<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-----------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (date of earliest event reported): May 20, 1998
OWENS-ILLINOIS, INC.
-----------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 1-9576 22-2781933
- -------------------------------- ------------------------ ----------------------
<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
Incorporation) Identification Number)
</TABLE>
One SeaGate, Toledo, Ohio 43666
-----------------------------------------------------
(Address of principal executive offices) (Zip Code)
(419) 247-5000
-----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ITEM 5. OTHER EVENTS
On May 20, 1998, Owens-Illinois, Inc. (the "Company") completed
underwritten offerings of $350,000,000 of its 7.15% Senior Notes due 2005 (the
"7-Year Notes"), $250,000,000 of its 7.35% Senior Notes due 2008 (the "10-Year
Notes"), $250,000,000 of its 7.50% Senior Debentures due 2010 (the "12-Year
Debentures") and $250,000,000 of its 7.80% Senior Debentures due 2018 (the
"20-Year Debentures" and, together with the 7-Year Notes, the 10-Year Notes, and
the 12-Year Debentures, the "Debt Securities") under its shelf registration
statement (Registration No. 333-47519) declared effective by the Securities and
Exchange Commission on April 20, 1998 (the "Registration Statement") (which
Registration Statement also constitutes, pursuant to Rule 429 under the
Securities Act of 1933, as amended, Post-Effective Amendment No. 1 to
registration statement No. 333-25175, as amended), a Prospectus, dated April 20,
1998, and four related Prospectus Supplements, dated May 14, 1998.
The 7-Year Notes were priced to the public at 99.817% of par value, the
10-Year Notes were priced to the public at 99.716% of par value, the 12-Year
Debentures were priced to the public at 99.682% of par value, and the 20-Year
Debentures were priced to the public at 99.982% of par value, with accrued
interest in each case from May 20, 1998. The sale of the 7-Year Notes was
underwritten by Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, First Chicago Capital Markets, Inc., Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon
Brothers Inc and Scotia Capital Markets (USA) Inc. pursuant to an Underwriting
Agreement attached as Exhibit 1.1 hereto. The sale of the 10-Year Notes was
underwritten by Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon
Brothers Inc and Scotia Capital Markets (USA) Inc. pursuant to an Underwriting
Agreement attached as Exhibit 1.2 hereto. The sale of the 12-Year Debentures was
underwritten by Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Nationsbanc Montgomery Securities LLC and Salomon Brothers Inc
pursuant to an Underwriting Agreement attached as Exhibit 1.3 hereto. The sale
of the 20-Year Debentures was underwritten by Morgan Stanley & Co. Incorporated,
BT Alex. Brown Incorporated, Credit Suisse First Boston Corporation, Goldman,
Sachs & Co., Lehman Brothers Inc., Nationsbanc Montgomery Securities LLC and
Salomon Brothers Inc pursuant to an Underwriting Agreement attached as Exhibit
1.4 hereto.
The terms and conditions of the Debt Securities and related matters are
set forth in the following documents: (i) the Indenture, dated as of May 20,
1998 by and between the Company and The Bank of New York, as trustee, filed as
Exhibit 4.1 hereto; (ii) with respect to the 7-Year Notes, pursuant to
Article 2.01 of the Indenture, the Officers' Certificate, filed as Exhibit 4.2
hereto, (iii) with respect to the 10-Year Notes, pursuant to Article 2.01 of the
Indenture, the Officers' Certificate, filed as Exhibit 4.3 hereto, (iv) with
respect to the 12-Year Debentures, pursuant to Article 2.01 of the Indenture,
the Officers' Certificate, filed as Exhibit 4.4 hereto and (v) with respect to
the 20-Year Debentures, pursuant to Article 2.01 of the Indenture, the Officers'
Certificate, filed as Exhibit 4.5 hereto.
1
<PAGE>
On May 20, 1998, the Company also completed an underwritten offering of
15,690,000 shares of the Company's common stock (including the over-allotment
option of 1,890,000 shares), par value $.01 per share (the "Common Stock") under
the Registration Statement, a Prospectus, dated April 20, 1998, and the related
Prospectus Supplement, dated May 14, 1998. The shares of Common Stock were
offered by Smith Barney Inc., BT Alex. Brown Incorporated, Credit Suisse First
Boston Corporation, Goldman, Sachs & Co., Lehman Brothers Inc., Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Morgan Stanley & Co. Incorporated
pursuant to an Underwriting Agreement attached as Exhibit 1.5 hereto. The shares
of Common Stock were priced to the public at $41.8125 per share.
On May 20, 1998, the Company also completed an underwritten offering of
9,050,000 shares of the Company's $2.375 Convertible Preferred Stock
(liquidation preference $50.00 per share) (including the over-allotment option
of 1,050,000 shares) under the Registration Statement, a Prospectus, dated
April 20, 1998, and the related Prospectus Supplement, dated May 14, 1998. The
shares of Common Stock were offered by Smith Barney Inc., BT Alex. Brown
Incorporated, Goldman, Sachs & Co. and Lehman Brothers Inc. pursuant to an
Underwriting Agreement attached as Exhibit 1.6 hereto. The shares of Convertible
Preferred Stock were priced to the public at $50.00 per share with an initial
conversion price of $52.68 per share of Common Stock. A complete description of
the Convertible Preferred Stock is set forth in the Certificate of Designation
filed as Exhibit 4.10 hereto.
2
<PAGE>
ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits: The following exhibits are filed as part of this Report and
as exhibits to the Registration Statement.
1.1 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, First Chicago Capital Markets, Inc., Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Brothers Inc and Scotia Capital Markets (USA)
Inc.
1.2 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Brothers Inc and Scotia Capital Markets (USA)
Inc.
1.3 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Lehman Brothers Inc., Nationsbanc Montgomery Securities LLC and Salomon
Brothers Inc.
1.4 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Nationsbanc Montgomery Securities LLC and Salomon
Brothers Inc.
1.5 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Smith Barney Inc., BT Alex. Brown Incorporated, Credit Suisse
First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley &
Co. Incorporated.
1.6 Underwriting Agreement, dated as of May 14, 1998, among Owens-
Illinois, Inc., Smith Barney Inc., BT Alex. Brown Incorporated,
Goldman, Sachs & Co. and Lehman Brothers Inc.
4.1 Indenture, dated as of May 20, 1998, between Owens-Illinois, Inc. and
The Bank of New York, as Trustee.
4.2 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.15% Senior Notes due 2005.
4.3 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.35% Senior Notes due 2008.
3
<PAGE>
4.4 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.50% Senior Notes due 2010.
4.5 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.80% Senior Notes due 2018.
4.6 Form of 7.15% Senior Note due 2005 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.2 to this Report).
4.7 Form of 7.35% Senior Note due 2008 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.3 to this Report)
4.8 Form of 7.50% Senior Note due 2010 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.4 to this Report).
4.9 Form of 7.80% Senior Note due 2018 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.5 to this Report).
4.10 Certificate of Designation of Convertible Preferred Stock.
4.11 Form of Convertible Preferred Stock Certificate (filed as Exhibit 4.2
to the Registrant's Registration Statement on Form 8-A, and
incorporated herein by reference).
4
<PAGE>
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 hereunto duly authorized.
OWENS-ILLINOIS, INC.
Dated: May 26, 1998 By: /s/ Lee A. Wesselmann
----------------------------
Lee A. Wesselmann
Senior Vice President and
Chief Financial Officer
5
<PAGE>
EXHIBIT INDEX
Exhibit
1.1 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, Credit Suisse First Boston
Corporation, First Chicago Capital Markets, Inc., Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Brothers Inc and Scotia Capital Markets (USA)
Inc.
1.2 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Brothers Inc and Scotia Capital Markets (USA)
Inc.
1.3 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BancAmerica Robertson
Stephens, Credit Suisse First Boston Corporation, Goldman, Sachs & Co.,
Lehman Brothers Inc., Nationsbanc Montgomery Securities LLC and Salomon
Brothers Inc.
1.4 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated,
Credit Suisse First Boston Corporation, Goldman, Sachs & Co., Lehman
Brothers Inc., Nationsbanc Montgomery Securities LLC and Salomon
Brothers Inc.
1.5 Underwriting Agreement, dated as of May 14, 1998, among Owens-Illinois,
Inc., Smith Barney Inc., BT Alex. Brown Incorporated, Credit Suisse
First Boston Corporation, Goldman, Sachs & Co., Lehman Brothers Inc.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated and Morgan Stanley &
Co. Incorporated.
1.6 Underwriting Agreement, dated as of May 14, 1998, among Owens-
Illinois, Inc., Smith Barney Inc., BT Alex. Brown Incorporated,
Goldman, Sachs & Co. and Lehman Brothers Inc.
4.1 Indenture, dated as of May 20, 1998, between Owens-Illinois, Inc. and
The Bank of New York, as Trustee.
4.2 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.15% Senior Notes due 2005.
4.3 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.35% Senior Notes due 2008.
6
<PAGE>
4.4 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.50% Senior Notes due 2010.
4.5 Officers' Certificate, dated May 20, 1998, establishing the terms of
the 7.80% Senior Notes due 2018.
4.6 Form of 7.15% Senior Note due 2005 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.2 to this Report).
4.7 Form of 7.35% Senior Note due 2008 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.3 to this Report)
4.8 Form of 7.50% Senior Note due 2010 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.4 to this Report).
4.9 Form of 7.80% Senior Note due 2018 (attached as Annex A to the
Officers' Certificate filed as Exhibit 4.5 to this Report).
4.10 Certificate of Designation of Convertible Preferred Stock.
4.11 Form of Convertible Preferred Stock Certificate (filed as Exhibit 4.2
to the Registrant's Registration Statement on Form 8-A, and
incorporated herein by reference).
7
<PAGE>
Exhibit 1.1
OWENS-ILLINOIS, INC.
$350,000,000 7.15% Senior Notes due 2005
UNDERWRITING AGREEMENT
May 14, 1998
<PAGE>
May 14, 1998
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
FIRST CHICAGO CAPITAL MARKETS, INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
SCOTIA CAPITAL MARKETS (USA) INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $350,000,000 principal amount of its 7.15% Senior
Notes due 2005 (the "Securities") to be issued pursuant to the provisions of an
Indenture dated as of May 20, 1998 (the "Indenture") by and between the Company
and The Bank of New York, as Trustee (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"),
Post-Effective Amendment No. 1 to the Registration Statement (File No.
333-25175), as amended, relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act. Such
registration statements, as amended, have been declared effective by the
Commission, and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). In addition, the Company has
prepared and filed with the Commission the Preliminary Prospectus (as defined
herein) pursuant to Rule 424(b) under the Securities Act in accordance with Rule
424(b) under the Securities Act.
The terms which follow, when used in this
Agreement, shall have the meanings indicated. The term "the
<PAGE>
Effective Date" shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become effective.
"Execution Time" shall mean the date and time that this Agreement is executed
and delivered by the parties hereto. "Preliminary Prospectus" shall mean any
preliminary prospectus, including any preliminary prospectus supplement, used in
connection with the offer of any Securities prior to the date hereof and any
preliminary prospectus included in the Registration Statement at the Effective
Date. "Prospectus" shall mean the prospectus, including any prospectus
supplement relating to the Securities, that is first filed pursuant to Rule
424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date. "Registration
Statement" shall mean the registration statement (File No. 333-47519) referred
to above, including incorporated documents and financial statements, as amended
at the Execution Time and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as defined herein), shall also mean
such registration statement as so amended. Any reference herein to the
Registration Statement, a Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") on or before the Effective
Date of the Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
1. Representations and Warranties. (a) The
Company represents and warrants, as of the date hereof and
as of the Closing Date, to and agrees with each of the
Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under
the Securities Act. The Registration Statement, at the time the
Registration Statement became effective, as of the Closing Date and as
amended or supplemented, if applicable, and the Prospectus, when it is
first filed in accordance with Rule 424(b) under the Securities Act and on
the Closing Date, complied and will comply, as the case may be, in all
material respects with the requirements of the
2
<PAGE>
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply (A) to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus or (B) to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act (Form T-1) of the Trustee under the Indenture.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein
3
<PAGE>
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young (Australia), who
are reporting upon the audited financial statements and schedules included
or incorporated by reference in the Registration Statement and the
Prospectus, each as amended or supplemented, if applicable, are
independent public accountants as required by the Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the Preliminary
Prospectus and the Prospectus under the heading "Unaudited Pro Forma
Condensed Consolidated Financial Information" have been prepared on a
basis consistent with the historical statements referred to in (vi) above,
except for the pro forma adjustments specified therein, and (A) include
all material adjustments to the historical financial data required by Rule
11-02 of Regulation S-X necessary to reflect the Acquisition and the
related financing and the Offerings (each as defined in the Preliminary
Prospectus or the Prospectus), (B) give effect to the assumptions made on
a reasonable basis, (C) present fairly in all material respects, the
historical and proposed transactions contemplated by the Preliminary
Prospectus and the Prospectus and (D) comply in all material respects with
the requirements of Rules 11-01 and 11-02 of Regulation S-X; and the other
pro forma financial information and pro forma financial data set forth in
the Prospectus under the captions "Summary --Summary Historical and Pro
Forma Financial Data" and "Consolidated Capitalization" are derived from
such
4
<PAGE>
"Unaudited Pro Forma Condensed Consolidated Financial
Information."
(viii) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has
the corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to transact
business and is in good standing in each jurisdiction in which the conduct
of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or otherwise),
properties, assets, business or results of operations of the Company and
its subsidiaries, considered as one enterprise (a "Material Adverse
Effect").
(ix) Each subsidiary of the Company that is a "Significant Subsidiary"
(as defined in Rule 1-02 of Regulation S-X under the Securities Act)
(hereinafter a "Significant Subsidiary") has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain
5
<PAGE>
securities of the Company, who have the right to request the Company to
register securities held by them under the Securities Act, except for the
Registration Rights Agreement dated as of March 17, 1986 by and among OII
Holdings Corporation (the predecessor in interest to the Company), KKR
Partners II, L.P., OII Associates, L.P., OII Associates II, L.P. and KKR
Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Company has the corporate power and authority to execute
and deliver the Indenture and to perform its obligations provided for
therein; the Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company substantially in the form
filed as an exhibit to the Registration Statement and, when executed and
delivered by the Company and assuming due execution and delivery by the
Trustee, will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and as rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability (whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture conforms in all material respects to the description thereof
contained in the Prospectus.
(xv) The Company has the corporate power and authority to execute,
issue and deliver the Securities and to incur and perform its obligations
provided for therein; the Securities have been duly authorized and, when
executed, issued and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and
6
<PAGE>
as rights of acceleration, if any, and the availability of equitable
remedies may be limited by equitable principles of general applicability
(whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the knowledge of the
Company, in violation of or has violated any permit, certificate, license,
order or other approval or authorization required in connection with the
operation of its business that, with respect to each of clause (A), (B)
and (C) of this paragraph, would (individually or in the aggregate) (I)
adversely affect the legality, validity or enforceability of this
Agreement, the Indenture or the Securities, (II) have a Material Adverse
Effect or (III) impair the ability of the Company to fully perform on a
timely basic any
7
<PAGE>
obligations that it has under this Agreement, the Indenture or the
Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Indenture, the compliance by the Company with the terms herein and
therein and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus, do not and will not result in a violation of any of the terms
or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any conflict, breach or violation
that would not have a Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for (A) the due authorization, execution,
delivery and performance by the Company of this Agreement and the
Indenture or the valid authorization, issuance, sale and delivery of the
Securities, except (I) such as may be required by the securities or blue
sky laws of the various states (the "Blue Sky laws") in connection with
the offer and sale of the Securities and (II) for such authorizations,
approvals, consents or orders of, or qualifications with, any governmental
body or agency that are required and have been received and are in full
force and effect as of the Closing Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company,
8
<PAGE>
threatened, against or affecting the Company or any of its subsidiaries or
any of their properties and assets that (A) is required to be disclosed in
the Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or the Indenture or any of the transactions contemplated hereby
or thereby or (D) questions the legality or validity of any such
transaction or seeks to recover damages or obtain other relief in
connection with any such transaction, and, in each case to the knowledge
of the Company, there is no valid basis for any such action, suit,
investigation or proceeding; the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their properties and assets that are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to its business, would not have a
Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
9
<PAGE>
(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
10
<PAGE>
(xxviii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to the terms and conditions set forth herein, to sell to the several
Underwriters, and, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, each Underwriter
agrees, severally and not jointly, to purchase from the Company (A) the
respective principal amounts of Securities set forth in Schedule I hereto
opposite its name at 98.692% of their respective principal amounts (the
"Securities Purchase Price") plus accrued interest, if any, from May 20, 1998 to
the date of payment and delivery, calculated on the basis of a 360-day year of
twelve 30-day months.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to the public initially at 99.817% of their
principal amount (the "Securities Public Offering Price") plus accrued interest,
if any, from May 20, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.50% of their principal amount under the Securities Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of .25% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company by wire transfer in federal funds or other funds immediately
available in New York City or through the facilities of The Depository Trust
Company of the Securities Purchase Price against delivery of
11
<PAGE>
such Securities for the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on May 20, 1998, or at such other time on the same or
such other date, not later than May 26, 1998, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of global certificates
representing the Securities registered in the name of Cede & Co. with any
transfer taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid.
The Company agrees to have the global certificates referred to above
available for inspection and checking by Morgan Stanley & Co. Incorporated in
New York, New York, not later than 1:00 P.M., New York City time on the business
day prior to the Closing Date.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g) (2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock.
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by
12
<PAGE>
the Chairman of the Board or the President or a Vice President and the
Treasurer or Controller of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility of the Trustee on
Form T-1. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel has assumed
that the statements made therein (or incorporated by reference
therein) are correct and complete;
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the
13
<PAGE>
effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings therefor have been initiated
or threatened by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) under the Securities Act has been
made in accordance with Rule 424(b) under the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Indenture has been (A) duly qualified under the Trust
Indenture Act and (B) duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by the Trustee, will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except (i) as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors, (ii) as may be limited by the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the
enforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to liability where such
indemnification or contribution is contrary to public policy; (iv)
such counsel shall not be required to express any opinion concerning
the enforceability of the waiver or right or defenses contained in
Section 4.06 of the Indenture; and (v) the manner by which the
acceleration of the Securities may affect the collectibility of that
portion of the stated principal amount thereof which might be
determined to constitute unearned interest thereon;
(vi) the Securities, when executed and authenticated in
accordance with the terms of the
14
<PAGE>
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms except (i) as may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) as may be
limited by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the enforceability under certain circumstances under
law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to
liability where such indemnification or contribution is contrary to
public policy; (iv) such counsel shall not be required to express
any opinion concerning the enforceability of the waiver or rights or
defenses contained in Section 4.06 of the Indenture; and (v) the
manner by which the acceleration of the Securities may affect the
collectibility of that portion of the stated principal amount
thereof which might be determined to constitute unearned interest
thereon;
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (i) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (ii) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
15
<PAGE>
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement and the Indenture or the
issuance and sale of the Securities by the Company, except (A) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities and
(B) except such as have been obtained or made;
(ix) the statements set forth in the Prospectus under the
caption "Description of the Notes" insofar as such statements
constitute summaries of the documents referred to therein, are
accurate in all material respects; and the Securities conform in all
material respects to the description thereof incorporated by
reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" insofar
as such statements constitute a summary of legal matters, are
accurate in all material respects; and
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and have not made any independent check or
verification thereof (except as set forth in paragraphs (ix) and (x) above),
during the course of such participation, no facts came to such counsel's
attention that caused such counsel to believe that the Registration Statement
(including the incorporated documents), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (including the incorporated documents),
16
<PAGE>
as of its date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted 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; it being understood that such
counsel express no belief with respect to the financial statements, schedule and
other financial data or the Statement of Eligibility of the Trustee on Form T-1
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver
17
<PAGE>
the foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.1.);
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) (B) the
breach of or default under (I) any indenture or other agreement or
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such counsel;
(vi) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its
18
<PAGE>
subsidiaries is a party or to which any of the properties or assets
of the Company or any of its subsidiaries is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described therein; or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required, except such exhibits which are
permitted, pursuant to the Securities Act, to be filed subsequently
on a Current Report on Form 8-K; and
(vii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-1. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or
19
<PAGE>
contains an untrue statement of a material fact or omitted 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; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial data included or
incorporated by reference in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder
and the Trust Indenture Act and the regulations thereunder, and neither
the Registration Statement nor the Prospectus, as they may then be amended
or supplemented, shall 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, in the case of the Prospectus, in the
light of the circumstances under which they were made, not misleading;
(ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus
other than as set forth therein and no proceedings shall be pending or, to
the knowledge of the Company, threatened against it or any of its
subsidiaries before
20
<PAGE>
or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect, other than as set forth in the Prospectus; (iv)
the Company shall have complied with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement and the Indenture, each as contemplated in this Agreement, shall
be reasonably satisfactory in form and substance to you and to your
counsel.
(i) If Securities are to be listed on the New York Stock Exchange
(the "NYSE"), such Securities shall have been duly authorized for listing
on the NYSE at or by the Closing Date, subject only to official notice of
issuance thereof and notice of a satisfactory distribution of the
Securities.
21
<PAGE>
(j) Prior to the Closing Date, the Company shall have furnished to
Morgan Stanley & Co. Incorporated such further information, certificates
and documents as Morgan Stanley & Co. Incorporated may reasonably request.
(k) On or prior to the Closing Date, the Company shall have (i)
completed the public offering of 13,800,000 shares of its Common Stock,
par value $.01 per share, as contemplated by the Prospectus Supplement
dated May 14, 1998 relating thereto and the accompanying Prospectus dated
April 20, 1998 and (ii) completed the public offering of 8,000,000 shares
of its Convertible Preferred Stock, par value of $.0l per share, as
contemplated by the Prospectus Supplement dated May 14, 1998 relating
thereto and the accompanying Prospectus dated April 20, 1998.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10(a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second
22
<PAGE>
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required under the Securities Act;
to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein;
(b) To furnish to each of Morgan Stanley & Co. Incorporated and its
counsel, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto)
and, during the period mentioned in paragraph (d) below, as many copies of
the Preliminary Prospectus and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
23
<PAGE>
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing of any
supplement to the Preliminary Prospectus or the Prospectus or any document
to be filed pursuant to the Exchange Act which will be incorporated by
reference into the Registration Statement, Preliminary Prospectus or the
Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, the Preliminary Prospectus or the
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary
Prospectus or the Prospectus or for additional information and (v) 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. The Company will make every commercially reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain, as soon as possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act, the Exchange Act and the Trust Indenture Act and the
regulations thereunder so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and the Prospectus;
and the Company, during the period when the Preliminary Prospectus and the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13 or 14 of the Exchange Act within the time periods required
under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect
24
<PAGE>
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period covered
thereby a consolidated earnings statement for a twelve-month period
beginning after the effective date (as defined in Rule 158(c) under the
Securities Act) of the Registration Statement relating to such Securities,
but not later than the first day of the Company's fiscal quarter next
following such effective date and that otherwise satisfies the provisions
of Section 11(a) of the Securities Act and the regulations thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) any debt securities of
the Company with a maturity of less than one year), without the prior
written consent of Morgan Stanley & Co. Incorporated.
(l) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the
25
<PAGE>
Securities; (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel; (iv) the qualification of
the Securities under the state securities or blue sky laws in accordance
with the provisions of Section 6(g) herein, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the preliminary and
final state securities laws or blue sky surveys (the "Blue Sky Surveys")
or any Legal Investment Memoranda; (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of each Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of the Blue
Sky Surveys or any Legal Investment Memoranda; (vii) any fees charged by
rating agencies for the rating of the Securities or the listing, if any,
of the Securities on the NYSE; (viii) the filing fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc. (the "NASD") made in connection with the offering
of the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) document
production charges, if any, of counsel to the Underwriters incurred in
connection with the preparation of the Indenture.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter
26
<PAGE>
through you expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of Securities to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities unless such failure is the result of
non-compliance by the Company with Section 7(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding 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. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
27
<PAGE>
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a)
above and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (not to be
unreasonably withheld), but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless (i) such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 8 is unavailable to an indemnified party or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
28
<PAGE>
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this
29
<PAGE>
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. Morgan Stanley & Co. Incorporated may terminate
this Agreement by notice to the Company, at any time at or prior to the Closing
Date (a) if there has been, since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any Material Adverse
Change, or any development involving a prospective Material Adverse Change or
(b) if there has occurred any new outbreak of hostilities or escalation of
existing hostilities or other calamity or crisis the effect of which on the
financial markets in the United States is such as to make it, in your judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, or (c) if trading in any securities of the Company has been
suspended on any exchange or in any over-the-counter market or by the
Commission, or if trading generally on the NYSE has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission or
any other governmental authority or (d) if a general moratorium on commercial
banking activities in New York State has been declared by either federal or New
York State authorities.
11. Defaulting Underwriters. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase and pay for the
Securities that it has or
30
<PAGE>
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase and pay
for the Securities and the aggregate principal amount of Securities with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
12. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
(a) if to the Underwriters:
Morgan Stanley & Co. Incorporated
440 South LaSalle Street
Chicago, Illinois 60605
Facsimile No.: (312) 706-4701
Attention: Francis Oelerich III
31
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.: (419) 247-2226
Attention: Thomas L. Young, Esq.
General Counsel
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
17. Authority of Representative. Morgan Stanley & Co. Incorporated
hereby represents and warrants to the Company that it has the authority to act
as agent on behalf of the Underwriters named in Schedule I and the Company shall
be
32
<PAGE>
entitled to rely upon statements, notices, requests and agreements made by
Morgan Stanley & Co. Incorporated on behalf of the Underwriters.
Very truly yours,
OWENS-ILLINOIS, INC.
By: /s/ David G. Van Hooser
-------------------------------
Name: David G. Van Hooser
Title: Senior Vice President
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
FIRST CHICAGO CAPITAL MARKETS, INC.
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
SCOTIA CAPITAL MARKETS (USA) INC.
Acting severally on behalf
of themselves and the several
Underwriters named herein
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Francis J. Oelerich III
--------------------------------------
Name: Francis J. Oelerich III
Title: Managing Director
33
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount
of 7.15% Senior
Notes due 2005
Underwriter To Be Purchased
- ----------- ---------------
<S> <C>
Morgan Stanley & Co.
Incorporated ............................... $140,000,000
Credit Suisse First Boston
Corporation ................................ 30,000,000
First Chicago Capital
Markets, Inc. .............................. 30,000,000
Goldman, Sachs & Co. ....................... 30,000,000
Lehman Brothers Inc. ....................... 30,000,000
Merrill Lynch,
Pierce Fenner & Smith Inc. ................. 30,000,000
Salomon Brothers Inc ....................... 30,000,000
Scotia Capital Markets (USA)
Inc. ....................................... 30,000,000
Total ...................................... $350,000,000
============
</TABLE>
<PAGE>
Schedule II
Upon the consummation of the Senior Note Offerings, 100% of the
shares of capital stock of each Significant Subsidiary will be, directly or
indirectly, owned by the Company free and clear of any material lien, except
that the Company owns approximately 99% of the outstanding shares of AVIR S.p.A.
<PAGE>
Exhibit 1.2
OWENS-ILLINOIS, INC.
$250,000,000 7.35% Senior Notes due 2008
UNDERWRITING AGREEMENT
May 14, 1998
<PAGE>
May 14, 1998
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
SCOTIA CAPITAL MARKETS (USA) INC.
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $250,000,000 principal amount of its 7.35% Senior
Notes due 2008 (the "Securities") to be issued pursuant to the provisions of an
Indenture dated as of May 20, 1998 (the "Indenture") by and between the Company
and The Bank of New York, as Trustee (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"),
Post-Effective Amendment No. 1 to the Registration Statement (File No.
333-25175), as amended, relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act. Such
registration statements, as amended, have been declared effective by the
Commission, and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). In addition, the Company has
prepared and filed with the Commission the Preliminary Prospectus (as defined
herein) pursuant to Rule 424(b) under the Securities Act in accordance with Rule
424(b) under the Securities Act.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the
<PAGE>
Effective Date" shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become effective.
"Execution Time" shall mean the date and time that this Agreement is executed
and delivered by the parties hereto. "Preliminary Prospectus" shall mean any
preliminary prospectus, including any preliminary prospectus supplement, used in
connection with the offer of any Securities prior to the date hereof and any
preliminary prospectus included in the Registration Statement at the Effective
Date. "Prospectus" shall mean the prospectus, including any prospectus
supplement relating to the Securities, that is first filed pursuant to Rule
424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the Securities
included in the Registration Statement at the Effective Date. "Registration
Statement" shall mean the registration statement (File No. 333-47519) referred
to above, including incorporated documents and financial statements, as amended
at the Execution Time and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as defined herein), shall also mean
such registration statement as so amended. Any reference herein to the
Registration Statement, a Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") on or before the Effective
Date of the Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement became effective, as of the Closing Date and as amended or
supplemented, if applicable, and the Prospectus, when it is first filed in
accordance with Rule 424(b) under the Securities Act and on the Closing
Date, complied and will comply, as the case may be, in all material
respects with the requirements of the
2
<PAGE>
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply (A) to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus or (B) to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act (Form T-1) of the Trustee under the Indenture.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein
3
<PAGE>
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young (Australia), who are
reporting upon the audited financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus, each as amended or supplemented, if applicable, are
independent public accountants as required by the Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings (each as defined in the
Preliminary Prospectus or the Prospectus), (B) give effect to the
assumptions made on a reasonable basis, (C) present fairly in all material
respects, the historical and proposed transactions contemplated by the
Preliminary Prospectus and the Prospectus and (D) comply in all material
respects with the requirements of Rules 11-01 and 11-02 of Regulation S-X;
and the other pro forma financial information and pro forma financial data
set forth in the Prospectus under the captions "Summary -- Summary
Historical and Pro Forma Financial Data" and "Consolidated Capitalization"
are derived from such
4
<PAGE>
"Unaudited Pro Forma Condensed Consolidated Financial Information."
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, assets, business or results of operations of the
Company and its subsidiaries, considered as one enterprise (a "Material
Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain
5
<PAGE>
securities of the Company, who have the right to request the Company to
register securities held by them under the Securities Act, except for the
Registration Rights Agreement dated as of March 17, 1986 by and among OII
Holdings Corporation (the predecessor in interest to the Company), KKR
Partners II, L.P., OII Associates, L.P., OII Associates II, L.P. and KKR
Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Company has the corporate power and authority to execute
and deliver the Indenture and to perform its obligations provided for
therein; the Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company substantially in the form
filed as an exhibit to the Registration Statement and, when executed and
delivered by the Company and assuming due execution and delivery by the
Trustee, will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and as rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability (whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture conforms in all material respects to the description thereof
contained in the Prospectus.
(xv) The Company has the corporate power and authority to execute,
issue and deliver the Securities and to incur and perform its obligations
provided for therein; the Securities have been duly authorized and, when
executed, issued and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and
6
<PAGE>
as rights of acceleration, if any, and the availability of equitable
remedies may be limited by equitable principles of general applicability
(whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the knowledge of the
Company, in violation of or has violated any permit, certificate, license,
order or other approval or authorization required in connection with the
operation of its business that, with respect to each of clause (A), (B)
and (C) of this paragraph, would (individually or in the aggregate) (I)
adversely affect the legality, validity or enforceability of this
Agreement, the Indenture or the Securities, (II) have a Material Adverse
Effect or (III) impair the ability of the Company to fully perform on a
timely basis any
7
<PAGE>
obligations that it has under this Agreement, the Indenture or the
Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Indenture, the compliance by the Company with the terms herein and
therein and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus, do not and will not result in a violation of any of the terms
or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any conflict, breach or violation
that would not have a Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for (A) the due authorization, execution,
delivery and performance by the Company of this Agreement and the
Indenture or the valid authorization, issuance, sale and delivery of the
Securities, except (I) such as may be required by the securities or blue
sky laws of the various states (the "Blue Sky laws") in connection with
the offer and sale of the Securities and (II) for such authorizations,
approvals, consents or orders of, or qualifications with, any governmental
body or agency that are required and have been received and are in full
force and effect as of the Closing Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company,
8
<PAGE>
threatened, against or affecting the Company or any of its subsidiaries or
any of their properties and assets that (A) is required to be disclosed in
the Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or the Indenture or any of the transactions contemplated hereby
or thereby or (D) questions the legality or validity of any such
transaction or seeks to recover damages or obtain other relief in
connection with any such transaction, and, in each case to the knowledge
of the Company, there is no valid basis for any such action, suit,
investigation or proceeding; the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their properties and assets that are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to its business, would not have a
Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
9
<PAGE>
(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
10
<PAGE>
(xxviii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to the terms and conditions set forth herein, to sell to the several
Underwriters, and, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, each Underwriter
agrees, severally and not jointly, to purchase from the Company (A) the
respective principal amounts of Securities set forth in Schedule I hereto
opposite its name at 98.466% of their respective principal amounts (the
"Securities Purchase Price") plus accrued interest, if any, from May 20, 1998 to
the date of payment and delivery, calculated on the basis of a 360-day year of
twelve 30-day months.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to the public initially at 99.716% of their
principal amount (the "Securities Public Offering Price") plus accrued interest,
if any, from May 20, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.55% of their principal amount under the Securities Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of .30% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company by wire transfer in federal funds or other funds immediately
available in New York City or through the facilities of The Depository Trust
Company of the Securities Purchase Price against delivery of
11
<PAGE>
such Securities for the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on May 20, 1998, or at such other time on the same or
such other date, not later than May 26, 1998, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of global certificates
representing the Securities registered in the name of Cede & Co. with any
transfer taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid.
The Company agrees to have the global certificates referred to above
available for inspection and checking by Morgan Stanley & Co. Incorporated in
New York, New York, not later than 1:00 P.M., New York City time on the business
day prior to the Closing Date.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock.
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by
12
<PAGE>
the Chairman of the Board or the President or a Vice President and the
Treasurer or Controller of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility of the Trustee on
Form T-1. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel has assumed
that the statements made therein (or incorporated by reference
therein) are correct and complete;
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the
13
<PAGE>
effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings therefor have been initiated
or threatened by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) under the Securities Act has been
made in accordance with Rule 424(b) under the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Indenture has been (A) duly qualified under the Trust
Indenture Act and (B) duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by the Trustee, will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except (i) as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors, (ii) as may be limited by the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the
enforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to liability where such
indemnification or contribution is contrary to public policy; (iv)
such counsel shall not be required to express any opinion concerning
the enforceability of the waiver or right or defenses contained in
Section 4.06 of the Indenture; and (v) the manner by which the
acceleration of the Securities may affect the collectibility of that
portion of the stated principal amount thereof which might be
determined to constitute unearned interest thereon;
(vi) the Securities, when executed and authenticated in
accordance with the terms of the
14
<PAGE>
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms except (i) as may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) as may be
limited by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the enforceability under certain circumstances under
law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to
liability where such indemnification or contribution is contrary to
public policy; (iv) such counsel shall not be required to express
any opinion concerning the enforceability of the waiver or rights or
defenses contained in Section 4.06 of the Indenture; and (v) the
manner by which the acceleration of the Securities may affect the
collectibility of that portion of the stated principal amount
thereof which might be determined to constitute unearned interest
thereon;
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (i) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (ii) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
15
<PAGE>
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement and the Indenture or the
issuance and sale of the Securities by the Company, except (A) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities and
(B) except such as have been obtained or made;
(ix) the statements set forth in the Prospectus under the
caption "Description of the Notes" insofar as such statements
constitute summaries of the documents referred to therein, are
accurate in all material respects; and the Securities conform in all
material respects to the description thereof incorporated by
reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" insofar
as such statements constitute a summary of legal matters, are
accurate in all material respects; and
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and have not made any independent check or
verification thereof (except as set forth in paragraphs (ix) and (x) above),
during the course of such participation, no facts came to such counsel's
attention that caused such counsel to believe that the Registration Statement
(including the incorporated documents), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (including the incorporated documents),
16
<PAGE>
as of its date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted 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; it being understood that such
counsel express no belief with respect to the financial statements, schedule and
other financial data or the Statement of Eligibility of the Trustee on Form T-1
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver
17
<PAGE>
the foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.);
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) (B) the
breach of or default under (I) any indenture or other agreement or
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such counsel;
(vi) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its
18
<PAGE>
subsidiaries is a party or to which any of the properties or assets
of the Company or any of its subsidiaries is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described therein; or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required, except such exhibits which are
permitted, pursuant to the Securities Act, to be filed subsequently
on a Current Report on Form 8-K; and
(vii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-1. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or
19
<PAGE>
contains an untrue statement of a material fact or omitted 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; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial data included or
incorporated by reference in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder
and the Trust Indenture Act and the regulations thereunder, and neither
the Registration Statement nor the Prospectus, as they may then be amended
or supplemented, shall 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, in the case of the Prospectus, in the
light of the circumstances under which they were made, not misleading;
(ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus
other than as set forth therein and no proceedings shall be pending or, to
the knowledge of the Company, threatened against it or any of its
subsidiaries before
20
<PAGE>
or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect, other than as set forth in the Prospectus; (iv)
the Company shall have complied with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement and the Indenture, each as contemplated in this Agreement, shall
be reasonably satisfactory in form and substance to you and to your
counsel.
(i) If Securities are to be listed on the New York Stock Exchange
(the "NYSE"), such Securities shall have been duly authorized for listing
on the NYSE at or by the Closing Date, subject only to official notice of
issuance thereof and notice of a satisfactory distribution of the
Securities.
21
<PAGE>
(j) Prior to the Closing Date, the Company shall have furnished to
Morgan Stanley & Co. Incorporated such further information, certificates
and documents as Morgan Stanley & Co. Incorporated may reasonably request.
