B)(x) of the covenant described under
Certain CovenantsLimitation on Restricted
Payments for purposes of determining whether a Restricted
Payment may be made.
Existing Indentures means (a) the
Indenture dated as of June 16, 2009 among the Company,
U.S. Bank National Association, as Trustee, and the other
parties thereto relating to the Existing Senior Notes
S-61
and (b) the Indenture dated as of August 8, 2003 among
the Company, Wells Fargo Bank, National Association, as Trustee,
and the other parties thereto relating to the Companys
9.50% Senior Subordinated Notes due 2013.
Existing Notes means the Existing Senior
Notes and the Companys 9.50% Senior Subordinated
Notes due 2013, in each case, outstanding on the Issue Date.
Existing Senior Notes means the
Companys
91/2%
Senior Notes due 2017 outstanding on the Issue Date.
Fair Market Value means, with respect to any
asset or property, the fair market value of such asset or
property as determined in good faith by the Board of Directors,
whose determination will be conclusive.
Financing Disposition means any sale,
transfer, conveyance or other disposition of property or assets
by the Company or any Subsidiary thereof to any Receivables
Entity, or by any Receivables Subsidiary, in each case in
connection with the Incurrence by a Receivables Entity of
Indebtedness, or obligations to make payments to the obligor on
Indebtedness, which may be secured by a Lien in respect of such
property or assets.
Foreign Subsidiary means (a) any
Restricted Subsidiary of the Company that is not organized under
the laws of the United States of America or any state thereof or
the District of Columbia and (b) any Restricted Subsidiary
of the Company that has no material assets other than securities
of one or more Foreign Subsidiaries, and other assets relating
to an ownership interest in any such securities or Subsidiaries.
GAAP means generally accepted accounting
principles in the United States of America as in effect on the
Issue Date (for purposes of the definitions of the terms
Consolidated Coverage Ratio, Consolidated
EBITDA, Consolidated Interest Expense,
Consolidated Net Income and Consolidated
Tangible Assets, all defined terms in the Indenture to the
extent used in or relating to any of the foregoing definitions,
and all ratios and computations based on any of the foregoing
definitions) and as in effect from time to time (for all other
purposes of the Indenture), including 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 Indenture shall be computed in conformity with GAAP.
GPC means Graphic Packaging Corporation, a
Delaware corporation, and any successor in interest thereto.
Guarantee means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness or other obligation of any other Person;
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.
Guarantor Subordinated Obligations means,
with respect to a Note Guarantor, any Indebtedness of such Note
Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that is expressly subordinated in right of payment to
the obligations of such Note Guarantor under its Note Guarantee
pursuant to a written agreement.
Hedging Obligations of any Person means the
obligations of such Person pursuant to any Interest Rate
Agreement, Currency Agreement or Commodities Agreement.
Holder means the Person in whose name a Note
is registered in the Note Register.
S-62
Holding means Graphic Packaging Holding
Company, a Delaware corporation, and any successor in interest
thereto.
Holding Expenses means (i) costs
(including all professional fees and expenses) incurred by
Holding or GPC in connection with its reporting obligations
under, or in connection with compliance with, applicable laws or
applicable rules of any governmental, regulatory or
self-regulatory body or stock exchange, the Indenture or any
other agreement or instrument relating to Indebtedness of the
Company or any Restricted Subsidiary, including in respect of
any reports filed with respect to the Securities Act, Exchange
Act or the respective rules and regulations promulgated
thereunder, (ii) expenses incurred by GPC or Holding in
connection with the acquisition, development, maintenance,
ownership, prosecution, protection and defense of its
intellectual property and associated rights (including but not
limited to trademarks, service marks, trade names, trade dress,
patents, copyrights and similar rights, including registrations
and registration or renewal applications in respect thereof,
inventions, processes, designs, formulae, trade secrets,
know-how, confidential information, computer software, data and
documentation, and any other intellectual property rights; and
licenses of any of the foregoing) to the extent such
intellectual property and associated rights relate to the
business of the Company or any of its Subsidiaries,
(iii) indemnification obligations of Holding or GPC owing
to directors, officers, employees or other Persons under its
charter or by-laws or pursuant to written agreements with any
such Person, or obligations in respect of director and officer
insurance (including premiums therefor), (iv) other
operational expenses of Holding or GPC incurred in the ordinary
course of business, and (v) fees and expenses incurred by
Holding or GPC in connection with any offering of Capital Stock
or Indebtedness, (x) where the net proceeds of such
offering are intended to be received by or contributed or loaned
to the Company or a Restricted Subsidiary, or (y) in a
prorated amount of such expenses in proportion to the amount of
such net proceeds intended to be so received, contributed or
loaned, or (z) otherwise on an interim basis prior to
completion of such offering so long as Holding or GPC shall
cause the amount of such expenses to be repaid to the Company or
the relevant Restricted Subsidiary out of the proceeds of such
offering promptly if completed.
Incur means issue, assume, enter into any
Guarantee of, incur or otherwise become liable for; provided,
however, that any Indebtedness or Capital Stock of a Person
existing at the time such Person becomes a Subsidiary (whether
by merger, consolidation, acquisition or otherwise) shall be
deemed to be Incurred by such Subsidiary at the time it becomes
a Subsidiary. Accrual of interest, the accretion of accreted
value and the payment of interest in the form of additional
Indebtedness will not be deemed to be an Incurrence of
Indebtedness. Any Indebtedness issued at a discount (including
Indebtedness on which interest is payable through the issuance
of additional Indebtedness) shall be deemed Incurred at the time
of original issuance of the Indebtedness at the initial accreted
amount thereof.
Indebtedness means, with respect to any
Person on any date of determination (without duplication):
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(i)
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the principal of indebtedness of such Person for borrowed money,
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(ii)
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the principal of obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments,
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(iii)
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all reimbursement obligations of such Person in respect of
letters of credit or other similar instruments (the amount of
such obligations being equal at any time to the aggregate then
undrawn and unexpired amount of such letters of credit or other
instruments plus the aggregate amount of drawings thereunder
that have not then been reimbursed),
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(iv)
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all obligations of such Person to pay the deferred and unpaid
purchase price of property (except Trade Payables), which
purchase price is due more than one year after the date of
placing such property in final service or taking final delivery
and title thereto,
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(v)
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all Capitalized Lease Obligations of such Person,
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S-63
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(vi)
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the redemption, repayment or other repurchase amount of such
Person with respect to any Disqualified Stock of such Person or
(if such Person is a Subsidiary of the Company other than a Note
Guarantor) any Preferred Stock of such Subsidiary, but
excluding, in each case, any accrued dividends (the amount of
such obligation to be equal at any time to the maximum fixed
involuntary redemption, repayment or repurchase price for such
Capital Stock, or if less (or if such Capital Stock has no such
fixed price), to the involuntary redemption, repayment or
repurchase price therefor calculated in accordance with the
terms thereof as if then redeemed, repaid or repurchased, and if
such price is based upon or measured by the fair market value of
such Capital Stock, such fair market value shall be as
determined in good faith by the Board of Directors or the board
of directors or other governing body of the issuer of such
Capital Stock),
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(vii)
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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 Indebtedness of
such Person shall be the lesser of (A) the fair market
value of such asset at such date of determination (as determined
in good faith by the Company) and (B) the amount of such
Indebtedness of such other Persons,
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(viii)
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all Guarantees by such Person of Indebtedness of other Persons,
to the extent so Guaranteed by such Person, and
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(ix)
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to the extent not otherwise included in this definition, net
Hedging Obligations of such Person (the amount of any such
obligation to be equal at any time to the termination value of
such agreement or arrangement giving rise to such Hedging
Obligation that would be payable by such Person at such time).
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The amount of Indebtedness of any Person at any date shall be
determined as set forth above or otherwise provided in the
Indenture, or otherwise shall equal the amount thereof that
would appear on a balance sheet of such Person (excluding any
notes thereto) prepared in accordance with GAAP.
Interest Rate Agreement means, with respect
to any Person, any interest rate protection agreement, future
agreement, option agreement, swap agreement, cap agreement,
collar agreement, hedge agreement or other similar agreement or
arrangement (including derivative agreements or arrangements),
as to which such Person is party or a beneficiary.
Inventory means goods held for sale or lease
by a Person in the ordinary course of business, net of any
reserve for goods that have been segregated by such Person to be
returned to the applicable vendor for credit, as determined in
accordance with GAAP.
Investment in any Person by any other Person
means any direct or indirect advance, loan or other extension of
credit (other than to customers, suppliers, directors, officers
or employees of any Person in the ordinary course of business)
or capital contribution (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) to, or any purchase or
acquisition of Capital Stock, Indebtedness or other similar
instruments issued by, such Person. For purposes of the
definition of Unrestricted Subsidiary and the
covenant described under Certain
CovenantsLimitation on Restricted Payments only,
(i) Investment shall include the portion
(proportionate to the Companys equity interest in such
Subsidiary) of the fair market value of the net assets of any
Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary, provided that upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the
Company shall be deemed to continue to have a permanent
Investment in an Unrestricted Subsidiary in an
amount (if positive) equal to (x) the Companys
Investment in such Subsidiary at the time of such
redesignation less (y) the portion (proportionate to the
Companys equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time of
such redesignation, (ii) any property transferred to or
from an Unrestricted Subsidiary shall be
S-64
valued at its fair market value at the time of such transfer,
and (iii) in each case under clause (i) or
(ii) above, fair market value shall be as determined in
good faith by the Board of Directors. Guarantees shall not be
deemed to be Investments. The amount of any Investment
outstanding at any time shall be the original cost of such
Investment, reduced (at the Companys option) by any
dividend, distribution, interest payment, return of capital,
repayment or other amount or value received in respect of such
Investment; provided that to the extent that the amount
of Restricted Payments outstanding at any time is so reduced by
any portion of any such amount or value that would otherwise be
included in the calculation of Consolidated Net Income, such
portion of such amount or value shall not be so included for
purposes of calculating the amount of Restricted Payments that
may be made pursuant to paragraph (a) of the covenant
described under Certain CovenantsLimitation on
Restricted Payments.
Investors means CDR Fund V, EXOR Group
S.A., Field Holdings, Inc., the Coors Stockholders, the TPG
Entities and any of their respective successors in interest.
Issue Date means September 29, 2010.
Lien means any mortgage, pledge, security
interest, encumbrance, lien or charge of any kind (including any
conditional sale or other title retention agreement or lease in
the nature thereof).
Management Advances means (1) loans or
advances made to directors, officers or employees of GPC, the
Company or any Restricted Subsidiary (x) in respect of
travel, entertainment or moving-related expenses incurred in the
ordinary course of business, (y) in respect of
moving-related expenses incurred in connection with any closing
or consolidation of any facility, or (z) in the ordinary
course of business and (in the case of this clause (z)) not
exceeding $5.0 million in the aggregate outstanding at any
time, (2) promissory notes of Management Investors acquired
in connection with the issuance of Management Stock to such
Management Investors, (3) Management Guarantees, or
(4) other Guarantees of borrowings by Management Investors
in connection with the purchase of Management Stock, which
Guarantees are permitted under the covenant described under
Certain CovenantsLimitation on
Indebtedness.
Management Guarantees means guarantees
(x) of up to an aggregate principal amount of
$10.0 million of borrowings by Management Investors in
connection with their purchase of Management Stock or
(y) made on behalf of, or in respect of loans or advances
made to, directors, officers or employees of GPC, Holding, the
Company or any Restricted Subsidiary (1) in respect of
travel, entertainment and moving-related expenses incurred in
the ordinary course of business, or (2) in the ordinary
course of business and (in the case of this clause (2)) not
exceeding $5.0 million in the aggregate outstanding at any
time.
Management Investors means the officers,
directors, employees and other members of the management of
Holding, GPC, the Company or any of their respective
Subsidiaries, or family members or relatives thereof, or trusts
or partnerships for the benefit of any of the foregoing, or any
of their heirs, executors, successors and legal representatives,
who at any date beneficially own or have the right to acquire,
directly or indirectly, Capital Stock of the Company, Holding or
GPC.
Management Stock means Capital Stock of the
Company or GPC (including any options, warrants or other rights
in respect thereof) held by any of the Management Investors.
Moodys means Moodys Investors
Service, Inc., and its successors.
Net Available Cash from an Asset Disposition
means cash payments received (including any cash payments
received by way of deferred payment of principal pursuant to a
note or installment receivable or otherwise, but only as and
when received, but excluding any other consideration received in
the form of assumption by the acquiring person of Indebtedness
or other obligations relating to the properties or assets that
are the subject of such Asset Disposition or received in any
other non-cash form) therefrom, in each case net
S-65
of (i) all legal, title and recording tax expenses,
commissions and other fees and expenses incurred, and all
Federal, state, provincial, foreign and local taxes required to
be paid or accrued as a liability under GAAP, as a consequence
of such Asset Disposition (including as a consequence of any
transfer of funds in connection with the application thereof in
accordance with the covenant described under Certain
CovenantsLimitation on Sales of Assets and Subsidiary
Stock), (ii) all payments made, and all installment
payments required to be made, on any Indebtedness that is
secured by any assets subject to such Asset Disposition, in
accordance with the terms of any Lien upon such assets, or that
must by its terms, or in order to obtain a necessary consent to
such Asset Disposition, or by applicable law, be repaid out of
the proceeds from such Asset Disposition, (iii) all
distributions and other payments required to be made to minority
interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition, or to any other Person (other than
the Company or a Restricted Subsidiary) owning a beneficial
interest in the assets disposed of in such Asset Disposition and
(iv) any liabilities or obligations associated with the
assets disposed of in such Asset Disposition and retained by the
Company or any Restricted Subsidiary after such Asset
Disposition, including without limitation pension and other
post-employment benefit liabilities, liabilities related to
environmental matters, and liabilities relating to any
indemnification obligations associated with such Asset
Disposition.
Net Cash Proceeds, with respect to any
issuance or sale of any securities of the Company or any
Subsidiary by the Company or any Subsidiary, or any capital
contribution, means the cash proceeds of such issuance, sale or
contribution net of attorneys fees, accountants
fees, underwriters or placement agents fees,
discounts or commissions and brokerage, consultant and other
fees actually incurred in connection with such issuance, sale or
contribution and net of taxes paid or payable as a result
thereof.
Notes means the promissory notes issued
pursuant to the Indenture.
Note Guarantee means a Parent Guarantee or a
Subsidiary Guarantee.
Note Guarantor means a Parent Guarantor or a
Subsidiary Guarantor.
Officer means, with respect to the Company or
any other obligor upon the Notes, the Chairman of the Board, the
President, the Chief Executive Officer, the Chief Financial
Officer, any Vice President, the Controller, the Treasurer or
the Secretary (a) of such Person or (b) if such Person
is owned or managed by a single entity, of such entity (or any
other individual designated as an Officer for the
purposes of the Indenture by the Board of Directors).
Officers Certificate means, with
respect to the Company or any other obligor upon the Notes, a
certificate signed by one Officer of such Person.
Opinion of Counsel means a written opinion
from legal counsel who is reasonably acceptable to the Trustee.
The counsel may be an employee of or counsel to the Company or
the Trustee.
Permitted Holder means any of the following:
(i) any of the Investors, Management Investors, CDR, the
TPG Entities and their respective Affiliates; (ii) any
investment fund or vehicle managed, sponsored or advised by CDR,
TPG or any Investor or Affiliate thereof, and any Affiliate of
or successor to any such investment fund or vehicle; and
(iii) any Person acting in the capacity of an underwriter
in connection with a public or private offering of Capital Stock
of Holding or the Company.
Permitted Investment means an Investment by
the Company or any Restricted Subsidiary in, or consisting of,
any of the following:
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(i)
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a Restricted Subsidiary, the Company, or a Person that will,
upon the making of such Investment, become a Restricted
Subsidiary;
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(ii)
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another Person if as a result of such Investment such other
Person is merged or consolidated with or into, or transfers or
conveys all or substantially all its assets to, or is liquidated
into, the Company or a Restricted Subsidiary;
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(iii)
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Temporary Cash Investments or Cash Equivalents;
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(iv)
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receivables owing to the Company or any Restricted Subsidiary,
if created or acquired in the ordinary course of business;
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(v)
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any securities or other Investments received as consideration
in, or retained in connection with, sales or other dispositions
of property or assets, including Asset Dispositions made in
compliance with the covenant described under Certain
CovenantsLimitation on Sales of Assets and Subsidiary
Stock;
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(vi)
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securities or other Investments received in settlement of debts
created in the ordinary course of business and owing to the
Company or any Restricted Subsidiary, or as a result of
foreclosure, perfection or enforcement of any Lien, or in
satisfaction of judgments, including in connection with any
bankruptcy proceeding or other reorganization of another Person;
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(vii)
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Investments in existence or made pursuant to legally binding
written commitments in existence on the Issue Date;
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(viii)
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Currency Agreements, Interest Rate Agreements, Commodities
Agreements and related Hedging Obligations, which obligations
are Incurred in compliance with the covenant described under
Certain CovenantsLimitation on
Indebtedness;
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(ix)
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pledges or deposits (x) with respect to leases or utilities
provided to third parties in the ordinary course of business or
(y) otherwise described in the definition of
Permitted Liens or made in connection with Liens
permitted under the covenant described under Certain
CovenantsLimitation on Liens;
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(x)
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(1) Investments in any Receivables Subsidiary, or in
connection with a Financing Disposition by or to any Receivables
Entity, including Investments of funds held in accounts
permitted or required by the arrangements governing such
Financing Disposition or any related Indebtedness, or
(2) any promissory note issued by the Company, GPC or
Holding, provided that if Holding or GPC receives cash from the
relevant Receivables Entity in exchange for such note, an equal
cash amount is contributed by Holding or GPC to the Company;
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(xi)
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bonds secured by assets leased to and operated by the Company or
any Restricted Subsidiary that were issued in connection with
the financing of such assets so long as the Company or any
Restricted Subsidiary may obtain title to such assets at any
time by paying a nominal fee, canceling such bonds and
terminating the transaction;
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(xiii)
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any Investment to the extent made using Capital Stock of the
Company (other than Disqualified Stock), or Capital Stock of
Holding or GPC, as consideration;
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(xiv)
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Management Advances;
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S-67
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(xv)
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joint ventures in an aggregate amount outstanding at any time
not to exceed $150.0 million; and
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(xvi)
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other Investments in an aggregate amount outstanding at any time
not to exceed 10% of Consolidated Tangible Assets.
