sv4
As filed with the Securities and Exchange Commission on
November 22, 2010
Registration
No. 333-
UNITED STATES SECURITIES AND
EXCHANGE COMMISSION
Washington, DC 20549
Form S-4
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF
1933
Libbey Glass Inc.
(Exact name of registrant as
specified in its charter)
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Delaware
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3220
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22-2784107
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(State or other jurisdiction
of
incorporation or organization)
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(Primary Standard Industrial
Classification Code Number)
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(I.R.S. Employer
Identification No.)
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See Table of Additional
Co-Registrants Included in this Registration Statement
300 Madison Avenue
Toledo, Ohio 43604
Telephone:
(419) 325-2100
(Address, including zip code,
and telephone number, including area code, of registrants
principal executive offices)
Susan A.
Kovach, Esq.
Vice President, General Counsel
and Secretary
Libbey Glass Inc.
300 Madison Avenue
Toledo, Ohio 43604
Telephone:
(419) 325-2100
(Name, address, including zip
code, and telephone number, including area code, of agent for
service)
Copy to:
Christopher D.
Lueking, Esq.
Latham & Watkins
LLP
Sears Tower, Suite
5800
233 South Wacker Drive
Chicago, Illinois
60606
Telephone: (312)
876-7700
Facsimile: (312)
993-9767
Approximate date of commencement of proposed sale to the
public: As soon as practicable after the
effective date of this registration statement.
If the securities being registered on this Form are being
offered in connection with the formation of a holding company
and there is compliance with General Instruction G, check
the following
box. o
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act,
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same
offering. o
If this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following
box and list the Securities Act registration statement number of
the earlier effective registration statement for the same
offering. o
Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of
large accelerated filer, accelerated
filer and smaller reporting company in Rule
12b-2 of the
Exchange Act. (Check one):
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Large
Accelerated
Filer o
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Accelerated
Filer o
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Non-Accelerated
Filer þ
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Smaller Reporting
Company o
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(Do not check if a smaller
reporting company)
If applicable, place an X in the box to designate the
appropriate rule provision relied upon in conducting this
transaction:
Exchange Act
Rule 13e-4(i)
(Cross-Border Issuer Tender
Offer) o
Exchange Act
Rule 14d-1(d)
(Cross-Border Third-Party Tender
Offer) o
CALCULATION
OF REGISTRATION FEE
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Proposed Maximum
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Proposed Maximum
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Amount of
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Title of Each Class of
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Amount to be
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Offering
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Aggregate
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Registration
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Securities to be Registered
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Registered
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Price per Unit
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Offering Price(1)
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Fee
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10% Senior Secured Notes due 2015
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400,000,000
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100%
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$400,000,000
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$28,520
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Guarantees of 10% Senior Secured Notes due 2015(2)
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N/A
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N/A
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N/A
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N/A
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(1)
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Estimated solely for the purpose of
calculating the registration fee pursuant to Rule 457(f) under
the Securities Act.
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(2)
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Determined in accordance with
Rule 457(n) of the Securities Act; no separate registration
fee is payable for the guarantees.
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The Registrant hereby amends this Registration Statement on
such date or dates as may be necessary to delay its effective
date until the Registrant shall file a further amendment which
specifically states that this Registration Statement shall
thereafter become effective in accordance with Section 8(a)
of the Securities Act or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant
to said Section 8(a), may determine.
Table of
Additional Co-Registrants
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I.R.S. Employer
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Exact Name of the Co-Registrant as
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State or Other Jurisdiction of
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Primary Standard Industrial
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Identification
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Specified in its Charter
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Incorporation or Organization
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Classification Code Number
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Number
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LGA3 Corp.
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Delaware
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3220
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31-1521505
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LGA4 Corp.
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Delaware
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3220
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31-1525673
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LGAC LLC
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Delaware
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3220
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34-1930497
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LGC Corp.
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Delaware
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3220
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34-1896034
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LGFS Inc.
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Delaware
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3220
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34-1930975
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Libbey Inc.
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Delaware
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3220
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34-1559357
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Libbey.com LLC
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Delaware
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3220
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34-1906913
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The Drummond Glass Company
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Delaware
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3220
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34-1700383
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Traex Company
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Delaware
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3220
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34-1896032
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Syracuse China Company
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Delaware
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3220
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16-1481904
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World Tableware Inc.
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Delaware
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3220
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31-1521231
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The
information in this prospectus is not complete and may be
changed. We may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these
securities and is not soliciting an offer to buy these
securities in any state where the offer or sale is not
permitted.
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SUBJECT TO COMPLETION, DATED
NOVEMBER 22, 2010
PROSPECTUS
Libbey Glass Inc.
Guaranteed by Libbey
Inc.
OFFER TO EXCHANGE
$400,000,000 principal amount
of its 10% Senior Secured Notes due 2015,
which have been registered under the Securities Act,
for any and all of its outstanding 10% Senior Secured Notes
due 2015.
We are offering to exchange our 10% Senior Secured Notes
due 2015, or the exchange notes, for our currently
outstanding 10% Senior Secured Notes due 2015, or the
outstanding notes. The exchange notes are
substantially identical to the outstanding notes, except that
the exchange notes have been registered under the federal
securities laws and will not bear any legend restricting their
transfer, will bear a different CUSIP number than the
outstanding notes and will not be entitled to certain
registration rights and related provisions for additional
interest applicable to the outstanding notes. The exchange notes
will represent the same debt as the outstanding notes, and we
will issue the exchange notes under the same indenture.
The principal features of the exchange offer are as follows:
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The exchange offer expires at 12:00 midnight, New York City
time,
on ,
2010, unless extended.
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We will exchange all outstanding notes that are validly tendered
and not validly withdrawn prior to the expiration of the
exchange offer.
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You may withdraw tendered outstanding notes at any time prior to
the expiration of the exchange offer.
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The exchange of outstanding notes for exchange notes pursuant to
the exchange offer will not be a taxable event for
U.S. federal income tax purposes.
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The exchange offer is subject to the conditions set forth under
The Exchange Offer Conditions to the Exchange
Offer.
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We will not receive any proceeds from the exchange offer.
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We do not intend to apply for listing of the exchange notes on
any securities exchange or automated quotation system.
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The exchange notes will be guaranteed on a senior basis by our
parent company, Libbey Inc., a Delaware corporation, and by all
of our existing and future domestic subsidiaries that guarantee
any of our indebtedness or indebtedness of any subsidiary
guarantor, including any indebtedness under our amended and
restated ABL Facility, whom we refer to as the guarantors.
The exchange notes and the guarantees will be secured by
first-priority liens on substantially all of our and the
guarantors owned real property, equipment and fixtures in
the United States, subject to certain exceptions and permitted
liens, which we refer to as the Notes Priority Collateral. The
exchange notes and the guarantees also will be secured by
second-priority liens on all of our and the guarantors
tangible and intangible assets in the United States that secure
our and the guarantors obligations under the amended and
restated ABL Facility on a first-priority basis, consisting
primarily of accounts receivable, inventory and related assets
and equity interests of us and our subsidiaries that guarantee
the notes, which we refer to as the Credit Agreement Priority
Collateral, in each case subject to certain exceptions and
permitted liens. We refer to the Notes Priority Collateral
together with the Credit Agreement Priority Collateral as the
Collateral. For a more detailed discussion, see
Description of Exchange Notes Collateral.
The exchange notes will be our senior secured obligations, will
rank senior in right of payment to all of our existing and
future debt that is expressly subordinated in right of payment
to the exchange notes, and will rank equally in right of payment
with all our existing and future liabilities that are not so
subordinated. Each of the guarantees will rank senior in right
of payment to all of such guarantors existing and future
debt that is expressly subordinated in right of payment to the
exchange notes and will rank equally in right of payment with
all of such guarantors existing and future liabilities
that are not so subordinated. The exchange notes and the
guarantees will be structurally subordinated to all of the
existing and future liabilities (including trade payables) of
any of our subsidiaries that do not guarantee the exchange notes.
Each broker-dealer that receives exchange notes for its own
account pursuant to the exchange offer must acknowledge that it
will deliver a prospectus in connection with any resale of such
exchange notes. The letter of transmittal delivered with this
prospectus states that by so acknowledging and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the
Securities Act of 1933. This prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer
in connection with resales of exchange notes received in
exchange for outstanding notes where such outstanding notes were
acquired by such broker-dealer as a result of market-making
activities or other trading activities. We have agreed that, for
a period of 180 days after the completion of the exchange
offer, we will make this prospectus available to any
broker-dealer for use in connection with any such resale. See
Plan of Distribution.
Investing in the exchange notes involves risks. See
Risk Factors beginning on page 19 of this
prospectus.
Neither the Securities and Exchange Commission nor any state
securities commission has approved or disapproved of these
securities, nor have any of these organizations determined that
this prospectus is truthful or complete. Any representation to
the contrary is a criminal offense.
The date of this prospectus
is ,
2010.
TABLE OF
CONTENTS
Until ,
2010, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required
to deliver a prospectus. This is in addition to the
dealers obligation to deliver a prospectus when acting as
underwriters and with respect to their unsold allotments or
subscriptions.
We have not authorized any dealer, salesman or other person
to give any information or to make any representation other than
those contained or incorporated by reference in this prospectus.
You must not rely upon any information or representation not
contained or incorporated by reference in this prospectus as if
we had authorized it. This prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any
securities other than the registered securities to which it
relates, nor does this prospectus constitute an offer to sell or
a solicitation of an offer to buy securities in any jurisdiction
to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction.
WHERE YOU
CAN FIND ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on
Form S-4
under the Securities Act, which we refer to as the registration
statement. This prospectus does not contain all of the
information set forth in the registration statement and the
exhibits filed as part of the registration statement. For
further information, we refer you to the registration statement
and the exhibits filed as a part of the registration statement
and the documents incorporated herein. Statements contained in
this prospectus concerning the contents of any contract or any
other document are not necessarily complete. If a contract or
document has been filed as an exhibit to the registration
statement, we refer you to the copy of the contract or document
that has been filed. Each statement in this prospectus relating
to a contract or document filed as an exhibit is qualified in
all respects by the filed exhibit.
In addition, Libbey Inc. is subject to the periodic reporting
and other informational requirements of the Securities Exchange
Act of 1934. Libbey Inc. files annual, quarterly and current
reports and other information with the SEC. The reports and
other information Libbey Inc. files with the SEC can be read and
copied at the SECs Public Reference Room at
100 F Street, N.E., Room 1580 Washington D.C.
20549. Copies of these materials can be obtained at prescribed
rates from the Public Reference Section of the SEC at the
principal offices of the SEC, 100 F Street, N.E.,
Room 1580 Washington D.C. 20549. You may obtain information
regarding the operation of the public reference room by calling
1 (800) SEC-0330. The SEC also maintains a web site
(www.sec.gov) that contains reports, proxy and
information statements and other information regarding issuers
that file electronically with the SEC.
You may request a copy of any documents incorporated by
reference into this prospectus, at no cost, by writing or
telephoning us at the following address and telephone number:
Libbey Glass
Inc.
Attention: Investor Relations
300 Madison Avenue
Toledo, Ohio 43604
Tel:
(419) 325-2100
Exhibits to the filings will not be sent, however, unless those
exhibits have specifically been incorporated by reference into
this prospectus.
IN ORDER FOR YOU TO RECEIVE TIMELY DELIVERY OF THE DOCUMENTS
BEFORE THE EXPIRATION OF THE EXCHANGE OFFER, WE SHOULD RECEIVE
YOUR REQUEST NO LATER
THAN ,
2010.
INCORPORATION
OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the
information we file with them, which means that we can disclose
important information to you by referring you to those documents
instead of having to repeat this information in this prospectus.
The information incorporated by reference is considered to be
part of this prospectus, and information that we file later with
the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed
below and any future filings made with the SEC under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
between the date of this prospectus and the termination of the
offering. We are not, however, incorporating by reference any
documents or portions thereof that are not deemed
filed with the SEC, including any information
furnished pursuant to Items 2.02 or 7.01 of
Form 8-K
or certain exhibits furnished pursuant to Item 9.01 of
Form 8-K.
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our Annual Report on
Form 10-K
for the fiscal year ended December 31, 2009, filed on
March 15, 2010;
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our Quarterly Report on
Form 10-Q
for the quarter ended March 31, 2010, filed on May 10,
2010;
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our Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2010, filed on July 30,
2010;
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our Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2010, filed on
November 5, 2010;
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our Current Reports on
Form 8-K
filed on February 12, 2010, April 23, 2010,
May 11, 2010, June 10, 2010 (Acc-no:
950123-10-057106)
and August 16, 2010; and
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the description of our common stock contained in our
registration statement on
Form 8-A
filed with the SEC on December 31, 2009 including any
amendments or reports filed for the purpose of updating the
description.
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Any statement incorporated herein shall be deemed to be modified
or superseded for purposes of this prospectus to the extent that
a statement contained herein or in any other subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
prospectus.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus includes statements that are, or may deemed to
be, forward-looking statements. These
forward-looking statements can be identified by the use of
forward-looking terminology, including the terms
believes, estimates,
anticipates, expects,
intends, may, will or
should or, in each case, their negative or other
variations or comparable terminology. These forward-looking
statements include all matters that are not historical facts.
They appear in a number of places throughout this prospectus and
include statements regarding our intentions, beliefs or current
expectations concerning, among other things, our results of
operations, financial condition, liquidity, prospects, growth,
strategies and the industry in which we operate.
By their nature, forward-looking statements involve risks and
uncertainties because they relate to events and depend on
circumstances that may or may not occur in the future. We
caution you that forward-looking statements are not guarantees
of future performance and that our actual results of operations,
financial condition and liquidity, and the development of the
industry in which we operate, may differ materially from those
made in or suggested by the forward-looking statements contained
in this prospectus. In addition, even if our results of
operations, financial condition and liquidity, and the
development of the industry in which we operate, are consistent
with the forward-looking statements contained in this
prospectus, those results or developments may not be indicative
of results or developments in subsequent periods.
The following listing represents some, but not necessarily all,
of the factors that may cause actual results to differ from
those anticipated or predicted:
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Slowdowns in the retail, travel, restaurant and bar or
entertainment industries, such as those caused by general
economic downturns, terrorism, health concerns or strikes or
bankruptcies within those industries, could reduce our revenues
and production activity levels.
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Our high level of debt, as well as incurrences of additional
debt, may limit our operating flexibility, which could adversely
affect our results of operations and financial condition.
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Natural gas, the principal fuel we use to manufacture our
products, is subject to fluctuating prices; fluctuations in
natural gas prices could adversely affect our results of
operations and financial condition.
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International economic and political factors could affect demand
for imports and exports, and our financial condition and results
of operations could be adversely impacted as a result.
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Fluctuation of the currencies in which we conduct operations
could adversely affect our financial condition and results of
operations or reduce the cost competitiveness of our products or
those of our subsidiaries.
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Our business requires us to maintain a large fixed cost base
that can affect our profitability.
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We may not be able to achieve the international growth
contemplated by our strategy.
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We face intense competition and competitive pressures, which
could adversely affect our results of operations and financial
condition.
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We may not be able to renegotiate collective bargaining
agreements successfully when they expire; organized strikes or
work stoppages by unionized employees may have an adverse effect
on our operating performance.
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The inability to extend or refinance debt of our foreign
subsidiaries, or the calling of that debt before scheduled
maturity, could adversely impact our liquidity and financial
condition.
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Our cost-reduction projects may not result in anticipated
savings in operating costs.
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We are subject to risks associated with operating in foreign
countries. These risks could adversely affect our results of
operations and financial condition.
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If we have a fair value impairment in a business segment, our
net earnings and net worth could be materially and adversely
affected by a write-down of goodwill, intangible assets or fixed
assets.
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A severe outbreak, epidemic or pandemic of the H1N1 virus or
other contagious disease in a location where we have a facility
could adversely impact our results of operations and financial
condition.
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We are subject to various environmental legal requirements and
may be subject to new legal requirements in the future; these
requirements could have a material adverse effect on our
operations.
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If we are unable to obtain sourced products or materials at
favorable prices, our operating performance may be adversely
affected.
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Unexpected equipment failures may lead to production
curtailments or shutdowns.
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High levels of inflation and high interest rates in Mexico could
adversely affect the operating results and cash flows of Crisa.
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Charges related to our employee pension and postretirement
welfare plans resulting from market risk and headcount
realignment may adversely affect our results of operations and
financial condition.
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If our hedges do not qualify as highly effective or if we do not
believe that forecasted transactions would occur, the changes in
the fair value of the derivatives used as hedges would be
reflected in our earnings.
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Our business may suffer if we do not retain our senior
management.
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We rely on increasingly complex information systems for
management of our manufacturing, distribution, sales and other
functions. If our information systems fail to perform these
functions adequately, or if we experience an interruption in
their operation, our business and results of operations could
suffer.
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We may not be able to effectively integrate future businesses we
acquire or joint ventures we enter into.
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Our business requires significant capital investment and
maintenance expenditures that we may be unable to fulfill.
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If our investments in new technology and other capital
expenditures do not yield expected returns, our results of
operations could be reduced.
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Our failure to protect our intellectual property or prevail in
any intellectual property litigation could materially and
adversely affect our competitive position, reduce revenue or
otherwise harm our business.
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Devaluation or depreciation of, or governmental conversion
controls over, the foreign currencies in which we operate could
affect our ability to convert the earnings of our foreign
subsidiaries into U.S. dollars.
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Payment of severance or retirement benefits earlier than
anticipated could strain our cash flow.
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We are involved in litigation from time to time in the ordinary
course of business.
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Our products are subject to various health and safety
requirements and may be subject to new health and safety
requirements in the future; these requirements could have a
material adverse effect on our operations.
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You also should read carefully the factors described below in
Risk Factors to better understand the risks and
uncertainties inherent in our business and underlying any
forward-looking statements.
Any forward-looking statements that we make in this prospectus
speak only as of the date of those statements, and we undertake
no obligation to update those statements. Comparisons of results
for current and any prior periods are not intended to express
any future trends or indications of future performance, unless
expressed as such, and should only be viewed as historical data.
iv
PROSPECTUS
SUMMARY
This summary highlights important information about our
business and this exchange offer. It does not contain all of the
information that is important to you. For a more complete
understanding of this exchange offer, we encourage you to review
the prospectus in its entirety and the documents to which we
have referred you. The following summary should be read in
conjunction with the more detailed information and financial
statements (including the notes to the financial statements,
which are incorporated by reference into this prospectus).
Unless otherwise stated or the context otherwise requires,
references to our consolidated financial statements
or our audited consolidated financial statements
refer to the consolidated financial statements of Libbey Inc.
included in, or incorporated by reference into, this
prospectus.
As used in this prospectus, unless otherwise stated or the
context otherwise requires, the terms Company,
Libbey, we, us, and
our refer to Libbey Glass Inc., the subsidiaries of
Libbey Glass Inc. and Libbey Inc. Libbey Glass Inc., which we
refer to as Libbey Glass, is the wholly-owned operating
subsidiary of Libbey Inc. Libbey Inc. has no operations separate
from its investment in Libbey Glass and will provide a full,
unconditional, joint and several guarantee of Libbey
Glasss obligations under the exchange notes.
Our definition of EBIT, EBITDA, Adjusted EBITDA and other
financial terms are described in footnote 3 under the caption
Summary Historical Consolidated Financial and
Other Data.
Our
Company
We believe we are a leading manufacturer and marketer of glass
tableware products worldwide and the largest in the Western
Hemisphere. Our product portfolio consists of an extensive line
of high quality, machine-made glass tableware, including casual
glass beverageware, in addition to ceramic dinnerware,
metalware, and plasticware. We sell our products to foodservice,
retail, industrial and
business-to-business
customers in over 100 countries, with our core North American
market accounting for approximately 76% of our net sales in
2009. We are the largest manufacturer and marketer of casual
glass beverageware in North America for the foodservice and
retail channels. Additionally, we believe we are a leading
manufacturer and marketer of casual glass beverageware in Europe
and have a growing presence in Asia.
We have a robust portfolio of glass tableware brands, with
Libbey®
and
Crisa®
enjoying leading market positions and strong recognition in
North America and Royal
Leerdam®
and Crisal
Glass®
enjoying strong recognition among customers within their
respective key trade channels in Europe. In addition, in North
America we market a range of products across complementary
foodservice categories under the
Syracuse®
China,
World®
Tableware and
Traex®
brands.
Our sales to the U.S. and Canadian foodservice channel
represent our largest activity. We believe we enjoy a preeminent
position in this channel and have an extensive and well
established distribution network. Due to the substantial initial
investment in glass beverageware that foodservice establishments
make and associated high switching costs, sales to the
foodservice channel are highly repetitive in nature. We believe
that a significant majority of our sales to the U.S. and
Canadian foodservice channel represent sales to replace glass
beverageware that is broken, damaged or missing. In addition,
while the initial investment by foodservice establishments in
glass beverageware is substantial, we believe that foodservice
establishments are not highly sensitive to increases in glass
beverageware prices, since the cost of glass beverageware is a
minor component of the profitability of beverage sales. As a
result, in addition to implementing, effective November 1,
2010, price increases in the U.S. and Canadian foodservice
channel, we have implemented price increases in 37 of the
previous 40 years. Accordingly, we believe that our leading
position, together with our large installed base of products,
represent a significant competitive strength. Additionally, we
believe that our ability to differentiate our offering to the
foodservice channel through the breadth of our product line and
the high level of service that we are capable of providing
represents an additional competitive strength.
The North American retail channel is another area of strength in
our glass tableware business. Our innovative products, speed to
market, superior service level and increasing cost
competitiveness, supported by our strong brands, have enabled us
to achieve supplier of choice status with many leading retailers.
1
We believe that our product innovation and our proprietary
manufacturing processes and technologies are core competencies.
Together with our reputation for quality, reliable service and
speed to market, these distinctive capabilities underpin our
leading market positions, as they enable us to introduce
innovative products in a timely and cost efficient manner to
address market trends and changing customer needs. We have an
extensive manufacturing footprint comprised of six glass
tableware production facilities and one plant that produces
plastic products for the foodservice industry. Over the last
seven years, we have successfully realigned our manufacturing
footprint to improve our cost structure and better position us
for continued profitable growth. For the year ended
December 31, 2009, approximately 42% of our net sales were
derived from operations outside the United States and
approximately half of our glass products were produced in
low-cost countries, including Mexico, China and Portugal.
Additionally, we operate distribution centers at or near each of
our manufacturing facilities as well as in other strategic
locations, giving us the ability to distribute our products to
more than 100 countries and enabling us to provide high service
levels.
Our foodservice customers comprise approximately 500
distributors in the United States and Canada, wholesale
distributors in Mexico and a broad network of distributors in
Europe and East Asia. In the retail channel, we sell to a wide
variety of top retailers, including leading mass merchants,
department stores, retail chains and specialty housewares
stores, as well as to retail distributors. In the
business-to-business
channel, our customers primarily include companies that utilize
our products in candle and floral applications, gourmet food
packaging companies, and companies that utilize our products in
various original equipment manufacturer, which we refer to as
OEM, applications. In addition, in Europe we service large
breweries and distilleries for which products are decorated with
brand logos for promotional and resale purposes.
We are headquartered in Toledo, Ohio and trace our roots to
1818. We achieved net sales of $785.0 million for the
twelve months ended September 30, 2010 and net sales of
$748.6 million for the year ended December 31, 2009.
For the twelve months ended September 30, 2010 we achieved
net income of $60.2 million and net loss of
$28.8 million for the year ended December 31, 2009. We
achieved Adjusted EBITDA of $115.3 million for the twelve
months ended September 30, 2010 and Adjusted EBITDA of
$90.1 million for the year ended December 31, 2009.
Adjusted EBITDA is a non-GAAP financial measure; see footnote 3
under the caption Summary Historical
Consolidated Financial and Other Data for a reconciliation
of net (loss) income to Adjusted EBITDA.
Our
Competitive Strengths
Leading market position. We believe we are a
leading manufacturer and marketer of glass tableware products
worldwide and the largest in the Western Hemisphere. We are the
leading manufacturer and marketer of casual glass beverageware
in the United States, where management estimates that, within
the attractive U.S. foodservice channel, we have a 58%
market share, which we believe is significantly in excess of the
market share of our largest competitor. In the retail channel,
we increased our leading share of the U.S. market for the
fourth year in a row and, according to the Retail Tracking
Services of NPD Group, an independent provider of retail sales
tracking data in the houseware industry, we had a market share
of 42.1% as of 2009. We believe we are also the leading
manufacturer and marketer of glass tableware in Mexico, where
management estimates we have a 58% share of the market, which we
believe is significantly in excess of the market share of our
largest competitor. Due to our established relationships with
major retailers, we enjoy strong product placement and prominent
shelf positions. In addition to our prominent position in the
North American market for casual glass beverageware, we believe
we are a leading provider of ceramic dinnerware and metalware to
the U.S. foodservice channel through our Syracuse China and
World Tableware subsidiaries. In the European Union, we believe
we are a leading glass beverageware manufacturer and marketer
with our Royal Leerdam (the Netherlands) and Crisal (Portugal)
subsidiaries. The numerous awards and other recognition that we
have received from foodservice customers, leading retailers and
industry publications are a testament to our best in class
service and supplier of choice status. For example, FE&S
magazine, one of the leading publications in the foodservice
industry, selected us as the leading tabletop manufacturer in
its annual Best in Class survey for eight
consecutive years. In addition, in April 2010, we were
recognized by OSI Restaurant Partners (which owns the Outback
Steakhouse chain) as 2009 Purveyor of the Year and by Edward
Don & Company (a leading distributor of foodservice
equipment and supplies) as 2009 Tabletop Supplier of the Year.
2
Highly attractive U.S. foodservice
base. We believe that our core North American
foodservice franchise is highly attractive and that a
significant majority of our sales to the North American
foodservice channel are derived from the replacement of broken,
damaged or missing glass beverageware. Our leading position in
the foodservice channel is evidenced by our management estimated
58% share of the U.S. market for casual glass beverageware,
and we believe is supported by our strong presence in
complementary product categories, including dinnerware
(Syracuse®
China), metal and ceramic tableware
(World®
Tableware) and plastic carrying trays and tabletop warewashing
racks
(Traex®).
Our network of approximately 500 distributors, which includes
Sysco Corporation, US Foodservice and other leading national,
regional and local distributors, ensures deep market penetration
and the ability to reach over 300,000 full-service foodservice
establishments in the United States and Canada. We believe that
our broad product line of over 1,000 items, which enables us to
best meet the portion control requirements of foodservice
establishments, a critical component of beverage sales
profitability, presents a significant barrier to entry to the
market, since the investment that a new entrant would be
required to make in order to provide a competitive product
offering would be extremely high. The substantial initial
investment by foodservice establishments in glass beverageware
and the high costs of switching to another glass beverageware
supplier create additional barriers to entry. Further, while the
initial investment by a foodservice establishment in glass
beverageware is significant, beverage sales are important to the
profitability of foodservice establishments, and the cost of
glass beverageware is a minor component of the cost per serving.
Consequently, we believe that the sensitivity of foodservice
establishments to increases in the price of glass tableware is
relatively low. We have benefitted from this relatively low
price sensitivity by implementing price increases in the
U.S. and Canadian foodservice channel in 37 of the previous
40 years, which is in addition to price increases in the
U.S. and Canadian foodservice channel effective
November 1, 2010.
Superior momentum in North American retail. We
believe that, in the retail channel, we are the leading
manufacturer and marketer in the attractive North American
market for casual glass beverageware. According to the Retail
Tracking Services of NPD, we enjoy a market share of 42.1% in
the United States as of 2009, having achieved a share increase
for the fourth consecutive year for a cumulative market share
gain of approximately 1,490 basis points since 2005. In
Mexico, we believe we are the leading manufacturer and marketer
of casual glass beverageware, with a 58% share of the market,
according to management estimates. We believe that our strong
momentum stems from our ability to achieve supplier of choice
status with leading retailers due to our innovative products and
packaging, our speed to market, superior service levels and
increasing cost competitiveness, supported by our strong brands.
Our customers in the North American retail channel include a
wide variety of top retailers, including leading mass merchants,
department stores, retail chains and specialty housewares
stores, as well as retail distributors.
Strong brand portfolio. We have a broad
portfolio of brands with significant recognition in the
foodservice and retail channels. We believe our brand
recognition is the result of our long operating history and
reputation for innovation, consistent quality, reliable service
and speed to market.
Libbey®
is one of the most recognized glass beverageware brands in North
America, and, according to the Retail Tracking Services of NPD,
was the number one purchased casual glass beverageware brand in
the United States in 2007, 2008 and 2009.
Crisa®
is the leading glass tableware brand in Mexico, with a
management estimated 58% market share and a management estimated
90% brand recognition. In Europe, our Royal
Leerdam®
and
Crisal®
brands have a long history and we believe enjoy strong
recognition among customers in their respective trade channels
in key markets. In addition to the significant recognition of
our glass beverageware brands, we believe our
Syracuse®
China and
World®
Tableware brands enjoy strong positions in complementary
foodservice categories in the United States and Canada.
Product innovation and proprietary
technology. We believe that product innovation
and design and world-class manufacturing technologies are core
competencies and create a competitive advantage for our casual
glass beverageware in the foodservice and retail channels, where
service levels and breadth of product line are key sources of
our competitive advantage. In 2009, we introduced over 250 new
products, coupled with several additional variations in color,
shape, size and packaging to address new market trends and
customer needs. Product innovation is supported by our in-house
research and development efforts as well as our proprietary and
highly automated furnace, manufacturing and mold technologies,
which enable us to introduce new products in a timely and
cost-efficient manner. We believe that, together with our
reputation for quality, reliable service and speed to
3
market, these distinctive capabilities, which are instrumental
in driving profitable growth, underpin our leading market
positions.
Extensive manufacturing base and distribution
capabilities. We have an extensive manufacturing
and distribution platform. We own and operate six glass
tableware manufacturing facilities, including two each in the
United States and Europe, one in Mexico and one in China. In
addition, our Traex subsidiary operates a plant that produces
plastic products, including carrying trays and tabletop
warewashing racks, for the foodservice industry. We operate
distribution centers at or near each of our manufacturing
facilities as well as in other strategic locations, enabling us
to distribute our products to more than 100 countries. Our
extensive North American presence provides significant
distribution flexibility and high service levels, which we
believe drive our status as a preferred provider to the North
American foodservice and retail markets. From our distribution
centers located in China, the Netherlands and Portugal, we
distribute our products to customers located in Asia-Pacific and
Europe. Over the last seven years, we have successfully
realigned our manufacturing footprint to improve our cost
structure and better position us for continued profitable
growth. For the year ended December 31, 2009, approximately
42% of our net sales were generated outside of the United
States, a significant increase from 11% in 2002, and
approximately 50% of our glass products were produced in
low-cost countries, including Mexico, China and Portugal, a
significant increase from approximately 15% in 2002. We believe
that our Mexican facility is the largest glass tableware plant
in the Western Hemisphere and that, due to its close proximity
and ability to import glassware into the United States on a
duty-free basis, it provides us with a significant competitive
advantage over importers from other countries. Our
state-of-the-art
facility in China has been operational since the first quarter
of 2007 and now serves customers in over 70 countries.
Experienced management team. Our management
team, which is highly experienced and includes professionals
with several decades of industry experience, has implemented and
continues to implement initiatives aimed at increasing
operational and cost efficiencies and enhancing our product
lines and competitive positioning, while exploiting global
opportunities for profitable growth. Our senior management team
has an average of more than 20 years of industry management
experience.
Our
Strategy
Our strategic vision is to be the premier provider of glass
tableware and related products worldwide. We seek to continue to
increase our share of our core North American market in both the
foodservice and the retail channels by leveraging our leading
market position, superior product development capabilities, high
customer service levels and broad distribution network. In
International markets, we seek to increase our sales in the
European glass tableware market while broadening the reach of
our
business-to-business
franchise. We also believe that we have significant
opportunities for continued growth in China and throughout the
Pacific Rim due to our state of the art facility as well as our
growing sales force and distribution network.
In addition to our focus on top line growth, the concurrent
improvement in profitability and cash flow generation is a key
element of our strategy. To this end, we continue to focus on a
number of initiatives aimed at creating operating efficiencies,
including eliminating waste and instilling a culture of
continuous improvement in all aspects of our operations, through
what we refer to as our Lean program, and improving Working
Capital while reducing natural gas consumption and greenhouse
gas emissions. We also believe that by leveraging our production
capabilities in low-cost countries such as Mexico, China and
Portugal, our business can achieve greater profitability and
generate increased cash flow through our ability to sell our
products at price points that enable us to compete more
profitably.
Our growth strategy emphasizes continued internal growth in
combination with selected strategic partnerships, acquisitions
and green field developments. Since successfully
completing the acquisition of Crisa in Mexico in 2006 and
launching our glass manufacturing facility in China in 2007, we
have focused on improving our liquidity and capital structure.
While deleveraging our capital structure continues to be our
primary use of cash flow, we believe that in the long term there
will be opportunities for strategic acquisitions in attractive
developing and emerging markets to complement our internal
growth.
4
We intend to grow our business through the following key
initiatives:
Continue to grow our leading share of our core North American
market. In the North American foodservice
channel, our strong brands, broad installed product base,
extensive distribution network and superior service level are
key competitive advantages, and we believe that we can leverage
them to further increase our share of the market for glass
beverageware and related products in the foodservice channel. In
the retail channel, our superior product innovation, superior
service level and increasing cost competitiveness, supported by
our strong brands, continue to build upon our significant gains
in our market share for casual glass beverageware. Notably, in
the United States, we have achieved approximately
1,490 basis points of cumulative market share gains in the
retail market for casual glass beverageware since 2005. We also
believe there are opportunities to expand our product offering
into product categories beyond our core glass beverageware
business and to increase our share of the market for glass
tableware in the North American
business-to-business
channel. In addition, we are implementing initiatives aimed at
further strengthening our competitive advantage by improving
turnaround time for customer orders while maintaining high
service levels. Such initiatives include the recent
consolidation of our North American distribution and warehousing
facilities along with the continued implementation of enhanced
warehouse management systems.
Capitalize on continued improvement of market conditions in
North America. Our core foodservice business is a
traffic business, driven by occupancy rates in hotels and
customer traffic at drinking and dining establishments. Market
conditions have shown early signs of recovery, although they
continue to be challenging. The U.S. foodservice industry
forecast issued by Technomic, a leading independent research
data provider, in September 2010 predicted 0.3% nominal growth
in food and non-alcohol beverage sales for 2010 and 1.7% nominal
growth for 2011. On October 19, 2010, STR, a leading
independent provider of research data for the hotel industry,
reported that the occupancy rate for the nine months ended
September 30, 2010 was 5.2% higher than the occupancy rate
for the same period of 2009. In the U.S. foodservice
industry, the National Restaurant Association reported on
October 29, 2010 that its Restaurant Performance
Index a monthly composite index that tracks the
health of and outlook for the U.S. restaurant industry,
stood at 100.3, the first time in five months that it rose above
100, signaling expansion in the industry. In addition, the
National Restaurant Associations September Expectations
Index, which measures restaurant operators six-month
outlook for four industry indicators (same-store sales,
employees, capital expenditures and business conditions), was
101.1, its strongest level in five months. Overall, as traffic
at our lodging and restaurant customers continues to recover, we
expect demand for our North American foodservice business to
benefit. Our retail business in the U.S. and Canada
continues to post strong performance, with a 10.0% increase in
net sales in the first nine months of 2010 as compared to the
same period in 2009, following a more than 7.0% increase in the
full year 2009 as compared to the same period in 2008. As
economic conditions and unemployment rates continue to improve,
we expect our business to continue to benefit. Our business in
Mexico is experiencing strong momentum, with a 24.4% increase in
sales of Crisa products (of which 4.2% is attributable to the
currency impact of the Mexican peso) in the first nine months of
2010 compared to the same period in 2009. Our Mexican business
is benefiting from a recovery of economic conditions in the
market, improved dynamics of the tourism business and a strong
performance by our OEM business.
Increase our presence in the European market across
channels. We aim to continue to grow our presence
in the European market by capitalizing on the strength of our
sales force and our expanding distributor base. The recent
reorganization of our European sales force, which is now better
aligned with our global platform, combined with the strength of
our
Libbey®
brand in foodservice and Royal
Leerdam®
brand in retail, is expected to drive continued growth in the
market. Our broad manufacturing base enables us to provide our
customers with an extensive offering across price points by
sourcing products from our low cost manufacturing facilities in
Mexico and China to complement products from our facilities in
the Netherlands and Portugal. We also believe that the European
business-to-business
channel presents significant untapped opportunities for growth.
Exploit growth opportunities in China and other potential
high-growth markets. Our entry into the Chinese
market is relatively recent, although our
state-of-the-art
facility and our expanding distribution network have been
instrumental in achieving sustained double digit growth rates in
sales. Our facility is strategically located south of Beijing,
providing us with easy access to consumers. In China, we sell
through
5
distributors, enabling us to support our rapid growth while
providing the service levels to our customers that are
instrumental in increasing recognition of our
Libbey®
and Royal
Leerdam®
brands. The relative proximity of our facility to Tianjin, one
of the major ports in China, enables us to efficiently
distribute our products to other potential high-growth markets
in the Pacific Rim as well as to Europe and North America.
Today, our Chinese facility supplies over 70 countries
worldwide. Libbey China has experienced strong growth, albeit
from a relatively small base, with a 15.6% increase in shipments
in 2009 (of which 3.9% is attributable to the currency impact of
the Chinese RMB) and a 29.0% increase in the first nine months
of 2010 compared to the same period in 2009. While 2009 sales
were affected by particularly harsh weather conditions around
the Chinese New Year, we believe that Libbey China presents
significant opportunities for continued strong growth in 2010.
Continue to drive improvements in profitability and cash flow
generation. Complementing our top line growth
with continuous improvements in profitability and cash flow is a
key component of our strategy. In 2009, we significantly reduced
our enterprise costs with initiatives such as the closure of our
Syracuse China manufacturing facility, which contributed to
right-sizing our global workforce. We also reduced our cost base
through increased sourcing of finished goods from third party
vendors in low-cost countries. Such cost initiatives enabled us
to withstand the challenging market conditions of 2009 and, in
spite of a 7.6% decline in net sales from 2008 to 2009, to
increase earnings before interest, taxes, depreciation and
amortization, or EBITDA, and Adjusted EBITDA to
$83.8 million and $90.1 million, respectively, in 2009
from $40.0 million and $85.2 million, respectively, in
2008. As market conditions continue to recover, our improved
cost structure positions us to benefit from operating leverage
and improved capacity utilization to drive profitability. In the
first nine months of 2010, we achieved EBITDA and Adjusted
EBITDA of $138.3 million and $86.2 million,
respectively, as compared to $55.6 million and
$61.0 million, respectively, in the same period in 2009.
EBITDA and Adjusted EBITDA are non-GAAP financial measures; see
footnote 3 under the caption Summary
Historical Consolidated Financial and Other Data for a
reconciliation of net (loss) income to EBITDA and Adjusted
EBITDA. We expect to continue to achieve further operating
efficiencies and cash flow generation with the implementation of
enhanced warehouse and labor management systems aimed at
improving productivity and working capital. We also will
continue to focus on our Lean program, a disciplined approach to
eliminating waste and instilling a culture of continuous
improvement in all aspects of our operations, while continuing
to optimize our sourcing of finished goods and raw materials and
managing our capital expenditures.
In the medium term, evaluate strategic partnerships and
acquisitions to facilitate entry into select
markets. Our strategy emphasizes continued
internal growth, although over the years we have completed
select acquisitions in order to strengthen our platform and
accelerate growth. While recently our focus has been on
improving our liquidity and deleveraging our capital structure,
we believe that in the long term there will be strategic
partnership or acquisition opportunities that could best enable
our entry into attractive emerging and developing markets.
Although not a priority at present, strategic partnerships and
acquisitions may help us selectively broaden our global
footprint and continue to leverage our strong brands and
superior infrastructure to create value.
Corporate
Information
Our principal executive offices are located at 300 Madison
Avenue, Toledo, Ohio 43604, and our telephone number at that
address is
(419) 325-2100.
Our website can be found at www.libbey.com. The
information contained in, or that can be accessed through our
website is not part of this prospectus.
6
The
Offering
On February 8, 2010, we completed an offering of
$400.0 million in aggregate principal amount of
10% Senior Secured Notes due 2015. The offering was exempt
from registration under the Securities Act.
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Outstanding Notes |
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We sold the outstanding notes to Barclays Capital Inc, Banc of
America Securities LLC and CJS Securities Inc. on
February 8, 2010. The initial purchasers subsequently
resold the outstanding notes to qualified institutional buyers
pursuant to Rule 144A under the Securities Act and to
non-U.S.
persons outside the United States in reliance on
Regulation S under the Securities Act. |
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Registration Rights Agreement |
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In connection with the sale of the outstanding notes, Libbey
Inc., Libbey Glass and its domestic subsidiaries (together with
Libbey Inc., the guarantors) entered into a registration rights
agreement with the initial purchasers. Under the terms of that
agreement, we agreed, to the extent not prohibited by any
applicable law or applicable interpretations of the SEC staff,
to: |
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use commercially reasonable efforts to file a
registration statement for the exchange offer after the closing
of the offering of outstanding notes and to have such
registration statement remain effective until 180 days
after the exchange date;
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use commercially reasonably efforts to have the
registration statement for the exchange offer declared effective
by the Securities and Exchange Commission, which we refer to as
the SEC; and
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use commercially reasonable efforts to complete the
exchange of notes for all outstanding notes tendered in the
exchange offer within 365 days after the issuance of the
outstanding notes.
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If the exchange offer is not completed within 365 days
after the date of issuance of the outstanding notes and a shelf
registration has not been filed or the shelf registration
statement, if required, has not become effective on or prior to
90 days after its filing, we must pay additional interest
on the outstanding notes at a rate of an additional 0.25% per
annum for the first
90-day
period, increasing by an additional 0.25% per annum for each
subsequent
90-day
period until the exchange offer is completed or the shelf
registration statement is declared effective, up to a maximum
increase of 1.00% per annum, or the Additional Interest. If the
Company receives a shelf request and the shelf registration
statement required to be filed in connection with the request
has not become effective by 120 days after delivery of the
shelf request, we must pay Additional Interest on the
outstanding notes on the same terms as set forth above until the
shelf registration statement becomes effective or the securities
become freely tradable under the Securities Act. The exchange
offer is being made pursuant to the registration rights
agreement and is intended to satisfy the rights granted under
the registration rights agreement. |
7
The
Exchange Offer
The following is a brief summary of the terms of the exchange
offer. For a more complete description of the exchange offer,
see The Exchange Offer.
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Securities Offered |
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$400.0 million in aggregate principal amount of 10% Senior
Secured Notes due 2015. |
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Exchange Offer |
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The exchange notes are being offered in exchange for a like
principal amount of outstanding notes. We will accept any and
all outstanding notes validly tendered and not withdrawn prior
to 12:00 midnight, New York City time, on , 2010. Holders may
tender some or all of their outstanding notes pursuant to the
exchange offer. However, outstanding notes may be tendered only
in minimum denominations of $2,000 in principal amount and
integral multiples of $1,000 in excess thereof. The form and
terms of the exchange notes are the same as the form and terms
of the outstanding notes except that: |
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the exchange notes have been registered under the
federal securities laws and will not bear any legend restricting
their transfer;
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the exchange notes bear a different CUSIP number
than the outstanding notes; and
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the holders of the exchange notes will not be
entitled to certain rights under the registration rights
agreement, including the provisions for an increase in the
interest rate on the outstanding notes in some circumstances
relating to the timing of the exchange offer. See The
Exchange Offer.
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Expiration Date |
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The exchange offer will expire at 12:00 midnight, New York City
time,
on ,
2010, unless we decide to extend the exchange offer. |
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Conditions to the Exchange Offer |
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The exchange offer is subject to certain customary conditions,
some of which we may waive. See The Exchange
Offer Conditions to the Exchange Offer. |
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Procedures for Tendering Outstanding Notes |
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Each holder of outstanding notes that wishes to exchange
outstanding notes for exchange notes pursuant to the exchange
offer must follow the procedures set forth in this prospectus
and the related letter of transmittal, which require that each
holder, before the exchange offer expires, either: |
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transmit a properly completed and duly executed
letter of transmittal, together with all other documents
required by the letter of transmittal, including the outstanding
notes, to the exchange agent; or
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if outstanding notes are to be exchanged in
accordance with book-entry procedures, arrange with The
Depository Trust Company, or DTC, to cause to be
transmitted to the exchange agent an agents message
indicating, among other things, the holders agreement to
be bound by the letter of transmittal and deliver a timely
confirmation of book-entry transfer of outstanding notes into
the exchange agents account; or
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comply with the procedures described below under
The Exchange Offer Guaranteed Delivery
Procedures.
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8
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By executing the letter of transmittal, you will represent
to us that, among other things:
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any exchange notes to be received by you will be
acquired in the ordinary course of business;
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you have no arrangement or understanding with any
person to participate in the distribution (within the meaning of
the Securities Act) of the exchange notes in violation of the
provisions of the Securities Act;
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you are not an affiliate (within the
meaning of Rule 405 under the Securities Act) of Libbey; and
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if you are a broker-dealer that will receive
exchange notes for your own account in exchange for outstanding
notes that were acquired as a result of market-making or other
trading activities, then you will deliver a prospectus in
connection with any resale of the exchange notes.
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See The Exchange Offer Procedures for
Tendering Outstanding Notes and Plan of
Distribution. |
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If you beneficially own outstanding notes that are held in the
name of a broker, dealer, commercial bank, trust company or
other nominee or custodian and wish to tender your outstanding
notes in the exchange offer, you should promptly instruct that
nominee as soon as possible and instruct it to exchange the
outstanding notes on your behalf. |
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Effect of Not Tendering |
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Participation in the exchange offer is voluntary, and any
outstanding notes that are not tendered or that are tendered but
not accepted will remain subject to the restrictions on
transfer. Since the outstanding notes have not been registered
under the federal securities laws, they bear a legend
restricting their transfer absent registration or the
availability of a specific exemption from registration. Upon the
completion of the exchange offer, we will have no further
obligations, except under limited circumstances, to provide for
registration of the outstanding notes under the federal
securities laws. See The Exchange Offer
Purpose and Effect. |
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Interest on the Exchange Notes and the Outstanding Notes |
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The exchange notes will bear interest from the most recent
interest payment date to which interest has been paid on the
notes. Interest on the outstanding notes accepted for exchange
will cease to accrue upon the issuance of the exchange notes. |
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Withdrawal Rights |
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Tenders of outstanding notes may be withdrawn at any time prior
to 12:00 midnight, New York City time, on the expiration date. |
|
U.S. Federal Income Tax Consequences |
|
The exchange of outstanding notes for exchange notes pursuant to
this exchange offer will not be a taxable exchange for U.S.
federal income tax purposes. See Material U.S. Federal
Income Tax Considerations. |
|
Accounting Treatment |
|
We will not recognize any gain or loss for accounting purposes
upon the completion of the exchange offer. The expenses of the
exchange offer that we pay will increase our deferred financing
costs in |
9
|
|
|
|
|
accordance with generally accepted accounting principles, which
we refer to as GAAP. See The Exchange Offer
Accounting Treatment. |
|
Regulatory Approval |
|
Other than the federal securities laws, we are not aware of any
federal or state regulatory requirements that we must comply
with and we are not aware of any approvals that we must obtain
in connection with the exchange offer. |
|
No Appraisal Rights |
|
Holders of the outstanding notes do not have any appraisal or
dissenters rights in the exchange offer. |
|
Use of Proceeds |
|
We will not receive any proceeds from the issuance of exchange
notes pursuant to the exchange offer. |
|
Exchange Agent |
|
The Bank of New York Mellon Trust Company, N.A., the
trustee under the indenture, is serving as exchange agent in
connection with the exchange offer. |
Terms of
the Exchange Notes
The following is a brief summary of the terms of the exchange
notes. The financial terms and covenants of the exchange notes
are the same as the outstanding notes. For a more complete
description of the terms of the exchange notes, please refer to
the section entitled Description of Exchange Notes.
|
|
|
Issuer |
|
Libbey Glass Inc. |
|
Exchange Notes Offered |
|
$400.0 million aggregate principal amount of
10% senior secured notes due 2015. |
|
Maturity Date |
|
February 15, 2015. |
|
Interest |
|
Interest will be payable in cash in arrears on February 15 and
August 15, commencing August 15, 2010. The exchange
notes will bear interest at a rate per annum of 10%. |
|
Guarantees |
|
The exchange notes will be guaranteed on a senior basis by
Libbey Inc. and by all of our domestic subsidiaries that
guarantee any of the issuers indebtedness or indebtedness
of any subsidiary guarantor, including any of the issuers
indebtedness under our amended and restated $110 million
Asset Based Loan facility, or the amended and restated ABL
Facility. Any domestic subsidiaries that in the future guarantee
the issuers indebtedness, including the issuers
indebtedness under our amended and restated ABL Facility, or
indebtedness of any subsidiary guarantor, will also guarantee
the notes. The guarantees will be released when the guarantees
of our indebtedness, including indebtedness under our amended
and restated ABL Facility, and the guarantees of indebtedness of
our subsidiary guarantors are released. The guarantees will be
senior secured indebtedness of our subsidiary guarantors and
will have the same ranking with respect to indebtedness of our
subsidiary guarantors as the notes will have with respect to our
indebtedness. |
|
Collateral |
|
The exchange notes and the guarantees will be secured by a
first-priority lien (subject to certain exceptions and permitted
liens) on substantially all of our and the guarantors
owned real property, equipment and fixtures in the United
States. We refer to these assets as the Notes Priority
Collateral. |
10
|
|
|
|
|
The exchange notes and the guarantees will also be secured by a
second priority lien on substantially all of the tangible and
intangible assets in the United States that secure our and the
guarantors obligations under the amended and restated ABL
Facility on a first priority basis (subject to certain
exceptions and permitted liens), consisting primarily of
accounts receivable, inventory, cash (other than cash proceeds
of the Notes Priority Collateral), the capital stock of us and
of any subsidiary held by us and any guarantor (but limited to
65% of the voting stock of any first-tier subsidiary that is a
foreign subsidiary and excluding any stock of any other foreign
subsidiaries), general intangibles and instruments related to
the foregoing and proceeds of the foregoing, in each case held
by us and the guarantors. We refer to these assets as the Credit
Agreement Priority Collateral. See Description of Exchange
Notes Collateral Assets Pledged as
Collateral. |
|
Ranking |
|
The exchange notes will: |
|
|
|
be our general secured obligations;
|
|
|
|
rank equally in right of payment with all of our
existing and future unsubordinated debt;
|
|
|
|
rank equally in right of payment with all of our and
the guarantors existing and future senior indebtedness,
including amounts outstanding under the amended and restated ABL
Facility;
|
|
|
|
rank equally to our and the guarantors
obligations under any other pari passu lien obligations
incurred after the issue date to the extent of the Notes
Priority Collateral;
|
|
|
|
be effectively subordinated to our indebtedness and
the guarantors obligations under the amended and restated
ABL Facility, any other debt incurred after the issue date that
has a first-priority security interest in the Credit Agreement
Priority Collateral, any permitted hedging obligations and all
cash management obligations incurred with any lender or any of
its affiliates under the amended and restated ABL Facility, in
each case to the extent of the value of the Credit Agreement
Priority Collateral;
|
|
|
|
be effectively senior to our and the
guarantors obligations under the amended and restated ABL
Facility, any other debt incurred after the issue date that has
a first-priority security interest in the Credit Agreement
Priority Collateral, any permitted hedging obligations and all
cash management obligations incurred with any lender or any of
its affiliates under the amended and restated ABL Facility, to
the extent of the value of the Notes Priority Collateral;
|
|
|
|
be senior in right of payment to all of our existing
and future senior subordinated or subordinated debt;
|
|
|
|
be effectively senior to our existing and future
senior unsecured indebtedness and other liabilities (including
trade payables) to the extent of the value of the Collateral; and
|
|
|
|
be structurally subordinated to all of the existing
and future liabilities (including trade payables) of each of our
subsidiaries that do not guarantee the notes.
|
11
|
|
|
|
|
As of September 30, 2010: |
|
|
|
we had approximately $459.7 million aggregate
principal amount of debt outstanding (including the outstanding
notes), none of which would have been subordinate to the
outstanding notes;
|
|
|
|
excluding the outstanding notes, we would have had
approximately $59.7 million of secured debt, including the
amended and restated ABL Facility, which had no borrowings drawn
on it, but excluding an additional $18.4 million
represented by letters of credit, to which the notes would have
been effectively subordinated with respect to the Credit
Agreement Priority Collateral securing such debt. Libbey Glass
and Libbey Europe B.V. (a non-guarantor subsidiary) would have
had total availability under the amended and restated ABL
Facility of approximately $69.6 million (after giving
effect to borrowing base limitations, other reserves and the
$18.4 million of letters of credit), all of which would be
secured if borrowed; and
|
|
|
|
we and the guarantor subsidiaries had 78.3% of our
total liabilities, excluding intercompany liabilities (but
including 87.2% of our indebtedness under our various
third-party debt agreements with the remainder consisting of
trade payables and other accrued liabilities due to third
parties).
|
|
Covenants |
|
We will issue the exchange notes under an indenture with The
Bank of New York Mellon Trust Company, N.A., as trustee.
The indenture will, among other things, limit our ability and
the ability of our restricted subsidiaries (as defined under
Description of Exchange Notes) to: |
|
|
|
incur, assume or guarantee additional debt;
|
|
|
|
issue redeemable stock and preferred stock;
|
|
|
|
repurchase capital stock;
|
|
|
|
make other restricted payments including, without
limitation, paying dividends and making investments;
|
|
|
|
create liens;
|
|
|
|
redeem debt that is junior in right of payment to
the notes;
|
|
|
|
sell or otherwise dispose of assets, including
capital stock of subsidiaries;
|
|
|
|
enter into agreements that restrict dividends from
subsidiaries;
|
|
|
|
enter into mergers or consolidations;
|
|
|
|
enter into transactions with affiliates;
|
|
|
|
guarantee debt; and
|
|
|
|
enter into new lines of business.
|
|
|
|
These covenants will be subject to a number of important
exceptions and qualifications. See Description of Exchange
Notes. |
|
Optional Redemption |
|
The exchange notes will be redeemable at our option, in whole or
in part, at any time on or after August 15, 2012, at the
redemption prices set forth in this prospectus, together with
accrued and unpaid interest, if any, to the date of redemption.
In addition, prior to August 15, 2012, |
12
|
|
|
|
|
but not more than once in any twelve-month period, we may redeem
up to 10% of the exchange notes at a redemption price of 103%
plus accrued and unpaid interest. |
|
Mandatory offers to purchase |
|
The occurrence of a change of control will be a triggering event
requiring us to offer to purchase from you all or a portion of
your exchange notes at a price equal to 101% of their principal
amount, together with accrued and unpaid interest, if any, to
the date of purchase. |
|
|
|
If we sell assets under certain circumstances, we will be
required to make an offer to purchase the exchange notes at
their face amount, plus accrued and unpaid interest to the
purchase date. See Description of Exchange
Notes Certain Covenants Limitation on
Sales of Assets and Subsidiary Stock. |
|
Absence of Public Market for the Notes |
|
The exchange notes are a new issue of securities and will not be
listed on any securities exchange or included in any automated
quotation system. |
|
Original Issue Discount |
|
The exchange notes will be treated as issued with original issue
discount, which we refer to as OID, for U.S. federal income tax
purposes. Thus, in addition to the stated interest on the
exchange notes, a U.S. holder (as defined in Material U.S.
Federal Income Tax Considerations) will be required to
include such OID in gross income as it accrues, in advance of
the receipt of cash attributable to such income and regardless
of the U.S. holders regular method of accounting for U.S.
federal income tax purposes. See Material U.S. Federal
Income Tax Considerations. |
Risk
Factors
You should carefully consider all the information in this
prospectus prior to participating in the exchange offer. In
particular, we urge you to consider carefully the factors set
forth under Risk Factors beginning immediately after
this Prospectus Summary.
Market
and Industry Data and Forecasts
Certain market data contained in or incorporated by reference
into this prospectus are based on independent industry
publications and reports by market research firms. Although we
believe these sources are reliable, we have not independently
verified the information and cannot guarantee its accuracy and
completeness. Some data are also based on our good faith
estimates, which are derived from our review of internal
surveys, as well as the independent sources referred to above.
Trademarks
We own or have the rights to various trademarks and trade names
used in our business, including
Libbey®,
Syracuse®
China,
World®
Tableware, Royal
Leerdam®,
Crisal
Glass®,
Traex®
and
Crisa®.
This prospectus also includes trade names and trademarks of
other companies. Our use or display of other parties trade
names, trademarks or products is not intended to and does not
imply a relationship with, or endorsement or sponsorship of us
by, the trade name or trademark owners.
13
Summary
Historical Consolidated Financial and Other Data
The following table sets forth our summary historical
consolidated financial and other data on an actual basis for the
periods ended and at the dates indicated below. Our summary
financial data for fiscal 2009, 2008 and 2007 have been derived
from our consolidated audited financial statements for the year
ended December 31, 2009. The summary historical
consolidated financial data for the nine-month periods ended
September 30, 2010 and 2009 have been derived from our
consolidated unaudited financial statements for the nine months
ended September 30, 2010. The unaudited financial statement
data includes in the opinion of management, all adjustments,
including usual recurring adjustments, necessary for a fair
statement of that information for such periods. The financial
data presented for the interim periods are not necessarily
indicative of our results for the full year.
The summary financial data should be read in conjunction with
our historical financial statements and related notes and
Managements Discussion and Analysis of Financial
Condition and Results of Operations which is incorporated
by reference into this prospectus.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Year Ended December 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands, except per-share amounts)
|
|
|
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
748,635
|
|
|
$
|
810,207
|
|
|
$
|
814,160
|
|
|
$
|
576,947
|
|
|
$
|
540,557
|
|
Freight billed to customers
|
|
|
1,605
|
|
|
|
2,422
|
|
|
|
2,207
|
|
|
|
1,311
|
|
|
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
750,240
|
|
|
|
812,629
|
|
|
|
816,367
|
|
|
|
578,258
|
|
|
|
541,720
|
|
Cost of sales
|
|
|
617,095
|
(1)
|
|
|
703,292
|
(1)
|
|
|
658,698
|
|
|
|
454,665
|
(2)
|
|
|
453,761
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
133,145
|
|
|
|
109,337
|
|
|
|
157,669
|
|
|
|
123,593
|
|
|
|
87,959
|
|
Selling, general and administrative expenses
|
|
|
94,900
|
(1)
|
|
|
88,451
|
|
|
|
91,568
|
|
|
|
72,878
|
(2)
|
|
|
69,699
|
(2)
|
Impairment of goodwill and other intangible assets
|
|
|
|
|
|
|
11,889
|
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
Special charges
|
|
|
1,631
|
(1)
|
|
|
14,545
|
(1)
|
|
|
|
|
|
|
1,088
|
(2)
|
|
|
974
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
36,614
|
|
|
|
(5,548
|
)
|
|
|
66,101
|
|
|
|
49,627
|
|
|
|
17,286
|
|
Gain on redemption of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,792
|
(2)
|
|
|
|
|
Other income
|
|
|
4,053
|
(1)
|
|
|
1,119
|
(1)
|
|
|
8,778
|
|
|
|
916
|
(2)
|
|
|
5,424
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before interest and income taxes
|
|
|
40,667
|
|
|
|
(4,429
|
)
|
|
|
74,879
|
|
|
|
107,335
|
|
|
|
22,710
|
|
Interest expense
|
|
|
66,705
|
|
|
|
69,720
|
|
|
|
65,888
|
|
|
|
33,243
|
|
|
|
52,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before income taxes
|
|
|
(26,038
|
)
|
|
|
(74,149
|
)
|
|
|
8,991
|
|
|
|
74,092
|
|
|
|
(29,452
|
)
|
Provision for (benefit from) income taxes
|
|
|
2,750
|
|
|
|
6,314
|
|
|
|
11,298
|
|
|
|
6,769
|
|
|
|
(7,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
$
|
(28,788
|
)
|
|
$
|
(80,463
|
)
|
|
$
|
(2,307
|
)
|
|
$
|
67,323
|
|
|
$
|
(21,696
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.90
|
)
|
|
$
|
(5.48
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
3.98
|
|
|
$
|
(1.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(1.90
|
)
|
|
$
|
(5.48
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
3.26
|
|
|
$
|
(1.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBIT(3)
|
|
$
|
40,667
|
|
|
$
|
(4,429
|
)
|
|
$
|
74,879
|
|
|
$
|
107,335
|
|
|
$
|
22,710
|
|
EBITDA(3)
|
|
|
83,833
|
|
|
|
40,001
|
|
|
|
116,451
|
|
|
|
138,329
|
|
|
|
55,585
|
|
Adjusted EBITDA(3)
|
|
|
90,141
|
|
|
|
85,238
|
|
|
|
116,451
|
|
|
|
86,171
|
|
|
|
61,005
|
|
Capital expenditures
|
|
|
17,005
|
|
|
|
45,717
|
|
|
|
43,121
|
|
|
|
19,122
|
|
|
|
12,287
|
|
Depreciation and amortization
|
|
|
43,166
|
|
|
|
44,430
|
|
|
|
41,572
|
|
|
|
30,994
|
|
|
|
32,875
|
|
Net cash provided by (used in) operating activities
|
|
|
102,148
|
|
|
|
(1,040
|
)
|
|
|
51,457
|
|
|
|
(10,833
|
)
|
|
|
65,729
|
|
Net cash (used in) investing activities
|
|
|
(16,740
|
)
|
|
|
(45,600
|
)
|
|
|
(34,908
|
)
|
|
|
(27,537
|
)
|
|
|
(12,027
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(43,565
|
)
|
|
|
25,828
|
|
|
|
(22,407
|
)
|
|
|
19,055
|
|
|
|
(36,273
|
)
|
14
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
As of September 30,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2010
|
|
2009
|
|
Balance sheet data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
55,089
|
|
|
$
|
13,304
|
|
|
$
|
36,539
|
|
|
$
|
35,568
|
|
|
$
|
30,648
|
|
Working Capital(4)
|
|
|
167,601
|
|
|
|
206,886
|
|
|
|
213,819
|
|
|
|
211,011
|
|
|
|
192,555
|
|
Property, plant and equipment net
|
|
|
290,013
|
|
|
|
314,847
|
|
|
|
327,303
|
|
|
|
272,723
|
|
|
|
296,862
|
|
Total assets
|
|
|
794,813
|
|
|
|
821,554
|
|
|
|
899,471
|
|
|
|
814,783
|
|
|
|
799,177
|
|
Total debt (including current maturities)
|
|
|
515,239
|
|
|
|
550,257
|
|
|
|
496,634
|
|
|
|
456,102
|
|
|
|
526,699
|
|
Shareholders (deficit) equity
|
|
|
(66,907
|
)
|
|
|
(57,889
|
)
|
|
|
93,115
|
|
|
|
8,353
|
|
|
|
(61,992
|
)
|
|
|
|
(1) |
|
The table below is a summary of the 2009 and 2008 special items
and reflects the classification of these items in our
consolidated statements of operations. See notes 7 and 9 to
our Consolidated Financial Statements for the year ended
December 31, 2009, which are incorporated by reference into
this prospectus, for further details on the pension settlement
charges, facility closures, goodwill and intangible asset
impairment charges and fixed asset impairment charges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
Goodwill and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement
|
|
|
Facility
|
|
|
Intangible
|
|
|
Fixed Asset
|
|
|
|
|
|
|
|
|
|
Charges(b)
|
|
|
Closures(b)
|
|
|
Asset Impairment
|
|
|
Impairment
|
|
|
Total
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
Cost of sales
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,960
|
|
|
$
|
14,199
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,482
|
|
|
$
|
1,960
|
|
|
$
|
18,681
|
|
Selling, general and administrative expenses
|
|
|
3,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,190
|
|
|
|
|
|
Impairment of goodwill and other intangible assets(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,889
|
|
Special charges(a)(b)
|
|
|
|
|
|
|
|
|
|
|
1,631
|
|
|
|
14,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,631
|
|
|
|
14,545
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
232
|
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232
|
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items (income) expense
|
|
$
|
3,190
|
|
|
$
|
|
|
|
$
|
3,823
|
|
|
$
|
29,127
|
|
|
$
|
|
|
|
$
|
11,889
|
|
|
$
|
|
|
|
$
|
4,482
|
|
|
$
|
7,013
|
|
|
$
|
45,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Special charges reflect a reclassification of impairment of
intangible assets of $2.5 million from special charges to
impairment of goodwill and other intangible assets. |
|
(b) |
|
Total pension settlement charges for 2009 were
$3.7 million. Of this total, $0.5 million is related
to employee reductions at closed facilities and is reported in
the facility closure amounts in the above table. |
|
|
|
(2) |
|
The table below is a summary of the special items for the nine
months ended September 30, 2010 and 2009 and reflects the
classification of these items in our condensed consolidated
statements of operations. See notes 4, 5 and 7 to our
Condensed Consolidated Financial Statements for the nine months
ended September 30, 2010 and 2009, which are incorporated
by reference into this prospectus, for further details on the
pension settlement charges, facility closures, redemption of
debt, fixed asset and inventory impairment and other. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement
|
|
|
Facility
|
|
|
Redemption of
|
|
|
Fixed Asset and Inventory
|
|
|
|
|
|
|
|
|
|
Charges
|
|
|
Closures
|
|
|
Debt
|
|
|
Impairment
|
|
|
Other(a)
|
|
|
Total
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Cost of sales
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,983
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,265
|
|
|
$
|
|
|
|
$
|
(945
|
)
|
|
$
|
|
|
|
$
|
2,320
|
|
|
$
|
1,983
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
2,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,096
|
|
|
|
|
|
|
|
1,096
|
|
|
|
2,955
|
|
Special charges
|
|
|
|
|
|
|
|
|
|
|
388
|
|
|
|
974
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,088
|
|
|
|
974
|
|
Gain on redemption of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,792
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,792
|
)
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
130
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items (income) expense
|
|
$
|
|
|
|
$
|
2,955
|
|
|
$
|
518
|
|
|
$
|
3,170
|
|
|
$
|
(56,792
|
)
|
|
$
|
|
|
|
$
|
3,965
|
|
|
$
|
|
|
|
$
|
151
|
|
|
$
|
|
|
|
$
|
(52,158
|
)
|
|
$
|
6,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Other includes an insurance claim recovery and expenses related
to the secondary stock offering. |
15
|
|
|
(3) |
|
We define EBIT as net (loss) income plus (1) interest
expense and (2) provision for (benefit from) income taxes.