(k) On or prior to the Closing Date, the Company shall have (i)
completed the public offering of 13,800,000 shares of its Common Stock,
par value $.01 per share, as contemplated by the Prospectus Supplement
dated May 14, 1998 relating thereto and the accompanying Prospectus dated
April 20, 1998 and (ii) completed the public offering of 8,000,000 shares
of its Convertible Preferred Stock, par value of $.01 per share, as
contemplated by the Prospectus Supplement dated May 14, 1998 relating
thereto and the accompanying Prospectus dated April 20, 1998.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10(a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second
22
<PAGE>
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required under the Securities Act;
to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein;
(b) To furnish to each of Morgan Stanley & Co. Incorporated and its
counsel, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto)
and, during the period mentioned in paragraph (d) below, as many copies of
the Preliminary Prospectus and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
23
<PAGE>
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing of any
supplement to the Preliminary Prospectus or the Prospectus or any document
to be filed pursuant to the Exchange Act which will be incorporated by
reference into the Registration Statement, Preliminary Prospectus or the
Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, the Preliminary Prospectus or the
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary
Prospectus or the Prospectus or for additional information and (v) 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. The Company will make every commercially reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain, as soon as possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act, the Exchange Act and the Trust Indenture Act and the
regulations thereunder so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and the Prospectus;
and the Company, during the period when the Preliminary Prospectus and the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13 or 14 of the Exchange Act within the time periods required
under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect
24
<PAGE>
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period covered
thereby a consolidated earnings statement for a twelve-month period
beginning after the effective date (as defined in Rule 158(c) under the
Securities Act) of the Registration Statement relating to such Securities,
but not later than the first day of the Company's fiscal quarter next
following such effective date and that otherwise satisfies the provisions
of Section 11(a) of the Securities Act and the regulations thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) any debt securities of
the Company with a maturity of less than one year), without the prior
written consent of Morgan Stanley & Co. Incorporated.
(l) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the
25
<PAGE>
Securities; (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel; (iv) the qualification of
the Securities under the state securities or blue sky laws in accordance
with the provisions of Section 6(g) herein, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the preliminary and
final state securities laws or blue sky surveys (the "Blue Sky Surveys")
or any Legal Investment Memoranda; (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of each Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of the Blue
Sky Surveys or any Legal Investment Memoranda; (vii) any fees charged by
rating agencies for the rating of the Securities or the listing, if any,
of the Securities on the NYSE; (viii) the filing fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc. (the "NASD") made in connection with the offering
of the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) document
production charges, if any, of counsel to the Underwriters incurred in
connection with the preparation of the Indenture.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter
26
<PAGE>
through you expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of Securities to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities unless such failure is the result of
non-compliance by the Company with Section 7(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding 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. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
27
<PAGE>
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a)
above and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (not to be
unreasonably withheld), but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless (i) such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 8 is unavailable to an indemnified party or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
28
<PAGE>
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this
29
<PAGE>
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. Morgan Stanley & Co. Incorporated may terminate
this Agreement by notice to the Company, at any time at or prior to the Closing
Date (a) if there has been, since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any Material Adverse
Change, or any development involving a prospective Material Adverse Change or
(b) if there has occurred any new outbreak of hostilities or escalation of
existing hostilities or other calamity or crisis the effect of which on the
financial markets in the United States is such as to make it, in your judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, or (c) if trading in any securities of the Company has been
suspended on any exchange or in any over-the-counter market or by the
Commission, or if trading generally on the NYSE has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission or
any other governmental authority or (d) if a general moratorium on commercial
banking activities in New York State has been declared by either federal or New
York State authorities.
11. Defaulting Underwriters. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase and pay for the
Securities that it has or
30
<PAGE>
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase and pay
for the Securities and the aggregate principal amount of Securities with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
12. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
(a) if to the Underwriters:
Morgan Stanley & Co. Incorporated
440 South LaSalle Street
Chicago, Illinois 60605
Facsimile No.: (312) 706-4701
Attention: Francis Oelerich III
31
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.:(419) 247-2226
Attention: Thomas L. Young, Esq.
General Counsel
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No. : (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
17. Authority of Representative. Morgan Stanley & Co. Incorporated
hereby represents and warrants to the Company that it has the authority to act
as agent on behalf of the Underwriters named in Schedule I and the Company shall
be
32
<PAGE>
entitled to rely upon statements, notices, requests and agreements made by
Morgan Stanley & Co. Incorporated on behalf of the Underwriters.
Very truly yours,
OWENS-ILLINOIS, INC.
By: /s/ David G. Van Hooser
-----------------------------
Name: David G. Van Hooser
Title: Senior Vice President
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
SALOMON BROTHERS INC
SCOTIA CAPITAL MARKETS (USA) INC.
Acting severally on behalf
of themselves and the several
Underwriters named herein
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Francis J. Oelerich III
----------------------------------
Name: Francis J. Oelerich III
Title: Managing Director
33
<PAGE>
SCHEDULE I
Principal Amount
of 7.35% Senior
Notes due 2008
Underwriter To Be Purchased
- ----------- ---------------
Morgan Stanley & Co.
Incorporated ............... $100,000,003
BancAmerica Robertson
Stephens ................... 21,428,571
Credit Suisse First Boston
Corporation ................ 21,428,571
Goldman, Sachs & Co. ....... 21,428,571
Lehman Brothers Inc. ....... 21,428,571
Merrill Lynch,
Pierce Fenner & Smith Inc. . 21,428,571
Salomon Brothers Inc ....... 21,428,571
Scotia Capital Markets (USA)
Inc. ....................... 21,428,571
Total ...................... $250,000,000
============
<PAGE>
Schedule II
Upon the consummation of the Senior Note Offerings, 100% of the
shares of capital stock of each Significant Subsidiary will be, directly or
indirectly, owned by the Company free and clear of any material lien, except
that the Company owns approximately 99% of the outstanding shares of AVIR S.p.A.
<PAGE>
Exhibit 1.3
OWENS-ILLINOIS, INC.
$250,000,000 7.50% Senior Debentures due 2010
UNDERWRITING AGREEMENT
May 14, 1998
<PAGE>
May 14, 1998
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
NATIONSBANC MONTGOMERY SECURITIES LLC.
SALOMON BROTHERS INC
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $250,000,000 principal amount of its 7.50% Senior
Debentures due 2010 (the "Securities") to be issued pursuant to the provisions
of an Indenture dated as of May 20, 1998 (the "Indenture") by and between the
Company and The Bank of New York, as Trustee (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"),
Post-Effective Amendment No. 1 to the Registration Statement (File No.
333-25175), as amended, relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act. Such
registration statements, as amended, have been declared effective by the
Commission, and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). In addition, the Company has
prepared and filed with the Commission the Preliminary Prospectus (as defined
herein) pursuant to Rule 424(b) under the Securities Act in accordance with Rule
424(b) under the Securities Act.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration
<PAGE>
Statement and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus, including any preliminary
prospectus supplement, used in connection with the offer of any Securities prior
to the date hereof and any preliminary prospectus included in the Registration
Statement at the Effective Date. "Prospectus" shall mean the prospectus,
including any prospectus supplement relating to the Securities, that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus relating to
the Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement (File No.
333-47519) referred to above, including incorporated documents and financial
statements, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date (as
defined herein), shall also mean such registration statement as so amended. Any
reference herein to the Registration Statement, a Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") on or
before the Effective Date of the Registration Statement or the issue date of
such Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement, or the
issue date of any Preliminary Prospectus or the Prospectus, as the case may be,
deemed to be incorporated therein by reference.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement became effective, as of the Closing Date and as amended or
supplemented, if applicable, and the Prospectus, when it is first filed in
accordance with Rule 424(b) under the Securities Act and on the Closing
Date, complied and will comply, as the case may be, in all material
respects with the requirements of the
2
<PAGE>
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply (A) to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus or (B) to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act (Form T-1) of the Trustee under the Indenture.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein
3
<PAGE>
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young (Australia), who are
reporting upon the audited financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus, each as amended or supplemented, if applicable, are
independent public accountants as required by the Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings (each as defined in the
Preliminary Prospectus or the Prospectus), (B) give effect to the
assumptions made on a reasonable basis, (C) present fairly in all material
respects, the historical and proposed transactions contemplated by the
Preliminary Prospectus and the Prospectus and (D) comply in all material
respects with the requirements of Rules 11-01 and 11-02 of Regulation S-X;
and the other pro forma financial information and pro forma financial data
set forth in the Prospectus under the captions "Summary -- Summary
Historical and Pro Forma Financial Data" and "Consolidated Capitalization"
are derived from such
4
<PAGE>
"Unaudited Pro Forma Condensed Consolidated Financial Information."
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, assets, business or results of operations of the
Company and its subsidiaries, considered as one enterprise (a "Material
Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain
5
<PAGE>
securities of the Company, who have the right to request the Company to
register securities held by them under the Securities Act, except for the
Registration Rights Agreement dated as of March 17, 1986 by and among OII
Holdings Corporation (the predecessor in interest to the Company), KKR
Partners II, L.P., OII Associates, L.P., OII Associates II, L.P. and KKR
Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Company has the corporate power and authority to execute
and deliver the Indenture and to perform its obligations provided for
therein; the Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company substantially in the form
filed as an exhibit to the Registration Statement and, when executed and
delivered by the Company and assuming due execution and delivery by the
Trustee, will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and as rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability (whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture conforms in all material respects to the description thereof
contained in the Prospectus.
(xv) The Company has the corporate power and authority to execute,
issue and deliver the Securities and to incur and perform its obligations
provided for therein; the Securities have been duly authorized and, when
executed, issued and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and
6
<PAGE>
as rights of acceleration, if any, and the availability of equitable
remedies may be limited by equitable principles of general applicability
(whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the knowledge of the
Company, in violation of or has violated any permit, certificate, license,
order or other approval or authorization required in connection with the
operation of its business that, with respect to each of clause (A), (B)
and (C) of this paragraph, would (individually or in the aggregate) (I)
adversely affect the legality, validity or enforceability of this
Agreement, the Indenture or the Securities, (II) have a Material Adverse
Effect or (III) impair the ability of the Company to fully perform on a
timely basis any
7
<PAGE>
obligations that it has under this Agreement, the Indenture or the
Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Indenture, the compliance by the Company with the terms herein and
therein and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus, do not and will not result in a violation of any of the terms
or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any conflict, breach or violation
that would not have a Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for (A) the due authorization, execution,
delivery and performance by the Company of this Agreement and the
Indenture or the valid authorization, issuance, sale and delivery of the
Securities, except (I) such as may be required by the securities or blue
sky laws of the various states (the "Blue Sky laws") in connection with
the offer and sale of the Securities and (II) for such authorizations,
approvals, consents or orders of, or qualifications with, any governmental
body or agency that are required and have been received and are in full
force and effect as of the Closing Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company,
8
<PAGE>
threatened, against or affecting the Company or any of its subsidiaries or
any of their properties and assets that (A) is required to be disclosed in
the Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or the Indenture or any of the transactions contemplated hereby
or thereby or (D) questions the legality or validity of any such
transaction or seeks to recover damages or obtain other relief in
connection with any such transaction, and, in each case to the knowledge
of the Company, there is no valid basis for any such action, suit,
investigation or proceeding; the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their properties and assets that are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to its business, would not have a
Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
9
<PAGE>
(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
10
<PAGE>
(xxviii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to the terms and conditions set forth herein, to sell to the several
Underwriters, and, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, each Underwriter
agrees, severally and not jointly, to purchase from the Company (A) the
respective principal amounts of Securities set forth in Schedule I hereto
opposite its name at 98.307% of their respective principal amounts (the
"Securities Purchase Price") plus accrued interest, if any, from May 20, 1998 to
the date of payment and delivery, calculated on the basis of a 360-day year of
twelve 30-day months.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to the public initially at 99.682% of their
principal amount (the "Securities Public Offering Price") plus accrued interest,
if any, from May 20, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.60% of their principal amount under the Securities Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of .30% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company by wire transfer in federal funds or other funds immediately
available in New York City or through the facilities of The Depository Trust
Company of the Securities Purchase Price against delivery of
11
<PAGE>
such Securities for the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on May 20, 1998, or at such other time on the same or
such other date, not later than May 26, 1998, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of global certificates
representing the Securities registered in the name of Cede & Co. with any
transfer taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid.
The Company agrees to have the global certificates referred to above
available for inspection and checking by Morgan Stanley & Co. Incorporated in
New York, New York, not later than 1:00 P.M., New York City time on the business
day prior to the Closing Date.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock.
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by
12
<PAGE>
the Chairman of the Board or the President or a Vice President and the
Treasurer or Controller of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility of the Trustee on
Form T-1. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel has assumed
that the statements made therein (or incorporated by reference
therein) are correct and complete;
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the
13
<PAGE>
effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings therefor have been initiated
or threatened by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) under the Securities Act has been
made in accordance with Rule 424(b) under the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Indenture has been (A) duly qualified under the Trust
Indenture Act and (B) duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by the Trustee, will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except (i) as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors, (ii) as may be limited by the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the
enforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to liability where such
indemnification or contribution is contrary to public policy; (iv)
such counsel shall not be required to express any opinion concerning
the enforceability of the waiver or right or defenses contained in
Section 4.06 of the Indenture; and (v) the manner by which the
acceleration of the Securities may affect the collectibility of that
portion of the stated principal amount thereof which might be
determined to constitute unearned interest thereon;
(vi) the Securities, when executed and authenticated in
accordance with the terms of the
14
<PAGE>
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms except (i) as may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) as may be
limited by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the enforceability under certain circumstances under
law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to
liability where such indemnification or contribution is contrary to
public policy; (iv) such counsel shall not be required to express
any opinion concerning the enforceability of the waiver or rights or
defenses contained in Section 4.06 of the Indenture; and (v) the
manner by which the acceleration of the Securities may affect the
collectibility of that portion of the stated principal amount
thereof which might be determined to constitute unearned interest
thereon;
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (i) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (ii) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
15
<PAGE>
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement and the Indenture or the
issuance and sale of the Securities by the Company, except (A) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities and
(B) except such as have been obtained or made;
(ix) the statements set forth in the Prospectus under the
caption "Description of the Debentures" insofar as such statements
constitute summaries of the documents referred to therein, are
accurate in all material respects; and the Securities conform in all
material respects to the description thereof incorporated by
reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" insofar
as such statements constitute a summary of legal matters, are
accurate in all material respects; and
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and have not made any independent check or
verification thereof (except as set forth in paragraphs (ix) and (x) above),
during the course of such participation, no facts came to such counsel's
attention that caused such counsel to believe that the Registration Statement
(including the incorporated documents), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (including the incorporated documents),
16
<PAGE>
as of its date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted 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; it being understood that such
counsel express no belief with respect to the financial statements, schedule and
other financial data or the Statement of Eligibility of the Trustee on Form T-1
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver
17
<PAGE>
the foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.);
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) (B) the
breach of or default under (I) any indenture or other agreement or
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such counsel;
(vi) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its
18
<PAGE>
subsidiaries is a party or to which any of the properties or assets
of the Company or any of its subsidiaries is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described therein; or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required, except such exhibits which are
permitted, pursuant to the Securities Act, to be filed subsequently
on a Current Report on Form 8-K; and
(vii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-1. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or
19
<PAGE>
contains an untrue statement of a material fact or omitted 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; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial data included or
incorporated by reference in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder
and the Trust Indenture Act and the regulations thereunder, and neither
the Registration Statement nor the Prospectus, as they may then be amended
or supplemented, shall 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, in the case of the Prospectus, in the
light of the circumstances under which they were made, not misleading;
(ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus
other than as set forth therein and no proceedings shall be pending or, to
the knowledge of the Company, threatened against it or any of its
subsidiaries before
20
<PAGE>
or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect, other than as set forth in the Prospectus; (iv)
the Company shall have complied with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement and the Indenture, each as contemplated in this Agreement, shall
be reasonably satisfactory in form and substance to you and to your
counsel.
(i) If Securities are to be listed on the New York Stock Exchange
(the "NYSE"), such Securities shall have been duly authorized for listing
on the NYSE at or by the Closing Date, subject only to official notice of
issuance thereof and notice of a satisfactory distribution of the
Securities.
21
<PAGE>
(j) Prior to the Closing Date, the Company shall have furnished to
Morgan Stanley & Co. Incorporated such further information, certificates
and documents as Morgan Stanley & Co. Incorporated may reasonably request.
(k) On or prior to the Closing Date, the Company shall have (i)
completed the public offering of 13,800,000 shares of its Common Stock,
par value $.01 per share, as contemplated by the Prospectus Supplement
dated May 14, 1998 relating thereto and the accompanying Prospectus dated
April 20, 1998 and (ii) completed the public offering of 8,000,000 shares
of its Convertible Preferred Stock, par value of $.01 per share, as
contemplated by the Prospectus Supplement dated May 14, 1998 relating
thereto and the accompanying Prospectus dated April 20, 1998.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10(a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second
22
<PAGE>
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required under the Securities Act;
to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein;
(b) To furnish to each of Morgan Stanley & Co. Incorporated and its
counsel, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto)
and, during the period mentioned in paragraph (d) below, as many copies of
the Preliminary Prospectus and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
23
<PAGE>
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing of any
supplement to the Preliminary Prospectus or the Prospectus or any document
to be filed pursuant to the Exchange Act which will be incorporated by
reference into the Registration Statement, Preliminary Prospectus or the
Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, the Preliminary Prospectus or the
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary
Prospectus or the Prospectus or for additional information and (v) 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. The Company will make every commercially reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain, as soon as possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act, the Exchange Act and the Trust Indenture Act and the
regulations thereunder so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and the Prospectus;
and the Company, during the period when the Preliminary Prospectus and the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13 or 14 of the Exchange Act within the time periods required
under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect
24
<PAGE>
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period covered
thereby a consolidated earnings statement for a twelve-month period
beginning after the effective date (as defined in Rule 158(c) under the
Securities Act) of the Registration Statement relating to such Securities,
but not later than the first day of the Company's fiscal quarter next
following such effective date and that otherwise satisfies the provisions
of Section 11(a) of the Securities Act and the regulations thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) any debt securities of
the Company with a maturity of less than one year), without the prior
written consent of Morgan Stanley & Co. Incorporated.
(l) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the
25
<PAGE>
Securities; (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel; (iv) the qualification of
the Securities under the state securities or blue sky laws in accordance
with the provisions of Section 6(g) herein, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the preliminary and
final state securities laws or blue sky surveys (the "Blue Sky Surveys")
or any Legal Investment Memoranda; (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of each Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of the Blue
Sky Surveys or any Legal Investment Memoranda; (vii) any fees charged by
rating agencies for the rating of the Securities or the listing, if any,
of the Securities on the NYSE; (viii) the filing fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc. (the "NASD") made in connection with the offering
of the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) document
production charges, if any, of counsel to the Underwriters incurred in
connection with the preparation of the Indenture.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter
26
<PAGE>
through you expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of Securities to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities unless such failure is the result of
non-compliance by the Company with Section 7(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding 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. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
27
<PAGE>
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a)
above and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (not to be
unreasonably withheld), but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless (i) such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 8 is unavailable to an indemnified party or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
28
<PAGE>
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this
29
<PAGE>
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. Morgan Stanley & Co. Incorporated may terminate
this Agreement by notice to the Company, at any time at or prior to the Closing
Date (a) if there has been, since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any Material Adverse
Change, or any development involving a prospective Material Adverse Change or
(b) if there has occurred any new outbreak of hostilities or escalation of
existing hostilities or other calamity or crisis the effect of which on the
financial markets in the United States is such as to make it, in your judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, or (c) if trading in any securities of the Company has been
suspended on any exchange or in any over-the-counter market or by the
Commission, or if trading generally on the NYSE has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission or
any other governmental authority or (d) if a general moratorium on commercial
banking activities in New York State has been declared by either federal or New
York State authorities.
11. Defaulting Underwriters. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase and pay for the
Securities that it has or
30
<PAGE>
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase and pay
for the Securities and the aggregate principal amount of Securities with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
12. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, ny telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
(a) if to the Underwriters:
Morgan Stanley & Co. Incorporated
440 South LaSalle Street
Chicago, Illinois 60605
Facsimile No.: (312) 706-4701
Attention: Francis Oelerich III
31
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.: (419) 247-2226
Attention: Thomas L. Young, Esq.
General Counsel
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
17. Authority of Representative. Morgan Stanley & Co. Incorporated
hereby represents and warrants to the Company that it has the authority to act
as agent on behalf of the Underwriters named in Schedule I and the Company shall
be
32
<PAGE>
entitled to rely upon statements, notices, requests and agreements made by
Morgan Stanley & Co. Incorporated on behalf of the Underwriters.
Very truly yours,
OWENS-ILLINOIS, INC.
By: /s/ David G. Van Hooser
-----------------------------
Name: David G. Van Hooser
Title: Senior Vice President
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
BANCAMERICA ROBERTSON STEPHENS
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON BROTHERS INC
Acting severally on behalf
of themselves and the several
Underwriters named herein
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Francis J. Oelerich III
--------------------------------
Name: Francis J. Oelerich III
Title: Managing Director
33
<PAGE>
SCHEDULE I
Principal Amount
of 7.50% Senior
Debentures due
2010
Underwriter To Be Purchased
- ----------- ---------------
Morgan Stanley & Co.
Incorporated ............................... $100,000,000
BancAmerica Robertson
Stephens ................................... 25,000,000
Credit Suisse First Boston
Corporation ................................ 25,000,000
Goldman, Sachs & Co ........................ 25,000,000
Lehman Brothers Inc ........................ 25,000,000
NationsBanc Montgomery ..................... 25,000,000
Securities LLC
Salomon Brothers Inc ....................... 25,000,000
Total ...................................... $250,000,000
============
<PAGE>
Schedule II
Upon the consummation of the Senior Note Offerings, 100% of the
shares of capital stock of each Significant Subsidiary will be, directly or
indirectly, owned by the Company free and clear of any material lien, except
that the Company owns approximately 99% of the outstanding shares of AVIR S.p.A.
<PAGE>
Exhibit 1.4
OWENS-ILLINOIS, INC.
$250,000,000 7.80% Senior Debentures due 2018
UNDERWRITING AGREEMENT
May 14, 1998
<PAGE>
May 14, 1998
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
NATIONSBANC MONTGOMERY SECURITIES LLC.
SALOMON BROTHERS INC
c/o MORGAN STANLEY & CO. INCORPORATED
1585 Broadway
New York, New York 10036
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $250,000,000 principal amount of its 7.80% Senior
Debentures due 2018 (the "Securities") to be issued pursuant to the provisions
of an Indenture dated as of May 20, 1998 (the "Indenture") by and between the
Company and The Bank of New York, as Trustee (the "Trustee").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"),
Post-Effective Amendment No. 1 to the Registration Statement (File No.
333-25175), as amended, relating to the Securities and the offering thereof from
time to time in accordance with Rule 415 under the Securities Act. Such
registration statements, as amended, have been declared effective by the
Commission, and the Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). In addition, the Company has
prepared and filed with the Commission the Preliminary Prospectus (as defined
herein) pursuant to Rule 424(b) under the Securities Act in accordance with Rule
424(b) under the Securities Act.
The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration
2
<PAGE>
Statement and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Preliminary
Prospectus" shall mean any preliminary prospectus, including any preliminary
prospectus supplement, used in connection with the offer of any Securities prior
to the date hereof and any preliminary prospectus included in the Registration
Statement at the Effective Date. "Prospectus" shall mean the prospectus,
including any prospectus supplement relating to the Securities, that is first
filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus relating to
the Securities included in the Registration Statement at the Effective Date.
"Registration Statement" shall mean the registration statement (File No.
333-47519) referred to above, including incorporated documents and financial
statements, as amended at the Execution Time and, in the event any
post-effective amendment thereto becomes effective prior to the Closing Date (as
defined herein), shall also mean such registration statement as so amended. Any
reference herein to the Registration Statement, a Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Securities and Exchange Act of 1934, as amended (the "Exchange Act") on or
before the Effective Date of the Registration Statement or the issue date of
such Preliminary Prospectus or the Prospectus, as the case may be; and any
reference herein to the terms "amend", "amendment" or "supplement" with respect
to the Registration Statement, any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date of the Registration Statement, or the
issue date of any Preliminary Prospectus or the Prospectus, as the case may be,
deemed to be incorporated therein by reference.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement became effective, as of the Closing Date and as amended or
supplemented, if applicable, and the Prospectus, when it is first filed in
accordance with Rule 424(b) under the Securities Act and on the Closing
Date, complied and will comply, as the case may be, in all material
respects with the requirements of the
3
<PAGE>
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply (A) to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus or (B) to that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification under the Trust
Indenture Act (Form T-1) of the Trustee under the Indenture.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein
4
<PAGE>
or necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young (Australia), who are
reporting upon the audited financial statements and schedules included or
incorporated by reference in the Registration Statement and the
Prospectus, each as amended or supplemented, if applicable, are
independent public accountants as required by the Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings (each as defined in the
Preliminary Prospectus or the Prospectus), (B) give effect to the
assumptions made on a reasonable basis, (C) present fairly in all material
respects, the historical and proposed transactions contemplated by the
Preliminary Prospectus and the Prospectus and (D) comply in all material
respects with the requirements of Rules 11-01 and 11-02 of Regulation S-X;
and the other pro forma financial information and pro forma financial data
set forth in the Prospectus under the captions "Summary -- Summary
Historical and Pro Forma Financial Data" and "Consolidated Capitalization"
are derived from such
5
<PAGE>
"Unaudited Pro Forma Condensed Consolidated Financial Information.
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, assets, business or results of operations of the
Company and its subsidiaries, considered as one enterprise (a "Material
Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain
6
<PAGE>
securities of the Company, who have the right to request the Company to
register securities held by them under the Securities Act, except for the
Registration Rights Agreement dated as of March 17, 1986 by and among OII
Holdings Corporation (the predecessor in interest to the Company), KKR
Partners II, L.P., OII Associates, L.P., OII Associates II, L.P. and KKR
Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Company has the corporate power and authority to execute
and deliver the Indenture and to perform its obligations provided for
therein; the Indenture has been duly qualified under the Trust Indenture
Act and has been duly authorized by the Company substantially in the form
filed as an exhibit to the Registration Statement and, when executed and
delivered by the Company and assuming due execution and delivery by the
Trustee, will be a legal, valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting creditors' rights generally
and as rights of acceleration and the availability of equitable remedies
may be limited by equitable principles of general applicability (whether
enforcement is considered in a proceeding in equity or at law); and the
Indenture conforms in all material respects to the description thereof
contained in the Prospectus.
(xv) The Company has the corporate power and authority to execute,
issue and deliver the Securities and to incur and perform its obligations
provided for therein; the Securities have been duly authorized and, when
executed, issued and authenticated in accordance with the provisions of
the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with their
respective terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting
creditors' rights generally and
7
<PAGE>
as rights of acceleration, if any, and the availability of equitable
remedies may be limited by equitable principles of general applicability
(whether enforcement is considered in a proceeding in equity or at law);
and the Securities conform in all material respects to the descriptions
thereof contained in the Prospectus.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the knowledge of the
Company, in violation of or has violated any permit, certificate, license,
order or other approval or authorization required in connection with the
operation of its business that, with respect to each of clause (A), (B)
and (C) of this paragraph, would (individually or in the aggregate) (I)
adversely affect the legality, validity or enforceability of this
Agreement, the Indenture or the Securities, (II) have a Material Adverse
Effect or (III) impair the ability of the Company to fully perform on a
timely basis any
8
<PAGE>
obligations that it has under this Agreement, the Indenture or the
Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Indenture, the compliance by the Company with the terms herein and
therein and the consummation by the Company of the transactions
contemplated hereby, thereby and in the Registration Statement and the
Prospectus, do not and will not result in a violation of any of the terms
or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets, except for any conflict, breach or violation
that would not have a Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for (A) the due authorization, execution,
delivery and performance by the Company of this Agreement and the
Indenture or the valid authorization, issuance, sale and delivery of the
Securities, except (I) such as may be required by the securities or blue
sky laws of the various states (the "Blue Sky laws") in connection with
the offer and sale of the Securities and (II) for such authorizations,
approvals, consents or orders of, or qualifications with, any governmental
body or agency that are required and have been received and are in full
force and effect as of the Closing Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company,
9
<PAGE>
threatened, against or affecting the Company or any of its subsidiaries or
any of their properties and assets that (A) is required to be disclosed in
the Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or the Indenture or any of the transactions contemplated hereby
or thereby or (D) questions the legality or validity of any such
transaction or seeks to recover damages or obtain other relief in
connection with any such transaction, and, in each case to the knowledge
of the Company, there is no valid basis for any such action, suit,
investigation or proceeding; the aggregate of all pending legal or
governmental proceedings to which the Company or any of its subsidiaries
is a party or that affect any of their properties and assets that are not
described in the Registration Statement or the Prospectus, including
ordinary routine litigation incidental to its business, would not have a
Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
10
<PAGE>
(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
11
<PAGE>
(xxviii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940 Act")
(xxix) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Agreement to Sell and Purchase. The Company hereby agrees,
subject to the terms and conditions set forth herein, to sell to the several
Underwriters, and, upon the basis of the representations and warranties herein
contained and subject to the conditions hereinafter stated, each Underwriter
agrees, severally and not jointly, to purchase from the Company (A) the
respective principal amounts of Securities set forth in Schedule I hereto
opposite its name at 98.482% of their respective principal amounts (the
"Securities Purchase Price") plus accrued interest, if any, from May 20, 1998 to
the date of payment and delivery, calculated on the basis of a 360-day year of
twelve 30-day months.
3. Terms of Public Offering. The Company has been advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to the public initially at 99.982% of their
principal amount (the "Securities Public Offering Price") plus accrued interest,
if any, from May 20, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.65% of their principal amount under the Securities Public Offering Price, and
that any Underwriter may allow, and such dealers may reallow, a concession, not
in excess of .40% of their principal amount, to any Underwriter or to certain
other dealers.
4. Payment and Delivery. Payment for the Securities shall be made to
the Company by wire transfer in federal funds or other funds immediately
available in New York City or through the facilities of The Depository Trust
Company of the Securities Purchase Price against delivery of
12
<PAGE>
such Securities for the respective accounts of the several Underwriters at 10:00
A.M., New York City time, on May 20, 1998, or at such other time on the same or
such other date, not later than May 26, 1998, as shall be designated in writing
by you. The time and date of such payment are hereinafter referred to as the
"Closing Date."
Payment for the Securities shall be made against delivery to you for
the respective accounts of the several Underwriters of global certificates
representing the Securities registered in the name of Cede & Co. with any
transfer taxes payable in connection with the transfer of the Securities to the
Underwriters duly paid.
The Company agrees to have the global certificates referred to above
available for inspection and checking by Morgan Stanley & Co. Incorporated in
New York, New York, not later than 1:00 P.M., New York City time on the business
day prior to the Closing Date.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g) (2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock.
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by
13
<PAGE>
the Chairman of the Board or the president or a Vice President and the
Treasurer or Controller of the Company, dated the Closing Date, to the
effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility of the Trustee on
Form T-1. In passing upon the compliance as to form of the
Registration Statement and the Prospectus, such counsel has assumed
that the statements made therein (or incorporated by reference
therein) are correct and complete;
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the
14
<PAGE>
effectiveness of the Registration Statement has been issued under
the Securities Act and no proceedings therefor have been initiated
or threatened by the Commission; and any required filing of the
Prospectus pursuant to Rule 424(b) under the Securities Act has been
made in accordance with Rule 424(b) under the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) the Underwriting Agreement has been duly authorized,
executed and delivered by the Company;
(v) the Indenture has been (A) duly qualified under the Trust
Indenture Act and (B) duly authorized, executed and delivered by the
Company and, assuming the due authorization, execution and delivery
by the Trustee, will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its
terms except (i) as may be limited by the effect of bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to or affecting the rights and remedies
of creditors, (ii) as may be limited by the effect of general
principles of equity, whether enforcement is considered in a
proceeding in equity or law, and the discretion of the court before
which any proceeding therefor may be brought; (iii) the
enforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to liability where such
indemnification or contribution is contrary to public policy; (iv)
such counsel shall not be required to express any opinion concerning
the enforceability of the waiver or right or defenses contained in
Section 4.06 of the Indenture; and (v) the manner by which the
acceleration of the Securities may affect the collectibility of that
portion of the stated principal amount thereof which might be
determined to constitute unearned interest thereon;
(vi) the Securities, when executed and authenticated in
accordance with the terms of the
15
<PAGE>
Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be legally valid
and binding obligations of the Company, enforceable against the
Company in accordance with their terms except (i) as may be limited
by the effect of bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) as may be
limited by the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor may be
brought; (iii) the enforceability under certain circumstances under
law or court decisions of provisions providing for the
indemnification of or contribution to a party with respect to
liability where such indemnification or contribution is contrary to
public policy; (iv) such counsel shall not be required to express
any opinion concerning the enforceability of the waiver or rights or
defenses contained in Section 4.06 of the Indenture; and (v) the
manner by which the acceleration of the Securities may affect the
collectibility of that portion of the stated principal amount
thereof which might be determined to constitute unearned interest
thereon;
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (i) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (ii) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
16
<PAGE>
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement and the Indenture or the
issuance and sale of the Securities by the Company, except (A) such
as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Securities and
(B) except such as have been obtained or made;
(ix) the statements set forth in the Prospectus under the
caption "Description of the Debentures" insofar as such statements
constitute summaries of the documents referred to therein, are
accurate in all material respects; and the Securities conform in all
material respects to the description thereof incorporated by
reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations" insofar
as such statements constitute a summary of legal matters, are
accurate in all material respects; and
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and the
Prospectus and related matters were discussed, and although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus and have not made any independent check or
verification thereof (except as set forth in paragraphs (ix) and (x) above),
during the course of such participation, no facts came to such counsel's
attention that caused such counsel to believe that the Registration Statement
(including the incorporated documents), at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (including the incorporated documents),
17
<PAGE>
as of its date and as of the Closing Date, contained or contains an untrue
statement of a material fact or omitted 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; it being understood that such
counsel express no belief with respect to the financial statements, schedule and
other financial data or the Statement of Eligibility of the Trustee on Form T-1
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver
18
<PAGE>
the foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.)
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) (B) the
breach of or default under (I) any indenture or other agreement or
instrument binding upon the Company or any of its subsidiaries that
is material to the Company and its subsidiaries considered as one
enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such counsel;
(vi) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its
19
<PAGE>
subsidiaries is a party or to which any of the properties or assets
of the Company or any of its subsidiaries is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described therein; or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not
described or filed as required, except such exhibits which are
permitted, pursuant to the Securities Act, to be filed subsequently
on a Current Report on Form 8-K; and
(vii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-l. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or
20
<PAGE>
contains an untrue statement of a material fact or omitted 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; it
being understood that such counsel expresses no belief with respect to the
financial statements, schedules and other financial data included or
incorporated by reference in the Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder
and the Trust Indenture Act and the regulations thereunder, and neither
the Registration Statement nor the Prospectus, as they may then be amended
or supplemented, shall 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, in the case of the Prospectus, in the
light of the circumstances under which they were made, not misleading;
(ii) there shall not have been, since the respective dates as of which
information is given in the Registration Statement, any Material Adverse
Change, or any development involving a prospective Material Adverse
Change, whether or not arising in the ordinary course of business; (iii)
no action, suit or proceeding at law or in equity shall be pending or, to
the knowledge of the Company, threatened against the Company or any of its
subsidiaries that would be required to be set forth in the Prospectus
other than as set forth therein and no proceedings shall be pending or, to
the knowledge of the Company, threatened against it or any of its
subsidiaries before
21
<PAGE>
or by any federal, state or other commission, board or administrative
agency wherein an unfavorable decision, ruling or finding could have a
Material Adverse Effect, other than as set forth in the prospectus; (iv)
the Company shall have complied with all material agreements and satisfied
all conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement and the Indenture, each as contemplated in this Agreement, shall
be reasonably satisfactory in form and substance to you and to your
counsel.
(i) If Securities are to be listed on the New York Stock Exchange
(the "NYSE"), such Securities shall have been duly authorized for listing
on the NYSE at or by the Closing Date, subject only to official notice of
issuance thereof and notice of a satisfactory distribution of the
Securities.
22
<PAGE>
(j) Prior to the Closing Date, the Company shall have furnished to
Morgan Stanley & Co. Incorporated such further information, certificates
and documents as Morgan Stanley & Co. Incorporated may reasonably request.