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Permitted Liens means:
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(i)
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Liens for taxes, assessments or other governmental charges not
yet delinquent or the nonpayment of which in the aggregate would
not reasonably be expected to have a material adverse effect on
the Company and its Restricted Subsidiaries or that are being
contested in good faith and by appropriate proceedings if
adequate reserves with respect thereto are maintained on the
books of the Company or a Subsidiary thereof, as the case may
be, in accordance with GAAP;
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(ii)
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carriers, warehousemens, mechanics,
landlords, materialmens, repairmens or other
like Liens arising in the ordinary course of business in respect
of obligations that are not overdue for a period of more than
60 days or that are bonded or that are being contested in
good faith and by appropriate proceedings;
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(iii)
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pledges, deposits or Liens in connection with workers
compensation, unemployment insurance and other social security
and other similar legislation or other insurance-related
obligations (including, without limitation, pledges or deposits
securing liability to insurance carriers under insurance or
self-insurance arrangements);
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(iv)
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pledges, deposits or Liens to secure the performance of bids,
tenders, trade, government or other contracts (other than for
borrowed money), obligations for utilities, leases, licenses,
statutory obligations, completion guarantees, surety, judgment,
appeal or performance bonds, other similar bonds, instruments or
obligations, and other obligations of a like nature incurred in
the ordinary course of business;
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(v)
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easements (including reciprocal easement agreements),
rights-of-way,
building, zoning and similar restrictions, utility agreements,
covenants, reservations, restrictions, encroachments, charges,
and other similar encumbrances or title defects incurred, or
leases or subleases granted to others, in the ordinary course of
business, which do not in the aggregate materially interfere
with the ordinary conduct of the business of the Company and its
Subsidiaries, taken as a whole;
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(vi)
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Liens existing on, or provided for under written arrangements
existing on, the Issue Date, or (in the case of any such Liens
securing Indebtedness of the Company or any of its Subsidiaries
existing or arising under written arrangements existing on the
Issue Date) securing any Refinancing Indebtedness in respect of
such Indebtedness so long as the Lien securing such Refinancing
Indebtedness is limited to all or part of the same property or
assets (plus improvements, accessions, proceeds or dividends or
distributions in respect thereof) that secured (or under such
written arrangements could secure) the original Indebtedness;
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(vii)
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(a) mortgages, liens, security interests, restrictions,
encumbrances or any other matters of record that have been
placed by any developer, landlord or other third party on
property over which the Company or any Restricted Subsidiary of
the Company has easement rights or on any leased property and
subordination or similar agreements relating thereto and
(b) any condemnation or eminent domain proceedings
affecting any real property;
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S-68
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(viii)
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Liens securing Hedging Obligations, Purchase Money Obligations
or Capitalized Lease Obligations Incurred in compliance with the
covenant described under Certain Covenants Limitation on
Indebtedness;
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(ix)
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Liens arising out of judgments, decrees, orders or awards in
respect of which the Company shall in good faith be prosecuting
an appeal or proceedings for review, which appeal or proceedings
shall not have been finally terminated, or if the period within
which such appeal or proceedings may be initiated shall not have
expired;
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(x)
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Leases, subleases, licenses or sublicenses to third parties;
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(xi)
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Liens securing (1) Indebtedness Incurred in compliance with
clause (b)(i), (b)(iv), (b)(vii), (b)(viii)(E), (b)(x) or
(b)(xi) of the covenant described under Certain Covenants
Limitation on Indebtedness, or clause (b)(iii) thereof
(other than Refinancing Indebtedness Incurred in respect of
Indebtedness described in paragraph (a) thereof),
(2) Bank Indebtedness, (3) the Existing Notes (but
only to the extent to the Notes are secured equally and ratably
with the Existing Notes) and the Notes, (4) Indebtedness of
any Restricted Subsidiary that is not a Note Guarantor,
(5) Indebtedness or other obligations of any Receivables
Entity or (6) obligations in respect of Management Advances
or Management Guarantees;
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(xii)
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Liens existing on property or assets of a Person at the time
such Person becomes a Subsidiary of the Company (or at the time
the Company or a Restricted Subsidiary acquires such property or
assets, including any acquisition by means of a merger or
consolidation with or into the Company or any Restricted
Subsidiary); provided, however, that such Liens are not
created in connection with, or in contemplation of, such other
Person becoming such a Subsidiary (or such acquisition of such
property or assets), and that such Liens are limited to all or
part of the same property or assets (plus improvements,
accessions, proceeds or dividends or distributions in respect
thereof) that secured (or, under the written arrangements under
which such Liens arose, could secure) the obligations to which
such Liens relate;
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(xiii)
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Liens on Capital Stock or other securities of an Unrestricted
Subsidiary that secure Indebtedness or other obligations of such
Unrestricted Subsidiary;
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(xiv)
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any encumbrance or restriction (including, but not limited to,
put and call agreements) with respect to Capital Stock of any
joint venture or similar arrangement pursuant to any joint
venture or similar agreement;
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(xv)
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Liens securing Refinancing Indebtedness Incurred in respect of
any Indebtedness secured by, or securing any refinancing,
refunding, extension, renewal or replacement (in whole or in
part) of any other obligation secured by, any other Permitted
Liens, provided that any such new Lien is limited to all or part
of the same property or assets (plus improvements, accessions,
proceeds or dividends or distributions in respect thereof) that
secured (or, under the written arrangements under which the
original Lien arose, could secure) the obligations to which such
Liens relate; and
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(xvi)
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Liens (a) arising by operation of law (or by agreement to
the same effect) in the ordinary course of business, (b) on
property or assets under construction (and related rights) in
favor of a contractor or developer or arising from progress or
partial payments by a third party relating to such property or
assets, (c) on receivables (including related rights),
(d) on cash set aside at the time of the incurrence of any
Indebtedness or government securities purchased with such cash,
in either case to the
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S-69
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extent that such cash or government securities prefund the
payment of interest on such Indebtedness and are held in an
escrow account or similar arrangement to be applied for such
purpose, (e) securing or arising by reason of any netting
or set-off arrangement entered into in the ordinary course of
banking or other trading activities, (f) in favor of the
Company or any Subsidiary (other than Liens on property or
assets of the Company in favor of any Subsidiary that is not a
Note Guarantor) or (g) arising out of conditional sale,
title retention, consignment or similar arrangements for the
sale of goods entered into in the ordinary course of business.
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Person means any individual, corporation,
partnership, joint venture, association, joint-stock company,
limited liability company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any
other entity.
Preferred Stock as applied to the Capital
Stock of any corporation means Capital Stock of any class or
classes (however designated) that by its terms is preferred as
to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of
such corporation, over shares of Capital Stock of any other
class of such corporation.
Purchase Money Obligations means any
Indebtedness Incurred to finance or refinance the acquisition,
leasing, construction or improvement of property (real or
personal) or assets, and whether acquired through the direct
acquisition of such property or assets or the acquisition of the
Capital Stock of any Person owning such property or assets, or
otherwise.
Receivable means a right to receive payment
arising from a sale or lease of goods or services by a Person
pursuant to an arrangement with another Person pursuant to which
such other Person is obligated to pay for goods or services
under terms that permit the purchase of such goods and services
on credit, as determined in accordance with GAAP.
Receivables Entity means (x) any
Receivables Subsidiary or (y) any other Person that is
engaged in the business of acquiring, selling, collecting,
financing or refinancing Receivables, accounts (as defined in
the Uniform Commercial Code as in effect in any jurisdiction
from time to time), other accounts
and/or other
receivables,
and/or
related assets.
Receivables Fees means distributions or
payments made directly or by means of discounts with respect to
any participation interest issued or sold in connection with,
and other fees paid to a Person that is not a Restricted
Subsidiary in connection with, any Receivables Financing.
Receivables Financing means any financing of
Receivables of the Company or any Restricted Subsidiary that
have been transferred to a Receivables Entity in a Financing
Disposition.
Receivables Subsidiary means a Subsidiary of
the Company that (a) is engaged solely in the business of
acquiring, selling, collecting, financing or refinancing
Receivables, accounts (as defined in the Uniform Commercial Code
as in effect in any jurisdiction from time to time) and other
accounts and receivables (including any thereof constituting or
evidenced by chattel paper, instruments or general intangibles),
all proceeds thereof and all rights (contractual and other),
collateral and other assets relating thereto, and any business
or activities incidental or related to such business, and
(b) is designated as a Receivables Subsidiary
by the Board of Directors.
Refinance means refinance, refund, replace,
renew, repay, modify, restate, defer, substitute, supplement,
reissue, resell or extend (including pursuant to any defeasance
or discharge mechanism); and the terms refinances,
refinanced and refinancing as used for
any purpose in the Indenture shall have a correlative meaning.
S-70
Refinancing Indebtedness means Indebtedness
that is Incurred to refinance any Indebtedness existing on the
date of the Indenture or Incurred in compliance with the
Indenture (including Indebtedness of the Company that refinances
Indebtedness of any Restricted Subsidiary (to the extent
permitted in the Indenture) and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing
Indebtedness; provided, that (1) if the Indebtedness
being refinanced is Subordinated Obligations or Guarantor
Subordinated Obligations, the Refinancing Indebtedness has a
final Stated Maturity at the time such Refinancing Indebtedness
is Incurred that is equal to or greater than the final Stated
Maturity of the Indebtedness being refinanced (or if shorter,
the Notes), (2) such Refinancing Indebtedness is Incurred
in an aggregate principal amount (or if issued with original
issue discount, an aggregate issue price) that is equal to or
less than the sum of (x) the aggregate principal amount (or
if issued with original issue discount, the aggregate accreted
value) then outstanding of the Indebtedness being refinanced,
plus (y) fees, underwriting discounts, premiums and other
costs and expenses incurred in connection with such Refinancing
Indebtedness and (3) Refinancing Indebtedness shall not
include (x) Indebtedness of a Restricted Subsidiary that is
not a Note Guarantor that refinances Indebtedness of the Company
that could not have been initially Incurred by such Restricted
Subsidiary pursuant to the covenant described under
Certain CovenantsLimitation on
Indebtedness or (y) Indebtedness of the Company or a
Restricted Subsidiary that refinances Indebtedness of an
Unrestricted Subsidiary.
Related Business means those businesses in
which the Company or any of its Subsidiaries is engaged on the
date of the Indenture, or that are related, complementary,
incidental or ancillary thereto or extensions, developments or
expansions thereof.
Related Taxes means (x) any taxes,
charges or assessments, including but not limited to sales, use,
transfer, rental, ad valorem, value-added, stamp, property,
consumption, franchise, license, capital, net worth, gross
receipts, excise, occupancy, intangibles or similar taxes,
charges or assessments (other than (i) federal, state,
local, foreign or provincial taxes measured by income and
(ii) federal, state, local, foreign or provincial
withholding imposed on payments made by or to Holding or GPC),
required to be paid by Holding or GPC by virtue of its being
incorporated or having Capital Stock outstanding (but not by
virtue of owning stock or other equity interests of any
corporation or other entity other than the Company or any of its
Subsidiaries), or being a holding company parent of the Company
or receiving dividends from or other distributions in respect of
the Capital Stock of the Company or any of its Subsidiaries, or
having guaranteed any obligations of the Company or any
Subsidiary thereof, or having made any payment in respect of any
of the items for which the Company or any of its Subsidiaries is
permitted to make payments to Holding or GPC pursuant to the
covenant described under Certain
CovenantsLimitation on Restricted Payments, or
acquiring, developing, maintaining, owning, prosecuting,
protecting or defending its intellectual property and associated
rights (including but not limited to receiving or paying
royalties for the use thereof) relating to the business or
businesses of the Company or any Subsidiary thereof, or
(y) any consolidated, combined or similar federal, state,
foreign, provincial or local taxes measured by income for which
Holding or GPC is liable up to an amount not to exceed, with
respect to any such tax, the amount of any such tax that the
Company and its Subsidiaries would have been required to pay on
a separate company basis, or on a consolidated basis as if the
Company had filed a consolidated, combined or similar return on
behalf of an affiliated group (as defined in Section 1504
of the Code or an analogous provision of state, local, foreign
or provincial law) of which it were the common parent; provided
that this definition of Related Taxes shall not
include any taxes, charges or assessments that are directly paid
to the appropriate taxing authority by the Company or any of its
Subsidiaries.
Restricted Payment Transaction means any
Restricted Payment permitted pursuant to the covenant described
under Certain CovenantsLimitation on
Restricted Payments, any Permitted Payment, any Permitted
Investment, or any transaction specifically excluded from the
definition of the term Restricted Payment.
Restricted Subsidiary means any Subsidiary of
the Company other than an Unrestricted Subsidiary.
S-71
SEC means the United States Securities and
Exchange Commission.
Senior Credit Agreement means the Credit
Agreement, dated as of May 16, 2007, among the Company, the
guarantors party thereto, the banks and other financial
institutions party thereto as lenders from time to time, Bank of
America, N.A., as administrative agent, and the other parties
thereto, as such agreement may be amended, supplemented, waived
or otherwise modified from time to time or refunded, refinanced,
restructured, replaced, renewed, repaid, increased or extended
from time to time (whether in whole or in part, whether with the
original administrative agent and lenders or other agents and
lenders or otherwise, and whether provided under the original
Senior Credit Agreement or other credit agreements or otherwise).
Senior Credit Facility means the collective
reference to the Senior Credit Agreement, any Loan Documents (as
defined therein), any notes and letters of credit issued
pursuant thereto and any guarantee and collateral agreement,
patent and trademark security agreement, mortgages, letter of
credit applications and other guarantees, pledge agreements,
security agreements and collateral documents, and other
instruments and documents, executed and delivered pursuant to or
in connection with any of the foregoing, in each case as the
same may be amended, supplemented, waived or otherwise modified
from time to time, or refunded, refinanced, restructured,
replaced, renewed, repaid, increased or extended from time to
time (whether in whole or in part, whether with the original
agent and lenders or other agents and lenders or otherwise, and
whether provided under the original Senior Credit Agreement or
one or more other credit agreements, indentures (including the
Indenture) or financing agreements or otherwise). Without
limiting the generality of the foregoing, the term Senior
Credit Facility shall include any agreement
(i) changing the maturity of any Indebtedness Incurred
thereunder or contemplated thereby, (ii) adding
Subsidiaries of the Company as additional borrowers or
guarantors thereunder, (iii) increasing the amount of
Indebtedness Incurred thereunder or available to be borrowed
thereunder or (iv) otherwise altering the terms and
conditions thereof.
Senior Indebtedness means any Indebtedness of
the Company or any Restricted Subsidiary other than, in the case
of the Company, Subordinated Obligations and, in the case of any
Note Guarantor, Guarantor Subordinated Obligations.
Significant Domestic Subsidiary means any
Domestic Subsidiary that is a Significant Subsidiary.
Significant Subsidiary means any Restricted
Subsidiary that would be a significant subsidiary of
the Company within the meaning of
Rule 1-02
under
Regulation S-X
promulgated by the SEC, as in effect on the Issue Date.
S&P means Standard &
Poors Ratings Group, a division of The McGraw-Hill
Companies, Inc., and its successors.
Stated Maturity means, with respect to any
security, the date specified in such security as the fixed date
on which the payment of principal of such security is due and
payable, including pursuant to any mandatory redemption
provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof
upon the happening of any contingency).
Subordinated Obligations means any
Indebtedness of the Company (whether outstanding on the date of
the Indenture or thereafter Incurred) that is expressly
subordinated in right of payment to the Notes pursuant to a
written agreement.
Subsidiary of any Person means any
corporation, association, partnership or other business entity
of which more than 50% of the total voting power of shares of
Capital Stock or other equity interests (including partnership
interests) entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or
trustees thereof is at the time owned or controlled, directly or
indirectly, by (i) such Person or (ii) one or more
Subsidiaries of such Person.
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Subsidiary Guarantee means any guarantee that
may from time to time be entered into by a Restricted Subsidiary
of the Company pursuant to the covenant described under
Certain Covenants Future Note Guarantors.
Subsidiary Guarantor means any Restricted
Subsidiary of the Company that enters into a Subsidiary
Guarantee.
Successor Company shall have the meaning
assigned thereto in clause (i) under Merger and
Consolidation.
Temporary Cash Investments means any of the
following: (i) any investment in (x) direct
obligations of the United States of America or any agency or
instrumentality thereof or obligations Guaranteed by the United
States of America or any agency or instrumentality thereof or
(y) direct obligations of any foreign country recognized by
the United States of America rated at least A by
S&P or
A-1
by Moodys (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or
Moodys then exists, the equivalent of such rating by any
nationally recognized rating organization), (ii) overnight
bank deposits, and investments in time deposit accounts,
certificates of deposit, bankers acceptances and money
market deposits (or, with respect to foreign banks, similar
instruments) maturing not more than one year after the date of
acquisition thereof issued by (x) any lender under the
Senior Credit Agreement or (y) a bank or trust company that
is organized under the laws of the United States of America, any
state thereof or any foreign country recognized by the United
States of America having capital and surplus aggregating in
excess of $250 million (or the foreign currency equivalent
thereof) and whose long term debt is rated at least
A by S&P or
A-1
by Moodys (or, in either case, the equivalent of such
rating by such organization or, if no rating of S&P or
Moodys then exists, the equivalent of such rating by any
nationally recognized rating organization) at the time such
Investment is made, (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of
the types described in clause (i) or (ii) above
entered into with a bank meeting the qualifications described in
clause (ii) above, (iv) Investments in commercial
paper, maturing not more than 270 days after the date of
acquisition, issued by a Person (other than of the Company or
any of its Subsidiaries), with a rating at the time as of which
any Investment therein is made of
P-2
(or higher) according to Moodys or
A-2
(or higher) according to S&P (or, in either case, the
equivalent of such rating by such organization or, if no rating
of S&P or Moodys then exists, the equivalent of such
rating by any nationally recognized rating organization),
(v) Investments in securities maturing not more than one
year after the date of acquisition issued or fully guaranteed by
any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority
thereof, and rated at least A by S&P or
A by Moodys (or, in either case, the
equivalent of such rating by such organization or, if no rating
of S&P or Moodys then exists, the equivalent of such
rating by any nationally recognized rating organization),
(vi) Preferred Stock (other than of the Company or any of
its Subsidiaries) having a rating of A or higher by
S&P or A2 or higher by Moodys (or, in
either case, the equivalent of such rating by such organization
or, if no rating of S&P or Moodys then exists, the
equivalent of such rating by any nationally recognized rating
organization), (vii) investment funds investing 95% of
their assets in securities of the type described in clauses
(i)-(vi) above (which funds may also hold reasonable amounts of
cash pending investment
and/or
distribution), (viii) any money market deposit accounts
issued or offered by a domestic commercial bank or a commercial
bank organized and located in a country recognized by the United
States of America, in each case, having capital and surplus in
excess of $250 million (or the foreign currency equivalent
thereof), or investments in money market funds complying with
the risk limiting conditions of
Rule 2a-7
(or any successor rule) of the SEC under the Investment Company
Act of 1940, as amended, and (ix) similar investments
approved by the Board of Directors in the ordinary course of
business.
TIA means the Trust Indenture Act of
1939 (15 U.S.C.
§§ 77aaa-7bbbb)
as in effect on the date of the Indenture.
TPG means TPG Capital, LP.
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TPG Entities means TPG Bluegrass IV AIV
1, LP, TPG Bluegrass IV AIV 2, LP, TPG FOF V-A, LP, TPG FOF
V-B, LP, TPG Bluegrass V AIV 1, LP, and TPG Bluegrass V AIV 2,
LP.
Trade Payables means, with respect to any
Person, any accounts payable or any indebtedness or monetary
obligation to trade creditors created, assumed or guaranteed by
such Person arising in the ordinary course of business in
connection with the acquisition of goods or services.
Transactions means, collectively, any or all
of the following:
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(a)
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the entry into the Indenture, the offer and issuance of the
Notes, and the provision of the Parent Guarantees by the Parent
Guarantors and the Subsidiary Guarantees by the Subsidiary
Guarantors;
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(b)
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the consummation of any tender offer for, or redemption
and/or other
acquisition or retirement of, the Companys existing
9.50% senior subordinated notes due 2013; and
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(c)
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all other transactions relating to any of the foregoing
(including payment of fees and expenses related to any of the
foregoing).
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Trustee means the party named as such in the
Indenture until a successor replaces it and, thereafter, means
the successor.
Trust Officer means the Chairman of the
Board, the President or any other officer or assistant officer
of the Trustee assigned by the Trustee to administer its
corporate trust matters.