The most directly comparable GAAP financial measure is net
(loss) income. |
|
|
|
We believe that EBIT is an important supplemental measure for
investors in evaluating operating performance in that it
provides insight into company profitability. Libbeys
senior management uses this measure internally to measure
profitability. EBIT also allows for a measure of comparability
to other companies with different capital and legal structures,
which accordingly may be subject to different interest rates and
effective tax rates. |
|
|
|
The non-GAAP measure of EBIT does have certain limitations. It
does not include interest expense, which is a necessary and
ongoing part of our cost structure resulting from debt incurred
to expand operations. Because this is a material and recurring
item, any measure that excludes it has a material limitation.
EBIT may not be comparable to similarly titled measures reported
by other companies. |
|
|
|
We define EBITDA as net (loss) income plus (1) interest
expense (2) provision for (benefit from) income taxes,
(3) depreciation and (4) amortization. |
|
|
|
We believe that EBITDA is an important supplemental measure for
investors in evaluating operating performance in that it
provides insight into company profitability and cash flow.
Libbeys senior management uses this measure internally to
measure profitability and to set performance targets for
managers. It also has been used regularly as one of the means of
publicly providing guidance on possible future results. EBITDA
also allows for a measure of comparability to other companies
with different capital and legal structures, which accordingly
may be subject to different interest rates and effective tax
rates, and to companies that may incur different depreciation
and amortization expenses or impairment charges. |
|
|
|
The non-GAAP measure of EBITDA does have certain limitations. It
does not include interest expense, which is a necessary and
ongoing part of our cost structure resulting from debt incurred
to expand operations. EBITDA also excludes depreciation and
amortization expenses. Because these are material and recurring
items, any measure that excludes them has a material limitation.
EBITDA may not be comparable to similarly titled measures
reported by other companies. |
|
|
|
Adjusted EBITDA presented in this prospectus represents EBITDA
further adjusted to reflect the impact of the facility closures,
goodwill and intangible asset impairment, fixed asset and
inventory impairment, pension settlement charges, insurance
claim recovery, gain on redemption of debt, expenses on
secondary stock offering and write-off of Shreveport decorating
assets described below. |
|
|
|
We present Adjusted EBITDA because we believe it assists
investors and analysts in comparing our performance across
reporting periods on a consistent basis by excluding items that
we do not believe are indicative of our core operating
performance. In addition, we use Adjusted EBITDA internally to
measure profitability and to set performance targets for
managers. |
|
|
|
Adjusted EBITDA has limitations as an analytical tool. Some of
these limitations are: |
|
|
|
Adjusted EBITDA does not reflect our cash
expenditures or future requirements for capital expenditures or
contractual commitments;
|
|
|
|
Adjusted EBITDA does not reflect changes in, or cash
requirements for, our working capital needs;
|
|
|
|
Adjusted EBITDA does not reflect the significant
interest expense, or the cash requirements necessary to service
interest or principal payments, on our debts;
|
|
|
|
although depreciation and amortization are non-cash
charges, the assets being depreciated and amortized will often
have to be replaced in the future, and Adjusted EBITDA does not
reflect any cash requirements for such replacements;
|
|
|
|
Adjusted EBITDA does not reflect the impact of
certain cash charges resulting from matters we consider not to
be indicative of our ongoing operations; and
|
|
|
|
other companies in our industry may calculate
Adjusted EBITDA differently than we do, limiting its usefulness
as a comparative measure.
|
|
|
|
Because of these limitations, Adjusted EBITDA should not be
considered in isolation or as a substitute for performance
measures calculated in accordance with GAAP. The table below is
a reconciliation of EBIT, EBITDA and Adjusted EBITDA for the
periods indicated. |
16
Reconciliation
of EBIT, EBITDA and Adjusted EBITDA to Net (Loss) Income for the
Periods Presented
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended
|
|
|
|
Year Ended December 31,
|
|
|
September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Net (loss) income
|
|
$
|
(28,788
|
)
|
|
$
|
(80,463
|
)
|
|
$
|
(2,307
|
)
|
|
$
|
67,323
|
|
|
$
|
(21,696
|
)
|
Add: Interest expense
|
|
|
66,705
|
|
|
|
69,720
|
|
|
|
65,888
|
|
|
|
33,243
|
|
|
|
52,162
|
|
Add: Provision for (benefit from) income taxes
|
|
|
2,750
|
|
|
|
6,314
|
|
|
|
11,298
|
|
|
|
6,769
|
|
|
|
(7,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before interest, income taxes (EBIT)
|
|
|
40,667
|
|
|
|
(4,429
|
)
|
|
|
74,879
|
|
|
|
107,335
|
|
|
|
22,710
|
|
Add: Depreciation and amortization
|
|
|
43,166
|
|
|
|
44,430
|
|
|
|
41,572
|
|
|
|
30,994
|
|
|
|
32,875
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings before interest, taxes, depreciation, amortization
(EBITDA)
|
|
|
83,833
|
|
|
|
40,001
|
|
|
|
116,451
|
|
|
|
138,329
|
|
|
|
55,585
|
|
Add: Gain on redemption of debt(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,792
|
)
|
|
|
|
|
Add: Facility closures(b)
|
|
|
3,823
|
|
|
|
29,127
|
|
|
|
|
|
|
|
518
|
|
|
|
3,170
|
|
Add: Fixed asset impairment(c)
|
|
|
|
|
|
|
4,482
|
|
|
|
|
|
|
|
2,687
|
|
|
|
|
|
Add: Goodwill and intangible asset impairment(d)
|
|
|
|
|
|
|
11,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Add: Pension settlement charges(e)
|
|
|
3,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,955
|
|
Add: Write-off of Shreveport decorating assets(f)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,278
|
|
|
|
|
|
Add: Insurance claim recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(945
|
)
|
|
|
|
|
Add: Expenses of secondary stock offering(g)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,096
|
|
|
|
|
|
Less: Depreciation expense included in special items and also in
depreciation and amortization above
|
|
|
(705
|
)
|
|
|
(261
|
)
|
|
|
|
|
|
|
|
|
|
|
(705
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings before interest, taxes, depreciation,
amortization (Adjusted EBITDA)
|
|
$
|
90,141
|
|
|
$
|
85,238
|
|
|
$
|
116,451
|
|
|
$
|
86,171
|
|
|
$
|
61,005
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Redemption of our $80.4 million principal amount of new
Senior Subordinated Secured Payment in Kind Notes due 2021 of
our subsidiary Libbey Glass Inc., or New PIK Notes, in
conjunction with the refinancing of our Floating Rate Senior
Secured Notes due 2011 of our subsidiary Libbey Glass Inc., or
Senior Floating Rate Notes, in February 2010 resulted in the
recognition of a $70.2 million gain. The gain was partially
offset by $13.4 million representing a write-off of bank
fees and discounts and a call premium on our Senior Floating
Rate Notes. See note 4 to the Condensed Consolidated
Financial Statements for the nine months ended
September 30, 2010 which are incorporated by reference into
this prospectus. |
|
(b) |
|
Facility closure charges in 2010, 2009 and 2008 are related to
the closure of our Syracuse, New York ceramic dinnerware
manufacturing facility and our Mira Loma, California
distribution center. See notes 4, 5 and 7 to the
Consolidated Financial Statements for the year ended
December 31, 2009, which are incorporated by reference into
this prospectus, and note 5 to the Condensed Consolidated
Financial Statements for the nine months ended
September 30, 2010, which are incorporated by reference
into this prospectus. |
|
(c) |
|
Fixed asset impairment charges for 2008 are related to
unutilized fixed assets at our North American Glass segment. See
note 7 to the Consolidated Financial Statements for the
year ended December 31, 2009, which are incorporated by
reference into this prospectus. Fixed asset impairment charges
for the nine months ended September 30, 2010 are related to
certain after-processing equipment within our International
segment. See note 5 to the Condensed Consolidated Financial
Statements for the nine months ended September 30, 2010,
which are incorporated by reference into this prospectus. |
|
(d) |
|
Goodwill and intangible asset impairment charges are related to
goodwill and intangible assets at our Crisal and Royal Leerdam
locations. See notes 4 and 7 to the Consolidated Financial
Statements for the year ended December 31, 2009, which are
incorporated by reference into this prospectus. |
|
(e) |
|
Pension settlement charges were triggered by excess lump sum
distributions taken by employees. See note 9 to the
Consolidated Financial Statements for the year ended
December 31, 2009, which are incorporated by reference into
this prospectus, and note 7 to the Condensed Consolidated
Financial Statements for the nine months ended
September 30, 2010, which are incorporated by reference
into this prospectus. |
|
(f) |
|
In August 2010, we wrote down decorating assets in our
Shreveport, Louisiana facility as a result of our decision to
outsource our U.S. decorating business. See note 5 to the
Condensed Consolidated Financial Statements for the nine months
ended September 30, 2010, which are incorporated by
reference into this prospectus. |
17
|
|
|
(g) |
|
In August 2010, we incurred $1.1 million of expenses
related to a secondary offering of 4.4 million shares of
our common stock on behalf of Merrill Lynch, PCG. See
note 4 to the Condensed Consolidated Financial Statements
for the nine months ended September 30, 2010, which are
incorporated by reference into this prospectus. |
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(4) |
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We define Working Capital as net accounts receivable plus net
inventories less accounts payable. The table below is a
reconciliation of Working Capital. |
Reconciliation
of Working Capital
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As of
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Year Ended December 31,
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September 30,
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2009
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2008
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2007
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2010
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2009
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(Dollars in thousands)
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Accounts
receivable-net
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$
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82,424
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$
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76,072
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$
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93,333
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$
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110,574
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$
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91,119
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Plus:
Inventories-net
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144,015
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185,242
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194,079
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|
|
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159,374
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153,523
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Less: Accounts payable
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58,838
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54,428
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73,593
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58,937
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52,087
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Working Capital
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$
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167,601
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$
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206,886
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|
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$
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213,819
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|
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$
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211,011
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|
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$
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192,555
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We believe that Working Capital is important supplemental
information for investors in evaluating liquidity in that it
provides insight into the availability of net current resources
to fund our ongoing operations. Working Capital is a measure
used by management in internal evaluations of cash availability
and operational performance.
Working Capital is used in conjunction with and in addition to
results presented in accordance with GAAP. Working Capital is
neither intended to represent nor be an alternative to any
measure of liquidity and operational performance recorded under
GAAP. Working Capital may not be comparable to similarly titled
measures reported by other companies.
Ratio of
Earnings to Fixed Charges
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Nine Months Ended
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Year Ended December 31,
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September 30,
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2005
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2006
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2007
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2008
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2009
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2009
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2010
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Ratio of Earnings to Fixed Charges
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(1
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)
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(2
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)
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1.1
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(3
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)
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(4
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)
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(5
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)
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3.1
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(1) |
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Due to our loss in 2005, the ratio coverage was less than 1:1.
We would have needed to generate additional earnings of
$21.9 million to achieve a coverage ratio of 1:1. |
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(2) |
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Due to our loss in 2006, the ratio coverage was less than 1:1.
We would have needed to generate additional earnings of
$32.2 million to achieve a coverage ratio of 1:1. |
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(3) |
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Due to our loss in 2008, the ratio coverage was less than 1:1.
We would have needed to generate additional earnings of
$74.1 million to achieve a coverage ratio of 1:1. |
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(4) |
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Due to our loss in 2009, the ratio coverage was less than 1:1.
We would have needed to generate additional earnings of
$26.0 million to achieve a coverage ratio of 1:1. |
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(5) |
|
Due to our loss in the first nine months of 2009, the ratio
coverage was less than 1:1. We would have needed to generate
additional earnings of $29.5 million to achieve a coverage
ratio of 1:1. |
These computations include us and our consolidated subsidiaries.
For purposes of determining the ratio of earnings to fixed
charges, earnings are defined as earnings before income taxes,
noncontrolling interest, income from investees and extraordinary
items, plus fixed charges and distributed income from investees
less interest capitalized. Fixed charges include interest
expense on all indebtedness, interest capitalized and one fifth
of rental expense on operating leases representing a portion of
rental expense deemed attributable to interest.
18
RISK
FACTORS
Our business, operations and financial condition are subject
to various risks. You should carefully consider the risks
described below as well as other information and data included
in this prospectus, before making an investment decision. If any
of the events described in the risk factors below occurs, our
business, financial condition, operating results and prospects
could be materially adversely affected, which in turn could
adversely affect our ability to repay the exchange notes.
Risks
Related to Our Business
Slowdowns
in the retail, travel, restaurant and bar or entertainment
industries, such as those caused by general economic downturns,
terrorism, health concerns or strikes or bankruptcies within
those industries, could reduce our revenues and production
activity levels.
Our business is affected by the health of the retail, travel,
restaurant and bar or entertainment industries. Expenditures in
these industries are sensitive to business and personal
discretionary spending levels and may decline during general
economic downturns. Additionally, travel is sensitive to safety
concerns, and thus may decline after incidents of terrorism,
during periods of geopolitical conflict in which travelers
become concerned about safety issues, or when travel might
involve health-related risks. For example, demand for our
products in the foodservice industry, which is critical to our
success, was significantly impacted by the global economic
recession beginning in the third quarter of 2008.
Ongoing volatility in financial markets and the weak national
and global economic conditions could materially and adversely
impact our operations, financial results
and/or
liquidity, including as follows:
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the financial stability of our customers or suppliers may be
compromised, which could result in additional bad debts for us
or non-performance by suppliers;
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it may become more costly or difficult to obtain financing or
refinance our debt in the future;
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the value of our assets held in pension plans may decline; and/or
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our assets may be impaired or subject to write-down or write-off.
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Uncertainty about current global economic conditions may cause
consumers of our products to postpone spending in response to
tighter credit, negative financial news
and/or
declines in income or asset values. This could have a material
adverse impact on the demand for our products and on our
financial condition and operating results. A further
deterioration in economic conditions would likely exacerbate
these adverse effects and could result in a wide-ranging and
prolonged impact on general business conditions, thereby
negatively impacting our operations, financial results
and/or
liquidity.
Our
high level of debt, as well as incurrences of additional debt,
may limit our operating flexibility, which could adversely
affect our results of operations and financial
condition.
We have a high degree of financial leverage. As of
September 30, 2010, we had $459.7 million aggregate
principal amount of debt outstanding. Of that amount:
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$400.0 million consisted of the outstanding notes, which
were secured by a first-priority lien on the Notes Priority
Collateral and a second-priority lien on the Credit Agreement
Priority Collateral;
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we had no debt outstanding under our amended and restated ABL
Facility, which is secured by a first-priority lien on the
Credit Agreement Priority Collateral and a second-priority lien
on the Notes Priority Collateral, although we had
$18.4 million of letters of credit issued under that
facility;
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RMB 250 million (approximately $37.4 million at
September 30, 2010) consisted of a loan made by China
Construction Bank Corporation Langfang Economic Development Area
Sub-branch,
or CCBC. We used the proceeds of this loan to finance the
construction of our manufacturing facility in China that began
operations in early 2007;
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19
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RMB 50 million (approximately $7.5 million at
September 30, 2010) consisted of a loan, which is
fully drawn, made by CCBC to finance the working capital needs
of our China facility;
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9.9 million (approximately $13.5 million at
September 30, 2010) consisted of a loan made by Banco
Espirito Santo, S.A., or the BES Euro Line, to finance
operational improvements associated with our Portuguese
operations; and
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$1.4 million consisted of amounts we owed under a
promissory note related to the purchase of our Laredo, Texas
warehouse.
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Although neither our amended and restated ABL Facility nor the
indenture governing the outstanding notes and the exchange notes
contains financial covenants, they do contain other covenants
that limit our operational and financial flexibility, such as by
limiting the additional indebtedness that we may incur, limiting
certain business activities, investments and payments, and
limiting our ability to dispose of certain assets. These
covenants may limit our ability to engage in activities that may
be in our long-term best interests. Our failure to comply with
those covenants could result in an event of default that, if not
cured or waived, could result in the acceleration of all of our
debt.
We are permitted, subject to limitations contained in the
agreements relating to our existing debt, to incur additional
debt in the future. Our high degree of leverage, as well as the
incurrence of additional debt, could have important consequences
for our business, such as:
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making it more difficult for us to satisfy our financial
obligation, including with respect to the exchange notes;
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limiting our ability to make capital investments in order to
expand our business;
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limiting our ability to obtain additional debt or equity
financing for working capital, capital expenditures, product
development, debt service requirements, acquisitions or other
purposes;
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limiting our ability to invest operating cash flow in our
business and future business opportunities, because we use a
substantial portion of these funds to service debt and because
our covenants restrict the amount of our investments;
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limiting our ability to withstand business and economic
downturns
and/or
placing us at a competitive disadvantage compared to our
competitors that have less debt, because of the high percentage
of our operating cash flow that is dedicated to servicing our
debt; and
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limiting our ability to pay dividends.
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If cash generated from operations is insufficient to satisfy our
liquidity requirements, if we cannot service our debt, or if we
fail to meet our covenants, we could have substantial liquidity
problems. In those circumstances, we might have to sell assets,
delay planned investments, obtain additional equity capital or
restructure our debt. Depending on the circumstances at the
time, we may not be able to accomplish any of these actions on
favorable terms or at all.
In addition, our failure to comply with the covenants contained
in our debt agreements could result in an event of default that,
if not cured or waived, could result in the acceleration of all
of our indebtedness.
Natural
gas, the principal fuel we use to manufacture our products, is
subject to fluctuating prices; fluctuations in natural gas
prices could adversely affect our results of operations and
financial condition.
Natural gas is the primary source of energy in most of our
production processes. We do not have long-term contracts for
natural gas and therefore are subject to market variables and
widely fluctuating prices. Consequently, our operating results
are strongly linked to the cost of natural gas. As of
September 30, 2010, we had forward contracts in place to
hedge approximately 66% of our estimated 2010 natural gas needs
with respect to our North American manufacturing facilities and
approximately 33% of our estimated 2010 natural gas needs with
respect to our International manufacturing facilities. For the
years ended December 31, 2009 and 2008, we spent
approximately $53.4 million and $69.6 million,
respectively, and for the nine months ended September 30,
2010 we spent
20
approximately $35.3 million, on natural gas. We have no way
of predicting to what extent natural gas prices will rise in the
future. To the extent that we are not able to offset increases
in natural gas prices, such as by passing along the cost to our
customers, these increases could adversely impact our margins
and operating performance.
International
economic and political factors could affect demand for imports
and exports, and our financial condition and results of
operations could be adversely impacted as a
result.
Our operations may be affected by actions of foreign governments
and global or regional economic developments. Global economic
events, such as changes in foreign import/export policy, the
cost of complying with environmental regulations or currency
fluctuations, could also affect the level of U.S. imports
and exports, thereby affecting our sales. Foreign subsidies,
foreign trade agreements and each countrys adherence to
the terms of these agreements can raise or lower demand for our
products. National and international boycotts and embargoes of
other countries or U.S. imports
and/or
exports, together with the raising or lowering of tariff rates,
could affect the level of competition between our foreign
competitors and us. Foreign competition has, in the past, and
may, in the future, result in increased low-cost imports that
drive prices downward. The World Trade Organization met in
November 2001 in Doha, Qatar, where members launched new
multilateral trade negotiations aimed at improving market access
and substantially reducing trade-distorting domestic support.
These negotiations are ongoing and may result in further
agreements in the future. As of September 30, 2010, the
current trade-weighted tariff rate applicable to glass tableware
products that are imported into the United States and are of the
type we manufacture in North America was approximately 20.5%.
However, any changes to international agreements that lower
duties or improve access to U.S. markets for our
competitors, particularly changes arising out of the ongoing
World Trade Organizations Doha round of negotiations,
could have an adverse effect on our financial condition and
results of operations. As we execute our strategy of acquiring
manufacturing platforms in lower cost regions and increasing our
volume of sales in overseas markets, our dependence on
international markets and our ability to effectively manage
these risks has increased and will continue to increase
significantly.
Fluctuation
of the currencies in which we conduct operations could adversely
affect our financial condition and results of operations or
reduce the cost competitiveness of our products or those of our
subsidiaries.
Changes in the value, relative to the U.S. dollar, of the
various currencies in which we conduct operations, including the
euro, the Mexican peso and the Chinese yuan, or the RMB, may
result in significant changes in the indebtedness of our
non-U.S. subsidiaries.
Currency fluctuations between the U.S. dollar and the
currencies of our
non-U.S. subsidiaries
affect our results as reported in U.S. dollars,
particularly the earnings of Crisa as expressed under GAAP, and
will continue to affect our financial income and expense and our
revenues from international settlements.
Major fluctuations in the value of the euro, the Mexican peso or
the RMB relative to the U.S. dollar and other major
currencies could also reduce the cost competitiveness of our
products or those of our subsidiaries, as compared to foreign
competition. For example, if the U.S. dollar appreciates
against the euro, the Mexican peso or the RMB, the purchasing
power of those currencies effectively would be reduced compared
to the U.S. dollar, making our
U.S.-manufactured
products more expensive in the euro zone, Mexico and China,
respectively, compared to the products of local competitors and
making products manufactured by our foreign competitors in those
locations more cost-competitive with our U.S. manufactured
products. An appreciation of the U.S. dollar against the
euro, the Mexican peso or the RMB also would increase the cost
of U.S. dollar-denominated purchases for our operations in
the euro zone, Mexico and China, respectively, including raw
materials. We would be forced to deduct these cost increases
from our profit margin or attempt to pass them along to
consumers. These fluctuations could adversely affect our results
of operations and financial condition.
Our
business requires us to maintain a large fixed cost base that
can affect our profitability.
The high levels of fixed costs of operating glass production
plants encourage high levels of output, even during periods of
reduced demand, which can lead to excess inventory levels and
exacerbate the pressure on profit margins. Our profitability is
dependent, in part, on our ability to spread fixed costs over an
increasing number of products sold
21
and shipped, and if we reduce our rate of production, as we did
in 2009, our costs per unit increase, negatively impacting our
gross margins. Decreased demand or the need to reduce
inventories can lower our ability to absorb fixed costs and
materially impact our results of operations.
We may
not be able to achieve the international growth contemplated by
our strategy.
Our strategy contemplates growth in international markets in
which we have significantly less experience than we do in North
America. Since we intend to benefit from our international
initiatives primarily by expanding our sales in the local
markets of other countries, our success depends on continued
growth in these markets, including Europe, Latin America and
Asia-Pacific.
We
face intense competition and competitive pressures, which could
adversely affect our results of operations and financial
condition.
Our business is highly competitive, with the principal
competitive factors being customer service, price, product
quality, new product development, brand name, delivery time and
breadth of product offerings. Advantages or disadvantages in any
of these competitive factors may be sufficient to cause the
customer to consider changing manufacturers.
Competitors in glass tableware include, among others:
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Arc International (a French company), which manufactures and
distributes glass tableware worldwide;
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Paşabahçe (a unit of Şişecam, a Turkish
company), which manufactures glass tableware at various sites
throughout the world and sells to retail, foodservice and
business-to-business
customers worldwide;
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Anchor Hocking Company (a U.S. company), which manufactures
and distributes glass beverageware, industrial products and
bakeware primarily to retail, industrial and foodservice
channels in the United States and Canada;
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Bormioli Rocco Group (an Italian company), which manufactures
glass tableware in Europe, where the majority of its sales are
to retail and foodservice customers;
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various manufacturers in China; and
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various sourcing companies.
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In addition, makers of tableware produced with other materials
such as plastics compete to a certain extent with glassware
manufacturers.
Some of our competitors have greater financial and capital
resources than we do and continue to invest heavily to achieve
increased production efficiencies. Competitors may have
incorporated more advanced technology in their manufacturing
processes, including more advanced automation techniques. Our
labor and energy costs also may be higher than those of some
foreign producers of glass tableware. We may not be successful
in managing our labor and energy costs or gaining operating
efficiencies that may be necessary to remain competitive. In
addition, our products may be subject to competition from
low-cost imports that intensify the price competition we face in
our markets. Finally, we may need to increase incentive payments
in our marketing incentive program in order to remain
competitive. Increases in these payments would adversely affect
our operating margins.
Competitors in the U.S. market for ceramic dinnerware
include, among others: Homer Laughlin; Oneida Ltd.; Steelite;
and various sourcing companies. Competitors in metalware
include, among others: Oneida Ltd.; Walco, Inc.; and various
sourcing companies. Competitors in plastic products include,
among others: Cambro Manufacturing Company; Carlisle Companies
Incorporated; and various sourcing companies. In Mexico, where a
larger portion of our sales are in the retail market, our
primary competitors include imports from foreign manufacturers
located in countries such as China, France, Italy and Colombia,
as well as Vidriera Santos and Vitro Par in the candle category.
Competitive pressures from these competitors and producers could
adversely affect our results of operations and financial
condition.
22
We may
not be able to renegotiate collective bargaining agreements
successfully when they expire; organized strikes or work
stoppages by unionized employees may have an adverse effect on
our operating performance.
We are party to collective bargaining agreements that cover most
of our manufacturing employees. The agreements with our
unionized employees in Toledo, Ohio expire on September 30,
2013, and the agreement with our unionized employees in
Shreveport, Louisiana expires on December 15, 2011. Royal
Leerdams collective bargaining agreement with its
unionized employees expires on July 1, 2011. Crisas
collective bargaining agreements with its unionized employees
have no expiration, but wages are reviewed annually and benefits
are reviewed every two years. Crisal does not have a written
collective bargaining agreement with its unionized employees but
does have an oral agreement that is revisited annually.
We may not be able to successfully negotiate new collective
bargaining agreements without any labor disruption. If any of
our unionized employees were to engage in a strike or work
stoppage prior to expiration of their existing collective
bargaining agreements, or if we are unable in the future to
negotiate acceptable agreements with our unionized employees in
a timely manner, we could experience a significant disruption of
operations. In addition, we could experience increased operating
costs as a result of higher wages or benefits paid to union
members upon the execution of new agreements with our labor
unions. We also could experience operating inefficiencies as a
result of preparations for disruptions in production, such as
increasing production and inventories. Finally, companies upon
which we are dependent for raw materials, transportation or
other services could be affected by labor difficulties. These
factors and any such disruptions or difficulties could have an
adverse impact on our operating performance and financial
condition.
In addition, we are dependent on the cooperation of our largely
unionized workforce to implement and adopt Lean initiatives that
are critical to our ability to improve our production
efficiency. The effect of strikes and other slowdowns may
adversely affect the degree and speed with which we can adopt
Lean optimization objectives and the success of that program.
The
inability to extend or refinance debt of our foreign
subsidiaries, or the calling of that debt before scheduled
maturity, could adversely impact our liquidity and financial
condition.
Our subsidiaries in Portugal and China have outstanding debt
under credit facilities provided to them by local financial
institutions. As of September 30, 2010 our subsidiary in
China had an RMB 250 million (approximately
$37.4 million at September 30, 2010) construction
loan and an RMB 50 million (approximately $7.5 million
at September 30, 2010) working capital loan, in each
case extended by CCBC. The RMB 50 million working capital
loan is scheduled to mature in January 2011. If CCBC were to
call the working capital loan
and/or the
construction loan before maturity, or if Banco Espirito Santo,
S.A., the lender under our Portuguese subsidiarys credit
facility, were to call the BES Euro line before maturity, our
liquidity and financial condition may be adversely impacted.
If either CCBC or Banco Espirito Santo, S.A. calls these loans
for repayment prior to their scheduled maturity, we may be
required to pursue one or more alternative strategies to repay
these loans, such as selling assets, refinancing or
restructuring these loans or selling additional debt or equity
securities. We may not, however, be able to refinance these
loans or sell additional debt or equity securities on favorable
terms, if at all, and if we are required to sell our assets, it
may negatively affect our ability to generate revenues.
Our
cost-reduction projects may not result in anticipated savings in
operating costs.
We may not be able to achieve anticipated cost reductions. Our
ability to achieve cost savings and other benefits within
expected time frames is subject to many estimates and
assumptions. These estimates and assumptions are subject to
significant economic, competitive and other uncertainties, some
of which are beyond our control. If these estimates and
assumptions are incorrect, if we experience delays, or if other
unforeseen events occur, our business, financial condition and
results of operations could be adversely impacted.
23
We are
subject to risks associated with operating in foreign countries.
These risks could adversely affect our results of operations and
financial condition.
We operate manufacturing and other facilities throughout the
world. As a result of our operations outside the United States,
we are subject to risks associated with operating in foreign
countries, including:
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political, social and economic instability;
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war, civil disturbance or acts of terrorism;
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taking of property by nationalization or expropriation without
fair compensation;
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changes in government policies and regulations;
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devaluations and fluctuations in currency exchange rates;
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imposition of limitations on conversions of foreign currencies
into dollars or remittance of dividends and other payments by
foreign subsidiaries;
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imposition or increase of withholding and other taxes on
remittances and other payments by foreign subsidiaries;
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ineffective intellectual property protection;
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hyperinflation in certain foreign countries; and
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impositions or increase of investment and other restrictions or
requirements by foreign governments.
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The risks associated with operating in foreign countries may
have a material adverse effect on our results of operations and
financial condition.
If we
have a fair value impairment in a business segment, our net
earnings and net worth could be materially and adversely
affected by a write-down of goodwill, intangible assets or fixed
assets.
We have recorded a significant amount of goodwill, which
represents the excess of cost over the fair value of the net
assets of the business acquired; other identifiable intangible
assets, including trademarks and trade names; and fixed assets.
Impairment of goodwill, identifiable intangible assets or fixed
assets may result from, among other things, deterioration in our
performance, adverse market conditions, adverse changes in
applicable laws or regulations, including changes that restrict
the activities of or affect the products sold by our business,
and a variety of other factors. Under GAAP, we are required to
charge the amount of any impairment immediately to operating
income. In 2009, we did not have an impairment related to
goodwill, intangible assets or fixed assets. In 2008, we wrote
down goodwill and other identifiable intangible assets by
$11.9 million related to the decline in the capital
markets, and we wrote down fixed assets by $9.7 million
related to the announcement of the closure of our Syracuse China
manufacturing facility and our Mira Loma, California
distribution center. After that adjustment, as of
December 31, 2008, we had goodwill and other identifiable
intangible assets of $192.9 million and net fixed assets of
$314.8 million. As of September 30, 2010, we had
goodwill and other identifiable intangible assets of
$191.9 million and net fixed assets of $272.7 million.
We conduct an impairment analysis at least annually. This
analysis requires our management to make significant judgments
and estimates, primarily regarding expected growth rates, the
terminal value calculation for cash flow and the discount rate.
We determine expected growth rates based on internally developed
forecasts considering our future financial plans. We establish
the terminal cash flow value based on expected growth rates,
capital spending trends and investment in working capital to
support anticipated sales growth. We estimate the discount rate
used based on an analysis of comparable company weighted average
costs of capital that considered market assumptions obtained
from independent sources. The estimates that our management uses
in this analysis could be materially impacted by factors such as
specific industry conditions, changes in cash flow from
operations and changes in growth trends. In addition, the
assumptions our management uses are managements best
estimates based on projected results and market conditions as of
the date of testing. Significant changes in these key
assumptions could result in indicators of impairment when
completing the annual impairment analysis. We remain subject to
future financial statement risk in the event that goodwill,
other identifiable intangible assets or fixed
24
assets become further impaired. For further discussion of key
assumptions in our critical accounting estimates, see
Managements Discussion and Analysis of Financial
Condition and Results of Operations Critical
Accounting Estimates, which is incorporated by reference
into this prospectus.
A
severe outbreak, epidemic or pandemic of the H1N1 virus or other
contagious disease in a location where we have a facility could
adversely impact our results of operations and financial
condition.
Our facilities may be impacted by the outbreak of certain public
health issues, including epidemics, pandemics and other
contagious diseases such as the H1N1 virus, commonly referred to
as the swine flu. If a severe outbreak were to occur
where we have facilities, it could adversely impact our results
of operations and financial condition.
We are
subject to various environmental legal requirements and may be
subject to new legal requirements in the future; these
requirements could have a material adverse effect on our
operations.
Our operations and properties, both in the United States and
abroad, are subject to extensive laws, ordinances, regulations
and other legal requirements relating to environmental
protection, including legal requirements governing investigation
and clean-up
of contaminated properties as well as water discharges, air
emissions, waste management and workplace health and safety.
These legal requirements frequently change and vary among
jurisdictions. Compliance with these requirements, or the
failure to comply with these requirements, may have a material
adverse effect on operations.
We have incurred, and expect to incur, costs to comply with
environmental legal requirements, including requirements
limiting greenhouse gas emissions, and these costs could
increase in the future. Many environmental legal requirements
provide for substantial fines, orders (including orders to cease
operations) and criminal sanctions for violations. Also, certain
environmental laws impose strict liability and, under certain
circumstances, joint and several liability on current and prior
owners and operators of these sites, as well as persons who sent
waste to them, for costs to investigate and remediate
contaminated sites. These legal requirements may apply to
conditions at properties that we presently or formerly owned or
operated, as well as at other properties for which we may be
responsible, including those at which wastes attributable to us
were disposed. A significant order or judgment against us, the
loss of a significant permit or license or the imposition of a
significant fine may have a material adverse effect on
operations.
If we
are unable to obtain sourced products or materials at favorable
prices, our operating performance may be adversely
affected.
Sand, soda ash, lime, corrugated packaging materials and resin
are the principal materials we use. In addition, we obtain glass
tableware, ceramic dinnerware, metal flatware and hollowware and
select plastic products from third parties. We may experience
temporary shortages due to disruptions in supply caused by
weather, transportation, production delays or other factors that
would require us to secure our sourced products or materials
from sources other than our current suppliers. If we are forced
to procure sourced products or materials from alternative
suppliers, we may not be able to do so on terms as favorable as
our current terms or at all. In addition, resins are a primary
material for our Traex operation and historically the price for
resins has fluctuated with the price of oil, directly impacting
our profitability. Material increases in the cost of any of
these items on an industry-wide basis would have an adverse
impact on our operating performance and cash flows if we were
unable to pass on these increased costs to our customers.
Unexpected
equipment failures may lead to production curtailments or
shutdowns.
Our manufacturing processes are dependent upon critical
glass-producing equipment, such as furnaces, forming machines
and lehrs. This equipment may incur downtime as a result of
unanticipated failures, accidents, natural disasters or other
force majeure events. We may in the future experience
facility shutdowns or periods of reduced production as a result
of such failures or events. Unexpected interruptions in our
production capabilities would adversely affect our productivity
and results of operations for the affected period. We also may
face shutdowns if we are unable to obtain enough energy in the
peak heating seasons.
25
High
levels of inflation and high interest rates in Mexico could
adversely affect the operating results and cash flows of
Crisa.
Although the annual rate of inflation in Mexico, as measured by
changes in the Mexican National Consumer Price Index, was only
6.53% for the year ended December 31, 2009 and 3.57% for
the year ended December 31, 2008, Mexico historically has
experienced high levels of inflation and high domestic interest
rates. If Mexico experiences high levels of inflation,
Crisas operating results and cash flows could be adversely
affected, and, more generally, high inflation might result in
lower demand or lower growth in demand for our products, thereby
adversely affecting our results of operations and financial
condition.
Charges
related to our employee pension and postretirement welfare plans
resulting from market risk and headcount realignment may
adversely affect our results of operations and financial
condition.
In connection with our employee pension and postretirement
welfare plans, we are exposed to market risks associated with
changes in the various capital markets. Changes in long-term
interest rates affect the discount rate that is used to measure
our obligations and related expense. Our total pension and
postretirement welfare expense, including pension settlement and
curtailment charges, for all U.S. and
non-U.S. plans
was $18.7 million and $19.0 million for the fiscal
years ended December 31, 2009 and 2008, respectively. We
expect our total pension and postretirement welfare expense for
all U.S. and
non-U.S. plans
to be $21.0 million in 2010. Of that amount,
$15.9 million was expensed in the nine months ended
September 30, 2010. Volatility in the capital markets
affects the performance of our pension plan asset performance
and related pension expense. Based on 2009 year-end data,
sensitivity to these key market risk factors is as follows:
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A change of 1% in the discount rate would change our total
pension and postretirement welfare expense by approximately
$3.6 million.
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A change of 1% in the expected long-term rate of return on plan
assets would change total pension expense by approximately
$2.4 million.
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As part of our pension expense, we incurred pension settlement
charges of $3.7 million during 2009. These charges were
triggered by excess lump sum distributions to retirees. For
further discussion of these charges, see note 9 to our
Consolidated Financial Statements for the year ended
December 31, 2009, which are incorporated by reference into
this prospectus. As part of total expense, we incurred pension
curtailment charges of $1.1 million and nonpension and
postretirement impairment charges of $3.1 million during
2008. The charges in 2008 were triggered by our announcement in
December 2008 that our Syracuse China manufacturing plant would
be shut down during April 2009. For further discussion, see
notes 7, 9 and 10 to our Consolidated Financial Statements
for the year ended December 31, 2009, which are
incorporated by reference into this prospectus. To the extent
that we experience additional headcount shifts or changes, we
may incur further expenses related to our employee pension and
postretirement welfare plans, which could have a material
adverse effect on our results of operations and financial
condition.
If our
hedges do not qualify as highly effective or if we do not
believe that forecasted transactions would occur, the changes in
the fair value of the derivatives used as hedges would be
reflected in our earnings.
In order to mitigate the variation in our operating results due
to commodity price fluctuations, we have derivative financial
instruments that hedge certain of commodity price risks
associated with forecasted future natural gas requirements and
foreign exchange rate risks associated with transactions
denominated in some currencies other than the U.S. dollar.
The results of our hedging practices could be positive, neutral
or negative in any period depending on price changes of the
hedged exposures. We account for derivatives in accordance with
Financial Accounting Standards Board Accounting Standards
Codificationtm
Topic 815, Derivatives and Hedging, or FASB
ASC 815. These derivatives qualify for hedge accounting if
the hedges are highly effective and we have designated and
documented contemporaneously the hedging relationships involving
these derivative instruments. If our hedges do not qualify as
highly effective or if we do not believe that forecasted
transactions would occur, the changes in the fair value of the
derivatives used as hedges will impact our results of operations
and could significantly impact our earnings.
26
Our
business may suffer if we do not retain our senior
management.
We depend on our senior management. The loss of services of any
of the members of our senior management team for any reason,
including resignation or retirement, could adversely affect our
business until a suitable replacement can be found. There may be
a limited number of persons with the requisite skills to serve
in these positions, and we may be unable to locate or employ
such qualified personnel on acceptable terms.
We
rely on increasingly complex information systems for management
of our manufacturing, distribution, sales and other functions.
If our information systems fail to perform these functions
adequately, or if we experience an interruption in their
operation, our business and results of operations could
suffer.
All of our major operations, including manufacturing,
distribution, sales and accounting, are dependent upon our
complex information systems. Our information systems are
vulnerable to damage or interruption from:
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earthquake, fire, flood, hurricane and other natural disasters;
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power loss, computer systems failure, internet and
telecommunications or data network failure; and
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hackers, computer viruses, software bugs or glitches.
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Any damage or significant disruption in the operation of such
systems or the failure of our information systems to perform as
expected could disrupt our business; result in decreased sales,
increased overhead costs, excess inventory and product
shortages; and otherwise adversely affect our operations,
financial performance and condition. We take significant steps
to mitigate the potential impact of each of these risks, but
there can be no assurance that these procedures would be
completely successful.
We may
not be able to effectively integrate future businesses we
acquire or joint ventures we enter into.
Any future acquisitions that we might make or joint ventures
into which we might enter are subject to various risks and
uncertainties, including:
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the inability to integrate effectively the operations, products,
technologies and personnel of the acquired companies (some of
which may be spread out in different geographic regions) and to
achieve expected synergies;
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the potential disruption of existing business and diversion of
managements attention from
day-to-day
operations;
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the inability to maintain uniform standards, controls,
procedures and policies or correct deficient standards,
controls, procedures and policies, including internal controls
and procedures sufficient to satisfy regulatory requirements of
a public company in the United States;
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the incurrence of contingent obligations that were not
anticipated at the time of the acquisitions;
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the failure to obtain necessary transition services such as
management services, information technology services and others;
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the need or obligation to divest portions of the acquired
companies; and
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the potential impairment of relationships with customers.
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In addition, we cannot assure you that the integration and
consolidation of newly acquired businesses or joint ventures
will achieve any anticipated cost savings and operating
synergies. The inability to integrate and consolidate operations
and improve operating efficiencies at newly acquired businesses
or joint ventures could have a material adverse effect on our
business, financial condition and results of operations.
27
Our
business requires significant capital investment and maintenance
expenditures that we may be unable to fulfill.
Our operations are capital intensive, requiring us to maintain a
large fixed cost base. Our total capital expenditures were
$17.0 million and $45.7 million for the years ended
December 31, 2009 and 2008, respectively, and
$19.1 million and $12.3 million for the nine months
ended September 30, 2010 and 2009, respectively.
Our business may not generate sufficient operating cash flow and
external financing sources may not be available in an amount
sufficient to enable us to make anticipated capital expenditures.
If our
investments in new technology and other capital expenditures do
not yield expected returns, our results of operations could be
reduced.
The manufacture of our tableware products involves the use of
automated processes and technologies. We designed much of our
glass tableware production machinery internally and have
continued to develop and refine this equipment to incorporate
advancements in technology. We will continue to invest in
equipment and make other capital expenditures to further improve
our production efficiency and reduce our cost profile. To the
extent that these investments do not generate targeted levels of
returns in terms of efficiency or improved cost profile, our
financial condition and results of operations could be adversely
affected.
Our
failure to protect our intellectual property or prevail in any
intellectual property litigation could materially and adversely
affect our competitive position, reduce revenue or otherwise
harm our business.
Our success depends in part on our ability to protect our
intellectual property rights. We rely on a combination of
patent, trademark, copyright and trade secret laws, licenses,
confidentiality and other agreements to protect our intellectual
property rights. However, this protection may not be fully
adequate. Our intellectual property rights may be challenged or
invalidated, an infringement suit by us against a third party
may not be successful
and/or third
parties could adopt trademarks similar to our own. In
particular, third parties could design around or copy our
proprietary furnace, manufacturing and mold technologies, which
are important contributors to our competitive position in the
glass tableware industry. We may be particularly susceptible to
these challenges in countries where protection of intellectual
property is not strong. In addition, we may be accused of
infringing or violating the intellectual property rights of
third parties. Any such claims, whether or not meritorious,
could result in costly litigation and divert the efforts of our
personnel. Our failure to protect our intellectual property or
prevail in any intellectual property litigation could materially
and adversely affect our competitive position, reduce revenue or
otherwise harm our business.
Devaluation
or depreciation of, or governmental conversion controls over,
the foreign currencies in which we operate could affect our
ability to convert the earnings of our foreign subsidiaries into
U.S. dollars.
Major devaluation or depreciation of the Mexican peso could
result in disruption of the international foreign exchange
markets and may limit our ability to transfer or to convert
Crisas Mexican peso earnings into U.S. dollars and
other currencies upon which we will rely in part to satisfy our
debt obligations. While the Mexican government does not
currently restrict, and for many years has not restricted, the
right or ability of Mexican or foreign persons or entities to
convert pesos into U.S. dollars or to transfer other
currencies out of Mexico, the government could institute
restrictive exchange rate policies in the future. Restrictive
exchange rate policies could adversely affect our results of
operations and financial condition.
In addition, the government of China imposes controls on the
convertibility of RMB into foreign currencies and, in certain
cases, the remittance of currency out of China. Shortages in the
availability of foreign currency may restrict the ability of our
Chinese subsidiaries to remit sufficient foreign currency to
make payments to us. Under existing Chinese foreign exchange
regulations, payments of current account items, including profit
distributions, interest payments and expenditures from
trade-related transactions, can be made in foreign currencies
without prior approval from the Chinese State Administration of
Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate government
authorities is required where RMB are to be converted into
foreign currencies and remitted out of China to pay capital
expenses such as the repayment of bank loans denominated in
foreign currencies. In the future, the Chinese government could
institute restrictive exchange
28
rate policies for current account transactions. These policies
could adversely affect our results of operations and financial
condition.
Payment
of severance or retirement benefits earlier than anticipated
could strain our cash flow.
Certain members of our senior management have employment and
change in control agreements that provide for substantial
severance payments and retirement benefits. We are required to
fund a certain portion of these payments according to a
predetermined schedule, but some of our nonqualified obligations
are currently unfunded. Should several of these senior managers
leave our employ under circumstances entitling them to severance
or retirement benefits, or become disabled or die, before we
have funded these payments, the need to pay these severance or
retirement benefits ahead of their anticipated schedule could
put a strain on our cash flow.
We are
involved in litigation from time to time in the ordinary course
of business.
We are involved in various routine legal proceedings arising in
the ordinary course of our business. We do not consider any
pending legal proceeding as material. However, we could be
adversely affected by legal proceedings in the future, including
products liability claims related to the products we manufacture.
Our
products are subject to various health and safety requirements
and may be subject to new health and safety requirements in the
future; these requirements could have a material adverse effect
on our operations.
Our glass tableware, ceramic dinnerware, metal flatware,
hollowware and serveware and plastic products are subject to
certain legal requirements relating to health and safety. These
legal requirements frequently change and vary among
jurisdictions. Compliance with these requirements, or the
failure to comply with these requirements, may have a material
adverse effect on our operations. If any of our products becomes
subject to new regulations, or if any of our products becomes
specifically regulated by additional governmental or other
regulatory entities, the cost of compliance could be material.
For example, the U.S. Consumer Product Safety Commission,
or CPSC, regulates many consumer products, including glass
tableware products that are externally decorated with certain
ceramic enamels. New regulations or policies by the CPSC could
require us to change our manufacturing processes, which could
materially raise our manufacturing costs. In addition, such new
regulations could reduce sales of our glass tableware products.
Furthermore, a significant order or judgment against us by any
such governmental or regulatory entity relating to health or
safety matters, or the imposition of a significant fine relating
to such matters, may have a material adverse effect on our
operations.
Risks
Related to the Exchange Notes
We may
not be able to generate sufficient cash to service all of our
indebtedness, including the exchange notes, and may be forced to
take other actions that may not be successful, in order to
satisfy our obligations under our indebtedness.
Our ability to make scheduled payments or to refinance our debt
obligations depends on our financial and operating performance,
which is subject to prevailing economic and competitive
conditions and certain financial, business and other factors
beyond our control. We cannot assure you that we will maintain a
level of cash flows from operating activities sufficient to
permit us to pay the principal, premium, if any, and interest on
our debt, including the exchange notes. See
Risks Related to our Business Our
high level of debt, as well as incurrences of additional debt,
may limit our operating flexibility, which could adversely
affect our results of operation and financial condition,
Forward-looking Statements and
Managements Discussion and Analysis of Financial
Condition and Results of Operations Liquidity and
Capital Resources, which are included else where in this
prospectus or are incorporated by reference into this prospectus
If we cannot make scheduled payments on our debt, we will be in
default and, as a result:
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our debt holders could declare all outstanding principal and
interest to be due and payable;
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the lenders under our amended and restated ABL Facility could
terminate their commitments to lend us money and foreclose
against the assets securing their borrowings; and
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we could be forced into bankruptcy or liquidation, which could
result in you losing your investment in the exchange notes.
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29
Despite our current debt levels, we may still be able to incur
substantially more debt in the future. This could further
exacerbate the risks described above. The terms of the indenture
governing the exchange notes offered hereby do not fully
prohibit us or our subsidiaries from doing so. If new debt is
added to our current debt levels, the related risks that we and
our subsidiaries now face could intensify. The subsidiaries that
guarantee the exchange notes are also guarantors under our
amended and restated ABL Facility. See Description of
Exchange Notes and Description of Other
Indebtedness.
The
pledge of the capital stock or other securities of Libbey Glass
and our subsidiaries that secure the exchange notes will
automatically be released from the lien on them and no longer
constitute Collateral for so long as the pledge of such capital
stock or such other securities would require the filing of
separate financial statements with the SEC for that
subsidiary.
The exchange notes and the guarantees will be secured by a
second-priority security interest pledge of the stock of us and
certain of our subsidiaries. Under the SEC regulations in effect
as of the issue date of the exchange notes, if the par value,
book value as carried by us or market value (whichever is
greatest) of the capital stock or other securities of a
subsidiary pledged as part of the Collateral is greater than or
equal to 20% of the aggregate principal amount of the notes then
outstanding, such a subsidiary would be required to provide
separate financial statements to the SEC. Therefore, the
indenture governing the exchange notes and the collateral
documents provide that any capital stock and other securities of
any of our subsidiaries will be excluded from the Collateral for
so long as, and only to the extent that, the pledge of such
capital stock or other securities to secure the exchange notes
and the outstanding notes would cause such subsidiary to be
required to file separate financial statements with the SEC
pursuant to
Rule 3-16
of
Regulation S-X
(as in effect from time to time).
As a result, holders of the exchange notes could lose a portion
or all of their security interest in the capital stock or other
securities of those subsidiaries during such period. It may be
more difficult, costly and time-consuming for holders of the
exchange notes to foreclose on the assets of a subsidiary than
to foreclose on its capital stock or other securities, so the
proceeds realized upon any such foreclosure could be
significantly less than those that would have been received upon
any sale of the capital stock or other securities of such
subsidiary. See Description of Exchange Notes
Collateral.
The
exchange notes will be structurally subordinated to all
indebtedness of our existing or future subsidiaries that do not
become guarantors of the exchange notes.
You will not have any claim as a creditor against any of our
existing subsidiaries that are not guarantors of the exchange
notes or against any of our future subsidiaries that do not
become guarantors of the exchange notes. Debt and other
liabilities, including trade payables, whether secured or
unsecured, of those subsidiaries will be effectively senior to
your claims against those subsidiaries. The exchange notes are
not secured by any of the assets of non-guarantor subsidiaries.
For the nine months ended September 30, 2010, we and the
guarantor subsidiaries collectively represented approximately
60.7% of our net sales, approximately 51.9% of our operating
income and approximately 45.7% of our Adjusted EBITDA. At
September 30, 2010, Libbey Glass and our guarantor
subsidiaries collectively represented 35.2% of our total assets
and 78.3% of our total liabilities, including trade payables,
but excluding intercompany liabilities.
In addition, the indenture governing the exchange notes will,
subject to some limitations, permit these subsidiaries to incur
additional indebtedness and will not contain any limitation on
the amount of other liabilities, such as trade payables, that
may be incurred by these subsidiaries.
There
may not be sufficient Collateral to pay all or any of the
exchange notes.
No appraisal of the value of the Collateral has been made in
connection with this offering and the value of the Collateral in
the event of liquidation will depend on market and economic
conditions, the availability of buyers and other factors.
Consequently, liquidating the Collateral securing the exchange
notes may not produce proceeds in an amount sufficient to pay
any amounts due on the exchange notes.
30
The Credit Agreement Priority Collateral is subject to
first-priority liens in favor of the lenders under our amended
and restated ABL Facility. The holders of the exchange notes
will have second-priority liens on the Credit Agreement Priority
Collateral, excluding pledges of stock of subsidiaries to the
extent that, as a result of the pledges, the subsidiaries would
be required to file separate financial statements with the SEC.
Because obligations under our amended and restated ABL Facility
are secured on a first-priority basis with respect to the Credit
Agreement Priority Collateral, our failure to comply with the
terms of that agreement would entitle those lenders to declare
all funds borrowed under it to be immediately due and payable.
If we were unable to service the debt under our amended and
restated ABL Facility, the lenders could foreclose on our assets
that serve as Credit Agreement Priority Collateral. As a result,
upon any distribution to our creditors, liquidation,
reorganization or similar proceedings, or following acceleration
of any of our debt or an event of default under our debt, the
lenders under the amended and restated ABL Facility will be
entitled to be repaid in full from the proceeds of the Credit
Agreement Priority Collateral before any payment is made to you
from the proceeds of such collateral.
In addition, we have the ability to incur debt that ranks
equally with the exchange notes and, subject to certain
limitations, secured equally and ratably with the exchange
notes. If we incur any additional indebtedness that ranks
equally with the exchange notes and is, subject to certain
limitations, secured equally and ratably with the exchange
notes, the holders of that debt will be entitled to share
ratably with holders of the exchange notes in any proceeds
distributed in connection with any insolvency, liquidation,
reorganization, dissolution or other
winding-up
of us. This may have the effect of reducing the amount of
proceeds paid to you. Additionally, our amended and restated ABL
Facility provides commitments of up to $110.0 million in
the aggregate, of which approximately $69.6 million was
available as of September 30, 2010. These borrowings will
be secured on a first-priority basis by the Credit Agreement
Priority Collateral (with the exception of pledges of stock of
our subsidiary guarantors to the extent that, as a result of the
pledges, they would be required to file separate financial
statements with the SEC). We cannot assure you that the
Collateral will produce proceeds sufficient to pay both amounts
due on the exchange notes, the amended and restated ABL Facility
and any such secured debt that ranks equally with the exchange
notes.
The fair market value of the Collateral is subject to
fluctuations based on factors that include, among others, the
condition of our facilities, the conditions of the glass
tableware industry, the ability to sell the Collateral in an
orderly sale, general economic conditions, the availability of
buyers and similar factors. The amount received upon a sale of
the Collateral would be dependent on numerous factors, including
but not limited to the actual fair market value of the
Collateral at such time and the timing and the manner of the
sale. By its nature, portions of the Collateral may be illiquid
and may have no readily ascertainable market value. In the event
of a foreclosure, liquidation, bankruptcy or similar proceeding,
we cannot assure you that the proceeds from any sale or
liquidation of this Collateral will be sufficient to pay our
obligations under our amended and restated ABL Facility or under
the exchange notes. The rights of the holders of the exchange
notes with respect to the Collateral securing the exchange notes
will also be materially limited pursuant to the terms of an
intercreditor agreement.
To the extent that pre-existing liens, liens permitted under the
indenture governing the exchange notes and other rights,
including liens on excluded assets, such as those securing
purchase money obligations and capital lease obligations granted
to other parties (in addition to the holders of obligations
secured by first-priority liens), encumber any of the Collateral
securing the exchange notes and the guarantees, those parties
have or may exercise rights and remedies with respect to the
Collateral that could adversely affect the value of the
Collateral and the ability of the collateral agent for the
exchange notes, the trustee under the indenture or the holders
of the exchange notes to realize or foreclose on the Collateral.
Other
secured indebtedness, including under our amended and restated
ABL Facility, will be effectively senior to the exchange notes
to the extent of the value of the Credit Agreement Priority
Collateral.
Our amended and restated ABL Facility is collateralized by a
first-priority lien in the Credit Agreement Priority Collateral.
We may also incur additional future indebtedness permitted by
the indenture that is secured by a first-priority lien on the
Credit Agreement Priority Collateral. As of September 30,
2010, we had $69.6 million of undrawn availability under
the amended and restated ABL Facility, after giving effect to
borrowing base limitations, other reserves and
$18.4 million of letters of credit. The exchange notes and
the related guarantees will be secured, subject to permitted
liens, by a second-priority lien in the Credit Agreement
Priority Collateral. Holders of the indebtedness under our
amended and restated ABL Facility and any other indebtedness
collateralized by a first-
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priority lien in the Credit Agreement Priority Collateral will
be entitled to receive proceeds from the realization of value of
the Credit Agreement Priority Collateral to repay such
indebtedness in full before the holders of the exchange notes
will be entitled to any recovery from such collateral.
Accordingly, holders of the exchange notes will only be entitled
to receive proceeds from the realization of value of the Credit
Agreement Priority Collateral after all indebtedness and other
obligations under our amended and restated ABL Facility and any
other obligations secured by first-priority liens on the Credit
Agreement Priority Collateral are repaid in full. As a result,
the exchange notes will be effectively junior in right of
payment to indebtedness under our amended and restated ABL
Facility and any other indebtedness collateralized by a
first-priority lien in the Credit Agreement Priority Collateral,
to the extent of the realizable value of such collateral.
The
lien ranking provisions of the indenture and other agreements
relating to the Credit Agreement Priority Collateral securing
the exchange notes will limit the rights of holders of the
exchange notes with respect to certain collateral, even during
an event of default.
The rights of the holders of the exchange notes with respect to
the Credit Agreement Priority Collateral will be substantially
limited by the terms of the lien ranking agreements set forth in
the indenture and the intercreditor agreement, even during an
event of default. Under the indenture and the intercreditor
agreement, at any time that obligations that have the benefit of
first-priority liens are outstanding, any actions that may be
taken with respect to (or in respect of) such collateral,
including the ability to cause the commencement of enforcement
proceedings against such collateral and to control the conduct
of such proceedings, and the approval of amendments to, releases
of such collateral from the lien of, and waivers of past
defaults under, such documents relating to such collateral, will
be at the direction of the holders of the obligations secured by
the first-priority liens, and the holders of the exchange notes
secured by lower priority liens may be adversely affected. See
Description of Exchange Notes
Collateral Assets Pledged as Collateral and
Description of Exchange Notes Amendments and
Waivers. Under the terms of the intercreditor agreement,
at any time that obligations that have the benefit of the
first-priority liens on the Credit Agreement Priority Collateral
are outstanding, if the holders of such indebtedness release the
Credit Agreement Priority Collateral for any reason whatsoever
(other than any such release granted following the discharge of
obligations with respect to the amended and restated ABL
Facility), including, without limitation, in connection with any
sale of assets, the second-priority security interest in such
Credit Agreement Priority Collateral securing the exchange notes
will be automatically and simultaneously released without any
consent or action by the holders of the exchange notes, subject
to certain exceptions. The Credit Agreement Priority Collateral
so released will no longer secure our and the guarantors
obligations under the exchange notes and the guarantees.
In addition, because the holders of the indebtedness secured by
first-priority liens in the Credit Agreement Priority Collateral
control the disposition of the Credit Agreement Priority
Collateral, such holders could decide not to proceed against the
Credit Agreement Priority Collateral, regardless of whether
there is a default under the documents governing such
indebtedness or under the indenture governing the exchange
notes. In such event, the only remedy available to the holders
of the exchange notes would be to sue for payment on the
exchange notes and the related guarantees. The indenture and the
intercreditor agreement contain certain provisions benefiting
holders of indebtedness under our amended and restated ABL
Facility, including provisions prohibiting the trustee and
collateral agent under the exchange notes from objecting
following the filing of a bankruptcy petition to a number of
important matters regarding the collateral and the financing to
be provided to us. After such filing, the value of this
collateral could materially deteriorate and holders of the
exchange notes would be unable to raise an objection. In
addition, the right of holders of obligations secured by
first-priority liens to foreclose upon and sell such collateral
upon the occurrence of an event of default also would be subject
to limitations under applicable bankruptcy laws if we or any of
our subsidiaries become subject to a bankruptcy proceeding. The
intercreditor agreement also gives the holders of first-priority
liens on the Credit Agreement Priority Collateral the right to
access and use the collateral that secures the exchange notes to
allow those holders to protect the Credit Agreement Priority
Collateral and to process, store and dispose of the Credit
Agreement Priority Collateral.
The Credit Agreement Priority Collateral will also be subject to
any and all exceptions, defects, encumbrances, liens and other
imperfections as may be accepted by the lenders under our
amended and restated ABL Facility and other creditors that have
the benefit of first-priority liens on such collateral from time
to time, whether on or after the date the exchange notes and
guarantees are issued. The existence of any such exceptions,
defects, encumbrances,
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liens and other imperfections could adversely affect the value
of the Credit Agreement Priority Collateral securing the
exchange notes as well as the ability of the exchange notes
collateral agent to realize or foreclose on such collateral.
The
waiver in the intercreditor agreement of rights of marshaling
may adversely affect the recovery rates of holders of the
exchange notes in a bankruptcy or foreclosure
scenario.
The exchange notes and the guarantees are secured on a
second-priority lien basis by the Credit Agreement Priority
Collateral. The intercreditor agreement provides that, at any
time obligations having the benefit of the first-priority liens
on the Credit Agreement Priority Collateral are outstanding, the
holders of the exchange notes, the trustee under the indenture
governing the exchange notes and the collateral agent for the
exchange notes may not assert or enforce any right of marshaling
accorded to a junior lienholder, as against the holders of such
indebtedness secured by first-priority liens in the Credit
Agreement Priority Collateral. Without this waiver of the right
of marshaling, holders of such indebtedness secured by
first-priority liens in the Credit Agreement Priority Collateral
would likely be required to liquidate collateral on which the
exchange notes did not have a lien, if any, prior to liquidating
the Credit Agreement Priority Collateral, thereby maximizing the
proceeds of the Credit Agreement Priority Collateral that would
be available to repay our obligations under the exchange notes.
As a result of this waiver, the proceeds of sales of the Credit
Agreement Priority Collateral could be applied to repay any
indebtedness secured by first-priority liens in the Credit
Agreement Priority Collateral before applying proceeds of other
collateral securing indebtedness, and the holders of exchange
notes may recover less than they would have if such proceeds
were applied in the order most favorable to the holders of the
exchange notes.