(k) On or prior to the Closing Date, the Company shall have (i)
completed the public offering of 13,800,000 shares of its Common Stock,
par value $.0l per share, as contemplated by the Prospectus Supplement
dated May 14, 1998 relating thereto and the accompanying Prospectus dated
April 20, 1998 and (ii) completed the public offering of 8,000,000 shares
of its Convertible Preferred Stock, par value of $.0l per share, as
contemplated by the Prospectus Supplement dated May 14, 1998 relating
thereto and the accompanying Prospectus dated April 20, 1998.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10 (a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second
23
<PAGE>
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required under the Securities Act;
to make no further amendment or any supplement to the Registration
Statement or to the Prospectus except as permitted herein;
(b) To furnish to each of Morgan Stanley & Co. Incorporated and its
counsel, without charge, one signed copy of the Registration Statement
(including exhibits thereto) and for delivery to each other Underwriter a
conformed copy of the Registration Statement (without exhibits thereto)
and, during the period mentioned in paragraph (d) below, as many copies of
the Preliminary Prospectus and the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
24
<PAGE>
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to the Registration Statement,
(ii) of the mailing or the delivery to the Commission for filing of any
supplement to the Preliminary Prospectus or the Prospectus or any document
to be filed pursuant to the Exchange Act which will be incorporated by
reference into the Registration Statement, Preliminary Prospectus or the
Prospectus, (iii) of the receipt of any comments from the Commission with
respect to the Registration Statement, the Preliminary Prospectus or the
Prospectus, (iv) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Preliminary
Prospectus or the Prospectus or for additional information and (v) 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. The Company will make every commercially reasonable effort
to prevent the issuance of any stop order and, if any stop order is
issued, to obtain, as soon as possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act, the Exchange Act and the Trust Indenture Act and the
regulations thereunder so as to permit the completion of the distribution
of the Securities as contemplated in this Agreement and the Prospectus;
and the Company, during the period when the Preliminary Prospectus and the
Prospectus is required to be delivered under the Securities Act, will file
promptly all documents required to be filed with the Commission pursuant
to Section 13 or 14 of the Exchange Act within the time periods required
under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect
25
<PAGE>
of doing business in any jurisdiction in which it is not otherwise so
subject. The Company will file such statements and reports as may be
required by the laws of each jurisdiction in which the Securities have
been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period covered
thereby a consolidated earnings statement for a twelve-month period
beginning after the effective date (as defined in Rule 158 (c) under the
Securities Act) of the Registration Statement relating to such Securities,
but not later than the first day of the Company's fiscal quarter next
following such effective date and that otherwise satisfies the provisions
of Section 11(a) of the Securities Act and the regulations thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise dispose of any debt securities of the Company or warrants to
purchase debt securities of the Company substantially similar to the
Securities (other than (i) the Securities and (ii) any debt securities of
the Company with a maturity of less than one year), without the prior
written consent of Morgan Stanley & Co. Incorporated.
(l) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the
26
<PAGE>
Securities; (iii) the fees and disbursements of the Company's counsel and
accountants and of the Trustee and its counsel; (iv) the qualification of
the Securities under the state securities or blue sky laws in accordance
with the provisions of Section 6(g) herein, including filing fees and the
fees and disbursements of counsel for the Underwriters in connection
therewith and in connection with the preparation of the preliminary and
final state securities laws or blue sky surveys (the "Blue Sky Surveys")
or any Legal Investment Memoranda; (v) the printing and delivery to the
Underwriters in quantities as hereinabove stated of copies of the
Registration Statement and all amendments thereto and of each Preliminary
Prospectus and the Prospectus and any amendments or supplements thereto;
(vi) the printing and delivery to the Underwriters of copies of the Blue
Sky Surveys or any Legal Investment Memoranda; (vii) any fees charged by
rating agencies for the rating of the Securities or the listing, if any,
of the Securities on the NYSE; (viii) the filing fees and expenses, if
any, incurred with respect to any filing with the National Association of
Securities Dealers, Inc. (the "NASD") made in connection with the offering
of the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) document
production charges, if any, of counsel to the Underwriters incurred in
connection with the preparation of the Indenture.
8. Indemnity and Contribution. (a) The Company agrees to indemnify
and hold harmless each Underwriter and each person, if any, who controls any
Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling person
in connection with defending or investigating any such action or claim) caused
by any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or any amendment thereof, any Preliminary
Prospectus or the Prospectus (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information relating to any Underwriter furnished to the Company in writing by
such Underwriter
27
<PAGE>
through you expressly for use therein provided, however, that the foregoing
indemnity agreement with respect to any Preliminary Prospectus shall not inure
to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Securities, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of Securities to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities unless such failure is the result of
non-compliance by the Company with Section 7(b) hereof.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Underwriter, but only with reference to information relating to such
Underwriter furnished to the Company in writing by such Underwriter through you
expressly for use in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendments or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to either paragraph (a) or (b) of this Section
8, such person (the "indemnified party") shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying party") in writing
and the indemnifying party, upon request of the indemnified party, shall retain
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel related to
such proceeding 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. In any such proceeding, any indemnified party shall
have the right to retain its own counsel, but the fees and expenses of such
28
<PAGE>
counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party and the indemnified party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the indemnifying party and the
indemnified party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the indemnifying party shall not, in respect of the legal
expenses of any indemnified party in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the fees and expenses of
more than one separate firm (in addition to any local counsel) for all such
indemnified parties and that all such fees and expenses shall be reimbursed as
they are incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to paragraph (a)
above and by the Company, in the case of parties indemnified pursuant to
paragraph (b) above. The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent (not to be
unreasonably withheld), but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by the second
and third sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its
written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party, unless (i) such settlement includes
an unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) To the extent the indemnification provided for in paragraph (a)
or (b) of this Section 8 is unavailable to an indemnified party or insufficient
to hold harmless an indemnified party in respect of any losses, claims, damages
29
<PAGE>
or liabilities referred to therein, then each indemnifying party under such
paragraph, in lieu of indemnifying such indemnified party thereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other hand in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other hand in connection with the offering of the
Securities shall be deemed to be in the same respective proportions as the net
proceeds from the offering of the Securities (before deducting expenses)
received by the Company and the total underwriting discounts and commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of the
Securities. The relative fault of the Company on the one hand and the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Underwriters' respective obligations to contribute
pursuant to this Section 8 are several in proportion to the respective principal
amounts of Securities they have purchased hereunder, and not joint.
(e) The Company and the Underwriters agree that it would not be just
or equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in paragraph (d) of this Section 8. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this
30
<PAGE>
Section 8, no Underwriter shall be required to contribute any amount in excess
of the amount by which the total price at which the Securities underwritten by
it and distributed to the public were offered to the public exceeds the amount
of any damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The remedies
provided for in this Section 8 are not exclusive and shall not limit any rights
or remedies which may otherwise be available to any indemnified party at law or
in equity.
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. Morgan Stanley & Co. Incorporated may terminate
this Agreement by notice to the Company, at any time at or prior to the Closing
Date (a) if there has been, since the respective dates as of which information
is given in the Registration Statement or the Prospectus, any Material Adverse
Change, or any development involving a prospective Material Adverse Change or
(b) if there has occurred any new outbreak of hostilities or escalation of
existing hostilities or other calamity or crisis the effect of which on the
financial markets in the United States is such as to make it, in your judgment,
impracticable to market the Securities or enforce contracts for the sale of the
Securities, or (c) if trading in any securities of the Company has been
suspended on any exchange or in any over-the-counter market or by the
Commission, or if trading generally on the NYSE has been suspended, or minimum
or maximum prices for trading have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or by order of the Commission or
any other governmental authority or (d) if a general moratorium on commercial
banking activities in New York State has been declared by either federal or New
York State authorities.
11. Defaulting Underwriters. If, on the Closing Date, any one or
more of the Underwriters shall fail or refuse to purchase and pay for the
Securities that it has or
31
<PAGE>
they have agreed to purchase hereunder on such date, and the aggregate principal
amount of Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase is not more than one-tenth of the aggregate
principal amount of the Securities to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Securities set forth opposite their respective names in Schedule I
bears to the principal amount of Securities set forth opposite the names of all
such non-defaulting Underwriters, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Underwriter
has agreed to purchase pursuant to this Agreement be increased pursuant to this
Section 11 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Underwriter. If, on the Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase and pay
for the Securities and the aggregate principal amount of Securities with respect
to which such default occurs is more than one-tenth of the aggregate principal
amount of Securities to be purchased on such date, and arrangements satisfactory
to you and the Company for the purchase of such Securities are not made within
36 hours after such default, this Agreement shall terminate without liability on
the part of any non-defaulting Underwriter or the Company. In any such case
either you or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this paragraph
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
12. Notices. All notices and other communications required or
permitted to be given under this Agreement shall be in writing and shall be
given (and shall be deemed to have been given upon receipt) by delivery in
person, by cable, by telecopy, by telegram, by telex or by registered or
certified mail (postage prepaid, return receipt requested) to the applicable
party at the addresses indicated below:
(a) if to the Underwriters:
Morgan Stanley & Co. Incorporated
440 South LaSalle Street
Chicago, Illinois 60605
Facsimile No.: (312) 706-4701
Attention: Francis Oelerich III
32
<PAGE>
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.: (419) 247-2226
Attention: Thomas L. Young, Esq.
General Counsel
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
16. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
17. Authority of Representative. Morgan Stanley & Co. Incorporated
hereby represents and warrants to the Company that it has the authority to act
as agent on behalf of the Underwriters named in Schedule I and the Company shall
be
33
<PAGE>
entitled to rely upon statements, notices, requests and agreements made by
Morgan Stanley & Co. Incorporated on behalf of the Underwriters.
Very truly yours,
OWENS - ILLINOIS, INC.
By: /s/ David G. Van Hooser
--------------------------------
Name: David G. Van Hooser
Title: Senior Vice President
Accepted as of the date hereof
MORGAN STANLEY & CO. INCORPORATED
BT ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
SALOMON BROTHERS INC
Acting severally on behalf
of themselves and the several
Underwriters named herein
By: MORGAN STANLEY & CO. INCORPORATED
By: /s/ Francis J. Oelerich III
----------------------------------
Name: Francis J. Oelerich III
Title: Managing Director
34
<PAGE>
SCHEDULE I
Principal Amount
of 7.80% Senior
Debentures due
2018
Underwriter To Be Purchased
- ----------- ---------------
Morgan Stanley & Co.
Incorporated ........................... $100,000,000
BT Alex. Brown Incorporated ............ 25,000,000
Credit Suisse First Boston
Corporation ............................ 25,000,000
Goldman, Sachs & Co .................... 25,000,000
Lehman Brothers Inc. ................... 25,000,000
NationsBanc Montgomery ................. 25,000,000
Securities LLC
Salomon Brothers Inc ................... 25,000,000
Total .................................. $250,000,000
============
35
<PAGE>
Schedule II
Upon the consummation of the Senior Note Offerings, 100% of the
shares of capital stock of each Significant Subsidiary will be, directly or
indirectly, owned by the Company free and clear of any material lien, except
that the Company owns approximately 99% of the outstanding shares of AVIR S.p.A.
<PAGE>
Exhibit 1.5
Owens-Illinois, Inc.
13,800,000 Shares
Common Stock
($.01 par value)
UNDERWRITING AGREEMENT
New York, New York
May 14, 1998
SMITH BARNEY INC.
BT ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you, Smith Barney Inc., are acting as representative
(the "Representative"), 13,800,000 shares of Common Stock, $.01 par value per
share ("Common Stock") of the Company (the "Underwritten Securities"). The
Company also proposes to grant to the Underwriters an option to purchase up to
1,890,000 additional shares of Common Stock (the "Option Securities"; the Option
Securities, together with the Underwritten Securities, being hereinafter called
the "Securities").
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"), Post-
Effective Amendment No. 1 to the Registration Statement (File No. 333-25175), as
amended, relating to the Securities and the offering thereof from time to time
in accordance with Rule 415 under the Securities Act. Such registration
statements, as amended, have been declared effective by the Commission. In
addition, the Company has prepared and filed with the Commission the Preliminary
Prospectus (as defined herein) pursuant to Rule
<PAGE>
2
424(b) under the Securities Act in accordance with Rule 424(b) under the
Securities Act.
The form of prospectus, including any prospectus supplement,
relating to the Securities as first filed pursuant to Rule 424(b) or, if no
filing pursuant to Rule 424(b) is made, such form of prospectus included in the
Registration Statement at the Effective Date, is hereinafter called the
"Prospectus". "Preliminary Prospectus" shall mean any preliminary prospectus,
including any preliminary prospectus supplement, used in connection with the
offer of any Securities prior to the date hereof.
The term "the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective. "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto. "Registration
Statement" shall mean the registration statement referred to above (File No.
333-47519), including incorporated documents and financial statements, as
amended at the Execution Time and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date (as defined herein), shall
also mean such registration statement as so amended. Any reference herein to the
Registration Statement, Preliminary Prospectuses or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") on or before the Effective
Date of the Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement became effective, as of the Closing Date and as amended or
supplemented, if applicable, and the Prospectus, when it is first filed in
accordance with Rule 424(b) under the Securities Act and on the Closing
Date, complied and will comply, as the case may be, in all material
respects with the requirements of the
<PAGE>
3
Securities Act and the applicable rules and regulations of the Commission
thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit to state a material
fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they are
made, not misleading.
<PAGE>
4
(v) Each of Ernst & Young LLP and Ernst & Young, Melbourne,
Australia, who are reporting upon the audited financial statements and
schedules included or incorporated by reference in the Registration
Statement and the Prospectus, each as amended or supplemented, if
applicable, are independent public accountants as required by the
Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings (each as defined in the
Preliminary Prospectus or the Prospectus), (B) give effect to the
assumptions made on a reasonable basis, (C) present fairly in all material
respects, the historical and proposed transactions contemplated by the
Preliminary Prospectus and the Prospectus and (D) comply in all material
respects with the requirements of Rules 11-01 and 11-02 of Regulation S-X;
and the other pro forma financial information and pro forma financial data
set forth in the Prospectus under the captions "Summary -- Summary
Historical and Pro Forma Financial Data" and "Consolidated Capitalization"
are derived from such "Unaudited Pro Forma Condensed Consolidated
Financial Information."
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing
<PAGE>
5
under the laws of the State of Delaware, has the corporate power and
authority to own its property and to conduct its business as described in
the Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or otherwise), properties, assets,
business or results of operations of the Company and its subsidiaries,
considered as one enterprise (a "Material Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain securities of the Company, who have the right to request
the Company to register securities held by them under the Securities Act,
except for the Registration Rights Agreement dated as of March 17, 1986 by
and among OII Holdings Corporation (the predecessor in interest to the
Company), KKR Partners II, L.P., OII
<PAGE>
6
Associates, L.P., OII Associates II, L.P. and KKR Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Securities to be issued and sold by the Company pursuant
to this Agreement have been duly authorized and, when issued to and paid
for by you in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable and, to the best of our knowledge,
free of preemptive rights.
(xv) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvi) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the performance or observance of any
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or its subsidiaries
is subject or by which any of them or any of their properties or assets
may be bound or affected, (B) in violation of any existing applicable law,
ordinance, regulation, judgment, order or decree of any government,
governmental instrumentality, arbitrator or court, domestic or foreign,
having jurisdiction over the Company or any of its subsidiaries or any of
their properties or assets or (C) in each case to the
<PAGE>
7
knowledge of the Company, in violation of or has violated any permit,
certificate, license, order or other approval or authorization required in
connection with the operation of its business that, with respect to each
of clause (A), (B) and (C) of this paragraph, would (individually or in
the aggregate) (I) adversely affect the legality, validity or
enforceability of this Agreement or the Securities, (II) have a Material
Adverse Effect or (III) impair the ability of the Company to fully perform
on a timely basis any obligations that it has under this Agreement, or the
Securities.
(xvii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement, the
compliance by the Company with the terms herein and the consummation by
the Company of the transactions contemplated hereby, and in the
Registration Statement and the Prospectus, do not and will not result in a
violation of any of the terms or provisions of the certificate of
incorporation or by-laws of the Company or any of its subsidiaries, and
(A) will not, as of the Closing Date, conflict with, or result in a breach
or violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan or credit agreement,
note, lease or other material agreement or instrument to which the Company
or any of its subsidiaries is a party or by which any of them or any of
their properties or assets is bound, except for such conflicts, breaches,
violations or defaults that would not have a Material Adverse Effect or
(B) do not and will not conflict with or result in a breach or violation
of any existing applicable law, rule, regulation, judgment, order or
decree of any government, governmental instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except for any
conflict, breach or violation that would not have a Material Adverse
Effect.
(xviii) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for the due authorization, execution,
delivery and performance by the Company of this Agreement, the valid
authorization, issuance, sale and delivery of the Securities, except (A)
such as may be required by the securities or blue sky laws of the various
states (the "Blue Sky laws") in connection with the offer and sale of the
Securities and (B) for such authorizations, approvals, consents or orders
of, or qualifications with, any governmental body or agency that are
required
<PAGE>
8
and have been received and are in full force and effect as of the Closing
Date.
(xix) There is no action, suit, investigation or proceeding before
or by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company, threatened,
against or affecting the Company or any of its subsidiaries or any of
their properties and assets that (A) is required to be disclosed in the
Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or any of the transactions contemplated hereby or (D) questions
the legality or validity of any such transaction or seeks to recover
damages or obtain other relief in connection with any such transaction,
and, in each case to the knowledge of the Company, there is no valid basis
for any such action, suit, investigation or proceeding; the aggregate of
all pending legal or governmental proceedings to which the Company or any
of its subsidiaries is a party or that affect any of their properties and
assets that are not described in the Registration Statement or the
Prospectus, including ordinary routine litigation incidental to its
business, would not have a Material Adverse Effect.
(xx) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required or, in the case of exhibits,
will not be so filed promptly after the Closing Date.
(xxi) Each of the Company and its subsidiaries has good title to all
properties owned by them, in each case free and clear of all liens except
(A) as do not materially interfere with the use made and proposed to be
made of such properties, (B) as set forth in the Registration Statement
and the Prospectus or (C) as could not reasonably be expected to have a
Material Adverse Effect.
(xxii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and
<PAGE>
9
use its properties and assets and to conduct its business in the manner
described in the Registration Statement or the Prospectus, except to the
extent that the failure to so obtain or file would not have a Material
Adverse Effect.
(xxiii) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxiv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxv) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
<PAGE>
10
(xxvi) The Securities are, or will be when issued, "excepted
securities" within the meaning of Rule 101(c) of Regulation M under the
Exchange Act.
(xxvii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxviii) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(xxix) The Securities have been approved for listing on the New York
Stock Exchange.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $40.4525 per
share, the number of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several Underwriters to purchase, severally and not jointly, up to
an aggregate of 1,890,000 shares of Option Securities at the same purchase price
per share as the Underwriters shall pay for the Underwritten Securities. Said
option may be exercised only to cover over-allotments in the sale of the
Underwritten Securities by the Underwriters. Said option may be exercised in
whole or in part at any time on or before the 30th day after the date of the
Prospectus upon written or telegraphic notice by the Representative to the
Company setting forth the number of shares of the Option Securities as to which
the several Underwriters are exercising the option and the settlement date.
Delivery of certificates for the shares of Option Securities, and payment
therefor, shall be made as provided in Section 3 hereof. The number of shares of
the Option Securities to be purchased by each Underwriter shall be the same
percentage of the total number of shares of the Option Securities to be
purchased by the several Underwriters as such Underwriter is
<PAGE>
11
purchasing of the Underwritten Securities, subject to such adjustments as you in
your absolute discretion shall make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the business day
prior to the Closing Date) shall be made at 7:00 a.m. New York City time, on May
20, 1998, or such later date (not later than May 26, 1998) as the Representative
shall designate, which date and time may be postponed by agreement between the
Representative and the Company or as provided in Section 11 hereof (such date
and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Representative
for the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representative of the purchase price thereof to
or upon the order of the Company by means of a wire transfer of immediately
available funds in accordance with written instructions from the Company or
through the facilities of the Depository Trust Company ("DTC"). Delivery of the
Underwritten Securities and the Option Securities shall be made at such location
as the Representative shall reasonably designate at least one business day in
advance of the Closing Date and payment for such Securities shall be made at the
office of Simpson Thacher & Bartlett, New York, New York. Certificates for the
Securities shall be registered in such names and in such denominations as the
Representative may request not less than one full business day in advance of the
Closing Date.
If the option to purchase the Option Securities provided for in
Section 2(b) hereof is exercised by the Underwriters after the business day
prior to the Closing Date, the Company will deliver (at the expense of the
Company) to the Representative, at 388 Greenwich Street, New York, New York, on
the date specified by the Representative (which shall be three business days
after exercise of said option, the "Option Closing Date"), delivery of the
Option Securities shall be made to the Representative for the respective
accounts of the several Underwriters against payment by the several Underwriters
through the Representative of the purchase price thereof to or upon the order of
the Company by means of a wire transfer of immediately available funds in
accordance with written instructions from the Company or through the facilities
of DTC. If settlement for the Option Securities occurs after the Closing Date,
the Company will deliver to the Representative on the settlement date for the
Option Securities, and the obligation of the Underwriter to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters
<PAGE>
12
confirming as of such date the opinions, certificates and letters delivered on
the Closing Date pursuant to Section 5 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock; and
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the
satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by the Chairman of the Board or the
President or a Vice President and the Treasurer or Controller of the
Company, dated the Closing Date, to the effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
<PAGE>
13
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility and Qualification of
the Trustee on Form T-1. In passing upon the compliance as to form
of the Registration Statement and the Prospectus, such counsel has
assumed that the statements made therein (or incorporated by
reference therein) are correct and complete.
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Securities Act and no proceedings therefor have
been initiated or threatened by the Commission; and any required
filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act has been made in accordance with Rule 424(b) under
the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate
<PAGE>
14
power and authority to own or lease its property and to conduct its
business as described in the Registration Statement and the
Prospectus;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement, have been duly authorized
and, when issued to and paid for by you in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable and, to our knowledge, free of preemptive rights.
(vi) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or New York statute, or any
rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or New York
statute known to such counsel to be applicable to the Company
(except that no opinion shall be expressed with respect to federal
or state securities or "blue sky" laws) or (B) the breach of or a
default under (I) any indenture or other agreement or instrument
pertaining to the Company's long-term debt listed in the Prospectus
Supplement under the caption "Consolidated Capitalization",
excluding long-term debt listed as "Other," or (II) any court or
administrative orders, writs, judgments or decrees specifically
directed to the Company and identified to such counsel by an officer
of the Company as material to the Company;
(vii) to such counsel's knowledge, no authorization, approval,
consent or order of, or filing or qualification with, any federal or
New York State court or governmental body or agency is required to
be obtained or made by the Company for the execution and delivery by
the Company of this Agreement or the issuance and sale of the
Securities by the Company, except (A) such as may be required under
state securities or blue sky laws in connection with the purchase
and distribution of the Securities and (B) except such as have been
obtained or made;
<PAGE>
15
(viii) the statements set forth in the "Description of the
Common Stock" contained in the Company's Registration Statement on
Form 8-A filed on December 3, 1991, as amended, insofar as such
statements constitute summaries of the documents referred to
therein, are accurate in all material respects; and the Securities
conform in all material respects to the description thereof
incorporated by reference in the Prospectus;
(ix) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations for
Non-United States Holders," insofar as such statements constitute a
summary of legal matters, are accurate in all material respects; and
(x) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and
the Prospectus and related matters were discussed, and although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and have not made any
independent check or verification thereof (except as set forth in
paragraphs (viii) and (ix) above), during the course of such
participation, no facts came to such counsel's attention that caused such
counsel to believe that the Registration Statement (including the
incorporated documents), at the time it became effective, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus (including the incorporated
documents), as of its date and as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted 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; it
being understood that such counsel express no belief with respect to the
financial statements, schedule and other financial data or the Statement
of Eligibility of the Trustee on Form T-1
<PAGE>
16
included or incorporated by reference in the Registration Statement or the
Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver the
foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.);
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all
<PAGE>
17
of the issued and outstanding capital stock of each Significant
Subsidiary has been duly authorized and validly issued, is fully
paid and non-assessable and all of the issued and outstanding
capital stock of such Significant Subsidiaries, except as set forth
on Schedule II hereto, is owned of record by the Company, directly
or through subsidiaries, and is free and clear of any material lien,
claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
(v) the Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement have been duly authorized
and, when issued to and paid for by you in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable and, to the best of our knowledge, free of
preemptive rights;
(vi) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) or (B)
the breach of or default under (I) any indenture or other agreement
or instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries considered as
one enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such officer;
(vii) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
<PAGE>
18
properties or assets of the Company or any of its subsidiaries is
subject that is required to be described in the Registration
Statement or the Prospectus and is not so described therein; or of
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required, except such exhibits
which are permitted, pursuant to the Securities Act, to be filed
subsequently on a Current Report on Form 8-K; and
(viii) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility of the Trustee on Form T-1. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel has assumed that the statements made
therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or contains an untrue statement
of a material fact or omitted or omits to state a material fact necessary
to
<PAGE>
19
make the statements therein, in the light of the circumstances under which
they were made, not misleading; it being understood that such counsel
expresses no belief with respect to the financial statements, schedules
and other financial data included or incorporated by reference in the
Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder,
and neither the Registration Statement nor the Prospectus, as they may
then be amended or supplemented, shall 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, in the case of the
Prospectus, in the light of the circumstances under which they were made,
not misleading; (ii) there shall not have been, since the respective dates
as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective
Material Adverse Change, whether or not arising in the ordinary course of
business; (iii) no action, suit or proceeding at law or in equity shall be
pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries that would be required to be set forth
in the Prospectus other than as set forth therein and no proceedings shall
be pending or, to the knowledge of the Company, threatened against it or
any of its subsidiaries before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could have a Material Adverse Effect, other
than as set forth in the Prospectus; (iv) the
<PAGE>
20
Company shall have complied with all material agreements and satisfied all
conditions on its part to be performed or satisfied at or prior to the
Closing Date; and (v) the other representations and warranties of the
Company set forth in Section 1(a) shall be accurate in all material
respects as though expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement shall be reasonably satisfactory in form and substance to you
and to your counsel.
(i) The Securities shall have been duly authorized for listing on
the New York Stock Exchange (the "NYSE"), at or by the Closing Date,
subject only to official notice of issuance thereof and notice of a
satisfactory distribution of the Securities.
(j) Prior to the Closing Date, the Company shall have furnished to
Smith Barney Inc. such further information, certificates and documents as
Smith Barney Inc. may reasonably request.
(k) The Lock-Up Agreements executed by (i) each of the Company's
executive officers and directors listed in Schedule III hereto and (ii) by
each of OII
<PAGE>
21
Associates, L.P., OII Associates II, L.P. and KKR Partners II, L.P. in
favor of the Underwriters relating to sales of shares of Common Stock of
the Company shall have been delivered to Smith Barney Inc. and shall be in
full force and effect on the Closing Date.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Simpson Thacher & Bartlett, counsel for the
Underwriters, at 425 Lexington Avenue, New York, New York 10017, on the Closing
Date.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10(a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day following
the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein;
<PAGE>
22
(b) To furnish to each of Smith Barney Inc. and its counsel, without
charge, one signed copy of the Registration Statement (including exhibits
thereto) and for delivery to each other Underwriter a conformed copy of
the Registration Statement (without exhibits thereto) and, during the
period mentioned in paragraph (d) below, as many copies of the Preliminary
Prospectus and the Prospectus and any supplements and amendments thereto
or to the Registration Statement as you may reasonably request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to
<PAGE>
23
the Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Preliminary Prospectus or
the Prospectus or any document to be filed pursuant to the Exchange Act
which will be incorporated by reference into the Registration Statement,
Preliminary Prospectus or the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Preliminary Prospectus or the Prospectus, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Preliminary Prospectus or the Prospectus or
for additional information and (v) 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. The Company will
make every commercially reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain, as soon as
possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act and the Exchange Act and the regulations thereunder so as
to permit the completion of the distribution of the Securities as
contemplated in this Agreement and the Prospectus; and the Company, during
the period when the Preliminary Prospectus and the Prospectus is required
to be delivered under the Securities Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the Exchange Act within the time periods required under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities; provided, however, that the Company shall not be obligated to
file any general consent to service of process or to qualify as a foreign
corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject. The
Company will file such statements and reports as may be required by the
laws of each jurisdiction in which the Securities have been qualified as
above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period
<PAGE>
24
covered thereby a consolidated earnings statement for a twelve-month
period beginning after the effective date (as defined in Rule 158(c) under
the Securities Act) of the Registration Statement relating to such
Securities, but not later than the first day of the Company's fiscal
quarter next following such effective date and that otherwise satisfies
the provisions of Section 11(a) of the Securities Act and the regulations
thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the Securities; (iii) the fees and disbursements of the Company's counsel
and accountants; (iv) the qualification of the Securities under the state
securities or blue sky laws in accordance with the provisions of Section
6(g) herein, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection
with the preparation of the preliminary and final state securities laws or
blue sky surveys (the "Blue Sky Surveys") or any Legal Investment
Memoranda; (v) the printing and delivery to the Underwriters in quantities
as hereinabove stated of copies of the Registration Statement and all
amendments thereto and of each Preliminary Prospectus and the Prospectus
and any amendments or supplements thereto; (vi) the printing and delivery
to the Underwriters of copies of the Blue Sky Surveys or any Legal
Investment Memoranda; (vii) any fees charged by rating agencies for the
rating of the Securities or the listing, if any, of the Securities on the
NYSE; (viii) the filing fees and expenses, if any, incurred with respect
to any filing with the National Association of Securities Dealers,
<PAGE>
25
Inc. (the "NASD") made in connection with the offering of the Securities;
and (ix) any expenses incurred by the Company in connection with a "road
show" presentation to potential investors.
(l) For a period of 90 days after the date of this Agreement, the
Company will not offer, sell, contract to sell, pledge, hypothecate, grant
any option to purchase or otherwise dispose of, directly or indirectly, or
file with the Commission a registration statement under the Securities Act
(other than on Form S-8 relating to resales of securities as described in
the general instructions to Form S-8) relating to any shares of Common
Stock or securities convertible or exchangeable into or exercisable for
any shares of Common Stock, without the prior written consent of Smith
Barney Inc., except (i) grants of employee stock options and other awards
pursuant to the terms of stock option plans in effect on the date hereof
or described in the Prospectus, (ii) sales and issuances of securities
pursuant to the exercise of any such options or awards or the exercise of
any other stock options or awards outstanding on the date hereof, (iii)
the issuance and/or sale of Common Stock pursuant to existing employee
benefit plans of the Company, (iv) the issuance and/or sale of Common
Stock upon the exercise of the respective rights of the holders of the
Company's Series A Exchangeable Preferred Stock, par value $.01 per share,
Series B Exchangeable Preferred Stock, par value $.01 per share, Series C
Exchangeable Preferred Stock, par value $.01 per share, and Convertible
Preferred Stock, par value $.01 per share, to exchange their shares of
Exchangeable or Convertible Preferred Stock, as the case may be, into
shares of Common Stock, (v) the issuance and/or sale of Common Stock upon
the exercise of any of the Company's warrants or options outstanding on
the date hereof and (vi) in connection with a bona fide loan transaction
which does not permit the pledgee, directly or indirectly, to offer, sell,
contract to sell or otherwise dispose of any interest in such shares or
securities during such 90 day period.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers and
employees of each Underwriter and each person who controls any Underwriter
within the meaning of either the Securities 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 Securities 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
<PAGE>
26
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in the
Preliminary Prospectus or the 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 agrees 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 the
Company will not 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
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in (i) the first sentence of the last paragraph of text on the cover
page of the Prospectus concerning the terms of the offering by the Underwriters,
(ii) the last paragraph on page S-2 of the Prospectus, concerning stabilization
and over-allotment by the Underwriters and (iii) the second paragraph of text
under the caption "Underwriters" in the Prospectus Supplement, concerning the
terms of the offering by the Underwriters in the Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Prospectus or the Prospectus, and you, as the
Representative, confirm that such statements are correct.
(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
<PAGE>
27
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 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
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
<PAGE>
28
insufficient to hold harmless an indemnified party for any reason, the Company
and the Underwriters 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 one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and by the Underwriters from the offering of the Securities; provided,
however, that in no case shall any Underwriter (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 Underwriter hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for any
reason, the Company and the Underwriters shall contribute in such proportion as
is appropriate to reflect not only such relative benefits but also the relative
fault of the Company and of the Underwriters in connection with the statements
or omissions which resulted in such Losses as well as any other relevant
equitable considerations. Benefits received by the Company shall be deemed to be
equal to the total net proceeds from the offering (before deducting expenses),
and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or the Underwriters. The Company and the Underwriters 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 Securities 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 an
Underwriter within the meaning of either the Securities Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Securities Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the
<PAGE>
29
representations, warranties and other statements of the Company contained in
this Agreement shall remain operative and in full force and effect regardless of
(a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person controlling the
Company and (c) acceptance of and payment for any of the Securities.
10. Termination. Smith Barney Inc. may terminate this Agreement by
notice to the Company, at any time at or prior to the Closing Date (a) if there
has been, since the respective dates as of which information is given in the
Registration Statement or the Prospectus, any Material Adverse Change, or any
development involving a prospective Material Adverse Change or (b) if there has
occurred any new outbreak of hostilities or escalation of existing hostilities
or other calamity or crisis the effect of which on the financial markets in the
United States is such as to make it, in your judgment, impracticable to market
the Securities or enforce contracts for the sale of the Securities, or (c) if
trading in any securities of the Company has been suspended on any exchange or
in any over-the-counter market or by the Commission, or if trading generally on
the NYSE has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by such
exchange or by order of the Commission or any other governmental authority or
(d) if a general moratorium on commercial banking activities in New York State
has been declared by either federal or New York State authorities.
11. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the
<PAGE>
30
event of a default by any Underwriter as set forth in this Section 11, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representative shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall relieve
any defaulting Underwriter of its liability, if any, to the Company and any
nondefaulting Underwriter for damages occasioned by its default hereunder.
12. Notices. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by Smith Barney Inc..
All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be given (and shall be
deemed to have been given upon receipt) by delivery in person, by cable, by
telecopy, ny telegram, by telex or by registered or certified mail (postage
prepaid, return receipt requested) to the applicable party at the addresses
indicated below:
(a) if to the Underwriters:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Facsimile No.: (212) 816-7912
Attention: General Counsel, Investment
Banking Division
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.: (419) 247-2226
Attention: Thomas L. Young
General Counsel
<PAGE>
31
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Time of the Essence. Time shall be of the essence of this
Agreement.
16. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
17. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
<PAGE>
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 among the
Company and the several Underwriters.
Very truly yours,
OWENS-ILLINOIS, INC.
By: /s/ David G. Van Hooser
----------------------------------------
Name: David G. Van Hooser
Title: Senior Vice President,
Director of Corporate
Strategy
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SMITH BARNEY INC.
BT ALEX. BROWN INCORPORATED
CREDIT SUISSE FIRST BOSTON CORPORATION
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
MORGAN STANLEY & CO. INCORPORATED
By: Smith Barney Inc.
By: /s/ Jeffrey McDermott
----------------------------------
Name: Jeffrey McDermott
Title: Managing Director
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
SCHEDULE I
Number of Number of Option
Underwritten Securities to be Purchased
Securities to be if Maximum Option
Underwriters Purchased Securities Exercised
------------ ---------------- --------------------------
Smith Barney Inc................... 1,971,432 270,000
BT Alex. Brown Incorporated........ 1,971,428 270,000
Credit Suisse First Boston
Corporation........................ 1,971,428 270,000
Goldman, Sachs & Co................ 1,971,428 270,000
Lehman Brothers Inc................ 1,971,428 270,000
Merrill Lynch, Pierce, Fenner &
Smith Incorporated................. 1,971,428 270,000
Morgan Stanley & Co.
Incorporated....................... 1,971,428 270,000
---------- ---------
Total.............................. 13,800,000 1,890,000
========== =========
<PAGE>
Schedule II
Upon the consummation of the Offerings (as defined in the
Prospectus), 100% of the shares of capital stock of each Significant Subsidiary
will be, directly or indirectly, owned by the Company free and clear of any
material lien, except that the Company owns approximately 99% of the outstanding
shares of AVIR S.p.A.
<PAGE>
SCHEDULE III
Executive Officers and Directors
Who Have Executed Lock-Up Agreements
Robert J. Dineen
Edward A. Gilhuly
James H. Greene, Jr.
John L. Hodges
Henry R. Kravis
Robert J. Lanigan
Joseph H. Lemieux
Robert I. MacDonnell
John J. McMackin, Jr.
Michael W. Michelson
George R. Roberts
R. Scott Trumbull
David G. Van Hooser
Lee A. Wesselmann
Thomas L. Young
<PAGE>
Exhibit 1.6
Owens-Illinois, Inc.
8,000,000 Shares
Convertible Preferred Stock
($.01 par value)
UNDERWRITING AGREEMENT
New York, New York
May 14, 1998
SMITH BARNEY INC.
BT ALEX. BROWN INCORPORATED
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
c/o SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Dear Ladies and Gentlemen:
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
proposes to sell to the underwriters named in Schedule I hereto (the
"Underwriters"), for whom you, Smith Barney Inc., are acting as representative
(the "Representative"), 8,000,000 shares of Convertible Preferred Stock, $.01
par value per share ("Convertible Preferred Stock") of the Company (the
"Underwritten Securities"). The Company also proposes to grant to the
Underwriters an option to purchase up to 1,050,000 additional shares of
Convertible Preferred Stock (the "Option Securities"; the Option Securities,
together with the Underwritten Securities, being hereinafter called the
"Securities").
The Securities are convertible into shares of the Company's Common
Stock, $.01 par value per share (the "Common Stock"), upon the terms and subject
to the conditions and adjustments set forth in the Certificate of Designation
relating thereto to be filed with the Secretary of State of the State of
Delaware on May 15, 1998 (the "Certificate of Designation"). The shares of
Common Stock initially issuable upon the conversion of the Securities (assuming
no adjustment of the conversion price therefor) are hereinafter called the
"Conversion Stock".
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (File No.
333-47519), which registration statement also constitutes, pursuant to Rule 429
under the Securities Act of 1933, as amended (the "Securities Act"), Post-
<PAGE>
2
Effective Amendment No. 1 to the Registration Statement (File No. 333-25175), as
amended, relating to the Securities and the offering thereof from time to time
in accordance with Rule 415 under the Securities Act. Such registration
statements, as amended, have been declared effective by the Commission. In
addition, the Company has prepared and filed with the Commission the Preliminary
Prospectus (as defined herein) pursuant to Rule 424(b) under the Securities Act
in accordance with Rule 424(b) under the Securities Act.
The form of prospectus, including any prospectus supplement,
relating to the Securities as first filed pursuant to Rule 424(b) or, if no
filing pursuant to Rule 424(b) is made, such form of prospectus included in the
Registration Statement at the Effective Date, is hereinafter called the
"Prospectus". "Preliminary Prospectus" shall mean any preliminary prospectus,
including any preliminary prospectus supplement, used in connection with the
offer of any Securities prior to the date hereof.