Unrestricted Subsidiary means (i) any
Subsidiary of the Company that at the time of determination is
an Unrestricted Subsidiary, as designated 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 the Company (including any newly
acquired or newly formed Subsidiary of the Company) to be an
Unrestricted Subsidiary unless such Subsidiary or any of its
Subsidiaries owns any Capital Stock or Indebtedness of, or owns
or holds any Lien on any property of, the Company or any other
Restricted Subsidiary of the Company that is not a Subsidiary of
the Subsidiary to be so designated; provided, that
(A) such designation was made at or prior to the Issue
Date, or (B) the Subsidiary to be so designated has total
consolidated assets of $1,000 or less or (C) if such
Subsidiary has consolidated assets greater than $1,000, then
such designation would be permitted under the covenant described
under Certain CovenantsLimitation on
Restricted Payments. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary;
provided, that immediately after giving effect to such
designation either the Company could incur at least $1.00 of
additional Indebtedness under paragraph (a) in the covenant
described under Certain CovenantsLimitation on
Indebtedness or (y) the Consolidated Coverage Ratio
would be greater than it was immediately prior to giving effect
to such designation. Any such designation by the Board of
Directors shall be evidenced to the Trustee by promptly filing
with the Trustee a copy of the resolution of the Companys
Board of Directors giving effect to such designation and an
Officers Certificate of the Company certifying that such
designation complied with the foregoing provisions.
U.S. Government Obligation means
(x) any security that is (i) a direct obligation of
the United States of America for the payment of which the full
faith and credit of the United States of America is pledged or
(ii) an obligation 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 under the preceding
clause (i) or (ii), is not callable or redeemable at the
option of the issuer thereof, and any depositary receipt issued
by a bank (as defined in Section 3(a)(2) of the Securities
Act) as custodian with respect to any U.S. Government
Obligation that is specified in clause (x) above and held
by such bank for the account of the holder of such depositary
receipt, or with respect to any specific payment of principal of
or interest on any U.S. Government Obligation
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that is so specified and held, 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 depositary receipt
from any amount received by the custodian in respect of the
U.S. Government Obligation or the specific payment of
principal or interest evidenced by such depositary receipt.
Voting Stock of an entity means all classes
of Capital Stock of such entity then outstanding and normally
entitled to vote in the election of directors or all interests
in such entity with the ability to control the management or
actions of such entity.
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CERTAIN
U.S. FEDERAL TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income
tax consequences and, in the case of a
Non-U.S. Holder
(as defined below), certain estate tax consequences to a holder
with respect to the purchase, ownership and disposition of the
notes, but does not purport to be a complete analysis of all the
potential U.S. federal income and estate tax consequences
of such purchase, ownership and disposition. This summary deals
only with holders who will hold the notes as capital assets for
U.S. federal income tax purposes and, who acquire the notes
in this offering at the public offering price. This summary does
not address the U.S. federal income or estate tax
consequences to any particular holder of notes and does not deal
with persons who may be subject to special treatment under
U.S. federal income tax laws, such as financial
institutions, insurance companies, regulated investment
companies, real estate investment trusts, partnerships or other
pass-through entities for U.S. federal income tax purposes
or investors in such entities, controlled foreign corporations,
passive foreign investment companies, former residents or
citizens of the United States, tax-exempt organizations,
individual retirement and other tax-deferred accounts, dealers
in securities or currencies, holders that hold the notes as a
position in a hedge, straddle, constructive sale transaction,
conversion transaction, synthetic security or other
integrated transaction for U.S. federal income tax purposes
and U.S. Holders (defined below) whose functional currency
is not the U.S. dollar. Further, this summary does not
discuss any alternative minimum tax consequences, any
consequences resulting from the newly enacted Medicare tax on
investment income, U.S. federal gift tax laws or the tax
laws of any state, local or foreign government that may be
applicable to the notes.
As used in this prospectus supplement, the term U.S. Holder
means a beneficial owner of the notes that is, for
U.S. federal income tax purposes:
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an individual who is a citizen or resident of the United States;
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a corporation, or other entity treated as a corporation for
U.S. federal income tax purposes, created or organized in
or under the laws of the United States, any state thereof or the
District of Columbia;
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an estate, the income of which is subject to U.S. federal
income taxation regardless of its source; or
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a trust, if (1) a court within the United States is able to
exercise primary supervision over the administration of the
trust and one or more U.S. persons have the authority to
control all substantial decisions of the trust, or (2) it
has a valid election in effect under applicable United States
Treasury Regulations to be treated as a United States person.
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Except as modified for estate tax purposes, a
Non-U.S. Holder
is a beneficial owner of notes that is, for U.S. federal
income tax purposes, an individual, corporation, estate or trust
and is not a U.S. Holder.
If any entity treated as a partnership for U.S. federal
income tax purposes is a beneficial owner of notes, the
treatment of a partner in the partnership will generally depend
upon the status of the partner and upon the activities of the
partnership. A holder of notes that is a partnership and
partners in such partnership should consult their tax advisors.
This summary is based on the Internal Revenue Code of 1986, as
amended (the Code), Treasury Regulations promulgated
thereunder, and judicial and administrative interpretations
thereof, all as in effect on the date hereof and all of which
are subject to change, which change may be retroactive and may
affect the tax consequences described herein. We have not and
will not seek any rulings from the Internal Revenue Service
(IRS) regarding the matters discussed below. There
can be no assurance that the IRS will not take positions
concerning the tax consequences of the purchase, ownership or
disposition of the notes that are different from those discussed
below.
S-76
We urge prospective investors to consult their tax advisors with
respect to the U.S. federal income and estate tax
consequences to them of the purchase, ownership and disposition
of notes in light of their own particular circumstances,
including the tax consequences under state, local, foreign and
other tax laws and the possible effects of changes in
U.S. federal income, estate and other tax laws.
U.S.
Holders
Payment
of Stated Interest
The stated interest that is payable on the notes will be
qualified stated interest (i.e., stated interest
that is payable in cash at a single fixed rate at least annually
over the entire term of the note) and a U.S. Holder of a
note is required to include in ordinary income the stated
interest payable on the note generally when received or accrued,
in accordance with the holders method of tax accounting
for U.S. federal income tax purposes.
Disposition
Upon a redemption, sale, exchange, retirement or other
disposition of a note, a U.S. Holder will recognize capital
gain or loss measured by the difference, if any, between the
amount received in exchange therefor (other than the portion
received for accrued but unpaid stated interest, which portion
is treated as interest received) and such holders adjusted
tax basis in the note. A U.S. Holders adjusted tax
basis in a note will generally be equal to the price paid for
such note. Any gain or loss recognized on the redemption, sale,
exchange, retirement or other disposition of a note generally
will be long-term capital gain or loss if such note is held for
more than one year at the time of such redemption, sale,
exchange, retirement or other taxable disposition. For certain
non-corporate U.S. Holders, any such long-term capital gain
is currently subject to U.S. federal income tax at a
reduced rate. The deduction of capital losses is subject to
limitation.
Backup
Withholding and Related Information Reporting
Under the Code and applicable Treasury Regulations, a
U.S. Holder of a note may be subject to backup withholding
(currently at a rate of 28% and scheduled to increase to 31% in
2011) and relating information reporting on certain amounts
paid or deemed paid to the holder unless such holder (1) is
a corporation or comes within certain other exempt categories
and, when required, provides proof of such exemption; or
(2) provides a correct taxpayer identification number,
certifies that such holder has not lost exemption from backup
withholding, and has met the requirements for the reporting of
previous income set forth in the backup withholding rules.
U.S. Holders of notes should consult their tax advisors as
to their qualification for exemption from withholding and the
procedure for obtaining such an exemption. Amounts paid as
backup withholding do not constitute an additional tax and may
be credited against a U.S. Holders federal income tax
liability and may entitle such holder to a refund provided that
the required information is properly and timely submitted to the
IRS.
When required, information will be reported to both
U.S. Holders and the IRS regarding the amount of interest
paid on the notes in each calendar year as well as the
corresponding amount of tax withheld, if any exists. This
obligation, however, does not apply with respect to payments to
certain U.S. Holders, including corporations, provided that
they establish entitlement to an exemption.
S-77
Non-U.S.
Holders
Payment
of Interest
In general, payments of interest received by a
Non-U.S. Holder
that is not effectively connected income (as described below)
will not be subject to U.S. federal withholding tax,
provided that:
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(1)
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(a) the
Non-U.S. Holder
does not actually or constructively own 10% or more of the total
combined voting power of all classes of our stock entitled to
vote;
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(b)
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the
Non-U.S. Holder
is not a controlled foreign corporation that is related to us;
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(c)
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the
Non-U.S. Holder
is not a bank receiving interest on an extension of credit
pursuant to a loan arrangement entered into in the ordinary
course of its trade or business; and
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(d)
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either (i) the
Non-U.S. Holder
certifies it is not a United States person (within the meaning
of the Code) by providing a properly completed and executed
Form W-8BEN
(or other applicable form) to us or our Paying Agent, or
(ii) a financial institution or other intermediary that
holds the note on behalf of the
Non-U.S. Holder
has entered into a withholding agreement with the IRS and
submits an IRS
Form W-8IMY
(or suitable successor or substitute form) and certain other
required documentation to us or our Paying Agent; or
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(2)
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the
Non-U.S. Holder
is entitled to the benefits of an income tax treaty under which
interest on the notes is exempt from U.S. withholding tax
and the
Non-U.S. Holder
or such
Non-U.S. Holders
agent provides a
Form W-8BEN
(or other applicable form) to us or our paying agent
demonstrating the exemption.
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Payments of interest not exempt from U.S. federal
withholding tax as described above will be subject to a 30%
withholding tax (subject to reduction under an applicable income
tax treaty).
Disposition
A
Non-U.S. Holder
generally will not be subject to U.S. federal income tax
(and generally no tax will be withheld) with respect to gain
realized on the redemption, sale, exchange, retirement or other
taxable disposition of a note unless (1) the
Non-U.S. Holder
is an individual who is present in the United States for a
period or periods aggregating 183 or more days in the taxable
year of the disposition and certain other conditions are met, in
which case the
Non-U.S. Holder
generally will be subject to a 30% U.S. federal income tax
on any gain recognized, which may be offset by certain
U.S. source losses; or (2) such gain is effectively
connected with the conduct by the
Non-U.S. Holder
of a U.S. trade or business, as described below.
Effectively
Connected Income
If interest or gain from a disposition (including a retirement
or redemption) of notes is effectively connected with a
Non-U.S. Holders
conduct of a U.S. trade or business, and if an income tax
treaty applies and the
Non-U.S. Holder
maintains a U.S. permanent establishment or
fixed base to which the interest or gain is
generally attributable, the
Non-U.S. Holder
will be subject to U.S. federal income tax on the interest
or gain in the same manner as if it were a U.S. Holder. A
foreign corporation that is a holder of a note also may be
subject to a branch profits tax on its effectively connected
earnings and profits for the taxable year, subject to certain
adjustments, at a rate of 30% or lower applicable treaty rate.
For this purpose, interest on a note or gain recognized on the
disposition of a note will be included in earnings and profits
if the interest or gain is effectively connected with the
conduct by the foreign corporation of a trade or business in the
United States. If
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interest income received with respect to the notes is
effectively connected income, the U.S. federal withholding
tax described above will not apply (assuming an appropriate
certification is provided).
Backup
Withholding and Related Information Reporting
Backup withholding (currently at a rate of 28% and scheduled to
increase to 31% in 2011) and related information reporting
requirements do not apply to payments of interest made by us or
a Paying Agent to
Non-U.S. Holders
if the certification described above under
Non-U.S. HoldersPayment
of Interest is received, provided that the payor does not
have actual knowledge or reason to know that the holder is a
U.S. Holder. Payments of the proceeds from a disposition
(including a retirement or redemption) by a
Non-U.S. Holder
of a note made by or through a foreign office of a broker
generally will not be subject to backup withholding and
information reporting, except that information reporting (but
generally not backup withholding) may apply to those payments if
the broker is a United States person; a controlled foreign
corporation for U.S. federal income tax purposes; a foreign
person 50% or more of whose gross income is effectively
connected with the conduct of a U.S. trade or business for
a specified three-year period; or a foreign partnership with
certain specified connections to the United States unless, in
each case, the certification requirements described above are
met or the holder otherwise establishes an exemption, and the
broker does not have actual knowledge or reason to know the
holder is a United States person. Information reporting and
backup withholding generally will apply to a payment of
disposition proceeds by a U.S. office of a broker, unless
the
Non-U.S. Holder
certifies its nonresident status or otherwise establishes an
exemption. Amounts paid as backup withholding do not constitute
an additional tax and may be credited against a
Non-U.S. Holders
U.S. federal income tax liability and may entitle such
holder to a refund, provided that the required information is
properly and timely submitted to the IRS.
Non-U.S. Holders
should consult their tax advisors regarding the filing of a
U.S. federal income tax return for claiming a refund of
such backup withholding.
U.S.
Federal Estate Taxes
Subject to applicable estate tax treaty provisions, notes held
at the time of death (or notes transferred before death but
subject to certain retained rights or powers) by an individual
who at the time of death is not a citizen or resident of the
United States (as specifically defined for estate tax purposes)
will not be included in such individuals gross estate for
U.S. federal estate tax purposes provided that the
individual does not actually or constructively own 10% or more
of the total combined voting power of all classes of our stock
entitled to vote or hold the notes in connection with a
U.S. trade or business.
S-79
UNDERWRITING
Banc of America Securities LLC, J.P. Morgan Securities LLC,
Goldman, Sachs & Co. and Deutsche Bank Securities Inc.
are acting as underwriters. Subject to the terms and conditions
set forth in the underwriting agreement among us and the
underwriters, we have agreed to sell to the underwriters, and
each of the underwriters listed below has agreed, severally and
not jointly, to purchase from us, the principal amount of notes
set forth opposite its name below.
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Principal
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Underwriter
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Amount of Notes
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Banc of America Securities LLC
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$
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112,500,000
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J.P. Morgan Securities LLC
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62,500,000
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Goldman, Sachs & Co.
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50,000,000
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Deutsche Bank Securities Inc.
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25,000,000
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Total
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$
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250,000,000
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Subject to the terms and conditions set forth in the
underwriting agreement, the underwriters have agreed, severally
and not jointly, to purchase all of the notes sold under the
underwriting agreement if any of these notes are purchased. If
an underwriter defaults, the underwriting agreement provides
that the purchase commitments of the nondefaulting underwriters
may be increased or the underwriting agreement may be terminated.
We have agreed to indemnify the several underwriters and their
controlling persons against certain liabilities in connection
with this offering, including liabilities under the Securities
Act, or to contribute to payments the underwriters may be
required to make in respect of those liabilities.
The underwriters are offering the notes, subject to prior sale,
when, as and if issued to and accepted by them, subject to
approval of legal matters by their counsel, including the
validity of the notes, and other conditions contained in the
underwriting agreement, such as the receipt by the underwriters
of officers certificates and legal opinions. The
underwriters reserve the right to withdraw, cancel or modify
offers to the public and to reject orders in whole or in part.
Commissions
and Discounts
The underwriters propose initially to offer the notes to the
public at the public offering price set forth on the cover page
of this prospectus supplement and to certain dealers at such
price less a concession not in excess of 1.75% of the principal
amount of the notes. After the initial offering, the public
offering price, concession or any other term of the offering may
be changed.
The expenses of the offering, not including the underwriting
discount, are estimated at $600,000 and are payable by us.
New Issue
of Notes
The notes are a new issue of securities with no established
trading market. We do not intend to apply for listing of the
notes on any national securities exchange or for inclusion of
the notes on any automated dealer quotation system. We have been
advised by the underwriters that they presently intend to make a
market in the notes after completion of the offering. However,
they are under no obligation to do so and may discontinue any
market-making activities at any time without any notice. We
cannot assure the liquidity of the trading market for the notes
or that an active public market for the notes will develop. If
an active public trading market for the notes does not develop,
the market price and liquidity of the notes may be adversely
affected. If the notes are traded, they may trade at a discount
from their initial offering price, depending on
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prevailing interest rates, the market for similar securities,
our operating performance and financial condition, general
economic conditions and other factors.
No Sales
of Similar Securities
We have agreed that, for a period of 30 days as of the date
of this prospectus supplement, we will not without first
obtaining the prior written consent of Banc of America
Securities LLC, directly or indirectly, issue, sell, offer to
contract or grant any option to sell, pledge. transfer or
otherwise dispose of, any debt securities or securities
exchangeable for or convertible into debt securities, except for
the notes sold to the initial purchasers pursuant to the
underwriting agreement.
Short
Positions
In connection with the offering, the underwriters may purchase
and sell the notes in the open market. These transactions may
include short sales and purchases on the open market to cover
positions created by short sales. Short sales involve the sale
by the underwriters of a greater principal amount of notes than
they are required to purchase in the offering. The underwriters
must close out any short position by purchasing notes in the
open market. A short position is more likely to be created if
the underwriters are concerned that there may be downward
pressure on the price of the notes in the open market after
pricing that could adversely affect investors who purchase in
the offering.
Similar to other purchase transactions, the underwriters
purchases to cover the syndicate short sales may have the effect
of raising or maintaining the market price of the notes or
preventing or retarding a decline in the market price of the
notes. As a result, the price of the notes may be higher than
the price that might otherwise exist in the open market.
Neither we nor any of the underwriters make any representation
or prediction as to the direction or magnitude of any effect
that the transactions described above may have on the price of
the notes. In addition, neither we nor any of the underwriters
make any representation that the representatives will engage in
these transactions or that these transactions, once commenced,
will not be discontinued without notice.
Other
Relationships
The underwriters and their respective affiliates are full
service financial institutions engaged in various activities,
which may include securities trading, commercial and investment
banking, financial advisory, investment management, investment
research, principal investment, hedging, financing and brokerage
activities. Some of the underwriters and their affiliates have
engaged in, and may in the future engage in, investment banking
and other commercial dealings in the ordinary course of business
with us or our affiliates. They have received, or may in the
future receive, customary fees and commissions for these
transactions. In addition, in the ordinary course of their
various business activities, the underwriters and their
respective affiliates may make or hold a broad array of
investments and actively trade debt and equity securities (or
related derivative securities) and financial instruments
(including bank loans) for their own account and for the
accounts of their customers, and such investment and securities
activities may involve securities and/or instruments of the
issuer. The underwriters and their respective affiliates may
also make investment recommendations and/or publish or express
independent research views in respect of such securities or
instruments and may at any time hold, or recommend to clients
that they acquire, long and/or short positions in such
securities and instruments. Banc of America Securities LLC is
acting as Dealer Manager in connection with the tender offer for
our 2013 Notes. Bank of America, N.A., an affiliate of Banc of
America Securities LLC, is administrative agent and a lender
under our Credit Agreement. Affiliates of Deutsche Bank
Securities Inc. and J.P. Morgan Securities LLC are lenders under
the Credit Agreement. Certain of the underwriters and/or their
respective affiliates may hold for their own accounts or for the
accounts of clients the 2013 Notes and may thus receive a
portion of the proceeds of the offering.
S-81
Notice to
Prospective Investors in the EEA
In relation to each Member State of the European Economic Area
which has implemented the Prospectus Directive (each, a
Relevant Member State) an offer to the public of any
notes which are the subject of the offering contemplated by this
prospectus supplement may not be made in that Relevant Member
State, once the prospectus has been approved by the competent
authority in such Relevant Member State and published in
accordance with the Prospectus Directive as implemented in such
Relevant Member State except that an offer to the public in that
Relevant Member State of any notes may be made at any time under
the following exemptions under the Prospectus Directive, if they
have been implemented in that Relevant Member State:
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(a)
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to legal entities which are authorized or regulated to operate
in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
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(b)
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to any legal entity which has two or more of (1) an average
of at least 250 employees during the last financial year;
(2) a total balance sheet of more than 43,000,000 and
(3) an annual net turnover of more than 50,000,000,
as shown in its last annual or consolidated accounts;
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(c)
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by the underwriters to fewer than 100 natural or legal persons
(other than qualified investors as defined in the
Prospectus Directive) subject to obtaining the prior consent of
the representatives for any such offer; or
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(d)
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in any other circumstances falling within Article 3(2) of
the Prospectus Directive;
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provided that no such offer of notes shall result in a
requirement for the publication by us or any representative of a
prospectus pursuant to Article 3 of the Prospectus
Directive.
