<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
- ------- OF THE SECURITIES EXCHANGE ACT OF 1934
For the period ended MARCH 31, 1994
------------------------
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
- ------- OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission File Number: 1-6690
------
CONTINENTAL CAN COMPANY, INC.
------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 11-2228114
- --------------------------- ------------------------------------
(State of Incorporation) (I.R.S. Employer Identification No.)
One Aerial Way, Syosset, New York 11791
- ---------------------------------------- --------
(Address of principal executive offices) Zip Code
(516) 822-4940
- ----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceeding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
X YES NO
- ------- -------
The number of shares outstanding of the registrant's Common Stock ($.25 par
value) as of May 10, 1994 is 2,910,972.
<PAGE>
FORM 10-Q
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- -----------------------------
Consolidated Balance Sheets as of March 31, 1993 and 1994 and
December 31, 1993
Consolidated Statements of Earnings and Retained Earnings for the
Three Months Ended March 31, 1994 and 1993
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1994 and 1993
Notes to Consolidated Financial Statements
2
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CONTINENTAL CAN COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1993 AND 1994 AND DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
---------- ------------ ---------
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,563 $ 12,741 $ 19,816
Investments 297 317 323
Accounts receivable:
Trade accounts 89,944 71,899 81,173
Other 10,676 8,357 9,139
Less allowance for doubtful accounts (3,671) (3,522) (3,382)
--------- --------- ---------
Accounts receivable, net 96,949 76,734 86,930
Inventories 83,255 69,503 89,585
Prepaid expenses and other current assets 4,161 4,911 4,793
--------- --------- ---------
Total current assets 201,225 164,206 201,447
Property, plant and equipment, at cost:
Land, building and building 43,559 43,733 46,472
improvements
Manufacturing machinery and equipment 208,651 206,423 192,452
Furniture, fixtures and equipment 7,624 7,379 7,570
Construction in progress 16,297 9,732 11,541
--------- --------- ---------
276,131 267,267 258,035
Less accumulated depreciation and
amortization 93,122 84,192 68,654
--------- --------- ---------
Net property plant and equipment 183,009 183,075 189,381
Goodwill, net of accumulated amortization 13,610 13,369 14,455
Investments - non-current 61 96 103
Other assets 23,580 25,161 26,006
--------- --------- ---------
Total assets $421,485 $385,907 $431,392
========= ========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
CONTINENTAL CAN COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1993 AND 1994 AND DECEMBER 31, 1993
(In thousands)
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1994 1993 1993
---------- ------------ ----------
<S> <C> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Short term borrowings $ 13,735 $ 6,378 $ 19,206
Accounts payable - trade 57,464 40,828 47,124
Accrued liabilities:
Employee compensation and benefits 13,270 16,075 20,219
Other accrued expenses 30,531 15,887 19,762
Current installments of long term debt
and obligations under capital leases 15,463 13,487 9,856
Income taxes payable 929 635 354
Other liabilities 1,467 4,811 9,920
-------- -------- --------
Total current liabilities 132,859 98,101 126,441
Long term debt, excluding current
installments 134,653 140,481 148,779
Obligations under capital leases,
excluding current installments 13,668 13,501 15,561
Deferred income taxes 2,943 2,717 3,537
Other 40,463 38,137 40,588
-------- -------- --------
Total liabilities 324,586 292,937 334,906
Minority interest 34,544 32,115 34,614
Stockholders' equity:
Capital stock:
First preferred stock, cumulative
$25 par value.
Authorized 250,000 shares; no - - -
shares issued.
Second preferred stock, 4% non-
cumulative, $100 par value.
Authorized 1,535 shares;
no shares issued. - - -
Common stock, $.25 par value.
Authorized 20,000,000 shares;
Outstanding 2,879,158 shares in
1994 and 2,858,026 shares in Dec. 1993 720 720 715
-------- -------- --------
and 2,857,026 in March 1993 720 720 715
Additional paid-in capital 41,414 41,414 41,234
Retained earnings 21,290 21,742 19,931
-------- -------- --------
63,424 63,876 61,880
Cumulative foreign currency translation
adjustment (1,069) (3,021) (8)
-------- -------- --------
Total stockholders' equity 62,355 60,855 61,872
-------- -------- --------
$421,485 $385,907 $431,392
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
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CONTINENTAL CAN COMPANY, INC.
CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands, except per share data)
<TABLE>
<CAPTION>
1994 1993
-------- --------
<S> <C> <C>
Sales $115,850 $110,772
Cost of goods sold 95,515 90,666
-------- --------
Gross profit 20,335 20,106
Selling, general and administrative expenses 15,830 15,330
-------- --------
Operating income 4,505 4,776
Other income (expense):
Interest expense, net (4,608) (5,725)
Foreign currency exchange gain (loss) 49 (85)
Other - net 36 37
-------- --------
Net other expense (4,523) (5,773)
-------- --------
Income before provision for income taxes,
minority interest and cumulative effect
of accounting change (18) (997)
Provision for income taxes 691 383
-------- --------
Income before minority interest and
cumulative effect of accounting change (709) (1,380)
Minority interest (520) (556)
-------- --------
Income before cumulative effect of accounting change (189) (824)
Cumulative effect of accounting change, net (263) -
-------- --------
Net loss ($452) ($824)
======== ========
Earnings (loss) per common share - Primary:
Before cumulative effect of accounting change ($0.06) ($0.27)
Cumulative effect of accounting change ($0.09) -
-------- --------
Net loss per common share ($0.15) ($0.27)
======== ========
Earnings (loss) per common share, assuming
full dilution:
Before cumulative effect of accounting change ($0.05) ($0.24)
Cumulative effect of accounting change ($0.08) -
-------- --------
Net loss per common share, assuming full dilution ($0.13) ($0.24)
======== ========
RETAINED EARNINGS
Balance at beginning of period $ 21,742 $ 20,755
Net loss (452) (824)
-------- --------
Balance at end of period $ 21,290 $ 19,931
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
CONTINENTAL CAN COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1994 AND 1993
(In thousands)
<TABLE>
<CAPTION>
1994 1993
--------- -------
<S> <C> <C>
Cash Flows From Operating Activities:
Net Loss ($452) ($824)
Depreciation and Amortization 8,718 9,063
Minority Interest (520) (556)
Cumulative Effect of Accounting Change, Net (263) -
Other Adjustments (1,372) (10,835)
--------- --------
Net Cash Provided by (Used in) Operating Activities 6,111 (3,152)
Net Cash Provided by (Used in) Investing Activities:
Capital Expenditures (6,794) (3,333)
Other 86 551
--------- --------
Net Cash Used in Investing Activities (6,708) (2,782)
Net Cash Provided by Financing Activities 4,177 11,402
Effect of Exchange Rate Changes on Cash 242 73
--------- --------
Net Increase in Cash 3,822 5,541
Cash at Beginning of Period 12,741 14,275
--------- --------
Cash at End of Period $16,563 $19,816
========= ========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
CONTINENTAL CAN COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1994
(1) Accounting Policies and Other Matters
(a) Basis of Presentation
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these consolidated financial statements be read in conjunction
with the financial statements and notes thereto included in the
Company's 1993 Annual Report to Stockholders.
(b) Adjustments
The results for the interim period reported herein have not been
audited, however, in the opinion of management, all adjustments
necessary for a fair presentation of the interim period statements have
been made.
(c) Earnings Per Common Share
Earnings per common share is based on the weighted average number of
common and common equivalent shares outstanding. Common equivalent
shares include dilutive stock options (using the treasury stock method)
exercisable under the Company's option plans and warrants. Weighted
average shares outstanding in the first quarter of 1994 and 1993 were
3,039,938 and 3,031,667, respectively.
Earnings per common share, assuming full dilution, gives effect to the
conversion of the Company's outstanding 10-3/4% Convertible
Subordinated Debentures due in 1994 as if such Debentures had been
converted on the issue date, after elimination of related interest
expense, net of income tax effect.
(2) Acquisitions
During the first quarter of 1994 the provincial Spanish government
exchanged amounts due it by Industrias Gomariz S.A. (Ingosa) at December
31, 1993 for 41% of Ingosa and Onena S.A. valued at $2,808,000 (384 million
pesetas). The amount of the debt in excess of this amount $1,097,000 (150
million pesetas) was allocated to property, plant and equipment. The
remaining transactions contemplated by the Company's agreement with the
government are expected to be completed during the second quarter of 1994.