The term "the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective. "Execution Time" shall mean the date and time that
this Agreement is executed and delivered by the parties hereto. "Registration
Statement" shall mean the registration statement referred to above (File No.
333- 47519), including incorporated documents and financial statements, as
amended at the Execution Time and, in the event any post-effective amendment
thereto becomes effective prior to the Closing Date (as defined herein), shall
also mean such registration statement as so amended. Any reference herein to the
Registration Statement, Preliminary Prospectuses or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Securities and
Exchange Act of 1934, as amended (the "Exchange Act") on or before the Effective
Date of the Registration Statement or the issue date of such Preliminary
Prospectus or the Prospectus, as the case may be; and any reference herein to
the terms "amend", "amendment" or "supplement" with respect to the Registration
Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement, or the issue date of any
Preliminary Prospectus or the Prospectus, as the case may be, deemed to be
incorporated therein by reference.
1. Representations and Warranties. (a) The Company represents and
warrants, as of the date hereof and as of the Closing Date, to and agrees with
each of the Underwriters as follows:
(i) The Company meets the requirements for use of Form S-3 under the
Securities Act. The Registration Statement, at the time the Registration
Statement
<PAGE>
3
became effective, as of the Closing Date and as amended or supplemented,
if applicable, and the Prospectus, when it is first filed in accordance
with Rule 424(b) under the Securities Act and on the Closing Date,
complied and will comply, as the case may be, in all material respects
with the requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(ii) The Registration Statement has become effective; no stop order
suspending the effectiveness of the Registration Statement is in effect
and no proceedings for such purpose are pending before or threatened by
the Commission; and any required filing of the Prospectus pursuant to Rule
424(b) under the Securities Act has been made in accordance with Rule
424(b) under the Securities Act.
(iii) The Registration Statement, at the time the Registration
Statement became effective, as amended or supplemented (or, if an
amendment to the Registration Statement or an annual report on Form 10-K
has been filed by the Company with the Commission subsequent to the
Effective Date, then at the time of the most recent such filing) did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Prospectus, at the time the
Registration Statement became effective, as amended or supplemented and as
of the Closing Date, did not and will not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in reliance
upon and in conformity with information furnished to the Company in
writing by any of you expressly for use in the Registration Statement or
Prospectus.
(iv) The documents incorporated by reference in the Registration
Statement and Prospectus, as amended or supplemented, if applicable, at
the time they were or hereafter are filed with the Commission, complied
and will comply in all material respects with the requirements of the
Exchange Act and the rules and regulations of the Commission thereunder
and, when read together with the other information in the Prospectus, at
the time the Registration Statement and any amendments thereto became or
become effective and at the Closing Date, did not and will not contain an
untrue statement of a material fact and will not omit
<PAGE>
4
to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they are made, not misleading.
(v) Each of Ernst & Young LLP and Ernst & Young, Melbourne,
Australia, who are reporting upon the audited financial statements and
schedules included or incorporated by reference in the Registration
Statement and the Prospectus, each as amended or supplemented, if
applicable, are independent public accountants as required by the
Securities Act.
(vi) (A) The consolidated financial statements and the related notes
of the Company included or incorporated by reference in the Registration
Statement and the Prospectus, or in any supplement thereto or amendment
thereof, present fairly, in all material respects, the consolidated
financial position of the Company and its subsidiaries, considered as one
enterprise, as of the dates indicated and the consolidated results of
operations and cash flows of the Company and its subsidiaries, considered
as one enterprise, for the periods specified; (B) such financial
statements and related notes have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and (C) the financial statement schedule
incorporated by reference in the Registration Statement presents fairly
the information required to be stated therein.
(vii) The pro forma financial statements contained in the
Preliminary Prospectus and the Prospectus under the heading "Unaudited Pro
Forma Condensed Consolidated Financial Information" have been prepared on
a basis consistent with the historical statements referred to in (vi)
above, except for the pro forma adjustments specified therein, and (A)
include all material adjustments to the historical financial data required
by Rule 11-02 of Regulation S-X necessary to reflect the Acquisition and
the related financing and the Offerings(each as defined in the Preliminary
Prospectus or the Prospectus), (B) give effect to the assumptions made on
a reasonable basis, (C) present fairly in all material respects, the
historical and proposed transactions contemplated by the Preliminary
Prospectus and the Prospectus and (D) comply in all material respects with
the requirements of Rules 11-01 and 11-02 of Regulation S-X; and the other
pro forma financial information and pro forma financial data set forth in
the Prospectus under the captions "Summary -- Summary Historical and Pro
Forma Financial Data" and "Consolidated Capitalization" are
<PAGE>
5
derived from such "Unaudited Pro Forma Condensed Consolidated Financial
Information."
(viii) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the State of Delaware,
has the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or
otherwise), properties, assets, business or results of operations of the
Company and its subsidiaries, considered as one enterprise (a "Material
Adverse Effect").
(ix) Each subsidiary of the Company that is a "Significant
Subsidiary" (as defined in Rule 1-02 of Regulation S-X under the
Securities Act) (hereinafter a "Significant Subsidiary") has been duly
incorporated, is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation, has the corporate power
and authority to own its property and to conduct its business as described
in the Prospectus and is duly qualified to transact business and is in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect.
(x) All of the issued and outstanding shares of capital stock of the
Company have been duly authorized and are validly issued, fully paid and
non-assessable.
(xi) All of the issued and outstanding capital stock of each
Significant Subsidiary of the Company (including Owens-Illinois Group,
Inc., a Delaware corporation and a wholly-owned subsidiary of the Company)
has been duly authorized, is validly issued, fully paid and non-assessable
and, except as set forth in Schedule II hereto, is owned by the Company,
directly or through one or more subsidiaries of the Company, free and
clear of any material lien.
(xii) There are no holders of securities (debt or equity) of the
Company, or holders of rights (including preemptive rights), warrants or
options to obtain securities of the Company, who have the right to
<PAGE>
6
request the Company to register securities held by them under the
Securities Act, except for the Registration Rights Agreement dated as of
March 17, 1986 by and among OII Holdings Corporation (the predecessor in
interest to the Company), KKR Partners II, L.P., OII Associates, L.P., OII
Associates II, L.P. and KKR Associates, L.P.
(xiii) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under, this Agreement have been authorized by all necessary corporate
action of the Company; and this Agreement has been duly executed and
delivered by the Company.
(xiv) The Securities to be issued and sold by the Company pursuant
to this Agreement have been duly authorized and, when issued to and paid
for by you in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable and, to the best of our knowledge,
free of preemptive rights.
(xv) All of the shares of Conversion Stock have been duly and
validly authorized and reserved for issuance upon conversion of the
Securities and, if issued and delivered upon conversion of the Securities
in accordance with the terms of the Certificate of Designation, would be
duly and validly issued, fully paid and non-assessable.
(xvi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated
therein, contemplated thereby or otherwise incorporated by reference
therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), properties, assets, business, or
results of operations of the Company and its subsidiaries, considered as
one enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Change"), (B) any transaction entered into by the
Company or any of its subsidiaries, other than in the ordinary course of
business, that could have a Material Adverse Effect, or (C) any dividend
or distribution of any kind declared, paid or made by the Company on its
capital stock.
(xvii) Neither the Company nor any of its subsidiaries is (A) in
violation of its certificate of incorporation or by-laws or in default
(nor has an event occurred that with notice or passage of time or both
would constitute such a default) in the
<PAGE>
7
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other material agreement or instrument to
which the Company or its subsidiaries is subject or by which any of them
or any of their properties or assets may be bound or affected, (B) in
violation of any existing applicable law, ordinance, regulation, judgment,
order or decree of any government, governmental instrumentality,
arbitrator or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets or
(C) in each case to the knowledge of the Company, in violation of or has
violated any permit, certificate, license, order or other approval or
authorization required in connection with the operation of its business
that, with respect to each of clause (A), (B) and (C) of this paragraph,
would (individually or in the aggregate) (I) adversely affect the
legality, validity or enforceability of this Agreement or the Securities,
(II) have a Material Adverse Effect or (III) impair the ability of the
Company to fully perform on a timely basis any obligations that it has
under this Agreement, or the Securities.
(xviii) The issuance, sale and delivery of the Securities, the
execution, delivery and performance by the Company of this Agreement and
the Certificate of Designation, the issuance of the Conversion Stock upon
conversion of the Securities (assuming that the issuance of the Conversion
Stock were to take place on the date hereof), the compliance by the
Company with the terms herein and the consummation by the Company of the
transactions contemplated hereby, and in the Registration Statement and
the Prospectus, do not and will not result in a violation of any of the
terms or provisions of the certificate of incorporation or by-laws of the
Company or any of its subsidiaries, and (A) will not, as of the Closing
Date, conflict with, or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their properties
or assets is bound, except for such conflicts, breaches, violations or
defaults that would not have a Material Adverse Effect or (B) do not and
will not conflict with or result in a breach or violation of any existing
applicable law, rule, regulation, judgment, order or decree of any
government, governmental instrumentality or court, domestic or foreign,
having jurisdiction over the
<PAGE>
8
Company or any of its subsidiaries or any of their properties or assets,
except for any conflict, breach or violation that would not have a
Material Adverse Effect.
(xix) No authorization, approval, consent or order of, or
qualification with, any governmental body or agency is required to be
obtained or made by the Company for the due authorization, execution,
delivery and performance by the Company of this Agreement, the valid
authorization, issuance, sale and delivery of the Securities, the valid
authorization, issuance and delivery of the Conversion Stock upon
conversion of the Securities (assuming that the issuance of the Conversion
Stock were to take place on the date hereof), except (A) such as may be
required by the securities or blue sky laws of the various states (the
"Blue Sky laws") in connection with the offer and sale of the Securities
and (B) for such authorizations, approvals, consents or orders of, or
qualifications with, any governmental body or agency that are required and
have been received and are in full force and effect as of the Closing
Date.
(xx) There is no action, suit, investigation or proceeding before or
by any government, governmental instrumentality or court, domestic or
foreign, now pending or, to the knowledge of the Company, threatened,
against or affecting the Company or any of its subsidiaries or any of
their properties and assets that (A) is required to be disclosed in the
Prospectus and is not so disclosed, (B) except as disclosed in the
Prospectus, could result in any Material Adverse Change, (C) seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge the
issuance and sale of the Securities or the execution and delivery of this
Agreement or any of the transactions contemplated hereby or (D) questions
the legality or validity of any such transaction or seeks to recover
damages or obtain other relief in connection with any such transaction,
and, in each case to the knowledge of the Company, there is no valid basis
for any such action, suit, investigation or proceeding; the aggregate of
all pending legal or governmental proceedings to which the Company or any
of its subsidiaries is a party or that affect any of their properties and
assets that are not described in the Registration Statement or the
Prospectus, including ordinary routine litigation incidental to its
business, would not have a Material Adverse Effect.
(xxi) There are no statutes, regulations, contracts or other
documents that are required to be described in the Registration Statement
or the
<PAGE>
9
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required or, in the case of exhibits, will
not be so filed promptly after the Closing Date.
(xxii) Each of the Company and its subsidiaries has good title to
all properties owned by them, in each case free and clear of all liens
except (A) as do not materially interfere with the use made and proposed
to be made of such properties, (B) as set forth in the Registration
Statement and the Prospectus or (C) as could not reasonably be expected to
have a Material Adverse Effect.
(xxiii) Each of the Company and its subsidiaries has all necessary
consents, authorizations, approvals, orders, certificates and permits of
and from, and has made all declarations and filings with, all federal,
state, local, foreign and other governmental authorities, all
self-regulatory organizations and all courts and other tribunals, to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in the Registration Statement or the
Prospectus, except to the extent that the failure to so obtain or file
would not have a Material Adverse Effect.
(xxiv) Each of the Company and its subsidiaries owns or possesses,
or can acquire on reasonable terms, adequate patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other proprietary or confidential information, systems or procedures,
whether patented or unpatented), trademarks, service marks and trade names
(collectively, "Intellectual Property") presently employed by them in
connection with the business now operated by them, except where the
failure to own or possess or have the ability to acquire any such
Intellectual Property would not have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received any notice of
infringement of or conflict with asserted rights of others with respect to
any of the foregoing that, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in any
Material Adverse Change.
(xxv) Except as disclosed in the Registration Statement and the
Prospectus, each of the Company and its subsidiaries is in material
compliance with all applicable existing federal, state, local and foreign
laws and regulations relating to protection of human health, safety and
the environment or imposing liability or standards of conduct concerning
any
<PAGE>
10
Hazardous Material (as hereinafter defined) ("Environmental Laws"),
except, in each case, where such noncompliance, individually or in the
aggregate, would not have a Material Adverse Effect. The term "Hazardous
Material" means (A) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, (B) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (C) any petroleum or petroleum
product, (D) any polychlorinated biphenyl and (E) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental
Law.
(xxvi) The Company has not taken and will not take, directly or
indirectly, any action designed to or that might be reasonably expected
to, cause or result in stabilization or manipulation of the price of the
Securities or any action resulting in a violation of Regulation M under
the Exchange Act.
(xxvii) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended (the "1940
Act").
(xxviii) The Company has complied with all provisions of Section
517.075, Florida Statutes relating to doing business with the Government
of Cuba or with any person or affiliate located in Cuba.
(xxix) The Securities have been approved for listing on the New York
Stock Exchange.
(b) Any certificate signed by any officer of either the Company or
any of its subsidiaries and delivered to you or to your counsel at the Closing
Date pursuant to this Agreement or the transactions contemplated hereby shall be
deemed a representation and warranty by the Company or such subsidiary of the
Company, as the case may be, to each of you as to the matters covered thereby.
2. Purchase and Sale. (a) Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Underwriter, and each Underwriter agrees, severally and
not jointly, to purchase from the Company, at a purchase price of $48.57 per
share, the number of the Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance upon the
representations and warranties herein set forth, the Company hereby grants an
option to the several
<PAGE>
11
Underwriters to purchase, severally and not jointly, up to an aggregate of
1,050,000 shares of Option Securities at the same purchase price per share as
the Underwriters shall pay for the Underwritten Securities. Said option may be
exercised only to cover over-allotments in the sale of the Underwritten
Securities by the Underwriters. Said option may be exercised in whole or in part
at any time on or before the 30th day after the date of the Prospectus upon
written or telegraphic notice by the Representative to the Company setting forth
the number of shares of the Option Securities as to which the several
Underwriters are exercising the option and the settlement date. Delivery of
certificates for the shares of Option Securities, and payment therefor, shall be
made as provided in Section 3 hereof. The number of shares of the Option
Securities to be purchased by each Underwriter shall be the same percentage of
the total number of shares of the Option Securities to be purchased by the
several Underwriters as such Underwriter is purchasing of the Underwritten
Securities, subject to such adjustments as you in your absolute discretion shall
make to eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for the
Underwritten Securities and the Option Securities (if the option provided for in
Section 2(b) hereof shall have been exercised on or before the business day
prior to the Closing Date) shall be made at 7:00 a.m. New York City time, on May
20, 1998, or such later date (not later than May 26, 1998) as the Representative
shall designate, which date and time may be postponed by agreement between the
Representative and the Company or as provided in Section 11 hereof (such date
and time of delivery and payment for the Securities being herein called the
"Closing Date"). Delivery of the Securities shall be made to the Representative
for the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representative of the purchase price thereof to
or upon the order of the Company by means of a wire transfer of immediately
available funds in accordance with written instructions from the Company or
through the facilities of the Depository Trust Company ("DTC"). Delivery of the
Underwritten Securities and the Option Securities shall be made at such location
as the Representative shall reasonably designate at least one business day in
advance of the Closing Date and payment for such Securities shall be made at the
office of Simpson Thacher & Bartlett, New York, New York. Certificates for the
Securities shall be registered in such names and in such denominations as the
Representative may request not less than one full business day in advance of the
Closing Date.
If the option to purchase the Option Securities provided for in
Section 2(b) hereof is exercised by the Underwriters after the business day
prior to the Closing
<PAGE>
12
Date, the Company will deliver (at the expense of the Company) to the
Representative, at 388 Greenwich Street, New York, New York, on the date
specified by the Representative (which shall be three business days after
exercise of said option, the "Option Closing Date"), delivery of the Option
Securities shall be made to the Representative for the respective accounts of
the several Underwriters against payment by the several Underwriters through the
Representative of the purchase price thereof to or upon the order of the Company
by means of a wire transfer of immediately available funds in accordance with
written instructions from the Company or through the facilities of DTC. If
settlement for the Option Securities occurs after the Closing Date, the Company
will deliver to the Representative on the settlement date for the Option
Securities, and the obligation of the Underwriter to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 5 hereof.
4. Offering by Underwriters. It is understood that the several
Underwriters propose to offer the Securities for sale to the public as set forth
in the Prospectus.
5. Conditions to the Underwriters' Obligations. The several
obligations of the Underwriters to purchase and pay for the Securities pursuant
to this Agreement are subject to the satisfaction of each of the following
conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) (A) no downgrading shall have occurred in the rating
accorded any of the Company's debt securities or preferred stock by
any "nationally recognized statistical rating organization" as that
term is defined by the Commission for purposes of Rule 436(g)(2)
under the Securities Act and regulations thereunder and (B) no such
organization shall have publicly announced that it has under
surveillance or review, with possible negative implications, its
rating of the Company's debt securities or preferred stock; and
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose shall have been instituted and shall be pending or, to your
knowledge or the knowledge of the Company, shall be contemplated by
the Commission, and any
<PAGE>
13
request on the part of the Commission for additional information
shall have been complied with to the satisfaction of your counsel.
(b) The Company shall have furnished to the Underwriters a
certificate of the Company, signed by the Chairman of the Board or the
President or a Vice President and the Treasurer or Controller of the
Company, dated the Closing Date, to the effect that:
(i) the representations and warranties of the Company 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 has complied in all material respects with all the
agreements and satisfied all the conditions on its part to be
performed or satisfied at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement is in effect and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Registration Statement and the Prospectus, there has
been no Material Adverse Change.
(c) The Underwriters shall have received on the Closing Date an
opinion of Latham & Watkins, outside counsel for the Company, dated the
Closing Date, in form and substance reasonably satisfactory to your
counsel to the effect that:
(i) the Registration Statement and the Prospectus (excluding
the documents incorporated therein by reference) comply as to form
in all material respects with the requirements for registration
statements on Form S-3 under the Securities Act and the rules and
regulations of the Commission thereunder; it being understood,
however, that such counsel expresses no opinion with respect to the
financial statements, schedules and other financial data included or
incorporated in the Registration Statement or the Prospectus or with
respect to the Statement as to the Eligibility and Qualification of
the Trustee on Form T-1. In passing upon the compliance as to form
of the Registration Statement and the Prospectus, such counsel has
assumed that the
<PAGE>
14
statements made therein (or incorporated by reference therein) are
correct and complete.
(ii) the Registration Statement has become effective under the
Securities Act and, to such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued under the Securities Act and no proceedings therefor have
been initiated or threatened by the Commission; and any required
filing of the Prospectus pursuant to Rule 424(b) under the
Securities Act has been made in accordance with Rule 424(b) under
the Securities Act;
(iii) the Company has been duly incorporated and is validly
existing and in good standing under the laws of the State of
Delaware, with corporate power and authority to own or lease its
property and to conduct its business as described in the
Registration Statement and the Prospectus;
(iv) this Agreement has been duly authorized, executed and
delivered by the Company;
(v) the Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement, have been duly authorized
and, when issued to and paid for by you in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable and, to our knowledge, free of preemptive rights.
(vi) the shares of Conversion Stock initially issuable upon
conversion of the Securities have been duly authorized and reserved
for issuance upon conversion of the Securities and, if issued on the
Closing Date upon conversion of the Securities in accordance with
the terms of the Certificate of Designation, would be validly
issued, fully paid and non-assessable.
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement, and the issuance of the Conversion Stock upon conversion
of the Securities (assuming that the issuance of the Conversion
Stock were to take place on the Closing Date), will not result in
(A) the violation by the Company of its Certificate of Incorporation
or Bylaws, the General Corporation Law of the State of Delaware or
any federal or New York statute, or any rule or regulation that has
been issued pursuant to the
<PAGE>
15
General Corporation Law of the State of Delaware or any federal or
New York statute known to such counsel to be applicable to the
Company (except that no opinion shall be expressed with respect to
federal or state securities or "blue sky" laws) or (B) the breach of
or a default under (I) any indenture or other agreement or
instrument pertaining to the Company's long-term debt listed in the
Prospectus Supplement under the caption "Consolidated
Capitalization", excluding long-term debt listed as "Other," or (II)
any court or administrative orders, writs, judgments or decrees
specifically directed to the Company and identified to such counsel
by an officer of the Company as material to the Company;
(viii) to such counsel's knowledge, no authorization,
approval, consent or order of, or filing or qualification with, any
federal or New York State court or governmental body or agency is
required to be obtained or made by the Company for the execution and
delivery by the Company of this Agreement or the issuance and sale
of the Securities by the Company or the valid authorization,
issuance and delivery of the Conversion Stock upon the conversion of
the Securities (assuming that the issuance of the Conversion Stock
were to take place on the Closing Date) except (A) such as may be
required under state securities or blue sky laws in connection with
the purchase and distribution of the Securities and (B) except such
as have been obtained or made;
(ix) the statements set forth in the "Description of the
Common Stock" contained in the Company's Registration Statement on
Form 8-A filed on December 3, 1991, as amended, and in the
"Description of the Convertible Preferred Stock" contained in the
Prospectus, insofar as such statements constitute summaries of the
documents referred to therein, are accurate in all material
respects; and the Securities conform in all material respects to the
description thereof incorporated by reference in the Prospectus;
(x) the statements set forth in the Prospectus under the
heading "Certain United States Federal Tax Considerations for
Non-United States Holders," insofar as such statements constitute a
summary of legal matters are accurate in all material respects; and
<PAGE>
16
(xi) the Company is not an "investment company," as such term
is defined in the 1940 Act.
In addition, such counsel shall state that, while they did not
prepare any of the documents incorporated by reference in the Registration
Statement and the Prospectus, they have participated in conferences with
officers and other representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives at which the contents of the Registration Statement and
the Prospectus and related matters were discussed, and although such
counsel is not passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and have not made any
independent check or verification thereof (except as set forth in
paragraphs (ix) and (x) above), during the course of such participation,
no facts came to such counsel's attention that caused such counsel to
believe that the Registration Statement (including the incorporated
documents), at the time it became effective, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading
or that the Prospectus (including the incorporated documents), as of its
date and as of the Closing Date, contained or contains an untrue statement
of a material fact or omitted 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; it being understood that such
counsel express no belief with respect to the financial statements,
schedule and other financial data or the Statement of Eligibility of the
Trustee on Form T-1 included or incorporated by reference in the
Registration Statement or the Prospectus.
In rendering such opinion, Latham & Watkins may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials and need not express any opinion with regard to the laws of any
jurisdiction other than the federal law of the United States, the law of
the State of New York and the General Corporation Law of the State of
Delaware.
(d) At the Closing Date, each of you shall have received a signed
opinion of Thomas L. Young, Esq., General Counsel of the Company, dated as
of the Closing Date, in form and substance reasonably satisfactory to your
counsel, to the effect that:
<PAGE>
17
(i) the Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a Material Adverse
Effect;
(ii) each Significant Subsidiary (as defined in Rule 1-02 of
Regulation S-X under the Securities Act) of the Company has been
duly incorporated, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation,
has the corporate power and authority to own its property and to
conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership
or leasing of property requires such qualifications, except to the
extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect (other than Owens-Illinois
International B.V. and the following foreign subsidiaries of the
Company, with respect to which foreign counsel will deliver the
foregoing opinion: Continental PET Holdings Pty Limited,
Owens-Illinois (Australia) Pty Limited, ACI Operations Pty Limited,
BTR Nylex Limited, AVIR S.p.A., Orion S.p.A. and OI Italia S.r.l.);
(iii) the Company's capitalization as of March 31, 1998 is as
set forth in the Prospectus, including any amendment or supplement
thereto; all of the issued and outstanding capital stock of each
Significant Subsidiary has been duly authorized and validly issued,
is fully paid and non-assessable and all of the issued and
outstanding capital stock of such Significant Subsidiaries, except
as set forth on Schedule II hereto, is owned of record by the
Company, directly or through subsidiaries, and is free and clear of
any material lien, claim, encumbrance or other security interest;
(iv) the Company has the corporate power and authority to
execute, deliver and perform its obligations under this Agreement;
the execution and delivery of, and the performance by the Company of
its obligations under, this Agreement have been authorized by all
necessary corporate action of the Company;
<PAGE>
18
(v) the Securities to be issued and sold by the Company
pursuant to the Underwriting Agreement have been duly authorized
and, when issued to and paid for by you in accordance with the terms
of the Underwriting Agreement, will be validly issued, fully paid
and non-assessable and, to the best of our knowledge, free of
preemptive rights;
(vi) the shares of Conversion Stock initially issuable upon
conversion of the Securities have been duly authorized and reserved
for issuance upon conversion of the Securities and, if issued on the
Closing Date and delivered upon conversion in accordance with the
terms of the Certificate of Designation, would be validly issued,
fully paid and non-assessable.
(vii) the execution and delivery by the Company of, and the
issuance and sale of the Securities by the Company pursuant to, this
Agreement and the conversion of the Securities (assuming that the
conversion were to take place on the Closing Date), upon the terms
and subject to the conditions and adjustments set forth in the
Certificate of Designation and the issuance of the Conversion Stock,
will not result in (A) the violation by the Company of its
Certificate of Incorporation or Bylaws, the General Corporation Law
of the State of Delaware or any federal or Ohio State Statute, or
any rule or regulation that has been issued pursuant to the General
Corporation Law of the State of Delaware or any federal or Ohio
State Statute known to such counsel to be applicable to the Company
or any of its subsidiaries (except that no opinion is expressed with
respect to federal or state securities or "blue sky" laws) or (B)
the breach of or default under (I) any indenture or other agreement
or instrument binding upon the Company or any of its subsidiaries
that is material to the Company and its subsidiaries considered as
one enterprise or (II) any court or administrative orders, writs,
judgments or decrees known to such officer;
(viii) Such counsel has no knowledge of any legal or
governmental proceeding pending or threatened to which the Company
or any of its subsidiaries is a party or to which any of the
properties or assets of the Company or any of its subsidiaries is
subject that is required to be described in the Registration
Statement or the Prospectus and is not so described therein; or of
<PAGE>
19
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required, except such exhibits
which are permitted, pursuant to the Securities Act, to be filed
subsequently on a Current Report on Form 8-K; and
(ix) each of the documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectus, at the time it was filed with the Commission, complied
as to form in all material respects with the requirements for such
document under the Exchange Act and the regulations thereunder; it
being understood, however, that such counsel expresses no opinion
with respect to the financial statements, schedules and other
financial data included or incorporated in the Registration
Statement or the Prospectus or with respect to the Statement as to
the Eligibility and Qualification of the Trustee on Form T-1. In
passing upon the compliance as to form of the Registration Statement
and the Prospectus, such counsel has assumed that the statements
made therein (or incorporated by reference therein) are correct and
complete.
In addition, such counsel shall state that he has participated in
conferences with representatives of the Company, representatives of the
independent public accountants for the Company, and the Underwriters'
representatives and counsel at which the contents of the Registration
Statement and the Prospectus and related matters were discussed, and
although such counsel is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus,
during the course of such participation no facts came to such counsel's
attention that caused such counsel to believe that the Registration
Statement (including the incorporated documents), at the time it became
effective, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading or that the Prospectus, as of its
date and as of the Closing Date, contained or contains an untrue statement
of a material fact or omitted 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; it being understood that such
counsel
<PAGE>
20
expresses no belief with respect to the financial statements, schedules
and other financial data included or incorporated by reference in the
Registration Statement or the Prospectus.
In rendering such opinion, such counsel may rely as to factual
matters upon certificates or written statements from officers or other
appropriate representatives of the Company or upon certificates of public
officials, and need not express any opinion with respect to the laws of
any jurisdiction other than the federal law of the United States, the law
of the State of Ohio and the General Corporation Law of the State of
Delaware.
(e) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated
the Closing Date, covering certain matters requested by the Underwriters.
(f) At the Closing Date, (i) the Registration Statement and the
Prospectus, as they may then be amended or supplemented, shall contain all
statements that are required to be stated therein under the Securities Act
and the regulations thereunder and in all material respects shall conform
to the requirements of the Securities Act and the regulations thereunder,
and neither the Registration Statement nor the Prospectus, as they may
then be amended or supplemented, shall 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, in the case of the
Prospectus, in the light of the circumstances under which they were made,
not misleading; (ii) there shall not have been, since the respective dates
as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective
Material Adverse Change, whether or not arising in the ordinary course of
business; (iii) no action, suit or proceeding at law or in equity shall be
pending or, to the knowledge of the Company, threatened against the
Company or any of its subsidiaries that would be required to be set forth
in the Prospectus other than as set forth therein and no proceedings shall
be pending or, to the knowledge of the Company, threatened against it or
any of its subsidiaries before or by any federal, state or other
commission, board or administrative agency wherein an unfavorable
decision, ruling or finding could have a Material Adverse Effect, other
than as set forth in the Prospectus; (iv) the Company shall have complied
with all material agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to the Closing
<PAGE>
21
Date; and (v) the other representations and warranties of the Company set
forth in Section 1(a) shall be accurate in all material respects as though
expressly made at and as of the Closing Date.
(g) The Underwriters shall have received on the Closing Date letters
dated the date hereof and the Closing Date, in form and substance
reasonably satisfactory to the Underwriters, from Ernst & Young LLP and
Ernst & Young, Melbourne, Australia, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(h) By the Closing Date, your counsel shall have been furnished with
all such documents (including any consents under any agreements to which
the Company is a party), certificates and opinions as they may reasonably
request for the purpose of enabling them to pass upon the issuance and
sale of the Securities as contemplated in this Agreement and in Section
5(e) herein and in order to evidence the accuracy and completeness of any
of the representations, warranties or statements of the Company, the
performance of any of the covenants of the Company, or the fulfillment of
any of the conditions herein; and all proceedings taken by the Company at
or prior to the Closing Date in connection with the authorization,
issuance and sale of the Securities, and by the Company at or prior to the
Closing Date in connection with the authorization and delivery of this
Agreement shall be reasonably satisfactory in form and substance to you
and to your counsel.
(i) The Securities shall have been duly authorized for listing on
the New York Stock Exchange (the "NYSE"), at or by the Closing Date and
any shares of Conversion Stock will be duly authorized for listing on the
NYSE upon any conversion of the Securities, subject only to official
notice of issuance thereof and notice of a satisfactory distribution of
the Securities or the Conversion Stock.
(j) Prior to the Closing Date, the Company shall have furnished to
Smith Barney Inc. such further information, certificates and documents as
Smith Barney Inc. may reasonably request.
(k) The Lock-Up Agreements executed by (i) each of the Company's
executive officers and directors listed in Schedule III hereto and (ii) by
each of OII
<PAGE>
22
Associates, L.P., OII Associates II, L.P. and KKR Partners II, L.P. in
favor of the Underwriters relating to sales of shares of Common Stock of
the Company shall have been delivered to Smith Barney Inc. and shall be in
full force and effect on the Closing Date.
If any of the conditions specified in this Section 5 shall not have
been fulfilled when and as required by this Agreement, this Agreement may be
terminated by you on notice to the Company at any time at or prior to the
Closing Date, and such termination shall be without liability of any party to
any other party, except as provided in Section 6 herein. Notwithstanding any
such termination, the provisions of Sections 1(a) and 8 herein shall remain in
effect. Notice of such termination shall be given to the Company in writing or
by telephone confirmed in writing.
The documents required to be delivered by this Section 5 shall be
delivered at the office of Simpson Thacher & Bartlett, counsel for the
Underwriters, at 425 Lexington Avenue, New York, New York 10017, on the Closing
Date.
6. Reimbursement of Underwriters' Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 5 herein is not satisfied,
because of any termination pursuant to Section 10(a) herein or because of any
refusal, inability or failure on the part of the Company to perform any
agreement herein or comply with any provision herein other than by reason of a
default by any of the Underwriters, the Company will reimburse the Underwriters
severally upon demand for all documented out-of-pocket expenses (including fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Securities.
7. Covenants of the Company. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To prepare the Prospectus, including any amendment or supplement
thereto, in a form approved by the Underwriters and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than
the Commission's close of business on the second business day following
the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required under the Securities Act; to make no
further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein;
<PAGE>
23
(b) To furnish to each of Smith Barney Inc. and its counsel, without
charge, one signed copy of the Registration Statement (including exhibits
thereto) and for delivery to each other Underwriter a conformed copy of
the Registration Statement (without exhibits thereto) and, during the
period mentioned in paragraph (d) below, as many copies of the Preliminary
Prospectus and the Prospectus and any supplements and amendments thereto
or to the Registration Statement as you may reasonably request.
(c) Before amending or supplementing the Registration Statement or
the Prospectus, to furnish to you a copy of each such proposed amendment
or supplement and not to file any such proposed amendment or supplement to
which you reasonably object.
(d) If, during such period after the first date of the public
offering of the Securities, as in the opinion of counsel for the
Underwriters, the Preliminary Prospectus or the Prospectus is required by
law to be delivered in connection with sales by an Underwriter or a
dealer, any event shall occur or condition exist as a result of which it
is necessary to amend or supplement the Preliminary Prospectus or the
Prospectus, as the case may be, in order to make the statements therein,
in the light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, not
misleading, or if, in the opinion of counsel for the Underwriters, it is
necessary to amend or supplement the Preliminary Prospectus or the
Prospectus to comply with applicable law, forthwith to prepare, file with
the Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company) to
which Securities may have been sold by you on behalf of the Underwriters
and to any other dealers upon request, either amendments or supplements to
the Preliminary Prospectus or the Prospectus, as the case may be, so that
the statements therein as so amended or supplemented will not, in the
light of the circumstances when the Preliminary Prospectus or the
Prospectus, as the case may be, is delivered to a purchaser, be misleading
or so that the Preliminary Prospectus or the Prospectus, as amended or
supplemented, as the case may be, will comply with law.
(e) From the date of this Agreement, and for so long as a
Preliminary Prospectus or a Prospectus is required to be delivered in
connection with the sale of Securities covered by this Agreement, the
Company will notify you immediately, and confirm the notice in writing,
(i) of the effectiveness of any amendment to
<PAGE>
24
the Registration Statement, (ii) of the mailing or the delivery to the
Commission for filing of any supplement to the Preliminary Prospectus or
the Prospectus or any document to be filed pursuant to the Exchange Act
which will be incorporated by reference into the Registration Statement,
Preliminary Prospectus or the Prospectus, (iii) of the receipt of any
comments from the Commission with respect to the Registration Statement,
the Preliminary Prospectus or the Prospectus, (iv) of any request by the
Commission for any amendment to the Registration Statement or any
amendment or supplement to the Preliminary Prospectus or the Prospectus or
for additional information and (v) 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. The Company will
make every commercially reasonable effort to prevent the issuance of any
stop order and, if any stop order is issued, to obtain, as soon as
possible, the lifting thereof.
(f) The Company will comply to the best of its ability with the
Securities Act and the Exchange Act and the regulations thereunder so as
to permit the completion of the distribution of the Securities as
contemplated in this Agreement and the Prospectus; and the Company, during
the period when the Preliminary Prospectus and the Prospectus is required
to be delivered under the Securities Act, will file promptly all documents
required to be filed with the Commission pursuant to Section 13 or 14 of
the Exchange Act within the time periods required under the Exchange Act.
(g) The Company will endeavor to qualify the Securities for offer
and sale under the state securities or blue sky laws of such jurisdictions
as you shall reasonably request and to maintain such qualifications in
effect for as long as may be required for the distribution of the
Securities by the Underwriters; provided, however, that the Company shall
not be obligated to file any general consent to service of process or to
qualify as a foreign corporation or as a dealer in securities in any
jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is
not otherwise so subject. The Company will file such statements and
reports as may be required by the laws of each jurisdiction in which the
Securities have been qualified as above provided.
(h) With respect to each sale of Securities, the Company will make
generally available to its security holders as soon as practicable but in
any event not later than 90 days after the close of the period
<PAGE>
25
covered thereby a consolidated earnings statement for a twelve-month
period beginning after the effective date (as defined in Rule 158(c) under
the Securities Act) of the Registration Statement relating to such
Securities, but not later than the first day of the Company's fiscal
quarter next following such effective date and that otherwise satisfies
the provisions of Section 11(a) of the Securities Act and the regulations
thereunder.
(i) The Company will use the proceeds received from the sale of the
Securities in the manner specified in the Prospectus under the heading
"Use of Proceeds."
(j) For a period of five years after the Closing Date, if so
requested, the Company will furnish to each of you copies of all annual
reports, quarterly reports and current reports filed with the Commission
on Forms 10-K, 10-Q and 8-K, or such other similar forms as may be
designated by the Commission, and such other documents, reports and
information as shall be furnished by the Company to the holders of the
Securities or to security holders of its respective publicly issued
securities generally.
(k) To pay all expenses incident to the performance of its
obligations under this Agreement, including: (i) the preparation and
filing of the Registration Statement including all financial statements,
schedules and exhibits and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery to you of
the Securities; (iii) the fees and disbursements of the Company's counsel
and accountants; (iv) the qualification of the Securities under the state
securities or blue sky laws in accordance with the provisions of Section
6(g) herein, including filing fees and the fees and disbursements of
counsel for the Underwriters in connection therewith and in connection
with the preparation of the preliminary and final state securities laws or
blue sky surveys (the "Blue Sky Surveys") or any Legal Investment
Memoranda; (v) the printing and delivery to the Underwriters in quantities
as hereinabove stated of copies of the Registration Statement and all
amendments thereto and of each Preliminary Prospectus and the Prospectus
and any amendments or supplements thereto; (vi) the printing and delivery
to the Underwriters of copies of the Blue Sky Surveys or any Legal
Investment Memoranda; (vii) any fees charged by rating agencies for the
rating of the Securities or the listing, if any, of the Securities on the
NYSE; (viii) the filing fees and expenses, if any, incurred with respect
to any filing with the National Association of Securities Dealers,
<PAGE>
26
Inc. (the "NASD") made in connection with the offering of the Securities;
and (ix) any expenses incurred by the Company in connection with a "road
show" presentation to potential investors.