Any person making or intending to make any offer of notes within
the EEA should only do so in circumstances in which no
obligation arises for us or any of the underwriters to produce a
prospectus for such offer. Neither we nor the underwriters have
authorized, nor do they authorize, the making of any offer of
notes through any financial intermediary, other than offers made
by the underwriters which constitute the final offering of notes
contemplated in this prospectus supplement.
For the purposes of this provision, and your representation
below, the expression an offer to the public in
relation to any notes in any Relevant Member State means the
communication in any form and by any means of sufficient
information on the terms of the offer and any notes to be
offered so as to enable an investor to decide to purchase any
notes, as the same may be varied in that Relevant Member State
by any measure implementing the Prospectus Directive in that
Relevant Member State and the expression Prospectus
Directive means Directive 2003/71/EC and includes any
relevant implementing measure in each Relevant Member State.
Each person in a Relevant Member State who receives any
communication in respect of, or who acquires any notes under,
the offer of notes contemplated by this prospectus supplement
will be deemed to have represented, warranted and agreed to and
with us and each underwriter that:
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(a)
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it is a qualified investor within the meaning of the
law in that Relevant Member State implementing
Article 2(1)(e) of the Prospectus Directive; and
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(b)
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in the case of any notes acquired by it as a financial
intermediary, as that term is used in Article 3(2) of the
Prospectus Directive, (i) the notes acquired by it in the
offering have not been acquired on behalf of, nor have they been
acquired with a view to their offer or
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S-82
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resale to, persons in any Relevant Member State other than
qualified investors (as defined in the Prospectus
Directive), or in circumstances in which the prior consent of
the representatives has been given to the offer or resale; or
(ii) where notes have been acquired by it on behalf of
persons in any Relevant Member State other than qualified
investors, the offer of those notes to it is not treated under
the Prospectus Directive as having been made to such persons.
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Notice to
Prospective Investors in Switzerland
This document, as well as any other material relating to the
notes which are the subject of the offering contemplated by this
prospectus supplement, do not constitute an issue prospectus
pursuant to Article 652a of the Swiss Code of Obligations.
The notes will not be listed on the SWX Swiss Exchange and,
therefore, the documents relating to the notes, including, but
not limited to, this document, do not claim to comply with the
disclosure standards of the listing rules of SWX Swiss Exchange
and corresponding prospectus schemes annexed to the listing
rules of the SWX Swiss Exchange. The notes are being offered in
Switzerland by way of a private placement, i.e. to a
small number of selected investors only, without any public
offer and only to investors who do not purchase the notes with
the intention to distribute them to the public. The investors
will be individually approached by us from time to time. This
document, as well as any other material relating to the notes,
is personal and confidential and do not constitute an offer to
any other person. This document may only be used by those
investors to whom it has been handed out in connection with the
offering described herein and may neither directly nor
indirectly be distributed or made available to other persons
without our express consent. It may not be used in connection
with any other offer and shall in particular not be copied
and/or
distributed to the public in (or from) Switzerland.
Notice to
Prospective Investors in the Dubai International Financial
Centre
This document relates to an exempt offer in accordance with the
Offered Securities Rules of the Dubai Financial Services
Authority. This document is intended for distribution only to
persons of a type specified in those rules. It must not be
delivered to, or relied on by, any other person. The Dubai
Financial Services Authority has no responsibility for reviewing
or verifying any documents in connection with exempt offers. The
Dubai Financial Services Authority has not approved this
document nor taken steps to verify the information set out in
it, and has no responsibility for it. The notes which are the
subject of the offering contemplated by this prospectus
supplement may be illiquid
and/or
subject to restrictions on their resale. Prospective purchasers
of the notes offered should conduct their own due diligence on
the notes. If you do not understand the contents of this
document you should consult an authorised financial adviser.
Notice to
Prospective Investors in Hong Kong, Japan and
Singapore
The notes may not be offered or sold by means of any document
other than (i) in circumstances which do not constitute an
offer to the public within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), or (ii) to
professional investors within the meaning of the
Securities and Futures Ordinance (Cap.571, Laws of Hong Kong)
and any rules made thereunder, or (iii) in other
circumstances which do not result in the document being a
prospectus within the meaning of the Companies
Ordinance (Cap.32, Laws of Hong Kong), and no advertisement,
invitation or document relating to the notes may be issued or
may be in the possession of any person for the purpose of issue
(in each case whether in Hong Kong or elsewhere), which is
directed at, or the contents of which are likely to be accessed
or read by, the public in Hong Kong (except if permitted to do
so under the laws of Hong Kong) other than with respect to notes
which are or are intended to be disposed of only to persons
outside Hong Kong or only to professional investors
within the meaning of the Securities and Futures Ordinance (Cap.
571, Laws of Hong Kong) and any rules made thereunder.
S-83
The securities have not been and will not be registered under
the Financial Instruments and Exchange Law of Japan (the
Financial Instruments and Exchange Law) and each underwriter has
agreed that it will not offer or sell any securities, directly
or indirectly, in Japan or to, or for the benefit of, any
resident of Japan (which term as used herein means any person
resident in Japan, including any corporation or other entity
organized under the laws of Japan), or to others for re-offering
or resale, directly or indirectly, in Japan or to a resident of
Japan, except pursuant to an exemption from the registration
requirements of, and otherwise in compliance with, the Financial
Instruments and Exchange Law and any other applicable laws,
regulations and ministerial guidelines of Japan.
This prospectus has not been registered as a prospectus with the
Monetary Authority of Singapore. Accordingly, this prospectus
and any other document or material in connection with the offer
or sale, or invitation for subscription or purchase, of the
notes may not be circulated or distributed, nor may the notes be
offered or sold, or be made the subject of an invitation for
subscription or purchase, whether directly or indirectly, to
persons in Singapore other than (i) to an institutional
investor under Section 274 of the Securities and Futures
Act, Chapter 289 of Singapore (the SFA),
(ii) to a relevant person, or any person pursuant to
Section 275(1A), and in accordance with the conditions,
specified in Section 275 of the SFA or (iii) otherwise
pursuant to, and in accordance with the conditions of, any other
applicable provision of the SFA.
Where the notes are subscribed or purchased under
Section 275 by a relevant person which is: (a) a
corporation (which is not an accredited investor) the sole
business of which is to hold investments and the entire share
capital of which is owned by one or more individuals, each of
whom is an accredited investor; or (b) a trust (where the
trustee is not an accredited investor) whose sole purpose is to
hold investments and each beneficiary is an accredited investor,
shares, debentures and units of shares and debentures of that
corporation or the beneficiaries rights and interest in
that trust shall not be transferable for 6 months after
that corporation or that trust has acquired the notes under
Section 275 except: (1) to an institutional investor
under Section 274 of the SFA or to a relevant person, or
any person pursuant to Section 275(1A), and in accordance
with the conditions, specified in Section 275 of the SFA;
(2) where no consideration is given for the transfer; or
(3) by operation of law.
We expect that the delivery of the notes will be made against
payment therefor on or about September 29, 2010, which will
be the tenth business day following the date of pricing of the
notes (such settlement cycle being herein referred to as
T+10). Under Rule 15c6-1 under the Exchange
Act, trades in the secondary market generally are required to
settle in three business days, unless the parties to any such
trade expressly agree otherwise. Accordingly, the purchasers who
wish to trade notes on the date of pricing or within the six
trading days thereafter will be required, by virtue of the fact
that the notes initially will settle T+10, to specify an
alternative settlement cycle at the time of any such trade to
prevent a failed settlement. Purchasers of notes who wish to
trade notes on the date of pricing or within three trading days
thereafter should consult their advisor.
S-84
LEGAL
MATTERS
The validity of the notes offered and sold in this offering will
be passed upon for us by Alston & Bird LLP.
Alston & Bird LLP has, from time to time, represented,
currently represents, and may continue to represent, some or all
of the underwriters in connection with various legal matters.
Certain legal matters will be passed upon for the underwriters
by Cahill Gordon & Reindel
llp.
EXPERTS
The consolidated financial statements of the Company at
December 31, 2008 and 2009 and for the years then ended,
incorporated by reference from the Companys Annual Report
on
Form 10-K
for the year ended December 31, 2009, including the
schedule appearing therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their report thereon and
incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements for the year ended
December 31, 2007 incorporated in this prospectus
supplement by reference from the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
WHERE YOU
CAN FIND MORE INFORMATION
GPHC files annual, quarterly and current reports, proxy
statements and other information with the SEC under the Exchange
Act. You may read and copy any reports, statements or other
information on file at the SECs public reference facility
located at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at
1-800-SEC-0330
for further information regarding its public facilities.
GPHCs SEC filings are available to the public from
commercial document retrieval services and also available at the
Internet website maintained by the SEC at
http://www.sec.gov.
You may also retrieve GPHCs SEC filings at our Internet
website at www.graphicpkg.com. The information
contained on our website is not a part of this prospectus
supplement.
We are incorporating by reference information into
this prospectus supplement. This means that we are disclosing
important information by referring to another document
separately filed with the SEC. This information incorporated by
reference is deemed to be part of this prospectus supplement,
except for any information superseded by information in this
prospectus supplement. This prospectus supplement incorporates
by reference the documents set forth below that we have
previously filed with the SEC. These documents contain important
information about us.
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Annual Report on
Form 10-K
of GPHC, as amended, for the year ended December 31, 2009;
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Quarterly Reports on
Form 10-Q
of GPHC for the periods ended March 31, 2010 and
June 30, 2010; and
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Current Reports on
Form 8-K
of GPHC filed January 22, 2010, May 24, 2010,
July 7, 2010 and August 12, 2010.
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We also incorporate by reference into this prospectus supplement
any future filings made with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act (other than those made
pursuant to Item 2.02 or Item 7.01 of
Form 8-K
or any other information furnished to the SEC,
unless specifically stated otherwise) after the date of this
prospectus supplement and before the end of the offering of the
securities pursuant to this prospectus supplement or the
offering is otherwise terminated.
S-85
We encourage you to read our periodic and current reports, as
they provide additional information about us that prudent
investors find important. You may request a copy of these
filings without charge by writing to or by telephoning us at the
following address:
Graphic Packaging Holding Company
814 Livingston Court
Marietta, GA 30067
(770) 644-3000
Attention: Investor Relations Department
S-86
GRAPHIC PACKAGING HOLDING
COMPANY
Common Stock, Preferred Stock,
Debt Securities, Guarantees of Debt Securities,
Depositary Shares, Warrants,
Purchase Contracts and Units
GRAPHIC PACKAGING
INTERNATIONAL, INC.
Debt Securities Guaranteed by
Graphic Packaging Holding Company and Guarantees of Debt
Securities
We may offer, issue and sell from time to time, together or
separately, up to $500,000,000 of the securities in one or more
offerings.
Graphic Packaging Holding Company
Graphic Packaging Holding Company may offer and sell the
following securities:
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common stock;
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preferred stock;
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debt securities;
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guarantees of debt securities;
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depositary shares;
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warrants to purchase common stock, preferred stock or debt
securities;
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purchase contracts; or
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units.
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Graphic Packaging International, Inc.
Graphic Packaging International, Inc. may offer and sell the
following securities:
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debt securities guaranteed by Graphic Packaging Holding Company;
or
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guarantees of debt securities.
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This prospectus describes some of the general terms that may
apply to these securities. The specific terms of any securities
to be offered will be described in a supplement to this
prospectus. The prospectus supplement may also add, update or
change information contained in this prospectus. You should read
this prospectus and the applicable prospectus supplement
carefully before you make your investment decision. This
prospectus may not be used to sell securities unless accompanied
by a prospectus supplement.
We may offer and sell these securities to or through one or more
underwriters, dealers and agents, or directly to purchasers, on
a continuous or delayed basis. The supplements to this
prospectus will describe the terms of any offering of these
securities, including any underwriting arrangements. See
Plan of Distribution.
Our common stock is listed on the New York Stock Exchange under
the trading symbol GPK. Each prospectus supplement
will indicate if the securities offered thereby will be listed
on any securities exchange.
You should carefully read and consider the risk factors
included in our periodic reports and other information that we
file with the Securities and Exchange Commission before your
invest in our securities.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities or passed upon the accuracy or adequacy of this
prospectus. Any representation to the contrary is a criminal
offense.
The date of this prospectus is July 1, 2010.
TABLE OF
CONTENTS
We include cross references to captions elsewhere in this
prospectus where you can find related additional information.
The following table of contents tells you where to find these
captions.
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2
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3
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4
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4
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13
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22
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28
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28
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In this prospectus, except as otherwise indicated, the terms
Company, we, us or
our mean Graphic Packaging Holding Company and all
entities included in our consolidated financial statements.
GPHC refers to Graphic Packaging Holding Company,
GPC refers to Graphic Packaging Corporation, and
GPII refers to Graphic Packaging International, Inc.
ABOUT
THIS PROSPECTUS
This prospectus is part of a registration statement on
Form S-3
that we filed with the Securities and Exchange Commission, or
the SEC, using a shelf registration
process. Under this shelf registration process, we may, from
time to time, sell any combination of the securities described
in this prospectus up to a maximum aggregate offering of
$500,000,000. This prospectus provides you with a general
description of those securities. Each time we sell securities,
we will provide a prospectus supplement that will contain
specific information about the terms of that offering, including
the specific amounts, prices and terms of the securities
offered. The prospectus supplement may also add, update or
change information contained in this prospectus. If there is any
inconsistency between the information in this prospectus and any
prospectus supplement, you should rely on the information in the
prospectus supplement. You should read this prospectus and the
applicable prospectus supplement together with the additional
information described under the heading Where You Can Find
More Information.
WHERE YOU
CAN FIND MORE INFORMATION
You may obtain from the SEC, through the SECs website or
at the SECs offices mentioned in the following paragraph,
a copy of the registration statement, including exhibits, that
we have filed with the SEC to register the securities offered
under this prospectus. This prospectus is part of the
registration statement and does not contain all the information
in the registration statement on
Form S-3.
You will find additional information about us in the
registration statement. Any statement made in this prospectus
concerning a contract or other document of ours is not
necessarily complete, and you should read the documents that are
filed as exhibits to the registration statement or otherwise
filed with the SEC for a more complete understanding of the
document or matter. Each such statement is qualified in all
respects by reference to the document to which it refers.
We file annual, quarterly and current reports, proxy statements
and other information with the SEC. Our SEC filings are
available to the public over the Internet at the SECs
website at www.sec.gov and on our corporate website at
www.graphicpkg.com. Information on our website does not
constitute part of this prospectus. You may inspect without
charge any documents filed by us at the SECs Public
Reference Room at 100 F Street, N.E.,
Washington, D.C. 20549. You may obtain copies of all or any
part of these materials from the SEC upon the payment of certain
fees prescribed by the SEC. Please call the SEC at
1-800-SEC-0330
for further information on the Public Reference Room.
We incorporate by reference into this prospectus
documents we file with the SEC, which means that we can disclose
important information to you by referring you to those
documents. The information incorporated by reference is an
important part of this prospectus. Some information contained in
this prospectus updates the information incorporated by
reference, and information that we file subsequently with the
SEC will automatically update this prospectus. In other words,
in the case of a conflict or inconsistency between information
set forth in this prospectus and information that we file later
and incorporate by reference into this prospectus, you should
rely on the information contained in the document that was filed
later.
We incorporate by reference into this prospectus the documents
listed below and any filings we make with the SEC under
Sections 13(a), 13(c), 14, or 15(d) of the Securities
Exchange Act of 1934, as amended, or the Exchange
Act, after the initial filing of the registration
statement that contains this prospectus and prior to the time
that all the securities offered by this prospectus have been
issued as described in this prospectus (other than, in each
case, documents or information deemed to have been
furnished and not filed in accordance
with SEC rules):
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our Annual Report on
Form 10-K
for the year ended December 31, 2009 (filed on
February 23, 2010);
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010 (filed on May 6,
2010);
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our Current Reports on
Form 8-K
filed on January 22, 2010 and May 24, 2010; and
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the description of our common stock set forth in our
Registration Statement on
Form 8-A
filed pursuant to Section 12 of the Exchange Act on
March 10, 2008 and any amendment or report filed for the
purpose of updating that description.
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You may request a copy of the registration statement, the above
filings and any future filings that are incorporated by
reference into this prospectus, other than an exhibit to a
filing unless that exhibit is specifically incorporated by
reference into that filing, at no cost, by writing or calling us
at the following address: Office of the Secretary, Graphic
Packaging Holding Company, 814 Livingston Court, Marietta,
Georgia 30067;
telephone: (770) 644-3000.
2
You should rely only on the information contained or
incorporated by reference in this prospectus, any accompanying
prospectus supplement or any free writing prospectus filed by us
with the SEC and any information about the terms of securities
offered conveyed to you by us, our underwriters or agents. We
have not authorized anyone else to provide you with additional
or different information. These securities are only being
offered in jurisdictions where the offer is permitted. You
should not assume that the information contained in this
prospectus, any accompanying prospectus supplement or any free
writing prospectus is accurate as of any date other than their
respective dates.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements regarding our expectations, including, but
not limited to, statements regarding the effect of deflation of
certain input costs, price increases for coated paperboard and
cartons, cost savings from the Companys continuous
improvement programs, capital investment, depreciation and
amortization, interest expense, debt reduction and pension plan
contributions in this prospectus constitute
forward-looking statements as defined in the Private
Securities Litigation Reform Act of 1995. Such statements are
based on currently available operating, financial and
competitive information and are subject to various risks and
uncertainties that could cause actual results to differ
materially from the Companys historical experience and
present expectations. These risks and uncertainties include, but
are not limited to, the Companys substantial amount of
debt, inflation of and volatility in raw material and energy
costs, continuing pressure for lower cost products, the
Companys ability to implement its business strategies,
including productivity initiatives and cost reduction plans,
currency movements and other risks of conducting business
internationally, and the impact of regulatory and litigation
matters, including those that could limit the Companys
ability to utilize its net operating losses to offset taxable
income and those that impact the Companys ability to
protect and use its intellectual property. Undue reliance should
not be placed on such forward-looking statements, as such
statements speak only as of the date on which they are made and
the Company undertakes no obligation to update such statements.
Additional information regarding these and other risks is
contained in the Companys annual report on
Form 10-K
for the fiscal year ended December 31, 2009 and other
reports subsequently filed with the SEC.
OUR
COMPANY
We are a leading provider of packaging solutions for a wide
variety of products to food, beverage and other consumer
products companies. Additionally, we are the largest
U.S. producer of folding cartons and hold leading market
positions in coated unbleached kraft paperboard, coated-recycled
boxboard and multi-wall bags. Our customers include some of the
most widely recognized companies in the world. We strive to
provide our customers with packaging solutions designed to
deliver marketing and performance benefits at a competitive cost
by capitalizing on our low-cost paperboard mills and converting
plants, proprietary carton and packaging designs and commitment
to customer service. We have approximately 13,100 employees.
On March 10, 2008, the business of GPC was combined with
the business of Altivity Packaging, LLC (Altivity).
Altivity was the largest privately-held producer of folding
cartons and a market leader in all of its major businesses,
including coated-recycled boxboard, multi-wall bag and specialty
packaging. The combination brought together two of the most
innovative, value-added paperboard packaging companies in the
global packaging market with expanded product offerings, market
reach and technology capabilities. As part of the integration
with Altivity, we have achieved cost synergies and operating
efficiencies sooner than expected. We have already implemented
steps that we believe will result in at least $100 million
in annual synergies. We believe further opportunities exist to
optimize our manufacturing operations.
As a result of the combination with Altivity (the Altivity
Transaction), our business segments were revised. We
report our results in three business segments: paperboard
packaging, multi-wall bag and specialty packaging. For a more
detailed description, see Business and
Managements Discussion and Analysis of Financial
Condition and Results of Operations included in our annual
report on
Form 10-K
for the fiscal year ended December 31, 2009 and our
quarterly report on
Form 10-Q
for the quarter ended March 31, 2010.