7
<PAGE>
(3) Inventories
Inventories consist principally of packaging materials. The components of
inventory were as follows: (000's omitted)
<TABLE>
<CAPTION>
March 31, December 31,
1994 1993
--------- ------------
<S> <C> <C>
(in thousands)
Finished goods $41,187 $31,774
Work in process 8,779 5,834
Raw materials and supplies 33,179 31,720
------- -------
83,145 69,328
LIFO reserve 110 175
------- -------
$83,255 $69,503
</TABLE>
(4) Postemployment Benefits
In November 1992, the Financial Accounting Standards Board issued
Statement No. 112, EMPLOYERS' ACCOUNTING FOR POSTEMPLOYMENT BENEFITS,
which requires employers to recognize the obligation to provide
postemployment benefits and allocation of those benefits to the periods
the employees render service. The Company adopted the provisions of
Statement 112 as of January 1, 1994. The cumulative effect of this
change in accounting for postemployment benefits determined as of January
1, 1994 was a charge to income, net of minority interest, of $263,000.
This amount is reported separately in the consolidated statement of
operations for the quarter ended March 31, 1994. Prior years financial
statements have not been restated to apply the provisions of Statement
112.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
----------------------------------------------------------
CONDITION AND RESULTS OF OPERATIONS
-----------------------------------
Sales during the first quarter of 1994 increased 4.5% to $115,850,000 as
compared to $110,772,000 in the first quarter of 1993. Increased sales in
1994 reflected higher volumes at Plastic Containers, Inc. and Ferembal
(approximately $4 million) and the acquisition of Ingosa in late 1993
(approximately $2.8 million). The amount of the increase was reduced by
currency translation rate differences (approximately $4 million) and lower
revenues at the Company's engineering subsidiary which was adversely affected
by severe winter weather in the Northeast resulting in reduced field
activities.
Gross profit as a percentage of sales declined slightly in the first
quarter of 1994 as compared to the same period of 1993. The decline primarily
at Ferembal reflected a higher percentage of lower margin products in the
period.
Selling, general and administrative expense as a percentage of sales
declined slightly in 1994 as compared to 1993. Because of these various
factors, operating income amounted to $4,505,000 in the first quarter of 1994
as compared to $4,776,000 in the first quarter of 1993.
Net interest expense declined to $4,608,000 in the first quarter of 1994
as compared to $5,725,000 in the same period of 1993. This decline resulted
from lower debt levels and interest rates, principally at the Company's
European subsidiaries.
Although the Company's consolidated operations reflected losses before
tax in each period in 1994 and 1993, provision for income taxes amounted to
$691,000 in the first quarter of 1994 and $383,000 in the first quarter of
1993, reflecting a lower level of tax benefits for accounting purposes in loss
operations than tax expense in the Company's profitable operations. Minority
interest during each period reflects the interests of other shareholders in
some of the Company's subsidiaries.
Loss before cumulative effect of an accounting change amounted to
$189,000 ($.06 per share) in the first quarter of 1994 as compared to $824,000
($.27 per share) in the same prior year period. A charge amounting to
$263,000 ($.09 per share) resulted from the cumulative effect of an accounting
change in the first quarter of 1994. See Note 4 of the Notes to Consolidated
Financial Statements. Net losses in the first quarter of 1994 amounted to
$452,000 ($.15) as compared to $824,000 ($.27 per share) in the first quarter
of 1993.
9
<PAGE>
FINANCIAL CONDITION
-------------------
CAPITAL REQUIREMENTS
The Company acquired $6,794,000 of capital assets during the first
quarter of 1994 consisting primarily of packaging equipment. These assets
were acquired for cash. Similar types of assets are expected to be acquired
for the remainder of 1994. Total capital spending in 1994 is expected to
amount to approximately $25 million.
The Company intends to actively pursue acquisition possibilities in
1994. It is presently the Company's intention to finance any acquisitions by
leveraging the assets of the business to be acquired, with existing cash,
through bank borrowings or, possibly, through the issuance of stock.
LIQUIDITY
The Company's liquidity position declined slightly during the first
quarter of 1994. Working capital decreased slightly to approximately $68.4
million, and the current ratio amounted to 1.51 at March 31, 1994 compared to
1.67 at December 31, 1993.
During the first quarter of 1994, the Company's operating activities
generated $6,111,000 of cash primarily as a result of depreciation charges.
The Company used $6,708,000 in investing activities primarily for the purchase
of packaging equipment. The small shortfall was generated from financing
activities primarily short term borrowings of $6,915,000, which were also used
to repay long term debt with the remainder being added to the Company's cash
reserves.