If a
bankruptcy petition were filed by or against us, holders of
exchange notes might receive less for their bankruptcy claim
than they would have been entitled to receive under the
indenture governing the exchange notes.
If a bankruptcy petition were filed by or against us under
U.S. bankruptcy law after the issuance of the exchange
notes, the claim by any holder of the exchange notes for the
principal amount of the exchange notes might be limited, and
holders of the exchange notes under these circumstances might
receive less than they would be entitled to receive under the
terms of the indenture governing the exchange notes, even if
sufficient funds were available to pay the full amounts due
under the indenture.
In the
event of a bankruptcy of us or any of the guarantors, holders of
the exchange notes may be deemed to have an unsecured claim to
the extent that our obligations in respect of the exchange notes
exceed the fair market value of the Collateral securing the
exchange notes.
In any bankruptcy proceeding with respect to us or any of the
guarantors, it is possible that the bankruptcy trustee, the
debtor-in-possession
or competing creditors will assert that the fair market value of
the Collateral with respect to the exchange notes on the date of
the bankruptcy filing was less than the then-current principal
amount of the exchange notes. Upon a finding by the bankruptcy
court that the exchange notes are under-collateralized, the
claims in the bankruptcy proceeding with respect to the exchange
notes would be bifurcated between a secured claim in an amount
equal to the value of the Collateral and an unsecured claim with
respect to the remainder of its claim which would not be
entitled to the benefits of security in the Collateral. Other
consequences of a finding of under-collateralization would be,
among other things, a lack of entitlement on the part of the
exchange notes to receive post-petition interest and a lack of
entitlement on the part of the unsecured portion of the exchange
notes to receive adequate protection under federal
bankruptcy laws. In addition, if any payments of post-petition
interest had been made at any time prior to such a finding of
under-collateralization, those payments would be recharacterized
by the bankruptcy court as a reduction of the principal amount
of the secured claim with respect to the exchange notes.
Your
rights in the Collateral may be adversely affected by the
failure to perfect security interests in certain collateral
acquired in the future.
Applicable law requires that certain property and rights
acquired after the grant of a general security interest can be
perfected only at the time the property and rights are acquired
and identified. There can be no assurance that
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the collateral agent under our amended and restated ABL Facility
or the trustee or the collateral agent for the exchange notes
will monitor, or that we will inform the collateral agent under
our amended and restated ABL Facility or the trustee or the
collateral agent for the exchange notes of, the future
acquisition of property and rights that constitute Collateral,
and that the necessary action will be taken to properly perfect
the security interest in such after-acquired Collateral. The
collateral agent for the exchange notes has no obligation to
monitor the acquisition of additional property or rights that
constitute Collateral or the perfection of any security interest
in favor of the exchange notes against third parties.
The
trustee under the indenture may be unable to foreclose on the
Collateral, or exercise associated rights, and pay you any
amount due on the exchange notes.
Under the indenture governing the exchange notes, if an event of
default occurs, including defaults in payment of interest or
principal on the exchange notes when due at maturity or
otherwise, the trustee may accelerate the exchange notes and,
among other things, the collateral agent appointed under the
indenture may initiate proceedings to foreclose on the
collateral securing the exchange notes and exercise associated
rights. The right of the collateral agent to repossess and
dispose of the Collateral after the occurrence of an event of
default is likely to be significantly impaired or, at a minimum,
delayed by applicable U.S. bankruptcy laws if a bankruptcy
proceeding involving Libbey Inc., Libbey Glass or any subsidiary
guarantor were to be commenced prior to the trustees
disposition of the Collateral. For example, under applicable
U.S. bankruptcy laws, a secured creditor is prohibited from
repossessing and selling its collateral from a debtor in a
bankruptcy case without bankruptcy court approval. Under any of
these circumstances, you may not be fully compensated for your
investment in the exchange notes in the event of a default by
Libbey Glass.
State
law may limit the ability of the collateral agent, trustee and
the holders of the exchange notes to foreclose on the real
property and improvements included in the
Collateral.
The exchange notes will be secured by, among other things, liens
on real property and improvements located in the states of Ohio,
Louisiana and Wisconsin. The laws of those states may limit the
ability of the trustee and the holders of the exchange notes to
foreclose on the improved real property Collateral located in
those states. Laws of those states govern the perfection,
enforceability and foreclosure of mortgage liens against real
property interests which secure debt obligations such as the
exchange notes. These laws may impose procedural requirements
for foreclosure different from and necessitating a longer time
period for completion than the requirements for foreclosure of
security interests in personal property. Debtors may have the
right to reinstate defaulted debt (even if it has been
accelerated) before the foreclosure date by paying the past due
amounts and a right of redemption after foreclosure. Governing
laws may also impose security first and one form of action
rules, which rules can affect the ability to foreclose or the
timing of foreclosure on real and personal property collateral
regardless of the location of the collateral and may limit the
right to recover a deficiency following a foreclosure.
You and the trustee also may be limited in your ability to
enforce a breach of the no liens and no
transfers or assignments covenants. Some decisions of
state courts have placed limits on a lenders ability to
prohibit and to accelerate debt secured by real property upon
breach of covenants prohibiting sales or assignments or the
creation of certain junior liens or leasehold estates, and the
lender may need to demonstrate that enforcement of such
covenants is reasonably necessary to protect against impairment
of the lenders security or to protect against an increased
risk of default. Although the foregoing court decisions may have
been preempted, at least in part, by certain federal laws, the
scope of such preemption, if any, is uncertain. Accordingly, a
court could prevent the trustee and the holders of the exchange
notes from declaring a default and accelerating the exchange
notes by reason of a breach of this covenant, which could have a
material adverse effect on the ability of holders to enforce the
covenant.
Delivery
of mortgages or security interests in other Collateral after the
issue date increases the risk that the mortgages or other
security interests could be avoidable in
bankruptcy.
We intend to secure certain other Collateral after the issue
date. If we or any guarantor were to become subject to a
bankruptcy proceeding after the issue date of the exchange
notes, any mortgage or security interest in other Collateral
delivered after the issue date of the exchange notes would face
a greater risk than security interests in place on the issue
date of being avoided by the pledgor (as debtor in possession)
or by its trustee in bankruptcy as a
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preference under bankruptcy law if certain events or
circumstances exist or occur, including if the pledgor is
insolvent at the time of the pledge, if the pledge permits the
holders of the exchange notes to receive a greater recovery than
if the pledge had not been given, and if a bankruptcy proceeding
in respect of the pledgor is commenced within 90 days
following the pledge, or, in certain circumstances, a longer
period. To the extent that the grant of any such mortgage or
other security interest is avoided as a preference, you would
lose the benefit of the mortgage or security interest. As more
fully described herein, certain of the assets securing the
exchange notes will not be subject to a valid and perfected
security interest on the closing date.
In the
event of a bankruptcy, the ability of the holders of the
exchange notes to realize upon the Collateral will be subject to
certain bankruptcy law limitations.
The ability of holders of the exchange notes to realize upon the
Collateral will be subject to certain bankruptcy law limitations
in the event of a bankruptcy. Under applicable federal
bankruptcy laws, secured creditors are prohibited from
repossessing their security from a debtor in a bankruptcy case,
or from disposing of security repossessed from a debtor in a
bankruptcy case, without bankruptcy court approval. Moreover,
applicable federal bankruptcy laws generally permit the debtor
to continue to retain collateral even though the debtor is in
default under the applicable debt instruments, provided
generally that the secured creditor is given adequate
protection. The meaning of the term adequate
protection may vary according to the circumstances, but is
intended in general to protect the value of the secured
creditors interest in the collateral at the commencement
of the bankruptcy case and may include cash payments or the
granting of additional security, if and at such times as the
presiding court in its discretion determines, for any diminution
in the value of the collateral as a result of the stay of
repossession or disposition of the collateral during the
pendency of the bankruptcy case. In view of the lack of a
precise definition of the term adequate protection
and the broad discretionary powers of a U.S. bankruptcy
court, we cannot predict whether payments under the exchange
notes would be made following commencement of and during a
bankruptcy case, whether or when the trustee under the indenture
for the exchange notes could foreclose upon or sell the
Collateral or whether or to what extent holders of exchange
notes would be compensated for any delay in payment or loss of
value of the Collateral through the provision of adequate
protection.
The
value of the Collateral securing the exchange notes may not be
sufficient to secure post-petition interest.
In the event of a bankruptcy, liquidation, dissolution,
reorganization or similar proceeding against us, you will only
be entitled to post-petition interest, fees, costs or charges
under U.S. bankruptcy laws to the extent that the value of
their security interest in the Collateral is greater than the
amount of their pre-bankruptcy claim. If you have a security
interest in Collateral with a value equal or less than your
pre-bankruptcy claim as a holder of the exchange notes, you will
not be entitled to post-petition interest under
U.S. bankruptcy laws. We have not prepared any appraisal of
the fair market value of the Collateral in connection with this
offering and we therefore cannot assure you that the value of
your interest in the Collateral equals or exceeds the principal
amount of the exchange notes. If the value of the Collateral is
less than the principal amount of the exchange notes, then in
the event of a bankruptcy, you will have only an unsecured claim
against Libbey Inc., Libbey Glass and the subsidiary guarantors
to the extent of such shortfall.
There may not be sufficient Collateral to pay all or any of the
exchange notes. See There may not be
sufficient Collateral to pay all or any of the exchange
notes and Description of Exchange Notes.
There
are circumstances other than repayment or discharge of the
exchange notes under which the Collateral securing the exchange
notes and guarantees will be released automatically, without
your consent or the consent of the trustee.
Under various circumstances, all or a portion of the Collateral
may be released, including:
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to enable the sale, transfer or other disposal of such
Collateral in a transaction not prohibited under the indenture
or the amended and restated ABL Facility, including the sale of
any entity in its entirety that owns or holds such Collateral;
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with respect to Collateral held by a guarantor, upon the release
of such guarantor from its guarantee; and
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with respect to any Credit Agreement Priority Collateral, upon
any release by the lenders under our amended and restated ABL
Facility of their first-priority security interest in such
Credit Agreement Priority Collateral (other than any such
release granted following the discharge of the obligations with
respect to the amended and restated ABL Facility).
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In addition, the guarantee of a subsidiary guarantor will be
released in connection with a sale of such subsidiary guarantor
in a transaction not prohibited by the indenture.
The indenture will also permit us to designate one or more of
our restricted subsidiaries that is a guarantor of the exchange
notes as an unrestricted subsidiary. If we designate a
subsidiary guarantor as an unrestricted subsidiary, all of the
liens on any Collateral owned by such subsidiary or any of its
subsidiaries and any guarantees of the exchange notes by such
subsidiary or any of its subsidiaries will be released under the
indenture but not under the amended and restated ABL Facility.
Designation of an unrestricted subsidiary will reduce the
aggregate value of the Collateral securing the exchange notes to
the extent that liens on the assets of the unrestricted
subsidiary and its subsidiaries are released. In addition, the
creditors of the unrestricted subsidiary and its subsidiaries
will have a senior claim on the assets of such unrestricted
subsidiary and its subsidiaries. See Description of
Exchange Notes.
The
Collateral is subject to casualty risks.
We intend to maintain insurance or otherwise insure against
hazards in a manner appropriate and customary for our business.
There are, however, certain losses that may be either
uninsurable or not economically insurable, in whole or in part.
Insurance proceeds may not compensate us fully for our losses.
If there is a complete or partial loss of any of the pledged
Collateral, the insurance proceeds may not be sufficient to
satisfy all of the secured obligations, including the exchange
notes and the guarantees.
In the event of a total or partial loss to any of the mortgaged
facilities, certain items of equipment and inventory may not be
easily replaced. Accordingly, even though there may be insurance
coverage, the extended period needed to manufacture replacement
units or inventory could cause significant delays.
Guarantees
of the exchange notes may be released.
In addition, the exchange notes will be guaranteed by each of
our future restricted domestic subsidiaries that guarantees any
of the debt of Libbey Glass or debt of any subsidiary guarantor.
Under the terms of the indenture, a guarantee of the exchange
notes made by a exchange note guarantor will be released without
any action on the part of the trustee or any holder of exchange
notes if the collateral agent under our amended and restated ABL
Facility releases the guarantee of the obligations under our
amended and restated ABL Facility made by that exchange note
guarantor and it is released from all other guarantees of our
debt (unless the exchange note guarantor remains a guarantor of
our other debt) so long as the remaining debt of such subsidiary
is permitted to have been incurred by a non-guarantor
subsidiary. See Description of Exchange Notes
Note Guarantees.
Restrictive
covenants may adversely affect our operations.
Our amended and restated ABL Facility and the indenture that
will govern the exchange notes contain various covenants that
limit our ability to, among other things:
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incur additional debt or provide guarantees in respect of
obligations of other persons;
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issue redeemable stock and preferred stock;
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pay dividends or distributions or redeem or repurchase capital
stock;
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prepay, redeem or repurchase debt;
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make loans, investments and capital expenditures;
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incur liens;
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engage in sale/leaseback transactions;
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restrict distributions from our subsidiaries;
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sell assets and capital stock of our subsidiaries;
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consolidate or merge with or into, or sell substantially all of
our assets to, another person; and
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enter into new lines of business.
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Upon the occurrence of an event of default under our amended and
restated ABL Facility, the lenders could elect to declare all
amounts outstanding under our amended and restated ABL Facility
to be immediately due and payable and terminate all commitments
to extend further credit. If we were unable to repay those
amounts, the lenders under our amended and restated ABL Facility
could proceed against the Collateral granted to them to secure
that debt. See Description of Other Indebtedness.
Variable
rate indebtedness subjects us to interest rate risk, which could
cause our debt service obligations to increase
significantly.
A portion of our indebtedness, primarily our amended and
restated ABL Facility, is at variable rates of interest,
exposing us to interest rate risk. If interest rates increase,
our debt service obligations on the variable rate indebtedness
would increase even though the amount borrowed remained the
same, and our net income would decrease. The interest rates
payable under the amended and restated ABL Facility will depend
on the type of loan plus an applicable margin. As of
September 30, 2010, the applicable margin of the LIBOR
loans under our amended and restated ABL Facility currently is
3.50% and for the CBFR loans under our amended and restated ABL
Facility is 2.50%. As of September 30, 2010, we have $0
drawn on the facilities.
We may
not be able to repurchase the exchange notes upon a change of
control.
Upon the occurrence of specific kinds of change of control
events, we will be required to offer to repurchase all
outstanding exchange notes at 101% of their principal amount,
plus accrued and unpaid interest. We may not be able to
repurchase the exchange notes upon a change of control because
we may not have sufficient funds. Further, we may be
contractually restricted under the terms of our amended and
restated ABL Facility or other future senior debt from
repurchasing all of the exchange notes tendered by holders upon
a change of control. Accordingly, we may not be able to satisfy
our obligations to purchase your exchange notes unless we are
able to refinance or obtain waivers under the amended and
restated ABL Facility or other senior debt, as applicable. Our
failure to repurchase the exchange notes upon a change of
control would cause a default under the indenture governing the
exchange notes and a cross-default under our amended and
restated ABL Facility. Our amended and restated ABL Facility
also provides that a change of control, as defined in the
facility, will be a default that permits lenders to accelerate
the maturity of borrowings under the agreement and, if that debt
is not paid, to enforce security interests in the collateral
securing that debt, thereby limiting our ability to raise cash
to purchase the exchange notes, and reducing the practical
benefit of the
offer-to-purchase
provisions to the holders of the exchange notes. Any of our
future debt agreements may contain similar provisions.
In addition, the change of control provisions in the indenture
may not protect you from certain important corporate events,
such as a leveraged recapitalization (which would increase the
level of our indebtedness), reorganization, restructuring,
merger or other similar transaction, unless such a transaction
constitutes a Change of Control under the indenture.
Such a transaction may not involve a change in voting power or
beneficial ownership or, even if it does, may not involve a
change that constitutes a Change of Control, as
defined in the indenture, that would trigger our obligation to
repurchase the exchange notes. Therefore, if an event occurs
that does not constitute a Change of Control, as
defined in the indenture, we will not be required to make an
offer to repurchase the exchange notes and you may be required
to continue to hold your exchange notes despite the event. See
Description of Other Indebtedness and
Description of Exchange Notes Change of
Control.
Federal
and state fraudulent transfer laws permit a court to void the
exchange notes and the guarantees. If that occurs, you may not
receive any payments on the exchange notes.
The issuance of the exchange notes and the guarantees may be
subject to review under federal and state fraudulent transfer
and conveyance statutes. While the relevant laws may vary from
state to state, under these laws the payment of consideration
will be a fraudulent conveyance if (1) we paid the
consideration with the intent of
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hindering, delaying or defrauding creditors or (2) we or
any of our guarantors, as applicable, received less than
reasonably equivalent value or fair consideration in return for
issuing either the exchange notes or a guarantee and, in the
case of (2) only, any of the following is also true:
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we or any of our guarantors were or was insolvent or rendered
insolvent by reason of the incurrence of the
indebtedness; or
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payment of the consideration left us or any of our guarantors
with an unreasonably small amount of capital to carry on the
business; or
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we or any of our guarantors intended to, or believed that we or
it would, incur debts beyond our or its ability to pay as they
mature.
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If a court were to find that the issuance of the exchange notes
or a guarantee was a fraudulent conveyance, the court could void
the payment obligations under the exchange notes or guarantee or
subordinate the exchange notes or guarantee to presently
existing and future debt that we or the guarantor may owe, or
require the holders of the exchange notes to repay any amounts
received with respect to the exchange notes or guarantee. In the
event of a finding that a fraudulent conveyance occurred, you
may not receive any repayment on the exchange notes. Further,
the voidance of the exchange notes could result in an event of
default with respect to our other debt and that of our
guarantors that could result in acceleration of the debt.
Generally, an entity would be considered insolvent if, at the
time it incurred debt:
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the sum of its debts, including contingent liabilities, was
greater than the fair saleable value of all its assets; or
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the present fair saleable value of its assets was less than the
amount that would be required to pay its probable liability on
its existing debts and liabilities, including contingent
liabilities, as they become absolute and mature; or
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it could not pay its debts as they become due.
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We cannot be certain as to the standards a court would use to
determine whether or not we or the guarantors were solvent at
the relevant time, or, regardless of the standard that a court
were to use, that the issuance of the exchange notes and the
guarantees would not be subordinated to our or any
guarantors other debt.
If the guarantees were legally challenged, any guarantee could
also be subject to the claim that, since the guarantee was
incurred for our benefit, and only indirectly for the benefit of
the guarantor, the obligations of the applicable guarantor were
incurred for less than fair consideration. A court could thus
void the obligations under the guarantees, subordinate them to
the applicable guarantors other debt or take other action
detrimental to the holders of the exchange notes.
Your
ability to transfer the exchange notes may be limited by the
absence of an active trading market, and there is no assurance
that any active trading market will develop for the exchange
notes.
The exchange notes are new issues of securities for which there
is no established public market. We do not intend to have the
exchange notes listed on a national securities exchange or to
arrange for quotation on any automated dealer quotation systems.
The initial purchasers have advised us that they intend to make
a market in the exchange notes, if issued, as permitted by
applicable laws and regulations; however, the initial purchasers
are not obligated to make a market in the exchange notes and
they may discontinue their market-making activities at any time
without notice. Therefore, we cannot assure you as to the
development or liquidity of any trading market for the exchange
notes. The liquidity of any market for the notes will depend on
a number of factors, including:
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the number of holders of exchange notes;
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our operating performance and financial condition;
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the market for similar securities;
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the interest of securities dealers in making a market in the
exchange notes; and
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prevailing interest rates.
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Historically, the market for non-investment grade debt has been
subject to disruptions that have caused substantial volatility
in the prices of securities similar to the exchange notes. We
cannot assure you that the market, if any, for the exchange
notes will be free from similar disruptions or that any such
disruptions may not adversely affect the prices at which you may
sell your exchange notes. Therefore, we cannot assure you that
you will be able to sell your exchange notes at a particular
time or the price that you receive when you sell will be
favorable.
The
exchange notes will be treated as issued with original issue
discount.
The exchange notes will be treated as issued with OID for
U.S. federal income tax purposes because the stated
principal amount of the exchange notes exceeded their issue
price by more than a de minimis amount. Thus in addition to
stated interest on the exchange notes, U.S. holders will be
required to include the original issue discount in gross income
(as ordinary income) for U.S. federal income tax purposes
as it accrues, in advance of the receipt of cash payments to
which the income is attributable (regardless of a holders
method of tax accounting). See Material U.S. Federal
Income Tax Considerations.
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THE
EXCHANGE OFFER
Purpose
and Effect
In connection with the sale by us of the outstanding notes on
February 8, 2010, we and the guarantors entered into a
registration rights agreement, dated February 8, 2010, with
the initial purchasers of the outstanding notes, which requires
that we use our commercially reasonable efforts to file with the
SEC, and to cause to become effective a registration statement
under the Securities Act with respect to the exchange notes and,
upon effectiveness of that registration statement, to offer to
the holders of the outstanding notes the opportunity to exchange
their outstanding notes for a like principal amount of exchange
notes. The exchange notes will be issued without a restrictive
legend and generally may be reoffered and resold without
registration under the Securities Act. The registration rights
agreement further provides that we must use our commercially
reasonable efforts to complete the exchange within 365 days
after the date of issuance of the outstanding notes.
Except as described below, upon the completion of the exchange
offer, our obligations with respect to the registration of the
outstanding notes will terminate. A copy of the registration
rights agreement has been filed as an exhibit to the
registration statement of which this prospectus is a part, and
below is a summary of the material provisions of the
registration rights agreement. For a more complete understanding
of the registration rights agreement, we encourage you to read
the actual agreement as it, and not this description, governs
your rights as holders of the outstanding notes. If the exchange
offer is timely completed, we will not have to pay certain
additional interest on the outstanding notes provided in the
registration rights agreement. Following the completion of the
exchange offer, holders of outstanding notes that are not
tendered will not have any further registration rights other
than as set forth in the paragraphs below, and those outstanding
notes will continue to be subject to certain restrictions on
transfer. Accordingly, the liquidity of the market for the
outstanding notes could be adversely affected upon consummation
of the exchange offer.
In order to participate in the exchange offer, a holder must
represent to us, among other things, that:
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any exchange notes to be received by the holder will be acquired
in the ordinary course of business;
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the holder has no arrangement or understanding with any person
to participate in the distribution (within the meaning of the
Securities Act) of the exchange notes in violation of the
provisions of the Securities Act;
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the holder is not an affiliate (within the meaning
of Rule 405 under Securities Act) of us; and
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if the holder is a broker-dealer that will receive exchange
notes for its own account in exchange for outstanding notes that
were acquired as a result of market-making or other trading
activities, then the holder will deliver a prospectus in
connection with any resale of the exchange notes.
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In the event that:
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we and the guarantors are not permitted to consummate the
exchange offer because the exchange offer is not permitted by
applicable law or SEC policy;
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the exchange offer is not for any other reason completed within
365 days after the date of issuance of the outstanding
notes; or
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any holder of outstanding notes notifies us within 90 business
days following the date the registration statement is declared
effective that it holds outstanding notes that are or were
ineligible to be exchanged in the exchange offer,
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we must use commercially reasonable efforts to cause to be filed
a shelf registration statement for a continuous
offering in connection with the outstanding notes pursuant to
Rule 415 under the Securities Act.
Based on an interpretation by the SECs staff set forth in
no-action letters issued to third parties unrelated to us, we
believe that, with the exceptions set forth below, exchange
notes issued in the exchange offer may be offered for resale,
resold and otherwise transferred by the holder of exchange notes
without compliance with the registration and prospectus delivery
requirements of the Securities Act, unless the holder:
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acquired the exchange notes other than in the ordinary course of
the holders business;
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40
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has an arrangement with any person to engage in the distribution
of exchange notes;
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is an affiliate of ours within the meaning of
Rule 405 under the Securities Act; or
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is a broker-dealer who purchased outstanding notes directly from
us for resale under Rule 144A or Regulation S or any
other available exemption under the Securities Act.
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Any holder who tenders in the exchange offer for the purpose of
participating in a distribution of the exchange notes cannot
rely on this interpretation by the SECs staff and must
comply with the registration and prospectus delivery
requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives
exchange notes for its own account in exchange for outstanding
notes, where the outstanding notes were acquired by the
broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a
prospectus in connection with any resale of the exchange notes.
See Plan of Distribution. Broker-dealers who
acquired outstanding notes directly from us and not as a result
of market-making activities or other trading activities may not
rely on the SECs staffs interpretations discussed
above or participate in the exchange offer and must comply with
the prospectus delivery requirements of the Securities Act in
order to sell the outstanding notes.
Terms of
the Exchange Offer
Upon the terms and subject to the conditions set forth in this
prospectus and in the letter of transmittal, we will accept any
and all outstanding notes validly tendered and not withdrawn
prior 12:00 midnight, New York City time,
on ,
2010 or such date and time to which we extend the offer.
Outstanding notes may be tendered only in minimum denominations
of $2,000 in principal amount and integral multiples of $1,000
in excess thereof. We will issue $1,000 in principal amount of
exchange notes in exchange for each $1,000 principal amount of
outstanding notes accepted in the exchange offer. Holders may
tender some or all of their outstanding notes pursuant to the
exchange offer.
The exchange notes will evidence the same debt as the
outstanding notes and will be issued under the terms of, and
entitled to the benefits of, the applicable indenture relating
to the outstanding notes.
As of the date of this prospectus, outstanding notes
representing $400.0 million in aggregate principal amount
of notes were outstanding and there was one registered holder, a
nominee of The Depository Trust Company. This prospectus,
together with the letter of transmittal, is being sent to the
registered holder and to others believed to have beneficial
interests in the outstanding notes. We intend to conduct the
exchange offer in accordance with the applicable requirements of
the Exchange Act and the rules and regulations of the SEC
promulgated under the Exchange Act.
We will be deemed to have accepted validly tendered outstanding
notes when, as and if we have given oral or written notice
thereof to The Bank of New York Mellon Trust Company, N.A.,
the exchange agent. The exchange agent will act as agent for the
tendering holders for the purpose of receiving the exchange
notes from us. If any tendered outstanding notes are not
accepted for exchange because of an invalid tender, the
occurrence of certain other events set forth under the heading
Conditions to the Exchange Offer or
otherwise, certificates for any such unaccepted outstanding
notes will be returned, without expense, to the tendering holder
of those outstanding notes promptly after the expiration date
unless the exchange offer is extended.
Holders who tender outstanding notes in the exchange offer will
not be required to pay brokerage commissions or fees or, subject
to the instructions in the letter of transmittal, transfer taxes
with respect to the exchange of outstanding notes in the
exchange offer. We will pay all charges and expenses, other than
certain applicable taxes, applicable to the exchange offer. See
Fees and Expenses.
Expiration
Date; Extensions; Amendments
The expiration date shall be 12:00 midnight, New York City time,
on ,
2010, unless we, in our sole discretion, extend the exchange
offer, in which case the expiration date shall be the latest
date and time to which the exchange offer is extended. In order
to extend the exchange offer, we will notify the exchange agent
and each registered holder of any extension by press release or
other public announcement prior to 9:00 a.m., New York City
41
time, on the next business day after the previously scheduled
expiration date. We reserve the right, in our sole discretion:
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to delay accepting any outstanding notes, to extend the exchange
offer or, if any of the conditions set forth under
Conditions to Exchange Offer shall not have been
satisfied, to terminate the exchange offer, by giving oral or
written notice of that delay, extension or termination to the
exchange agent, or
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to amend the terms of the exchange offer in any manner.
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If we amend the exchange offer in a manner that we consider
material, we will as promptly as practicable distribute to the
holders of the outstanding notes a prospectus supplement or, if
appropriate, an updated prospectus from a post-effective
amendment to the registration statement of which this prospectus
is a part, disclosing the change and extend the exchange offer
for a period of five to ten business days, depending upon the
significance of the amendment to the exchange offer and the
manner of disclosure to the registered holders, if the exchange
offer would otherwise expire during the five to ten business day
period.
Procedures
for Tendering Outstanding Notes
Only a holder of outstanding notes may tender outstanding notes
in the exchange offer. Holders must follow the procedures set
forth in this prospectus and the related letter of transmittal.
Except as set forth under the heading
Book-Entry Transfer, to tender in the
exchange offer a holder must complete, sign and date the letter
of transmittal, or a copy of the letter of transmittal, have the
signatures on the letter of transmittal guaranteed if required
by the letter of transmittal, and mail or otherwise deliver the
letter of transmittal or copy to the exchange agent prior to the
expiration date. In addition:
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certificates for the outstanding notes must be received by the
exchange agent along with the letter of transmittal prior to the
expiration date;
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the exchange agent must receive, prior to the expiration date, a
timely confirmation of a book-entry transfer, which we refer to
as a book-entry confirmation, of outstanding notes into the
exchange agents account at The Depository
Trust Company, or DTC, pursuant to the book-entry transfer
procedure described below under the caption Book-Entry
Transfer; or
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you must comply with the guaranteed delivery procedures
described below.
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To be tendered effectively, the letter of transmittal and other
required documents must be received by the exchange agent at the
address set forth under the heading Exchange
Agent prior to the expiration date (or, if applicable, the
book-entry procedures described below under Book-Entry
Transfer must be complied with).
Your tender, if not withdrawn before the expiration date, will
constitute an agreement between you and us in accordance with
the terms and subject to the conditions set forth herein and in
the letter of transmittal.
The method of delivery of outstanding notes and the letter of
transmittal and all other required documents to the exchange
agent is at your election and risk. We recommend that, instead
of using delivery by mail, you use an overnight or hand delivery
service. In all cases, sufficient time should be allowed to
assure delivery to the exchange agent before the expiration
date. No letter of transmittal or outstanding notes should be
sent to us. You may request your brokers, dealers, commercial
banks, trust companies or nominees to effect these transactions
for you.
No alternative, conditional or contingent tenders will be
accepted. Each tendering holder, by execution of a letter of
transmittal or by causing the transmission of an agents
message through DTC (as described below), waives any right to
receive any notice of the acceptance of such tender.
Any beneficial owner whose outstanding notes are registered in
the name of a broker, dealer, commercial bank, trust company, or
other nominee and who wishes to tender should contact the
registered holder promptly and instruct the registered holder to
tender on the beneficial owners behalf. If the beneficial
owner wishes to tender on the owners own behalf, the owner
must, prior to completing and executing the letter of
transmittal and delivering the owners outstanding notes,
either make appropriate arrangements to register ownership of
the outstanding notes
42
in the beneficial owners name or obtain a properly
completed bond power from the registered holder. The transfer of
registered ownership may take considerable time.
Signatures on a letter of transmittal or a notice of withdrawal,
as the case may be, must be guaranteed by an eligible
guarantor institution within the meaning of
Rule 17Ad-15
under the Exchange Act, which we refer to as an eligible
institution, unless outstanding notes tendered pursuant thereto
are tendered:
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by a registered holder who has not completed the box entitled
Special Registration Instruction or Special
Delivery Instructions on the letter of transmittal; or
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for the account of an eligible institution.
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An eligible institution is a firm or other entity
which is identified as an eligible guarantor
institution in
Rule 17Ad-15
under the Exchange Act, including:
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a bank;
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a broker, dealer, municipal securities broker or dealer or
government securities broker or dealer;
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a credit union;
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a national securities exchange, registered securities
association or clearing agency; or
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a savings association.
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If signatures on a letter of transmittal or a notice of
withdrawal, as the case may be, are required to be guaranteed,
the guarantee must be by any eligible guarantor institution that
is a member of or participant in the Securities Transfer Agents
Medallion Program, the New York Stock Exchange Medallion
Signature Program or an eligible institution.
If outstanding notes are registered in the name of a person
other than the signer of the letter of transmittal, the
outstanding notes surrendered for exchange must be endorsed or
accompanied by a properly completed bond power in satisfactory
form as determined by us in our sole discretion, duly executed
by the registered holder with the holders signature
guaranteed by an eligible institution, and must also be
accompanied by such opinions of counsel, certifications and
other information as we and the guarantors or the trustee under
the indenture for the outstanding notes may require in
accordance with the restrictions on transfer applicable to the
outstanding notes.
If the letter of transmittal or any outstanding notes or bond
powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations, or
others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence
satisfactory to us of their authority to so act must be
submitted with the letter of transmittal unless waived by us.
All questions as to the validity, form and eligibility,
including time of receipt, acceptance and withdrawal of tendered
outstanding notes, will be determined by us in our sole
discretion, and our determination will be final and binding. We
reserve the absolute right to reject any and all outstanding
notes not properly tendered or any outstanding notes our
acceptance of which would, in the opinion of our counsel, be
unlawful. We also reserve the right to waive any defects,
irregularities or conditions of tender as to particular
outstanding notes. Our interpretation of the terms and
conditions of the exchange offer, including the instructions in
the letter of transmittal, will be final and binding on all
parties. Unless waived, any defects or irregularities in
connection with tenders of outstanding notes must be cured
within such time as we shall determine. Although we intend to
notify holders of defects or irregularities with respect to
tenders of outstanding notes, neither we, the exchange agent,
nor any other person shall incur any liability for failure to
give that notification. Tenders of outstanding notes will not be
deemed to have been made until the defects or irregularities
have been cured or waived. Any outstanding notes received by the
exchange agent that are not properly tendered and as to which
the defects or irregularities have not been cured or waived will
be returned by the exchange agent to the tendering holders,
unless otherwise provided in the letter of transmittal, promptly
following the expiration date, unless the exchange offer is
extended.
In addition, we reserve the right in our sole discretion to
purchase or make offers for any outstanding notes that remain
outstanding after the expiration date or, as set forth under the
heading Conditions to the Exchange
Offer, to terminate the exchange offer and, to the extent
permitted by applicable law, purchase outstanding notes in
43
the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could
differ from the terms of the exchange offer.
By tendering, you will be representing to us that, among other
things:
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any exchange notes to be received by you will be acquired in the
ordinary course of business;
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you have no arrangement or understanding with any person to
participate in the distribution (within the meaning of the
Securities Act) of the exchange notes in violation of the
provisions of the Securities Act;
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you are not an affiliate (within the meaning of
Rule 405 under Securities Act) of us; and
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if you are a broker-dealer that will receive exchange notes for
your own account in exchange for outstanding notes that were
acquired as a result of market-making or other trading
activities, then you will deliver a prospectus in connection
with any resale of the exchange notes.
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In all cases, issuances of exchange notes in exchange for
outstanding notes tendered and accepted for exchange pursuant to
the exchange offer will be made only after timely receipt by the
exchange agent of certificates for outstanding notes or a
book-entry confirmation of a book-entry transfer of outstanding
notes into the exchange agents account at DTC, a completed
letter of transmittal, or, in the case of a book-entry transfer,
an agents message in lieu of the letter of transmittal,
and any other documents required by the letter of transmittal.
Such exchange will be made promptly after the expiration date.
If for any reason whatsoever, acceptance for exchange or the
exchange of any outstanding notes tendered pursuant to the
exchange offer is delayed (whether before or after our
acceptance for exchange of original notes) or we extend the
exchange offer or are unable to accept for exchange or exchange
any outstanding notes tendered pursuant to the exchange offer,
then, without prejudice to our rights set forth herein, the
exchange agent may, nevertheless, on our behalf and subject to
Rule 14e-l
under the Exchange Act, retain tendered original notes and such
original notes may not be withdrawn except to the extent
tendering holders are entitled to withdrawal rights as described
under the caption Withdrawal Rights.
If any tendered outstanding notes are not accepted for any
reason set forth in the terms and conditions of the exchange
offer or if outstanding notes are submitted for a greater
principal amount than the holder desires to exchange, the
unaccepted or non-exchanged outstanding notes will be returned
without expense to the tendering holder or, in the case of
outstanding notes tendered by book-entry transfer into the
exchange agents account at the book-entry transfer
facility according to the book-entry transfer procedures
described below, those non-exchanged outstanding notes will be
credited to an account maintained with that book-entry transfer
facility, in each case, promptly after the expiration or
termination of the exchange offer.
Each broker-dealer that receives exchange notes for its own
account in exchange for outstanding notes, where those
outstanding notes were acquired by the broker-dealer as a result
of market making activities or other trading activities, must
acknowledge that it will deliver a prospectus in connection with
any resale of those exchange notes. See Plan of
Distribution.
Book-Entry
Transfer
The exchange agent will make a request to establish an account
with respect to the outstanding notes at DTC for purposes of the
exchange offer within two business days after the date of this
prospectus. Any financial institution that is a participant in
DTCs systems may make book-entry delivery of outstanding
notes by causing DTC to transfer those outstanding notes into
the exchange agents account at DTC in accordance with
DTCs procedures for transfer. Although delivery of
outstanding notes may be effected through book-entry transfer
into the exchange agents account at DTC, an agents
message must in any case be transmitted to and received by the
exchange agent on or prior to the expiration date, or the
guaranteed delivery procedures described below must be complied
with. The Depository Trust Companys Automated Tender
Offer Program, or ATOP, is the only method of
processing exchange offers through The Depository
Trust Company. To accept the exchange offer through ATOP,
participants in DTC must send electronic instructions to DTC
through DTCs communication system instead of sending a
signed, hard copy letter of transmittal. DTC is obligated to
communicate those electronic instructions to the exchange agent
(the agents message). To tender outstanding notes through
ATOP, the electronic instructions sent to The Depository
Trust Company and transmitted by The Depository
Trust Company to the exchange agent
44
must contain the character by which the participant acknowledges
its receipt of and agrees to be bound by the letter of
transmittal. Delivery of documents to DTC in accordance with
DTCs procedures does not constitute delivery to the
exchange agent.
Guaranteed
Delivery Procedures
If a registered holder of the outstanding notes desires to
tender outstanding notes and the outstanding notes are not
immediately available, or time will not permit that
holders outstanding notes or other required documents to
reach the exchange agent before the expiration date, or the
procedure for book-entry transfer cannot be completed on a
timely basis, a tender may be effected if:
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the tender is made through an eligible institution;
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prior to the expiration date, the exchange agent receives from
that eligible institution a properly completed and duly executed
notice of guaranteed delivery, substantially in the form
provided by us, by telegram, telex, fax transmission, mail or
hand delivery, setting forth the name and address of the holder
of outstanding notes and the amount of outstanding notes
tendered, stating that the tender is being made by guaranteed
delivery and guaranteeing that within three New York Stock
Exchange, Inc., or NYSE, trading days after the date
of execution of the notice of guaranteed delivery, the letter of
transmittal (or a copy thereof), together with certificates for
all physically tendered outstanding notes (or a book-entry
confirmation and an agents message, as the case may be),
in proper form for transfer, will be deposited by the eligible
institution with the exchange agent; and
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a properly executed letter of transmittal (or a copy thereof),
as well as the certificates for all physically tendered
outstanding notes, in proper form for transfer, or a book-entry
confirmation and an agents message, as the case may be,
are received by the exchange agent within three NYSE trading
days after the date of execution of the notice of guaranteed
delivery.
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Withdrawal
Rights
Tenders of outstanding notes may be withdrawn at any time prior
to 12:00 midnight, New York City time, on the expiration date.
For a withdrawal of a tender of outstanding notes to be
effective, a written or, for The Depository Trust Company
participants, electronic ATOP transmission notice of withdrawal,
must be received by the exchange agent at its address set forth
under the heading Exchange Agent prior
to 12:00 midnight, New York City time, on the expiration date.
Any such notice of withdrawal must:
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specify the name of the person having deposited the outstanding
notes to be withdrawn, whom we refer to as the depositor;
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identify the outstanding notes to be withdrawn, including the
certificate number or numbers and principal amount of the
outstanding notes;
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be signed by the holder in the same manner as the original
signature on the letter of transmittal by which the outstanding
notes were tendered, including any required signature
guarantees, or be accompanied by documents of transfer
sufficient to have the trustee register the transfer of the
outstanding notes into the name of the person withdrawing the
tender; and
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specify the name in which any the outstanding notes are to be
registered, if different from that of the depositor.
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If the outstanding notes to be withdrawn have been delivered or
otherwise identified to the exchange agent, a signed notice of
withdrawal is effective immediately upon written or facsimile
notice of such withdrawal even if physical release is not yet
effected.
Any permitted withdrawal of outstanding notes may not be
rescinded. Any outstanding notes properly withdrawn will
thereafter be deemed not validly tendered for purposes of the
exchange offer. However, properly withdrawn outstanding notes
may be retendered by following one of the procedures described
in this prospectus
45
under the caption The Exchange Offer
Procedures for Tendering Outstanding Notes at any time
prior to the expiration date.
All questions as to the validity, form, eligibility and time of
receipt of the notices will be determined by us, whose
determination shall be final and binding on all parties. Any
outstanding notes that have been tendered for exchange but that
are not exchanged for any reason will be returned to the holder
of those outstanding notes without cost to that holder promptly
after withdrawal, rejection of tender, or termination of the
exchange offer.
Conditions
to the Exchange Offer
Notwithstanding any other provision of the exchange offer, we
will not be required to accept for exchange, or to issue
exchange notes in exchange for, any outstanding notes and may
terminate or amend the exchange offer if at any time before the
acceptance of those outstanding notes for exchange or the
exchange of the exchange notes for those outstanding notes, we
determine that the exchange offer violates any applicable law or
applicable interpretation of the Staff of the SEC.
The foregoing conditions are for our sole benefit and may be
asserted by us regardless of the circumstances giving rise to
any such condition or may be waived by us in whole or in part at
any time and from time to time prior to the expiration of the
exchange offer in our sole discretion. The failure by us at any
time to exercise any of the foregoing rights shall not be deemed
a waiver of any of those rights and each of those rights shall
be deemed an ongoing right that may be asserted at any time and
from time to time prior to the expiration of the exchange offer.
In addition, we will not accept for exchange any outstanding
notes tendered, and no exchange notes will be issued in exchange
for those outstanding notes, if at the time any stop order shall
be threatened or in effect with respect to the registration
statement of which this prospectus constitutes a part. We are
required to use commercially reasonable efforts to obtain the
withdrawal of any stop order at the earliest possible time.
Accounting
Treatment
The exchange notes will be recorded at the same carrying value
as the outstanding notes as reflected in our accounting records
on the date of the exchange. Accordingly, we will not recognize
any gain or loss for accounting purposes upon the completion of
the exchange offer. The expenses of the exchange offer that we
pay will increase our deferred financing costs in accordance
with generally accepted accounting principles.
Exchange
Agent
All executed letters of transmittal should be directed to the
exchange agent. The Bank of New York Mellon Trust Company,
N.A. has been appointed as exchange agent for the exchange
offer. Questions, requests for assistance and requests for
additional copies of this prospectus or of the letter of
transmittal should be directed to the exchange agent addressed
as follows:
By Registered or Certified Mail, Hand Delivery or Overnight
Courier:
The Bank of New York Mellon Trust Company, N.A.
Corporate Trust Operations Reorganization Unit
101 Barclay Street 7 East
New York, NY 10286
Attn: William Buckley
By Facsimile:
(212) 298-1915
For Information or Confirmation by Telephone:
(212) 815-5788
Originals of all documents sent by facsimile should be sent
promptly by registered or certified mail, by hand or by
overnight delivery service.
46
Fees and
Expenses
We will not make any payments to brokers, dealers or others
soliciting acceptances of the exchange offer. The principal
solicitation is being made by mail; however, additional
solicitations may be made in person or by telephone by our
officers and employees. The estimated cash expenses to be
incurred in connection with the exchange offer will be paid by
us and will include accounting, legal, printing, and related
fees and expenses.
Transfer
Taxes
Holders who tender their outstanding notes for exchange will not
be obligated to pay any transfer taxes in connection with that
tender or exchange, except that holders who instruct us to
register exchange notes in the name of, or request that
outstanding notes not tendered or not accepted in the exchange
offer be returned to, a person other than the registered
tendering holder will be responsible for the payment of any
applicable transfer tax on those outstanding notes.
Effect of
Not Tendering
Holders of the outstanding notes do not have any appraisal or
dissenters rights in the exchange offer. Participation in
the exchange offer is voluntary, and any outstanding notes that
are not tendered or that are tendered but not accepted will
remain subject to the restrictions on transfer. Since the
outstanding notes have not been registered under the federal
securities laws, they bear a legend restricting their transfer
absent registration or the availability of a specific exemption
from registration. Upon the completion of the exchange offer, we
will have no further obligations, except under limited
circumstances, to provide for registration of the outstanding
notes under the federal securities laws. See The Exchange
Offer Purpose and Effect.
47
USE OF
PROCEEDS
The exchange offer is intended to satisfy our obligations under
the registration rights agreement, dated February 8, 2010,
by and among us, the guarantors and the initial purchasers of
the outstanding notes. We will not receive any proceeds from the
issuance of the exchange notes in the exchange offer. We will
receive in exchange outstanding notes in like principal amount.
We will retire or cancel all of the outstanding notes tendered
in the exchange offer.
On February 8, 2010, we used the net proceeds from the
offering of the outstanding notes to refinance existing
indebtedness and pay related fees and expenses.
48
CAPITALIZATION
The following table sets forth our capitalization on a
consolidated basis as of September 30, 2010 on an actual
basis. This table should be read in conjunction with
Selected Historical Consolidated Financial Data,
Managements Discussion and Analysis of Financial
Condition and Results of Operations and our consolidated
financial statements and related notes which are incorporated by
reference into this prospectus.
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Actual as of
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September 30, 2010
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(Dollars in thousands)
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Cash and equivalents
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$
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35,568
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Debt:
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Outstanding Notes
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$
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400,000
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Other
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59,741
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Total debt gross
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459,741
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Less: Unamortized discounts
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6,689
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Plus: Carrying value adjustment on debt related to the Interest
Rate Agreement
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3,050
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Total debt
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456,102
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Total shareholders equity
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8,353
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Total capitalization
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$
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464,455
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49
SELECTED
HISTORICAL CONSOLIDATED FINANCIAL DATA
The consolidated financial data set forth below as of and for
fiscal years ended 2009, 2008 and 2007 have been derived from
our consolidated financial statements, which are incorporated by
reference into this prospectus, which have been audited by
Ernst & Young LLP, independent registered public
accounting firm. The consolidated financial data set forth below
as of and for fiscal years ended 2006 and 2005 have been derived
from audited consolidated financial statements that are not
included in this prospectus. The historical consolidated
financial data for the nine-month periods ended
September 30, 2010 and 2009 have been derived from our
unaudited consolidated financial statements, which, in the
opinion of management, include all adjustments, including usual
recurring adjustments, necessary for the fair statement of that
information for these periods. The financial data presented for
the interim periods are not necessarily indicative of our
results for the full year.
The selected historical consolidated financial data below should
be read in conjunction with Prospectus
Summary Summary Historical Consolidated Financial and
Other Data and our consolidated financial statements and
related notes, which are incorporated by reference into this
prospectus.
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Nine Months Ended
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Year Ended December 31,
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September 30,
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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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2010
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2009
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|
|
(Dollars in thousands, except per-share amounts)
|
|
|
Statement of operations data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
748,635
|
|
|
$
|
810,207
|
|
|
$
|
814,160
|
|
|
$
|
689,480
|
|
|
$
|
568,133
|
|
|
$
|
576,947
|
|
|
$
|
540,557
|
|
Freight billed to customers
|
|
|
1,605
|
|
|
|
2,422
|
|
|
|
2,207
|
|
|
|
2,921
|
|
|
|
1,932
|
|
|
|
1,311
|
|
|
|
1,163
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total revenues
|
|
|
750,240
|
|
|
|
812,629
|
|
|
|
816,367
|
|
|
|
692,401
|
|
|
|
570,065
|
|
|
|
578,258
|
|
|
|
541,720
|
|
Cost of sales
|
|
|
617,095
|
(1)
|
|
|
703,292
|
(1)
|
|
|
658,698
|
|
|
|
569,237
|
(3)
|
|
|
483,523
|
(3)
|
|
|
454,665
|
(2)
|
|
|
453,761
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
133,145
|
|
|
|
109,337
|
|
|
|
157,669
|
|
|
|
123,164
|
|
|
|
86,542
|
|
|
|
123,593
|
|
|
|
87,959
|
|
Selling, general and administrative expenses
|
|
|
94,900
|
(1)
|
|
|
88,451
|
|
|
|
91,568
|
|
|
|
87,566
|
(3)
|
|
|
71,535
|
(3)
|
|
|
72,878
|
(2)
|
|
|
69,699
|
(2)
|
Impairment of goodwill and other intangible assets
|
|
|
|
|
|
|
11,889
|
(1)
|
|
|
|
|
|
|
|
|
|
|
9,179
|
(3)
|
|
|
|
|
|
|
|
|
Special charges
|
|
|
1,631
|
(1)
|
|
|
14,545
|
(1)
|
|
|
|
|
|
|
16,334
|
(3)
|
|
|
14,745
|
(3)
|
|
|
1,088
|
(2)
|
|
|
974
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
|
36,614
|
|
|
|
(5,548
|
)
|
|
|
66,101
|
|
|
|
19,264
|
|
|
|
(8,917
|
)
|
|
|
49,627
|
|
|
|
17,286
|
|
Gain on redemption of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
56,792
|
(2)
|
|
|
|
|
Equity earnings (loss) pre-tax
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,986
|
|
|
|
(4,100
|
)
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
4,053
|
(1)
|
|
|
1,119
|
(1)
|
|
|
8,778
|
|
|
|
(3,236
|
)
|
|
|
2,567
|
|
|
|
916
|
(2)
|
|
|
5,424
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) before interest, income taxes and
non-controlling interest
|
|
|
40,667
|
|
|
|
(4,429
|
)
|
|
|
74,879
|
|
|
|
18,014
|
|
|
|
(10,450
|
)
|
|
|
107,335
|
|
|
|
22,710
|
|
Interest expense
|
|
|
66,705
|
|
|
|
69,720
|
|
|
|
65,888
|
|
|
|
46,594
|
(3)
|
|
|
15,255
|
|
|
|
33,243
|
|
|
|
52,162
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) earnings before income taxes and non-controlling interest
|
|
|
(26,038
|
)
|
|
|
(74,149
|
)
|
|
|
8,991
|
|
|
|
(28,580
|
)
|
|
|
(25,705
|
)
|
|
|
74,092
|
|
|
|
(29,452
|
)
|
Provision for (benefit from) income taxes
|
|
|
2,750
|
|
|
|
6,314
|
|
|
|
11,298
|
|
|
|
(7,747
|
)
|
|
|
(6,384
|
)
|
|
|
6,769
|
|
|
|
(7,756
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income
|
|
|
(28,788
|
)
|
|
|
(80,463
|
)
|
|
|
(2,307
|
)
|
|
|
(20,833
|
)
|
|
|
(19,321
|
)
|
|
|
67,323
|
|
|
|
(21,696
|
)
|
Less: Net income attributable to the non-controlling interest
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
66
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income attributable to Libbey Inc.
|
|
$
|
(28,788
|
)
|
|
$
|
(80,463
|
)
|
|
$
|
(2,307
|
)
|
|
$
|
(20,899
|
)
|
|
$
|
(19,355
|
)
|
|
$
|
67,323
|
|
|
$
|
(21,696
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(1.90
|
)
|
|
$
|
(5.48
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(1.47
|
)
|
|
$
|
(1.39
|
)
|
|
$
|
3.98
|
|
|
$
|
(1.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
|
|
$
|
(1.90
|
)
|
|
$
|
(5.48
|
)
|
|
$
|
(0.16
|
)
|
|
$
|
(1.47
|
)
|
|
$
|
(1.39
|
)
|
|
$
|
3.26
|
|
|
$
|
(1.45
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other financial data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital expenditures
|
|
|
17,005
|
|
|
|
45,717
|
|
|
|
43,121
|
|
|
|
73,598
|
|
|
|
44,270
|
|
|
|
19,122
|
|
|
|
12,287
|
|
Depreciation and amortization
|
|
|
43,166
|
|
|
|
44,430
|
|
|
|
41,572
|
|
|
|
35,720
|
|
|
|
32,481
|
|
|
|
30,994
|
|
|
|
32,875
|
|
Cash dividends declared per common share
|
|
|
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.10
|
|
|
|
0.40
|
|
|
|
|
|
|
|
|
|
Statement of cash flows data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by (used in) operating activities
|
|
|
102,148
|
|
|
|
(1,040
|
)
|
|
|
51,457
|
|
|
|
54,858
|
|
|
|
38,113
|
|
|
|
(10,833
|
)
|
|
|
65,729
|
|
Net cash (used in) investing activities
|
|
|
(16,740
|
)
|
|
|
(45,600
|
)
|
|
|
(34,908
|
)
|
|
|
(152,032
|
)
|
|
|
(73,006
|
)
|
|
|
(27,537
|
)
|
|
|
(12,027
|
)
|
Net cash (used in) provided by financing activities
|
|
|
(43,565
|
)
|
|
|
25,828
|
|
|
|
(22,407
|
)
|
|
|
135,298
|
|
|
|
31,891
|
|
|
|
19,055
|
|
|
|
(36,273
|
)
|
50
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of
|
|
|
Year Ended December 31,
|
|
September 30,
|
|
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2010
|
|
2009
|
|
Balance sheet data (at end of period):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and equivalents
|
|
$
|
55,089
|
|
|
$
|
13,304
|
|
|
$
|
36,539
|
|
|
$
|
41,766
|
|
|
$
|
3,242
|
|
|
$
|
35,568
|
|
|
$
|
30,648
|
|
Working Capital(4)
|
|
|
167,601
|
|
|
|
206,886
|
|
|
|
213,819
|
|
|
|
200,060
|
|
|
|
162,426
|
|
|
|
211,011
|
|
|
|
192,555
|
|
Property, plant and equipment net
|
|
|
290,013
|
|
|
|
314,847
|
|
|
|
327,303
|
|
|
|
314,473
|
|
|
|
202,398
|
|
|
|
272,723
|
|
|
|
296,862
|
|
Total assets
|
|
|
794,813
|
|
|
|
821,554
|
|
|
|
899,471
|
|
|
|
878,131
|
|
|
|
595,784
|
|
|
|
814,783
|
|
|
|
799,177
|
|
Total debt (including current maturities)
|
|
|
515,239
|
|
|
|
550,257
|
|
|
|
496,634
|
|
|
|
491,232
|
|
|
|
261,679
|
|
|
|
456,102
|
|
|
|
526,699
|
|
Shareholders (deficit) equity attributable to Libbey
Inc.
|
|
|
(66,907
|
)
|
|
|
(57,889
|
)
|
|
|
93,115
|
|
|
|
87,850
|
|
|
|
119,605
|
|
|
|
8,353
|
|
|
|
(61,992
|
)
|
|
|
|
(1) |
|
The table below is a summary of the 2009 and 2008 special items
and reflects the classification of these items in our
consolidated statements of operations. See notes 7 and 9 to
our Consolidated Financial Statements for the year ended
December 31, 2009, which are incorporated by reference into
this prospectus, for further details on the pension settlement
charges, facility closures, goodwill and intangible asset
impairment charges and fixed asset impairment charges. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
Goodwill and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement
|
|
|
Facility
|
|
|
Intangible
|
|
|
Fixed Asset
|
|
|
|
|
|
|
|
|
|
Charges(b)
|
|
|
Closures(b)
|
|
|
Asset Impairment
|
|
|
Impairment
|
|
|
Total
|
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
2009
|
|
|
2008
|
|
|
|
(Dollars in thousands)
|
|
|
Cost of sales
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,960
|
|
|
$
|
14,199
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
4,482
|
|
|
$
|
1,960
|
|
|
$
|
18,681
|
|
Selling, general and administrative expenses
|
|
|
3,190
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,190
|
|
|
|
|
|
Impairment of goodwill and other intangible assets(a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,889
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
11,889
|
|
Special charges(a)(b)
|
|
|
|
|
|
|
|
|
|
|
1,631
|
|
|
|
14,545
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,631
|
|
|
|
14,545
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
232
|
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232
|
|
|
|
383
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items (income) expense
|
|
$
|
3,190
|
|
|
$
|
|
|
|
$
|
3,823
|
|
|
$
|
29,127
|
|
|
$
|
|
|
|
$
|
11,889
|
|
|
$
|
|
|
|
$
|
4,482
|
|
|
$
|
7,013
|
|
|
$
|
45,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Special charges reflect a reclassification of impairment of
intangible assets of $2.5 million from special charges to
impairment of goodwill and other intangible assets. |
|
(b) |
|
Total pension settlement charges for 2009 were
$3.7 million. Of this total, $0.5 million is related
to employee reductions at closed facilities and is reported in
the facility closure amounts in the above table. |
51
|
|
|
(2) |
|
The table below is a summary of the special items for the nine
months ended September 30, 2010 and 2009 and reflects the
classification of these items in our condensed consolidated
statements of operations. See notes 4, 5 and 7 to our
Condensed Consolidated Financial Statements for the nine months
ended September 30, 2010 and 2009, which are incorporated
by reference into this prospectus, for further details on the
pension settlement charges, facility closures, redemption of
debt, fixed asset and inventory impairment and other. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed Asset and
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Settlement
|
|
|
Facility
|
|
|
Redemption of
|
|
|
Inventory
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charges
|
|
|
Closures
|
|
|
Debt
|
|
|
Impairment
|
|
|
Other(a)
|
|
|
Total
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Cost of sales
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
1,983
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
3,265
|
|
|
$
|
|
|
|
$
|
(945
|
)
|
|
$
|
|
|
|
$
|
2,320
|
|
|
$
|
1,983
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
2,955
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,096
|
|
|
|
|
|
|
|
1,096
|
|
|
|
2,955
|
|
Special charges
|
|
|
|
|
|
|
|
|
|
|
388
|
|
|
|
974
|
|
|
|
|
|
|
|
|
|
|
|
700
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,088
|
|
|
|
974
|
|
Gain on redemption of debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,792
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(56,792
|
)
|
|
|
|
|
Other expense
|
|
|
|
|
|
|
|
|
|
|
130
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
130
|
|
|
|
213
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items (income) expense
|
|
$
|
|
|
|
$
|
2,955
|
|
|
$
|
518
|
|
|
$
|
3,170
|
|
|
$
|
(56,792
|
)
|
|
$
|
|
|
|
$
|
3,965
|
|
|
$
|
|
|
|
$
|
151
|
|
|
$
|
|
|
|
$
|
(52,158
|
)
|
|
$
|
6,125
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
|
Other includes an insurance claim recovery and expenses related
to the secondary stock offering. |
|
|
|
(3) |
|
The table below is a summary of the 2006 and 2005 special items
and reflects the classification of these items in our
consolidated statements of operations. See notes 7, 9, 10
and 12 to our Consolidated Financial Statements for the year
ended December 31, 2006, which are not included in this
prospectus, for further details on the capacity realignment,
salaried workforce reduction program, Syracuse China asset
impairment and other charges, pension settlement accounting,
Crisa restructuring and write off of finance fees. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Salaried
|
|
|
Syracuse China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Workforce
|
|
|
Asset Impairment
|
|
|
Pension
|
|
|
|
|
|
|
|
|
|
|
|
|
Capacity
|
|
|
Reduction
|
|
|
and Other
|
|
|
Settlement
|
|
|
Crisa
|
|
|
Write Off of
|
|
|
|
|
|
|
Realignment
|
|
|
Program
|
|
|
Charges
|
|
|
Accounting
|
|
|
Restructuring
|
|
|
Finance Fees
|
|
|
Total
|
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
2006
|
|
|
2005
|
|
|
|
(Dollars in thousands)
|
|
|
Cost of sales
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
867
|
|
|
$
|
|
|
|
$
|
1,098
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,158
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
|
|
|
$
|
2,158
|
|
|
$
|
1,965
|
|
Selling, general and administrative expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,347
|
|
|
|
|
|
|
|
|
|
|
|
2,045
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,045
|
|
|
|
1,347
|
|
Impairment of goodwill and other intangible assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
9,179
|
|
Special charges
|
|
|
(298
|
)
|
|
|
1,073
|
|
|
|
(70
|
)
|
|
|
2,494
|
|
|
|
|
|
|
|
6,257
|
|
|
|
|
|
|
|
4,921
|
|
|
|
16,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
16,334
|
|
|
|
14,745
|
|
Interest expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,906
|
|
|
|
|
|
|
|
4,906
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total special items (income) expense
|
|
$
|
(298
|
)
|
|
$
|
1,073
|
|
|
$
|
(70
|
)
|
|
$
|
4,708
|
|
|
$
|
|
|
|
$
|
16,534
|
|
|
$
|
2,045
|
|
|
$
|
4,921
|
|
|
$
|
18,860
|
|
|
$
|
|
|
|
$
|
4,906
|
|
|
$
|
|
|
|
$
|
25,443
|
|
|
$
|
27,236
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(4) |
|
We define Working Capital as net accounts receivable plus net
inventories less accounts payable. The table below is a
reconciliation of Working Capital. |
52
Reconciliation
of Working Capital
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31,
|
|
|
As of September 30,
|
|
|
|
2009
|
|
|
2008
|
|
|
2007
|
|
|
2006
|
|
|
2005
|
|
|
2010
|
|
|
2009
|
|
|
|
(Dollars in thousands)
|
|
|
Accounts
receivable-net
|
|
$
|
82,424
|
|
|
$
|
76,072
|
|
|
$
|
93,333
|
|
|
$
|
96,783
|
|
|
$
|
78,497
|
|
|
$
|
110,574
|
|
|
$
|
91,119
|
|
Plus:
Inventories-net
|
|
|
144,015
|
|
|
|
185,242
|
|
|
|
194,079
|
|
|
|
168,402
|
|
|
|
128,894
|
|
|
|
159,374
|
|
|
|
153,523
|
|
Less: Accounts payable
|
|
|
58,838
|
|
|
|
54,428
|
|
|
|
73,593
|
|
|
|
65,125
|
|
|
|
44,965
|
|
|
|
58,937
|
|
|
|
52,087
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Working Capital
|
|
$
|
167,601
|
|
|
$
|
206,886
|
|
|
$
|
213,819
|
|
|
$
|
200,060
|
|
|
$
|
162,426
|
|
|
$
|
211,011
|
|
|
$
|
192,555
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
We believe that Working Capital is important supplemental
information for investors in evaluating liquidity in that it
provides insight into the availability of net current resources
to fund our ongoing operations. Working Capital is a measure
used by management in internal evaluations of cash availability
and operational performance.
Working Capital is used in conjunction with and in addition to
results presented in accordance with GAAP. Working Capital is
neither intended to represent nor be an alternative to any
measure of liquidity and operational performance recorded under
GAAP. Working Capital may not be comparable to similarly titled
measures reported by other companies.
53
BUSINESS
Our
Company
We believe we are a leading manufacturer and marketer of glass
tableware products worldwide and the largest in the Western
Hemisphere. Our product portfolio consists of an extensive line
of high quality, machine-made glass tableware, including casual
glass beverageware, in addition to ceramic dinnerware,
metalware, and plasticware. We sell our products to foodservice,
retail, industrial and
business-to-business
customers in over 100 countries, with our core North American
market accounting for approximately 76% of our net sales in
2009. We are the largest manufacturer and marketer of casual
glass beverageware in North America for the foodservice and
retail channels. Additionally, we believe we are a leading
manufacturer and marketer of casual glass beverageware in Europe
and have a growing presence in Asia.
We have a robust portfolio of glass tableware brands, with
Libbey®
and
Crisa®
enjoying leading market positions and strong recognition in
North America and Royal
Leerdam®
and Crisal
Glass®
enjoying strong recognition among customers within their
respective key trade channels in Europe. In addition, in North
America we market a range of products across complementary
foodservice categories under the
Syracuse®
China,
World®
Tableware and
Traex®
brands.
