-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, C8K026h9MJXKKDWyDycfwD0k8RzKTOl35nqkyeu7FruGYycmWbrNw5T6axQJTtql YxFaqSAC6AQMLFg1PniD7w== 0000950137-96-002284.txt : 19961121 0000950137-96-002284.hdr.sgml : 19961121 ACCESSION NUMBER: 0000950137-96-002284 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19960929 FILED AS OF DATE: 19961113 DATE AS OF CHANGE: 19961119 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: US CAN CORP CENTRAL INDEX KEY: 0000895726 STANDARD INDUSTRIAL CLASSIFICATION: 3411 IRS NUMBER: 061094196 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-13678 FILM NUMBER: 96662619 BUSINESS ADDRESS: STREET 1: 900 COMMERCE DR STREET 2: SUITE 302 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085712500 MAIL ADDRESS: STREET 1: 900 COMMERCE DRIVE CITY: OAK BROOK STATE: IL ZIP: 60521 FILER: COMPANY DATA: COMPANY CONFORMED NAME: UNITED STATES CAN COMPANY /DE/ CENTRAL INDEX KEY: 0000880657 STANDARD INDUSTRIAL CLASSIFICATION: 3411 IRS NUMBER: 061145011 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 033-43734 FILM NUMBER: 96662620 BUSINESS ADDRESS: STREET 1: 900 COMMERCE DR STREET 2: SUITE 302 CITY: OAK BROOK STATE: IL ZIP: 60521 BUSINESS PHONE: 7085712500 MAIL ADDRESS: STREET 1: 900 COMMERCE DRIVE CITY: OAK BROOK STATE: IL ZIP: 60521 10-Q 1 QUARTERLY REPORT DATED 9-29-96 1 - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q JOINT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996 COMMISSION FILE NUMBER 0-21314 COMMISSION FILE NUMBER 33-43734 U.S. CAN CORPORATION UNITED STATES CAN COMPANY (Exact name of registrant (Exact name of registrant as specified in its charter) as specified in its charter) 06-1094196 06-1145011 (I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.) DELAWARE DELAWARE (State or Other Jurisdiction of (State or Other Jurisdiction of Incorporation or Organization) Incorporation or Organization) 900 COMMERCE DRIVE 900 COMMERCE DRIVE OAK BROOK, ILLINOIS 60521 OAK BROOK, ILLINOIS 60521 (Address of Principal Executive (Address of Principal Executive Offices, Including Zip Code) Offices, Including Zip Code) (630) 571-2500 (630) 571-2500 (Registrant's Telephone Number, (Registrant's Telephone Number, Including Area Code) Including Area Code)
Indicate by check mark whether the registrants (1) have filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act") during the preceding 12 months (or for such shorter period that the registrants were required to file such reports), and (2) have been subject to such filing requirements for the past 90 days. Yes [X] No [ ] (Explanatory Note: United States Can Company (a wholly owned subsidiary of U.S. Can Corporation) is not required by Section 13 or 15(d) of the Exchange Act to file such reports, but has agreed, pursuant to the Indenture under which its 13 1/2% Senior Subordinated Notes Due 2002 were issued, to file all reports required by Section 13 or 15(d) whether or not required by law.) As of October 31, 1996, 12,926,696 shares of U.S. Can Corporation's common stock were outstanding. As of October 31, 1996, 1,000 shares of United States Can Company's common stock were outstanding. - - -------------------------------------------------------------------------------- - - -------------------------------------------------------------------------------- 2 U.S. CAN CORPORATION UNITED STATES CAN COMPANY FORM 10-Q FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996 TABLE OF CONTENTS
PAGE ---- PART I FINANCIAL INFORMATION Item 1. Financial Statements (Unaudited) U.S. Can Corporation Condensed Consolidated Balance Sheets September 29, 1996 and December 31, 1995........................................................ 3 United States Can Company Condensed Consolidated Balance Sheets September 29, 1996 and December 31, 1995................................................... 4 U.S. Can Corporation Condensed Consolidated Statements of Operations Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 5 United States Can Company Condensed Consolidated Statements of Operations Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 6 U.S. Can Corporation Condensed Consolidated Statements of Cash Flows Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 7 United States Can Company Condensed Consolidated Statements of Cash Flows Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 8 Notes to Condensed Consolidated Financial Statements......................... 9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations........................................................ 16 PART II OTHER INFORMATION Item 1. Legal Proceedings............................................................ 20 Item 6. Exhibits and Reports on Form 8-K............................................. 20
2 3 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000'S OMITTED, EXCEPT SHARE DATA)
SEPTEMBER 29, DECEMBER 31, 1996 1995 ------------- ------------ ASSETS CURRENT ASSETS: Cash and cash equivalents........................................... $ 3,940 $ 136 Accounts receivable, less allowances of $9,305 and $5,451 in 1996 and 1995, respectively............................................ 103,083 51,279 Inventories......................................................... 113,735 78,252 Prepaid expenses and other current assets........................... 10,794 10,786 Prepaid income taxes................................................ 4,274 6,732 --------- --------- Total current assets.............................................. $ 235,826 $ 147,185 --------- --------- PROPERTY, PLANT AND EQUIPMENT: Land................................................................ 4,428 2,576 Buildings........................................................... 51,183 44,954 Machinery, equipment and construction in process.................... 394,475 306,319 --------- --------- $ 450,086 $ 353,849 Less -- Accumulated depreciation and amortization................... (145,081) (123,748) --------- --------- Total property, plant and equipment............................... $ 305,005 $ 230,101 --------- --------- MACHINERY REPAIR PARTS................................................ $ 5,888 $ 5,395 INTANGIBLES........................................................... 65,994 62,301 OTHER ASSETS.......................................................... 11,443 10,454 --------- --------- Total assets...................................................... $ 624,156 $ 455,436 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Current maturities of long-term debt................................ $ 17,946 $ 17,216 Cash overdrafts..................................................... 10,142 5,395 Accounts payable.................................................... 56,433 32,560 Accrued payrolls and benefits....................................... 27,100 19,282 Accrued insurance................................................... 5,892 5,830 Other current liabilities........................................... 27,321 17,954 --------- --------- Total current liabilities......................................... $ 144,834 $ 98,237 --------- --------- SENIOR DEBT........................................................... $ 232,206 $ 127,360 SUBORDINATED DEBT..................................................... 100,000 100,000 --------- --------- Total long-term debt.............................................. $ 332,206 $ 227,360 --------- --------- OTHER LONG-TERM LIABILITIES: Postretirement benefits............................................. $ 25,350 $ 25,080 Deferred income taxes............................................... 21,358 19,962 Other long-term liabilities......................................... 3,536 2,970 --------- --------- Total other long-term liabilities................................. $ 50,244 $ 48,012 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock, $.01 par value; 10,000,000 shares authorized, none issued or outstanding............................................. $ -- $ -- Common stock, $.01 par value; 50,000,000 shares authorized 12,933,636 and 12,902,111 shares issued in 1996 and 1995, respectively...................................................... 129 129 Paid-in capital..................................................... 104,557 103,913 Unearned restricted stock........................................... (1,735) (2,052) Treasury common stock, at cost; 18,591 and 37,908 shares in 1996 and 1995, respectively................................................ (223) (319) Retained deficit.................................................... (5,856) (19,844) --------- --------- Total stockholders' equity........................................ $ 96,872 $ 81,827 --------- --------- Total liabilities and stockholders' equity..................... $ 624,156 $ 455,436 ========= =========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these balance sheets. 3 4 UNITED STATES CAN COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED) (000'S OMITTED, EXCEPT SHARE DATA)
SEPTEMBER 29, DECEMBER 31, ASSETS 1996 1995 - - -------------------------------------------------------------------- ------------- ------------ CURRENT ASSETS: Cash and cash equivalents......................................... $ 3,940 $ 136 Accounts receivable, less allowances of $9,305 and $5,451 in 1996 and 1995, respectively......................................... 103,083 51,279 Inventories....................................................... 113,735 78,252 Prepaid expenses and other current assets......................... 10,794 10,125 Prepaid income taxes.............................................. 2,977 6,096 --------- --------- Total current assets......................................... $ 234,529 $ 145,888 --------- --------- PROPERTY, PLANT AND EQUIPMENT: Land.............................................................. 4,428 2,576 Buildings......................................................... 51,183 44,954 Machinery, equipment and construction in process.................. 394,475 306,319 --------- --------- $ 450,086 $ 353,849 Less -- Accumulated depreciation and amortization................. (145,081) (123,748) --------- --------- Total property, plant and equipment.......................... $ 305,005 $ 230,101 --------- --------- MACHINERY REPAIR PARTS.............................................. $ 5,888 $ 5,395 LONG-TERM RECEIVABLE FROM PARENT.................................... 622 1,472 INTANGIBLES......................................................... 65,994 62,301 OTHER ASSETS........................................................ 11,443 10,454 --------- --------- Total assets................................................. $ 623,481 $ 455,611 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY - - -------------------------------------------------------------------- CURRENT LIABILITIES: Current maturities of long-term debt.............................. $ 17,946 $ 17,216 Cash overdrafts................................................... 10,142 5,395 Accounts payable.................................................. 56,433 32,560 Payable to Parent................................................. 1,265 1,057 Accrued payrolls and benefits..................................... 27,100 19,282 Accrued insurance................................................. 5,892 5,830 Other current liabilities......................................... 27,321 17,954 --------- --------- Total current liabilities.................................... $ 146,099 $ 99,294 --------- --------- SENIOR DEBT......................................................... $ 232,206 $ 127,360 SUBORDINATED DEBT................................................... 100,000 100,000 --------- --------- Total long-term debt......................................... $ 332,206 $ 227,360 --------- --------- OTHER LONG-TERM LIABILITIES: Postretirement benefits........................................... $ 25,350 $ 25,080 Deferred income taxes............................................. 22,097 20,701 Other long-term liabilities....................................... 3,536 2,970 --------- --------- Total other long-term liabilities............................ $ 50,983 $ 48,751 --------- --------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Common stock, 1,000 shares authorized and outstanding............. $ 1 $ 1 Paid-in capital................................................... 94,300 94,300 Retained deficit.................................................. (108) (14,095) --------- --------- Total stockholder's equity................................... $ 94,193 $ 80,206 --------- --------- Total liabilities and stockholder's equity................ $ 623,481 $ 455,611 ========= =========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these balance sheets. 4 5 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (000'S OMITTED, EXCEPT PER SHARE DATA)
QUARTERLY PERIOD ENDED NINE MONTHS ENDED --------------------------- --------------------------- SEPTEMBER 29, OCTOBER 1, SEPTEMBER 29, OCTOBER 1, 1996 1995 1996 1995 ------------- ---------- ------------- ---------- NET SALES....................................... $ 194,109 $ 154,345 $ 538,316 $ 474,387 COST OF SALES................................... 171,150 142,103 470,745 419,072 -------- -------- -------- -------- Gross income.................................. $ 22,959 $ 12,242 $ 67,571 $ 55,315 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.... 7,173 6,898 21,103 20,590 -------- -------- -------- -------- Operating income.............................. $ 15,786 $ 5,344 $ 46,468 $ 34,725 INTEREST EXPENSE ON BORROWINGS.................. 6,993 6,241 19,513 18,388 AMORTIZATION OF DEFERRED FINANCING COSTS........ 330 396 1,132 1,135 CONSOLIDATION EXPENSE........................... -- 81 -- 245 OTHER EXPENSE................................... 480 499 1,483 1,216 -------- -------- -------- -------- Income (loss) before income taxes............. $ 7,983 $ (1,873) $ 24,340 $ 13,741 PROVISION (BENEFIT) FOR INCOME TAXES............ 3,402 (593) 10,352 5,939 -------- -------- -------- -------- NET INCOME (LOSS)............................... $ 4,581 $ (1,280) $ 13,988 $ 7,802 ======== ======== ======== ======== PER SHARE DATA: Net income (loss)............................. $ 0.35 $ (0.10) $ 1.07 $ 0.61 ======== ======== ======== ======== Weighted average shares and equivalent shares outstanding (000's)........................ 13,120 12,756 13,070 12,833 ======== ======== ======== ========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 5 6 UNITED STATES CAN COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) (000'S OMITTED)
QUARTERLY PERIOD ENDED NINE MONTHS ENDED --------------------------- --------------------------- SEPTEMBER 29, OCTOBER 1, SEPTEMBER 29, OCTOBER 1, 1996 1995 1996 1995 ------------- ---------- ------------- ---------- NET SALES....................................... $ 194,109 $ 154,345 $ 538,316 $ 474,387 COST OF SALES................................... 171,150 142,103 470,745 419,072 -------- -------- -------- -------- Gross income.................................. $ 22,959 $ 12,242 $ 67,571 $ 55,315 SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.... 7,173 6,898 21,103 20,590 -------- -------- -------- -------- Operating income.............................. $ 15,786 $ 5,344 $ 46,468 $ 34,725 INTEREST EXPENSE ON BORROWINGS.................. 6,993 6,241 19,513 18,388 AMORTIZATION OF DEFERRED FINANCING COSTS............................... 330 396 1,132 1,135 CONSOLIDATION EXPENSE........................... -- 81 -- 245 OTHER EXPENSE................................... 480 499 1,483 1,216 -------- -------- -------- -------- Income (loss) before income taxes............. $ 7,983 $ (1,873) $ 24,340 $ 13,741 PROVISION (BENEFIT) FOR INCOME TAXES.................................. 3,402 (593) 10,352 5,939 -------- -------- -------- -------- NET INCOME (LOSS)............................... $ 4,581 $ (1,280) $ 13,988 $ 7,802 ======== ======== ======== ========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 6 7 U.S. CAN CORPORATION AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED)
NINE MONTHS ENDED --------------------------- SEPTEMBER 29, OCTOBER 1, 1996 1995 ------------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income.......................................................... $ 13,988 $ 7,802 Adjustments to reconcile net income to net cash provided by operating activities -- Depreciation and amortization.................................... 24,844 21,285 Plant consolidation costs paid................................... -- (1,966) Consolidation expense............................................ -- 245 Deferred income taxes............................................ 2,484 1,425 Change in operating assets and liabilities, net of acquired businesses -- Accounts receivable.............................................. (23,598) (9,295) Inventories...................................................... (16,667) 9,257 Accounts payable................................................. 6,155 (16,771) Accrued payrolls and benefits, insurance and other............... (3,463) (1,925) Postretirement benefits.......................................... 139 213 Other, net....................................................... (1,085) 577 --------- -------- Net cash provided by operating activities................... $ 2,797 $ 10,847 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures................................................ $ (23,400) $ (24,382) Acquisition of businesses, net of cash acquired..................... (78,346) (29,167) Proceeds from sale of property...................................... -- 600 Machinery repair parts usage, net................................... 118 62 --------- -------- Net cash used in investing activities....................... $(101,628) $ (52,887) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Issuance of common stock............................................ $ 56 $ 100 Net borrowings under the revolving line of credit and changes in cash overdrafts.................................................. 106,954 51,970 Borrowings of other long-term debt, including capital lease obligations...................................................... 3,985 4,990 Payments of other long-term debt, including capital lease obligations...................................................... (7,325) (13,993) Payments of debt refinancing costs.................................. (835) (818) Payments of common stock issuance costs............................. -- (22) Purchase of treasury stock, net..................................... (200) (153) --------- -------- Net cash provided by financing activities................... $ 102,635 $ 42,074 --------- -------- INCREASE IN CASH AND CASH EQUIVALENTS................................. $ 3,804 $ 34 CASH AND CASH EQUIVALENTS, beginning of period........................ 136 123 --------- -------- CASH AND CASH EQUIVALENTS, end of period.............................. $ 3,940 $ 157 ========= ========
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 7 8 UNITED STATES CAN COMPANY AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (000'S OMITTED)
NINE MONTHS ENDED --------------------------- SEPTEMBER 29, OCTOBER 1, 1996 1995 ------------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income.......................................................... $ 13,988 $ 7,802 Adjustments to reconcile net income to net cash provided by operating activities-- Depreciation and amortization.................................... 24,844 21,285 Plant consolidation costs paid................................... -- (1,966) Consolidation expense............................................ -- 245 Deferred income taxes............................................ 2,484 1,425 Change in operating assets and liabilities, net of acquired businesses-- Accounts receivable.............................................. (23,598) (9,295) Inventories...................................................... (16,667) 9,257 Accounts payable................................................. 6,155 (16,771) Accrued payrolls and benefits, insurance and other............... (3,463) (1,925) Postretirement benefits.......................................... 139 213 Other, net....................................................... (1,085) 577 --------- -------- Net cash provided by operating activities...................... $ 2,797 $ 10,847 --------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures................................................ $ (23,400) $ (24,382) Acquisition of businesses, net of cash acquired..................... (78,346) (29,167) Proceeds from sale of property...................................... -- 600 Machinery repair parts usage, net................................... 118 62 --------- -------- Net cash used in investing activities............................ $(101,628) $ (52,887) --------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Net borrowings under the revolving line of credit and changes in cash overdrafts.................................................. 106,954 51,970 Changes in payable to Parent........................................ (144) (75) Borrowings of other long-term debt, including capital lease obligations...................................................... 3,985 4,990 Payments of other long-term debt, including capital lease obligations...................................................... (7,325) (13,993) Payments of debt refinancing costs.................................. (835) (818) --------- -------- Net cash provided by financing activities........................ $ 102,635 $ 42,074 --------- -------- INCREASE IN CASH AND CASH EQUIVALENTS................................. $ 3,804 $ 34 CASH AND CASH EQUIVALENTS, beginning of period........................ 136 123 --------- -------- CASH AND CASH EQUIVALENTS, end of period.............................. $ 3,940 $ 157 --------- --------
The accompanying Notes to Condensed Consolidated Financial Statements are an integral part of these statements. 8 9 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 29, 1996 (UNAUDITED) (1) PRINCIPLES OF REPORTING The condensed consolidated financial statements of U.S. Can Corporation (the "Corporation") include the accounts of the Corporation and its wholly owned subsidiary, United States Can Company ("U.S. Can"). The condensed consolidated financial statements of U.S. Can include only the accounts of U.S. Can and its wholly owned subsidiaries. The consolidated group including the Corporation is hereinafter referred to as the Company. These financial statements have been prepared in accordance with generally accepted accounting principles for interim reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. These financial statements, which, in the opinion of management, include all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation, have not been audited by independent public accountants. Operating results for any interim period are not necessarily indicative of results that may be expected for the full year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission; however, management believes that the disclosures contained herein are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the previously filed financial statements and footnotes included in the Corporation's and U.S. Can's Joint Annual Report on Form 10-K/A-1 for the year ended December 31, 1995. Quarterly accounting periods are based upon two four-week periods and one five-week period. Management believes that this technique provides a more consistent view of accounting data resulting in greater comparability than the calendar month basis would provide. (2) ACQUISITIONS In early 1995, the Company completed its acquisition of the stock of Metal Litho International, Inc. and the portion of a related partnership not previously owned by MLI (collectively, "MLI") for approximately $10.1 million in cash, plus the assumption of approximately $4.2 million of debt. The former MLI plant, located in Trenton, New Jersey, is a full service metal decorating facility, providing coil shearing and tin plate coating and printing. In March 1995, the Company completed its acquisition of the stock of Plastite Corporation ("Plastite") for approximately $7.3 million, plus future contingent payments of approximately $2.5 million. The former Plastite plant, located in Morrow, Georgia, manufactures plastic paint cans and pails in two sizes. In April 1995, the Company completed an acquisition of certain assets of Prospect Industries Corporation ("Prospect") for approximately $8.8 million. The acquired assets, located in North Brunswick, New Jersey, are used to manufacture metal pails for the chemical and coatings industries. U.S. Can's North Brunswick operation includes coil cutting, coating and lithography, as well as manufacturing of tops and bottoms. In May 1995, the Company completed an acquisition of the stock of Hunter Container Corporation ("Hunter") for approximately $4.0 million, plus the assumption of $2.5 million of debt. The former Hunter facility, located in Vernalis, California, manufactures a broad line of proprietary and specialty metal containers. In April 1996, the Company acquired from Alltrista Corporation ("Alltrista") substantially all of the machinery, equipment and coatings and inks inventory of, as well as certain proprietary technology used in, Alltrista Metal Services ("AMS"), a division of Alltrista (collectively referred to hereinafter as the "Assets"), and assumed a liability of approximately $0.5 million. The Assets were purchased for approximately $9.6 million. The Company also agreed to purchase the Chicago, Illinois, Baltimore, Maryland and 9 10 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) Trussville, Alabama real property and buildings formerly used in AMS's business for approximately $4.8 million. In a related transaction, in June 1996, the Company completed the purchase of AMS's remaining inventory for approximately $8 million. AMS was engaged in the business of metal cutting and decorating, as well as the manufacture, sale and licensure of certain proprietary products. In July 1996, the Company discontinued operations at the former AMS operations in Baltimore, Maryland and Trussville, Alabama. On August 2, 1996, the Company completed the acquisition of all of the outstanding stock of three related companies, CPI Plastics, Inc., CP Ohio, Inc. and CP Illinois, Inc. (collectively, the "CPI Group"), engaged in manufacturing molded plastic drums and pails and poultry products at locations in Newnan, Georgia, Alliance, Ohio and Jerseyville, Illinois. To acquire the stock, the Company paid approximately $15 million in cash to the stockholders of the CPI Group, subject to adjustment for the change in net working capital (as defined in the acquisition agreement) from December 31, 1995 through the closing date, plus potential contingent payments (in an amount not to exceed $1 million) based upon the CPI Group's financial performance for the years 1996 and 1997. This acquisition was financed with borrowings under the Acquisition Facility. For additional information regarding the Acquisition Facility, see Note (4) of the Notes to Condensed Consolidated Financial Statements. On September 11, 1996, the Company completed the acquisition of a portion of Crown Cork & Seal Company, Inc.'s ("Crown's") European aerosol can businesses ("USC Europe") for $52.8 million and the assumption of net indebtedness of $5.8 million, subject to a post-closing adjustment for the change in working capital from April 30, 1996 to the closing date. This acquisition included manufacturing operations in the United Kingdom, France, Spain and Germany and the aerosol can manufacturing equipment and assets from a Crown facility in Italy. USC Europe produced approximately 24% of all European steel aerosol cans sold in 1995 and, as a group, constituted the second largest manufacturer of steel aerosol cans in Europe. Each of the foregoing business acquisitions was accounted for as a purchase for financial reporting purposes. Accordingly, certain recorded assets and liabilities of the acquired companies were revalued at estimated fair values as of the acquisition date. Such revaluation adjustments, all made pursuant to the purchase method of accounting, resulted in increased amortization and depreciation in periods following the acquisition. Management has used its best judgment and available information in estimating the fair value of those assets and liabilities. Any changes to these estimates are not expected to be material. Amortization of any excess purchase price over the estimated fair value of the net assets acquired is made over a period of forty years. The following is a summary of the allocation of the aggregate purchase price of the CPI Group and USC Europe acquisitions (000's omitted): Current assets..................................................... $ 51,827 Net property, plant and equipment.................................. 55,199 Other assets....................................................... 1,087 Current liabilities................................................ (36,530) Other liabilities.................................................. (8,189) -------- Net assets....................................................... 63,394 Resulting goodwill................................................. 4,413 -------- Purchase price paid.............................................. $ 67,807 ========
10 11 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) The following data represents the unaudited pro forma results of operations as if the CPI Group and USC Europe acquisitions had occurred on January 1 of the applicable period (000's omitted, except per share data):
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED SEPTEMBER 29, 1996 DECEMBER 31, 1995 -------------------------- -------------------------- AS REPORTED PRO FORMA AS REPORTED PRO FORMA ----------- --------- ----------- --------- Net Sales.................................. $ 538,316 $ 644,678 $ 626,485 $ 774,942 Net income................................. 13,988 14,823 3,939 5,277 Earnings per share......................... $ 1.07 $ 1.13 $ 0.31 $ 0.41
The pro forma operating results include each company's results of operations for the indicated periods with adjustments to reflect, among other things, amortization of goodwill, interest expense on the acquisition borrowings and the effect of income taxes thereon. The pro forma information given above does not purport to be indicative of the results that actually would have been obtained if the operations were combined during the periods presented and is not intended to be a projection of future results or trends. Other than the CPI Group and USC Europe, the acquisitions described above were not significant to the Company or U.S. Can. On August 16, 1996, the Company completed its acquisition of a site in the Dallas, Texas area for the establishment of a paint and general line manufacturing plant. The decision to expand manufacturing capabilities in the Southwest followed the Company's agreement with one of its major coating customers on the material terms of a long-term supply arrangement. In October 1996, the Company and this customer signed a definitive long-term supply agreement. This Texas facility will initially produce gallon round paint cans for the coatings industry. In the future, if circumstances warrant, the Company may expand this facility to include production of certain of its other products. The Company has selected Merthyr Tydfil, U.K. as the site of a new aerosol container manufacturing facility. This plant, expected to be operational in mid-1997, represents an initial investment of $20 million (spread over two to three years), and will supply The Gillette Company's North Atlantic operations. (3) INVENTORIES Inventories are stated at cost determined by the last-in, first-out ("LIFO") cost method (for all but foreign inventories), not in excess of market. Inventory costs include elements of material, labor and factory overhead. Current (first-in, first-out) cost of such inventories approximated their LIFO value at September 29, 1996, and December 31, 1995. Inventories of foreign locations of approximately $17.3 million are valued at the lower of first-in, first-out cost or market. Inventories reported in the accompanying balance sheets were classified as follows (000's omitted):
SEPTEMBER 29, DECEMBER 31, 1996 1995 ------------- ------------ Raw materials....................................................... $ 35,898 $ 21,066 Work in process..................................................... 49,556 34,138 Finished goods...................................................... 24,079 19,549 Machine shop inventory.............................................. 4,202 3,499 -------- ------- $ 113,735 $ 78,252 ======== =======
11 12 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) (4) CREDIT AGREEMENT On April 29, 1994, U. S. Can entered into a four-year credit agreement (the "Credit Agreement") with a group of banks providing a $130 million line of credit consisting of a $95 million revolving credit line (the "Revolving Credit Facility") and a $35 million term loan (the "Term Loan"). As of September 29, 1996, $9,000,000 of the Term Loan had been repaid under the terms of the Credit Agreement. Funds available under the Credit Agreement are used for working capital and other general corporate purposes. The loans outstanding under the Credit Agreement bear interest at a floating rate equal to, at the election of U.S. Can, one of the following: (i) the Base Rate per annum (currently 8.25%), or (ii) based on the current pricing ratio, a reserve-adjusted Eurodollar rate plus 1.0% per annum, for specified interest periods (selected by U.S. Can) of one, two, three or six months. The "Base Rate" is the higher of: (i) the Federal Funds rate plus 1/2 of 1% per annum or (ii) the rate of interest publicly announced from time to time by Bank of America Illinois, Chicago, Illinois as its "reference rate." For letters of credit issued under the Credit Agreement, U.S. Can pays fees equal to: (a) the applicable Eurodollar Margin, currently 1.0% per annum, multiplied by the aggregate face amount outstanding on each such letter of credit and (b) an amount payable to the issuing bank equal to 0.2% per annum of the aggregate face amount outstanding on each such letter of credit, both of which are payable quarterly in arrears. Currently, U.S. Can is required to pay a commitment fee of .325% per annum of the average daily unused portion of each lender's commitment under the Credit Agreement. The Credit Agreement is secured by the accounts receivable and inventories of U.S. Can. The Term Loan is also secured by a mortgage on U.S. Can's Elgin, Illinois facility and certain equipment located at the Elgin facility. In early April 1996, the lenders under the Credit Agreement provided U.S. Can a temporary $10 million increase in the Revolving Credit Facility due to seasonal inventory requirements. In late April 1996, these lenders provided U.S. Can an additional temporary $20 million increase in the Revolving Credit Facility due to the acquisition of certain assets from Alltrista. As of September 29, 1996, borrowings under the Credit Agreement totaled $193.4 million, an additional $11.7 million in letters of credit had been issued pursuant thereto, and $13.2 million of unused credit remained available thereunder. In July 1996, the lenders under the Credit Agreement provided to U.S. Can a supplemental $97 million credit facility (the "Acquisition Facility") to fund certain permitted acquisitions and, at U.S. Can's option, prepay the Revolving Credit Facility by an amount not to exceed $20 million on December 31, 1996. While the Acquisition Facility is in place, U.S. Can may not use the Revolving Credit Facility to fund acquisitions. The Acquisition Facility matures on April 30, 1997, but U.S. Can may, at its option and subject to certain restrictions, elect to convert the outstanding borrowings thereunder to term loans with a five-year amortization period. Base rate and Eurodollar loans outstanding under the Acquisition Facility bear interest at a higher margin than other borrowings under the Credit Agreement. Under the amended Credit Agreement, U.S. Can's interest rate margins vary depending upon U.S. Can's ratio of total funded debt to earnings, before interest, taxes, depreciation and amortization. In addition, U.S. Can is required to pay an acquisition loan activation fee in an amount equal to 0.25% of the amount by which the loans outstanding at any time under the Acquisition Facility exceed $50 million. In connection with the Acquisition Facility, U.S. Can pledged substantially all of its unencumbered personal property (including machinery and equipment) and owned real estate to secure its obligations under the Acquisition Facility. U.S. Can is also required to pledge the stock and/or assets, and provide the guaranty, of any company or operations acquired using a borrowing under the Acquisition Facility. In connection with the USC Europe Acquisition, U.S. Can pledged 65% of the stock of its European holding company to secure its obligations under the Acquisition Facility and agreed that, so long as any obligations under the Acquisition Facility remain outstanding, the European holding company shall not 12 13 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) (i) own any assets other than the capital stock of foreign subsidiaries, (ii) make any expenditures other than expenditures necessary to maintain its separate corporate existence, (iii) incur any debt, (iv) have employees or engage in any trade or business, (v) merge with any other person, (vi) dispose of any assets or (vii) permit any lien on its assets. None of the companies included in USC Europe have provided guaranties of U.S. Can's obligations under the Credit Agreement. The terms of the Credit Agreement impose restrictions that affect, among other things, U.S. Can's ability to (i) incur additional indebtedness, (ii) create liens on assets, (iii) sell assets, (iv) engage in mergers, acquisitions or consolidations, (v) make investments, (vi) pay dividends or make distributions and (vii) engage in certain transactions with affiliates and subsidiaries. The Credit Agreement also requires U.S. Can to comply with certain financial ratios and tests. Under and pursuant to the Credit Agreement, U.S. Can may pay cash dividends on account of any shares of any class of capital stock of U.S. Can (or on any warrants, options or rights with respect thereto) in an amount not to exceed 25% of Net Income (as defined in the Credit Agreement) in any given fiscal year, but in any event not more than 25% of consolidated cumulative Net Income attributable to the period commencing subsequent to April 29, 1994, and ending on the date of such proposed cash dividends; provided that either: (i) the Term Loan has been indefeasibly paid in full in cash or (ii) the Leverage Ratio (as defined in the Credit Agreement) as of the last day of the last fiscal quarter of such fiscal year does not exceed 3.50 to 1.00; and, provided further, that no Default or Event of Default (as defined in the Credit Agreement) exists immediately prior to any such cash dividend or would result therefrom. Notwithstanding the foregoing, in no event may U.S. Can pay such cash dividends prior to the delivery of the annual audited consolidated financial statements to the banks for the fiscal year ended in which either of the conditions contained in clauses (i) or (ii) above has been satisfied. Because amounts remain outstanding under the Term Loan, the Credit Agreement currently prohibits U.S. Can from paying cash dividends. The Credit Agreement also contains subjective covenants providing that U.S. Can would be in default if, in the judgment of the lenders, there is a material adverse change in the financial condition of U.S. Can. Management is not aware of, nor does it anticipate, any facts, events or occurrences which could reasonably be expected to have a material adverse effect on the operations of U.S. Can that would cause the lenders to demand repayment of the amounts borrowed under the Credit Agreement prior to April 29, 1998. Accordingly, the borrowings thereunder have been classified as long-term debt in the accompanying balance sheets. U.S. Can was in compliance with all terms and restrictive covenants of the Credit Agreement and its other long-term debt agreements as of September 29, 1996. (5) SUPPLEMENTAL CASH FLOW INFORMATION U.S. Can paid interest on borrowings of $22,609,000 and $21,883,000 for the nine-month periods ended September 29, 1996 and October 1, 1995, respectively. The Corporation and U.S. Can paid approximately $3,847,000 and $5,046,000 of income taxes for the nine-month periods ended September 29, 1996 and October 1, 1995, respectively. During the nine-month periods ended September 29, 1996 and October 1, 1995, the Corporation issued stock valued at approximately $943,000 and $3,067,000, respectively, into certain of its employee benefit plans. During the first nine-months of 1996 the Company received no tax benefits on the exercise of non-qualified stock options. The Company did receive approximately $87,000 of such benefits during the first nine months of 1995. 13 14 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) (6) LEGAL PROCEEDINGS On February 28, 1995, Continental Holdings Inc. ("CHI"), an affiliate of Peter Kiewit Sons', Inc. ("Kiewit"), filed a Complaint against U.S. Can and others in the United States District Court of the State of New Jersey, asserting claims based upon alleged indemnity and reimbursement obligations of U.S. Can to Kiewit, as successor in interest to Continental Can Company, USA, Inc. ("CCC"), arising from the 1987 acquisition by U.S. Can of the general packaging business of CCC. These alleged obligations relate to environmental liabilities, reimbursable insurance deductibles and reinsurance amounts, and certain personal injury claims and employment discrimination claims. The Complaint includes counts for breach of contract, declaratory judgment, indemnification and contribution, CERCLA remedies, state environmental law remedies and unjust enrichment. CHI seeks unspecified compensatory damages, consequential and incidental damages, interest, attorneys' fees and costs of litigation, equitable relief, environmental response costs, and restitution. No aggregate dollar amount of damages is specified in the Complaint. However, in an initial discovery disclosure served on U.S. Can, CHI alleged that its damages to the date of such disclosure were approximately $4.4 million. U.S. Can has filed an Answer to the Complaint, asserted affirmative defenses and made counterclaims against CHI seeking reimbursement for expenses and accruals relating to postretirement medical and life insurance benefits for former employees of CCC, and expenses incurred as a result of CCC's breach of its contractual indemnification obligations to U.S. Can. The case has been transferred to the United States District Court for the Northern District of Illinois. U.S. Can believes it has meritorious defenses to all of CHI's claims. The National Labor Relations Board has issued a decision finding the Company in violation of certain sections of the National Labor Relations Act as a result of the Company's closure of certain facilities in 1991 and failure to offer inter-plant job opportunities to affected employees. Management does not believe that the resolution of this matter will have a material adverse effect on the Company's financial condition or results of operations. The Company understands that the groundwater in San Leandro, California is contaminated at shallow and intermediate depths, and that the area of concern partially extends to the groundwater below a facility formerly owned by the Company. In late April 1996, the California Department of Toxic Substances Control ("CDTSC") issued to certain of the past and present owners of this facility, including U.S. Can, an order directing such owners to conduct remediation activities at this site. Although there can be no assurance that the Company will not incur material costs and expenses in connection with the CDTSC order, extensive environmental testing has been performed at this facility and management does not believe that substantial remediation activities at this facility are justified. Representatives of the Company have met with the CDTSC and agreed to undertake additional site assessment work. The San Leandro facility was closed in 1989 and was sold, except for a related parcel of land, in 1994. The remaining parcel was sold in 1995, and the Company agreed to indemnify the purchaser against any environmental claims related to the Company's ownership of the property. On August 30, 1996, the Company received a general Notice of Potential Liability from the Environmental Protection Agency (the "EPA") regarding the Master Metals, Inc. site in Cleveland, Ohio. The letter alleges that the Company is a Potentially Responsible Party ("PRP") in that it generated hazardous materials disposed at this site. The Company is one of a number of PRPs and, as of the date of this report, it is evaluating information regarding the site to determine the extent, if any, of its liability. The Company is involved in various other environmental and legal actions and administrative proceedings. Management is of the opinion that their outcome will not have a material effect on the Company's financial position or results of operations. 14 15 U.S. CAN CORPORATION AND SUBSIDIARY UNITED STATES CAN COMPANY AND SUBSIDIARIES NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED) SEPTEMBER 29, 1996 (UNAUDITED) (7) SUBSEQUENT EVENTS On October 17, 1996, the Corporation issued $275 million principal amount of 10 1/8% Senior Subordinated Notes due 2006 (the "10 1/8% Notes") in a private placement. The Noteholders have registration rights with respect to the 10 1/8% Notes. Net proceeds from the issuance of the 10 1/8% Notes were $268.1 million and were used to pay down amounts under the Credit Agreement ($158.4 million) with $109.7 million being placed in an escrow account to be used to redeem the $100 million principal amount of 13 1/2% Senior Subordinated Notes due 2002 (the "13 1/2% Notes") and pay all remaining interest on the 13 1/2% Notes. The 10 1/8% Notes are fully and unconditionally guaranteed on an unsecured senior subordinated basis by U.S. Can, excluding USC Europe. As the Corporation had no assets or operations separate from its investment in U.S. Can and U.S. Can was the Company's only subsidiary until the acquisition of USC Europe on September 11, 1996, separate financial statements of U.S. Can, excluding USC Europe, would not provide additional information which would be useful in assessing the financial composition of U.S. Can and, therefore, are not presented. The Acquisition Facility and aggregate $30 million supplemental increases to the Revolving Credit Facility were terminated on the closing date of the 10 1/8% Note offering. The amounts placed in the escrow account are invested in U.S. Government obligations and must, pursuant to the amended and restated escrow agreement, be used by the escrow agent to redeem the 13 1/2% Notes on or immediately after the earliest redemption date (January 15, 1997) of such notes and pay all remaining interest on the 13 1/2% Notes. Such redemption will include a $4 million premium and unpaid interest earned on such notes through the redemption date. Considering the interest income accruing on the funds in the escrow account, the Company is not expected to make any additional payments for this redemption. Accordingly, the Company recorded the early extinguishment of this debt as of October 17, 1996, which resulted in an after-tax extraordinary charge in the fourth quarter of 1996 of $5.5 million representing the difference between the $109.7 million placed in escrow and the October 17, 1996, carrying value of the 13 1/2% Notes, related accrued interest and related unamortized deferred financing costs. 15 16 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following narrative discusses the results of operations, liquidity and capital resources for the Corporation and U.S. Can on a consolidated basis. The consolidated group including the Corporation is referred to herein as the Company. The Corporation's only business interest is in its ownership of U.S. Can's common stock. Operating results for the Company and U.S. Can are identical. This section should be read in conjunction with the Corporation's and U.S. Can's Joint Annual Report on Form 10-K/A-1 for the fiscal year ended December 31, 1995. See "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. Inclusion of Forward-Looking Information Certain statements under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Report constitute "forward-looking statements" within the meaning of Section 21E (i)(1) of the Exchange Act. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among other things, the following: general economic and business and market conditions, changes in product demand, changes in competition, the ability of the Company to integrate acquisitions or complete future acquisitions, interest rate fluctuations, currency fluctuations, dependence on raw material producers, dependence on and availability of qualified personnel, changes in or failure to comply with governmental regulations including environmental laws, ability to obtain adequate financing in the future and other factors indicated in the Company's registration statements and reports filed with the SEC. These important factors may also cause the forward-looking statements made by the Company in this Report, including but not limited to those contained under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operations" and elsewhere in this Report to be materially different from actual results achieved by the Company. In light of these and other uncertainties, the inclusion of a forward-looking statement herein should not be regarded as a representation by the Company that the Company's plans and objectives will be achieved. RESULTS OF OPERATIONS QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996 VS. QUARTERLY PERIOD ENDED OCTOBER 1, 1995 Net Sales Net sales for the quarterly period ended September 29, 1996 totaled $194.1 million, an increase of 25.8% over the corresponding period in 1995. In the third quarter of 1996, the Company realized additional sales in its Metal Services and Paint and General Line operations as a result of the 1996 acquisitions of AMS and the CPI Group. A return to more normal markets for the Company's products compared to the third quarter of 1995 resulted in increased unit volumes in Aerosol and Paint and General Line. These increased unit volumes and increased sales of Custom and Specialty products also contributed to the sales growth. Gross Income Gross income of $23.0 million for the third quarter of 1996 was $10.7 million, or 87.5%, higher than gross income for the third quarter of 1995. Gross margin increased to 11.8% of net sales during the third quarter of 1996 from 7.9% in the third quarter of 1995. Increased net sales and stable costs were the primary factors contributing to improved gross income. Operating Income The Company's operating income of $15.8 million for the third quarter of 1996 was $10.4 million, or 195.4%, higher than operating income for the third quarter of 1995. Income was favorably impacted by the increased sales, improved gross margins and decreased selling, general and administrative expenses as a percent of net sales. Operating income as a percent of net sales was 8.1% for the third quarter of 1996 as 16 17 compared to 3.5% for the third quarter of 1995. Selling, general and administrative expenses increased slightly period to period and decreased as a percent of net sales from 4.5% of net sales in the third quarter of 1995 to 3.7% of net sales in the third quarter of 1996. Increased diversification into metal services, plastics and Europe is expected to temporarily restrain margin growth until those new operations are assimilated into the Company. Interest and Other Expenses Interest expense on borrowings increased in the third quarter of 1996 as compared to the third quarter of 1995 by approximately $750,000. The increase is a result of increased borrowing under the Credit Agreement to finance the AMS, CPI Group and USC Europe acquisitions. Amortization of deferred financing costs and other expense decreased slightly in the third quarter of 1996 as compared to the third quarter of 1995 due to completed amortization of older items. Net Income Due to the factors discussed above, net income in the third quarter of 1996 was $4.6 million, compared to a loss of $1.3 million in the third quarter of 1995. Primary earnings per share were $0.35 in the third quarter of 1996 compared to a loss of $0.10 in the third quarter of 1995. Weighted average shares outstanding increased slightly from period to period. NINE-MONTH PERIOD ENDED SEPTEMBER 29, 1996 VS. NINE-MONTH PERIOD ENDED OCTOBER 1, 1995 Net Sales Net sales for the nine-month period ended September 29, 1996 totaled $538.3 million, an increase of 13.5% over the corresponding period in 1995. Sales gains for the year-to-date period reflect volume gained through acquisitions (approximately $25.7 million) as well as volume growth in substantially all of the Company's products. U.S. Can has realized additional sales as a result of the MLI, Plastite, Hunter and Prospect acquisitions in 1995 and the AMS and CPI Group acquisitions in 1996. Gross Income Gross income of $67.6 million for the first nine months of 1996 was $12.3 million, or 22.2%, higher than gross income for the first nine months of 1995. The AMS and CPI Group acquisitions and higher margins on certain products contributed to this increase. Gross margin increased to 12.6% of net sales in the first nine months of 1996 from 11.7% of net sales in the first nine months of 1995 despite a significant advance purchase of steel in late 1994 which resulted in the Company not realizing the full impact of the 1995 steel price increase in the first quarter of 1995. Volume gains with stable costs contributed to improved performance. Operating Income The Company's operating income of $46.5 million for the first nine months of 1996 was $11.7 million, or 33.8%, higher than operating income for the first nine months of 1995. Income was favorably impacted by increased sales, improved margins and the effect of an overhead reduction program begun in late 1995. Operating income as a percent of net sales was 8.6% for the first nine months of 1996 as compared to 7.3% for the first nine months of 1995. The Company experienced a slight increase in selling, general and administrative expenses period to period. However, these expenses as a percent of net sales decreased from 4.3% of net sales in the first nine months of 1995 to 3.9% of net sales in the first nine months of 1996. Increased diversification into metal services, plastics and Europe is expected to temporarily restrain margin growth until those new operations are assimilated into the Company. Interest and Other Expenses Interest expense on borrowings increased by approximately $1.1 million in the first nine months of 1996 as compared to the first nine months of 1995. The increase is a result of increased borrowing, primarily to 17 18 finance the Company's acquisitions. Amortization of deferred financing costs and other expense remained flat in the first nine months of 1996 as compared to the first nine months of 1995. Net Income Due to the factors discussed above, net income was $14.0 million, up 79.3%, in the first nine months of 1996. Primary earnings per share were $1.07 for the first nine months of 1996, compared to $0.61 per share in the first nine months of 1995. Weighted average shares outstanding increased slightly from period to period. LIQUIDITY AND CAPITAL RESOURCES The Company's cash requirements for operations, acquisitions and capital expenditures during the nine-month period ended September 29, 1996 were financed by internally generated cash flows and borrowings under the Revolving Credit Facility and the Acquisition Facility provided to U.S. Can under the Credit Agreement. For a more detailed discussion of the Credit Agreement, see Note (4) of the unaudited Notes to Condensed Consolidated Financial Statements. Net cash provided by operating activities decreased from $10.8 million for the first nine months of 1995 to $2.8 million during the same period in 1996. The decrease is primarily due to increases in accounts receivable and inventories as a result of higher sales. A similar increase in accounts payable and higher 1996 earnings partially offset the increase in current assets. On October 17, 1996, U.S. Can Corporation sold $275 million principal amount of 10 1/8% Notes in a private placement. Of the $268.1 million net proceeds to the Company from the offering, (i) approximately $109.7 million was deposited in an escrow account to be employed solely for the purpose of redeeming the Company's outstanding 13 1/2% Notes on or immediately after January 15, 1997, the first date for optional redemption thereof by the Company, and for paying all remaining interest thereon; (ii) approximately $67.3 million of the net proceeds were used to repay all outstanding indebtedness under the Acquisition Facility; and (iii) approximately $91.1 million of the net proceeds were used to repay a portion of the Revolving Credit Facility. Excluding principal payments due under the Revolving Credit Facility and redemption of the 13 1/2% Notes, scheduled principal payments for 1997 and 1998 are $21.1 million and $11.6 million, respectively. In early April 1996, the lenders under the Credit Agreement provided U.S. Can a temporary $10 million increase in the Revolving Credit Facility due to seasonal inventory requirements. In late April 1996, these lenders provided U.S. Can an additional temporary $20 million increase in the Revolving Credit Facility due to the acquisition of certain assets from Alltrista. In July 1996, the Company's lenders provided U.S. Can the Acquisition Facility to fund certain permitted acquisitions. All of these supplemental facilities were terminated on the closing date of the 10 1/8% Notes offering. In August 1996, the Company completed the acquisition of all of the outstanding stock of the CPI Group for approximately $15.0 million, subject to certain post-closing adjustments and potential future contingent payments which payments are not to exceed $1 million. The Company completed the USC Europe Acquisition on September 11, 1996. The purchase price included $52.8 million in cash and the assumption of net indebtedness totaling $5.8 million, subject to a post-closing adjustment for changes in working capital between April 30, 1996 and the closing of the USC Europe Acquisition. The cash portion of the purchase price for each acquisition was funded by the Acquisition Facility. For a more detailed discussion of these acquisitions, see Note (2) of the unaudited Notes to Condensed Consolidated Financial Statements. Under the terms of the Credit Agreement, $11,000,000 of the term loan had been repaid as of October 31, 1996. As of September 29, 1996, U.S. Can had borrowings of $193.4 million outstanding under the Credit Agreement, $11.7 million in letters of credit had been issued pursuant thereto, and $13.2 million of unused credit remained available thereunder. As of November 7, 1996, U.S. Can had borrowings of $34.0 million outstanding under the Credit Agreement, $11.7 million in letters of credit had been issued pursuant thereto, and $73.3 million of unused credit remained available thereunder. As of September 29, 1996, U.S. Can was in compliance with all restrictive covenants of the Credit Agreement and its other long-term debt agreements. 18 19 Management believes that cash flow from operations, amounts available under its revolving lines of credit and proceeds from equipment financings should provide sufficient funds to meet short-term and long-term capital expenditure and debt amortization requirements, and other cash needs in the ordinary course of business. The Company believes it will be able to refinance the Revolving Credit Facility on or prior to maturity. If future strategic acquisition opportunities arise, the Company would expect to finance them though some combination of cash, stock and/or debt financing. USC EUROPE As an indication of USC Europe's historic liquidity and capital resources, USC Europe's liquidity needs since January 1995 have principally been met through internally generated cash flows or advances from its previous owners. Working capital increased to $25.1 million as of June 30, 1996, from $24.4 million and $15.0 million as of December 31, 1995 and 1994, respectively. Net income plus depreciation and amortization charges and less the change in working capital amounted to $4.5 million and ($0.5 million) for the six months ended June 30, 1996 and the year ended December 31, 1995, respectively. Based on information provided to the Company by USC Europe's previous owners, capital expenditures for USC Europe were approximately $4.6 million, $8.5 million and $4.8 million for the six months ended June 30, 1996, and the years ended December 31, 1995 and 1994, respectively. Indebtedness of USC Europe decreased from $12.6 million as of December 31, 1994 to $10.8 million as of December 31, 1995 and $8.9 million as of June 30, 1996. Changes to the previous owner's net investment in USC Europe, excluding the effect of net income on such investment, was an increase of $11.2 million during the year ended December 31, 1995 and a decrease of $2.2 million during the six months ended June 30, 1996. Based on USC Europe's performance in the six months ended June 30, 1996, the Company expects that USC Europe will increase the Company's consolidated cash flows, enhance its liquidity and improve consolidated results of operations. 19 20 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS On August 30, 1996, the Company received a General Notice of Potential Liability from the EPA regarding the Master Metals, Inc. site in Cleveland, Ohio. The letter alleges that the Company is a PRP in that it generated hazardous materials disposed at the site. The Company is one of a number of PRPs and, as of the date of this Report, it is evaluating information regarding the site to determine the extent, if any, of its liability. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits
INCORPORATION EXHIBIT BY REFERENCE NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE) - - ------ ----------------------------------------------------------------------- --------------- 3.1 Restated Certificate of Incorporation of U.S. Can Corporation.......... *4.3 3.2 Restated Certificate of Incorporation of United States Can Company..... @3.1 3.3 By-Laws of U.S. Can Corporation........................................ &4.1 3.4 By-Laws of United States Can Company................................... X3.3 4.1 Amendment No. 8 to Credit Agreement, dated September 9, 1996........... 4.2 Indenture for 10 1/8% Notes............................................ 10.1 Stock Purchase Agreement dated as of August 2, 1996, among U.S. Can, Irving A. Rubin, Robert Bonczyk and the other stockholders of the CPI Group.................................................................. **2.1 10.2 Acquisition Agreement between the Company and Crown, dated as of August 1, 1996................................................................ @@2.1 10.3 Newnan, Georgia Lease.................................................. 10.4 Alliance, Ohio Lease................................................... 99.1 Purchase Agreement for 10 1/8% Notes................................... 99.2 Amended and Restated Escrow Agreement for 13 1/2% Notes................ 99.3 Registration Rights Agreement for 10 1/8% Notes........................ 27.1 Financial Data Schedule (EDGAR version only)...........................