3
USE OF
PROCEEDS
Except as may be otherwise set forth in the applicable
prospectus supplement accompanying this prospectus, the net
proceeds from the sale of the securities will be used for
general corporate purposes, including:
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repayment of short-term or long-term borrowings;
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acquisitions of or investments in businesses or assets;
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working capital; and
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capital expenditures.
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Pending application of the net proceeds, we may temporarily
invest the net proceeds in short-term marketable securities.
RATIOS OF
EARNINGS TO FIXED CHARGES
Our ratios of earnings to fixed charges for the three months
ended March 31, 2010 and the five fiscal years ended
December 31, 2009 are set forth below:
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Three Months
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Ended March 31,
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Year Ended December 31,
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2010
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2009
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2008
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2007
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2006
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2005
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Ratio of Earnings to Fixed Charges(1)(2)
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1.3
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1.4
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(3
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(3
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(3
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(3
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(1) |
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For purposes of calculating this ratio, earnings
consists of income from continuing operations before income
taxes and income from equity affiliates plus (a) fixed
charges minus interest capitalized during the period,
(b) distributed income from equity affiliates and
(c) amortization of previously capitalized interest. Fixed
charges consist of interest expense, capitalized interest,
amortization of discount on indebtedness and an appropriate
portion of rental expense representative of the interest factor. |
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(2) |
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Currently, we have no shares of preferred stock outstanding and
thus have not paid any dividends on preferred stock in the
periods presented. Therefore, the ratio of earnings to combined
fixed charges and preference dividends is not shown because it
is not different from the ratio of earnings to fixed charges. |
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(3) |
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Earnings for the years ended 2008, 2007, 2006 and 2005 were
inadequate to cover fixed charges by $64.1 million,
$24.2 million, $75.6 million and $67.9 million
respectively. |
DESCRIPTION
OF CAPITAL STOCK
Overview
Our restated certificate of incorporation authorizes
1 billion shares of common stock, par value $0.01 per
share, and 100 million shares of preferred stock, par value
$0.01 per share. Approximately 343.2 million shares of our
common stock are issued and outstanding, and no shares of
preferred stock are issued and outstanding.
The following descriptions of our capital stock and provisions
of our restated certificate of incorporation and amended and
restated by-laws are summaries of their material terms and
provisions and are qualified by reference to the complete text
of our certificate of incorporation and by-laws, which are
incorporated by reference in their entirety and filed as
exhibits to the registration statement of which this prospectus
is a part.
Common
Stock
Holders of our common stock are entitled to one vote for each
share held on all matters submitted to a vote of stockholders
and do not have cumulative voting rights. Holders of common
stock are entitled to receive proportionately any dividends that
may be declared by our board of directors, subject to the
preferences and rights of any shares of preferred stock. In the
event of our liquidation, dissolution or
winding-up,
holders of common stock will be entitled to receive
proportionately any of our assets remaining after the payment of
debts and liabilities and subject to the preferences and rights
of any shares of preferred stock. Holders of common stock have
no preemptive, subscription, redemption or conversion rights.
The rights and privileges of holders of our common stock will be
subject to any series of preferred stock that we may issue in
the future, as described below.
4
Preferred
Stock
Our certificate of incorporation provides that our board of
directors has the authority, without further vote or action by
our stockholders, to issue up to 100 million shares of
preferred stock in one or more series and to fix the number of
shares constituting any such series and the preferences,
limitations and relative rights, including but not limited to,
dividend rights, dividend rate, voting rights, terms of
redemption, redemption price or prices, conversion rights and
liquidation preferences of the shares constituting any series.
The issuance of preferred stock could adversely affect the
rights of holders of common stock.
Our certificate of incorporation authorizes shares of preferred
stock that may be designated Series A junior participating
preferred stock in connection with our stockholder rights plan.
See Stockholder Rights Plan below.
Change of
Control Related Provisions
A number of provisions in our certificate of incorporation and
by-laws and under the Delaware General Corporation Law, or the
DGCL, may make it more difficult for third parties to acquire
control of us. These provisions may have the effect of delaying,
deferring, discouraging, preventing or rendering more difficult
a future takeover attempt which is not approved by our board of
directors, but which individual stockholders may deem to be in
their best interests or in which stockholders may receive a
substantial premium for their shares over then current market
prices. As a result, stockholders who might desire to
participate in such a transaction may not have an opportunity to
do so. In addition, these provisions may adversely affect the
prevailing market price of the common stock. These provisions
are intended to:
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discourage some types of transactions that may involve an actual
or threatened change in control;
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discourage certain tactics that may be used in proxy fights;
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enhance the likelihood of continuity and stability in the
composition of our board of directors;
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ensure that our board of directors will have sufficient time to
act in what the board believes to be in the best interests of us
and our stockholders; and
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encourage persons seeking to acquire control of us to consult
first with our board to negotiate the terms of any proposed
business combination or offer.
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Unissued
Shares of Common Stock
There are currently outstanding approximately 343.2 million
shares of our authorized common stock. The remaining shares of
authorized and unissued common stock are available for future
issuance without additional stockholder approval, except as may
be required by the rules or regulations of the New York Stock
Exchange (the NYSE) or other stock exchange on which
our common stock may be listed. While the additional shares are
not designed to deter or prevent a change of control, under some
circumstances we could use the additional shares to create
voting impediments or to frustrate persons seeking to effect a
takeover or otherwise gain control by, for example, issuing
those shares in private placements to purchasers who might side
with our board of directors in opposing a hostile takeover bid.
Unissued
Shares of Preferred Stock
Our certificate of incorporation grants our board of directors
the authority, without any further vote or action by our
stockholders, except as may be required by the rules or
regulations of the NYSE or other stock exchange on which our
common stock may be listed, to issue preferred stock in one or
more series and to fix the number of shares constituting any
such series and the preferences, limitations and relative
rights, including but not limited to, dividend rights, dividend
rate, voting rights, terms of redemption, redemption price or
prices, conversion rights and liquidation preferences of the
shares constituting any series. The existence of authorized but
unissued preferred stock could reduce our attractiveness as a
target for an unsolicited takeover bid since we could, for
example, issue shares of preferred stock to parties who might
oppose such a takeover bid or shares that contain terms the
potential acquirer may find unattractive. This may have the
effect of delaying or preventing a change in control, may
discourage bids for the common stock at a premium over the
market price of the common stock, and may adversely affect the
market price of, and the voting and other rights of the holders
of, common stock.
5
Classified
Board of Directors, Vacancies and Removal of
Directors
Our certificate of incorporation and by-laws provide that our
board of directors is divided into three classes of even number
or nearly even number, with each class elected for staggered
three-year terms expiring in successive years. Any effort to
obtain control of our board of directors by causing the election
of a majority of the board of directors may require more time
than would be required without a staggered board structure.
Under the DGCL, for companies like us with a classified board of
directors, stockholders may remove directors only for cause.
Vacancies (including a vacancy created by increasing the size of
the board) in our board of directors may only be filled by a
majority vote of our directors. Any director elected to fill a
vacancy will hold office for the remainder of the full term of
the class of directors in which the vacancy occurred (including
a vacancy created by increasing the size of the board) and until
such directors successor shall have been duly elected and
qualified. No decrease in the number of directors will shorten
the term of any incumbent director. Our certificate of
incorporation and by-laws provide that the number of directors
will be fixed and increased or decreased from time to time
solely by resolution of the board of directors, but the board of
directors will at no time consist of fewer than three directors.
These provisions may have the effect of slowing or impeding a
third party from initiating a proxy contest, making a tender
offer or otherwise attempting a change in the membership of our
board of directors that would effect a change of control.
Advance
Notice Requirements for Nomination of Directors and Presentation
of New Business at Meetings of Stockholders; Action by Written
Consent
Our by-laws provide for advance notice requirements for
stockholder proposals and nominations for director. Generally,
to be timely, notice must be delivered to us not fewer than
90 days nor more than 120 days prior to the first
anniversary date of the annual meeting for the preceding year.
In addition, under the provisions of both our certificate of
incorporation and by-laws, action may not be taken by written
consent of stockholders; rather, any action taken by the
stockholders must be effected at a duly called annual or special
meeting. A special meeting may only be called by our board of
directors. These provisions make it more procedurally difficult
for a stockholder to place a proposal or nomination on the
meeting agenda or to take action without a meeting, and
therefore may reduce the likelihood that a stockholder will seek
to take independent action to replace directors or seek a
stockholder vote with respect to other matters that are not
supported by management.
Business
Combination under Delaware Law
We are subject to Section 203 of the DGCL. Subject to
specified exceptions, Section 203, as currently in effect,
prohibits a publicly held Delaware corporation from engaging in
a business combination with an interested
stockholder for a period of three years following the date
the person became an interested stockholder, unless:
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before that date, the board of directors approved either the
business combination or the transaction in which such
stockholder became an interested stockholder;
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upon consummation of the transaction that resulted in the
stockholders becoming an interested stockholder, the
interested stockholder owned at least 85% of the voting stock of
the corporation outstanding at the time the transaction
commenced, other than statutorily excluded shares; or
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on or after that date, the business combination is approved by
the board of directors and authorized at an annual or special
meeting of stockholders, and not by written consent, by the
affirmative vote of holders of at least
662/3%
of the corporations outstanding voting stock which is not
owned by the interested stockholder.
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A business combination, as further defined by the
DGCL, includes a merger, asset or stock sale, or other
transaction resulting in a financial benefit to the interested
stockholder. Except as otherwise described in the DGCL, an
interested stockholder is defined to include
(1) any person that is the owner of 15% or more of the
outstanding voting stock of the corporation, or is an affiliate
or associate of the corporation and was the owner of 15% or more
of the outstanding voting stock of the corporation at any time
within three years immediately before the date of determination,
and (2) the affiliates and associates of any such person.
Certain stockholders that are members or affiliates of the Coors
family (the Coors Family Stockholders) as well as
certain investment partnerships organized by TPG Capital that
became stockholders as a result of the Altivity Transaction (the
TPG Entities) and their respective affiliates or
associates are not be subject to the restrictions imposed by
Section 203 because our board of directors approved the
transactions, i.e., the business combinations, in which those
stockholders became interested stockholders.
6
Limitation
of Liability of Directors
Our certificate of incorporation provides that no director will
be personally liable to us or our stockholders for monetary
damages for breach of fiduciary duty as a director, except to
the extent that this limitation on or exemption from liability
is not permitted by the DGCL. As currently enacted, the DGCL
permits a corporation to provide in its certificate of
incorporation that a director of the corporation will not be
personally liable to the corporation or its stockholders for
monetary damages for breach of fiduciary duty as a director,
except for liability for:
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any breach of the directors duty of loyalty to the
corporation or our stockholders;
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acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law;
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payments of unlawful dividends or unlawful stock repurchases or
redemptions; or
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any transaction from which the director derived an improper
personal benefit.
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The principal effect of this limitation on liability provision
is that a stockholder will be unable to recover monetary damages
against a director for breach of fiduciary duty unless the
stockholder can demonstrate that one of the exceptions listed in
the DGCL applies. The inclusion of this provision in our
certificate of incorporation may discourage or deter
stockholders or management from bringing a lawsuit against our
directors for a breach of their fiduciary duties, even though
such an action, if successful, might otherwise have benefited us
and our stockholders. This provision should not affect the
availability of equitable remedies such as an injunction or
rescission of a transaction based upon a directors breach
of his or her fiduciary duties.
The DGCL provides that a corporation may indemnify its directors
and officers as well as its other employees and agents against
judgments, fines, amounts paid in settlement and expenses,
including attorneys fees, actually and reasonably incurred
in connection with various proceedings, other than an action
brought by or in the right of the corporation, if such person
acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or
proceeding, if he or she had no reasonable cause to believe his
or her conduct was unlawful. A similar standard applies to
actions brought by or in the right of the corporation, except
that indemnification in such a case may only extend to expenses,
including attorneys fees, incurred in connection with the
defense or settlement of such actions, and the statute requires
court approval before there can be any indemnification where the
person seeking indemnification has been found liable to the
corporation.
Our certificate of incorporation and, with regard to our
officers, our by-laws provide that we will indemnify our current
and former directors, as well as any person who has agreed to
become a director, and officers to the fullest extent permitted
by the DGCL. Under these provisions and subject to the DGCL, we
are required to indemnify our directors and officers for all
judgments, fines, settlements, liabilities, losses, ERISA excise
taxes or penalties, legal fees and other expenses actually and
reasonably incurred in connection with pending or threatened
legal proceedings because of the directors or
officers position with us or another entity that the
director or officer serves as a director, officer, employee or
agent at our request, subject to various conditions, and to
advance funds to our directors and officers before final
disposition of such proceedings to enable them to defend against
such proceedings. To receive indemnification, the director or
officer must have met the applicable standard of conduct
required by Delaware law to be indemnified.
Unless otherwise ordered by a court, any indemnification of a
present or former director, officer or employee of the Company
shall be made by us (and may be made by us in the case of an
agent) upon a determination that indemnification of such person
is proper because he or she has met the applicable standard of
conduct required by Delaware law to be indemnified. With respect
to a person who is a director or officer at the time of such
determination, such determination shall be made: (i) by a
majority vote of the directors who are not parties to the
proceeding, even though less than a quorum, (ii) a
committee of such directors designated by a majority vote of
such directors, even thought less than a quorum, (iii) by
independent legal counsel in a written opinion if there are no
such directors or if such directors so direct, or (iv) by
our stockholders. The by-laws also specifically authorize us to
maintain insurance on behalf of any person who is or was or has
agreed to become a director, officer, employee or agent, or is
or was serving at our request as a director, officer, employee
or agent of another entity, against certain liabilities.
7
Supermajority
Voting Requirement for Amendment of Certain Provisions of Our
Certificate of Incorporation and By-Laws
The provisions of our certificate of incorporation governing,
among other things, the classified board, the liability of
directors and the elimination of the ability of stockholders to
act by written consent, may not be amended, altered or repealed
unless the amendment is approved by the vote of holders of 75%
of the combined voting power of the then outstanding shares
entitled to vote thereon. This requirement exceeds the majority
vote of the outstanding stock that would otherwise be required
by the DGCL for the repeal or amendment of such provisions of
the certificate of incorporation. Our by-laws may be amended by
the board of directors or by the vote of holders of 75% of the
combined voting power of the then outstanding shares entitled to
vote thereon. These provisions make it more difficult for any
person to remove or amend any provisions that may have an
anti-takeover effect.
Stockholder
Rights Plan
We have adopted a stockholder rights plan under which each
outstanding share of our common stock will be coupled with a
stock purchase right. The description and terms of the rights
can be found in a rights agreement between us and Wells Fargo
Bank, N.A., as the rights agent. The following is a summary of
the material provisions of the rights plan. This summary is
qualified in its entirety by reference to the rights plan, which
is attached as an exhibit to the registration statement of which
this prospectus is a part and incorporated herein by reference
in its entirety. This summary may not contain all of the
information about the rights plan which is important to you, and
we encourage you to read the rights plan in its entirety.
The rights are currently attached to the certificates
representing outstanding shares of common stock, and no separate
rights certificates will be distributed. The rights are
transferable only with the common stock until a distribution
date (as described below). Each right entitles the holder to
purchase one one-thousandth of a share of our Series A
junior participating preferred stock at an exercise price of
$20.00, subject to adjustment. Each one one-thousandth of a
share of Series A junior participating preferred stock will
have economic and voting terms approximately equivalent to one
share of our common stock. Until it is exercised, the right
itself will not entitle the holder of the right to any rights as
a stockholder, including the right to receive dividends or to
vote at stockholder meetings.
The rights are not exercisable until the distribution date and
will expire at the close of business on March 10, 2018,
unless earlier redeemed or exchanged by us. As soon as
practicable after the distribution date, we would issue separate
certificates representing the rights which would trade
separately from the shares of our common stock. A distribution
date would generally occur upon the earlier of:
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the tenth day after the first public announcement by or
communication to us that a person or group of affiliated or
associated persons (referred to as an acquiring person) has
acquired beneficial ownership of 15% or more of our outstanding
common stock (the date of such announcement or communication is
referred to as the stock acquisition time); or
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the tenth business day after the commencement or first public
announcement of the intention to commence a tender offer or
exchange offer that would result in a person or group becoming
an acquiring person.
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However, an acquiring person will not include us, any of our
subsidiaries, any of our employee benefit plans or any person or
entity acting under our employee benefit plans. In addition, an
acquiring person will not include stockholders, including the
Coors Family Stockholders and the TPG Entities, who beneficially
owned 15% or more of our outstanding common stock immediately
after the completion of the Altivity Transaction (referred to as
grandfathered persons, provided that any such
stockholder will cease to be a grandfathered person at such time
when such stockholder beneficially owns less than 15% of our
outstanding common stock).
If any person becomes an acquiring person, each right will
represent, instead of the right to acquire one one-thousandth of
a share of Series A junior participating preferred stock,
the right to receive upon exercise a number of shares of common
stock having a value equal to two times the purchase price of
the right, subject to certain exceptions. All rights that are
beneficially owned by an acquiring person or its transferee will
become null and void.
8
If at any time after a public announcement has been made or we
have received notice that a person has become an acquiring
person and:
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we are acquired in a merger or other business combination and we
are not the surviving corporation; or
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50% or more of our assets, cash flow or earning power (taken as
a whole with our subsidiaries) is sold or transferred;
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each right, except rights that previously have been voided as
described above, will represent the right to receive, upon
exercise, common stock of the acquiring company having a value
equal to two times the purchase price of the right.
At any time until the earlier of (1) the time we become
aware that a person has become an acquiring person or
(2) March 10, 2018, we may redeem all the rights at a
price of $0.001 per right. At any time after a person has become
an acquiring person and before the acquisition by such person
and its affiliates of 50% or more of the outstanding shares of
our common stock, we may exchange the rights, in whole or in
part, at an exchange ratio of one share of common stock per
right.
The purchase price of the rights, the number of thousandths of a
share of Series A junior participating preferred stock and
the amount of common stock, cash or other securities or property
issuable upon exercise of, or exchange for, the rights, and the
number of such rights outstanding, are subject to adjustment
from time to time to prevent dilution. Except as provided in the
rights agreement, no adjustment in the purchase price or the
number of shares of Series A junior participating preferred
stock issuable upon exercise of a right will be required until
the cumulative adjustment would require an increase or decrease
of at least 1% in the purchase price or number of shares for
which a right is exercisable.
Before the time that a person or group becomes an acquiring
person, and subject to specified limitations, the rights
agreement may be supplemented or amended by us and the rights
agent, without the approval of the holders of the rights.
The stockholder rights plan is designed to protect stockholders
in the event of unsolicited offers to acquire us and other
coercive takeover tactics which, in the opinion of our board of
directors, could impair our ability to represent stockholder
interests. The rights will not prevent a takeover of us.
However, the provisions of the stockholder rights plan may
render an unsolicited takeover more difficult or less likely to
occur, even though such takeover may offer our stockholders the
opportunity to sell their stock at a price above the prevailing
market rate
and/or may
be favored by a majority of our stockholders.
Stockholders
Agreement
The following is a summary of the material provisions of the
stockholders agreement. This summary is qualified in its
entirety by reference to the stockholders agreement, which is
incorporated by reference in its entirety and is included as an
exhibit to the registration statement of which this prospectus
is a part. This summary may not contain all of the information
about the stockholders agreement which is important to you, and
we encourage you to read the stockholders agreement in its
entirety.