At March 31, 1994, the Company had an available credit line under a
Revolving Credit Agreement of $2.6 million. In addition, the Company's
consolidated subsidiaries had available approximately $33 million in short
term credit lines and bank overdraft facilities at March 31, 1994. However,
the Company's ability to draw upon these lines for other than its
subsidiaries' needs is restricted.
The Company expects that cash from operations and its existing banking
facilities will be sufficient to meet its operating needs for the remainder of
1994.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a) Exhibits Required
(4) First Supplemental Indenture between the
Company and United States Trust Company of
New York, Trustee, dated March 11, 1994
relating to 10.75% Convertible Subordinated
Debentures due May 1, 1994. Page 12
(11) Statement re computation of per share earnings
See Note 1(c) on Page 7
All other items for which provision is made in the applicable
regulations of the Securities and Exchange Commission have been omitted
as they are not required under the related instructions or they are
inapplicable.
(b) Reports on Form 8-K
No reports on Form 8-K have been filed since
December 31, 1993.
SIGNATURE
---------
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.
CONTINENTAL CAN COMPANY, INC.
(REGISTRANT)
By: /S/ Abdo Yazgi
--------------
Abdo Yazgi
Principal Financial Officer
and on behalf of registrant
DATED: MAY 10, 1994
11
<PAGE>
EXHIBIT
CONTINENTAL CAN COMPANY, INC.
(formerly VIATECH, INC.)
AND
UNITED STATES TRUST COMPANY OF NEW YORK,
TRUSTEE
______________________________________
FIRST SUPPLEMENTAL INDENTURE
MARCH 11, 1994
_______________________________________
SUPPLEMENTAL TO THE
INDENTURE DATED AS OF MAY 21, 1987
________________________________________
10-3/4% CONVERTIBLE SUBORDINATED DEBENTURES DUE 1994
ARTICLE ONE
AMENDMENT OF THE ORIGINAL INDENTURE
Section 1.1. Amendment of Form of Reverse of Debentures.
-------------------------------------------
The first three paragraphs of Section 203 of the Original Indenture
are hereby amended to read in full as follows:
"Section 203. Form of Reverse of Debentures.
------------------------------
This Debenture is one of a duly authorized issue of Debentures of
the Company designated as its 10-3/4% Convertible Subordinated Debentures Due
1994 (herein called the "Debentures"), limited in aggregate principal amount
to $1,623,915, issued and to be issued under an Indenture, dated as of May 21,
1987 (herein called the "Indenture"), between the Company and United States
Trust Company of New York, Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement
of the respective rights, limitations of rights, duties and immunities
thereunder of the Company, the Trustee, the holders of Senior Indebtedness and
the Holders of the Debentures and of the terms upon which the Debentures are,
and are to be, authenticated and delivered.
At any time after May 1, 1988, and subject to and upon compliance
with the provisions of the Indenture, the Holder of this Debenture is
entitled, at his option, at any time on or before the close of business on May
1, 1994, or in case this Debenture or a portion hereof is called for
redemption, then in respect of this Debenture or such portion hereof until and
including, but (unless the Company defaults in making the payment due upon
redemption) not after, the close of business on the Redemption Date, to
convert this Debenture (or any portion of the principal amount hereof which is
an integral multiple of $15.00), into such number of fully paid and non-
assessable Common Shares of the Company, as may be issuable pursuant to either
clause (i) or (ii) below, selected at the option of the Holder:
(i) the Holder may elect to surrender $7.50 aggregate principal
amount of Debentures and pay an additional $7.50 in cash, upon which
surrender and payment the Holder will be issued Common Shares of the
Company at the conversion price of $15.00 (or such other conversion
price as may be determined after giving effect to adjustments set forth
in Section 1204); or
(ii) the Holder may elect to surrender $15.00 aggregate principal
amount of Debentures and make no additional cash payment, upon which
surrender the Holder will be issued the number of Common Shares equal to
(xx) the number of shares which would be issuable pursuant to clause (i)
above if the Holder had surrendered $7.50 aggregate principal amount of
Debentures and paid an additional $7.50 in cash, less (yy) the
Equalization Factor.