(l) For a period of 90 days after the date of this Agreement, the
Company will not offer, sell, contract to sell, pledge, hypothecate, grant
any option to purchase or otherwise dispose of, directly or indirectly, or
file with the Commission a registration statement under the Securities Act
(other than on Form S-8 relating to resales of securities as described in
the general instructions to Form S-8) relating to any shares of Common
Stock or securities convertible or exchangeable into or exercisable for
any shares of Common Stock, without the prior written consent of Smith
Barney Inc., except (i) grants of employee stock options and other awards
pursuant to the terms of stock option plans in effect on the date hereof
or described in the Prospectus, (ii) sales and issuances of securities
pursuant to the exercise of any such options or awards or the exercise of
any other stock options or awards outstanding on the date hereof, (iii)
the issuance and/or sale of Common Stock pursuant to existing employee
benefit plans of the Company, (iv) the issuance and/or sale of Common
Stock upon the exercise of the respective rights of the holders of the
Company's Series A Exchangeable Preferred Stock, par value $.01 per share,
Series B Exchangeable Preferred Stock, par value $.01 per share, Series C
Exchangeable Preferred Stock, and the Convertible Preferred Stock, par
value $.01 per share, to exchange their shares of Exchangeable or
Convertible Preferred Stock, as the case may be, into shares of Common
Stock, (v) the issuance and/or sale of Common Stock upon the exercise of
any of the Company's warrants or options outstanding on the date hereof
and (vi) in connection with a bona fide loan transaction which does not
permit the pledgee, directly or indirectly, to offer, sell, contract to
sell or otherwise dispose of any interest in such shares or securities
during such 90 day period;
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter, the directors, officers and
employees of each Underwriter and each person who controls any Underwriter
within the meaning of either the Securities 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 Securities 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
<PAGE>
27
untrue statement of a material fact contained in the registration statement for
the registration of the Securities as originally filed or in any amendment
thereof, or in the Preliminary Prospectus or the 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 agrees 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 the Company will not 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
therein in reliance upon and in conformity with written information furnished to
the Company by or on behalf of any Underwriter through the Representative
specifically for inclusion therein. This indemnity agreement will be in addition
to any liability which the Company may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
the Company, each of its directors, each of its officers who signs the
Registration Statement, and each person who controls the Company within the
meaning of either the Securities Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each Underwriter, but only with
reference to written information relating to such Underwriter furnished to the
Company by or on behalf of such Underwriter through the Representative
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any Underwriter may otherwise have. The Company acknowledges that the statements
set forth in (i) the first sentence of the last paragraph of text on the cover
page of the Prospectus concerning the terms of the offering by the Underwriters,
(ii) the last paragraph on page S-2 of the Prospectus, concerning stabilization
and over-allotment by the Underwriters and (iii) the second paragraph of text
under the caption "Underwriters" in the Prospectus Supplement, concerning the
terms of the offering by the Underwriters in the Prospectus constitute the only
information furnished in writing by or on behalf of the several Underwriters for
inclusion in any Preliminary Prospectus or the Prospectus, and you, as the
Representative, confirm that such statements are correct.
(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
<PAGE>
28
under this Section 8, 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 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
<PAGE>
29
reason, the Company and the Underwriters 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 one or more of the Underwriters
may be subject in such proportion as is appropriate to reflect the relative
benefits received by the Company and by the Underwriters from the offering of
the Securities; provided, however, that in no case shall any Underwriter (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
Underwriter hereunder. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the Company and the Underwriters shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company and of the
Underwriters in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses), and benefits received by the
Underwriters shall be deemed to be equal to the total underwriting discounts and
commissions, in each case as set forth on the cover page of the Prospectus.
Relative fault shall be determined by reference to whether any alleged untrue
statement or omission relates to information provided by the Company or the
Underwriters. The Company and the Underwriters 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 Securities 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 an
Underwriter within the meaning of either the Securities Act or the Exchange Act
and each director, officer, employee and agent of an Underwriter shall have the
same rights to contribution as such Underwriter, and each person who controls
the Company within the meaning of either the Securities Act or the Exchange Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of this
paragraph (d).
9. Survival. The indemnity and contribution provisions contained in
Section 8 herein and the representations, warranties and other statements of the
<PAGE>
30
Company contained in this Agreement shall remain operative and in full force and
effect regardless of (a) any termination of this Agreement, (b) any
investigation made by or on behalf of any Underwriter or any person controlling
any Underwriter or by or on behalf of the Company, its officers or directors or
any person controlling the Company and (c) acceptance of and payment for any of
the Securities.
10. Termination. Smith Barney Inc. may terminate this Agreement by
notice to the Company, at any time at or prior to the Closing Date (a) if there
has been, since the respective dates as of which information is given in the
Registration Statement or the Prospectus, any Material Adverse Change, or any
development involving a prospective Material Adverse Change or (b) if there has
occurred any new outbreak of hostilities or escalation of existing hostilities
or other calamity or crisis the effect of which on the financial markets in the
United States is such as to make it, in your judgment, impracticable to market
the Securities or enforce contracts for the sale of the Securities, or (c) if
trading in any securities of the Company has been suspended on any exchange or
in any over-the-counter market or by the Commission, or if trading generally on
the NYSE has been suspended, or minimum or maximum prices for trading have been
fixed, or maximum ranges for prices for securities have been required, by such
exchange or by order of the Commission or any other governmental authority or
(d) if a general moratorium on commercial banking activities in New York State
has been declared by either federal or New York State authorities.
11. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Securities agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Securities set
forth opposite their names in Schedule I hereto bears to the aggregate amount of
Securities set forth opposite the names of all the remaining Underwriters) the
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
Securities which the defaulting Underwriter or Underwriters agreed but failed to
purchase shall exceed 10% of the aggregate amount of Securities set forth in
Schedule I hereto, the remaining Underwriters shall have the right to purchase
all, but shall not be under any obligation to purchase any, of the Securities,
and if such nondefaulting Underwriters do not purchase all the Securities, this
Agreement will terminate without liability to any nondefaulting Underwriter or
the Company. In the event of a default by any Underwriter as set forth in this
<PAGE>
31
Section 11, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representative shall determine in order that the required
changes in the Registration Statement and the Prospectus or in any other
documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting Underwriter of its liability, if any, to the
Company and any nondefaulting Underwriter for damages occasioned by its default
hereunder.
12. Notices. In all dealings hereunder, you shall act on behalf of
each of the Underwriters, and the parties hereto shall be entitled to act and
rely upon any statement, request, notice or agreement on behalf of any
Underwriter made or given by Smith Barney Inc..
All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be given (and shall be
deemed to have been given upon receipt) by delivery in person, by cable, by
telecopy, ny telegram, by telex or by registered or certified mail (postage
prepaid, return receipt requested) to the applicable party at the addresses
indicated below:
(a) if to the Underwriters:
Smith Barney Inc.
388 Greenwich Street
New York, New York 10013
Facsimile No.: (212) 816-7912
Attention: General Counsel,
Investment Banking Division
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile No.: (212) 455-2502
Attention: John B. Tehan, Esq.
(b) if to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Facsimile No.: (419) 247-2226
Attention: Thomas L. Young
General Counsel
<PAGE>
32
with a copy to:
Kohlberg Kravis & Roberts & Co.
2800 Sand Hill Road, Suite 200
Menlo Park, California 94025
Facsimile No.: (415) 233-6561
Attention: Edward A. Gilhuly
Partner
and with a copy to:
Latham & Watkins
505 Montgomery Street, Suite 1900
San Francisco, California 94111
Facsimile No.: (415) 395-8095
Attention: Tracy K. Edmonson, Esq.
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 referred to in Section 8 herein, and no
other person will have any right or obligation hereunder.
14. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
15. Time of the Essence. Time shall be of the essence of this
Agreement.
16. Applicable Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK.
17. Headings. The headings of the sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed a part
of this Agreement.
<PAGE>
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 among the
Company and the several Underwriters.
Very truly yours,
OWENS-ILLINOIS, INC.
By: /s/ David G. Van Hooser
------------------------------
Name: David G. Van Hooser
Title: Senior Vice President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SMITH BARNEY INC.
BT ALEX. BROWN INCORPORATED
GOLDMAN, SACHS & CO.
LEHMAN BROTHERS INC.
By: Smith Barney Inc.
By: /s/ Jeffrey McDermott
----------------------------
Name: Jeffrey McDermott
Title: Managing Director
For itself and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
<PAGE>
SCHEDULE I
Number of Number of Option
Underwritten Securities to be Purchased
Securities to be if Maximum Option
Underwriters Purchased Securities Exercised
------------ ---------------- --------------------------
Smith Barney Inc................... 2,800,001 367,500
BT Alex. Brown Incorporated........ 1,733,333 227,500
Goldman, Sachs & Co................ 1,733,333 227,500
Lehman Brothers Inc................ 1,733,333 227,500
--------- ---------
Total.............................. 8,000,000 1,050,000
========= =========
<PAGE>
Schedule II
Upon the consummation of the Offerings (as defined in the
Prospectus), 100% of the shares of capital stock of each Significant Subsidiary
will be, directly or indirectly, owned by the Company free and clear of any
material lien, except that the Company owns approximately 99% of the outstanding
shares of AVIR S.p.A.
<PAGE>
SCHEDULE III
Executive Officers and Directors
Who Have Executed Lock-Up Agreements
Robert J. Dineen
Edward A. Gilhuly
James H. Greene, Jr.
John L. Hodges
Henry R. Kravis
Robert J. Lanigan
Joseph H. Lemieux
Robert I. MacDonnell
John J. McMackin, Jr.
Michael W. Michelson
George R. Roberts
R. Scott Trumbull
David G. Van Hooser
Lee A. Wesselmann
Thomas L. Young
<PAGE>
Exhibit 4.1
EXECUTION COPY
OWENS-ILLINOIS, INC.,
as Issuer
and
THE BANK OF NEW YORK
as Trustee
--------------------
INDENTURE
dated as of May 20, 1998
--------------------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
<S> <C>
ARTICLE 1. DEFINITIONS AND INCORPORATION BY REFERENCE............................................................1
Section 1.01. Certain Definitions............................................................................1
Section 1.02. Other Definitions..............................................................................4
Section 1.03. Incorporation by Reference of Trust Indenture Act..............................................5
Section 1.04. Rules of Construction..........................................................................5
ARTICLE 2. THE SECURITIES........................................................................................5
Section 2.01. Unlimited In Amount, Issuable In Series, Form and Dating.......................................5
Section 2.02. Execution and Authentication...................................................................8
Section 2.03. Registrar and Paying Agent.....................................................................8
Section 2.04. Paying Agent to Hold Money in Trust............................................................8
Section 2.05. Securityholder Lists...........................................................................9
Section 2.06. Transfer and Exchange..........................................................................9
Section 2.07. Replacement Securities........................................................................10
Section 2.08. Outstanding Securities........................................................................10
Section 2.09. Temporary Securities..........................................................................10
Section 2.10. Cancellation..................................................................................11
Section 2.11. Defaulted Interest............................................................................11
Section 2.12. Special Record Dates..........................................................................11
Section 2.13. Global Securities.............................................................................12
Section 2.14. CUSIP Numbers.................................................................................13
ARTICLE 3. REDEMPTION...........................................................................................13
Section 3.01. Notices to Trustee............................................................................13
Section 3.02. Selection of Securities to Be Redeemed........................................................14
Section 3.03. Notice of Redemption..........................................................................14
Section 3.04. Effect of Notice of Redemption................................................................15
Section 3.05. Deposit of Redemption Price...................................................................15
Section 3.06. Securities Redeemed in Part...................................................................15
ARTICLE 4. COVENANTS............................................................................................15
Section 4.01. Payment of Securities.........................................................................15
Section 4.02. Maintenance of Office or Agency...............................................................16
Section 4.03. Commission Reports............................................................................16
Section 4.04. Compliance Certificate........................................................................17
Section 4.05. Taxes.........................................................................................17
Section 4.06. Stay, Extension and Usury Laws................................................................17
Section 4.07. Corporate Existence...........................................................................17
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.08. Calculation of Original Issue Discount........................................................18
ARTICLE 5. SUCCESSORS...........................................................................................18
Section 5.01. When Company May Merge, etc...................................................................18
Section 5.02. Successor Corporation Substituted.............................................................18
ARTICLE 6. DEFAULTS AND REMEDIES................................................................................19
Section 6.01. Events of Default.............................................................................19
Section 6.02. Acceleration..................................................................................20
Section 6.03. Other Remedies................................................................................21
Section 6.04. Waiver of Past Defaults.......................................................................21
Section 6.05. Control by Majority...........................................................................21
Section 6.06. Limitation on Suits...........................................................................21
Section 6.07. Rights of Holders to Receive Payment..........................................................22
Section 6.08. Collection Suit by Trustee....................................................................22
Section 6.09. Trustee May File Proofs of Claim..............................................................22
Section 6.10. Priorities....................................................................................23
Section 6.11. Undertaking for Costs.........................................................................23
ARTICLE 7. TRUSTEE 24
Section 7.01. Duties of Trustee.............................................................................24
Section 7.02. Rights of Trustee.............................................................................25
Section 7.03. Individual Rights of Trustee..................................................................26
Section 7.04. Trustee's Disclaimer..........................................................................26
Section 7.05. Notice of Defaults............................................................................26
Section 7.06. Reports by Trustee to Holders.................................................................26
Section 7.07. Compensation and Indemnity....................................................................27
Section 7.08. Replacement of Trustee........................................................................27
Section 7.09. Successor Trustee by Merger, etc..............................................................29
Section 7.10. Eligibility; Disqualification.................................................................29
Section 7.11. Preferential Collection of Claims Against Company.............................................29
ARTICLE 8. SATISFACTION AND DISCHARGE; DEFEASANCE...............................................................29
Section 8.01. Satisfaction and Discharge of Indenture.......................................................29
Section 8.02. Application of Trust Funds; Indemnification...................................................30
Section 8.03. Legal Defeasance of Securities of any Series..................................................31
Section 8.04. Covenant Defeasance...........................................................................33
Section 8.05. Repayment to Company..........................................................................34
ARTICLE 9. SUPPLEMENTS, AMENDMENTS AND WAIVERS..................................................................34
Section 9.01. Without Consent of Holders....................................................................34
</TABLE>
ii
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 9.02. With Consent of Holders.......................................................................35
Section 9.03. Revocation and Effect of Consents.............................................................36
Section 9.04. Notation on or Exchange of Securities.........................................................36
Section 9.05. Trustee to Sign Amendments, etc...............................................................36
ARTICLE 10. MISCELLANEOUS.......................................................................................36
Section 10.01. Indenture Subject to Trust Indenture Act....................................................36
Section 10.02. Notices.....................................................................................37
Section 10.03. Communication By Holders With Other Holders.................................................38
Section 10.04. Certificate and Opinion as to Conditions Precedent..........................................38
Section 10.05. Statements Required in Certificate or Opinion...............................................38
Section 10.06. Rules by Trustee and Agents.................................................................38
Section 10.07. Legal Holidays..............................................................................39
Section 10.08. No Recourse Against Others..................................................................39
Section 10.09. Counterparts................................................................................39
Section 10.10. Governing Law..............................................................................39
Section 10.11. Severability...............................................................................39
Section 10.12. Effect of Headings, Table of Contents, etc.................................................39
Section 10.13. Successors and Assigns.....................................................................39
Section 10.14. No Interpretation of Other Agreements......................................................40
</TABLE>
iii
<PAGE>
<TABLE>
<CAPTION>
CROSS-REFERENCE TABLE*
Trust Indenture
Act Section Indenture Section
----------- -----------------
<S> <C>
310(a)(1) .........................................................................................7.10
(a)(2) .........................................................................................7.10
(a)(3) .........................................................................................N.A.
(a)(4) .........................................................................................N.A.
(a)(5) .........................................................................................7.10
(b) ................................................................................7.03, 7.08; 7.10
(c) ............................................................................................N.A.
311(a) ............................................................................................7.11
(b) ............................................................................................7.11
(c) ............................................................................................N.A.
312(a) ............................................................................................2.05
(b)............................................................................................10.03
(c)............................................................................................10.03
313(a) ............................................................................................7.06
(b) ............................................................................................7.06
(c) .....................................................................................7.06; 10.02
(d) ............................................................................................7.06
314(a) .....................................................................................4.03; 10.02
(b) ............................................................................................N.A.
(c)(1) ........................................................................................10.04
(c)(2) ........................................................................................10.04
(c)(3) ........................................................................................N.A.
(d) ............................................................................................N.A.
(e) ...........................................................................................10.05
(f) ............................................................................................N.A.
315(a) ...............................................................................7.01(b)(ii), 7.02
(b) ...............................................................................7.02, 7.05; 10.02
(c) ...................................................................................7.01(a), 7.02
(d) ...................................................................................7.01(d), 7.02
(e) ............................................................................................6.11
316(a)(last sentence) .........................................................................2.13(f)
(a)(1)(A) ......................................................................................6.05
(a)(1)(B) .....................................................................................6.04
(a)(2) ........................................................................................N.A.
(b) ...........................................................................................6.07
(c) .....................................................................................2.12; 9.03
317(a)(1) ........................................................................................6.08
(a)(2) ........................................................................................6.09
(b) ...........................................................................................2.04
318(a) ...........................................................................................10.01
(b) ............................................................................................N.A.
(c)............................................................................................10.01
</TABLE>
*
- -------------------
N.A. means not applicable.
* This Cross-Reference Table is not part of the Indenture.
<PAGE>
INDENTURE dated as of May 20, 1998 between Owens-Illinois,
Inc., a Delaware corporation (the "Company"), and The Bank of New York, a New
York banking corporation, as Trustee (the "Trustee").
The Company has duly authorized the execution and delivery of
this Indenture to provide for the issuance from time to time of its debentures,
notes or other evidences of indebtedness to be issued in one or more series (the
"Securities"), as herein provided, up to such principal amount as may from time
to time be authorized in or pursuant to one or more resolutions of the Board of
Directors or by supplemental indenture.
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the Holders of each series of the
Securities:
ARTICLE 1.
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Certain Definitions.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common control with the
Company. For purposes of this definition, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting stock, by
agreement or otherwise.
"Agent" means any Registrar, Paying Agent, authenticating
agent or co-Registrar.
"Board of Directors" means the Board of Directors of the
Company or any authorized committee thereof.
"Board Resolution" means a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly adopted
by the Board of Directors or pursuant to authorization by the Board of Directors
and to be in full force and effect on the date of such certification (and
delivered to the Trustee, if appropriate).
"Closing Date" means the date on which the Securities of a
particular series were originally issued under this Indenture.
"Commission" means the Securities and Exchange Commission.
"Company" means the party named as such above until a
successor replaces it pursuant to this Indenture and thereafter means the
successor.
1
<PAGE>
"Company Order" means a written order signed in the name of
the Company by two Officers, one of whom must be the Company's principal
executive officer, principal financial officer or principal accounting officer.
"Company Request" means a written request signed in the name
of the Company by its Chairman of the Board, a President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
"Corporate Trust Office" shall mean the corporate trust office
of the Trustee, which shall initially be 101 Barclay Street, Floor 21 West, New
York, New York 10286.
"Default" means any event that is, or with the passage of time
or the giving of notice or both would be, an Event of Default.
"Depositary" means, with respect to the Securities of any
series issuable or issued in whole or in part in the form of one or more Global
Securities, the person designated as Depositary for such series by the Company,
which Depositary shall be a clearing agency registered under the Exchange Act;
and if at any time there is more than one such person, "Depositary" as used with
respect to the Securities of any series shall mean the Depositary with respect
to the Securities of such series.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as have been approved by a significant segment
of the accounting profession, which are applicable to the circumstances as of
the Closing Date.
"Global Security" shall mean a Security issued to evidence all
or a part of any series of Securities that is executed by the Company and
authenticated and delivered by the Trustee to a Depositary or pursuant to such
Depositary's instructions, all in accordance with this Indenture and pursuant to
Section 2.01, which shall be registered as to principal and interest in the name
of such Depositary or its nominee.
"Holder" or "Securityholder" means a Person in whose name a
Security is registered in the register of Securities kept by the Registrar.
"Indenture" means this Indenture, as amended or supplemented
from time to time.
"Interest" when used with respect to an Original Issue
Discount Security that by its terms bears interest only after maturity, means
interest payable after maturity.
2
<PAGE>
"Maturity" when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at Stated
Maturity or by declaration of acceleration, call for redemption or otherwise.
"Officer" means the Chairman of the Board, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, any Vice-President, the Treasurer, the Controller, the
Secretary, any Assistant Treasurer or any Assistant Secretary of the Company.
"Officers' Certificate" means a certificate signed by two
Officers, one of whom must be the principal executive officer, principal
financial officer or principal accounting officer of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee.
"Original Issue Discount Security" means any Security which
provides that an amount less than its principal amount is due and payable upon
acceleration after an Event of Default.
"Person" means any individual, corporation, partnership, joint
venture, association, limited liability company, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Principal" of a Security means the principal amount due on
the stated maturity of the Security plus the premium, if any, on the Security.
"Securities" means the Securities authenticated and delivered
under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Stated Maturity" when used with respect to any Security or
any installment of interest thereon, means the date specified in such Security
as the fixed date on which the principal of such Security or such installment of
interest is due and payable.
"Subsidiary" means any corporation, partnership or limited
liability company of which the Company, or the Company and one or more
Subsidiaries, or any one or more Subsidiaries, directly or indirectly owns or
own (i) in the case of a corporation, voting securities entitling the holders
thereof to elect a majority of the directors, either at all times or so long as
there is no default or contingency which permits the holders of any other class
of securities to vote for the election of one or more directors, (ii) in the
case of a partnership, at least a majority of the general partnership interests
and at least a majority of total outstanding partnership
3
<PAGE>
interests or (iii) in the case of a limited liability company, at least a
majority of the membership interests.
"TIA" means the Trust Indenture Act of 1939, as amended from
time to time, and as in effect on the date of execution of this Indenture;
provided, however, that in the event the TIA is amended after such date, "TIA"
means, to the extent required by such amendment, the Trust Indenture Act, as so
amended.
"Trustee" means the party named as such above until a
successor becomes such pursuant to this Indenture and thereafter means or
includes each party who is then a trustee hereunder, and if at any time there is
more than one such party, "Trustee" as used with respect to the Securities of
any series means the Trustee with respect to Securities of that series. If
Trustees with respect to different series of Securities are trustees under this
Indenture, nothing herein shall constitute the Trustees co-trustees of the same
trust, and each Trustee shall be the trustee of a trust separate and apart from
any trust administered by any other Trustee with respect to a different series
of Securities.
"Trust Officer" means any officer or assistant officer of the
Trustee assigned by the Trustee to administer its corporate trust matters.
"U.S. Government Obligations" means securities that are (i)
direct obligations of the United States of America for the payment of which its
full faith and credit is pledged or (ii) obligations of a person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America, the payment of which is unconditionally guaranteed as a full faith and
credit obligation by the United States of America that is not callable or
redeemable at the option of the issuer thereof, and shall also include a
depository receipt issued by a bank or trust company as custodian with respect
to any such U.S. Government Obligation or a specific payment of interest on or
principal of any such U.S. Government Obligation held by such custodian for the
account of the holder of a depository receipt, provided that (except as required
by law) such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligation evidenced by such
depository receipt.
Section 1.02. Other Definitions.
<TABLE>
<CAPTION>
Term Defined in Section
---- ------------------
<S> <C>
"Bankruptcy Law" 6.01
"Custodian" 6.01
"Event of Default" 6.01
"Legal Holiday" 10.07
"Paying Agent" 2.03
"Place of Payment" 2.01
"redemption price" 3.03
"Registrar" 2.03
</TABLE>
4
<PAGE>
Section 1.03. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture. The
following TIA terms used in this Indenture have the following meanings:
"indenture securities" means the Securities.
"indenture securityholder" means a Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the Securities means the Company and any
successor obligor on the Securities.
All other terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
under the TIA have the meanings so assigned to them.
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) words in the singular include the plural,
and in the plural include the singular; and
(v) provisions apply to successive events and
transactions.
ARTICLE 2.
THE SECURITIES
Section 2.01. Unlimited In Amount, Issuable In Series, Form and Dating.
The aggregate principal amount of Securities that may be
authenticated and delivered under this Indenture is unlimited. The Securities
may be issued in one or more series. There shall be established in or pursuant
to a Board Resolution or an Officers' Certificate
5
<PAGE>
pursuant to authority granted under a Board Resolution or established in one or
more indentures supplemental hereto, prior to the issuance of Securities of any
series:
(a) the title of the Securities of the series
(which shall distinguish the Securities of the series from all other
Securities);
(b) any limit upon the aggregate principal amount of
Securities of the series that may be authenticated and delivered under
this Indenture (except for Securities authenticated and delivered upon
registration of transfer of, or in exchange for, or in lieu of, other
Securities of the series pursuant to this Article 2);
(c) the price or prices (expressed as a percentage
of the aggregate principal amount thereof) at which the Securities of
the series will be issued;
(d) the date or dates on which the principal of the
Securities of the series is payable;
(e) the rate or rates that may be fixed or variable
at which the Securities of the series shall bear interest, if any, or
the manner in which such rate or rates shall be determined, the date or
dates from which such interest shall accrue, the interest payment dates
on which such interest shall be payable and the record dates for the
determination of Holders to whom interest is payable;
(f) the place or places where the principal of and
any interest on Securities of the series shall be payable, if other
than as provided herein;
(g) the price or prices at which (if any), the
period or periods within which (if any) and the terms and conditions
upon which (if other than as provided herein) Securities of the series
may be redeemed, in whole or in part, at the option, or as an
obligation, of the Company;
(h) the obligation, if any, of the Company to
redeem, purchase or repay Securities of the series, in whole or in
part, pursuant to any sinking fund or analogous provisions or at the
option of a Holder thereof and the price or prices at which and the
period and periods within which and the terms and conditions upon which
Securities of the series shall be redeemed, purchased or repaid
pursuant to such obligation;
(i) if other than denominations of $1,000 and any
multiple thereof, the denominations in which Securities of the series
shall be issuable;
(j) if other than the principal amount thereof, the
portion of the principal amount of Securities of the series which shall
be payable upon declaration of acceleration of the maturity thereof
pursuant to Section 6.02 hereof;
6
<PAGE>
(k) any addition to or change in the covenants set
forth in Article 4 that applies to Securities of the series;
(l) any Events of Default with respect to the
Securities of a particular series, if not set forth herein;
(m) the Trustee for the series of Securities;
(n) whether the Securities of the series shall be
issued in whole or in part in the form of a Global Security or
Securities; the terms and conditions, if any, upon which such Global
Security or Securities may be exchanged in whole or in part for other
individual Securities, and the Depositary for such Global Security and
Securities;
(o) the provisions, if any, relating to any security
provided for the Securities of the series;
(p) any other terms of the series (which terms shall
not be inconsistent with the provisions of this Indenture, but which
may modify or delete any provision of this Indenture with respect to
such series; provided, however, that no such term may modify or delete
any provision hereof if imposed by the TIA; and provided, further, that
any modification or deletion of the rights, duties or immunities of the
Trustee hereunder shall have been consented to in writing by the
Trustee).
All Securities of any series shall be substantially identical
except as to denomination and except as may otherwise be provided in or pursuant
to such Board Resolution or Officers' Certificate or in any such indenture
supplemental hereto.
The principal of and any interest on the Securities shall be
payable at the office or agency of the Company designated in the form of
Security for the series (each such place herein called the "Place of Payment");
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the address of the Person entitled thereto as such
address shall appear in the register of Securities referred to in Section 2.03
hereof.
Each Security shall be in one of the forms approved from time
to time by or pursuant to a Board Resolution or Officers' Certificate, or
established in one or more indentures supplemental hereto. Prior to the delivery
of a Security to the Trustee for authentication in any form approved by or
pursuant to a Board Resolution or Officers' Certificate, the Company shall
deliver to the Trustee the Board Resolution or Officers' Certificate by or
pursuant to which such form of Security has been approved, which Board
Resolution or Officers' Certificate shall have attached thereto a true and
correct copy of the form of Security that has been approved by or pursuant
thereto.
The Securities may have notations, legends or endorsements
required by law, stock exchange rule or usage. Each Security shall be dated the
date of its authentication.
7
<PAGE>
Section 2.02. Execution and Authentication.
Two Officers shall sign the Securities for the Company by
manual or facsimile signature.
If an Officer whose signature is on a Security no longer holds
that office at the time the Security is authenticated, the Security shall
nevertheless be valid.
A Security shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence that
the Security has been authenticated under this Indenture.
The Trustee shall authenticate Securities for original issue
upon a Company Order.
The Trustee may appoint an authenticating agent acceptable to
the Company to authenticate Securities. An authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as an Agent to deal with the Company or
an Affiliate of the Company.
Section 2.03. Registrar and Paying Agent.
The Company shall maintain an office or agency where
Securities of a particular series may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities of
that series may be presented for payment (a "Paying Agent"). The Registrar for a
particular series of Securities shall keep a register of the Securities of that
series and of their transfer and exchange. The Company may appoint one or more
co-Registrars and one or more additional paying agents for each series of
Securities. The term "Paying Agent" includes any additional paying agent. The
Company may change any Paying Agent, Registrar or co-Registrar without prior
notice to any Securityholder. The Company shall notify the Trustee in writing of
the name and address of any Agent not a party to this Indenture.
If the Company fails to maintain a Registrar or Paying Agent
for any series of Securities, the Trustee shall act as such. The Company or any
of its Affiliates may act as Paying Agent, Registrar or co-Registrar.
The Company hereby appoints the Trustee the initial Registrar
and Paying Agent for each series of Securities unless another Registrar or
Paying Agent, as the case may be, is appointed prior to the time Securities of
that series are first issued.
Section 2.04. Paying Agent to Hold Money in Trust.
Whenever the Company has one or more Paying Agents it will,
prior to each due date of the principal of or interest on, any Securities,
deposit with a Paying Agent a sum sufficient to pay the principal or interest so
becoming due, such sum to be held in trust for the
8
<PAGE>
benefit of the Persons entitled to such principal or interest, and (unless such
Paying Agent is the Trustee) the Company will promptly notify the Trustee of its
action or failure so to act.
The Company shall require each Paying Agent other than the
Trustee to agree in writing that such Paying Agent will hold in trust for the
benefit of the Securityholders of the particular series for which it is acting,
or the Trustee, all money held by the Paying Agent for the payment of principal
or interest on the Securities of such series, and that such Paying Agent will
notify the Trustee of any Default by the Company or any other obligor of the
series of Securities in making any such payment and at any time during the
continuance of any such Default, upon the written request of the Trustee,
forthwith pay to the Trustee all sums so held in trust by such Paying Agent. If
the Company or an Affiliate acts as Paying Agent, it shall segregate and hold in
a separate trust fund for the benefit of the Securityholders of the particular
series for which it is acting all money held by it as Paying Agent. The Company
at any time may require a Paying Agent to pay all money held by it to the
Trustee. Upon so doing, the Paying Agent (if other than the Company or an
Affiliate of the Company) shall have no further liability for such money. Upon
any bankruptcy or reorganization proceedings relating to the Company, the
Trustee shall serve as Paying Agent for the Securities.
Section 2.05. Securityholder 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 Securityholders, separately by series, and shall otherwise comply
with TIA Section 312(a). If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least seven 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 Securityholders, separately by series, relating to such
interest payment date or request, as the case may be.
Section 2.06. Transfer and Exchange.
Where Securities of a series are presented to the Registrar or
a co-Registrar with a request to register a transfer or to exchange them for an
equal principal amount of Securities of the same series of other authorized
denominations, the Registrar shall register the transfer or make the exchange if
its requirements for such transactions are met. To permit registrations of
transfers and exchanges, the Company shall issue and the Trustee shall
authenticate Securities at the Registrar's request.
No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.09, 2.13, 3.06 or 9.04).
The Company need not issue, and the Registrar or co-Registrar
need not register the transfer or exchange of, (i) any Security of a particular
series during a period beginning at the opening of business 15 days before the
day of any selection of Securities of that series for
9
<PAGE>
redemption under Section 3.02 and ending at the close of business on the day of
selection, or (ii) any Security so selected for redemption in whole or in part,
except the unredeemed portion of any Security of that series being redeemed in
part.
Section 2.07. Replacement Securities.
If a mutilated Security is surrendered to the Trustee 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 of same series if the Company's and the Trustee's
requirements are met. The Trustee or the Company may require an indemnity bond
to be furnished which is sufficient in the judgment of both to protect the
Company, the Trustee, and any Agent from any loss which any of them may suffer
if a Security is replaced. The Company may charge such Holder for its expenses
in replacing a Security.
Every replacement Security is an obligation of the Company and
shall be entitled to all the benefit of the Indenture equally and
proportionately with any and all other Securities of the same series.
Section 2.08. Outstanding Securities.
The Securities of any series outstanding at any time are all
the Securities of that series 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.
If a Security is replaced pursuant to Section 2.07, it ceases
to be outstanding unless the Trustee receives proof satisfactory to it that the
replaced Security is held by a bona fide purchaser.
If Securities are considered paid under Section 4.01, they
cease to be outstanding and interest on them ceases to accrue.
Except as set forth in Section 2.09 hereof, a Security does
not cease to be outstanding because the Company or an Affiliate holds the
Security.
For each series of Original Issue Discount Securities, the
principal amount of such Securities that shall be deemed to be outstanding and
used to determine whether the necessary Holders have given any request, demand,
authorization, direction, notice, consent or waiver shall be the principal
amount of such Securities that could be declared to be due and payable upon
acceleration upon an Event of Default as of the date of such determination. When
requested by the Trustee, the Company shall advise the Trustee of such amount,
showing its computations in reasonable detail.
Section 2.09. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities upon
a written order of the Company signed
10
<PAGE>
by one Officer of the Company. 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
in exchange for temporary Securities.
Holders of temporary securities shall be entitled to all of
the benefits of this Indenture.
Section 2.10. Cancellation.
The Company at any time may deliver Securities to the Trustee
for cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration of
transfer, exchange, payment, replacement or cancellation and shall return such
canceled Securities to the Company at the Company's written request. The Company
may not issue new Securities to replace Securities that it has paid or that have
been delivered to the Trustee for cancellation.
Section 2.11. Defaulted Interest.
If the Company fails to make a payment of interest on any
series of Securities, it shall pay such defaulted interest plus (to the extent
lawful) any interest payable on the defaulted interest, in any lawful manner. It
may elect to pay such defaulted interest, plus any such interest payable on it,
to the Persons who are Holders of such Securities on which the interest is due
on a subsequent special record date. The Company shall notify the Trustee in
writing of the amount of defaulted interest proposed to be paid on each such
Security. The Company shall fix any such record date and payment date for such
payment. At least 15 days before any such record date, the Company shall mail to
Securityholders affected thereby a notice that states the record date, payment
date, and amount of such interest to be paid.
Section 2.12. Special Record Dates.
(a) The Company may, but shall not be obligated to,
set a record date for the purpose of determining the identity of
Holders entitled to consent to any supplement, amendment or waiver
permitted by this Indenture. If a record date is fixed, the Holders of
Securities of that series outstanding on such record date, and no other
Holders, shall be entitled to consent to such supplement, amendment or
waiver or revoke any consent previously given, whether or not such
Holders remain Holders after such record date. No consent shall be
valid or effective for more than 90 days after such record date unless
consents from Holders of the principal amount of Securities of that
series required hereunder for such amendment or waiver to be effective
shall have also been given and not revoked within such 90-day period.
(b) The Company may, but shall not be obligated to,
fix any day as a record date for the purpose of determining the Holders
of any series of Securities entitled to join in the giving or making of
any notice of Default, any declaration of acceleration,
11
<PAGE>
any request to institute proceedings or any other similar direction.
If a record date is fixed, the Holders of Securities of that series
outstanding on such record date, and no other Holders, shall be
entitled to join in such notice, declaration, request or direction,
whether or not such Holders remain Holders after such record date;
provided, however, that no such action shall be effective hereunder
unless taken on or prior to the date 90 days after such record date.
Section 2.13. Global Securities.
(a) Terms of Securities. A Board Resolution, a
supplemental indenture hereto or an Officers' Certificate shall
establish whether the Securities of a series shall be issued in whole
or in part in the form of one or more Global Securities and the
Depositary for such Global Security or Securities.
(b) Transfer and Exchange. Notwithstanding any
provisions to the contrary contained in Section 2.06 of this Indenture
and in addition thereto, any Global Security shall be exchangeable
pursuant to Section 2.06 of this Indenture for securities registered in
the names of Holders other than the Depositary for such Security or its
nominee only if (i) such Depositary notifies the Company that it is
unwilling or unable to continue as Depositary for such Global Security
or if at any time such Depositary ceases to be a clearing agency
registered under the Exchange Act, and, in either case, the Company
fails to appoint a successor Depositary within 90 days of such event or
(ii) the Company executes and delivers to the Trustee an Officers'
Certificate to the effect that such Global Security shall be so
exchangeable. Any Global Security that is exchangeable pursuant to the
preceding sentence shall be exchangeable for Securities registered in
such names as the Depositary shall direct in writing in an aggregate
principal amount equal to the principal amount of the Global Security
with like tenor and terms.