- - ------------------------- * Previously filed with Registration Statement on Form S-3 of the Corporation, filed on June 1, 1994 (Registration No. 33-79556). ** Previously filed with Form 8-K Current Report of the Corporation and U.S. Can, filed on August 9, 1996. @ Previously filed with Form 10-K Annual Report of U.S. Can for the fiscal year ended December 31, 1992. @@ Previously filed with Form 8-K Current Report of the Corporation and U.S. Can, filed on September 26, 1996. & Previously filed with Registration Statement on Form S-8 of the Corporation, filed on March 23, 1994 (Registration No. 33-76742). X Previously filed with Registration Statement on Form S-1 of U.S. Can, filed on November 1, 1991 (Registration No. 33-43734). (b) U.S. Can Corporation and United States Can Company filed a joint report on Form 8-K concerning the CPI Group acquisition on August 9, 1996, a joint report on Form 8-K concerning the USC Europe acquisition on September 26, 1996, and a joint report on Form 8-K/A-1 including financial statements of the CPI Group and USC Europe, as well as unaudited pro forma condensed combined financials, on October 2, 1996. 20 21 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. U.S. CAN CORPORATION Date: November 13, 1996 By /s/ TIMOTHY W. STONICH ----------------------------------- Timothy W. Stonich Executive Vice President-Finance, Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. Date: November 13, 1996 /s/ TIMOTHY W. STONICH ------------------------------------ Timothy W. Stonich Executive Vice President-Finance, Chief Financial Officer and Secretary 21 22 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. UNITED STATES CAN COMPANY Date: November 13, 1996 By /s/ TIMOTHY W. STONICH ----------------------------------- Timothy W. Stonich Executive Vice President-Finance, Chief Financial Officer and Secretary Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the undersigned, in his capacity as the principal financial officer of the registrant. Date: November 13, 1996 /s/ TIMOTHY W. STONICH ------------------------------------ Timothy W. Stonich Executive Vice President-Finance, Chief Financial Officer and Secretary 22 23 EXHIBIT INDEX
EXHIBIT NUMBER DESCRIPTION OF EXHIBIT - - ------ ------------------------------------------------------------------------------------- 4.1 Amendment No. 8 to Credit Agreement, dated September 9, 1996 4.2 Indenture for 10 1/8% Notes 10.3 Newnan, Georgia Lease 10.4 Alliance, Ohio Lease 99.1 Purchase Agreement for 10 1/8% Notes 99.2 Amended and Restated Escrow Agreement for 13 1/2% Notes 99.3 Registration Rights Agreement for 10 1/8% Notes 27.1 Financial Data Schedule (EDGAR version only)
EX-4.1 2 AMENDMENT #8 TO CREDIT AGREEMENT 1 EXHIBIT 4.1 AMENDMENT NO. 8 THIS AMENDMENT NO. 8 (this "Amendment"), dated as of September 9, 1996, among United States Can Company, a Delaware corporation (the "Borrower"), the various financial institutions that are or may become parties to the Credit Agreement described hereinbelow (individually, a "Lender" and collectively, the "Lenders") and Bank of America Illinois, an Illinois banking corporation, as agent for the Lenders (in such capacity, the "Agent"), is made pursuant to Section 9.1 of that certain Credit Agreement, dated as of April 29, 1994 (as amended or modified and in effect on the date hereof, the "Existing Credit Agreement" and, as amended or otherwise modified in this Amendment, the "Amended Credit Agreement"; capitalized terms used but not defined herein having the same respective meanings as in the Amended Credit Agreement), among the Borrower, the Lenders and the Agent. WITNESSETH: WHEREAS, the Borrower has requested that the Lenders amend the Existing Credit Agreement in the manner hereinafter appearing; and, subject to the terms and conditions set forth herein, the Lenders have agreed to so amend the Existing Credit Agreement; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows: ARTICLE 1. - AMENDMENTS 1.1. Section 2.8.1(e) of the Existing Credit Agreement is hereby amended by inserting the phrase "the Parent," immediately before the phrase "the Borrower" in the first line thereof. 1.2. Section 2.22(c)(iv) of the Existing Credit Agreement is hereby amended by deleting the last word "and" therefrom. 1.3. Section 2.22(c)(v) of the Existing Credit Agreement is hereby amended by deleting the final period and substituting the phrase "; and" in lieu thereof. 1.4. The following new clause (vi) is hereby added to Section 2.22(c) of the Existing Credit Agreement: (vi) (A) guaranties by any or all of the European Subsidiaries of the Obligations as the Majority Lenders may request in their sole discretion, (B) such documents as the Majority Lenders may request in their sole discretion to evidence and perfect security interests in the stock and assets of any or all of the European Subsidiaries or stock of Subsidiaries other than the European Subsidiaries and assets having a substantially equivalent fair market value to the stock and assets of such European 2 Subsidiaries (the "European Collateral Documents"), and (C) the Borrower and each applicable Subsidiary have taken all other steps reasonably requested to grant to the Agent, for the benefit of the Secured Parties, a first priority Lien in the collateral described in the European Collateral Documents, subject to no Liens whatsoever except for Liens permitted under the European Collateral Documents. 1.5. Section 4.4(c) of the Existing Credit Agreement is hereby amended by inserting the following phrase immediately before the final period thereof: "; provided that none of the foregoing in this clause (c) shall apply with respect to the Acquisition of any Acquisition Target that is a European Acquisition Target if the Borrower has made or caused to be made the necessary filings (which shall not be withdrawn) with appropriate governmental authorities within forty-five (45) days of the consummation of such Acquisition such that the assets of such European Acquisition Target will be owned (either directly or indirectly) by U.S.C. Europe N.V." 1.6. Section 6.2(b)(i) of the Existing Credit Agreement is hereby amended in its entirety to read as follows: (i) Investments by the Borrower in any of its Subsidiaries (A) owned on the date hereof, (B) acquired as permitted by Section 6.2(a) or (C) that are European Subsidiaries, or by any such Subsidiary in any of its Subsidiaries, in the form of contributions to capital or loans or advances; provided that any Investments in the European Subsidiaries or any Subsidiaries thereof shall either (X) be in the form of equity contributions permitted by Section 6.2(n) or (Y) if not included in clause (X), not exceed $10,000,000 in the aggregate at any one time outstanding; and provided further, that no Investment permitted by this paragraph shall be made at any time that a Default or Event of Default shall have occurred and is continuing or would result therefrom; 1.7. Section 6.2(c)(v) of the Existing Credit Agreement is hereby amended in its entirety to read as follows: (v) the Borrower may refinance the Subordinated Notes with the proceeds of any Approved Parent Debt; and 1.8. Section 6.2(c) of the Existing Credit Agreement is hereby amended by inserting the following clause (vi) immediately before the phrase "provided that no Default" in the third to last line thereof: (vi) the Borrower may declare and simultaneously make Debt Service Dividends; 1.9. Section 6.2(f) of the Existing Credit Agreement is hereby amended in its entirety to read as follows: -2- 3 (f) Guaranties. The Borrower shall not, and shall not permit any of its Subsidiaries to, create or become or be liable, whether directly or indirectly, with respect to any Guaranty, except that the Borrower may incur unsecured Guaranties (I) of the obligations of the Parent under any Approved Parent Debt, (II) for the benefit of any supplier or vendor to the European Subsidiaries to secure obligations incurred in the ordinary course of business by the European Subsidiaries, and (III) unless otherwise permitted in clauses (I) or (II), (i) for the benefit of the Borrower or any Subsidiary if the primary obligation is permitted by this Agreement, (ii) for the benefit of the Parent or any wholly-owned subsidiary of the Parent, and (iii) for the benefit of any supplier or vendor to the Borrower or its Subsidiaries to secure obligations incurred in the ordinary course of business by the Borrower or its Subsidiaries (provided that the aggregate amount of such Guaranties described in clause (iii) outstanding at any time shall not exceed $5,000,000); provided that (x) each Guaranty permitted under clauses (I) or (III) is limited in amount to a stated maximum dollar liability, (y) each Guaranty permitted under clause (II) is limited in amount to the aggregate purchase price of goods purchased by the applicable European Subsidiary from such supplier or vendor, and (z) after the incurrence of each such Guaranty, there would exist no Default or Event of Default. Notwithstanding anything in the foregoing sentence to the contrary, the Guaranties permitted under clauses (III)(i), (ii) and (iii) above shall in all cases be limited in amount to a stated maximum dollar liability of $10,000,000 in the aggregate for the Borrower and the Subsidiaries at any one time. 1.10. Section 6.2(i) of the Existing Credit Agreement is hereby amended by deleting the proviso immediately after the words "twelve consecutive months" in the seventh line thereof and substituting the following phrase in lieu thereof: "; provided that the Borrower may refinance the Subordinated Notes with the proceeds of any Approved Parent Debt" 1.11. Section 6.2(n) of the Existing Credit Agreement is hereby amended by inserting the following phrase immediately before the final period thereto: "; provided that the Borrower may make equity contributions of (i) the assets or stock of an Acquisition Target, (ii) the proceeds of an Acquisition Loan for the purpose of making an Acquisition, (iii) the European Subsidiaries to U.S.C. Europe N.V., and (iv) $1,200,000 to U.S.C. France Holding, S.A.S., provided that such amount is dividended to the Borrower within sixty (60) days of such equity contribution. 1.12. Section 6.2 of the Existing Credit Agreement is hereby amended by adding the following clause (r) thereto: (r) U.S.C. Europe N.V. So long as any Obligations with respect to Acquisition Loans shall remain outstanding, the Borrower shall not permit its Subsidiary, U.S.C. Europe N.V., to (i) own any assets other than the capital stock of (A) European Subsidiaries or (B) upon prior written notice to the Agent, any other Subsidiary incorporated under the laws of a jurisdiction other than the United States of America or any political subdivision thereof, (ii) make any expenditures other than such minimal expenditures necessary to maintain its separate corporate existence and good standing in the Netherlands Antilles, (iii) create, incur, -3- 4 assume or otherwise become liable with respect to any Debt, (iv) have any employees or engage in any trade or business, (v) merge or consolidate with any other Person, (vi) sell or otherwise transfer any of its assets or (vii) create, incur, assume or permit to exist any Lien on any of its assets. 1.13. The definition of "Current Ratio" in Schedule I of the Existing Credit Agreement is hereby amended by adding the following sentence to the end thereof: "Current Ratio", when used with respect to the Borrower, shall include any current liabilities of the Parent with respect to any Approved Parent Debt to the extent that the proceeds of such Approved Parent Debt are not irrevocably deposited in a trust or similar escrow account until the Subordinated Notes are callable on January 15, 1997. 1.14. The definition of "Net Securities Proceeds" in Schedule I of the Existing Credit Agreement is hereby amended in its entirety to read as follows: "Net Securities Proceeds" means the net cash proceeds (i.e., gross cash proceeds minus reasonable and customary underwriting commissions, legal, accounting or other usual professional fees and taxes) received by the Parent, the Borrower or any Subsidiary from any sale or issuance of any debt or equity securities; provided that "Net Securities Proceeds" shall not include the proceeds of any Approved Parent Debt applied to the prepayment of the Subordinated Notes (or irrevocably deposited in a trust or similar escrow account for such purpose until the Subordinated Notes are callable on January 15, 1997) and any related prepayment premiums required by the terms of the Subordinated Notes. 1.15. The definition of "Net Worth" in Schedule I of the Existing Credit Agreement is hereby amended by inserting the following phrase immediately before the final period thereof: "; provided, that for the purposes of calculating the consolidated Net Worth of the Borrower under Section 6.3(f), Net Worth shall not include any equity contributions made by the Parent to the Borrower which constitute proceeds of any Approved Parent Debt" 1.16. The definition of "Required Debt Amortization" in Schedule I of the Existing Credit Agreement is hereby amended by inserting the following phrase immediately before the final period thereof: "; provided that for the purposes of this definition, any payments of Debt Service Dividends shall be treated as if the Borrower had incurred the Approved Parent Debt and was making payments in an amount equal to such Debt Service Dividends thereon" 1.17. The definition of "Subordinated Debt" in Schedule I of the Existing Credit Agreement is hereby amended in its entirety to read as follows: -4- 5 "Subordinated Debt" means both (i) any Guaranties by the Borrower of the obligations of the Parent under any Approved Parent Debt and (ii) unsecured indebtedness of the Borrower, which in each case is subordinated in right of payment to the Obligations and which contains terms and conditions which are acceptable to the Agent and the Majority Lenders in their reasonable discretion (including terms and conditions with respect to amounts, maturities, covenants, defaults, remedies and subordination); such definition to include the Subordinated Notes. 1.18. The last sentence of the definition of "Total Funded Debt" in Schedule I of the Existing Credit Agreement is hereby amended by adding the following phrase immediately before the final period thereof: "; provided that such Total Funded Debt shall not include any Guaranties by the Borrower of the obligations of the Parent under any Approved Parent Debt to the extent that the proceeds of such Approved Parent Debt are irrevocably deposited in a trust or similar escrow account until the Subordinated Notes are callable on January 15, 1997" 1.19. Schedule I of the Existing Credit Agreement is hereby amended by adding the following new definitions in the appropriate alphabetical order: "Approved Parent Debt" means any Debt issued by the Parent, the proceeds of which are applied to (a) the prepayment of the Subordinated Notes (or irrevocably deposited in a trust or similar escrow account for such purpose until the Subordinated Notes are callable on January 15, 1997), (b) any related prepayment premiums required by the terms of the Subordinated Notes or (c) the prepayment of first, the Acquisition Loans, and second, the Revolving Loans; provided that the terms and conditions of any such Approved Parent Debt are as follows: (v) the principal amortization is not shorter, (w) the interest rate is not greater, (x) the covenants are not more restrictive, (y) the subordination provisions are not less protective of senior debt of the Borrower and (z) the terms and conditions are otherwise no less favorable to the Parent and the Borrower than the terms and conditions of the Subordinated Notes. "Debt Service Dividends" means cash dividends declared and made by the Borrower to the Parent in such amounts and to the extent necessary to allow the Parent to make any regularly scheduled payment of principal or interest in respect of any Approved Parent Debt if and to the extent that such payment is not prohibited at such time by the subordination provisions or other applicable terms of such Approved Parent Debt or any instrument governing such Approved Parent Debt. "European Acquisition Target" means an Acquisition Target listed on Schedule V. "European Collateral Documents" has the meaning specified in Section 2.22(c)(vi). "European Subsidiary" means a Subsidiary of the Borrower listed on Schedule VI. -5- 6 1.20. The Existing Credit Agreement is hereby amended by adding to the end thereof a new Schedule V in the form of Schedule V hereto. 1.21. The Existing Credit Agreement is hereby amended by adding to the end thereof a new Schedule VI in the form of Schedule VI hereto. ARTICLE 2. - CONDITIONS 2.1. This Amendment shall become effective as of the date hereof on the date (the "Amendment Effective Date") that the Agent shall have received each of the following, in form and substance satisfactory to it: (a) counterparts hereof executed by the Borrower and the Lenders; (b) a certificate, dated as of the Amendment Effective Date, of the Secretary or Assistant Secretary of the Borrower as to resolutions of its Board of Directors then in full force and effect authorizing the execution and delivery of this Amendment and the incumbency and signatures of its officers signing this Amendment; (c) a certificate, dated as of the Amendment Effective Date, of an authorized officer of the Borrower as to (i) no Default or Event of Default as of the Amendment Effective Date after giving effect to this Amendment, (ii) the correctness of the representations and warranties contained in the Loan Documents in all material respects as of the Amendment Effective Date after giving effect to this Amendment, (iii) no amendments or other modifications to the Borrower's Certificate of Incorporation and By-Laws having occurred since the date that the certified copies of such documents were delivered by the Borrower pursuant to Sections 4.1(b) and 4.1(c) of the Existing Credit Agreement, respectively, and (iv) the satisfaction of each of the conditions precedent contained in this Article II; (d) evidence that the Borrower shall have pledged sixty-five percent (65%) of the outstanding capital stock of U.S.C. Europe N.V. to the Agent, for the benefit of the Secured Parties, pursuant to an amendment to the Pledge Agreement; and (e) an opinion of counsel for the Borrower as to this Amendment and the transactions contemplated hereby, in form and substance satisfactory to the Agent. 2.2. The Agent agrees to notify the Borrower and the Lenders of such Amendment Effective Date promptly after such Amendment Effective Date occurs. ARTICLE 3. - GENERAL 3.1. To induce the Agent and the Lenders to enter into this Amendment, the Borrower warrants to the Agent and the Lenders that: (a) the warranties contained in the Loan Documents, as amended by the Amendment, are -6- 7 true and correct in all material respects as of the date hereof with the same effect as though made on the date hereof; (b) after giving effect to this Amendment, no Event of Default or Default exists; (c) this Amendment has been duly authorized by all necessary corporate proceedings and duly executed and delivered by the Borrower, and the Amended Credit Agreement and each of the other Loan Documents are the legal, valid and binding obligations of the applicable Loan Party, enforceable against such Loan Party in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency or other similar laws of general application affecting the enforcement of creditors' rights or by general principles of equity; (d) no consent, approval, authorization, order, registration or qualification with any Governmental Authority or securities exchange is required for, and in the absence of which would adversely affect, the legal and valid execution and delivery or performance by the Borrower of this Amendment or the performance by the Borrower of the Amended Credit Agreement or any other Loan Document to which it is a party; and (e) the Agent has a first priority lien in the Collateral subject to no other liens, claims or encumbrances whatsoever other than the "Permitted Liens" (as defined in the Additional Security Agreement). 3.2. This Amendment may be executed in any number of counterparts and by the different parties on separate counterparts and each such counterpart shall be deemed to be an original, but all such counterparts shall together constitute but one and the same Amendment. 3.3. Except as specifically provided above, the Existing Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed in all respects. The execution, delivery, and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of any right, power, or remedy of the Agent or any Lender under the Existing Credit Agreement or any of the other Loan Documents, nor constitute a waiver or modification of any provision of any of the other Loan Documents, and the Obligations shall continue to be secured in all respects by the Collateral. 3.4. On and after the Amendment Effective Date, each reference in the Existing Credit Agreement and related documents to "Credit Agreement," "this Agreement" or words of like import, shall, unless the context otherwise requires, be deemed to refer to the Amended Credit Agreement. 3.5. The Borrower agrees to pay on demand all reasonable costs and expenses incurred at any time by the Agent (including the reasonable attorney fees and expenses for the Agent, including the allocated cost of internal counsel) in connection with the preparation, negotiation, execution and administration of this Amendment and all other instruments or documents provided for herein or delivered or to be delivered hereunder or in connection herewith. 3.6. This Amendment shall be binding upon the Borrower, the Agent, the Lenders and their respective successors and assigns, and shall inure to the benefit of the Borrower, the Agent, the Lenders and their respective successors and assigns as provided in the Amended Credit Agreement. * * * * * -7- 8 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the day and year first above written. UNITED STATES CAN COMPANY By: /s/ Peter J. Andres -------------------------------------- Name: Peter J. Andres ------------------------------------- Title: Vice President -------------------------------------- BANK OF AMERICA ILLINOIS, as Agent By: /s/ David L. Graham ------------------------------------ Name: David L. Graham ------------------------------------ Title: Vice President ------------------------------------- BANK OF AMERICA ILLINOIS, individually By: /s/ Tracy J. Alfery ------------------------------------- Name: Tracy J. Alfery ------------------------------------- Title: Vice President ------------------------------------- THE FIRST NATIONAL BANK OF CHICAGO By: /s/ Cory M. Helfand ------------------------------------ Name: Cory M. Helfand ------------------------------------ Title: Vice President ------------------------------------- 9 HARRIS TRUST AND SAVINGS BANK By: /s/ Ronald L. Dellartino -------------------------------------- Name: Ronald L. Dellartino ------------------------------------- Title: Vice President ------------------------------------- FLEET NATIONAL BANK By: /s/ Stephen P. Kanarian ------------------------------------ Name: Stephen P. Kanarian ------------------------------------ Title: V.P. -------------------------------------- BANK OF SCOTLAND By: /s/ Catherine M. Oniffrey ------------------------------------- Name: Catherine M. Oniffrey ------------------------------------ Title: Vice President ------------------------------------- THE NORTHERN TRUST COMPANY By: /s/ Arthur J. Fogel -------------------------------------- Name: Arthur J. Fogel ------------------------------------- Title: Vice President ------------------------------------- 10 SOCIETE GENERALE By: /s/ Joseph A. Philbin -------------------------------------- Name: Joseph A. Philbin ------------------------------------- Title: Vice President -------------------------------------- -10- 11 SCHEDULE V EUROPEAN ACQUISITION TARGETS Name Jurisdiction - - ---- ------------ CarnaudMetalbox Aerosols S.A. France CMB Aerosoldosen Deutschland GmbH Germany CMB Aerosoles S.A. Spain 12 SCHEDULE VI EUROPEAN SUBSIDIARIES Name Jurisdiction - - ---- ------------ U.S.C. Europe N.V. Netherlands Antilles Thuvine Duiven B.V. Netherlands U.S.C. Holding U.K. Ltd. England U.K. Can Ltd. England U.S.C. Europe U.K. Ltd. England U.S.C. Europe Italia, S.r.l. Italy U.S.C. France Holding, S.A.S. France CarnaudMetalbox Aerosols S.A. (to be known as U.S.C. Aerosols France, S.A.S.) France Can Beteiligungs GmbH Germany Can Verwaltungs GmbH Germany U.S.C. Aerosoldosen Deutschland GmbH & Co. KG Germany U.S. Can Espana Holding SCpA Spain CMB Aerosoles S.A. (to be known as U.S.C. Europe Espana SCpA) Spain EX-4.2 3 INDENTURE 1 EXHIBIT 4.2 ================================================================================ U.S. CAN CORPORATION, Issuer 10-1/8% Senior Subordinated Notes Due 2006 UNITED STATES CAN COMPANY, Guarantor _____________________ INDENTURE Dated as of October 17, 1996 _____________________ HARRIS TRUST AND SAVINGS BANK, Trustee ================================================================================ 2 CROSS-REFERENCE TABLE
TIA INDENTURE SECTION SECTION - - ------- ----------- 310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10 (a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. 312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03 313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06 314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.10; 4.11; 12.02 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04 (c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04 (c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05 (f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11 315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 12.02 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01 (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11 316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.06 (a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05 (a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A. (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07 317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08 (a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04 318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01 "N.A." means Not Applicable.
________________ Note: This Cross-Reference Table shall not, for any purpose, be deemed to be part of this Indenture. 3 TABLE OF CONTENTS
PAGE ---- ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 2.04. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.06. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.07. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 SECTION 2.08. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 2.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 2.10. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 2.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 ARTICLE 3 REDEMPTION SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 SECTION 3.02. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . 23 SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
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PAGE ---- SECTION 4.04. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.05. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 SECTION 4.06. Limitation on Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . 27 SECTION 4.07. Limitation on Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 SECTION 4.08. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 SECTION 4.09. Limitation on Layered Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.10. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.11. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.12. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 4.13. Ownership of United States Can Company . . . . . . . . . . . . . . . . . . . . . 33 SECTION 4.14. Future Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 4.15. Establishment of Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . 33 SECTION 4.16. Required Redemption of 13 1/2% Notes . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE 5 SURVIVING ENTITY SECTION 5.01. Merger, Consolidation and Sale of Assets . . . . . . . . . . . . . . . . . . . . 34 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 6.07. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 6.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . 39 ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 40
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PAGE ---- SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 41 SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 7.09. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 7.11. Preferential Collection of Claims Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Discharge of Liability on Securities; Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 SECTION 8.02. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 SECTION 8.03. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.04. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.05. Indemnity for Government Obligations . . . . . . . . . . . . . . . . . . . . . . 45 SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45 ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 46 SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47 SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 9.04. Revocation and Effect of Consents and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 9.06. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 SECTION 9.07. Payment for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 ARTICLE 10 SUBORDINATION SECTION 10.01. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 10.02. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 10.03. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 49 SECTION 10.04. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 10.05. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 10.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 10.07. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
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PAGE ---- SECTION 10.08. Subordination May Not Be Impaired by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 10.09. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 10.10. Distribution or Notice to Repre- sentative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate . . . . . . . . . . . . . . . . . . . . . 51 SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51 SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 10.16. Reliance by Holders of Senior Indebt- edness on Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . 52 ARTICLE 11 SUBSIDIARY GUARANTIES; SUBORDINATION OF SUBSIDIARY GUARANTIES SECTION 11.01. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 11.02. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 SECTION 11.03. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 11.04. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 54 SECTION 11.05. Default on Senior Indebtedness of Sub- sidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 11.06. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 11.07. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 11.08. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55 SECTION 11.09. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.10. Subordination May Not Be Impaired by the Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.11. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.12. Distribution or Notice to Repre- sentative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.13. Article 11 Not to Prevent Events of Default or Limit Right To Accelerate . . . . . . . . . . . . . . . . . . . . . 56 SECTION 11.14. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 11.15. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 11.16. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 11.17. Trustee Not Fiduciary for Holders of Senior Indebtedness of Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 11.18. Reliance by Holders of Senior Indebt- edness of Subsidiary Guarantors on Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 11.19. Release of Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . 58
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ARTICLE 12 MISCELLANEOUS PAGE ---- SECTION 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 SECTION 12.03. Communication by Holders with Other Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 12.04. Certificate and Opinion as to Condi- tions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 12.05. Statements Required in Certificate or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59 SECTION 12.06. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.07. Rules by Trustee, Paying Agent and Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 12.13. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 SECTION 12.14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Exhibit A - Form of Initial Notes Exhibit B - Form of Exchange Note -v- 8 INDENTURE dated as of October 17, 1996, among U.S. CAN CORPORATION, a Delaware corporation (the "Company"), UNITED STATES CAN COMPANY, a Delaware corporation (the "Guarantor") and HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation (the "Trustee"). Each party agrees as follows for the benefit of the other parties and for the equal and ratable benefit of the Holders (as defined herein) of the Company's 10-1/8% Senior Subordinated Notes Due 2006 (the "Initial Notes") and, if and when issued in exchange for the Initial Notes, the Company's Series B 10-1/8% Senior Subordinated Notes Due 2006 (the "Exchange Notes," and, together with the Initial Notes, the "Securities"): ARTICLE 1 DEFINITIONS AND INCORPORATION BY REFERENCE SECTION 1.01. Definitions. "Additional Assets" means (i) any property or assets (other than Indebtedness and Capital Stock) in a Related Business; (ii) Capital Stock of a Person that becomes a Restricted Subsidiary as a result of the acquisition of such Capital Stock by the Company or another Restricted Subsidiary; or (iii) 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 (ii) and (iii), such Restricted Subsidiary is primarily engaged in a Related Business. "Affiliate" of any specified Person means (i) any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person or (ii) any other Person who is a director or officer (a) of such specified Person, (b) of any subsidiary of such specified Person or (c) of any Person described in clause (i) above. For the purposes of this definition, "control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. For purposes of the Section 4.07 only, "Affiliate" shall also mean any beneficial owner of shares representing 10% or more of the total voting power of the Voting Stock (on a fully diluted basis) of the Company or of rights or warrants to purchase such Voting Stock (whether or not currently exercisable) and any Person who would be an Affiliate of any such beneficial owner pursuant to the first sentence hereof. "Asset Disposition" means any direct or indirect sale including a Sale/Leaseback Transaction, lease, transfer, conveyance or other disposition (or series of related sales, Sale/Leaseback Transactions, leases, transfers, conveyances or dispositions) of shares of Capital Stock of a Restricted Subsidiary (other than directors' qualifying shares), property or other assets (each referred to for the purposes of this definition as a "disposition") by the Company or any of its Restricted Subsidiaries other than (i) a disposition by a Restricted Subsidiary to the Company or by the Company or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of property or assets at Fair Market Value in the ordinary course of business and consistent with past practices of the Company or any of its Restricted Subsidiaries, as applicable, (iii) a disposition with a Fair Market Value and a sale price of less than $5 million, (iv) for purposes of Section 4.06, only, a disposition subject to 9 the limitations set forth under Section 4.04 and (v) when used with respect to the Company or the Guarantor, any Asset Disposition pursuant to Section 5.01 which constitutes a disposition of all or substantially all of the Company's or the Guarantor's property. "Attributable Indebtedness" means Indebtedness deemed to be Incurred in respect of a Sale/Leaseback Transaction and shall be, at the date of determination, the greater of (i) the fair market value of the property subject to such Sale/Leaseback Transaction (as determined in good faith by the Board of Directors) or (ii) the present value (discounted at the actual rate of interest implicit in such transaction, compounded annually) of the total obligations of the lessee for 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). "Average Life" means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (i) the sum of the products of the numbers of years from the date of determination to the 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 such payment by (ii) the sum of all such payments. "Bank Indebtedness" means any and all amounts payable under or in respect of the Credit Agreement, as amended (or refinanced or replaced) from time to time, including principal, premium (if any), interest (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company or the Guarantor whether or not a claim for post-filing interest is allowed in such proceedings), fees, charges, expenses, reimbursement obligations, guarantees and all other amounts payable thereunder or in respect thereof. "Board of Directors" means the Board of Directors of the Company or any committee thereof duly authorized to act on behalf of such Board of Directors. "Business Day" shall mean any Monday, Tuesday, Wednesday, Thursday, or Friday which is not a Legal Holiday. "Capital Expenditure Indebtedness" means Indebtedness issued to finance the purchase or construction of any assets acquired (other than from an Affiliate) or constructed after the Issue Date (i) to the extent the purchase or construction prices for such assets are or should be included in "addition to property, plant or equipment" in accordance with GAAP, (ii) if the acquisition or construction of such assets is not part of any acquisition of a person or business unit and (iii) if such Indebtedness is issued within 360 days of the acquisition or completion of construction of such assets. "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 represented by such obligation shall be the capitalized amount of such obligation determined in accordance with GAAP; and the Stated Maturity thereof shall be the date of the last payment of rent or any other amount due under such lease prior to the first date upon which such lease may be terminated by the lessee without payment of a penalty. -2- 10 "Capital Stock" of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock, but excluding any debt securities convertible or exchangeable into such equity. "Certified Resolution" means a duly adopted resolution of the Board of Directors in full force and effect at the time of determination and certified as such by the Secretary or an Assistant Secretary of the Company. "Change of Control" means the occurrence of any of the following events: (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the Exchange Act), other than one or more Permitted Holders or an underwriter engaged in a firm commitment underwriting in connection with a public offering of the Voting Stock of the Company, is or becomes the "beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to have "beneficial ownership" of all shares that any such person has the right to acquire, whether such right is exercisable immediately or only after the passage of time), directly or indirectly, of more than 35% of the total voting power of the Voting Stock of the Company; (ii) during any period of two consecutive years after the date of this Indenture, individuals who at the beginning of such period constituted the Board of Directors (together with any new directors whose election by the Board of Directors or whose nomination for election by the stockholders of the Company was approved by a vote of 66 2/3% of the directors of the Company then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Board of Directors then in office, (iii) the Company consolidates or merges with or into any other Person, other than a consolidation or merger (a) with a Wholly Owned Subsidiary or a Permitted Holder or (b) pursuant to a transaction in which the outstanding Voting Stock of the Company is changed into or exchanged for cash, securities or other property with the effect that the beneficial owners of the outstanding Voting Stock of the Company immediately prior to such transaction beneficially own, directly or indirectly, more than 50% of the total voting power of the Voting Stock of the surviving corporation immediately following such transaction, or (iv) the Company or any of its Restricted Subsidiaries, directly or indirectly, sells, assigns, conveys, transfers, leases, or otherwise disposes of, in one transaction or a series of related transactions, all or substantially all of the property or assets of the Company and its Restricted Subsidiaries to any Person or group of related Persons (as such terms are used in Section 13(d) of the Exchange Act), other than the Company, a Wholly Owned Subsidiary or a Permitted Holder. "Code" means the Internal Revenue Code of 1986, as amended. "Company" means the party named as such in this Indenture until a successor replaces it and, thereafter, means the successor and, for purposes of any provision contained herein and required by the TIA, each other obligor on the indenture securities. "Company Order" means a written order signed in the name of the Company by its Chairman of the Board, its President or a Vice President, and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered to the Trustee. -3- 11 "Consolidated Coverage Ratio" as of any date of determination means the ratio of (i) the aggregate amount of EBITDA for the period of the most recent four consecutive fiscal quarters ending at least 45 days prior to the date of such determination to (ii) Consolidated Interest Expense for such four fiscal quarters; provided, however, that (a) if the Company or any Restricted Subsidiary has Incurred any Indebtedness since the beginning of such period that remains outstanding, or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness, or both, Consolidated Interest Expense for such period shall be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been Incurred on the first day of such period, 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; (b) if, since the beginning of such period, the Company or any Restricted Subsidiary shall have made any Asset Disposition, or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is an Asset Disposition, or both, the EBITDA for such period shall be reduced by an amount equal to the EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Disposition for such period, or increased by an amount equal to the EBITDA (if negative) directly attributable thereto for such period, as if such Asset Disposition had occurred on the first day of such period, and Consolidated Interest Expense for such period shall be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise discharged with respect to the Company and its continuing Restricted Subsidiaries in connection with such Asset Disposition for such period as if such Asset Disposition had occurred on the first day of such period (or, if the Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest Expense for such period as if such Asset Disposition had occurred on the first day of such period directly attributable to the Indebtedness of such Restricted Subsidiary to the extent the Company and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale); (c) if, since the beginning of such period the Company or any Restricted Subsidiary (by merger or otherwise) shall have made an Investment in any Restricted Subsidiary (or any Person which becomes a Restricted Subsidiary), 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 an operating unit of a business, EBITDA and Consolidated Interest Expense for such period shall 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; and (d) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary or was merged with or into the Company or any Restricted Subsidiary since the beginning of such period) shall have made any Asset Disposition or any Investment that would have required an adjustment pursuant to clause (b) or (c) above if made by the Company or a Restricted Subsidiary during such period, EBITDA and Consolidated Interest Expense for such period shall be calculated after giving pro forma effect thereto as if such Asset Disposition or Investment occurred on the first day of such period. For purposes of this definition, whenever pro forma effect is to be given to an acquisition of assets, the pro forma calculations of the amount of income or earnings relating thereto and the amount of Consolidated Interest Expense associated with any Indebtedness Incurred in connection therewith shall be determined in good faith by a responsible financial or accounting officer of the Company and as further contemplated by the definition of pro forma. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness shall be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire -4- 12 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). "Consolidated Interest Expense" means, for any period, the total interest expense of the Company and its consolidated Subsidiaries, plus, to the extent not included in such interest expense, (i) interest expense attributable to Capitalized Lease Obligations, (ii) amortization of debt discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash interest expense, (v) accrued interest, (vi) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers' acceptance financing, (vii) to the extent any Indebtedness of any Person is guaranteed by the Company or any Subsidiary, the aggregate amount of interest paid or accrued by such other Person during such period attributable to such Indebtedness, (viii) net costs associated with Interest Rate Agreements and Currency Exchange Agreements (including, in each case, amortization of fees), (ix) the interest portion of any deferred obligation, (x) Preferred Stock dividends in respect of all Preferred Stock of the Company and its Subsidiaries and Redeemable Stock of the Company held by Persons other than the Company or a Wholly Owned Subsidiary, (xi) fees payable in connection with financings to the extent not included in (ii) above, including commitment, availability and similar fees and (xii) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are used by such plan or trust to pay interest or fees to any Person (other than the Company) in connection with Indebtedness Incurred by such plan or trust; provided, however, that there shall be excluded therefrom any such interest expense of any Unrestricted Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by the Company or any Restricted Subsidiary. "Consolidated Net Income" means, for any period, the net income (loss) of the Company and its Subsidiaries; provided, however, that there shall not be included in such Consolidated Net Income (i) any net income (loss) of any Person if such Person is not a Restricted Subsidiary, except that (a) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Person for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Company or a Restricted Subsidiary as a dividend or other distribution (subject, in the case of a dividend or other distribution to a Restricted Subsidiary, to the limitations contained in clause (iii) below) and (b) the Company's equity in a net loss of any such Person (other than an Unrestricted Subsidiary) for such period shall be included in determining such Consolidated Net Income, (ii) any net income (loss) of any Person acquired by the Company or a Subsidiary in a pooling of interests transaction for any period prior to the date of such acquisition, (iii) any net income (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 the Company, except that (a) subject to the limitations contained in clause (iv) below, the Company's equity in the net income of any such Restricted Subsidiary for such period shall be included in such Consolidated Net Income up to the aggregate amount of cash that could have been distributed by such Restricted Subsidiary during such period to the Company or another Restricted Subsidiary as a dividend (subject, in the case of a dividend to another Restricted Subsidiary, to the limitation contained in this clause) and (b) the Company's equity in a net loss of any such Restricted Subsidiary for such period shall be included in determining such Consolidated Net Income, (iv) any gain (but not loss) realized upon the sale or other disposition of any property, plant or equipment of the Company or its consolidated Subsidiaries (including pursuant to any Sale/Leaseback Transaction) which is not sold or otherwise disposed of in the ordinary course of business -5- 13 and any gain (but not loss) realized upon the sale or other disposition of any Capital Stock of any Person, (v) any extraordinary gain or loss and (vi) the cumulative effect of a change in accounting principles. Notwithstanding the provisions of clause (iii) in the preceding paragraph, in the event that Consolidated Net Income is being calculated with respect to the Company or any Surviving Entity (a) for purposes of determining whether the Company or any Surviving Entity could Incur at least $1.00 of additional Indebtedness pursuant to clause (i) of the definition of Permitted Indebtedness for purposes of (i) clause (2) of Section 4.04 hereof, (ii) clause (c) of Section 5.01(i) hereof or (iii) the definition of "Unrestricted Subsidiary" or (b) pursuant to clause (3)(A) of Section 4.04 hereof, restrictions on the payment of dividends or the making of distributions to the Company by United States Can Company referred to in clause (a)(3) of Section 4.05(ii) shall be disregarded. Notwithstanding the provisions of clause (iii) in the first paragraph of this definition, in the event that Consolidated Net Income is being calculated with respect to the Company for purposes of determining whether the Incurrence of Indebtedness proposed to be Incurred is permissible under clause (i) of the definition of Permitted Indebtedness, then (i) if such proposed Indebtedness is proposed to be Incurred by United States Can Company or any Subsidiary thereof that is a Restricted Subsidiary, restrictions on the payment of dividends or the making of distributions to the Company by United States Can Company referred to in clause (a)(3) of Section 4.05(ii) shall be disregarded and (ii) if such proposed Indebtedness is proposed to be Incurred by the Company or any Subsidiary of the Company (other than United States Can Company and its Subsidiaries) that is a Restricted Subsidiary, restrictions on the payment of dividends or the making of distributions to the Company by United States Can Company referred to in clause (a)(3) of Section 4.05(ii) shall be disregarded, provided that the lenders pursuant to the Credit Agreement modify the Credit Agreement to allow for the payment of dividends or the making of distributions to the Company in amounts sufficient to pay the scheduled principal and interest payments on such proposed Indebtedness when due and payable or, in the case of a proposed Incurrence of Indebtedness by a Subsidiary, in an amount sufficient to fund capital contributions or other Investments to or in such Subsidiary in amounts sufficient to pay the scheduled principal and interest payments on such proposed Indebtedness when due and payable so long as there does not exist an event which after notice or passage of time or both would permit the lenders under the Credit Agreement to declare all amounts thereunder due and payable. "Credit Agreement" means that certain Credit Agreement, dated April 29, 1994, as amended, among the Guarantor and the syndicate of banks named therein, including the $97 million acquisition facility, and any extensions, revisions, refinancings or replacements thereof by a bank or a syndicate of banks. "Currency Exchange Agreement" means any foreign currency swap agreement or other agreement pursuant to which the Company or any of its Subsidiaries hedge their exposure to foreign currency exchange rates in connection with their business operations. "Default" means any event which is, or after notice or passage of time or both would be, an Event of Default. -6- 14 "Designated Senior Indebtedness" means any Senior Indebtedness which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $25 million, is specifically designated by the Company in the instrument evidencing or governing such Senior Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture and has been designated as "Designated Senior Indebtedness" for purposes of this Indenture in an Officers' Certificate received by the Trustee. "Designated Senior Indebtedness of Subsidiary Guarantors" means (i) with respect to the Guarantor, the Bank Indebtedness and (ii) any other Senior Indebtedness of Subsidiary Guarantors which, at the date of determination, has an aggregate principal amount outstanding of, or under which, at the date of determination, the holders thereof are committed to lend up to, at least $25 million, is specifically designated by such Subsidiary Guarantor in the instrument evidencing or governing such Senior Indebtedness of Subsidiary Guarantors as "Designated Senior Indebtedness of Subsidiary Guarantors" for purposes of this Indenture and has been designated as "Designated Senior Indebtedness of Subsidiary Guarantors" for purposes of this Indenture in an Officers' Certificate received by the Trustee. "Disinterested Director" means a director of the Company other than a director (i) who is an employee of the Company or a Subsidiary of the Company or (ii) who is a party, or who is a director, officer, employee or Affiliate (or is related by blood or marriage to any such person) of a party, to the transaction in question, and who is, in fact, independent in respect of such transaction. "Disqualified Stock" of a Person means Redeemable Stock of such Person as to which the maturity, mandatory redemption, conversion or exchange or redemption at the option of the holder thereof occurs, or may occur, on or prior to the first anniversary of the Stated Maturity of the Securities. "Domestic Restricted Subsidiary" means any Restricted Subsidiary of the Company other than a Foreign Restricted Subsidiary. "EBITDA" means, for any Person for any period, the sum for such Person for such period of Consolidated Net Income plus, to the extent reflected in the income statement of such Person for such period from which Consolidated Net Income is determined, without duplication, (i) Consolidated Interest Expense, (ii) provision for plant closing, (iii) income tax expense, (iv) depreciation expense, (v) amortization expense, and (vi) any charge related to any premium or penalty paid in connection with redeeming or retiring any Indebtedness prior to its Stated Maturity. "Escrow Account" has the meaning given in the Escrow Agreement. "Escrow Agreement" means that certain Escrow Agreement dated as of October 17, 1996 by and among the Company, The First National Bank of Chicago, as escrow agent (the "Escrow Agent") and the Trustee, substantially in the form of Exhibit C hereto. "Exchange Act" means the Securities Exchange Act of 1934, as amended. -7- 15 "Fair Market Value" means, with respect to any asset or property, the price which could be negotiated in an arm's-length free market transaction, for cash, between a willing seller and a willing buyer, neither of whom is under undue pressure or compulsion to complete the transaction. Fair Market Value shall be determined, except as otherwise provided, (i) if such property or asset has a Fair Market Value of less than $3.0 million, by any Officer of the Company or (ii) if such property or asset has a Fair Market Value in excess of $3.0 million, by a majority of the Board of Directors and evidenced by a Certified Resolution, dated within 30 days of the relevant transaction. "Foreign Restricted Subsidiary" means any Restricted Subsidiary of the Company which is not organized under the laws of the United States of America or any state thereof or the District of Columbia. "Foreign Significant Subsidiary" means any foreign Restricted Subsidiary of the Company meeting the standards specified in Rule 1-02(w) of the Regulation S-X promulgated by the SEC as in effect on the Issue Date. "GAAP" means generally accepted accounting principles in the United States of America as in effect as of the Issue Date, including those set forth in (i) the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants, (ii) statements and pronouncements of the Financial Accounting Standards Board and (iii) such other statements by such other entity as approved by a significant segment of the accounting profession. All ratios and computations based on GAAP contained in this Indenture shall be computed in conformity with GAAP consistently applied. "Guaranty" means any obligation, contingent or otherwise, of any Person, directly or indirectly, guaranteeing any Indebtedness or other obligation of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person (i) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other obligation of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise) or (ii) entered into for purposes of assuring in any other manner the obligee of such Indebtedness or other obligation of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part); provided, however, that the term "Guaranty" shall not include endorsements for collection or deposit in the ordinary course of business. The term "Guaranty" used as a verb has a corresponding meaning. "Holder" means the Person in whose name a Security is registered on the Registrar's books. "Incur" means issue, assume, Guaranty, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Subsidiary (whether by merger, consolidation, acquisition or otherwise) shall be deemed to be incurred by such Subsidiary at the time it becomes a Subsidiary. The terms "Incurred", "Incurrence" and "Incurring" shall each have a correlative meaning. "Indebtedness" means, with respect to any Person on any date of determination (without duplication), -8- 16 (i) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money; (ii) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments; (iii) all Capitalized Lease Obligations and Attributable Indebtedness of such Person; (iv) all obligations of such Person to pay the deferred and unpaid purchase price of property or services (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 or the completion of such services; (v) all obligations of such Person in respect of letters of credit, banker's acceptances or other similar instruments or credit transactions (including reimbursement obligations with respect thereto), other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (i) through (iv) above) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon, or, if and to the extent drawn upon, such drawing is reimbursed no later than the third Business Day following receipt by such Person of a demand for reimbursement following payment on the letter of credit; (vi) the amount of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, with respect to any Subsidiary, any Preferred Stock (but excluding, in each case, any accrued dividends); (vii) 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 shall be the lesser of (a) the fair market value of such asset at such date of determination and (b) the amount of such Indebtedness of such other Persons; (viii) all Indebtedness of other Persons to the extent Guaranteed by such Person; and (ix) to the extent not otherwise included in this definition, obligations in respect of Interest Rate Agreements and Currency Exchange Agreements. The amount of Indebtedness of any Person at any date shall be the outstanding balance at such date of all unconditional obligations as described above and the maximum liability, upon the occurrence of the contingency giving rise to the obligation, of any contingent obligations at such date. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into pursuant to the applicable provisions hereof, including, for all purposes of this -9- 17 instrument and any such supplemental indenture, the provisions of the TIA that are deemed to be a part of and govern this instrument and any such supplemental indenture, respectively. "Interest Rate Agreement" means, in respect of a Person, any interest rate swap agreement, interest rate option agreement, interest rate cap agreement, interest rate collar agreement, interest rate floor agreement or other similar agreement or arrangement. "Investment" in any Person means any direct or indirect advance, loan (other than advances to customers in the ordinary course of business that are recorded as accounts receivable on the balance sheet of such Person) or other extension of credit (including by way of Guaranty or similar arrangement) 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. For purposes of the definition of "Unrestricted Subsidiary" and the limitations set forth in Section 4.04, (i) "Investment" shall include the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of any Subsidiary of the Company at the time that such Subsidiary is designated an Unrestricted Subsidiary; provided, however, that, upon a redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall be deemed to continue to have a permanent "Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Company's "Investment" in such Subsidiary at the time of such redesignation less (b) the portion (proportionate to the Company's equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary; and (ii) any property transferred to or from an Unrestricted Subsidiary shall be valued at its Fair Market Value at the time of such transfer. In determining the amount of any Investment in respect of any property or assets other than cash, such property or asset shall be valued at its Fair Market Value at the time of such Investment (unless otherwise specified in this definition), as determined in good faith by the Board of Directors, whose determination shall be evidenced by a Certified Resolution. "Issue Date" means the date on which the Initial Notes are originally issued. "Lien" means any mortgage, pledge, security interest, encumbrance, lien or charge of any kind (including any conditional sale or other title retention agreement or lease in the nature thereof) or any Sale/Leaseback Transaction. "Net Available Cash" from an Asset Disposition means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to a note or installment receivable or otherwise, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring person of Indebtedness or other obligations relating to such properties or assets or received in any other noncash form) therefrom, in each case, net of (i) all legal, title and recording tax expenses, commissions and other fees and expenses incurred, and all federal, state, provincial, foreign and local taxes required to be paid or accrued as a liability under GAAP, as a consequence of such Asset Disposition, (ii) all payments made on any Indebtedness which is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which 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 -10- 18 Asset Disposition, (iii) all distributions and other payments required to be made to minority interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition and (iv) the deduction of appropriate amounts to be provided by the seller as a reserve, in accordance with GAAP, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Company 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, discounts or commissions and brokerage, consultant and other fees actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result thereof. "Officer" means the Chairman of the Board, President, Executive Vice President--Operations, Chief Financial Officer, Treasurer or Controller of the Company. "Officers' Certificate" means a certificate signed by two Officers at least one of whom shall be the principal executive officer, principal accounting officer or principal financial officer of the Company. "Opinion of Counsel" means a written opinion from legal counsel who is acceptable to the Trustee. The counsel may be outside counsel to the Company or an employee of or outside counsel to the Trustee. "pari passu", as applied to the ranking of any Indebtedness of a Person in relation to other Indebtedness of such Person, means that each such Indebtedness either (i) is not subordinate in right of payment to any Indebtedness or (ii) is subordinate in right of payment to the same Indebtedness as is the other, and is so subordinate to the same extent, and is not subordinate in right of payment to each other or to any Indebtedness as to which the other is not so subordinate. "Permitted Holder" means each of William J. Smith, Ricardo Poma, Carl Ferenbach and Francisco A. Soler, or any Person of which the foregoing "beneficially owns" (as defined in Rules 13d-3 and 13d-5 under the Exchange Act) voting securities representing at least 75% of the total voting power of all classes of Capital Stock of such Person (exclusive of any matters as to which class voting rights exist). "Permitted Indebtedness" is defined to include: (i) Indebtedness Incurred if, after giving pro forma effect to the Incurrence and application of the proceeds thereof, the Consolidated Coverage Ratio exceeds 2.0 to 1.0, if such determination is being made prior to the third anniversary of the Issue Date, or 2.5 to 1.0, if such determination is being made thereafter; (ii) Indebtedness Incurred pursuant to the Credit Agreement in an amount outstanding at any time not to exceed $130 million; (iii) Capital Expenditure Indebtedness Incurred in an aggregate principal amount not to exceed $15 million in any fiscal year of the Company; (iv) Indebtedness under Interest Rate Agreements and Currency Exchange Agreements entered into for the purpose of limiting interest rate or foreign exchange risk, as the case may be, provided that the obligations under such agreements are related to payment obligations on Permitted Indebtedness; (v) Indebtedness of the Company to any Restricted Subsidiary or of any Restricted Subsidiary to the Company or any other Restricted -11- 19 Subsidiary (but only so long as such Indebtedness is held by the Company or such Restricted Subsidiary); (vi) Indebtedness evidenced by the Securities and the Subsidiary Guaranties; (vii) Indebtedness outstanding immediately after the issuance of the Securities and the application of the proceeds thereof (other than the 13 1/2% Notes); (viii) Indebtedness evidenced by the 13 1/2% Notes, but only to the extent outstanding on or prior to the latest date on which the Company may effect the Required Redemption in compliance with Section 4.16 hereof (regardless of whether such Required Redemption is actually so effected); (ix) Indebtedness under reimbursement obligations in respect of letters of credit Incurred in the ordinary course of business or pursuant to self-insurance obligations; (x) Indebtedness Incurred by Foreign Restricted Subsidiaries with respect to such Subsidiaries' working capital requirements in an aggregate principal amount outstanding at any one time not to exceed $10 million; (xi) Refinancing Indebtedness Incurred with respect to Indebtedness referred to in clauses (i), (iii), (vi), and (vii) of this paragraph; and (xii) Indebtedness not otherwise permitted to be Incurred pursuant to Section 4.03 in an aggregate principal amount not to exceed at any one time outstanding $15 million. "Permitted Investment" means an Investment by the Company or any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person which 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; (ii) another Person if as a result of such Investment such other Person is merged or consolidated with or into, or transfers or conveys all or substantially all its assets to, the Company or a Restricted Subsidiary; provided, however, that such Person's primary business is a Related Business; (iii) Temporary Cash Investments; (iv) receivables owing to the Company or any Restricted Subsidiary, if 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 the Company or any such Restricted Subsidiary deems reasonable under the circumstances; (v) 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; (vi) loans or advances to employees made in the ordinary course of business consistent with past practices of the Company or such Restricted Subsidiary, as the case may be, not to exceed $1 million per employee and $3 million in the aggregate; and (vii) stock, obligations or securities received in settlement of debts created in the ordinary course of business and owing to the Company or any Restricted Subsidiary or in satisfaction of judgments. "Permitted Liens" means, with respect to any Person, (i) pledges or deposits by such Person under workmen's 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 United States government bonds to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import duties or for the payment of rent, in each case, Incurred in the ordinary course of business; (ii) Liens imposed by law, such as carriers', warehousemen's and mechanics' Liens, in each case, for sums not yet due or being contested in good faith by appropriate proceedings, or other Liens arising out of judgments or awards against such Person with respect to which such Person shall then be prosecuting an appeal or other proceedings for review; (iii) Liens for property taxes not yet due or payable or subject to penalties for non-payment and which are being contested in good faith by -12- 20 appropriate proceedings; (iv) Liens in favor of issuers of surety bonds or letters of credit issued pursuant to the request of and for the account of such Person in the ordinary course of its business; (v) minor survey exceptions, minor encumbrances, 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 or other restrictions as to the use of real property or Liens incidental to the conduct of the business of such Person or to the ownership of its properties which were not Incurred in connection with Indebtedness and which 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; (vi) Liens existing on the Issue Date; (vii) Liens on property or shares of stock of a Person at the time such Person becomes a Subsidiary; provided, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary; provided further, that such Liens are not Incurred in anticipation of or in connection with the transaction or series of related transactions pursuant to which such Person became a Subsidiary; and (viii) Liens on property at the time the Company or a Subsidiary acquired the property, including any acquisition by means of a merger or consolidation with or into the Company or any Restricted Subsidiary; provided, however, that any such Lien may not extend to any other property owned by the Company or any Restricted Subsidiary; provided further, that such Liens are not Incurred in anticipation of or in connection with the acquisition of such property; (ix) Liens to secure any refinancing, refunding, extension, renewal or replacement (or successive refinancings, refundings, extensions, renewals or replacements) as a whole, or in part, of any Indebtedness secured by any Lien referred to in the foregoing clauses (vi), (vii) and (viii); provided, however, that (a) such new Lien shall be limited to all or part of the same property that secured the original Lien (plus improvements on such property) and (b) the Indebtedness secured by such Lien at such time is not increased to any amount greater than the sum of (1) the outstanding principal amount or, if greater, committed amount of the Indebtedness described under clauses (vi), (vii) and (viii) at the time the original Lien became a Permitted Lien under this Indenture and (2) an amount necessary to pay any fees and expenses, including premiums, related to such refinancing, refunding, extension, renewal or replacement. "Person" means any individual, corporation, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity. "Preferred Stock", as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) which is preferred as to the payment of dividends, or as to the distribution of assets upon any voluntary or involuntary liquidation or dissolution of such corporation, over shares of Capital Stock of any other class of such corporation. "principal" of a Security means the principal of the Security plus the premium, if any, payable on the Security which is due or overdue or is to become due at the relevant time. "pro forma" means, with respect to any calculation made or required to be made pursuant to the terms hereof, a calculation in accordance with Article 11 of Regulation S-X promulgated under the Securities Act (to the extent applicable), as interpreted in good faith by the Board of Directors after consultation with the independent certified public accountants of the Company, or otherwise a calculation made in good faith by the Board of -13- 21 Directors after consultation with the independent certified public accountants of the Company, as the case may be. "Redeemable Stock" means, with respect to any Person, any Capital Stock which by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event (i) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness or Disqualified Stock, or (iii) is redeemable at the option of the holder thereof, in whole or in part. "Refinancing Indebtedness" means Indebtedness that refunds, refinances, replaces, renews, repays or extends (including pursuant to any defeasance or discharge mechanism) (collectively, "refinances," and "refinanced" shall have a correlative meaning) any Indebtedness existing on the date of this Indenture or Incurred in compliance with this Indenture (including Indebtedness of the Company 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 (i) the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced, (ii) 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, (iii) 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 aggregate principal amount (or if issued with original issue discount, the aggregate accredit value) then outstanding of the Indebtedness being refinanced and (iv) if the Indebtedness of the Company or a Restricted Subsidiary being refinanced is subordinated to other Indebtedness of the Company or a Restricted Subsidiary in any respect, such Refinancing Indebtedness is subordinated at least to the same extent; provided further, however, that Refinancing Indebtedness shall not include (a) Indebtedness of a Subsidiary that refinances Indebtedness of the Company or (b) Indebtedness of the Company or a Restricted Subsidiary that refinances Indebtedness of an Unrestricted Subsidiary. "Related Business" means any business related, or complementary (as determined in good faith by the Board of Directors), to the business of the Company and the Restricted Subsidiaries on the Issue Date. "Representative" means the trustee, agent or representative (if any) for an issue of Senior Indebtedness. "Required Redemption" means the redemption of the entire principal amount outstanding of the 13 1/2% Notes in accordance with the provision of this Indenture and the indenture governing the 13 1/2% Notes. "Restricted Subsidiary" means (i) United States Can Company, (ii) U.S.C. Europe N.V., (iii) Thuvine Duiven B.V., (iv) U.S.C. Holding U.K. Ltd., (v) U.K. Can Ltd., (vi) U.S.C. Europe U.K. Ltd., (vii) U.S.C. Europe Italia, S.r.l., (viii) U.S.C. France Holding, S.A.S., (ix) CarnaudMetalbox Aerosols S.A. (to be known as U.S.C. Aerosols France, S.A.S.), (x) Can Beteilungs GmbH, (xi) Can Verwaltungs GmbH, (xii) U.S.C. Aerosoldosen Deutschland GmbH & Co. KG, (xiii) U.S. Can Espana Holding SCpA, (xiv) -14- 22 CMB Aerosoles S.A. (to be known as U.S.C. Europe Espana SCpA, (xv) any other Subsidiary of the Company that is not designated by the Board of Directors to be an Unrestricted Subsidiary and (xvi) an Unrestricted Subsidiary which is redesignated as a Restricted Subsidiary as permitted pursuant to the definition of "Unrestricted Subsidiary." "Sale/Leaseback Transaction" means an arrangement relating to property now owned or hereafter acquired whereby the Company or a Restricted Subsidiary transfers such property to a Person and the Company or a Restricted Subsidiary leases it from such Person. "SEC" means the Securities and Exchange Commission. "Securities Act" means the Securities Act of 1933, as amended. "Senior Indebtedness" means all Indebtedness of the Company including interest thereon, whether outstanding on the date of this Indenture or thereafter issued, unless in the instrument creating or evidencing the same, or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Securities; provided, however, that Senior Indebtedness shall not include (i) any obligation of the Company to any Subsidiary, (ii) any liability for federal, state, local or other taxes owed or owing by the Company, (iii) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guaranties thereof or instruments evidencing such liabilities), (iv) any Indebtedness, Guaranty or obligation of the Company which is subordinate or junior in any respect to any other Indebtedness, Guaranty or obligation of the Company, including any Senior Subordinated Indebtedness and any Subordinated Obligations, (v) any Capital Stock or (vi) any Indebtedness Incurred in violation of this Indenture. "Senior Indebtedness of Subsidiary Guarantors" means (i) with respect to the Guarantor, the Bank Indebtedness and (ii) all other Indebtedness of the Subsidiary Guarantors including interest thereon, whether outstanding on the date of this Indenture or thereafter issued, unless in the instrument creating or evidencing the same or pursuant to which the same is outstanding it is provided that such obligations are not superior in right of payment to the Subsidiary Guaranties, provided, however, that Senior Indebtedness of Subsidiary Guarantors shall not include (a) any obligation of any Subsidiary Guarantor to any Subsidiary, (b) any liability for federal, state, local or other taxes owed or owing by any Subsidiary Guarantor, (c) any accounts payable or other liability to trade creditors arising in the ordinary course of business (including Guaranties thereof or instruments evidencing such liabilities), (d) any Indebtedness, Guaranty or obligation of any Subsidiary Guarantor which is subordinate or junior in any respect to any other Indebtedness, Guaranty or obligation of such Subsidiary Guarantor, including Senior Subordinated Indebtedness of Subsidiary Guarantors and any Subordinated Obligations, (e) any obligations with respect to any Capital Stock or (f) any Indebtedness Incurred in violation of this Indenture. "Senior Subordinated Indebtedness" means the Securities and any other Indebtedness of the Company that specifically provides that such Indebtedness is to rank pari passu with the Securities and is not subordinated by its terms to any Indebtedness or other obligation of the Company which is not Senior Indebtedness. -15- 23 "Senior Subordinated Indebtedness of Subsidiary Guarantors" means (i) with respect to the Guarantor, the 13 1/2% Notes, (ii) the Subsidiary Guaranties and (iii) any other Indebtedness of any Subsidiary Guarantor that specifically provides that such Indebtedness is to rank pari passu with the Subsidiary Guaranties and is not subordinated by its terms to any Indebtedness or other obligation of such Subsidiary Guarantor which is not Senior Indebtedness of Subsidiary Guarantors. "Stated Maturity" means, with respect to any security, the date specified in such security as the fixed date on which the payment of principal of such security is due and payable, including pursuant to any mandatory redemption provision (but excluding any provision providing for the repurchase of such security at the option of the holder thereof upon the happening of any contingency beyond the control of the issuer unless such contingency has occurred). "Subordinated Obligation" means (i) any Indebtedness of the Company (whether outstanding on the date of this Indenture or thereafter Incurred) which is subordinate or junior in right of payment to the Securities or (ii) any Indebtedness of the Subsidiary Guarantors (whether outstanding on the date of this Indenture or thereafter Incurred) which is subordinate or junior in right of payment to the Subsidiary Guaranties. "Subsidiary" of any specified Person means any corporation, partnership, joint venture, association or other business entity, whether now existing or hereafter organized or acquired, (i) in the case of a corporation, of which at least 50% of the total voting power of the Voting Stock is held by such first-named Person or any of its Subsidiaries and such first-named Person or any of its Subsidiaries has the power to direct the management, policies and affairs thereof; or (ii) in the case of a partnership, joint venture, association, or other business entity, with respect to which such first-named Person or any of its Subsidiaries has the power to direct or cause the direction of the management and policies of such entity by contract or otherwise if in accordance with GAAP such entity is consolidated with the first-named Person for financial statement purposes. "Subsidiary Guarantors" means (i) the Guarantor and (ii) each Domestic Restricted Subsidiary that in the future executes a supplemental indenture in which such Subsidiary agrees to be bound by the terms of this Indenture as a Subsidiary Guarantor, provided that any Person constituting a Subsidiary Guarantor as described above shall cease to constitute a Subsidiary Guarantor when its respective Subsidiary Guaranty is released in accordance with the terms of this Indenture. "Temporary Cash Investments" means any of the following: (i) investments in U.S. Government Obligations maturing within 90 days of the date of acquisition thereof, (ii) investments in time deposit accounts, certificates of deposit and money market deposits maturing within 90 days of the date of acquisition thereof, issued by a bank or trust company which is organized under the laws of the United States of America or any state thereof having capital, surplus and undivided profits aggregating in excess of $500,000,000 and whose long-term debt is rated "A-3" or A- or higher according to Moody's Investors Service, Inc. or Standard and Poor's Corporation (or such similar equivalent rating by at least one "nationally recognized statistical rating organization" (as defined in Rule 436 under the Securities Act)), (iii) repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above, and (iv) investments in commercial -16- 24 paper, maturing not more than 90 days after the date of acquisition, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard and Poor's Corporation. "13 1/2% Notes" means the $100 million principal amount of 13 1/2% Senior Subordinated Notes due 2002 of the Guarantor. "TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) as in effect on the date of this Indenture; provided, however, that, in the event the Trust Indenture Act of 1939 is amended after such date, "TIA" means, to the extent required by any such amendment, the Trust Indenture Act of 1939, as may be amended from time to time. "Trade Payables" means, with respect to any Person, any accounts payable or any indebtedness or monetary obligation to trade creditors created, assumed or Guaranteed by such Person arising in the ordinary course of business of such Person in connection with the acquisition of goods or services. "Trustee" means the party named as such in this Indenture until a successor replaces it in accordance with the provisions of this Indenture and, thereafter, means such successor. "Trust Officer" means the Chairman of the Board, the President or any other officer or assistant officer of the Trustee assigned by the Trustee to administer its corporate trust matters. "Uniform Commercial Code" means the New York Uniform Commercial Code as in effect from time to time. "Unrestricted Subsidiary" means (i) any Subsidiary of the Company that at the time of determination shall be designated an Unrestricted Subsidiary by the Board of Directors in the manner provided below and (ii) any Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate any Subsidiary of the Company (including any newly acquired or newly formed Subsidiary of the Company) to be an Unrestricted Subsidiary unless such Subsidiary (i) owns any Capital Stock or Indebtedness of, or owns or holds any Lien on any property of, the Company or any other Subsidiary of the Company that is not a Subsidiary of the Subsidiary to be so designated or (ii) is obligated under any Indebtedness or other obligation that, if in default, would result (with the passage of time or the giving of notice or otherwise) in a default on any Indebtedness of the Company or of any Restricted Subsidiary); provided, however, that either (a) the Subsidiary to be so designated has total assets of $1,000 or less or (b) if such Subsidiary has assets greater than $1,000, then such designation would be permitted under Section 4.04 as a Restricted Payment. Unless so designated as an Unrestricted Subsidiary, any Person that becomes a Subsidiary of the Company or of any Restricted Subsidiary shall be classified as a Restricted Subsidiary. Notwithstanding the foregoing sentence, the Board of Directors may designate any Unrestricted Subsidiary to be a Restricted Subsidiary; provided, however, that immediately after giving pro forma effect to such designation (1) the Company could Incur $1.00 -17- 25 of additional Indebtedness pursuant to clause (i) of the definition of "Permitted Indebtedness" and (2) no Default shall have occurred and be continuing. Any such designation by the Board of Directors shall be evidenced to the Trustee by promptly filing with the Trustee a copy of the Certified Resolution giving effect to such designation and an Officers' Certificate certifying that such designation complies with the foregoing provisions. "U.S. Government Obligations" means direct obligations (or certificates representing an ownership interest in such obligations) of the United States of America (including any agency or instrumentality thereof) for the payment of which the full faith and credit of the United States of America is pledged and which are not callable or redeemable at the issuer's option. "Voting Stock" of a corporation means all classes of Capital Stock of such corporation then outstanding and normally entitled to vote in the election of directors. "Wholly Owned Subsidiary" means a Restricted Subsidiary of the Company all the Capital Stock of which (other than directors' qualifying shares) is owned by the Company or another Wholly Owned Subsidiary. -18- 26 SECTION 1.02. Other Definitions.