Our sales to the U.S. and Canadian foodservice channel
represent our largest activity. We believe we enjoy a preeminent
position in this channel and have an extensive and well
established distribution network. Due to the substantial initial
investment in glass beverageware that foodservice establishments
make and associated high switching costs, sales to the
foodservice channel are highly repetitive in nature. We believe
that a significant majority of our sales to the U.S. and
Canadian foodservice channel represent sales to replace glass
beverageware that is broken, damaged or missing. In addition,
while the initial investment by foodservice establishments in
glass beverageware is substantial, we believe that foodservice
establishments are not highly sensitive to increases in glass
beverageware prices, since the cost of glass beverageware is a
minor component of the profitability of beverage sales. As a
result, in addition to implementing, effective November 1,
2010, price increases in the U.S. and Canadian foodservice
channel, we have implemented price increases in 37 of the
previous 40 years. Accordingly, we believe that our leading
position, together with our large installed base of products,
represent a significant competitive strength. Additionally, we
believe that our ability to differentiate our offering to the
foodservice channel through the breadth of our product line and
the high level of service that we are capable of providing
represents an additional competitive strength.
The North American retail channel is another area of strength in
our glass tableware business. Our innovative products, speed to
market, superior service level and increasing cost
competitiveness, supported by our strong brands, have enabled us
to achieve supplier of choice status with many leading retailers.
We believe that our product innovation and our proprietary
manufacturing processes and technologies are core competencies.
Together with our reputation for quality, reliable service and
speed to market, these distinctive capabilities underpin our
leading market positions, as they enable us to introduce
innovative products in a timely and cost efficient manner to
address market trends and changing customer needs. We have an
extensive manufacturing footprint comprised of six glass
tableware production facilities and one plant that produces
plastic products for the foodservice industry. Over the last
seven years, we have successfully realigned our manufacturing
footprint to improve our cost structure and better position us
for continued profitable growth. For the year ended
December 31, 2009, approximately 42% of our net sales were
derived from operations outside the United States and
approximately half of our glass products were produced in
low-cost countries, including Mexico, China and Portugal.
Additionally, we operate distribution centers at or near each of
our manufacturing facilities as well as in other strategic
locations, giving us the ability to distribute our products to
more than 100 countries and enabling us to provide high service
levels.
Our foodservice customers comprise approximately 500
distributors in the United States and Canada, wholesale
distributors in Mexico and a broad network of distributors in
Europe and East Asia. In the retail channel, we sell to a wide
variety of top retailers, including leading mass merchants,
department stores, retail chains and specialty housewares
stores, as well as to retail distributors. In the
business-to-business
channel, our customers primarily include companies that utilize
our products in candle and floral applications, gourmet food
packaging companies, and companies that utilize our products in
various OEM applications. In addition, in Europe we service
54
large breweries and distilleries for which products are
decorated with brand logos for promotional and resale purposes.
We are headquartered in Toledo, Ohio and trace our roots to
1818. We achieved net sales of $785.0 million for the
twelve months ended September 30, 2010 and net sales of
$748.6 million for the year ended December 31, 2009.
For the twelve months ended September 30, 2010 we achieved
net income of $60.2 million and net loss of
$28.8 million for the year ended December 31, 2009. We
achieved Adjusted EBITDA of $115.3 million for the twelve
months ended September 30, 2010 and Adjusted EBITDA of
$90.1 million for the year ended December 31, 2009.
Adjusted EBITDA is a non-GAAP financial measure; see footnote 3
under the caption Prospectus Summary Summary
Historical Consolidated Financial and Other Data for a
reconciliation of net (loss) income to Adjusted EBITDA.
Our
Competitive Strengths
Leading market position. We believe we are a
leading manufacturer and marketer of glass tableware products
worldwide and the largest in the Western Hemisphere. We are the
leading manufacturer and marketer of casual glass beverageware
in the United States, where management estimates that, within
the attractive U.S. foodservice channel, we have a 58%
market share, which we believe is significantly in excess of the
market share of our largest competitor. In the retail channel,
we increased our leading share of the U.S. market for the
fourth year in a row and, according to the Retail Tracking
Services of NPD Group, an independent provider of retail sales
tracking data in the houseware industry, we had a market share
of 42.1% as of 2009. We believe we are also the leading
manufacturer and marketer of glass tableware in Mexico, where
management estimates we have a 58% share of the market, which we
believe is significantly in excess of the market share of our
largest competitor. Due to our established relationships with
major retailers, we enjoy strong product placement and prominent
shelf positions. In addition to our prominent position in the
North American market for casual glass beverageware, we believe
we are a leading provider of ceramic dinnerware and metalware to
the U.S. foodservice channel through our Syracuse China and
World Tableware subsidiaries. In the European Union, we believe
we are a leading glass beverageware manufacturer and marketer
with our Royal Leerdam (the Netherlands) and Crisal (Portugal)
subsidiaries. The numerous awards and other recognition that we
have received from foodservice customers, leading retailers and
industry publications are a testament to our best in class
service and supplier of choice status. For example, FE&S
magazine, one of the leading publications in the foodservice
industry, selected us as the leading tabletop manufacturer in
its annual Best in Class survey for eight
consecutive years. In addition, in April 2010, we were
recognized by OSI Restaurant Partners (which owns the Outback
Steakhouse chain) as 2009 Purveyor of the Year and by Edward
Don & Company (a leading distributor of foodservice
equipment and supplies) as 2009 Tabletop Supplier of the Year.
Highly attractive U.S. foodservice
base. We believe that our core North American
foodservice franchise is highly attractive and that a
significant majority of our sales to the North American
foodservice channel are derived from the replacement of broken,
damaged or missing glass beverageware. Our leading position in
the foodservice channel is evidenced by our management estimated
58% share of the U.S. market for casual glass beverageware,
and we believe is supported by our strong presence in
complementary product categories, including dinnerware
(Syracuse®
China), metal and ceramic tableware
(World®
Tableware) and plastic carrying trays and tabletop warewashing
racks
(Traex®).
Our network of approximately 500 distributors, which includes
Sysco Corporation, US Foodservice and other leading national,
regional and local distributors, ensures deep market penetration
and the ability to reach over 300,000 full-service foodservice
establishments in the United States and Canada. We believe that
our broad product line of over 1,000 items, which enables us to
best meet the portion control requirements of foodservice
establishments, a critical component of beverage sales
profitability, presents a significant barrier to entry to the
market, since the investment that a new entrant would be
required to make in order to provide a competitive product
offering would be extremely high. The substantial initial
investment by foodservice establishments in glass beverageware
and the high costs of switching to another glass beverageware
supplier create additional barriers to entry. Further, while the
initial investment by a foodservice establishment in glass
beverageware is significant, beverage sales are important to the
profitability of foodservice establishments, and the cost of
glass beverageware is a minor component of the cost per serving.
Consequently, we believe that the sensitivity of foodservice
establishments to increases in the price of glass tableware is
relatively low. We have benefitted from this relatively low
price sensitivity by implementing price increases in the
U.S. and Canadian
55
foodservice channel in 37 of the previous 40 years, which
is in addition to price increases in the U.S. and Canadian
foodservice channel effective November 1, 2010.
Superior momentum in North American retail. We
believe that, in the retail channel, we are the leading
manufacturer and marketer in the attractive North American
market for casual glass beverageware. According to the Retail
Tracking Services of NPD, we enjoy a market share of 42.1% in
the United States as of 2009, having achieved a share increase
for the fourth consecutive year for a cumulative market share
gain of approximately 1,490 basis points since 2005. In
Mexico, we believe we are the leading manufacturer and marketer
of casual glass beverageware, with a 58% share of the market,
according to management estimates. We believe that our strong
momentum stems from our ability to achieve supplier of choice
status with leading retailers due to our innovative products and
packaging, our speed to market, superior service levels and
increasing cost competitiveness, supported by our strong brands.
Our customers in the North American retail channel include a
wide variety of top retailers, including leading mass merchants,
department stores, retail chains and specialty housewares
stores, as well as retail distributors.
Strong brand portfolio. We have a broad
portfolio of brands with significant recognition in the
foodservice and retail channels. We believe our brand
recognition is the result of our long operating history and
reputation for innovation, consistent quality, reliable service
and speed to market.
Libbey®
is one of the most recognized glass beverageware brands in North
America, and, according to the Retail Tracking Services of NPD,
was the number one purchased casual glass beverageware brand in
the United States in 2007, 2008 and 2009.
Crisa®
is the leading glass tableware brand in Mexico, with a
management estimated 58% market share and a management estimated
90% brand recognition. In Europe, our Royal
Leerdam®
and
Crisal®
brands have a long history and we believe enjoy strong
recognition among customers in their respective trade channels
in key markets. In addition to the significant recognition of
our glass beverageware brands, we believe our
Syracuse®
China and
World®
Tableware brands enjoy strong positions in complementary
foodservice categories in the United States and Canada.
Product innovation and proprietary
technology. We believe that product innovation
and design and world-class manufacturing technologies are core
competencies and create a competitive advantage for our casual
glass beverageware in the foodservice and retail channels, where
service levels and breadth of product line are key sources of
our competitive advantage. In 2009, we introduced over 250 new
products, coupled with several additional variations in color,
shape, size and packaging to address new market trends and
customer needs. Product innovation is supported by our in-house
research and development efforts as well as our proprietary and
highly automated furnace, manufacturing and mold technologies,
which enable us to introduce new products in a timely and
cost-efficient manner. We believe that, together with our
reputation for quality, reliable service and speed to market,
these distinctive capabilities, which are instrumental in
driving profitable growth, underpin our leading market positions.
Extensive manufacturing base and distribution
capabilities. We have an extensive manufacturing
and distribution platform. We own and operate six glass
tableware manufacturing facilities, including two each in the
United States and Europe, one in Mexico and one in China. In
addition, our Traex subsidiary operates a plant that produces
plastic products, including carrying trays and tabletop
warewashing racks, for the foodservice industry. We operate
distribution centers at or near each of our manufacturing
facilities as well as in other strategic locations, enabling us
to distribute our products to more than 100 countries. Our
extensive North American presence provides significant
distribution flexibility and high service levels, which we
believe drive our status as a preferred provider to the North
American foodservice and retail markets. From our distribution
centers located in China, the Netherlands and Portugal, we
distribute our products to customers located in Asia-Pacific and
Europe. Over the last seven years, we have successfully
realigned our manufacturing footprint to improve our cost
structure and better position us for continued profitable
growth. For the year ended December 31, 2009, approximately
42% of our net sales were generated outside of the United
States, a significant increase from 11% in 2002, and
approximately 50% of our glass products were produced in
low-cost countries, including Mexico, China and Portugal, a
significant increase from approximately 15% in 2002. We believe
that our Mexican facility is the largest glass tableware plant
in the Western Hemisphere and that, due to its close proximity
and ability to import glassware into the United States on a
duty-free basis, it provides us with a significant competitive
advantage over importers from other countries. Our
state-of-the-art
facility in China has been operational since the first quarter
of 2007 and now serves customers in over 70 countries.
56
Experienced management team. Our management
team, which is highly experienced and includes professionals
with several decades of industry experience, has implemented and
continues to implement initiatives aimed at increasing
operational and cost efficiencies and enhancing our product
lines and competitive positioning, while exploiting global
opportunities for profitable growth. Our senior management team
has an average of more than 20 years of industry management
experience.
Our
Strategy
Our strategic vision is to be the premier provider of glass
tableware and related products worldwide. We seek to continue to
increase our share of our core North American market in both the
foodservice and the retail channels by leveraging our leading
market position, superior product development capabilities, high
customer service levels and broad distribution network. In
International markets, we seek to increase our sales in the
European glass tableware market while broadening the reach of
our
business-to-business
franchise. We also believe that we have significant
opportunities for continued growth in China and throughout the
Pacific Rim due to our state of the art facility as well as our
growing sales force and distribution network.
In addition to our focus on top line growth, the concurrent
improvement in profitability and cash flow generation is a key
element of our strategy. To this end, we continue to focus on a
number of initiatives aimed at creating operating efficiencies,
including eliminating waste and instilling a culture of
continuous improvement in all aspects of our operations, through
what we refer to as our Lean program, and improving Working
Capital while reducing natural gas consumption and greenhouse
gas emissions. We also believe that by leveraging our production
capabilities in low-cost countries such as Mexico, China and
Portugal, our business can achieve greater profitability and
generate increased cash flow through our ability to sell our
products at price points that enable us to compete more
profitably.
Our growth strategy emphasizes continued internal growth in
combination with selected strategic partnerships, acquisitions
and green field developments. Since successfully
completing the acquisition of Crisa in Mexico in 2006 and
launching our glass manufacturing facility in China in 2007, we
have focused on improving our liquidity and capital structure.
While deleveraging our capital structure continues to be our
primary use of cash flow, we believe that in the long term there
will be opportunities for strategic acquisitions in attractive
developing and emerging markets to complement our internal
growth.
We intend to grow our business through the following key
initiatives:
Continue to grow our leading share of our core North American
market. In the North American foodservice
channel, our strong brands, broad installed product base,
extensive distribution network and superior service level are
key competitive advantages, and we believe that we can leverage
them to further increase our share of the market for glass
beverageware and related products in the foodservice channel. In
the retail channel, our superior product innovation, superior
service level and increasing cost competitiveness, supported by
our strong brands, continue to build upon our significant gains
in our market share for casual glass beverageware. Notably, in
the United States, we have achieved approximately
1,490 basis points of cumulative market share gains in the
retail market for casual glass beverageware since 2005. We also
believe there are opportunities to expand our product offering
into product categories beyond our core glass beverageware
business and to increase our share of the market for glass
tableware in the North American
business-to-business
channel. In addition, we are implementing initiatives aimed at
further strengthening our competitive advantage by improving
turnaround time for customer orders while maintaining high
service levels. Such initiatives include the recent
consolidation of our North American distribution and warehousing
facilities along with the continued implementation of enhanced
warehouse management systems.
Capitalize on continued improvement of market conditions in
North America. Our core foodservice business is a
traffic business, driven by occupancy rates in hotels and
customer traffic at drinking and dining establishments. Market
conditions have shown early signs of recovery, although they
continue to be challenging. The U.S. foodservice industry
forecast issued by Technomic, a leading independent research
data provider, in September 2010 predicted 0.3% nominal growth
in food and non-alcohol beverage sales for 2010 and 1.7% nominal
growth for 2011. On October 19, 2010, STR, a leading
independent provider of research data for the hotel industry,
reported that the occupancy rate for the nine months ended
September 30, 2010 was
57
5.2% higher than the occupancy rate for the same period of 2009.
In the U.S. foodservice industry, the National Restaurant
Association reported on October 29, 2010 that its
Restaurant Performance Index a monthly composite
index that tracks the health of and outlook for the
U.S. restaurant industry, stood at 100.3, the first time in
five months that it rose above 100, signaling expansion in the
industry. In addition, the National Restaurant
Associations September Expectations Index, which measures
restaurant operators six-month outlook for four industry
indicators (same-store sales, employees, capital expenditures
and business conditions), was 101.1, its strongest level in five
months. Overall, as traffic at our lodging and restaurant
customers continues to recover, we expect demand for our North
American foodservice business to benefit. Our retail business in
the U.S. and Canada continues to post strong performance,
with a 10.0% increase in net sales in the first nine months of
2010 as compared to the same period in 2009, following a more
than 7.0% increase in the full year 2009 as compared to the same
period in 2008. As economic conditions and unemployment rates
continue to improve, we expect our business to continue to
benefit. Our business in Mexico is experiencing strong momentum,
with a 24.4% increase in sales of Crisa products (of which 4.2%
is attributable to the currency impact of the Mexican peso) in
the first nine months of 2010 compared to the same period in
2009. Our Mexican business is benefiting from a recovery of
economic conditions in the market, improved dynamics of the
tourism business and a strong performance by our OEM business.
Increase our presence in the European market across
channels. We aim to continue to grow our presence
in the European market by capitalizing on the strength of our
sales force and our expanding distributor base. The recent
reorganization of our European sales force, which is now better
aligned with our global platform, combined with the strength of
our
Libbey®
brand in foodservice and Royal
Leerdam®
brand in retail, is expected to drive continued growth in the
market. Our broad manufacturing base enables us to provide our
customers with an extensive offering across price points by
sourcing products from our low cost manufacturing facilities in
Mexico and China to complement products from our facilities in
the Netherlands and Portugal. We also believe that the European
business-to-business
channel presents significant untapped opportunities for growth.
Exploit growth opportunities in China and other potential
high-growth markets. Our entry into the Chinese
market is relatively recent, although our
state-of-the-art
facility and our expanding distribution network have been
instrumental in achieving sustained double digit growth rates in
sales. Our facility is strategically located south of Beijing,
providing us with easy access to consumers. In China, we sell
through distributors, enabling us to support our rapid growth
while providing the service levels to our customers that are
instrumental in increasing recognition of our
Libbey®
and Royal
Leerdam®
brands. The relative proximity of our facility to Tianjin, one
of the major ports in China, enables us to efficiently
distribute our products to other potential high-growth markets
in the Pacific Rim as well as to Europe and North America.
Today, our Chinese facility supplies over 70 countries
worldwide. Libbey China has experienced strong growth, albeit
from a relatively small base, with a 15.6% increase in shipments
in 2009 (of which 3.9% is attributable to the currency impact of
the Chinese RMB) and a 29.0% increase in the first nine months
of 2010 compared to the same period in 2009. While 2009 sales
were affected by particularly harsh weather conditions around
the Chinese New Year, we believe that Libbey China presents
significant opportunities for continued strong growth in 2010.
Continue to drive improvements in profitability and cash flow
generation. Complementing our top line growth
with continuous improvements in profitability and cash flow is a
key component of our strategy. In 2009, we significantly reduced
our enterprise costs with initiatives such as the closure of our
Syracuse China manufacturing facility, which contributed to
right-sizing our global workforce. We also reduced our cost base
through increased sourcing of finished goods from third party
vendors in low-cost countries. Such cost initiatives enabled us
to withstand the challenging market conditions of 2009 and, in
spite of a 7.6% decline in net sales from 2008 to 2009, to
increase earnings before interest, taxes, depreciation and
amortization, or EBITDA, and Adjusted EBITDA to
$83.8 million and $90.1 million, respectively, in 2009
from $40.0 million and $85.2 million, respectively, in
2008. As market conditions continue to recover, our improved
cost structure positions us to benefit from operating leverage
and improved capacity utilization to drive profitability. In the
first nine months of 2010, we achieved EBITDA and Adjusted
EBITDA of $138.3 million and $86.2 million,
respectively, as compared to $55.6 million and
$61.0 million, respectively, in the same period in 2009.
58
EBITDA and Adjusted EBITDA are non-GAAP financial measures; see
footnote 3 under the caption Prospectus
Summary Summary Historical Consolidated Financial
and Other Data for a reconciliation of net (loss) income
to EBITDA and Adjusted EBITDA. We expect to continue to achieve
further operating efficiencies and cash flow generation with the
implementation of enhanced warehouse and labor management
systems aimed at improving productivity and working capital. We
also will continue to focus on our Lean program, a disciplined
approach to eliminating waste and instilling a culture of
continuous improvement in all aspects of our operations, while
continuing to optimize our sourcing of finished goods and raw
materials and managing our capital expenditures.
In the medium term, evaluate strategic partnerships and
acquisitions to facilitate entry into select
markets. Our strategy emphasizes continued
internal growth, although over the years we have completed
select acquisitions in order to strengthen our platform and
accelerate growth. While recently our focus has been on
improving our liquidity and deleveraging our capital structure,
we believe that in the long term there will be strategic
partnership or acquisition opportunities that could best enable
our entry into attractive emerging and developing markets.
Although not a priority at present, strategic partnerships and
acquisitions may help us selectively broaden our global
footprint and continue to leverage our strong brands and
superior infrastructure to create value.
Products
Our tableware products consist of glass tableware (including
casual glass beverageware), ceramic dinnerware, metal flatware,
hollowware and serveware and plastic items. Our glass tableware
includes tumblers, stemware (including wine glasses), mugs,
bowls, ashtrays, bud vases, salt and pepper shakers, shot
glasses, canisters, candleholders and various other items. Royal
Leerdam produces high-quality stemware. Crisal produces glass
tableware, mainly tumblers, stemware and glassware accessories.
Crisas glass tableware product assortment includes the
product types produced by Libbey, as well as glass bakeware and
handmade glass tableware. In addition, Crisa products include
blender jars, washing machine windows and other glass products
sold principally to OEMs. Through our Syracuse China and
World Tableware subsidiaries, we offer a wide range of ceramic
dinnerware products. These include plates, bowls, platters,
cups, saucers and other tableware accessories. Our World
Tableware subsidiary provides an extensive selection of metal
flatware, including knives, forks, spoons and serving utensils.
In addition, World Tableware sells metal hollowware, including
serving trays, chafing dishes, pitchers and other metal
tableware accessories, as well as an extensive line of
dinnerware. Through our Traex subsidiary, we produce and sell a
wide range of plastic products, including tabletop warewashing
and storage racks, trays, dispensers and organizers, to the
foodservice industry. Our global sales force presents all of our
products to the global marketplace in a coordinated fashion.
We also have an agreement to be the exclusive distributor of
Luigi Bormioli glassware in the United States and Canada to
foodservice users. Luigi Bormioli, based in Italy, is a highly
regarded supplier of high-end glassware used in many of the
finest eating and drinking establishments.
Customers
The customers for our tableware products include approximately
500 foodservice distributors in the United States and
Canada. In the retail channel, we sell to mass merchants,
department stores, retail distributors, national retail chains
and specialty housewares stores. In addition, our
business-to-business
channel primarily includes customers that use glass containers
for candle and floral applications, gourmet food packaging
companies, and various OEM applications. In Mexico, we sell to
retail mass merchants and wholesale distributors, as well as
candle and food packers, and various OEM users of custom molded
glass. In Europe, we market glassware to retailers, distributors
and decorators that service the retail, foodservice and highly
developed
business-to-business
channel, which includes large breweries and distilleries, for
which products are decorated with company logos for promotional
and resale purposes. We also have other customers who use our
products for promotional or other private uses. In China, we
sell to distributors and wholesalers. No single customer
accounts for 10% or more of our sales, although the loss of any
of our major customers could have a meaningful effect on us.
59
Sales,
Marketing and Distribution
In 2009, approximately 76% of our sales were to customers
located in North America, and approximately 24% of our sales
were to customers located outside of North America. We sell our
products to over 100 countries around the world, competing in
the tableware markets of Latin America, Asia and Europe, as well
as North America.
We have our own sales staff of professionals who call on
customers and distributors. In addition, we retain the services
of manufacturing representative organizations to assist in
selling our products in select countries.
We also have a marketing staff located at our corporate
headquarters in Toledo, Ohio, as well as in Mexico, the
Netherlands and China. They engage in developing strategies
relating to product development, pricing, distribution,
advertising and sales promotion.
We operate distribution centers located at or near each of our
manufacturing facilities (see
Properties). In addition, we operate
distribution centers for our products produced in Mexico in
Laredo, Texas, and for our
Syracuse®
China,
World®
Tableware and
Traex®
products in West Chicago, Illinois. We also operate a
distribution center for many of our products at Gorinchem, the
Netherlands. The glass tableware manufacturing and distribution
centers are strategically located to enable us to supply
significant quantities of our product to virtually all of our
customers on a timely and cost effective basis.
The majority of our sales are in the foodservice, retail and
business-to-business
channels, which are further detailed below.
Foodservice
We have, according to our estimates, the leading market share in
glass tableware sales in the U.S. and Canadian foodservice
channel. Our
Syracuse®
China,
World®
Tableware and
Traex®
brands are long-established brands of high-quality ceramic
dinnerware, metal flatware, hollowware and serveware, and
plastic items, respectively. We are among the leading suppliers
of these product categories to foodservice end users. A
significant majority of our tableware sales to foodservice end
users are made through a network of foodservice distributors.
The distributors in turn sell to a wide variety of foodservice
establishments, including national and regional hotel chains,
national and regional restaurant chains, independently owned
bars and restaurants and casinos.
Retail
Our primary customers in the retail channel include national and
international mass merchants. In recent years, we have increased
our retail sales by increasing our sales to specialty housewares
stores and value-oriented retailers. In 2010, we were recognized
by the Retail Tracking Services of NPD Group for increasing our
overall U.S. market share in the casual glass beverageware
market in 2009 to approximately 42%. Royal Leerdam and Crisa
sell to similar retail customers in Europe and Mexico, while
Crisal is increasingly positioned with retailers on the Iberian
Peninsula. With this retail representation, we are positioned to
successfully introduce profitable new products. We also operate
outlet stores located at or near the majority of our
manufacturing locations. In addition, we sell selected items in
the United States on the internet at www.libbey.com.
Business-to-Business
Royal Leerdam and Crisal supply glassware to the
business-to-business
channel of distribution in Europe. Customers in this channel
include marketers who decorate our glassware with company logos
and resell these products to large breweries and distilleries,
which redistribute the glassware for promotional purposes and
resale. Our
business-to-business
channel in North America includes candle and floral
applications, blender jars and washing machine windows. The
craft industries and gourmet food packing companies are also
business-to-business
consumers of glassware.
Seasonality
Primarily due to the impact of consumer buying patterns and
production activity, our sales and operating income, excluding
special charges, tend to be stronger in the second half and
weaker in the first half of each year. In
60
addition, our cash flow from operations tends to be stronger in
the second half of the year and weaker in the first half of the
year due to these seasonal Working Capital trends. In
particular, our inventory levels typically reach their highest
levels in the third quarter of the year, and decrease in the
following quarter due to seasonally higher sales that typically
peak in the fourth quarter of the year. In addition, our
receivables typically peak during the third and early fourth
quarters and begin to decrease by the end of the year as cash
collections continue through the end of December, but limited
shipments occur during the final week of the year. Our payables
normally peak during the third and fourth quarters of the year
as a result of our increased production levels going into those
quarters, but are not significant enough to provide relief for
total Working Capital needs caused by increased investment in
inventories. Accordingly, our overall investment in Working
Capital will normally reach higher levels through the summer
months as we build inventory during slower sales periods in
order to allow for optimum customer service and timely delivery
during the higher sales periods in the second half of the year,
when sales typically exceed short term production capabilities.
Although little information with respect to our competitors is
publicly available, we believe that our experience with Working
Capital is generally consistent with the experience for the
industry as a whole.
Backlog
As of December 31, 2009, our backlog was approximately
$54.9 million, compared to approximately $31.1 million
at December 31, 2008. The increase was caused by increased
demand by our customers as orders have moved closer to more
traditional levels, and lower inventories that require us to
fill more orders from production, instead of from inventory.
Backlog includes orders confirmed with a purchase order for
products scheduled to be shipped to customers in a future
period. Because orders may be changed
and/or
cancelled, we do not believe that our backlog is necessarily
indicative of actual sales for any future period.
Manufacturing
and Sourcing
In North America, we currently own and operate three glass
tableware manufacturing plants two in the
United States (one in Toledo, Ohio and one in Shreveport,
Louisiana) and one in Monterrey, Mexico. We also own and operate
one facility in Dane, Wisconsin that produces plastic products
for the foodservice industry. In Europe, we own and operate two
glass tableware manufacturing plants one in Leerdam,
the Netherlands, and the other in Marinha Grande, Portugal. In
Asia, we own and operate a glass tableware production facility
in Langfang, China.
The manufacture of our tableware products involves the use of
automated processes and technologies. We design much of our
glass tableware production machinery, and we continuously refine
it to incorporate technological advances to create a competitive
advantage. We believe that our production machinery and
equipment continue to be adequate for our needs in the
foreseeable future, but we continue to invest in ways to further
improve our production efficiency and reduce our cost profile.
Our glass tableware products generally are produced using one of
two manufacturing methods or, in the case of certain stemware, a
combination of such methods. Most of our tumblers, stemware and
other glass tableware products are produced by forming molten
glass in molds with the use of compressed air. These products
are known as blown glass products. Our other glass
tableware products and the stems of certain stemware are
pressware products, which are produced by pressing
molten glass into the desired product shape.
Ceramic dinnerware is also produced through the forming of raw
materials into the desired product shape and is either
manufactured at our Syracuse, New York, production facility
(through April 2009) or imported primarily from China and
Bangladesh. We source all metal flatware and metal hollowware
through our World Tableware subsidiary, primarily from China.
Plastic products are also produced through the injection molding
of raw materials into the desired shape and are manufactured at
our Dane, Wisconsin, production facility or imported primarily
from Taiwan and China.
To assist in the manufacturing process, we employ a team of
engineers whose responsibilities include efforts to improve and
upgrade our manufacturing facilities, equipment and processes.
In addition, they provide engineering required to manufacture
new products and implement the large number of innovative
changes continuously being made to our product designs, sizes
and shapes. See Research and Development
below for additional information.
61
Raw
Materials
Our primary raw materials are sand, lime, soda ash, corrugated
packaging, clay, resins and colorants. Historically, these
materials have been available in adequate supply from multiple
sources. However, there may be temporary shortages of certain
materials due to weather or other factors, including disruptions
in supply caused by material transportation or production
delays. Such shortages have not previously had, and are not
expected in the future to have, a material adverse effect on our
operations. Natural gas is a primary source of energy in most of
our production processes, and variability in the price for
natural gas has had and could continue to have an impact on our
profitability. Historically, we have used natural gas hedging
contracts to partially mitigate this impact. In addition, resins
are a primary source of materials for our Traex operation, and,
historically, the price for resins has fluctuated, directly
impacting our profitability. We also experience fluctuations in
the cost to deliver raw materials to our facilities, and such
changes may affect our earnings and cash flow.
Research
and Development
Our core competencies include our engineering excellence and
world-class manufacturing techniques. Our focus is to increase
the quality of our products and enhance the profitability of our
business through research and development. We will continue to
invest in strategic research and development projects that will
further enhance our ability to compete in our core business.
We employ a team of engineers, in addition to external
consultants, to conduct research and development. Our
expenditures on research and development activities related to
new and/or
improved products and processes were $2.0 million in 2009,
$1.7 million in 2008, and $1.5 million in 2007. These
costs were expensed as incurred.
Patents,
Trademarks and Licenses
Based upon market research and surveys, we believe our trade
names and trademarks as well as our product shapes and styles
enjoy a high degree of customer recognition and are valuable
assets. We believe that the
Libbey®,
Syracuse®
China,
World®
Tableware, Royal
Leerdam®,
Crisal
Glass®,
Traex®
and
Crisa®
trade names and trademarks are material to our business.
We have rights under a number of patents that relate to a
variety of products and processes. However, we do not consider
that any patent or group of patents relating to a particular
product or process is of material importance to our business as
a whole.
Competitors
Our business is highly competitive, with the principal
competitive factors being customer service, price, product
quality, new product development, brand name and delivery time.
Competitors in glass tableware include, among others:
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Arc International (a French company), which manufactures and
distributes glass tableware worldwide;
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Paşabahçe (a unit of Şişecam, a Turkish
company), which manufactures glass tableware at various sites
throughout the world and sells to retail, foodservice and
business-to-business
customers worldwide;
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Anchor Hocking Company (a U.S. company), which manufactures
and distributes glass beverageware, industrial products and
bakeware primarily to retail, industrial and foodservice
channels in the United States and Canada;
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Bormioli Rocco Group (an Italian company), which manufactures
glass tableware in Europe, where the majority of its sales are
to retail and foodservice customers;
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various manufacturers in China; and
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various sourcing companies.
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Other materials such as plastics also compete with glassware.
62
Competitors in U.S. ceramic dinnerware include, among
others:
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Homer Laughlin;
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Oneida Ltd.;
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Steelite; and
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various sourcing companies.
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Competitors in metalware include:
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Oneida Ltd.;
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Walco, Inc.; and
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various sourcing companies.
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Competitors in plastic products are, among others:
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Cambro Manufacturing Company;
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Carlise Corporation Incorporated; and
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various sourcing companies.
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Facilities
The following information sets forth the location and square
footage of our principal facilities at September 30,
2010.
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North American Glass
|
|
North American Other
|
|
International
|
Location
|
|
Owned
|
|
Leased
|
|
Owned
|
|
Leased
|
|
Owned
|
|
Leased
|
|
Toledo, Ohio:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
734,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
713,000
|
|
|
|
598,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shreveport, Louisiana:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
525,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
166,000
|
|
|
|
646,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dane, Wisconsin:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
|
|
|
|
|
|
|
|
56,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
|
|
|
|
|
|
|
|
61,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Monterrey, Mexico:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
534,000
|
|
|
|
160,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
228,000
|
|
|
|
592,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Leerdam, Netherlands:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
141,000
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
127,000
|
|
|
|
442,000
|
|
Laredo, Texas:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
149,000
|
|
|
|
117,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Chicago, Illinois:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
249,000
|
|
|
|
|
|
|
|
|
|
Marinha Grande, Portugal:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
217,000
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
193,000
|
|
|
|
13,000
|
|
Langfang, China
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Manufacturing
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
195,000
|
|
|
|
|
|
Warehousing/Distribution
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
232,000
|
|
|
|
|
|
63
In addition to the facilities listed above, our headquarters
(Toledo, Ohio), some showrooms (in Toledo, Ohio and New York),
some warehouses (various locations), sales offices (various
locations) and various outlet stores are located in leased
space. We also utilize various warehouses as needed on a
month-to-month
basis. In April 2009, we closed our Syracuse China manufacturing
facility in Syracuse, New York, and in May 2009, we closed our
Mira Loma, California warehousing and distribution facility.
All of our principal facilities are currently being utilized for
their intended purpose. We believe that all of these facilities
are well maintained and adequate for our planned operational
requirements.
Litigation
We are involved in various routine legal proceedings arising in
the ordinary course of our business. No pending legal proceeding
is deemed to be material.
Environmental
Matters
Our operations, in common with those of industry generally, are
subject to numerous existing laws and governmental regulations
designed to protect the environment, particularly regarding
plant wastes and emissions and solid waste disposal and
remediations of contaminated sites. We believe that we are in
material compliance with applicable federal, state and local
environmental laws, and we are not aware of any regulatory
initiatives that we expect will have a material effect on our
products or operations. See Risk Factors Risks
Related to Our Business We are subject to various
environmental legal requirements and may be subject to new legal
requirements in the future; these requirements could have a
material adverse effect on our operations.
We have shipped, and we continue to ship, waste materials for
off-site disposal. However, we are not named as a potentially
responsible party with respect to any waste disposal site
matters pending prior to June 24, 1993, the date of
Libbeys initial public offering and separation from
Owens-Illinois, Inc. (Owens-Illinois). Owens-Illinois has been
named as a potentially responsible party or other participant in
connection with certain waste disposal sites to which we also
may have shipped wastes prior to June 24, 1993. We may bear
some responsibility in connection with those shipments. Pursuant
to an indemnification agreement between Owens-Illinois and
Libbey, Owens-Illinois has agreed to defend and hold us harmless
against any costs or liabilities we may incur in connection with
any such matters identified and pending as of June 24,
1993, and to indemnify us for any liability that results from
these matters in excess of $3 million. We believe that if
it is necessary to draw upon this indemnification, collection is
probable.
Pursuant to the indemnification agreement referred to above,
Owens-Illinois is defending us with respect to the King Road
landfill. In January 1999, the Board of Commissioners of Lucas
County, Ohio instituted a lawsuit against Owens-Illinois, Libbey
and numerous other defendants in the U.S. District Court
for the Northern District of Ohio to recover costs incurred to
address contamination from the King Road landfill formerly
operated by the County. The Board of Commissioners dismissed the
lawsuit without prejudice in October 2000. In view of the
uncertainty as to any re-filing of the suit, the remedy, and the
number of potentially responsible parties and potential
defenses, we are unable to quantify our exposure with respect to
the King Road landfill.
On October 10, 1995, Syracuse China Company, our
wholly-owned subsidiary, acquired from The Pfaltzgraff Co. and
certain of its subsidiary corporations, the assets operated by
them as Syracuse China. The Pfaltzgraff Co. and the New York
State Department of Environmental Conservation, which we refer
to as the DEC, entered into an Order on Consent effective
November 1, 1994 that required Pfaltzgraff to develop a
remedial action plan for and to remediate a landfill, as well as
wastewater sludge ponds and adjacent wetlands located on
property that Syracuse China Company purchased. Although
Syracuse China was not a party to the Order on Consent, as part
of the Asset Purchase Agreement with The Pfaltzgraff Co., which
we refer to as the APA, Syracuse China agreed to share a part of
the remediation and related expense up to the lesser of
50 percent of such costs or $1.35 million. The
approved remedy has been implemented and Syracuse Chinas
payment obligation under the APA has been satisfied.
In addition, Syracuse China has been named as a potentially
responsible party by reason of its potential ownership of
certain property that adjoins its plant and that has been
designated a
sub-site of
the Onondaga Lake Superfund Site. We believe that any
contamination of the
sub-site was
caused by and will be remediated by owners
64
of this site at no cost to Syracuse China. We believe that, even
if Syracuse China were deemed to be responsible for any expense
in connection with the contamination of the
sub-site, it
is likely that a portion of the expense would be paid by
Pfaltzgraff pursuant to the APA.
By letter dated October 31, 2008, the DEC and
U.S. Environmental Protection Agency, which we refer to as
the EPA, made a demand upon Syracuse China and several other
companies for recovery of approximately $12.5 million of
direct and indirect costs allegedly expended by the DEC and EPA
in connection with the
clean-up of
the Onondaga Lake Superfund Site. By letter dated
October 30, 2009, the EPA notified Syracuse China and
several other companies that they are potentially responsible
parties in connection with the Lower Ley Creek
sub-site of
the Onondaga Lake Superfund Site. At this time it is not certain
that there is a nexus between Syracuse China and the Superfund
Site. Under the APA, we and The Pfaltzgraff Co. will share any
costs for off-premise liability of this kind up to an aggregate
of $7.5 million. We have no reason to believe that the
indemnification would not be honored if it were to become
necessary for us to draw upon that indemnification.
We regularly review the facts and circumstances of the various
environmental matters affecting us, including those covered by
indemnification. Although not free of uncertainties, we do not
expect, based upon the number of parties involved at the sites
and the estimated cost of undisputed work necessary for
remediation based upon known technology and the experience of
others, to incur material loss for new matters in the future.
There can be no assurance, however, that indemnification
agreements will be performed or our future expenditures for
environmental matters will not have a material adverse effect on
our financial position or results of operations.
In addition, occasionally the federal government and various
state authorities have investigated possible health issues that
may arise from the use of lead or other ingredients in enamels
such as those used by us on the exterior surface of our
decorated products. In that connection, Libbey Glass Inc. and
numerous other glass tableware manufacturers, distributors and
importers entered into a consent judgment on August 31,
2004 in connection with an action, Leeman v. Arc
International North America, Inc. et al, Case
No. CGC-003-418025
(Superior Court of California, San Francisco County)
brought under Californias so-called Proposition
65. Proposition 65 requires businesses with ten or more
employees to give a clear and reasonable warning
prior to exposing any person to a detectable amount of a
chemical listed by the state as covered by this statute. Lead is
one of the chemicals covered by that statute. Pursuant to the
consent judgment, Libbey Glass Inc. and the other defendants
(including Anchor Hocking and Arc International North America,
Inc.) agreed, over a period of time, to reformulate the enamels
used to decorate the external surface of certain glass tableware
items to reduce the lead content of those enamels. We have
complied with this requirement.
Capital expenditures for property, plant and equipment for
environmental control activities were not material during 2008
or 2009 and are not expected to increase significantly in 2010.
Employees
Our employees are vital to achieving our vision to be the
premier provider of tabletop glassware and related products
worldwide and our mission to create value by
delivering quality products, great service and strong financial
results through the power of our people worldwide. We
strive to achieve our vision and mission through our values of
customer focus, performance, continuous improvement, teamwork,
respect and development.
We employed 7,047 persons at September 30, 2010.
Approximately 66% of our employees are employed outside the
United States, and the majority of our employees are paid hourly
and covered by collective bargaining agreements. Royal
Leerdams collective bargaining agreement with its
unionized employees expires on July 1, 2011. Agreements
with our unionized employees in Toledo, Ohio expire on
September 30, 2013. The agreement with our unionized
employees in Shreveport, Louisiana expires on December 15,
2011. Crisas collective bargaining agreements with its
unionized employees have no expiration, but wages are reviewed
annually and benefits are reviewed every two years. Crisal does
not have a written collective bargaining agreement with its
unionized employees but does have an oral agreement that is
revisited annually.
65
DESCRIPTION
OF OTHER INDEBTEDNESS
The following is a summary of certain provisions of the
instruments evidencing our material indebtedness, the material
indebtedness of Libbey Inc. and the material indebtedness of our
subsidiaries. This summary does not purport to be complete and
is subject to, and is qualified in its entirety by reference to,
the provisions of each debt instrument summarized below,
including the definitions of certain terms therein that are not
otherwise defined in this prospectus.
Amended
and Restated Asset Based Loan Facility
The
ABL Facility
The amended and restated ABL Facility is available to us and
Libbey Europe B.V. for extensions of credit in Dollars or in
Euros (in the latter case not exceeding the Dollar equivalent of
$55.0 million in the aggregate). The Dutch subfacility is
only available to Libbey Europe B.V. for extensions of credit in
Dollars or in Euros.
Credit available to Libbey Glass, which we refer to as the
U.S. availability, is, subject to certain exceptions, equal
to (i) the lesser of the maximum amount of the facility and
the amount determined pursuant to a borrowing base minus
(ii) the sum of the aggregate outstanding amount of credit
extensions under the facility (net of credit extensions under
the Dutch subfacility) plus the undrawn amount of outstanding
letters of credit. The borrowing base is equal to the
U.S. dollar equivalent amount of the sum of (i) 85% of
eligible accounts receivable, (ii) the lesser of
(A) 65% of eligible inventory, (B) the product of 85%
of the net orderly liquidation value percentage multiplied by
the eligible inventory and (C) $70.0 million, in each
case of us and our domestic subsidiaries (together with
inventory attributable to the Dutch borrowing base), and in each
case less reserves and availability blocks that may be
established by the administrative agent from time to time.
Libbey Europe B.V., subject to certain exceptions, generally has
the same borrowing availability as we do and, in addition, may
have credit availability under the Dutch subfacility. However,
the aggregate credit availability of Libbey Europe B.V. under
the amended and restated ABL Facility (including the Dutch
subfacility) is capped at $55.0 million.
The credit availability of Libbey Europe B.V. under the Dutch
subfacility is, subject to certain exceptions, equal to
(i) the lesser of $20.0 million and an amount
determined pursuant to the borrowing base applicable to the
Dutch subfacility minus (ii) the sum of the aggregate
amount of credit extensions outstanding under the Dutch
subfacility. Additionally, Libbey Europe B.V. may avail itself
of a portion of the U.S. availability, subject to the
overall cap of $55.0 million described in the preceding
paragraph.
The borrowing base for extensions of credit to Libbey Europe
B.V. under the Dutch subfacility is determined in accordance
with a similar formula to that used to calculate our borrowing
base, but takes into account instead the eligible accounts
receivable and eligible inventory (with the maximum amount of
inventory attributable to such borrowing base not to exceed
$12.5 million) of Libbey Europe B.V. and certain of its
Dutch subsidiaries.
Furthermore, the administrative agent for the facility may in
its sole discretion cause us to make borrowings for certain
purposes, including, without limitation, to preserve or protect
the Collateral. Borrowing availability for such protective
advances is equal to (i) the maximum amount of the facility
minus (ii) the sum of the aggregate amount of credit
extensions outstanding under the facility.
Availability
Amounts available under the amended and restated ABL Facility
may be borrowed, repaid and reborrowed, and letters of credit
may be issued, until the maturity date thereof, in each case
subject to the satisfaction of certain conditions to funding,
and may be used to refinance existing indebtedness and for
working capital and general corporate purposes, including
permitted investments and permitted acquisitions.
Maturity
and Prepayments
The amended and restated ABL Facility terminates and all amounts
outstanding thereunder are due and payable in full on
April 8, 2014. Advances under the revolving credit facility
may be prepaid at our option, upon
66
notice and in mutually agreed upon minimum principal amounts and
multiples, without premium or penalty (except, in the case of
LIBOR borrowings, breakage and redeployment costs related to
prepayments not made on the last day of the relevant interest
period). We may cancel the commitments under the facility upon
the payment in full of all loans thereunder and all other
obligations in respect thereof and the cancellation and return
(or cash collateralization, at the discretion of the facility
agent, backstop) of all letters of credit issued thereunder.
Upon the occurrence of certain events, advances under the
revolving credit facility are subject to mandatory prepayments.
Guarantees,
Security and Intercreditor Agreement
All borrowings by us or Libbey Europe B.V. under the amended and
restated ABL Facility are:
|
|
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|
|
secured by a first-priority security interest in the Credit
Agreement Priority Collateral;
|
|
|
|
secured by a second-priority security interest in the Notes
Priority Collateral; and
|
|
|
|
guaranteed by our present and future direct and indirect
U.S. subsidiaries, which we refer to as the U.S. loan
parties.
|
Additionally, borrowings by Libbey Europe B.V. under the amended
and restated ABL Facility are secured by a first priority
security interest in:
|
|
|
|
|
substantially all of the existing and future real and personal
property (including without limitation all of the tangible and
intangible property) of Libbey Europe B.V. and all of the
present and future direct and indirect Dutch subsidiaries of
Libbey Europe B.V. and of the U.S. loan parties, and
substantially all proceeds and products from such property and
assets; and
|
|
|
|
guaranteed by the Netherlands Loan Parties.
|
The collateral agent under the amended and restated ABL Facility
entered into an intercreditor agreement with the trustee for the
holders of the notes, which agreement provides for the relative
priorities (and certain other rights) of the lenders and the
holders of the notes in respect of the Collateral. For a
description of the terms of the intercreditor agreement, see
Description of Exchange Notes
Collateral Intercreditor Agreement.
Interest
Borrowings under the amended and restated ABL Facility
denominated in Dollars may be made as CBFR loans (subject to
certain exceptions, the prime rate of interest announced from
time to time by the agent or its parent) or LIBOR loans at our
election. Swingline Loans denominated in Dollars will be made as
CBFR Loans in the case of Swingline Loans made to Libbey Glass
and at an alternative rate with respect to Swingline Loans made
to Libbey Europe B.V. Borrowings denominated in Euros will
(subject to certain exceptions) be made as LIBOR loans or will
bear interest at a rate determined by the administrative agent
in its reasonable discretion. The interest rates payable under
the amended and restated ABL Facility will depend on the type of
loan plus an applicable margin. The applicable margin will be
subject to adjustment based on established excess availability
under the amended and restated ABL Facility and is currently
3.50% with respect to LIBOR loans and 2.50% with respect to CBFR
loans.
We may select interest periods of one, two, three or six months
for LIBOR borrowings. Interest is calculated on the basis of a
360-day year
(365/366 day year with respect to CBFR loans) and is
payable quarterly for CBFR loans and at the end of each interest
period for LIBOR loans (but not less frequently than quarterly).
During the continuance of certain defaults or during the
continuance of any event of default, all obligations will bear
interest at a rate per annum equal to 2.0% in excess of the
otherwise applicable interest rate then in effect, which shall
be payable upon demand.
Fees
The amended and restated ABL Facility contains certain fees,
including, without limitation, letter of credit fees, commitment
fees for our revolving credit facility based upon the unutilized
portion of available commitments and certain fees paid to the
agents and bookrunners.
67
Covenants
The amended and restated ABL Facility contains various covenants
customary for similar credit facilities, including, but not
limited to covenants pertaining to:
|
|
|
|
|
incurrence of indebtedness;
|
|
|
|
sales and lease-backs;
|
|
|
|
guarantee obligations;
|
|
|
|
incurrence of liens;
|
|
|
|
restrictions on fundamental changes;
|
|
|
|
sales of assets;
|
|
|
|
restricted payments;
|
|
|
|
investments, loans, advances, guarantees and acquisitions;
|
|
|
|
optional payments and modifications of certain debt (including
the notes);
|
|
|
|
modification of material documents;
|
|
|
|
hedging arrangements;
|
|
|
|
transactions with affiliates;
|
|
|
|
changes in fiscal year;
|
|
|
|
negative pledge clauses;
|
|
|
|
compliance with law;
|
|
|
|
payment of certain obligations;
|
|
|
|
maintenance of existence and material property, rights and
privileges;
|
|
|
|
appraisals;
|
|
|
|
environmental compliance;
|
|
|
|
depository arrangements;
|
|
|
|
insurance; and
|
|
|
|
providing various notices and financial and collateral reporting.
|
Financial
Covenants
The amended and restated ABL Facility contains no financial
covenants.
Events
of Default
The amended and restated ABL Facility contains customary events
of default, including, without limitation, defaults related to:
|
|
|
|
|
failure to make payments when due;
|
|
|
|
default or acceleration event in certain other material debt
agreements;
|
|
|
|
noncompliance with covenants;
|
|
|
|
breaches of representations and warranties;
|
|
|
|
certain bankruptcy related events;
|
68
|
|
|
|
|
judgments in excess of specified amounts;
|
|
|
|
certain ERISA related events; and
|
|
|
|
change in control.
|
China
Construction Loan
On January 23, 2006, Libbey Glassware (China) Co., Ltd.,
which we refer to as Libbey China, an indirect wholly-owned
subsidiary of Libbey, entered into the China Construction Loan.
Pursuant to the China Construction Loan, CCBC agreed to lend to
Libbey China RMB 250 million, or approximately
$37.4 million at September 30, 2010, in connection
with the construction of Libbeys production facility in
China.
Term
The China Construction Loan has a term of eight years.
Interest
Borrowings under the China Construction Loan bear interest at a
variable rate announced by the Peoples Bank of China, to
be adjusted annually. As of the date of the initial advance
under the China Construction Loan, the annual interest rate was
5.51%. As of September 30, 2010, the annual interest rate
was 5.35%. Interest is payable quarterly.
Mandatory
Payments
A payment of principal in the amount of RMB 30 million
(approximately $4.4 million at September 30,
2010) must be made on July 20, 2012, and a payment of
principal in the amount of RMB 40 million (approximately
$6.0 million at September 30, 2010) must be made
on December 20, 2012. In addition, three payments of
principal in the amount of RMB 60 million (approximately
$9.0 million at September 30, 2010) each must be
made on July 20, 2013, December 20, 2013 and
January 20, 2014.
Guarantees
The obligations of Libbey China under the Loan Contract are
secured by a guarantee executed by Libbey for the benefit of
CCBC and a mortgage lien on the Libbey China facility.
Covenants
None.
China
Working Capital Loan
In March 2007, Libbey China entered into an RMB
50.0 million working capital loan with CCBC. The
3-year term
loan had an original principal payment at maturity on
March 14, 2010. On February 25, 2010, the terms of the
working capital loan were extended. Under the new terms, the
loan matures in January 2011 and is secured by a letter of
credit. At September 30, 2010, the loan had an interest
rate of 5.31% and the U.S. dollar equivalent on the line
was $7.5 million. Interest is payable quarterly.
Libbey
Portugal Loans
In January 2007, Libbeys Portuguese subsidiary entered
into a seven year, 11.0 million line of credit
(approximately $15.0 million at September 30,
2010) with Banco Espírito Santo, S.A. The
$13.5 million outstanding at September 30, 2010 was
the U.S. dollar equivalent under the line at an interest
rate of 3.77%. Payment of 1.6 million (approximately
$2.2 million at September 30, 2010) is due in
December 2010, payment of 2.2 million (approximately
$3.0 million at September 30, 2010) is due in
December 2011, payment of 2.8 million
69
(approximately $3.8 million at September 30,
2010) is due in December 2012 and payment of
3.3 million (approximately $4.5 million at
September 30, 2010) is due in December 2013. Interest
with respect to the line is paid every six months.
Promissory
Note
On August 31, 2001, Libbey Glass Inc. issued a $2,660,000
promissory note to Wells Fargo Bank Nebraska National
Association in connection with the purchase of its Laredo, Texas
warehouse facility. The promissory note is secured by a first
deed of trust on the real estate in Laredo. Pursuant to a
payment schedule, starting October 1, 2001, monthly
payments of $22,446.59 are made on the first day of each month
thereafter. Libbey Glass Inc. has the right to prepay any part
or all of the unpaid principal balance, at any time without
penalty, after the end of the fifth year from the date of the
promissory note. At September 30, 2010, the total amount
outstanding under the promissory note was $1.4 million.
Term
The promissory note matures on September 1, 2016.
Interest
The promissory note bears an interest rate of 6% per annum.
Covenants
None.
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DESCRIPTION
OF EXCHANGE NOTES
Definitions of certain terms used in this Description of
Exchange Notes may be found under the heading Certain
Definitions. For purposes of this section, (1) the
terms Company, Libbey Glass,
we, our and us refer only to
Libbey Glass Inc. and not to Libbey Inc. or any Subsidiaries of
Libbey Glass Inc., (2) the term outstanding
notes means the notes of the Company issued on
February 8, 2010, (3) the term exchange
notes means the notes offered hereby and (4) the term
notes means the exchange notes and the outstanding
notes (and any other notes issued pursuant to the Indenture (as
defined below)), in each case outstanding at any given time and
issued under the Indenture (as defined below). Certain other
defined terms used in this description but not defined herein
have the meanings assigned to them in the Indenture. The notes
are obligations solely of the Company, the Parent and the
Subsidiary Guarantors.
Libbey Glass issued the outstanding notes to the initial
purchases on February 8, 2010. The initial purchasers
subsequently resold the outstanding notes to qualified
institutional buyers pursuant to Rule 144A under the
Securities Act and to
non-U.S. persons
outside of the United States in reliance on Regulation S
under the Securities Act. Libbey Glass issued the outstanding
notes and will issue the exchange notes under an Indenture (the
Indenture) among itself, the Parent, the Subsidiary
Guarantors (together with the Parent, the Note
Guarantors) and The Bank of New York Mellon
Trust Company, N.A., as trustee (the Trustee).
The terms of the exchange notes are identical in all material
respects to the outstanding notes except that, upon completion
of the exchange offer, the exchange notes will be:
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registered under the Securities Act; and
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free of any covenants regarding exchange registration rights.
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In addition, the exchange notes are new issues of securities and
will not be listed on any securities exchange or included in any
automated quotation system. The Indenture contains provisions
that define your rights under the notes. In addition, the
Indenture governs the obligations of the Issuers and of each
Guarantor under the notes. The terms of the notes include those
stated in the Indenture and those made part of the Indenture by
reference to the Trust Indenture Act of 1939, as amended
(the Trust Indenture Act).
The following description is intended to be a useful overview of
the material provisions of the exchange notes and the Indenture.
Since the description of the exchange notes is only a summary,
you should refer to the Indenture for a complete description of
the obligations of Libbey Glass and your rights and the terms of
the Indenture will control in all respects. Libbey Glass will
make a copy of the Indenture available to the holders and to
prospective investors upon request. You may obtain a copy of the
Indenture from the Company at its address set forth elsewhere in
this prospectus. See Where You Can Find Additional
Information.
General
The
Exchange Notes
We will issue up to an aggregate principal amount of
$400.0 million of exchange notes in the exchange offering.
The exchange notes:
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are senior secured Obligations of Libbey Glass;
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are limited to an aggregate principal amount of
$400.0 million, subject to our ability to issue Additional
Notes;
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will mature on February 15, 2015;
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will be issued in minimum denominations of $2,000 and integral
multiples of $1,000 in excess thereof;
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will be represented by one or more registered notes in global
form, but in certain circumstances may be represented by notes
in definitive form. See Book-Entry Settlement and
Clearance;
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rank equally in right of payment to any future senior
Indebtedness of Libbey Glass and the Note Guarantors, without
giving effect to collateral arrangements;
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will be secured on a first-priority lien basis by the Notes
Priority Collateral (as defined below) and on a second-priority
lien basis by the Credit Agreement Priority Collateral (as
defined below), in each case subject to certain Permitted Liens;
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will be senior in right of payment to any existing or future
Subordinated Obligations of Libbey Glass;
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will be effectively senior to all Lenders Debt to the extent of
the value of the Notes Priority Collateral;
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will be structurally subordinated to all liabilities and
preferred stock of Non-Guarantor Restricted Subsidiaries;
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will be effectively subordinated to Lenders Debt to the extent
of the value of the Credit Agreement Priority
Collateral; and
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will be guaranteed on a senior secured basis (with the Lien
priorities described below) by Parent and each Subsidiary
Guarantor.
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Interest
Interest on the notes compounds semi-annually and:
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accrues at a rate per annum equal to 10%;
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accrues from the most recent date to which interest has been
paid or, if no interest has been paid, from February 8,
2010;
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is payable in cash semi-annually in arrears on February 15 and
August 15 (each an Interest Payment Date),
commencing on August 15, 2010;
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is payable to holders of record at the close of business on the
February 1 and August 1 immediately preceding the relevant
Interest Payment Date; and
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is computed on the basis of a
360-day year
comprised of twelve
30-day
months.
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Notwithstanding the foregoing, if any such Interest Payment Date
(other than an Interest Payment Date at maturity) would
otherwise be a day that is not a business day, then the interest
payment will be postponed to the next succeeding business day
(except if that business day falls in the next succeeding
calendar month, then interest will be paid on the immediately
preceding business day). If the maturity date of the notes is a
day that is not a business day, all payments to be made on that
day will be made on the next succeeding business day, with the
same force and effect as if made on the maturity date, and no
additional interest will be payable as a result of the delay in
payment.
Payments
on the Notes; Paying Agent and Registrar
We will pay principal of, premium, if any, and interest on the
notes at the office or agency designated by Libbey Glass in the
Borough of Manhattan, The City of New York, except that we may,
at our option, pay interest on the notes by check mailed to
holders of the notes at their registered addresses as they
appear in the Registrars books. We have initially
designated the corporate trust office of the Trustee in New
York, New York to act as our Paying Agent and Registrar. We may,
however, change the Paying Agent or Registrar without prior
notice to the holders of the notes, and Libbey Glass or any of
its Restricted Subsidiaries may act as Paying Agent or Registrar.
We will pay principal of, premium, if any, and interest on,
notes in global form registered in the name of or held by The
Depository Trust Company or its nominee in immediately
available funds to The Depository Trust Company or its
nominee, as the case may be, as the registered holder of the
global note.
Transfer
and Exchange
A holder may transfer or exchange notes in accordance with the
Indenture. The Registrar and the Trustee may require a holder,
among other things, to furnish appropriate endorsements and
transfer documents. No service charge will be imposed by Libbey
Glass, the Trustee or the Registrar for any registration of
transfer or exchange of notes, but Libbey Glass may require a
holder to pay a sum sufficient to cover any transfer tax or
other governmental
72
taxes and fees required by law or permitted by the Indenture.
Libbey Glass is not required to transfer or exchange any note
selected for redemption. Also, Libbey Glass is not required to
transfer or exchange any note for a period of 15 days
before a selection of notes to be redeemed.
The registered holder of the note will be treated as the owner
of it for all purposes.
Optional
Redemption
Except as described below, the notes are not redeemable until
August 15, 2012. On and after August 15, 2012, Libbey
Glass may redeem all or, from time to time, a part of the notes
upon not less than 30 nor more than 60 days notice,
at the following redemption prices (expressed as a percentage of
principal amount) plus accrued and unpaid interest on the notes,
if any, to the applicable 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 twelve-month period beginning on August 15 of the
years indicated below:
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Year
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Percentage
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2012
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105.00
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%
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2013
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102.50
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%
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2014 and thereafter
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100.00
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%
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Prior to August 15, 2012 Libbey Glass may on any one or
more occasions redeem up to 35% of the original principal amount
of the notes with the Net Cash Proceeds of one or more Equity
Offerings at a redemption price of 110% of the principal amount
thereof, plus any accrued and unpaid interest, or additional
interest 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 that
(1) at least 65% of the original principal amount of the
notes remains outstanding after each the redemption; and
(2) the redemption occurs within 90 days after the
closing of the Equity Offering.
In addition, at any time and from time to time prior to
August 15, 2012, but not more than once in any twelve-month
period, Libbey Glass may redeem in the aggregate, up to 10% of
the original aggregate principal amount of the notes at a
redemption price (expressed as a percentage of principal amount
thereof) of 103%, plus any accrued and unpaid interest and
additional interest, to the applicable 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 the optional redemption date is on or after an interest
record date and on or before the related interest payment date,
the accrued and unpaid interest, if any, will be paid to the
Person in whose name the note is registered at the close of
business, on the record date, and no additional interest will be
payable to holders whose notes will be subject to redemption by
Libbey Glass.
In the case of any partial redemption, selection of the notes
for redemption will be made by the Trustee in compliance with
the requirements of the principal national securities exchange,
if any, on which the notes are listed or, if the notes are not
listed, then on a pro rata basis, by lot or by an other method
as the Trustee in its sole discretion will 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 that
note will 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.
Libbey Glass is not required to make mandatory redemption
payments or sinking fund payments with respect to the notes.
Libbey Glass, the Parent or their Affiliates may acquire notes
by means other than a redemption, whether by tender offer, open
market purchases, negotiated transactions or otherwise, in
accordance with applicable securities laws, so long as such
acquisition does not otherwise violate the terms of the
Indenture upon such terms and at such prices as they may
determine and regardless of whether for cash or other
consideration.
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Ranking
The notes are general Obligations of Libbey Glass that rank
senior in right of payment to all existing and future
Indebtedness that is expressly subordinated in right of payment
to the notes. The notes rank equally in right of payment with
all existing and future liabilities of Libbey Glass that are not
so subordinated and will be effectively subordinated to all of
Libbey Glasss Obligations in respect of Lenders Debt to
the extent of the value of the Credit Agreement Priority
Collateral and to all liabilities of our Subsidiaries that do
not guarantee the notes. In addition, the notes are effectively
senior to the future and existing senior unsecured Indebtedness
and other liabilities, including trade payables, of Libbey
Glass, to the extent of the value of the Notes Priority
Collateral. The liens securing the notes are also
second-priority liens with respect to the Credit Agreement
Priority Collateral, while the liens securing Lenders Debt are
first-priority liens with respect to the Credit Agreement
Priority Collateral. Proceeds of the assets of Libbey Glass and
its Subsidiary Guarantors constituting Credit Agreement Priority
Collateral that secure Lenders Debt will be available to pay
Obligations on the notes and the Subsidiary Guarantees only
after all Lenders Debt has been repaid in full from such assets.
We advise you that there may not be sufficient assets remaining
to pay amounts due on any or all the notes and the Subsidiary
Guarantees then outstanding.
As of September 30, 2010:
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outstanding aggregate principal Indebtedness of Libbey Glass and
the Subsidiary Guarantors was $401.4 million, of which,
excluding the notes, $1.4 million would have been
secured; and
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Libbey Glass and the Subsidiary Guarantors had
$631.7 million of liabilities (excluding intercompany
liabilities and Guarantees of the Senior Secured Credit
Agreement and the Indenture).
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Note
Guarantees
The Note Guarantors have, jointly and severally, unconditionally
guaranteed on a senior secured basis Libbey Glasss
Obligations under the notes and all obligations under the
Indenture. Each Note Guarantee, along with such Note
Guarantors guarantee of Lenders Debt, is secured by the
Collateral. The notes have first priority with respect to the
Notes Priority Collateral. The Note Guarantees are effectively
subordinated to the Note Guarantors Obligations in respect
of Lenders Debt to the extent of the value of the Credit
Agreement Priority Collateral that secures Lenders Debt on a
first-priority basis as described below under
Collateral. Such Note Guarantors have agreed to pay,
in addition to the amount stated above, any and all costs and
expenses (including reasonable counsel fees and expenses)
Incurred by the Trustee or the holders in enforcing any rights
under the Note Guarantees. The Obligations of the Note
Guarantors under the Note Guarantees rank equally (without
giving effect to collateral arrangements) in right of payment
with other Indebtedness of the Note Guarantors, except to the
extent such other Indebtedness is expressly subordinated to the
Obligations arising under the Note Guarantees. All of the
domestic Subsidiaries of Libbey Glass are currently Subsidiary
Guarantors.