Certain of our significant stockholders, including the Coors
Family Stockholders, Clayton, Dubilier & Rice
Fund V Limited Partnership (the CDR Fund), Old
Town, S.A. (formerly known as EXOR Group S.A.) (Old
Town), Field Holdings, Inc. and the TPG Entities, entered
into the stockholders agreement in connection with the Altivity
Transaction. The parties thereto have made certain agreements
regarding matters further described below, that, among other
things: (i) provides the covered stockholders certain
rights to designate members of our board of directors;
(ii) restricts the ability of the covered stockholders to
transfer their shares of our common stock; and (iii) limits
the covered stockholders from acquiring additional shares of our
common stock and from taking certain other actions with respect
to us.
Designation
Rights
The stockholders agreement provides that each of the Coors
Family Stockholders, the CDR Fund, Old Town and the TPG Entities
will have the right, subject to requirements related to stock
ownership, to designate a certain number of individuals for
nomination for election to our board of directors as described
below. Each of the Coors Family Stockholders, the CDR Fund and
Old Town is entitled to designate one individual for nomination
for
9
election to the board for so long as each such stockholder owns
at least 3% of the fully diluted shares of our common stock.
The TPG Entities, as a group, are entitled to designate the
following number of individuals for nomination for election to
our board of directors for so long as they meet the requirements
related to stock ownership specified below:
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three individuals for so long as the TPG Entities own at least
20% of our fully diluted shares common stock in the aggregate;
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two individuals for so long as the TPG Entities own at least the
lesser of (i) 16% of our fully diluted shares common stock
in the aggregate or (ii) the percentage of our common stock
then held by the Coors Family Stockholders, so long as that
percentage is not less than 10%; and
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one individual for so long as the TPG Entities own at least 3%
of the fully diluted outstanding shares of our common stock.
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The stockholders agreement further provides that each of our
other directors, not designated in the manner described above,
will be independent directors, as described below, designated
for nomination by the nominating and corporate governance
committee of our board.
Pursuant to the stockholders agreement, at each meeting of our
stockholders at which directors are to be elected, we will
recommend that our stockholders elect to the board of directors
the designees of the individuals designated by the Coors Family
Stockholders, the CDR Fund, Old Town and the TPG Entities. In
addition, our then serving Chief Executive Officer shall be
nominated for election to the board.
In the event that the Coors Family Stockholders, the CDR Fund,
Old Town or the TPG Entities lose the right to designate a
person to the board, such designee will resign immediately upon
receiving notice from the nominating and corporate governance
committee that it has identified a replacement director, and
will resign in any event no later than 120 days after the
designating person or entity loses the right to designate such
designee to the board. The board seat formerly occupied by such
designee shall become a seat for an additional independent
director to be selected solely by the nominating and corporate
governance committee or the board may determine to reduce its
size by the number of vacated board seats.
An independent director is a director who:
(i) is not an officer or employee of the Company or any of
its affiliates, (ii) is not an officer or employee of any
covered stockholder or, if such covered stockholder is a trust,
a direct or indirect beneficiary of such trust and
(iii) meets the standards of independence under applicable
law and the requirements applicable to companies listed on the
NYSE.
Agreement
to Vote for Directors; Vacancies
Each covered stockholder is obligated to vote all of the shares
owned by such covered stockholder in favor of the CEO director
and each of the parties designees to the board, and to
take all other steps within such covered stockholders
power to ensure that the composition of the board is as
contemplated by the stockholders agreement.
As long as the Coors Family Stockholders, the CDR Fund, Old Town
or the TPG Entities, as the case may be, has the right to
designate a person for nomination for election to the board, at
any time at which the seat occupied by such partys
designee becomes vacant as a result of death, disability,
retirement, resignation, removal or otherwise, such party will
be entitled to designate for appointment by the remaining
directors an individual to fill such vacancy and to serve as a
director. We, along with each of the covered stockholders, have
agreed to take such actions as will result in the appointment to
the board as soon as practicable of any individual so designated
by the Coors Family Representative, the CDR Fund, Old Town or
the TPG Entities.
At any time at which a vacancy is created on the board as a
result of the death, disability, retirement, resignation,
removal or otherwise of one of the independent directors before
the expiration of his or her term as director, the nominating
and corporate governance committee will notify the board of a
replacement who is an independent director. We, along with and
the covered stockholders has agreed to take such actions as will
result in the appointment of such replacement to the board as
soon as practicable.
10
Actions
of the Board of Directors; Affiliate Agreements
The stockholders agreement provides that actions of the board
will require the affirmative vote of at least a majority of the
directors present in person or by telephone at a duly convened
meeting at which a quorum is present, or the unanimous written
consent of the board, except that a board decision regarding the
merger, consolidation or sale of substantially all our assets
will require the affirmative vote of a majority of the directors
then in office. In addition, a decision by us to enter into,
modify or terminate any agreement with an affiliate of the Coors
Family Stockholders, the CDR Fund, Old Town or the TPG Entities
will require the affirmative vote of a majority of the directors
not nominated by a covered stockholder which, directly or
indirectly through an affiliate, has an interest in that
agreement.
Committees
of the Board of Directors
The stockholders agreement provides for the board to have an
audit committee, a compensation and benefits committee and a
nominating and corporate governance committee as follows:
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the audit committee will have at least three members, each of
whom will be an independent director;
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the compensation and benefits committee will have three members,
each of whom will be an independent director; and
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the nominating and corporate governance committee will have five
members, consisting of the directors designated by the Coors
Family Stockholders, the CDR Fund, Old Town and two of the
directors designated by the TPG Entities, plus in certain
circumstances, a non-voting chairman.
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The rights described above of each of the covered stockholders
to have its director designee sit as a member of board
committees will cease at such time as such stockholder holds
less than 3% of the fully diluted shares of our common stock,
and in the case of the two TPG Entities designees on the
nominating and corporate governance committee, one such designee
shall resign from the committee at such time as the TPG Entities
have the right to designate only one director for nomination for
election to the board. Our board of directors will fill any
committee seats that become vacant in the manner provided in the
preceding sentence with independent directors. The stockholders
agreement prohibits the board from forming an executive
committee.
Transfer
Restrictions
The covered stockholders are restricted from transferring their
shares, except:
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to us or in a transaction approved by the our board of directors;
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to certain affiliated permitted transferees that agree to be
bound by the stockholders agreement;
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pursuant to a public offering; or
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pursuant to a transfer made in accordance with Rule 144 of
the Securities Act or that is exempt from the registration
requirements of the Securities Act, to any person so long as
such transferee would not own in excess of 5% of the fully
diluted shares of our common stock.
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Standstill
Agreement
The covered stockholders are also subject to standstill
provisions that generally restrict the covered stockholders from
acquiring additional equity securities of us (or any rights to
purchase equity securities) that would increase such covered
stockholders beneficial ownership of our common stock on a
percentage basis greater than the percentage held as of the
closing date of the Altivity Transaction, or otherwise take
action to increase such covered stockholders control over
us. These restrictions prohibit the covered stockholders from
taking the following actions, among other items:
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acquiring the beneficial ownership of additional equity
securities (or the rights to purchase equity securities) of us,
subject to certain exceptions;
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making or participating in any solicitation of proxies to vote
any of our securities in an election contest;
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participating in the formation of a group with respect to shares
of our common stock (except to the extent such group is formed
with respect to the stockholders agreement or the registration
rights agreement);
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granting any proxy to any person other than us or our designees
to vote at any meeting of our stockholders;
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initiating or soliciting stockholders for the approval of one or
more stockholder proposals with respect to us;
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seeking to place a representative on our board of directors,
except as contemplated by the stockholders agreement;
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seeking to publicly call a meeting of our stockholders;
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making any public announcement or proposal with respect to any
form of business combination involving us; and
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disclosing any plan to do any of the foregoing or assist or
encouraging any third party to do any of the foregoing.
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Once the TPG Entities transfer shares of our common stock such
that their aggregate percentage holdings of our outstanding
common stock drops below 25%, and then below 15%, respectively,
the TPG Entities may not acquire beneficial ownership on a
percentage basis of shares greater than 25% or 15%, as the case
may be.
Term
of Stockholders Agreement
The stockholders agreement will terminate under the following
circumstances:
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by the unanimous consent of us and the covered stockholders;
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with respect to any covered stockholder, at such time as such
covered stockholder holds less than 3% of the fully diluted
shares of our common stock;
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except with respect to the standstill provisions, at such time
as no more than one of the covered stockholders holds more than
3% of the fully diluted shares of our common stock;
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except with respect to the standstill provisions, at such time
as approved by each of the covered stockholders who holds in
excess of 3% of the fully diluted shares of our common
stock; or
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upon the fifth anniversary of the effective date of the
stockholders agreement; provided, however, that the
confidentiality provisions of the stockholders agreement shall
survive for one year following the termination of the
stockholders agreement.
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Notwithstanding the foregoing, the standstill provisions of the
stockholders agreement will terminate on the earlier of the date
on which the TPG Entities or the covered stockholders other than
the TPG Entities collectively, beneficially own less than 10% of
the fully diluted shares of our common stock and the third
anniversary of the closing of the transactions; provided,
however, that in no event will the standstill provisions of
the stockholders agreement terminate prior to the second
anniversary of the closing of the transactions.
Registration
Rights
The holders of an aggregate of 268,821,452 shares of our
common stock are entitled to certain rights with respect to
registration of such shares under the Securities Act. These
shares are referred to as registrable securities.
The holders of registrable securities possess certain
registration rights pursuant to the terms of a registration
rights agreement, dated as of July 9, 2007, by and among
us, the Coors Family Stockholders, Old Town, the CDR Fund, the
TPG Entities and certain other stockholders. The registration
rights agreement provides, in part, that if we determine to
register any of our securities under the Securities Act, these
holders are entitled to written notice of the registration and
are entitled to include all or portion of their registrable
shares in the registration, subject to certain limitations. In
addition, these holders will have the right to require us to
file a registration statement under the Securities Act to
register all or any part of the registrable securities held by
such holders, subject to certain conditions and limitations.
This is not a complete description of the registration rights
agreement and is qualified by the full text of the registration
rights agreement, which is filed as an exhibit to the
registration statement of which this prospectus is a part.
Listing
Our common stock is listed on the NYSE under the ticker symbol
GPK.
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Transfer
Agent and Registrar
The transfer agent and registrar for our common stock is Wells
Fargo Bank, N.A.
DESCRIPTION
OF THE DEBT SECURITIES
General
The following description of the terms of our senior debt
securities and subordinated debt securities (together, the
debt securities) sets forth certain general terms
and provisions of the debt securities to which any prospectus
supplement may relate. Unless otherwise noted, the general terms
and provisions of our debt securities discussed below apply to
both our senior debt securities and our subordinated debt
securities. Our debt securities may be issued from time to time
in one or more series. The particular terms of any series of
debt securities and the extent to which the general provisions
may apply to a particular series of debt securities will be
described in the prospectus supplement relating to that series.
Debt securities may be issued either by GPHC or GPII. When
describing any debt securities, references to we,
us and our refer to the issuer of those
debt securities.
The senior debt securities will be issued under an indenture
between us and U.S. Bank National Association, as Senior
Indenture Trustee (the senior indenture). The
subordinated debt securities will be issued under an indenture
between us and U.S. Bank National Association, as
Subordinated Indenture Trustee (the subordinated
indenture and, together with the senior indenture, the
indentures). The Senior Indenture Trustee and the
Subordinated Indenture Trustee are both referred to,
individually, as the Trustee. The senior debt
securities will constitute our unsecured and unsubordinated
obligations and the subordinated debt securities will constitute
our unsecured and subordinated obligations. A detailed
description of the subordination provisions is provided below
under the caption Ranking and
Subordination Subordination. In general,
however, if we declare bankruptcy, holders of the senior debt
securities will be paid in full before the holders of
subordinated debt securities will receive anything.
The statements set forth below are brief summaries of certain
provisions contained in the indentures, which summaries do not
purport to be complete and are qualified in their entirety by
reference to the indentures, which are filed as exhibits to the
registration statement of which this prospectus forms a part.
Terms used herein that are otherwise not defined shall have the
meanings given to them in the indentures. Such defined terms
shall be incorporated herein by reference.
The indentures will not limit the amount of debt securities that
may be issued under the applicable indenture, and debt
securities may be issued under the applicable indenture up to
the aggregate principal amount that may be authorized from time
to time by us. Any such limit applicable to a particular series
will be specified in the prospectus supplement relating to that
series.
The prospectus supplement relating to any series of debt
securities in respect of which this prospectus is being
delivered will contain the following terms, among others, for
each such series of debt securities:
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the designation and issue date of the debt securities;
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the date or dates on which the principal amount of the debt
securities is payable;
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the rate or rates (or manner of calculation thereof), if any,
per annum at which the debt securities will bear interest, if
any, the date or dates from which interest will accrue and the
interest payment date or dates for the debt securities;
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any limit upon the aggregate principal amount of the debt
securities which may be authenticated and delivered under the
applicable indenture;
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the period or periods within which, the redemption price or
prices or the repayment price or prices, as the case may be, at
which, and the terms and conditions upon which, the debt
securities may be redeemed at the issuing companys option
or the option of the holder of such debt securities;
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the obligation, if any, of the issuing company to purchase the
debt securities pursuant to any sinking fund or analogous
provisions or at the option of a holder of such debt securities
and the period or periods within
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which, the price or prices at which and the terms and conditions
upon which such debt securities will be purchased, in whole or
in part, pursuant to such obligation;
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if other than denominations of $1,000 and any integral multiple
thereof, the denominations in which the debt securities will be
issuable;
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in the case of debt securities issued by GPHC, provisions, if
any, with regard to the conversion or exchange of the debt
securities, at the option of the holders of such debt securities
or GPHC, as the case may be, for or into new securities of a
different series, GPHCs common stock or other securities;
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if other than U.S. dollars, the currency or currencies or
units based on or related to currencies in which the debt
securities will be denominated and in which payments of
principal of, and any premium and interest on, such debt
securities shall or may be payable;
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if the principal of (and premium, if any) or interest, if any,
on the debt securities are to be payable, at the election of the
issuing company or a holder of such debt securities, in a
currency (including a composite currency) other than that in
which such debt securities are stated to be payable, the period
or periods within which, and the terms and conditions upon
which, such election may be made;
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if the amount of payments of principal of (and premium, if any)
or interest, if any, on the debt securities may be determined
with reference to an index based on a currency (including a
composite currency) other than that in which such debt
securities are stated to be payable, the manner in which such
amounts shall be determined;
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provisions, if any, related to the exchange of the debt
securities, at the option of the holders of such debt
securities, for other securities of the same series of the same
aggregate principal amount or of a different authorized series
or different authorized denomination or denominations, or both;
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the portion of the principal amount of the debt securities, if
other than the principal amount thereof, which shall be payable
upon declaration of acceleration of the maturity thereof as more
fully described under the section Events of
Default, Notice and Waiver below;
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whether the debt securities will be issued in the form of global
securities and, if so, the identity of the depositary with
respect to such global securities;
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if the debt securities will be guaranteed, the terms and
conditions of such guarantees and provisions for the accession
of the guarantors to certain obligations under the applicable
indenture;
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with respect to subordinated debt securities only, the amendment
or modification of the subordination provisions in the
subordinated indenture with respect to the debt
securities; and
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any other specific terms.
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We may issue debt securities of any series at various times and
we may reopen any series for further issuances from time to time
without notice to existing holders of securities of that series.
Some of the debt securities may be issued as original issue
discount debt securities. Original issue discount debt
securities bear no interest or bear interest at below-market
rates. These are sold at a discount below their stated principal
amount. If we issue these securities, the prospectus supplement
relating to such series of debt securities will describe any
special tax, accounting or other information which we think is
important. We encourage you to consult with your own tax and
financial advisors on these important matters.
Unless we specify otherwise in the applicable prospectus
supplement relating to such series of debt securities, the
covenants contained in the indentures will not provide special
protection to holders of debt securities if we enter into a
highly leveraged transaction, recapitalization or restructuring.
Unless otherwise set forth in the prospectus supplement relating
to such series of debt securities, interest on outstanding debt
securities will be paid to holders of record on the date that is
15 days prior to the date such interest is to be paid or,
if not a business day, the next preceding business day. Unless
otherwise specified in the prospectus supplement, debt
securities will be issued in fully registered form only. Unless
otherwise specified in the prospectus supplement, the principal
amount of the debt securities will be payable at the corporate
trust office of the Trustee in New York, New York. The debt
securities may be presented for transfer or exchange at such
office unless otherwise specified in the prospectus supplement,
subject to the limitations provided in the applicable indenture,
without any
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service charge, but we may require payment of a sum sufficient
to cover any tax or other governmental charges payable in
connection therewith.
Guarantees
The payment obligations of GPHC under any series of debt
securities may be guaranteed by one or more of GPHCs
direct or indirect subsidiaries, including GPC, GPII or by other
persons. The payment obligations of GPII under any series of
debt security will be guaranteed fully and unconditionally by
GPHC, and may be guaranteed by one or more of GPHCs other
direct or indirect subsidiaries or by other persons. If a series
of debt securities is so guaranteed, the guarantors will execute
a supplemental indenture or notation of guarantee as further
evidence of their guarantee. The applicable prospectus
supplement will describe the terms of any guarantee.
The obligations of each guarantor under its guarantee may be
limited to the maximum amount that will not result in such
guarantee obligations constituting a fraudulent conveyance or
fraudulent transfer under federal or state law, after giving
effect to all other contingent and fixed liabilities of that
subsidiary and any collections from or payments made by or on
behalf of any other guarantor in respect to its obligations
under its guarantee.
Ranking
and Subordination
General
The subordinated debt securities and the related guarantees will
effectively rank junior in right of payment to any of our or the
guarantors current and future secured obligations to the
extent of the value of the assets securing such obligations. The
debt securities and the guarantees will be effectively
subordinated to all existing and future liabilities, including
indebtedness and trade payables, of our non-guarantor
subsidiaries. Unless otherwise set forth in the prospectus
supplement relating to such series of debt securities, the
indentures will not limit the amount of unsecured indebtedness
or other liabilities that can be incurred by our non-guarantor
subsidiaries.
Furthermore, GPHC is a holding company with no material business
operations. GPHCs ability to service its indebtedness and
other obligations is dependent primarily upon the earnings and
cash flows of its subsidiaries and the distribution or other
payment to GPHC of such earnings or cash flows. In addition,
certain indebtedness of GPHCs subsidiaries contains, and
future agreements relating to any indebtedness of its
subsidiaries may contain, significant restrictions on the
ability of its subsidiaries to pay dividends or otherwise make
distributions to us.
Ranking
of Debt Securities
The senior debt securities described in this prospectus will be
unsecured, senior obligations of the issuing company and will
rank equally with the issuing companys other unsecured and
unsubordinated obligations. Any guarantees of the senior debt
securities will be unsecured and senior obligations of each of
the guarantors, and will rank equally with all other unsecured
and unsubordinated obligations of such guarantors. The
subordinated debt securities will be unsecured, subordinated
obligations and the any guarantees of the subordinated debt
securities will be unsecured and subordinated obligations of
each of the guarantors.
Subordination
If issued, the indebtedness evidenced by the subordinated debt
securities will be subordinate to the prior payment in full of
all our Senior Indebtedness (as defined below). During the
continuance beyond any applicable grace period of any default in
the payment of principal, premium, interest or any other payment
due on any of our Senior Indebtedness, we may not make any
payment of principal of, or premium, if any, or interest on the
subordinated debt securities. In addition, upon any payment or
distribution of our assets upon any dissolution, winding up,
liquidation or reorganization, the payment of the principal of,
or premium, if any, and interest on the subordinated debt
securities will be subordinated to the extent provided in the
subordinated indenture in right of payment to the prior payment
in full of all our Senior Indebtedness. Because of this
subordination, if we dissolve or otherwise liquidate, holders of
our subordinated debt securities may receive less, ratably, than
holders of our Senior Indebtedness. The subordination provisions
do not prevent the occurrence of an event of default under the
subordinated indenture.
The subordination provisions also apply in the same way to each
guarantor with respect to the Senior Indebtedness of such
guarantor.