Except as provided in this paragraph (b) of this
Section, a Global Security may not be transferred except as a whole by
the Depositary with respect to such Global Security to a nominee of
such Depositary, by a nominee of such Depositary to such Depositary or
another nominee of such Depositary or by the Depositary or any such
nominee to a successor Depositary or a nominee of such a successor
Depositary.
(c) Legend. Any Global Security issued hereunder
shall bear a legend in substantially the following form:
"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
issuer 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 may be requested by an
authorized representative of DTC (and any payment is made to
Cede & Co. or such other entity as may be requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
12
<PAGE>
WRONGFUL inasmuch as the registered owner hereof, Cede & Co.
has an interest herein."
"Transfer 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 successor's nominee and limited to
transfers made in accordance with the restrictions set forth
in the Indenture referred to herein."
(d) Acts of Holders. The Depositary, as a Holder, may
appoint agents and otherwise authorize participants to give or take any
request, demand, authorization, direction, notice, consent, waiver or
other action which a Holder is entitled to give or take under this
Indenture.
(e) Payments. Notwithstanding the other provisions of
this Indenture, unless otherwise specified as contemplated by Section
2.01 hereof, payment of the principal of and interest, if any, on any
Global Security shall be made to the Person specified therein.
(f) Consents, Declaration and Directions. Except as
provided in paragraph (e) of this Section, the Company, the Trustee and
any Agent shall treat a Person as the Holder of such principal amount
of outstanding Securities of such series represented by a Global
Security as shall be specified in a written statement of the Depositary
with respect to such Global Security, for purposes of obtaining any
consents, declarations or directions required to be given by the
Holders pursuant to this Indenture.
Section 2.14. CUSIP Numbers.
The Company in issuing any series of Securities may use
"CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use
"CUSIP" numbers in notices as a convenience to Holders; provided that any such
notice may state that no representation is made as to the correctness of such
numbers either as printed on such Securities or as contained in any notice and
that reliance may be placed only on the other identification numbers printed on
such Securities, and any such action relating to such notice shall not be
affected by any defect in or omission of such numbers in such notice. The
Company shall promptly notify the Trustee of any change in the "CUSIP" numbers.
ARTICLE 3.
REDEMPTION
Section 3.01. Notices to Trustee.
If the Company elects to redeem Securities of any series
pursuant to any optional redemption provisions thereof, it shall notify the
Trustee of the redemption date and the principal amount of Securities of that
series to be redeemed.
13
<PAGE>
The Company shall give the notice provided for in this Section
at least 45 days before the redemption date (unless a shorter notice period
shall be satisfactory to the Trustee), which notice shall specify the provisions
of such Security pursuant to which the Company elects to redeem such Securities.
If the Company elects to reduce the principal amount of
Securities of any series to be redeemed pursuant to mandatory redemption
provisions thereof, it shall notify the Trustee of the amount of, and the basis
for, any such reduction. If the Company elects to credit against any such
mandatory redemption Securities it has not previously delivered to the Trustee
for cancellation, it shall deliver such Securities with such notice.
Section 3.02. Selection of Securities to Be Redeemed.
If less than all the Securities of any series are to be
redeemed, the Trustee shall select the Securities of that series to be redeemed
by a method that complies with the requirements of any exchange on which the
Securities of that series are listed, or, if the Securities of that series are
not listed on an exchange, by lot or by such other method as the Trustee deems
appropriate. The Trustee shall make the selection not more than 75 days and not
less than 30 days before the redemption date from Securities of that series
outstanding and not previously called for redemption. Except as otherwise
provided as to any particular series of Securities, Securities and portions
thereof that the Trustee selects shall be in amounts equal to the minimum
authorized denomination for Securities of the series to be redeemed or any
integral multiple thereof. 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 in writing of the
Securities or portions of Securities to be called for redemption.
Section 3.03. Notice of Redemption.
Except as otherwise provided as to any particular series of
Securities, at least 30 days but not more than 60 days before a redemption date,
the Company shall mail a notice of redemption to each Holder whose Securities
are to be redeemed.
The notice shall identify the Securities of the series to be
redeemed and shall state:
(1) the redemption date;
(2) the redemption price fixed in accordance with the terms
of the Securities of the series to be redeemed, plus accrued interest,
if any, to the date fixed for redemption (the "redemption price");
(3) if any Security is being redeemed in part, the portion
of the principal amount of such Security to be redeemed and that, after
the redemption date, upon surrender of such Security, a new Security or
Securities in principal amount equal to the unredeemed portion will be
issued;
(4) the name and address of the Paying Agent;
14
<PAGE>
(5) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(6) that, unless the Company defaults in payment of the
redemption price, interest on Securities called for redemption ceases
to accrue on and after the redemption date; and
(7) the CUSIP number, if any, of the Securities to be
redeemed.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at its expense. The notice mailed in the
manner herein provided shall be conclusively presumed to have been duly given
whether or not the Holder receives such notice. In any case, failure to give
such notice by mail or any defect in the notice of the Holder of any Security
shall not affect the validity of the proceeding for the redemption of any other
Security.
Section 3.04. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section
3.03 hereof, Securities called for redemption become due and payable on the
redemption date for the redemption price. Upon surrender to the Paying Agent,
such Securities will be paid at the Redemption Price.
Section 3.05. Deposit of Redemption Price.
On or before 10:00 a.m. New York City time on the redemption
date, the Company shall deposit with the Paying Agent (or, if the Company or any
Affiliate is the Paying Agent, shall segregate and hold in trust) money
sufficient to pay the redemption price of all Securities called for redemption
on that date other than Securities that have previously been delivered by the
Company to the Trustee for cancellation. The Paying Agent shall return to the
Company any money not required for that purpose.
Section 3.06. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part, the
Company shall issue and the Trustee shall authenticate for the Holder at the
expense of the Company a new Security of same series equal in principal amount
to the unredeemed portion of the Security surrendered.
ARTICLE 4.
COVENANTS
Section 4.01. Payment of Securities.
The Company shall pay or cause to be paid the principal of and
interest on the Securities on the dates and in the manner provided in this
Indenture and the Securities. Principal and interest shall be considered paid on
the date due if the Paying Agent, if other than the
15
<PAGE>
Company or an Affiliate, holds as of 10:00 a.m. New York City time on that date
immediately available funds designated for and sufficient to pay all principal
and interest then due.
To the extent lawful, the Company shall pay interest on
overdue principal and overdue installments of interest at the rate per annum
borne by the applicable series of Securities.
Section 4.02. Maintenance of Office or Agency.
The Company shall maintain in the Borough of Manhattan, The
City of New York, an office or agency (which may be an office of the Trustee or
an affiliate of the Trustee or Registrar) where Securities may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Company in respect of the Securities and this Indenture may be served.
The Company shall give prompt written notice to the Trustee of the location, and
any change in the location, of such office or agency. If at any time the Company
shall fail to maintain any such required office or agency or shall fail to
furnish the Trustee with the address thereof, such presentations, surrenders,
notices and demands may be made or served at the Corporate Trust Office of the
Trustee.
The Company may also from time to time designate one or more
other offices or agencies where the Securities may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company of its obligation to maintain an office or agency
in the Borough of Manhattan, The City of New York for such purposes. The Company
shall give prompt written notice to the Trustee of any such designation or
rescission and of any change in the location of any such other office or agency.
The Company hereby designates the Corporate Trust Office of
the Trustee as one such office or agency of the Company in accordance with
Section 2.03.
Section 4.03. Commission Reports.
The Company shall deliver to the Trustee within 15 days after
it files them with the Commission copies of the annual reports and of the
information, documents, and other reports (or copies of such portions of any of
the foregoing as the Commission may by rules and regulations prescribe) that the
Company is required to file with the Commission pursuant to Section 13 or 15(d)
of the Exchange Act; provided, however the Company shall not be required to
deliver to the Trustee any materials for which the Company has sought and
received confidential treatment by the Commission. The Company also shall comply
with the other provisions of TIA Section 314(a).
Delivery of such reports, information and documents to the
Trustee is for informational purposes only and the Trustee's receipt of such
shall not constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Company's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
16
<PAGE>
Section 4.04. Compliance Certificate.
The Company shall deliver to the Trustee, within 120 days
after the end of each fiscal year of the Company, commencing within 120 days of
December 31, 1998, 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 failure by the Company to comply with all
conditions, or default by the Company with respect to any covenants, under this
Indenture, and further stating whether or not they have knowledge of any such
failure or default and, if so, specifying each such failure or default and the
nature thereof. For purposes of this Section, such compliance shall be
determined without regard to any period of grace or requirement of notice
provided for in this Indenture. The certificate need not comply with Section
10.04 hereof.
The Company shall, so long as any of the Securities are
outstanding, deliver to the Trustee, forthwith upon becoming aware of any
Default or Event of Default, an Officers' Certificate specifying such Default or
Event of Default and what action the Company is taking or proposes to take with
respect thereto.
Section 4.05. Taxes.
The Company shall pay prior to delinquency, all material
taxes, assessments, and governmental levies except as contested in good faith by
appropriate proceedings.
Section 4.06. Stay, Extension and Usury Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall not at any time insist upon, plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay, extension or
usury law wherever enacted, now or at any time hereafter in force, that 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 covenants that it shall not, by resort to any
such law, 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 has been enacted.
Section 4.07. Corporate Existence.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect (i)
its corporate existence, and the corporate, partnership or other existence of
each of its Subsidiaries, in accordance with the respective organizational
documents (as the same may be amended from time to time) of each Subsidiary and
(ii) the rights (charter and statutory), licenses and franchises of the Company
and its Subsidiaries; provided, however, that the Company shall not be required
to preserve any such right, license or franchise, or the corporate, partnership
or other existence of any of its Subsidiaries, if the Board of Directors shall
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company and its Subsidiaries, taken as a whole, and that the
loss thereof is not adverse in any material respect to the Holders.
17
<PAGE>
Section 4.08. Calculation of Original Issue Discount.
If, as of the end of any fiscal year of the Company, the
Company has any outstanding Original Issue Discount Securities under the
Indenture, the Company shall file with the Trustee promptly following the end of
such fiscal year (i) a written notice specifying the amount of original issue
discount (including daily rates and accrual periods) accrued on such Original
Issue Discount Securities as of the end of such year and (ii) such other
specific information relating to such original issue discount as may then be
required under the Internal Revenue Code of 1986, as amended from time to time.
ARTICLE 5.
SUCCESSORS
Section 5.01. When Company May Merge, etc.
The Company shall not consolidate or merge with or into
(whether or not the Company is the surviving corporation), or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
properties or assets in one or more related transactions to any Person unless:
(1) the Company is the surviving corporation or the
Person formed by or surviving any such consolidation or merger (if
other than the Company) or to which such sale, assignment, transfer,
lease, conveyance or other disposition shall have been made is a
corporation organized and existing under the laws of the United States,
any state thereof or the District of Columbia;
(2) the Person formed by or assuming any such
consolidation or merger (if other than the Company) or the Person to
which such sale, assignment, transfer, lease, conveyance or other
disposition shall have been made assumes by supplemental indenture all
the obligations of the Company under the Securities and this Indenture;
and
(3) immediately prior to and after giving effect to
the transaction no Default or Event of Default shall have occurred and
be continuing.
The Company shall deliver to the Trustee on or prior to the consummation of the
proposed transaction an Officers' Certificate to the foregoing effect and an
Opinion of Counsel stating that the proposed transaction and such supplemental
indenture comply with this Indenture.
Section 5.02. Successor Corporation Substituted.
Upon any consolidation or merger, or any transfer by the
Company (other than by lease) of all or substantially all of the assets of the
Company in accordance with Section 5.01 hereof, the successor corporation formed
by such consolidation or into which the Company is merged or to which such
transfer is made shall succeed to, and be substituted for, and may
18
<PAGE>
exercise every right and power of, the Company under this Indenture with the
same effect as if such successor corporation had been named as the Company
herein. In the event of any such transfer, the predecessor Company shall be
released and discharged from all liabilities and obligations in respect of the
Securities and the Indenture, and the predecessor Company may be dissolved,
wound up or liquidated at any time thereafter.
ARTICLE 6.
DEFAULTS AND REMEDIES
Section 6.01. Events of Default.
An "Event of Default" occurs with respect to Securities of any
particular series if, unless in the establishing Board Resolution, Officers'
Certificate or supplemental indenture hereto, it is provided that such series
shall not have the benefit of said Event of Default:
(1) the Company defaults in the payment of interest
on any Security of that series when the same becomes due and payable
and the Default continues for a period of 30 days;
(2) the Company defaults in the payment of the
principal of any Security of that series when the same becomes due and
payable at maturity, upon redemption or otherwise;
(3) an Event of Default, as defined in the Securities
of that series, occurs and is continuing, or the Company fails to
comply with any of its other agreements in the Securities of that
series or in this Indenture with respect to that series and the Default
continues for the period and after the notice specified below;
(4) the Company 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 all or substantially all of its
property;
(D) makes a general assignment for the
benefit of its creditors; or
(E) admits in writing its inability
generally to pay its debts as the same become due.
19
<PAGE>
(5) a court of competent jurisdiction enters an order
or decree under any Bankruptcy Law that:
(A) is for relief against the Company in an
involuntary case;
(B) appoints a Custodian of the Company or
for all or substantially all of its property; or
(C) orders the liquidation of the Company;
and the order or decree remains unstayed and in effect for 60 days.
(6) any other Event of Default provided with respect
to Securities of that series which is specified in a Board Resolution,
Officers' Certificate or supplemental indenture establishing that
series of Securities.
The term "Bankruptcy Law" means Title 11, U.S. Code or any
similar federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator or similar official under any
Bankruptcy Law.
A Default under clause (3) above is not an Event of Default
with respect to a particular series of Securities until the Trustee or the
Holders of at least 50% in principal amount of the then outstanding Securities
of that series notify the Company of the Default and the Company does not cure
the Default within 60 days after receipt of the notice. The notice must specify
the Default, demand that it be remedied and state that the notice is a "Notice
of Default." Such notice shall be given by the Trustee if so requested in
writing by the Holders of 50% of the principal amount of the then outstanding
Securities of that series.
Section 6.02. Acceleration.
If an Event of Default with respect to Securities of any
series (other than an Event of Default specified in clauses (4) and (5) of
Section 6.01) occurs and is continuing, the Trustee by notice to the Company, or
the Holders of at least 50% in principal amount of the then outstanding
Securities of that series by notice to the Company and the Trustee, may declare
the unpaid principal (or, in the case of Original Issue Discount Securities,
such lesser amount as may be provided for in such Securities) of and any accrued
interest on all the Securities of that series to be due and payable on the
Securities of that series. Upon such declaration the principal (or such lesser
amount) and interest shall be due and payable immediately. If an Event of
Default specified in clause (4) or (5) of Section 6.01 occurs, all of such
amount shall become and be immediately due and payable without any declaration
or other act on the part of the Trustee or any Holder. The Holders of a majority
in principal amount of the then outstanding Securities of that series by 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 with respect to that series have been cured or waived except
nonpayment of principal (or such lesser amount) or interest that has become due
solely because of the acceleration.
20
<PAGE>
Section 6.03. Other Remedies.
If an Event of Default with respect to Securities of any
series occurs and is continuing, the Trustee may pursue any available remedy to
collect the payment of principal or interest on the Securities of that series or
to enforce the performance of any provision of the Securities of that series 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 Securityholder 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. All remedies
are cumulative to the extent permitted by law.
Section 6.04. Waiver of Past Defaults.
Subject to Section 9.02, the Holders of a majority in
principal amount of the then outstanding Securities of any series, by notice to
the Trustee, may waive an existing Default or Event of Default with respect to
that series and its consequences except a Default or Event of Default in the
payment of the principal (including any mandatory sinking fund or like payment)
of or interest on any Security of that series (provided, however, that the
Holders of a majority in principal amount of the outstanding Securities of any
series may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration).
Section 6.05. Control by Majority.
The Holders of a majority in principal amount of the then
outstanding Securities of any series may direct the time, method and place of
conducting any proceeding for any remedy with respect to that series available
to the Trustee or exercising any trust or power conferred on it. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture, that is unduly prejudicial to the rights of another Holder of
Securities of that series, or that may involve the Trustee in personal
liability. The Trustee may take any other action which it deems proper that is
not inconsistent with any such direction.
Section 6.06. Limitation on Suits.
A Holder of Securities of any series may not pursue a remedy
with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice of
a continuing Event of Default with respect to that series;
(2) the Holders of at least 50% in principal amount
of the then outstanding Securities of that series make a written
request to the Trustee to pursue the remedy;
21
<PAGE>
(3) such Holder or Holders offer to the Trustee
indemnity satisfactory to the Trustee 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 and, if
requested, the provision of indemnity; and
(5) during such 60-day period the Holders of a
majority in principal amount of the then outstanding Securities of that
series do not give the Trustee a direction inconsistent with the
request.
No Holder of any series of Securities may use this Indenture to prejudice the
rights of another Holder of Securities of that series or to obtain a preference
or priority over another Holder of Securities of that series.
Section 6.07. Rights of Holders to Receive Payment.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Security to receive payment of principal of and
interest, if any, on the Security, on or after the respective due dates
expressed in the Security, 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 the Holder.
Section 6.08. Collection Suit by Trustee.
If an Event of Default specified in Section 6.01(1) or (2)
hereof occurs and is continuing with respect to Securities of any series, 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 (or such portion of the
principal as may be specified as due upon acceleration at that time in the terms
of that series of Securities) and interest, if any, remaining unpaid on the
Securities of that series then outstanding, together with (to the extent lawful)
interest on overdue principal and interest, and such further amount as shall be
sufficient to cover the costs and, to the extent lawful, expenses of collection,
including the reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel and any other amounts due the Trustee under
Section 7.07 hereof.
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 Securityholders allowed in any judicial proceedings relative to
the Company (or any other obligor on the Securities), its creditors or its
property and shall be entitled to and empowered to collect and receive any money
or other property payable or deliverable on any such claims and to distribute
the same, and any custodian in any such judicial proceedings is hereby
authorized by each Holder to make such payments to the Trustee and, in the event
that the Trustee shall consent to the making of such payments directly to the
Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent
22
<PAGE>
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
Nothing contained herein shall be deemed to authorize the Trustee to authorize
or consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
Section 6.10. Priorities.
If the Trustee collects any money with respect to Securities
of any series pursuant to this Article, it shall pay out the money in the
following order:
First: to the Trustee, its agents and attorneys
for amounts due under Section 7.07 hereof,
including payment of all compensation,
expense and liabilities incurred, and all
advances made, by the Trustee and the
costs and expenses of collection;
Second: to Securityholders for amounts due and
unpaid on the Securities of such series
for principal and interest, ratably,
without preference or priority of any
kind, according to the amounts due and
payable on the Securities of such series
for principal and interest, respectively;
and
Third: to the Company or to such party as a court
of competent jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Securities of any series pursuant to this Section. The
Trustee shall notify the Company in writing reasonably in advance of any such
record date and payment date.
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 a 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 and expenses, against any party litigant in the suit,
having due regard to the merits and good faith of the claims or defense 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 hereof or a suit by Holders of more than
10% in principal amount of the then outstanding Securities of any series.
23
<PAGE>
ARTICLE 7.
TRUSTEE
Section 7.01. Duties of Trustee.
(a) If an Event of Default has occurred and is
continuing, the Trustee shall exercise such of 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 man would exercise or use under
the circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of
Default known to the Trustee:
(i) the duties of the Trustee shall be
determined solely by the express provisions
of this Indenture or the TIA and the Trustee
need perform only those duties that are
specifically set forth in this Indenture or
the TIA and no others, and no implied
covenants or obligations shall be read into
this Indenture against the Trustee; and
(ii) 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, in the case of
any certificates or opinions which by any
provision hereof are specifically required
to be furnished to the Trustee, the Trustee
shall examine the certificates and opinions
to determine whether or not they conform to
the requirements of this Indenture (but need
not confirm or investigate the accuracy of
mathematical calculations or other facts
stated therein).
(c) The Trustee may not be relieved from liabilities
for its own negligent action, its own negligent failure to act, or its
own willful misconduct, except that:
(i) this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii) the Trustee shall not be liable for any
error of judgment made in good faith by a
responsible officer of the Trustee, unless
it is proved that the Trustee was negligent
in ascertaining the pertinent facts; and
24
<PAGE>
(iii) 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 hereof.
(d) Whether or not therein expressly so provided,
every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or incur any liability. The
Trustee may refuse to perform any duty or exercise any right or power
unless it receives security and indemnity satisfactory to it against
any loss, liability or expense.
(f) 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. Absent written instruction from the Company, the
Trustee shall not be required to invest any such money. Money held in
trust by the Trustee need not be segregated from other funds except to
the extent required by law.
Section 7.02. Rights of Trustee.
Subject to TIA Section 315(a) through (d):
(a) The Trustee may conclusively rely on any document
believed by it to be genuine and to have been signed or presented by
the proper person. The Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its
discretion, may make such further inquiry or investigation into such
facts or matters as it may see fit.
(b) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel, or
both. The Trustee shall not be liable for any action it takes or omits
to take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel.
(c) The Trustee may act through agents and shall not
be responsible for the misconduct or negligence of any agent appointed
with due care.
(d) 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 under the Indenture, unless the
Trustee's conduct constitutes negligence.
(e) Unless otherwise specifically provided in this
Indenture, any demand, request, direction or notice from the Company
shall be sufficient if signed by an Officer of the Company.
25
<PAGE>
(f) The Trustee may consult with counsel of its
selection and may rely upon the advice of such counsel or any Opinion
of Counsel.
(g) The Trustee shall not be deemed to have notice of
any Default or Event of Default unless a Trust Officer of the Trustee
has actual knowledge thereof or unless written notice of any event that
is in fact such a default is received by the Trustee at the Corporate
Trust Office of the Trustee, and such notice references the Securities
generally or the Securities of a particular series, as the case may be,
and this Indenture.
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 an
Affiliate with the same rights it would have if it were not Trustee. Any Agent
may do the same with like rights. However, the Trustee is subject to TIA
Sections 310(b) and 311.
Section 7.04. Trustee's Disclaimer.
The Trustee 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 in the Securities other than its certificate of
authentication.
Section 7.05. Notice of Defaults.
If a Default or Event of Default with respect to the
Securities of any series occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to all Holders of Securities of that series a
notice of the Default or Event of Default within 90 days after it occurs. Except
in the case of a Default or Event of Default in payment on any such Security,
the Trustee may withhold the notice if and so long as a committee of its Trust
Officers in good faith determines that withholding the notice is in the
interests of such Securityholders.
Section 7.06. Reports by Trustee to Holders.
Within 60 days after May 15 in each year, the Trustee with
respect to any series of Securities shall mail to Holders of Securities of that
series as provided in TIA Section 313(c) a brief report dated as of such May 15
that complies with TIA Section 313(a) (if such report is required by TIA Section
313(a)). The Trustee shall also comply with TIA Section 313(b).
A copy of each report at the time of its mailing to
Securityholders shall be mailed to the Company and filed with the Commission and
each stock exchange on which any of the Securities are listed, as required by
TIA Section 313(d). The Company shall notify the Trustee when the Securities are
listed on any stock exchange, and of any delisting thereof.
26
<PAGE>
Section 7.07. Compensation and Indemnity.
The Company shall pay to the Trustee from time to time such
compensation as shall be agreed upon in writing for its services hereunder. The
Company shall reimburse the Trustee upon written request for all reasonable
out-of-pocket expenses incurred by it. Such expenses shall include the
reasonable compensation and out-of-pocket expenses of the Trustee's agents and
counsel.
The Company shall indemnify each of the Trustee or any
predecessor Trustee for any loss, liability, damage, claims or expenses,
including taxes (other than taxes based upon, measured by or determined by the
income of the Trustee) incurred by it, without negligence or bad faith on its
part, in connection with the acceptance or administration of this Indenture and
its duties hereunder. The Trustee shall notify the Company promptly of any claim
for which it may seek indemnity. The Company shall defend the claim and the
Trustee shall cooperate in the defense. The Trustee may have separate counsel
and the Company shall pay the reasonable fees and expenses of such counsel. The
Company need not pay for any settlement made without its consent.
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 in its capacity as Trustee, except money or
property held in trust to pay principal and interest on particular Securities.
Such lien will survive the satisfaction and discharge of this Indenture.
If the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(4) or (5) hereof occurs, the expenses
and the compensation for the services will be intended to constitute expenses of
administration under any applicable Bankruptcy Law.
This Section 7.07 shall survive the termination of this
Indenture.
Section 7.08. Replacement of Trustee.
A resignation or removal of the Trustee with respect to one or
more or all series of Securities and appointment of a successor Trustee shall
become effective only upon the successor Trustee's acceptance of appointment as
provided in this Section.
The Trustee may resign with respect to one or more or all
series of Securities by so notifying the Company in writing. The Holders of a
majority in principal amount of the then outstanding Securities of any series
may remove the Trustee as to that series by so notifying the Trustee in writing
and may appoint a successor Trustee with the Company's consent. The Company may
remove the Trustee with respect to one or more or all series of Securities if:
(1) the Trustee fails to comply with Section
7.10 hereof;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
27
<PAGE>
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee becomes incapable of acting.
If, as to any series of Securities, the Trustee resigns or is
removed or if a vacancy exists in the office of Trustee for any reason, the
Company shall promptly appoint a successor Trustee for that series. Within one
year after the successor Trustee with respect to any series takes office, the
Holders of a majority in principal amount of the then outstanding Securities of
that series may appoint a successor Trustee to replace the successor Trustee
appointed by the Company. If a successor Trustee as to a particular series does
not take office within 60 days after the retiring Trustee resigns or is removed,
the retiring Trustee, the Company or the Holders of at least 10% in principal
amount of the then outstanding Securities of that series may petition any court
of competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof with
respect to any series, any Holder of Securities of that series who satisfies the
requirements of TIA Section 310(b) may petition any court of competent
jurisdiction for the removal of the Trustee and the appointment of a successor
Trustee for that series.
A successor Trustee as to any series of Securities shall
deliver a written acceptance of its appointment to the retiring Trustee and to
the Company. Immediately after that, 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 hereof), 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 as to that
series. The successor Trustee shall mail a notice of its succession to the
Holders of Securities of that series.
Notwithstanding replacement of the Trustee pursuant to this
Section 7.08, the Company's obligations under Section 7.07 hereof shall continue
for the benefit of the retiring trustee.
In case of the appointment hereunder of a successor Trustee
with respect to the Securities of one or more (but not all) series, the Company,
the retiring Trustee and each successor Trustee with respect to the Securities
of one or more series shall execute and deliver an indenture supplemental hereto
wherein each successor Trustee shall accept such appointment and that (1) shall
contain such provisions as shall be necessary or desirable to transfer and
confirm to, and to vest in, each successor Trustee all the rights, powers,
trusts and duties of the retiring Trustee with respect to the Securities of that
or those series to which the appointment of such successor Trustee relates, (2)
shall contain such provisions as shall be necessary or desirable to confirm that
all the rights, powers, trusts and duties of the retiring Trustee with respect
to the Securities of that or those series as to which the retiring Trustee is
not retiring shall continue to be vested in the retiring Trustee, and (3) shall
add to or change any of the provisions of this Indenture as shall be necessary
or desirable to provide for or facilitate the administration of the trusts
hereunder by more than one Trustee; provided, however, that nothing herein or in
such supplemental Indenture shall constitute such Trustee co-trustees of the
same trust and that each
28
<PAGE>
such Trustee shall be trustee of a trust hereunder separate and apart from any
trust hereunder administered by any other such Trustee.
Upon the execution and delivery of such supplemental Indenture
the resignation or removal of the retiring Trustee shall become effective to the
extent provided therein and each such successor Trustee, without any further
act, deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Trustee with respect to the Securities of that or
those series to which the appointment of such successor Trustee relates.
Section 7.09. Successor Trustee by Merger, etc.
If the Trustee as to any series of Securities consolidates,
merges or converts into, or transfers all or substantially all of its corporate
trust business to, another corporation, the successor corporation without any
further act shall be the successor Trustee as to that series.
Section 7.10. Eligibility; Disqualification.
Each series of Securities shall always have a Trustee who
satisfies the requirements of TIA Section 310(a)(1), (2) and (5). The Trustee as
to any series of Securities shall always have a combined capital and surplus of
at least $25,000,000 as set forth in its most recent published annual report of
condition. The Trustee is subject to TIA Section 310(b).
Section 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8.
SATISFACTION AND DISCHARGE; DEFEASANCE
Section 8.01. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Order cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Securities herein expressly provided for), and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture, when
(a) either
(i) all Securities theretofore authenticated
and delivered (other than Securities that have been
destroyed, lost or stolen and that have been replaced
or paid) have been delivered to the Trustee for
cancellation; or
(ii) all such Securities not theretofore
delivered to the Trustee for cancellation
29
<PAGE>
(1) have become due and payable, or
(2) will become due and payable at
their stated maturity within one year, or
(3) are to be called for redemption
within one year under arrangements
satisfactory to the Trustee for the giving
of notice of redemption by the Trustee in
the name, and at the expense, of the
Company, or
(4) are deemed paid and discharged
pursuant to Section 8.03, as applicable;
and the Company, in the case of (1), (2) or (3) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust an
amount sufficient for the purpose of paying and discharging the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal and interest to the date of
such deposit (in the case of Securities that have become due and
payable on or prior to the date of such deposit) or to the stated
maturity or redemption date, as the case may be;
(b) the Company has paid or caused to be paid all
other sums payable hereunder by the Company; and
(c) the Company has delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction
and discharge of this Indenture have been complied with.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 7.07 hereof, and, if
money shall have been deposited with the Trustee pursuant to clause (a) of this
Section or if money or obligations shall have been deposited with or received by
the Trustee pursuant to Section 8.03 hereof, the obligations of the Trustee
under Sections 8.02 and 8.05 hereof shall survive.
Section 8.02. Application of Trust Funds; Indemnification.
(a) Subject to the provisions of Section 8.05 hereof,
all money deposited with the Trustee pursuant to Section 8.01 hereof,
all money and U.S. Government Obligations deposited with the Trustee
pursuant to Section 8.03 or 8.04 hereof and all money received by the
Trustee in respect of U.S. Government Obligations deposited with the
Trustee pursuant to Section 8.03 or 8.04 hereof, shall be held in trust
and applied by it, in accordance with the provisions of the Securities
and this Indenture, to the payment, either directly or through any
Paying Agent (including the Company acting as its own Paying Agent) as
the Trustee may determine, to the persons entitled thereto, of the
principal and interest for whose payment such money has been deposited
with or received by the Trustee or to make mandatory sinking fund
payments or analogous payments as contemplated by Sections 8.03 and
8.04 hereof.
30
<PAGE>
(b) The Company shall pay and shall indemnify the
Trustee against any tax, fee or other charge imposed on or assessed
against U.S. Government Obligations deposited pursuant to Sections 8.03
or 8.04 hereof or the interest and principal received in respect of
such obligations other than any payable by or on behalf of Holders.
(c) The Trustee shall deliver or pay to the Company
from time to time upon Company Request any U.S. Government Obligations
or money held by it as provided in Sections 8.03 or 8.04 hereof that,
in the opinion of a nationally recognized firm of independent certified
public accountants expressed in a written certification thereof
delivered to the Trustee, are then in excess of the amount thereof
which then would have been required to be deposited for the purpose for
which such U.S. Government Obligations or money were deposited or
received. This provision shall not authorize the sale by the Trustee of
any U.S. Government Obligations held under this Indenture.
Section 8.03. Legal Defeasance of Securities of any Series.
Unless this Section 8.03 is otherwise specified to be
inapplicable to Securities of any series, the Company shall be deemed to have
paid and discharged the entire indebtedness on all the outstanding Securities of
any such series on the 91st day after the date of the deposit referred to in
subparagraph (d) hereof, and the provisions of this Indenture, as it relates to
such outstanding Securities of such series, shall no longer be in effect (and
the Trustee, at the expense of the Company, shall, upon Company Request, execute
proper instruments acknowledging the same), except as to:
(a) the rights of Holders of Securities of such
series to receive, from the trust funds described in subparagraph (d)
hereof, (i) payment of the principal of an each installment of
principal of or interest on the outstanding Securities of such series
on the stated maturity of such principal of or interest and (ii) the
benefit of any mandatory sinking fund payments applicable to the
Securities of such series on the day on which such payments are due and
payable in accordance with the terms of this Indenture and the
Securities of such series;
(b) the Company's obligations with respect to such
Securities of such series under Sections 2.03, 2.06 and 2.07 hereof;
and
(c) the rights, powers, trust and immunities of the
Trustee hereunder and the duties of the Trustee under Section 8.02
hereof and the duty of the Trustee to authenticate Securities of such
series issued on registration of transfer of exchange;
provided that, the following conditions shall have been satisfied:
(d) the Company shall have deposited or caused to be
deposited irrevocably with the Trustee as trust funds in trust for the
purpose of making the following payments, specifically pledged as
security for and dedicated solely to the benefit of the Holders of such
Securities, cash in U.S. Dollars and/or U.S. Government
31
<PAGE>
Obligations which through the payment of interest and principal in
respect thereof, in accordance with their terms, will provide (and
without reinvestment and assuming no tax liability will be imposed on
such Trustee), not later than one day before the due date of any
payment of money, an amount in cash, sufficient, in the opinion of a
nationally recognized firm of independent public accountants expressed
in a written certification thereof delivered to the Trustee, to pay
and discharge each installment of principal (including mandatory
sinking fund or analogous payments) of and interest, if any, on all
the Securities of such series on the dates such installments of
interest or principal are due;
(e) such deposit will not result in a breach or
violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party
or by which it is bound;
(f) no Default or Event of Default with respect to
the Securities of such series shall have occurred and be continuing on
the date of such deposit or during the period ending on the 91st day
after such date;
(g) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel to the effect that
(i) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (ii) since the date of execution
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 of the
Securities of such series will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the
case if such deposit, defeasance and discharge had not occurred;
(h) the Company shall have delivered to the Trustee
an Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of the Securities of
such series over any other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding any other creditors of
the Company;
(i) such deposit shall not result in the trust
arising from such deposit constituting an investment company (as
defined in the Investment Company Act of 1940, as amended), or such
trust shall be qualified under such Act or exempt from regulation
thereunder; and
(j) the Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to the defeasance
contemplated by this Section have been complied with.
32
<PAGE>
Section 8.04. Covenant Defeasance.
Unless this Section 8.04 is otherwise inapplicable to
Securities of any series, on and after the 91st day after the date of the
deposit referred to in subparagraph (a) hereof, the Company may omit to comply
with any term, provision or condition set forth under Sections 4.03, 4.04, 4.05,
4.06, 4.07, 4.08 and 5.01 hereof as well as any additional covenants contained
in a supplemental indenture hereto for a particular series of Securities or a
Board Resolution or an Officers' Certificate delivered pursuant to Section
2.01(n) hereof (and the failure to comply with any such provisions shall not
constitute a Default or Event of Default under Section 6.01 hereof) and the
occurrence of any event described in clause (e) of Section 6.01 hereof shall not
constitute a Default or Event of Default hereunder, with respect to the
Securities of such series, provided that the following conditions shall have
been satisfied:
(a) With reference to this Section 8.04, the Company
has deposited or caused to be irrevocably deposited (except as provided
in Section 8.03 hereof) with the Trustee as trust funds in trust,
specifically pledged as security for, and dedicated solely to, the
benefit of the Holders of such Securities, cash in U.S. Dollars and/or
U.S. Government Obligations which through the payment of interest and
principal in respect thereof, in accordance with their terms, will
provide (and without reinvestment and assuming no tax liability will be
imposed on such Trustee), not later than one day before the due date of
any payment of money, an amount in cash, sufficient, in the opinion of
a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to
the Trustee, to pay principal and interest, if any, on and any
mandatory sinking fund in respect of the Securities of such series on
the dates such installments of interest or principal are due;
(b) Such deposit will not result in a breach or
violation of, or constitute a default under, this Indenture or any
other material agreement or instrument to which the Company is a party
or by which it is bound;
(c) No Default or Event of Default with respect to
the Securities of such series shall have occurred and be continuing on
the date of such deposit or during the period ending on the 91st day
after such date;
(d) The Company shall have delivered to the Trustee
an Opinion of Counsel confirming that Holders of the Securities of such
series will not recognize income, gain or loss for federal income tax
purposes as a result of such deposit and defeasance and will be subject
to federal income tax on the same amounts, in the same manner and at
the same times as would have been the case if such deposit and
defeasance had not occurred;
(e) The Company shall have delivered to the Trustee
an Officers' Certificate stating the deposit was not made by the
Company with the intent of preferring the Holders of the Securities of
such series over any other creditors of the Company or with the intent
of defeating, hindering, delaying or defrauding any other creditors of
the Company; and
33
<PAGE>
(f) The Company shall have delivered to the Trustee
an Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent herein provided for relating to the defeasance
contemplated by this Section have been complied with.
Section 8.05. Repayment to Company.
The Trustee and the Paying Agent shall pay to the Company upon
the Company's request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person.
ARTICLE 9.
SUPPLEMENTS, AMENDMENTS AND WAIVERS
Section 9.01. Without Consent of Holders.
The Company and the Trustee as to any series of Securities may
supplement or amend this Indenture or the Securities without notice to or the
consent of any Securityholder:
(1) to cure any ambiguity, defect or inconsistency;
(2) to comply with Article 5;
(3) to comply with any requirements of the Commission
in connection with the qualification of this Indenture under the TIA;
(4) to provide for uncertificated Securities in
addition to or in place of certificated Securities;
(5) to add to, change or eliminate any of the
provisions of this Indenture in respect of one or more series of
Securities, provided, however, that any such addition, change or
elimination (A) shall neither (i) apply to any Security of any series
created prior to the execution of such supplemental indenture and
entitled to the benefit of such provision nor (ii) modify the rights of
the Holder of any such Security with respect to such provision or (B)
shall become effective only when there is no outstanding Security of
any series created prior to the execution of such supplemental
indenture and entitled to the benefit of such provision;
(6) to make any change that does not adversely affect
in any material respect the interests of the Securityholders of any
series; or
(7) to establish additional series of Securities as
permitted by Section 2.01 hereof.