Although the Indenture limits the amount of indebtedness that
Restricted Subsidiaries may Incur, such indebtedness may be
substantial.
The Obligations of each Subsidiary Guarantor under its
Subsidiary Guarantee is limited as necessary to prevent that
Subsidiary Guarantee from constituting a fraudulent conveyance
or fraudulent transfer under applicable law.
In the event a Subsidiary Guarantor is sold or disposed of
(whether by merger, consolidation, the sale of its Capital Stock
or the sale of all or substantially all of its assets (other
than by lease) and whether or not the Subsidiary Guarantor is
the surviving corporation in such transaction) to a Person that
is not Libbey Glass or a Restricted Subsidiary of Libbey Glass,
such Subsidiary Guarantor will be released from its obligations
under its Subsidiary Guarantee if:
(1) the sale or other disposition is in compliance with the
Indenture, including the covenants Certain
Covenants Limitation on Sales of Assets and
Subsidiary Stock (it being understood that only such
portion of the Net Available Cash as is required to be applied
on or before the date of such release in accordance with the
terms of the Indenture needs to be applied in accordance
therewith at such time), Certain Covenants
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Limitation on Sale of Capital Stock of Restricted
Subsidiaries and Certain Covenants
Merger and Consolidation; and
(2) all the obligations of such Subsidiary Guarantor under
all Credit Facilities and related documentation and any other
agreements relating to any other Indebtedness of Libbey Glass or
its Restricted Subsidiaries terminate upon consummation of such
transaction.
If a Subsidiary Guarantor is released and discharged in full
from all of its obligations under its Guarantee of Indebtedness
under the Senior Secured Credit Agreement and all other
Indebtedness of Libbey Glass and its Restricted Subsidiaries,
then such Subsidiary Guarantor will be released from its
obligations under its Subsidiary Guarantee as specified under
the covenant Certain Covenants Future
Subsidiary Guarantors.
In addition, a Subsidiary Guarantor will be released from its
obligations under the Indenture, its Subsidiary Guarantee and
the Registration Rights Agreement if Libbey Glass designates
such Subsidiary as an Unrestricted Subsidiary and such
designation complies with the other applicable provisions of the
Indenture or in connection with any legal defeasance of the
notes or upon satisfaction and discharge of the Indenture, each
in accordance with the terms of the Indenture.
Collateral
Assets
Pledged as Collateral
The notes and the Note Guarantees have the benefit of the
Collateral, which consists of (i) the Notes Priority
Collateral, as to which the holders of the notes and holders of
any future Pari Passu Secured Indebtedness have a first-priority
security interest and the lenders under the Senior Secured
Credit Agreement have a second-priority security interest (in
each case subject to Permitted Liens), and (ii) the Credit
Agreement Priority Collateral, as to which the lenders under the
Senior Secured Credit Agreement have a first-priority security
interest, the holders of the notes have a second-priority
security interest and holders of any future Pari Passu Secured
Indebtedness may have a second-priority security interest (in
each case subject to Permitted Liens). Notwithstanding the
foregoing, in the event that the Company registers the notes or
the related exchange notes with the SEC pursuant to the
Registration Rights Agreement and at any time
Rule 3-16
of
Regulation S-X
under the Securities Act requires (or is replaced with another
rule or regulation or any other law, rule or regulation is
adopted, which would require) the filing with the SEC (or any
other governmental agency) of separate financial statements of
any Subsidiary of Libbey Glass due to the fact that such
Subsidiarys Capital Stock secures the notes or exchange
notes, then the Capital Stock of such Subsidiary shall at such
time automatically be deemed not to be part of the Collateral
securing the notes, but only to the extent necessary to not be
subject to such requirement. In such event, the Collateral
Documents may be amended or modified, without the consent of any
holder of notes or related exchange notes, to the extent
necessary to release the security interests on the shares of
Capital Stock that are so deemed to no longer constitute part of
the Collateral. For the avoidance of doubt, any requirement to
release a pledge of shares of Capital Stock (or any portion
thereof) of us or our subsidiaries for the reasons described in
the immediately preceding two sentences would not apply to or
affect the security interests granted to secure obligations in
respect of Lenders Debt.
Libbey Glass and the Note Guarantors has been able to incur
additional Indebtedness in the future which could share in all
or part of the Collateral. The amount of all such additional
Indebtedness are limited by the covenants disclosed under
Certain Covenants Limitation on Liens
and Certain Covenants Limitation on
Indebtedness. Under certain circumstances the amount of
such additional secured Indebtedness could be significant.
Notes
Priority Collateral
The Notes Priority Collateral will be pledged as collateral to
the Collateral Agent for the benefit of the Trustee, the
Collateral Agent and the holders of the notes. The notes and
Note Guarantees will be secured by first-priority security
interests in the Notes Priority Collateral, subject to certain
Permitted Liens. The Notes Priority Collateral
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generally consists of the following assets of Libbey Glass and
the Subsidiary Guarantors (and in the case of the Equity
Interests of Libbey Glass, Parent):
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certain owned real properties located in the United States owned
by Libbey Glass and the Subsidiary Guarantors and certain
personal property located at such real properties (other than
personal property constituting Credit Agreement Priority
Collateral);
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all equipment and fixtures; and
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all general intangibles, instruments, books and records and
supporting obligations related to the foregoing and proceeds of
the foregoing (other than intangibles that constitute Credit
Agreement Priority Collateral, accounts that are proceeds of the
sale of inventory and, for the avoidance of doubt, proceeds of
Credit Agreement Priority Collateral).
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Subject to Permitted Liens, only the notes and Note Guarantees
have the benefit of the first-priority security interest in the
Notes Priority Collateral. No other Indebtedness incurred by
Libbey Glass may share in the first-priority security interest
in the Notes Priority Collateral other than any Additional Notes
and certain future Indebtedness constituting Pari Passu Secured
Indebtedness.
Credit
Agreement Priority Collateral
The notes and Note Guarantees are also be secured by a
second-priority Lien on and security interest in the Credit
Agreement Priority Collateral, subject to Permitted Liens. The
Credit Agreement Priority Collateral generally
consists of all of the following assets of Libbey Glass and the
Subsidiary Guarantors:
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all accounts;
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all inventory;
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all patents, trademarks and copyrights;
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all deposit accounts and securities accounts (and all assets and
amounts contained therein but excluding (i) identifiable
proceeds of the Notes Priority Collateral and (ii) certain
special purpose and de minimis deposit accounts); and
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all of the Equity Interests of Libbey Glass held by Parent;
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all of the other Equity Interests held by Libbey Glass or any
Subsidiary Guarantor (which, in the case of any equity interest
in any Foreign Subsidiary, will be limited to 100% of the
non-voting stock (if any) and 65% of the voting stock of
first-tier Foreign Subsidiaries);
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all general intangibles, instruments, books and records and
supporting obligations related to the foregoing and proceeds of
the foregoing, in each case held by Libbey Glass and the Note
Guarantors.
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The notes second-priority Lien on and security interest in
the Credit Agreement Priority Collateral will be terminated and
automatically released if the Lien on such Credit Agreement
Priority Collateral in favor of the Credit Agreement Secured
Parties (as defined below) is released in connection with any
sale or other disposition of such Credit Agreement Priority
Collateral after the occurrence of an event of default under the
Senior Secured Credit Agreement permitting the acceleration of
the Lenders Debt or in connection with an enforcement action by
the collateral agent under the Senior Secured Credit Agreement.
Except as provided in the Intercreditor Agreement, holders of
Liens on the Credit Agreement Priority Collateral that are
junior relative to the holders of Lenders Debt, including
holders of the notes, will not be able to take any enforcement
action with respect to the Credit Agreement Priority Collateral
so long as any Lenders Debt is outstanding. The notes do not
have a lien on and security interest in any assets of any
Foreign Subsidiary (regardless of whether such assets are
pledged to the collateral agent under the Senior Secured Credit
Agreement), and, for the avoidance of doubt, such assets shall
not constitute Collateral for purposes of the
Indenture and the obligations of Libbey Glass and the Note
Guarantors under the Notes are effectively subordinated to
Indebtedness secured by a Lien on such assets, including Lenders
Debt.
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Collateral
Documents and Certain Related Intercreditor Provisions
Libbey Glass, the Note Guarantors, the Collateral Agent and the
Trustee have entered into a number of Collateral Documents
creating and establishing the terms of the security interests
and Liens that secure the notes and the Guarantees. These
security interests and Liens secure the payment and performance
when due of all of the Obligations of Libbey Glass and the Note
Guarantors under the notes, the Indenture, the Guarantees, the
Intercreditor Agreement and the Collateral Documents, as
provided in the Collateral Documents. Libbey Glass and the Note
Guarantors will use their commercially reasonable efforts to
complete on or prior to the Issue Date all filings and other
similar actions required in connection with the perfection of
such security interests. If they are not able to complete such
actions on or prior to the Issue Date, they will use their
commercially reasonable efforts to complete such actions as soon
as reasonably practicable after such date. The Trustee has been
appointed, pursuant to the Indenture, as the Collateral Agent.
The collateral agent under the Senior Secured Credit Agreement
and holders of Lenders Debt secured by Credit Agreement Priority
Collateral are referred to collectively as Credit
Agreement Secured Parties. The Trustee, Collateral Agent,
each holder of the notes, each other holder of, or obligee in
respect of, any Obligations in respect of the notes outstanding
at such time are referred to collectively as the
Noteholder Secured Parties.
Intercreditor
Agreement
Libbey Glass, the Note Guarantors, the Collateral Agent and the
collateral agent under the Senior Secured Credit Agreement
entered into the Intercreditor Agreement on the Issue Date.
Although the holders of the notes and the holders of Lenders
Debt are not party to the Intercreditor Agreement, by their
acceptance of the notes and Lenders Debt, respectively, they
will each agree to be bound thereby. The Indenture provides that
the Intercreditor Agreement may be amended from time to time
without the consent of the holders or the holders of Lenders
Debt to add other parties holding Pari Passu Secured
Indebtedness in each case to the extent permitted to be Incurred
under the Indenture and other applicable agreements. See
Amendments and Waivers.
The aggregate amount of the Obligations secured by the Credit
Agreement Priority Collateral may, subject to the limitations
set forth in the Indenture, be increased. The Obligations
secured by the Credit Agreement Priority Collateral consist of
or may consist of Indebtedness that is revolving in nature, and
the amount thereof that may be outstanding at any time or from
time to time may be increased or reduced and subsequently
reborrowed and such obligations may, subject to the limitations
set forth in the Indenture, be increased, extended, renewed,
replaced, restated, supplemented, restructured, repaid,
refunded, refinanced or otherwise amended or modified from time
to time, all without affecting the subordination of the Liens in
favor of the Noteholder Secured Parties (relative to those of
the Credit Agreement Secured Parties) or the provisions of the
Intercreditor Agreement defining the relative rights of the
parties thereto. The Lien priorities provided for in the
Intercreditor Agreement shall not be altered or otherwise
affected by any amendment, modification, supplement, extension,
increase, replacement, renewal, restatement or refinancing of
either the Obligations secured by the Credit Agreement Priority
Collateral or the Obligations secured by the Notes Priority
Collateral, by the release of any Collateral or of any
guarantees securing any Obligations secured by a lien or by any
action that any representative or secured party may take or fail
to take in respect of any Collateral.
Control
of Enforcement With Respect to the Credit Agreement Priority
Collateral and Application of Proceeds of Credit Agreement
Priority Collateral
Pursuant to the terms of the Intercreditor Agreement, prior to
the Discharge of Credit Agreement Obligations, the collateral
agent under the Senior Secured Credit Agreement will have the
exclusive right to control the time and method by which the
security interests in the Credit Agreement Priority Collateral
will be enforced, including, without limitation, following the
occurrence of an Event of Default under the Indenture. Prior to
the Discharge of Credit Agreement Obligations, the Noteholder
Secured Parties will not be permitted to enforce their security
interests in the Credit Agreement Priority Collateral even if an
Event of Default under the Indenture has occurred and the notes
have been accelerated except (a) in any insolvency or
liquidation proceeding, solely as necessary to file a proof of
claim or statement of interest with respect to the Obligations
under the notes and Note Guarantees, as applicable or
(b) certain protective actions in order to prove, preserve,
perfect or protect (but not enforce) its security interest and
rights in, and the perfection and priority of its Lien on, the
Credit Agreement Priority Collateral.
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Any proceeds from any Credit Agreement Priority Collateral
received at any time, including, without limitation, in any
insolvency or liquidation proceeding or pursuant to any
enforcement of remedies against the Credit Agreement Priority
Collateral, will be applied to repay the Lenders Debt in full
(including any post-petition interest thereon) until the
Discharge of Credit Agreement Obligations has occurred prior to
being applied to the repayment of any Obligations owing to the
Noteholder Secured Parties.
After the Discharge of Credit Agreement Obligations, the
Collateral Agent will distribute all cash proceeds (after
payment of the costs of enforcement and collateral
administration, including any amounts owed to the Trustee in its
capacity as Trustee or Collateral Agent) of the Credit Agreement
Priority Collateral received by it under the Collateral
Documents first, for the ratable benefit of the holders of the
notes and second, for the ratable benefit of the Noteholder
Secured Parties.
The proceeds from the sale of any Credit Agreement Priority
Collateral remaining after the satisfaction of all Obligations
under Lenders Debt may not be sufficient to satisfy the
Obligations under the Indenture and notes. The Intercreditor
Agreement will have similar provisions regarding the Collateral
Agents rights relative to those of the collateral agent
under the Senior Secured Credit Agreement with respect to the
Notes Priority Collateral.
No
Duties of Collateral Agent under the Senior Secured Credit
Agreement
The Intercreditor Agreement will provide that no Credit
Agreement Secured Party will generally have any duties or other
obligations to any Noteholder Secured Party with respect to the
Credit Agreement Priority Collateral, other than serving as
agent for perfection with respect to certain Credit Agreement
Priority Collateral. In addition, the Intercreditor Agreement
will further provide that, until the Discharge of Credit
Agreement Obligations, the collateral agent under the Senior
Secured Credit Agreement will be entitled, for the benefit of
the Credit Agreement Secured Parties, to sell, transfer or
otherwise dispose of or deal with such Credit Agreement Priority
Collateral without regard to any security interest that is
junior relative to those of the Credit Agreement Secured Parties
therein or any rights to which any Noteholder Secured Party
would otherwise be entitled as a result of such junior-priority
security interest. Without limiting the foregoing, the Trustee
and the Collateral Agent agreed in the Intercreditor Agreement
for the Noteholder Secured Parties, that no Credit Agreement
Secured Party will have any duty or obligation first to marshal
or realize upon the Credit Agreement Priority Collateral, or to
sell, dispose of or otherwise liquidate all or any portion of
the Credit Agreement Priority Collateral, in any manner that
would maximize the return to the Noteholder Secured Parties,
notwithstanding that the order and timing of any such
realization, sale, disposition or liquidation may affect the
amount of proceeds actually received by the Noteholder Secured
Parties from such realization, sale, disposition or liquidation.
The Intercreditor Agreement has similar provisions regarding the
duties owed to the Credit Agreement Secured Parties by the
Noteholder Secured Parties with respect to the Notes Priority
Collateral.
The Collateral Agent has agreed in the Intercreditor Agreement
for the Noteholder Secured Parties, that the Noteholder Secured
Parties will waive any claim that may be had against any Credit
Agreement Secured Party arising out of (i) any actions
which any Credit Agreement Secured Party takes or omits to take
(including, actions with respect to the creation, perfection or
continuation of Liens on any Credit Agreement Priority
Collateral, actions with respect to the foreclosure upon, sale,
release or depreciation of, or failure to realize upon, any of
the Credit Agreement Priority Collateral and actions with
respect to the collection of any claim for all or any part of
the Lenders Debt from any account debtor, guarantor or any other
party) or the valuation, use, protection or release of any
security for such Lenders Debt, (ii) any election by any
Credit Agreement Secured Party, in any proceeding instituted
under Title 11 of the United States Code (the
Bankruptcy Code) of the application of
Section 1111(b) of the Bankruptcy Code or (iii) any
borrowing of, or grant of a security interest or administrative
expense priority under Section 364 of the Bankruptcy Code
to, Parent, Libbey Glass or any of its Subsidiaries as
debtor-in-possession.
The Credit Agreement Secured Parties agreed to waive similar
claims with respect to the actions of any of the Noteholder
Secured Parties pursuant to the Intercreditor Agreement.
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No
Interference; Payment Over; Reinstatement
The Collateral Agent agreed in the Intercreditor Agreement for
the Noteholder Secured Parties, that prior to the Discharge of
Credit Agreement Obligations:
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it will not challenge or question in any proceeding the validity
or enforceability of any first-priority security interest in the
Credit Agreement Priority Collateral, the validity, attachment,
perfection or priority of any Lien held by any Credit Agreement
Secured Party, or the validity or enforceability of the
priorities, rights or duties established by or other provisions
of the Intercreditor Agreement;
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it will not take or cause to be taken any action the purpose or
intent of which is, or could be, to interfere, hinder or delay,
in any manner, whether by judicial proceedings or otherwise, any
sale, transfer or other disposition of the Credit Agreement
Priority Collateral by any Credit Agreement Secured Party;
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it will have no right to (A) direct any Credit Agreement
Secured Party to exercise any right, remedy or power with
respect to such Credit Agreement Priority Collateral or
(B) consent to the exercise by any Credit Agreement Secured
Party of any right, remedy or power with respect to such Credit
Agreement Priority Collateral;
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it will not institute any suit or assert in any suit,
bankruptcy, insolvency or other proceeding any claim against any
Credit Agreement Secured Party seeking damages from or other
relief by way of specific performance, instructions or otherwise
with respect to, and no Credit Agreement Secured Party will be
liable for, any action taken or omitted to be taken by any
Credit Agreement Secured Party with respect to such Credit
Agreement Priority Collateral;
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it will not object to any waiver or forbearance by the
collateral agent under the Senior Secured Credit Agreement from
or in respect of bringing or pursuing any foreclosure proceeding
or action or any other exercise of any rights or remedies
relating to the Credit Agreement Priority Collateral;
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it will not seek, and will waive any right, to have any Credit
Agreement Priority Collateral or any part thereof marshaled upon
any foreclosure or other disposition of such Credit Agreement
Priority Collateral; and
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it will not attempt, directly or indirectly, whether by judicial
proceedings or otherwise, to challenge the enforceability of any
provision of the Intercreditor Agreement.
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If any Credit Agreement Secured Party is required in any
insolvency or liquidation proceeding or otherwise to turn over
or otherwise pay any amount to the estate of Libbey Glass or any
Note Guarantor (or any trustee, receiver or similar person
therefor), because the payment of such amount was declared to be
fraudulent or preferential in any respect or for any other
reason, such amount (a Recovery) whether received as
proceeds of security, enforcement of any right of setoff or
otherwise, then as among the parties to the Intercreditor
Agreement, the Lenders Debt shall be deemed to be reinstated to
the extent of such Recovery and to be outstanding as if such
payment had not occurred and such holder of Lenders Debt shall
be entitled to a reinstatement of Lenders Debt with respect to
all such recovered amounts and shall have all rights under the
Intercreditor Agreement. If the Intercreditor Agreement was
terminated (in whole or in part) prior to such Recovery, the
Intercreditor Agreement shall be reinstated in full force and
effect, and such prior termination shall not diminish, release,
discharge, impair or otherwise affect the obligations of the
parties thereto. Any Credit Agreement Priority Collateral
received by a Noteholders Secured Party prior to the time of
such Recovery shall be deemed to have been received prior to the
Discharge of Credit Agreement Obligations and subject to the
provisions of the immediately preceding paragraph. The Credit
Agreement Secured Parties will agree to similar limitations with
respect to their rights in the Notes Priority Collateral and
their ability to bring a suit against the Collateral Agent or
the holders of the notes pursuant to the Intercreditor Agreement.
The Trustee and the Collateral Agent agreed in the Intercreditor
Agreement for the Noteholder Secured Parties that if any
Noteholder Secured Party obtains possession of the Credit
Agreement Priority Collateral or realizes any proceeds or
payment in respect of the Credit Agreement Priority Collateral,
pursuant to any Collateral Document or by the exercise of any
rights available to it under applicable law or in any
bankruptcy, insolvency or similar proceeding or through any
other exercise of remedies, at any time prior to the Discharge
of Credit Agreement Obligations, then it will (to the extent
still in its possession, in the case of the Collateral Agent or
the Trustee) hold
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such Credit Agreement Priority Collateral, proceeds or payment
in trust for the Credit Agreement Secured Parties and transfer
such Credit Agreement Priority Collateral, proceeds or payment,
as the case may be, to the collateral agent under the Senior
Secured Credit Agreement. The Trustee and the Collateral Agent
further agreed in the Intercreditor Agreement for the Noteholder
Secured Parties that if, at any time, all or part of any payment
with respect to any Lenders Debt secured by any Credit Agreement
Priority Collateral previously made shall be rescinded for any
reason whatsoever, it will (to the extent still in its
possession, in the case of the Collateral Agent or the Trustee)
promptly pay over to the collateral agent under the Senior
Secured Credit Agreement any payment received by it in respect
of any such Credit Agreement Priority Collateral and shall
promptly turn any such Credit Agreement Priority Collateral then
held by it over to the collateral agent under the Senior Secured
Credit Agreement, and the provisions set forth in the
Intercreditor Agreement will be reinstated as if such payment
had not been made, until the payment and satisfaction in full of
such Lenders Debt. The Credit Agreement Secured Parties are
subject to similar limitations with respect to the Notes
Priority Collateral and any proceeds or payments in respect of
any Notes Priority Collateral pursuant to the Intercreditor
Agreement.
In addition, so long as the Discharge of Credit Agreement
Obligations has not occurred, the Collateral Agent shall not
acquire or hold any Lien on any assets of Libbey Glass or any
Guarantor (and neither Libbey Glass nor any Guarantor shall
grant such Lien) securing any Obligations under the notes or the
Note Guarantees that are not also subject to the first-priority
Lien (in the case of Credit Agreement Priority Collateral) or
second-priority Lien (in the case of Notes Priority Collateral)
in favor of the collateral agent under the Senior Secured Credit
Agreement for the benefit of the holders of Lenders Debt. If the
Collateral Agent shall acquire or hold any Lien on any assets of
Libbey Glass or a Guarantor that is not also subject to the Lien
in favor of the collateral agent under the Senior Secured Credit
Agreement for the benefit of the holders of Lenders Debt, then
the Collateral Agent, as the case may be, shall, without the
need for any further consent of any party and notwithstanding
anything to the contrary in any other document, be deemed to
also hold and have held such Lien for the benefit of the
collateral agent under the Senior Secured Credit Agreement as
security for the Lenders Debt (subject to the applicable Lien
priority and other terms of the Intercreditor Agreement). Other
than with respect to Foreign Subsidiaries and Foreign Assets,
the collateral agent under the Senior Secured Credit Agreement
is subject to similar limitations and requirements in favor of
the Collateral Agent with respect to the Notes Priority
Collateral pursuant to the Intercreditor Agreement.
Entry
Upon Premises and Use of Equipment and Fixtures by Collateral
Agent under the Senior Secured Credit Agreement and Holders of
Lenders Debt
The Intercreditor Agreement provides that if the collateral
agent under the Senior Secured Credit Agreement takes any
enforcement action with respect to the Credit Agreement Priority
Collateral, the Noteholder Secured Parties (i) will
cooperate with the collateral agent under the Senior Secured
Credit Agreement in its efforts to enforce its security interest
in the Credit Agreement Priority Collateral and to finish any
work-in-process
and assemble the Credit Agreement Priority Collateral,
(ii) will not hinder or restrict in any respect the
collateral agent under the Senior Secured Credit Agreement from
enforcing its security interest in the Credit Agreement Priority
Collateral or from finishing any
work-in-process
or assembling the Credit Agreement Priority Collateral, and
(iii) will, subject to the rights of any landlords under
real estate leases, permit the collateral agent under the Senior
Secured Credit Agreement, its employees, agents, advisers and
representatives, at the sole cost and expense of the Credit
Agreement Secured Parties, to enter upon and use real property
constituting part of the Notes Priority Collateral and to use
equipment and fixtures constituting part of the Notes Priority
Collateral for a period not to exceed 180 days after the
taking of such enforcement action, for purposes of
(A) assembling and storing the Credit Agreement Priority
Collateral and completing the processing of and turning into
finished goods of any Credit Agreement Priority Collateral
consisting of
work-in-process,
(B) selling any or all of the Credit Agreement Priority
Collateral located on real property constituting part of such
Notes Priority Collateral, whether in bulk, in lots or to
customers in the ordinary course of business or otherwise,
(C) removing any or all of the Credit Agreement Priority
Collateral located on real property constituting part of such
Notes Priority Collateral, or (D) taking reasonable actions
to protect, secure, and otherwise enforce the rights of the
Credit Agreement Secured Parties in and to the Credit Agreement
Priority Collateral; provided, however, that
nothing contained in the Intercreditor Agreement restricts the
rights of the Collateral Agent from selling, assigning or
otherwise transferring any Notes Priority Collateral prior to
the expiration of such
180-day
period if the purchaser, assignee or transferee thereof agrees
to be bound by the provisions of the Intercreditor Agreement. If
any stay or other order prohibiting the exercise of
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remedies with respect to the Credit Agreement Priority
Collateral has been entered by a court of competent
jurisdiction, such
180-day
period shall be tolled during the pendency of any such stay or
other order. If the collateral agent under the Senior Secured
Credit Agreement conducts a public auction or private sale of
the Credit Agreement Priority Collateral at any of the real
property included within the Notes Priority Collateral, the
collateral agent under the Senior Secured Credit Agreement shall
provide the Collateral Agent with reasonable notice and use
reasonable efforts to hold such auction or sale in a manner
which would not unduly disrupt the Collateral Agents use
of such real property.
During the period of actual occupation, use or control by the
collateral agent under the Senior Secured Credit Agreement or
the holders of Lenders Debt or their agents or representatives
of any Notes Priority Collateral, the Credit Agreement Secured
Parties will be obligated to repair at their expense any
physical damage to such Notes Priority Collateral or other
assets or property resulting from such occupancy, use or
control, ordinary wear and tear excepted.
Agreements
With Respect to Bankruptcy or Insolvency
Proceedings
If the collateral agent under the Senior Secured Credit
Agreement consents to financing (DIP Financing) to
be provided by one or more lenders (the DIP Lenders)
under Section 364 of the Bankruptcy Code which is to be
secured by any Credit Agreement Priority Collateral or the use
of cash collateral representing proceeds of Credit Agreement
Priority Collateral under Section 363 of the Bankruptcy
Code, the Trustee will agree in the Intercreditor Agreement for
the Noteholder Secured Parties, that it will raise no objection
to any such financing or to the Liens on the Credit Agreement
Priority Collateral securing the same (DIP Financing
Liens) or to any use of cash collateral that constitutes
Credit Agreement Priority Collateral, unless such DIP Financing,
DIP Financing Liens or use of cash collateral is not permitted
under the Lenders Debt so long as:
(i) either (x) all DIP Financing Liens are senior to,
or rank pari passu with, the Liens of the Lenders Debt in
such Credit Agreement Priority Collateral (in which case, the
Collateral Agent will agree for the Noteholder Secured Parties,
to subordinate the Liens of the Noteholder Secured Parties in
such Credit Agreement Priority Collateral to the Liens of the
Lenders Debt in such Credit Agreement Priority Collateral and
the DIP Financing Liens) or (y) the Liens of the Collateral
Agent are not subordinated to such DIP Financing Liens;
(ii) the Noteholder Secured Parties retain liens on all the
Credit Agreement Priority Collateral, including proceeds thereof
arising after the commencement of such proceeding, with the same
priority as existed prior to the commencement of the case under
the Bankruptcy Code, subject to any super-priority ranking of
liens in favor of the DIP Lenders as provided above and any
carve out for administrative expenses agreed to by
the collateral agent under the Senior Secured Credit
Agreement; and
(iii) no Noteholder Secured Party is required (without its
consent) to lend or incur any monetary obligation in connection
with such DIP Financing.
The Credit Agreement Secured Parties agreed to similar
provisions with respect to any DIP Financing and DIP Financing
Liens related to the Notes Priority Collateral.
The Trustee and the Collateral Agent agreed in the Intercreditor
Agreement for each of the Noteholder Secured Parties that it
will:
(i) not object to or oppose a sale or other disposition of
any Credit Agreement Priority Collateral (or any portion
thereof) under Section 363 of the Bankruptcy Code or any
other provision of the Bankruptcy Code if the Credit Agreement
Secured Parties shall have consented to such sale or disposition
of such Credit Agreement Priority Collateral and the proceeds of
such sale or disposition are applied in accordance with the
Intercreditor Agreement. Notwithstanding the foregoing, the
Intercreditor Agreement shall not be construed to prohibit the
Noteholder Secured Parties from exercising a credit bid in a
sale or other disposition of Credit Agreement Priority
Collateral under Section 363 of the Bankruptcy Code;
provided that in connection with and immediately after
giving effect to any such sale pursuant to such credit bid there
occurs a Discharge of Credit Agreement Obligations;
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(ii) not object to or otherwise contest (or support any
other Person contesting), any motion for relief from the
automatic stay or from any injunction against foreclosure or
enforcement in respect of the Credit Agreement Priority
Collateral made by the Credit Agreement Secured Parties;
(iii) until the Discharge of Credit Agreement Obligations,
not seek relief from the automatic stay or any other stay in any
insolvency or liquidation proceeding in respect of the Credit
Agreement Priority Collateral, without the prior written consent
of the collateral agent under the Senior Secured Credit
Agreement;
(iv) not object to, or otherwise contest (or support any
Person contesting), (a) any request by the Credit Agreement
Secured Parties for adequate protection on account of the Credit
Agreement Priority Collateral or (b) any objection by the
Credit Agreement Secured Parties to any motion, relief, action
or proceeding based on the collateral agent under the Senior
Secured Credit Agreements or such holder of Lenders
Debts claiming a lack of adequate protection with respect
to the Credit Agreement Priority Collateral;
(v) until the Discharge of Credit Agreement Obligations,
not assert or enforce (or support any Person asserting or
enforcing) any claim under Section 506(c) of the Bankruptcy
Code pari passu with the Liens on the Credit Agreement
Priority Collateral securing the Lenders Debt for costs or
expenses of preserving or disposing any Credit Agreement
Priority Collateral; and
(vi) not oppose or otherwise contest (or support any other
Person contesting) any lawful exercise by the Credit Agreement
Secured Parties of the right to credit bid at any sale of Credit
Agreement Priority Collateral.
In addition, no Noteholder Secured Party will file or prosecute
in any insolvency or liquidation proceeding any motion for
adequate protection (or any comparable request for relief) based
upon their respective security interests in the Credit Agreement
Priority Collateral, except that:
(i) any of them may freely seek and obtain relief granting
a junior Lien co-extensive in all respects with, but
subordinated to, all Liens granted in the insolvency or
liquidation proceeding to, or for the benefit of, the holders of
Lenders Debt (and the Intercreditor Agreement will provide that
the Credit Agreement Secured Parties will not object to the
granting of such junior Lien); and
(ii) any of them may freely seek and obtain any relief upon
a motion for adequate protection (or any comparable relief),
without any condition or restriction whatsoever, at any time
after the Discharge of Credit Agreement Obligations.
Without limiting the generality of any provisions of the
Intercreditor Agreement, any vote to accept, and any other act
to support the confirmation or approval of any Non-Conforming
Plan of Reorganization shall be inconsistent with and,
accordingly, a violation of the terms of the Intercreditor
Agreement, and the collateral agent under the Senior Secured
Credit Agreement shall be entitled to have any such vote to
accept a Non-Conforming Plan of Reorganization dismissed and any
such support of any Non-Conforming Plan of Reorganization
withdrawn.
The Collateral Agent agreed in the Intercreditor Agreement for
the Noteholder Secured Parties that (a) the Noteholder
Secured Parties claims against Libbey Glass and the Note
Guarantors in respect of the Credit Agreement Priority
Collateral constitutes junior claims separate and apart (and of
a different class) from the senior claims of the holders of
Lenders Debt against Libbey Glass and the Note Guarantors in
respect of the Credit Agreement Priority Collateral,
(b) the Lenders Debt includes all interest that accrues
after the commencement of any insolvency or liquidation
proceeding of Libbey Glass or any Guarantor at the rate provided
for in the Credit Agreement, regardless of whether a claim for
post-petition interest is allowed or allowable in any such
insolvency or liquidation proceeding and (c) the
Intercreditor Agreement constitutes a subordination
agreement under Section 510 of the Bankruptcy Code.
The Credit Agreement Secured Parties are subject to similar
limitations in favor of the Noteholder Secured Parties pursuant
to the Intercreditor Agreement.
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Insurance
Until written notice by the collateral agent under the Senior
Secured Credit Agreement to the Trustee that the Discharge of
Credit Agreement Obligations has occurred, as between the
collateral agent under the Senior Secured Credit Agreement, on
the one hand, and the Noteholders Secured Parties, on the other
hand, only the collateral agent under the Senior Secured Credit
Agreement will have the right (subject to the rights of Libbey
Glass and the Note Guarantors under the documents related to the
Senior Secured Credit Agreement) to adjust or settle any
insurance policy or claim covering or constituting Credit
Agreement Priority Collateral in the event of any covered loss
thereunder and to approve any award granted in any condemnation
or similar proceeding affecting the Credit Agreement Priority
Collateral. All proceeds of such claims will be applied as
provided in the Senior Secured Credit Agreement. Unless and
until written notice by the Trustee to the collateral agent
under the Senior Secured Credit Agreement that the obligations
under the Indenture and the notes have been paid in full, as
between the collateral agent under the Senior Secured Credit
Agreement on the one hand, and the Trustee and the Collateral
Agent, as the case may be, on the other hand, only the
Collateral Agent will have the right (subject to the rights of
the Grantors under the documents related to the notes) to adjust
or settle any insurance policy or claim covering or constituting
Notes Priority Collateral in the event of any covered loss
thereunder and to approve any award granted in any condemnation
or similar proceeding solely affecting the Notes Priority
Collateral. All proceeds of such claims will be applied as
provided in the Indenture. To the extent that an insured loss
covers or constitutes both Credit Agreement Priority Collateral
and Notes Priority Collateral, then the collateral agent under
the Senior Secured Credit Agreement and the Collateral Agent
will work jointly and in good faith to collect, adjust or settle
(subject to the rights of Libbey Glass and the Note Guarantors
under the documents related to the Senior Secured Credit
Agreement and the notes) under the relevant insurance policy.
Refinancings
of Lenders Debt and the Notes
The Obligations in respect of Lenders Debt and the obligations
under the Indenture may be refinanced or replaced, in whole or
in part, in each case without notice to or the consent of
(except to the extent a consent is otherwise required to permit
the refinancing transaction under the Senior Secured Credit
Agreement or any security document related thereto or the
Indenture and the Collateral Documents, as applicable) the
Credit Agreement Secured Parties or any Noteholder Secured
Party, all without affecting the Lien priorities provided for in
the Intercreditor Agreement; provided, however,
that the holders of any such refinancing or replacement
Indebtedness (or an authorized agent or trustee on their behalf)
bind themselves in writing to the terms of the Intercreditor
Agreement pursuant to such documents or agreements (including
amendments or supplements to the Intercreditor Agreement) as the
collateral agent under the Senior Secured Credit Agreement or
the Collateral Agent, as the case may be, shall reasonably
request and in form and substance reasonably acceptable to the
collateral agent under the Senior Secured Credit Agreement or
Collateral Agent, as the case may be.
In addition, if at any time in connection with or after the
Discharge of Credit Agreement Obligations, Libbey Glass enters
into any refinancing of Lenders Debt secured by the Credit
Agreement Priority Collateral on a first-priority basis, then
such Discharge of Credit Agreement Obligations shall
automatically be deemed not to have occurred for all purposes of
the Intercreditor Agreement, the Senior Secured Credit Agreement
and the Indenture, and the obligations under such refinancing
shall automatically be treated as Lenders Debt for all purposes
of the Intercreditor Agreement, including for purposes of the
Lien priorities and rights in respect of Credit Agreement
Priority Collateral set forth therein.
In connection with any refinancing or replacement contemplated
by the foregoing paragraph, the Intercreditor Agreement may be
amended at the request and sole expense of Libbey Glass, and
without the consent of any holder of notes, (a) to add
parties (or any authorized agent or trustee therefor) providing
any such refinancing or replacement Indebtedness in compliance
with the Senior Secured Credit Agreement and the Indenture,
(b) to establish that Liens on any Notes Priority
Collateral securing such refinancing or replacement Indebtedness
shall have the same priority (or junior priority) as the Liens
on any Notes Priority Collateral securing the Indebtedness being
refinanced or replaced and (c) to establish that the Liens
on any Credit Agreement Priority Collateral securing such
refinancing or replacement indebtedness shall have the same
priority (or junior priority) as the Liens on any Credit
Agreement Priority Collateral securing the Indebtedness being
refinanced or replaced, all on the terms provided for herein
immediately prior to such refinancing or replacement.
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Subject to the terms of the Collateral Documents, Libbey Glass
and the Note Guarantors will have the right to remain in
possession and retain exclusive control of the Collateral
securing the notes, to freely operate the Collateral and to
collect, invest and dispose of any income therefrom. See
Risk Factors Risks Related to the
Notes In the event of a bankruptcy, the ability of
the holders of the notes to realize upon the collateral will be
subject to certain bankruptcy law limitations.
Sufficiency
of Collateral
By its nature, portions of the Collateral may be illiquid and
may have no readily ascertainable market value. The fair market
value of the Collateral is subject to fluctuations based on
factors that include, among others, the condition of Libbey
Glasss industry, the ability to sell the Collateral in an
orderly sale, general economic conditions, the availability of
buyers and similar factors. The amount to be received upon a
sale of the Collateral would also be dependent on numerous
factors, including, but not limited to, the actual fair market
value of the Collateral at such time and the timing and the
manner of the sale. Accordingly, there can be no assurance that
the Collateral can be sold in a short period of time or in an
orderly manner. In addition, in the event of a bankruptcy, the
ability of the holders to realize upon any of the Collateral may
be subject to certain bankruptcy law limitations as described
below.
Certain
Covenants with Respect to the Collateral
The Collateral will be pledged pursuant to the Collateral
Documents, which contain provisions relating to the
administration, preservation and disposition of the Collateral.
The following is a summary of some of the covenants and
provisions set forth in the Collateral Documents and the
Indenture as they relate to the Collateral.
Maintenance of Collateral. The Indenture
and/or the
Collateral Documents provide that Libbey Glass and the Note
Guarantors shall maintain the Collateral in good, safe and
insurable operating order, condition and repair (ordinary wear
and tear excepted) and do all other acts as may be reasonably
necessary or appropriate to maintain and preserve the value of
the Collateral, except where the failure to maintain such value
would not have a material adverse effect on the Collateral. The
Indenture
and/or the
Collateral Documents also provide that Libbey Glass and the Note
Guarantors shall pay all real estate and other taxes (except for
those being contested in good faith and for which adequate
reserves have been made), and maintain in full force and effect
all material permits and certain insurance coverages, except to
the extent that the failure to maintain such permits and
coverages follows the sale, in accordance with the Indenture, of
the assets to which such permits or coverages relate or where
such failure would not have a material adverse effect on the
Collateral.
Further Assurances. Libbey Glass and the Note
Guarantors shall execute any and all further documents,
financing statements, agreements and instruments, and take all
further action that may be required under applicable law, or
that the Collateral Agent may reasonably request, in order to
grant, preserve, protect and perfect the validity and priority
of the security interests and Liens created or intended to be
created by the Collateral Documents in the Collateral. In
addition, from time to time, Libbey Glass will reasonably
promptly secure the obligations under the Indenture, Collateral
Documents and Intercreditor Agreement by pledging or creating,
or causing to be pledged or created, perfected security
interests and Liens with respect to the Collateral. Such
security interests and Liens will be created under the
Collateral Documents and other security agreements, mortgages,
deeds of trust and other instruments and documents in form and
substance substantially consistent with the Collateral Documents
as in effect immediately after the Issue Date.
As necessary, or upon reasonable request of the Collateral Agent
or the Trustee, Libbey Glass and the Note Guarantors shall, at
their sole expense, execute, acknowledge and deliver such
documents and instruments and take such other actions, as may be
necessary or as the Collateral Agent or the Trustee may
reasonably request to create, protect, assure, perfect, transfer
and confirm the Liens, benefits, property and rights conveyed or
intended to be conveyed by the Indenture or the Collateral
Documents for the benefit of the holders and the Trustee,
including with respect to after-acquired Collateral.
Real Estate Mortgages and Filings. With
respect to any fee interest in certain real property interests
identified in a schedule to the Indenture (individually and
collectively, the Premises) owned by Libbey Glass or
a
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Note Guarantor on the Issue Date or acquired by Libbey Glass or
a Note Guarantor after the Issue Date that secures Lenders Debt:
(1) Within 45 days of the Issue Date Libbey Glass
delivered to the Collateral Agent, as mortgagee or beneficiary,
as applicable, fully executed counterparts of Mortgages, each
dated as of the date such property is pledged to secure Lenders
Debt, in accordance with the requirements of the Indenture
and/or the
Collateral Documents, duly executed by Libbey Glass or the
applicable Note Guarantor, together with evidence of the
completion (or satisfactory arrangements for the completion) of
all recordings and filings of such Mortgage (and payment of any
taxes or fees in connection therewith) as may be necessary to
create a valid, perfected first-priority Lien (subject to
Permitted Liens) against the properties purported to be covered
thereby;
(2) the Collateral Agent received mortgagees title
insurance policies in favor of the Collateral Agent, as
mortgagee for the ratable benefit of itself and the Trustee, the
holders of the notes and holders of any Pari Passu Secured
Indebtedness, in the form necessary, with respect to the
property purported to be covered by such Mortgage, to insure
that the interests created by the Mortgage constitute valid
first-priority Liens on such property free and clear of all
Liens, defects and encumbrances (other than Permitted Liens),
each such title insurance policy is in an amount reasonably
satisfactory to the Collateral Agent and such policies include,
to the extent available at a commercially reasonable premium,
the endorsements equivalent to those delivered in connection
with Lenders Debt and were accompanied by evidence of the
payment in full of all premiums thereon; and
(3) Libbey Glass, or each Note Guarantor, delivered to the
Collateral Agent, with respect to each of the covered Premises,
such filings, surveys (or any updates or affidavits that the
title company may reasonably require as necessary to issue the
title insurance policies), local counsel opinions, landlord
agreements and fixture filings, along with such other documents,
instruments, certificates and agreements, as the Collateral
Agent and its counsel reasonably required to create, evidence or
perfect a valid first-priority Lien on the property subject to
each such Mortgage (subject to Permitted Liens).
Foreclosure
Upon the occurrence and during the continuance of an Event of
Default, the Collateral Documents provide for (among other
available remedies) the foreclosure upon and sale of the
applicable Collateral by the Collateral Agent and the
distribution of the Net Proceeds of any such sale to the holders
of the notes, subject to any prior Liens on the Collateral and
the provisions of the Intercreditor Agreement. The Intercreditor
Agreement imposes severe restrictions upon the ability of the
Collateral Agent to pursue foreclosure of Credit Agreement
Priority Collateral. See Intercreditor
Agreement. In the event of foreclosure on the Collateral,
the proceeds from the sale of the Collateral may not be
sufficient to satisfy in full Libbey Glasss obligations
under the notes.
Certain
Bankruptcy Limitations
The right of the Collateral Agent to repossess and dispose of
the Collateral upon the occurrence of an Event of Default would
be significantly impaired by applicable bankruptcy law in the
event that a bankruptcy case were to be commenced by or against
Libbey Glass or any Note Guarantor prior to the Collateral Agent
having repossessed and disposed of the Collateral. Upon the
commencement of a case for relief under Title 11 of the
United States Code, as amended (the Bankruptcy
Code), a secured creditor such as the Collateral Agent is
prohibited from repossessing its security from a debtor in a
bankruptcy case, or from disposing of security repossessed from
the debtor or any other Collateral, without bankruptcy court
approval.
In view of the broad equitable powers of a U.S. bankruptcy
court, it is impossible to predict how long payments under the
notes could be delayed following commencement of a bankruptcy
case, whether or when the Collateral Agent could repossess or
dispose of the Collateral, the value of the Collateral at the
time of the bankruptcy petition or whether or to what extent
holders of the notes would be compensated for any delay in
payment or loss of value of the Collateral. The Bankruptcy Code
permits only the payment
and/or
accrual of post-petition interest, costs and attorneys
fees to a secured creditor during a debtors bankruptcy
case to the extent the value of the Collateral is determined by
the bankruptcy court to exceed the aggregate outstanding
principal amount of the obligations secured by the Collateral,
including any obligation secured on a priority basis.
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Furthermore, in the event a bankruptcy court determines that the
value of the Collateral is not sufficient to repay all amounts
due on the notes after payment of any priority claims, the
holders of the notes would hold secured claims only to the
extent of the value of the Collateral to which the holders of
the notes are entitled, and unsecured claims with respect to
such shortfall.
Release
Release
of Collateral
Libbey Glass and the Note Guarantors will be entitled to the
releases of property and other assets included in the Collateral
from the Liens securing the notes under any one or more of the
following circumstances:
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to enable the disposition of such property or assets to the
extent not prohibited under the covenant described under
Certain Covenants Limitation on
Sales of Assets and Subsidiary Stock;
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the release of Excess Proceeds that remain unexpended after the
conclusion of an Asset Disposition Offer conducted in accordance
with the Indenture;
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in the case of a Note Guarantor that is released from its Note
Guarantee, the release of the property and assets of such Note
Guarantor; or
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as described under Amendments and
Waivers below.
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The second-priority lien on the Credit Agreement Priority
Collateral securing the notes will terminate and be released
automatically if the first-priority liens on the Credit
Agreement Priority Collateral are released by the collateral
agent under the Senior Secured Credit Agreement in connection
with a sale, transfer or disposition of Credit Agreement
Priority Collateral that occurs after the occurrence of an event
of default under the Senior Secured Credit Agreement permitting
the acceleration of the Lenders Debt or in connection with the
foreclosure of, or other exercise of remedies with respect to,
such Credit Agreement Priority Collateral by the collateral
agent under the Senior Secured Credit Agreement (except with
respect to any proceeds of such sale, transfer or disposition
that remain after the Discharge of Credit Agreement Obligations).
The security interests in all Collateral securing the notes and
Note Guarantees also will be released upon (i) payment in
full of the principal of, together with accrued and unpaid
interest on, the notes and all other Obligations under the
Indenture, the Note Guarantees under the Indenture and the
Collateral Documents that are due and payable at or prior to the
time such principal, together with accrued and unpaid interest,
are paid or (ii) a legal defeasance or covenant defeasance
under the Indenture as described below under
Defeasance or a discharge of the
Indenture in accordance with the satisfaction and discharge
provisions therein.
Change of
Control
If a Change of Control occurs, each holder will have the right
to require Libbey Glass to repurchase all or any part (equal to
$2,000 or an integral multiple of $1,000 in excess thereof) of
such holders notes at a purchase price in cash equal to
101% of the principal amount of the notes plus accrued and
unpaid interest, if any, to the date of purchase (subject to the
right of holders of record on the relevant record date to
receive interest due on the relevant interest payment date).
Within 30 days following any Change of Control, Libbey
Glass will mail a notice (the Change of Control
Offer) to each holder, with a copy to the Trustee, stating:
(1) that a Change of Control has occurred and that such
holder has the right to require Libbey Glass to purchase such
holders notes at a purchase price in cash equal to 101% of
the principal amount of such notes 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) (the Change of Control
Payment);
(2) the repurchase date (which shall be no earlier than
30 days nor later than 60 days from the date such
notice is mailed) (the Change of Control Payment
Date); and
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(3) the procedures determined by Libbey Glass, consistent
with the Indenture, that a holder must follow in order to have
its notes repurchased.
On the Change of Control Payment Date, Libbey Glass will, to the
extent lawful:
(1) accept for payment all notes or portions of notes (in
minimum denominations of $2,000 or integral multiples of $1,000
in excess thereof) properly tendered pursuant to the Change of
Control Offer;
(2) deposit with the paying agent an amount equal to the
Change of Control Payment in respect of all notes or portions of
notes so tendered; and
(3) deliver or cause to be delivered to the Trustee the
notes so accepted together with an Officers Certificate
stating the aggregate principal amount of notes or portions of
notes being purchased by Libbey Glass.
The paying agent will promptly mail to each holder of notes so
tendered the Change of Control Payment for such notes, and the
Trustee will promptly authenticate and mail (or cause to be
transferred by book-entry) to each holder a new note equal in
principal amount to any unpurchased portion of the notes
surrendered, if any; provided that each such new note
will be in a principal amount of $2,000 or an integral multiple
of $1,000 in excess thereof.
If the Change of Control Payment Date is on or after an interest
record date and on or before the related interest payment date,
any accrued and unpaid interest, if any, will be paid to the
Person in whose name a note is registered at the close of
business on such record date, and no additional interest will be
payable to holders who tender pursuant to the Change of Control
Offer.
The Change of Control provisions described above are applicable
whether or not any other provisions of the Indenture are
applicable. Except as described above with respect to a Change
of Control, the Indenture does not contain provisions that
permit the holders to require that Libbey Glass repurchase or
redeem the notes in the event of a takeover, recapitalization or
similar transaction.
Libbey Glass will publicly announce the results of the Change of
Control Offer on or as soon as practicable after the Change of
Control Payment Date.
Libbey Glass will not be required to make a Change of Control
Offer upon a Change of Control if (i) a third party makes
the Change of Control Offer in the manner, at the times and
otherwise in compliance with the requirements set forth in the
Indenture applicable to a Change of Control Offer made by Libbey
Glass and purchases all notes validly tendered and not withdrawn
under such Change of Control Offer or (ii) a notice of
redemption has been given pursuant to the Indenture as described
under Optional Redemption.
Libbey Glass will comply, to the extent applicable, with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws or
regulations thereunder 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 the Indenture, Libbey Glass will comply with the
applicable securities laws and regulations and will not be
deemed to have breached its obligations described in the
Indenture by virtue of the conflict.
The Change of Control provisions described above may deter
certain mergers, tender offers and other takeover attempts
involving Libbey Glass by increasing the capital required to
effectuate such transactions. The definition of Change of
Control includes a disposition of all or substantially all
of the property and assets of Libbey Glass and its Restricted
Subsidiaries taken as a whole to any Person. Although there is a
limited body of case law interpreting the phrase
substantially all, there is no precise established
definition of the phrase under applicable law. Accordingly, in
certain circumstances there may be a degree of uncertainty as to
whether a particular transaction would involve a disposition of
all or substantially all of the property or assets
of a Person. As a result, it may be unclear as to whether a
Change of Control has occurred and whether a holder of notes may
require Libbey Glass to make an offer to repurchase the notes as
described above. The provisions under the Indenture relative to
Libbey Glasss obligation to make an offer to repurchase
the notes as a result of a Change of Control may be waived or
modified with the written consent of the holders of a majority
in principal amount of the notes.
See Risk Factors We may not be able to
repurchase the notes upon a change of control for a
description of the risks relating to Libbey Glasss ability
to repurchase notes pursuant to a Change of Control Offer.
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Certain
Covenants
Effectiveness
of Certain Covenants
If on any date following the date of the Indenture:
(1) the notes are rated Baa3 or better by Moodys
Investors Service, Inc. and BBB- or better by
Standard & Poors Ratings Group, Inc. (or, if
either such entity ceases to rate the notes for reasons outside
of the control of Libbey Glass, the equivalent investment grade
credit rating from any other nationally recognized statistical
rating agency selected by Libbey Glass as a replacement
agency); and
(2) no Default or Event of Default shall have occurred and
be continuing,
then, beginning on that day and subject to the provisions of the
following paragraph, the covenants specifically listed under the
following captions in this prospectus will be suspended:
(1) Certain Covenants Limitation
on Indebtedness;
(2) Certain Covenants Limitation
on Restricted Payments;
(3) Certain Covenants Limitation
on Restrictions on Distributions from Restricted
Subsidiaries;
(4) Certain Covenants Limitation
on Sales of Assets and Subsidiary Stock;
(5) Certain Covenants Limitation
on Affiliate Transactions;
(6) Certain Covenants Limitation
on Sale of Capital Stock of Restricted Subsidiaries;
(7) Certain Covenants SEC
Reports;
(8) clause (3) with respect to Libbey Glass of
Certain Covenants Merger and
Consolidation;
(9) Certain Covenants Future
Subsidiary Guarantors (but only with respect to the
obligation to create future Subsidiary Guarantors); and
(10) Certain Covenants Limitation
on Lines of Business.
Notwithstanding the foregoing, if the rating assigned by either
such rating agency should subsequently decline to below Baa3 or
BBB-, respectively, the foregoing covenants will be reinstituted
as of and from the date of such rating decline. Calculations
under the reinstated Limitation on Restricted
Payments covenant will be made as if the Limitation
on Restricted Payments covenant had been in effect since
the date of the Indenture except that no Default will be deemed
to have occurred solely by reason of a Restricted Payment made
while that covenant was suspended.
Limitation
on Indebtedness
Libbey Glass will not, and will not permit any of its Restricted
Subsidiaries to, Incur any Indebtedness (including Acquired
Indebtedness); provided, however, that Libbey
Glass and the Subsidiary Guarantors may Incur Indebtedness if on
the date thereof the Consolidated Coverage Ratio for Libbey
Glass and its Restricted Subsidiaries is at least 2.00 to 1.00.
The first paragraph of this covenant will not prohibit the
Incurrence of the following Indebtedness:
(1) Indebtedness of Libbey Glass, any Subsidiary Guarantor
or any Restricted Subsidiary that is a Foreign Subsidiary
Incurred pursuant to a Credit Facility in an aggregate amount up
to the greater of (a) $110.0 million and (b) the
Borrowing Base;
(2) Guarantees by (x) Libbey Glass or its Subsidiary
Guarantors of Indebtedness Incurred by Libbey Glass or a
Restricted Subsidiary in accordance with the provisions of the
Indenture, provided that in the event such Indebtedness
that is being Guaranteed is a Subordinated Obligation or a
Guarantor Subordinated Obligation, then the related Guarantee
shall be subordinated in right of payment to the notes or the
Subsidiary Guarantee, as the case may be, and
(y) Non-Guarantor Restricted Subsidiaries of Indebtedness
Incurred by Non-Guarantor Restricted Subsidiaries in accordance
with the provisions of the Indenture;
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(3) Indebtedness of Libbey Glass owing to and held by any
Restricted Subsidiary or Indebtedness of a Restricted Subsidiary
owing to and held by Libbey Glass or any other Restricted
Subsidiary; provided, however,
(a) if Libbey Glass is the obligor on such Indebtedness and
a Subsidiary Guarantor is not the obligee, such Indebtedness is
expressly subordinated to the prior payment in full in cash of
all obligations with respect to the notes;
(b) if a Subsidiary Guarantor is the obligor on such
Indebtedness and Libbey Glass or a Subsidiary Guarantor is not
the obligee, such Indebtedness is expressly subordinated in
right of payment to the Subsidiary Guarantees of such Subsidiary
Guarantor; and
(c) (i) any subsequent issuance or transfer of Capital
Stock or any other event that results in any such Indebtedness
being beneficially held by a Person other than Libbey Glass or a
Restricted Subsidiary of Libbey Glass; and
(ii) any sale or other transfer of any such Indebtedness to
a Person other than Libbey Glass or a Restricted Subsidiary of
Libbey Glass
shall be deemed, in each case, to constitute an Incurrence of
such Indebtedness by Libbey Glass or such Subsidiary, as the
case may be.
(4) Indebtedness represented by (a) the notes issued
on the Issue Date, the Subsidiary Guarantees and the related
exchange notes and exchange guarantees issued pursuant to the
Registration Rights Agreement, (b) any Indebtedness (other
than the Indebtedness described in clauses (1) or (4)(a))
outstanding on the Issue Date and (c) any Refinancing
Indebtedness Incurred in respect of Indebtedness described in
the first paragraph of this covenant or any of clauses (4),
(5) and (7);
(5) Indebtedness of a Restricted Subsidiary Incurred and
outstanding on the date on which such Restricted Subsidiary was
acquired by, or merged into, Libbey Glass or any Restricted
Subsidiary (whether or not such Indebtedness was Incurred
(a) to provide all or any portion of the funds utilized to
consummate the transaction or series of related transactions
pursuant to which such Restricted Subsidiary became a Restricted
Subsidiary or was otherwise acquired by Libbey Glass or
(b) otherwise in connection with, or in contemplation of,
such acquisition); provided, however, that at the
time such Restricted Subsidiary is acquired by Libbey Glass,
Libbey Glass would have been able to Incur $1.00 of additional
Indebtedness pursuant to the first paragraph of this covenant
after giving effect to the Incurrence of such Indebtedness
pursuant to this clause (5);
(6) Indebtedness under Hedging Obligations that are
Incurred in the ordinary course of business (and not for
speculative purposes) and Obligations in connection with cash
management and related banking services Incurred in the ordinary
course of business;
(7) the Incurrence by Libbey Glass or any of its Restricted
Subsidiaries of Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations
Incurred pursuant to this clause (7), and Attributable
Indebtedness, in an aggregate principal amount (including all
Refinancing Indebtedness Incurred to refund, defease, renew,
extend, refinance or replace any Indebtedness Incurred pursuant
to this clause (7)) not to exceed $15.0 million at any time
outstanding, plus an amount equal to the aggregate of all
Attributable Indebtedness Incurred in connection with any
Sale/Leaseback Transaction with respect to Libbey Glasss
distribution center located in Laredo, Texas and any
Sale/Leaseback Transaction to enable the construction and
leaseback of office and related space on land located within the
Monterrey, Mexico manufacturing complex owned and operated by a
Restricted Subsidiary of Libbey Glass;
(8) Indebtedness Incurred in respect of workers
compensation claims, self-insurance obligations, letters of
credit, performance, surety and similar bonds, warranties,
indemnities and completion guarantees provided by Libbey Glass
or a Restricted Subsidiary in the ordinary course of business;
(9) Indebtedness arising from agreements of Libbey Glass or
a Restricted Subsidiary providing for customary guarantees,
indemnification, adjustment of purchase price or similar
obligations, in each case, Incurred or assumed in connection
with the disposition of any business, assets or Capital Stock of
a Restricted
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Subsidiary, provided, that the maximum aggregate
liability in respect of all such Indebtedness shall at no time
exceed the gross proceeds actually received by Libbey Glass and
its Restricted Subsidiaries in connection with such disposition;
(10) Indebtedness represented by earnout provisions,
contingent payments in respect of purchase price or adjustment
of purchase price or similar obligations in acquisition
agreements; provided, that this clause (10) shall
not extend to Indebtedness Incurred to finance an earnout or any
such obligations or other component of such Investment;
(11) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar
instrument (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided, however, that such Indebtedness is
extinguished within five business days of Incurrence;
(12) Indebtedness Incurred by Foreign Subsidiaries that are
not Subsidiary Guarantors (other than Libbey Glassware (China)
Co., Ltd. or a Restricted Subsidiary that is a Foreign
Subsidiary organized under the laws of the Peoples
Republic of China) in an aggregate principal amount, together
with all other Indebtedness Incurred pursuant to this clause
(12), not to exceed at any time outstanding the greater of
(x) $45.0 million and (y) 10% of Foreign Assets
(determined as of the end of the most recent fiscal quarter
immediately preceding the date of such Incurrence);
(13) Indebtedness of Libbey Glassware (China) Co., Ltd. or
a Restricted Subsidiary that is a Foreign Subsidiary organized
under the laws of the Peoples Republic of China in an
aggregate principal amount, together with all other Indebtedness
Incurred pursuant to this clause (13), not to exceed
$50.0 million at any time outstanding, and any Guarantee of
such Indebtedness issued by Libbey Glass; and
(14) in addition to the items referred to in
clauses (1) through (13) above, Indebtedness of Libbey
Glass or any of its Restricted Subsidiaries in an aggregate
principal amount, together with all other Indebtedness Incurred
pursuant to this clause (14), not to exceed $25 million at
any time outstanding.
For purposes of determining compliance with, and the outstanding
principal amount of any particular Indebtedness Incurred
pursuant to and in compliance with, this covenant:
(1) subject to clause (2) below, in the event that
Indebtedness meets the criteria of more than one of the types of
Indebtedness described in the first and second paragraphs of
this covenant, Libbey Glass, in its sole discretion, will
classify such item of Indebtedness on the date of Incurrence and
may later classify such item of Indebtedness in any manner that
complies with this covenant and only be required to include the
amount and type of such Indebtedness in one of such clauses;
(2) all Indebtedness outstanding on the Issue Date under
the Senior Secured Credit Agreement shall be deemed Incurred on
the Issue Date under clause (1) of the second paragraph of
this covenant;
(3) Guarantees of, or obligations in respect of letters of
credit relating to, Indebtedness that is otherwise included in
the determination of a particular amount of Indebtedness shall
not be included;
(4) if obligations in respect of letters of credit are
Incurred pursuant to a Credit Facility and are being treated as
Incurred pursuant to clause (1) of the second paragraph
above and the letters of credit relate to other Indebtedness,
then such other Indebtedness shall not be included;
(5) the principal amount of any Disqualified Stock of
Libbey Glass or a Restricted Subsidiary, or Preferred Stock of a
Restricted Subsidiary that is not a Subsidiary Guarantor, will
be equal to the greater of the maximum mandatory redemption or
repurchase price (not including, in either case, any redemption
or repurchase premium) or the liquidation preference thereof;
(6) Indebtedness permitted by this covenant need not be
permitted solely by reference to one provision permitting such
Indebtedness but may be permitted in part by one such provision
and in part by one or more other provisions of this covenant
permitting such Indebtedness;
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(7) the principal amount of any Indebtedness outstanding in
connection with a securitization transaction is the amount of
obligations outstanding under the legal documents entered into
as part of such securitization that would be characterized as
principal on any date of determination if such securitization
transaction were structured as a secured lending
transaction; and
(8) the amount of Indebtedness issued at a price that is
less than the principal amount thereof will be equal to the
amount of the liability in respect thereof determined in
accordance with GAAP.
Accrual of interest, accrual of dividends, the accretion of
accreted value, the payment of interest in the form of
additional Indebtedness and the payment of dividends in the form
of additional shares of Preferred Stock or Disqualified Stock
will not be deemed to be an Incurrence of Indebtedness for
purposes of this covenant. The amount of any Indebtedness
outstanding as of any date shall be (i) the accreted value
thereof in the case of any Indebtedness issued with original
issue discount or the aggregate principal amount outstanding in
the case of Indebtedness issued with interest
payable-in-kind
and (ii) the principal amount or liquidation preference
thereof, in the case of any other Indebtedness.
In addition, Libbey Glass will not permit any of its
Unrestricted Subsidiaries to Incur any Indebtedness or issue any
shares of Disqualified Stock, other than Non-Recourse Debt. If
at any time an Unrestricted Subsidiary becomes a Restricted
Subsidiary, any Indebtedness of such Subsidiary shall be deemed
to be Incurred by a Restricted Subsidiary as of such date (and,
if the Incurrence of such Indebtedness as of such date violates
this Limitation on Indebtedness
covenant, Libbey Glass shall be in Default of this covenant).