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The term Senior Indebtedness of a person means with
respect to such person the principal of, premium, if any,
interest on, and any other payment due pursuant to any of the
following, whether outstanding on the date of the subordinated
indenture or incurred by that person in the future:
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all of the indebtedness of that person for borrowed money,
including any indebtedness secured by a mortgage or other lien
which is (1) given to secure all or part of the purchase
price of property subject to the mortgage or lien, whether given
to the vendor of that property or to another lender, or
(2) existing on property at the time that person acquires
it;
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all of the indebtedness of that person evidenced by notes,
debentures, bonds or other similar instruments sold by that
person for money;
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all of the lease obligations which are capitalized on the books
of that person in accordance with generally accepted accounting
principles;
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all indebtedness of others of the kinds described in the first
two bullet points above and all lease obligations of others of
the kind described in the third bullet point above, in each
case, that the person, in any manner, assumes or guarantees or
that the person in effect guarantees through an agreement to
purchase, whether that agreement is contingent or
otherwise; and
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all renewals, extensions or refundings of indebtedness of the
kinds described in the first, second or fourth bullet point
above and all renewals or extensions of leases of the kinds
described in the third or fourth bullet point above;
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unless, in the case of any particular indebtedness,
lease, renewal, extension or refunding, the instrument or lease
creating or evidencing it or the assumption or guarantee
relating to it expressly provides that such indebtedness, lease,
renewal, extension or refunding is not superior in right of
payment to the subordinated debt securities. Our senior debt
securities, and any unsubordinated guarantee obligations of ours
or any guarantor to which we and the guarantors are a party,
including the guarantors guarantees of our debt securities
and other indebtedness for borrowed money, constitute Senior
Indebtedness for purposes of the subordinated indenture.
Pursuant to the subordinated indenture, the subordinated
indenture may not be amended, at any time, to alter the
subordination provisions of any outstanding subordinated debt
securities without the consent of the requisite holders of each
outstanding series or class of Senior Indebtedness (as
determined in accordance with the instrument governing such
Senior Indebtedness) that would be adversely affected thereby.
Consolidation,
Merger, Conveyance or Transfer on Certain Terms
Except as described in the applicable prospectus supplement
relating to such debt securities, we will not consolidate with
or merge into any other entity or convey or transfer our
properties and assets substantially as an entirety to any
entity, unless:
(1) the entity formed by such consolidation or into which
we are merged or the entity that acquires by conveyance or
transfer our properties and assets substantially as an entirety
shall be organized and existing under the laws of the United
States of America or any State or the District of Columbia, and
will expressly assume, by supplemental indenture, executed and
delivered to the Trustee, in form reasonably satisfactory to the
Trustee, the due and punctual payment of the principal of (and
premium, if any) and interest on all the debt securities and the
performance of every covenant of the applicable indenture (as
supplemented from time to time) on our part to be performed or
observed;
(2) immediately after giving effect to such transaction, no
Event of Default (as defined below), and no event which, after
notice or lapse of time, or both, would become an Event of
Default, shall have happened and be continuing; and
(3) we have delivered to the Trustee an officers
certificate and an opinion of counsel each stating that such
consolidation, merger, conveyance or transfer and such
supplemental indenture comply with the requirements set forth in
paragraphs (1) and (2) above and that all conditions
precedent relating to such transaction have been complied with.
Upon any consolidation or merger, or any conveyance or transfer
of our properties and assets substantially as an entirety as set
forth above, the successor person formed by such consolidation
or into which we are merged or to
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which such conveyance or transfer is made shall succeed to, and
be substituted for, and may exercise every right and power of
ours under the applicable indenture with the same effect as if
such successor had been named in the applicable indenture. In
the event of any such conveyance or transfer, we, as the
predecessor, shall be discharged from all obligations and
covenants under the applicable indenture and the debt securities
issued under such indenture and may be dissolved, wound up or
liquidated at any time thereafter.
Certain
Covenants
Any covenants pertaining to a series of debt securities will be
set forth in a prospectus supplement relating to such series of
debt securities.
Except as described in the prospectus and any applicable
prospectus supplement relating to such series of debt
securities, the indentures and the debt securities do not
contain any covenants or other provisions designed to afford
holders of debt securities protection in the event of a
recapitalization or highly leveraged transaction involving us.
Certain
Definitions
The following are certain of the terms defined in the indentures:
GAAP means generally accepted accounting
principles as such principles are in effect in the
United States as of the date of the applicable indenture.
Significant Subsidiary means any Subsidiary
which would be a significant subsidiary as defined
in
Rule 1-02
of
Regulation S-X,
promulgated pursuant to the Securities Act of 1933 (the
Securities Act), as in effect on the date of the
applicable indenture.
Subsidiary means, with respect to any person,
any corporation more than 50% of the voting stock of which is
owned directly or indirectly by such person, and any
partnership, association, joint venture or other entity in which
such person owns more than 50% of the equity interests or has
the power to elect a majority of the board of directors or other
governing body.
Optional
Redemption
Unless we specify otherwise in the applicable prospectus
supplement, we may redeem any of the debt securities as a whole
at any time or in part from time to time, at our option, on at
least 15 days, but not more than 45 days, prior notice
mailed to the registered address of each holder of the debt
securities to be redeemed, at respective redemption prices equal
to the greater of:
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100% of the principal amount of the debt securities to be
redeemed, and
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the sum of the present values of the Remaining Scheduled
Payments, as defined below, discounted to the redemption date,
on a semi-annual basis, assuming a 360 day year consisting
of twelve 30 day months, at the Treasury Rate, as defined
below, plus the number, if any, of basis points specified in the
applicable prospectus supplement;
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plus, in each case, accrued interest to the date of redemption
that has not been paid (such redemption price, the
Redemption Price).
Comparable Treasury Issue means, with respect
to the debt securities, the U.S. Treasury security selected
by an Independent Investment Banker as having a maturity
comparable to the remaining term (Remaining Life) of
the debt securities being redeemed that would be utilized, at
the time of selection and in accordance with customary financial
practice, in pricing new issues of corporate debt securities of
comparable maturity to the Remaining Life of such debt
securities.
Comparable Treasury Price means, with respect
to any redemption date for the debt securities: (1) the
average of two Reference Treasury Dealer Quotations for that
redemption date, after excluding the highest and lowest of four
such Reference Treasury Dealer Quotations; or (2) if the
Trustee obtains fewer than four Reference Treasury Dealer
Quotations, the average of all quotations obtained by the
Trustee.
Independent Investment Banker means one of
the Reference Treasury Dealers, to be appointed by us.
Reference Treasury Dealer means four primary
U.S. Government securities dealers to be selected by us.
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Reference Treasury Dealer Quotations means,
with respect to each Reference Treasury Dealer and any
redemption date, the average, as determined by the Trustee, of
the bid and asked prices for the Comparable Treasury Issue,
expressed in each case as a percentage of its principal amount,
quoted in writing to the Trustee by such Reference Treasury
Dealer at 3:00 p.m., New York City time, on the third
business day preceding such redemption date.
Remaining Scheduled Payments means, with
respect to each debt security to be redeemed, the remaining
scheduled payments of the principal thereof and interest thereon
that would be due after the related redemption date but for such
redemption; provided, however, that, if such redemption
date is not an interest payment date with respect to such debt
security, the amount of the next succeeding scheduled interest
payment thereon will be deemed to be reduced by the amount of
interest accrued thereon to such redemption date.
Treasury Rate means, with respect to any
redemption date for the debt securities: (1) the yield,
under the heading which represents the average for the
immediately preceding week, appearing in the most recently
published statistical release designated H.15(519)
or any successor publication which is published weekly by the
Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury
debt securities adjusted to constant maturity under the caption
Treasury Constant Maturities, for the maturity
corresponding to the Comparable Treasury Issue; provided
that if no maturity is within three months before or after
the maturity date for the debt securities, yields for the two
published maturities most closely corresponding to the
Comparable Treasury Issue will be determined and the Treasury
Rate will be interpolated or extrapolated from those yields on a
straight line basis, rounding to the nearest month; or
(2) if that release, or any successor release, is not
published during the week preceding the calculation date or does
not contain such yields, the rate per annum equal to the
semiannual equivalent yield to maturity of the Comparable
Treasury Issue, calculated using a price for the Comparable
Treasury Issue (expressed as a percentage of its principal
amount) equal to the Comparable Treasury Price for that
redemption date. The Treasury Rate will be calculated on the
third business day preceding the redemption date.
On and after the redemption date, interest will cease to accrue
on the debt securities or any portion thereof called for
redemption, unless we default in the payment of the
Redemption Price, and accrued interest. On or before the
redemption date, we shall deposit with a paying agent, or the
applicable Trustee, money sufficient to pay the
Redemption Price of and accrued interest on the debt
securities to be redeemed on such date. If we elect to redeem
less than all of the debt securities of a series, then the
Trustee will select the particular debt securities of such
series to be redeemed in a manner it deems appropriate and fair.
Defeasance
Except as otherwise set forth in the prospectus supplement
relating to such series of debt securities, each indenture will
provide that we, at our option,
(1) will be discharged from any and all obligations in
respect of any series of debt securities (except in each case
for certain obligations to register the transfer or exchange of
debt securities, replace stolen, lost or mutilated debt
securities, maintain paying agencies and hold monies for payment
in trust), or
(2) need not comply with any restrictive covenants
described in a prospectus supplement relating to such series of
debt securities, the guarantors will be released from the
guarantees and certain Events of Default (other than those
arising out of the failure to pay interest or principal on the
debt securities of a particular series and certain events of
bankruptcy, insolvency and reorganization) will no longer
constitute Events of Default with respect to such series of debt
securities,
in each case, if we deposit with the Trustee, in trust, money or
the equivalent in securities of the government which issued the
currency in which the debt securities are denominated or
government agencies backed by the full faith and credit of such
government, or a combination thereof, which through the payment
of interest thereon and principal thereof in accordance with
their terms will provide money in an amount sufficient to pay
all the principal (including any mandatory sinking fund
payments) of, and interest on, such series on the dates such
payments are due in accordance with the terms of such series.
To exercise any such option, we are required, among other
things, to deliver to the Trustee an opinion of counsel to the
effect that the deposit and related defeasance would not cause
the holders of such series to recognize
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income, gain or loss for federal income tax purposes and, in the
case of a discharge pursuant to clause (a) above,
accompanied by a ruling to such effect received from or
published by the U.S. Internal Revenue Service.
In addition, we are required to deliver to the Trustee an
officers certificate stating that such deposit was not
made by us with the intent of preferring the holders over other
creditors of ours or with the intent of defeating, hindering,
delaying or defrauding creditors of ours or others.
Events of
Default, Notice and Waiver
Except as otherwise set forth in the prospectus supplement
relating to such series of debt securities, each indenture will
provide that, if an Event of Default specified therein with
respect to any series of debt securities issued thereunder shall
have happened and be continuing, either the Trustee thereunder
or the holders of
331/3%
in aggregate principal amount of the outstanding debt securities
of such series (or
331/3%
in aggregate principal amount of all outstanding debt securities
under such indenture, in the case of certain Events of Default
affecting all series of debt securities issued under such
indenture) may declare the principal of all the debt securities
of such series to be due and payable.
Except as otherwise set forth in the prospectus supplement
relating to such series of debt securities, an Event of
Default in respect of any series will be defined in
the indentures as being any one of the following events:
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default for 30 days in payment of any interest installment
with respect to such series;
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default in payment of principal of, or premium, if any, on, or
any sinking or purchase fund or analogous obligation with
respect to, debt securities of such series when due at their
stated maturity, by declaration or acceleration, when called for
redemption or otherwise;
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default for 90 days after written notice to us by the
Trustee thereunder or by holders of
331/3%
in aggregate principal amount of the outstanding debt securities
of such series in the performance, or breach, of any covenant or
warranty pertaining to debt securities of such series; and
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certain events of bankruptcy, insolvency and reorganization with
respect to us or any Significant Subsidiary of ours which is
organized under the laws of the United States or any political
sub-division
thereof or the entry of an order ordering the winding up or
liquidation of our affairs.
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Each indenture will provide that the Trustee thereunder will,
within 90 days after the occurrence of a default with
respect to the debt securities of any series issued under such
indenture, give to the holders of the debt securities of such
series notice of all uncured and unwaived defaults known to it;
provided, however, that, except in the case of default in
the payment of principal of, premium, if any, or interest, if
any, on any of the debt securities of such series, the Trustee
will be protected in withholding such notice if it in good faith
determines that the withholding of such notice is in the
interests of the holders of the debt securities of such series.
The term default for the purpose of this provision
means any event which is, or after notice or lapse of time or
both would become, an Event of Default with respect to debt
securities of such series.
Each indenture will contain provisions entitling the Trustee
under such indenture, subject to the duty of the Trustee during
an Event of Default to act with the required standard of care,
to be indemnified to its reasonable satisfaction by the holders
of the debt securities before proceeding to exercise any right
or power under the applicable indenture at the request of
holders of such debt securities.
Each indenture will provide that the holders of a majority in
aggregate principal amount of the outstanding debt securities of
any series issued under such indenture may direct the time,
method and place of conducting proceedings for remedies
available to the Trustee or exercising any trust or power
conferred on the Trustee in respect of such series, subject to
certain conditions.
Except as otherwise set forth in the prospectus supplement
relating to the debt securities, in certain cases, the holders
of a majority in principal amount of the outstanding debt
securities of any series may waive, on behalf of the holders of
all debt securities of such series, any past default or Event of
Default with respect to the debt securities of such series
except, among other things, a default not theretofore cured in
payment of the principal of, or premium, if any, or interest, if
any, on any of the senior debt securities of such series or
payment of any sinking or purchase fund or analogous obligations
with respect to such senior debt securities.
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Each indenture will include a covenant that we will file
annually with the Trustee a certificate of no default or
specifying any default that exists.
Modification
of the Indentures
Except as set forth in the prospectus supplement relating to the
debt securities, we and the Trustee may, without the consent of
the holders of the debt securities issued under the indenture
governing such debt securities, enter into indentures
supplemental to the applicable indenture for, among others, one
or more of the following purposes:
(1) to evidence the succession of another person to us or
to a guarantor, if any, and the assumption by such successor of
our or the guarantors obligations under the applicable
indenture and the debt securities of any series;
(2) to add to our covenants or those of any guarantor, if
any, or to surrender any of our rights or powers or those of any
guarantor for the benefit of the holders of debt securities of
any or all series issued under such indenture;
(3) to cure any ambiguity, to correct or supplement any
provision in the applicable indenture which may be inconsistent
with any other provision therein, or to make any other
provisions with respect to matters or questions arising under
such indenture;
(4) to add to the applicable indenture any provisions that
may be expressly permitted by the Trust Indenture Act of
1939, as amended (the TIA), excluding the provisions
referred to in Section 316(a)(2) of the TIA as in effect at
the date as of which the applicable indenture was executed or
any corresponding provision in any similar federal statute
hereafter enacted;
(5) to establish the form or terms of any series of debt
securities to be issued under the applicable indenture, to
provide for the issuance of any series of debt securities
and/or to
add to the rights of the holders of debt securities;
(6) to evidence and provide for the acceptance of any
successor Trustee with respect to one or more series of debt
securities or to add or change any of the provisions of the
applicable indenture as shall be necessary to facilitate the
administration of the trusts thereunder by one or more trustees
in accordance with the applicable indenture;
(7) to provide any additional Events of Default;
(8) to provide for uncertificated securities in addition to
or in place of certificated securities; provided that the
uncertificated securities are issued in registered form for
certain federal tax purposes;
(9) to provide for the terms and conditions of converting
those debt securities that are convertible into common stock or
another such similar security;
(10) to secure any series of debt securities;
(11) to add guarantees in respect of any series or all of
the debt securities;
(12) to make any change necessary to comply with any
requirement of the SEC in connection with the qualification of
the applicable indenture or any supplemental indenture under the
TIA; and
(13) to make any other change that does not adversely
affect the rights of the holders of the debt securities.
No supplemental indenture for the purpose identified in clauses
(2), (3) or (5) above may be entered into if to do so
would adversely affect the rights of the holders of debt
securities of any series issued under the same indenture in any
material respect.
Except as set forth in the prospectus supplement relating to
such series of debt securities, each indenture will contain
provisions permitting us and the Trustee under such indenture,
with the consent of the holders of a majority in principal
amount of the outstanding debt securities of all series issued
under such indenture to be affected voting as a single class, to
execute supplemental indentures for the purpose of adding any
provisions to or changing or eliminating any of the provisions
of the applicable indenture or modifying the rights of the
holders of the debt
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securities of such series to be affected, except that no such
supplemental indenture may, without the consent of the holders
of affected debt securities, among other things:
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change the maturity of the principal of, or the maturity of any
premium on, or any installment of interest on, any such debt
security, or reduce the principal amount or the interest or any
premium of any such debt securities, or change the method of
computing the amount of principal or interest on any such debt
securities on any date or change any place of payment where, or
the currency in which, any debt securities or any premium or
interest thereon is payable, or impair the right to institute
suit for the enforcement of any such payment on or after the
maturity of principal or premium, as the case may be;
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reduce the percentage in principal amount of any such debt
securities the consent of whose holders is required for any
supplemental indenture, waiver of compliance with certain
provisions of the applicable indenture or certain defaults under
the applicable indenture;
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modify any of the provisions of the applicable indenture related
to (i) the requirement that the holders of debt securities
issued under such indenture consent to certain amendments of the
applicable indenture, (ii) the waiver of past defaults and
(iii) the waiver of certain covenants, except to increase
the percentage of holders required to make such amendments or
grant such waivers; or
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impair or adversely affect the right of any holder to institute
suit for the enforcement of any payment on, or with respect to,
such senior debt securities on or after the maturity of such
debt securities.
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In addition, the subordinated indenture will provide that we may
not make any change in the terms of the subordination of the
subordinated debt securities of any series in a manner adverse
in any material respect to the holders of any series of
subordinated debt securities without the consent of each holder
of subordinated debt securities that would be adversely affected.
The
Trustee
U.S. Bank National Association is the Trustee under each
indenture. The Trustee and its affiliates may also provide
banking, trustee and other services for, and transact other
banking business with, us in the normal course of business.
Governing
Law
The indentures will be governed by, and construed in accordance
with, the laws of the State of New York.
Global
Securities
We may issue debt securities through global securities. A global
security is a security, typically held by a depositary, that
represents the beneficial interests of a number of purchasers of
the security. If we do issue global securities, the following
procedures will apply.
We will deposit global securities with the depositary identified
in the prospectus supplement. After we issue a global security,
the depositary will credit on its book-entry registration and
transfer system the respective principal amounts of the debt
securities represented by the global security to the accounts of
persons who have accounts with the depositary. These account
holders are known as participants. The underwriters
or agents participating in the distribution of the debt
securities will designate the accounts to be credited. Only a
participant or a person who holds an interest through a
participant may be the beneficial owner of a global security.
Ownership of beneficial interests in the global security will be
shown on, and the transfer of that ownership will be effected
only through, records maintained by the depositary and its
participants.
We and the Trustee will treat the depositary or its nominee as
the sole owner or holder of the debt securities represented by a
global security. Except as set forth below, owners of beneficial
interests in a global security will not be entitled to have the
debt securities represented by the global security registered in
their names. They also will not receive or be entitled to
receive physical delivery of the debt securities in definitive
form and will not be considered the owners or holders of the
debt securities.
Principal, any premium and any interest payments on debt
securities represented by a global security registered in the
name of a depositary or its nominee will be made to the
depositary or its nominee as the registered owner of the global
security. None of us, the Trustee or any paying agent will have
any responsibility or liability for any
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aspect of the records relating to or payments made on account of
beneficial ownership interests in the global security or
maintaining, supervising or reviewing any records relating to
the beneficial ownership interests.