34
<PAGE>
Section 9.02. With Consent of Holders.
Subject to Section 6.07, the Company and the Trustee as to any
series of Securities may amend this Indenture or the Securities of that series
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities of each series affected by the amendment, with each
such series voting as a separate class. The Holders of a majority in principal
amount of the then outstanding Securities of any series may also waive
compliance in a particular instance by the Company with any provision of this
Indenture with respect to that series or the Securities of that series;
provided, however, that without the consent of each Securityholder affected, an
amendment or waiver may not:
(1) reduce the percentage of the principal amount of
Securities whose Holders must consent to an amendment or waiver;
(2) reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous provision;
(3) reduce the rate of, or change the time for
payment of interest on, any Security;
(4) reduce the principal of or change the fixed
maturity of any Security or waive a redemption payment or alter the
redemption provisions with respect thereto;
(5) make any Security payable in money other than
that stated in the Security (including defaulted interest);
(6) reduce the principal amount of Original Issue
Discount Securities payable upon acceleration of the maturity thereof;
(7) make any change in Section 6.04, 6.07 or 9.02
(this sentence); or
(8) waive a default in the payment of the principal
of, or interest on, any Security, except to the extent otherwise
provided for in Section 6.02 hereof.
An amendment or waiver under this Section that waives, changes
or eliminates any covenant or other provision of this Indenture that has
expressly been included solely for the benefit of one or more particular series
of Securities, or that modifies the rights of the Holders of Securities of such
series with respect to such covenant or other provision, shall be deemed not to
affect the rights under this Indenture of the Holders of Securities of any other
series.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment or waiver,
but it shall be sufficient if such consent approves the substance thereof.
The Company shall mail supplemental indentures to Holders upon
request. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such
supplemental indenture or waiver.
35
<PAGE>
Section 9.03. Revocation and Effect of Consents.
Until an amendment or waiver becomes effective, a consent to
it by a Holder of a Security is a continuing consent by the Holder and every
subsequent Holder of a Security or portion of a Security that evidences the same
debt as the consenting Holder's Security, even if notation of the consent is not
made on any Security; provided, however, that unless a record date shall have
been established pursuant to Section 2.12(a) hereof, any such Holder or
subsequent Holder may revoke the consent as to his Security or portion of a
Security if the Trustee receives the notice of revocation before the date on
which the amendment or waiver becomes effective. An amendment or waiver shall
become effective on receipt by the Trustee of consents from the Holders of the
requisite percentage principal amount of the outstanding Securities of any
series, and thereafter shall bind every Holder of Securities of that series.
Section 9.04. Notation on or Exchange of Securities.
If an amendment or waiver changes the terms of a Security: (a)
the Trustee may require the Holder of the Security to deliver it to the Trustee,
the Trustee may, at the written direction of the Company and at the Company's
expense, place an appropriate notation on the Security about the changed terms
and return it to the Holder and the Trustee may place an appropriate notation on
any Security thereafter authenticated; or (b) 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.
Section 9.05. Trustee to Sign Amendments, etc.
The Trustee shall receive an Opinion of Counsel stating that
the execution of any amendment or waiver proposed pursuant to this Article is
authorized or permitted by this Indenture. Subject to the preceding sentence,
the Trustee shall sign such amendment or waiver if the same does not adversely
affect the rights, duties, liabilities or immunities of the Trustee. The Trustee
may, but shall not be obligated to, execute any such amendment, supplement or
waiver that affects the Trustee's own rights, duties, liabilities or immunities
under this Indenture or otherwise.
ARTICLE 10.
MISCELLANEOUS
Section 10.01. Indenture Subject to Trust Indenture Act.
This Indenture is subject to the provisions of the TIA that
are required to be part of this Indenture, and shall, to the extent applicable,
be governed by such provisions.
36
<PAGE>
Section 10.02. Notices.
Any notice or communication is duly given if in writing and
delivered in person or sent by first-class mail (registered or certified, return
receipt requested), telecopier or overnight air courier guaranteeing next-day
delivery, addressed as follows:
If to the Company:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Attention: Treasurer
Telephone: (419) 247-5000
Facsimile: (419) 247-1322
If to the Trustee:
The Bank of New York
101 Barclay Street, Floor 21 West
New York, New York 10286
Attention: Corporate Trust Administration
Telephone: (212) 815-5741
Facsimile: (212) 815-5915
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
All notices and communications (other than those sent to
Holders) shall be deemed to have been duly given: at the time delivered by hand,
if personally delivered; five business days after being deposited in the mail,
postage prepaid, if mailed; when receipt acknowledged, if telecopied; and the
next business day after timely delivery to the courier, if sent by overnight air
courier guaranteeing next-day delivery.
Any notice or communication to a Securityholder shall be
mailed by first-class mail to his address shown on the register kept by the
Registrar. Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If the Company mails a notice or communication to
Securityholders, it shall mail a copy to the Trustee at the same time.
If a notice or communication is mailed in the manner provided
above within the time prescribed, it is duly given, whether or not the addressee
receives it.
37
<PAGE>
Section 10.03. 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 10.04. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company to the Trustee
to take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate stating that, in the
opinion of the signers, all conditions precedent, if any, provided for
in this Indenture relating to the proposed action have been complied
with; and
(b) an Opinion of Counsel stating that, in the
opinion of such counsel, all such conditions precedent have been
complied with.
Section 10.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than the certificate
provided for in Section 4.03 hereof) shall include:
(1) a statement that the Person 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 Person,
he or she 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 Person, such condition or covenant has been complied with;
provided, however, that with respect to matters of fact an Opinion of
Counsel may rely on an officer's certificate or certificates of public
officials.
Section 10.06. Rules by Trustee and Agents.
The Trustee as to Securities of any series may make reasonable
rules for action by or at a meeting of Holders of Securities of that series. The
Registrar and any Paying Agent or Authenticating Agent may make reasonable rules
and set reasonable requirements for their functions.
38
<PAGE>
Section 10.07. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which
banking institutions in New York, New York or Toledo, Ohio, are not required to
be open. If a payment date is a Legal Holiday at a place of payment, payment may
be made at that place on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period.
Section 10.08. No Recourse Against Others.
A past, present or future director, officer, employee,
stockholder or incorporator, as such, of the Company or any successor
corporation shall not have any liability for any obligations of the Company
under any series of Securities or the Indenture or for any claim based on, in
respect of, or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
The waiver and release are part of the consideration of issuance of the
Securities.
Section 10.09. Counterparts.
This Indenture may be executed 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.
Section 10.10. Governing Law.
The internal laws of the State of New York shall govern this
Indenture and the Securities, without regard to the conflict of laws provisions
thereof.
Section 10.11. 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.
Section 10.12. Effect of Headings, Table of Contents, etc.
The Article and Section headings herein and the table of
contents are for convenience only and shall not affect the construction hereof.
Section 10.13. Successors and Assigns.
All covenants and agreements of the Company in this Indenture
and the Securities shall bind its successors and assigns. All agreements of the
Trustee in this Indenture shall bind its successor.
39
<PAGE>
Section 10.14. No Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture,
loan or debt agreement of the Company or any Subsidiary. Any such indenture,
loan or debt agreement may not be used to interpret this Indenture.
[signature page follows]
40
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first above written.
OWENS-ILLINOIS, INC.
BY: /s/ David G. Van Hooser
-----------------------
Name: David G. Van Hooser
Title: Senior Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Lucille Firrincieli
-----------------------
Name: Lucille Firrincieli
Title: Vice President
41
<PAGE>
Exhibit 4.2
OWENS-ILLINOIS, INC.
$350,000,000 7.15% Senior Notes due 2005
Officers' Certificate Pursuant to Section 2.01 of the Indenture
The undersigned officers of Owens-Illinois, Inc., a Delaware corporation
(the "Company"), pursuant to the authority granted such officers pursuant to
resolutions duly adopted by the Board of Directors of the Company on March 4,
1998 (the "Resolutions"), hereby establish a series of the Company's Securities
(as defined and provided for in the Indenture (the "Indenture") dated as of May
20, 1998 between the Company and The Bank of New York, as Trustee, designated as
the "7.15% Senior Notes due May 15, 2005," and hereby certify, pursuant to
Section 2.01 of the Indenture, as follows:
1. Form of Note. Attached hereto as Annex A is a true and correct copy of
a specimen Note (the "Form of Note") representing the Company's 7.15% Senior
Notes due May 15, 2005 (the "Notes").
2. Terms of the Notes. The terms of the Notes are as follows:
(a) The title of the Notes to be issued as a series of Securities
(as defined in the Indenture) under the Indenture shall be the
"7.15% Senior Notes due 2005";
(b) The aggregate principal amount of the Notes that may be
authenticated and delivered under the Indenture shall be
limited to $350,000,000 (except for Notes authenticated and
delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Article 2 and
Section 9.04 of the Indenture);
(c) The Notes shall be issued at a price equal to 99.817% of the
aggregate principal amount thereof;
(d) The principal of the Notes shall be payable on May 15, 2005;
(e) The Notes shall bear interest at a rate equal to 7.15% per
annum; interest on the Notes shall accrue from May 20, 1998 or
from the most recent interest payment date to which interest
has been paid or provided for, as the case may be; interest on
the Notes shall be payable semi-annually on May 15 and
November 15 of each year until maturity,
<PAGE>
2
commencing on November 15, 1998; and interest on the Notes
shall be payable to holders of record on the May 1 or November
1 immediately preceding the applicable interest payment date;
(f) The place or places where the principal of and any interest on
the Notes shall be payable shall be as set forth in the Notes,
the form of which is attached hereto as Annex A;
(g) The Notes shall not be subject to redemption at the option of
the Company prior to maturity;
(h) The Company shall not be obligated to redeem or purchase the
Notes pursuant to any sinking fund or at the option of any
holder thereof prior to maturity;
(i) The Notes shall be issued in denominations of $1,000 and any
integral multiple thereof;
(j) 100% of the principal amount thereof shall be payable upon
declaration of acceleration of the maturity thereof pursuant
to Section 6.02 of the Indenture;
(k) In addition to the covenants and provisions set forth in
Article 4 and Article 5 of the Indenture, the Notes shall
include the additional covenants and provisions set forth in
Section 3 of this Officers' Certificate;
(l) In addition to the Events of Default set forth in Section 6.01
of the Indenture, the Notes shall include the additional Event
of Default set forth in Section 4 of this Officers'
Certificate;
(m) The Trustee for the Notes shall be The Bank of New York;
(n) The Notes shall be issued initially in the form of two Global
Notes ("Global Notes") in definitive, fully registered form
without interest coupons in substantially the form of Annex A,
which shall be deposited on behalf of the purchasers of the
Notes represented thereby with the Trustee, at its principal
corporate trust office in New York City, as custodian for the
Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee where so provided. The aggregate
principal amount of the Global Notes may from time to time be
increased or decreased by adjustments made on the records of
the Trustee and the Depositary or its nominee in accordance
with the Depositary's procedures and as provided in Section
2.13 of the Indenture. Except as provided in Section 2.13 of
the Indenture, owners
<PAGE>
3
of beneficial interests in Global Notes shall not be entitled
to receive physical delivery of certificated Notes. The
Depositary for such Global Notes shall be The Depository Trust
Company;
(o) The Notes shall not be secured by any collateral;
(p) The Notes shall not be guaranteed by any person;
(q) The Notes shall be senior unsecured obligations of the Company
and shall rank pari passu in right of payment with all
existing and future senior unsecured indebtedness of the
Company and senior in right of payment to all subordinated
indebtedness of the Company;
(r) The provisions of Section 8.03 and 8.04 of the Indenture shall
be applicable to the Notes; and
(s) In addition to the definitions set forth in Article 1 of the
Indenture, the Notes shall include the definitions set forth
in Section 5 of this Officers' Certificate.
3. Additional Covenants and Provisions.
A. In addition to the covenants set forth in Article 4 of the
Indenture, the Notes shall include the following additional covenants:
"4.08. Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make any loan, advance, guaranty or capital contribution
to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement, or
understanding with, or for the benefit of, any Affiliate of the Company (each,
an "Affiliate Transaction") involving aggregate consideration in excess of $5.0
million for any one transaction, except on terms that are no less favorable to
the Company or the relevant Subsidiary, as the case may be, than those that
could have been obtained in a comparable transaction on an arm's length basis
from a person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to, (i)
transactions (x) in respect of which the Company or such Subsidiary delivers to
the Trustee a written opinion of a nationally recognized investment banking,
accounting, appraisal or consulting firm stating that the transaction is fair to
the Company or such Subsidiary from a financial point of view or (y) approved by
a majority of the disinterested members of the Board of Directors of the Company
or, if there are no such directors, a majority of the directors of the Company,
(ii) the payment of reasonable and customary regular fees paid to, and indemnity
provided on behalf of, officers, directors, employees and consultants to the
Company or its Subsidiaries,
<PAGE>
4
(iii) payments or loans to officers, directors and employees of the Company for
business or personal purposes and other loans and advances to such officers,
directors and employees for travel, entertainment, moving and other relocation
expenses made in the ordinary course of business of the Company and its
Subsidiaries, (iv) the payment by the Company or any of its Subsidiaries to KKR
and its Affiliates of (1) fees for any financial, advisory, financing,
underwriting or placement services or in respect of other investment banking
activities, including without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the Board of
Directors of the Company and (2) annual management, consulting and advisory fees
and related expenses, (v) any agreement in effect as of the Closing Date or any
amendment thereto (so long as such amendment is not disadvantageous to the
Holders in any material respect) or any transaction contemplated thereby, (vi)
transactions with customers, clients, suppliers or purchasers or sellers of
goods or services, in each case in the ordinary course of business which are
fair to the Company or its Subsidiaries, in the reasonable determination of the
Board of Directors of the Company or the senior management thereof and (vii)
transactions between or among any of the Company and its Subsidiaries.
4.09. Limitation on Liens
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character, or any shares of Capital Stock or Indebtedness of any of its
Subsidiaries held by the Company or any of its Subsidiaries in order to secure
any Indebtedness of the Company, without making effective provision for all of
the Notes and all other amounts due under the Indenture relating to the Notes to
be directly secured equally and ratably with (or, if the Indebtedness to be
secured by such Lien is subordinated in right of payment to the Notes, prior to)
the Indebtedness secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or
properties of the Company or its Subsidiaries, or any shares of Capital Stock or
Indebtedness of any of its Subsidiaries held by the Company or any of its
Subsidiaries, securing Indebtedness of the Company created in favor of the
Holders; (iii) Liens securing Indebtedness which is incurred to refinance
Indebtedness which is secured by Liens permitted to be incurred under the
Indenture; provided that such Liens do not extend to or cover any property or
assets of the Company or any of its Subsidiaries other than the property or
assets securing the Indebtedness being refinanced; or (iv) Permitted Liens.
4.10. Investments in Unrestricted Subsidiaries
The Company will not make, and will not permit any of its Subsidiaries to
make, any Investments in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the sum of $150,000,000.
<PAGE>
5
4.11. Payments for Consent
Neither the Company nor any Subsidiary 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 of these Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or these Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of these Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement."
4.12. Intercreditor Agreement
If the Company executes the Pledge Agreements and the Intercreditor
Agreement pursuant to the terms of the Amended Bank Credit Agreement, the
Trustee shall deliver to the collateral agent under the Pledge Agreements an
acknowledgement to the Intercreditor Agreement and shall execute such further
documents and instruments as may be necessary or desirable to create in favor of
the collateral agent under the Pledge Agreements a valid and perfected first
priority Lien on any collateral pledged pursuant to the Pledge Agreements.
B. In addition to the provisions set forth in Section 5.01 of the
Indenture, the Notes shall include the following additional provision:
"Notwithstanding Section 5.01 of the Indenture, any Subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company."
4. Additional Events of Default. In addition to the Events of Default set
forth in Section 6.01 of the Indenture, the Notes shall include the following
additional Event of Default:
"(6) except as a result of compliance with any court order to which the
Company is subject or any applicable law or any government decree, if an event
of default as defined in any mortgage, indenture or instrument, under which
there may be issued, or by which there may be secured or evidenced, any
Indebtedness of the Company (including a default under the Indenture with
respect to Securities of any series other than the Notes) whether such
Indebtedness now exists or shall hereafter be created, shall happen and shall
result in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled by the holders of such
Indebtedness within 10 days after written notice to the Company from the Trustee
or to the Company and to the Trustee from the Holders of not less than a
majority of the principal amount of the Notes then outstanding under the
Indenture; provided, however, that it shall not be a default hereunder if the
principal amount of Indebtedness the maturity of which is so accelerated is less
than $125,000,000, individually or in the aggregate; and provided, further, that
if, prior to a declaration of acceleration of the Maturity of such Notes then
outstanding or the entry of judgment in favor of the Trustee in a suit pursuant
to Section 6.08 of the Indenture, such default shall be remedied or cured by the
<PAGE>
6
Company or waived by the holders of such Indebtedness, or such Indebtedness
shall be discharged, then the default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of such Notes."
5. Additional Definitions. In addition to the definitions set forth in
Article 1 of the Indenture, the Notes shall include the following additional
definitions, which, in the event of a conflict with the definition of terms in
the Indenture, shall control:
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of April 30, 1998 among the Company, certain of its
subsidiaries, Bankers Trust Company, as Administrative Agent, and the managing
agents, co-agents, lead managers, arrangers and the other agents and lenders
party thereto, as such agreement may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time.
"Capitalized Lease Obligation" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, subject to certain provisions of the Indenture, generally
accepted accounting principals set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession, which are applicable to the
circumstances as of the Closing Date.
<PAGE>
7
"Indebtedness" of any Person means, without duplication, with respect to
any Person, any indebtedness, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements with respect thereto) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capitalized Lease Obligations), except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but does not include contingent
liabilities which appear only in a footnote to a balance sheet), and shall also
include, to the extent not otherwise included, the guaranty by such Person of
items which would be included within this definition, obligations in respect of
Currency Agreements and Interest Rate Agreements and the maximum fixed
repurchase price of any Redeemable Stock. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date of determination, provided that if such Redeemable Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Redeemable Stock.
"Intercreditor Agreement" means the Intercreditor Agreement to be entered
into under certain circumstances pursuant to subsection 5.8 of the Bank Credit
Agreement, substantially in the form of Exhibit XXII thereto, as such
Intercreditor Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of the definition of "Unrestricted Subsidiary" and Section 4.10 set
forth in Section 3 of this Officers' Certificate, (i) the amount of any
"Investment" shall be 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 and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary that is designated a Subsidiary of the Company and (ii)
any property transferred to or from any Unrestricted Subsidiary shall be valued
at fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
<PAGE>
8
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Permitted Liens" means (i) Liens (including extensions and renewals
thereof) upon real or personal (whether tangible or intangible) property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness incurred, (1) to finance the cost
(including the cost of improvement or construction) of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within 12 months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (ii) any
interest or title of a lessor in the property subject to any Capitalized Lease
Obligation or operating lease; (iii) Liens on property of, or on shares of
Capital Stock or Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, the Company or any Subsidiary of the Company;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
acquired; (iv) Liens in favor of the Company or any Subsidiary; (v) Liens
securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (vi) Liens encumbering customary initial deposits
and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect the
Company or any of its Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities; (vii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business of the Company and its Subsidiaries; (viii) Liens on or sales of
receivables; (ix) Liens securing the Company's obligations in respect of
bankers' acceptances issued or created to facilitate the purchase, shipment or
storage of inventory or other goods; and (x) in addition to any other Liens
permitted to be incurred pursuant to the Indenture, Liens securing Indebtedness
in an amount not to exceed $500 million.
"Pledge Agreements" means the Company Pledge Agreement and the Subsidiary
Pledge Agreement to be executed and delivered by the Company under certain
circumstances pursuant to subsection 5.8 of the Bank Credit Agreement,
substantially in the form of Exhibits XX and XXI thereto, respectively, as such
Pledge Agreements may thereafter be amended, supplemented or otherwise modified
from time to time.
"Redeemable Stock" means any equity security that by its terms or
otherwise is required to be redeemed prior to the stated maturity of the Notes,
or is redeemable at the option of the holder thereof at any time prior to the
stated maturity of the Notes.
<PAGE>
9
"Subsidiary" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of the Company
for purposes of the Indenture.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (2) 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) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Liens on, any property of, the Company
or any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary to be so designated; provided that either (x) the fair market value
of the net assets of the Subsidiary to be so designated is $1,000 or less or (y)
if the fair market value of the net assets of such Subsidiary is greater than
$1,000, the amount of the Company's Investments in Unrestricted Subsidiaries at
the time of designation is less than $150,000,000. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary. Any such designation
by the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions."
6. Board Resolutions. Attached hereto as Annex B are true and correct
copies of the Resolutions; the Resolutions have not been amended, modified or
rescinded and remain in full force and effect; and the Resolutions are the only
resolutions adopted by the Company's Board of Directors or any committee thereof
relating to the Notes and the transactions related thereto.
Each of the undersigned officers further states that he has read the
provisions of such Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Notes and the definitions relating
thereto, the Resolutions authorizing the issuance of the Notes and the Form of
Note; that the statements made in this Certificate are based upon the
examination of the provisions of such Indenture, the Resolutions and the Form of
Note; that he has, in his opinion, made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not the
conditions precedent for the issuance, authentication and delivery of the Notes
have been complied with; and that, in his opinion, such conditions have been
complied with.
[Signature page follows]
<PAGE>
10
IN WITNESS WHEREOF, said officers have signed this certificate.
Dated: May 20, 1998
/s/ Lee A. Wesselmann /s/ David G. Van Hooser
- -------------------------------- ---------------------------------------
By: Lee A. Wesselmann By: David G. Van Hooser
Title: Senior Vice President and Title: Senior Vice President, Director
Chief Financial Officer of Corporate Strategy
<PAGE>
ANNEX A
[FORM OF 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 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN 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
SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.
OWENS-ILLINOIS, INC.
7.15% SENIOR NOTES DUE 2005
Number: 1 CUSIP No. 690768 BE 5 $200,000,000
OWENS-ILLINOIS, INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to Cede & Co., as nominee of The
Depository Trust Company, or registered assigns, the principal sum of TWO
HUNDRED MILLION DOLLARS on May 15, 2005.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth below following
the signatures of the authorized officers of the Company.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
OWENS-ILLINOIS, INC.
By:
----------------------------
Name: David G. Van Hooser
Title: Senior Vice President, Director
of Corporate Strategy
By:
----------------------------
Name: James W. Baehren
Title: Associate General Counsel and
Assistant Secretary
Dated: May 20, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------
Authorized Signatory
<PAGE>
OWENS-ILLINOIS, INC.
7.15% SENIOR NOTES DUE 2005
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest
OWENS-ILLINOIS, INC., a Delaware corporation (such entity, 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. Interest on the Securities shall
accrue from May 20, 1998 or from the most recent interest payment date to which
interest has been paid or provided for, as the case may be; interest on the
Securities shall be payable semi-annually on May 15 and November 15 of each year
until maturity, or, if such day is a Legal Holiday, on the next succeeding day
that is not a Legal Holiday (each, an "Interest Payment Date"), commencing on
November 15, 1998; and interest on the Securities shall be payable to holders of
record on the May 1 or November 1 immediately preceding the applicable Interest
Payment Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay defaulted interest on overdue interest,
plus (to the extent lawful) any interest payable on the defaulted interest, as
provided in Section 2.11 of the Indenture.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are holders ("Holders") of record in the security
register of the Company (the "Security Register") of Securities at the close of
business on the May 1 or November 1 (each, a "Record Date") next preceding the
Interest Payment Date, in each case even if the Securities are cancelled solely
by virtue of registration of transfer or registration of exchange after such
Record Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in the Borough of Manhattan, the City of New
York (which initially will be the Corporate Trust Office of the Trustee);
provided that, at the option of the Company, payment of interest may be made by
check mailed to the address of each Holder as such address appears in the
Security Register.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-Registrar without notice to any Holder.
The Company or
<PAGE>
2
any of its Affiliates may act as Paying Agent, Registrar or co-Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
20, 1998 by and between the Company and the Trustee, the terms of which have
been established in an Officers' Certificate, dated May 20, 1998, pursuant to
Section 2.01 of the Indenture (collectively, the "Indenture"). The Securities
are a series designated as the "7.15% Senior Notes due 2005" of the Company,
limited in aggregate principal amount to $350,000,000. 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. ss.ss.
77aaa-77bbbb) as in effect on May 20, 1998 (the "TIA"). The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms. Any conflict between the terms of this
Security and the Indenture will be governed by the Indenture.
The Securities are senior unsecured obligations of the Company and
rank pari passu in right of payment with all existing and future senior
unsecured indebtedness of the Company, and senior in right of payment to all
subordinated indebtedness of the Company.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to enter transactions with Affiliates, to create or incur
certain Liens on any of its assets or properties or any shares of Capital Stock
or Indebtedness of any Subsidiary, to make Investments in Unrestricted
Subsidiaries, to consolidate or merge, or transfer all or substantially all of
its property or assets, and to pay any fees to Holders for or as an inducement
to any consent, waiver or amendment of the Indenture.
5. Optional Redemption
The Securities may not be redeemed at the option of the Company
prior to maturity.
6. Sinking Fund
The Securities will not be subject to the operation of any sinking
fund.
7. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof. A
Holder may transfer or exchange Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require the
<PAGE>
3
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith, subject to and as permitted
by the Indenture.
8. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
9. Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon the
Company's request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person.
10. 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 money and/or U.S. Government Obligations for
the payment of principal and interest on the Securities to maturity.
11. Defaults and Remedies
Under the Indenture, Events of Default include (a) failure to pay
the principal of, or premium, if any, on such Securities when due and payable;
(b) failure to pay any interest on such Securities when due, continued for 30
days; (c) failure to perform or observe any other agreements of the Company in
such Indenture, including failure to comply with the provisions of the Indenture
applicable to consolidation, merger and sale of assets of the Company, continued
for 60 days after written notice; (d) acceleration of $125,000,000 or more,
individually or in the aggregate, in principal amount of Indebtedness of the
Company under the terms of the instrument under which such indebtedness is
issued or secured, except as a result of compliance with applicable laws, orders
or decrees, if such Indebtedness shall not have been discharged or such
acceleration is not annulled within ten days after written notice; and (e)
certain events of bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event or Default relating to
certain events of bankruptcy, insolvency or reorganization) shall occur and be
continuing, either the Trustee or the holders of at least 50% in principal
amount of the outstanding Securities by notice, as provided in the Indenture,
may declare the unpaid principal amount of, and any accrued and
<PAGE>
4
unpaid interest on, the Securities to be due and payable immediately. However,
at any time after a declaration of acceleration with respect to the Securities
has been made, the holders of a majority in principal amount of the outstanding
Securities of such series may, under certain circumstances, rescind and annul
such acceleration if the rescission would not conflict with any judgment or
decree and if all existing Events of Default with respect to such Securities
have been cured or waived except nonpayment of principal (or such lesser amount)
or interest that has become due solely because of the acceleration.
Subject to the duty of the Trustee during an Event of Default to act
with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable security or indemnity. Subject to certain provisions,
including those requiring security or indemnification of the Trustee, the
holders of a majority in principal amount of the outstanding Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities.
12. Supplements, Amendments and Waivers
Subject to certain exceptions, the Company and the Trustee may amend
the Indenture or the Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Securities. The holders of
a majority in principal amount of the then outstanding Securities may also waive
compliance in a particular instance by the Company with any provision of the
Indenture with respect to the Securities; provided, however, that certain
amendments or waivers may not be made without the consent of each holder of
Securities affected as provided in the Indenture.
The Company and the Trustee may amend the Indenture or the
Securities without notice to or the consent of any holder of Securities in
certain circumstances described in the Indenture.
The holders of a majority in principal amount of the outstanding
Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except a Default or Event of Default in the payment
of the principal of, or any interest on, the Securities (provided, however, that
the holders of a majority in principal amount of the outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, 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
<PAGE>
5
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A past, present or future director, officer, employee, stockholder
or incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
16. Successors and Assigns.
All covenants and agreements of the Company in the Indenture and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in the Indenture shall bind its successor.
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 hereon.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
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
<PAGE>
6
the Securities, and the Trustee may use CUSIP numbers in notices as a
convenience to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in any notice
and reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Such requests
may be addressed to:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Attention: Corporate Secretary
---------------------------------------------------
<PAGE>
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 [print or type agent's name] agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
_______________________________________________________________________________
Date: _____________________ Your Signature: ______________________________
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed)
_______________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
<PAGE>
Exhibit 4.3
OWENS-ILLINOIS, INC.
$250,000,000 7.35% Senior Notes due 2008
Officers' Certificate Pursuant to Section 2.01 of the Indenture
The undersigned officers of Owens-Illinois, Inc., a Delaware corporation
(the "Company"), pursuant to the authority granted such officers pursuant to
resolutions duly adopted by the Board of Directors of the Company on March 4,
1998 (the "Resolutions"), hereby establish a series of the Company's Securities
(as defined and provided for in the Indenture (the "Indenture") dated as of May
20, 1998 between the Company and The Bank of New York, as Trustee, designated as
the "7.35% Senior Notes due May 15, 2008," and hereby certify, pursuant to
Section 2.01 of the Indenture, as follows:
1. Form of Note. Attached hereto as Annex A is a true and correct copy of
a specimen Note (the "Form of Note") representing the Company's 7.35% Senior
Notes due May 15, 2008 (the "Notes").
2. Terms of the Notes. The terms of the Notes are as follows:
(a) The title of the Notes to be issued as a series of Securities
(as defined in the Indenture) under the Indenture shall be the
"7.35% Senior Notes due 2008";
(b) The aggregate principal amount of the Notes that may be
authenticated and delivered under the Indenture shall be
limited to $250,000,000 (except for Notes authenticated and
delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Notes pursuant to Article 2 and
Section 9.04 of the Indenture);
(c) The Notes shall be issued at a price equal to 99.716% of the
aggregate principal amount thereof;
(d) The principal of the Notes shall be payable on May 15, 2008;
(e) The Notes shall bear interest at a rate equal to 7.35% per
annum; interest on the Notes shall accrue from May 20, 1998 or
from the most recent interest payment date to which interest
has been paid or provided for, as the case may be; interest on
the Notes shall be payable semi-annually on May 15 and
November 15 of each year until maturity,
<PAGE>
2
commencing on November 15, 1998; and interest on the Notes
shall be payable to holders of record on the May 1 or November
1 immediately preceding the applicable interest payment date;
(f) The place or places where the principal of and any interest on
the Notes shall be payable shall be as set forth in the Notes,
the form of which is attached hereto as Annex A;
(g) The Notes shall not be subject to redemption at the option of
the Company prior to maturity;
(h) The Company shall not be obligated to redeem or purchase the
Notes pursuant to any sinking fund or at the option of any
holder thereof prior to maturity;
(i) The Notes shall be issued in denominations of $1,000 and any
integral multiple thereof;
(j) 100% of the principal amount thereof shall be payable upon
declaration of acceleration of the maturity thereof pursuant
to Section 6.02 of the Indenture;
(k) In addition to the covenants and provisions set forth in
Article 4 and Article 5 of the Indenture, the Notes shall
include the additional covenants and provisions set forth in
Section 3 of this Officers' Certificate;
(l) In addition to the Events of Default set forth in Section 6.01
of the Indenture, the Notes shall include the additional Event
of Default set forth in Section 4 of this Officers'
Certificate;
(m) The Trustee for the Notes shall be The Bank of New York;
(n) The Notes shall be issued initially in the form of two Global
Notes ("Global Notes") in definitive, fully registered form
without interest coupons in substantially the form of Annex A,
which shall be deposited on behalf of the purchasers of the
Notes represented thereby with the Trustee, at its principal
corporate trust office in New York City, as custodian for the
Depositary, and registered in the name of the Depositary or a
nominee of the Depositary, duly executed by the Company and
authenticated by the Trustee where so provided. The aggregate
principal amount of the Global Notes may from time to time be
increased or decreased by adjustments made on the records of
the Trustee and the Depositary or its nominee in accordance
with the Depositary's procedures and as provided in Section
2.13 of the Indenture. Except as provided in Section 2.13 of
the Indenture, owners
<PAGE>
3
of beneficial interests in Global Notes shall not be entitled
to receive physical delivery of certificated Notes. The
Depositary for such Global Notes shall be The Depository Trust
Company;
(o) The Notes shall not be secured by any collateral;
(p) The Notes shall not be guaranteed by any person;
(q) The Notes shall be senior unsecured obligations of the Company
and shall rank pari passu in right of payment with all
existing and future senior unsecured indebtedness of the
Company and senior in right of payment to all subordinated
indebtedness of the Company;
(r) The provisions of Section 8.03 and 8.04 of the Indenture shall
be applicable to the Notes; and
(s) In addition to the definitions set forth in Article 1 of the
Indenture, the Notes shall include the definitions set forth
in Section 5 of this Officers' Certificate.
3. Additional Covenants and Provisions.
A. In addition to the covenants set forth in Article 4 of the
Indenture, the Notes shall include the following additional covenants:
"4.08. Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make any loan, advance, guaranty or capital contribution
to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement, or
understanding with, or for the benefit of, any Affiliate of the Company (each,
an "Affiliate Transaction") involving aggregate consideration in excess of $5.0
million for any one transaction, except on terms that are no less favorable to
the Company or the relevant Subsidiary, as the case may be, than those that
could have been obtained in a comparable transaction on an arm's length basis
from a person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to, (i)
transactions (x) in respect of which the Company or such Subsidiary delivers to
the Trustee a written opinion of a nationally recognized investment banking,
accounting, appraisal or consulting firm stating that the transaction is fair to
the Company or such Subsidiary from a financial point of view or (y) approved by
a majority of the disinterested members of the Board of Directors of the Company
or, if there are no such directors, a majority of the directors of the Company,
(ii) the payment of reasonable and customary regular fees paid to, and indemnity
provided on behalf of, officers, directors, employees and consultants to the
Company or its Subsidiaries,
<PAGE>
4
(iii) payments or loans to officers, directors and employees of the Company for
business or personal purposes and other loans and advances to such officers,
directors and employees for travel, entertainment, moving and other relocation
expenses made in the ordinary course of business of the Company and its
Subsidiaries, (iv) the payment by the Company or any of its Subsidiaries to KKR
and its Affiliates of (1) fees for any financial, advisory, financing,
underwriting or placement services or in respect of other investment banking
activities, including without limitation, in connection with acquisitions or
divestitures, which payments are approved by a majority of the Board of
Directors of the Company and (2) annual management, consulting and advisory fees
and related expenses, (v) any agreement in effect as of the Closing Date or any
amendment thereto (so long as such amendment is not disadvantageous to the
Holders in any material respect) or any transaction contemplated thereby, (vi)
transactions with customers, clients, suppliers or purchasers or sellers of
goods or services, in each case in the ordinary course of business which are
fair to the Company or its Subsidiaries, in the reasonable determination of the
Board of Directors of the Company or the senior management thereof and (vii)
transactions between or among any of the Company and its Subsidiaries.
4.09. Limitation on Liens
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character, or any shares of Capital Stock or Indebtedness of any of its
Subsidiaries held by the Company or any of its Subsidiaries in order to secure
any Indebtedness of the Company, without making effective provision for all of
the Notes and all other amounts due under the Indenture relating to the Notes to
be directly secured equally and ratably with (or, if the Indebtedness to be
secured by such Lien is subordinated in right of payment to the Notes, prior to)
the Indebtedness secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or
properties of the Company or its Subsidiaries, or any shares of Capital Stock or
Indebtedness of any of its Subsidiaries held by the Company or any of its
Subsidiaries, securing Indebtedness of the Company created in favor of the
Holders; (iii) Liens securing Indebtedness which is incurred to refinance
Indebtedness which is secured by Liens permitted to be incurred under the
Indenture; provided that such Liens do not extend to or cover any property or
assets of the Company or any of its Subsidiaries other than the property or
assets securing the Indebtedness being refinanced; or (iv) Permitted Liens.
4.10. Investments in Unrestricted Subsidiaries
The Company will not make, and will not permit any of its Subsidiaries to
make, any Investments in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the sum of $150,000,000.
<PAGE>
5
4.11. Payments for Consent
Neither the Company nor any Subsidiary 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 of these Notes for or as an inducement
to any consent, waiver or amendment of any of the terms or provisions of the
Indenture or these Notes unless such consideration is offered to be paid or
agreed to be paid to all Holders of these Notes which so consent, waive or agree
to amend in the time frame set forth in solicitation documents relating to such
consent, waiver or agreement."
4.12. Intercreditor Agreement
If the Company executes the Pledge Agreements and the Intercreditor
Agreement pursuant to the terms of the Amended Bank Credit Agreement, the
Trustee shall deliver to the collateral agent under the Pledge Agreements an
acknowledgement to the Intercreditor Agreement and shall execute such further
documents and instruments as may be necessary or desirable to create in favor of
the collateral agent under the Pledge Agreements a valid and perfected first
priority Lien on any collateral pledged pursuant to the Pledge Agreements.
B. In addition to the provisions set forth in Section 5.01 of the
Indenture, the Notes shall include the following additional provision:
"Notwithstanding Section 5.01 of the Indenture, any Subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company."