As used in clause (ii) above, the term "Equalization Factor" shall mean the
quotient obtained by dividing (v) $7.50 by (w) the Applicable Common Share
Market Price (in each by (w) the Applicable Common Share Market Price (in each
case as adjusted to give appropriate effect to any adjustment previously made
pursuant to Section 1204 of the Indenture). As used in this paragraph, the
term "Applicable Common Share Market Price" shall mean (x) in the case of any
Debentures called for redemption and converted at any time after the date of
the notice of
12
<PAGE>
redemption given pursuant to Section 1104 of the Indenture, the Common Share
Market Price on the Business Day preceding the Redemption Date, and (y) in all
other cases, the Common Share Market Price on the Business Day immediately
preceding the date on which such Debentures are presented for conversion
pursuant to Section 1202 of the Indenture. As used in this paragraph, the term
"Common Share Market Price" shall mean the reported last sale price regular
way or, reported closing bid and asked prices regular way, in either case on
the New York Stock Exchange or, if the Common Shares are not listed or
admitted to trading on such Exchange, on the principal national securities
exchange on which the Common Shares are listed or admitted to trading or, if
not listed or admitted to trading on any national securities exchange, the
average of the closing bid and asked prices as furnished by any New York Stock
Exchange member firm selected from time to time by the Company for that
purpose.
The Holder of this Debenture may elect to convert this Debenture, or
any portion thereof, which is an integral multiple of $15.00, by surrender of
this Debenture, duly endorsed or assigned to the Company or in blank, to the
Company at its office or agency maintained pursuant to Section 1002 of the
Indenture, accompanied (a) by written notice to the Company that the Holder
hereof elects to convert this Debenture, or if less than the entire principal
amount hereof is to be converted, the portion hereof to be converted, (b) in
case of any election to convert pursuant to clause (i) of the preceding
paragraph, by payment in New York Clearing House or other funds acceptable to
the Company of $7.50 (subject to adjustment) for each $7.50 aggregate
principal amount of Debenture to be converted, and (c) in case such surrender
shall be made during the period from the close of business on any Regular
Record Date next preceding any Interest Payment Date to the opening of
business on such Interest Payment Date (unless this Debenture or the portion
thereof being converted has been called for redemption during such period),
also by payment in New York Clearing House or other funds acceptable to the
Company of an amount equal to the interest payable on such Interest Payment
Date on the principal amount of this Debenture then being converted. Subject
to the aforesaid requirement for payment and, in the case of a conversion
after the Regular Record Date next preceding any Interest Payment Date and on
or before such Interest Payment Date, to the right of the Holder of this
Debenture (or any Predecessor Debenture) of record at such Regular Record Date
to receive an installment of interest (with certain exceptions provided in the
Indenture), no payment or adjustment is to be made on conversion for interest
accrued hereon or for dividends on the Common Shares issued on conversion. No
fractions of shares or scrip representing fractions of shares will be issued
on conversion, but instead of any fractional interest the Company shall pay a
cash adjustment as provided in the Indenture. The conversion price is subject
to adjustment as provided in the Indenture. In addition, the Indenture
provides that in the case of certain consolidations or mergers to which the
Company is a party or the sale or transfer of all or substantially all of the
assets of the Company, the Indenture shall be amended, without the consent of
any Holders of Debentures so that this Debenture, if then outstanding, will be
convertible thereafter, during the period this Debenture shall be convertible
as specified above, only into the kind and amount of securities, cash and
other property receivable upon the consolidation, merger, sale or transfer by
a holder of the number of Common Shares of the Company into which this
Debenture might have been converted immediately prior to such consolidation,
merger, sale or transfer (assuming such holder of Common Shares failed to
exercise any rights of election as to the kind or amount of securities, cash
and other property receivable upon such consolidation, merger, sale or
transfer).
The Debentures are subject to redemption, upon not less than 30 nor
more than 60 days' notice by mail, at any time on or after May 1, 1991, as a
whole or in part, at the election of the Company, at a Redemption Price,
consisting of (i) a cash payment equal to 100% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, plus (ii) a Warrant, exercisable at any time on or before the
close of business on May 1, 1994, to purchase that number of Common Shares
equal to one-half of the largest whole even number of Common Shares into which
such Debentures could be converted on the Redemption Date, pursuant to clause
(i) of the second paragraph appearing on the reverse side of this Debenture,
upon payment of a warrant exercise price per Common Share equal to the
quotient obtained by dividing (x) the aggregate principal amount of such
Debentures, by (y) the number of Common Shares initially issuable upon the
exercise of the Warrant. Interest installments whose Stated Maturity is on or
prior to such Redemption Date will be payable to the Holders of such
Debentures, or one or more Predecessor Debentures, of record at the close of
business on the relevant Record Dates referred to on the face hereof, all as
provided in the Indenture."