DEFINED IN TERM SECTION ---- ----------- "Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03 "covenant defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . 8.01 "Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Escrow Funds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15 "Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01 "Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Exchange Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital "incorporated provision" . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01 "Initial Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital "legal defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01 "Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.08 "Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Offer Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Offered Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Pari Passu Debt Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Pari Passu Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "pay the Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03 "Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03 "Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03 "Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Redemption Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16 "Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03 "Reports" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04 "Security Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06 "Subsidiary Guaranties" . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01 "Subsidiary Guarantors Blockage Notice" . . . . . . . . . . . . . . . . . . . 11.05 "Subsidiary Guarantors Payment Blockage Period" . . . . . . . . . . . . . . . 11.05 "Surviving Entity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
SECTION 1.03. Incorporation by Reference of Trust Indenture Act. This Indenture is subject to the mandatory provisions of the TIA which are incorporated by reference in and made a part of this Indenture. The following TIA terms have the following meanings: "Commission" means the SEC. "indenture securities" means the Securities. "indenture security holder" means a Holder. "indenture to be qualified" means this Indenture. -19- 27 "indenture trustee" or "institutional trustee" means the Trustee. "obligor" on the indenture securities means the Company and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by SEC rule have the meanings assigned to them by such definitions. SECTION 1.04. Rules of Construction. Unless the context otherwise requires: (i) a term has the meaning assigned to it; (ii) an accounting term not otherwise defined has the meaning assigned to it in accordance with GAAP; (iii) "or" is not exclusive; (iv) "including" means including without limitation; (v) words in the singular include the plural and words in the plural include the singular; (vi) unsecured Indebtedness shall not be deemed to be subordinate or junior to secured Indebtedness merely by virtue of its nature as unsecured Indebtedness; (vii) the principal amount of any noninterest bearing or other discount security at any date shall be the principal amount thereof that would be shown on a balance sheet of the issuer dated such date prepared in accordance with GAAP and accretion of principal on such security shall be deemed to be the Incurrence of Indebtedness; and (viii) the principal amount of any Preferred Stock shall be the greater of (i) the maximum liquidation value of such Preferred Stock, or (ii) the maximum mandatory redemption or mandatory repurchase price with respect to such Preferred Stock. ARTICLE 2 THE SECURITIES SECTION 2.01. Form and Dating. The Initial Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit A which is hereby incorporated in and expressly made a part of this Indenture. The Exchange Notes and the Trustee's certificate of authentication shall be substantially in the form of Exhibit B, which is hereby incorporated in and expressly made a part of this Indenture. The Securities may have notations, legends or endorsements required by law, stock exchange rule, agreements to which the Company is subject, if any, or usage (provided that any such notation, legend -20- 28 or endorsement is in a form acceptable to the Company). Each Security shall be dated the date of its authentication. The terms of the Securities set forth in Exhibit A and Exhibit B are part of the terms of this Indenture. SECTION 2.02. Execution and Authentication. Two Officers shall sign the Securities for the Company by manual or facsimile signature. The Company's seal shall be impressed, affixed, imprinted or reproduced on the Securities and may be in facsimile form. If an Officer whose signature is on a Security no longer holds that office at the time the Trustee authenticates the Security, the Security shall be valid nevertheless. A Security shall not be valid until an authorized signatory of the Trustee manually signs the certificate of authentication on the Security. The signature shall be conclusive evidence that the Security has been authenticated under this Indenture. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Securities executed by the Company to the Trustee for authentication, together with a Company Order for the authentication and delivery of such Securities; and the Trustee in accordance with such Company Order shall authenticate and deliver such Securities as provided in this Indenture and not otherwise. The Trustee may appoint an authenticating agent reasonably acceptable to the Company to authenticate the Securities. Unless limited by the terms of such appointment, an authenticating agent may authenticate Securities whenever the Trustee may do so. Each reference in this Indenture to authentication by the Trustee includes authentication by such agent. An authenticating agent has the same rights as any Registrar, Paying Agent or agent for service of notices and demands. SECTION 2.03. Registrar and Paying Agent. The Company shall maintain an office or agency where Securities may be presented for registration of transfer or for exchange (the "Registrar") and an office or agency where Securities may be presented for payment (the "Paying Agent"). The Registrar shall keep a register of the Securities and of their transfer and exchange. The Company may have one or more co-registrars and one or more additional paying agents; provided, however, that so long as Harris Trust and Savings Bank shall be the Trustee, without the consent of the Trustee, there shall be no more than one Registrar or Paying Agent. The term "Paying Agent" includes any additional paying agent. The Company shall enter into an appropriate agency agreement with any Registrar, Paying Agent or co-registrar not a party to this Indenture, which shall incorporate the terms of the TIA. The agreement shall implement the provisions of this Indenture that relate to such agent. The Company shall notify the Trustee of the name and address of any such agent. If the Company fails to maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be entitled to appropriate compensation therefor pursuant to Section 7.07. The Company or any of its domestically incorporated Wholly Owned Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer agent. The Company initially appoints the Trustee as Registrar and Paying Agent in connection with the Securities. -21- 29 SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to each due date of the principal and interest on any Security, the Company shall deposit with the Paying Agent a sum sufficient to pay such principal and interest when so becoming due. The Company shall require each Paying Agent (other than the Trustee) to agree in writing that the Paying Agent shall hold in trust for the benefit of Holders or the Trustee all money held by the Paying Agent for the payment of principal of or interest on the Securities and shall notify the Trustee of any default by the Company in making any such payment. If the Company or a Subsidiary acts as Paying Agent, it shall segregate the money held by it as Paying Agent and hold it as a separate trust fund. The Company at any time may require a Paying Agent to pay all money held by it to the Trustee and to account for any funds disbursed by the Paying Agent. Upon complying with this Section, the Paying Agent shall have no further liability for the money delivered to the Trustee. SECTION 2.05. Holder Lists. The Trustee shall preserve in as current a form as is reasonably practicable the most recent list available to it of the names and addresses of Holders. If the Trustee is not the Registrar, the Company shall furnish to the Trustee, in writing at least five Business Days before each interest payment date and at such other times as the Trustee may request in writing, a list in such form and as of such date as the Trustee may reasonably require of the names and addresses of Holders. SECTION 2.06. Replacement Securities. If a mutilated Security is surrendered to the Registrar or if the Holder of a Security claims that the Security has been lost, destroyed or wrongfully taken, the Company shall issue and the Trustee shall authenticate a replacement Security if the requirements of Section 8-405 of the Uniform Commercial Code are met and the Holder satisfies any other reasonable requirements of the Trustee. If required by the Trustee or the Company, such Holder shall furnish an indemnity bond sufficient in the judgment of the Company and the Trustee to protect the Company, the Trustee, the Paying Agent, the Registrar and any co-registrar from any loss which any of them may suffer if a Security is replaced. The Company and the Trustee may charge the Holder for their expenses in replacing a Security. Every replacement Security is an additional obligation of the Company. SECTION 2.07. Outstanding Securities. Securities outstanding at any time are all Securities authenticated by the Trustee except for those canceled by it, those delivered to it for cancellation and those described in this Section as not outstanding. A Security does not cease to be outstanding because the Company or an Affiliate of the Company holds the Security. If a Security is replaced pursuant to Section 2.06, it ceases to be outstanding unless the Trustee and the Company receive proof satisfactory to them that the replaced Security is held by a bona fide purchaser, in which event the replacement Security shall cease to be outstanding, subject to the provisions of Section 8-405 of the Uniform Commercial Code. If the Paying Agent segregates and holds in trust, in accordance with this Indenture, on a redemption date or maturity date money sufficient to pay all principal and interest payable on that date with respect to the Securities (or portions thereof) to be redeemed or maturing, as the case may be, and the Paying Agent is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture, then on -22- 30 and after that date such Securities (or portions thereof) cease to be outstanding and interest on them ceases to accrue. SECTION 2.08. Temporary Securities. Until definitive Securities are ready for delivery, the Company may prepare and the Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Company considers appropriate for temporary Securities. Without unreasonable delay, the Company shall prepare and the Trustee shall authenticate definitive Securities and deliver them in exchange for temporary Securities. SECTION 2.09. Cancellation. The Company at any time may deliver Securities to the Trustee for cancellation. The Registrar and the Paying Agent shall forward to the Trustee any Securities surrendered to them for registration of transfer, exchange or payment. The Trustee and no one else shall cancel and destroy (subject to the record retention requirements of the Exchange Act) all Securities surrendered for registration of transfer, exchange, payment or cancellation and deliver a certificate of such destruction to the Company. The Company may not issue new Securities to replace Securities it has redeemed, paid or delivered to the Trustee for cancellation. SECTION 2.10. Defaulted Interest. If the Company defaults in a payment of interest on the Securities, the Company shall pay defaulted interest (plus interest on such defaulted interest to the extent lawful) in any lawful manner. The Company may pay the defaulted interest to the Persons who are Holders on a subsequent special record date. The Company shall fix or cause to be fixed any such special record date and payment date to the reasonable satisfaction of the Trustee and shall promptly mail to each Holder a notice that states the special record date, the payment date and the amount of defaulted interest to be paid. SECTION 2.11. CUSIP Numbers. The Company, in issuing the Securities, may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to Holders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. ARTICLE 3 REDEMPTION SECTION 3.01. Notices to Trustee. If the Company elects to redeem Securities pursuant to paragraph 6 of the Securities, it shall notify the Trustee in writing of the redemption date, the principal amount of Securities to be redeemed and the paragraph of the Securities pursuant to which the redemption will occur. The Company shall give each notice to the Trustee provided for in this Section at least 45 days before the redemption date unless the Trustee consents to a shorter period. Such notice shall be accompanied by an Officers' Certificate and an Opinion of -23- 31 Counsel from the Company to the effect that such redemption will comply with the conditions herein. SECTION 3.02. Selection of Securities To Be Redeemed. If fewer than all the Securities are to be redeemed, the Trustee shall select the Securities to be redeemed pro rata or by lot or by a method that complies with applicable legal and securities exchange requirements, if any, and that the Trustee considers fair and appropriate and in accordance with methods generally used at the time of selection by fiduciaries in similar circumstances. The Trustee shall make the selection from outstanding Securities not previously called for redemption. The Trustee may select for redemption portions of the principal of Securities that have denominations larger than $1,000. Securities and portions of them the Trustee selects shall be in amounts of $1,000 or a whole multiple of $1,000. Provisions of this Indenture that apply to Securities called for redemption also apply to portions of Securities called for redemption. The Trustee shall notify the Company promptly of the Securities or portions of Securities to be redeemed. SECTION 3.3. Notice of Redemption. At least 30 days but not more than 60 days before a date for redemption of Securities, the Company shall mail a notice of redemption by first-class mail to each Holder of Securities to be redeemed. The notice shall identify the Securities to be redeemed and shall state: (i) the redemption date; (ii) the redemption price; (iii) the name and address of the Paying Agent; (iv) that Securities called for redemption must be surrendered to the Paying Agent to collect the redemption price; (v) if fewer than all the outstanding Securities are to be redeemed, the identification and principal amounts of the particular Securities to be redeemed; (vi) that, unless the Company defaults in making such redemption payment or the Paying Agent is prohibited from making such payment pursuant to the terms of this Indenture, interest on Securities (or portion thereof) called for redemption ceases to accrue on and after the redemption date; and (vii) that no representation is made as to the correctness or accuracy of the CUSIP number, if any, listed in such notice or printed on the Securities. At the Company's written request, the Trustee shall give the notice of redemption in the Company's name and at the Company's expense. In such event, the Company shall provide the Trustee with the information required by this Section at least 45 days before the redemption date. SECTION 3.04. Effect of Notice of Redemption. Once notice of redemption is mailed, Securities called for redemption become due and payable on the redemption date and at the redemption price stated in the notice. Upon surrender to the Paying Agent, -24- 32 such Securities shall be paid at the redemption price stated in the notice, plus accrued interest to the redemption date. Failure to give notice or any defect in the notice to any Holder shall not affect the validity of the notice to any other Holder. SECTION 3.05. Deposit of Redemption Price. Prior to the redemption date, the Company shall deposit with the Paying Agent (or, if the Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust) money sufficient to pay the redemption price of and accrued interest on all Securities to be redeemed on that date other than Securities or portions of Securities called for redemption which have been delivered by the Company to the Trustee for cancellation. SECTION 3.06. Securities Redeemed in Part. Upon surrender of a Security that is redeemed in part, the Company shall execute and the Trustee shall authenticate for the Holder (at the Company's expense) a new Security equal in principal amount to the unredeemed portion of the Security surrendered. ARTICLE 4 COVENANTS SECTION 4.01. Payment of Securities. The Company shall promptly pay the principal of and interest on the Securities on the dates and in the manner provided in the Securities and in this Indenture due on such due date. Principal and interest shall be considered paid on the date due if on such date the Trustee or the Paying Agent holds in accordance with this Indenture money sufficient to pay all principal and interest then due and the Trustee or the Paying Agent, as the case may be, is not prohibited from paying such money to the Holders on that date pursuant to the terms of this Indenture. The Company shall pay interest on overdue principal at the rate specified therefor in the Securities, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. SECTION 4.02. SEC Reports. The Company and the Guarantor shall file with the Trustee and provide Holders at the Company's and the Guarantor's expense, within 15 days after it files them with the SEC, copies of their annual report and other reports which the Company and the Guarantor are required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act. Notwithstanding that the Company may not be required to remain subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company shall continue to file with the SEC and provide the Trustee and Holders and prospective Holders (upon request) with the annual reports and other reports which are specified in Sections 13 and 15(d) of the Exchange Act; provided, however, that the Company and the Guarantor shall not be required to file any report, document or other information with the SEC if the SEC does not permit such filing. The Company and the Guarantor also shall comply with the other provisions of Section 314(a) of the TIA. SECTION 4.03. Limitation on Indebtedness. The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, Incur any Indebtedness, unless such Indebtedness is Permitted Indebtedness. -25- 33 SECTION 4.04. Limitation on Restricted Payments. (i) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly (a) declare or pay any dividend on, or make any distribution in respect of, any Capital Stock of the Company, except for dividends or distributions payable solely in Capital Stock of the Company (other than Disqualified Stock); (b) purchase, redeem, retire or acquire for value any Capital Stock of the Company or any Affiliate of the Company (other than a Restricted Subsidiary); (c) purchase, repurchase, redeem, defease or acquire for value, prior to scheduled maturity, scheduled repayment or scheduled sinking fund payment, any Subordinated Obligation (other than in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case, due within one year of the date of acquisition); or (d) make any Investment (other than Permitted Investments) in any Person, (any such dividend, distribution, purchase, redemption, repurchase, defeasance, other acquisition, retirement or Investment being herein referred to as a "Restricted Payment") if at the time of and after giving effect to the proposed Restricted Payment: (1) any Default or Event of Default has occurred and is continuing; (2) the Company could not Incur at least $1.00 of additional Indebtedness pursuant to clause (i) of the definition of Permitted Indebtedness; or (3) the aggregate amount expended or declared for all Restricted Payments after the Issue Date exceeds (without duplication) the sum of: (A) 50% of the Consolidated Net Income accrued during the period (treated as one accounting period) from the first day of the fiscal quarter in which the Issue Date occurs to the end of the most recent fiscal quarter ending at least 45 days prior to the date of such Restricted Payment (or, in case such Consolidated Net Income shall be a deficit, minus 100% of such deficit) and minus 100% of the amount of any write-downs, write-offs, other negative revaluations and other negative extraordinary charges not otherwise reflected in Consolidated Net Income during such period; (B) 100% of the aggregate Net Cash Proceeds received by the Company from the issuance or sale of its Capital Stock (other than Disqualified Stock) subsequent to the Issue Date (other than an issuance or a sale to a Subsidiary of the Company or an employee stock ownership plan or trust); (C) the amount by which Indebtedness of the Company or its Restricted Subsidiaries is reduced on the Company's balance sheet upon the conversion or exchange (other than by a Subsidiary) subsequent to the Issue Date, of any Indebtedness of the Company or its Restricted Subsidiaries convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Company; (D) an amount equal to the net reduction in Investments resulting from dividends, repayments of loans or advances or other transfers of assets (to the extent not included in Consolidated Net Income), in each case, to the Company or any Restricted Subsidiary, not to exceed the amount of Investments previously made that were included as Restricted Payments; and -26- 34 (E) $40 million. (ii) The provisions of Section 4.04(i) shall not prevent the Company from: (a) paying a dividend on its Capital Stock within 60 days after the declaration thereof, if, on the declaration date, the Company could have paid such dividend in compliance with this Indenture; (b) redeeming, repurchasing, defeasing, acquiring or retiring for value Subordinated Obligations from proceeds of Refinancing Indebtedness permitted by clause (xi) of the definition of Permitted Indebtedness; (c) acquiring, redeeming or retiring Capital Stock or Subordinated Obligations of the Company in exchange for, or in connection with a substantially concurrent issuance of, Capital Stock of the Company (other than Disqualified Stock); and (d) repurchasing or redeeming shares of, or options to purchase shares of, Capital Stock of the Company or stock appreciation rights from officers, directors and employees (or the heirs of such persons) of the Company or any Restricted Subsidiary whose employment has terminated or who have died or retired or become disabled or upon the vesting of stock appreciation rights, so long as the aggregate amount of such payments in any fiscal year does not exceed $5 million. (iii) Payments made pursuant to Sections 4.04(ii)(b) and (c) shall be excluded from the calculation of the amount available for Restricted Payments, provided that the proceeds from the issuance of Capital Stock of the Company pursuant to Section 4.04(ii)(c) shall not increase the amount available for Restricted Payments. SECTION 4.05. Limitation on Dividends and Other Payment Restrictions Affecting Restricted Subsidiaries. (i) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, cause to exist or become effective or enter into any encumbrance or restriction (other than pursuant to law or regulation) on the ability of any Restricted Subsidiary (a) to pay dividends or make any other distributions in respect of its Capital Stock or pay any debt or other obligation owed to the Company or any other Restricted Subsidiary; (b) to make loans or advances to the Company or any other Restricted Subsidiary; or (c) to transfer any of its property or assets to the Company or any other Restricted Subsidiary. (ii) The provisions of Section 4.05(i) shall not apply: (a) with respect to Sections 4.05(i)(a), (b) and (c), to encumbrances and restrictions (1) in existence under or by reason of any agreement (not otherwise described in clause (3) below and other than those contained in the indenture governing the 13 1/2% Notes) in effect on the Issue Date; (2) relating to Indebtedness of a Restricted Subsidiary and existing at such Restricted Subsidiary at the time it became a Restricted Subsidiary if such encumbrance or restriction was not created in connection with or in anticipation of the transaction or series of related transactions pursuant to which such Restricted Subsidiary became a Restricted Subsidiary or was -27- 35 acquired by the Company; (3) pursuant to the Credit Agreement, provided that such restrictions or encumbrances are no less favorable to the Holders than those restrictions or encumbrances pursuant to the Credit Agreement as in effect on the Issue Date, provided further, however, that the provisions of the Credit Agreement permit distributions to the Company for the purpose of, and in an amount sufficient to fund, the payment of principal due at maturity and interest in respect of the Securities (provided that, in either case, such payment is due or to become due within 30 days from the date of such distribution) at a time when there does not exist an event which after notice or passage of time or both would permit the lenders under the Credit Agreement to declare all amounts thereunder due and payable; (4) which result from the renewal, refinancing, extension or amendment of an agreement referred to in Sections 4.05(ii)(a)(1), (2) and (6) and in Sections 4.05(ii)(b)(1) and (2) provided that, such encumbrance or restriction is no more restrictive to such Restricted Subsidiary and is not materially less favorable to the Holders than those under or pursuant to the agreement evidencing the Indebtedness so extended, renewed, refinanced or replaced; (5) pursuant to the indenture governing the 13 1/2% Notes (while such 13 1/2% Notes remain outstanding as permitted pursuant to Section 4.16 hereof), provided that such restrictions or encumbrances are no less favorable to Holders than those restrictions or encumbrances pursuant to such indenture as in effect on the Issue Date; or (6) relating to Indebtedness Incurred pursuant to clause (xi) of the definition of Permitted Indebtedness; and (b) with respect to Section 4.05(i)(c) only, to (1) any encumbrance or restriction relating to Indebtedness that is permitted to be Incurred and secured pursuant to the provisions of Sections 4.03 and 4.12 that limit the right of the debtor to dispose of the assets or property securing such Indebtedness; (2) any encumbrance or restriction in connection with an acquisition of property, so long as such encumbrance or restriction relates solely to the property so acquired and was not created in connection with or in anticipation of such acquisition; (3) customary provisions restricting subletting or assignment of leases and customary provisions in other agreements that restrict assignment of such agreements or rights thereunder; or (4) customary restrictions contained in asset sale agreements limiting the transfer of such assets pending the closing of such sale. SECTION 4.06. Limitation on Asset Dispositions. (i) The Company shall not, and shall not permit any Restricted Subsidiary to, make any Asset Disposition unless (a) the Company or such Restricted Subsidiary receives consideration at the time of such Asset Disposition at least equal to the Fair Market Value, as determined in good faith by the Board of Directors, the determination of which shall be evidenced by a Certified Resolution (including as to the value of all non-cash consideration), of the shares and assets subject to such Asset Disposition; (b) at least 80% of the consideration thereof received by the Company or such Restricted Subsidiary is in the form of cash or cash equivalents, provided, however, that any securities or notes received by the Company or such Restricted Subsidiary in connection with such Asset Disposition that are converted by the Company or such Restricted Subsidiary into cash or cash equivalents within 10 business days of the date of such Asset Disposition shall be deemed to be cash equivalents; (c) the Company delivers an Officers' Certificate to the Trustee certifying that such Asset Disposition complies with subclauses (a) and (b); and (d) an amount equal to 100% of the Net Available Cash from such Asset Disposition is applied by the Company (or such Restricted Subsidiary, as the case may be) (1) first, to the extent the Company elects (or is required by the terms of any Senior Indebtedness), to prepay, repay or purchase Senior Indebtedness or Senior Indebtedness of Subsidiary Guarantors (in each case, other than Indebtedness owed to the Company or an Affiliate of the Company) or, if the Asset Disposition is made by a Foreign Restricted Subsidiary, Senior Indebtedness of a Foreign Restricted Subsidiary, within 270 days from the later of the date of such Asset Disposition or the receipt of such Net Available Cash; (2) second, to the extent of the balance of Net Available Cash after application in accordance with sub-subclause (1), to the extent the Company or such Restricted Subsidiary elects, to reinvest in Additional Assets (including by means of an Investment in Additional Assets by a Restricted Subsidiary with Net Available Cash received by the Company or another Restricted Subsidiary) within 270 days from -28- 36 the later of such Asset Disposition or the receipt of such Net Available Cash; (3) third, to the extent of the balance of such Net Available Cash after application in accordance with sub-subclauses (1) and (2) (which balance constitutes "Excess Proceeds"), to make an Offer (as defined in the next paragraph) to purchase Securities and other pari passu Indebtedness (if required) pursuant to and subject to the conditions of the following paragraph; provided, however, that in connection with any prepayment, repayment or purchase of Indebtedness pursuant to Sections 4.06(i)(d)(1) or (3), the Company or such Restricted Subsidiary shall retire such Indebtedness and shall cause the related loan commitment (if any) to be permanently reduced in an amount equal to the principal amount so prepaid, repaid or purchased. Pending application of Net Available Cash pursuant to this provision, such Net Available Cash shall be invested in Temporary Cash Investments. (ii) When the aggregate amount of Excess Proceeds exceeds $15 million (including interest earned thereon), the Company shall apply the Excess Proceeds to the repayment of the Securities and any other pari passu Indebtedness outstanding with similar provisions requiring the Company to make an offer to purchase such Indebtedness with the proceeds from any Asset Disposition as follows: (a) the Company shall make an offer to purchase (an "Offer") from all holders of the Securities in accordance with the procedures set forth in this Indenture in the maximum principal amount (expressed as a multiple of $1,000) of Securities that may be purchased out of an amount (the "Security Amount") equal to the product of such Excess Proceeds multiplied by a fraction, the numerator of which is the outstanding principal amount of the Securities, and the denominator of which is the sum of the outstanding principal amount of the Securities and such pari passu Indebtedness (subject to proration in the event such amount is less than the aggregate Offered Price of all Securities tendered) and (b) to the extent required by such pari passu Indebtedness to reduce permanently the principal amount of such pari passu Indebtedness, the Company shall make an offer to purchase or otherwise repurchase or redeem pari passu Indebtedness (a "Pari Passu Offer") in an amount (the "Pari Passu Debt Amount") equal to the Excess Proceeds over the Security Amount; provided that in no event will the Company be required to make a Pari Passu Offer in a Pari Passu Debt Amount exceeding the principal amount of such pari passu Indebtedness plus the amount of any premium required to be paid to repurchase such pari passu Indebtedness. The offer price for the Securities shall be payable in cash in an amount equal to 100% of the principal amount of the Securities plus accrued and unpaid interest, if any, to the date (the "Offer Date") such Offer is consummated (the "Offered Price"), in accordance with the procedures set forth in this Indenture. To the extent that the aggregate Offered Price of the Securities tendered pursuant to the Offer is less than the Security Amount relating thereto or the aggregate amount of pari passu Indebtedness that is purchased in a Pari Passu Offer is less than the Pari Passu Debt Amount, the Company may use any remaining Excess Proceeds for general corporate purposes. If the aggregate principal amount of Securities and pari passu Indebtedness surrendered by holders thereof exceeds the amount of Excess Proceeds, the Trustee shall select the Securities to be purchased on a pro rata basis. Upon the completion of the purchase of all the Securities tendered pursuant to an Offer and the completion of a Pari Passu Offer, the amount of Excess Proceeds, if any, shall be reset at zero. -29- 37 (iii) (a) Promptly, and in any event within 10 days after the Company becomes obligated to make an Offer, the Company shall be obligated to deliver to the Trustee and send, by first-class mail to each Holder, a written notice stating that the Holder may elect to have his Securities purchased by the Company, either in whole or in part, (subject to proration as hereinafter described in the event the Offer is oversubscribed) in integral multiples of $1,000 of principal amount, at the applicable purchase price. The notice shall specify a purchase date not less than 30 days nor more than 60 days after the date of such notice (the "Purchase Date") and shall contain information concerning the business of the Company which the Company in good faith believes will enable such Holders to make an informed decision (which at a minimum will include (1) the most recently filed Annual Report on Form 10-K (including audited consolidated financial statements) of the Company, the most recent subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form 8-K of the Company filed subsequent to such Quarterly Report, other than Current Reports describing Asset Dispositions (or corresponding successor reports) (collectively, the "Reports"), (2) a description of material developments in the Company's business subsequent to the date of the latest of the Reports, and (3) if material, appropriate pro forma financial information), and all instructions and materials necessary to tender Securities pursuant to the Offer, together with the information contained in Section 4.06(iii)(b). (b) Not later than the date upon which written notice of an Offer is delivered to the Trustee as provided below, the Company shall deliver to the Trustee an Officers' Certificate as to (i) the Offered Price, (ii) the allocation of the Net Available Cash from the Asset Dispositions pursuant to which such Offer is being made and (iii) the compliance of such allocation with the provisions described herein. On such date, the Company shall also irrevocably deposit with the Trustee or with a paying agent (or, if the Company is acting as its own paying agent, segregate and hold in trust) in Temporary Cash Investments an amount equal to the Offered Price to be held for payment in accordance with the provisions of this provision. Upon the expiration of the period for which the Offer remains open (the "Offer Period"), the Company shall deliver to the Trustee the Securities or portions thereof which have been properly tendered to and are to be accepted by the Company. The Trustee shall, on the Purchase Date, mail or deliver payment to each tendering Holder in the amount of the purchase price. In the event that the aggregate purchase price of the Securities delivered by the Company to the Trustee is less than the Offered Price, the Trustee shall deliver the excess to the Company immediately after the expiration of the Offer Period. (c) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least five Business Days prior to the Purchase Date. Holders will be entitled to withdraw their election it the Trustee or the Company receives not later than three Business Days prior to the Purchase Date, a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased. If, at the expiration of the Offer Period, the aggregate principal amount of Securities surrendered by Holders exceeds the Offered Price, the Company shall select the Securities to be purchased on a pro rata basis (with such adjustments as may be deemed appropriate by the Company so that only Securities in denominations of $1,000, or integral multiples thereof, shall be purchased). Holders whose Securities are purchased only in part will be issued new Securities equal in principal amount to the unpurchased portion of the Securities surrendered. -30- 38 (d) At the time the Company delivers Securities which are to be accepted for purchase to the Trustee, the Company shall also deliver an Officers' Certificate stating that such Securities are to be accepted by the Company pursuant to and in accordance with the terms of this provision. A Security shall be deemed to have been accepted for purchase at the time the Trustee, directly or through an agent, mails or delivers payment therefor to the surrendering Holder. (e) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to the covenant described hereunder. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under such covenant by virtue thereof. SECTION 4.07. Limitation on Transactions with Affiliates. (i) The Company shall not, and shall not permit any Restricted Subsidiary to, directly or indirectly, conduct any business or enter into any transaction or series of transactions with or for the benefit of any Affiliate, unless the terms of such transaction or series of transactions are (a) set forth in writing, (b) in the best interest of the Company or such Restricted Subsidiary, and (c) no less favorable to the Company or such Restricted Subsidiary than those that could be obtained in a comparable arm's-length transaction with an unrelated third party; and (ii) with respect to a transaction or series of transactions involving aggregate payments or value in excess of $3 million, the Board of Directors (including a majority of the Disinterested Directors thereof) approves such transaction or series of transactions and, in its good faith judgment, believes that such transaction or series of transactions complies with Section 4.07(i), as evidenced by a Certified Resolution delivered to the Trustee. Section 4.07(i) shall not prohibit (a) any Restricted Payment permitted to be paid pursuant to Section 4.04, (b) any issuance of securities, or other payments, awards or grants in cash, securities or otherwise pursuant to, or the funding of, employment arrangements, stock options and stock ownership plans approved by the Board of Directors (including a majority of the Disinterested Directors thereof), (c) any transaction pursuant to any contract in existence on the Issue Date, (d) loans or advances to employees in the ordinary course of business in accordance with past practices of the Company, not to exceed $1 million per employee and $3 million in the aggregate, (e) the payment of reasonable fees to directors of the Company and its Restricted Subsidiaries who are not employees of the Company or its Restricted Subsidiaries, (f) any transaction between the Company and a Restricted Subsidiary or between Restricted Subsidiaries and (g) the making of payments to Salomon Brothers Inc or its Affiliates for investment banking services. SECTION 4.08. Change of Control. (i) Upon a Change of Control, each Holder shall have the right to require that the Company repurchase all or any part of such Holder's Securities at a repurchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, through the date of repurchase. In the event that at the time of such Change of Control the terms of the Bank Indebtedness or other Senior Indebtedness restrict or prohibit the repurchase of Securities pursuant to this provision, then prior to the mailing of the notice to Holders provided for in the next paragraph below, but in any event within 30 days following any Change of Control, the Company covenants to (a) repay in full all Bank Indebtedness or such other Senior Indebtedness to the extent required to permit the repurchase of Securities pursuant to this provision or (b) -31- 39 obtain the requisite consent under the agreements governing the Bank Indebtedness or such other Senior Indebtedness to permit the repurchase of the Securities as provided for in Section 4.08(ii). (ii) Within 30 days following any Change of Control, the Company shall send, by first-class mail to each Holder, a notice to each Holder with a copy to the Trustee stating: (a) that a Change of Control has occurred and that such Holder has the right to require the Company to purchase such Holder's Securities at a purchase price in cash equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any, to the date of purchase; (b) the circumstances and relevant facts regarding such Change of Control which the Company in good faith believes will enable Holders to make an informed decision (which at a minimum will include information with respect to pro forma historical income, cash flow and capitalization, each after giving effect to such Change of Control, events causing such Change of Control and the date such Change of Control is deemed to have occurred); (c) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed); and (d) the instructions determined by the Company, consistent with this provision, that a Holder must follow in order to have its Securities purchased, together with the information contained in Section 4.08(iii) (and including any related materials). (iii) Holders electing to have a Security purchased will be required to surrender the Security, with an appropriate form duly completed, to the Company at the address specified in the notice at least five Business Days prior to the purchase date. Holders will be entitled to withdraw their election if the Trustee or the Company receives not later than three Business Days prior to the purchase date a telegram, facsimile transmission or letter setting forth the name of the Holder, the principal amount of the Security which was delivered for purchase by the Holder and a statement that such Holder is withdrawing his election to have such Security purchased. (iv) On the purchase date, all Securities purchased by the Company under this provision shall be delivered by the Trustee for cancellation, and the Company shall pay the purchase price plus accrued and unpaid interest, if any, to the Holders entitled thereto. (v) The Company shall comply, to the extent applicable, with the requirements of Section 14(e) of the Exchange Act and any other securities laws or regulations in connection with the repurchase of Securities pursuant to the covenant described hereunder. To the extent that the provisions of any securities laws or regulations conflict with the provisions of the covenant described hereunder, the Company shall comply with the applicable securities laws and regulations and shall not be deemed to have breached its obligations under such covenant by virtue thereof. -32- 40 (vi) The Company's obligations to repurchase the Securities upon a Change of Control will be guaranteed on a senior subordinated basis by the Subsidiary Guarantors pursuant to the Subsidiary Guaranties. Such Guaranty will be subordinated to Senior Indebtedness of Subsidiary Guarantors to the same extent described in Article 11. SECTION 4.09. Limitation on Layered Indebtedness. (i) The Company shall not, and shall not permit any Subsidiary Guarantor to, directly or indirectly, Incur any Indebtedness that is subordinate in right of payment to any other Indebtedness of the Company or such Subsidiary Guarantor, as the case may be, unless such Indebtedness is subordinate in right of payment to, or ranks pari passu with, the Securities in the case of the Company or the Subsidiary Guaranties in the case of the Subsidiary Guarantors. (ii) The Subsidiary Guarantors shall not, directly or indirectly, Guaranty any Indebtedness of the Company that is subordinated in right of payment to any other Indebtedness of the Company unless such Guaranty is subordinate in right of payment to, or ranks pari passu with, the Subsidiary Guaranties. SECTION 4.10. Compliance Certificate. The Company shall deliver to the Trustee within 120 days after the end of each fiscal year of the Company an Officers' Certificate stating that in the course of the performance by the signers of their duties as Officers of the Company they would normally have knowledge of any Default and whether or not the signers know of any Default that occurred during such period. If they do, the certificate shall describe the Default, its status and what action the Company is taking or proposes to take with respect thereto. The Company also shall comply with Section 314(a)(4) of the TIA. SECTION 4.11. Further Instruments and Acts. Upon request of the Trustee, the Company will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. SECTION 4.12. Limitation on Liens. The Company shall not, and shall not permit any Subsidiary Guarantor to, directly or indirectly, Incur any Lien of any kind, other than Permitted Liens, on or with respect to any property or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom to secure Indebtedness that is subordinate in right of payment to, or ranks pari passu with, in the case of the Company, the Securities, or, in the case of the Subsidiary Guarantors, the Subsidiary Guaranties, unless the Notes are secured prior to (in the case of any Indebtedness that is subordinated in right of payment), or equally and ratably with (in the case of any Indebtedness that ranks pari passu), the Indebtedness so secured. SECTION 4.13. Ownership of United States Can Company. Except as provided under Article 11, the Company shall at all times maintain its ownership of 100% of the Capital Stock of United States Can Company. SECTION 4.14. Future Subsidiary Guarantors. The Company shall cause each Domestic Restricted Subsidiary created or acquired after the Issue Date to execute and deliver to the Trustee a supplemental indenture pursuant to which such Restricted Subsidiary will Guaranty payment of the Securities on the same terms and conditions as those set forth in this Indenture. Each Subsidiary Guaranty will be limited in amount to an amount not to exceed the maximum amount that can be Guaranteed by the applicable Subsidiary -33- 41 Guarantor without rendering such Subsidiary Guaranty voidable under applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. As of the Issue Date, United States Can Company is the only Domestic Restricted Subsidiary. SECTION 4.15. Establishment of Escrow Account. Immediately upon the receipt by the Company of the proceeds from the issuance of the Initial Notes hereunder, the Company shall deposit with the Escrow Agent (as defined in the Escrow Agreement), by wire transfer of immediately available funds to the Escrow Account, the amount of principal and call premium necessary to redeem the 13 1/2% Notes on January 22, 1997, plus the amount of any interest to be paid on the 13 1/2% Notes through January 22, 1997 (the "Escrow Funds"). Except as provided in Section 4.16, such deposit shall be irrevocable. SECTION 4.16. Required Redemption of 13 1/2% Notes. (1) The Company shall timely take all actions necessary or desirable to effect the Required Redemption (including the giving of any notice to the holders of the 13 1/2% Notes in the manner in which such notice is required to be given to effect such redemption pursuant to the indenture governing such 13 1/2% Notes), and shall effect such Required Redemption, as promptly as practicable on or after January 15, 1997 (but in no event later than January 22, 1997), and shall use the Escrow Funds to effect such Required Redemption. (2) No later than the date on which notice of the Required Redemption is first given to the holders of the 13 1/2% Notes pursuant to the preceding sentence, the Company shall deliver an Officer's Certificate to the Trustee stating that the 13 1/2% Notes are to be redeemed pursuant to the provisions hereof and setting forth the anticipated date of such Required Redemption. Upon receipt of such Officer's Certificate, the Trustee shall join with the Company in directing the Escrow Agent by written notice to release from escrow (on the specified date and pursuant to the provisions of the Escrow Agreement) sufficient funds to effect the Required Redemption and to transfer such funds to the account specified in such written notice (the "Redemption Account"). (3) If the date on which the Company is to effect the Required Redemption pursuant to the notice to be given under paragraph (1) of this Section 4.16 is after January 15, 1997, the Company shall, on January 15, 1997, cause to be paid from the Escrow Funds all interest then due and payable on the 13 1/2% Notes. In such event, the Company shall specify in the Officer's Certificate referred to in paragraph (2) of this Section 4.16 that all interest due and payable on January 15, 1997 on the 13 1/2% Notes shall be paid from the Escrow Funds on such date, and the Trustee shall timely join with the Company in directing the Escrow Agent by written notice to release from the Escrow Account on such date sufficient funds to make such interest payment in full on such date. (4) If on the date of the Required Redemption the Escrow Funds are insufficient to effect the Required Redemption, the Company shall immediately deliver, by wire transfer of immediately available funds to the Redemption Account, funds in such amount that, when added to the Escrow Funds, will be sufficient to effect the Required Redemption. Any portion of the Escrow Funds remaining after the Required Redemption shall be immediately paid over to the Company. -34- 42 ARTICLE 5 SURVIVING ENTITY SECTION 5.01. Merger, Consolidation and Sale of Assets. (i) Neither the Company nor the Guarantor shall merge or consolidate with or into any other entity (other than a merger of a Subsidiary Guarantor into the Company or another Subsidiary Guarantor) or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of their assets unless (a) the entity formed by or surviving any such consolidation or merger (if other than the Company or any Subsidiary Guarantor) or to which such sale, transfer or conveyance is made (the "Surviving Entity") shall be a corporation organized and existing under the laws of the United States of America and such corporation expressly assumes, by supplemental indenture satisfactory to the Trustee, all obligations of the Company or the Subsidiary Guarantor, as the case may be, pursuant to this Indenture and the Escrow Agreement; (b) immediately before and after giving effect to such transaction or series of transactions on a pro forma basis, no Default or Event of Default (and no event that, after notice or lapse of time, or both, would become an Event of Default) shall have occurred and be continuing; (c) immediately after giving effect to such transaction or series of transactions on a pro forma basis (including, without limitation, any Indebtedness Incurred or anticipated to be Incurred in connection with such transaction or series of transactions), the Company or the Surviving Entity, as the case may be, would be able to Incur at least $1.00 of additional debt pursuant to clause (i) of the definition of Permitted Indebtedness; and (d) the Company 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 this Indenture. Notwithstanding the foregoing, no other Subsidiary Guarantor shall merge or consolidate with or into any other entity, or sell, convey, assign, transfer, lease or otherwise dispose of all or substantially all of its assets, unless the Company and its remaining Restricted Subsidiaries have complied with Sections 5.01(i)(b), (c) and (d). (ii) The Surviving Entity shall succeed to, and be substituted for, and may exercise every right and power of, the Company or the Subsidiary Guarantor, as the case may be, under this Indenture and the Escrow Agreement, but the predecessor Company, in the case of a lease, shall not be released from the obligation to pay the principal of and interest on the Notes. (iii) Notwithstanding Sections 5.01(i)(b), (c) and (d), any Domestic Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties and assets to the Company or any other Domestic Restricted Subsidiary, and any Foreign Restricted Subsidiary may consolidate with, merge into or transfer all or part of its properties or assets to (i) any other Foreign Restricted Subsidiary or (ii) the Company or any Domestic Restricted Subsidiary, provided that the surviving company or the transferee entity, as the case may be, in such consolidation, merger or transfer is the Company or such Domestic Restricted Subsidiary. -35- 43 ARTICLE 6 DEFAULTS AND REMEDIES SECTION 6.01. Events of Default. An "Event of Default" occurs if: (i) the Company and the Subsidiary Guarantors default in any payment of interest on any Security when the same becomes due and payable, and such default continues for a period of 30 days; (ii) the Company and the Subsidiary Guarantors (a) default in the payment of the principal of any Security when the same becomes due and payable at its Stated Maturity, upon redemption, upon declaration or otherwise, or (b) fail to redeem or purchase Securities when required pursuant to this Indenture or the Securities; (iii) the Company or any Subsidiary Guarantor fails to comply with the provisions of Section 5.01; (iv) the Company or any Subsidiary Guarantor, as the case may be, fails to comply with Sections 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.12, 4.13, 4.14 or 4.15 (other than a failure to purchase Securities when required under Section 4.06 or 4.08) of this Indenture and such failure continues for 30 days after the notice specified below or the Company fails to give the notice specified below; (v) the Company or any Subsidiary Guarantor fails to comply with any of its agreements in the Securities or this Indenture (other than those referred to in clauses (i), (ii), (iii) or (iv) above) and such failure continues for 60 days after the notice specified below or the Company fails to give the notice specified below; (vi) the principal, any premium or accrued and unpaid interest of Indebtedness of the Company or any Restricted Subsidiary is not paid within any applicable grace period after final maturity or is accelerated by the holders thereof because of a default, the total amount of such Indebtedness unpaid or accelerated exceeds $10 million at the time and such default continues for 10 days; (vii) the Company, any Subsidiary Guarantor or any Foreign Significant Subsidiary pursuant to or within the meaning of any Bankruptcy Law: (a) commences a voluntary case; (b) consents to the entry of an order for relief against it in an involuntary case; (c) consents to the appointment of a Custodian of it or for any substantial part of its property; or (d) makes a general assignment for the benefit of its creditors; or takes any comparable action under any foreign laws relating to insolvency; (viii) a court of competent jurisdiction enters an order or decree under any Bankruptcy Law that: (a) is for relief against the Company, any Subsidiary Guarantor or any Foreign Significant Subsidiary in an involuntary case; (b) appoints a Custodian of the Company, any Subsidiary Guarantor or any Foreign Significant Subsidiary or for any substantial part of the Company's, any Subsidiary Guarantor's or any Foreign Significant Subsidiary's property; or (c) orders the -36- 44 winding up or liquidation of the Company or any Subsidiary Guarantor or any Foreign Significant Subsidiary; or any similar relief is granted under any foreign laws and the order or decree remains unstayed and in effect for 60 days; (ix) any judgment or decree for the payment of money in excess of $10 million at the time is entered against the Company or any Restricted Subsidiary and is not discharged and either (a) an enforcement proceeding has been commenced by any creditor upon such judgment or decree or (b) there is a period of 60 days following the entry of such judgment or decree during which such judgment or decree is not discharged, waived or the execution thereof stayed and, in the case of (a) or (b), such default continues for 10 days; (x) any Subsidiary Guaranty is held to be unenforceable or invalid or ceases to be in full force and effect; (xi) the Required Redemption has not been consummated by the latest date provided therefor in Section 4.16; or (xii) the Company shall breach any material representation, warranty or agreement set forth in, or otherwise not comply with the provisions of, the Escrow Agreement, or the Escrow Agreement shall be held in any judicial proceeding to be unenforceable or invalid or shall cease for any reason to be in full force and effect (except as a result of the complete performance thereof). The foregoing shall constitute Events of Default whatever the reason for any such Event of Default and whether it is voluntary or involuntary or is effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body. The term "Bankruptcy Law" means Title 11, United States Code, or any similar Federal or state law for the relief of debtors. The term "Custodian" means any receiver, trustee, assignee, liquidator, custodian or similar official under any Bankruptcy Law. SECTION 6.02. Acceleration. If an Event of Default (other than an Event of Default specified in Section 6.01(vii) or (viii) with respect to the Company or any Subsidiary Guarantor) occurs and is continuing, the Trustee by notice to the Company, or the Holders of at least 25% in principal amount of the Securities by written notice to the Company and the Trustee, may declare the principal of and accrued interest on all the Securities to be due and payable. Upon such a declaration, such principal and interest shall be due and payable immediately. If an Event of Default specified in Section 6.01(vii) or (viii) with respect to the Company or any Subsidiary Guarantor occurs, the principal of and interest on all the Securities shall ipso facto 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 Securities by written notice to the Trustee may rescind an acceleration and its consequences if the rescission would not conflict with any judgment or decree and if all existing Events of Default have been cured or waived except nonpayment of principal or interest that has become due solely because of acceleration. No such rescission shall affect any subsequent Default or impair any right consequent thereto. -37- 45 SECTION 6.03. Other Remedies. If an Event of Default occurs and is continuing, the Trustee may pursue any available remedy to collect the payment of principal of or interest on the Securities or to enforce the performance of any provision of the Securities or this Indenture. The Trustee may maintain a proceeding even if it does not possess any of the Securities or does not produce any of them in the proceeding. A delay or omission by the Trustee or any Holder in exercising any right or remedy accruing upon an Event of Default shall not impair the right or remedy or constitute a waiver of or acquiescence in the Event of Default. No remedy is exclusive of any other remedy. All available remedies are cumulative. SECTION 6.04. Waiver of Past Defaults. The Holders of a majority in principal amount of the Securities by written notice to the Trustee may waive an existing Default and its consequences except (i) a Default in the payment of the principal of or interest on a Security or (ii) a Default in respect of a provision that under Section 9.02 cannot be amended without the consent of each Holder affected. When a Default is waived, it is deemed cured, but no such waiver shall extend to any subsequent or other Default or impair any consequent right. SECTION 6.05. Control by Majority. The Holders of a majority in principal amount of the Securities may direct the time, method and place of conducting any proceeding for any remedy available to the Trustee or of exercising any trust or power conferred on the Trustee. However, the Trustee may refuse to follow any direction that conflicts with law or this Indenture or, subject to Section 7.01, that the Trustee determines is unduly prejudicial to the rights of other Holders, it being understood that the Trustee shall have no duty to ascertain whether or not such actions or forebearances are unduly prejudicial to such Holders, or would involve the Trustee in personal liability; provided, however, that the Trustee may take any other action deemed proper by the Trustee that is not inconsistent with such direction. Prior to taking any action hereunder, the Trustee shall be entitled to indemnification satisfactory to it in its sole discretion against all losses and expenses caused by taking or not taking such action. SECTION 6.06. Limitation on Suits. A Holder may not pursue any remedy with respect to this Indenture or the Securities unless: (1) the Holder gives to the Trustee written notice stating that an Event of Default is continuing; (2) the Holders of at least 25% in principal amount of the Securities make a written request to the Trustee to pursue the remedy; (3) such Holder or Holders offer to the Trustee reasonable security or indemnity against any loss, liability or expense; (4) the Trustee does not comply with the request within 60 days after receipt of the request and the offer of security or indemnity; and (5) the Holders of a majority in principal amount of the Securities do not give the Trustee a direction inconsistent with the request during such 60-day period. -38- 46 A Holder may not use this Indenture to prejudice the rights of another Holder or to obtain a preference or priority over another Holder. SECTION 6.07. Rights of Holders To Receive Payment. Notwithstanding any other provision of this Indenture, the right of any Holder to receive payment of principal of and interest on the Securities held by such Holder on or after the respective due dates expressed in the Securities, or to bring suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. SECTION 6.08. Collection Suit by Trustee. If an Event of Default in payment of interest or principal specified in Section 6.01(i) or (ii) occurs and is continuing, the Trustee may recover judgment in its own name and as trustee of an express trust against the Company for the whole amount of principal and interest remaining unpaid (together with interest on such unpaid interest to the extent lawful) and the amounts provided for in Section 7.07. SECTION 6.09. Trustee May File Proofs of Claim. The Trustee may file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee and the Holders allowed in any judicial proceedings relative to the Company, its creditors or its property and, unless prohibited by law or applicable regulations, may vote on behalf of the Holders in any election of a trustee in bankruptcy or other Person performing similar functions, and any Custodian in any such judicial proceeding is hereby authorized by each Holder to make payments to the Trustee and, in the event that the Trustee shall consent to the making of such payments directly to the Holders, to pay to the Trustee any amount due it for the reasonable compensation, expenses, disbursements and advances of the Trustee, its agents and its counsel, and any other amounts due the Trustee under Section 7.07. SECTION 6.10. Priorities. If the Trustee collects any money or property pursuant to this Article 6, it shall pay out the money or property in the following order: FIRST: to the Trustee for amounts due under Section 7.07; SECOND: to holders of Senior Indebtedness to the extent required by Article 10; THIRD: to Holders for amounts due and unpaid on the Securities for principal and interest, ratably, without preference or priority of any kind, according to the amounts due and payable on the Securities for principal and interest, respectively; and FOURTH: to the Company. The Trustee may fix a record date and payment date for any payment to Holders pursuant to this Section. At least 15 days before such record date, the Company shall mail to each Holder and the Trustee a notice that states the record date, the payment date and amount to be paid. -39- 47 SECTION 6.11. Undertaking for Costs. In any suit for the enforcement of any right or remedy under this Indenture or in any suit against the Trustee for any action taken or omitted by it as Trustee, a court in its discretion may require the filing by any party litigant in the suit of an undertaking to pay the costs of the suit, and the court in its discretion may assess reasonable costs, including reasonable attorneys' fees, against any party litigant in the suit, having due regard to the merits and good faith of the claims or defenses made by the party litigant. This Section does not apply to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit by Holders of more than 10% in principal amount of the Securities. SECTION 6.12. Waiver of Stay or Extension Laws. The Company (to the extent it may lawfully do so) shall not at any time insist upon, or plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, which may affect the covenants or the performance of this Indenture; and the Company (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of any such law, and shall not hinder, delay or impede the execution of any power herein granted to the Trustee, but shall suffer and permit the execution of every such power as though no such law had been enacted. ARTICLE 7 TRUSTEE SECTION 7.01. Duties of Trustee. (i) If an Event of Default has occurred and is continuing, the Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent Person would exercise or use under the circumstances in the conduct of such Person's own affairs. (ii) Except during the continuance of an Event of Default: (a) the Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (b) in the absence of bad faith on its part, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture. However, the Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (iii) The Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own wilful misconduct, except that: (a) this Section 7.01(iii) does not limit the effect of Section 7.01(ii); (b) the Trustee shall not be liable for any error of judgment made in good faith by a Trust Officer unless it is proved that the Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 6.05. (iv) Every provision of this Indenture that in any way relates to the Trustee is subject to Sections 7.01(i), (ii) and (iii). -40- 48 (v) The Trustee shall not be liable for interest on any money received by it except as the Trustee may agree in writing with the Company. (vi) Money held in trust by the Trustee need not be segregated from other funds except to the extent required by law. (vii) No provision of this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. (viii) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 7.02. Rights of Trustee. (i) The Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper person. The Trustee need not investigate any fact or matter stated in the document. (ii) Before the Trustee acts or refrains from acting, it may require an Officers' Certificate or an Opinion of Counsel. The Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on the Officers' Certificate or Opinion of Counsel. (iii) The Trustee may act through agents and shall not be responsible for the misconduct or negligence of any agent appointed with due care. (iv) The Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Trustee's conduct does not constitute wilful misconduct or negligence. (v) The Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Securities shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. (vi) The Trustee shall not be required to give any bond or surety in respect of the performance of its powers and duties hereunder; (vii) The Trustee shall not be bound to ascertain or inquire as to the performance or observance of any covenants, conditions, or agreements on the part of the Company, except as otherwise set forth herein, but the Trustee may require of the Company full information and advice as to the performance of the covenants, conditions and agreements contained herein; -41- 49 (viii) The permissive rights of the Trustee to do things enumerated in this Indenture shall not be construed as a duty and the Trustee shall not be answerable for other than its negligence or willful misconduct; (ix) Except for (i) a default under Sections 6.01(i) or (ii) hereof, or (ii) any other event of which the Trustee has "actual knowledge" and which event, with the giving of notice or the passage of time or both, would constitute an Event of Default under this Indenture, the Trustee shall not be deemed to have notice of any default or Event of Default unless specifically notified in writing of such event by the Company or the Holders of not less than 25% in aggregate principal amount of the Securities then outstanding; as used herein, the term "actual knowledge" means the actual fact or statement of knowing, without any duty to make any investigation with regard thereto. SECTION 7.03. Individual Rights of Trustee. The Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or co-paying agent may do the same with like rights. However, the Trustee must comply with Sections 7.10 and 7.11. SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Securities, it shall not be accountable for the Company's use of the proceeds from the Securities, and it shall not be responsible for any statement of the Company in this Indenture or in any document issued in connection with the sale of the Securities or in the Securities other than the Trustee's certificate of authentication. SECTION 7.05. Notice of Defaults. If a Default occurs and is continuing and if it is known to the Trustee, the Trustee shall mail to each Holder notice of the Default within 90 days after it occurs. Except in the case of a Default in payment of principal of or interest on any Security (including payments pursuant to the mandatory redemption provisions of such Security, if any), the Trustee may withhold the notice if and so long as the Trustee in good faith determines that withholding the notice is in the interests of Holders. SECTION 7.06. Reports by Trustee to Holders. At the expense of the Company, as promptly as practicable after each August 15 beginning with the August 15 following the date of this Indenture, and in any event prior to October 15 in each year, the Trustee shall mail to each Holder a brief report dated as of August 15 that complies with Section 313(a) of the TIA. The Trustee also shall comply with Section 313(b) of the TIA. A copy of each report at the time of its mailing to Holders shall be filed with the SEC and each stock exchange (if any) on which the Securities are listed. The Company agrees to notify promptly the Trustee whenever the Securities become listed on any stock exchange and of any delisting thereof. SECTION 7.07. Compensation and Indemnity. The Company shall pay to the Trustee from time to time, and the Trustee shall be entitled to, reasonable compensation for its services. The Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Company shall reimburse the Trustee upon request -42- 50 for all reasonable out-of-pocket expenses incurred or made by it, including costs of collection, in addition to the compensation for its services. Such expenses shall include the reasonable compensation and expenses, disbursements and advances of the Trustee's agents, counsel, accountants and experts. The Company shall indemnify the Trustee and its agents, officers, directors and employees for, and hold them harmless against, any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder. The Trustee shall notify the Company promptly of any claim for which it may seek indemnity. Failure by the Trustee to so notify the Company shall not relieve the Company of its obligations hereunder. The Company shall defend the claim and the Trustee may have separate counsel and the Company shall pay the fees and expenses of such counsel. The Company need not reimburse any expense or indemnify against any loss, liability or expense incurred by the Trustee through the Trustee's own wilful misconduct or negligence. The Company need not pay for any settlement made by the Trustee without the Company's consent, such consent not to be unreasonably withheld. To secure the Company's payment obligations in this Section, the Trustee shall have a Lien prior to the Securities on all money or property held or collected by the Trustee other than money or property held in trust to pay principal of and interest on particular Securities. The Company's payment obligations pursuant to this Section shall survive the discharge of this Indenture. When the Trustee incurs expenses after the occurrence of a Default specified in Section 6.01(vii) or (viii) with respect to the Company, the expenses are intended to constitute expenses of administration under the Bankruptcy Law. SECTION 7.08. Replacement of Trustee. The Trustee may resign at any time by so notifying the Company. The Holders of a majority in principal amount of the Securities may remove the Trustee by so notifying the Trustee and may appoint a successor Trustee. The Company shall remove the Trustee if: (1) the Trustee fails to comply with Section 7.10; (2) the Trustee is adjudged bankrupt or insolvent; (3) a receiver or other public officer takes charge of the Trustee or its property; or (4) the Trustee otherwise becomes incapable of acting. If the Trustee resigns, is removed by the Company or by the Holders of a majority in principal amount of the Securities and such Holders do not reasonably promptly appoint a successor Trustee, or if a vacancy exists in the office of Trustee for any reason (the Trustee in such event being referred to herein as the "retiring Trustee"), the Company shall promptly appoint a successor Trustee. A successor Trustee shall deliver a written acceptance of its appointment to the retiring Trustee and to the Company. Thereupon the resignation or removal of the retiring Trustee shall become effective, and the successor Trustee shall have all the rights, powers and duties of the Trustee under this Indenture. The successor Trustee shall mail a -43- 51 notice of its succession to Holders. The retiring Trustee shall promptly transfer all property held by it as Trustee to the successor Trustee, subject to the Lien provided for in Section 7.07. If a successor Trustee does not take office within 60 days after the retiring Trustee resigns or is removed, the retiring Trustee or the Holders of 25% in principal amount of the Securities may petition any court of competent jurisdiction for the appointment of a successor Trustee. If the Trustee fails to comply with Section 7.10, any Holder may petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor Trustee. Notwithstanding the replacement of the Trustee pursuant to this Section, the Company's obligations under Section 7.07 shall continue for the benefit of the retiring Trustee. SECTION 7.09. Successor Trustee by Merger. If the Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation or banking association without any further act shall be the successor Trustee. In case at the time such successor or successors by merger, conversion or consolidation to the Trustee shall succeed to the trusts created by this Indenture any of the Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Securities so authenticated; and, in case at that time any of the Securities shall not have been authenticated, any successor to the Trustee may authenticate such Securities either in the name of any predecessor hereunder or in the name of the successor to the Trustee; and, in all such cases, such certificates shall have the full force which it is anywhere in the Securities or in this Indenture provided that the certificate of the Trustee shall have. SECTION 7.10. Eligibility; Disqualification. The Trustee shall at all times satisfy the requirements of Section 310(a) of the TIA. The Trustee shall have a combined capital and surplus of at least $50 million as set forth in its most recent published annual report of condition. The Trustee shall comply with Section 310(b) of the TIA; provided, however, that there shall be excluded from the operation of Section 310(b)(1) of the TIA any indenture or indentures under which other securities or certificates of interest or participation in other securities of the Company are outstanding if the requirements for such exclusion set forth in Section 310(b)(1) of the TIA are met. SECTION 7.11. Preferential Collection of Claims Against Company. The Trustee shall comply with Section 311(a) of the TIA, excluding any creditor relationship listed in Section 311(b) of the TIA. A Trustee who has resigned or been removed shall be subject to Section 311(a) of the TIA to the extent indicated. -44- 52 ARTICLE 8 DISCHARGE OF INDENTURE; DEFEASANCE SECTION 8.01. Discharge of Liability on Securities; Defeasance. (i) When (a) the Company delivers to the Trustee all outstanding Securities (other than Securities replaced pursuant to Section 2.06) for cancellation or (b) all outstanding Securities have become due and payable, whether at maturity or as a result of the mailing of a notice of redemption pursuant to Article 3 hereof and the Company irrevocably deposits with the Trustee funds sufficient to pay at maturity or upon redemption all outstanding Securities, including interest thereon (other than Securities replaced pursuant to Section 2.06), and, if in either case, the Company pays all other sums payable hereunder by the Company, then this Indenture shall, subject to Sections 8.01(iii) and 8.06, cease to be of further effect. The Trustee shall acknowledge satisfaction and discharge of this Indenture on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel and at the cost and expense of the Company. (ii) Subject to Sections 8.01(iii), 8.02 and 8.06, the Company at any time may terminate (a) all its obligations under the Securities and this Indenture ("legal defeasance option") or (b) its obligations under Sections 4.02 (to the extent that the failure to comply with such Section 4.02 shall not violate the TIA), 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.11, 4.12, 4.13, 4.14, 4.15 and 4.16 or Article 5 and the related operation of Sections 6.01(iii), (iv), (v), (vi), (ix) and (xi) ("covenant defeasance option"). The Company may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Company exercises its legal defeasance option, payment of the Securities may not be accelerated because of an Event of Default. If the Company exercises its covenant defeasance option, payment of the Securities may not be accelerated because of an Event of Default specified in Sections 6.01(iii), (iv), (v), (vi), (ix) and (xi) (except to the extent covenants or agreements referenced in such Sections remain applicable). Upon satisfaction of the conditions set forth herein and upon written request of the Company, the Trustee shall acknowledge in writing the discharge of those obligations that the Company terminates. (iii) Notwithstanding clauses (i) and (ii) above, the Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 7.07, 7.08, 8.04, 8.05 and 8.06 shall survive until the Securities have been paid in full. Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall survive. SECTION 8.02. Conditions to Defeasance. The Company may exercise its legal defeasance option or its covenant defeasance option only if: (i) the Company irrevocably deposits in trust with the Trustee money or U.S. Government Obligations for the payment of principal and interest on the Securities to maturity or redemption, as the case may be; -45- 53 (ii) the Company delivers to the Trustee a certificate from a nationally recognized firm of independent accountants expressing their opinion that the payments of principal and interest when due and without reinvestment on the deposited U.S. Government Obligations plus any deposited money without investment will provide cash at such times and in such amounts as will be sufficient to pay principal and interest when due on all the Securities to maturity or redemption, as the case may be; (iii) 123 days pass after the deposit is made and during the 123-day period no Default specified in Section 6.01(vii) or (viii) with respect to the Company occurs which is continuing at the end of the period; (iv) no Default has occurred and is continuing on the date of such deposit and after giving effect thereto; (v) the deposit does not constitute a default under any other agreement binding on the Company and is not prohibited by Article 10 or 11; (vi) the Company delivers to the Trustee an Opinion of Counsel to the effect that the trust resulting from the deposit does not constitute, or is qualified as, a regulated investment company under the Investment Company Act of 1940; (vii) in the case of the legal defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel stating that (a) the Company has received from, or there has been published by, the Internal Revenue Service a ruling, or (b) since the date of this Indenture there has been a change in the applicable federal income tax law, in either case, to the effect that, and based thereon such Opinion of Counsel shall confirm that, the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such legal defeasance had not occurred; (viii) in the case of the covenant defeasance option, the Company shall have delivered to the Trustee an Opinion of Counsel to the effect that the Holders will not recognize income, gain or loss for federal income tax purposes as a result of such covenant defeasance and will be subject to federal income tax on the same amounts, in the same manner and at the same times as would have been the case if such covenant defeasance had not occurred; and (ix) the Company delivers to the Trustee an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent to the defeasance and discharge of the Securities as contemplated by this Article 8 have been complied with. Before or after a deposit, the Company may make arrangements satisfactory to the Trustee for the redemption of Securities at a future date in accordance with Article 3. SECTION 8.03. Application of Trust Money. The Trustee shall hold in trust money or U.S. Government Obligations deposited with it pursuant to this Article 8. It shall apply the deposited money and the money from U.S. Government Obligations through -46- 54 the Paying Agent and in accordance with this Indenture to the payment of principal of and interest on the Securities. Money and securities so held in trust are not subject to Article 10. SECTION 8.04. Repayment to Company. The Trustee and the Paying Agent shall promptly turn over to the Company upon request any excess money or securities held by them at any time. Subject to any applicable abandoned property law, the Trustee and the Paying Agent shall pay to the Company upon request any money held by them for the payment of principal or interest that remains unclaimed for two years, and, thereafter, Holders entitled to the money must look to the Company for payment as general creditors. SECTION 8.05. Indemnity for Government Obligations. The Company shall pay and shall indemnify the Trustee against any tax, fee or other charge imposed on or assessed against deposited U.S. Government Obligations or the principal and interest received on such U.S. Government Obligations. SECTION 8.06. Reinstatement. If the Trustee or Paying Agent is unable to apply any money or U.S. Government Obligations in accordance with this Article 8 by reason of any legal proceeding or by reason of any order or judgment of any court or governmental authority enjoining, restraining or otherwise prohibiting such application, the Company's obligations under this Indenture and the Securities shall be revived and reinstated as though no deposit had occurred pursuant to this Article 8 until such time as the Trustee or Paying Agent is permitted to apply all such money or U.S. Government Obligations in accordance with this Article 8; provided, however, that, if the Company has made any payment of interest on or principal of any Securities because of the reinstatement of its obligations, the Company shall be subrogated to the rights of the Holders of such Securities to receive such payment from the money or U.S. Government Obligations held by the Trustee or Paying Agent. ARTICLE 9 AMENDMENTS SECTION 9.01. Without Consent of Holders. The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture, the Subsidiary Guaranty, the Escrow Agreement or the Securities without notice to or consent of any Holder: (1) to cure any ambiguity, omission, defect or inconsistency; (2) to comply with Article 5; (3) to provide for uncertificated Securities in addition to or in place of certificated Securities; provided, however, that the uncertificated Securities are issued in registered form for purposes of Section 163(f) of the Code or in a manner such that the uncertificated Securities are described in Section 163(f)(2)(B) of the Code; -47- 55 (4) to make any change in Article 10 that would limit or terminate the benefits available to any holder of Senior Indebtedness (or Representatives therefor) under Articles 10 and 11; (5) to add guarantees with respect to the Securities or to secure the Securities; (6) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (7) to comply with any requirements of the SEC in connection with qualifying this Indenture under the TIA; or (8) to make any change that does not adversely affect the rights of any Holder. An amendment under this Section may not make any change that adversely affects the rights under Articles 10 and 11 of any holder of Senior Indebtedness then outstanding unless the holders of such Senior Indebtedness (or any group or representative thereof authorized to give a consent), consent to such change. After an amendment under this Section becomes effective, the Company or the Trustee at the Company's request and expense, shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.02. With Consent of Holders. The Company, the Subsidiary Guarantors and the Trustee may amend this Indenture, the Subsidiary Guaranty, the Escrow Agreement or the Securities without notice to any Holder but with the written consent of the Holders of at least a majority in principal amount of the Securities; provided, however, that no amendment may be made to Section 4.08 without the written consent of the Holders of at least 75% in principal amount of the Securities. However, without the consent of each Holder affected, an amendment may not: (1) reduce the amount of Securities whose Holders must consent to an amendment; (2) reduce the rate of or extend the time for payment of interest on any Security; (3) reduce the principal of or extend the Stated Maturity of any Security; (4) reduce the premium payable upon the redemption of any Security or change the time at which any Security may be redeemed in accordance with Article 3; (5) make any Security payable in money other than that stated in the Security; -48- 56 (6) make any change in Article 10 or 11 that adversely affects the rights of any Holder under Article 10 or 11; or (7) make any change in Section 6.04 or 6.07 or the second sentence of this Section. It shall not be necessary for the consent of the Holders under this Section to approve the particular form of any proposed amendment, but it shall be sufficient if such consent approves the substance thereof. An amendment under this Section may not make any change that adversely affects the rights under Article 10 or 11 of any holder of Senior Indebtedness or Senior Indebtedness of Subsidiary Guarantors then outstanding unless the holders of such Senior Indebtedness or Senior Indebtedness of Subsidiary Guarantors, as the case may be (or any group or representative thereof authorized to give a consent), consent to such change. After an amendment under this Section becomes effective, the Company, or the Trustee at the Company's request and expense, shall mail to Holders a notice briefly describing such amendment. The failure to give such notice to all Holders, or any defect therein, shall not impair or affect the validity of an amendment under this Section. SECTION 9.03. Compliance with Trust Indenture Act. Every amendment to this Indenture or the Securities shall comply with the TIA as then in effect. SECTION 9.04. Revocation and Effect of Consents and Waivers. A consent to an amendment or a waiver by a Holder of a Security shall bind the Holder and every subsequent Holder of that Security or portion of the Security that evidences the same debt as the consenting Holder's Security, even if notation of the consent or waiver is not made on the Security. However, any such Holder or subsequent Holder may revoke the consent or waiver as to such Holder's Security or portion of the Security if the Trustee receives the notice of revocation before the date the amendment or waiver becomes effective. After an amendment or waiver becomes effective, it shall bind every Holder. The Company may, but shall not be obligated to, fix a record date for the purpose of determining the Holders entitled to give their consent or take any other action described above or required or permitted to be taken pursuant to this Indenture. If a record date is fixed, then notwithstanding the immediately preceding paragraph, those Persons who were Holders at such record date (or their duly designated proxies), and only those Persons, shall be entitled to give such consent or to revoke any consent previously given or to take any such action, whether or not such Persons continue to be Holders after such record date. No such consent shall be valid or effective for more than 120 days after such record date. SECTION 9.05. Notation on or Exchange of Securities. If an amendment changes the terms of a Security, the Trustee may require the Holder of the Security to deliver it to the Trustee. The Trustee may place an appropriate notation on the Security regarding the changed terms and return it to the Holder. Alternatively, if the Company or the Trustee so determines, the Company, in exchange for the Security, shall issue and the Trustee shall authenticate a new Security that reflects the changed terms. Failure to make the appropriate notation or to issue a new Security shall not affect the validity of such amendment. -49- 57 SECTION 9.06. Trustee To Sign Amendments. The Trustee shall sign any amendment authorized pursuant to this Article 9 if the amendment does not adversely affect the rights, duties, liabilities or immunities of the Trustee. If it does, the Trustee may but need not sign it. In signing such amendment the Trustee shall be entitled to receive indemnity reasonably satisfactory to it and to receive, and (subject to Section 7.01) shall be fully protected in relying upon, an Officers' Certificate and an Opinion of Counsel stating that such (i) amendment is authorized or permitted by this Indenture and that all conditions precedent to the execution, delivery and performance of such amendment have been satisfied; (ii) the Company has all necessary corporate power and authority to execute and deliver the amendment and that the execution, delivery and performance of such amendment has been duly authorized by all necessary corporate action; (iii) the execution, delivery and performance of the amendment do not conflict with, or result in the breach of or constitute a default under any of the terms, conditions or provisions of (a) this Indenture, (b) the Certificate of Incorporation or By-laws of the Company, (c) any law or regulation applicable to the Company, (d) any material order, writ, injunction or decree of any court or governmental instrumentality applicable to the Company or (e) any material agreement or instrument to which the Company is subject; (iv) such amendment has been duly and validly executed and delivered by the Company, and this Indenture together with such amendment constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency or similar laws affecting the enforcement of creditors' rights generally and general equitable principles; and (v) this Indenture together with such amendment complies with the TIA. SECTION 9.07. Payment for Consent. Neither the Company nor any Affiliate of the Company shall, directly or indirectly, pay or cause to be paid any consideration, whether by way of interest, fee or otherwise, to any Holder for or as an inducement to any consent, waiver or amendment of any of the terms or provisions of this Indenture or the Securities unless such consideration is offered to be paid to all Holders that so consent, waive or agree to amend in the time frame set forth in solicitation documents relating to such consent, waiver or agreement. ARTICLE 10 SUBORDINATION OF SECURITIES SECTION 10.01. Agreement To Subordinate. The Company agrees, and each Holder by accepting a Security agrees, that the Indebtedness evidenced by the Securities is subordinated in right of payment, to the extent and in the manner provided in this Article 10, to the prior payment of all Senior Indebtedness and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness. The Securities shall in all respects rank pari passu with all other Senior Subordinated Indebtedness of the Company and only Indebtedness of the Company which is Senior Indebtedness shall rank senior to the Securities in accordance with the provisions set forth herein. All provisions of this Article 10 shall be subject to Section 10.12. SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution of the assets of the Company to creditors upon a total or partial liquidation or -50- 58 a total or partial dissolution of the Company or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Company or its property: (1) holders of Senior Indebtedness shall be entitled to receive payment in full of the Senior Indebtedness before Holders shall be entitled to receive any payment of principal of or interest on the Securities; and (2) until the Senior Indebtedness is paid in full, any distribution to which Holders would be entitled but for this Article 10 shall be made to holders of Senior Indebtedness as their interests may appear, except that Holders may receive shares of stock and any debt securities that are subordinated to Senior Indebtedness to at least the same extent as the Securities. SECTION 10.03. Default on Senior Indebtedness. The Company may not pay the principal of or interest on the Securities, or make any deposit pursuant to Section 8.01, and may not repurchase, redeem or otherwise retire any Securities (collectively, "pay the Securities") if (i) any Senior Indebtedness is not paid when due or (ii) any other default on Senior Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated in accordance with its terms unless, in either case, (a) the default has been cured or waived and any such acceleration has been rescinded or (b) such Senior Indebtedness has been paid in full. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Company may not pay the Securities for a period (a "Payment Blockage Period") commencing upon the receipt by the Company and the Trustee of written notice of such default from the Representative of any Designated Senior Indebtedness specifying an election to effect a Payment Blockage Period (a "Blockage Notice") and ending 179 days thereafter (or earlier, if such Payment Blockage Period is terminated (i) by written notice to the Trustee and the Company from the Person or Persons who gave such Blockage Notice, (ii) by repayment in full of such Designated Senior Indebtedness or (iii) because the default giving rise to such Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section), unless the holders of such Designated Senior Indebtedness or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness, the Company may resume payments on the Securities after such Payment Blockage Period. Not more than one Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness during such period. SECTION 10.04. Acceleration of Payment of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company or the Trustee shall promptly notify the holders of the Designated Senior Indebtedness (or their Representatives) of the acceleration. SECTION 10.05. When Distribution Must Be Paid Over. If a distribution is made to Holders that because of this Article 10 should not have been made to them, the Holders who receive the distribution shall hold it in trust for holders of Senior Indebtedness and pay it over to them as their interests may appear. -51- 59 SECTION 10.06. Subrogation. After all Senior Indebtedness is paid in full and until the Securities are paid in full, Holders shall be subrogated to the rights of holders of Senior Indebtedness to receive distributions applicable to Senior Indebtedness. A distribution made under this Article 10 to holders of Senior Indebtedness which otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Company on Senior Indebtedness. SECTION 10.07. Relative Rights. This Article 10 defines the relative rights of Holders and holders of Senior Indebtedness. Nothing in this Indenture shall: (1) impair, as between the Company and Holders, the obligation of the Company, which is absolute and unconditional, to pay principal of and interest on the Securities in accordance with their terms; or (2) prevent the Trustee or any Holder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness to receive distributions otherwise payable to Holders. SECTION 10.08. Subordination May Not Be Impaired by Company. No right of any holder of Senior Indebtedness to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by the Company or by its failure to comply with this Indenture. SECTION 10.09. Rights of Trustee and Paying Agent. Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives written notice satisfactory to it that payments may not be made under this Article 10. The Company, the Registrar or co-registrar, the Paying Agent, a Representative of holders of or a holder or holders holding a majority of Senior Indebtedness may give the written notice; provided, however, that, if holders of Senior Indebtedness have a Representative, only such Representative may give the notice. The Trustee, in its individual or any other capacity, may hold Senior Indebtedness with the same rights it would have if it were not Trustee. The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 10 with respect to any Senior Indebtedness which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 10 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 10.10. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness, the distribution may be made and the notice given to their Representative (if any). SECTION 10.11. Article 10 Not To Prevent Events of Default or Limit Right To Accelerate. The failure to make a payment pursuant to the Securities by reason of any provision in this Article 10 shall not be construed as preventing the occurrence of a -52- 60 Default. Nothing in this Article 10 shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of the Securities. SECTION 10.12. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article 10, and none of the Holders shall be obligated to pay over any such amount to the Company or any holder of Senior Indebtedness of the Company or any other creditor of the Company. SECTION 10.13. Trustee Entitled To Rely. Upon any payment or distribution pursuant to this Article 10, the Trustee and the Holders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders or (iii) upon the Representatives for the holders of Senior Indebtedness for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness and other Indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 10. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness to participate in any payment or distribution pursuant to this Article 10, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 10, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 10. SECTION 10.14. Trustee To Effectuate Subordination. Each Holder by accepting a Security authorizes and directs the Trustee on his, her or its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness as provided in this Article 10 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 10.15. Trustee Not Fiduciary for Holders of Senior Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the Company or any other Person money or assets to which any holders of Senior Indebtedness shall be entitled by virtue of this Article 10 or otherwise. SECTION 10.16. Reliance by Holders of Senior Indebtedness on Subordination Provisions. Each Holder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness, whether such Senior Indebtedness was created or acquired before or after the issuance of the Securities, to acquire and continue to -53- 61 hold, or to continue to hold, such Senior Indebtedness and such holder of Senior Indebtedness shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness. ARTICLE 11 SUBSIDIARY GUARANTIES; SUBORDINATION OF SUBSIDIARY GUARANTIES SECTION 11.01. Subsidiary Guaranties. Subject to the provisions of this Article 11, each Subsidiary Guarantor hereby unconditionally guarantees to each Holder and to the Trustee on behalf of the Holders (i) the due and punctual payment of principal of and interest on each Security when and as the same shall become due and payable whether at the date of maturity or by declaration of acceleration or otherwise, (ii) the due and punctual payment of interest on the overdue principal of and interest, if any, on the Securities, to the extent lawful, and (iii) the due and punctual performance of all other obligations of the Company to the Holders or the Trustee, all in accordance with the terms of the Securities and this Indenture (the "Subsidiary Guaranties"). In case of the failure of the Company punctually to make any such principal or interest payment, the Subsidiary Guarantors hereby agree to cause any such payment to be made punctually when and as the same shall become due and payable, whether at the date of maturity or by declaration of acceleration or otherwise, and as if such payment were made by the Company. Each Subsidiary Guarantor hereby agrees that its obligations hereunder shall be unconditional, irrespective of and unaffected by the validity, regularity or enforceability of the Securities or this Indenture, or of any amendment thereto or hereto, the absence of any action to enforce the same, the waiver or consent by any Holder or by the Trustee with respect to any provisions thereof or of this Indenture, the recovery of any judgment against the Company or any action to enforce the same or any other circumstance which might otherwise constitute a legal or equitable discharge or defense of a guarantor. The Company hereby waives diligence, presentment, demand of payment, filing of claims with a court in the event of merger, insolvency or bankruptcy of the Company, any right to require a proceeding first against the Company, protest or notice with respect to the Securities or the Indebtedness evidenced thereby and all demands whatsoever, and covenants that the Subsidiary Guaranties will not be discharged except by complete performance of the obligations contained in the Securities, in this Indenture and pursuant to the Subsidiary Guaranties. The Subsidiary Guarantors further agree that, as between the Subsidiary Guarantors, on the one hand, and Holders and the Trustee, on the other hand, (i) for purposes of the Subsidiary Guaranties, the maturity of the obligations guaranteed by the Subsidiary Guaranties may be accelerated as provided in Article 6, notwithstanding any stay, injunction or other prohibition preventing such acceleration in respect of the obligations guaranteed thereby, and (ii) in the event of any acceleration of such obligations (whether or not due and payable), such obligations shall forthwith become due and payable by the Subsidiary Guarantors for purposes of the Subsidiary Guaranties. The Subsidiary Guaranties shall continue to be effective or shall be reinstated, as the case may be, if at any time any payment, or any part thereof, of principal of or interest on any of the Securities is rescinded or must otherwise be returned by the Holders or the Trustee upon the insolvency, bankruptcy or reorganization of the Company or the Subsidiary Guarantors or otherwise, all as though such payment had not been made. -54- 62 The Subsidiary Guarantors shall be subrogated to all rights of the Holders against the Company in respect of any amounts paid by the Subsidiary Guarantors pursuant to the provisions of the Subsidiary Guaranties or this Indenture; provided, however, that the Subsidiary Guarantors shall not be entitled to enforce or to receive any payments until the principal of and interest on all Securities issued hereunder shall have been paid in full. The Subsidiary Guaranties are specifically designated by the Subsidiary Guarantors as Indebtedness of the Subsidiary Guarantors for purposes of this Indenture. Any term or provision of this Indenture to the contrary notwithstanding, the maximum aggregate amount of the obligations guaranteed hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that can be hereby guaranteed without rendering this Indenture, as it relates to such Subsidiary Guarantor, voidable under the applicable law relating to fraudulent conveyance or fraudulent transfer or similar laws affecting the rights of creditors generally. SECTION 11.02. Contribution. In order to provide for just and equitable contribution among the Subsidiary Guarantors, the Subsidiary Guarantors agree, inter se, that in the event any payment or distribution is made by a Subsidiary Guarantor (a "Funding Subsidiary Guarantor") under the Guaranty, such Funding Subsidiary Guarantor shall be entitled to a contribution form all other Subsidiary Guarantors in a pro rata amount based upon the Adjusted Net Assets of each Subsidiary Guarantor (including the Funding Subsidiary Guarantor) for all payments, damanges and expenses incurred by that Funding Subsidiary Guarantor in discharging the Company's obligations with respect to the Securities or any other Subsidiary Guarantor's obligations with respect to the Guaranty. "Adjusted Net Assets" of such Subsidiary Guarantor at any date shall mean the lesser of the amount by which (x) the fair value of the property of such Subsidiary Guarantor exceeds the total amount of liabilities, including, without limitation, contingent liabilities (after giving effect to all other fixed and contingent liabiities Incurred or assumed on such date), but excluding liabilities under the Guaranty, of such Subsidiary Guarantor at such date and (y) the present fair saleable value of the assets of such Subsidiary Guarantor at such date exceeds the amount that will be required to pay the probable liability of such Subsidiary Guarantor on its debts including, without limitation, Senior Indebtedness of Subsidiary Guarantors (after giving effect to all other fixed and contingent liabilities Incurred or assumed on such date and after giving effect to any collection from any Subsidiary of such Subsidiary Guarantor in respect of the obligations of such Subsidiary under the Guaranty), excluding debt in respect of the Guaranty of such Subsidiary Guarantor, as they become absolute and matured. SECTION 11.03. Agreement To Subordinate. The Subsidiary Guarantors agree, and each Holder, by accepting a Security, agrees, that the Subsidiary Guaranties are subordinated in right of payment, to the extent and in the manner provided in this Article 11, to the prior payment of all Senior Indebtedness of Subsidiary Guarantors and that the subordination is for the benefit of and enforceable by the holders of Senior Indebtedness of Subsidiary Guarantors. The Securities shall in all respects rank pari passu with all other Senior Subordinated Indebtedness of Subsidiary Guarantors and only Indebtedness of Subsidiary Guarantors which is Senior Indebtedness of Subsidiary Guarantors shall rank senior to the Securities in accordance with the provisions set forth herein. All provisions of this Article 11 shall be subject to Section 11.14. -55- 63 SECTION 11.04. Liquidation, Dissolution, Bankruptcy. Upon any payment or distribution of the assets of the Subsidiary Guarantors to creditors upon a total or partial liquidation or a total or partial dissolution of the Subsidiary Guarantors, or in a bankruptcy, reorganization, insolvency, receivership or similar proceeding relating to the Subsidiary Guarantors or their property: (1) holders of Senior Indebtedness of Subsidiary Guarantors shall be entitled to receive payment in full of the Senior Indebtedness of Subsidiary Guarantors before Holders shall be entitled to receive any payment of principal of or interest on the Securities pursuant to the Subsidiary Guaranties; and (2) until the Senior Indebtedness of Subsidiary Guarantors is paid in full, any distribution to which Holders would be entitled but for this Article 11 shall be made to holders of Senior Indebtedness of Subsidiary Guarantors as their interests may appear, except that Holders may receive shares of stock and any debt securities that are subordinated to Senior Indebtedness of Subsidiary Guarantors to at least the same extent as under the Subsidiary Guaranties. SECTION 11.05. Default on Senior Indebtedness of Subsidiary Guarantors. The Subsidiary Guarantors may not pay the principal of or interest on the Securities pursuant to the Subsidiary Guaranties if (i) any Senior Indebtedness of Subsidiary Guarantors is not paid when due or (ii) any other default on Senior Indebtedness of Subsidiary Guarantors occurs and the maturity of such Senior Indebtedness of Subsidiary Guarantors is accelerated in accordance with its terms unless, in either case, (a) the default has been cured or waived and any such acceleration has been rescinded or (b) such Senior Indebtedness of Subsidiary Guarantors has been paid in full. During the continuance of any default (other than a default described in clause (i) or (ii) of the preceding sentence) with respect to any Designated Senior Indebtedness of Subsidiary Guarantors pursuant to which the maturity thereof may be accelerated immediately without further notice (except such notice as may be required to effect such acceleration) or the expiration of any applicable grace periods, the Subsidiary Guarantors may not pay the Securities for a period (a "Subsidiary Guarantors Payment Blockage Period") commencing upon the receipt by the Subsidiary Guarantors and the Trustee of written notice of such default from the Representative of any Designated Senior Indebtedness of Subsidiary Guarantors specifying an election to effect a Subsidiary Guarantors Payment Blockage Period (a "Subsidiary Guarantors Blockage Notice") and ending 179 days thereafter (or earlier, if such Subsidiary Guarantors Payment Blockage Period is terminated (i) by written notice to the Trustee and the Subsidiary Guarantors from the Person or Persons who gave such Subsidiary Guarantors Blockage Notice, (ii) by repayment in full of such Designated Senior Indebtedness of Subsidiary Guarantors or (iii) because the default giving rise to such Subsidiary Guarantors Blockage Notice is no longer continuing). Notwithstanding the provisions described in the immediately preceding sentence (but subject to the provisions contained in the first sentence of this Section 11.05), unless the holders of such Designated Senior Indebtedness of Subsidiary Guarantors or the Representative of such holders shall have accelerated the maturity of such Designated Senior Indebtedness of Subsidiary Guarantors, the Subsidiary Guarantors may resume payments on the Securities pursuant to the Subsidiary Guaranties after such Payment Blockage Period. Not more than one Subsidiary Guarantors Blockage Notice may be given in any consecutive 360-day period, irrespective of the number of defaults with respect to Designated Senior Indebtedness of Subsidiary Guarantors during such period. -56- 64 SECTION 11.06. Acceleration of Payment of Securities. If payment of the Securities is accelerated because of an Event of Default, the Company shall promptly notify the holders of the Designated Senior Indebtedness of Subsidiary Guarantors (or their Representatives) of the acceleration. SECTION 11.07. When Distribution Must Be Paid Over. If a distribution is made to Holders that because of this Article 11 should not have been made to them, the Holders who receive the distribution shall hold it in trust for holders of Senior Indebtedness of Subsidiary Guarantors and pay it over to them as their interests may appear. SECTION 11.08. Subrogation. After all Senior Indebtedness is paid in full and until the Securities are paid in full, Holders shall be subrogated to the rights of holders of Senior Indebtedness of Subsidiary Guarantors to receive distributions applicable to Senior Indebtedness of Subsidiary Guarantors. A distribution made under this Article 11 to holders of Senior Indebtedness of Subsidiary Guarantors which otherwise would have been made to Holders is not, as between the Company and Holders, a payment by the Subsidiary Guarantors on Senior Indebtedness of Subsidiary Guarantors. SECTION 11.09. Relative Rights. This Article 11 defines the relative rights of Holders and holders of Senior Indebtedness of Subsidiary Guarantors. Nothing in this Indenture shall: (1) impair, as between the Subsidiary Guarantors and Holders, the obligation of the Subsidiary Guarantors, which is absolute and unconditional, to pay principal of and interest on the Securities pursuant to the Subsidiary Guaranties in accordance with their terms; or (2) prevent the Trustee or any Holder from exercising its available remedies upon a Default, subject to the rights of holders of Senior Indebtedness of Subsidiary Guarantors to receive distributions otherwise payable to Holders. SECTION 11.10. Subordination May Not Be Impaired by the Subsidiary Guarantors. No right of any holder of Senior Indebtedness of Subsidiary Guarantors to enforce the subordination of the Indebtedness evidenced by the Securities shall be impaired by any act or failure to act by any Subsidiary Guarantor or by its failure to comply with this Indenture. SECTION 11.11. Rights of Trustee and Paying Agent. Notwithstanding Section 11.05, the Trustee or Paying Agent may continue to make payments on the Securities and shall not be charged with knowledge of the existence of facts that would prohibit the making of any such payments unless, not less than two Business Days prior to the date of such payment, a Trust Officer of the Trustee receives notice satisfactory to it that payments may not be made under this Article 11. The Subsidiary Guarantors, the Registrar or co-registrar, the Paying Agent, a Representative of holders of, or holders holding a majority of Senior Indebtedness may give the notice; provided, however, that, if holders of Senior Indebtedness of Subsidiary Guarantors have a Representative, only such Representative may give the notice. The Trustee, in its individual or any other capacity, may hold Senior Indebtedness of Subsidiary Guarantors with the same rights it would have if it were not Trustee. -57- 65 The Registrar and co-registrar and the Paying Agent may do the same with like rights. The Trustee shall be entitled to all the rights set forth in this Article 11 with respect to any Senior Indebtedness of Subsidiary Guarantors which may at any time be held by it, to the same extent as any other holder of Senior Indebtedness of Subsidiary Guarantors; and nothing in Article 7 shall deprive the Trustee of any of its rights as such holder. Nothing in this Article 11 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 7.07. SECTION 11.12. Distribution or Notice to Representative. Whenever a distribution is to be made or a notice given to holders of Senior Indebtedness of Subsidiary Guarantors, the distribution may be made and the notice given to their Representative (if any). SECTION 11.13. Article 11 Not To Prevent Events of Default or Limit Right To Accelerate. The failure to make a payment pursuant to the Securities by reason of any provision in this Article 11 shall not be construed as preventing the occurrence of a Default. Nothing in this Article 11 shall have any effect on the right of the Holders or the Trustee to accelerate the maturity of the Securities. SECTION 11.14. Trust Moneys Not Subordinated. Notwithstanding anything contained herein to the contrary, payments from money or the proceeds of U.S. Government Obligations held in trust under Article 8 by the Trustee for the payment of principal of and interest on the Securities shall not be subordinated to the prior payment of any Senior Indebtedness or subject to the restrictions set forth in this Article 11, and none of the Holders shall be obligated to pay over any such amount to the Subsidiary Guarantors or any holder of Senior Indebtedness of Subsidiary Guarantors or any other creditor of the Subsidiary Guarantors. SECTION 11.15. Trustee Entitled To Rely. Upon any payment or distribution pursuant to this Article 11, the Trustee and the Holders shall be entitled to rely (i) upon any order or decree of a court of competent jurisdiction in which any proceedings of the nature referred to in Section 11.04 are pending, (ii) upon a certificate of the liquidating trustee or agent or other Person making such payment or distribution to the Trustee or to the Holders, or (iii) upon the Representatives for the holders of Senior Indebtedness of Subsidiary Guarantors for the purpose of ascertaining the Persons entitled to participate in such payment or distribution, the holders of the Senior Indebtedness of Subsidiary Guarantors and other Indebtedness of the Subsidiary Guarantors, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article 11. In the event that the Trustee determines, in good faith, that evidence is required with respect to the right of any Person as a holder of Senior Indebtedness of Subsidiary Guarantors to participate in any payment or distribution pursuant to this Article 11, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of Senior Indebtedness of Subsidiary Guarantors held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and other facts pertinent to the rights of such Person under this Article 11, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall be applicable to all actions or omissions of actions by the Trustee pursuant to this Article 11. -58- 66 SECTION 11.16. Trustee To Effectuate Subordination. Each Holder by accepting a Security authorizes and directs the Trustee on its behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination between the Holders and the holders of Senior Indebtedness of Subsidiary Guarantors as provided in this Article 11 and appoints the Trustee as attorney-in-fact for any and all such purposes. SECTION 11.17. Trustee Not Fiduciary for Holders of Senior Indebtedness of Subsidiary Guarantors. The Trustee shall not be deemed to owe any fiduciary duty to the holders of Senior Indebtedness of Subsidiary Guarantors and shall not be liable to any such holders if it shall mistakenly pay over or distribute to Holders or the Subsidiary Guarantors or any other Person money or assets to which any holders of Senior Indebtedness of Subsidiary Guarantors shall be entitled by virtue of this Article 11 or otherwise. SECTION 11.18. Reliance by Holders of Senior Indebtedness of Subsidiary Guarantors on Subordination Provisions. Each Holder by accepting a Security acknowledges and agrees that the foregoing subordination provisions are, and are intended to be, an inducement and a consideration to each holder of any Senior Indebtedness of Subsidiary Guarantors, whether such Senior Indebtedness of Subsidiary Guarantors was created or acquired before or after the issuance of the Securities, to acquire and continue to hold, or to continue to hold, such Senior Indebtedness of Subsidiary Guarantors and such holder of Senior Indebtedness of Subsidiary Guarantors shall be deemed conclusively to have relied on such subordination provisions in acquiring and continuing to hold, or in continuing to hold, such Senior Indebtedness of Subsidiary Guarantors. SECTION 11.19. Release of Subsidiary Guarantor. This Subsidiary Guaranty as to any Subsidiary Guarantor other than the Guarantor shall terminate and be of no further force or effect on the sale or other transfer (i) by such Subsidiary Guarantor of all or substantially all of its assets in compliance with the terms of this Indenture or (ii) by the Company of all of its stock or other equity interests in such Subsidiary Guarantor, in each case to a Person that is not an Affiliate of the Company; provided, however, that such sale or transfer shall be deemed to constitute an Asset Disposition and the Company shall comply with all applicable provisions of Section 4.06 with respect to such Asset Disposition. ARTICLE 12 MISCELLANEOUS SECTION 12.01. Trust Indenture Act Controls. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by, or with another provision (an "incorporated provision") included in this Indenture by operation of, Sections 310 to 318, inclusive, of the TIA, such imposed duties or incorporated provision shall control. If any provision of this Indenture modifies or excludes any provision of the TIA that may be so modified or excluded, the latter provision shall be deemed to apply to this Indenture as so modified or excluded, as the case may be. SECTION 12.02. Notices. Any notice or communication shall be in writing and delivered in person or mailed by first-class mail addressed as follows: -59- 67 If to the Company or any Subsidiary Guarantor: U.S. Can Corporation 900 Commerce Drive Oak Brook, Illinois 60521 Attention: Timothy W. Stonich With a copy to: Ross & Hardies 150 North Michigan Avenue Chicago, Illinois 60601 Attention: Lawrence R. Samuels, Esq. If to the Trustee: Harris Trust & Savings Bank Attention: Indenture Trust Administration 311 West Monroe, 12th Floor Chicago, IL 60606 If to the Paying Agent: Harris Trust & Savings Bank Attention: Indenture Trust Administration 311 West Monroe, 12th Floor Chicago, IL 60606 The Company or the Trustee by notice to the other may designate additional or different addresses for subsequent notices or communications. Any notice or communication mailed to a Holder shall be mailed to the Holder at the Holder's address as it appears on the registration books of the Registrar and shall be sufficiently given if so mailed within the time prescribed. Failure to mail a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. If a notice or communication is mailed in the manner provided above, it is duly given, whether or not the addressee receives it. If the Company or a Subsidiary Guarantor mails a notice or communication to Holders, it shall mail a copy to the Trustee and each Paying Agent at the same time. SECTION 12.03. Communication by Holders with Other Holders. Holders may communicate pursuant to TIA Section 312(b) with other Holders with respect to their rights under this Indenture or the Securities. The Company, the Trustee, the Registrar and anyone else shall have the protection of TIA Section 312(c). SECTION 12.04. Certificate and Opinion as to Conditions Precedent. Upon any request or application by the Company to the Trustee to take or refrain from taking any action under this Indenture, the Company shall furnish to the Trustee: -60- 68 (1) an Officers' Certificate in form and substance reasonably satisfactory to the Trustee and complying with Section 12.05 stating that, in the opinion of the signers, all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with; and (2) an Opinion of Counsel in form and substance reasonably satisfactory to the Trustee stating that, in the opinion of such counsel, all such conditions precedent have been complied with. SECTION 12.05. Statements Required in Certificate or Opinion. Each certificate or opinion with respect to compliance with a covenant or condition provided for in this Indenture (other than a certificate pursuant to Section 3.14(a)(4) of the TIA) shall comply with the provisions of Section 3.14(e) of the TIA and shall include: (1) a statement that the individual making such certificate or opinion has read such covenant or condition; (2) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (3) a statement that, in the opinion of such individual, he or she or such individual has made such examination or investigation as is necessary to enable him or her to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not, in the opinion of such individual, such covenant or condition has been complied with or satisfied. SECTION 12.06. When Securities Disregarded. In determining whether the Holders of the required principal amount of Securities have concurred in any direction, waiver or consent, Securities owned by the Company or by any Person, directly or indirectly, controlling or controlled by or under, direct or indirect, common control with the Company shall be disregarded and deemed not to be outstanding, except that, for the purpose of determining whether the Trustee shall be protected in relying on any such direction, waiver or consent, only Securities which the Trustee has actual knowledge to be so owned shall be so disregarded. Also, subject to the foregoing, only Securities outstanding at the time shall be considered in any such determination. SECTION 12.07. Rules by Trustee, Paying Agent and Registrar. The Trustee may make reasonable rules for action by or a meeting of Holders. The Registrar and the Paying Agent may make reasonable rules for their functions. SECTION 12.08. Legal Holidays. A "Legal Holiday" is a Saturday, a Sunday or a day on which banking institutions are not required to be open in the State of New York or the State of Illinois. If a payment date is a Legal Holiday, payment shall be made on the next succeeding day that is not a Legal Holiday, and no interest shall accrue for the intervening period. If a regular record date is a Legal Holiday, the record date shall not be affected. -61- 69 SECTION 12.09. GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION WOULD BE REQUIRED THEREBY. SECTION 12.10. No Recourse Against Others. A director, officer, employee or stockholder, as such, of the Company, the Subsidiary Guarantors or the Trustee shall not have any liability for any obligations of the Company, the Subsidiary Guarantors or the Trustee (as the case may be) under the Securities or this Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder shall waive and release all such liability. The waiver and release shall be part of the consideration for the issue of the Securities. SECTION 12.11. Successors. All agreements of each of the Company and the Subsidiary Guarantors in this Indenture and the Securities shall bind its successors. All agreements of the Trustee in this Indenture shall bind its successors. SECTION 12.12. Multiple Originals. The parties may sign any number of copies of this Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. One signed copy is enough to prove this Indenture. SECTION 12.13. Table of Contents; Headings. The table of contents, cross-reference sheet and headings of the Articles and Sections of this Indenture have been inserted for convenience of reference only, are not intended to be considered a part hereof and shall not modify or restrict any of the terms or provisions hereof. SECTION 12.14. Severability. In case any provision in this Indenture or in the Securities shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. -62- 70 IN WITNESS WHEREOF, the parties have caused this Indenture to be duly executed as of the date first written above. U.S. CAN CORPORATION by /s/ Timothy W. Stonich ---------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President, Finance, Chief Financial Officer and Secretary UNITED STATES CAN COMPANY by /s/ Timothy W. Stonich ---------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President, Finance, Chief Financial Officer and Secretary HARRIS TRUST AND SAVINGS BANK, as Trustee by /s/ J. Bartolini ---------------------------------------- Name: J. Bartolini Title: Vice President [Indenture] 71 EXHIBIT A [FORM OF FACE OF INITIAL NOTES] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. [Restricted Security Legend] THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) OR (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a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a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (0)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT. -2- 73 CUSIP NO. No. $ 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006 U.S. Can Corporation, a Delaware corporation, promises to pay to ______________________________, or registered assigns, the principal sum of ________________________________________________________________ on Interest Payment Dates: April 15 and October 15 Record Dates: April 1 and October 1 Additional provisions of this Security are set forth on the other side of this Security. Dated: U.S. CAN CORPORATION by: ______________________________ President by: ______________________________ Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION HARRIS TRUST AND SAVINGS BANK as Trustee, certifies that this is one of the Securities referred to in the Indenture. [seal] by: __________________________ Authorized Signatory -3- 74 [FORM OF REVERSE SIDE OF INITIAL NOTES] 10-1/8% Senior Subordinated Note Due 2006 1. Interest U.S. Can Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security (the "Security") at the rate per annum shown above. The Company will pay interest semiannually on April 15 and October 15 of each year. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of 12 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. Special Interest The holder of this Security is entitled to the benefits of a Registration Rights Agreement, dated as of October 17, 1996, among the Company, United States Can Company (the "Guarantor") and the Initial Purchasers (the "Registration Agreement"). Pursuant to the Registration Agreement, the Company and the Guarantor have agreed as follows: (1) If neither a registration statement (the "Exchange Offer Registration Statement") in respect of a registed offered to exchange the Securities (the "Exchange Offer") nor a registration statement permitting public resale of the Securities (the "Shelf Registration Statement") has been filed on or prior to the 60th day (the "Filing Date") after the date the Initial Notes were issued (the "Issue Date"), then, commencing on the 61st day after the Issue Date, additional interest on the Securities ("Liquidated Damages") shall accrue on the Securities over and above the stated interest at a rate of 0.50% per annum of the principal amount of the Securities for the first 90 days immediately following the Filing Date, such Liquidated Damages rate increasing by an additional 0.25% per annum of the principal amount of the Securities at the beginning of each subsequent 90-day period; (2) If the Exchange Offer Registration Statement is not declared effective by the SEC on or prior to the 120th day (the "Effectiveness Date") after the Issue Date, then, commencing on the 121st day after the Issue Date, Liquidated Damages shall accrue on the Securities included or which should have been included in such Registration Statement over and above the stated interest at a rate of 0.50% per annum of the principal amount of the Securities for the first 90 days immediately following the Effectiveness Date, such Liquidated Damages increasing by an additional 0.25% per annum of the principal amount of the Securities at the beginning of each subsequent 90-day period; and (3) If (A) the Exchange Offer has not been consummated, and the Shelf Registration Statement has not been declared effective by the SEC, on or prior to the 150th day after the Issue Date or (B) the Exchange Offer Registration Statement or, if applicable, the Shelf Registration Statement has been declared effective and such Registration Statement ceases to be effective at any time during the periods specified in the Registration Rights Agreement (unless all the Securities have previously been sold thereunder), then Liquidated Damages shall accrue (over and above any interest otherwise payable on such Securities) at a rate of 0.50% per annum of -4- 75 the principal amount of the Securities for the first 90 days commencing on (x) the 151st day after the Issue Date with respect to the Securities validly tendered and not exchanged by the Company, in the case of (A) above, or (y) the day such Exchange Offer Registration Statement or Shelf Registration Statement ceases to be effective in the case of (B) above, such Liquidated Damages rate increasing by an additional 0.25% per annum of the principal amount of the Securities at the beginning of each such subsequent 90-day period (it being understood and agreed that, in the case of (B) above, so long as any Security is then covered by an effective Shelf Registration Statement, no Liquidated Damages shall accrue on such Security); provided, however, that the Liquidated Damages rate on any affected Security may not exceed at any one time in the aggregate 2.0% per annum of the principal amount of the Securities; and provided further, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (1) of this Section 2), (2) upon the effectiveness of the Exchange Offer Registration Statement (in the case of clause (2) of this Section 2), or (3) upon the exchange of all Securities tendered or the effectiveness of the Shelf Registration Statement (in the case of clause (3)(A) of this Section 2), or upon the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement which had ceased to remain effective (in the case of clause (3)(B) of this Section 2), Liquidated Damages on the affected Securities as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. 3. Method of Payment The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered holders of Securities (each, a "Holder") at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are concealed after the record date and on or before the interest payment date. Holders must surrender Securities to an office or agency where Securities may be presented for payment (the "Paying Agent") to collect principal payments. The Company will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 4. Paying Agent and Registrar Initially, Harris Trust and Savings Bank, an Illinois banking corporation ("Trustee"), will act as Paying Agent and the office or agency where Securities may be presented for registration or transfer or for exchange (the "Registrar"). The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated wholly owned subsidiaries may act as Paying Agent, Registrar or co-registrar. 5. Indenture The Company issued the Securities under an Indenture dated as of October 17, 1996 (the "Indenture"), between the Company, the Guarantor and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms. -5- 76 The Securities are general unsecured obligations of the Company limited to $275,000,000 aggregate principal amount (subject to Section 2.07 of the Indenture). This Security is one of the Initial Notes referred to in the Indenture. The Securities include the Initial Notes and any notes issued in exchange for the Initial Notes pursuant to the Registration Rights Agreement (the "Exchange Notes"). The Initial Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the Company and the Restricted Subsidiaries, including the Incurrence of additional Indebtedness, payment of dividends or other distributions with respect to Capital Stock of the Company, sale of assets of the Company or its Restricted Subsidiaries, or restrictions on the ability of any Restricted Subsidiary to pay dividends or make any other distributions in respect of its Capital Stock. In addition, the Indenture contains certain covenants that, among other things, limit the ability of the Company and its Subsidiary Guarantors to Incur Indebtedness which is senior to or ranks pari passu with the Securities or the Subsidiary Guaranties, as the case may be, create certain Liens, or enter into certain mergers and consolidations. The payment of principal and interest on the Securities is unconditionally guaranteed on a senior subordinated and unsecured basis by the Subsidiary Guarantors. 6. Optional Redemption Except as set forth in paragraphs 7 and 8, the Securities may not be redeemed prior to October 15, 2001. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date): if redeemed during the 12-month period beginning October 15 of the years below.
Year Percentage ---- ---------- 2001 . . . . . . . . . . . . . . . . . . . 105.063% 2002 . . . . . . . . . . . . . . . . . . . 103.375% 2003 . . . . . . . . . . . . . . . . . . . 101.688% 2004 and thereafter . . . . . . . . . . . 100.000%
In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee, in its sole discretion, shall deem to be fair and appropriate (and which complies with applicable legal and securities exchange requirements), although no Security of $1,000 in original principal amount or less will be redeemed in part. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. 7. Notice of Redemption A notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at such -6- 77 Holder's registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 8. Put Provisions Upon a Change of Control, any Holder of Securities will have the right, subject to certain conditions, to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record in the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. 9. Subordination The Securities are subordinated to Senior Indebtedness, as defined in the Indenture, and the Subsidiary Guaranties are subordinated to Senior Indebtedness of the Subsidiary Guarantors, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness or Senior Indebtedness of the Subsidiary Guarantors must be paid before the Securities may be paid. The Company and the Subsidiary Guarantors agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give effect to such provisions and appoints the Trustee as attorney-in-fact for such purpose. 10. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 11. Persons Deemed Owners The registered Holder of this Security may be treated as the owner of it for all purposes. 12. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. -7- 78 13. Discharge and Defeasance Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee payment of principal and interest on the Securities to redemption or maturity, as the case may be. 14. Amendment, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make certain changes in the subordination provisions, or to make any change that does not adversely affect the rights of any Holder. 15. Defaults and Remedies Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption, upon declaration or otherwise, or failure by the Company and the Subsidiary Guarantor to redeem or purchase Securities when required; (iii) failure by the Company or the Subsidiary Guarantor to comply with the provisions of Section 5.01 of the Indenture; (iv) failure by the Company or any Subsidiary Guarantor to comply with certain other sections of the Indenture; (v) failure by the Company or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (vi) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $10 million and the default continues for 10 days; (vii) certain events of bankruptcy or insolvency with respect to the Company and any Subsidiary Guarantor or any Foreign Significant Subsidiary; (viii) certain judgments or decrees for the payment of money in excess of $10 million; (ix) any Subsidiary Guaranty is held to be unenforceable or is valid or ceases to be in full force and effect; (x) the Required Redemption has not been consummated; (xi) the Company breaches any provision or otherwise does not comply with the Escrow Agreement, or such agreement is held unenforceable, invalid or ceases for any reason to be in full force and effect (except as a result of the complete performance thereof). If an Event of Default (other than certain Events of Default specified in (vii) above) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may, by notice to the Company, declare the principal amount of and accrued interest on the Securities to be due and payable immediately upon the occurrence of such Event of Default. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default -8- 79 (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. 16. Trustee Dealings with the Company Subject to certain limitations imposed by the Act, the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 17. No Recourse Against Others A director, officer, employee or stockholder, as such, of the Company, any Subsidiary Guarantor or the Trustee shall not have any liability for any obligations of the Company, any Subsidiary Guarantor or the Trustee under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 18. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 19. Abbreviations Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 20. CUSIP Numbers Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE COMPANY WILL FURNISH TO ANY HOLDER, UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER, A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: U.S. CAN CORPORATION, 900 COMMERCE DRIVE, OAK BROOK, ILLINOIS 60521, ATTENTION: CHIEF FINANCIAL OFFICER. ________________________________________________________________________________ -9- 80 [FORM OF NOTATION ON INITIAL NOTE RELATING TO GUARANTY] SENIOR SUBORDINATED GUARANTY UNITED STATES CAN COMPANY (the "Guarantor") has unconditionally guaranteed on a senior subordinated basis (such guaranty by each Guarantor being referred to herein as the "Guaranty") (i) the due and punctual payment of the principal of and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Securities, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article 11 of the Indenture and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantor to the Holders and to the Trustee pursuant to the Guaranty and the Indenture are expressly set forth and are expressly subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness of Subsidiary Guarantors to the extent and in the manner provided in Article 11 of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guaranty therein made. No director, officer, employee or stockholder, as such, of any of the Subsidiary Guarantors shall have any liability under the Guaranty of such Subsidiary Guarantor by reason of such person's status as director, officer, employee or stockholder. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Guaranty. The Guaranty shall not be valid or obligatory for any purpose until the certificate of authentication on the Securities upon which the Guaranty is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized signatories. UNITED STATES CAN COMPANY By:_____________________________ Name: Title: -10- 81 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to ________________________________________________________________________________ (Print or type assignee's name, address and zip code) ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ______________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date: __________ Your Signature: _____________________________________________ ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. Signature Guaranty:_____________________________________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) -11- 82 In connection with any transfer of any of the Securities evidenced by this certificate occurring prior to the date that is three years after the later of the date of original issuance of such Securities and the last date, if any, on which such Securities were owned by the Company or any Affiliate of the Company, the undersigned confirms that such Securities are being transferred: (CHECK ONE BOX BELOW) (1) / / to the Company or a subsidiary thereof (2) / / to an institutional "accredited investor" (as defined in rule 501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended) that has furnished to the Holder a signed letter containing certain representations and agreements (the form of which letter can be obtained from the Trustee) (3) / / pursuant to effective registration statement under the Securities Act of 1933, as amended (4) / / inside the United States to a "qualified institutional buyer" (as defined in Rule 144A under the Securities Act of 1933, as amended) that purchases for its own account or for the account of a qualified institutional buyer to whom notice is given that such transfer is being made in reliance on Rule 144A, in each case, pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (5) / / outside the United States in an offshore transaction to a "foreign person" in accordance with Rule 904 of Regulation S under the Securities Act of 1933, as amended (6) / / pursuant to the exemption from registration provided by Rule 144 under the Securities Act of 1933, as amended (7) / / pursuant to another available exemption from the registration requirements of the Securities Act of 1933, as amended Unless one of the boxes is checked, the Trustee will refuse to register any of the Securities evidenced by this certificate in the name of any person other than the registered holder thereof; provided, however, that if box (2), (5), (6) or (7) is checked, the Trustee may require, prior to registering any such transfer of the Securities such legal opinions, certifications and other information as the Company has reasonably requested to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act of 1933, as amended, such as the exemption provided by Rule 144 under such Securities Act of 1933, as amended. ___________________________ Signature -12- 83 TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED The undersigned represents and warrants that it is purchasing this Security for its own account or an account with respect to which it exercises sole investment discretion and that it and any such account is a "qualified institutional buyer" within the meaning of Rule 144A ("Rule 144A") under the Securities Act of 1933, as amended, and is aware that the sale to it is being made in reliance on Rule 144A and acknowledges that it has received such information regarding the Company as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the transferor is relying upon the undersigned's foregoing representations in order to claim the exemption from registration provided by Rule 144A. Date: ________________ ___________________________________________ NOTICE: To be executed by an executive officer -13- 84 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Exchange Amount of decrease Amount of Increase Principal Amount Signature of in Principal in Principal [at Maturity] of authorized officer Amount [at Amount [at this Global of Trustee or Maturity] of this Maturity] of this Security following Securities Global Security Global Security such decrease or Custodian increase
-14- 85 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount: $_________________ Date: ______________ Your Signature: _______________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guaranty: __________________________________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) -15- 86 EXHIBIT B [FORM OF FACE OF EXCHANGE NOTE] UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN. TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSORS NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF. 87 No. $ CUSIP No.: SERIES B 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006 U.S. Can Corporation, a Delaware corporation, promises to pay to _____________________________, or registered assigns, the principal sum of ____________________________________________________________________ on Interest Payment Dates: April 15 and October 15 Record Dates: April 1 and October 1 Additional provisions of this Security are set forth on the other side of this Security. Dated: U.S. CAN CORPORATION by: _________________________ President by: _________________________ Secretary TRUSTEE'S CERTIFICATE OF AUTHENTICATION HARRIS TRUST AND SAVINGS BANK as Trustee, certifies that this is one of the Securities referred to in the Indenture. [seal] by: _______________________________ Authorized Signatory -2- 88 [FORM OF REVERSE SIDE OF EXCHANGE NOTE] SERIES B 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006 1. Interest U.S. Can Corporation, a Delaware corporation (such corporation, and its successors and assigns under the Indenture hereinafter referred to, being herein called the "Company"), promises to pay interest on the principal amount of this Security at the rate per annum shown above. The Company will pay interest semiannually on April 15 and October 15 of each year. Interest on the Securities will accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the Issue Date. Interest will be computed on the basis of a 360-day year of 12 30-day months. The Company shall pay interest on overdue principal at the rate borne by the Securities plus 1% per annum, and it shall pay interest on overdue installments of interest at the same rate to the extent lawful. 2. Method of Payment The Company will pay interest on the Securities (except defaulted interest) to the persons who are registered holders of Securities ("Holder" or "Holder") at the close of business on the April 1 or October 1 next preceding the interest payment date even if Securities are concealed after the record date and on or before the interest payment date. Holders must surrender Securities to an office or agency where Securities may be presented for payment (the "Paying Agent") to collect principal payments. The Company will pay principal and interest in money of the United States of America that at the time of payment is legal tender for payment of public and private debts. However, the Company may pay principal and interest by check payable in such money. It may mail an interest check to a Holder's registered address. 3. Paying Agent and Registrar Initially, Harris Trust and Savings Bank, an Illinois banking corporation ("Trustee"), will act as Paying Agent and the office or agency where Securities may be presented for registration or transfer or for exchange (the "Registrar"). The Company may appoint and change any Paying Agent, Registrar or co-registrar without notice. The Company or any of its domestically incorporated wholly owned subsidiaries may act as Paying Agent, Registrar or co-registrar. 4. Indenture The Company issued the Securities under an Indenture dated as of October __, 1996 (the "Indenture"), between the Company, United States Can Company (the "Guarantor") and the Trustee. The terms of the Securities include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Terms defined in the Indenture and not defined herein have the meanings ascribed thereto in the Indenture. The Securities are subject to all such terms, and Holders are referred to the Indenture and the Act for a statement of those terms. The Securities are general unsecured obligations of the Company limited to $275,000,000 aggregate principal amount (subject to Section 2.07 of the Indenture). This Security is one of 10-1/8% Series B Senior Subordinated Notes due 2006 (the "Exchange -3- 89 Notes") referred to in the Indenture. The Securities include the 10-1/8% Senior Subordinated Notes due 2006 originally issued under the Indenture (the "Initial Notes") and any Exchange Notes issued in exchange for the Initial Notes. The Initial Notes and the Exchange Notes are treated as a single class of securities under the Indenture. The Indenture imposes certain limitations on the Company and the Restricted Subsidiaries, including the Incurrence of additional Indebtedness, payment of dividends or other distributions with respect to Capital Stock of the Company, sale of assets of the Company or its Restricted Subsidiaries, or restrictions on the ability of any Restricted Subsidiary to pay dividends or make any other distributions in respect of its Capital Stock. In addition, the Indenture contains certain covenants that, among other things, limit the ability of the Company and its Subsidiary Guarantors to Incur Indebtedness which is senior to or ranks pari passu with the Securities or the Subsidiary Guaranties, as the case may be, create certain Liens, or enter into certain mergers and consolidations. The payment of principal and interest on the Securities is unconditionally guaranteed on a senior subordinated and unsecured basis by the Subsidiary Guarantors. 5. Optional Redemption Except as set forth in paragraphs 6 and 7, the Securities may not be redeemed prior to October, 2001. On and after that date, the Company may redeem the Securities in whole at any time or in part from time to time at the following redemption prices (expressed in percentages of principal amount), plus accrued interest to the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on the related interest payment date): if redeemed during the 12-month period beginning October 15 of the years below.