We expect that the depositary, upon receipt of any payments,
will immediately credit participants accounts with
payments in amounts proportionate to their respective beneficial
interests in the principal amount of the global security as
shown on the depositarys records. We also expect that
payments by participants to owners of beneficial interests in
the global security will be governed by standing instructions
and customary practices, as is the case with the securities held
for the accounts of customers registered in street
names, and will be the responsibility of the participants.
If the depositary is at any time unwilling or unable to continue
as depositary and a successor depositary is not appointed by us
within 90 days, we will issue registered securities in
exchange for the global security. In addition, we may at any
time in our sole discretion determine not to have any of the
debt securities of a series represented by global securities. In
that event, we will issue debt securities of that series in
definitive form in exchange for the global securities.
DESCRIPTION
OF THE DEPOSITARY SHARES
General
We may, at our option, elect to offer fractional shares rather
than full shares of the preferred stock of a series. In the
event that we determine to do so, we will issue receipts for
depositary shares, each of which will represent a fraction (to
be set forth in the prospectus supplement relating to a
particular series of preferred stock) of a share of a particular
series of preferred stock as more fully described below.
The shares of any series of preferred stock represented by
depositary shares will be deposited under one or more deposit
agreements among us, a depositary to be named in the applicable
prospectus supplement, and the holders from time to time of
depositary receipts issued thereunder. Subject to the terms of
the applicable deposit agreement, each holder of a depositary
share will be entitled, in proportion to the applicable fraction
of a share of preferred stock represented by the depositary
share, to all the rights and preferences of the preferred stock
represented thereby (including, as applicable, dividend, voting,
redemption, subscription and liquidation rights).
The depositary shares will be evidenced by depositary receipts
issued pursuant to the deposit agreement. Depositary receipts
will be distributed to those persons purchasing the fractional
shares of the related series of preferred stock.
The following description sets forth certain general terms and
provisions of the depositary shares to which any prospectus
supplement may relate. The particular terms of the depositary
shares to which any prospectus supplement may relate and the
extent, if any, to which such general provisions may apply to
the depositary shares so offered will be described in the
applicable prospectus supplement. To the extent that any
particular terms of the depositary shares or the deposit
agreement described in a prospectus supplement differ from any
of the terms described below, then the terms described below
will be deemed to have been superseded by that prospectus
supplement relating to such deposited shares. The forms of
deposit agreement and depositary receipt will be filed as
exhibits to the documents incorporated or deemed to be
incorporated by reference in this prospectus.
The following summary of certain provisions of the depositary
shares and deposit agreement does not purport to be complete and
is subject to, and is qualified in its entirety by express
reference to, all the provisions of the deposit agreement and
the applicable prospectus supplement, including the definitions.
Immediately following our issuance of shares of a series of
preferred stock that will be offered as fractional shares, we
will deposit the shares with the depositary, which will then
issue and deliver the depositary receipts to the purchasers
thereof. Depositary receipts will only be issued evidencing
whole depositary shares. A depositary receipt may evidence any
number of whole depositary shares.
Pending the preparation of definitive depositary receipts, the
depositary may, upon our written order, issue temporary
depositary receipts substantially identical to (and entitling
the holders thereof to all the rights pertaining to) the
definitive depositary receipts but not in definitive form.
Definitive depositary receipts will be prepared thereafter
without unreasonable delay, and such temporary depositary
receipts will be exchangeable for definitive depositary receipts
at our expense.
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Dividends
and Other Distributions
The depositary will distribute all cash dividends or other cash
distributions received in respect of the related series of
preferred stock to the record holders of depositary shares
relating to the series of preferred stock in proportion to the
number of the depositary shares owned by the holders.
In the event of a distribution other than in cash, the
depositary will distribute property received by it to the record
holders of depositary shares entitled thereto in proportion to
the number of depositary shares owned by the holders, unless the
depositary determines that the distribution cannot be made
proportionately among the holders or that it is not feasible to
make the distributions, in which case the depositary may, with
our approval, adopt any method as it deems equitable and
practicable for the purpose of effecting the distribution,
including the sale (at public or private sale) of the securities
or property thus received, or any part thereof, at the place or
places and upon those terms as it may deem proper.
The amount distributed in any of the foregoing cases will be
reduced by any amounts required to be withheld by us or the
depositary on account of taxes or other governmental charges.
Redemption
of Depositary Shares
If any series of the preferred stock underlying the depositary
shares is subject to redemption, the depositary shares will be
redeemed from the proceeds received by the depositary resulting
from any redemption, in whole or in part, of the series of the
preferred stock held by the depositary. The redemption price per
depositary share will be equal to the applicable fraction of the
redemption price per share payable with respect to the series of
the preferred stock. If we redeem shares of a series of
preferred stock held by the depositary, the depositary will
redeem as of the same redemption date the number of depositary
shares representing the shares of preferred stock so redeemed.
If less than all the depositary shares are to be redeemed, the
depositary shares to be redeemed will be selected by lot or
substantially equivalent method determined by the depositary.
After the date fixed for redemption, the depositary shares so
called for redemption will no longer be deemed to be outstanding
and all rights of the holders of the depositary shares will
cease, except the right to receive the monies payable upon
redemption and any money or other property to which the holders
of the depositary shares were entitled upon such redemption,
upon surrender to the depositary of the depositary receipts
evidencing the depositary shares. Any funds deposited by us with
the depositary for any depositary shares that the holders
thereof fail to redeem will be returned to us after a period of
two years from the date the funds are so deposited.
Voting
the Underlying Preferred Stock
Upon receipt of notice of any meeting at which the holders of
any series of the preferred stock are entitled to vote, the
depositary will mail the information contained in the notice of
meeting to the record holders of the depositary shares relating
to the series of preferred stock. Each record holder of the
depositary shares on the record date (which will be the same
date as the record date for the related series of preferred
stock) will be entitled to instruct the depositary as to the
exercise of the voting rights pertaining to the number of shares
of the series of preferred stock represented by that
holders depositary shares. The depositary will endeavor,
insofar as practicable, to vote or cause to be voted the number
of shares of preferred stock represented by the depositary
shares in accordance with the instructions, provided the
depositary receives the instructions sufficiently in advance of
the meeting to enable it to so vote or cause to be voted the
shares of preferred stock, and we will agree to take all
reasonable action that may be deemed necessary by the depositary
in order to enable the depositary to do so. The depositary will
abstain from voting shares of the preferred stock to the extent
it does not receive specific instructions from the holders of
depositary shares representing the preferred stock.
Withdrawal
of Stock
Upon surrender of the depositary receipts at the corporate trust
office of the depositary and upon payment of the taxes, charges
and fees provided for in the deposit agreement and subject to
the terms thereof, the holder of the depositary shares evidenced
thereby will be entitled to delivery at such office, to or upon
his or her order, of the number of whole shares of the related
series of preferred stock and any money or other property, if
any, represented by the depositary shares. Holders of depositary
shares will be entitled to receive whole shares of the related
series of preferred stock, but holders of the whole shares of
preferred stock will not thereafter be entitled to deposit the
shares of preferred stock with the depositary or to receive
depositary shares therefor. If the depositary receipts delivered
by
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the holder evidence a number of depositary shares in excess of
the number of depositary shares representing the number of whole
shares of the related series of preferred stock to be withdrawn,
the depositary will deliver to the holder or upon his or her
order at the same time a new depositary receipt evidencing the
excess number of depositary shares.
Amendment
and Termination of a Deposit Agreement
The form of depositary receipt evidencing the depositary shares
of any series and any provision of the applicable deposit
agreement may at any time and from time to time be amended by
agreement between us and the depositary. However, any amendment
that materially adversely alters the rights of the holders of
depositary shares of any series will not be effective unless the
amendment has been approved by the holders of at least a
majority of the depositary shares of the series then
outstanding. Every holder of a depositary receipt at the time
the amendment becomes effective will be deemed, by continuing to
hold the depositary receipt, to be bound by the deposit
agreement as so amended. Notwithstanding the foregoing, in no
event may any amendment impair the right of any holder of any
depositary shares, upon surrender of the depositary receipts
evidencing the depositary shares and subject to any conditions
specified in the deposit agreement, to receive shares of the
related series of preferred stock and any money or other
property represented thereby, except in order to comply with
mandatory provisions of applicable law. The deposit agreement
may be terminated by us at any time upon not less than
60 days prior written notice to the depositary, in which
case, on a date that is not later than 30 days after the
date of the notice, the depositary shall deliver or make
available for delivery to holders of depositary shares, upon
surrender of the depositary receipts evidencing the depositary
shares, the number of whole or fractional shares of the related
series of preferred stock as are represented by the depositary
shares. The deposit agreement shall automatically terminate
after all outstanding depositary shares have been redeemed or
there has been a final distribution in respect of the related
series of preferred stock in connection with any liquidation,
dissolution or winding up of us and the distribution has been
distributed to the holders of depositary shares.
Charges
of Depositary
We will pay all transfer and other taxes and the governmental
charges arising solely from the existence of the depositary
arrangements. We will pay the charges of the depositary,
including charges in connection with the initial deposit of the
related series of preferred stock and the initial issuance of
the depositary shares and all withdrawals of shares of the
related series of preferred stock, except that holders of
depositary shares will pay transfer and other taxes and
governmental charges and any other charges as are expressly
provided in the deposit agreement to be for their accounts.
Resignation
and Removal of Depositary
The depositary may resign at any time by delivering to us
written notice of its election to do so, and we may at any time
remove the depositary. Any resignation or removal will take
effect upon the appointment of a successor depositary, which
successor depositary must be appointed within 60 days after
delivery of the notice of resignation or removal and must be a
bank or trust company having its principal office in the United
States and having a combined capital and surplus of at least
$50,000,000.
Miscellaneous
The depositary will forward to the holders of depositary shares
all reports and communications from us that are delivered to the
depositary and which we are required to furnish to the holders
of the related preferred stock.
The depositarys corporate trust office will be identified
in the applicable prospectus supplement. Unless otherwise set
forth in the applicable prospectus supplement, the depositary
will act as transfer agent and registrar for depositary receipts
and if shares of a series of preferred stock are redeemable, the
depositary will also act as redemption agent for the
corresponding depositary receipts.
DESCRIPTION
OF THE WARRANTS
The following description of the terms of the warrants sets
forth certain general terms and provisions of the warrants to
which any prospectus supplement may relate. GPHC may issue
warrants for the purchase of common stock, preferred stock, debt
securities, or depositary shares. Warrants may be issued
independently or together with
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common stock, preferred stock, debt securities or depositary
shares offered by any prospectus supplement and may be attached
to or separate from any such offered securities. Each series of
warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant
agent. The warrant agent will act solely as our agent in
connection with the warrants and will not assume any obligation
or relationship of agency or trust for or with any holders or
beneficial owners of warrants. The following summary of certain
provisions of the warrants does not purport to be complete and
is subject to, and qualified in its entirety by reference to,
the provisions of the warrant agreement that will be filed with
the SEC in connection with the offering of such warrants.
Debt
Warrants
The prospectus supplement relating to a particular issue of debt
warrants will describe the terms of such debt warrants,
including the following:
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the title of such debt warrants;
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the offering price for such debt warrants, if any;
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the aggregate number of such debt warrants;
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the designation and terms of the debt securities purchasable
upon exercise of such debt warrants;
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if applicable, the designation and terms of the debt securities
with which such debt warrants are issued and the number of such
debt warrants issued with each such debt security;
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if applicable, the date from and after which such debt warrants
and any debt securities issued therewith will be separately
transferable;
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the principal amount of debt securities purchasable upon
exercise of a debt warrant and the price at which such principal
amount of debt securities may be purchased upon exercise (which
price may be payable in cash, securities or other property);
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the date on which the right to exercise such debt warrants shall
commence and the date on which such right shall expire;
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if applicable, the minimum or maximum amount of such debt
warrants that may be exercised at any one time;
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whether the debt warrants represented by the debt warrant
certificates or debt securities that may be issued upon exercise
of the debt warrants will be issued in registered or bearer form;
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information with respect to book-entry procedures, if any;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States federal
income tax considerations;
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the antidilution or adjustment provisions of such debt warrants,
if any;
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the redemption or call provisions, if any, applicable to such
debt warrants; and
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any additional terms of such debt warrants, including terms,
procedures, and limitations relating to the exchange and
exercise of such debt warrants.
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Stock
Warrants
The prospectus supplement relating to any particular issue of
common stock warrants, preferred stock warrants or depositary
share warrants will describe the terms of such warrants,
including the following:
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the title of such warrants;
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the offering price for such warrants, if any;
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the aggregate number of such warrants;
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the designation and terms of the offered securities purchasable
upon exercise of such warrants;
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if applicable, the designation and terms of the offered
securities with which such warrants are issued and the number of
such warrants issued with each such offered security;
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if applicable, the date from and after which such warrants and
any offered securities issued therewith will be separately
transferable;
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the number of shares of common stock, preferred stock or
depositary shares purchasable upon exercise of a warrant and the
price at which such shares may be purchased upon exercise;
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the date on which the right to exercise such warrants shall
commence and the date on which such right shall expire;
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if applicable, the minimum or maximum amount of such warrants
that may be exercised at any one time;
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the currency or currency units in which the offering price, if
any, and the exercise price are payable;
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if applicable, a discussion of material United States federal
income tax considerations;
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the antidilution provisions of such warrants, if any;
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the redemption or call provisions, if any, applicable to such
warrants; and
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any additional terms of such warrants, including terms,
procedures and limitations relating to the exchange and exercise
of such warrants.
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DESCRIPTION
OF THE PURCHASE CONTRACTS
We may issue, from time to time, purchase contracts, including
contracts obligating holders to purchase from us and us to sell
to the holders, a specified principal amount of senior debt
securities, subordinated debt securities, shares of common stock
or preferred stock, depositary shares, government securities, or
any of the other securities that we may sell under this
prospectus at a future date or dates. The consideration payable
upon settlement of the purchase contracts may be fixed at the
time the purchase contracts are issued or may be determined by a
specific reference to a formula set forth in the purchase
contracts. The purchase contracts may be issued separately or as
part of units consisting of a purchase contract and other
securities or obligations issued by us or third parties,
including United States treasury securities, securing the
holders obligations to purchase the relevant securities
under the purchase contracts. The purchase contracts may require
us to make periodic payments to the holders of the purchase
contracts or units or vice versa, and the payments may be
unsecured or prefunded on some basis. The purchase contracts may
require holders to secure their obligations under the purchase
contracts.
The prospectus supplement related to any particular purchase
contracts will describe, among other things, the material terms
of the purchase contracts and of the securities being sold
pursuant to such purchase contracts, a discussion, if
appropriate, of any special United States federal income tax
considerations applicable to the purchase contracts and any
material provisions governing the purchase contracts that differ
from those described above. The description in the prospectus
supplement will not necessarily be complete and will be
qualified in its entirety by reference to the purchase
contracts, and, if applicable, collateral arrangements and
depositary arrangements, relating to the purchase contracts.
DESCRIPTION
OF THE UNITS
We may, from time to time, issue units comprised of one or more
of the other securities that may be offered under this
prospectus, in any combination. Each unit may also include debt
obligations of third parties, such as U.S. Treasury
securities. Each unit will be issued so that the holder of the
unit is also the holder of each security included in the unit.
Thus, the holder of a unit will have the rights and obligations
of a holder of each included security. The unit agreement under
which a unit is issued may provide that the securities included
in the unit may not be held or transferred separately at any
time, or at any time before a specified date.
Any prospectus supplement related to any particular units will
describe, among other things:
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the material terms of the units and of the securities comprising
the units, including whether and under what circumstances those
securities may be held or transferred separately;
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any material provisions relating to the issuance, payment,
settlement, transfer or exchange of the units or of the
securities comprising the units;
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if appropriate, any special United States federal income tax
considerations applicable to the units; and
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any material provisions of the governing unit agreement that
differ from those described above.
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PLAN OF
DISTRIBUTION
We may sell the securities being offered hereby in one or more
of the following ways from time to time:
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to underwriters or dealers for resale to the public or to
institutional investors;
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directly to institutional investors;
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directly to a limited number of purchasers or to a single
purchaser;
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through agents to the public or to institutional
investors; or
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through a combination of any of these methods of sale.
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If we use underwriters or dealers in the sale, the securities
will be acquired by the underwriters or dealers for their own
account and may be resold from time to time in one or more
transactions, including:
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at a fixed price or prices, which may be changed from time to
time;
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in at the market offerings within the meaning of the
SECs Rule 415(a)(4);
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at prices related to such prevailing market prices; or
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at negotiated prices.
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For each series of securities, the prospectus supplement will
set forth the terms of the offering of the securities, including:
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the initial public offering price;
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the method of distribution, including the names of any
underwriters, dealers or agents;
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the purchase price of the securities;
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our net proceeds from the sale of the securities;
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any underwriting discounts, agency fees, or other compensation
payable to underwriters or agents;
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any discounts or concessions allowed or reallowed or repaid to
dealers; and
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the securities exchanges on which the securities will be listed,
if any.
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If we use underwriters in the sale, they will buy the securities
for their own account. The underwriters may then resell the
securities in one or more transactions at a fixed public
offering price or at varying prices determined at the time of
sale or thereafter. The obligations of the underwriters to
purchase the securities will be subject to certain conditions.
The underwriters will be obligated to purchase all the
securities offered if they purchase any securities. Any initial
public offering price and any discounts or concessions allowed
or re-allowed or paid to dealers may be changed from time to
time. In connection with an offering, underwriters and selling
group members and their affiliates may engage in transactions to
stabilize, maintain or otherwise affect the market price of the
securities in accordance with applicable law.
If we use dealers in the sale, we will sell securities to such
dealers as principals. The dealers may then resell the
securities to the public at varying prices to be determined by
such dealers at the time of resale. If we use agents in the
sale, they will use their reasonable best efforts to solicit
purchases for the period of their appointment. If we sell
directly, no underwriters or agents would be involved. We are
not making an offer of securities in any jurisdiction that does
not permit such an offer.
Underwriters, dealers and agents that participate in the
securities distribution may be deemed to be underwriters as
defined in the Securities Act. Any discounts, commissions or
profit they receive when they resell the securities may be
treated as underwriting discounts and commissions under the
Securities Act. We may have agreements with underwriters,
dealers and agents to indemnify them against certain civil
liabilities, including certain liabilities under the Securities
Act, or to contribute with respect to payments that they may be
required to make. Underwriters, dealers and agents may engage in
transactions with, or perform services for, us or our
subsidiaries in the ordinary course of their business.
It has not presently been established whether the underwriters,
if any, of any of the securities will make a market in the
securities. If the underwriters make a market in the securities,
such market making may be
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discontinued at any time without notice. No assurance can be
given as to the liquidity of the trading market for the
securities.
LEGAL
MATTERS
The validity of the securities offered by this prospectus will
be passed upon for us by Alston & Bird LLP, Atlanta,
Georgia, and for any underwriters or agents by counsel named in
the applicable prospectus supplement.
EXPERTS
The consolidated financial statements of the Company at
December 31, 2008 and 2009 and for the years then ended,
incorporated by reference from the Companys Annual Report
on
Form 10-K
for the year ended December 31, 2009, including the
schedule appearing therein, have been audited by
Ernst & Young LLP, independent registered public
accounting firm, as set forth in their report thereon and
incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon
such reports given on the authority of such firm as experts in
accounting and auditing.
The consolidated financial statements for the year ended
December 31, 2007 incorporated in this registration
statement by reference from the Companys Annual Report on
Form 10-K
for the year ended December 31, 2009 have been so
incorporated in reliance on the report of PricewaterhouseCoopers
LLP, an independent registered public accounting firm, given on
the authority of said firm as experts in auditing and accounting.
28
$250,000,000
Graphic Packaging
International, Inc.
77/