13
<PAGE>
Section 1.2. Conversion Privilege and Conversion Price.
-----------------------------------------
Section 1201 of the Original Indenture is hereby amended to read in
full as follows:
"Section 1201. Conversion Privilege and Conversion Price.
------------------------------------------
(a) At any time after May 1, 1988 and subject to and upon compliance
with the provisions of this Article, at the option of the Holder thereof, any
Debenture (or any portion of the principal amount thereof which is $15.00) or
an integral multiple of $15.00 may be converted into such number of fully paid
and non-assessable Common Shares of the Company, as may be issuable pursuant
to either clause (i) or (ii) below, selected at the option of the Holder:
(i) the Holder may elect to surrender $7.50 aggregate principal
amount of Debentures and pay an additional $7.50 in cash, upon which
payment the Holder will be issued Common Shares of the Company at
the conversion price of $15.00 (or such other conversion price as
may be determined after giving effect to adjustments set forth in
Section 1204); or
(ii) the Holder may elect to surrender $15.00 aggregate
principal amount of Debentures and make no additional cash payment,
upon which payment the Holder will be issued the number of Common
Shares equal to (xx) the total number of shares issuable pursuant to
clause (i) above, less (yy) the Equalization Factor.
(b) As used in paragraph (a) above, the term "Equalization Factor"
shall mean the quotient obtained by dividing (i) $15 by (ii) the Applicable
Common Share Market Price (in each case as adjusted to give appropriate effect
to any adjustment pre-viously made pursuant to Section 1204). As used in this
paragraph, the term "Applicable Common Share Market Price" shall mean (i) in
the case of any Debentures called for redemption and converted at any time
after the date of the notice of redemption given pursuant to Section 1104
hereof, the Common Share Market Price on the Business Day preceding the
Redemption Date, and (ii) in all other cases, the Common Share Market Price on
the Business Day immediately preceding the date on which such Debentures are
presented for conversion pursuant to Section 1202 hereof. As used in this
paragraph, the term "Common Share Market Price" shall mean the reported last
sale price regular way or, reported closing bid and asked prices regular way,
in either case on the New York Stock Exchange or, if the Common Shares are not
listed or admitted to trading on such Exchange, on the principal national
securities exchange on which the Common Shares are listed or admitted to
trading or, if not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by any
New York Stock Exchange member firm selected from time to time by the Company
for that purpose.
(c) The conversion right set forth herein shall expire at the close
of business on May 1, 1994. In case a Debenture or portion thereof is called
for redemption, such conversion right in respect of the Debenture or portion
so called shall expire at the close of business on the Redemption Date, unless
the Company defaults in making the payment due upon redemption.
(d) The price at which Common Shares shall be delivered upon
conversion pursuant to clause (i) of paragraph (a) of this Section 1201
(herein called the (conver-sion price") shall be initially $15.00 for each
Common Share payable as set forth
14
<PAGE>
above. In the case of any Common Shares issued pursuant to clause (i) of
paragraph (a) above, the portion of the conversion price with respect to
a Common Share to be paid by the cancellation of Debentures is here
called the "Canceled Debenture Portion" of the conversion price, and the
portion of such conversion price to be paid in cash is herein called the
"Cash Portion" of the conversion price. The conversion price shall be
adjusted in certain instances as provided in paragraphs (1), (2), (3),
(4), (7) and (9) of Section 1204."
Section 1.3. Fractions of Shares.
--------------------
Section 1203 of the Original Indenture is hereby amended to read in
full as follows:
"Section 1203. Fractions of Shares.
--------------------
No fractional Common Shares shall be issued upon conversion of
Debentures. If more than one Debenture shall be surrendered for
conversion at one time by the same Holder, the number of full shares
which shall be issuable upon conversion thereof shall be computed on
the basis of the aggregate principal amount of the Debentures (or
specified portions thereof) so surrendered. In the case of any Common
Shares to be issued upon the conversion of Debentures pursuant to
Section 1201 (a) (i), instead of any fractional Common Share which
would otherwise be issuable upon conversion of any Debenture or
Debentures (or specified portions thereof), the Company shall pay a
cash adjustment equal to the portion of the principal amount of any
Debenture (up to a Maximum of $14.99) which cannot be applied toward
the payment of the Canceled Debenture Portion of the conversion price
(as determined by the Board of Directors or in any manner prescribed by
the Board of Directors). In the case of any Common Shares to be issued
upon the conversion of Debentures pursuant to Section 1201 (a) (ii), no
cash adjustment payment shall be made with respect to any fractional
Common Share which would otherwise be issuable."