Year Percentage ---- ---------- 2001 . . . . . . . . . . . . . . . . . . . 105.063% 2002 . . . . . . . . . . . . . . . . . . . 103.375% 2003 . . . . . . . . . . . . . . . . . . . 101.688% 2004 and thereafter . . . . . . . . . . . . 100.000%
In the case of any partial redemption, selection of the Securities for redemption will be made by the Trustee on a pro rata basis, by lot or by such other method as the Trustee, in its sole discretion, shall deem to be fair and appropriate (and which complies with applicable legal and securities exchange requirements), although no Security of $1,000 in original principal amount or less will be redeemed in part. If any Security is to be redeemed in part only, the notice of redemption relating to such Security shall state the portion of the principal amount thereof to be redeemed. A new Security in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Security. 6. Notice of Redemption A notice of redemption will be mailed at least 30 days but not more than 60 days before the redemption date to each Holder of Securities to be redeemed at such Holder's registered address. Securities in denominations larger than $1,000 may be redeemed in part but only in whole multiples of $1,000. If money sufficient to pay the redemption price of and accrued interest on all Securities (or portions thereof) to be redeemed on the redemption date is deposited with the Paying Agent on or before the redemption date -4- 90 and certain other conditions are satisfied, on and after such date interest ceases to accrue on such Securities (or such portions thereof) called for redemption. 7. Put Provisions Upon a Change of Control, any Holder of Securities will have the right, subject to certain conditions, to cause the Company to repurchase all or any part of the Securities of such Holder at a repurchase price equal to 101% of the principal amount of the Securities to be repurchased plus accrued interest to the date of repurchase (subject to the right of holders of record on the relevant record date to receive interest due on the related interest payment date) as provided in, and subject to the terms of, the Indenture. 8. Subordination The Securities are subordinated to Senior Indebtedness, as defined in the Indenture, and the Subsidiary Guaranties are subordinated to Senior Indebtedness of Subsidiary Guarantors, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness or Senior Indebtedness of Subsidiary Guarantors must be paid before the Securities may be paid. The Company and the Subsidiary Guarantors agree, and each Holder by accepting a Security agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give effect to such provisions and appoints the Trustee as attorney-in-fact for such purpose. 9. Denominations; Transfer; Exchange The Securities are in registered form without coupons in denominations of $1,000 and whole multiples of $1,000. A Holder may transfer or exchange Securities in accordance with the Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements or transfer documents and to pay any taxes and fees required by law or permitted by the Indenture. The Registrar need not register the transfer of or exchange any Securities selected for redemption (except, in the case of a Security to be redeemed in part, the portion of the Security not to be redeemed) or any Securities for a period of 15 days before a selection of Securities to be redeemed or 15 days before an interest payment date. 10. Persons Deemed Owners The registered Holder of this Security may be treated as the owner of it for all purposes. 11. Unclaimed Money If money for the payment of principal or interest remains unclaimed for two years, the Trustee or Paying Agent shall pay the money back to the Company at its request unless an abandoned property law designates another Person. After any such payment, Holders entitled to the money must look only to the Company and not to the Trustee for payment. 12. Discharge and Defeasance Subject to certain conditions, the Company at any time may terminate some or all of its obligations under the Securities and the Indenture if the Company deposits with the Trustee payment of principal and interest on the Securities to redemption or maturity, as the case may be. -5- 91 13. Amendment, Waiver Subject to certain exceptions set forth in the Indenture, (i) the Indenture or the Securities may be amended with the written consent of the Holders of at least a majority in principal amount outstanding of the Securities and (ii) any default or noncompliance with any provision may be waived with the written consent of the Holders of a majority in principal amount outstanding of the Securities. Subject to certain exceptions set forth in the Indenture, without the consent of any Holder, the Company, the Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities to cure any ambiguity, omission, defect or inconsistency, or to comply with Article 5 of the Indenture, or to provide for uncertificated Securities in addition to or in place of certificated Securities, or to add guarantees with respect to the Securities or to secure the Securities, or to add additional covenants or surrender rights and powers conferred on the Company, or to comply with any request of the SEC in connection with qualifying the Indenture under the Act, or to make certain changes in the subordination provisions, or to make any change that does not adversely affect the rights of any Holder. 14. Defaults and Remedies Under the Indenture, Events of Default include (i) default for 30 days in payment of interest on the Securities; (ii) default in payment of principal on the Securities at maturity, upon redemption, upon declaration or otherwise, or failure by the Company and the Subsidiary Guarantor to redeem or purchase Securities when required; (iii) failure by the Company or the Subsidiary Guarantor to comply with the provisions of Section 5.01 of the Indenture; (iv) failure by the Company or any Subsidiary Guarantor to comply with certain other sections of the Indenture; (v) failure by the Company or any Subsidiary Guarantor to comply with other agreements in the Indenture or the Securities, in certain cases subject to notice and lapse of time; (vi) certain accelerations (including failure to pay within any grace period after final maturity) of other Indebtedness of the Company if the amount accelerated (or so unpaid) exceeds $10 million and continue for 10 days; (vii) certain events of bankruptcy or insolvency with respect to the Company and any Subsidiary Guarantor or any Foreign Significant Subsidiary; (viii) certain judgments or decrees for the payment of money in excess of $10 million; (ix) any Subsidiary Guaranty being held unenforceable or invalid or ceasing to be in full force and effect; (x) the Required Redemption not been consummated pursuant to the terms of the Indenture; (xi) the Company breaching any provision or otherwise not complying with the Escrow Agreement, or such agreement being held unenforceable, invalid or ceasing for any reason to be in full force and effect (except as a result of the complete performance thereof). If an Event of Default (other than an Event of Default specified in (vii) above) occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the Securities may, by notice to the Company, declare the principal amount of and accrued interest on the Securities to be due and payable immediately upon the occurrence of such Events of Default. Holders may not enforce the Indenture or the Securities except as provided in the Indenture. The Trustee may refuse to enforce the Indenture or the Securities unless it receives reasonable indemnity or security. Subject to certain limitations, Holders of a majority in principal amount of the Securities may direct the Trustee in its exercise of any trust or power. The Trustee may withhold from Holders notice of any continuing Default (except a Default in payment of principal or interest) if it determines that withholding notice is in the interest of the Holders. -6- 92 15. Trustee Dealings with the Company Subject to certain limitations imposed by the Act, the Trustee, in its individual or any other capacity, may become the owner or pledgee of Securities and may otherwise deal with and collect obligations owed to it by the Company or its Affiliates and may otherwise deal with the Company or its Affiliates with the same rights it would have if it were not Trustee. 16. No Recourse Against Others A director, officer, employee or stockholder, as such, of the Company, any Subsidiary Guarantor or the Trustee shall not have any liability for any obligations of the Company, any Subsidiary Guarantor or the Trustee under the Securities or the Indenture or for any claim based on, in respect of or by reason of such obligations or their creation. By accepting a Security, each Holder waives and releases all such liability. The waiver and release are part of the consideration for the issue of the Securities. 17. Authentication This Security shall not be valid until an authorized signatory of the Trustee (or an authenticating agent) manually signs the certificate of authentication on the other side of this Security. 18. Abbreviations Customary abbreviations may be used in the name of a Holder or an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the entireties), JT TEN (=joint tenants with rights of survivorship and not as tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors Act). 19. CUSIP Numbers Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures the Company has caused CUSIP numbers to be printed on the Securities and has directed the Trustee to use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Securities or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon. THE COMPANY WILL FURNISH TO ANY HOLDER, UPON WRITTEN REQUEST AND WITHOUT CHARGE TO THE HOLDER, A COPY OF THE INDENTURE WHICH HAS IN IT THE TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: U.S. CAN CORPORATION, 900 COMMERCE DRIVE, OAK BROOK, ILLINOIS 60521, ATTENTION: CHIEF FINANCIAL OFFICER. ________________________________________________________________________________ -7- 93 [FORM OF NOTATION ON EXCHANGE NOTE RELATING TO GUARANTY] SENIOR SUBORDINATED GUARANTY UNITED STATES CAN COMPANY (the "Guarantor") has unconditionally guaranteed on a senior subordinated basis (such guaranty by each Guarantor being referred to herein as the "Guaranty") (i) the due and punctual payment of the principal of and interest on the Securities, whether at maturity, by acceleration or otherwise, the due and punctual payment of interest on the overdue principal and interest, if any, on the Securities, to the extent lawful, and the due and punctual performance of all other obligations of the Company to the Holders or the Trustee all in accordance with the terms set forth in Article 11 of the Indenture and (ii) in case of any extension of time of payment or renewal of any Securities or any of such other obligations, that the same will be promptly paid in full when due or performed in accordance with the terms of the extension or renewal, whether at stated maturity, by acceleration or otherwise. The obligations of the Guarantor to the Holders and to the Trustee pursuant to the Guaranty and the Indenture are expressly set forth and are expressly subordinated and subject in right of payment to the prior payment in full of all Senior Indebtedness of Subsidiary Guarantors to the extent and in the manner provided in Article 11 of the Indenture, and reference is hereby made to such Indenture for the precise terms of the Guaranty therein made. No director, officer, employee or stockholder, as such, of any of the Subsidiary Guarantors shall have any liability under the Guaranty of such Subsidiary Guarantor by reason of such person's status as director, officer, employee or stockholder. Each Holder of a Security by accepting a Security waives and releases all such liability. The waiver and release are part of the consideration for the issuance of the Guaranty. The Guaranty shall not be valid or obligatory for any purpose until the certificate of authentication on the Securities upon which the Guaranty is noted shall have been executed by the Trustee under the Indenture by the manual signature of one of its authorized signatories. UNITED STATES CAN COMPANY By: _____________________________ Name: Title: -8- 94 ASSIGNMENT FORM To assign this Security, fill in the form below: I or we assign and transfer this Security to ________________________________________________________________________________ (Print or type assignee's name, address and zip code) ________________________________________________________________________________ (Insert assignee's soc. sec. or tax I.D. No.) and irrevocably appoint ______________________________________________________ agent to transfer this Security on the books of the Company. The agent may substitute another to act for him. ________________________________________________________________________________ Date: __________ Your Signature: _____________________________________________ ________________________________________________________________________________ Sign exactly as your name appears on the other side of this Security. Signature Guaranty:_____________________________________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) -9- 95 [TO BE ATTACHED TO GLOBAL SECURITIES] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY The following increases or decreases in this Global Security have been made: Date of Exchange Amount of decrease Amount of Increase Principal Amount Signature of in Principal in Principal [at Maturity] of authorized officer Amount [at Amount [at this Global of Trustee or Maturity] of this Maturity] of this Security following Securities Global Security Global Security such decrease or Custodian increase
-10- 96 OPTION OF HOLDER TO ELECT PURCHASE If you want to elect to have this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box: / / If you want to elect to have only part of this Security purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture, state the amount: $_________________ Date: ______________ Your Signature: _______________________________________ (Sign exactly as your name appears on the other side of the Security) Signature Guaranty: __________________________________________________________ (Signature must be guaranteed by a member firm of the New York Stock Exchange or a commercial bank or trust company) -11- EX-10.3 4 AGREEMENT FOR BUILDING LEASE (GEORGIA) 1 EXHIBIT 10.3 NEWNAN, GEORGIA A G R E E M E N T F O R B U I L D I N G L E A S E DATED AUGUST 1, 1996 BY AND BETWEEN CPI PLASTICS, L.L.C., A MICHIGAN LIMITED LIABILITY COMPANY LANDLORD, AND UNITED STATES CAN COMPANY, A DELAWARE CORPORATION TENANT 2 A G R E E M E N T F O R B U I L D I N G L E A S E CPI PLASTICS, L.L.C., a Michigan limited liability company ("Landlord"), hereby leases to UNITED STATES CAN COMPANY, a Delaware Corporation ("Tenant"), and Tenant hereby accepts, subject to the terms and conditions of this Lease, that certain building containing approximately 95,000 square feet (the "Building") located at 434 Corinth Road, Newnan, Georgia, and the surrounding land containing approximately 9.1 acres and legally described on Exhibit A which is attached hereto and made a part hereof (the Building and the surrounding property used as the parking areas and driveway shall be referred to as the "Premises" and the said property and Building and Landlord's interest therein shall be referred to as the "Property"), for an initial term (the "Term") of fifteen (15) years commencing on August 1, 1996 (the "Commencement Date"), and ending on July 31, 2011 or such other date as the Term is extended pursuant to Article IX hereof (the "Termination Date"). RECITALS WHEREAS, Tenant has entered into a certain Stock Purchase Agreement dated August 2, 1996 with Irving A. Rubin, Robert Bonczyk et al. (the "Stock Purchase Agreement") pursuant to which Tenant has agreed to purchase, all of the stock of CPI PLASTICS INC., CP OHIO, Inc. and CP Illinois, Inc. WHEREAS, in connection therewith, Landlord and Tenant have agreed to enter into this Lease; WHEREAS, if requested by either party to this Lease, a memorandum of this Lease in recordable form duly executed and acknowledged shall be entered into and recorded by the parties hereto; NOW, THEREFORE, IN CONSIDERATION of the above demise, and the acceptance of the mutual covenants herein contained, Landlord and Tenant covenant and agree as follows: ARTICLE I RENTAL 1.1. Rental. Tenant shall pay to Landlord, at such place as Landlord may designate to Tenant in writing, the rent and other payments reserved and required under this Article I, which rent and other payments, together with all other amounts becoming due from Tenant to Landlord hereunder, are herein collectively referred to as the "Rent" or "Rental." Except as set forth in Section 10.4 of the Stock Purchase Agreement, all Rental shall be paid without notice or demand, and without abatement, deduction, counterclaim or set-off. In the 3 event Tenant does not make Rental payments within ten (10) days of receipt of notice that such amount is unpaid, Tenant shall pay to Landlord Three Hundred Dollars ($300.00) as a late fee. 1.2. Base Rent. Subject to rent adjustments in accordance with Section 1.3 hereof, Tenant shall pay to Landlord an annual Base Rent (the "Base Rent") set forth on Exhibit B attached hereto and made a part hereof. Base Rent shall be paid in advance on the first day of each and every calendar month during the Term. 1.3. Additional Payments. In addition to Base Rent, Tenant shall pay all of the Expenses (as hereafter defined) assessed or incurred in connection with the Premises on or before the respective due dates thereof. Tenant's obligation to pay the Expenses shall survive the expiration of the Term. For purposes of this Section 1.3, Expenses shall mean, for any calendar year, all reasonable and customary expenses, costs and disbursements which Landlord shall pay or become obligated to pay because of or in connection with the operation, maintenance, repair and replacement, of the Premises (other than the items which are Landlord's responsibility pursuant to Section 2.2 of this Lease) and of the personal property, fixtures, machinery, equipment, systems and apparatus located therein or used in connection therewith, including, but not limited to, the cost of utilities to the Premises. Notwithstanding the foregoing, payments made or incurred by Landlord or Tenant prior to the Commencement Date shall not be included in Expenses. 1.4. Triple Net Lease. Except for Landlord's obligations delineated in Section 2.2 hereof, the parties hereto intend that the Rental payable hereunder shall be an absolute net return to Landlord and that, except as expressly provided to the contrary herein or the Stock Purchase Agreement, all costs, expenses and obligations of whatever kind, whether foreseen or unforeseen, general or special, ordinary or extraordinary, that may arise in connection with the use, occupancy, maintenance or operation of the Premises shall be paid or performed by Tenant. Tenant shall not be obligated to pay any income or franchise taxes which may be levied against Landlord. 1.5. Taxes. (a) Tenant shall pay, as Additional Rent and prior to delinquency, all ad valorem real estate taxes, special assessments and personal property taxes (including any rental or similar taxes and license, building, occupancy or similar fees levied or imposed in lieu of or in addition to general real or personal property taxes) which may be levied or imposed during the Term against the Premises or any part thereof. Tenant shall pay before delinquency all taxes, assessments, license fees and other public charges levied, assessed or imposed upon its business operations and its leasehold improvements, merchandise and other personal property in or about the Premises (collectively, the "Taxes"). Tenant shall deliver to Landlord copies of receipts showing payment of said real estate taxes within thirty (30) days after request by Landlord. (b) Tenant shall have the right to contest at Tenant's expense, all Taxes levied against the Premises by legal proceedings provided that such proceedings have the effect of preventing the forfeiture of the Premises or any part thereof to satisfy the same. All contest proceedings shall be conducted in good faith and with due diligence by Tenant. Tenant shall - 2 - 4 give Landlord such security as Landlord may reasonably require to insure the payment of the Taxes so contested, and all interest and penalties thereon. Landlord shall cooperate in any such proceedings. (c) Taxes with respect to the years in which the Term commences and expires shall be prorated between Landlord and Tenant, and together with the first installment of Rental hereunder, Tenant shall pay to Landlord the portion of Taxes, if any, which have been paid by Landlord and which are attributable to the Term of this Lease and upon expiration of the term (except in the event Tenant purchases the property pursuant to the Option Agreement as hereinafter defined), Landlord shall pay to Tenant the portion of any Taxes, if any, which have been paid by Tenant and which are attributable after the Term of this Lease. ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY 2.1. Use. Subject to the Permitted Exceptions (as hereafter defined), Tenant shall have the exclusive right to and shall occupy and use the Property for its business operations and any other use reasonably related thereto. Tenant shall not occupy or use the Premises or permit the Premises to be occupied or used for any purpose, act, or thing which is in violation of any public law, ordinance, or governmental regulation. 2.2. Maintenance and Repair and Replacement. Except for damage caused by Tenant, Landlord shall, in full compliance with all applicable laws and ordinances, maintain and make all necessary structural repairs, replacements and alterations to the Building, including but not limited to foundations, roofs, exterior and load bearing walls, structural columns and structural beams, ordinary wear and tear excepted, Landlord shall proceed promptly with such maintenance, repairs and replacements. Tenant shall, at its own cost and expense subject to the provisions of Section 2.3, (i) keep the interior of the Premises in a clean and tenantable condition during the Term and (ii) maintain in good operating condition and repair, ordinary wear and tear excepted, all electrical, mechanical and plumbing fixtures located within the Premises, all system and fixtures serving the Premises, and the ventilating, heating and air conditioning, if any, systems serving the Premises, the floors, the parking lot and parking areas during the Term. Tenant shall also repair any damage to the Premises caused by Tenant, or its agents or employees, ordinary wear and tear excepted. If either party fails to make or commence to make such repairs after written notice thereof from the other party and applicable grace periods, the notifying party may, in its sole discretion, do so and the defaulting party shall pay to the notifying party the reasonable cost thereof within thirty (30) days of being billed therefor. In the event the defaulting party does not reimburse the notifying party within the aforesaid thirty (30) day period, such failing shall be deemed to be a further default hereunder and such amount shall bear interest from the date of the statement at the rate set forth in Section 13.3(b). Landlord may enter the Premises at reasonable times to inspect, to show the Property to prospective tenants during the last six (6) - 3 - 5 months of the Term or the extended Term, if applicable (so long as the option to extend set forth in Section 9.1 has not been exercised), or to make such repairs to the Premises as Landlord shall reasonably deem necessary, or as required in order to comply with its obligations hereunder or as required by any governmental authority or judicial order. In making such entry, Landlord shall use its best efforts not to unreasonably interfere with Tenant's use and occupancy of the Premises, and, except in the event of an emergency, shall enter only upon reasonable prior notice to Tenant explaining the reasons therefor. 2.3. Alterations. Tenant shall not, without Landlord's prior written consent, alter or remodel the Premises, which consent shall not be unreasonably withheld or delayed; provided, however, that Tenant may make non-structural alterations at a cost of less than $25,000 without Landlord's prior written consent. In the event that Landlord consents to any proposed alteration or remodeling of the Premises, Tenant shall not have the obligation to restore such proposed alteration or remodelling unless such consent specifies that Landlord will require Tenant to remove the same upon expiration of the Term. All work performed by or on behalf of Tenant shall be in accordance with good construction practices, all applicable laws, insurance requirements, and Landlord's reasonable rules and regulations. Prior to the commencement of any work by Tenant, Tenant shall (i) obtain or cause to be obtained public liability and workmen's compensation insurance to cover every contractor to be employed by Tenant and such contractor's subcontractors, and shall deliver duplicate originals of all certificates of such insurance to Landlord for approval; (ii) furnish Landlord with all necessary permits, licenses, approvals, certificates and authorizations for prosecution and completion of such work; and (iii) furnish Landlord with such other documents as may be reasonably requested by Landlord. Tenant shall have the right to install signage on the Premises provided that Tenant also pay the cost of all signage and the installation thereof. Landlord shall have the right, but not the duty, to inspect construction operations in connection with any work completed or being completed on the Premises. Tenant shall indemnify and hold Landlord harmless from and against any and all loss, cost or expense incurred by Landlord as a result of such alterations or remodelling. In the event any construction or other lien is filed against the Premises as a result of such alteration or remodelling, Tenant shall either pay such lien claim or if Tenant elects to contest such claim, provide a bond, title indemnity or other security reasonably satisfactory to Landlord protecting Landlord's interest in the Premises. Nothing herein shall give Landlord any interest in Tenant's personal property, machinery, equipment, inventory, raw materials, office furniture, office equipment, trade fixtures, cables, data processing equipment or appliances, which shall remain the property of Tenant. - 4 - 6 ARTICLE III LANDLORD'S RIGHTS Landlord reserves and shall have the following rights, exercisable, unless otherwise herein provided, without notice, without liability to Tenant for damage or injury to person, property or business, without being deemed an eviction or disturbance in any manner of Tenant's use or possession of the Premises and without relieving Tenant from its obligation to pay Rental when due or from any other obligation hereunder: (a) To display the Premises to prospective tenants upon prior notice at reasonable hours during the last three (3) months of the Term or the extended term if the Option to Extend set forth in Article IX is exercised, to display the Premises to prospective purchasers, mortgagees or investors upon prior notice and at reasonable hours at any time during the Term, and, if the Premises are abandoned during the Term, to decorate, remodel, repair or otherwise prepare the Premises for reoccupancy, provided it will not unreasonably disrupt Tenant's normal business activities; (b) To have and retain paramount title to the Premises free and clear of any act of Tenant purporting to burden or encumber it (excluding Permitted Liens, as hereafter defined); and (c) To take any and all reasonable measures, including inspections, repairs and alterations to the Premises as may be reasonably necessary for the safety, protection or preservation thereof or Landlord's interest therein. ARTICLE IV DAMAGE - CONDEMNATION 4.1. Fire or Casualty. If the Premises or the Building is damaged by fire or other casualty (regardless of whether the Premises are made substantially untenantable), then Landlord shall proceed with due diligence, but subject to the remainder of this Section 4.1, to repair and restore the Building or the Premises, as the case may be with the insurance proceeds from the policy referred in Section 6.2 below. In the event the insurance proceeds are insufficient to restore such damage, Landlord shall have no obligation to expend sums in excess of such proceeds. Notwithstanding the foregoing, if such damage renders the Premises untenantable and it is estimated by Landlord in its reasonable judgment that the time to repair and restore the Premises will exceed one hundred eighty (180) days or if such damage occurs during the last twelve (12) months of the Term of this Lease (or, if the Term of this Lease has been extended pursuant to Article IX hereof, during the last twelve (12) months of the Term of this Lease as extended), both Tenant and Landlord shall have the right to terminate this Lease by delivery to the other of written notice of such termination within thirty (30) days following the damage, and all Rental and other charges hereunder for the remainder of the Term shall - 5 - 7 abate. If neither Tenant nor Landlord elects to terminate the Lease as hereinabove provided then the insurance proceeds, if any, shall be utilized by Landlord to commence repairing the damage and Landlord shall repair the damage so that the Premises are in substantially the same condition as they were prior to being damaged. All Rental and other charges shall abate from the date of casualty until such restoration is completed. 4.2. Condemnation. In the event that the whole of the Premises shall be taken in any proceeding by any public authority by condemnation or otherwise, or be acquired for public or quasi-public purposes (all of which are hereinafter collectively referred to as "Condemnation"), this Lease shall terminate as of the date of the taking of possession by the condemning authority and the Rental and other charges payable by Tenant shall cease as of the date possession of the Premises is delivered to such condemning authority. In the event any part of the Premises shall be so taken and such taking substantially interferes with the Tenant's continued use of the Premises as reasonably determined by Tenant, Tenant may, at Tenant's option terminate this Lease as of the date of the taking of possession by the condemning authority and the Rental and other charges payable by Tenant shall cease as of the date possession of the Premises is delivered to such condemning authority. If Tenant, pursuant to the preceding sentence, desires to exercise its option of terminating the Term of this Lease, such termination shall be effective (without any payment by Landlord to Tenant therefor) by Tenant giving notice to Landlord provided that such notice shall be given not more than thirty (30) days subsequent to the date on which Tenant shall have been deprived of possession of the part so taken as determined as an equitable basis. If this Lease is not so terminated, then Rental shall abate as to the portion of the Premises so taken. If the Lease is terminated pursuant to this paragraph, Rental and other charges payable by Tenant shall cease as of the date of such taking. Tenant shall have the right to make a claim to the condemning authority for relocation expenses, its leasehold value and the unamortized value of any improvements, alterations or additions to the Premises paid for by Tenant. Except for any claim awarded to Tenant in accordance with the preceding sentence, Tenant hereby assigns to Landlord, Tenant's interest in any condemnation award. ARTICLE V LANDLORD'S AND TENANT'S REMEDIES 5.1. Events of Default. Each of the following shall be an "Event of Default." (a) If Tenant fails to pay any installment of Rental, or any other payment or money to be paid by Tenant under this Lease within ten (10) days after receipt of notice that the Rental is unpaid; or - 6 - 8 (b) If Tenant fails to observe or perform one or more of the other terms, conditions, covenants or agreements of this Lease and such failure shall continue for a period of thirty (30) days after written notice from Landlord specifying such failure (unless such failure requires work to be performed, acts to be done, or conditions to be removed which cannot by their nature reasonably be performed, done or removed, as the case may be, within such thirty (30) day period, in which case, no Event of Default shall be deemed to exist so long as Tenant shall have commenced the same within such thirty (30) day period and shall diligently and continuously prosecute the same to completion); or (c) If Tenant makes an assignment for the benefit of creditors, admits its inability to pay its debts or takes any action towards a general compromise of its debts or a composition with its creditors; or (d) If all or any substantial part of the assets of Tenant, including the leasehold interest hereunder of Tenant, are attached, seized or become subject to a writ or distress warrant, are levied upon or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and such attachment, seizure, writ, warrant or levy is not withdrawn or removed within ninety (90) days after becoming effective; or (e) If a notice of lien or levy is filed with respect to all or substantially all of Tenant's assets located on the Premises by any federal, state, county or municipal body, department, agency or instrumentality for taxes or debts then owing by Tenant and such notice is not released or withdrawn within ninety (90) days of its filing (unless such lien is a "Permitted Lien" (as hereafter defined)); or (f) If any involuntary petition or similar pleading is filed in any court under any section of the Federal Bankruptcy Code seeking to declare Tenant bankrupt, or seeking a plan of reorganization for Tenant under Chapter 11 of the Bankruptcy Code, or a similar proceeding under state law and such petition or pleading is not withdrawn or denied within ninety (90) days after its filing, or if any voluntary petition or similar pleading is filed in any court under any section of the Federal Bankruptcy Code; or (g) If Tenant fails to comply with any single obligation under this Lease more than three (3) times during a calendar year after having received notice of the previous defaults, such event shall be deemed to be a default without a cure period; provided, however, that any such event must be a separate incident such as the failure to pay Base Rent when due. 5.2. Termination. Upon the occurrence of an Event of Default under Section 5.1, Landlord may, at its option, at any time thereafter, without notice (i) terminate this Lease, or (ii) without terminating this Lease, forthwith terminate the Tenant's right to possession of the - 7 - 9 Premises, or (iii) pursue any other remedy now or hereafter available to Landlord under the laws of the State of Georgia. (a) Upon Landlord's termination of this Lease as a result of the occurrence of an Event of Default, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including (i) the unpaid Rental discounted to present value at the rate of eight percent (8%) per annum, and other charges which had been earned as of the date of termination; and (ii) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease, including, but not limited to, any reasonable costs or expenses incurred by Landlord in maintaining or preserving the Premises after the occurrence of such Event of Default, the reasonable cost of recovering possession of the Premises, expenses of reletting, including necessary renovation or alteration of the Premises, Landlord's reasonable attorneys' fees incurred in connection therewith, and any reasonable real estate commission paid or payable. (b) Upon and after Landlord's termination of this Lease or Tenant's right to possession of the Premises, Landlord shall make reasonable efforts to relet the Premises or any part thereof to any person, firm or corporation other than Tenant for such rent, for such term and upon such conditions as Landlord shall determine, in Landlord's reasonable discretion, and Landlord shall not be required to accept any tenant offered by Tenant (provided that such acceptance shall not be unreasonably refused) or to observe any instructions given by Tenant covering such reletting. In any such case, Landlord may incur reasonable expenses for repairs, alterations, improvements, additions and decoration of or to the Premises to the extent reasonably deemed necessary or desirable by Landlord for the purpose of reletting the Premises. All such reasonable expenses, plus all reasonable brokers' commissions and reasonable attorneys' fees incurred by Landlord in connection with any reletting of the Premises, shall be paid by Tenant to Landlord upon demand. In addition, Tenant shall, for the remainder of the Term, reimburse Landlord, on demand, for any deficiency between Rental and other charges reserved hereunder and the rent received by Landlord upon reletting the Premises. In the event Tenant does not pay such sums when due, such sums shall accrue interest as set forth in Section 13.3(b) below. 5.3. Surrender of Possession. Upon termination of this Lease, whether by lapse of time or otherwise, or upon any termination of Tenant's right to possession of the Premises without termination of the Lease, Tenant shall surrender and vacate the Premises immediately and deliver possession thereof to Landlord in clean, good and tenantable condition, ordinary wear and damage by fire or other casualty excepted. Upon any termination for a thirty (30) day period, Tenant shall be entitled to remove from the Premises any machinery, equipment, inventory, raw materials, built-in furniture, computers, data or word processing or duplicating equipment, trade fixtures, cables or appliances, provided that Tenant shall repair all damage resulting from such removal and shall restore the Premises to a tenantable condition. 5.4. Holding Over. If Tenant retains possession of the Premises or any part thereof after the termination of this Lease by lapse of time or otherwise Tenant shall pay to - 8 - 10 Landlord, Rental at one and one half times the per diem rate payable for the month immediately preceding said holding over, computed on a per diem basis, for each day or part thereof that Tenant thus remains in possession. The provisions of this Section 5.4 shall not be deemed to limit or exclude any of Landlord's rights of re-entry or any other right granted to Landlord hereunder or under law. 5.5. Payment of Expenses in Enforcing Obligations. In the event of any dispute between Landlord and Tenant to enforce any of the provisions and/or rights hereunder, the unsuccessful party covenants and agrees to pay to the successful party all costs and expenses, including reasonable attorneys' fees, incurred therein by the successful party, which costs and expenses shall be included in and as a part of a judgment if litigation is involved. If Landlord, without fault on its part, shall be made a party to any litigation instituted by or against the Tenant by reason of this Lease, then Landlord shall be entitled to receive from the Tenant upon demand all costs, expenses and reasonable attorneys' fees incurred by Landlord in or in connection with such litigation. If Tenant, without fault on its part, shall be made a party to any litigation instituted by or against Landlord by reason of this Lease, then Tenant shall be entitled to receive from the Landlord upon demand all costs, expenses and reasonable attorneys' fees incurred by Tenant in or in connection with such litigation. 5.6. Landlord's Performance of Tenant's Obligations. If Tenant shall default in the performance of any of its obligations hereunder and such default shall continue after the expiration of any notice or grace period herein provided, Landlord may perform such obligation for the account and expense of Tenant upon thirty (30) days written notice except in cases of emergency, and Tenant shall reimburse Landlord therefor upon demand plus Landlord's reasonable costs and expenses, including attorneys' fees. 5.7. Non-Waiver. No waiver of any agreement or condition expressed in this Lease shall be implied by any neglect of Landlord or Tenant to enforce any remedy on account of the violation of such agreement or condition if such violation be continued or repeated subsequently, and no express waiver shall affect any agreement or condition other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination in any way of the Term or of Tenant's right of possession hereunder, or after the giving of any notice, shall reinstate, continue or extend the Term or affect any notice given to Tenant prior to the receipt of such monies, it being agreed that after the service or notice or the commencement of a suit or after final judgment for possession of the Premises Landlord may receive and collect any Rental due, and the payment of said Rental shall not waive or affect said notice, suit or judgment. 5.8. Rights and Remedies Cumulative. All rights and remedies of Landlord and Tenant under this Article and elsewhere in this Lease shall be distinct, separate and cumulative and none shall exclude any other right or remedy of Landlord or Tenant as set forth in this Lease or allowed by law. Landlord's and Tenant's obligations under this Article shall survive the expiration of the Term. - 9 - 11 5.9. Tenant's Performance of Landlord's Obligations. If Landlord shall default in the performance of any of its obligations hereunder and such default shall continue after the expiration of any notice or grace period herein provided, Tenant may perform such obligation for the account and expense of Landlord upon thirty (30) days written notice except in cases of emergency, and Landlord shall reimburse Tenant therefor upon demand, plus Tenant's reasonable costs and expenses, including attorneys' fees. ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND RIGHTS OF RECOVERY ON INSURANCE 6.1. Waiver of Claims and Indemnity. Tenant hereby releases and waives all claims against Landlord, agents, employees and servants for injury or damage to person, property or business sustained in or about the Property by Tenant, its agents, employees or servants, which injury or damage results from any act, neglect, occurrence or conditions in or about the Property, except to the extent that such injury or damage is caused by the negligence or willful or wanton act or omission by Landlord, or its agents, employees or servants. To the extent any of the foregoing is covered by insurance, Landlord or Tenant, as the case may be, shall have but one (1) recovery, but any such recovery shall not be limited to the amount of such insurance. Tenant hereby agrees to indemnify and hold Landlord, its agents, employees and servants harmless against any and all claims, damage, demands, costs and expenses of every kind and nature, including reasonable attorneys' fees for the defense thereof, arising from Tenant's occupancy of the Property or from any breach or default on the part of Tenant in the performance of any agreement of Tenant to be performed pursuant to the terms of this Lease, or from any act, omission or negligence of the Tenant, its employees, servants and agents, subtenants and/or assignees in or about the Property during the term of the Lease. To the extent any of the foregoing is covered by insurance, Landlord shall have but one (1) recovery. In case any such proceeding is brought against Landlord, its agents, employees or servants, Tenant covenants to defend such proceeding at its sole cost and expense by legal counsel reasonably satisfactory to Landlord. Landlord hereby agrees to indemnify and hold Tenant, its agents, employees and servants harmless against any and all claims, damage, demands, costs and expenses of every kind and nature, including reasonable attorneys' fees for the defense thereof, arising from any breach or default on the part of Landlord in the performance of any agreement of Landlord to be performed pursuant to the terms of this Lease, or from any act, omission or negligence of Landlord, its employees, servants and agents in or about the Property. To the extent any of the foregoing is covered by insurance, Tenant shall have but one (1) recovery. In case any such proceeding is brought against Tenant, its agents, employees or servants, Landlord covenants to defend such proceeding at its sole cost and expense by legal counsel reasonably satisfactory to Tenant - 10 - 12 In the event of any conflict or in consistency between the indemnification provisions hereof and those contained in the Stock Purchase Agreement, those contained in the Stock Purchase Agreement shall govern. 6.2. Insurance Coverage. Tenant, at Tenant's sole cost and expense, shall obtain and maintain, for the Term of this Lease, as extended, insurance policies in form and content, and issued by an insurer, reasonably acceptable to Landlord, providing the following coverage: (i) all perils included in the classification "fire and extended coverage" under insurance industry practices in effect from time to time in the jurisdiction in which the Building is located covering the Building and all fixtures and property located therein, including without limitation, Tenant's fixtures, machinery, equipment, furnishings, merchandise, alterations, improvements and other contents in the Premises, for 100% of the full replacement value of said Building and items; and (ii) comprehensive generally liability insurance (including contractual liability) naming Landlord, and any mortgagee, as additional insureds, which policy is to be in the minimum amount of Two Million Dollars ($2,000,000.00) with respect to any one person, in the minimum amount of Three Million Dollars ($3,000,000.00) with respect to any one accident, and in the minimum amount of Five Hundred Thousand Dollars ($500,000.00) with respect to personal property damage. Each policy described in this Section 6.2 shall name Landlord and any mortgagee of the Premises as additional insureds and as loss payees and shall contain a provision that it shall (i) not be cancelable and that it shall continue in full force and effect unless Landlord has received at least thirty (30) days prior written notice of such cancellation or termination, and (ii) not be materially changed without thirty (30) days prior notice to Landlord. Insurance coverage under umbrella policies shall be acceptable. Landlord shall be named as loss payee on the casualty policy with respect to the Building. 6.3. Rights of Recovery on Insurance. Landlord and Tenant agree to have all fire and extended coverage and material damage insurance which may be carried with respect to the Building, the Premises or to the property located therein endorsed with a clause substantially as follows: "This insurance shall not be invalidated should the insured waive in writing prior to a loss any or all rights of recovery against any party for loss occurring to the property described herein." Landlord and Tenant hereby waive all claims for recovery from each other for any loss or damage to them or to any of their property insured under valid and collectible insurance policies to the extent of the proceeds collected under such insurance policies. ARTICLE VII TITLE MATTERS 7.1. Subordination of Lease. This Lease and the rights of Tenant hereunder shall become subject and subordinate at all times to the lien of the mortgage or deed of trust existing against the Property referred to on Exhibit C attached hereto and made a part hereof, and to all advances made or hereafter to be made upon the security thereof, and to all future mortgages or deeds of trust made to an institutional lender such as a bank, savings and loan, or - 11 - 13 insurance company; provided that the mortgagee or trustee under any such existing and future mortgage or deed of trust provides a non-disturbance agreement reasonably satisfactory to Tenant and which provides that such mortgagee or trustee recognizes all of Tenant's rights hereunder, including but not limited to Tenant's options to expand, purchase and extend the Term of this Lease. In the event any proceedings are brought to foreclose any mortgage or deed of trust, Tenant will attorn to the purchaser upon any foreclosure sale and recognize such purchaser as the landlord under this Lease. Tenant agrees to execute and deliver at any time any instrument to further evidence such attornment as may be reasonably requested in writing by any holder of such mortgage, or the trustee under any such deed of trust. 7.2. Estoppel Certificate. Landlord and Tenant agree that from time to time upon not less than fifteen (15) business days prior request by the other, the non-requesting party, or its duly authorized representative having knowledge of the following facts, will deliver to the requesting party, or to such person as the requesting party may designate, a statement in writing certifying (i) that this Lease is unmodified and in full force and effect, or, if there have been modifications, that the Lease as modified is in full force and effect; (ii) the dates to which the Rental and other charges have been paid; (iii) that to the best of the non-requesting party's knowledge, the requesting party is not in default under any provision of this Lease, or, if in default, the nature thereof in detail; and (iv) such other provisions reasonably requested by the requesting party. 7.3. Assignment and Subletting. Except as otherwise permitted in Section 7.4 and this Section 7.3, Tenant shall not without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed, (i) assign or convey this Lease or any interest under this Lease, provided, however, Tenant may provide a leasehold mortgage to an institutional lender with assets in excess of $500,000,000; (ii) sublease all or any portion of the Premises; or (iii) permit the use or occupancy of the Premises by any party other than Tenant, its agents, employees, guests, invitees and licensees. Notwithstanding the limitations set forth above, Tenant may assign this Lease or sublet all or any portion of the Tenant Premises without Landlord's consent: (a) To a corporation controlling, controlled by or under common control with Tenant, (hereinafter an "Affiliated Corporation"); provided that any such assignment or sublease shall be subject to the terms and conditions of this Lease. For purposes hereof, "control" shall mean the ownership, either directly or indirectly, of fifty percent (50%) or more of all shares entitled to vote of such other corporation; and (b) To the surviving corporation in a merger, reorganization or consolidation or other corporate action involving Tenant provided that any such assignment or sublease shall be subject to the terms and conditions of this Lease. - 12 - 14 No assignment of this Lease or sublease of the Premises pursuant to the provisions of this Section 7.3 shall be effective unless and until the assignee or sublessee shall have executed an appropriate instrument, in form reasonably satisfactory to Landlord, assuming all of the obligations of Tenant hereunder to the extent of the Premises assigned or subleased, and shall have delivered a copy thereof, or an executed counterpart thereof, to Landlord. In the event of any permitted assignment of this Lease or subletting of the Premises, Tenant shall remain fully liable for all of the obligations of Tenant under this Lease, except for additional obligations entered into as a result of a lease amendment between Landlord and any assignee. 7.4. Covenant Against Mechanic's Liens. Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialmen to be placed against the Property or any part thereof arising from work done by or on behalf of Tenant. If any such lien shall attach to the Property or any part thereof, Tenant shall either (i) pay off and remove the same or (ii) if Tenant desires to contest such lien in a court of competent jurisdiction, Tenant shall either (1) file with Landlord a bond or other security in an amount and with an independent surety, reasonably satisfactory to Landlord or (2) maintain a title indemnity with appropriate security to protect against an exception to title with a title insurance company reasonably designated by Landlord and in such amount and on such terms as are reasonably satisfactory to Landlord and such title insurance company, in which event such a lien shall be a "Permitted Lien". Other than a Permitted Lien, Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Property or any part thereof. Any and all liens and encumbrances created by Tenant shall attach only to Tenant's interest in the Premises. 7.5. Covenant of Quiet Enjoyment. Landlord covenants, represents and warrants that it has full power and proper authority to execute this Lease and to grant the rights provided to Tenant hereunder and further covenants that, upon paying the Rental and keeping the agreements of this Lease on its part to be kept and performed, Tenant shall have peaceful and quiet possession of the Premises and full enjoyment of all of its rights herein granted for the Term of this Lease (or, if the Term of this Lease has been extended pursuant to Article IX hereof, for the Term of this Lease as extended). 7.6. Permitted Title Exceptions. The leasehold interest conveyed hereby shall be subject to the following exceptions (the "Permitted Exceptions"): a. Taxes for the year 1996 and subsequent years, not yet due and payable; b. Acts done or suffered by Tenant, pursuant to this Lease or otherwise; c. Zoning laws and ordinances, provided that Tenant's use of the Premises complies with such laws and ordinances; d. Mortgage or deed of trust described in Section 7.1 above; and - 13 - 15 e. Easements for public utilities which do not or will not underlie the improvements as built, provided same are recorded in the public records of Coweta County, Georgia. Landlord agrees that Landlord shall not further encumber the Property without Tenant's prior written consent except with respect to Landlord's right to mortgage the Property so long as such financing complies with the requirement set forth in Section 7.1 above. Tenant shall not be responsible for correcting any violation of the above Permitted Exceptions if such violation was not caused by Tenant or if it existed on or before the Commencement Date. Landlord shall not further encumber title to the Property. ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE In the event of any sale or other transfer of the Property effective after the Commencement Date of this Lease, Landlord and the seller or transferor shall be entirely freed and relieved of all agreements and obligations of Landlord hereunder accruing after the date of such sale or transfer, provided, such purchaser or transferee shall have assumed and agreed to perform all agreements and obligations of the Landlord hereunder accruing from and after the date of such sale or transfer and shall take title subject to this Lease. Subject to the provisions of the preceding sentence, Tenant hereby consents to any future assignment by Landlord of any part or all of its rights under this Lease. ARTICLE IX TENANT'S OPTION TO EXTEND LEASE 9.1. Option. Tenant shall have the right and option to extend the Term of this Lease for two additional consecutive five (5) year periods (the "Option Periods") commencing immediately following the Termination Date provided that (i) Tenant sends notice of its election to extend the Term of the Lease to Landlord not less than one hundred eighty (180) days prior to the end of the Term of the Lease or the extended Term; (ii) at the time Tenant sends such notice, Tenant is not then in default in the performance of any term, condition, covenant or agreement of this Lease as to which notice of default has been given to Tenant unless such default cannot, with due diligence, be cured, prior to the last date on which Tenant is entitled to exercise such option and Tenant has proceeded promptly and with due diligence after service of the notice of default to cure such default; and (iii) at the date of commencement of the Option Period, or the Second Option Period Tenant is not in default in the performance of any term, condition, covenant or agreement of this Lease as to which notice of default has been given to Tenant or, if notice of default has been given, Tenant has proceeded promptly and with due diligence after service of the notice of default to cure such default, and no event is occurring which, with the passage of time or the giving of notice, or both, would constitute a default hereunder. - 14 - 16 9.2. Rent During Option Years. (a) The Base Rent due and payable during the Option Periods shall be agreed to by the parties within thirty (30) days of Tenant's notice to Landlord, or if the parties cannot agree within the aforesaid thirty (30) day period, in accordance with Section 9.2(b). All the terms and conditions of this Lease shall be applicable to such extended terms except (i) for those matters that have expired by their own terms or have been performed and (ii) the Base Rent for such extended terms shall be as set forth below. Such Lease shall be deemed extended without any further lease or instrument. (b) The Base Rent for the option periods shall be adjusted by 50% of the increase in the Index now known as "United States Bureau of Labor Statistics, Consumer Price Index, for all Urban Consumers (the "CPI-U"), All Items for Atlanta Average (1967 = 100)" hereinafter referred to as the "Index", provided, that the amount payable by Tenant under this Lease as Base Rent shall not be less than the annual Base Rent payable for the preceding lease year. Such adjustment shall be accomplished by multiplying the aforementioned Base Rent by one half of the increase in the Index from the monthly Index preceding the first day of the option period for which the adjustment is made over the corresponding monthly Index for the month of the Commencement Date of this Lease. If such Index shall be discontinued with no successor or comparable successor Index, the parties shall attempt to agree upon a substitute or comparable successor Index, but if the parties are unable to agree upon a substitute formula, then the manner in which the Base Rent shall be adjusted to take into account changes in the cost of living shall be determined by arbitration in accordance with the rules of the American Arbitration Association then prevailing. ARTICLE X ENVIRONMENTAL MATTERS 10.1. Environmental Matters. Except as described in the environmental reports all delivered by Landlord to Tenant and referred to on Exhibit D attached hereto and made a part hereof, prior to the Commencement Date, (i) no Hazardous Materials have been located on the Property or have been released in the environment, or discharged, placed or disposed of at, on or under the Property; (ii) no underground storage tanks have been located on the Property; (iii) the Property has never been used as a dump for waste material; and (iv) the Property and its prior uses comply with and at all times have complied with, all applicable governmental laws, regulations or requirements relating to environmental and occupational, health and safety matters and Hazardous Materials. The term "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local governmental authority, the State of Georgia, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "hazardous material," "hazardous - 15 - 17 substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of Georgia law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive material, (vi) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C Section 9601). The term "Environmental Laws" shall mean all statutes specifically described in the foregoing sentence and all federal, state and local environmental health and safety statutes, ordinances, codes, rules, regulations, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials. Additionally, but not in lieu of Landlord's affirmative undertakings set forth herein, Landlord agrees to indemnify, defend and hold harmless Tenant and its successors and assigns hereunder in accordance with the environmental indemnities set forth in Section 10.2 of the Stock Purchase Agreement for the full term of this Lease. ARTICLE XI OPTION TO PURCHASE 11.1. Option. (a) Tenant shall have the right and option to purchase the Property (the "Purchase Option") at a purchase price equal to Fair Market Value, disregarding the fact that the Property is encumbered with this Lease (as hereinafter defined), which Purchase Option shall be exercisable on the earlier of (i) the last day of the fifth year of the Term hereof, and (ii) the date on which the environmental condition of the Property is acceptable to Tenant, and which Purchase Option shall be exercisable at any time during each year thereafter during the Term hereof on any extended Term, if applicable. In the event Tenant elects to exercise its Purchase Option, Tenant shall so notify Landlord of its election on or before the date which is ninety (90) days prior to the date on which such purchase is to occur (the "Closing Date"). The terms of the sale by Landlord and the purchase by Tenant of the Property shall be in accordance with the provisions of Exhibit E attached hereto and made a part hereof. (b) Determination of Fair Market Value. "Fair Market Value" as used herein shall be determined as follows: If Landlord and Tenant shall fail to agree upon the Fair Market Value within thirty (30) days of the exercise of Tenant's option to purchase the Property, then Landlord and Tenant each shall give notice to the other setting forth the name and address of an arbitrator designated by the party giving such notice. If either party shall fail to give notice of such designation within forty-five (45) days after the thirty (30) day period, then the arbitrator chosen shall make the determination alone. If two arbitrators shall have been designated, such two arbitrators shall, within thirty (30) days, make their determination of Fair Market Value in writing and give notice thereof to each other and to Landlord and Tenant. Such two arbitrators shall have thirty (30) days after the receipt of notice of each other's determination to confer with each other and attempt to reach a determination as to Fair Market Value. If such two arbitrators - 16 - 18 shall concur as to the determination of the Fair Market Value, such concurrence shall be final and binding upon Landlord and Tenant. If the Fair Market Value of such two arbitrators are within ten percent (10%) of each other, the Fair Market Value during the option period shall be the average of the two arbitrator's Fair Market Values. If such two arbitrators shall fail to concur and their respective Fair Market Values are more than ten percent (10%) different, then such two arbitrators shall immediately designate a third arbitrator, who shall satisfy the requirements set forth herein for an arbitrator and shall also be an American Arbitration Association or any successor thereto having jurisdiction for the designation of such arbitrator. All arbitrators shall be non-affiliated industrial real estate appraisers, who shall have at least ten (10) years experience in the business of appraising industrial real estate in the State of Georgia and who shall have not worked for either party hereto or for an affiliate or owner of either party hereto for ten (10) years. The third arbitrator shall conduct such hearings and investigations as he may deem appropriate, and shall, within thirty (30) days of the designation of the third arbitrator, choose one of the determinations of the two arbitrators originally selected by the parties and that choice by the third arbitrator shall be binding upon Landlord and Tenant. Each party shall pay its own counsel fees and expenses, if any, in connection with any arbitration under this Section 11 including the expenses and fees of any arbitrator selected by it and the parties shall share equally all other expenses and fees of any such arbitration. ARTICLE XII OPTION TO EXPAND 12.1. Expansion Option. Tenant shall have the option to be exercised at any time during the Term to require Landlord to finance the expansion of the improvements on the Property. Upon exercise of such option, an officer of Tenant and Irving Rubin, Robert Bonczyk, or their successors and assigns, shall negotiate in good faith and on a reasonable basis for a period of thirty (30) days an amendment to this Lease which provides for a lease term and rental sufficient to allow financing of such expansion. In the event Landlord and Tenant are unable to agree upon a lease amendment after such thirty (30) day period, either party shall have the right to submit the matter to arbitration which arbitration shall be conducted in accordance with the arbitration provisions of the Stock Purchase Agreement. ARTICLE XIII GENERAL 13.1. Notices. All notices, waivers, demands, requests or other communications required or permitted hereunder shall, unless otherwise expressly provided, be in writing and be deemed to have been properly given, served and received (i) if delivered by messenger, when delivered, (ii) if mailed, on the third (3rd) business day after deposit in the United States Mail, certified or registered, postage prepaid, return receipt requested, (iii) if telexed, telegraphed or telecopied, three (3) hours after being dispatched by telex, telegram or telecopy, if such third (3rd) hour falls on a business day within the hours of 8:00 a.m. through 5:00 p.m. of the time in effect at the place of receipt, or at 8:00 a.m. on the next business day thereafter if such third - 17 - 19 (3rd) hour is later than 5:00 p.m., or (iv) if delivered by reputable overnight express courier, freight prepaid, the next business day after delivery to such courier; in every case addressed to the party to be notified as follows: If to Landlord: CPI Plastics, L.L.C. 29200 Southfield Road Suite 209 Southfield, Michigan 48076-1925 Attention: Irving A. Rubin And to: Robert Bonczyk 314 Buchner Hill Northville, Michigan 48167 With a copy to: Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C. 28400 Northwestern Highway Third Floor - Essex Centre Southfield, Michigan 48034-8004 Attention: Richard Roth If to Tenant: United States Can Company 900 Commerce Drive Oak Brook, Illinois 60521 Attn: Vice President of Materials & Logistics With a copy to: Ross & Hardies 150 North Michigan Avenue Suite 2500 Chicago, Illinois 60601-7567 (312) 558-1000 Attn: Patrick E. Brady or at such other address as the party to receive said notice may theretofore have furnished by written notice as set forth above. - 18 - 20 13.2. Brokers. Tenant and Landlord represent and warrant to each other that they have not dealt with any broker or finder in connection with this Lease, and to their knowledge, no other broker or finder initiated or participated in the negotiation of this Lease, submitted or showed the Premises to Tenant or is entitled to any commission in connection with this Lease. Tenant and Landlord hereby indemnify and hold each other harmless from and against any and all claims, damages and expenses based upon or arising out of any claim by any person with whom it is ultimately determined that Landlord or Tenant has dealt in violation of the foregoing representations and warranties of any other real estate broker for commissions resulting from a breach of the foregoing representations and warranties. 13.3. General. (a) All rights and remedies of Landlord or Tenant, as the case may be, under this Lease shall be cumulative and none shall exclude any other rights and remedies allowed by laws. (b) All installments of Rental and any other sums which are unpaid when due and remain unpaid for ten (10) days after notice, shall bear interest at a rate of ten percent (10%) per annum from the date due until paid. (c) Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit, not only of Landlord and of Tenant, but also of their respective heirs, legal representatives, successors and assigns, subject to Section 7.4. hereof. (d) All of the representations, agreements and obligations of Landlord and Tenant are contained herein, and no modification, waiver or amendment of this Lease or of any of its conditions or provisions shall be binding upon the Landlord or Tenant unless in writing signed by such party. (e) No receipt of money by Landlord from Tenant after the termination of this Lease or after the service of any notice or after the commencement of any suit, or after final judgment for possession of the Premises shall reinstate, continue or extend the Term of this Lease or affect any such notice, demand or suit. (f) The officers of Tenant and Landlord executing this Lease each represent that he has been duly authorized by his respective Boards of Directors to execute this Lease in this form and containing the aforesaid covenants. (g) The headings or captions of Sections are for convenience only, are not part of this Lease, and shall not affect the interpretation of this Lease. (h) This lease may be executed in any number of counterparts, all of which when put together shall be deemed an original. - 19 - 21 (i) This Lease shall be governed by and construed in accordance with the laws of the State of Georgia. If any provision or part of this Lease or the application thereof to any persons or circumstances shall, to any extent, be invalid, illegal or unenforceable, the remainder of this Lease, or the application of such provision or part to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law. IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement for Building Lease to be executed as of the first day written above. LANDLORD: CPI PLASTICS, L.L.C., a Michigan limited liability company By: /s/ Irving A. Rubin -------------------------------------------- Name: Irving A. Rubin Title: Member TENANT: UNITED STATES CAN COMPANY, a Delaware corporation By: /s/ Timothy W. Stonich -------------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President Chief Financial Officer - 20 - 22 EXHIBIT A LEGAL DESCRIPTION 23 EXHIBIT B BASE RENT Tenant shall pay the monthly installments of Base Rent in advance on the first day of each calendar month during the Term subject to the following schedule: Time Period Monthly Rent ----------- ------------ August 1, 1996 through July 31, 2011 $ 25,000.00/month 24 EXHIBIT C LANDLORD'S EXISTING MORTGAGE NONE 25 EXHIBIT D ENVIRONMENTAL REPORTS Environmental Reports dated July 30, 1996 prepared by Environmental Resources Management, Inc. 26 EXHIBIT E TERMS OF AGREEMENT OF SALE Upon Tenant's exercise of the Option to Purchase in conformity with Article XI of the attached Lease, without further action of the Landlord or Tenant, there shall be a Binding Agreement of Sale for the Property between Landlord, as Seller, and Tenant, as Buyer, upon the following terms and conditions: PROPERTY AND TERMS 1. Seller hereby agrees to sell and convey to Buyer, who hereby agrees to purchase ALL THAT CERTAIN lot or piece of ground, more particularly described in Exhibit "A" to the Lease attached hereto and made a part hereof and known by street address of 434 Corinth Road, Newnan, Georgia, together with all improvements thereon, including one (1) building with approximately 95,000 square feet of interior area, together with all fixtures owned by Seller and located therein ("Property"), for the Purchase Price set forth in Article XI of the attached Lease in cash, wire transfer on other immediately available funds. TITLE 2. At Closing, title to the Property shall convey by general warranty deed good and marketable and such as will be insured in the amount of the purchase price by title insurance company selected by Buyer (the "Title Company") and reasonably acceptable to the Seller, at Seller's expense, free and clear of all mortgages, liens, encumbrances and easements, excepting only those listed on Exhibit 1 of this Agreement. In the event the Seller is unable to give a good and marketable title and such as will be insured by the Title Company, subject as aforesaid, Buyer shall have the option of taking such title as the Seller can give by deducting from the Purchase Price liens of a definite or ascertainable amount or of terminating this Agreement of Sale upon written notice to Seller; and in the latter event there shall be no further liability or obligation on either of the parties hereto and this Agreement of Sale shall become null and void. Within thirty (30) days of exercise of this option, Buyer shall obtain a then current survey of the Property certified to Buyer, the Title Company and Buyer's lender, as having been made in accordance with the Minimum Land Survey Standard Detail Requirements for Land Title Surveys jointly established and adopted by ALTA and ACSM (the "Survey"). The Survey shall show that the Property is not in a flood plain. Within thirty (30) days following receipt of the Survey, Buyer shall notify Seller of any discrepancies or conflicts in boundary lines, shortages in area, and encroachments as may be shown by the Survey. Seller shall have twenty-five (25) days following receipt of Buyer's notice to advise Buyer if Seller can remove or clear the discrepancy or conflict. If Seller is unable to remove or clear such discrepancies in title, Buyer shall have the option of either taking such title as Seller can give without abatement of price or of terminating this Agreement of Sale upon written notice to Seller. In the latter event, there 27 shall be no further liability or obligation on either of the parties hereto and this Agreement of Sale shall become null and void. Notwithstanding anything to the contrary contained herein, Seller shall not further encumber title to the Property without Buyer's consent. Seller shall provide Buyer with a title insurance policy at closing insuring Buyer's interest as the owner of the Property from a title insurance company designated by Buyer (the "Title Insurer") in the amount of the Purchase Price with extended coverage over the general exceptions, a 3.1 zoning endorsement, amended to include parking and approving Buyer's current use of the Property and such other endorsements reasonably requested by Buyer. The cost of the extended coverage shall be paid for by Buyer. Within fifteen (15) days of the exercise of this option to Purchase, Buyer shall order a title commitment. At closing, Buyer shall deduct from the proceeds of sale the cost for all survey, title charges and title insurance. CONDITION OF PROPERTY 3. Except for the provisions of Section 7, Buyer shall accept the Property in their "as-is" condition on the date of Closing, provided that if Buyer determines at any time prior to Closing that the Property or the lands in the vicinity of the Property are not free of toxic and hazardous substances and materials, Buyer shall have the option of terminating this Agreement upon notice to Seller. ASSESSMENT 4. Excepting notices previously delivered by Seller to Buyer during the term of the Lease, Seller covenants and represents as of the Exercise Date that no notice by any governmental agency or body regarding the Property, including, without limitation, notices pertaining to Environmental Laws and other governmental statutes, rules, regulations or directives affecting the Property, have been served upon Seller or anyone on the Seller's behalf. POSSESSION 5. Possession is to be delivered and physical possession at day and time of Closing. TAXES AND ADJUSTMENTS 6. All apportionable debits and credits, including assessments, taxes (subject to Buyer's obligation to pay taxes pursuant to the Lease) and sewer rent (if any) for the current term shall be calculated as levied and pro-rated as of the date of Closing. All real estate transfer taxes imposed by a governmental authority shall be paid for by Seller. ENVIRONMENTAL INDEMNITY 7. Except as described in the environmental reports all delivered by Seller to Buyer and referred to on Exhibit D to the Lease and made a part thereof, prior to the Commencement Date (as defined in the Lease), (i) no Hazardous Materials have been located on the Property or have been released in the environment, or discharged, placed or disposed of at, on or under 28 the Property; (ii) no underground storage tanks have been located on the Property; (iii) the Property has never been used as a dump for waste material; and (iv) the Property and its prior uses comply with and at all times have complied with, all applicable governmental laws, regulations or requirements relating to environmental and occupational, health and safety matters and Hazardous Materials. The term "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local governmental authority, the State of Georgia, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of Georgia law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive material, (vi) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C Section 9601). The term "Environmental Laws" shall mean all statutes specifically described in the foregoing sentence and all federal, state and local environmental health and safety statutes, ordinances, codes, rules, regulations, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials. Additionally, but not in lieu of Seller's affirmative undertakings set forth herein, Seller agrees to indemnity, defend and hold harmless Buyer and its grantees in accordance with the environmental indemnities set forth in Section 10.2 of the Stock Purchase Agreement. The indemnity and the obligation to defend and hold Buyer harmless set forth herein shall survive for a period of four years from the closing date of the Stock Purchase Agreement. RISK OF LOSS 8. Any loss or damage to the Property caused by fire, or loss commonly covered by the extended coverage endorsement of a reputable insurance companies between the Exercise Date and the date of Closing shall not in any way void or impair the conditions and obligations thereof, except that should the Property suffer loss or damage due to fire or other casualties, not repaired or replaced prior to Closing, Buyer shall have the option of terminating this Agreement upon notice to Seller; provided, however, that Seller shall have the right to reconstruct improvements so long as such reconstruction is completed within one hundred eighty (180) days of the date of casualty. In such event, there shall be no further liability or obligation on either of the parties hereto and this Agreement shall become null and void. WHOLE AGREEMENT 9. This Agreement contains the whole Agreement between the Seller and the Buyer and there are no other terms, obligations, covenants, representations, statements or conditions, 29 oral or otherwise of any kind whatsoever concerning this sale. Any changes or additions to this Agreement must be made in writing and executed by the parties hereto. ASSIGNMENT 10. This Agreement shall be binding upon the respective successors and, to the extent assignable on the assigns of the parties hereto. This Agreement is to be construed and interpreted in accordance with the laws of the State of Georgia. BROKERS 11. Buyer and Seller each represent and warrant to the other that the transactions contemplated hereby have been carried out by Buyer directly with Seller in such manner as not to give rise to any valid claims against any of the parties hereto for a brokerage commission, finders fee, or other like payment. Buyer and Seller each shall indemnify and hold the other harmless from any breach of the above stated representation and warranty. TIME OF ESSENCE 12. The date for Closing and all other dates referred to for the performance of any of the obligations of this Agreement are hereby agreed to be of the essence of this Agreement. DESCRIPTIVE HEADING 13. The descriptive headings used here are for convenience only and they are not intended to indicate the matter in the sections which follow them. Accordingly, they shall have no effect whatsoever in determining the rights or obligations of the parties. 30 EXHIBIT 1 LIST OF ENCUMBRANCE Real Estate taxes not yet due and payable. 31 AGREEMENT FOR BUILDING LEASE Dated as of August 1, 1996 By and Between CPI PLASTICS, L.L.C., a Michigan limited liability company Landlord, and UNITED STATES CAN COMPANY, a Delaware corporation Tenant TABLE OF CONTENTS