For purposes of determining compliance with any
U.S. dollar-denominated restriction on the Incurrence of
Indebtedness, the U.S. dollar-equivalent principal amount
of Indebtedness denominated in a foreign currency shall be
calculated based on the relevant currency exchange rate in
effect on the date such Indebtedness was Incurred, in the case
of term Indebtedness, or first committed, in the case of
revolving credit Indebtedness; provided that the
U.S. dollar-equivalent principal amount of Indebtedness of
Libbey Glassware (China) Co., Ltd. under the Credit Facility to
which it is a party as of the Issue Date shall be calculated
based on the relevant currency exchange rate in effect on the
date first committed; and provided further that if any
such Indebtedness is Incurred to refinance other Indebtedness
denominated in a foreign currency, and such refinancing would
cause the applicable U.S. dollar-denominated restriction to
be exceeded if calculated at the relevant currency exchange rate
in effect on the date of such refinancing, such
U.S. 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. Notwithstanding any other
provision of this covenant, the maximum amount of Indebtedness
that Libbey Glass may Incur pursuant to this covenant shall not
be deemed to be exceeded solely as a result of fluctuations in
the exchange rate of currencies. 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 Refinancing
Indebtedness is denominated that is in effect on the date of
such refinancing.
Limitation
on Restricted Payments
Libbey Glass will not, and will not permit any of its Restricted
Subsidiaries, directly or indirectly, to:
(1) declare or pay any dividend or make any distribution
(whether made in cash, securities or other property) on or in
respect of its Capital Stock (including any payment in
connection with any merger or consolidation involving Libbey
Glass or any of its Restricted Subsidiaries) except:
(a) dividends or distributions payable in Capital Stock of
Libbey Glass (other than Disqualified Stock) or in options,
warrants or other rights to purchase such Capital Stock of
Libbey Glass; and
(b) dividends or distributions payable to Libbey Glass, any
Restricted Subsidiary or to the holders of common Capital Stock
of Restricted Subsidiaries on a pro rata basis);
(2) purchase, redeem, retire or otherwise acquire for value
any Capital Stock of Libbey Glass or any direct or indirect
parent of Libbey Glass held by Persons other than Libbey Glass
or a Restricted Subsidiary (other than in exchange for Capital
Stock of Libbey Glass (other than Disqualified Stock));
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(3) purchase, repurchase, redeem, defease or otherwise
acquire or retire for value, prior to scheduled maturity,
scheduled repayment or scheduled sinking fund payment, any
Subordinated Obligations or Guarantor Subordinated Obligations
(other than (x) Indebtedness of Libbey Glass owing to and
held by any Subsidiary Guarantor or Indebtedness of a Subsidiary
Guarantor owing to and held by Libbey Glass or any other
Subsidiary Guarantor permitted under clause (3) of the
second paragraph of the covenant Limitation on
Indebtedness or (y) the purchase, repurchase,
redemption, defeasance or other acquisition or retirement of
Subordinated Obligations or Guarantor Subordinated Obligations
purchased in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each
case due within one year of the date of purchase, repurchase,
redemption, defeasance or other acquisition or
retirement); or
(4) make any Restricted Investment in any Person
(any such dividend, distribution, purchase, redemption,
repurchase, defeasance, other acquisition, retirement or
Restricted Investment referred to in clauses (1) through
(4) shall be referred to herein as a Restricted
Payment), if at the time Libbey Glass or such Restricted
Subsidiary makes such Restricted Payment:
(a) a Default shall have occurred and be continuing (or
would result therefrom); or
(b) Libbey Glass is not able to Incur $1.00 of additional
Indebtedness pursuant to the first paragraph under the
Limitation on Indebtedness covenant
after giving effect, on a pro forma basis, to such Restricted
Payment; or
(c) the aggregate amount of such Restricted Payment and all
other Restricted Payments declared or made subsequent to the
Issue Date (excluding clauses (1), (2), (3), (4), (6), (7), (8),
(9), (11), (13) and (14) of the next succeeding
paragraph) would exceed the sum of, without duplication:
(i) 50% of Consolidated Net Income for the period (treated
as one accounting period) from the beginning of the first fiscal
quarter commencing after the Issue Date to the end of the most
recent fiscal quarter ending prior to the date of such
Restricted Payment for which financial statements are in
existence (or, in case such Consolidated Net Income is a
deficit, minus 100% of such deficit);
(ii) 100% of the aggregate Net Cash Proceeds received by
Libbey Glass, plus the fair market value of property other than
cash or of marketable securities (such fair market value to be
determined on the date of contractually agreeing to such sale as
determined in good faith by the Board of Directors) received by
Libbey Glass from the issue or sale of its Capital Stock (other
than Disqualified Stock) or other capital contributions
subsequent to the Issue Date (other than Net Cash Proceeds
received from an issuance or sale of such Capital Stock to a
Subsidiary of Libbey Glass or an employee stock ownership plan,
option plan or similar trust to the extent such sale to an
employee stock ownership plan or similar trust is financed by
loans from or Guaranteed by Libbey Glass or any Restricted
Subsidiary unless such loans have been repaid with cash on or
prior to the date of determination);
(iii) the amount by which Indebtedness of Libbey Glass or
its Restricted Subsidiaries is reduced on Libbey Glasss
balance sheet upon the conversion or exchange (other than by a
Subsidiary of Libbey Glass) subsequent to the Issue Date of any
Indebtedness of Libbey Glass or its Restricted Subsidiaries
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of Libbey Glass or the Parent (less the
amount of any cash, or the fair market value of any other
property, distributed by Libbey Glass upon such conversion or
exchange); and
(iv) 100% of the Net Cash Proceeds and the fair market
value of property other than cash and marketable securities
(such fair market value to be determined in good faith by the
Board of Directors) from the sale or other disposition (other
than to Libbey Glass or a Note Guarantor or to an employee stock
ownership plan or trust established by Libbey Glass or any
Restricted Subsidiary) of Restricted Investments made after the
Issue Date and redemptions and repurchases of such Restricted
Investments from Libbey Glass or its Restricted Subsidiaries and
repayment of loans or advances from Libbey Glass and its
Restricted Subsidiaries (other than in each case to the extent
the Restricted Investment was made pursuant to clause (14)
of the next succeeding paragraph);
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(v) to the extent that any Unrestricted Subsidiary of
Libbey Glass designated as such after the Issue Date is
redesignated as a Restricted Subsidiary or any Unrestricted
Subsidiary of Libbey Glass merges into or consolidates with
Libbey Glass or any of its Restricted Subsidiaries, in each case
after the Issue Date, the fair market value of such Subsidiary
as of the date of such redesignation or such merger or
consolidation, or in the case of the transfer of assets of an
Unrestricted Subsidiary to Libbey Glass or a Restricted
Subsidiary, the fair market value of the Investment in such
Unrestricted Subsidiary, as determined by the Board of Directors
of Libbey Glass in good faith at the time of the redesignation
of such Unrestricted Subsidiary as a Restricted Subsidiary or at
the time of such merger, consolidation or transfer of assets
(other than an Unrestricted Subsidiary to the extent the
Investment in such Unrestricted Subsidiary was made by a
Restricted Subsidiary pursuant to clause (14) of the next
succeeding paragraph or to the extent such Investment
constituted a Permitted Investment); and
(vi) 50% of any cash dividends received by Libbey Glass or
a Restricted Subsidiary of Libbey Glass after the Issue Date
from an Unrestricted Subsidiary of Libbey Glass, to the extent
that such dividends were not otherwise included in the
Consolidated Net Income of Libbey Glass.
The provisions of the preceding paragraph will not prohibit:
(1) any Restricted Payment (including Restricted Payments
by Libbey Glass or a Restricted Subsidiary) made by exchange
for, or out of the proceeds of the substantially concurrent sale
of, Capital Stock of Libbey Glass or the Parent (other than
Disqualified Stock and other than Capital Stock issued or sold
to a Subsidiary or an employee stock ownership plan or similar
trust to the extent such sale to an employee stock ownership
plan or similar trust is financed by loans from or Guaranteed by
Libbey Glass or any Restricted Subsidiary unless such loans have
been repaid with cash on or prior to the date of determination);
provided, however, that the Net Cash Proceeds from
such sale of Capital Stock will be excluded from clause (c)(ii)
of the preceding paragraph;
(2) any purchase, repurchase, redemption, defeasance or
other acquisition or retirement of Subordinated Obligations of
Libbey Glass or Guarantor Subordinated Obligations of any
Subsidiary Guarantor made by exchange for, or out of the
proceeds of the substantially concurrent sale of, Subordinated
Obligations of Libbey Glass or any purchase, repurchase,
redemption, defeasance or other acquisition or retirement of
Guarantor Subordinated Obligations made by exchange for or out
of the proceeds of the substantially concurrent sale of
Guarantor Subordinated Obligations that, in each case,
constitutes Refinancing Indebtedness;
(3) any purchase, repurchase, redemption, defeasance or
other acquisition or retirement of Disqualified Stock of Libbey
Glass or a Restricted Subsidiary made by exchange for or out of
the proceeds of the sale within 60 days of Disqualified
Stock of Libbey Glass, the Parent or such Restricted Subsidiary,
as the case may be, that, in each case, is permitted to be
Incurred pursuant to the covenant described under
Limitation on Indebtedness and that in
each case constitutes Refinancing Indebtedness;
(4) any purchase or redemption of Subordinated Obligations
or Guarantor Subordinated Obligations of a Subsidiary Guarantor
from Net Available Cash to the extent permitted under
Limitation on Sales of Assets and Subsidiary
Stock below;
(5) dividends paid within 60 days after the date of
declaration if at such date of declaration such dividend would
have complied with this provision;
(6) Restricted Payments, cash dividends or loans to the
Parent, for the purchase, redemption or other acquisition,
cancellation or retirement for value of Capital Stock, or
options, warrants, equity appreciation rights or other rights to
purchase or acquire Capital Stock, of Libbey Glass or any
Restricted Subsidiary or any direct or indirect parent of Libbey
Glass held by any existing or former directors, officers,
employees or consultants of Libbey Glass or the Parent or any
Subsidiary of Libbey Glass or their assigns, estates or heirs,
in each case in connection with the repurchase provisions under
stock option or stock purchase agreements or other agreements to
compensate such Persons; provided, that such redemptions,
repurchases or payments pursuant to this clause shall not be
permitted with respect to the compensation or issuance of
securities for any services that were not related to, or for the
benefit of, Libbey Glass and its Restricted Subsidiaries;
provided, further, that such redemptions or
repurchases pursuant to this clause will not exceed
$3.0 million in the aggregate during any calendar year;
provided, further, that (x) Libbey Glass may
carry over and make in
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subsequent calendar years, in addition to the $3.0 million
amount permitted for such calendar year, the amount of such
purchases, redemptions or other acquisitions or retirements for
value permitted to be made, but not made, in any preceding
calendar year, up to a maximum amount of $8.0 million in
any calendar year and (y) the maximum amount in any
calendar year may be increased by the amount of any capital
contributions to Libbey Glass as a result of sales of such
shares of Capital Stock of Libbey Glass or any direct or
indirect parent of Libbey Glass to such persons (provided
that the Net Cash Proceeds from such sale of Capital Stock
will be excluded from clause (c)(ii) of the preceding paragraph)
to the extent not so previously applied, plus the amount of any
key man insurance proceeds, received by Libbey Glass
or any Restricted Subsidiary to the extent not so previously
applied;
(7) the declaration and payment of dividends to holders of
any class or series of Disqualified Stock of Libbey Glass issued
in accordance with the terms of the Indenture to the extent such
dividends are included in the definition of Consolidated
Interest Expense;
(8) repurchases of Capital Stock deemed to occur upon
(x) the exercise of stock options, warrants or other
convertible securities if such Capital Stock represents a
portion of the exercise price thereof or (y) cash dividends
or loans to the Parent in amounts sufficient to pay taxes of
directors, officers, employees or consultants relating to the
withholding of a portion of the Capital Stock granted or awarded
to a director, officer, employee or consultant in exchange for
the payment of taxes payable by such Person upon such grant or
award;
(9) cash dividends or loans to the Parent in amounts equal
to:
(a) the amounts required for the Parent to pay any Federal,
state or local income taxes to the extent that such income taxes
are directly attributable to the income of Libbey Glass and its
Restricted Subsidiaries and, to the extent of amounts actually
received from Unrestricted Subsidiaries, in amounts required to
pay such taxes to the extent attributable to the income of the
Unrestricted Subsidiaries;
(b) the amounts required for the Parent to pay franchise
taxes and other fees required to maintain its legal existence;
(c) amounts to pay corporate overhead expenses (including
professional fees and expenses payable to third parties) of the
Parent Incurred in the ordinary course of business (including
(x) financing transactions (of debt or equity) that
benefit, or are intended to benefit, Libbey Glass and its
Restricted Subsidiaries and (y) in connection with
reporting obligations under or otherwise in connection with
applicable laws, rules or regulations of any governmental,
regulatory or self-regulatory body or stock exchange, the
Indenture or any other agreement or instrument of Indebtedness
of the Parent, Libbey Glass or any Restricted Subsidiary), and
to pay salaries, benefits or other compensation of directors,
officers, employees and consultants who perform services for the
Parent, Libbey Glass or any Restricted Subsidiary, including,
with respect to any financing transaction to pay such expenses
on an interim basis so long as such expenses are repaid out of
the proceeds of such transaction upon completion of such
transaction;
(10) the purchase, repurchase, redemption, defeasance or
other acquisition or retirement for value of any Subordinated
Obligation (i) at a purchase price not greater than 101% of
the principal amount of such Subordinated Obligation in the
event of a Change of Control in accordance with provisions
similar to the Change of Control
covenant or (ii) at a purchase price not greater than 100%
of the principal amount thereof in accordance with provisions
similar to the Limitation on Sales of Assets
and Subsidiary Stock covenant; provided that, prior
to or simultaneously with such purchase, repurchase, redemption,
defeasance or other acquisition or retirement, Libbey Glass has
made the Change of Control Offer or Asset Disposition Offer, as
applicable, as provided in such covenant with respect to the
notes and has completed the repurchase or redemption of all
notes validly tendered for payment in connection with such
Change of Control Offer or Asset Disposition Offer;
(11) the repurchase or redemption of Libbey Glasss or
the Parents preferred stock purchase rights, or any
substitute therefor, in an aggregate amount not to exceed the
product of (x) the number of outstanding
94
shares of Common Stock of the Parent and (y) $0.01 per
share, as such amount may be adjusted in accordance with any
rights agreement relating to the Common Stock of the Parent;
(12) so long as no Event of Default exists and has not been
cured or waived, cash dividends or loans to the Parent in
amounts required for the Parent to declare and pay cash
dividends on its common stock, par value $.01 per share (the
Parent Common Stock) in an amount not to exceed
$0.20 per share in any fiscal year, which amount will be reduced
to reflect any subdivision of the Parent Common Stock by means
of a stock split, stock dividend or otherwise;
(13) the repurchase, redemption or other acquisition for
value of Capital Stock of Libbey Glass or any direct or indirect
parent of Libbey Glass representing fractional shares of such
Capital Stock in connection with a merger, consolidation,
amalgamation or other combination involving Libbey Glass or any
direct or indirect parent of Libbey Glass; and
(14) Restricted Payments in an amount not to exceed
$15.0 million;
provided, however, that at the time of and after
giving effect to any Restricted Payment permitted under clauses
(4), (7) or (14), no Default shall have occurred and be
continuing or would occur as a consequence thereof.
The amount of all Restricted Payments (other than cash) shall be
the fair market value on the date of such Restricted Payment of
the asset(s) or securities proposed to be paid, transferred or
issued by Libbey Glass or such Restricted Subsidiary, as the
case may be, pursuant to such Restricted Payment. The fair
market value of any cash Restricted Payment shall be its face
amount and any non-cash Restricted Payment shall be determined
conclusively by the Board of Directors of Libbey Glass acting in
good faith whose resolution with respect thereto shall be
delivered to the Trustee. Not later than the date of making any
Restricted Payment, Libbey Glass shall deliver to the Trustee an
Officers Certificate stating that such Restricted Payment
is permitted and setting forth the basis upon which the
calculations required by the covenant
Limitation on Restricted Payments were
computed.
Limitation
on Liens
Libbey Glass will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, create, Incur or suffer
to exist any Lien (other than Permitted Liens) upon any of its
property or assets (including Capital Stock of Restricted
Subsidiaries), whether owned on the Issue Date or acquired after
that date, other than:
(1) in the case of Liens on any Notes Priority Collateral,
any Lien if (i) such Lien ranks expressly junior in
priority to the Lien securing the notes with respect to such
Notes Priority Collateral; or (ii) such Lien is a Permitted
Lien; and
(2) in the case of any other asset or property, any Lien if
(i) the notes are equally and ratably secured with (or, in
the case such Lien secures any Subordinated Obligations the
notes are secured on a senior basis to) the Obligations secured
by such Lien or (ii) such Lien is a Permitted Lien.
In addition, if Libbey Glass or any Subsidiary Guarantor,
directly or indirectly, shall create, Incur or suffer to exist
any Lien (other than Permitted Liens) securing any Lenders Debt,
Libbey Glass or such Subsidiary Guarantor, as the case may be,
must concurrently grant at least a second-priority Lien in the
case of assets constituting Credit Agreement Priority Collateral
or a first-priority Lien in the case of assets constituting
Notes Priority Collateral upon such property as security for the
notes as is also described above in the second paragraph under
Collateral Assets Pledged as Collateral,
excluding any Foreign Assets or Capital Stock which by the terms
of the Collateral Documents are expressly permitted to be
subject to a Lien securing Lenders Debt without also being
subject to a Lien securing the Notes and the Note Guarantees.
95
Limitation
on Restrictions on Distributions from Restricted
Subsidiaries
Libbey Glass will not, and will not permit any Restricted
Subsidiary to, create or otherwise cause or permit to exist or
become effective any consensual encumbrance or consensual
restriction on the ability of any Restricted Subsidiary to:
(1) pay dividends or make any other distributions on its
Capital Stock or pay any Indebtedness or other obligations owed
to Libbey Glass or any Restricted Subsidiary (it being
understood that the priority of any Preferred Stock in receiving
dividends or liquidating distributions prior to dividends or
liquidating distributions being paid on Common Stock shall not
be deemed a restriction on the ability to make distributions on
Capital Stock);
(2) make any loans or advances to Libbey Glass or any
Restricted Subsidiary (it being understood that the
subordination of loans or advances made to Libbey Glass or any
Restricted Subsidiary to other Indebtedness Incurred by Libbey
Glass or any Restricted Subsidiary shall not be deemed a
restriction on the ability to make loans or advances); or
(3) transfer any of its property or assets to Libbey Glass
or any Restricted Subsidiary (it being understood that such
transfers shall not include any type of transfer described in
clause (1) or (2) above).
The preceding provisions will not prohibit:
(i) any encumbrance or restriction pursuant to an agreement
in effect at or entered into on the Issue Date, including,
without limitation, the Indenture, the outstanding notes, the
exchange notes, the Subsidiary Guarantees, the Collateral
Documents, the Intercreditor Agreement and the Senior Secured
Credit Agreement (and related documentation) in effect on such
date;
(ii) any encumbrance or restriction with respect to a
Person pursuant to an agreement relating to any Capital Stock or
Indebtedness Incurred by such Person on or before the date on
which such Person became a Restricted Subsidiary or was acquired
by, merged into or consolidated with Libbey Glass or a
Restricted Subsidiary (other than Capital Stock or Indebtedness
Incurred as consideration in, or to provide all or any portion
of the funds utilized to consummate, the transaction or series
of related transactions pursuant to which such Person became a
Restricted Subsidiary or was acquired by, merged into or
consolidated with Libbey Glass or in contemplation of the
transaction) and outstanding on such date, provided that
any such encumbrance or restriction shall not extend to any
assets or property of Libbey Glass or any other Restricted
Subsidiary other than the assets and property so acquired and
that, in the case of Indebtedness, was permitted to be Incurred
pursuant to the Indenture;
(iii) any encumbrance or restriction pursuant to an
agreement effecting a refunding, replacement or refinancing of
Indebtedness Incurred pursuant to an agreement referred to in
clause (i) or (ii) of this paragraph or this
clause (iii) or contained in any amendment, restatement,
modification, renewal, supplement, refunding, replacement or
refinancing of an agreement referred to in clause (i) or
(ii) of this paragraph or this clause (iii);
provided, however, that the encumbrances and
restrictions with respect to such Restricted Subsidiary
contained in any such agreement are no less favorable in any
material respect, taken as a whole, to the holders of the notes
than the encumbrances and restrictions contained in such
agreements referred to in clauses (i) or (ii) of this
paragraph on the Issue Date or the date such Restricted
Subsidiary became a Restricted Subsidiary or was merged into a
Restricted Subsidiary, whichever is applicable;
(iv) in the case of clause (3) of the first paragraph
of this covenant, Liens permitted to be incurred under the
provisions of the covenant described under
Limitation on Liens;
(v) (a) purchase money obligations or mortgage
financings for property acquired in the ordinary course of
business and (b) Capitalized Lease Obligations permitted
under the Indenture, in each case, that impose encumbrances or
restrictions of the nature described in clause (3) of the
first paragraph of this covenant on the property so acquired;
(vi) any restriction 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 the Capital Stock or assets
96
of such Restricted Subsidiary (or the property or assets that
are subject to such restriction) pending the closing of such
sale or disposition;
(vii) any customary provisions relating to the disposition
or distribution of assets or property in joint venture
agreements, asset sale agreements, stock sale agreements and
other similar agreements entered into in the ordinary course of
business;
(viii) net worth provisions in leases and other agreements
and provisions restricting cash or other deposits in agreements
entered into by Libbey Glass or any Restricted Subsidiary in the
ordinary course of business;
(ix) encumbrances or restrictions arising or existing by
reason of applicable law or any applicable rule, regulation or
order; and
(x) encumbrances or restrictions contained in indentures or
debt instruments or other debt arrangements Incurred or
Preferred Stock issued by Subsidiary Guarantors in accordance
with Limitation on Indebtedness, that
are not more restrictive, taken as a whole, than those
applicable to Libbey Glass in either the Indenture or the Senior
Secured Credit Agreement on the Issue Date (which results in
encumbrances or restrictions comparable to those applicable to
Libbey Glass at a Restricted Subsidiary level);
(xi) encumbrances or restrictions contained in indentures
or other debt instruments or debt arrangements Incurred or
Preferred Stock issued by Restricted Subsidiaries that are not
Subsidiary Guarantors subsequent to the Issue Date pursuant to
clauses (5), (12), (13) or (14) of the second
paragraph of the covenant Limitation on
Indebtedness, provided that such encumbrances and
restrictions contained in any agreement or instrument will not
materially affect Libbey Glasss ability to make
anticipated principal or interest payments on the notes (as
determined by the Board of Directors of Libbey Glass);
(xii) encumbrances or restrictions contained in customary
non-assignment provisions in leases, contracts, licenses or
other agreements entered into in the ordinary course of
business; and
(xiii) encumbrances or restrictions arising or agreed to in
the ordinary course of business, not relating to Indebtedness,
that do not, individually or in the aggregate, detract from the
value of property or assets of Libbey Glass or any Restricted
Subsidiary thereof in any manner material to Libbey Glass or any
Restricted Subsidiary.
Limitation
on Sales of Assets and Subsidiary Stock
Libbey Glass will not, and will not permit any of its Restricted
Subsidiaries to, make any Asset Disposition unless:
(1) Libbey Glass or such Restricted Subsidiary, as the case
may be, receives consideration at least equal to the fair market
value (such fair market value to be determined on the date of
contractually agreeing to such Asset Disposition), as determined
in good faith by the Board of Directors (including as to the
value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition;
(2) except for any Permitted Asset Swap, at least 75% of
the consideration from such Asset Disposition received by Libbey
Glass or such Restricted Subsidiary, as the case may be, is in
the form of cash or Cash Equivalents;
(3) if such Asset Disposition involves the disposition of
Notes Priority Collateral or, after the Discharge of Credit
Agreement Obligations, the disposition of Credit Agreement
Priority Collateral, the Net Available Cash from such Asset
Disposition, pending application in accordance with the
provisions described under clause (4) below, be paid
directly by the purchaser of such Collateral to the Collateral
Agent for deposit into the Collateral Account, and, any portion
of the consideration therefor other than cash or Cash
Equivalents shall be made subject to the Lien of the Indenture
and the applicable Collateral Documents; and
97
(4) an amount equal to 100% of the Net Available Cash from
such Asset Disposition is applied by Libbey Glass or such
Restricted Subsidiary, as the case may be:
(a) to the extent such Net Available Cash constitute
proceeds from the sale of Credit Agreement Priority Collateral,
to repay Indebtedness under the Credit Agreement secured by such
Credit Agreement Priority Collateral within 365 days from
the later of the date of such Asset Disposition or the receipt
of such Net Available Cash;
(b) to the extent such Net Cash Proceeds constitute
proceeds from the sale of Notes Priority Collateral, to
permanently repay, equally and ratably, the notes and any Pari
Passu Secured Indebtedness, within 365 days from the later
of the date of such Asset Disposition or the receipt of such Net
Available Cash;
(c) to permanently reduce obligations under other
Indebtedness secured by a Lien (provided that if Libbey Glass or
any Note Guarantor shall so reduce such obligations, Libbey
Glass will equally and ratably reduce obligations under the
notes and any Pari Passu Secured Indebtedness if the notes and
such Pari Passu Secured Indebtedness are then prepayable or, if
the notes may not then be prepaid, by making an offer (in
accordance with the procedures set forth below for an Asset
Disposition Offer) to all holders to purchase at a purchase
price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest and additional interest, if any, the
pro rata principal amount of notes that would otherwise be
prepaid) or Indebtedness of a Non-Guarantor Restricted
Subsidiary, in each case other than Indebtedness owed to Libbey
Glass or an Affiliate of Libbey Glass within 365 days from
the later of the date of such Asset Disposition or the receipt
of such Net Available Cash; or
(d) to invest in Additional Assets within 365 days
from the later of the date of such Asset Disposition or the
receipt of such Net Available Cash; provided,
however, that with respect to Asset Dispositions of Notes
Priority Collateral, such Additional Assets are added to the
Notes Priority Collateral with the exception of Net Available
Cash not to exceed $15.0 million that is invested in
Additional Assets of Non-Guarantor Restricted Subsidiaries;
provided that pending the final application of any such
Net Available Cash in accordance with clauses (a) through
(d) above, Libbey Glass and its Restricted Subsidiaries may
temporarily reduce Indebtedness or otherwise invest such Net
Available Cash in any manner not prohibited by the Indenture;
provided further that in the case of an Asset Disposition
of Notes Priority Collateral, any cash will be deposited in
accordance with clause (3) above.
Any Net Available Cash from Asset Dispositions that are not
applied or invested as provided in the preceding paragraph will
be deemed to constitute Excess Proceeds. To the
extent that the aggregate amount of Excess Proceeds exceeds
$20.0 million on the 366th day after an Asset
Disposition, Libbey Glass will be required to make an offer
(Asset Disposition Offer) to all holders of notes
and to the extent required by the terms of other Pari Passu
Secured Indebtedness, to all holders of other Pari Passu Secured
Indebtedness outstanding with similar provisions requiring
Libbey Glass to make an offer to purchase such Pari Passu
Secured Indebtedness with the proceeds from any Asset
Disposition (Pari Passu Notes), to purchase the
maximum principal amount of notes and any such Pari Passu Notes
to which the Asset Disposition Offer applies that may be
purchased out of the Excess Proceeds, at an offer price in cash
in an amount equal to 100% of the principal amount of the notes
and Pari Passu Notes plus accrued and unpaid interest to the
date of purchase, in accordance with the procedures set forth in
the Indenture or the agreements governing the Pari Passu Notes,
as applicable, and in compliance with the Intercreditor
Agreement, in each case in integral multiples of $1,000. To the
extent that the aggregate amount of notes and Pari Passu Notes
so validly tendered and not properly withdrawn pursuant to an
Asset Disposition Offer is less than the Excess Proceeds, Libbey
Glass may use any remaining Excess Proceeds for general
corporate purposes, subject to other covenants contained in the
Indenture. If the aggregate principal amount of notes
surrendered by holders thereof and other Pari Passu Notes
surrendered by holders or lenders, collectively, exceeds the
amount of Excess Proceeds, the Trustee shall select the notes
and Pari Passu Notes to be purchased on a pro rata basis on the
basis of the aggregate principal amount of tendered notes and
Pari Passu Notes. Upon completion of such Asset Disposition
Offer, the amount of Excess Proceeds shall be reset at zero.
98
The Asset Disposition Offer will remain open for a period of 20
Business Days following its commencement, except to the extent
that a longer period is required by applicable law (the
Asset Disposition Offer Period). Libbey Glass will
mail a notice of an Asset Disposition Offer first class, postage
prepaid, to the record holders shown on the register of Holders
within 20 days following the 366th day referred to in
the second paragraph of this clause, with a copy to the Trustee,
offering to purchase the notes and Pari Passu Notes as described
above. Each notice of an Asset Disposition Offer shall state,
among other things, the purchase date, which must be no earlier
than 30 days nor later than 60 days from the date the
notice is mailed, subject to applicable law (the Asset
Disposition Purchase Date). No later than five Business
Days after the termination of the Asset Disposition Offer
Period, Libbey Glass will purchase the principal amount of notes
and Pari Passu Notes required to be purchased pursuant to this
covenant (the Asset Disposition Offer Amount) or, if
less than the Asset Disposition Offer Amount has been so validly
tendered, all notes and Pari Passu Notes validly tendered in
response to the Asset Disposition Offer.
If the Asset Disposition Purchase Date is on or after an
interest record date and on or before the related interest
payment date, any accrued and unpaid interest will be paid to
the Person in whose name a note is registered at the close of
business on such record date, and no additional interest will be
payable to holders who tender notes pursuant to the Asset
Disposition Offer.
On or before the Asset Disposition Purchase Date, Libbey Glass
will, to the extent lawful, accept for payment, on a pro rata
basis to the extent necessary, the Asset Disposition Offer
Amount of notes and Pari Passu Notes or portions of notes and
Pari Passu Notes so validly tendered and not properly withdrawn
pursuant to the Asset Disposition Offer, or if less than the
Asset Disposition Offer Amount has been validly tendered and not
properly withdrawn, all notes and Pari Passu Notes so validly
tendered and not properly withdrawn, in each case in integral
multiples of $1,000. Libbey Glass will deliver to the Trustee an
Officers Certificate stating that such notes or portions
thereof were accepted for payment by Libbey Glass in accordance
with the terms of this covenant and, in addition, Libbey Glass
will deliver all certificates and notes required, if any, by the
agreements governing the Pari Passu Notes. Libbey Glass or the
Paying Agent, as the case may be, will promptly (but in any case
not later than five Business Days after the Asset Disposition
Purchase Date) mail or deliver to each tendering holder of notes
or holder or lender of Pari Passu Notes, as the case may be, an
amount equal to the purchase price of the notes or Pari Passu
Notes so validly tendered and not properly withdrawn by such
holder or lender, as the case may be, and accepted by Libbey
Glass for purchase, and Libbey Glass will promptly issue a new
note, and the Trustee, upon delivery of an Officers
Certificate from Libbey Glass, will authenticate and mail or
deliver such new note to such holder, in a principal amount
equal to any unpurchased portion of the note surrendered;
provided that each such new note will be in a principal
amount of $2,000 or an integral multiple of $1,000 in excess
thereof. In addition, Libbey Glass will take any and all other
actions required by the agreements governing the Pari Passu
Notes. Any note not so accepted will be promptly mailed or
delivered by Libbey Glass to the holder thereof. Libbey Glass
will publicly announce the results of the Asset Disposition
Offer on the Asset Disposition Purchase Date.
For the purposes of clause (2) of this covenant, the
following will be deemed to be cash:
(1) any liabilities as shown on the most recent
consolidated balance sheet of Libbey Glass or any Restricted
Subsidiary (other than contingent liabilities and liabilities
that are by their terms subordinated to the notes) that are
assumed by the transferee of any such assets pursuant to a
customary novation agreement that releases Libbey Glass or such
Restricted Subsidiary from further liability;
(2) any securities, notes or other obligations received by
Libbey Glass or any such Restricted Subsidiary from such
transferee that are converted by Libbey Glass or such Restricted
Subsidiary into cash, to the extent of the cash received in that
conversion, with 180 days following the closing of such
Asset Disposition; and
(3) any Designated Non-cash Consideration received by
Libbey Glass or any Restricted Subsidiary in such Asset
Disposition having an aggregate fair market value, taken
together with all other Designated Non-cash Consideration
received pursuant to this clause (3) that is at the time
outstanding, not to exceed $15.0 million at the time of the
receipt of such Designated Non-cash Consideration, with the fair
market value of each item of Designated Non-cash Consideration
being measured at the time received and without giving effect to
subsequent changes in value.
99
Libbey Glass will comply, to the extent applicable, with the
requirements of
Rule 14e-1
under the Exchange Act and any other securities laws or
regulations in connection with the repurchase of notes pursuant
to the Indenture. To the extent that the provisions of any
securities laws or regulations conflict with provisions of this
covenant, Libbey Glass will comply with the applicable
securities laws and regulations and will not be deemed to have
breached its obligations under the Indenture by virtue of any
conflict.
Limitation
on Affiliate Transactions
Libbey Glass will not, and will not permit any of its Restricted
Subsidiaries to, directly or indirectly, enter into or conduct
any transaction (including the purchase, sale, lease or exchange
of any property or the rendering of any service) involving
aggregate consideration in excess of $2.5 million with any
Affiliate of Libbey Glass (an Affiliate Transaction)
unless:
(1) the terms of such Affiliate Transaction are no less
favorable to Libbey Glass or such Restricted Subsidiary, as the
case may be, than those that could be obtained in a comparable
transaction at the time of such transaction in arms-length
dealings with a Person who is not such an Affiliate;
(2) in the event such Affiliate Transaction involves an
aggregate consideration in excess of $10.0 million, the
terms of such transaction have been approved by a majority of
the members of the Board of Directors of Libbey Glass and by a
majority of the members of such Board having no personal stake
in such transaction, if any (and such majority or majorities, as
the case may be, determines that such Affiliate Transaction
satisfies the criteria in clause (1) above); and
(3) in the event such Affiliate Transaction involves an
aggregate consideration in excess of $25.0 million, Libbey
Glass has received a written opinion from an independent
investment banking, accounting or appraisal firm of nationally
recognized standing that such Affiliate Transaction is not
materially less favorable than those that might reasonably have
been obtained in a comparable transaction at such time on an
arms-length basis from a Person that is not an Affiliate.
The preceding paragraph will not apply to:
(1) any Restricted Payment (other than a Restricted
Investment) permitted to be made pursuant to the covenant
described under Limitation on Restricted
Payments;
(2) any issuance of securities, or other payments, awards
or grants in cash, securities or otherwise pursuant to, or the
funding of, employment agreements and other compensation
arrangements, options to purchase Capital Stock of Libbey Glass
restricted stock plans, long-term incentive plans, stock
appreciation rights plans, participation plans or similar
employee benefits plans, pension plans or similar plans
and/or
indemnity provided on behalf of current or former directors,
officers and employees approved by the Board of Directors of
Libbey Glass;
(3) loans or advances to employees, officers or directors
of Libbey Glass or any Restricted Subsidiary of Libbey Glass in
the ordinary course of business consistent with past practices,
in an aggregate amount outstanding at any time not in excess of
$5.0 million (without giving effect to the forgiveness of
any such loan);
(4) any transaction between Libbey Glass and a Restricted
Subsidiary or between Restricted Subsidiaries and any Guarantees
issued by Libbey Glass or a Restricted Subsidiary for the
benefit of Libbey Glass or a Restricted Subsidiary, as the case
may be, in accordance with Limitation on
Indebtedness;
(5) the payment of reasonable and customary fees paid to,
and indemnity provided on behalf of, current, former and future
directors of Libbey Glass or any Restricted Subsidiary;
(6) the existence of, and the performance of obligations of
Libbey Glass or any of its Restricted Subsidiaries under the
terms of any agreement to which Libbey Glass or any of its
Restricted Subsidiaries is a party as of or on the Issue Date,
as these agreements may be amended, modified, supplemented,
extended or renewed from time to time; provided,
however, that any future amendment, modification,
supplement, extension or renewal entered into after the Issue
Date will be permitted to the extent that its terms are not more
disadvantageous to the holders of the notes than the terms of
the agreements in effect on the Issue Date;
100
(7) transactions with customers, clients, suppliers or
purchasers or sellers of goods or services, in each case in the
ordinary course of the business of Libbey Glass and its
Restricted Subsidiaries and otherwise in compliance with the
terms of the Indenture; provided that in the reasonable
determination of the members of the Board of Directors or senior
management of Libbey Glass, such transactions are on terms that
are no less favorable to Libbey Glass or the relevant Restricted
Subsidiary than those that would have been obtained in a
comparable transaction by Libbey Glass or such Restricted
Subsidiary with an unrelated Person;
(8) any issuance or sale of Capital Stock (other than
Disqualified Stock) to Affiliates of Libbey Glass and the
granting and performance of registration and other customary
rights in connection therewith;
(9) transactions with a Person that is an Affiliate of
Libbey Glass solely because Libbey Glass, directly or
indirectly, owns Capital Stock of, or controls, such Person;
(10) transactions with Affiliates solely in their capacity
as holders of the Indebtedness or Capital Stock of Libbey Glass
or any of its Subsidiaries, so long as such transaction is with
all holders of such class (and there are such non-Affiliate
holders) and such Affiliates are treated no more favorably than
all other holders of such class generally;
(11) any contribution to the common equity capital of
Libbey Glass;
(12) the pledge of Capital Stock of any Unrestricted
Subsidiary to lenders to support the Indebtedness of such
Unrestricted Subsidiary owed to such lenders;
(13) payments by Libbey Glass or any of its Restricted
Subsidiaries pursuant to any tax sharing, allocation or similar
agreement; and
(14) transactions permitted by, and complying with, the
provisions of the covenant described under
Merger and Consolidation.
Limitation
on Sale of Capital Stock of Restricted Subsidiaries
Libbey Glass will not, and will not permit any Restricted
Subsidiary to, transfer, convey, sell, lease or otherwise
dispose of any Voting Stock of any Restricted Subsidiary or to
issue any of the Voting Stock of a Restricted Subsidiary (other
than, if necessary, shares of its Voting Stock constituting
directors qualifying shares) to any Person except:
(1) to Libbey Glass or a Wholly-Owned Subsidiary; or
(2) in compliance with the covenant described under
Limitation on Sales of Assets and Subsidiary
Stock and immediately after giving effect to such issuance
or sale, such Restricted Subsidiary either continues to be a
Restricted Subsidiary or if such Restricted Subsidiary would no
longer be a Restricted Subsidiary, then the Investment of Libbey
Glass in such Person (after giving effect to such issuance or
sale) would have been permitted to be made under the
Limitation on Restricted Payments
covenant as if made on the date of such issuance or sale.
Notwithstanding the preceding paragraph, Libbey Glass and any
Restricted Subsidiary may sell all the Voting Stock of a
Restricted Subsidiary as long as Libbey Glass and its Restricted
Subsidiaries comply with the terms of the covenant described
under Limitation on Sales of Assets and
Subsidiary Stock.
SEC
Reports
Notwithstanding that Libbey Glass may not be subject to the
reporting requirements of Section 13 or 15(d) of the
Exchange Act, to the extent permitted by the Exchange Act,
Libbey Glass will file with the SEC, and make available to the
Trustee and the registered holders of the notes:
(1) all quarterly and annual financial information that
would be required to be contained in a filing with the SEC on
Forms 10-Q
and 10-K if
Libbey Glass were required to file such Forms, including a
Managements Discussion and Analysis of Financial
Condition and Results of Operations and, with respect
101
to the annual information only, a report on the annual financial
statements by Libbey Glasss certified independent
accountants; and
(2) all current reports that would be required to be filed
with the SEC on
Form 8-K
if Libbey Glass were required to file such reports.
In the event that Libbey Glass is not permitted to file such
reports, documents and information with the SEC pursuant to the
Exchange Act, Libbey Glass will nevertheless make available such
Exchange Act information to the Trustee and the holders of the
notes as if Libbey Glass were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act
(a) in the case of quarterly reports, within 15 days
after the time period specified in the SECs rules and
regulations and (b) in the case of annual reports, within
30 days after the time period specified in the SECs
rules and regulations; provided, that Libbey Glass shall
not be required to furnish any information, certifications or
reports required by Items 307 or 308 of
Regulation S-K
prior to the commencement of the exchange offer or the
effectiveness of the shelf registration statement (each as
described under Exchange Offer; Registration Rights).
If Libbey Glass has designated any of its Subsidiaries as
Unrestricted Subsidiaries, then the quarterly and annual
financial information required by the preceding paragraph shall
include a reasonably detailed presentation, either on the face
of the financial statements or in the footnotes to the financial
statements and in Managements Discussion and Analysis of
Results of Operations and Financial Condition, of the financial
condition and results of operations of Libbey Glass and its
Restricted Subsidiaries.
In addition, Libbey Glass and the Note Guarantors have agreed
that they will make available to the holders and to prospective
investors, upon the request of such holders, the information
required to be delivered pursuant to Rule 144A(d)(4) under
the Securities Act so long as the notes are not freely
transferable under the Securities Act. For purposes of this
covenant, Libbey Glass and the Note Guarantors will be deemed to
have furnished the reports to the Trustee and the holders of
notes as required by this covenant if it has filed such reports
with the SEC via the EDGAR filing system and such reports are
publicly available.
The filing requirements set forth above for the applicable
period may be satisfied by Libbey Glass prior to the
commencement of the exchange offer or the effectiveness of the
shelf registration statement by the filing with the SEC of the
exchange offer registration statement
and/or shelf
registration statement, and any amendments thereto, with such
financial information that satisfies
Regulation S-X
of the Securities Act; provided that this paragraph shall
not supersede or in any manner suspend or delay Libbey
Glasss reporting obligations set forth in the first three
paragraphs of this covenant.
The Parent may satisfy the obligations of Libbey Glass set forth
above; provided that (x) the financial information
filed with the SEC or delivered to holders pursuant to this
covenant should include consolidating financial statements for
the Parent, Libbey Glass, the Subsidiary Guarantors and the
Subsidiaries that are not Subsidiary Guarantors in the form
prescribed by the SEC and (y) the Parent is not engaged in
any business in any material respect other than incidental to
its ownership, directly or indirectly, of Libbey Glass.
Merger
and Consolidation
Libbey Glass will not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets
to, any Person, unless:
(1) the resulting, surviving or transferee Person (the
Successor Company) will be a corporation organized
and existing under the laws of the United States of America, any
State of the United States or the District of Columbia and the
Successor Company (if not Libbey Glass) will expressly assume,
by supplemental indenture, executed and delivered to the
Trustee, in form satisfactory to the Trustee, all the
obligations of Libbey Glass under the notes and the Indenture
and will expressly assume, by written agreement all the
obligations of Libbey Glass under the Registration Rights
Agreement, the Collateral Documents and the Intercreditor
Agreement;
(2) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
Successor Company or any Subsidiary of the Successor Company as
a result of such
102
transaction as having been Incurred by the Successor Company or
such Subsidiary at the time of such transaction), no Default or
Event of Default would exist that shall not have been cured or
waived;
(3) immediately after giving effect to such transaction,
the Successor Company would (i) be able to Incur at least
$1.00 of additional Indebtedness pursuant to the first paragraph
of the Limitation on Indebtedness
covenant or (ii) have a Consolidated Coverage Ratio of not
less than the Consolidated Coverage Ratio of Libbey Glass
immediately prior to such transaction;
(4) each Note Guarantor (unless it is the other party to
the transactions above, in which case clause (1) shall
apply) shall have by supplemental indenture confirmed that its
Note Guarantee shall apply to such Persons obligations in
respect of the Indenture and the notes; and
(5) Libbey Glass shall have delivered to the Trustee an
Officers Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture, the
Collateral Documents and the Intercreditor Agreement.
Notwithstanding the preceding clause (3), (x) any
Restricted Subsidiary may consolidate with, merge into or
transfer all or part of its properties and assets to Libbey
Glass and (y) Libbey Glass may merge with an Affiliate
incorporated solely for the purpose of reincorporating Libbey
Glass in another jurisdiction; provided that, in the case
of a Restricted Subsidiary that merges into Libbey Glass, Libbey
Glass will not be required to comply with the preceding clauses
(2), (3) or (5).
Parent will not consolidate with or merge with or into, or
convey, transfer or lease all or substantially all its assets
to, any Person, unless:
(1) (a) the resulting, surviving or transferee Person
(the Successor Parent) will be a corporation
organized and existing under the laws of the United States of
America, any State of the United States or the District of
Columbia, and (b) the Successor Parent (if not Parent) will
expressly assume, by supplemental indenture (and other
applicable documents), executed and delivered to the Trustee, in
form satisfactory to the Trustee, all the obligations of Parent
under its Note Guarantee, the Indenture, the Collateral
Documents, the Intercreditor Agreement and the Registration
Rights Agreement;
(2) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
Successor Parent or any Subsidiary of the Successor Parent as a
result of such transaction as having been Incurred by the
Successor Parent or such Subsidiary at the time of such
transaction), no Default or Event of Default would exist that
shall not have been cured or waived; and
(3) Libbey Glass shall have delivered to the Trustee an
Officers Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture, the
Collateral Documents and the Intercreditor Agreement.
For purposes of this covenant, the sale, lease, conveyance,
assignment, transfer, or other disposition of all or
substantially all of the properties and assets of one or more
Subsidiaries of Libbey Glass, which properties and assets, if
held by the Parent or Libbey Glass instead of such Subsidiaries,
would constitute all or substantially all of the properties and
assets of the Parent or Libbey Glass on a consolidated basis,
shall be deemed to be the transfer of all or substantially all
of the properties and assets of the Parent and Libbey Glass.
The predecessor company will be released from its obligations
under the Indenture and the Successor Company will succeed to,
and be substituted for, and may exercise every right and power
of, Libbey Glass under the Indenture, the Collateral Documents
and the Intercreditor Agreement but, in the case of a lease of
all or substantially all its assets, the predecessor company
will not be released from the obligation to pay the principal of
and interest on the notes or any obligation under the Collateral
Documents and the Intercreditor Agreement.
Although there is a limited body of case law interpreting the
phrase substantially all, there is no precise
established definition of the phrase under applicable law.
Accordingly, in certain circumstances there may be a degree of
uncertainty as to whether a particular transaction would involve
all or substantially all of the property or assets
of a Person.
103
In addition, Libbey Glass will not permit any Subsidiary
Guarantor to consolidate with, merge with or into any Person
(other than another Subsidiary Guarantor) and will not permit
the conveyance, transfer or lease of all or substantially all of
the assets of any Subsidiary Guarantor (other than to another
Subsidiary Guarantor) unless:
(1) if such entity remains a Subsidiary Guarantor, the
resulting, surviving or transferee Person will be a corporation,
partnership, trust or limited liability company organized and
existing under the laws of the United States of America, any
State of the United States or the District of Columbia;
(2) immediately after giving effect to such transaction
(and treating any Indebtedness that becomes an obligation of the
resulting, surviving or transferee Person or any Restricted
Subsidiary as a result of such transaction as having been
Incurred by such Person or such Restricted Subsidiary at the
time of such transaction), no Default of Event of Default would
exist that shall not have been cured or waived;
(3) the resulting, surviving or transferee Person assumes
all the obligations of such Subsidiary Guarantor pursuant to a
supplemental indenture in form and substance reasonably
satisfactory to the Trustee under the notes, the Indenture, the
Collateral Documents, the Intercreditor Agreement and the
Registration Rights Agreement; and
(4) Libbey Glass will have delivered to the Trustee an
Officers Certificate and an Opinion of Counsel, each
stating that such consolidation, merger or transfer and such
supplemental indenture (if any) comply with the Indenture.
Notwithstanding the foregoing, (1) a Subsidiary Guarantor
may merge with an Affiliate incorporated solely for the purpose
of reincorporating such Subsidiary Guarantor in another
jurisdiction, so long as the amount of Indebtedness of such
Subsidiary Guarantor is not increased thereby, and (2) any
Subsidiary Guarantor may merge into or transfer or lease all or
part of its properties and assets to Libbey Glass or another
Subsidiary Guarantor.
Future
Subsidiary Guarantors
Libbey Glass will cause each domestic Subsidiary that
Guarantees, on the Issue Date or any time thereafter, any
Indebtedness of Libbey Glass or any Subsidiary Guarantor to
execute and deliver to the Trustee a supplemental indenture
pursuant to which such domestic Subsidiary will unconditionally
Guarantee, on a joint and several basis, the full and prompt
payment of the principal of, premium, if any, and interest
(including Additional Interest, if any) in respect of the notes
on a senior secured basis and all other obligations under the
Indenture. Each domestic Subsidiary that becomes a Subsidiary
Guarantor after the Issue Date will also become a party to the
Collateral Documents and the Intercreditor Agreement and will
take such actions as are necessary or advisable to grant to the
Collateral Agent for the benefit of the Trustee, the Collateral
Agent and the holders of the notes a perfected and at least
second-priority security interest in any Collateral held by such
domestic Subsidiary, subject to Permitted Liens. Notwithstanding
the foregoing, in the event (a) a Subsidiary Guarantor is
released and discharged in full from all of its obligations
under its Guarantees of (1) Lenders Debt and (2) all
other Indebtedness of Libbey Glass and its Restricted
Subsidiaries and (b) such Subsidiary Guarantor has not
Incurred any Indebtedness in reliance on its status as a
Subsidiary Guarantor under the covenant
Limitation on Indebtedness or such
Subsidiary Guarantors obligations under such Indebtedness
are satisfied in full and discharged or are otherwise permitted
to be Incurred by a Restricted Subsidiary (other than a
Subsidiary Guarantor) under the second paragraph of
Limitation on Indebtedness, then the
Subsidiary Guarantee and the obligations of such Subsidiary
Guarantor under the Collateral Documents and Intercreditor
Agreement of such Subsidiary Guarantor shall be automatically
and unconditionally released or discharged.
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
(including, without limitation, any Guarantees of Lenders Debt)
and after giving effect to any collections from or payments made
by or on behalf of any other Subsidiary Guarantor in respect of
the obligations of such other Subsidiary Guarantor under its
Subsidiary Guarantee or pursuant to its contribution obligations
under the Indenture, result in the obligations of such
Subsidiary Guarantor under its Subsidiary Guarantee not
constituting a fraudulent conveyance or fraudulent transfer
under federal or state law.
104
Each Subsidiary Guarantee shall be released in accordance with
the provisions of the Indenture described under
Note Guarantees. Upon the release of any
Note Guarantor from its Note Guarantee, the liens granted by
such Note Guarantor under the Collateral Documents will also be
released and the Trustee and Collateral Agent will execute such
documents confirming such release as Libbey Glass or such Note
Guarantor may request.
Limitation
on Lines of Business
Libbey Glass will not, and will not permit any Restricted
Subsidiary to, engage in any business other than a Related
Business.
Events of
Default
Each of the following is an Event of Default:
(1) default in any payment of interest or additional
interest (as required by the Registration Rights Agreement) on
any note when due, continued for 30 days;
(2) default in the payment of principal of or premium, if
any, on any note when due at its Stated Maturity, upon optional
redemption, upon required repurchase, upon declaration or
otherwise;
(3) failure by Libbey Glass or any Guarantor to comply with
its obligations under Certain Covenants Merger
and consolidation;
(4) failure by Libbey Glass to comply for 45 days
after notice as provided below with (a) any of its
obligations under the covenants described under Change of
control above or under the covenants described under
Certain covenants above (in each case, other than a
failure to purchase notes that will constitute an Event of
Default under clause (2) above and other than a failure to
comply with Certain Covenants Merger and
consolidation which is covered by clause (3)) or
(b) any of its agreements contained in the Collateral
Documents or Intercreditor Agreement;
(5) failure by Libbey Glass to comply for 60 days
after notice as provided below with its other agreements
contained in the Indenture;
(6) default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured
or evidenced any Indebtedness for money borrowed by Libbey Glass
or any of its Restricted Subsidiaries (or the payment of which
is guaranteed by Libbey Glass or any of its Restricted
Subsidiaries), other than Indebtedness owed to Libbey Glass or a
Restricted Subsidiary, whether such Indebtedness or guarantee
now exists, or is created after the Issue Date, which default:
(a) is caused by a failure to pay principal of, or interest
or premium, if any, on such Indebtedness prior to the expiration
of the grace period provided in such Indebtedness (payment
default); or
(b) results in the acceleration of such Indebtedness prior
to its maturity (the cross acceleration provision);
and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other
such Indebtedness under which there has been a payment default
or the maturity of which has been so accelerated, aggregates
$20.0 million or more;
(7) certain events of bankruptcy, insolvency or
reorganization of Libbey Glass or a Significant Subsidiary or
group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for Libbey
Glass and its Restricted Subsidiaries), would constitute a
Significant Subsidiary (the bankruptcy provisions);
(8) failure by Libbey Glass or any Significant Subsidiary
or group of Restricted Subsidiaries that, taken together (as of
the latest audited consolidated financial statements for Libbey
Glass and its Restricted Subsidiaries), would constitute a
Significant Subsidiary to pay final judgments aggregating in
excess of $20.0 million (net of any amounts that a
reputable and creditworthy insurance company has acknowledged
105
liability for in writing), which judgments are not paid,
discharged or stayed for a period of 60 days (the
judgment default provision);
(9) any Subsidiary Guarantee, Collateral Document or
obligation under the Intercreditor Agreement of a Significant
Subsidiary or group of Restricted Subsidiaries that taken
together as of the latest audited consolidated financial
statements for Libbey Glass and its Restricted Subsidiaries
would constitute a Significant Subsidiary ceases to be in full
force and effect (except as contemplated by the terms of the
Indenture) or is declared null and void in a judicial proceeding
or any Subsidiary Guarantor that is a Significant Subsidiary or
group of Subsidiary Guarantors that taken together as of the
latest audited consolidated financial statements of Libbey Glass
and its Restricted Subsidiaries would constitute a Significant
Subsidiary denies or disaffirms its obligations under the
Indenture, its Subsidiary Guarantee, any Collateral Document or
the Intercreditor Agreement; or
(10) with respect to any Collateral having a fair market
value in excess of $20.0 million, individually or in the
aggregate, (A) the security interest under the Collateral
Documents, at any time, ceases to be in full force and effect
for any reason other than in accordance with their terms and the
terms of the Indenture and other than the satisfaction in full
of all obligations under the Indenture and discharge of the
Indenture, (B) any security interest created thereunder or
under the Indenture is declared invalid or unenforceable or
(C) Libbey Glass or any Note Guarantor asserts, in any
pleading in any court of competent jurisdiction, that any such
security interest is invalid or unenforceable.
However, a default under clauses (4) and (5) of this
paragraph will not constitute an Event of Default until the
Trustee or the holders of 25% in principal amount of the
outstanding notes notify Libbey Glass of the default and Libbey
Glass does not cure such default within the time specified in
clauses (4) and (5) of this paragraph after receipt of
such notice.
If an Event of Default (other than an Event of Default described
in clause (7) above) occurs and is continuing, the Trustee
by notice to Libbey Glass, or the holders of at least 25% in
principal amount of the outstanding notes by notice to Libbey
Glass and the Trustee, may, and the Trustee at the request of
such holders shall, declare the principal of, premium, if any,
and accrued and unpaid interest, if any, on all the notes to be
due and payable. Upon such a declaration, such principal,
premium and accrued and unpaid interest will be due and payable
immediately. In the event of a declaration of acceleration of
the notes because an Event of Default described in
clause (6) under Events of Default has occurred
and is continuing, the declaration of acceleration of the notes
shall be automatically annulled if (i) the default
triggering such Event of Default pursuant to clause (6)
shall be remedied or cured by Libbey Glass or a Restricted
Subsidiary or waived by the holders of the relevant Indebtedness
within 20 days after the declaration of acceleration with
respect thereto and (ii) the annulment of the acceleration
of the notes would not conflict with any judgment or decree of a
court of competent jurisdiction. If an Event of Default
described in clause (7) above occurs and is continuing, the
principal of, premium, if any, and accrued and unpaid interest
on all the notes will become and be immediately due and payable
without any declaration or other act on the part of the Trustee
or any holders. The holders of a majority in principal amount of
the outstanding notes may waive all past defaults (except with
respect to nonpayment of principal, premium or interest) and
rescind any such acceleration with respect to the notes and its
consequences if (1) rescission would not conflict with any
judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, other than the
nonpayment of the principal of, premium, if any, and interest on
the notes that have become due solely by such declaration of
acceleration, have been cured or waived.
Subject to the provisions of the Indenture relating to the
duties of the Trustee or the Collateral Agent, if an Event of
Default occurs and is continuing, the Trustee or the Collateral
Agent will be under no obligation to exercise any of the rights
or powers under the Indenture or the Collateral Documents at the
request or direction of any of the holders unless such holders
have offered to the Trustee or the Collateral Agent 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:
(1) such holder has previously given the Trustee notice
that an Event of Default is continuing;
106
(2) holders of at least 25% in principal amount of the
outstanding notes have requested the Trustee to pursue the
remedy;
(3) such holders have offered the Trustee reasonable
security or indemnity against any loss, liability or expense;
(4) 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
(5) the holders of a majority in principal amount of the
outstanding notes have not given the Trustee a direction that,
in the opinion of the Trustee, is 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 the Collateral Agent
or of exercising any trust or power conferred on the Trustee or
the Collateral Agent. The Indenture provides that in the event
an Event of Default has occurred and is continuing, the Trustee
will be required in the exercise of its powers to use the degree
of care that a prudent person would use in the conduct of its
own affairs. The Trustee, however, may refuse to follow any
direction that conflicts with law or the Indenture, the
Collateral Documents or the Intercreditor Agreement 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. Pursuant to the terms of the
Intercreditor Agreement, prior to the discharge of the
first-priority Liens securing the Lenders Debt, the collateral
agent under the Senior Secured Credit Agreement will determine
the time and method by which the security interests in the
Collateral will be enforced. The Trustee will not be permitted
to enforce the security interests and certain other rights
related to the notes even if an Event of Default has occurred
and the notes have been accelerated except in any insolvency or
liquidation proceeding, as necessary to file a claim or
statement of interest with respect to the notes or any Note
Guarantee, and except in certain other limited situations. After
the discharge of the first-priority Liens securing the Lenders
Debt, the Collateral Agent, acting at the instruction of the
holders of a majority in principal amount of the notes and any
Pari Passu Secured Indebtedness, voting as one class, in
accordance with the provisions of the Indenture and the
Collateral Documents, will determine the time and method by
which the security interests in the Collateral will be enforced
and, if applicable, will distribute proceeds (after payment of
the costs of enforcement and Collateral administration) of the
Collateral received by it under the Collateral Documents for the
ratable benefit of the holders of the notes and the Pari Passu
Secured Indebtedness.
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, premium, if any, or interest on any note, the
Trustee may withhold notice if and so long as a committee of
trust officers of the Trustee in good faith determines that
withholding notice is in the interests of the holders. In
addition, Libbey Glass 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 that occurred during the previous year. Libbey Glass
also is required to deliver to the Trustee, within 30 days
after the occurrence thereof, written notice of any events which
would constitute certain Defaults, their status and what action
Libbey Glass is taking or proposing to take in respect thereof
unless such Default has been cured before the end of the
30-day
period.
Amendments
and Waivers
Subject to certain exceptions, the Indenture, the notes, the
Collateral Documents and the Intercreditor Agreement may be
amended or supplemented with the consent of the holders of a
majority in principal amount of the notes then outstanding
(including, without limitation, consents obtained in connection
with a purchase of, or tender offer or exchange offer for,
notes) and, subject to certain exceptions, any existing 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 outstanding (including, without limitation, consents
obtained in connection with a purchase of, or tender offer or
107
exchange offer for, notes). However, without the consent of each
holder of an outstanding note affected, no amendment, supplement
or waiver may, among other things:
(1) reduce the amount of notes whose holders must consent
to an amendment;
(2) change the method of calculating the rate of interest
or extend the stated time for payment of interest on any note;
(3) reduce the principal of or extend the Stated Maturity
of any note;
(4) reduce the premium payable upon the redemption or
repurchase of any note or change the time at which any note may
be redeemed or repurchased as described above under
Optional Redemption or Change of
Control, whether through an amendment or waiver of
provisions in the covenants or otherwise; provided that
amendments to the definition of Change of Control shall not
require the consent of each holder affected;
(5) make any note payable in money other than that stated
in the note;
(6) impair the right of any holder to receive payment of
principal, premium, if any, and interest on such holders
notes on or after the due dates therefor or to institute suit
for the enforcement of any payment on or with respect to such
holders notes;
(7) make any change in the amendment provisions that
require each holders consent or in the waiver provisions;
(8) modify the Note Guarantees in any manner adverse to the
holders of the notes; or
(9) modify the provisions of the Collateral Documents or
the Intercreditor Agreement in any manner materially adverse to
the holders of the notes or release all or substantially all of
the Collateral from the Lien under the Collateral Documents or
the Intercreditor Agreement other than in accordance with the
Indenture, the Collateral Documents or the Intercreditor
Agreement.
In addition, without the consent of holders of sixty-six and
two-thirds percent
(662/3%)
in aggregate principal amount of the notes outstanding, an
amendment or waiver may not (with respect to any notes held by a
non-consenting holder) release Collateral other than in
accordance with the Indenture, the Collateral Documents and the
Intercreditor Agreement.
Notwithstanding the foregoing, without the consent of any
holder, Libbey Glass, the Note Guarantors and the Trustee may
amend the Indenture and the notes, the Collateral Documents or
the Intercreditor Agreement to:
(1) cure any ambiguity, omission, defect or inconsistency;
(2) provide for the assumption by a successor corporation
of the obligations of Libbey Glass or any Note Guarantor under
the Indenture;
(3) provide for uncertificated notes in addition to or in
place of certificated notes (provided that the
uncertificated notes are issued in registered form for purposes
of Section 163(f) of the Code, or in a manner such that the
uncertificated notes are described in Section 163(f) (2)
(B) of the Code);
(4) add Guarantees with respect to the notes or release a
Subsidiary Guarantor upon its designation as an Unrestricted
Subsidiary; provided, however, that the
designation is in accord with the applicable provisions of the
Indenture;
(5) expand the collateral securing the notes;
(6) add to the covenants of Libbey Glass for the benefit of
the holders or surrender any right or power conferred upon
Libbey Glass;
(7) make any change that does not adversely affect the
rights of any holder;
(8) comply with any requirement of the SEC in connection
with the qualification of the Indenture under the
Trust Indenture Act;
108
(9) release a Note Guarantor from its obligations under its
Note Guarantee or the Indenture in accordance with the
applicable provisions of the Indenture;
(10) make, complete or confirm any Collateral permitted or
required by the Indenture or Collateral Documents or any release
of Liens in favor of the Collateral Agent in the Collateral as
provided under Collateral Release or
otherwise in accordance with the terms of the Indenture,
Collateral Documents or the Intercreditor Agreement;
(11) provide for the appointment of a successor trustee;
provided that the successor trustee is otherwise
qualified and eligible to act as such under the terms of the
Indenture;
(12) provide for the issuance of Additional Notes (and the
grant of security for the benefit of the Additional Notes) in
accordance with the terms of the Indenture and provide for the
issuance of exchange securities that shall have terms
substantially identical in all respects to the notes (except
that the transfer restrictions contained in the notes shall be
modified or eliminated as appropriate) and that shall be
treated, together with any outstanding notes, as a single class
of securities;
(13) conform the text of the Indenture, the notes or the
Note Guarantees to any provision of this Description of
Exchange Notes to the extent that such provision in this
Description of Exchange Notes was intended to be a
verbatim recitation of a provision of the Indenture, the notes
or the Note Guarantees;
(14) add additional secured parties to the extent Liens
securing obligations held by such parties are permitted under
the Indenture;
(15) provide for the succession of any parties to the
Collateral Documents (and other amendments that are
administrative or ministerial in nature) in connection with an
amendment, renewal, extension, substitution, refinancing,
restructuring, replacement, supplementing or other modification
from time to time of any agreement in accordance with the terms
of the Indenture and the relevant Collateral Document;
(16) provide for a reduction in the minimum denominations
of the notes; or
(17) comply with the rules of any applicable securities
depositary.