Section 1.4. Adjustment of Conversion Price.
-------------------------------
Section 1204 (9) of the Original Indenture is hereby amended to read in
full as follows:
"(9) In the case of any Common Shares to be issued upon the
conversion of Debentures pursuant to Section 1201 (a) (i), any
adjustment to be made to the conversion price pursuant to this Section
shall be effected by adjusting the Canceled Debenture Portion of the
conversion price by an amount equal to 50% of the total amount of the
adjustment to be made and by adjusting the Cash Portion of the con-
version by an amount equal to 50% of the total amount of the adjustment
to be made."
ARTICLE TWO
MISCELLANEOUS PROVISIONS
Section 2.1. Relation to the Original Indenture.
-----------------------------------
This First Supplemental Indenture and all the terms and provisions
herein contained shall form a part of the Indenture as fully and with the same
effect as if all such terms and provisions had been set forth in the Original
Indenture and each and every term and condition contained in the Original
Indenture shall apply to this First Supplemental Indenture with the same force
and effect as if the same were in this First Supplemental Indenture set forth
in full, with such omissions, variations and modifications thereof as may be
appropriate to make each such term and condition conform to this First
Supplemental Indenture. The Original Indenture is hereby ratified and
confirmed and shall remain and continue in full force and effect in accordance
with the terms and provisions thereof, as supplemented and amended by this
First Supplemental Indenture, and the Original Indenture and this First
Supplemental Indenture shall be read, taken and construed together as one
instrument. All references to the "Indenture" in the Original Indenture and
the Debentures shall be deemed to be references to the Original Indenture as
amended by this First Supplemental Indenture. Except as expressly amended
thereby, the terms and conditions of the Original Indenture shall remain in
full force and effect.
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<PAGE>
Section 2.2. No Responsibility of Trustee for Recitals, etc.
-----------------------------------------------
The Trustee shall not be responsible in any manner whatsoever for or
with respect to any of the recitals or statements contained herein, all of
which recitals or statements are made solely by the Company, or for or with
respect to (i) the validity, efficacy, or sufficiency of this First
Supplemental Indenture or any of the terms or provisions hereof, (ii) the
proper authorization hereof by corporate action of the Company, (iii) the due
execution hereof by the Company or (iv) the consequences, direct or indirect
(and whether deliberate or inadvertent), of any amendment herein provided for,
and the Trustee makes no representation with respect to such matters.
Section 2.3. Meaning of Terms.
-----------------
All capitalized terms used in this First Supplemental Indenture but not
defined herein shall have the meanings specified in the Original Indenture.
Section 2.4. Notice to Holders and Form of Reverse of Debentures
---------------------------------------------------
(a) Upon the effectiveness of this First Supplemental Indenture, the
Trustee shall notify each Holder of such effectiveness; however the form of
Debenture for Debentures currently outstanding shall not change.
(b) Debentures authenticated and delivered after the effectiveness of
this First Supplemental Indenture shall contain the amendments to the reverse
set forth in Section 1.1 of this First Supplemental Indenture.
Section 2.5. Multiple Originals
------------------
The parties may sign any number of copies of this First Supplemental
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 First
Supplemental Indenture. The parties may sign this First Supplemental
Indenture in counterparts.
Section 2.6. Effectiveness.
--------------
The First Supplemental Indenture shall be effective when executed by
each of the parties hereto.
Section 2.7. Successors and Assigns.
-----------------------
All the covenants, stipulations, promises and agreements in the First
Supplemental Indenture contained by or on behalf of the Company shall bind its
successors and assigns, whether so expressed or not.
Section 2.8. Governing Law.
--------------
The laws of the State of New York shall govern this First Supplemental
Indenture.
IN WITNESS WHEREOF, the parties hereby have caused this First
Supplemental Indenture to be executed on their behalf by their duly authorized
officers all as of the day and year first above written.
Attest: CONTINENTAL CAN COMPANY, INC.
/s/ Linda Driscoll By: /s/ Abdo Yazgi
---------------------- -------------------
Attest: UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
/s/ B. Eising By: /s/ Patricia Stermer
---------------------- -----------------------
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