ARTICLE NO. PAGE NO. - - ---------- ------- ARTICLE I RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III LANDLORD'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE IV DAMAGE - CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE V LANDLORD'S AND TENANT'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND RIGHTS OF RECOVERY ON INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ARTICLE VII TITLE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
32 ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE IX TENANT'S OPTION TO EXTEND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE X ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE XI OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE XII OPTION TO EXPAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE XIII GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 SCHEDULE OF EXHIBITS Exhibit A Legal Description Exhibit B Base Rent Exhibit C Landlord's Existing Mortgage Exhibit D Environmental Report Exhibit E Terms of Agreement of Sale
EX-10.4 5 AGREEMENT FOR BUILDING LEASE (OHIO) 1 EXHIBIT 10.4 ALLIANCE, OHIO A G R E E M E N T F O R B U I L D I N G L E A S E DATED AUGUST 1, 1996 BY AND BETWEEN CP ALLIANCE, INC., A MICHIGAN CORPORATION LANDLORD, AND UNITED STATES CAN COMPANY, A DELAWARE CORPORATION TENANT 2 A G R E E M E N T F O R B U I L D I N G L E A S E CP ALLIANCE, INC., a Michigan corporation ("Landlord"), hereby leases to UNITED STATES CAN COMPANY, a Delaware Corporation ("Tenant"), and Tenant hereby accepts, subject to the terms and conditions of this Lease, those certain buildings containing approximately 52,000 square feet (the "Building") located at 12240 Rockhill Road, Alliance, Ohio 44601, and the surrounding land containing approximately 10.5 acres and legally described on Exhibit A which is attached hereto and made a part hereof (the Building and the surrounding property used as the parking areas and driveway shall be referred to as the "Premises" and the said property and Building and Landlord's interest therein shall be referred to as the "Property"), for an initial term (the "Term") of five (5) years commencing on August 1, 1996 (the "Commencement Date"), and ending on July 31, 2001 or such other date as the Term is extended pursuant to Article IX hereof (the "Termination Date"). RECITALS WHEREAS, Tenant has entered into a certain Stock Purchase Agreement dated August 2, 1996 with Irving A. Rubin, Robert Bonczyk et al. (the "Stock Purchase Agreement") pursuant to which Tenant has agreed to purchase all of the stock of CPI Plastics, Inc., CP Ohio, Inc. and CP Illinois, Inc. WHEREAS, in connection therewith, Landlord and Tenant have agreed to enter into this Lease; WHEREAS, if requested by either party to this Lease, a memorandum of this Lease in recordable form duly executed and acknowledged shall be entered into and recorded by the parties hereto; NOW, THEREFORE, IN CONSIDERATION of the above demise, and the acceptance of the mutual covenants herein contained, Landlord and Tenant covenant and agree as follows: ARTICLE I RENTAL 1.1. Rental. Tenant shall pay to Landlord, at such place as Landlord may designate to Tenant in writing, the rent and other payments reserved and required under this Article I, which rent and other payments, together with all other amounts becoming due from 3 Tenant to Landlord hereunder, are herein collectively referred to as the "Rent" or "Rental." Except as set forth in Section 10.4 of the Stock Purchase Agreement, all Rental shall be paid without notice or demand, and without abatement, deduction, counterclaim or set-off. In the event Tenant does not make Rental payments within ten (10) days of receipt of notice that such amount is unpaid, Tenant shall pay to Landlord Three Hundred Dollars ($300.00) as a late fee. 1.2. Base Rent. Subject to rent adjustments in accordance with Section 1.3 hereof, Tenant shall pay to Landlord an annual Base Rent (the "Base Rent") set forth on Exhibit B attached hereto and made a part hereof. Base Rent shall be paid in advance on the first day of each and every calendar month during the Term. 1.3. Additional Payments. In addition to Base Rent, Tenant shall pay all of the Expenses (as hereafter defined) assessed or incurred in connection with the Premises on or before the respective due dates thereof. Tenant's obligation to pay the Expenses shall survive the expiration of the Term. For purposes of this Section 1.3, Expenses shall mean, for any calendar year, all reasonable and customary expenses, costs and disbursements which Landlord shall pay or become obligated to pay because of or in connection with the operation, maintenance, repair and replacement, of the Premises (other than the items which are Landlord's responsibility pursuant to Section 2.2 of this Lease) and of the personal property, fixtures, machinery, equipment, systems and apparatus located therein or used in connection therewith, including, but not limited to, the cost of utilities to the Premises. Notwithstanding the foregoing, payments made or incurred by Landlord or Tenant prior to the Commencement Date shall not be included in Expenses. 1.4. Triple Net Lease. Except for Landlord's obligations delineated in Section 2.2 hereof, the parties hereto intend that the Rental payable hereunder shall be an absolute net return to Landlord and that, except as expressly provided to the contrary herein or the Stock Purchase Agreement, all costs, expenses and obligations of whatever kind, whether foreseen or unforeseen, general or special, ordinary or extraordinary, that may arise in connection with the use, occupancy, maintenance or operation of the Premises shall be paid or performed by Tenant. Tenant shall not be obligated to pay any income or franchise taxes which may be levied against Landlord. 1.5. Taxes. (a) Tenant shall pay, as Additional Rent and prior to delinquency, all ad valorem real estate taxes, special assessments and personal property taxes (including any rental or similar taxes and license, building, occupancy or similar fees levied or imposed in lieu of or in addition to general real or personal property taxes) which may be levied or imposed during the Term against the Premises or any part thereof. Tenant shall pay before delinquency all taxes, assessments, license fees and other public charges levied, assessed or imposed upon its business operations and its leasehold improvements, merchandise and other personal property in or about the Premises (collectively, the "Taxes"). Tenant shall deliver to Landlord copies of receipts showing payment of said real estate taxes within thirty (30) days after request by Landlord. -2- 4 (b) Tenant shall have the right to contest at Tenant's expense, all Taxes levied against the Premises by legal proceedings provided that such proceedings have the effect of preventing the forfeiture of the Premises or any part thereof to satisfy the same. All contest proceedings shall be conducted in good faith and with due diligence by Tenant. Tenant shall give Landlord such security as Landlord may reasonably require to insure the payment of the Taxes so contested, and all interest and penalties thereon. Landlord shall cooperate in any such proceedings. (c) Taxes with respect to the years in which the Term commences and expires shall be prorated between Landlord and Tenant, and together with the first installment of Rental hereunder, Tenant shall pay to Landlord the portion of Taxes, if any, which have been paid by Landlord and which are attributable to the Term of this Lease and upon expiration of the term (except in the event Tenant purchases the property pursuant to the Option Agreement as hereinafter defined), Landlord shall pay to Tenant the portion of any Taxes, if any, which have been paid by Tenant and which are attributable after the Term of this Lease. ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY 2.1. Use. Subject to the Permitted Exceptions (as hereafter defined), Tenant shall have the exclusive right to and shall occupy and use the Property for its business operations and any other use reasonably related thereto. Tenant shall not occupy or use the Premises or permit the Premises to be occupied or used for any purpose, act, or thing which is in violation of any public law, ordinance, or governmental regulation. 2.2. Maintenance and Repair and Replacement. Except for damage caused by Tenant, Landlord shall, in full compliance with all applicable laws and ordinances, maintain and make all necessary structural repairs, replacements and alterations to the Building, including but not limited to foundations, roofs, exterior and load bearing walls, structural columns and structural beams. Landlord shall proceed promptly with such maintenance, repairs and replacements. Tenant shall, at its own cost and expense subject to the provisions of Section 2.3, (i) keep the interior of the Premises in a clean and tenantable condition during the Term and (ii) maintain in good operating condition and repair, ordinary wear and tear excepted, all electrical, mechanical and plumbing fixtures located within the Premises, all system and fixtures serving the Premises, and the ventilating, heating and air conditioning, if any, systems serving the Premises the floors, the parking lot and the parking area during the Term; provided however, Tenant shall have no responsibility with respect to the maintenance of the tin outbuilding containing less than 1000 square feet and shall have the right to tear down such building at Tenant's option. Tenant shall also repair any damage to the Premises caused by Tenant, or its agents or employees, ordinary wear and tear excepted. If either party fails to make or commence to make such repairs after written notice thereof from the other party and applicable grace periods, the notifying party may, in its sole -3- 5 discretion, do so and the defaulting party shall pay to the notifying party the reasonable cost thereof within thirty (30) days of being billed therefor. In the event the defaulting party does not reimburse the notifying party within the aforesaid thirty (30) day period, such failing shall be deemed to be a further default hereunder and such amount shall bear interest from the date of the statement at the rate set forth in Section 13.3(b). Landlord may enter the Premises at reasonable times to inspect or show the Property to prospective tenants during the last six (6) months of the Term or the extended Term if applicable (so long as the option to extend set forth in Section 9.1 has not been exercised) or to make such repairs to the Premises as Landlord shall reasonably deem necessary, or as required in order to comply with its obligations hereunder or as required by any governmental authority or judicial order. In making such entry, Landlord shall use its best efforts not to unreasonably interfere with Tenant's use and occupancy of the Premises, and, except in the event of an emergency, shall enter only upon reasonable prior notice to Tenant explaining the reasons therefor. 2.3. Alterations. Tenant shall not, without Landlord's prior written consent, alter or remodel the Premises, which consent shall not be unreasonably withheld or delayed; provided, however, that Tenant may make non-structural alterations at a cost of less than $25,000 without Landlord's prior written consent. In the event that Landlord consents to any proposed alteration or remodeling of the Premises, Tenant shall not have the obligation to restore such proposed alteration or remodelling unless such consent specifies that Landlord will require Tenant to remove the same upon expiration of the Term. All work performed by or on behalf of Tenant shall be in accordance with good construction practices, all applicable laws, insurance requirements, and Landlord's reasonable rules and regulations. Prior to the commencement of any work by Tenant, Tenant shall (i) obtain or cause to be obtained public liability and workmen's compensation insurance to cover every contractor to be employed by Tenant and such contractor's subcontractors, and shall deliver duplicate originals of all certificates of such insurance to Landlord for approval; (ii) furnish Landlord with all necessary permits, licenses, approvals, certificates and authorizations for prosecution and completion of such work; and (iii) furnish Landlord with such other documents as may be reasonably requested by Landlord. Tenant shall have the right to install signage on the Premises provided that Tenant also pay the cost of all signage and the installation thereof. Landlord shall have the right, but not the duty, to inspect construction operations in connection with any work completed or being completed on the Premises. Tenant shall indemnify and hold Landlord harmless from and against any and all loss, cost or expense incurred by Landlord as a result of such alterations or remodelling. In the event any construction or other lien is filed against the Premises as a result of such alteration or remodelling, Tenant shall either pay such lien claim or if Tenant elects to contest such claim, provide a bond, title indemnity or other security reasonably satisfactory to Landlord protecting Landlord's interest in the Premises. Nothing herein shall give Landlord any interest in Tenant's personal property, machinery, equipment, inventory, raw materials, office furniture, office equipment, trade -4- 6 fixtures, cables, data processing equipment or appliances, which shall remain the property of Tenant. ARTICLE III LANDLORD'S RIGHTS Landlord reserves and shall have the following rights, exercisable, unless otherwise herein provided, without notice, without liability to Tenant for damage or injury to person, property or business, without being deemed an eviction or disturbance in any manner of Tenant's use or possession of the Premises and without relieving Tenant from its obligation to pay Rental when due or from any other obligation hereunder: (a) To display the Premises to prospective tenants upon prior notice at reasonable hours during the last three (3) months of the Term or the extended term if the Option to Extend set forth in Article IX is exercised, to display the Premises to prospective purchasers, mortgagees or investors upon prior notice and at reasonable hours at any time during the Term, and, if the Premises are abandoned during the Term, to decorate, remodel, repair or otherwise prepare the Premises for reoccupancy, provided it will not unreasonably disrupt Tenant's normal business activities; (b) To have and retain paramount title to the Premises free and clear of any act of Tenant purporting to burden or encumber it (excluding Permitted Liens, as hereafter defined); and (c) To take any and all reasonable measures, including inspections, repairs and alterations to the Premises as may be reasonably necessary for the safety, protection or preservation thereof or Landlord's interest therein. ARTICLE IV DAMAGE - CONDEMNATION 4.1. Fire or Casualty. If the Premises or the Building is damaged by fire or other casualty (regardless of whether the Premises are made substantially untenantable), then Landlord shall proceed with due diligence, but subject to the remainder of this Section 4.1, to repair and restore the Building or the Premises, as the case may be with the insurance proceeds from the policy referred in Section 6.2 below. In the event the insurance proceeds are insufficient to restore such damage, Landlord shall have no obligation to expend sums in excess of such proceeds. Notwithstanding the foregoing, if such damage renders the Premises untenantable and it is estimated by Landlord in its reasonable judgment that the time to repair and restore the Premises will exceed one hundred eighty (180) days or if such damage occurs during the last twelve (12) months of the Term of this Lease (or, if the Term of this Lease has -5- 7 been extended pursuant to Article IX hereof, during the last twelve (12) months of the Term of this Lease as extended), both Tenant and Landlord shall have the right to terminate this Lease by delivery to the other of written notice of such termination within thirty (30) days following the damage, and all Rental and other charges hereunder for the remainder of the Term shall abate. If neither Tenant nor Landlord elects to terminate the Lease as hereinabove provided then the insurance proceeds, if any, shall be utilized by Landlord to commence repairing the damage and Landlord shall repair the damage so that the Premises are in substantially the same condition as they were prior to being damaged. All Rental and other charges shall abate from the date of casualty until such restoration is completed. 4.2. Condemnation. In the event that the whole of the Premises shall be taken in any proceeding by any public authority by condemnation or otherwise, or be acquired for public or quasi-public purposes (all of which are hereinafter collectively referred to as "Condemnation"), this Lease shall terminate as of the date of the taking of possession by the condemning authority and the Rental and other charges payable by Tenant shall cease as of the date possession of the Premises is delivered to such condemning authority. In the event any part of the Premises shall be so taken and such taking substantially interferes with the Tenant's continued use of the Premises as reasonably determined by Tenant, Tenant may, at Tenant's option terminate this Lease as of the date of the taking of possession by the condemning authority and the Rental and other charges payable by Tenant shall cease as of the date possession of the Premises is delivered to such condemning authority. If Tenant, pursuant to the preceding sentence, desires to exercise its option of terminating the Term of this Lease, such termination shall be effective (without any payment by Landlord to Tenant therefor) by Tenant giving notice to Landlord provided that such notice shall be given not more than thirty (30) days subsequent to the date on which Tenant shall have been deprived of possession of the part so taken as determined as an equitable basis. If this Lease is not so terminated, then Rental shall abate as to the portion of the Premises so taken. If the Lease is terminated pursuant to this paragraph, Rental and other charges payable by Tenant shall cease as of the date of such taking. Tenant shall have the right to make a claim to the condemning authority for relocation expenses, its leasehold value and the unamortized value of any improvements, alterations or additions to the Premises paid for by Tenant. Except for any claim awarded to Tenant in accordance with the preceding sentence, Tenant hereby assigns to Landlord, Tenant's interest in any condemnation award. ARTICLE V LANDLORD'S AND TENANT'S REMEDIES 5.1. Events of Default. Each of the following shall be an "Event of Default." -6- 8 (a) If Tenant fails to pay any installment of Rental, or any other payment or money to be paid by Tenant under this Lease within ten (10) days after receipt of notice that the Rental is unpaid; or (b) If Tenant fails to observe or perform one or more of the other terms, conditions, covenants or agreements of this Lease and such failure shall continue for a period of thirty (30) days after written notice from Landlord specifying such failure (unless such failure requires work to be performed, acts to be done, or conditions to be removed which cannot by their nature reasonably be performed, done or removed, as the case may be, within such thirty (30) day period, in which case, no Event of Default shall be deemed to exist so long as Tenant shall have commenced the same within such thirty (30) day period and shall diligently and continuously prosecute the same to completion); or (c) If Tenant makes an assignment for the benefit of creditors, admits its inability to pay its debts or takes any action towards a general compromise of its debts or a composition with its creditors; or (d) If all or any substantial part of the assets of Tenant, including the leasehold interest hereunder of Tenant, are attached, seized or become subject to a writ or distress warrant, are levied upon or come within the possession of any receiver, trustee, custodian or assignee for the benefit of creditors and such attachment, seizure, writ, warrant or levy is not withdrawn or removed within ninety (90) days after becoming effective; or (e) If a notice of lien or levy is filed with respect to all or substantially all of Tenant's assets located on the Premises by any federal, state, county or municipal body, department, agency or instrumentality for taxes or debts then owing by Tenant and such notice is not released or withdrawn within ninety (90) days of its filing (unless such lien is a "Permitted Lien" (as hereafter defined)); or (f) If any involuntary petition or similar pleading is filed in any court under any section of the Federal Bankruptcy Code seeking to declare Tenant bankrupt, or seeking a plan of reorganization for Tenant under Chapter 11 of the Bankruptcy Code, or a similar proceeding under state law and such petition or pleading is not withdrawn or denied within ninety (90) days after its filing, or if any voluntary petition or similar pleading is filed in any court under any section of the Federal Bankruptcy Code; or (g) If Tenant fails to comply with any single obligation under this Lease more than three (3) times during a calendar year after having received notice of the previous defaults, such event shall be deemed to be a default without a cure period; provided, however, that any such event must be a separate incident such as the failure to pay Base Rent when due. -7- 9 5.2. Termination. Upon the occurrence of an Event of Default under Section 5.1, Landlord may, at its option, at any time thereafter, without notice (i) terminate this Lease, or (ii) without terminating this Lease, forthwith terminate the Tenant's right to possession of the Premises, or (iii) pursue any other remedy now or hereafter available to Landlord under the laws of the State of Ohio. (a) Upon Landlord's termination of this Lease as a result of the occurrence of an Event of Default, Landlord shall be entitled to recover from Tenant all damages incurred by Landlord by reason of Tenant's default, including (i) the unpaid Rental discounted to present value at the rate of eight percent (8%) per annum, and other charges which had been earned as of the date of termination; and (ii) any other amount necessary to compensate Landlord for all the detriment proximately caused by Tenant's failure to perform its obligations under this Lease, including, but not limited to, any reasonable costs or expenses incurred by Landlord in maintaining or preserving the Premises after the occurrence of such Event of Default, the reasonable cost of recovering possession of the Premises, expenses of reletting, including necessary renovation or alteration of the Premises, Landlord's reasonable attorneys' fees incurred in connection therewith, and any reasonable real estate commission paid or payable. (b) Upon and after Landlord's termination of this Lease or Tenant's right to possession of the Premises, Landlord shall make reasonable efforts to relet the Premises or any part thereof to any person, firm or corporation other than Tenant for such rent, for such term and upon such conditions as Landlord shall determine, in Landlord's reasonable discretion, and Landlord shall not be required to accept any tenant offered by Tenant (provided that such acceptance shall not be unreasonably refused) or to observe any instructions given by Tenant covering such reletting. In any such case, Landlord may incur reasonable expenses for repairs, alterations, improvements, additions and decoration of or to the Premises to the extent reasonably deemed necessary or desirable by Landlord for the purpose of reletting the Premises. All such reasonable expenses, plus all reasonable brokers' commissions and reasonable attorneys' fees incurred by Landlord in connection with any reletting of the Premises, shall be paid by Tenant to Landlord upon demand. In addition, Tenant shall, for the remainder of the Term, reimburse Landlord, on demand, for any deficiency between Rental and other charges reserved hereunder and the rent received by Landlord upon reletting the Premises. In the event Tenant does not pay such sums when due, such sums shall accrue interest as set forth in Section 13.3(b) below. 5.3. Surrender of Possession. Upon termination of this Lease, whether by lapse of time or otherwise, or upon any termination of Tenant's right to possession of the Premises without termination of the Lease, Tenant shall surrender and vacate the Premises immediately and deliver possession thereof to Landlord in clean, good and tenantable condition, ordinary wear and damage by fire or other casualty excepted. Upon any termination for a thirty (30) day period, Tenant shall be entitled to remove from the Premises any machinery, equipment, inventory, raw materials, built-in furniture, computers, data or word processing or duplicating equipment, trade fixtures, cables or appliances, provided that Tenant shall repair all damage resulting from such removal and shall restore the Premises to a tenantable condition. -8- 10 5.4. Holding Over. If Tenant retains possession of the Premises or any part thereof after the termination of this Lease by lapse of time or otherwise Tenant shall pay to Landlord, Rental at one and one half times the per diem rate payable for the month immediately preceding said holding over, computed on a per diem basis, for each day or part thereof that Tenant thus remains in possession. The provisions of this Section 5.4 shall not be deemed to limit or exclude any of Landlord's rights of re-entry or any other right granted to Landlord hereunder or under law. 5.5. Payment of Expenses in Enforcing Obligations. In the event of any dispute between Landlord and Tenant to enforce any of the provisions and/or rights hereunder, the unsuccessful party covenants and agrees to pay to the successful party all costs and expenses, including reasonable attorneys' fees, incurred therein by the successful party, which costs and expenses shall be included in and as a part of a judgment if litigation is involved. If Landlord, without fault on its part, shall be made a party to any litigation instituted by or against the Tenant by reason of this Lease, then Landlord shall be entitled to receive from the Tenant upon demand all costs, expenses and reasonable attorneys' fees incurred by Landlord in or in connection with such litigation. If Tenant, without fault on its part, shall be made a party to any litigation instituted by or against Landlord by reason of this Lease, then Tenant shall be entitled to receive from the Landlord upon demand all costs, expenses and reasonable attorneys' fees incurred by Tenant in or in connection with such litigation. 5.6. Landlord's Performance of Tenant's Obligations. If Tenant shall default in the performance of any of its obligations hereunder and such default shall continue after the expiration of any notice or grace period herein provided, Landlord may perform such obligation for the account and expense of Tenant upon thirty (30) days written notice except in cases of emergency, and Tenant shall reimburse Landlord therefor upon demand plus Landlord's reasonable costs and expenses, including attorneys' fees. 5.7. Non-Waiver. No waiver of any agreement or condition expressed in this Lease shall be implied by any neglect of Landlord or Tenant to enforce any remedy on account of the violation of such agreement or condition if such violation be continued or repeated subsequently, and no express waiver shall affect any agreement or condition other than the one specified in such waiver and that one only for the time and in the manner specifically stated. No receipt of monies by Landlord from Tenant after the termination in any way of the Term or of Tenant's right of possession hereunder, or after the giving of any notice, shall reinstate, continue or extend the Term or affect any notice given to Tenant prior to the receipt of such monies, it being agreed that after the service or notice or the commencement of a suit or after final judgment for possession of the Premises Landlord may receive and collect any Rental due, and the payment of said Rental shall not waive or affect said notice, suit or judgment. 5.8. Rights and Remedies Cumulative. All rights and remedies of Landlord and Tenant under this Article and elsewhere in this Lease shall be distinct, separate and cumulative and none shall exclude any other right or remedy of Landlord or Tenant as set forth in this -9- 11 Lease or allowed by law. Landlord's and Tenant's obligations under this Article shall survive the expiration of the Term. 5.9. Tenant's Performance of Landlord's Obligations. If Landlord shall default in the performance of any of its obligations hereunder and such default shall continue after the expiration of any notice or grace period herein provided, Tenant may perform such obligation for the account and expense of Landlord upon thirty (30) days written notice except in cases of emergency, and Landlord shall reimburse Tenant therefor upon demand, plus Tenant's reasonable costs and expenses, including attorneys' fees. ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND RIGHTS OF RECOVERY ON INSURANCE 6.1. Waiver of Claims and Indemnity. Tenant hereby releases and waives all claims against Landlord, agents, employees and servants for injury or damage to person, property or business sustained in or about the Property by Tenant, its agents, employees or servants, which injury or damage results from any act, neglect, occurrence or conditions in or about the Property, except to the extent that such injury or damage is caused by the negligence or willful or wanton act or omission by Landlord, or its agents, employees or servants. To the extent any of the foregoing is covered by insurance, Landlord or Tenant, as the case may be, shall have but one (1) recovery, but any such recovery shall not be limited to the amount of such insurance. Tenant hereby agrees to indemnify and hold Landlord, its agents, employees and servants harmless against any and all claims, damage, demands, costs and expenses of every kind and nature, including reasonable attorneys' fees for the defense thereof, arising from Tenant's occupancy of the Property or from any breach or default on the part of Tenant in the performance of any agreement of Tenant to be performed pursuant to the terms of this Lease, or from any act, omission or negligence of the Tenant, its employees, servants and agents, subtenants and/or assignees in or about the Property during the term of the Lease. To the extent any of the foregoing is covered by insurance, Landlord shall have but one (1) recovery. In case any such proceeding is brought against Landlord, its agents, employees or servants, Tenant covenants to defend such proceeding at its sole cost and expense by legal counsel reasonably satisfactory to Landlord. Landlord hereby agrees to indemnify and hold Tenant, its agents, employees and servants harmless against any and all claims, damage, demands, costs and expenses of every kind and nature, including reasonable attorneys' fees for the defense thereof, arising from any breach or default on the part of Landlord in the performance of any agreement of Landlord to be performed pursuant to the terms of this Lease, or from any act, omission or negligence of Landlord, its employees, servants and agents in or about the Property. To the extent any of the foregoing is covered by insurance, Tenant shall have but one (1) recovery. In case any such -10- 12 proceeding is brought against Tenant, its agents, employees or servants, Landlord covenants to defend such proceeding at its sole cost and expense by legal counsel reasonably satisfactory to Tenant. In the event of any conflict or inconsistency between the indemnification provisions hereof and those contained in the Stock Purchase Agreement, those contained in the Stock Purchase Agreement shall govern. 6.2. Insurance Coverage. Tenant, at Tenant's sole cost and expense, shall obtain and maintain, for the Term of this Lease, as extended, insurance policies in form and content, and issued by an insurer, reasonably acceptable to Landlord, providing the following coverage: (i) all perils included in the classification "fire and extended coverage" under insurance industry practices in effect from time to time in the jurisdiction in which the Building is located covering the Building and all fixtures and property located therein, including without limitation, Tenant's fixtures, machinery, equipment, furnishings, merchandise, alterations, improvements and other contents in the Premises, for 100% of the full replacement value of said Building and items; and (ii) comprehensive generally liability insurance (including contractual liability) naming Landlord, and any mortgagee, as additional insureds, which policy is to be in the minimum amount of Two Million Dollars ($2,000,000.00) with respect to any one person, in the minimum amount of Three Million Dollars ($3,000,000.00) with respect to any one accident, and in the minimum amount of Five Hundred Thousand Dollars ($500,000.00) with respect to personal property damage. Each policy described in this Section 6.2 shall name Landlord and any mortgagee of the Premises as additional insureds and as loss payees and shall contain a provision that it shall (i) not be cancelable and that it shall continue in full force and effect unless Landlord has received at least thirty (30) days prior written notice of such cancellation or termination, and (ii) not be materially changed without thirty (30) days prior notice to Landlord. Insurance coverage under umbrella policies shall be acceptable. Landlord shall be named as loss payee on the casualty policy with respect to the Building. 6.3. Rights of Recovery on Insurance. Landlord and Tenant agree to have all fire and extended coverage and material damage insurance which may be carried with respect to the Building, the Premises or to the property located therein endorsed with a clause substantially as follows: "This insurance shall not be invalidated should the insured waive in writing prior to a loss any or all rights of recovery against any party for loss occurring to the property described herein." Landlord and Tenant hereby waive all claims for recovery from each other for any loss or damage to them or to any of their property insured under valid and collectible insurance policies to the extent of the proceeds collected under such insurance policies. -11- 13 ARTICLE VII TITLE MATTERS 7.1. Subordination of Lease. This Lease and the rights of Tenant hereunder shall become subject and subordinate at all times to the lien of the mortgage or deed of trust existing against the Property referred to on Exhibit C attached hereto and made a part hereof, and to all advances made or hereafter to be made upon the security thereof, and to all future mortgages or deeds of trust made to an institutional lender such as a bank, savings and loan, or insurance company; provided that the mortgagee or trustee under any such existing and future mortgage or deed of trust provides a non-disturbance agreement reasonably satisfactory to Tenant and which provides that such mortgagee or trustee recognizes all of Tenant's rights hereunder, including but not limited to Tenant's options to expand, purchase and extend the Term of this Lease. In the event any proceedings are brought to foreclose any mortgage or deed of trust, Tenant will attorn to the purchaser upon any foreclosure sale and recognize such purchaser as the landlord under this Lease. Tenant agrees to execute and deliver at any time any instrument to further evidence such attornment as may be reasonably requested in writing by any holder of such mortgage, or the trustee under any such deed of trust. 7.2. Estoppel Certificate. Landlord and Tenant agree that from time to time upon not less than fifteen (15) business days prior request by the other, the non-requesting party, or its duly authorized representative having knowledge of the following facts, will deliver to the requesting party, or to such person as the requesting party may designate, a statement in writing certifying (i) that this Lease is unmodified and in full force and effect, or, if there have been modifications, that the Lease as modified is in full force and effect; (ii) the dates to which the Rental and other charges have been paid; (iii) that to the best of the non-requesting party's knowledge, the requesting party is not in default under any provision of this Lease, or, if in default, the nature thereof in detail; and (iv) such other provisions reasonably requested by the requesting party. 7.3. Assignment and Subletting. Except as otherwise permitted in Section 7.4 and this Section 7.3, Tenant shall not without Landlord's prior written consent, which consent shall not be unreasonably withheld or delayed, (i) assign or convey this Lease or any interest under this Lease, provided, however, Tenant may provide a leasehold mortgage to an institutional lender with assets in excess of $500,000,000; (ii) sublease all or any portion of the Premises; or (iii) permit the use or occupancy of the Premises by any party other than Tenant, its agents, employees, guests, invitees and licensees. Notwithstanding the limitations set forth above, Tenant may assign this Lease or sublet all or any portion of the Tenant Premises without Landlord's consent: (a) To a corporation controlling, controlled by or under common control with Tenant, (hereinafter an "Affiliated Corporation"); provided that any such assignment or sublease shall be subject to the terms and conditions of this Lease. For purposes hereof, "control" shall mean the ownership, either directly or -12- 14 indirectly, of fifty percent (50%) or more of all shares entitled to vote of such other corporation; and (b) To the surviving corporation in a merger, reorganization or consolidation or other corporate action involving Tenant provided that any such assignment or sublease shall be subject to the terms and conditions of this Lease. No assignment of this Lease or sublease of the Premises pursuant to the provisions of this Section 7.3 shall be effective unless and until the assignee or sublessee shall have executed an appropriate instrument, in form reasonably satisfactory to Landlord, assuming all of the obligations of Tenant hereunder to the extent of the Premises assigned or subleased, and shall have delivered a copy thereof, or an executed counterpart thereof, to Landlord. In the event of any permitted assignment of this Lease or subletting of the Premises, Tenant shall remain fully liable for all of the obligations of Tenant under this Lease, except for additional obligations entered into as a result of a lease amendment between Landlord and any assignee. 7.4. Covenant Against Mechanic's Liens. Tenant covenants and agrees not to suffer or permit any lien of mechanics or materialmen to be placed against the Property or any part thereof arising from work done by or on behalf of Tenant. If any such lien shall attach to the Property or any part thereof, Tenant shall either (i) pay off and remove the same or (ii) if Tenant desires to contest such lien in a court of competent jurisdiction, Tenant shall either (1) file with Landlord a bond or other security in an amount and with an independent surety, reasonably satisfactory to Landlord or (2) maintain a title indemnity with appropriate security to protect against an exception to title with a title insurance company reasonably designated by Landlord and in such amount and on such terms as are reasonably satisfactory to Landlord and such title insurance company, in which event such a lien shall be a "Permitted Lien". Other than a Permitted Lien, Tenant has no authority or power to cause or permit any lien or encumbrance of any kind whatsoever, whether created by act of Tenant, operation of law or otherwise, to attach to or be placed upon the Property or any part thereof. Any and all liens and encumbrances created by Tenant shall attach only to Tenant's interest in the Premises. 7.5. Covenant of Quiet Enjoyment. Landlord covenants, represents and warrants that it has full power and proper authority to execute this Lease and to grant the rights provided to Tenant hereunder and further covenants that, upon paying the Rental and keeping the agreements of this Lease on its part to be kept and performed, Tenant shall have peaceful and quiet possession of the Premises and full enjoyment of all of its rights herein granted for the Term of this Lease (or, if the Term of this Lease has been extended pursuant to Article IX hereof, for the Term of this Lease as extended). 7.6. Permitted Title Exceptions. The leasehold interest conveyed hereby shall be subject to the following exceptions (the "Permitted Exceptions"): a. Taxes for the year 1996 and subsequent years, not yet due and payable; -13- 15 b. Acts done or suffered by Tenant, pursuant to this Lease or otherwise; c. Zoning laws and ordinances, provided that Tenant's use of the Premises complies with such laws and ordinances; d. Mortgage or deed of trust described in Section 7.1 above; and e. Easements for public utilities which do not or will not underlie the improvements as built, provided same are recorded in the public records of Stark County, Ohio. Landlord agrees that Landlord shall not further encumber the Property without Tenant's prior written consent except with respect to Landlord's right to mortgage the Property so long as such financing complies with the requirements set forth in Section 7.1 above. Tenant shall not be responsible for correcting any violation of the above Permitted Exceptions if such violation was not caused by Tenant or if it existed on or before the Commencement Date. Landlord shall not further encumber title to the Property. ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE In the event of any sale or other transfer of the Property effective after the Commencement Date of this Lease, Landlord and the seller or transferor shall be entirely freed and relieved of all agreements and obligations of Landlord hereunder accruing after the date of such sale or transfer, provided, such purchaser or transferee shall have assumed and agreed to perform all agreements and obligations of the Landlord hereunder accruing from and after the date of such sale or transfer and shall take title subject to this Lease. Subject to the provisions of the preceding sentence, Tenant hereby consents to any future assignment by Landlord of any part or all of its rights under this Lease. ARTICLE IX TENANT'S OPTION TO EXTEND LEASE 9.1. Option. Tenant shall have the right and option to extend the Term of this Lease for two additional consecutive five (5) year periods (the "Option Periods") commencing immediately following the Termination Date provided that (i) Tenant sends notice of its election to extend the Term of the Lease to Landlord not less than one hundred eighty (180) days prior to the end of the Term of the Lease or the extended Term; (ii) at the time Tenant sends such notice, Tenant is not then in default in the performance of any term, condition, covenant or agreement of this Lease as to which notice of default has been given to Tenant unless such default cannot, with due diligence, be cured, prior to the last date on which Tenant is entitled to exercise such option and Tenant has proceeded promptly and with due diligence after service of the notice of default to cure such default; and (iii) at the date of commencement of the Option -14- 16 Period, or the Second Option Period Tenant is not in default in the performance of any term, condition, covenant or agreement of this Lease as to which notice of default has been given to Tenant or, if notice of default has been given, Tenant has proceeded promptly and with due diligence after service of the notice of default to cure such default, and no event is occurring which, with the passage of time or the giving of notice, or both, would constitute a default hereunder. 9.2. Rent During Option Years. (a) The Base Rent due and payable during the Option Periods shall be agreed to by the parties within thirty (30) days of Tenant's notice to Landlord, or if the parties cannot agree within the aforesaid thirty (30) day period, in accordance with Section 9.2(b). All the terms and conditions of this Lease shall be applicable to such extended terms except (i) for those matters that have expired by their own terms or have been performed and (ii) the Base Rent for such extended terms shall be as set forth below. Such Lease shall be deemed extended without any further lease or instrument. (b) If Landlord and Tenant shall fail to agree upon the rent within thirty (30) days of the exercise of Tenant's option to extend the Lease term, then the Base Rent for the option periods shall be adjusted by 50% of the increase in the Index now known as "United States Bureau of Labor Statistics, Consumer Price Index, for all Urban Consumers (the "CPU-U"), All Items for Atlanta Average (1967 = 100)" hereinafter referred to as the "Index", provided, that the amount payable by Tenant under this Lease as Base Rent shall not be less than the annual Base Rent payable for the preceding lease year. Such adjustment shall be accomplished by multiplying the aforementioned Base Rent by one half of the increase in the Index from the most recently published monthly Index preceding the first day of the Option Period for which the adjustment is made over the corresponding monthly Index for the month of the Commencement Date of this Lease. If such Index shall be discontinued with no successor or comparable successor Index, the parties shall attempt to agree upon a substitute or comparable successor Index, but if the parties are unable to agree upon a substitute formula, then the manner in which the Base Rent shall be adjusted to take into account changes in the cost of living shall be determined by arbitration in accordance with the rules of the American Arbitration Association then prevailing. ARTICLE X ENVIRONMENTAL MATTERS 10.1. Environmental Matters. Except as described in the environmental reports all delivered by Landlord to Tenant and referred to on Exhibit D attached hereto and made a part hereof, prior to the Commencement Date, (i) no Hazardous Materials have been located on the Property or have been released in the environment, or discharged, placed or disposed of at, on or under the Property; (ii) no underground storage tanks have been located on the Property; (iii) -15- 17 the Property has never been used as a dump for waste material; and (iv) the Property and its prior uses comply with and at all times have complied with, all applicable governmental laws, regulations or requirements relating to environmental and occupational, health and safety matters and Hazardous Materials. The term "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local governmental authority, the State of Ohio, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of Ohio law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive material, (vi) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C Section 9601). The term "Environmental Laws" shall mean all statutes specifically described in the foregoing sentence and all federal, state and local environmental health and safety statutes, ordinances, codes, rules, regulations, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials. Additionally, but not in lieu of Landlord's affirmative undertakings set forth herein, Landlord agrees to indemnify, defend and hold harmless Tenant and its successors and assigns hereunder in accordance with the environmental indemnities set forth in Section 10.2 of the Stock Purchase Agreement for the full term of this Lease. ARTICLE XI OPTION TO PURCHASE 11.1. Option. (a) Tenant shall have the right and option to purchase the Property (the "Purchase Option") at a purchase price equal to Fair Market Value, disregarding the fact that the Property is encumbered with this Lease (as hereinafter defined), which Purchase Option shall be exercisable on the earlier of (i) the last day of the fifth year of the Term hereof, and (ii) the date on which the environmental condition of the Property is acceptable to Tenant, and which Purchase Option shall be exercisable at any time during each year thereafter during the Term hereof on any extended Term, if applicable. In the event Tenant elects to exercise its Purchase Option, Tenant shall so notify Landlord of its election on or before the date which is ninety (90) days prior to the date on which such purchase is to occur (the "Closing Date"). The terms of the sale by Landlord and the purchase by Tenant of the Property shall be in accordance with the provisions of Exhibit E attached hereto and made a part hereof. (b) Determination of Fair Market Value. "Fair Market Value" as used herein shall be determined as follows: If Landlord and Tenant shall fail to agree upon the Fair Market Value within thirty (30) days of the exercise of Tenant's option to purchase the Property, then -16- 18 Landlord and Tenant each shall give notice to the other setting forth the name and address of an arbitrator designated by the party giving such notice. If either party shall fail to give notice of such designation within forty-five (45) days after such thirty (30) day period, then the arbitrator chosen shall make the determination alone. If two arbitrators shall have been designated, such two arbitrators shall, within thirty (30) days, make their determination of Fair Market Value in writing and given notice thereof to each other and to Landlord and Tenant. Such two arbitrators shall have thirty (30) days after the receipt of notice of each other's determination to confer with each other and attempt to reach a determination as to Fair Market Value. If such two arbitrators shall concur as to the determination of the Fair Market Value, such concurrence shall be final and binding upon Landlord and Tenant. If the Fair Market Value of such two arbitrators are within ten percent (10%) of each other, the Fair Market Value during the option period shall be the average of the two arbitrators' Fair Market Values. If such two arbitrators shall fail to concur and their respective Fair Market Value are more than ten percent (10%) different, then such two arbitrators shall immediately designate a third arbitrator, who shall satisfy the requirements set forth herein for an arbitrator and shall also be an American Arbitration Association arbitrator. If the two arbitrators shall fail to agree upon the designation of such third arbitrator within ten (10) days of such notice, then either party may apply to the American Arbitration Association or any successor thereto having jurisdiction for the designation of such arbitrator. All arbitrators shall be non-affiliated industrial real estate appraisers, who shall have at least ten (10) years experience in the business of appraising industrial real estate in the State of Ohio and who shall have not worked for either party hereto or for an affiliate or owner of either party hereto for ten (10) years. The third arbitrator shall conduct such hearings and investigations as he may deem appropriate, and shall, within thirty (30) days of the designation of the third arbitrator, choose one of the determinations of the two arbitrators originally selected by the parties and that choice by the third arbitrator shall be binding upon Landlord and Tenant. Each party shall pay its own counsel fees and expenses, if any, in connection with any arbitration under this Section 11 including the expenses and fees of any arbitrator selected by it and the parties shall share equally all other expenses and fees of any such arbitration. ARTICLE XII OPTION TO EXPAND 12.1. Expansion Option. Tenant shall have the option to be exercised at any time during the Term to require Landlord to finance the expansion of the improvements on the Property. Upon exercise of such option an officer of Tenant and Irving Rubin, Robert Bonczyk, or their successors and assigns, shall negotiate in good faith and on a reasonable basis for a period of thirty (30) days, an amendment to this Lease which provides for a lease term and rental sufficient to allow financing of such expansion. In the event Landlord and Tenant are unable to agree upon a lease amendment after such thirty (30) day period, either party shall have the right to submit the matter to arbitration which arbitration shall be conducted in accordance with the arbitration provisions of the Stock Purchase Agreement. -17- 19 ARTICLE XIII GENERAL 13.1. Notices. All notices, waivers, demands, requests or other communications required or permitted hereunder shall, unless otherwise expressly provided, be in writing and be deemed to have been properly given, served and received (i) if delivered by messenger, when delivered, (ii) if mailed, on the third (3rd) business day after deposit in the United States Mail, certified or registered, postage prepaid, return receipt requested, (iii) if telexed, telegraphed or telecopied, three (3) hours after being dispatched by telex, telegram or telecopy, if such third (3rd) hour falls on a business day within the hours of 8:00 a.m. through 5:00 p.m. of the time in effect at the place of receipt, or at 8:00 a.m. on the next business day thereafter if such third (3rd) hour is later than 5:00 p.m., or (iv) if delivered by reputable overnight express courier, freight prepaid, the next business day after delivery to such courier; in every case addressed to the party to be notified as follows: If to Landlord: CP Alliance, Inc. 29200 Southfield Road Suite 209 Southfield, Michigan 48076-1925 Attention: Irving A. Rubin and to: Robert Bonczyk 314 Buchner Hill Northville, Michigan 48167 With a copy to: Maddin, Hauses, Wartell, Roth, Heller & Pesses, P.C. 28400 Northwestern Highway Third Floor - Essex Centre Southfield, Michigan 48034-8004 Attention: Richard Roth If to Tenant: United States Can Company 900 Commerce Drive Oak Brook, Illinois 60521 Attn: Vice President of Materials & Logistics -18- 20 With a copy to: Ross & Hardies 150 North Michigan Avenue Suite 2500 Chicago, Illinois 60601-7567 (312) 558-1000 Attn: Patrick E. Brady or at such other address as the party to receive said notice may theretofore have furnished by written notice as set forth above. 13.2. Brokers. Tenant and Landlord represent and warrant to each other that they have not dealt with any broker or finder in connection with this Lease, and to their knowledge, no other broker or finder initiated or participated in the negotiation of this Lease, submitted or showed the Premises to Tenant or is entitled to any commission in connection with this Lease. Tenant and Landlord hereby indemnify and hold each other harmless from and against any and all claims, damages and expenses based upon or arising out of any claim by any person with whom it is ultimately determined that Landlord or Tenant has dealt in violation of the foregoing representations and warranties of any other real estate broker for commissions resulting from a breach of the foregoing representations and warranties. 13.3. General. (a) All rights and remedies of Landlord or Tenant, as the case may be, under this Lease shall be cumulative and none shall exclude any other rights and remedies allowed by laws. (b) All installments of Rental and any other sums which are unpaid when due and remain unpaid for ten (10) days after notice, shall bear interest at a rate of ten percent (10%) per annum from the date due until paid. (c) Each of the provisions of this Lease shall extend to and shall, as the case may require, bind or inure to the benefit, not only of Landlord and of Tenant, but also of their respective heirs, legal representatives, successors and assigns, subject to Section 7.4. hereof. (d) All of the representations, agreements and obligations of Landlord and Tenant are contained herein, and no modification, waiver or amendment of this Lease or of any of its conditions or provisions shall be binding upon the Landlord or Tenant unless in writing signed by such party. (e) No receipt of money by Landlord from Tenant after the termination of this Lease or after the service of any notice or after the commencement of any suit, or after final -19- 21 judgment for possession of the Premises shall reinstate, continue or extend the Term of this Lease or affect any such notice, demand or suit. (f) The officers of Tenant and Landlord executing this Lease each represent that he has been duly authorized by his respective Boards of Directors to execute this Lease in this form and containing the aforesaid covenants. (g) The headings or captions of Sections are for convenience only, are not part of this Lease, and shall not affect the interpretation of this Lease. (h) This lease may be executed in any number of counterparts, all of which when put together shall be deemed an original. (i) This Lease shall be governed by and construed in accordance with the laws of the State of Ohio. If any provision or part of this Lease or the application thereof to any persons or circumstances shall, to any extent, be invalid, illegal or unenforceable, the remainder of this Lease, or the application of such provision or part to persons or circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby, and each term and provision of this Lease shall be valid and enforced to the fullest extent permitted by law. -20- 22 IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement for Building Lease to be executed as of the first day written above. LANDLORD: CP ALLIANCE, INC., a Michigan corporation By: /s/ Irving A. Rubin --------------------------------------- Name: Irving A. Rubin Title: Chairman & CEO TENANT: UNITED STATES CAN COMPANY, a Delaware corporation By: /s/ Timothy W. Stonich ----------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President Chief Financial Officer -21- 23 EXHIBIT A LEGAL DESCRIPTION 24 EXHIBIT B BASE RENT Tenant shall pay the monthly installments of Base Rent in advance on the first day of each calendar month during the Term subject to the following schedule: Time Period Monthly Rent ----------- ------------ August 1, 1996 through July 31, 2001 $5,400.00 25 EXHIBIT C LANDLORD'S EXISTING MORTGAGE None. 26 EXHIBIT D ENVIRONMENTAL REPORTS Environmental Report dated July 26, 1996, prepared by Environmental Resources Management, Inc. 27 EXHIBIT E TERMS OF AGREEMENT OF SALE Upon Tenant's exercise of the Option to Purchase in conformity with Article XI of the attached Lease, without further action of the Landlord or Tenant, there shall be a Binding Agreement of Sale for the Property between Landlord, as Seller, and Tenant, as Buyer, upon the following terms and conditions: PROPERTY AND TERMS 1. Seller hereby agrees to sell and convey to Buyer, who hereby agrees to purchase ALL THAT CERTAIN lot or piece of ground, more particularly described in Exhibit "A" to the Lease attached hereto and made a part hereof and known by street address of 12240 Rockhill Road, Alliance, Ohio, together with all improvements thereon, including ______ (__) building(s) with approximately 52,000 square feet of interior area, together with all fixtures owned by Seller and located therein ("Property"), for the Purchase Price set forth in Article XI of the attached Lease in cash, wire transfer on other immediately available funds. TITLE 2. At Closing, title to the Property shall convey by general warranty deed good and marketable and such as will be insured in the amount of the purchase price by title insurance company selected by Buyer (the "Title Company") and reasonably acceptable to the Seller, at Seller's expense, free and clear of all mortgages, liens, encumbrances and easements, excepting only those listed on Exhibit 1 of this Agreement. In the event the Seller is unable to give a good and marketable title and such as will be insured by the Title Company, subject as aforesaid, Buyer shall have the option of taking such title as the Seller can give by deducting from the Purchase Price liens of a definite or ascertainable amount or of terminating this Agreement of Sale upon written notice to Seller; and in the latter event there shall be no further liability or obligation on either of the parties hereto and this Agreement of Sale shall become null and void. Within thirty (30) days of exercise of this option, Purchaser shall obtain a then current survey of the Property certified to Buyer, the Title Company and Buyer's lender, as having been made in accordance with the Minimum Land Survey Standard Detail Requirements for Land Title Surveys jointly established and adopted by ALTA and ACSM (the "Survey"). The Survey shall show that the Property is not in a flood plain. Within thirty (30) days following receipt of the Survey, Buyer shall notify Seller of any discrepancies or conflicts in boundary lines, shortages in area, and encroachments as may be shown by the Survey. Seller shall have twenty-five (25) days following receipt of Buyer's notice to advise Buyer if Seller can remove or clear the discrepancy or conflict. If Seller is unable to remove or clear such discrepancies in title, Buyer shall have the option of either taking such title as Seller can give without abatement of 28 price or of terminating this Agreement of Sale upon written notice to Seller. In the latter event, there shall be no further liability or obligation on either of the parties hereto and this Agreement of Sale shall become null and void. Notwithstanding anything to the contrary contained herein, Seller shall not further encumber title to the Property without Buyer's consent. Seller shall provide Buyer with a title insurance policy at closing insuring Buyer's interest as the owner of the Property from a title insurance company designated by Buyer (the "Title Insurer") in the amount of the Purchase Price with extended coverage over the general exceptions, a 3.1 zoning endorsement, amended to include parking and approving Buyer's current use of the Property and such other endorsements reasonably requested by Buyer. The cost of the extended coverage shall be paid for by Buyer. Within fifteen (15) days of the exercise of the option to purchase, Buyer shall order a title commitment. At closing, Purchaser shall deduct from the proceeds of sale the cost for all survey, title charges and title insurance. CONDITION OF PROPERTY 3. Except for the provisions of Section 7, Buyer shall accept the Property in their "as-is" condition on the date of Closing, provided that if Buyer determines at any time prior to Closing that the Property or the lands in the vicinity of the Property are not free of toxic and hazardous substances and materials, Buyer shall have the option of terminating this Agreement upon notice to Seller. ASSESSMENT 4. Excepting notices previously delivered by Seller to Buyer during the term of the Lease, Seller covenants and represents as of the Exercise Date that no notice by any governmental agency or body regarding the Property, including, without limitation, notices pertaining to Environmental Laws and other governmental statutes, rules, regulations or directives affecting the Property, have been served upon Seller or anyone on the Seller's behalf. POSSESSION 5. Possession is to be delivered and physical possession at day and time of Closing. TAXES AND ADJUSTMENTS 6. All apportionable debits and credits, including assessments, taxes (subject to Buyer's obligation to pay taxes pursuant to the Lease) and sewer rent (if any) for the current term shall be calculated as levied and pro-rated as of the date of Closing. All real estate transfer taxes imposed by a governmental authority shall be paid for by Seller. ENVIRONMENTAL INDEMNITY -2- 29 7. Except as described in the environmental reports all delivered by Seller to Buyer and referred to on Exhibit D to the Lease and made a part thereof, prior to the Commencement Date (as defined in the Lease), (i) no Hazardous Materials have been located on the Property or have been released in the environment, or discharged, placed or disposed of at, on or under the Property; (ii) no underground storage tanks have been located on the Property; (iii) the Property has never been used as a dump for waste material; and (iv) the Property and its prior uses comply with and at all times have complied with, all applicable governmental laws, regulations or requirements relating to environmental and occupational, health and safety matters and Hazardous Materials. The term "Hazardous Materials" shall mean any substance, material, waste, gas or particulate matter which is regulated by any local governmental authority, the State of Ohio, or the United States Government, including, but not limited to, any material or substance which is (i) defined as a "hazardous waste," "hazardous material," "hazardous substance," "extremely hazardous waste," or "restricted hazardous waste" under any provision of Ohio law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive material, (vi) designated as a "hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as a "hazardous substance" pursuant to Section 101 of the Comprehensive Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C Section 9601). The term "Environmental Laws" shall mean all statutes specifically described in the foregoing sentence and all federal, state and local environmental health and safety statutes, ordinances, codes, rules, regulations, orders and decrees regulating, relating to or imposing liability or standards concerning or in connection with Hazardous Materials. Additionally, but not in lieu of Seller's affirmative undertakings set forth herein, Seller agrees to indemnity, defend and hold harmless Buyer and its grantees in accordance with the environmental indemnities set forth in Section 10.2 of the Stock Purchase Agreement. The indemnity and the obligation to defend and hold Buyer harmless set forth herein shall survive for a period of four years from the closing date of the Stock Purchase Agreement. RISK OF LOSS 8. Any loss or damage to the Property caused by fire, or loss commonly covered by the extended coverage endorsement of a reputable insurance companies between the Exercise Date and the date of Closing shall not in any way void or impair the conditions and obligations thereof, except that should the Property suffer loss or damage due to fire or other casualties, not repaired or replaced prior to Closing, Buyer shall have the option of terminating this Agreement upon notice to Seller; provided, however, that Seller shall have the right to reconstruct improvements so long as such reconstruction is completed within one hundred eighty (180) days of the date of casualty. In such event, there shall be no further liability or obligation on either of the parties hereto and this Agreement shall become null and void. -3- 30 WHOLE AGREEMENT 9. This Agreement contains the whole Agreement between the Seller and the Buyer and there are no other terms, obligations, covenants, representations, statements or conditions, oral or otherwise of any kind whatsoever concerning this sale. Any changes or additions to this Agreement must be made in writing and executed by the parties hereto. ASSIGNMENT 10. This Agreement shall be binding upon the respective successors and, to the extent assignable on the assigns of the parties hereto. This Agreement is to be construed and interpreted in accordance with the laws of the State of Ohio. BROKERS 11. Buyer and Seller each represent and warrant to the other that the transactions contemplated hereby have been carried out by Buyer directly with Seller in such manner as not to give rise to any valid claims against any of the parties hereto for a brokerage commission, finders fee, or other like payment. Buyer and Seller each shall indemnify and hold the other harmless from any breach of the above stated representation and warranty. TIME OF ESSENCE 12. The date for Closing and all other dates referred to for the performance of any of the obligations of this Agreement are hereby agreed to be of the essence of this Agreement. DESCRIPTIVE HEADING 13. The descriptive headings used here are for convenience only and they are not intended to indicate the matter in the sections which follow them. Accordingly, they shall have no effect whatsoever in determining the rights or obligations of the parties. -4- 31 EXHIBIT 1 LIST OF ENCUMBRANCE Real Estate taxes not yet due and payable. 32 AGREEMENT FOR BUILDING LEASE Dated as of August 1, 1996 By and Between CP ALLIANCE, INC., a Delaware corporation Landlord, and UNITED STATES CAN COMPANY, a Delaware corporation Tenant ================================================================================ TABLE OF CONTENTS
ARTICLE NO. PAGE NO. - - ---------- ------- ARTICLE I RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III LANDLORD'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE IV DAMAGE - CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ARTICLE V LANDLORD'S AND TENANT'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND RIGHTS OF RECOVERY ON INSURANCE . . . . . . . 10 ARTICLE VII TITLE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
33 ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE IX TENANT'S OPTION TO EXTEND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 ARTICLE X ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE XI OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 ARTICLE XII OPTION TO EXPAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 ARTICLE XIII GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 SCHEDULE OF EXHIBITS Exhibit A Legal Description Exhibit B Base Rent Exhibit C Landlord's Existing Mortgage Exhibit D Environmental Report Exhibit E Terms of Agreement of Sale