The consent of the holders is not necessary under the Indenture
to approve the particular form of any proposed amendment or
supplement. It is sufficient if such consent approves the
substance of the proposed amendment or supplement. A consent to
any amendment, supplement or waiver under the Indenture by any
holder of notes given in connection with a tender of such
holders notes will not be rendered invalid by such tender.
After an amendment or supplement under the Indenture, the
Collateral Documents or the Intercreditor Agreement becomes
effective, Libbey Glass is required to mail to the holders a
notice briefly describing such amendment or supplement. However,
the failure to give such notice to all the holders, or any
defect in the notice will not impair or affect the validity of
the amendment or supplement.
Defeasance
Libbey Glass at any time may terminate all its obligations under
the notes, the Indenture, the Collateral Documents and the
Intercreditor Agreement, and cause the release of all Collateral
granted under the Collateral Documents (legal
defeasance), except for certain obligations, including
those respecting 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. If Libbey
Glass exercises its legal defeasance option, the Note Guarantees
in effect at such time will terminate.
Libbey Glass at any time may terminate its obligations described
under Change of Control and under the covenants
described under Certain Covenants (other than
Merger and Consolidation), the operation of the
cross-default upon a payment default, cross acceleration
provisions, the bankruptcy provisions with respect to
Significant Subsidiaries and the judgment default provision
described under Events of Default above and the
limitations contained in clause (3) under Certain
Covenants Merger and Consolidation above
(covenant defeasance).
109
Libbey Glass may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance
option. If Libbey Glass exercises its legal defeasance option,
payment of the notes may not be accelerated because of an Event
of Default with respect to the notes. If Libbey Glass exercises
its covenant defeasance option, payment of the notes may not be
accelerated because of an Event of Default specified in clause
(3) (other than an Event of Default resulting from failure to
comply with clause (1) under Certain
Covenants Merger and Consolidation), (4), (5),
(6), (7) (with respect only to Significant Subsidiaries),
(8) or (9) under Events of Default above.
In order to exercise either defeasance option, Libbey Glass must
irrevocably deposit in trust (the defeasance trust)
with the Trustee money or U.S. Government Obligations for
the payment of principal, 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 (subject to customary
exceptions and exclusions) to the effect that holders of the
notes 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. 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.
No
Personal Liability of Directors, Officers, Employees and
Stockholders
No director, officer, employee, incorporator or stockholder of
the Parent, Libbey Glass or any of the Subsidiary Guarantors, as
such, shall have any liability for any obligations of Libbey
Glass under the notes, the Indenture, the Note Guarantees, the
Collateral Documents or for any claim based on, in respect of,
or by reason of, such obligations or their creation. Each holder
by accepting a note waives and releases all such liability. The
waiver and release are part of the consideration for issuance of
the notes. Such waiver may not be effective to waive liabilities
under the federal securities laws and it is the view of the SEC
that such a waiver is against public policy.
Concerning
the Trustee
The Bank of New York Mellon Trust Company, N.A. is the
Trustee under the Indenture and has been appointed by Libbey
Glass as Registrar and Paying Agent with regard to the notes.
Governing
Law
The Indenture provides that it and the notes, the Collateral
Documents and the Intercreditor Agreement will be governed by,
and construed in accordance with, the laws of the State of New
York. However, the Mortgages will be governed by, and construed
in accordance with, the laws of the states in which the
applicable Premises are located.
Certain
Definitions
Acquired Indebtedness means Indebtedness
(i) of a Person or any of its Subsidiaries existing at the
time such Person is merged with or into or becomes a Restricted
Subsidiary of Libbey Glass or (ii) assumed in connection
with the acquisition of assets from such Person, in each case
whether or not Incurred by such Person in connection with, or in
anticipation or contemplation of, such Person merging into, or
becoming a Restricted Subsidiary of Libbey Glass or such
acquisition. Acquired Indebtedness shall be deemed to have been
Incurred, with respect to clause (i) of the preceding
sentence, on the date such Person becomes a Restricted
Subsidiary and, with respect to clause (ii) of the
preceding sentence, on the date of consummation of such
acquisition of assets.
Added Historical Amount means the special
charges in the amounts and for the periods set forth in and
described in the definition of Added Historical
Amount in the Indenture, but only to the extent such
special charges occurred in the consecutive four-quarter
reference period referred to in the definition of Consolidated
Coverage Ratio.
Additional Assets means:
(1) any property, plant or equipment or other asset
(excluding working capital for the avoidance of doubt) to be
used by Libbey Glass or a Restricted Subsidiary in a Related
Business;
110
(2) the Capital Stock of a Person that becomes a Restricted
Subsidiary as a result of the acquisition of such Capital Stock
by Libbey Glass or a Restricted Subsidiary; or
(3) Capital Stock constituting a minority interest in any
Person that at such time is a Restricted Subsidiary;
provided, however, that, in the case of
clauses (2) and (3), such Restricted Subsidiary is
primarily engaged in a Related Business.
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 possession, directly or indirectly, of 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; provided that exclusively for
purposes of Certain Covenants Limitation on
Affiliate Transactions, beneficial ownership of 10% or
more of the Voting Stock of a Person shall be deemed to be
control. For purpose of this definition, terms
controlling and controlled have meanings
correlative to the foregoing.
Asset Disposition means any direct or
indirect sale, lease (other than an operating lease entered into
in the ordinary course of business), transfer, issuance or other
disposition, or a series of related sales, leases, transfers,
issuances or dispositions that are part of a common plan, of
shares of Capital Stock of a Subsidiary (other than
directors qualifying shares), property or other assets
(each referred to for the purposes of this definition as a
disposition) by Libbey Glass or any of its
Restricted Subsidiaries, including any disposition by means of a
merger, consolidation or similar transaction.
Notwithstanding the preceding, the following items shall not be
deemed to be Asset Dispositions:
(1) a disposition of assets by a Restricted Subsidiary to
Libbey Glass or by Libbey Glass or a Restricted Subsidiary to a
Restricted Subsidiary;
(2) the sale of Cash Equivalents in the ordinary course of
business;
(3) a disposition of inventory or products or a sale of
services in the ordinary course of business;
(4) a disposition of obsolete or worn out equipment or
equipment that is no longer useful in the conduct of the
business of Libbey Glass and its Restricted Subsidiaries and
that is disposed of in each case in the ordinary course of
business;
(5) transactions permitted under Certain
Covenants Merger and Consolidation;
(6) an issuance of Capital Stock by a Restricted Subsidiary
to Libbey Glass or by a Restricted Subsidiary to a Restricted
Subsidiary (other than a Receivables Entity);
(7) for purposes of Certain Covenants
Limitation on Sales of Assets and Subsidiary Stock only,
the making of a Permitted Investment (other than a Permitted
Investment to the extent such transaction results in the receipt
of cash or Cash Equivalents by Libbey Glass or its Restricted
Subsidiaries) or a disposition subject to Certain
Covenants Limitation on Restricted Payments;
(8) sales of accounts receivable and related assets or an
interest therein;
(9) dispositions of assets or issuance or sale of Capital
Stock of any Restricted Subsidiary in any transaction or series
of related transactions with an aggregate fair market value of
less than $2.5 million (with unused amounts in any calendar
year being carried over to the next succeeding calendar year
subject to a maximum of $5 million in such next succeeding
calendar year);
(10) the creation of a Permitted Lien and dispositions in
connection with Permitted Liens;
(11) dispositions of receivables in connection with the
compromise, settlement or collection thereof in the ordinary
course of business or in bankruptcy or similar proceedings and
exclusive of factoring or similar arrangements;
111
(12) the issuance by a Restricted Subsidiary of Preferred
Stock that is permitted by the covenant described under the
caption Certain Covenants
Limitation on Indebtedness;
(13) the licensing or sublicensing of intellectual property
or other general intangibles and licenses, leases, subleases or
assignments of other property in the ordinary course of business;
(14) any sale of Capital Stock, Indebtedness or other
securities of, an Unrestricted Subsidiary (with the exception of
Investments in Unrestricted Subsidiaries acquired pursuant to
clauses (11) or (13) of the definition of Permitted
Investments or clause (14) of the second paragraph of
Certain Covenants Limitation on
Restricted Payments);
(15) the sale of any property built or acquired by Libbey
Glass or any Restricted Subsidiary after the Issue Date in a
Sale/Leaseback Transaction within three months of the
construction or acquisition of such property;
(16) foreclosure, condemnation or similar action on
assets; and
(17) the sale, transfer or assignment of assets of a
Foreign Subsidiary (including Capital Stock) to a joint venture;
provided that the aggregate fair market value of such
assets shall not exceed $75.0 million;
provided, that for purposes of the definition of
Asset Disposition the fair market value of property
or assets shall be determined by the Board of Directors of
Libbey Glass in good faith, if less than $25.0 million and
if greater than or equal to $25.0 million, such
determination shall be made by an Independent Financial Advisor).
Attributable Indebtedness in respect of a
Sale/Leaseback Transaction means, as at the time of
determination, the present value (discounted at the interest
rate implicit in the transaction) of the total obligations of
the lessee for net rental payments during the remaining term of
the lease included in such Sale/Leaseback Transaction (including
any period for which such lease has been extended), determined
in accordance with GAAP; provided, however, that
if such Sale/Leaseback Transaction results in a Capitalized
Lease Obligation, the amount of Indebtedness represented thereby
will be determined in accordance with the definition of
Capitalized Lease Obligations.
Average Life means, as of the date of
determination, with respect to any Indebtedness or Preferred
Stock, the quotient obtained by dividing (1) the sum of the
products of the numbers of years from the date of determination
to the date or dates of each successive scheduled principal
payment of such Indebtedness or redemption or similar payment
with respect to such Preferred Stock multiplied by the amount of
each such payment by (2) the sum of all such payments.
Board of Directors means, as to any Person,
the board of directors or managers, as applicable, of such
Person or any duly authorized committee thereof.
Borrowing Base means, as of the date of
determination, an amount equal to the sum, without duplication
of (1) 85% of the net book value of Libbey Glasss and
its Restricted Subsidiaries accounts receivable at such
date and (2) 65% of the net book value of Libbey
Glasss and its Restricted Subsidiaries inventory at
such date. Net book value shall be determined in accordance with
GAAP and shall be calculated using amounts reflected on the most
recent available balance sheet (it being understood that the
accounts receivable and inventories of an acquired business may
be included if such acquisition has been completed on or prior
to the date of determination).
Business Day means each day that is not a
Saturday, Sunday or other day on which banking institutions in
New York, New York, Chicago, Illinois or a place of payment
under the Indenture are authorized or required by law to close.
Capital Stock of any Person means any and all
shares, interests, rights to purchase, warrants, options,
participation or other equivalents of or interests in (however
designated) equity of such Person, including any Preferred Stock
and limited liability or partnership interests (whether general
or limited), but excluding any debt securities convertible into
such equity.
Capitalized Lease Obligations means an
obligation that is required to be classified and accounted for
as a capitalized lease for financial reporting purposes in
accordance with GAAP, and the amount of Indebtedness
112
represented by such obligation will be the capitalized amount of
such obligation at the time any determination thereof is to be
made as determined in accordance with GAAP, and the Stated
Maturity thereof will be the date of the last payment of rent or
any other amount due under such lease prior to the first date
such lease may be terminated without penalty.
Cash Equivalents means:
(1) U.S. dollars, or in the case of Libbey Glass or
any Foreign Subsidiary, such local currencies held by it from
time to time in the ordinary course of business;
(2) securities issued or directly and fully guaranteed or
insured by the U.S. Government or any agency or
instrumentality of the United States (provided that the
full faith and credit of the U.S. Government is pledged in
support thereof), having maturities of not more than one year
from the date of acquisition;
(3) marketable general obligations issued by any state of
the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within
one year from the date of acquisition of the United States
(provided that the full faith and credit of the United
States is pledged in support thereof) and, at the time of
acquisition, having a credit rating of A or better
from either Standard & Poors Ratings Services or
Moodys Investors Service, Inc.;
(4) certificates of deposit, time deposits, eurodollar time
deposits, overnight bank deposits or bankers acceptances
having maturities of not more than one year from the date of
acquisition thereof issued by any commercial bank having
combined capital and surplus in excess of $500 million;
(5) repurchase obligations with a term of not more than
thirty days for underlying securities of the types described in
clauses (2), (3) and (4), entered into with any bank
meeting the qualifications specified in clause (4) above;
(6) commercial paper rated at the time of acquisition
thereof at least
A-2
or the equivalent thereof by Standard & Poors
Ratings Services or
P-2
or the equivalent thereof by Moodys Investors Service,
Inc., or carrying an equivalent rating by a nationally
recognized rating agency, if both of the two named rating
agencies cease publishing ratings of investments, and in any
case maturing within one year after the date of acquisition
thereof; and
(7) interests in any investment company or money market
fund that invests 95% or more of its assets in instruments of
the type specified in clauses (1) through (6) above.
Change of Control means the occurrence of any
of the following:
(1) the consummation of any transaction (including, without
limitation, any merger or consolidation), the result of which is
that any person or group of related
persons (as such terms are used in Sections 13(d) and 14(d)
of the Exchange Act) becomes the beneficial owner (as defined in
Rules 13d-3
and 13d-5
under the Exchange Act, except that such person or group shall
be deemed to have beneficial ownership of all shares
that any such person or group has the right to acquire, whether
such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total
voting power of the Voting Stock of Libbey Glass or the Parent
(or its successor by merger, consolidation or purchase of all or
substantially all of its assets) (for the purposes of this
clause, such person or group shall be deemed to beneficially own
any Voting Stock of Libbey Glass or the Parent held by a parent
entity, if such person or group beneficially owns
(as defined above), directly or indirectly, more than 50% of the
voting power of the Voting Stock of such parent entity); or
(2) the sale, lease, transfer, conveyance or other
disposition (other than by way of merger or consolidation), in
one or a series of related transactions, of all or substantially
all of the assets of the Parent or Libbey Glass and its
Restricted Subsidiaries taken as a whole to any
person (as such term is used in Sections 13(d)
and 14(d) of the Exchange Act) other than the Parent, Libbey
Glass or any of its Restricted Subsidiaries; or
(3) the adoption by the stockholders of Libbey Glass or the
Parent of a plan or proposal for the liquidation or dissolution
of Libbey Glass or the Parent.
113
Code means the United States Internal Revenue
Code of 1986, as amended.
Collateral means all property and tangible
and intangible assets, whether now owned or hereafter acquired,
in which Liens are, from time to time, granted to secure the
notes and the Note Guarantees pursuant to the Collateral
Documents. The Collateral as of the Issue Date shall
not include any owned real property that is held for sale at the
Issue Date.
Collateral Agent means The Bank of New York
Mellon Trust Company, N.A., acting as the collateral agent
for the holders of the notes, the Trustee and any holders of
Pari Passu Secured Indebtedness (including any agent therefor)
under the Collateral Documents.
Collateral Documents means the Mortgages,
security agreements, pledge agreements, agency agreements and
other instruments and documents executed and delivered pursuant
to the Indenture or any of the foregoing, as the same may be
amended, supplemented or otherwise modified from time to time
and pursuant to which Collateral is pledged, assigned or granted
to or on behalf of the Collateral Agent for the ratable benefit
of the holders of the notes and the Trustee and the holders of
any Pari Passu Secured Indebtedness or notice of such pledge,
assignment or grant is given.
Commodity Agreement means any commodity
futures contract, commodity option or other similar agreement or
arrangement entered into by Libbey Glass or any Restricted
Subsidiary designed to protect Libbey Glass or any of its
Restricted Subsidiaries against fluctuations in the price of
commodities actually used in the ordinary course of business of
Libbey Glass and its Restricted Subsidiaries.
Common Stock means with respect to any
Person, any and all shares, interest or other participations in,
and other equivalents (however designated and whether voting or
nonvoting) of such Persons common stock whether or not
outstanding on the Issue Date, and includes, without limitation,
all series and classes of such common stock.
Consolidated Coverage Ratio means as of any
date of determination, with respect to any Person, the ratio of
(x) the aggregate amount of Consolidated EBITDA of such
Person for the period of the most recent four consecutive fiscal
quarters ending prior to the date of such determination for
which financial statements are in existence to
(y) Consolidated Interest Expense for such four fiscal
quarters; provided, however, that:
(1) if Libbey Glass or any Restricted Subsidiary:
(a) has Incurred any Indebtedness since the beginning of
such period 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 will 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 will be deemed to be (i) the
average daily balance of such Indebtedness during such four
fiscal quarters or such shorter period for which such facility
was outstanding or (ii) 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) and the
discharge of any other Indebtedness repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new
Indebtedness as if such discharge had occurred on the first day
of such period; or
(b) has repaid, repurchased, defeased or otherwise
discharged any Indebtedness since the beginning of the period
that is no longer outstanding on such date of determination 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 and the related commitment terminated),
Consolidated EBITDA and Consolidated Interest Expense for such
period will 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;
(2) if since the beginning of such period Libbey Glass or
any Restricted Subsidiary will have made any Asset Disposition
or disposed of any company, division, operating unit, segment,
business, group of related
114
assets or line of business or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is such an
Asset Disposition:
(a) the Consolidated EBITDA for such period will be reduced
by an amount equal to the Consolidated EBITDA (if positive)
directly attributable to the assets that are the subject of such
disposition for such period or increased by an amount equal to
the Consolidated EBITDA (if negative) directly attributable
thereto for such period; and
(b) Consolidated Interest Expense for such period will be
reduced by an amount equal to the Consolidated Interest Expense
directly attributable to any Indebtedness of Libbey Glass or any
Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to Libbey Glass and its continuing
Restricted Subsidiaries in connection with such disposition for
such period (or, if the Capital Stock of any Restricted
Subsidiary is sold, the Consolidated Interest Expense for such
period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent Libbey Glass and its
continuing Restricted Subsidiaries are no longer liable for such
Indebtedness after such sale);
(3) if since the beginning of such period Libbey Glass or
any Restricted Subsidiary (by merger or otherwise) will have
made an Investment in any Restricted Subsidiary (or any Person
that becomes a Restricted Subsidiary or is merged with or into
Libbey Glass) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder, which constitutes
all or substantially all of a company, division, operating unit,
segment, business, group of related assets or line of business,
Consolidated EBITDA and Consolidated Interest Expense for such
period will be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such
period;
(4) if since the beginning of such period any Person (that
subsequently became a Restricted Subsidiary or was merged with
or into Libbey Glass or any Restricted Subsidiary since the
beginning of such period) will have Incurred any Indebtedness or
discharged any Indebtedness, made any disposition or any
Investment or acquisition of assets that would have required an
adjustment pursuant to clause (1), (2) or (3) above if
made by Libbey Glass or a Restricted Subsidiary during such
period, Consolidated EBITDA and Consolidated Interest Expense
for such period will be calculated after giving pro forma effect
thereto as if such transaction occurred on the first day of such
period; and
(5) any Person that is a Restricted Subsidiary on the date
of determination will be deemed to have been a Restricted
Subsidiary at all times during such four-quarter period and any
Person that is not a Restricted Subsidiary on the date of
determination will be deemed not to have been a Restricted
Subsidiary at any time during such four-quarter period.
For purposes of this definition, whenever pro forma effect is to
be given to any calculation under this definition, the pro forma
calculations will be determined in good faith by a responsible
financial or accounting officer of Libbey Glass (including pro
forma expense and cost reductions calculated on a basis
consistent with
Regulation S-X
under the Securities Act). If any Indebtedness bears a floating
rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will 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 such
Interest Rate Agreement has a remaining term in excess of
12 months). If any Indebtedness that is being given pro
forma effect bears an interest rate at the option of Libbey
Glass, the interest rate shall be calculated by applying such
optional rate chosen by Libbey Glass.
Consolidated EBITDA for any period means,
without duplication, the Consolidated Net Income for such
period, plus the following to the extent deducted in calculating
such Consolidated Net Income:
(1) Consolidated Interest Expense; plus
(2) Consolidated Income Taxes; plus
(3) consolidated depreciation expense; plus
(4) impairment charges, asset write-offs or acquisition
costs recorded in accordance with GAAP; plus
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(5) any expenses or charges related to any Equity Offering,
Permitted Investment, acquisition, recapitalization or
Indebtedness permitted to be incurred under the Indenture (in
each case whether or not consummated), deducted in such period
in computing Consolidated Net Income; plus or minus
(6) any fees, expenses or charges Incurred in connection
with the Transactions; plus
(7) the amount of any restructuring charges or reserves
(including retention, severance, systems establishment cost,
pension settlement or curtailment charges, contract termination
costs, future lease commitments, and costs to consolidate
facilities and relocate employees) deducted in such period in
computing Consolidated Net Income; plus
(8) any net after-tax income or loss from discontinued
operations and any net after-tax gains or losses on disposal of
discontinued operations; plus
(9) Receivables Fees to the extent deducted in calculating
Consolidated Net Income for such period; plus
(10) any extraordinary expenses and charges Incurred by
Libbey Glass or any of its Restricted Subsidiaries; plus
(11) net after-tax gains or losses (less all fees and
expenses or charges relating thereto) attributable to the early
extinguishment of Indebtedness; plus or minus
(12) unrealized gains or losses relating to hedging
transactions and
mark-to-market
Indebtedness denominated in foreign currencies resulting from
the application of GAAP; plus
(13) non-cash compensation charges, including any such
noncash charges arising from stock options, restricted stock
grants or other equity incentive programs; plus
(14) the Added Historical Amount; plus
(15) other non-cash charges reducing Consolidated Net
Income (excluding any such non-cash charge to the extent it
represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was
paid in a prior period not included in the calculation);
less
(16) non-cash items increasing Consolidated Net Income of
such Person for such period (excluding any items which represent
the reversal of any accrual of, or reserve for, anticipated cash
charges made in any prior period and excluding the accrual of
revenue in the ordinary course of business).
Notwithstanding the preceding sentence, clauses (2) through
(11) relating to amounts of a Restricted Subsidiary of a
Person will be added to Consolidated Net Income to compute
Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such
Restricted Subsidiary was included in calculating the
Consolidated Net Income of such Person and, to the extent the
amounts set forth in clauses (2) through (11) are in
excess of those necessary to offset a net loss of such
Restricted Subsidiary or if such Restricted Subsidiary has net
income for such period included in Consolidated Net Income, only
if a corresponding amount would be permitted at the date of
determination to be dividended to Libbey Glass by such
Restricted Subsidiary without prior approval (that has not been
obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes,
rules and governmental regulations applicable to that Restricted
Subsidiary or its stockholders.
Consolidated Income Taxes means, with respect
to any Person for any period, taxes imposed upon such Person or
other payments required to be made by such Person by any
governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person
or such Person and its Restricted Subsidiaries (to the extent
such income or profits were included in computing Consolidated
Net Income for such period), regardless of whether such taxes or
payments are required to be remitted to any governmental
authority.
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Consolidated Interest Expense means, for any
period, the total interest expense of Libbey Glass and its
consolidated Restricted Subsidiaries, whether paid or accrued,
plus, to the extent not included in such interest expense:
(1) interest expense attributable to Capitalized Lease
Obligations and the interest portion of rent expense associated
with Attributable Indebtedness in respect of the relevant lease
giving rise thereto, determined as if such lease were a
capitalized lease in accordance with GAAP and the interest
component of any deferred payment obligations;
(2) amortization of debt discount, debt issuance cost or
deferred financing costs (provided that any amortization
of bond premium will be credited to reduce Consolidated Interest
Expense unless, pursuant to GAAP, such amortization of bond
premium has otherwise reduced Consolidated Interest Expense);
(3) non-cash interest expense;
(4) commissions, discounts and other fees and charges owed
with respect to letters of credit and bankers acceptance
financing;
(5) the interest expense on Indebtedness of another Person
that is Guaranteed by such Person or one of its Restricted
Subsidiaries or secured by a Lien on assets of such Person or
one of its Restricted Subsidiaries;
(6) costs associated with Hedging Obligations (including
amortization of fees); provided, however, that if
Hedging Obligations result in net benefits rather than costs,
such benefits shall be credited to reduce Consolidated Interest
Expense unless, pursuant to GAAP, such net benefits are
otherwise reflected in Consolidated Net Income;
(7) the consolidated interest expense of such Person and
its Restricted Subsidiaries that was capitalized during such
period; and
(8) the product of (a) all dividends paid or payable,
in cash, Cash Equivalents or Indebtedness or accrued during such
period on any series of Disqualified Stock of such Person or on
Preferred Stock of its Restricted Subsidiaries that are not
Subsidiary Guarantors payable to a party other than Libbey Glass
or a Restricted Subsidiary, times (b) a fraction, the
numerator of which is one and the denominator of which is one
minus the then current combined federal, state, provincial and
local statutory tax rate of such Person, expressed as a decimal,
in each case, on a consolidated basis and in accordance with
GAAP.
For the purpose of calculating the Consolidated Coverage Ratio,
the calculation of Consolidated Interest Expense shall include
all interest expense (including any amounts described in
clauses (1) through (8) above) relating to any
Indebtedness of Libbey Glass or any Restricted Subsidiary
described in the final paragraph of the definition of
Indebtedness.
For purposes of the foregoing, total interest expense will be
determined (i) after giving effect to any net payments made
or received by Libbey Glass and its Subsidiaries with respect to
Interest Rate Agreements and (ii) exclusive of amounts
classified as other comprehensive income in the balance sheet of
Libbey Glass. Notwithstanding anything to the contrary contained
herein, commissions, discounts, yield and other fees and charges
Incurred in connection with any transaction pursuant to which
Libbey Glass or its Restricted Subsidiaries may sell, convey or
otherwise transfer or grant a security interest in any accounts
receivable or related assets shall be included in Consolidated
Interest Expense.
Consolidated Net Income means, for any
period, the net income (loss) of Libbey Glass and its
consolidated Restricted Subsidiaries determined in accordance
with GAAP; provided, however, that there will not
be included in such Consolidated Net Income:
(1) any net income (loss) of any Person if such Person is
not a Restricted Subsidiary, except that:
(a) subject to the limitations contained in clauses (3),
(4) and (5) below, Libbey Glasss equity in the
net income of any such Person for such period will be included
in such Consolidated Net Income up to the aggregate amount of
cash actually distributed by such Person during such period to
Libbey Glass or a
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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 (2) below); and
(b) Libbey Glasss equity in a net loss of any such
Person (other than an Unrestricted Subsidiary) for such period
will be included in determining such Consolidated Net Income
only to the extent such loss has been funded with cash from
Libbey Glass or a Restricted Subsidiary;
(2) solely for the purpose of determining the amounts
available under clause (4)(c) of the first paragraph of the
covenant described under Limitation on Restricted
Payments, any net income (but not loss) of any Restricted
Subsidiary if such Subsidiary is subject to restrictions,
directly or indirectly, on the payment of dividends or the
making of distributions by such Restricted Subsidiary, directly
or indirectly, to Libbey Glass, except that:
(a) subject to the limitations contained in clauses (3),
(4) and (5) below and subject, in the case of a
dividend to another Restricted Subsidiary, to the limitation
contained in this clause (2), Libbey Glasss equity in the
net income of any such Restricted Subsidiary for such period
will be included in such Consolidated Net Income up to the
aggregate amount of cash (x) that could have been
distributed by such Restricted Subsidiary during such period to
Libbey Glass or another Restricted Subsidiary as a dividend, for
purposes of the calculation of Consolidated EBITDA and
(y) that actually is paid in cash or converted into cash,
for purposes of calculating clause (c)(i) of Certain
Covenants Limitation on Restricted
Payments; and
(b) Libbey Glasss equity in a net loss of any such
Restricted Subsidiary for such period will be included in
determining such Consolidated Net Income;
(3) any gain (loss) realized upon the sale or other
disposition of any property, plant or equipment of Libbey Glass
or its consolidated Restricted Subsidiaries (including pursuant
to any Sale/Leaseback Transaction) that is not sold or otherwise
disposed of in the ordinary course of business and any gain
(loss) realized upon the sale or other disposition of any
Capital Stock of any Person;
(4) effects of adjustments in any line item in any
Persons consolidated financial statements pursuant to GAAP
resulting from the application of purchase accounting in
relation to the Acquisition or any other consummated acquisition;
(5) after-tax effect of nonrecurring restructuring,
closure, plant consolidation or similar charges relating to
property, plant and equipment acquired in the Acquisition or in
future acquisitions that are contemplated at the time of and
incurred within 12 months of the closing of such
transaction;
(6) any extraordinary gain or loss; and
(7) the cumulative effect of a change in accounting
principles.
Any amounts distributed or otherwise transferred to Parent
pursuant to clause (9) of the second paragraph of the
covenant described under Certain Covenants
Limitation on Restricted Payments, without duplication of
any amounts otherwise deducted in calculating Consolidated Net
Income, the funds for which are provided by Libbey Glass
and/or its
Restricted Subsidiaries, shall be deducted in calculating the
Consolidated Net Income of Libbey Glass and its Restricted
Subsidiaries.
Credit Facility means, with respect to Libbey
Glass or any Subsidiary Guarantor or any Restricted Subsidiary
that is a Foreign Subsidiary, one or more debt facilities
(including, without limitation, the Senior Secured Credit
Agreement or commercial paper facilities with banks or other
institutional lenders providing for revolving credit loans, term
loans, receivables financing (including through the sale of
receivables to such lenders or to special purpose entities
formed to borrow from such lenders against such receivables) or
letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced (whether upon or after termination
or otherwise) or refinanced (including by means of sales of debt
securities to institutional investors) in whole or in part from
time to time (and whether or not with the original
administrative agent and lenders or another administrative agent
or agents or other lenders and whether provided under the
original Senior Secured Credit Agreement or any other credit or
other agreement or indenture).
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Currency Agreement means in respect of a
Person any foreign exchange contract, currency swap agreement,
futures contract, option contract or other similar agreement as
to which such Person is a party or a beneficiary.
Default means any event that is, or after
notice or the passage of time or both would be, an Event of
Default.
Designated Non-cash Consideration means the
fair market value of non-cash consideration received by Libbey
Glass or a Restricted Subsidiary in connection with an Asset
Disposition that is so designated as Designated Non-cash
Consideration pursuant to an Officers Certificate, setting
forth the basis of such valuation, executed by the principal
financial officer of Libbey Glass, less the amount of cash or
Cash Equivalents received in connection with a subsequent sale
of or collection on such Designated Non-cash Consideration.
Discharge of Credit Agreement Obligations
means the date on which the Lenders Debt has been paid in full,
in cash, all commitments to extend credit thereunder shall have
been terminated and the Lenders Debt is no longer secured by the
Credit Agreement Priority Collateral; provided that the
Discharge of Credit Agreement Obligations shall not be deemed to
have occurred in connection with a refinancing of such Lenders
Debt with Indebtedness secured by such Credit Agreement Priority
Collateral on a first-priority basis under an agreement that has
been designated as a Credit Facility in writing by the
administrative agent under the Credit Facility so refinancing
the Senior Secured Credit Agreement in accordance with the terms
of the Intercreditor Agreement.
Disqualified Stock means, with respect to any
Person, any Capital Stock of such Person that by its terms (or
by the terms of any security into which it is convertible or for
which it is exchangeable) or upon the happening of any event:
(1) matures or is mandatorily redeemable pursuant to a
sinking fund obligation or otherwise;
(2) is convertible or exchangeable for Indebtedness or
Disqualified Stock (excluding Capital Stock that is convertible
or exchangeable solely at the option of Libbey Glass or a
Restricted Subsidiary); or
(3) is redeemable at the option of the holder of the
Capital Stock in whole or in part,
in each case on or prior to the date that is 91 days after
the earlier of the date (a) of the Stated Maturity of the
notes or (b) on which there are no notes outstanding,
provided that only the portion of Capital Stock that so
matures or is mandatorily redeemable, is so convertible or
exchangeable or is so redeemable at the option of the holder
thereof prior to such date will be deemed to be Disqualified
Stock; provided further that any Capital Stock that would
constitute Disqualified Stock solely because the holders thereof
have the right to require Libbey Glass to repurchase such
Capital Stock upon the occurrence of a change of control or
asset sale (each defined in a substantially similar manner to
the corresponding definitions in the Indenture) shall not
constitute Disqualified Stock if the terms of such Capital Stock
(and all such securities into which it is convertible or for
which it is ratable or exchangeable) provide that Libbey Glass
may not repurchase or redeem any such Capital Stock (and all
such securities into which it is convertible or for which it is
ratable or exchangeable) pursuant to such provision prior to
compliance by Libbey Glass with the provisions of the Indenture
described under the captions Change of Control and
Certain Covenants Limitation on Sales of
Assets and Subsidiary Stock and such repurchase or
redemption complies with Certain Covenants
Limitation on Restricted Payments.
Equity Offering means a public offering for
cash by Libbey Glass or the Parent, as the case may be, of its
Common Stock, or options, warrants or rights with respect to its
Common Stock, other than (x) public offerings with respect
to Libbey Glasss or the Parents, as the case may be,
Common Stock, or options, warrants or rights, registered on
Form S-4
or S-8,
(y) an issuance to any Subsidiary or (z) any offering
of Common Stock issued in connection with a transaction that
constitutes a Change of Control.
Exchange Act means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the
SEC promulgated thereunder.
Foreign Assets means the aggregate assets
held by, or related to, the Foreign Subsidiaries of Libbey Glass
determined in accordance with GAAP as disclosed in the financial
statements or in the footnotes to the financial statements of
Libbey Glass most recently made available in accordance with the
Indenture.
Foreign Subsidiary means any Restricted
Subsidiary that is not organized under the laws of the United
States of America or any state thereof or the District of
Columbia and any Subsidiary of such Restricted Subsidiary.
119
GAAP means generally accepted accounting
principles in the United States of America as in effect from
time to time, 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 will be computed in conformity with GAAP,
except that in the event Libbey Glass is acquired in a
transaction in which purchase accounting is applied to Libbey
Glasss financial statements, the effects of the
application of purchase accounting in such instance shall be
disregarded in the calculation of such ratios and other
computations.
Guarantee means any obligation, contingent or
otherwise, of any Person directly or indirectly guaranteeing any
Indebtedness of any other Person and any obligation, direct or
indirect, contingent or otherwise, of such Person:
(1) to purchase or pay (or advance or supply funds for the
purchase or payment of) such Indebtedness of such other Person
(whether arising by virtue of partnership arrangements, or by
agreement to keep-well, to purchase assets, goods, securities or
services, to
take-or-pay,
or to maintain financial statement conditions or
otherwise); or
(2) entered into for purposes of assuring in any other
manner the obligee of such Indebtedness of the payment thereof
or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the
term Guarantee will not include endorsements for
collection or deposit in the ordinary course of business. The
term Guarantee used as a verb has a corresponding
meaning.
Guarantor Pari Passu Indebtedness means
Indebtedness of a Subsidiary Guarantor that ranks equally in
right of payment to its Subsidiary Guarantee.
Guarantor Subordinated Obligation means, with
respect to a Subsidiary Guarantor, any Indebtedness of such
Subsidiary Guarantor (whether outstanding on the Issue Date or
thereafter Incurred) that is expressly subordinated in right of
payment to the obligations of such Subsidiary Guarantor under
its Subsidiary Guarantee, including the Guarantees of the
Private Placement Notes, pursuant to a written agreement,
without giving effect to collateral arrangements.
Hedging Obligations of any Person means the
obligations of such Person pursuant to any Interest Rate
Agreement, Currency Agreement or Commodity Agreement.
holder means a Person in whose name a note is
registered on the Registrars books.
Incur means issue, create, assume, Guarantee,
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 Restricted
Subsidiary (whether by merger, consolidation, acquisition or
otherwise) will be deemed to be Incurred by such Person at the
time it becomes a Restricted Subsidiary; and the terms
Incurred and Incurrence have meanings
correlative to the foregoing.
Indebtedness means, with respect to any
Person on any date of determination (without duplication):
(1) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(2) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes
or other similar instruments;
(3) the principal component of all obligations of such
Person in respect of letters of credit, bankers
acceptances or other similar instruments (including
reimbursement obligations with respect thereto except to the
extent such reimbursement obligation relates to a trade payable
or similar obligation to a trade creditor in each case incurred
in the ordinary course of business);
(4) the principal component of 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
six months after the date of placing such property in service or
taking delivery and title thereto;
(5) Capitalized Lease Obligations and all Attributable
Indebtedness of such Person;
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(6) the principal component or liquidation preference of
all obligations of such Person with respect to the redemption,
repayment or other repurchase of any Disqualified Stock of
Libbey Glass or a Restricted Subsidiary or Preferred Stock of a
Subsidiary that is not a Subsidiary Guarantor (but excluding, in
each case, any accrued dividends);
(7) the principal component of 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, however, that the amount of such
Indebtedness will be the lesser of (a) the fair market
value of such asset at such date of determination and
(b) the amount of such Indebtedness of such other Persons;
(8) the principal component of Indebtedness of other
Persons to the extent Guaranteed by such Person;
(9) to the extent not otherwise included in this
definition, net obligations of such Person under Hedging
Obligations (the amount of any such obligations to be equal at
any time to the termination value of such agreement or
arrangement giving rise to such obligation that would be payable
by such Person at such time); and
(10) to the extent not otherwise included in this
definition, the principal amount of any Indebtedness outstanding
in connection with a securitization transaction is the amount of
obligations outstanding under the legal documents entered into
as part of such securitization that would be characterized as
principal on any date of determination if such securitization
transaction were structured as a secured lending transaction.
The amount of Indebtedness of any Person at any date will be the
outstanding balance at such date of all unconditional
obligations as described above and the maximum liability, upon
the occurrence of the contingency giving rise to the obligation,
of any contingent obligations at such date; provided that
contingent obligations arising in the ordinary course of
business and not with respect of borrowed money shall be deemed
not to constitute Indebtedness. Notwithstanding the foregoing,
money borrowed and set aside at the time of the Incurrence of
any Indebtedness in order to pre-fund the payment of interest on
such Indebtedness shall not be deemed to be
Indebtedness, provided that such money is
held to secure the payment of such interest.
In addition, Indebtedness of any Person shall
include Indebtedness described in the preceding paragraph that
would not appear as a liability on the balance sheet of such
Person if:
(1) such Indebtedness is the obligation of a partnership or
joint venture that is not a Restricted Subsidiary (a Joint
Venture);
(2) such Person or a Restricted Subsidiary of such Person
is a general partner of the Joint Venture (a General
Partner); and
(3) there is recourse, by contract or operation of law,
with respect to the payment of such Indebtedness to property or
assets of such Person or a Restricted Subsidiary of such Person;
and then such Indebtedness shall be included in an amount not to
exceed:
(a) the lesser of (i) the net assets of the General
Partner and (ii) the amount of such obligations to the
extent that there is recourse, by contract or operation of law,
to the property or assets of such Person or a Restricted
Subsidiary of such Person; or
(b) if less than the amount determined pursuant to
clause (a) immediately above, the actual amount of such
Indebtedness that is recourse to such Person or a Restricted
Subsidiary of such Person, if the Indebtedness is evidenced by a
writing and is for a determinable amount.
Independent Financial Advisor means an
accounting, appraisal or investment banking firm or consultant
to Persons engaged in a Permitted Business of nationally
recognized standing that is, in the good faith judgment of
Libbey Glass, qualified to perform the task for which it has
been engaged.
Intercreditor Agreement means the
Intercreditor Agreement, dated as of February 8, 2010, by
and among JPMorgan Chase Bank, N.A., in its capacity as
administrative agent pursuant to the Senior Secured Credit
Agreement, the holders of any Pari Passu Secured Debt from time
to time (or any agent or representative on their behalf), the
Trustee, the Collateral Agent, Libbey Glass and the Note
Guarantors.
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Interest Payment Date has the meaning set
forth under General Interest.
Interest Rate Agreement means with respect to
any Person any interest rate protection agreement, interest rate
future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate
collar agreement, interest rate hedge agreement or other similar
agreement or arrangement as to which such Person is party or a
beneficiary.
Investment means, with respect to any Person,
all investments by such Person in other Persons (including
Affiliates) in the form of any direct or indirect advance, loan
(other than advances or extensions of credit to customers in the
ordinary course of business) or other extensions of credit
(including by way of Guarantee or similar arrangement, but
excluding any debt or extension of credit represented by a bank
deposit other than a time deposit) or capital contribution to
(by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of
others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by, such Person
and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP;
provided that none of the following will be deemed to be
an Investment:
(1) Hedging Obligations entered into in the ordinary course
of business and in compliance with the Indenture;
(2) endorsements of negotiable instruments and documents in
the ordinary course of business; and
(3) an acquisition of assets, Capital Stock or other
securities by Libbey Glass or a Subsidiary for consideration to
the extent such consideration consists of Common Stock of Libbey
Glass or the Parent.
For purposes of Certain Covenants Limitation
on Restricted Payments,
(1) Investment will include the portion
(proportionate to Libbey Glasss equity interest in a
Restricted Subsidiary to be designated as an Unrestricted
Subsidiary) of the fair market value of the net assets of such
Restricted Subsidiary at the time that such Restricted
Subsidiary is designated an Unrestricted Subsidiary;
provided, however, that upon a redesignation of
such Subsidiary as a Restricted Subsidiary, Libbey Glass will be
deemed to continue to have a permanent Investment in
an Unrestricted Subsidiary in an amount (if positive) equal to
(a) Libbey Glasss Investment in such
Subsidiary at the time of such redesignation less (b) the
portion (proportionate to Libbey Glasss equity interest in
such Subsidiary) of the fair market value of the net assets (as
conclusively determined by the Board of Directors of Libbey
Glass in good faith) of such Subsidiary at the time that such
Subsidiary is so redesignated a Restricted Subsidiary;
(2) any property transferred to or from an Unrestricted
Subsidiary will be valued at its fair market value at the time
of such transfer, in each case as determined in good faith by
the Board of Directors of Libbey Glass; and
(3) if Libbey Glass or any Restricted Subsidiary sells or
otherwise disposes of any Voting Stock of any Restricted
Subsidiary such that, after giving effect to any such sale or
disposition, such entity is no longer a Subsidiary of Libbey
Glass, Libbey Glass shall be deemed to have made an Investment
on the date of any such sale or disposition equal to the fair
market value (as conclusively determined by the Board of
Directors of Libbey Glass in good faith) of the Capital Stock of
such Subsidiary not sold or disposed of.
Issue Date means February 8, 2010.
Joint Venture means any Person, other than an
individual or a Subsidiary of Libbey Glass, (i) in which
Libbey Glass or a Restricted Subsidiary holds or acquires a
security interest (whether by way of Capital Stock or otherwise)
and (ii) which is engaged in a Related Business.
Lenders Debt means any (i) Indebtedness
outstanding from time to time under the Senior Secured Credit
Agreement, (ii) any Indebtedness which has a first-priority
security interest in the Credit Agreement Priority Collateral
(subject to Permitted Liens), and (iii) all cash management
Obligations and related banking services and Hedging Obligations
incurred with any agent or lender under the Senior Secured
Credit Agreement (or their affiliates).
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Lien means, with respect to any asset, any
mortgage, pledge, security interest, encumbrance, lien or charge
of any kind in respect of such asset (including any conditional
sale or other title retention agreement or lease in the nature
thereof).
Mortgages means the mortgages, deeds of
trust, deeds to secure Indebtedness or other similar documents
securing Liens on the Premises, as well as the other Collateral
secured by and described in the mortgages, deeds of trust, deeds
to secure Indebtedness or other similar documents.
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 and net proceeds
from the sale or other disposition of any securities received as
consideration, 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 of:
(1) all legal, accounting, investment banking, 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
(after taking into account any available tax credits or
deductions and any tax sharing agreements), as a consequence of
such Asset Disposition;
(2) all payments made on any Indebtedness that is secured
by any assets subject to such Asset Disposition, in accordance
with the terms of any Lien upon or any other security agreement
of any kind with respect to 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;
(3) 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; and
(4) the deduction of appropriate amounts to be provided by
the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the property or other assets
disposed of in such Asset Disposition and retained by Libbey
Glass or any Restricted Subsidiary after such Asset Disposition.
Net Cash Proceeds, with respect to any
issuance or sale of Capital Stock, means the cash proceeds of
such issuance or sale net of attorneys fees,
accountants fees, underwriters or placement
agents fees, listing fees, discounts or commissions and
brokerage, consultant and other fees and charges actually
Incurred in connection with such issuance or sale and net of
taxes paid or payable as a result of such issuance or sale
(after taking into account any available tax credit or
deductions and any tax sharing arrangements); provided
that the cash proceeds of an Equity Offering by Parent shall
not be deemed Net Cash Proceeds, except to the extent such cash
proceeds are contributed to Libbey Glass.
Non-Conforming Plan of Reorganization means
any plan of reorganization that grants any Noteholder Secured
Party any right or benefit, directly or indirectly, which right
or benefit is prohibited at such time by the provisions of the
Intercreditor Agreement.
Non-Guarantor Restricted Subsidiary means any
Restricted Subsidiary that is not a Subsidiary Guarantor.
Non-Recourse Debt means Indebtedness of a
Person:
(1) as to which neither Libbey Glass nor any Restricted
Subsidiary (a) provides any Guarantee or credit support of
any kind (including any undertaking, guarantee, indemnity,
agreement or instrument that would constitute Indebtedness) or
(b) is directly or indirectly liable (as a guarantor or
otherwise);
(2) no default with respect to which (including any rights
that the holders thereof may have to take enforcement action
against an Unrestricted Subsidiary) would permit (upon notice,
lapse of time or both) any holder of any other Indebtedness of
Libbey Glass or any Restricted Subsidiary to declare a default
under such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its Stated Maturity; and
(3) the explicit terms of which provide there is no
recourse against any of the assets of Libbey Glass or its
Restricted Subsidiaries, except that Standard Securitization
Undertakings shall not be considered recourse.
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Note Guarantee means, individually, any
Guarantee of payment of the notes and exchange notes issued in a
registered exchange offer pursuant to the Registration Rights
Agreement by a Note Guarantor pursuant to the terms of the
Indenture and any supplemental indenture thereto, and,
collectively, all such Note Guarantees. Each such Note Guarantee
will be in the form prescribed by the Indenture.
Obligations means any principal, interest
(including any interest accruing subsequent to the filing of a
petition in bankruptcy, reorganization or similar proceeding at
the rate provided for in the documentation with respect thereto,
whether or not such interest is an allowed claim under
applicable state, federal or foreign law), penalties, fees,
indemnifications, reimbursements (including, without limitation,
reimbursement obligations with respect to letters of credit and
bankers acceptances), damages and other liabilities, and
guarantees of payment of such principal, interest, penalties,
fees, indemnifications, reimbursements, damages and other
liabilities, payable under the documentation governing any
Indebtedness, Hedging Obligations or cash management and related
banking services.
Offering Memorandum means the Offering
Memorandum dated as of January 28, 2010 relating to the
offering of the notes.
Officer means the Chairman of the Board, the
Chief Executive Officer, the President, the Chief Financial
Officer, any Vice President, the Treasurer or the Secretary of
Libbey Glass or, if Libbey Glass is a partnership or a limited
liability company that has no such officers, a person duly
authorized under applicable law by the general partner,
managers, members or a similar body to act on behalf of Libbey
Glass. Officer of any Note Guarantor has a correlative meaning.
Officers Certificate means a
certificate signed by two Officers or by an Officer and either
an Assistant Treasurer or an Assistant Secretary of Libbey Glass.
Opinion of Counsel means a written opinion
from legal counsel who is acceptable to the Trustee. The counsel
may be an employee of or counsel to Libbey Glass, a Note
Guarantor or the Trustee.
Parent means Libbey Inc., a Delaware
corporation, or any successor thereto.
Pari Passu Indebtedness means Indebtedness
that ranks equally in right of payment to the notes (without
giving effect to collateral arrangements).
Pari Passu Secured Indebtedness means any
Indebtedness of Libbey Glass or any Note Guarantor that ranks
pari passu in right of payment with the notes or the relevant
Note Guarantee and is secured by a Lien on the Collateral that
has the same priority as the Lien securing the notes and that is
designated in writing as such by Libbey Glass to the Trustee and
the holders of which enter into an appropriate agency agreement
with the Collateral Agent.
Permitted Asset Swap means any transfer of
property or assets by Libbey Glass or any of its Restricted
Subsidiaries in which at least 90% of the consideration received
by the transferor consists of properties or assets (other than
cash and Investments) that will be used in a Related Business;
provided that the aggregate fair market value of the
property or assets being transferred by Libbey Glass or such
Restricted Subsidiary is not greater than the aggregate fair
market value of the property or assets received by Libbey Glass
or such Restricted Subsidiary in such exchange (provided,
however, that in the event such aggregate fair market
value of the property or assets being transferred or received by
Libbey Glass is (x) less than $25.0 million, such
determination shall be made in good faith by the Board of
Directors of Libbey Glass and (y) greater than or equal to
$25.0 million, such determination shall be made by an
Independent Financial Advisor).
Permitted Investment means an Investment by
Libbey Glass or any Restricted Subsidiary in:
(1) a Restricted Subsidiary or a Person that will, upon the
making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of
such Restricted Subsidiary is a Related Business;
(2) 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,
Libbey Glass or a Restricted Subsidiary (other than a
Receivables Entity); provided, however, that such
Persons primary business is a Related Business;
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(3) cash and Cash Equivalents;
(4) receivables owing to Libbey Glass or any Restricted
Subsidiary created or acquired in the ordinary course of
business and payable or dischargeable in accordance with
customary trade terms; provided, however, that
such trade terms may include such concessionary trade terms as
Libbey Glass or any such Restricted Subsidiary deems reasonable
under the circumstances;
(5) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be
treated as expenses for accounting purposes and that are made in
the ordinary course of business;
(6) loans or advances to employees of Libbey Glass and its
Restricted Subsidiaries, (i) the proceeds of which are used
to purchase Capital Stock of Libbey Glass or the Parent (to the
extent such proceeds are actually received by Libbey Glass or
the Parent), or (ii) made in the ordinary course of
business consistent with past practices of Libbey Glass or such
Restricted Subsidiary in an aggregate amount at any one time
outstanding not to exceed $5.0 million (loans or advances
that are forgiven shall continue to be deemed outstanding);
(7) Capital Stock, obligations or securities received in
settlement of debts created in the ordinary course of business
and owing to Libbey Glass or any Restricted Subsidiary or in
satisfaction of judgments or pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or
insolvency of a debtor;
(8) Investments made as a result of the receipt of non-cash
consideration from an Asset Disposition that was made pursuant
to and in compliance with Certain Covenants
Limitation on Sales of Assets and Subsidiary Stock;
(9) Investments in existence on the Issue Date and any
modification, replacement, renewal, or extension thereof;
provided, however, that the amount of such
Investment may be increased (x) as required by the terms of
such Investment as in existence on the Issue Date or (y) as
otherwise permitted under the Indenture;
(10) Currency Agreements, Interest Rate Agreements,
Commodity Agreements and related Hedging Obligations, which
transactions or obligations are Incurred in compliance with
Certain Covenants Limitation on
Indebtedness;
(11) Investments by Libbey Glass or any of its Restricted
Subsidiaries, together with all other Investments pursuant to
this clause (11), in an aggregate amount at the time of such
Investment not to exceed the greater of
(a) $20.0 million or (b) 2.5% of Total Assets
outstanding at any one time (with the fair market value of such
Investment being measured at the time made and without giving
effect to subsequent changes in value);
(12) Guarantees issued in accordance with Certain
Covenants Limitation on Indebtedness;
(13) Investments by Libbey Glass or a Restricted Subsidiary
in a Receivables Entity or any Investment by a Receivables
Entity in any other Person, in each case, in connection with a
Receivables securitization transaction; provided,
however, that any Investment in any such Person is in the
form of a purchase money note, or any equity interest or
interests in Receivables and related assets generated by Libbey
Glass or a Restricted Subsidiary and transferred to any Person
in connection with a Receivables securitization transaction or
any such Person owning such Receivables;
(14) Investments consisting of licensing of intellectual
property pursuant to joint marketing arrangements with other
Persons;
(15) Investments in Joint Ventures of Libbey Glass or any
of its Restricted Subsidiaries not to exceed $40.0 million
at any time outstanding (with the fair market value of such
Investment being measured at the time made and without giving
effect to subsequent changes in value); provided,
however, that the aggregate amount of all such
Investments made by Libbey Glass and its Restricted Subsidiaries
(other than Foreign Subsidiaries) shall not exceed
$25.0 million at any time outstanding;
(16) Investments the payment for which consists of Capital
Stock of Libbey Glass or the Parent (exclusive of Disqualified
Stock);
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(17) guarantees (including Guarantees) of Indebtedness
permitted under the covenant Limitation on
Indebtedness and performance guarantees in the ordinary
course of business;
(18) Investments consisting of purchases and acquisitions
of inventory, supplies, materials and equipment or purchases of
contract rights or licenses or leases of intellectual property,
in each case in the ordinary course of business;
(19) Investments resulting from the receipt of non-cash
consideration in an Asset Disposition received in compliance
with the covenant Limitation on Sales of
Assets and Subsidiary Stock;
provided, that for purposes of the definition of
Permitted Investment the fair market value of any
property or assets shall be determined by the Board of Directors
of Libbey Glass in good faith, if less than $25.0 million
and if greater than or equal to $25.0 million, such
determination shall be made by an Independent Financial Advisor).
Permitted Liens means, with respect to any
Person:
(1) Liens securing Indebtedness and other obligations under
the Senior Secured Credit Agreement, Hedging Obligations owing
to agents or lenders under the Senior Secured Credit Agreement
(or their Affiliates) and related banking services and cash
management Obligations owing to agents or lenders under the
Senior Secured Credit Agreement (or their Affiliates) and Liens
on assets of Restricted Subsidiaries securing Guarantees of
Indebtedness and other Obligations of Libbey Glass
and/or
Libbey Europe B.V. under the Senior Secured Credit Agreement
permitted to be Incurred under the Indenture, provided
that (i) in the case of any such Liens of Libbey Glass
or the Note Guarantors on any Notes Priority Collateral, such
Liens secure the notes and the Note Guarantees on at least a
first-priority basis and (ii) in the case of any such Liens
of Libbey Glass or the Note Guarantors on any Credit Agreement
Priority Collateral, such Liens secure the notes and the Note
Guarantees on at least a second-priority basis (other than
Foreign Assets or Capital Stock which by the terms of the
Collateral Documents are expressly permitted to be subject to a
Lien securing Lenders Debt without also being subject to a Lien
securing the notes and the Note Guarantees).
(2) pledges or deposits by such Person under workers
compensation laws, unemployment insurance laws or similar
legislation, or good faith deposits in connection with bids,
tenders, contracts (other than for the payment of Indebtedness)
or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of
cash or U.S. government bonds to secure surety or appeal
bonds to which such Person is a party, or deposits as security
for contested taxes or import or customs duties or for the
payment of rent, in each case Incurred in the ordinary course of
business;
(3) Liens imposed by law, including carriers,
warehousemens, mechanics, materialmens and
repairmens Liens, Incurred in the ordinary course of
business;
(4) Liens for taxes, assessments or other governmental
charges not yet subject to penalties for non-payment or that are
being contested in good faith by appropriate proceedings,
provided appropriate reserves required pursuant to GAAP
have been made in respect thereof;
(5) Liens in favor of issuers of surety or performance
bonds or letters of credit or bankers acceptances issued
pursuant to the request of and for the account of such Person in
the ordinary course of its business;
(6) survey exceptions encumbrances, ground leases,
easements or reservations of, or rights of others for, licenses,
rights of way, sewers, electric lines, telegraph and telephone
lines and other similar purposes, or zoning, building codes or
other restrictions (including, without limitation, minor defects
or irregularities in title and similar encumbrances) as to the
use of real properties or liens incidental to the conduct of the
business of such Person or to the ownership of its properties
that do not in the aggregate materially adversely affect the
value of said properties or materially impair their use in the
operation of the business of such Person; provided that
the Person complies with the applicable provisions of the
Collateral Documents relating to such Liens;
(7) Liens securing Hedging Obligations so long as the
related Indebtedness is, and is permitted to be under the
Indenture, secured by a Lien on the same property securing such
Hedging Obligation;
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(8) leases, licenses, subleases and sublicenses of assets
(including, without limitation, real property and intellectual
property rights) that do not materially interfere with the
ordinary conduct of the business of Libbey Glass or any of its
Restricted Subsidiaries;
(9) judgment Liens not giving rise to an Event of Default
so long as such Lien is adequately bonded and any appropriate
legal proceedings that may have been duly initiated for the
review of such judgment have not been finally terminated or the
period within which such proceedings may be initiated has not
expired;
(10) Liens for the purpose of securing the payment of all
or a part of the purchase price of, or Capitalized Lease
Obligations, purchase money obligations or other payments
Incurred to finance the acquisition, lease, improvement or
construction of, assets or property acquired or constructed in
the ordinary course of business, provided that:
(a) the Incurrence of the aggregate principal amount of
Indebtedness secured by such Liens is otherwise permitted to be
Incurred under the Indenture and does not exceed the cost of the
assets or property so acquired or constructed; and
(b) such Liens are created within 180 days of
construction or acquisition of such assets or property and do
not encumber any other assets or property of Libbey Glass or any
Restricted Subsidiary other than such assets or property and
assets affixed or appurtenant thereto;
(11) Liens arising solely by virtue of any statutory or
common law provisions relating to bankers Liens, rights of
set-off or similar rights and remedies as to deposit accounts or
other funds maintained with a depositary institution;
(12) Liens arising from Uniform Commercial Code financing
statement filings regarding operating leases entered into by
Libbey Glass and its Restricted Subsidiaries in the ordinary
course of business;
(13) Liens existing on the Issue Date (other than Liens
permitted under clause (1));
(14) Liens on property or shares of stock of a Person at
the time such Person is merged into or consolidated with Libbey
Glass or becomes a Restricted Subsidiary; provided,
however, that any such Lien may not extend to any other
property owned by Libbey Glass or any Restricted Subsidiary;
(15) Liens on property at the time Libbey Glass or a
Restricted Subsidiary acquired the property, including any
acquisition by means of a merger or consolidation with or into
Libbey Glass or any Restricted Subsidiary; provided,
however, that such Liens may not extend to any other
property owned by Libbey Glass or any Restricted Subsidiary;
(16) Liens in favor of Libbey Glass or any Restricted
Subsidiary;
(17) Liens securing the notes and Subsidiary Guarantees;
(18) Liens securing Refinancing Indebtedness Incurred to
refinance, refund, replace, amend, extend or modify, as a whole
or in part, Indebtedness that was previously so secured,
provided that any such 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 Indebtedness being
refinanced or is in respect of property that is the security for
a Permitted Lien hereunder;
(19) any interest or title of a lessor under any
Capitalized Lease Obligation or operating lease;
(20) Liens under industrial revenue, municipal or similar
bonds;
(21) Liens securing Indebtedness (other than Subordinated
Obligations and Guarantor Subordinated Obligations) in an
aggregate principal amount outstanding at any one time not to
exceed $25.0 million; and
(22) Liens securing Indebtedness and other obligations of
Foreign Subsidiaries that are Incurred in accordance with
Certain Covenants Limitation on
Indebtedness; provided that any such Lien may not
extend to any property of Libbey Glass or any Restricted
Subsidiary that is not a Foreign Subsidiary.
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Person means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, limited liability company,
government or any agency or political subdivision hereof 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 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
Person, over shares of Capital Stock of any other class of such
Person.
Rating Agencies means Standard &
Poors Ratings Group, Inc. and Moodys Investors
Service, Inc. or if Standard & Poors Ratings
Group, Inc. or Moodys Investors Service, Inc. or both
shall not make a rating on the notes publicly available, a
nationally recognized statistical rating agency or agencies, as
the case may be, selected by Libbey Glass (as certified by a
resolution of the Board of Directors) which shall be substituted
for Standard & Poors Ratings Group, Inc. or
Moodys Investors Service, Inc. or both, as the case may be.
Receivable means a right to receive payment
arising from a sale or lease of goods or the performance of
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 and shall include, in any
event, any items of property that would be classified as an
account, chattel paper, payment
intangible or instrument under the Uniform
Commercial Code as in effect in the State of New York and any
supporting obligations as so defined.
Receivables Entity means a Wholly-Owned
Subsidiary (or another Person in which Libbey Glass or any
Restricted Subsidiary makes an Investment and to which Libbey
Glass or any Restricted Subsidiary transfers Receivables and
related assets) which engages in no activities other than in
connection with the financing of Receivables and which is
designated by the Board of Directors of Libbey Glass (as
provided below) as a Receivables Entity:
(1) no portion of the Indebtedness or any other obligations
(contingent or otherwise) of which:
(a) is guaranteed by Libbey Glass or any Restricted
Subsidiary (excluding guarantees of obligations (other than the
principal of, and interest on, Indebtedness) pursuant to
Standard Securitization Undertakings);
(b) is recourse to or obligates Libbey Glass or any
Restricted Subsidiary in any way other than pursuant to Standard
Securitization Undertakings; or
(c) subjects any property or asset of Libbey Glass or any
Restricted Subsidiary, directly or indirectly, contingently or
otherwise, to the satisfaction thereof, other than pursuant to
Standard Securitization Undertakings;
(2) with which neither Libbey Glass nor any Restricted
Subsidiary has any material contract, agreement, arrangement or
understanding other than on terms no less favorable to Libbey
Glass or such Restricted Subsidiary than those that might be
obtained at the time from Persons that are not Affiliates of
Libbey Glass, other than fees payable in the ordinary course of
business in connection with servicing Receivables; and
(3) to which neither Libbey Glass nor any Restricted
Subsidiary has any obligation to maintain or preserve such
entitys financial condition or cause such entity to
achieve certain levels of operating results.
Any such designation by the Board of Directors of Libbey Glass
shall be evidenced to the Trustee by filing with the Trustee a
certified copy of the resolution of the Board of Directors of
Libbey Glass giving effect to such designation and an
Officers Certificate certifying that such designation
complied with the foregoing conditions.
Receivables Fees means any fees or interest
paid to purchasers or lenders providing the financing in
connection with a securitization transaction, factoring
agreement or other similar agreement, including any such amounts
paid by discounting the face amount of Receivables or
participations therein transferred in connection with a
securitization transaction, factoring agreement or other similar
arrangement, regardless of whether any such transaction is
structured as on-balance sheet or off-balance sheet or through a
Restricted Subsidiary or an Unrestricted Subsidiary.
128
Refinancing Indebtedness means Indebtedness
that is Incurred to refund, refinance, replace, exchange, renew,
repay or extend (including pursuant to any defeasance or
discharge mechanism) (collectively, refinance,
refinances, and refinanced shall have a
correlative meaning) any Indebtedness existing on the Issue Date
or Incurred in compliance with the Indenture (including
Indebtedness of Libbey Glass that refinances Indebtedness of any
Restricted Subsidiary and Indebtedness of any Restricted
Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing
Indebtedness; provided, however, that:
(1) (a) if the Stated Maturity of the Indebtedness
being refinanced is earlier than the Stated Maturity of the
notes, the Refinancing Indebtedness has a Stated Maturity no
earlier than the Stated Maturity of the Indebtedness being
refinanced or (b) if the Stated Maturity of the
Indebtedness being refinanced is later than the Stated Maturity
of the notes, the Refinancing Indebtedness has a Stated Maturity
at least 91 days later than the Stated Maturity of the
notes;
(2) the Refinancing Indebtedness has an Average Life at the
time such Refinancing Indebtedness is Incurred that is equal to
or greater than the Average Life of the Indebtedness being
refinanced;
(3) 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 the aggregate principal amount (or if issued
with original issue discount, the aggregate accreted value) then
outstanding of the Indebtedness being refinanced (plus, without
duplication, any additional Indebtedness Incurred to pay
interest or premiums required by the instruments governing such
existing Indebtedness and fees Incurred in connection
therewith); and
(4) if the Indebtedness being refinanced is subordinated in
right of payment to the notes or the Subsidiary Guarantee, such
Refinancing Indebtedness is subordinated in right of payment to
the notes or the Subsidiary Guarantee on terms at least as
favorable to the holders as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded.