EX-99.1 6 PURCHASE AGREEMENT 1 EXHIBIT 99.1 U.S. CAN CORPORATION 10-1/8% Senior Subordinated Notes Due October 15, 2006 PURCHASE AGREEMENT New York, New York October 10, 1996 SALOMON BROTHERS INC CS FIRST BOSTON CORPORATION BA SECURITIES, INC. c/o Salomon Brothers Inc Seven World Trade Center New York, New York 10048 Dear Sirs: U.S. Can Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to you (the "Initial Purchasers") $275,000,000 principal amount of its 10-1/8% Senior Subordinated Notes Due October 15, 2006 (the "Notes") to be guaranteed (the "Guaranty") on a senior subordinated and unsecured basis by United States Can Company, a Delaware corporation and the sole direct and only United States subsidiary of the Company (the "Guarantor"), and to be issued under an indenture (the "Indenture") to be dated as of October 17, 1996, between the Company, the Guarantor and Harris Trust and Savings Bank, as trustee (the "Trustee"). References herein to the Notes shall be deemed to also include the Guaranty unless the context otherwise requires. The sale of the Notes to you will be made without registration of the Notes under the Securities Act of 1933, as amended (the "Act"), in reliance upon the exemption from the registration requirements of the Act provided by Section 4(2) thereof. You have advised the Company that you will make an offering of the Notes purchased by you hereunder in accordance with Section 4 hereof on the terms set forth in the Final Memorandum (as defined below), as soon as you deem advisable after this Agreement has been executed and delivered. In connection with the sale of the Notes, the Company has prepared a preliminary offering memorandum, dated September 24, 1996 (the "Preliminary Memorandum"), and a final offering memorandum, dated October 10, 1996 (the "Final Memorandum"). Each of the Preliminary Memorandum and the Final Memorandum sets forth certain information concerning the Company and the Notes. The Company hereby confirms that it has authorized the use of the Preliminary Memorandum and the Final Memorandum in connection with the offering and resale by the Initial Purchasers of the Notes. Any references herein to the Preliminary Memorandum or the Final Memorandum shall be deemed to include all exhibits thereto and all documents (if any) incorporated by reference and filed by the Company or the Guarantor pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on or before the execution and delivery of this Agreement by each of the parties hereto (the "Execution Time"); and any reference herein to the terms "amend", "amendment" or "supplement" with respect to the Final Memorandum shall be 2 deemed to refer to and include the filing of any document under the Exchange Act after the Execution Time which is incorporated by reference therein (if any). The Initial Purchasers and their direct and indirect transferees of the Notes will be entitled to the benefits of the Registration Rights Agreement, substantially in the form attached hereto as Exhibit C (the "Registration Rights Agreement"), pursuant to which the Company and the Guarantor have agreed, among other things, to file a registration statement (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") registering the Notes under the Act. In connection with the sale of the Notes, the Company, the Trustee and The First National Bank of Chicago will enter into the Escrow Agreement prior to the Closing Date pursuant to which the funds necessary to redeem the Guarantor's 13 1/2% Senior Subordinated Notes due 2002 (the "13 1/2% Notes") will be escrowed to provide for such redemption prior to January 22, 1997. 1. Representations and Warranties. Each of the Company and the Guarantor, jointly and severally, represents and warrants to, and agrees with, the Initial Purchasers as set forth below in this Section 1. (a) Each of the Preliminary Memorandum and the Final Memorandum as of its date did not, and the Final Memorandum (as the same may have been amended or supplemented) as of the Closing Date (as defined in Section 3 hereof) will not, contain any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided, however, that the Company and the Guarantor make no representations or warranties as to the information contained in or omitted from the Preliminary Memorandum or the Final Memorandum in reliance upon and in conformity with information furnished in writing to the Company or the Guarantor by the Initial Purchasers specifically for inclusion in the Preliminary Memorandum or the Final Memorandum (and any amendment or supplement thereof or thereto). No forward looking statement within the meaning of Section 27A of the Act and Section 21E of the Exchange Act contained in the Final Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith. (b) The audited financial statements of the Company and its subsidiaries included in the Final Memorandum present fairly in all material respects the financial position, results of operations and cash flows of the Company and its subsidiaries at the dates and for the periods to which they relate. The audited financial statements of the CPI Group (as hereinafter defined) included in the Final Memorandum present fairly in all material respects the financial position, results of operations and cash flows of the CPI Group at the dates and for the periods to which they relate. The audited financial statements of USC Europe (as defined in the Final Memorandum) included in the Final Memorandum present fairly in all material respects the financial position and results of operations of USC Europe at the dates and for the periods to which they relate. All of such financial statements have been prepared in conformity with generally accepted accounting principles in accordance with the Act and the rules and regulations promulgated thereunder, except as otherwise expressly indicated in the Final Memorandum. The unaudited financial statements of the Company, the CPI Group and USC Europe included in the Final Memorandum -2- 3 fairly present the financial position of the Company, the CPI Group and USC Europe, respectively, as of the dates indicated and the results of operation, changes in cash flows and stockholders' equity of the Company, the CPI Group and, except for changes in cash flows, USC Europe, respectively, for the portions of the respective fiscal years ending on such dates, in each case subject to year-end audit adjustments. The summary and selected financial data in the Final Memorandum present fairly in all material respects the information shown therein and the summary and selected financial data have been prepared and compiled on a basis consistent with the audited financial statements included therein, except as otherwise expressly stated therein. Arthur Andersen LLP, Befec-Price Waterhouse and Plante & Moran LLP are independent public accounting firms within the meaning of the Act and the rules and regulations promulgated thereunder. (c) The Company and the Guarantor have not taken and will not take, directly or indirectly, any action prohibited by Rule 10b-6 under the Exchange Act in connection with the offering of the Notes. (d) None of the Company, the Guarantor or any affiliate (as defined in Rule 501(b) of Regulation D under the Act ("Regulation D")) (other than Salomon Brothers Inc, as to which the Company and the Guarantor make no representation or warranty as to the matters covered by this Section 1(d)) of the Company or the Guarantor has directly, or through any agent, (i) sold, offered for sale, solicited offers to buy or otherwise negotiated in respect of, any security (as defined in the Act) which is or will be integrated with the sale of the Notes in a manner that would require the registration of the Notes under the Act or (ii) engaged in any form of general solicitation or general advertising (within the meaning of Regulation D) in connection with the offering of the Notes. (e) It is not necessary in connection with the offer, sale and delivery of the Notes in the manner contemplated by this Agreement and the Final Memorandum to register the Notes under the Act or to qualify the Indenture under the Trust Indenture Act of 1939, as amended (the "TIA"). (f) None of the Company, the Guarantor, their affiliates (other than Salomon Brothers Inc, as to which the Company and the Guarantor make no representation or warranty as to the matters covered by this Section 1(f)) or any person acting on behalf of the Company, the Guarantor or such affiliates has engaged in any directed selling efforts (as that term is defined in Regulation S under the Act ("Regulation S")) with respect to the Notes, and the Company, the Guarantor and such affiliates and any person acting on their behalf have complied with the offering restrictions requirement of Regulation S. (g) The Company is subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Company meets the requirements for the use of Form S-3 under the Act in connection with the Registration Rights Agreement. (h) The Notes satisfy the requirements set forth in Rule 144A(d)(3) under the Act. The Company has been advised by the National Association of Securities Dealers, Inc. ("NASD") Private Offerings, Resales and Trading through Automatic -3- 4 Linkages ("PORTAL") Market that the Notes have or will be designated PORTAL eligible securities in accordance with the rules and regulations of the NASD. (i) Each of the Company and the Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Final Memorandum, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business. Each of the Guarantor's subsidiaries has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification wherein it owns or leases material properties or conducts material business. Exhibit E is a complete list of all of the Company's and the Guarantor's direct or indirect subsidiaries, (collectively, the "Subsidiaries") as of the Execution Time and as of the Closing Date, including each Subsidiary's jurisdiction of incorporation. (j) All of the outstanding shares of capital stock of each of the Company and the Guarantor have been duly and validly authorized and issued and are fully paid and nonassessable, and all outstanding shares of capital stock of the Company's subsidiaries are owned by the Company, directly or indirectly, free and clear of any perfected security interest and any other security interests, claims, liens or encumbrances, other then the pledge by the Company of 65% of the common stock of U.S.C. Europe N.V. outstanding as of the date hereof to Bank of America Illinois for the benefit of the Senior Lenders (as defined in the Final Memorandum). (k) The Company's authorized equity capitalization is as set forth in the Final Memorandum; and the Notes, the Exchange Notes (as defined in the Registration Rights Agreement), the Indenture, the Registration Rights Agreement and the Senior Credit Agreement (as defined in the Final Memorandum) conform in all material respects to the descriptions thereof contained in the Final Memorandum. (l) The Company and the Guarantor have full corporate power and authority to enter into this Agreement and perform the transactions contemplated hereby. This Agreement has been duly authorized, executed and delivered by each of the Company and the Guarantor and (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) constitutes a valid and binding obligation of each of the Company and the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and except as to those provisions relating to indemnity or contribution for liabilities arising under federal and state securities laws. (m) The Company and the Guarantor have full corporate power and authority to enter into the Indenture and perform the transactions contemplated thereby. The Indenture meets the requirements for qualification under the TIA. The Indenture has been duly authorized by each of the Company the Guarantor and, when -4- 5 executed and delivered by each of the Company and the Guarantor (assuming the due authorization, execution and delivery by the Trustee) will constitute a valid and binding obligation of each of the Company and the Guarantor, enforceable in accordance with its terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and except as to those provisions relating to indemnity or contribution for liabilities arising under federal and state securities laws. (n) The Notes are in the form contemplated by the Indenture. Each of the Company and the Guarantor has full corporate power and authority to execute, deliver and perform each of its obligations under the Notes and the Exchange Notes, including the Guaranty. The Notes and the Exchange Notes have each been duly and validly authorized by each of the Company and the Guarantor and, when executed by each of the Company and the Guarantor and authenticated by the Trustee in accordance with the provisions of the Indenture and, in the case of the Notes, when delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, will constitute valid and binding obligations of each of the Company and the Guarantor, entitled to the benefits of the Indenture and enforceable in accordance with their terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and except as to those provisions relating to indemnity or contribution for liabilities arising under federal and state securities laws. (o) The Company and the Guarantor have full corporate power and authority to enter into the Registration Rights Agreement and perform the transactions contemplated thereby. The Registration Rights Agreement has been duly authorized by each of the Company the Guarantor and, when executed and delivered by each of the Company and the Guarantor (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) will constitute a valid and binding obligation of each of the Company and the Guarantor enforceable in accordance with its terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and except as to those provisions relating to indemnity or contribution for liabilities arising under federal and state securities laws. (p) The Company has full corporate power and authority to enter into the Escrow Agreement and perform the transactions contemplated thereby. The Escrow Agreement has been duly authorized by the Company and, when executed and delivered by each of the Company (assuming the due authorization, execution and delivery thereof by the Trustee and the Escrow Agent) will constitute a valid and binding obligation of the Company enforceable in accordance with its terms, except as enforceability may be limited by general equitable principles, bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors' rights generally and except as to those provisions relating to indemnity or contribution for liabilities arising under federal and state securities laws. (q) The issuance and sale of the Notes, the execution, delivery and performance of this Agreement, the Indenture and the Registration Rights Agreement by each of the Company and the Guarantor and the consummation of the transactions -5- 6 contemplated hereby and thereby (including, without limitation, the Required Redemption (as defined in the Indenture)) (i) will not violate any provisions of the certificate of incorporation, bylaws or other organizational documents of the Company or any of its subsidiaries and (ii) will not conflict with, result in a breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a default under (A) any indenture, mortgage, deed of trust, loan agreement, note, lease, license, franchise agreement, permit, certificate, contract or other agreement or instrument to which any of them or their subsidiaries is a party or to which any of them or their respective properties or assets (or those of their subsidiaries) is subject (each, a "Contract") or (B) any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or any of its subsidiaries or any of their respective properties except, in the case of clause (ii) above, any such conflict, breach, violation or default that would not, individually or in the aggregate, have a material adverse effect on the condition (financial or otherwise), properties, business, operations, assets, results of operations or prospects of the Company or its Subsidiaries, taken as a whole (a "Material Adverse Effect"). (r) No consent, approval, authorization or other order of any court, regulatory body, administrative agency, other governmental body or any third party which has not already been obtained is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with state securities or "Blue Sky" laws in connection with the purchase and resale of the Notes by the Initial Purchasers. Neither the Company nor the Guarantor is (i) in violation of its certificate of incorporation or bylaws (or similar organizational document), (ii) in breach or violation of any statute, judgment, decree, order, rule or regulation applicable to any of them or any of their respective properties or assets, except for any such breach or violation which would not, individually or in the aggregate, have a Material Adverse Effect, or (iii) in breach of or default under (nor has any event occurred which, with notice or passage of time or both, would constitute a default under) or in violation of any of the terms or provisions of any Contract, except for any such breach, default, violation or event which would not, individually or in the aggregate, have a Material Adverse Effect or result in the creation of any mortgage, lien, charge or encumbrance upon any of the properties or assets of the Company or the Guarantor in any manner which would reasonably be expected to have a Material Adverse Effect. There is no such term or provision which affects or in the future is reasonably likely to (so far as the Company or the Guarantor can now foresee) affect the Company or the Guarantor in any manner which is reasonably likely to have a Material Adverse Effect. (s) Except as disclosed in the Final Memorandum, there are no legal or governmental actions, suits or proceedings pending or, to the best of the Company's knowledge, threatened to which the Company or any of its subsidiaries is or is threatened to be made a party or of which property owned or leased by the Company or any of its subsidiaries is or is threatened to be made the subject, which actions, suits or proceedings could, individually or in the aggregate, prevent or adversely affect the transactions contemplated by this Agreement or have a Material Adverse Effect or which seek to restrain, enjoin, prevent the consummation of or otherwise challenge the issuance or sale of the Notes to be sold hereunder or the consummation -6- 7 of the other transactions described in the Final Memorandum; and no labor disturbance by the employees of the Company or any of its subsidiaries exists or is imminent which could have a Material Adverse Effect. Except as disclosed in the Final Memorandum, neither the Company nor any of its Subsidiaries is a party or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body. The Company and the Guarantor have no reason to believe that any governmental agencies are investigating the Company, the Guarantor, any Subsidiary or any related parties, other than as described in the Final Memorandum or in ordinary course administrative reviews or in any ordinary course review of the transactions contemplated hereby. (t) Except as disclosed in the Final Memorandum, the Company and its Subsidiaries have sufficient trademarks, trade names, patent rights, copyrights, licenses, approvals and governmental authorizations to conduct their businesses as now conducted without any known conflict with the rights of others; the Company's and its Subsidiaries' controlling persons, key employees and stockholders have all necessary permits, licenses and other authorizations required by applicable law for the Company and its Subsidiaries to conduct their businesses as now conducted; each of the Company and the Guarantor is in compliance in all material respects with all material franchises, grants, authorizations, licenses, permits, easements, consents, certificates and orders of any governmental or regulatory body, domestic or foreign, required for the conduct of its business; and the expiration of any trademarks, trade names, patent rights, copyrights, licenses, approvals or governmental authorizations would not have a Material Adverse Effect. (u) The Company and its subsidiaries are conducting business in compliance with all applicable laws, rules and regulations of the jurisdictions in which they are conducting business, except where the failure to be so in compliance would not have a Material Adverse Effect. (v) In connection with the Company's request, as set forth in a letter (the "Waiver Request") dated August 27, 1996 from John R. McGowan, Vice President and Controller of United States Can Company, to Craig Olinger, Associate Chief Accountant, Division of Corporate Finance, Securities and Exchange Commission (the "Commission"), that the Commission waive compliance by the Company with Rules 3-02 and 3-04 of Regulation S-X with respect to reporting certain financial information specified in the Waiver Request relating to USC Europe and the acquisition thereof by the Company, (i) the Company has received a response from the Commission that is responsive in all respects to the matters set forth in the Waiver Request and is set forth as Exhibit F hereto (the "Commission Response"), (ii) the Commission Response is in full force and effect as of the date hereof, (iii) neither the Company nor the Guarantor has taken or failed to take any action, nor is the Company or the Guarantor aware of any fact, that could result in such Commission Response being revoked by the Commission or otherwise becoming ineffective in whole or in part, (iv) any related disclosure in the Preliminary Memorandum and the Final Memorandum would comply in all respects with the conditions and requirements set forth in the Commission Response if such disclosure were included in a prospectus filed under the Act or a report filed under the Exchange Act and (v) the consolidated financial statements of the Company, the historical financial statements -7- 8 of the CPI Group and USC Europe and any related disclosure included in reports or other documents filed or to be filed with the Commission otherwise comply, or will otherwise comply, with the applicable requirements of Regulation S-X. (w) Neither the Company nor any Subsidiary has sustained since December 31, 1995 any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Final Memorandum; and, since the respective dates as of which information is given in the Final Memorandum, there has not been and there is not reasonably expected to be any change in the capital stock or long-term debt of the Company or any Material Adverse Effect, otherwise than as set forth or contemplated in the Final Memorandum. (x) All foreign and federal, state and city tax returns and tax reports of each of the Company and the Guarantor required to be filed have been duly filed, and all taxes and all material assessments, fees and other governmental charges upon each of the Company and the Guarantor and upon their respective properties, assets, income and franchises which are due thereunder have been paid, other than those presently payable without penalty or interest, or which the Company or the Guarantor, as the case may be, is contesting in good faith and as to which adequate reserves have been made. The federal income tax liability of the Company has been finally determined and satisfied for all fiscal periods through the fiscal year ended December 31, 1992. Adequate charges, accruals and reserves have been made in the applicable financial statements referred to in Section 1(b) hereof in respect of federal income tax for all periods subsequent to December 31, 1992 and ending on or before June 30, 1996, and adequate charges, accruals and reserves have been made on the books of the Company in respect of all such taxes. To the best of each of the Company's and the Guarantor's knowledge, no material unpaid assessment for additional federal or foreign income tax is due from the Company or the Guarantor for any fiscal period, except for assessments which the Company or the Guarantor is contesting in good faith and as to which adequate reserves have been made. (y) Each of the Company and the Guarantor is not in default with respect to any short-term or long-term borrowing or any funded debt or any instrument or agreement relating thereto, or in arrears in the payment of any dividends or other distributions due in respect of any securities. Complete and correct copies of all instruments and agreements relating to any short-term or long-term borrowings, mortgages, funded debt or other securities of the Company, the Guarantor and the Subsidiaries have been provided to Wachtell, Lipton, Rosen & Katz, special counsel for the Initial Purchasers. (z) Each of the Company and the Guarantor has good and marketable title in fee simple to all real property and good and marketable title to all personal property and assets owned by it on the date hereof, in each case subject to no material mortgage or material encumbrance except as set forth on Schedule 1(z) hereto or as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company or the Guarantor, as the case may be. As to any property held under lease by the Company or the Guarantor, the Company or the Guarantor, as the case may be, enjoys peaceful -8- 9 undisturbed possession under all such leases which are material to the Company or the Guarantor, as the case may be; all such leases are valid, subsisting and enforceable, with no material default on the part of the lessee existing thereunder; and none of such leases contains any unusual or burdensome provision which materially adversely affects or in the future may (so far as the Company or the Guarantor can now foresee) affect the operations of the Company or the Guarantor in any manner which is reasonably likely to have a Material Adverse Effect. (aa) To the best of the Company's and the Guarantor's knowledge, the Company and the Guarantor have not engaged in any transaction in connection with which the Company or the Guarantor could be subject to either a civil penalty assessed pursuant to Section 502(i) or 501(l) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA") or a tax imposed by Section 4975 of the Internal Revenue Code of 1986, as amended (the "Code"). No defined benefit pension plan of the Company or the Guarantor which is subject to ERISA (a "Plan") has been terminated since June 30, 1996. No material liability to the Pension Benefit Guaranty Corporation has been or is expected by the Company or the Guarantor to be incurred with respect to any Plan by the Company or the Guarantor. There has been no "reportable event" (within the meaning of Section 4043(b) of ERISA or the regulations thereunder) with respect to any Plan, or any event or condition, which presents a material risk of termination of any Plan by the Pension Benefit Guaranty Corporation. Full payment has been made of all amounts which the Company or the Guarantor is required, under the terms of each pension plan of the Company or the Guarantor which is subject to ERISA (an "Employee Plan"), to have paid as contributions to such Employee Plan as of the last day of the most recent fiscal year of such Employee Plan ended prior to the date hereof, and no accumulated funding deficiency (as defined in Section 302 of ERISA and Section 412 of the Code), whether or not waived, exists with respect to any Employee Plan. As of January 1, 1996, the present value of accrued benefits under the Pension Plan for Hourly-Rated Employees of the Guarantor did not exceed the current value of all of the assets of such Plan allocable to such accrued benefits by more than $10 million. For purposes of the representation in the preceding sentence, the terms "present value," "current value" and "accrued benefit" have the meanings specified in Section 3 of ERISA, and the determination of such amounts is pursuant to assumptions used by the enrolled actuaries for such Plan in the actuarial report prepared for the most recent Plan year. There has been no withdrawal liability or liabilities assessed against the Company or the Guarantor with respect to any multi-employer plan to which the Company or the Guarantor contributes. The Company and the Guarantor have not engaged in any material violations of the requirements of Section 4980B of the Code or of Part 6 of Title I of ERISA which have resulted in or could result in liabilities or the imposition of penalties or sanctions under said Sections. (bb) There are no legal or governmental proceedings affecting the Company or any of its subsidiaries or any of their respective properties or assets which would be required to be described in a prospectus pursuant to the Act and the rules and regulations promulgated thereunder that are not described in the Final Memorandum, nor are there any material Contracts or other documents which would be required to be described in a prospectus pursuant to the Act that are not described in the Final Memorandum. -9- 10 (cc) Except as disclosed in the Final Memorandum and except as would not individually or in the aggregate have a Material Adverse Effect, (A) the Company and the Subsidiaries are each in compliance with all applicable Environmental Laws, (B) the Company and the Subsidiaries have all permits, authorizations and approvals required under any applicable Environmental Laws and are each in compliance with their requirements, (C) there are no pending or threatened Environmental Claims against the Company or any Subsidiary, and (D) with respect to the property or operations of the Company or the Subsidiaries, there are no circumstances that could reasonably be anticipated to form the basis of an Environmental Claim against the Company or the Subsidiaries. For the purposes of this Agreement, the following terms shall have the following meanings: "Environmental Law" means any United States (or other applicable jurisdiction's) federal, state, local or municipal statute, law, rule, regulation, ordinance, code, policy or rule of common law and any judicial or administrative interpretation thereof including any judicial or administrative order, consent decree or judgment, relating to the environment, health, safety or any chemical, material or substance, exposure to which is prohibited, limited or regulated by any governmental authority. "Environmental Claims" means any and all administrative, regulatory or judicial actions, suits, demands, demand letters, claims, liens, notices of noncompliance or violation, investigations or proceedings relating in any way to any Environmental Law. (dd) To the best knowledge of the Company and the Guarantor, none of the Company, the Guarantor, or any Subsidiary, or any employee or agent of the Company or the Guarantor, or any Subsidiary, has made any payment from funds of the Company or the Guarantor, or any Subsidiary, or received or retained any funds in violation of any rule or regulations, which payment, receipt or retention of funds would be required to be disclosed in a prospectus pursuant to the Act and the rules and regulations promulgated thereunder, or has individually or in the aggregate had a Material Adverse Effect. (ee) No holders of securities of the Company or the Guarantor have preemptive rights, rights of first refusal triggered by the transactions contemplated hereby or rights to the registration of such securities under the Registration Rights Agreement or pursuant to any of the obligations of the Company or the Guarantor thereunder. (ff) None of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Indenture (including, without limitation, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any rule or regulation promulgated thereunder, including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System. (gg) None of the Company or its Subsidiaries is, or upon the closing of the offering contemplated by this Agreement will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, nor are any of the foregoing subject to regulation under the Interstate Commerce Act or any federal -10- 11 or state statute or regulation limiting its ability to incur indebtedness for borrowed money. (hh) To the best knowledge of the Company, except as disclosed in the Final Memorandum, no executive officer or key employee of the Company or the Guarantor intends to resign or to retire. (ii) To the best knowledge of the Company, except as disclosed in the Final Memorandum, no group of salaried or hourly employees of the Company or any Subsidiary is currently participating in a work stoppage or is threatening to participate in a work stoppage at any of the Company's or any Subsidiary's facilities. (jj) Except as disclosed in the Final Memorandum, there are no contracts, agreements or understandings between the Company or the Guarantor and any person providing for a brokerage commission, finder's fee or other like payment to such person from the Company or the Guarantor in connection with the offering of the Notes. 2. Purchase and Sale. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth, the Company agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees, severally and not jointly, to purchase from the Company, at a purchase price of 97.5% of the principal amount thereof, plus accrued interest, if any, from October 17, 1996, to the Closing Date, the principal amount of the Notes set forth opposite such Initial Purchaser's name in Schedule I hereto. 3. Delivery and Payment. Delivery of and payment for the Notes shall be made at 12:00 PM, New York City time, on October 17, 1996, or such later date as the Initial Purchasers designate, which date and time may be postponed by agreement between the Initial Purchasers and the Company (such date and time of delivery and payment for the Notes being herein called the "Closing Date"). Delivery of the Notes shall be made to the Initial Purchasers against payment by the Initial Purchasers of the purchase price thereof by wire transfer in federal (same-day) funds, provided that the Company shall reimburse the Initial Purchasers for the difference between making such payment in same-day and next-day funds. Delivery of the Notes shall be made at such location as the Initial Purchasers shall reasonably designate at least one business day in advance of the Closing Date and payment for the securities shall be made at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York. Certificates for the Notes shall be registered in such names and in such denominations as the Initial Purchasers may request not less than one full business day in advance of the Closing Date. The Company agrees to have the Notes available for inspection, checking and packaging by the Initial Purchasers in New York, New York, not later than 1:00 PM on the business day prior to the Closing Date. 4. Offering of Notes; Restrictions on Transfer. A. Each Initial Purchaser, as to itself and not as to any other Initial Purchaser, represents and warrants to and agrees with the Company that (i) it has not solicited and will not solicit any offer to buy or offer to sell the Notes by means of any form of general solicitation or general advertising (within -11- 12 the meaning of Regulation D) or in any manner involving a public offering within the meaning of Section 4(2) of the Act or, with respect to Notes sold in reliance on Regulation S, by means of any directed selling efforts, (ii) it has solicited and will solicit offers to buy the Notes only from, and have offered and will offer, sell or deliver the Notes only to, (A) persons who it reasonably believes to be qualified institutional buyers (as defined in Rule 144A under the Act) or, if any such person is buying for one or more institutional accounts for which such person is acting as fiduciary or agent, only when such person has represented to it that each such account is a qualified institutional buyer, to whom notice has been given that such sale or delivery is being made in reliance on Rule 144A, and, in each case, in transactions under Rule 144A, (B) persons who it reasonably believes to be institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D), and who provide to it a letter in the form of Exhibit A hereto or (C) persons to whom, and under circumstances which, it reasonably believes offers and sales of Notes may be made without registration of the Notes under the Act in reliance upon Regulation S thereunder and (iii) it has offered and will offer to sell the Notes only to, and has solicited and will solicit offers to buy the Notes only from, persons that in purchasing such Notes will be deemed to have represented and agreed as provided under "Investor Representations and Restrictions on Resale" in Exhibit B hereto. (b) The Initial Purchasers represent and warrant that (i) they have not offered or sold and will not offer or sell any Securities in the United Kingdom by means of any document other than to persons whose ordinary business it is to buy, hold, manage or dispose of investments, whether as principal or agent, for the purposes of their businesses or otherwise in circumstances which do not constitute an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995, (ii) they have complied and will comply with all applicable provisions of the Financial Services Act 1986 of the United Kingdom with respect to anything done by them in relation to the Notes in, from or otherwise involving the United Kingdom and (iii) they have only issued or passed on, and will only issue or pass on, to any person in the United Kingdom any document received by them in connection with the issue of the Securities if that person is of the kind described in Article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom the document may otherwise lawfully be issued or passed on. 5. Agreements. Each of the Company and the Guarantor, jointly and severally, agrees with the Initial Purchasers that: (a) The Company or the Guarantor will furnish to the Initial Purchasers, without charge, as many copies of the Final Memorandum and any supplements and amendments thereof or thereto as the Initial Purchasers may reasonably request. The Company or the Guarantor will pay the expenses of printing or other production of all documents relating to the offering. (b) The Company and the Guarantor will not amend or supplement the Final Memorandum unless the Company has furnished to the Initial Purchasers a copy for their review prior to printing and distribution and will not make any such amendment or supplement to which the Initial Purchasers reasonably and timely object. (c) If at any time prior to the completion of the sale of the Notes by the Initial Purchasers, any event occurs as a result of which the Final Memorandum as -12- 13 then amended or supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend or supplement the Final Memorandum to comply with the Exchange Act or the rules thereunder or other applicable law, the Company and the Guarantor promptly will notify the Initial Purchasers of the same and, subject to paragraph (b) of this Section 5, will prepare and provide to the Initial Purchasers pursuant to paragraph (a) of this Section 5 an amendment or supplement which will correct such statement or omission or effect such compliance. (d) The Company and the Guarantor will arrange for the qualification of the Notes for sale under the laws of such jurisdictions as the Initial Purchasers may reasonably designate, will maintain such qualifications in effect so long as reasonably required for the sale of the Notes and will arrange for the determination of the legality of the Notes for purchase by institutional investors. The Company and the Guarantor will promptly advise the Initial Purchasers of the receipt by the Company or the Guarantor of any notification with respect to the suspension of the qualification of the Notes for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose. The Company or the Guarantor will pay the expenses of such qualification and determination. (e) None of the Company, the Guarantor or any affiliate (as defined in Rule 501(b) of Regulation D) of the Company or the Guarantor will solicit any offer to buy or offer or sell the Notes by means of any form of general solicitation or general advertising (within the meaning of Regulation D). (f) None of the Company, the Guarantor, their affiliates nor any person acting on behalf of the Company, the Guarantor or their affiliates will engage in any directed selling efforts with respect to the Notes within the meaning of Regulation S, and the Company, the Guarantor, their affiliates and each such person acting on their behalf will comply with the offering restrictions requirement of Regulation S. (g) The Company and the Guarantor shall, during any period in the three years after the Closing Date in which the Company is not subject to Section 13 or 15(d) of the Exchange Act, make available, upon request, to any holder of such Notes in connection with any sale thereof and any prospective purchaser of Notes from such holder the information ("Rule 144A Information") specified in Rule 144A(d)(4) under the Act. (h) The Company and the Guarantor will not, and will not permit any of their respective affiliates (as defined in Rule 501(b) of Regulation D) to, resell any Notes which constitute "restricted securities" under Rule 144 that have been reacquired by any of them. (i) None of the Company, the Guarantor or any affiliate (as defined in Rule 501(b) of Regulation D) of the Company of the Guarantor will sell, offer for sale or solicit offers to buy or otherwise negotiate in respect of any security (as defined in the Act) the offering of which security will be integrated with the sale of the Notes in a manner which would require the registration of the Notes under the Act. -13- 14 (j) The Company and the Guarantor shall include information substantially in the form set forth in Exhibit B in each Final Memorandum. (k) The Company and the Guarantor shall use their best efforts in cooperation with the Initial Purchasers to permit the Notes to be eligible for clearance and settlement through The Depository Trust Company. (l) The Company and the Guarantor will not, for a period of 180 days following the Execution Time without prior written consent of the Initial Purchasers (which consent will not be unreasonably withheld), offer, sell or contract to sell, grant any other option to purchase or otherwise dispose of, directly or indirectly, or announce the offering of, any debt securities issued or guaranteed by the Company or the Guarantor, other than with respect to the Exchange Notes in the manner contemplated by the Registration Rights Agreement. (m) The Company and the Guarantor will apply the net proceeds from the sale of the Notes sold by the Company in accordance with the statements under the caption "Use of Proceeds" in the Final Memorandum. 6. Conditions to the Obligations of the Initial Purchasers. The obligations of the Initial Purchasers to purchase the Notes shall be subject to the accuracy of the representations and warranties on the part of the Company and the Guarantor contained herein as of the Execution Time and the Closing Date, to the accuracy of the statements of the Company and the Guarantor made in any certificates pursuant to the provisions hereof, to the performance by each of the Company and the Guarantor of its obligations hereunder and to the following additional conditions: (a) The Initial Purchasers shall have received the opinion of Ross & Hardies, counsel for the Company and the Guarantor, addressed to the Initial Purchasers and dated the Closing Date, to the effect that: (i) each of the Company and the Guarantor has been duly incorporated and is validly existing as a corporation in good standing under the laws of the jurisdiction in which it is chartered or organized, with full corporate power and authority to own its properties and conduct its business as described in the Final Memorandum, and is duly qualified to do business as a foreign corporation and is in good standing under the laws of each jurisdiction which requires such qualification, except where the failure so to be qualified would not have a material adverse effect on the business of the Company or the Guarantor in such jurisdiction; (ii) all the outstanding shares of capital stock of the Company and the Guarantor have been duly and validly authorized and issued and are fully paid and nonassessable, and all outstanding shares of capital stock of the Company's subsidiaries (except, with respect to subsidiaries other than the Guarantor, any director qualifying shares thereof) are owned by the Company, free and clear of any perfected security interest and, to the best of such counsel's knowledge, after due inquiry, any other security interests, claims, liens or encumbrances except as set forth in the Final Memorandum; -14- 15 (iii) the Company's authorized equity capitalization is as set forth in the Final Memorandum; and the Notes, the Exchange Notes, the Indenture and the Registration Rights Agreement conform to the description thereof contained in the Final Memorandum; (iv) each of the Company and the Guarantor has full corporate power and authority to enter into this Agreement and perform the transactions contemplated hereby; this Agreement has been duly authorized, executed and delivered by each of the Company and the Guarantor and (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) constitutes a valid and binding obligation of each of the Company and the Guarantor enforceable in accordance with its terms; (v) the Company and the Guarantor have full corporate power and authority to enter into the Indenture and perform the transactions contemplated thereby; the Indenture meets the requirements for qualification under the TIA; and the Indenture has been duly authorized by each of the Company and the Guarantor and, when executed and delivered by each of the Company and the Guarantor (assuming the due authorization, execution and delivery thereof by the Trustee) will constitute a valid and binding obligation of each of the Company and the Guarantor enforceable in accordance with its terms; (vi) the Notes are in the form contemplated by the Indenture; each of the Company and the Guarantor has full corporate power and authority to execute, deliver and perform each of its obligations under the Notes and the Exchange Notes, including the Guaranty; and the Notes and the Exchange Notes have each been duly and validly authorized by each of the Company and the Guarantor and, when executed by each of the Company and the Guarantor and authenticated by the Trustee in accordance with the provisions of the Indenture and, in the case of the Notes, when delivered to and paid for by the Initial Purchasers in accordance with the terms of this Agreement, will constitute valid and binding obligations of each of the Company and the Guarantor, entitled to the benefits of the Indenture and enforceable in accordance with their terms; (vii) the Company and the Guarantor have full corporate power and authority to enter into the Registration Rights Agreement and perform the transactions contemplated thereby; the Registration Rights Agreement has been duly authorized by each of the Company and the Guarantor and, when executed and delivered by each of the Company and the Guarantor (assuming the due authorization, execution and delivery thereof by the Initial Purchasers) will constitute a valid and binding obligation of each of the Company and the Guarantor enforceable in accordance with its terms; (viii) the Company has full corporate power and authority to enter into the Escrow Agreement and perform the transactions contemplated thereby. The Escrow Agreement has been duly authorized by the Company and when executed and delivered by the Company (assuming the due authorization, execution and delivery thereof by the Trustee and the Escrow Agent) -15- 16 will constitute a valid and binding obligation of the Company enforceable in accordance with its terms; (ix) the statements in the Final Memorandum under the headings "Description of Capital Stock," "Description of Certain Indebtedness" and "Description of Notes" fairly summarize the matters therein described and, to the best of such counsel's knowledge, the statements in the Final Memorandum under the headings "Risk Factors--Environmental Matters," "Management's Discussion and Analysis of Financial Condition and Results of Operations--Environmental Matters," "Management's Discussion and Analysis of Financial Condition and Results of Operations--Litigation," "Business--Labor," "Business--Legal Proceedings and Regulatory Matters" fairly summarize the matters therein described; (x) such counsel has no reason to believe that, as of the Execution Time, the Final Memorandum contained any untrue statement of a material fact or omitted to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Final Memorandum contains any untrue statement of a material fact or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading, or that any forward looking statement within the meaning of Section 27A of the Act and Section 21E of the Exchange Act contained in the Final Memorandum has been made or reaffirmed without a reasonable basis or has been disclosed other than in good faith; (xi) the issuance and sale of the Notes, the execution, delivery and performance of this Agreement, the Indenture and the Registration Rights Agreement by each of the Company and the Guarantor, and the Escrow Agreement by the Company, and the consummation of the transactions contemplated hereby and thereby (i) will not violate any provisions of the certificate of incorporation, bylaws or other organizational documents of the Company or any of its subsidiaries, and (ii) will not conflict with, result in a material breach or violation of, or constitute, either by itself or upon notice or the passage of time or both, a material default under (A) any Contract or (B) any statute or any authorization, judgment, decree, order, rule or regulation of any court or any regulatory body, administrative agency or other governmental body applicable to the Company or any of its subsidiaries or any of their respective properties; (xii) no consent, approval, authorization or other order of any court, regulatory body, administrative agency, other governmental body or any third party which has not already been obtained is required for the execution and delivery of this Agreement or the consummation of the transactions contemplated by this Agreement, except for compliance with the Act and state securities or "Blue Sky" laws in connection with the purchase and resale of the Notes by the Initial Purchasers; and neither the Company nor the Guarantor is (i) in violation of its certificate of incorporation or bylaws (or similar organizational document), (ii) in breach or violation of any statute, judgment, decree, order, rule or regulation applicable to either of them -16- 17 or any of their respective properties or assets, except for any such breach or violation which would not, individually or in the aggregate, have a Material Adverse Effect, or (iii) in breach of or default under (nor has any event occurred which, with notice or passage of time or both, would constitute a default under) or in violation of any of the terms or provisions of any Contract, except for any such breach, default, violation or event which would not, individually or in the aggregate, have a Material Adverse Effect; (xiii) it is not necessary in connection with the offer, sale and delivery of the Notes in the manner contemplated by this Agreement to register the Notes under the Act or to qualify the Indenture under the TIA; (xiv) to the best of such counsel's knowledge: (a) except as disclosed in the Final Memorandum, there are no legal or governmental actions, suits or proceedings pending or threatened to which the Company or any of its subsidiaries is or is threatened to be made a party or of which property owned or leased by the Company or any of its subsidiaries is or is threatened to be made the subject, which actions, suits or proceedings could, individually or in the aggregate, prevent or adversely affect the transactions contemplated by this Agreement or have a Material Adverse Effect or which seek to restrain, enjoin, prevent the consummation of or otherwise challenge the issuance or sale of the Notes to be sold hereunder or the consummation of the other transactions described in the Final Memorandum; (b) no labor disturbance by the employees of the Company or any of its subsidiaries exists or is imminent which could have a Material Adverse Effect; (c) neither the Company nor any of its subsidiaries is a party or subject to the provisions of any material injunction, judgment, decree or order of any court, regulatory body, administrative agency or other governmental body; and (d) no governmental agencies are investigating the Company, the Guarantor or any related parties, other than as described in the Final Memorandum or in ordinary course administrative reviews or in any ordinary course review of the transactions contemplated hereby; (xv) to the best of such counsel's knowledge, there are no legal or governmental proceedings affecting the Company or any of its subsidiaries or any of their respective properties or assets which would be required to be described in a prospectus pursuant to the Act and the rules and regulations promulgated thereunder that are not described in the Final Memorandum, nor are there any material Contracts or other documents which would be required to be described in a prospectus pursuant to the Act that are not described in the Final Memorandum; (xvi) none of the Company or its subsidiaries is, or upon the closing of the offering contemplated by this Agreement will be, an "investment company" within the meaning of the Investment Company Act of 1940, as amended, nor are any of the foregoing subject to regulation under the Interstate Commerce Act or any federal or state statute or regulation limiting its ability to incur indebtedness for borrowed money; -17- 18 (xvii) to the best of such counsel's knowledge, no holders of securities of the Company or the Guarantor have preemptive rights, rights of first refusal triggered by the transactions contemplated hereby or rights to the registration of such securities under the Registration Rights Agreement or pursuant to any of the obligations of the Company or the Guarantor thereunder; (xviii) to the best of such counsel's knowledge, none of the transactions contemplated by this Agreement, the Registration Rights Agreement or the Indenture (including, without limitation, the use of the proceeds from the sale of the Notes) will violate or result in a violation of Section 7 of the Exchange Act, or any rule or regulation promulgated thereunder, including, without limitation, Regulations G, T, U and X of the Board of Governors of the Federal Reserve System; and (xix) the Company has received an affirmative response from the Commission that is responsive in all respects to the matters set forth in the Waiver Request, and to the best of such counsel's knowledge, the Commission Response is in full force and effect as of the date of this Agreement and neither the Company nor the Guarantor has taken or failed to take any action (nor is such counsel aware of any other fact) that could result in such Waiver being revoked by the Commission or otherwise becoming ineffective in whole or in part. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of New York, the State of Delaware, or the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Initial Purchaser and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and the Guarantor and public officials. References to the Final Memorandum in this paragraph (a) include any amendments or supplements thereof or thereto at the Closing Date. (b) The Initial Purchasers shall have received from Wachtell, Lipton, Rosen & Katz, counsel for the Initial Purchasers, such opinion or opinions, dated the Closing Date, with respect to the issuance and sale of the Notes, the Indenture, the Final Memorandum (together with any amendment or supplement thereof or thereto) and other related matters as the Initial Purchasers may reasonably require, and the Company and the Guarantor shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. (c) Each of the Company and the Guarantor shall have furnished to the Initial Purchasers its certificate, signed by its Chairman of the Board or President and its principal financial or accounting officer, dated the Closing Date, to the effect that the signers of each such certificate have carefully examined the Final Memorandum, any amendment or supplement to the Final Memorandum and this Agreement and that: -18- 19 (i) the representations and warranties of the Company or the Guarantor (as the case may be) in this Agreement are true and correct in all material respects on and as of the Closing Date with the same effect as if made on the Closing Date and the Company or the Guarantor (as the case may be) has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the Closing Date; and (ii) since the date of the most recent financial statements included in the Final Memorandum (exclusive of any amendment or supplement thereof or thereto), there has been no event that has had a Material Adverse Effect, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Final Memorandum (exclusive of any amendment or supplement thereof or thereto). (d) At the Execution Time and at the Closing Date, Arthur Andersen LLP shall have furnished to the Initial Purchasers a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance satisfactory to the Initial Purchasers, confirming that they are independent certified public accountants with respect to the Company under Rule 101 of the AICPA's Code of Professional Conduct and its interpretations and rulings and stating in effect that: (i) in their opinion the consolidated financial statements included in the Final Memorandum and audited by them comply in form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations thereunder; (ii) on the basis of a reading of the latest unaudited financial statements made available by the Company and its subsidiaries; their limited review in accordance with the standards established by the AICPA of the unaudited interim financial information as indicated in their reports included in the Final Memorandum; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and committees of the Board of Directors of the Company and its subsidiaries; and inquiries of certain officials of the Company and the Guarantor who have responsibility for financial and accounting matters of the Company, the Guarantor and their respective subsidiaries as to transactions and events subsequent to December 31, 1995, nothing came to their attention which caused them to believe that: (1) any unaudited financial statements included in the Final Memorandum do not comply in form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act; and said unaudited financial statements are not, in all material respects, in conformity with generally accepted accounting -19- 20 principles applied on a basis substantially consistent with that of the audited financial statements included in the Final Memorandum; or (2) with respect to the periods subsequent to June 30, 1996, there were any changes, at a specified date not more than five business days prior to the date of the letter, in the net Current Assets, Total Long-term Debt and Total Other Long-term Liabilities or capital stock of the Company or decreases in Total Stockholders' Equity of the Company as compared with the amounts shown on the June 30, 1996 consolidated balance sheet included or incorporated in the Final Memorandum, or for the period from July 1, 1996 to such specified dates there were any decreases, as compared with the corresponding period in the preceding year, in Net Sales, Operating Income or Income Before Income Taxes and Extraordinary Item, or in total or per share amounts of Net Income of the Company, except in all instances for changes or decreases set forth in such letter, in which case the letter shall be accompanied by an explanation by the Company as to the significance thereof unless said explanation is not deemed necessary by the Initial Purchasers; or (3) except as otherwise expressly indicated therein, the information included under the headings "Selected Consolidated Historical Data" is not in conformity with the disclosure requirements of Regulation S-K; or (4) the pro forma adjustments have not been properly applied to the historical amounts in the compilation of the unaudited pro forma condensed combined financial statements; and (iii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the Company and its subsidiaries) set forth in the Final Memorandum, including the information set forth under the captions "Selected Consolidated Historical Data" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Final Memorandum, agree with the accounting records of the Company and its subsidiaries, excluding any questions of legal interpretation. (e) At the Execution Time and at the Closing Date, Befec-Price Waterhouse shall have furnished to the Initial Purchasers a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance satisfactory to the Initial Purchasers, confirming that they are independent certified public accountants with respect to USC Europe under Rule 101 of the AICPA's Code of Professional Conduct and its interpretations and rulings and stating in effect that: -20- 21 (i) on the basis of a reading of the latest unaudited financial statements made available by USC Europe; their limited review in accordance with the standards established by the AICPA of the unaudited interim financial information as indicated in their reports included in the Final Memorandum; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and committees of the Board of Directors of Crown Cork & Seal Company, Inc. ("Crown") and its subsidiaries; and inquiries of certain officials of Crown who have responsibility for financial and accounting matters of Crown as to transactions and events subsequent to December 31, 1995, nothing came to their attention which caused them to believe that, except as otherwise expressly indicated in the Final Memorandum, any unaudited financial statements included in the Final Memorandum do not comply in form in all material respects with applicable accounting requirements and said unaudited financial statements are not, in all material respects, in conformity with international accounting standards; and (ii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of USC Europe) set forth in the Final Memorandum, including the information set forth under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Condensed Combined Financial Statements" in the Final Memorandum, agree with the accounting records of USC Europe its subsidiaries, excluding any questions of legal interpretation. (f) At the Execution Time and at the Closing Date, Plante & Moran LLP shall have furnished to the Initial Purchasers a letter or letters, dated respectively as of the Execution Time and as of the Closing Date, in form and substance satisfactory to the Initial Purchasers, confirming that they are independent certified public accountants with respect to the CPI Group (as defined below) under Rule 101 of the AICPA's Code of Professional Conduct and its interpretations and rulings and stating in effect that: (i) in their opinion the combined balance sheet of CPI Plastics, Inc., CP Illinois, Inc. and CP Ohio Inc. (the "CPI Group") as of December 31, 1994 and 1995 and the related combined statements of income, stockholders' equity and cash flows for each year in the three-year period ended December 31, 1995 included in the Final Memorandum and audited by them comply in form in all material respects with the applicable accounting requirements of the Act and the Exchange Act and the related published rules and regulations thereunder; -21- 22 (ii) on the basis of a reading of the latest unaudited financial statements made available by the CPI Group; their limited review in accordance with the standards established by the AICPA of the unaudited interim financial information as indicated in their reports included in the Final Memorandum; carrying out certain specified procedures (but not an examination in accordance with generally accepted auditing standards) which would not necessarily reveal matters of significance with respect to the comments set forth in such letter; a reading of the minutes of the meetings of the stockholders, directors and committees of the Board of Directors of the CPI Group; and inquiries of certain officials of the CPI Group who have responsibility for financial and accounting matters of the CPI Group as to transactions and events subsequent to December 31, 1995, nothing came to their attention which caused them to believe that: (1) any unaudited financial statements included in the Final Memorandum do not comply in form in all material respects with applicable accounting requirements and with the published rules and regulations of the Commission with respect to financial statements included or incorporated in quarterly reports on Form 10-Q under the Exchange Act; and said unaudited financial statements are not, in all material respects, in conformity with generally accepted accounting principles applied on a basis substantially consistent with that of the audited financial statements included in the Final Memorandum; or (2) with respect to the period subsequent to June 30, 1996 and prior to the consummation of the merger of the CPI Group into the Guarantor, there were any changes in the net Current Assets, Long-term Liabilities or capital stock of the CPI Group or decreases in Total Stockholders' Equity of the CPI Group as compared with the amounts shown on the June 30, 1996 combined interim balance sheet included in the Final Memorandum, or for the period from July 1, 1996 to the date of the consummation of such merger there were any decreases, as compared with the corresponding period in the preceding year, in Net Sales, Operating Income or in total or per share amounts of Net Income of the CPI Group, except in all instances for changes or decreases set forth in such letter, in which case the letter shall be accompanied by an explanation by the CPI Group or the Company as to the significance thereof unless said explanation is not deemed necessary by the Initial Purchasers; and (iii) they have performed certain other specified procedures as a result of which they determined that certain information of an accounting, financial or statistical nature (which is limited to accounting, financial or statistical information derived from the general accounting records of the CPI Group) set forth in the Final Memorandum, including the information set forth under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Unaudited Pro Forma Condensed Combined Financial Statements" in the Final Memorandum, agree with the accounting records of the CPI Group, excluding any questions of legal interpretation. -22- 23 (g) References to the Final Memorandum in paragraphs (d), (e) and (f) of this Section 6 include any amendment or supplement thereof or thereto at the date of the letter. (h) Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Final Memorandum (exclusive of any amendment or supplement thereof or thereto), there shall not have been (i) any change or decrease specified in the letter or letters referred to in paragraph (d) of this Section 6 or (ii) any change, or any development involving a prospective change, in or affecting the business or properties of the Company and its subsidiaries the effect of which, in any case referred to in clause (i) or (ii) above, is, in the judgment of the Initial Purchasers, so material and adverse as to make it impractical or inadvisable to market the Notes as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereof or thereto). (i) Subsequent to the Execution Time, there shall not have been any decrease in the rating of any of the Company's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change. (j) On the Closing Date, the Initial Purchasers shall have received the Registration Rights Agreement duly executed and delivered by each of the Company and the Guarantor, and such agreement shall be in full force and effect according to its terms at all times from and after the Closing Date. (k) Prior to the Closing Date, the Company and the Guarantor shall have furnished to the Initial Purchasers such further information, certificates and documents as the Initial Purchasers may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Initial Purchasers and counsel for the Initial Purchasers, this Agreement and all obligations of the Initial Purchasers hereunder may be canceled at, or at any time prior to, the Closing Date by the Initial Purchasers. Notice of such cancellation shall be given to the Company in writing or telegraph confirmed in writing. The documents required to be delivered by this Section 6 shall be delivered at the office of Wachtell, Lipton, Rosen & Katz, counsel for the Initial Purchasers, at 51 West 52nd Street, New York, New York on the Closing Date. 7. Reimbursement of Initial Purchaser's Expenses. If the sale of the Notes provided for herein is not consummated because any condition to the obligations of the Initial Purchasers set forth in Section 6 hereof is not satisfied, because of any termination pursuant to Section 10(i) hereof or because of any refusal, inability or failure on the part of the Company or the Guarantor to perform any agreement herein or comply with any provision hereof other than by reason of a default by the Initial Purchasers, the Company and the -23- 24 Guarantor will reimburse the Initial Purchasers upon demand for all reasonable out-of-pocket expenses (including reasonable fees and reasonable disbursements of counsel) that shall have been incurred by them in connection with the proposed purchase and sale of the Notes. 8. Indemnification and Contribution. B. The Company and the Guarantor, jointly and severally, agree to indemnify and hold harmless the Initial Purchasers, the directors, officers, employees and agents of the Initial Purchasers and each person who controls the Initial Purchasers within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Memorandum, the Final Memorandum or any Rule 144A Information provided by the Company or the Guarantor to any holder or prospective purchaser of Notes pursuant to Section 5(g), or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agree to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that neither the Company nor the Guarantor will be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made in the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto, in reliance upon and in conformity with written information furnished to the Company or the Guarantor by or on behalf of the Initial Purchasers specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Company or the Guarantor may otherwise have. (b) The Initial Purchasers agree to indemnify and hold harmless the Company, the Guarantor, their directors, their officers, and each person who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company and the Guarantor to the Initial Purchasers, but only with reference to written information relating to the Initial Purchasers furnished in writing to the Company or the Guarantor by or on behalf of the Initial Purchasers specifically for inclusion in the Preliminary Memorandum or the Final Memorandum, or in any amendment thereof or supplement thereto. This indemnity agreement will be in addition to any liability which the Initial Purchasers may otherwise have. The Company and the Guarantor acknowledge that the statements set forth in the last paragraph of the cover page and under the heading "Plan of Distribution" in the Preliminary Memorandum and the Final Memorandum constitute the only information furnished in writing by or on behalf of the Initial Purchasers for inclusion in the Preliminary Memorandum or the Final Memorandum. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure to so notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above -24- 25 unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company, the Guarantor and the Initial Purchasers agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Company and the Guarantor, on the one hand, and the Initial Purchasers, on the other, may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company and the Guarantor, on the one hand, and by the Initial Purchasers, on the other, from the offering of the Notes; provided, however, that in no case shall the Initial Purchasers be responsible for any amount in excess of the purchase discount or commission applicable to the Notes purchased by the Initial Purchasers hereunder. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Guarantor, on the one hand, and the Initial Purchasers, on the other, shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and the Guarantors, on the one hand, and of the Initial Purchasers, on the other, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. The aggregate benefits received by the Company and the Guarantor shall be deemed to be equal to the total net proceeds from the offering (before deducting expenses), and aggregate benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and -25- 26 commissions, in each case as set forth on the cover page of the Final Memorandum. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the Company or the Guarantor, on the one hand, or the Initial Purchasers, on the other. The Company, the Guarantor and the Initial Purchasers agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls the Initial Purchasers within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of a Initial Purchaser shall have the same rights to contribution as such Initial Purchaser, and each person who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act and each officer and director of the Company or the Guarantor shall have the same rights to contribution as the Company or the Guarantor, respectively, subject in each case to the applicable terms and conditions of this paragraph (d). 9. Default by an Initial Purchaser. If any one or more Initial Purchasers shall fail to purchase and pay for any of the Notes agreed to be purchased by such Initial Purchaser hereunder and such failure to purchase shall constitute a default in the performance of its or their obligations under this Agreement, the remaining Initial Purchasers shall be obligated severally to take up and pay for (in the respective proportions which the principal amount of Notes set forth opposite their names in Schedule I hereto bears to the aggregate principal amount of Notes set forth opposite the names of all the remaining Initial Purchasers) the Notes which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase; provided, however, that in the event that the aggregate principal amount of Notes which the defaulting Initial Purchaser or Initial Purchasers agreed but failed to purchase shall exceed 10% of the aggregate principal amount of Notes set forth in Schedule I hereto, the remaining Initial Purchasers shall have the right to purchase all, but shall not be under any obligation to purchase any, of the Notes, and if such non-defaulting Initial Purchasers do not purchase all the Notes, this Agreement will terminate without liability to any non-defaulting Initial Purchaser or the Company. In the event of a default by any Initial Purchaser as set forth in this Section 9, the Closing Date shall be postponed for such period, not exceeding seven days, as Salomon Brothers Inc shall determine in order that the required changes in the Final Memorandum or in any other documents or arrangements may be effected. Nothing contained in this Agreement shall relieve any defaulting Initial Purchaser of its liability, if any, to the Company or any non-defaulting Initial Purchaser for damages occasioned by its default hereunder. 10. Termination. This Agreement shall be subject to termination in the absolute discretion of the Initial Purchasers, by notice given to the Company prior to delivery of and payment for the Notes, if prior to such time (i) trading in the Company's Common Stock shall have been suspended by the Commission or the New York Stock Exchange or trading in securities generally on the New York Stock Exchange or the National Association of Securities Dealers Automated Quotation National Market System shall have been suspended or limited or minimum prices shall have been established on either of such Exchange or Market System, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or -26- 27 other calamity or crisis the effect of which on financial markets is such as to make it, in the judgment of the Initial Purchasers, impracticable or inadvisable to proceed with the offering or delivery of the Notes as contemplated by the Final Memorandum (exclusive of any amendment or supplement thereof or thereto). 11. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company, the Guarantor or their officers and of the Initial Purchasers set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Initial Purchasers or the Company, the Guarantor or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive delivery of and payment for the Notes. The provisions of Sections 7, 8 and 14 hereof shall survive the termination or cancellation of this Agreement. 12. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Initial Purchasers, will be mailed or delivered to them c/o Salomon Brothers Inc, Seven World Trade Center, New York, New York, 10048, and a copy to Wachtell, Lipton, Rosen & Katz, 51 West 52nd Street, New York, New York 10019, attention: David A. Katz, Esq.; or, if sent to the Company or the Guarantor, will be mailed or delivered to it c/o U.S. Can Corporation, 900 Commerce Drive, Oak Brook, Illinois 60521, attention: Timothy W. Stonich, and a copy to Ross & Hardies, 150 North Michigan Avenue, Chicago Illinois 60601, attention: Lawrence R. Samuels, Esq. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, first-class postage prepaid, if mailed; and one business day after being timely delivered to a next-day air courier. 13. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons, employees and agents referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 14. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York applicable to contracts made and to be performed wholly therein, without giving effect to any provisions thereof relating to conflicts of law. 15. Business Day. For purposes of this Agreement, "business day" means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on which banking institutions in The City of New York, New York are authorized or obligated by law, executive order or regulation to close. 16. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. -27- 28 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement between the Company, the Guarantor and the Initial Purchasers. Very truly yours, U.S. CAN CORPORATION By: /s/ Timothy W. Stonich ------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President, Chief Financial Officer and Secretary UNITED STATES CAN COMPANY By: /s/ Timothy W. Stonich ------------------------------------- Name: Timothy W. Stonich Title: Executive Vice President, Chief Financial Officer and Secretary The foregoing Agreement is hereby confirmed and accepted as of the date first above written. SALOMON BROTHERS INC CS FIRST BOSTON CORPORATION BA SECURITIES, INC. By: Salomon Brothers Inc By: /s/ Paul Lipari ------------------------------- Name: Paul Lipari Title: Associate [Purchase Agreement] EX-99.2 7 ESCROW AGREEMENT 1 EXHIBIT 99.2 ________________________________________________________________________________ AMENDED AND RESTATED ESCROW AGREEMENT by and among U.S. CAN CORPORATION, HARRIS TRUST AND SAVINGS BANK, as Trustee and THE FIRST NATIONAL BANK OF CHICAGO, as Escrow Agent Dated as of October 17, 1996 ________________________________________________________________________________ 2 ESCROW AGREEMENT THIS AMENDED AND RESTATED ESCROW AGREEMENT (this "Agreement"), dated as of October 17, 1996, is by and among U.S. CAN CORPORATION (the "Company"), HARRIS TRUST AND SAVINGS BANK, as trustee under the Indenture referred to below (the "Trustee"), and THE FIRST NATIONAL BANK OF CHICAGO, as escrow agent (the "Escrow Agent"). RECITALS A. Amendment and Restatement. Each of the parties hereto has previously entered into that certain Escrow Agreement, dated as of October 17, 1996 (the "Escrow Agreement"), and each of such parties desires to amend such Escrow Agreement and, pursuant thereto, to restate the Escrow Agreement in its entirety as set forth in this Agreement (such restatement to be effective as of the date of the Escrow Agreement). A. The Securities. Pursuant to that certain Indenture (the "Indenture") dated as of October 17, 1996 by and between the Company, the Trustee and United States Can Company, a wholly owned Subsidiary of the Company, as Guarantor, the Company will issue $275,000,000 in aggregate principal amount of 10-1/8% Senior Subordinated Notes due 2006 (the "Securities"). Simultaneously with receipt of payment for the Securities (the "Deposit Time"), $109,732,095 (or such other amount as is sufficient to effect the Required Redemption) received as proceeds by the Company from the sale of the Securities (the "Escrow Funds") will be deposited into a segregated cash account with the Escrow Agent at its office at 1 First National Plaza, Suite 0673, Chicago IL 60670, Account No. 22-203607, in the name of United States Can Company 13 1/2% Senior Subordinated Notes Redemption Escrow Account (the "Escrow Account"). The Escrow Account and all balances and investments from time to time therein shall be under the dominion and control of the Trustee and the Escrow Agent. The Escrow Funds will be invested as directed by the Company or an agent appointed by the Company subject to the provisions of this Agreement. Capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. B. The Required Redemption. Pursuant to the Indenture, the Company has covenanted and agreed that it will set aside the Escrow Funds and use such funds to redeem (including the payment of interest accrued or payable from the date hereof through the date of redemption, the "Required Redemption") the Company's 13 1/2% Senior Subordinated Notes due 2002 (the "13 1/2% Notes") by January 22, 1997, pursuant to the terms of the indenture under which the 13 1/2% Notes were issued. C. Purpose. The parties hereto desire to set forth their agreement with regard to the administration of the Escrow Account and the conditions upon which funds will be released from the Escrow Account. AGREEMENT NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 3 1. Maintenance of the Escrow Account. So long as this Agreement is in full force and effect: 1.1 the Company shall establish and maintain the Escrow Account with the Escrow Agent in Chicago, Illinois, and the Escrow Account shall at all times remain under the dominion and control of the Trustee and the Escrow Agent; and 1.2 it shall be a term and condition of the Escrow Account, notwithstanding any term or condition to the contrary in any other agreement relating to the Escrow Account and except as otherwise provided by the provisions of Article 3 of this Agreement, that no amount (including, without limitation, interest on or other proceeds of the Escrow Account or on any Temporary Cash Investments held therein) shall be paid or released to or for the account of, or withdrawn by or for the account of, the Company or any other person or entity other than the Trustee or its designated agent from the Escrow Account (other than customary brokerage or similar fees, discounts or commissions payable in connection with investments of funds pursuant to Section 2.1 hereof). 2. Investment and Liquidation of Funds in Escrow Account. Funds deposited in the Escrow Account shall be invested and reinvested by the Escrow Agent on the following terms and conditions: 2.1 Allowable Investments. Subject to the provisions of Articles 2 and 3, funds held by the Escrow Agent in the Escrow Account may, at the direction of the Company or an agent appointed by the Company, be invested and reinvested in the following ("Temporary Cash Investments"): (i) investments in U.S. Government Obligations with maturities no later than January 15, 1997 maturing within 90 days of the date of acquisition thereof, (ii) investments in time deposit accounts, certificates of deposit and money market deposits with maturities no later than January 15, 1997, issued by a bank or trust company which is organized under the laws of the United States of America or any state thereof having capital, surplus and undivided profits aggregating in excess of $500,000,000 and whose long-term debt is rated "A-3" or A- or higher according to Moody's Investors Service, Inc. or Standard & Poor's Corporation (or such similar equivalent rating by at least one "nationally recognized statistical rating organization" (as defined in Rule 436 under the Securities Act)), (iii) repurchase obligations with a term of not more than 7 days for underlying securities of the types described in clause (i) above entered into with a bank meeting the qualifications described in clause (ii) above, and (iv) investments in commercial paper, with maturities no later than January 15, 1997, issued by a corporation (other than an Affiliate of the Company) organized and in existence under the laws of the United States of America with a rating at the time as of which any investment therein is made of "P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard & Poor's Corporation. Investment instructions may instruct the Escrow Agent to purchase or sell specific securities to or from specific persons and/or on specific terms negotiated by the Company or its agent. If the Company or such agent fails to give investment instructions to the Escrow Agent by 12:00 noon (Chicago time) on any Business Day on which there is -2- 4 uninvested cash and/or maturing Temporary Cash Investments in the Escrow Account, the Trustee is hereby authorized and directed to direct the Escrow Agent to invest any such cash or the proceeds of any maturing Temporary Cash Investments in Temporary Cash Investments maturing on the next Business Day. The Company's or such agent's failure to give such investment instructions shall not constitute a default or an event of default hereunder. All of the Temporary Cash Investments shall mature on or prior to January 15, 1997; provided, however, that if the Trustee receives from the Company a certificate substantially in the form of Exhibit A hereto (a "Preliminary Release Certificate") that: (x) sets forth the date (the "Closing Date") set for the Required Redemption, which shall not be earlier than five (5) Business Days after receipt of such Preliminary Release Certificate; (y) states that the Company reasonably believes that the Required Redemption will be consummated on the specified Closing Date; and (z) directs the liquidation of all of the Temporary Cash Investments in accordance with Section 3.2, the Trustee shall direct the Escrow Agent to only invest in Temporary Cash Investments such that the funds held in the Escrow Account will be available for release no later than 12:00 noon (Chicago time) on the Closing Date. 2.2 Interest. All interest earned on funds invested in Temporary Cash Investments shall be held in the Escrow Account and reinvested in accordance with the terms hereof and will be subject to the security interest granted hereunder to the Trustee. 2.3 Limitation of Trustee's and Escrow Agent's Liability. In no event shall the Trustee or the Escrow Agent have any liability to the Company or any other person for investing the funds from time to time in the Escrow Account in accordance with the provisions of this Article 2, regardless of whether greater income or a higher yield could have been obtained had the Escrow Agent invested such funds in different Temporary Cash Investments, or for any loss associated with the sale or liquidation of Temporary Cash Investments in accordance with the terms of this Agreement. 3. Disposition of Escrow Funds Upon Certain Events 3.1 Use of Escrow Funds. Other than pursuant to Section 3.6 and the Temporary Cash Investments, the funds invested in the Escrow Account shall, as provided in Section 3.3 and following, irrevocably be used for the Required Redemption. 3.2 Transfer of Escrow Proceeds for the Required Redemption. When, on or prior to January 7, 1997, the Company delivers to the Trustee a Preliminary Release Certificate stating that the Required Redemption will occur, the Trustee shall direct the Escrow Agent to: (a) liquidate, within five (5) Business Days after the Trustee's receipt of such Preliminary Release Certificate, all of the Temporary Cash Investments in the Escrow Account and, (b) transfer, on the Closing Date, such amount of funds as specified pursuant to Section 3.3 sufficient to complete the Required Redemption (including the payment of any interest accrued and/or payable with respect to the 13 1/2% Notes), and the Escrow Agent hereby agrees to liquidate such amount of Temporary Cash Investments and to make such funds transfer, subject to Section 3.3. 3.3 Release of Funds. On the Closing Date, the Company shall deliver to the Trustee (x) confirmation of the amounts required to be transferred by the Escrow Agent -3- 5 pursuant to Section 3.2 (including any amounts with respect to interest accrued and/or payable with respect to the 13 1/2% Notes), (y) an opinion of Ross & Hardies, counsel to the Company in the form of Exhibit B hereto, to the effect that the Required Redemption complies with all of the conditions in the Indenture and the terms of the indenture governing the 13 1/2% Notes, and that the Company has duly authorized, executed and delivered the confirmation identified in clause (x) and the Release Certificate (as defined below), and (z) a certificate substantially in the form of Exhibit C hereto (a "Release Certificate") stating that (1) all conditions to the Required Redemption have been satisfied or waived, (2) that the Required Redemption will be consummated on such date on substantially the terms described in the Indenture and (3) that no Event of Default (as defined in the Indenture) has occurred and is continuing or will occur as a result of the release of funds contemplated hereby, and instructing the Trustee to direct the Escrow Agent to release the appropriate dollar amount of the Escrow Funds in accordance with this Section 3.3. Upon receipt of the foregoing and in good faith reliance thereon, the Trustee shall direct the Escrow Agent to transfer the amount specified by the applicable terms of such Release Certificate in immediately available funds in accordance with the terms of such Release Certificate. The delivery of the items identified in clauses (x), (y) and (z) shall be the only conditions precedent to the release of funds pursuant to this Agreement. 3.4 Payment of Interest on 13 1/2% Notes. If the Closing Date set forth in the Preliminary Release Certificate is not January 15, 1997, (i) the Company shall include in such Preliminary Release Certificate the amount of the interest payment required to be made in respect of the 13 1/2% Notes on January 15,1997 and (ii) the Trustee shall direct the Escrow Agent to transfer, on January 15, 1997, such amount of funds to the account specified by the Company in such Preliminary Release Certificate in order to make the required interest payment with respect to the 13 1/2% Notes, and the Escrow Agent hereby agrees to liquidate such amount of Temporary Cash Investments and to make such funds transfer. 3.5 Release of Remaining Funds in Escrow Account. Upon such date as the Escrow Funds have been released in accordance with Sections 3.2 and 3.3 hereof and upon receipt of a request by the Company, the Escrow Agent shall transfer by wire transfer of immediately available funds any funds remaining in the Escrow Account to an account designated by the Company. 3.6 Funds Continuously Held. In the event that the Escrow Funds are not released pursuant to Sections 3.2, 3.3 and 3.4, the Escrow Funds shall be continuously held as provided herein until receipt by the Escrow Agent of a final order of a court of competent jurisdiction directing Escrow Agent to withdraw the Escrow Funds. 4. Representations and Warranties. The Company hereby makes all representations and warranties applicable to the Company contained in the Indenture. The Company further represents and warrants that: 4.1 The execution, delivery and performance by the Company of this Agreement are within the Company's corporate powers, have been duly authorized by all necessary corporate action, and do not contravene, or constitute a default under, any provision of applicable law or regulation or of the certificate of incorporation or bylaws of the Company or of any agreement, judgment, injunction, order, decree or other instrument binding upon the Company, or result in the creation or imposition of any Lien on any assets of the Company. -4- 6 4.2 This Agreement has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. 4.3 No litigation, investigation or proceeding of or before any arbitrator or governmental authority is pending or, to the best knowledge of the Company, threatened by or against the Company or against any of its properties or revenues with respect to this Agreement or any of the transactions contemplated hereby. 5. Indemnity. The Company shall indemnify and hold harmless the Trustee, the Escrow Agent and their respective directors, officers, agents and employees, from and against any and all claims, actions, obligations, liabilities and expenses, including, without limitation, defense costs, investigative fees and costs, legal fees and claims for damages incurred in any action or proceeding between the parties hereto or in disputes with third parties or otherwise, arising from or in connection with the Trustee's and/or the Escrow Agent's acceptance of, or performance under, this Agreement, except to the extent that such liability, expense or claim is directly attributable to the gross negligence or bad faith of the Trustee or the Escrow Agent. 6. Termination. This Agreement shall terminate automatically upon the release of all of the Escrow Funds pursuant to Sections 3.2, 3.3, 3.4 and 3.5 hereof. 7. Miscellaneous. 7.1 Waiver. Any party hereto may specifically waive any breach of this Agreement by any other party, but no such waiver shall be deemed to have been given unless such waiver is in writing, signed by the waiving party, and specifically designates the breach waived, nor shall any such waiver constitute a continuing waiver of similar or other breaches. 7.2 Invalidity. If, for any reason whatsoever, any one or more of the provisions of this Agreement shall be held or deemed to be inoperative, unenforceable or invalid in a particular case or in all cases, such circumstances shall not have the effect of rendering any of the other provisions of this Agreement inoperative, unenforceable or invalid, and the inoperative, unenforceable or invalid provision shall be construed as if it were written so as to effectuate, to the maximum extent possible, the parties' intent. 7.3 Assignment. This Agreement shall inure to and be binding upon the parties and their respective successors and permitted assigns; provided, however, that the Company may not assign its rights or obligations hereunder without the express prior written consent of the Trustee. 7.4 Choice of Law. The existence, validity, construction, operation and effect of any and all terms and provisions of this Agreement shall be determined in accordance with and governed by the internal laws of the State of New York including, without limitation, the Uniform Commercial Code in effect in the State of New York, without giving effect to the conflicts of law principles of such State. 7.5 Entire Agreement; Amendments. This Agreement and the Indenture contain the entire agreement among the parties with respect to the subject matter hereof and -5- 7 supersede any and all prior agreements, understandings and commitments with respect thereto, whether oral or written; provided, however, that this Agreement is executed and accepted by the Trustee subject to all terms and conditions of its acceptance of the trust under the Indenture, as fully as if said terms and conditions were set forth at length herein. This Agreement may be amended only by a writing signed by duly authorized representatives of all parties. The Trustee and the Escrow Agent may not execute any amendment to this Agreement that would adversely affect the rights of the holders of the Securities. 7.6 Notices. All notices, requests, instructions, orders and other communications required or permitted to be given or made under this Agreement to any party hereto shall be delivered in writing by hand delivery or overnight delivery, or shall be delivered by facsimile or telephonically with confirmation in writing not more than twenty-four hours following such facsimile or telephonic notice. A notice given in accordance with the preceding sentence shall be deemed to have been duly given upon the sending thereof, except for notice to the Trustee or the Escrow Agent, which shall be deemed given only when received. Notices should be addressed as follows: To the Company: U.S. Can Corporation 900 Commerce Drive Oak Brook, IL 60521 Attention: Secretary Facsimile number: (708) 571-2500 Telephone number: (708) 573-0715 With copies to: Ross & Hardies 150 North Michigan Avenue Chicago, IL 60601 Attention: Lawrence R. Samuels, Esq. Facsimile number: (312) 750-8600 Telephone number: (312) 558-1000 and Wachtell, Lipton, Rosen & Katz 51 West 52nd Street New York, NY 10019 Attention: David A. Katz, Esq. Facsimile number: (212) 403-2000 Telephone number: (212) 403-1000 -6- 8 To the Trustee: Harris Trust and Savings Bank Attention: Indenture Trust Administration 311 West Monroe, 12th Floor Chicago, IL 60606 Facsimile number: (312) 461-3525 Telephone number: (312) 461-2908 To the Escrow Agent: The First National Bank of Chicago Attention: Corporate Trust Administration/ Escrow Unit U.S. Mail Delivery: 1 First National Plaza, Suite 0673 Chicago, IL 60670 Courier Delivery: 1 North State Street, 9th Floor, Suite 0673 Chicago, IL 60602 Facsimile number: (312) 407-1708 Telephone number: (312) 407-1844 or at such other address, facsimile number or phone number as the specified entity most recently may have designated in writing in accordance with this paragraph to the other parties. 7.7 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument. Delivery of an executed counterpart of a signature page to this Agreement by facsimile shall be effective as delivery of a manually executed counterpart of this Agreement. -7- 9 IN WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement as of the day first written above. COMPANY: U.S. CAN CORPORATION By /s/ Timothy W. Stonich --------------------------------- Name: Timothy W. Stonich Title: Executive Vice President, Finance, Chief Financial Officer and Secretary TRUSTEE: HARRIS TRUST AND SAVINGS BANK, as Trustee By /s/ Daniel Donovan --------------------------------- Name: Daniel Donovan Title: Assistant Vice President ESCROW AGENT: THE FIRST NATIONAL BANK OF CHICAGO, as Escrow Agent By /s/ J.T. Cahill --------------------------------- Name: J.T. Cahill Title: Assistant Vice President [Escrow Agreement] EX-99.3 8 REGISTRATION RIGHTS AGREEMENT 1 EXHIBIT 99.3 U.S. CAN CORPORATION 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006 REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (the "Agreement") is dated as of October 17, 1996, by and among U.S. Can Corporation, a Delaware corporation (the "Company"), United States Can Company, a Delaware corporation (the "Guarantor"), and Salomon Brothers Inc, CS First Boston Corporation and BA Securities, Inc. (the "Initial Purchasers"). This Agreement is entered into in connection with the Purchase Agreement, dated October 10, 1996, among the Company, the Guarantor and the Initial Purchasers (the "Purchase Agreement"), which provides, among other things, for the sale (the "Initial Placement") by the Company to the Initial Purchasers of $275,000,000 aggregate principal amount of the Company's 10-1/8% Senior Subordinated Notes due 2006 (the "Notes"), which Notes will be guaranteed by the Guarantor. The Company and the Guarantor are collectively referred to herein as the "Issuers". In order to induce the Initial Purchasers to enter into the Purchase Agreement, the Issuers have agreed to provide the registration rights set forth in this Agreement for the benefit of the Initial Purchasers and their direct and indirect transferees (collectively, the "Holders"). The execution and delivery of this Agreement is a condition to the obligation of the Initial Purchasers to purchase the Notes under the Purchase Agreement. The parties hereby agree as follows: 1. Definitions. Capitalized terms used herein without definition shall have their respective meanings set forth in the Purchase Agreement. As used in this Agreement, the following capitalized defined terms shall have the following meanings: "Act" means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Affiliate" of any specified person means any other person which, directly or indirectly, is in control of, is controlled by, or is under common control with, such specified person. For purposes of this definition, "control" of a person means the power, direct or indirect, to direct or cause the direction of the management and policies of such person whether by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Commission" means the Securities and Exchange Commission. "Effectiveness Date" means the 120th day after the Issue Date. "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. 2 "Exchange Notes" means debt securities of the Company identical in all material respects to the Notes (except that the cash interest and interest rate step-up provisions and the transfer restrictions will be modified or eliminated, as appropriate) to be issued under the Indenture. "Exchange Notes Trustee" means a bank or trust company reasonably satisfactory to the Initial Purchaser, as trustee with respect to the Exchange Notes under the Indenture. "Exchange Offer Registration Period" means the one year period following the consummation of the Registered Exchange Offer, exclusive of any period during which any stop order shall be in effect suspending the effectiveness of the Exchange Offer Registration Statement. "Exchange Offer Registration Statement" means a registration statement of the Company on an appropriate form under the Act with respect to the Registered Exchange Offer, all amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Exchanging Dealer" means any Holder (which may include the Initial Purchasers) which is a broker-dealer, electing to exchange Notes acquired for its own account as a result of market-making activities or other trading activities, for Exchange Notes. "Filing Date" means the date 60 days after the Issue Date. "Final Memorandum" has the meaning set forth in the Purchase Agreement. "Holders" has the meaning set forth in the preamble hereto. "Indenture" means the Indenture relating to the Notes dated as of October 17, 1996, between the Company, the Guarantor and Harris Trust and Savings Bank, as trustee, as the same may be amended from time to time in accordance with the terms thereof. "Initial Placement" has the meaning set forth in the preamble hereto. "Issue Date" has the meaning set forth in the Indenture. "Liquidated Damages" has the meaning set forth in Section 4(a) hereof. "Losses" has the meaning set forth in Section 7(d) hereof. "Majority Holders" means the Holders of a majority of the aggregate principal amount of securities registered under a Registration Statement. "Managing Underwriters" means the investment banker or investment bankers and manager or managers that shall administer an underwritten offering. "Notes" has the meaning set forth in the preamble hereto. -2- 3 "Prospectus" means the prospectus included in any Registration Statement (including, without limitation, a prospectus that discloses information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A under the Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Notes or the Exchange Notes, covered by such Registration Statement, and all amendments and supplements to the Prospectus, including post-effective amendments. "Registered Exchange Offer" means the proposed offer to the Holders to issue and deliver to such Holders, in exchange for the Notes, a like principal amount of the Exchange Notes. "Registration Statement" means any Exchange Offer Registration Statement or Shelf Registration Statement that covers any of the Notes or the Exchange Notes pursuant to the provisions of this Agreement, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Securities" means the Notes and the Exchange Notes. "Shelf Registration" means a registration effected pursuant to Section 3 hereof. "Shelf Registration Period" has the meaning set forth in Section 3(b) hereof. "Shelf Registration Statement" means a "shelf" registration statement of the Company pursuant to the provisions of Section 3 hereof which covers some or all of the Notes or Exchange Notes, as applicable, on an appropriate form under Rule 415 under the Act, or any similar rule that may be adopted by the Commission, amendments and supplements to such registration statement, including post-effective amendments, in each case including the Prospectus contained therein, all exhibits thereto and all material incorporated by reference therein. "Trustee" means the trustee with respect to the Notes under the Indenture. "underwriter" means any underwriter of Notes in connection with an offering thereof under a Shelf Registration Statement. 2. Registered Exchange Offer; Resales of Exchange Notes by Exchanging Dealers; Private Exchange. A. The Issuers shall prepare and, not later than the Filing Date, shall file with the Commission the Exchange Offer Registration Statement with respect to the Registered Exchange Offer. The Issuers shall cause the Exchange Offer Registration Statement to become effective under the Act within 120 days of the Issue Date. (b) Upon the effectiveness of the Exchange Offer Registration Statement, the Issuers shall promptly commence the Registered Exchange Offer, it being the objective of such Registered Exchange Offer to enable each Holder electing to exchange Notes for Exchange Notes (assuming that such Holder is not an affiliate of the Issuers within the meaning of the Act, acquires the Exchange Notes in the ordinary course of such Holder's business and has no arrangements with any person to participate in the distribution of the -3- 4 Exchange Notes) to trade such Exchange Notes from and after their receipt without any limitations or restrictions under the Act and without material restrictions under the securities laws of a substantial proportion of the several states of the United States. (c) In connection with the Registered Exchange Offer, the Issuers shall: (i) mail to each Holder a copy of the Prospectus forming part of the Exchange Offer Registration Statement, together with an appropriate letter of transmittal and related documents; (ii) keep the Registered Exchange Offer open for not less than 30 days and not more than 45 days after the date notice thereof is mailed to the Holders (or longer if required by applicable law); (iii) utilize the services of a depositary for the Registered Exchange Offer with an address in the Borough of Manhattan, The City of New York; and (iv) comply in all respects with all applicable laws. (d) As soon as practicable after the close of the Registered Exchange Offer, the Issuers shall: (i) accept for exchange all Notes tendered and not validly withdrawn pursuant to the Registered Exchange Offer; (ii) deliver to the Trustee for cancellation all Notes so accepted for exchange; and (iii) cause the Trustee or the Exchange Notes Trustee, as the case may be, promptly to authenticate and deliver to each Holder of Exchange Notes equal in principal amount to the Notes of such Holder so accepted for exchange. (e) The Initial Purchasers and the Issuers acknowledge that, pursuant to interpretations by the Commission's staff of Section 5 of the Act, and in the absence of an applicable exemption therefrom, each Exchanging Dealer is required to deliver a Prospectus in connection with a sale of any Exchange Notes received by such Exchanging Dealer pursuant to the Registered Exchange Offer in exchange for Notes acquired for its own account as a result of market-making activities or other trading activities. Accordingly, the Issuers shall: (i) include the information set forth in Annex A hereto on the cover of the Exchange Offer Registration Statement, in Annex B hereto in the forepart of the Exchange Offer Registration Statement in a section setting forth details of the Exchange Offer, and in Annex C hereto in the underwriting or plan of distribution section of the Prospectus forming a part of the Exchange Offer Registration Statement, and include the information set forth in Annex D hereto in the Letter of Transmittal delivered pursuant to the Registered Exchange Offer; and -4- 5 (ii) use their best efforts to keep the Exchange Offer Registration Statement continuously effective under the Act during the Exchange Offer Registration Period for delivery of the Prospectus contained therein by Exchanging Dealers in connection with sales of Exchange Notes received pursuant to the Registered Exchange Offer, as contemplated by Section 5(h) below. (f) In the event that any Initial Purchaser determines that it is not eligible to participate in the Registered Exchange Offer with respect to the exchange of Notes constituting any portion of an unsold allotment, at the request of such Initial Purchaser, the Issuers shall issue and deliver to such Initial Purchaser or the party purchasing Exchange Notes registered under a Shelf Registration Statement as contemplated by Section 3 hereof from such Initial Purchaser, in exchange for such Notes, a like principal amount of Exchange Notes. The Issuers shall seek to cause the CUSIP Service Bureau to issue the same CUSIP number for such Exchange Notes as for Exchange Notes issued pursuant to the Registered Exchange Offer. 3. Shelf Registration. If (i) because of any change in law or applicable interpretations thereof by the Commission's staff the Issuers determine upon advice of outside counsel that the Issuers are not permitted to effect the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) for any other reason the Registered Exchange Offer is not consummated within 150 days of the date hereof, or (iii) any Initial Purchaser so requests with respect to Notes held by it following consummation of the Registered Exchange Offer, or (iv) any Holder (other than an Initial Purchaser) is not eligible to participate in the Registered Exchange Offer, or (v) in the case of any Initial Purchaser that participates in the Registered Exchange Offer or acquires Exchange Notes pursuant to Section 2(f) hereof such Initial Purchaser does not receive freely tradeable Exchange Notes in exchange for Notes constituting any portion of an unsold allotment (it being understood that, for purposes of this Section 3, (x) the requirement that an Initial Purchaser deliver a Prospectus containing the information required by Items 507 and/or 508 of Regulation S-K under the Act in connection with sales of Exchange Notes acquired in exchange for such Notes shall result in such Exchange Notes being not "freely tradeable" but (y) the requirement that an Exchanging Dealer deliver a Prospectus in connection with sales of Exchange Notes acquired in the Registered Exchange Offer in exchange for Notes acquired as a result of market-making activities or other trading activities shall not result in such Exchange Notes not being "freely tradeable"), then the following provisions shall apply: (a) The Issuers shall as promptly as practicable (but in no event more than 30 days after so required or requested pursuant to this Section 3), file with the Commission and thereafter shall cause to be declared effective under the Act a Shelf Registration Statement relating to the offer and sale of the Notes or the Exchange Notes, as applicable, by the Holders from time to time in accordance with the methods of distribution elected by such Holders and set forth in such Shelf Registration Statement; provided, that, with respect to Exchange Notes received by an Initial Purchaser in exchange for Notes constituting any portion of an unsold allotment, the Issuers may, if permitted by current interpretations by the Commission's staff, file a post-effective amendment to the Exchange Offer Registration Statement containing the information required by Regulation S-K Items 507 and/or 508, as applicable, in satisfaction of their obligations under this paragraph (a) with respect thereto, and any such Exchange Offer Registration Statement, as so amended, shall be referred to -5- 6 herein as, and governed by the provisions herein applicable to, a Shelf Registration Statement. (b) The Issuers shall use their best efforts to keep the Shelf Registration Statement continuously effective in order to permit the Prospectus forming part thereof to be usable by Holders for (x) a period of three years from the date the Shelf Registration Statement is declared effective by the Commission or such shorter period that will terminate when all the Notes or Exchange Notes, as applicable, covered by the Shelf Registration Statement have been sold pursuant to the Shelf Registration Statement or (y) a period of one year from the date the Shelf Registration Statement is declared effective by the Commission, if such Shelf Registration Statement has been filed at the request of an Initial Purchaser pursuant to clause (iii) of the first paragraph of this Section 3 (in any such case, such period being called the "Shelf Registration Period"). The Issuers shall be deemed not to have used their best efforts to keep the Shelf Registration Statement effective during the requisite period if either Issuer voluntarily takes any action that would result in Holders of securities covered thereby not being able to offer and sell such securities during that period, unless (i) such action is required by applicable law or (ii) such action is taken by such Issuer in good faith and for valid business reasons (not including avoidance of such Issuer's obligations hereunder), including the acquisition or divestiture of assets, so long as such Issuer promptly thereafter complies with the requirements of Section 5(k) hereof, if applicable. 4. Liquidated Damages. (a) The Issuers and the Initial Purchasers agree that the Holders will suffer damages if the Issuers fail to fulfill their obligations under Section 2 or Section 3 hereof and that it would not be feasible to ascertain the extent of such damages with precision. Accordingly, the Issuers agree to pay, as liquidated damages, additional interest on the Notes ("Liquidated Damages") under the circumstances and to the extent set forth below: (i) if neither the Exchange Offer Registration Statement nor the Shelf Registration Statement has been filed on or prior to the Filing Date, then, commencing on the 61st day after the Issue Date, Liquidated Damages shall accrue on the Notes over and above the stated interest at a rate of 0.50% per annum of the principal amount of the Notes for the first 90 days immediately following the Filing Date, such Liquidated Damages rate increasing by an additional 0.25% per annum of the principal amount of the Notes at the beginning of each subsequent 90-day period; (ii) if the Exchange Offer Registration Statement is not declared effective by the Commission on or prior to the Effectiveness Date, then, commencing on the 121st day after the Issue Date, Liquidated Damages shall accrue on the Notes included or which should have been included in such Registration Statement over and above the stated interest at a rate of 0.50% per annum of the principal amount of the Notes for the first 90 days immediately following the Effectiveness Date, such Liquidated Damages increasing by an additional 0.25% per annum of the principal amount of the Notes at the beginning of each subsequent 90-day period; and (iii) if (A) the Issuers have not exchanged Exchange Notes for all Notes validly tendered in accordance with the terms of the Registered Exchange Offer and the Shelf Registration Statement has not been declared effective by the Commission -6- 7 on or prior to the 150th day after the Issue Date or (B) the Exchange Offer Registration Statement, or, if applicable, the Shelf Registration Statement, has been declared effective and such Registration Statement ceases to be effective at any time during the period specified in Section 2(c)(ii) hereof (in the case of the Exchange Offer Registration Statement) or during the Shelf Registration Period (in the case of the Shelf Registration Statement) unless all the Notes have previously been sold or exchanged thereunder, as the case may be, then Liquidated Damages shall accrue (over and above any interest otherwise payable on such Notes) at a rate of 0.50% per annum of the principal amount of the Notes for the first 90 days commencing on (x) the 151st day after the Issue Date with respect to the Notes validly tendered and not exchanged by the Company, in the case of (A) above, or (y) the day such Exchange Offer Registration Statement or Shelf Registration Statement ceases to be effective in the case of (B) above, such Liquidated Damages rate increasing by an additional 0.25% per annum of the principal amount of the Notes at the beginning of each such subsequent 90-day period (it being understood and agreed that, in the case of (B) above, so long as any Note is then covered by an effective Shelf Registration Statement, no Liquidated Damages shall accrue on such Note); provided, however, that the Liquidated Damages rate on any affected Note may not exceed at any one time in the aggregate 2.0% per annum of the principal amount of the Notes; and provided, further, that (1) upon the filing of the Exchange Offer Registration Statement or a Shelf Registration Statement (in the case of clause (i) of this Section 4(a)), (2) upon the effectiveness of the Exchange Offer Registration Statement (in the case of clause (ii) of this Section 4(a)), (3) upon the exchange of Exchange Notes for all Notes tendered or the effectiveness of the Shelf Registration Statement (in the case of clause (iii)(A) of this Section 4(a)), or (4) upon the effectiveness of the Exchange Offer Registration Statement or the Shelf Registration Statement which had ceased to remain effective (in the case of clause (iii)(B) of this Section 4(a)), Liquidated Damages on the affected Notes as a result of such clause (or the relevant subclause thereof), as the case may be, shall cease to accrue. (b) The Issuers shall notify the Trustee within one business day after each and every date on which an event occurs in respect of which Liquidated Damages are required to be paid (an "Event Date"). Any Liquidated Damages due pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of this Section 4 will be payable to the Holders of affected Notes in cash semi-annually on each April 15 and October 15 (to the holders of record on the April 1 and October 1 immediately preceding such dates), commencing with the first such date occurring after any such Liquidated Damages commence to accrue. The amount of Liquidated Damages will be determined by multiplying the applicable Liquidated Damages rate by the principal amount of the affected Notes of such Holders, multiplied by a fraction, the numerator of which is the number of days such Liquidated Damages rate was applicable during such period (determined on the basis of a 360-day year comprised of twelve 30-day months and, in the case of a partial month, the actual number of days elapsed), and the denominator of which is 360. 5. Registration Procedures. In connection with any Shelf Registration Statement and, to the extent applicable, any Exchange Offer Registration Statement, the following provisions shall apply: (a) The Issuers shall furnish to the Initial Purchasers, prior to the filing thereof with the Commission, a copy of any Shelf Registration Statement and any Exchange -7- 8 Offer Registration Statement, and each amendment thereof and each amendment or supplement, if any, to the Prospectus included therein and shall use their best efforts to reflect in each such document, when so filed with the Commission, such comments as the Initial Purchasers reasonably may propose. (b) The Issuers shall ensure that (i) any Registration Statement and any amendment thereto and any Prospectus forming part thereof and any amendment or supplement thereto complies in all material respects with the Act and the rules and regulations thereunder, (ii) any Registration Statement and any amendment thereto does not, when it becomes effective, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading and (iii) any Prospectus forming part of any Registration Statement, and any amendment or supplement to such Prospectus, does not include an untrue statement of a material fact or omit to state a material fact necessary in order to make the statements, in the light of the circumstances under which they were made, not misleading. (c) (1) The Issuers shall advise the Initial Purchasers and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby, and, if requested by the Initial Purchasers or any such Holder, confirm such advice in writing: (i) when a Registration Statement and any amendment thereto has been filed with the Commission and when the Registration Statement or any post-effective amendment thereto has become effective; and (ii) of any request by the Commission for amendments or supplements to the Registration Statement or the Prospectus included therein or for additional information. (2) The Issuers shall advise the Initial Purchasers and, in the case of a Shelf Registration Statement, the Holders of securities covered thereby, and, in the case of an Exchange Offer Registration Statement, any Exchanging Dealer which has provided in writing to the Company a telephone or facsimile number and address for notices, and, if requested by the Initial Purchasers or any such Holder or Exchanging Dealer, confirm such advice in writing: (i) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the initiation of any proceedings for that purpose; (ii) of the receipt by the Issuers of any notification with respect to the suspension of the qualification of the securities included therein for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and (iii) of the happening of any event that requires the making of any changes in the Registration Statement or the Prospectus so that, as of such date, the statements therein are not misleading and do not omit to state a material fact required to be stated therein or necessary to make the statements therein (in the case of the Prospectus, in light of the circumstances under which they were made) not misleading (which advice shall be accompanied by an instruction to suspend the use of the Prospectus until the requisite changes have been made). -8- 9 (d) The Issuers shall use their best efforts to obtain the withdrawal of any order suspending the effectiveness of any Registration Statement at the earliest possible time. (e) The Issuers shall furnish to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, at least one copy of such Shelf Registration Statement and any post-effective amendment thereto, including financial statements and schedules, and, if the Holder so requests in writing, all exhibits (including those incorporated by reference). (f) The Issuers shall, during the Shelf Registration Period, deliver to each Holder of securities included within the coverage of any Shelf Registration Statement, without charge, as many copies of the Prospectus (including each preliminary Prospectus) included in such Shelf Registration Statement and any amendment or supplement thereto as such Holder may reasonably request; and the Issuers consent to the use of the Prospectus or any amendment or supplement thereto by each of the selling Holders of securities in connection with the offering and sale of the securities covered by the Prospectus or any amendment or supplement thereto. (g) The Issuers shall furnish to each Exchanging Dealer which so requests, without charge, at least one copy of the Exchange Offer Registration Statement and any post-effective amendment thereto, including financial statements and schedules, any documents incorporated by reference therein, and, if the Exchanging Dealer so requests in writing, all exhibits (including those incorporated by reference). (h) The Issuers shall, during the Exchange Offer Registration Period, promptly deliver to each Exchanging Dealer, without charge, as many copies of the Prospectus included in such Exchange Offer Registration Statement and any amendment or supplement thereto as such Exchanging Dealer may reasonably request for delivery by such Exchanging Dealer in connection with a sale of Exchange Notes received by it pursuant to the Registered Exchange Offer; and the Issuers consent to the use of the Prospectus or any amendment or supplement thereto by any such Exchanging Dealer, as aforesaid. (i) Prior to the Registered Exchange Offer or any other offering of securities pursuant to any Registration Statement, the Issuers shall register or qualify or cooperate with the Holders of securities included therein and their respective counsel in connection with the registration or qualification of such securities for offer and sale under the securities or blue sky laws of such jurisdictions as any such Holders reasonably request in writing and shall do any and all other acts or things necessary or advisable to enable the offer and sale in such jurisdictions of the securities covered by such Registration Statement; provided, however, that the Issuers will not be required to qualify generally to do business in any jurisdiction where they are not then so qualified or to take any action which would subject them to general service of process or to taxation in any such jurisdiction where they are not then so subject. (j) The Issuers shall cooperate with the Holders of Securities to facilitate the timely preparation and delivery of certificates representing Securities to be sold pursuant to any Registration Statement free of any restrictive legends and in such denominations and registered in such names as Holders may request prior to sales of Securities pursuant to such Registration Statement. -9- 10 (k) Upon the occurrence of any event contemplated by paragraph (c)(2)(iii) above, the Issuers shall promptly prepare a post-effective amendment to any Registration Statement or an amendment or supplement to the related Prospectus or file any other required document so that, as thereafter delivered to purchasers of the Securities included therein, the Prospectus will not include an untrue statement of a material fact or omit to state any material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading. (l) Not later than the effective date of any such Registration Statement hereunder, the Issuers shall provide a CUSIP number for the Notes or Exchange Notes, as the case may be, registered under such Registration Statement, and provide the applicable trustee with printed certificates for such Notes or Exchange Notes, in a form eligible for deposit with The Depository Trust Company. (m) The Issuers shall use their best efforts to comply with all applicable rules and regulations of the Commission and shall make generally available to their security holders as soon as practicable after the effective date of the applicable Registration Statement an earnings statement satisfying the provisions of Section 11(a) of the Act. (n) The Issuers shall cause the Indenture to be qualified under the Trust Indenture Act in a timely manner. (o) The Issuers may require each Holder of Securities to be sold pursuant to any Shelf Registration Statement to furnish to the Issuers such information regarding the Holder and the distribution of such Securities as the Issuers may from time to time reasonably require for inclusion in such Registration Statement. (p) The Issuers shall, if requested, promptly incorporate in a Prospectus supplement or post-effective amendment to a Shelf Registration Statement, such information as the Managing Underwriters and Majority Holders reasonably agree should be included therein and shall make all required filings of such Prospectus supplement or post-effective amendment as soon as notified of the matters to be incorporated in such Prospectus supplement or post-effective amendment. (q) In the case of any Shelf Registration Statement, the Issuers shall enter into such agreements (including underwriting agreements) and take all other appropriate actions in order to expedite or facilitate the registration or the disposition of the Securities, and in connection therewith, if an underwriting agreement is entered into, cause the same to contain indemnification provisions and procedures no less favorable than those set forth in Section 7 (or such other provisions and procedures acceptable to the Majority Holders and the Managing Underwriters, if any) with respect to all parties to be indemnified pursuant to Section 7. (r) In the case of any Shelf Registration Statement, the Issuers shall (i) make reasonably available for inspection by the Holders of Securities to be registered thereunder, any underwriter participating in any disposition pursuant to such Registration Statement, and any attorney, accountant or other agent retained by the Holders or any such underwriter all relevant financial and other records, pertinent corporate documents and properties of the Issuers and their subsidiaries; (ii) cause the Issuers' officers, directors and employees to supply all relevant information reasonably requested by the Holders or any -10- 11 such underwriter, attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Issuers, in good faith, as confidential at the time of delivery of such information shall be kept confidential by the Holders or any such underwriter, attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; (iii) make such representations and warranties to the Holders of Securities registered thereunder and the underwriters, if any, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel to the Issuers and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to the Managing Underwriters, if any) addressed to each selling Holder and the underwriters, if any, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Holders and underwriters; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Issuers (and, if necessary, any other independent certified public accountants of any subsidiary of the Issuers or of any business acquired by the Issuers for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to each selling Holder of Securities registered thereunder and the underwriters, if any, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings; and (vi) deliver such documents and certificates as may be reasonably requested by the Majority Holders and the Managing Underwriters, if any, including those to evidence compliance with Section 5(k) and with any customary conditions contained in the underwriting agreement or other agreement entered into by the Issuers. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 5(r) shall be performed at (A) the effectiveness of such Registration Statement and each post-effective amendment thereto and (B) each closing under any underwriting or similar agreement as and to the extent required thereunder. (s) In the case of any Exchange Offer Registration Statement, the Issuers shall (i) make reasonably available for inspection by such Initial Purchaser, and any attorney, accountant or other agent retained by such Initial Purchaser, all relevant financial and other records, pertinent corporate documents and properties of each Issuer and their subsidiaries; (ii) cause the Issuers' officers, directors and employees to supply all relevant information reasonably requested by such Initial Purchaser or any such attorney, accountant or agent in connection with any such Registration Statement as is customary for similar due diligence examinations; provided, however, that any information that is designated in writing by the Issuers, in good faith, as confidential at the time of delivery of such information shall be kept confidential by such Initial Purchaser or any such attorney, accountant or agent, unless such disclosure is made in connection with a court proceeding or required by law, or such information becomes available to the public generally or through a third party without an accompanying obligation of confidentiality; (iii) make such representations and warranties to such Initial Purchaser, in form, substance and scope as are customarily made by issuers to underwriters in primary underwritten offerings and covering matters including, but not limited to, those set forth in the Purchase Agreement; (iv) obtain opinions of counsel -11- 12 to the Issuers and updates thereof (which counsel and opinions (in form, scope and substance) shall be reasonably satisfactory to such Initial Purchaser and their counsel) addressed to such Initial Purchaser, covering such matters as are customarily covered in opinions requested in underwritten offerings and such other matters as may be reasonably requested by such Initial Purchaser or their counsel; (v) obtain "cold comfort" letters and updates thereof from the independent certified public accountants of the Issuers (and, if necessary, any other independent certified public accountants of any subsidiary of the Issuers or of any business acquired by any of the Issuers for which financial statements and financial data are, or are required to be, included in the Registration Statement), addressed to such Initial Purchaser, in customary form and covering matters of the type customarily covered in "cold comfort" letters in connection with primary underwritten offerings, or if requested by such Initial Purchaser or their counsel in lieu of a "cold comfort" letter, an agreed-upon procedures letter under Statement on Auditing Standards No. 35, covering matters requested by such Initial Purchaser or their counsel; and (vi) deliver such documents and certificates as may be reasonably requested by such Initial Purchaser or their counsel, including those to evidence compliance with Section 5(k) and with conditions customarily contained in underwriting agreements. The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this Section 5(s) shall be performed at the close of the Registered Exchange Offer and the effective date of any post-effective amendment to the Exchange Offer Registration Statement. 6. Registration Expenses. The Issuers shall bear all expenses incurred in connection with the performance of their obligations under Sections 2, 3, 4 and 5 hereof and, in the event of any Shelf Registration Statement, will reimburse the Holders for the reasonable fees and disbursements of one firm or counsel designated by the Majority Holders to act as counsel for the Holders in connection therewith, and, in the case of any Exchange Offer Registration Statement, will reimburse the Initial Purchasers for the reasonable fees and disbursements of counsel acting in connection therewith. 7. Indemnification and Contribution. (a) In connection with any Registration Statement, the Issuers, jointly and severally, agree to indemnify and hold harmless each Holder of Securities covered thereby (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 5(h) hereof, each Exchanging Dealer), the directors, officers, employees and agents of each such Holder and each person who controls any such Holder within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the Exchange Act or other Federal or state statutory law or regulation, at common law or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement as originally filed or in any amendment thereof, or in any preliminary Prospectus or Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agree to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by it in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that the Issuers will not be liable in any case to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Issuers by or -12- 13 on behalf of any such Holder specifically for inclusion therein. This indemnity agreement will be in addition to any liability which the Issuers may otherwise have. The Issuers, jointly and severally, also agree to indemnify or contribute to Losses of, as provided in Section 7(d), any underwriters of Securities registered under a Shelf Registration Statement, their officers and directors and each person who controls such underwriters on substantially the same basis as that of the indemnification of the Initial Purchasers and the selling Holders provided in this Section 7(a) and shall, if requested by any Holder, enter into an underwriting agreement reflecting such agreement, as provided in Section 5(q) hereof. (b) Each Holder of Securities covered by a Registration Statement (including each Initial Purchaser and, with respect to any Prospectus delivery as contemplated in Section 5(h) hereof, each Exchanging Dealer) severally agrees to indemnify and hold harmless (i) the Issuers, (ii) each of their respective directors, (iii) each of their respective officers who signs such Registration Statement and (iv) each person who controls the Issuers within the meaning of either the Act or the Exchange Act to the same extent as the foregoing indemnity from the Issuers to each such Holder, but only with reference to written information relating to such Holder furnished to the Issuers by or on behalf of such Holder specifically for inclusion in the documents referred to in the foregoing indemnity. This indemnity agreement will be in addition to any liability which any such Holder may otherwise have. (c) Promptly after receipt by an indemnified party under this Section 7 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 7, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnifying party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel (and local counsel) if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and counsel to the indemnified party shall have reasonably concluded that there may be legal defenses available to such indemnified party and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel reasonably satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the -13- 14 indemnified party to employ separate counsel at the expense of the indemnifying party. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 7 is unavailable to, or insufficient to hold harmless, an indemnified party for any reason, then each applicable indemnifying party, in lieu of indemnifying such indemnified party, shall have a joint and several obligation to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which such indemnified party may be subject in such proportion as is appropriate to reflect the relative benefits received by such indemnifying party, on the one hand, and such indemnified party, on the other hand, from the Initial Placement and the Registration Statement which resulted in such Losses; provided, however, that in no case shall any Initial Purchaser or any subsequent Holder of any Note or Exchange Note be responsible, in the aggregate, for any amount in excess of the purchase discount or commission applicable to such Note, or in the case of an Exchange Note, applicable to the Note which was exchangeable into such Exchange Note, as set forth on the cover page of the Final Memorandum, nor shall any underwriter be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such underwriter under the Registration Statement which resulted in such Losses. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the indemnifying party and the indemnified party shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of such indemnifying party, on the one hand, and such indemnified party, on the other hand, in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Issuers shall be deemed to be equal to the total net proceeds from the Initial Placement (before deducting expenses) as set forth on the cover page of the Final Memorandum. Benefits received by the Initial Purchasers shall be deemed to be equal to the total purchase discounts and commissions as set forth on the cover page of the Final Memorandum, and benefits received by any other Holders shall be deemed to be equal to the value of receiving Notes or Exchange Notes, as applicable, registered under the Act. Benefits received by any underwriter shall be deemed to be equal to the total underwriting discounts and commissions, as set forth on the cover page of the Prospectus forming a part of the Registration Statement which resulted in such Losses. Relative fault shall be determined by reference to whether any alleged untrue statement or omission relates to information provided by the indemnifying party, on the one hand, or by the indemnified party, on the other hand. The parties agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 7, each person who controls a Holder within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent of such Holder shall have the same rights to contribution as such -14- 15 Holder, and each person who controls the Company or the Guarantor within the meaning of either the Act or the Exchange Act, each officer of the Company or the Guarantor who shall have signed the Registration Statement and each director of the Company or the Guarantor shall have the same rights to contribution as the Company or the Guarantor, respectively, subject in each case to the applicable terms and conditions of this paragraph (d). (e) The provisions of this Section 7 will remain in full force and effect, regardless of any investigation made by or on behalf of any Holder or the Issuers or any of the officers, directors or controlling persons referred to in Section 7 hereof, and will survive the sale by a Holder of Securities covered by a Registration Statement. 8. Market Making. The Company will, if requested to do so by any of the Initial Purchasers in the good faith belief that such actions are required in order to make a market in the Securities pursuant to applicable law, regulation or administrative practice, and for so long as any of the Securities are outstanding and any of the Initial Purchasers or any of their Affiliates (as defined in the Rules and Regulations under the Act) owns beneficially 5% or more of the equity securities of the Company or has a representative serving on the board of directors of the Company: (a) (i) Periodically amend the Registration Statement (which, for purposes of this Section 8 shall include a Shelf Registration Statement) so that the information contained in the Registration Statement complies with the requirements of Section 10(a) under the Act; (ii) if requested by any of the Initial Purchasers and if not otherwise incorporated therein by reference, within 45 days following the end of the Company's most recent fiscal quarter, file a supplement to the Prospectus which sets forth the financial results of the Company for the previous quarter; (iii) amend the Registration Statement or supplement the Prospectus when necessary to reflect any material changes in the information provided therein that are not otherwise incorporated therein by reference; (iv) amend the Registration Statement when required to do so in order to comply with Section 10(a)(3) of the Act as described in Part II, Item 22 of the Registration Statement (or in Part II, Item 17 of any registration statement on Form S-3 covering the Securities); and (v) comply with the provisions of the Act and the Exchange Act with regard to the foregoing; provided, however, that (A) a reasonable time prior to filing any post-effective amendment to the Registration Statement or any supplement to the Prospectus, the Company will furnish to the Initial Purchasers copies of all such documents proposed to be filed, which documents will be subject to the review of such Initial Purchasers' counsel and the Initial Purchasers, (B) the Company will not file any post-effective amendment to the Registration Statement or any supplement to the Prospectus to which such Initial Purchasers' counsel or the Initial Purchasers shall reasonably object, and (C) the Company will provide such Initial Purchasers' counsel and the Initial Purchasers with copies of each amendment or supplement as filed. (b) Notify the Initial Purchasers and, if requested, confirm such advice in writing, (i) when any Prospectus supplement or amendment or post-effective amendment has been filed, and, with respect to any post-effective amendment, when the same has become effective; (ii) of any request by the Commission for any post-effective amendment or supplement to the Registration Statement, any supplement or amendment to the Prospectus or for additional information; (iii) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration -15- 16 Statement or the initiation of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; and (v) of the happening of any event which makes any material statement made in the Registration Statement, the Prospectus or any amendment or supplement thereto untrue or which requires the making of any changes in the Registration Statement, the Prospectus or any amendment or supplement thereto, in order to make the statements therein not materially misleading. (c) Furnish to any of the Initial Purchasers, without charge, (i) at least one conformed copy of any post-effective amendment to the Registration Statement; and (ii) as many copies of any amendment or supplement to the Prospectus as each such person may reasonably request. (d) Consent to the use of the Prospectus or any amendment or supplement thereto by the Initial Purchasers in connection with the offering and sale of the Securities. (e) Agree to indemnify the Initial Purchasers, as well as the other indemnified persons referred to in Section 7(a), and if applicable, contribute to the Initial Purchasers, as well as the other indemnified persons referred to in Section 7(a), in the manner specified in Section 7 (with appropriate modifications). The Initial Purchasers agree to indemnify the Company against any losses, claims, damages or liabilities (or actions in respect thereof) to the extent that any such loss, claim, damage or liability (or action in respect thereof) arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in the Registration Statement or Prospectus, or in any amendment or post-effective amendment thereof or supplement thereto in reliance upon and in conformity with written information furnished to the Company by the Initial Purchasers specifically for inclusion therein, and, if applicable, to contribute to the losses, claims, damages or liabilities to which the Company may be subject, in such proportion as is appropriate to reflect the relative benefits received by the Initial Purchasers from the offering of the Securities; provided, however, that in no case shall any Initial Purchaser (except as may be provided in any agreement among underwriters relating to the offering of the Securities) be responsible for any amount in excess of the underwriting discount or commission applicable to the Securities purchased by such Initial Purchaser, and, if necessary, the relative fault of the Initial Purchaser, determined by reference to whether any alleged untrue statement or omission relates to information provided by the Initial Purchaser. Such indemnification and contribution shall be in the manner specified in Section 7 (with appropriate modifications). The Company will comply with the provisions of this Section 8 at its own expense and will reimburse the Initial Purchasers for their reasonable expenses paid or incurred in furtherance of the offering, sale or market-making in the Securities (including reasonable fees and disbursements of counsel to the Initial Purchasers). 9. Miscellaneous. (a) No Inconsistent Agreements. The Company and the Guarantor have not, as of the date hereof, entered into, nor shall either of them, on or after the date hereof, -16- 17 enter into, any agreement with respect to their securities that is inconsistent with the rights granted to the Holders herein or otherwise conflicts with the provisions hereof. (b) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, qualified, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the Issuers have obtained the written consent of the Holders of at least a majority of the then outstanding aggregate principal amount of Notes (or, after the consummation of any Exchange Offer in accordance with Section 2 hereof, of Exchange Notes); provided that, with respect to any matter that directly or indirectly affects the rights of any Initial Purchaser hereunder, the Issuers shall obtain the written consent of each such Initial Purchaser against which such amendment, qualification, supplement, waiver or consent is to be effective. Notwithstanding the foregoing (except the foregoing proviso), a waiver or consent to departure from the provisions hereof with respect to a matter that relates exclusively to the rights of Holders whose securities are being sold pursuant to a Registration Statement and that does not directly or indirectly affect the rights of other Holders may be given by the Majority Holders, determined on the basis of securities being sold rather than registered under such Registration Statement. (c) Notices. All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, first-class mail, telex, telecopier, or air courier guaranteeing overnight delivery: (1) if to a Holder, at the most current address given by such holder to the Company in accordance with the provisions of this Section 9(c), which address initially is, with respect to each Holder, the address of such Holder maintained by the Registrar under the Indenture, with a copy in like manner to Salomon Brothers Inc; (2) if to an Initial Purchaser, initially at the respective addresses set forth in the Purchase Agreement, with copies as indicated therein; and (3) if to Issuers, initially at the address of the Company set forth in the Purchase Agreement, with copies as indicated therein. All such notices and communications shall be deemed to have been duly given: when delivered by hand, if personally delivered; five business days after being deposited in the mail, first-class postage prepaid, if mailed; and one business day after being timely delivered to a next-day air courier. The Initial Purchasers or the Issuers by notice to the other may designate additional or different addresses for subsequent notices or communications. (d) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and assigns of each of the parties, including, without the need for an express assignment or any consent by the Issuers thereto, subsequent Holders of Notes and/or Exchange Notes. The Issuers hereby agree to extend the benefits of this Agreement to any Holder of Notes and/or Exchange Notes and any such Holder may specifically enforce the provisions of this Agreement as if an original party hereto. -17- 18 (e) Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. (f) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. (g) Governing Law. This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York applicable to agreements made and to be performed in said State. (h) Severability. In the event that any one or more of the provisions contained herein, or the application thereof in any circumstances, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired or affected thereby, it being intended that all of the rights and privileges of the parties shall be enforceable to the fullest extent permitted by law. (i) Notes Held by the Company, etc. Whenever the consent or approval of Holders of a specified percentage of principal amount of Notes or Exchange Notes is required hereunder, Notes or Exchange Notes, as applicable, held by the Company or its Affiliates (other than the Initial Purchasers or subsequent Holders of Notes or Exchange Notes if such subsequent Holders are deemed to be Affiliates solely by reason of their holdings of such Notes or Exchange Notes) shall not be counted in determining whether such consent or approval was given by the Holders of such required percentage. -18- 19 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above: U. S. CAN CORPORATION By: /s/ Timothy W. Stonich ------------------------ Name: Timothy W. Stonich Title: Executive Vice President, Finance, Chief Financial Officer and Secretary UNITED STATES CAN COMPANY By: /s/ Timothy W. Stonich ------------------------ Name: Timothy W. Stonich Title: Executive Vice President, Finance, Chief Financial Officer and Secretary SALOMON BROTHERS INC CS FIRST BOSTON CORPORATION BA SECURITIES, INC. by Salomon Brothers Inc By: /s/ Paul Lipari ------------------------ Name: Paul Lipari Title: Associate Salomon Brothers Inc [Registration Rights Agreement] EX-27.1 9 FINANCIAL DATA SCHEDULE WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
5 This schedule contains summary financial information extracted from the Condensed Consolidated Balance Sheets at September 29, 1996 (Unaudited) and condensed consolidated Statement of Operations for the Quarterly Period ended September 29, 1996 (Unaudited) and is qualified in its entirely by reference to such financial statements. 1,000 9-MOS DEC-31-1996 JAN-01-1996 SEP-29-1996 3,940 0 112,388 9,305 113,735 235,826 450,086 145,081 624,156 144,834 332,206 0 0 129 96,743 624,156 538,316 538,316 470,745 491,848 2,360 255 19,513 24,340 10,352 13,988 0 0 0 13,988 1.07 1.07
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