Registration Rights Agreement means that
certain registration rights agreement dated as of the Issue Date
by and among Libbey Glass, the Note Guarantors and the initial
purchasers set forth therein and, with respect to any additional
outstanding notes, one or more substantially similar
registration rights agreements among Libbey Glass and the other
parties thereto, as such agreements may be amended from time to
time.
Related Business means any business that is
the same as or related, ancillary or complementary to any of the
businesses of Libbey Glass and its Restricted Subsidiaries on
the Issue Date.
Representative Amount means a principal
amount of not less than $1,000,000 for a single transaction in
the relevant market at the relevant time.
Restricted Investment means any Investment
other than a Permitted Investment.
Restricted Subsidiary means any Subsidiary of
Libbey Glass other than an Unrestricted Subsidiary.
Sale/Leaseback Transaction means an
arrangement relating to property now owned or hereafter acquired
whereby Libbey Glass or a Restricted Subsidiary transfers such
property to a Person (other than Libbey Glass or any of its
Subsidiaries) and Libbey Glass or a Restricted Subsidiary leases
it from such Person.
SEC means the United States Securities and
Exchange Commission.
Securities Act means the Securities Act of
1933, as amended, and the rules and regulations of the SEC
promulgated thereunder.
Senior Secured Credit Agreement means the
Amended and Restated Credit Agreement, dated as of
February 8, 2010, among Libbey Glass, Libbey Europe B.V., a
Netherlands corporation, the other loan parties party thereto,
J.P. Morgan Securities Inc., as sole lead arranger and
bookrunner, JPMorgan Chase Bank, N.A., as Administrative Agent,
and the lenders party thereto from time to time, as the same may
be amended, restated, modified, renewed, refunded, replaced
(whether upon termination or otherwise) or refinanced in whole
or in part from time to time (including increasing the amount
loaned thereunder; provided that such additional
Indebtedness is Incurred in accordance with the covenant
described under Certain Covenants Limitation
on Indebtedness);
129
provided that a Senior Secured Credit Agreement shall not
(x) include Indebtedness issued, created or Incurred
pursuant to a registered offering of securities under the
Securities Act or a private placement of securities (including
under Rule 144A or Regulation S) pursuant to an
exemption from the registration requirements of the Securities
Act or (y) relate to Indebtedness that does not consist
exclusively of Pari Passu Indebtedness or Guarantor Pari Passu
Indebtedness or Indebtedness of a Foreign Subsidiary.
Senior Secured Credit Agreement Obligations
means Indebtedness outstanding under the Senior Secured Credit
Agreement that is secured by a Permitted Lien described in
clause (1) of the definition thereof, and all other
obligations (not constituting Indebtedness) of the Company or
any Note Guarantor under the Senior Secured Credit Agreement.
Significant Subsidiary means any Restricted
Subsidiary that would be a Significant Subsidiary of
Libbey Glass within the meaning of
Rule 1-02
under
Regulation S-X
promulgated by the SEC.
Standard Securitization Undertakings means
representations, warranties, covenants and indemnities entered
into by Libbey Glass or any Restricted Subsidiary that are
reasonably customary in securitization of Receivables
transactions.
Stated Maturity means, with respect to any
Indebtedness, the date specified in the agreement governing or
certificate relating to such Indebtedness as the fixed date on
which the final payment of principal of such security is due and
payable, including pursuant to any mandatory redemption
provision, but shall not include any contingent obligations to
repay, redeem or repurchase any such principal prior to the date
originally scheduled for the payment thereof.
Subordinated Obligation means any
Indebtedness of Libbey Glass (whether outstanding on the Issue
Date or thereafter Incurred) that is subordinated or junior in
right of payment to the notes, pursuant to a written agreement,
without giving effect to collateral arrangements.
Subsidiary of any Person means (a) any
corporation, association or other business entity (other than a
partnership, joint venture, limited liability company or similar
entity) of which more than 50% of the total ordinary voting
power of shares of Capital Stock entitled (without regard to the
occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof (or persons performing
similar functions) or (b) any partnership, joint venture
limited liability company or similar entity of which more than
50% of the capital accounts, distribution rights, total equity
and voting interests or general or limited partnership
interests, as applicable, is, in the case of clauses (a)
and (b), at the time owned or controlled, directly or
indirectly, by (1) such Person, (2) such Person and
one or more Subsidiaries of such Person or (3) one or more
Subsidiaries of such Person. Unless otherwise specified herein,
each reference to a Subsidiary will refer to a Subsidiary of
Libbey Glass.
Subsidiary Guarantee means any Note Guarantee
of a Subsidiary Guarantor.
Subsidiary Guarantor means each Restricted
Subsidiary in existence on the Issue Date that provides a
Subsidiary Guarantee on the Issue Date (and any other Restricted
Subsidiary that provides a Subsidiary Guarantee in accordance
with the Indenture); provided that upon release or
discharge of such Restricted Subsidiary from its Subsidiary
Guarantee in accordance with the Indenture, such Restricted
Subsidiary ceases to be a Subsidiary Guarantor.
Total Assets means, with respect to any
Person, the total assets of such Person and its Restricted
Subsidiaries determined in accordance with GAAP, as shown on its
most recent balance sheet.
Transactions means the issuance and sale of
the notes, the refinancing of certain existing indebtedness, the
entering into of the new Senior Secured Credit Agreement and
payment of fees and expenses related to each of the foregoing.
Unrestricted Subsidiary means:
(1) any Subsidiary of Libbey Glass that at the time of
determination shall be designated an Unrestricted Subsidiary by
the Board of Directors of Libbey Glass in the manner provided
below; and
(2) any Subsidiary of an Unrestricted Subsidiary.
130
The Board of Directors of Libbey Glass may designate any
Subsidiary of Libbey Glass (including any newly acquired or
newly formed Subsidiary or a Person becoming a Subsidiary
through merger or consolidation or Investment therein) to be an
Unrestricted Subsidiary only if:
(1) such Subsidiary or any of its Subsidiaries does not own
any Capital Stock or Indebtedness of or have any Investment in,
or own or hold any Lien on any property of, any other Subsidiary
of Libbey Glass that is not a Subsidiary of the Subsidiary to be
so designated or otherwise an Unrestricted Subsidiary;
(2) all the Indebtedness of such Subsidiary and its
Subsidiaries shall, at the date of designation, and will at all
times thereafter, consist of Non-Recourse Debt;
(3) such designation and the Investment of Libbey Glass in
such Subsidiary complies with Certain
Covenants Limitation on Restricted Payments;
(4) such Subsidiary, either alone or in the aggregate with
all other Unrestricted Subsidiaries, does not operate, directly
or indirectly, all or substantially all of the business of
Libbey Glass and its Subsidiaries;
(5) such Subsidiary is a Person with respect to which
neither Libbey Glass nor any of its Restricted Subsidiaries has
any direct or indirect obligation:
(a) to subscribe for additional Capital Stock of such
Person; or
(b) to maintain or preserve such Persons financial
condition or to cause such Person to achieve any specified
levels of operating results; and
(6) on the date such Subsidiary is designated an
Unrestricted Subsidiary, such Subsidiary is not a party to any
agreement, contract, arrangement or understanding with Libbey
Glass or any Restricted Subsidiary with terms substantially less
favorable to Libbey Glass than those that might have been
obtained from Persons who are not Affiliates of Libbey Glass.
Any such designation by the Board of Directors of Libbey Glass
shall be evidenced to the Trustee by filing with the Trustee a
resolution of the Board of Directors of Libbey Glass giving
effect to such designation and an Officers Certificate
certifying that such designation complies with the foregoing
conditions. If, at any time, any Unrestricted Subsidiary would
fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted
Subsidiary for purposes of the Indenture and any Indebtedness of
such Subsidiary shall be deemed to be Incurred as of such date.
The Board of Directors of Libbey Glass may designate any
Unrestricted Subsidiary to be a Restricted Subsidiary;
provided that immediately after giving effect to such
designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and
Libbey Glass could Incur at least $1.00 of additional
Indebtedness pursuant to the first paragraph of the
Certain Covenants Limitation on
Indebtedness covenant on a pro forma basis taking into
account such designation.
U.S. Government Obligations means
securities that are (a) direct obligations of the United
States of America for the timely payment of which its full faith
and credit is pledged or (b) obligations of a Person
controlled or supervised by and acting as an agency or
instrumentality of the United States of America the timely
payment of which is unconditionally guaranteed as a full faith
and credit obligation of the United States of America, which, in
either case, are not callable or redeemable at the option of the
issuer thereof, and shall also include a depositary receipt
issued by a bank (as defined in Section 3(a)(2) of the
Securities Act), as custodian with respect to any such
U.S. Government Obligations or a specific payment of
principal of or interest on any such U.S. Government
Obligations held by such custodian for the account of the holder
of such depositary receipt; provided that (except as
required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such
depositary receipt from any amount received by the custodian in
respect of the U.S. Government Obligations or the specific
payment of principal of or interest on the U.S. Government
Obligations evidenced by such depositary receipt.
Voting Stock of a Person means all classes of
Capital Stock of such Person then outstanding and normally
entitled to vote in the election of directors, managers or
trustees, as applicable, of such Person.
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Wholly-Owned Subsidiary means a Restricted
Subsidiary, all of the Capital Stock of which (other than
directors qualifying shares) is owned by Libbey Glass or
another Wholly-Owned Subsidiary.
BOOK-ENTRY
SETTLEMENT AND CLEARANCE
The exchange notes will be issued in the form of one or more
permanent global notes in definitive, fully registered form
without interest coupons and will be deposited with the Trustee
as custodian for DTC and registered in the name of
Cede & Co., as nominee of DTC.
Ownership of beneficial interests in each global note will be
limited to persons who have accounts with DTC, or DTC
participants, or persons who hold interests through DTC
participants. We expect that under procedures established by DTC:
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upon deposit of each global note with DTCs custodian, DTC
will credit portions of the principal amount of the global note
to the accounts of the DTC participants; and
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ownership of beneficial interests in each global note will be
shown on, and transfer of ownership of those interests will be
effected only through, records maintained by DTC (with respect
to interests of DTC participants) and the records of DTC
participants (with respect to other owners of beneficial
interests in the global note).
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Beneficial interests in the global notes may not be exchanged
for notes in physical, certificated form except in the limited
circumstances described below.
Book-Entry
Procedures for the Global Notes
All interests in the global notes will be subject to the
operations and procedures of DTC, Euroclear and Clearstream. We
provide the following summaries of those operations and
procedures solely for the convenience of investors. The
information in this section concerning DTC, Euroclear and
Clearstream and their book-entry systems has been obtained from
sources that we believe to be reliable, but neither we nor the
initial purchasers take any responsibility for or make any
representation or warranty with respect to the accuracy of this
information. DTC, Euroclear and Clearstream are under no
obligation to follow the procedures described herein to
facilitate the transfer of interest in global notes among
participants and account holders of DTC, Euroclear and
Clearstream, and such procedures may be discontinued or modified
at any time. Neither we, the guarantors, the trustee nor any
paying agent will have any responsibility for the performance of
DTC, Euroclear and Clearstream or their respective participants
or indirect participants of their respective obligations under
the rules and procedures governing their operations.
DTC has advised us that it is:
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a limited purpose trust company organized under the laws of the
State of New York;
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a banking organization within the meaning of the New
York State Banking Law;
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a member of the Federal Reserve System;
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a clearing corporation within the meaning of the
Uniform Commercial Code; and
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a clearing agency registered under Section 17A
of the Exchange Act.
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DTC was created to hold securities for its participants and to
facilitate the clearance and settlement of securities
transactions between its participants through electronic
book-entry changes to the accounts of its participants.
DTCs participants include securities brokers and dealers,
including the initial purchasers; banks and trust companies;
clearing corporations and other organizations. Indirect access
to DTCs system is also available to others such as banks,
brokers, dealers and trust companies; these indirect
participants clear through or maintain a custodial relationship
with a DTC participant, either directly or indirectly. Investors
who are not DTC participants may beneficially own securities
held by or on behalf of DTC only through DTC participants or
indirect participants in DTC.
132
So long as DTCs nominee is the registered owner of a
global note, that nominee will be considered the sole owner or
holder of the notes represented by that global note for all
purposes under the indenture. Except as provided below, owners
of beneficial interests in a global note:
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will not be entitled to have notes represented by the global
note registered in their names;
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will not receive or be entitled to receive physical,
certificated notes; and
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will not be considered the owners or holders of the notes under
the indenture for any purpose, including with respect to the
giving of any direction, instruction or approval to the Trustee
under the indenture.
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As a result, each investor who owns a beneficial interest in a
global note must rely on the procedures of DTC to exercise any
rights of a holder of notes under the indenture (and, if the
investor is not a participant or an indirect participant in DTC,
on the procedures of the DTC participant through which the
investor owns its interest).
Payments of principal, premium (if any) and interest with
respect to the notes represented by a global note will be made
by the Trustee to DTCs nominee as the registered holder of
the global note. Neither we nor the Trustee will have any
responsibility or liability for the payment of amounts to owners
of beneficial interests in a global note, for any aspect of the
records relating to or payments made on account of those
interests by DTC, or for maintaining, supervising or reviewing
any records of DTC relating to those interests.
Payments by participants and indirect participants in DTC to the
owners of beneficial interests in a global note will be governed
by standing instructions and customary industry practice and
will be the responsibility of those participants or indirect
participants and DTC.
Transfers between participants in DTC will be effected under
DTCs procedures and will be settled in
same-day
funds. Transfers between participants in Euroclear or
Clearstream will be effected in the ordinary way under the rules
and operating procedures of those systems.
Cross-market transfers between DTC participants, on the one
hand, and Euroclear or Clearstream participants, on the other
hand, will be effected within DTC through the DTC participants
that are acting as depositaries for Euroclear and Clearstream.
To deliver or receive an interest in a global note held in a
Euroclear or Clearstream account, an investor must send transfer
instructions to Euroclear or Clearstream, as the case may be,
under the rules and procedures of that system and within the
established deadlines of that system. If the transaction meets
its settlement requirements, Euroclear or Clearstream, as the
case may be, will send instructions to its DTC depositary to
take action to effect final settlement by delivering or
receiving interests in the relevant global notes in DTC, and
making or receiving payment under normal procedures for
same-day
funds settlement applicable to DTC. Euroclear and Clearstream
participants may not deliver instructions directly to the DTC
depositaries that are acting for Euroclear or Clearstream.
Because of time zone differences, the securities account of a
Euroclear or Clearstream participant that purchases an interest
in a global note from a DTC participant will be credited on the
business day for Euroclear or Clearstream immediately following
the DTC settlement date. Cash received in Euroclear or
Clearstream from the sale of an interest in a global note to a
DTC participant will be received with value on the DTC
settlement date but will be available in the relevant Euroclear
or Clearstream cash account as of the business day for Euroclear
or Clearstream following the DTC settlement date.
DTC, Euroclear and Clearstream have agreed to the above
procedures to facilitate transfers of interests in the global
notes among participants in those settlement systems. However,
the settlement systems are not obligated to perform these
procedures and may discontinue or change these procedures at any
time. Neither we nor the Trustee will have any responsibility
for the performance by DTC, Euroclear or Clearstream or their
participants or indirect participants of their obligations under
the rules and procedures governing their operations.
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Certificated
Notes
Notes in physical, certificated form will be issued and
delivered to each person that DTC identifies as a beneficial
owner of the related notes only if:
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DTC notifies us at any time that it is unwilling or unable to
continue as depositary for the global notes and a successor
depositary is not appointed within 90 days;
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DTC ceases to be registered as a clearing agency under the
Exchange Act and a successor depositary is not appointed within
90 days;
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we, at our option, notify the Trustee that we elect to cause the
issuance of certificated notes; or
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certain other events provided in the indenture should occur.
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134
MATERIAL
U.S. FEDERAL INCOME TAX CONSIDERATIONS
The following discussion describes the material
U.S. federal income tax considerations relevant to the
exchange of outstanding notes for exchange notes (collectively,
the notes) pursuant to this exchange offer and the
ownership and disposition of the exchange notes. This discussion
is not a complete analysis of all potential U.S. federal
income tax consequences and does not address any tax
consequences arising under any state, local or foreign tax laws
or U.S. federal estate or gift tax laws. This discussion is
based upon the Internal Revenue Code of 1986, as amended (the
Code), U.S. Treasury Regulations promulgated
thereunder, judicial decisions, and published rulings and
administrative pronouncements of the Internal Revenue Service
(IRS), all as in effect on the date of this
prospectus. These authorities are subject to change, possibly
retroactively, resulting in tax consequences different from
those discussed below. No rulings have or will be sought from
the IRS with respect to the matters discussed below, and there
can be no assurance that the IRS will not take a different
position concerning the tax consequences of the exchange of
outstanding notes for exchange notes, or the ownership or
disposition of the exchange notes, or that any such position
would not be sustained by a court.
This discussion is limited to holders who hold the notes as
capital assets within the meaning of Code
Section 1221 (generally, property held for investment).
This discussion does not address all of the U.S. federal
income tax consequences that may be relevant to a holder in
light of the holders particular circumstances or to
holders subject to special rules under the U.S. federal
income tax laws, such as banks, financial institutions,
U.S. expatriates, insurance companies, regulated investment
companies, real estate investment trusts, controlled
foreign corporations, passive foreign investment
companies, dealers in securities or currencies, traders in
securities, partnerships or other pass-through entities (or
investors in such entities), U.S. holders (as defined
below) whose functional currency is not the U.S. dollar,
persons subject to the alternative minimum tax, tax-exempt
organizations and persons holding the notes as part of a
straddle, hedge, conversion
transaction or other integrated transaction.
As used herein, U.S. holder means a beneficial
owner of the notes who is treated for U.S. federal income
tax purposes as:
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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 tax regardless of its source; or
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a trust if (i) a U.S. court is able to exercise
primary supervision over its administration and one or more
U.S. persons have authority to control all its substantial
decisions or (ii) the trust was in existence on
August 20, 1996, was treated as a U.S. person prior to
such date, and validly elected to continue to be so treated.
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A
non-U.S. holder
is a beneficial owner of the notes who is an individual,
corporation, estate or trust for U.S. federal income tax
purposes and who is not a U.S. holder.
If a partnership or other entity treated as a partnership for
U.S. federal income tax purposes holds the notes, the tax
treatment of a partner generally will depend on the status of
the partner and the activities of the partnership. Partnerships
and their partners should consult their tax advisors as to the
tax consequences to them of the ownership and disposition of the
notes.
YOU SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE
U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE EXCHANGE
OF OUTSTANDING NOTES FOR EXCHANGE NOTES PURSUANT TO
THIS EXCHANGE OFFER AND THE OWNERSHIP AND DISPOSITION OF THE
EXCHANGE NOTES, AS WELL AS ANY TAX CONSEQUENCES ARISING UNDER
ANY STATE, LOCAL OR FOREIGN TAX LAWS, OR ANY OTHER
U.S. FEDERAL TAX LAWS.
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Exchange
Pursuant to the Exchange Offer
The exchange of outstanding notes for exchange notes in the
exchange offer will not be treated as an exchange
for U.S. federal income tax purposes because the exchange
notes will not be considered to differ materially in kind or
extent from the outstanding notes. Accordingly, the exchange of
outstanding notes for exchange notes will not be a taxable event
to holders for U.S. federal income tax purposes. Moreover,
the exchange notes will have the same tax attributes and tax
consequences as the outstanding notes exchanged therefor,
including without limitation, the same issue price, adjusted
issue price, adjusted tax basis and holding period.
Classification
of the Notes
In certain circumstances (see Description of Exchange
Notes Optional Redemption and
Description of Exchange Notes Change of
Control), we may be obligated to pay amounts in excess of
stated interest or principal on the notes. We intend to take the
position that the possibility of such payments should not cause
the notes to be treated as contingent payment debt instruments.
This position is based in part on assumptions regarding the
likelihood, as of the date of issuance of the notes, that such
additional payments will not have to be paid. Assuming the
position is respected, a holder generally would not be required
to include any income in respect of the foregoing contingencies
unless and until any of the contingencies occurred. Our position
is binding on a holder unless the holder explicitly discloses on
its U.S. federal income tax return that it is taking a
contrary position. However, our position is not binding on the
IRS, and if the IRS were to challenge our position, a holder
might be required to accrue income on its notes in excess of the
stated interest and original issue discount on the notes, and to
treat as ordinary income, rather than capital gain, any income
realized on the taxable disposition of a note before the
resolution of the contingencies. The following discussion
assumes that the notes will not be treated as contingent payment
debt instruments. Holders are urged to consult their own tax
advisors regarding the potential application of the contingent
payment debt instrument rules to the notes and the consequences
thereof.
U.S.
Holders
Stated
Interest
Absent an election to treat all interest on a note as original
issue discount, as discussed below under
Original Issue Discount, payments of
stated interest on the notes generally will be taxable to a
U.S. holder as ordinary income at the time such payments
are received or accrued, in accordance with the holders
method of accounting for U.S. federal income tax purposes.
Original
Issue Discount
The notes were issued with original issue discount
(OID) in an amount equal to the difference between
their stated principal amount and their issue price.
The issue price of the notes is the first price at
which a substantial amount of the notes was sold for cash
(excluding sales to bond houses, brokers or similar persons or
organizations acting in the capacity of underwriters, placement
agents or wholesalers). Subject to the rules described below
under Acquisition Premium and
Amortizable Bond Premium,
U.S. holders must include OID in gross income (as ordinary
income) on a constant yield basis in advance of the receipt of
cash attributable to that income irrespective of their method of
tax accounting. However, U.S. holders generally will not be
required to include separately in income cash payments received
on the notes to the extent the payments constitute payments of
previously accrued OID.
The amount of OID includible in gross income by a
U.S. holder is the sum of the daily portions of
OID with respect to the note for each day during the taxable
year or portion thereof in which the U.S. holder holds the
note. The daily portion is determined by allocating to each day
in any accrual period a pro rata portion of the OID
allocable to that accrual period. The accrual period
for a note may be of any length and may vary in length over the
term of the note, provided that each accrual period is no longer
than one year and each scheduled payment of principal or
interest occurs on the first day or the final day of an accrual
period. The amount of OID allocable to any accrual period is an
amount equal to the excess, if any, of (i) the product of
the notes adjusted issue price at the
beginning of the accrual period and its yield to maturity
(determined on a constant yield method, compounded at the close
of each accrual period and properly adjusted for the length of
the accrual period) over (ii) the aggregate
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amount of all stated interest allocable to the accrual period.
OID allocable to the final accrual period is the difference
between the amount payable at maturity (other than a payment of
stated interest) and the adjusted issue price at the beginning
of the final accrual period. The adjusted issue
price of a note at the beginning of any accrual period is
equal to its issue price increased by the accrued OID for each
prior accrual period and reduced by any payments previously made
on the note other than payments of stated interest. The
yield to maturity of the notes is the discount rate
that, when used in computing the present value of all principal
and interest payments to be made on the notes, produces an
amount equal to the issue price of the notes. Under these rules,
a U.S. holder will have to include in income increasingly
greater amounts of OID in successive accrual periods.
Market
Discount
If a U.S. holder acquires a note at a cost that is less
than its adjusted issue price on the acquisition date, the
amount of the difference is treated as market
discount for U.S. federal income tax purposes, unless
the difference is less than .0025 multiplied by the notes
stated principal amount multiplied by the number of complete
years to maturity of the note from the date of acquisition (in
which case, the difference is de minimis market
discount). In general, market discount will be treated as
accruing ratably over the remaining term of the note or, at the
holders election, on a constant yield to maturity basis.
If a constant yield election is made, it will apply only to the
note for which it is made and may not be revoked.
A U.S. holder may elect to include market discount in
income currently as it accrues. Once made, this election will
apply to all market discount obligations acquired by the
U.S. holder on or after the first day of the first taxable
year to which the election applies and may not be revoked
without the consent of the IRS. A U.S. holders tax
basis in a note will be increased by the amount of market
discount included in the holders income under the
election. If a holder does not elect to include accrued market
discount in income over the remaining term of the note, the
holder may be required to defer the deduction of a portion of
the interest on any indebtedness incurred or maintained to
purchase or carry the note until maturity or until a taxable
disposition of the note.
If a U.S. holder acquires a note at a market discount, the
holder will be required to treat any gain on the disposition of
the note as ordinary income to the extent of accrued market
discount not previously included in income with respect to the
note. If a U.S. holder disposes of a note with market
discount in certain otherwise nontaxable transactions, the
U.S. holder must include accrued market discount in income
as ordinary income as if the holder had sold the note at its
then fair market value.
Acquisition
Premium
If a U.S. holder acquires a note at a cost less than or
equal to the stated principal amount, but greater than the
notes adjusted issue price on the acquisition date, the
holder will be treated as acquiring the note at an
acquisition premium. Unless an election is made, the
holder generally will reduce the amount of OID otherwise
includible in gross income for an accrual period by an amount
equal to the amount of OID otherwise includible in gross income
multiplied by a fraction, the numerator of which is the excess
of the holders initial basis in the note over the
notes adjusted issue price on the acquisition date and the
denominator of which is the excess of the stated principal
amount over the notes adjusted issue price on the
acquisition date. Alternatively, the U.S. holder may elect
to compute OID accruals by treating the acquisition of the note
as a purchase at original issuance and applying the constant
yield method described above.
Amortizable
Bond Premium
A U.S. holder generally will be considered to have acquired
a note with amortizable bond premium if the holder acquires the
note for an amount greater than the stated principal amount. The
amount of amortizable premium generally will equal the excess
the amount paid for the note over the notes stated
principal amount, or if it results in a smaller amount of
amortizable premium in the period prior to a call date described
under Description of Exchange Notes Optional
Redemption, the amount payable on the earlier call date,.
A U.S. holder who purchases a note with amortizable bond
premium generally will not be required to include any OID in
income and may elect to amortize the bond premium as an offset
to stated interest income under a constant yield method from the
acquisition date to the notes maturity date, or if it
results in a smaller amount of amortizable premium, to the
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earlier call date. Once made, this election applies to all debt
obligations held or subsequently acquired by the holder on or
after the first day of the first taxable year to which the
election applies and may not be revoked without the consent of
the IRS. A U.S. holder who elects to amortize bond premium
must reduce its tax basis in the note by the amount of bond
premium used to offset stated interest income.
Election
to Treat All Interest as OID
A U.S. holder may elect to treat all interest on a note
(including any stated interest, OID, market discount and de
minimis market discount, as adjusted by any acquisition premium
or amortizable bond premium) as OID and calculate the amount
includible in gross income under the constant yield method
described above. This election must be made for the taxable year
in which the holder acquires the note, and may not be revoked
without the consent of the IRS. If a note was acquired with
market discount, this election will result in a deemed election
to accrue market discount in income currently with respect to
the note and all other market discount obligations acquired by
the holder on or after the first day of the taxable year to
which the election first applies. Similarly, if a note was
acquired with amortizable bond premium, this election will
result in a deemed election to amortize bond premium with
respect to the note and all other debt obligations held or
subsequently acquired by the holder on or after the first day of
the taxable year to which the election first applies.
U.S. holders should consult their tax advisors about this
election.
Sale
or Other Taxable Disposition of the Notes
A U.S. holder will recognize gain or loss on the sale,
exchange (other than pursuant to a tax-free transaction),
redemption, retirement or other taxable disposition of a note
equal to the difference between the amount realized upon the
disposition (less a portion allocable to any accrued and unpaid
stated interest that the holder has not elected to treat as OID
as discussed above, which will be taxable as interest to the
extent not previously included in income) and the holders
adjusted tax basis in the note. A U.S. holders
adjusted tax basis in a note generally will be the holders
cost therefor, increased by OID or market discount previously
included in gross income with respect to the note and reduced by
the amount of amortizable bond premium previously taken into
account with respect to the note. Other than as described above
under Market Discount, this gain or loss
generally will be a capital gain or loss, and will be a
long-term capital gain or loss if the U.S. holder has held
the note for more than one year. Long-term capital gains of
non-corporate holders are currently subject to tax at a reduced
rate. The deductibility of capital losses is subject to
limitations.
Information
Reporting and Backup Withholding
A U.S. holder may be subject to information reporting and
backup withholding (at a rate of 28% in 2010) with respect
to interest (including OID) received on the notes and on the
proceeds received upon the sale or other disposition (including
a retirement or redemption) of the notes. Certain holders
generally are not subject to information reporting or backup
withholding. A U.S. holder generally will be subject to
backup withholding if the holder is not otherwise exempt and:
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the holder fails to furnish its taxpayer identification number,
which, for an individual, is ordinarily his or her social
security number;
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the holder furnishes an incorrect taxpayer identification number;
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we are notified by the IRS that the holder is subject to backup
withholding because it has failed to properly report payments of
interest or dividends; or
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the holder fails to certify, under penalties of perjury, that it
has furnished its correct taxpayer identification number and
that the IRS has not notified the U.S. holder that it is
subject to backup withholding.
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U.S. holders should consult their tax advisors regarding
their qualification for an exemption from backup withholding and
the procedures for obtaining such an exemption, if applicable.
Backup withholding is not an additional tax. Taxpayers may use
amounts withheld as a credit against their U.S. federal
income tax liability or may claim a refund if they timely
provide certain information to the IRS.
138
Non-U.S.
holders
Interest
Interest and OID paid to a
non-U.S. holder
will not be subject to U.S. federal withholding tax of 30%
(or, if applicable, a lower treaty rate) provided that:
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the interest and OID is not effectively connected with the
non-U.S. holders
conduct of a trade or business in the United States;
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the holder does not directly, indirectly, actually or
constructively own 10% or more of the total combined voting
power of all of the classes of our stock;
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the holder is not a controlled foreign corporation that is
related to us; and
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either (1) the
non-U.S. holder
certifies in a statement provided to us or our paying agent,
under penalties of perjury, that it is not a U.S. person
and provides its name and address (which certification may be
made on IRS
Form W-8BEN,
or applicable successor form), (2) a securities clearing
organization, bank or other financial institution that holds
customers securities in the ordinary course of its trade
or business and holds the notes on behalf of the
non-U.S. holder
certifies to us or our paying agent under penalties of perjury
that it, or the financial institution between it and the
non-U.S. holder,
has received from the
non-U.S. holder
a statement, under penalties of perjury, that the holder is not
a U.S. person and provides us or our paying agent with a
copy of the statement or (3) the
non-U.S. holder
holds its notes through a qualified intermediary and
certain conditions are satisfied.
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If the requirements described above are not satisfied, the gross
amount of any payments of interest and OID made to the
non-U.S. holder
that are not effectively connected with the
non-U.S. holders
conduct of a U.S. trade or business will be subject to
U.S. federal withholding tax at a rate of 30%. Interest and
OID that is effectively connected with a
non-U.S. holders
conduct of a trade or business in the United States will be
taxed as discussed below under U.S. trade
or business.
Even if the above conditions are not met, a
non-U.S. holder
may be entitled to a reduction in or an exemption from
withholding tax on interest and OID under an income tax treaty
between the United States and the
non-U.S. holders
country of residence. To claim such a reduction or exemption, a
non-U.S. holder
generally must complete IRS
Form W-8BEN
and claim this reduction or exemption on the form. In some
cases, a
non-U.S. holder
instead may be permitted to provide documentary evidence of its
claim to an intermediary, or a qualified intermediary already
may have some or all of the necessary evidence in its files.
The certification requirements described above may require a
non-U.S. holder
to provide its U.S. taxpayer identification number in order
to claim the benefit of an income tax treaty or for other
reasons. Special certification requirements apply to
intermediaries.
Non-U.S. holders
should consult their tax advisors regarding the certification
requirements discussed above.
Sale
or Other Taxable Disposition of the Notes
A
non-U.S. holder
generally will not be subject to U.S. federal income tax or
withholding tax on gain recognized on the sale, exchange,
redemption, retirement or other disposition of a note unless
(i) the gain is effectively connected with the
non-U.S. holders
conduct of a trade or business in the United States (in which
case, the
non-U.S. holder
will be taxed as discussed below under
U.S. trade or business) or
(ii) the holder is an individual present in the United
States for 183 days or more during the taxable year of the
disposition and certain other conditions are met (in which case,
the holder will be subject to a U.S. federal income tax of
30% (or, if applicable, a lower treaty rate) on such gain, which
may be offset by certain U.S. source capital losses).
U.S.
Trade or Business
If interest, OID or gain from a disposition of the notes is
effectively connected with a
non-U.S. holders
conduct of a trade or business in the United States and, if an
income tax treaty applies, the
non-U.S. holder
maintains a permanent establishment in the United
States to which the interest, OID or gain is attributable, the
139
non-U.S. holder
generally will be subject to U.S. federal income tax on the
interest, OID or gain on a net income basis in the same manner
as if it were a U.S. holder. If interest income received
(including OID) with respect to the notes is effectively
connected income, the 30% withholding tax described above will
not apply (assuming the appropriate certification is provided).
A foreign corporation that is a holder of a note also may be
subject to a branch profits tax equal to 30% of its effectively
connected earnings and profits for the taxable year, subject to
certain adjustments, unless it qualifies for a lower rate under
an applicable income tax treaty. For this purpose, interest or
OID on a note or gain recognized on the disposition of a note
will be included in earnings and profits if the interest, OID or
gain is effectively connected with the conduct by the foreign
corporation of a trade or business in the United States.
Information
Reporting and Backup Withholding
Backup withholding generally will not apply to payments of
interest (including OID) made by us or our paying agent, in such
capacities to a
non-U.S. holder
of a note if the holder certifies as to its
non-U.S. status
in the manner described above under
Non-U.S. Holders
Interest. However, information reporting on IRS
Form 1042-S
may still apply with respect to interest payments (including
OID). In addition, information regarding interest (including
OID) payments on the notes may be made available to the tax
authorities in the country where the
non-U.S. holder
resides or is established, pursuant to an applicable income tax
treaty.
Payments of the proceeds from a disposition (including a
redemption or retirement) by a
non-U.S. holder
of a note made to or through a foreign office of a broker will
not be subject to information reporting or backup withholding,
except that information reporting (but generally not backup
withholding) may apply to those payments if the broker is:
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a U.S. person;
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a controlled foreign corporation for U.S. federal income
tax purposes;
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a foreign person 50% or more of whose gross income is
effectively connected with a U.S. trade or business for a
specified three-year period; or
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a foreign partnership, if at any time during its tax year, one
or more of its partners are U.S. persons who in the
aggregate hold more than 50% of the income or capital interest
in the partnership, or if at any time during its tax year, the
foreign partnership is engaged in a U.S. trade or business.
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Payment of the proceeds from a disposition by a
non-U.S. holder
of a note made to or through the U.S. office of a broker
generally will be subject to information reporting and backup
withholding unless the beneficial owner certifies as to its
non-U.S. status
or otherwise establishes an exemption from information reporting
and backup withholding.
Non-U.S. holders
should consult their tax advisors regarding application of
withholding and backup withholding in their particular
circumstances and the availability of, and the procedure for
obtaining an exemption from, withholding, information reporting
and backup withholding under current U.S. Treasury
Regulations. In this regard, the current U.S. Treasury
Regulations provide that a certification may not be relied on if
the payer knows or has reason to know that the certification may
be false. Backup withholding is not an additional tax. Taxpayers
may use amounts withheld as a credit against their
U.S. federal income tax liability or may claim a refund if
they timely provide certain information to the IRS.
YOU SHOULD CONSULT YOUR TAX ADVISOR REGARDING THE
U.S. FEDERAL INCOME TAX CONSEQUENCES TO YOU OF THE EXCHANGE
OFFER AND THE OWNERSHIP AND DISPOSITION OF THE NOTES, AS WELL AS
ANY TAX CONSEQUENCES ARISING UNDER ANY STATE, LOCAL OR FOREIGN
TAX LAWS, OR ANY OTHER U.S. FEDERAL TAX LAWS.
140
PLAN OF
DISTRIBUTION
Each broker-dealer that receives exchange notes for its own
account in the exchange offer must acknowledge that it will
deliver a prospectus together with any resale of those exchange
notes. This prospectus, as it may be amended or supplemented
from time to time, may be used by a broker-dealer in the resales
of exchange notes received in exchange for outstanding notes
where those outstanding notes were acquired as a result of
market-making activities or other trading activities. We have
agreed that for a period of up to 180 days after the
expiration date, we will make this prospectus, as amended or
supplemented, available to any broker-dealer that requests it in
the letter of transmittal for use in any such resale.
We will not receive any proceeds from any sale of exchange notes
by broker-dealers or any other persons. Exchange notes received
by broker-dealers for their own account pursuant to the exchange
offer may be sold from time to time in one or more transactions
in the
over-the-counter
market, in negotiated transactions, through the writing of
options on the exchange notes or a combination of the methods of
resale, at market prices prevailing at the time of resale, at
prices related to the prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to
or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such
broker-dealer
and/or the
purchasers of any such exchange notes. Any broker-dealer that
resells exchange notes that of those exchange notes may be
deemed to be an underwriter within the meaning of
the Securities Act and any profit on any such resale of exchange
notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the
Securities Act. The letter of transmittal states that by
acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it
is an underwriter within the meaning of the
Securities Act.
We have agreed to pay certain expenses incident to our
performance of, or compliance with, the registration rights
agreement and will indemnify the holders of outstanding notes
including any broker-dealers, and certain parties related to the
holders, against certain types of liabilities, including
liabilities under the Securities Act.
141
LEGAL
MATTERS
The validity of the securities offered hereby will be passed
upon for us by Latham & Watkins LLP, Chicago, Illinois.
EXPERTS
The consolidated financial statements of Libbey Inc. appearing
in Libbey Inc.s Annual Report
(Form 10-K)
for the year ended December 31, 2009 (including the
schedule appearing therein), and the effectiveness of Libbey
Inc.s internal control over financial reporting as of
December 31, 2009, have been audited by Ernst &
Young LLP, independent registered public accounting firm, as set
forth in their reports thereon, included therein, 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.
142
OFFER TO
EXCHANGE
$400,000,000 principal amount of
its 10% Senior Secured Notes due 2015,
which have been registered under the Securities Act,
for any and all of its outstanding 10% Senior Secured Notes
due 2015
PROSPECTUS
,
2010
PART II
INFORMATION
NOT REQUIRED IN PROSPECTUS
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Item 20.
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Indemnification
of Directors and Officers.
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Delaware law authorizes corporations to limit or eliminate the
personal liability of directors to corporations and their
stockholders for monetary damages for breaches of
directors fiduciary duties. Our certificate of
incorporation includes a provision that eliminates, to the
fullest extent permitted by Delaware law, the personal liability
of a director to our company or our stockholders for monetary
damages for any breach of fiduciary duty as a director. Subject
to certain limitations, our bylaws provides that we must
indemnify our directors and executive officers to the fullest
extent permitted by Delaware law.
The limitation of liability and indemnification provisions in
our certificate of incorporation and bylaws may discourage
stockholders from bringing a lawsuit against directors for
breach of their fiduciary duty. These provisions may also have
the effect of reducing the likelihood of derivative litigation
against directors and officers, even though such an action, if
successful, might otherwise benefit us and our stockholders. In
addition, your investment may be adversely affected to the
extent we pay the costs of settlement and damage awards against
directors and officers pursuant to these indemnification
provisions.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, we
have been informed that in the opinion of the SEC such
indemnification is against public policy as expressed in the
Securities Act and is therefore, unenforceable.
There is currently no pending material litigation or proceeding
involving any of our directors, officers or employees for which
indemnification is sought.
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Item 21.
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Exhibits
and Financial Statement Schedules.
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See the Exhibit Index in this registration statement.
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(b)
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Financial
Statement Schedules
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None.
Each undersigned registrant hereby undertakes as follows:
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities
(other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by final adjudication of such issue.
Each undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act, each
filing of our annual report pursuant to Section 13(a) or
15(d) of the Exchange Act (and, where applicable, each filing of
an employee benefit plans annual report pursuant to
Section 15(d) of the Exchange Act) that is incorporated by
reference in the registration statement shall be deemed to be a
new
II-1
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
Each undersigned registrant hereby undertakes to respond to
requests for information that is incorporated by reference into
the prospectus pursuant to Items 4, 10(b), 11, or 13 of
this Form, within one business day of receipt of such request,
and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the
registration statement through the date of responding to the
request.
Each undersigned registrant hereby undertakes to supply by means
of a post-effective amendment all information concerning a
transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration
statement when it became effective.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LIBBEY GLASS INC.
Name: John F. Meier
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Title:
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Chairman of the Board and
Chief Executive Officer
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POWER OF
ATTORNEY
We, the undersigned directors and officers of Libbey Glass Inc.,
do hereby constitute and appoint John F. Meier and Susan A.
Kovach, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things
in our names and our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in
our name in the capacities indicated below, which said attorneys
and agents, or any of them, may deem necessary or advisable to
enable Libbey Glass Inc. to comply with the Securities Act and
any rules, regulations and requirements of the Securities and
Exchange Commission in connection with this registration
statement or any registration statement for this offering of
securities that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, including
specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ John
F. Meier
John
F. Meier
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Chairman, Chief Executive Officer (Principal Executive
Officer)
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November 22, 2010
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/s/ Richard
I. Reynolds
Richard
I. Reynolds
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Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
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November 22, 2010
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/s/ Susan
A. Kovach
Susan
A. Kovach
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Director
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November 22, 2010
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II-3
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LIBBEY INC.
Name: John F. Meier
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Title:
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Chairman and Chief Executive Officer
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POWER OF
ATTORNEY
We, the undersigned directors and officers of Libbey Inc., do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable Libbey
Inc. to comply with the Securities Act and any rules,
regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any
registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under
the Securities Act, including specifically, but without
limitation, any and all amendments (including post-effective
amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ John
F. Meier
John
F. Meier
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Chairman, Chief Executive Officer (Principal Executive
Officer)
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November 22, 2010
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/s/ Richard
I. Reynolds
Richard
I. Reynolds
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Executive Vice President, Chief Financial Officer and
Director
(Principal Financial Officer)
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November 22, 2010
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/s/ Scott
M. Sellick
Scott
M. Sellick
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Chief Accounting Officer
(Principal Accounting Officer)
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November 22, 2010
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/s/ William
A. Foley
William
A. Foley
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Director
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November 22, 2010
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/s/ Peter
C. McC. Howell
Peter
C. McC. Howell
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Director
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November 22, 2010
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/s/ Carol
B. Moerdyk
Carol
B. Moerdyk
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Director
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November 22, 2010
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II-4
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Signature
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Title
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Date
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/s/ Terence
P. Stewart
Terence
P. Stewart
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Director
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November 22, 2010
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/s/ Carlos
V. Duno
Carlos
V. Duno
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Director
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November 22, 2010
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/s/ Deborah
G. Miller
Deborah
G. Miller
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Director
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November 22, 2010
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/s/ Jean-René
Gougelet
Jean-René
Gougelet
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Director
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November 22, 2010
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/s/ John
C. Orr
John
C. Orr
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Director
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November 22, 2010
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II-5
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
THE DRUMMOND GLASS COMPANY
Name: John F. Meier
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Title:
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Chairman of the Board and
Chief Executive Officer
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POWER OF
ATTORNEY
We, the undersigned directors and officers of The Drummond Glass
Company, do hereby constitute and appoint John F. Meier and
Susan A. Kovach, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things
in our names and our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in
our name in the capacities indicated below, which said attorneys
and agents, or any of them, may deem necessary or advisable to
enable The Drummond Glass Company to comply with the Securities
Act and any rules, regulations and requirements of the
Securities and Exchange Commission in connection with this
registration statement or any registration statement for this
offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, including
specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ John
F. Meier
John
F. Meier
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Chairman, Chief Executive Officer (Principal Executive
Officer)
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November 22, 2010
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/s/ Richard
I. Reynolds
Richard
I. Reynolds
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Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
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November 22, 2010
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/s/ Susan
A. Kovach
Susan
A. Kovach
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Director
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November 22, 2010
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II-6
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
SYRACUSE CHINA COMPANY
Name: John F. Meier
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Title:
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Chairman of the Board and
Chief Executive Officer
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POWER OF
ATTORNEY
We, the undersigned directors and officers of Syracuse China
Company, do hereby constitute and appoint John F. Meier and
Susan A. Kovach, and each and any of them, our true and lawful
attorneys-in-fact and agents to do any and all acts and things
in our names and our behalf in our capacities as directors and
officers and to execute any and all instruments for us and in
our name in the capacities indicated below, which said attorneys
and agents, or any of them, may deem necessary or advisable to
enable Syracuse China Company to comply with the Securities Act
and any rules, regulations and requirements of the Securities
and Exchange Commission in connection with this registration
statement or any registration statement for this offering of
securities that is to be effective upon filing pursuant to
Rule 462(b) under the Securities Act, including
specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
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Signature
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Title
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Date
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/s/ John
F. Meier
John
F. Meier
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Chairman, Chief Executive Officer (Principal Executive
Officer)
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November 22, 2010
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/s/ Richard
I. Reynolds
Richard
I. Reynolds
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Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
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November 22, 2010
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/s/ Susan
A. Kovach
Susan
A. Kovach
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Director
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November 22, 2010
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II-7
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
WORLD TABLEWARE INC.
Name: John F. Meier
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Title:
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Chairman and Chief Executive Officer
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POWER OF
ATTORNEY
We, the undersigned directors and officers of World Tableware
Inc., do hereby constitute and appoint John F. Meier
and Susan A. Kovach, and each and any of them, our true and
lawful attorneys-in-fact and agents to do any and all acts and
things in our names and our behalf in our capacities as
directors and officers and to execute any and all instruments
for us and in our name in the capacities indicated below, which
said attorneys and agents, or any of them, may deem necessary or
advisable to enable World Tableware Inc. to comply with the
Securities Act and any rules, regulations and requirements of
the Securities and Exchange Commission in connection with this
registration statement or any registration statement for this
offering of securities that is to be effective upon filing
pursuant to Rule 462(b) under the Securities Act, including
specifically, but without limitation, any and all amendments
(including post-effective amendments) hereto, and we hereby
ratify and confirm all that said attorneys and agents, or any of
them, shall do or cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-8
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LGA3 CORP.
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned directors and officers of LGA3 Corp., do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable LGA3
Corp. to comply with the Securities Act and any rules,
regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any
registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under
the Securities Act, including specifically, but without
limitation, any and all amendments (including post-effective
amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-9
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LGA4 CORP.
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned directors and officers of LGA4 Corp., do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable LGA4
Corp. to comply with the Securities Act and any rules,
regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any
registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under
the Securities Act, including specifically, but without
limitation, any and all amendments (including post-effective
amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-10
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LGC CORP.
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned directors and officers of LGC Corp., do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable LGC Corp.
to comply with the Securities Act and any rules, regulations and
requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration
statement for this offering of securities that is to be
effective upon filing pursuant to Rule 462(b) under the
Securities Act, including specifically, but without limitation,
any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys
and agents, or any of them, shall do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-11
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
TRAEX COMPANY
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned directors and officers of Traex Company, do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable Traex
Company to comply with the Securities Act and any rules,
regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any
registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under
the Securities Act, including specifically, but without
limitation, any and all amendments (including post-effective
amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-12
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LIBBEY.COM LLC
|
|
|
|
By:
|
Libbey Glass Inc., Member
|
|
|
By:
|
/s/ John
F. Meier
|
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned officers of Libbey.com LLC and directors and
officers of Libbey Glass Inc., the sole member, do hereby
constitute and appoint John F. Meier and Susan A. Kovach, and
each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our
behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable
Libbey.com LLC to comply with the Securities Act and any rules,
regulations and requirements of the Securities and Exchange
Commission in connection with this registration statement or any
registration statement for this offering of securities that is
to be effective upon filing pursuant to Rule 462(b) under
the Securities Act, including specifically, but without
limitation, any and all amendments (including post-effective
amendments) hereto, and we hereby ratify and confirm all that
said attorneys and agents, or any of them, shall do or cause to
be done by virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chief Executive Officer, Manager (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Manager
|
|
November 22, 2010
|
II-13
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LGAC LLC
Name: John F. Meier
|
|
|
|
Title:
|
Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned managers and officers of LGAC LLC do hereby
constitute and appoint John F. Meier and Susan A. Kovach, and
each and any of them, our true and lawful attorneys-in-fact and
agents to do any and all acts and things in our names and our
behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable LGAC LLC
to comply with the Securities Act and any rules, regulations and
requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration
statement for this offering of securities that is to be
effective upon filing pursuant to Rule 462(b) under the
Securities Act, including specifically, but without limitation,
any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys
and agents, or any of them, shall do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chief Executive Officer, Manager (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Manager
|
|
November 22, 2010
|
II-14
SIGNATURES
Pursuant to the requirements of the Securities Act, the
registrant has duly caused this registration statement to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of Toledo, State of Ohio, on
November 22, 2010.
LGFS INC.
Name: John F. Meier
|
|
|
|
Title:
|
Chairman and Chief Executive Officer
|
POWER OF
ATTORNEY
We, the undersigned directors and officers of LGFS Inc., do
hereby constitute and appoint John F. Meier and Susan A. Kovach,
and each and any of them, our true and lawful attorneys-in-fact
and agents to do any and all acts and things in our names and
our behalf in our capacities as directors and officers and to
execute any and all instruments for us and in our name in the
capacities indicated below, which said attorneys and agents, or
any of them, may deem necessary or advisable to enable LGFS Inc.
to comply with the Securities Act and any rules, regulations and
requirements of the Securities and Exchange Commission in
connection with this registration statement or any registration
statement for this offering of securities that is to be
effective upon filing pursuant to Rule 462(b) under the
Securities Act, including specifically, but without limitation,
any and all amendments (including post-effective amendments)
hereto, and we hereby ratify and confirm all that said attorneys
and agents, or any of them, shall do or cause to be done by
virtue thereof.
Pursuant to the requirements of the Securities Act, this
registration statement has been signed by the following persons
in the capacities and on the dates indicated.
|
|
|
|
|
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
/s/ John
F. Meier
John
F. Meier
|
|
Chairman, Chief Executive Officer (Principal Executive
Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Richard
I. Reynolds
Richard
I. Reynolds
|
|
Executive Vice President, Chief Financial Officer
(Principal Financial and Accounting Officer)
|
|
November 22, 2010
|
|
|
|
|
|
/s/ Susan
A. Kovach
Susan
A. Kovach
|
|
Director
|
|
November 22, 2010
|
II-15
EXHIBIT INDEX
|
|
|
|
|
S-K Item
|
|
|
601 No.
|
|
Document
|
|
|
2
|
.1
|
|
Asset Purchase Agreement dated as of September 22, 1995 by
and among The Pfaltzgraff Co., The Pfaltzgraff Outlet Co.,
Syracuse China Company of Canada Ltd., LG Acquisition Corp. and
Libbey Canada Inc., Acquisition of Syracuse China Company (filed
as Exhibit 2.0 to Libbey Inc.s Current Report on
Form 8-K
dated September 22, 1995 and incorporated herein by
reference).
|
|
2
|
.2
|
|
Asset Purchase Agreement dated as of December 2, 2002 by
and between Menasha Corporation and Libbey Inc. (filed as
Exhibit 2.2 to Libbey Inc.s Annual Report on
Form 10-K
for the year-ended December 31, 2002, and incorporated
herein by reference).
|
|
2
|
.3
|
|
Stock Purchase Agreement dated as of December 31, 2002
between BSN Glasspack N.V. and Saxophone B.V. (filed as
Exhibit 2.3 to Libbey Inc.s Annual Report on
Form 10-K
for the year-ended December 31, 2002, and incorporated
herein by reference).
|
|
3
|
.1
|
|
Restated Certificate of Incorporation of Libbey Inc. (filed as
Exhibit 3.1 to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993 and incorporated herein
by reference).
|
|
3
|
.2
|
|
Amended and Restated By-Laws of Libbey Inc. (filed as
Exhibit 3.2 to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993, as amended as set
forth in Exhibit 3.01 to Libbey Incs
Form 8-K
filed on February 7, 2005, both of which filings are
incorporated herein by reference).
|
|
3
|
.3
|
|
Certificate of Incorporation of Libbey Glass Inc. (incorporated
by reference to Exhibit 3.3 to Libbey Glass Inc.s
Registration Statement on
Form S-4;
File
No. 333-139358).
|
|
3
|
.4
|
|
Amended and Restated By-Laws of Libbey Glass Inc. (incorporated
by reference to Exhibit 3.4 to Libbey Glass Inc.s
Registration Statement on
Form S-4;
File
No. 333-139358).
|
|
4
|
.1
|
|
New Notes Indenture, dated February 8, 2010, among Libbey
Glass Inc., Libbey Inc., the domestic subsidiaries of Libbey
Glass Inc. listed as guarantors therein, and The Bank of New
York Mellon Trust Company, N.A., as trustee and collateral
agent (filed as Exhibit 4.2 to Libbey Inc.s Current
Report on
Form 8-K
filed on February 12, 2010 and incorporated herein by
reference).
|
|
4
|
.2
|
|
Form of New Note (included in Exhibit 4.14).
|
|
4
|
.3
|
|
Registration Rights Agreement, dated February 8, 2010,
among Libbey Glass Inc., Libbey Inc., and the domestic
subsidiaries of Libbey Glass Inc. listed as guarantors (filed as
Exhibit 4.4 to Libbey Inc.s Current Report on
Form 8-K
filed on February 12, 2010 and incorporated herein by
reference).
|
|
4
|
.4
|
|
Intercreditor Agreement, dated February 8, 2010, among
Libbey Glass Inc., Libbey Inc., and the domestic subsidiaries of
Libbey Glass Inc. listed as guarantors (filed as
Exhibit 4.5 to Libbey Inc.s Current Report on
Form 8-K
filed on February 12, 2010 and incorporated herein by
reference).
|
|
5
|
.1*
|
|
Opinion of Latham & Watkins LLP.
|
|
10
|
.1
|
|
Management Services Agreement dated as of June 24, 1993
between Owens-Illinois General Inc. and Libbey Glass Inc. (filed
as Exhibit 10.2 to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993 and incorporated herein
by reference).
|
|
10
|
.2
|
|
Tax Allocation and Indemnification Agreement dated as of
May 18, 1993 by and among Owens-Illinois, Inc.,
Owens-Illinois Group, Inc. and Libbey Inc. (filed as
Exhibit 10.3 to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993 and incorporated herein
by reference).
|
|
10
|
.3
|
|
Pension and Savings Plan Agreement dated as of June 17,
1993 between Owens-Illinois, Inc. and Libbey Inc. (filed as
Exhibit 10.4 to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993 and incorporated herein
by reference).
|
|
10
|
.4
|
|
Cross-Indemnity Agreement dated as of June 24, 1993 between
Owens-Illinois, Inc. and Libbey Inc. (filed as Exhibit 10.5
to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 1993 and incorporated herein
by reference).
|
|
10
|
.5
|
|
Libbey Inc. Guarantee dated as of October 10, 1995 in favor
of The Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse
China Company of Canada Ltd. guaranteeing certain obligations of
LG Acquisition Corp. and Libbey Canada Inc. under the Asset
Purchase Agreement for the Acquisition of Syracuse China
(Exhibit 2.0) in the event certain contingencies occur
(filed as Exhibit 10.17 to Libbey Inc.s Current
Report on
Form 8-K
dated October 10, 1995 and incorporated herein by
reference).
|
|
|
|
|
|
S-K Item
|
|
|
601 No.
|
|
Document
|
|
|
10
|
.6
|
|
Susquehanna Pfaltzgraff Co. Guarantee dated as of
October 10, 1995 in favor of LG Acquisition Corp. and
Libbey Canada Inc. guaranteeing certain obligations of The
Pfaltzgraff Co., The Pfaltzgraff Outlet Co. and Syracuse China
Company of Canada, Ltd. under the Asset Purchase Agreement for
the Acquisition of Syracuse China (Exhibit 2.0) in the
event certain contingencies occur (filed as Exhibit 10.18
to Libbey Inc.s Current Report on
Form 8-K
dated October 10, 1995 and incorporated herein by
reference).
|
|
10
|
.7
|
|
First Amended and Restated Libbey Inc. Executive Savings Plan
(filed as Exhibit 10.23 to Libbey Inc.s Annual Report
on
Form 10-K
for the year ended December 31, 1996 and incorporated
herein by reference).
|
|
10
|
.8
|
|
Form of Non-Qualified Stock Option Agreement between Libbey Inc.
and certain key employees participating in The 1999 Equity
Participation Plan of Libbey Inc. (filed as Exhibit 10.69
to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended September 30, 1999 and incorporated
herein by reference).
|
|
10
|
.9
|
|
The 1999 Equity Participation Plan of Libbey Inc. (filed as
Exhibit 10.67 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 1999 and incorporated
herein by reference).
|
|
10
|
.10
|
|
Stock Promissory Sale and Purchase Agreement between
VAA Vista Alegre Atlantis SGPS, SA and Libbey Europe
B.V. dated January 10, 2005 (filed as Exhibit 10.76 to
Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2004 and incorporated
herein by reference).
|
|
10
|
.11
|
|
RMB Loan Contract between Libbey Glassware (China) Company
Limited and China Construction Bank Corporation Langfang
Economic Development Area
Sub-branch
entered into January 23, 2006 (filed as Exhibit 10.75
to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2005 and incorporated
herein by reference).
|
|
10
|
.12
|
|
Guarantee Contract executed by Libbey Inc. for the benefit of
China Construction Bank Corporation Langfang Economic
Development Area
Sub-branch
(filed as Exhibit 10.76 to Libbey Inc.s Annual Report
on
Form 10-K
for the year ended December 31, 2005 and incorporated
herein by reference).
|
|
10
|
.13
|
|
Limited Waiver and Second Amendment to Purchase Agreement, dated
June 16, 2006, among Vitro, S.A. de C.V., Crisa
Corporation, Crisa Libbey S.A. de C.V., Vitrocrisa Holdings, S.
de R.L. de C.V., Vitrocrisa S. de R.L. de C.V., Vitrocrisa
Comercial S. de R.L. de C.V., Crisa Industrial, L.L.C., Libbey
Mexico, S. de R.L. de C.V., Libbey Europe B.V., and LGA3 Corp.
(filed as Exhibit 10.1 to Libbey Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended June 30, 2006 and incorporated herein
by reference).
|
|
10
|
.14
|
|
Guaranty, dated May 31, 2006, executed by Libbey Inc. in
favor of Fondo Stiva S.A. de C.V. (filed as Exhibit 10.2 to
Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and incorporated herein
by reference).
|
|
10
|
.15
|
|
Guaranty Agreement, dated June 16, 2006, executed by Libbey
Inc. in favor of Vitro, S.A. de C.V. (filed as Exhibit 10.3
to Libbey Inc.s Quarterly Report on
Form 10-Q
for the quarter ended June 30, 2006 and incorporated herein
by reference).
|
|
10
|
.16
|
|
Amended and Restated 2006 Omnibus Incentive Plan of Libbey Inc.
(filed as Exhibit 10.29 to Libbey Inc.s Quarterly
Report on
Form 10-Q
for the quarter ended September 30, 2010 and incorporated
herein by reference).
|
|
10
|
.17
|
|
Libbey Inc. Amended and Restated Deferred Compensation Plan for
Outside Directors (incorporated by reference to
Exhibit 10.61 to Libbey Glass Inc.s Registration
Statement on
Form S-4;
File
No. 333-139358).
|
|
10
|
.18
|
|
2009 Director Deferred Compensation Plan (filed as
Exhibit 10.51 to Libbey Incs Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 and incorporated
herein by this reference).
|
|
10
|
.19
|
|
Executive Deferred Compensation Plan (filed as
Exhibit 10.52 to Libbey Incs Quarterly Report on
Form 10-Q
for the quarter ended September 30, 2008 and incorporated
herein by this reference).
|
|
10
|
.20
|
|
Amended and Restated Employment Agreement dated as of
December 31, 2008 between Libbey Inc. and John F. Meier
(filed as Exhibit 10.29 to Libbey Inc.s Annual Report
on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.21
|
|
Amended and Restated Employment Agreement dated as of
December 31, 2008 between Libbey Inc. and Richard I.
Reynolds (filed as Exhibit 10.30 to Libbey Inc.s
Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
|
|
|
|
S-K Item
|
|
|
601 No.
|
|
Document
|
|
|
10
|
.22
|
|
Amended and Restated Employment Agreement dated as of
December 31, 2008 between Libbey Inc. and Gregory T.
Geswein (filed as Exhibit 10.31 to Libbey Inc.s
Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.23
|
|
Form of Amended and Restated Employment Agreement dated as of
December 31, 2008 between Libbey Inc. and the respective
executive officers identified on Appendix 1 thereto (filed
as Exhibit 10.32 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.24
|
|
Amended and restated change in control agreement dated as of
December 31, 2008 between Libbey Inc. and John F. Meier
(filed as Exhibit 10.33 to Libbey Inc.s Annual Report
on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.25
|
|
Form of amended and restated change in control agreement dated
as of December 31, 2008 between Libbey Inc. and the
respective executive officers identified on Appendix 1
thereto (filed as Exhibit 10.34 to Libbey Inc.s
Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.26
|
|
Form of amended and restated change in control agreement dated
as of December 31, 2008 between Libbey Inc. and the
respective individuals identified on Appendix 1 thereto
(filed as Exhibit 10.35 to Libbey Inc.s Annual Report
on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.27
|
|
Form of Amended and Restated Indemnity Agreement dated as of
December 31, 2008 between Libbey Inc. and the respective
officers identified on Appendix 1 thereto (filed as
Exhibit 10.36 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.28
|
|
Form of Amended and Restated Indemnity Agreement dated as of
December 31, 2008 between Libbey Inc. and the respective
outside directors identified on Appendix 1 thereto (filed
as Exhibit 10.37 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.29
|
|
Amended and Restated Libbey Inc. Supplemental Retirement Benefit
Plan effective December 31, 2008 (filed as
Exhibit 10.38 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.30
|
|
Amendment to the First Amended and Restated Libbey Inc.
Executive Savings Plan effective December 31, 2008 (filed
as Exhibit 10.39 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2008 and incorporated
herein by reference).
|
|
10
|
.31
|
|
Employment Agreement dated as of January 1, 2010 between
Libbey Inc. and Roberto B. Rubio (filed as Exhibit 10.39 to
Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2009 and incorporated
herein by reference).
|
|
10
|
.32
|
|
Change in control agreement dated as of January 1, 2010
between Libbey Inc. and Roberto B. Rubio (filed as
Exhibit 10.40 to Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2009 and incorporated
herein by reference).
|
|
12
|
.1*
|
|
Statement of computation of ratio of earnings to fixed charges.
|
|
21
|
.1
|
|
Subsidiaries of the Registrant (filed as Exhibit 21 to
Libbey Inc.s Annual Report on
Form 10-K
for the year ended December 31, 2009 and incorporated
herein by reference).
|
|
23
|
.1*
|
|
Consent of Ernst & Young LLP.
|
|
23
|
.2*
|
|
Consent of Latham & Watkins LLP (included in
Exhibit 5.1).
|
|
24
|
.1*
|
|
Power of Attorney (included in the signature pages to the
Registration Statement).
|
|
25
|
.1*
|
|
Statement of Eligibility of Trustee on
Form T-1.
|
|
99
|
.1*
|
|
Form of Letter of Transmittal.
|
|
99
|
.2*
|
|
Form of Notice of Guaranteed Delivery.
|
|
99
|
.3*
|
|
Form of Letter to Registered Holders and DTC Participants.
|
|
99
|
.4*
|
|
Form of Letter to Beneficial Holders.
|