4. Additional Events of Default. In addition to the Events of Default set
forth in Section 6.01 of the Indenture, the Notes shall include the following
additional Event of Default:
"(6) except as a result of compliance with any court order to which the
Company is subject or any applicable law or any government decree, if an event
of default as defined in any mortgage, indenture or instrument, under which
there may be issued, or by which there may be secured or evidenced, any
Indebtedness of the Company (including a default under the Indenture with
respect to Securities of any series other than the Notes) whether such
Indebtedness now exists or shall hereafter be created, shall happen and shall
result in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled by the holders of such
Indebtedness within 10 days after written notice to the Company from the Trustee
or to the Company and to the Trustee from the Holders of not less than a
majority of the principal amount of the Notes then outstanding under the
Indenture; provided, however, that it shall not be a default hereunder if the
principal amount of Indebtedness the maturity of which is so accelerated is less
than $125,000,000, individually or in the aggregate; and provided, further, that
if, prior to a declaration of acceleration of the Maturity of such Notes then
outstanding or the entry of judgment in favor of the Trustee in a suit pursuant
to Section 6.08 of the Indenture, such default shall be remedied or cured by the
<PAGE>
6
Company or waived by the holders of such Indebtedness, or such Indebtedness
shall be discharged, then the default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of such Notes."
5. Additional Definitions. In addition to the definitions set forth in
Article 1 of the Indenture, the Notes shall include the following additional
definitions, which, in the event of a conflict with the definition of terms in
the Indenture, shall control:
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of April 30, 1998 among the Company, certain of its
subsidiaries, Bankers Trust Company, as Administrative Agent, and the managing
agents, co-agents, lead managers, arrangers and the other agents and lenders
party thereto, as such agreement may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time.
"Capitalized Lease Obligation" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Closing Date" means the date on which the Notes are originally issued
under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, subject to certain provisions of the Indenture, generally
accepted accounting principals set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession, which are applicable to the
circumstances as of the Closing Date.
<PAGE>
7
"Indebtedness" of any Person means, without duplication, with respect to
any Person, any indebtedness, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements with respect thereto) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capitalized Lease Obligations), except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but does not include contingent
liabilities which appear only in a footnote to a balance sheet), and shall also
include, to the extent not otherwise included, the guaranty by such Person of
items which would be included within this definition, obligations in respect of
Currency Agreements and Interest Rate Agreements and the maximum fixed
repurchase price of any Redeemable Stock. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date of determination, provided that if such Redeemable Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Redeemable Stock.
"Intercreditor Agreement" means the Intercreditor Agreement to be entered
into under certain circumstances pursuant to subsection 5.8 of the Bank Credit
Agreement, substantially in the form of Exhibit XXII thereto, as such
Intercreditor Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of the definition of "Unrestricted Subsidiary" and Section 4.10 set
forth in Section 3 of this Officers' Certificate, (i) the amount of any
"Investment" shall be 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 and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary that is designated a Subsidiary of the Company and (ii)
any property transferred to or from any Unrestricted Subsidiary shall be valued
at fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
<PAGE>
8
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Permitted Liens" means (i) Liens (including extensions and renewals
thereof) upon real or personal (whether tangible or intangible) property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness incurred, (1) to finance the cost
(including the cost of improvement or construction) of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within 12 months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (ii) any
interest or title of a lessor in the property subject to any Capitalized Lease
Obligation or operating lease; (iii) Liens on property of, or on shares of
Capital Stock or Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, the Company or any Subsidiary of the Company;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
acquired; (iv) Liens in favor of the Company or any Subsidiary; (v) Liens
securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (vi) Liens encumbering customary initial deposits
and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect the
Company or any of its Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities; (vii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business of the Company and its Subsidiaries; (viii) Liens on or sales of
receivables; (ix) Liens securing the Company's obligations in respect of
bankers' acceptances issued or created to facilitate the purchase, shipment or
storage of inventory or other goods; and (x) in addition to any other Liens
permitted to be incurred pursuant to the Indenture, Liens securing Indebtedness
in an amount not to exceed $500 million.
"Pledge Agreements" means the Company Pledge Agreement and the Subsidiary
Pledge Agreement to be executed and delivered by the Company under certain
circumstances pursuant to subsection 5.8 of the Bank Credit Agreement,
substantially in the form of Exhibits XX and XXI thereto, respectively, as such
Pledge Agreements may thereafter be amended, supplemented or otherwise modified
from time to time.
"Redeemable Stock" means any equity security that by its terms or
otherwise is required to be redeemed prior to the stated maturity of the Notes,
or is redeemable at the option of the holder thereof at any time prior to the
stated maturity of the Notes.
<PAGE>
9
"Subsidiary" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of the Company
for purposes of the Indenture.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (2) 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) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Liens on, any property of, the Company
or any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary to be so designated; provided that either (x) the fair market value
of the net assets of the Subsidiary to be so designated is $1,000 or less or (y)
if the fair market value of the net assets of such Subsidiary is greater than
$1,000, the amount of the Company's Investments in Unrestricted Subsidiaries at
the time of designation is less than $150,000,000. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary. Any such designation
by the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions."
6. Board Resolutions. Attached hereto as Annex B are true and correct
copies of the Resolutions; the Resolutions have not been amended, modified or
rescinded and remain in full force and effect; and the Resolutions are the only
resolutions adopted by the Company's Board of Directors or any committee thereof
relating to the Notes and the transactions related thereto.
Each of the undersigned officers further states that he has read the
provisions of such Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Notes and the definitions relating
thereto, the Resolutions authorizing the issuance of the Notes and the Form of
Note; that the statements made in this Certificate are based upon the
examination of the provisions of such Indenture, the Resolutions and the Form of
Note; that he has, in his opinion, made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or not the
conditions precedent for the issuance, authentication and delivery of the Notes
have been complied with; and that, in his opinion, such conditions have been
complied with.
[Signature page follows]
<PAGE>
10
IN WITNESS WHEREOF, said officers have signed this certificate.
Dated: May 20, 1998
/s/ Lee A. Wesselmann /s/ David G. Van Hooser
- ------------------------------- ---------------------------
By: Lee A. Wesselmann By: David G. Van Hooser
Title: Senior Vice President and Title: Senior Vice President, Director
Chief Financial Officer of Corporate Strategy
<PAGE>
ANNEX A
[FORM OF 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 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN 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
SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.
OWENS-ILLINOIS, INC.
7.35% SENIOR NOTES DUE 2008
Number: 1 CUSIP No. 690768 BC 9 $200,000,000
OWENS-ILLINOIS, INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to Cede & Co., as nominee of The
Depository Trust Company, or registered assigns, the principal sum of TWO
HUNDRED MILLION DOLLARS on May 15, 2008.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth below following
the signatures of the authorized officers of the Company.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
OWENS-ILLINOIS, INC.
By:
--------------------------------------
Name: David G. Van Hooser
Title: Senior Vice President, Director
of Corporate Strategy
By:
--------------------------------------
Name: James W. Baehren
Title: Associate General Counsel and
Assistant Secretary
Dated: May 20, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
--------------------------------------
Authorized Signatory
<PAGE>
OWENS-ILLINOIS, INC.
7.35% SENIOR NOTES DUE 2008
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest
OWENS-ILLINOIS, INC., a Delaware corporation (such entity, 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. Interest on the Securities shall
accrue from May 20, 1998 or from the most recent interest payment date to which
interest has been paid or provided for, as the case may be; interest on the
Securities shall be payable semi-annually on May 15 and November 15 of each year
until maturity, or, if such day is a Legal Holiday, on the next succeeding day
that is not a Legal Holiday (each, an "Interest Payment Date"), commencing on
November 15, 1998; and interest on the Securities shall be payable to holders of
record on the May 1 or November 1 immediately preceding the applicable Interest
Payment Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay defaulted interest on overdue interest,
plus (to the extent lawful) any interest payable on the defaulted interest, as
provided in Section 2.11 of the Indenture.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are holders ("Holders") of record in the security
register of the Company (the "Security Register") of Securities at the close of
business on the May 1 or November 1 (each, a "Record Date") next preceding the
Interest Payment Date, in each case even if the Securities are cancelled solely
by virtue of registration of transfer or registration of exchange after such
Record Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in the Borough of Manhattan, the City of New
York (which initially will be the Corporate Trust Office of the Trustee);
provided that, at the option of the Company, payment of interest may be made by
check mailed to the address of each Holder as such address appears in the
Security Register.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-Registrar without notice to any Holder.
The Company or
<PAGE>
2
any of its Affiliates may act as Paying Agent, Registrar or co-Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
20, 1998 by and between the Company and the Trustee, the terms of which have
been established in an Officers' Certificate, dated May 20, 1998, pursuant to
Section 2.01 of the Indenture (collectively, the "Indenture"). The Securities
are a series designated as the "7.35% Senior Notes due 2008" of the Company,
limited in aggregate principal amount to $250,000,000. 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. ss.ss.
77aaa-77bbbb) as in effect on May 20, 1998 (the "TIA"). The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms. Any conflict between the terms of this
Security and the Indenture will be governed by the Indenture.
The Securities are senior unsecured obligations of the Company and
rank pari passu in right of payment with all existing and future senior
unsecured indebtedness of the Company, and senior in right of payment to all
subordinated indebtedness of the Company.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to enter transactions with Affiliates, to create or incur
certain Liens on any of its assets or properties or any shares of Capital Stock
or Indebtedness of any Subsidiary, to make Investments in Unrestricted
Subsidiaries, to consolidate or merge, or transfer all or substantially all of
its property or assets, and to pay any fees to Holders for or as an inducement
to any consent, waiver or amendment of the Indenture.
5. Optional Redemption
The Securities may not be redeemed at the option of the Company
prior to maturity.
6. Sinking Fund
The Securities will not be subject to the operation of any sinking
fund.
7. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof. A
Holder may transfer or exchange Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require the
<PAGE>
3
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith, subject to and as permitted
by the Indenture.
8. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
9. Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon the
Company's request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person.
10. 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 money and/or U.S. Government Obligations for
the payment of principal and interest on the Securities to maturity.
11. Defaults and Remedies
Under the Indenture, Events of Default include (a) failure to pay
the principal of, or premium, if any, on such Securities when due and payable;
(b) failure to pay any interest on such Securities when due, continued for 30
days; (c) failure to perform or observe any other agreements of the Company in
such Indenture, including failure to comply with the provisions of the Indenture
applicable to consolidation, merger and sale of assets of the Company, continued
for 60 days after written notice; (d) acceleration of $125,000,000 or more,
individually or in the aggregate, in principal amount of Indebtedness of the
Company under the terms of the instrument under which such indebtedness is
issued or secured, except as a result of compliance with applicable laws, orders
or decrees, if such Indebtedness shall not have been discharged or such
acceleration is not annulled within ten days after written notice; and (e)
certain events of bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event or Default relating to
certain events of bankruptcy, insolvency or reorganization) shall occur and be
continuing, either the Trustee or the holders of at least 50% in principal
amount of the outstanding Securities by notice, as provided in the Indenture,
may declare the unpaid principal amount of, and any accrued and
<PAGE>
4
unpaid interest on, the Securities to be due and payable immediately. However,
at any time after a declaration of acceleration with respect to the Securities
has been made, the holders of a majority in principal amount of the outstanding
Securities of such series may, under certain circumstances, rescind and annul
such acceleration if the rescission would not conflict with any judgment or
decree and if all existing Events of Default with respect to such Securities
have been cured or waived except nonpayment of principal (or such lesser amount)
or interest that has become due solely because of the acceleration.
Subject to the duty of the Trustee during an Event of Default to act
with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable security or indemnity. Subject to certain provisions,
including those requiring security or indemnification of the Trustee, the
holders of a majority in principal amount of the outstanding Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities.
12. Supplements, Amendments and Waivers
Subject to certain exceptions, the Company and the Trustee may amend
the Indenture or the Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Securities. The holders of
a majority in principal amount of the then outstanding Securities may also waive
compliance in a particular instance by the Company with any provision of the
Indenture with respect to the Securities; provided, however, that certain
amendments or waivers may not be made without the consent of each holder of
Securities affected as provided in the Indenture.
The Company and the Trustee may amend the Indenture or the
Securities without notice to or the consent of any holder of Securities in
certain circumstances described in the Indenture.
The holders of a majority in principal amount of the outstanding
Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except a Default or Event of Default in the payment
of the principal of, or any interest on, the Securities (provided, however, that
the holders of a majority in principal amount of the outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, 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
<PAGE>
5
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A past, present or future director, officer, employee, stockholder
or incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
16. Successors and Assigns.
All covenants and agreements of the Company in the Indenture and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in the Indenture shall bind its successor.
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 hereon.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
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
<PAGE>
6
the Securities, and the Trustee may use CUSIP numbers in notices as a
convenience to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in any notice
and reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Such requests
may be addressed to:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Attention: Corporate Secretary
---------------------------------------------------
<PAGE>
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 [print or type agent's name] agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date:_________________________ Your Signature:________________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
________________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
<PAGE>
Exhibit 4.4
OWENS-ILLINOIS, INC.
$250,000,000 7.50% Senior Debentures due 2010
Officers' Certificate Pursuant to Section 2.01 of the Indenture
The undersigned officers of Owens-Illinois, Inc., a Delaware corporation
(the "Company"), pursuant to the authority granted such officers pursuant to
resolutions duly adopted by the Board of Directors of the Company on March 4,
1998 (the "Resolutions"), hereby establish a series of the Company's Securities
(as defined and provided for in the Indenture (the "Indenture") dated as of May
20, 1998 between the Company and The Bank of New York, as Trustee, designated as
the "7.50% Senior Debentures due May 15, 2010," and hereby certify, pursuant to
Section 2.01 of the Indenture, as follows:
1. Form of Debenture. Attached hereto as Annex A is a true and correct
copy of a specimen Debenture (the "Form of Debenture") representing the
Company's 7.50% Senior Debentures due May 15, 2010 (the "Debentures").
2. Terms of the Debentures. The terms of the Debentures are as follows:
(a) The title of the Debentures to be issued as a series of
Securities (as defined in the Indenture) under the Indenture
shall be the "7.50% Senior Debentures due 2010";
(b) The aggregate principal amount of the Debentures that may be
authenticated and delivered under the Indenture shall be
limited to $250,000,000 (except for Debentures authenticated
and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to Article 2 and
Section 9.04 of the Indenture);
(c) The Debentures shall be issued at a price equal to 99.682% of
the aggregate principal amount thereof;
(d) The principal of the Debentures shall be payable on May 15,
2010;
(e) The Debentures shall bear interest at a rate equal to 7.50%
per annum; interest on the Debentures shall accrue from May
20, 1998 or from the most recent interest payment date to
which interest has been paid or provided for, as the case may
be; interest on the Debentures shall be payable semi-annually
on May 15 and November 15 of each year until
<PAGE>
2
maturity, commencing on November 15, 1998; and interest on the
Debentures shall be payable to holders of record on the May 1
or November 1 immediately preceding the applicable interest
payment date;
(f) The place or places where the principal of and any interest on
the Debentures shall be payable shall be as set forth in the
Debentures, the form of which is attached hereto as Annex A;
(g) The Debentures shall not be subject to redemption at the
option of the Company prior to maturity;
(h) The Company shall not be obligated to redeem or purchase the
Debentures pursuant to any sinking fund or at the option of
any holder thereof prior to maturity;
(i) The Debentures shall be issued in denominations of $1,000 and
any integral multiple thereof;
(j) 100% of the principal amount thereof shall be payable upon
declaration of acceleration of the maturity thereof pursuant
to Section 6.02 of the Indenture;
(k) In addition to the covenants and provisions set forth in
Article 4 and Article 5 of the Indenture, the Debentures shall
include the additional covenants and provisions set forth in
Section 3 of this Officers' Certificate;
(l) In addition to the Events of Default set forth in Section 6.01
of the Indenture, the Debentures shall include the additional
Event of Default set forth in Section 4 of this Officers'
Certificate;
(m) The Trustee for the Debentures shall be The Bank of New York;
(n) The Debentures shall be issued initially in the form of two
Global Debentures ("Global Debentures") in definitive, fully
registered form without interest coupons in substantially the
form of Annex A, which shall be deposited on behalf of the
purchasers of the Debentures represented thereby with the
Trustee, at its principal corporate trust office in New York
City, as custodian for the Depositary, and registered in the
name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee where
so provided. The aggregate principal amount of the Global
Debentures may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the
Depositary or its nominee in accordance with the Depositary's
procedures and as provided in Section
<PAGE>
3
2.13 of the Indenture. Except as provided in Section 2.13 of
the Indenture, owners of beneficial interests in Global
Debentures shall not be entitled to receive physical delivery
of certificated Debentures. The Depositary for such Global
Debentures shall be The Depository Trust Company;
(o) The Debentures shall not be secured by any collateral;
(p) The Debentures shall not be guaranteed by any person;
(q) The Debentures shall be senior unsecured obligations of the
Company and shall rank pari passu in right of payment with all
existing and future senior unsecured indebtedness of the
Company and senior in right of payment to all subordinated
indebtedness of the Company;
(r) The provisions of Section 8.03 and 8.04 of the Indenture shall
be applicable to the Debentures; and
(s) In addition to the definitions set forth in Article 1 of the
Indenture, the Debentures shall include the definitions set
forth in Section 5 of this Officers' Certificate.
3. Additional Covenants and Provisions.
A. In addition to the covenants set forth in Article 4 of the
Indenture, the Debentures shall include the following additional covenants:
"4.08. Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make any loan, advance, guaranty or capital contribution
to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement, or
understanding with, or for the benefit of, any Affiliate of the Company (each,
an "Affiliate Transaction") involving aggregate consideration in excess of $5.0
million for any one transaction, except on terms that are no less favorable to
the Company or the relevant Subsidiary, as the case may be, than those that
could have been obtained in a comparable transaction on an arm's length basis
from a person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to, (i)
transactions (x) in respect of which the Company or such Subsidiary delivers to
the Trustee a written opinion of a nationally recognized investment banking,
accounting, appraisal or consulting firm stating that the transaction is fair to
the Company or such Subsidiary from a financial point of view or (y) approved by
a majority of the disinterested members of the Board of Directors of the Company
or, if there are no such directors, a majority of the directors of the Company,
(ii)
<PAGE>
4
the payment of reasonable and customary regular fees paid to, and indemnity
provided on behalf of, officers, directors, employees and consultants to the
Company or its Subsidiaries, (iii) payments or loans to officers, directors and
employees of the Company for business or personal purposes and other loans and
advances to such officers, directors and employees for travel, entertainment,
moving and other relocation expenses made in the ordinary course of business of
the Company and its Subsidiaries, (iv) the payment by the Company or any of its
Subsidiaries to KKR and its Affiliates of (1) fees for any financial, advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including without limitation, in connection with
acquisitions or divestitures, which payments are approved by a majority of the
Board of Directors of the Company and (2) annual management, consulting and
advisory fees and related expenses, (v) any agreement in effect as of the
Closing Date or any amendment thereto (so long as such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby, (vi) transactions with customers, clients, suppliers or
purchasers or sellers of goods or services, in each case in the ordinary course
of business which are fair to the Company or its Subsidiaries, in the reasonable
determination of the Board of Directors of the Company or the senior management
thereof and (vii) transactions between or among any of the Company and its
Subsidiaries.
4.09. Limitation on Liens
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character, or any shares of Capital Stock or Indebtedness of any of its
Subsidiaries held by the Company or any of its Subsidiaries in order to secure
any Indebtedness of the Company, without making effective provision for all of
the Debentures and all other amounts due under the Indenture relating to the
Debentures to be directly secured equally and ratably with (or, if the
Indebtedness to be secured by such Lien is subordinated in right of payment to
the Debentures, prior to) the Indebtedness secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or
properties of the Company or its Subsidiaries, or any shares of Capital Stock or
Indebtedness of any of its Subsidiaries held by the Company or any of its
Subsidiaries, securing Indebtedness of the Company created in favor of the
Holders; (iii) Liens securing Indebtedness which is incurred to refinance
Indebtedness which is secured by Liens permitted to be incurred under the
Indenture; provided that such Liens do not extend to or cover any property or
assets of the Company or any of its Subsidiaries other than the property or
assets securing the Indebtedness being refinanced; or (iv) Permitted Liens.
4.10. Investments in Unrestricted Subsidiaries
The Company will not make, and will not permit any of its Subsidiaries to
make, any Investments in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the sum of $150,000,000.
<PAGE>
5
4.11. Payments for Consent
Neither the Company nor any Subsidiary 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 of these Debentures for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or these Debentures unless such consideration is offered to be
paid or agreed to be paid to all Holders of these Debentures which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement."
4.12. Intercreditor Agreement
If the Company executes the Pledge Agreements and the Intercreditor
Agreement pursuant to the terms of the Amended Bank Credit Agreement, the
Trustee shall deliver to the collateral agent under the Pledge Agreements an
acknowledgement to the Intercreditor Agreement and shall execute such further
documents and instruments as may be necessary or desirable to create in favor of
the collateral agent under the Pledge Agreements a valid and perfected first
priority Lien on any collateral pledged pursuant to the Pledge Agreements.
B. In addition to the provisions set forth in Section 5.01 of the
Indenture, the Debentures shall include the following additional provision:
"Notwithstanding Section 5.01 of the Indenture, any Subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company."
4. Additional Events of Default. In addition to the Events of Default set
forth in Section 6.01 of the Indenture, the Debentures shall include the
following additional Event of Default:
"(6) except as a result of compliance with any court order to which the
Company is subject or any applicable law or any government decree, if an event
of default as defined in any mortgage, indenture or instrument, under which
there may be issued, or by which there may be secured or evidenced, any
Indebtedness of the Company (including a default under the Indenture with
respect to Securities of any series other than the Debentures) whether such
Indebtedness now exists or shall hereafter be created, shall happen and shall
result in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled by the holders of such
Indebtedness within 10 days after written notice to the Company from the Trustee
or to the Company and to the Trustee from the Holders of not less than a
majority of the principal amount of the Debentures then outstanding under the
Indenture; provided, however, that it shall not be a default hereunder if the
principal amount of Indebtedness the maturity of which is so accelerated is less
than $125,000,000, individually or in the aggregate; and provided, further, that
if, prior to a declaration of acceleration of the Maturity of such Debentures
then outstanding or the entry of judgment in favor of the Trustee in a suit
pursuant to Section 6.08 of the Indenture, such default shall be remedied or
cured by
<PAGE>
6
the Company or waived by the holders of such Indebtedness, or such Indebtedness
shall be discharged, then the default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of such
Debentures."
5. Additional Definitions. In addition to the definitions set forth in
Article 1 of the Indenture, the Debentures shall include the following
additional definitions, which, in the event of a conflict with the definition of
terms in the Indenture, shall control:
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities, by
contract or otherwise.
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of April 30, 1998 among the Company, certain of its
subsidiaries, Bankers Trust Company, as Administrative Agent, and the managing
agents, co-agents, lead managers, arrangers and the other agents and lenders
party thereto, as such agreement may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time.
"Capitalized Lease Obligation" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Closing Date" means the date on which the Debentures are originally
issued under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, subject to certain provisions of the Indenture, generally
accepted accounting principals set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession, which are applicable to the
circumstances as of the Closing Date.
<PAGE>
7
"Indebtedness" of any Person means, without duplication, with respect to
any Person, any indebtedness, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements with respect thereto) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capitalized Lease Obligations), except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but does not include contingent
liabilities which appear only in a footnote to a balance sheet), and shall also
include, to the extent not otherwise included, the guaranty by such Person of
items which would be included within this definition, obligations in respect of
Currency Agreements and Interest Rate Agreements and the maximum fixed
repurchase price of any Redeemable Stock. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date of determination, provided that if such Redeemable Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Redeemable Stock.
"Intercreditor Agreement" means the Intercreditor Agreement to be entered
into under certain circumstances pursuant to subsection 5.8 of the Bank Credit
Agreement, substantially in the form of Exhibit XXII thereto, as such
Intercreditor Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of the definition of "Unrestricted Subsidiary" and Section 4.10 set
forth in Section 3 of this Officers' Certificate, (i) the amount of any
"Investment" shall be 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 and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary that is designated a Subsidiary of the Company and (ii)
any property transferred to or from any Unrestricted Subsidiary shall be valued
at fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
<PAGE>
8
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Permitted Liens" means (i) Liens (including extensions and renewals
thereof) upon real or personal (whether tangible or intangible) property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness incurred, (1) to finance the cost
(including the cost of improvement or construction) of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within 12 months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (ii) any
interest or title of a lessor in the property subject to any Capitalized Lease
Obligation or operating lease; (iii) Liens on property of, or on shares of
Capital Stock or Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, the Company or any Subsidiary of the Company;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
acquired; (iv) Liens in favor of the Company or any Subsidiary; (v) Liens
securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (vi) Liens encumbering customary initial deposits
and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect the
Company or any of its Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities; (vii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business of the Company and its Subsidiaries; (viii) Liens on or sales of
receivables; (ix) Liens securing the Company's obligations in respect of
bankers' acceptances issued or created to facilitate the purchase, shipment or
storage of inventory or other goods; and (x) in addition to any other Liens
permitted to be incurred pursuant to the Indenture, Liens securing Indebtedness
in an amount not to exceed $500 million.
"Pledge Agreements" means the Company Pledge Agreement and the Subsidiary
Pledge Agreement to be executed and delivered by the Company under certain
circumstances pursuant to subsection 5.8 of the Bank Credit Agreement,
substantially in the form of Exhibits XX and XXI thereto, respectively, as such
Pledge Agreements may thereafter be amended, supplemented or otherwise modified
from time to time.
"Redeemable Stock" means any equity security that by its terms or
otherwise is required to be redeemed prior to the stated maturity of the
Debentures, or is redeemable at the option of the holder thereof at any time
prior to the stated maturity of the Debentures.
<PAGE>
9
"Subsidiary" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of the Company
for purposes of the Indenture.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (2) 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) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Liens on, any property of, the Company
or any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary to be so designated; provided that either (x) the fair market value
of the net assets of the Subsidiary to be so designated is $1,000 or less or (y)
if the fair market value of the net assets of such Subsidiary is greater than
$1,000, the amount of the Company's Investments in Unrestricted Subsidiaries at
the time of designation is less than $150,000,000. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary. Any such designation
by the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions."
6. Board Resolutions. Attached hereto as Annex B are true and correct
copies of the Resolutions; the Resolutions have not been amended, modified or
rescinded and remain in full force and effect; and the Resolutions are the only
resolutions adopted by the Company's Board of Directors or any committee thereof
relating to the Debentures and the transactions related thereto.
Each of the undersigned officers further states that he has read the
provisions of such Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Debentures and the definitions
relating thereto, the Resolutions authorizing the issuance of the Debentures and
the Form of Debenture; that the statements made in this Certificate are based
upon the examination of the provisions of such Indenture, the Resolutions and
the Form of Debenture; that he has, in his opinion, made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not the conditions precedent for the issuance, authentication and
delivery of the Debentures have been complied with; and that, in his opinion,
such conditions have been complied with.
[Signature page follows]
<PAGE>
10
IN WITNESS WHEREOF, said officers have signed this certificate.
Dated: May 20, 1998
/s/ Lee A. Wesselmann /s/ David G. Van Hooser
- -------------------------------- --------------------------------------
By: Lee A. Wesselmann By: David G. Van Hooser
Title: Senior Vice President and Title: Senior Vice President, Director
Chief Financial Officer of Corporate Strategy
<PAGE>
11
ANNEX A
[FORM OF DEBENTURE]
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 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN 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
SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.
OWENS-ILLINOIS, INC.
7.50% SENIOR DEBENTURES DUE 2010
Number: 1 CUSIP No. 690768 BD 7 $200,000,000
OWENS-ILLINOIS, INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to Cede & Co., as nominee of The
Depository Trust Company, or registered assigns, the principal sum of TWO
HUNDRED MILLION DOLLARS on May 15, 2010.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth below following
the signatures of the authorized officers of the Company.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
OWENS-ILLINOIS, INC.
By:
--------------------------------------
Name: David G. Van Hooser
Title: Senior Vice President, Director
of Corporate Strategy
By:
--------------------------------------
Name: James W. Baehren
Title: Associate General Counsel and
Assistant Secretary
Dated: May 20, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
----------------------------
Authorized Signatory
<PAGE>
OWENS-ILLINOIS, INC.
7.50% SENIOR DEBENTURES DUE 2010
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest
OWENS-ILLINOIS, INC., a Delaware corporation (such entity, 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. Interest on the Securities shall
accrue from May 20, 1998 or from the most recent interest payment date to which
interest has been paid or provided for, as the case may be; interest on the
Securities shall be payable semi-annually on May 15 and November 15 of each year
until maturity, or, if such day is a Legal Holiday, on the next succeeding day
that is not a Legal Holiday (each, an "Interest Payment Date"), commencing on
November 15, 1998; and interest on the Securities shall be payable to holders of
record on the May 1 or November 1 immediately preceding the applicable Interest
Payment Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay defaulted interest on overdue interest,
plus (to the extent lawful) any interest payable on the defaulted interest, as
provided in Section 2.11 of the Indenture.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are holders ("Holders") of record in the security
register of the Company (the "Security Register") of Securities at the close of
business on the May 1 or November 1 (each, a "Record Date") next preceding the
Interest Payment Date, in each case even if the Securities are cancelled solely
by virtue of registration of transfer or registration of exchange after such
Record Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in the Borough of Manhattan, the City of New
York (which initially will be the Corporate Trust Office of the Trustee);
provided that, at the option of the Company, payment of interest may be made by
check mailed to the address of each Holder as such address appears in the
Security Register.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-Registrar without notice to any Holder.
The Company or
<PAGE>
2
any of its Affiliates may act as Paying Agent, Registrar or co-Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
20, 1998 by and between the Company and the Trustee, the terms of which have
been established in an Officers' Certificate, dated May 20, 1998, pursuant to
Section 2.01 of the Indenture (collectively, the "Indenture"). The Securities
are a series designated as the "7.50% Senior Debentures due 2010" of the
Company, limited in aggregate principal amount to $250,000,000. 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. ss.ss.
77aaa-77bbbb) as in effect on May 20, 1998 (the "TIA"). The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms. Any conflict between the terms of this
Security and the Indenture will be governed by the Indenture.
The Securities are senior unsecured obligations of the Company and
rank pari passu in right of payment with all existing and future senior
unsecured indebtedness of the Company, and senior in right of payment to all
subordinated indebtedness of the Company.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to enter transactions with Affiliates, to create or incur
certain Liens on any of its assets or properties or any shares of Capital Stock
or Indebtedness of any Subsidiary, to make Investments in Unrestricted
Subsidiaries, to consolidate or merge, or transfer all or substantially all of
its property or assets, and to pay any fees to Holders for or as an inducement
to any consent, waiver or amendment of the Indenture.
5. Optional Redemption
The Securities may not be redeemed at the option of the Company
prior to maturity.
6. Sinking Fund
The Securities will not be subject to the operation of any sinking
fund.
7. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof. A
Holder may transfer or exchange Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require the
<PAGE>
3
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith, subject to and as permitted
by the Indenture.
8. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
9. Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon the
Company's request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person.
10. 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 money and/or U.S. Government Obligations for
the payment of principal and interest on the Securities to maturity.
11. Defaults and Remedies
Under the Indenture, Events of Default include (a) failure to pay
the principal of, or premium, if any, on such Securities when due and payable;
(b) failure to pay any interest on such Securities when due, continued for 30
days; (c) failure to perform or observe any other agreements of the Company in
such Indenture, including failure to comply with the provisions of the Indenture
applicable to consolidation, merger and sale of assets of the Company, continued
for 60 days after written notice; (d) acceleration of $125,000,000 or more,
individually or in the aggregate, in principal amount of Indebtedness of the
Company under the terms of the instrument under which such indebtedness is
issued or secured, except as a result of compliance with applicable laws, orders
or decrees, if such Indebtedness shall not have been discharged or such
acceleration is not annulled within ten days after written notice; and (e)
certain events of bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event or Default relating to
certain events of bankruptcy, insolvency or reorganization) shall occur and be
continuing, either the Trustee or the holders of at least 50% in principal
amount of the outstanding Securities by notice, as provided in the Indenture,
may declare the unpaid principal amount of, and any accrued and
<PAGE>
4
unpaid interest on, the Securities to be due and payable immediately. However,
at any time after a declaration of acceleration with respect to the Securities
has been made, the holders of a majority in principal amount of the outstanding
Securities of such series may, under certain circumstances, rescind and annul
such acceleration if the rescission would not conflict with any judgment or
decree and if all existing Events of Default with respect to such Securities
have been cured or waived except nonpayment of principal (or such lesser amount)
or interest that has become due solely because of the acceleration.
Subject to the duty of the Trustee during an Event of Default to act
with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable security or indemnity. Subject to certain provisions,
including those requiring security or indemnification of the Trustee, the
holders of a majority in principal amount of the outstanding Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities.
12. Supplements, Amendments and Waivers
Subject to certain exceptions, the Company and the Trustee may amend
the Indenture or the Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Securities. The holders of
a majority in principal amount of the then outstanding Securities may also waive
compliance in a particular instance by the Company with any provision of the
Indenture with respect to the Securities; provided, however, that certain
amendments or waivers may not be made without the consent of each holder of
Securities affected as provided in the Indenture.
The Company and the Trustee may amend the Indenture or the
Securities without notice to or the consent of any holder of Securities in
certain circumstances described in the Indenture.
The holders of a majority in principal amount of the outstanding
Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except a Default or Event of Default in the payment
of the principal of, or any interest on, the Securities (provided, however, that
the holders of a majority in principal amount of the outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, 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
<PAGE>
5
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A past, present or future director, officer, employee, stockholder
or incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
16. Successors and Assigns.
All covenants and agreements of the Company in the Indenture and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in the Indenture shall bind its successor.
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 hereon.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
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
<PAGE>
6
the Securities, and the Trustee may use CUSIP numbers in notices as a
convenience to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in any notice
and reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Such requests
may be addressed to:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Attention: Corporate Secretary
---------------------------------------------------
<PAGE>
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 [print or type agent's name] agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
_______________________________________________________________________________
Date: _____________________ Your Signature: ______________________________
Signature Guarantee: __________________________________________________________
(Signature must be guaranteed)
_______________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
<PAGE>
Exhibit 4.5
OWENS-ILLINOIS, INC.
$250,000,000 7.80% Senior Debentures due 2018
Officers' Certificate Pursuant to Section 2.01 of the Indenture
The undersigned officers of Owens-Illinois, Inc., a Delaware corporation
(the "Company"), pursuant to the authority granted such officers pursuant to
resolutions duly adopted by the Board of Directors of the Company on March 4,
1998 (the "Resolutions"), hereby establish a series of the Company's Securities
(as defined and provided for in the Indenture (the "Indenture") dated as of May
20, 1998 between the Company and The Bank of New York, as Trustee, designated as
the "7.80% Senior Debentures due May 15, 2018," and hereby certify, pursuant to
Section 2.01 of the Indenture, as follows:
1. Form of Debenture. Attached hereto as Annex A is a true and correct
copy of a specimen Debenture (the "Form of Debenture") representing the
Company's 7.80% Senior Debentures due May 15, 2018 (the "Debentures").
2. Terms of the Debentures. The terms of the Debentures are as follows:
(a) The title of the Debentures to be issued as a series of
Securities (as defined in the Indenture) under the Indenture
shall be the "7.80% Senior Debentures due 2018";
(b) The aggregate principal amount of the Debentures that may be
authenticated and delivered under the Indenture shall be
limited to $250,000,000 (except for Debentures authenticated
and delivered upon registration of transfer of, or in exchange
for, or in lieu of, other Debentures pursuant to Article 2 and
Section 9.04 of the Indenture);
(c) The Debentures shall be issued at a price equal to 99.982% of
the aggregate principal amount thereof;
(d) The principal of the Debentures shall be payable on May 15,
2018;
(e) The Debentures shall bear interest at a rate equal to 7.80%
per annum; interest on the Debentures shall accrue from May
20, 1998 or from the most recent interest payment date to
which interest has been paid or provided for, as the case may
be; interest on the Debentures shall be payable semi-annually
on May 15 and November 15 of each year until
<PAGE>
2
maturity, commencing on November 15, 1998; and interest on the
Debentures shall be payable to holders of record on the May 1
or November 1 immediately preceding the applicable interest
payment date;
(f) The place or places where the principal of and any interest on
the Debentures shall be payable shall be as set forth in the
Debentures, the form of which is attached hereto as Annex A;
(g) The Debentures shall not be subject to redemption at the
option of the Company prior to maturity;
(h) The Company shall not be obligated to redeem or purchase the
Debentures pursuant to any sinking fund or at the option of
any holder thereof prior to maturity;
(i) The Debentures shall be issued in denominations of $1,000 and
any integral multiple thereof;
(j) 100% of the principal amount thereof shall be payable upon
declaration of acceleration of the maturity thereof pursuant
to Section 6.02 of the Indenture;
(k) In addition to the covenants and provisions set forth in
Article 4 and Article 5 of the Indenture, the Debentures shall
include the additional covenants and provisions set forth in
Section 3 of this Officers' Certificate;
(l) In addition to the Events of Default set forth in Section 6.01
of the Indenture, the Debentures shall include the additional
Event of Default set forth in Section 4 of this Officers'
Certificate;
(m) The Trustee for the Debentures shall be The Bank of New York;
(n) The Debentures shall be issued initially in the form of two
Global Debentures ("Global Debentures") in definitive, fully
registered form without interest coupons in substantially the
form of Annex A, which shall be deposited on behalf of the
purchasers of the Debentures represented thereby with the
Trustee, at its principal corporate trust office in New York
City, as custodian for the Depositary, and registered in the
name of the Depositary or a nominee of the Depositary, duly
executed by the Company and authenticated by the Trustee where
so provided. The aggregate principal amount of the Global
Debentures may from time to time be increased or decreased by
adjustments made on the records of the Trustee and the
Depositary or its nominee in accordance with the Depositary's
procedures and as provided in Section
<PAGE>
3
2.13 of the Indenture. Except as provided in Section 2.13 of
the Indenture, owners of beneficial interests in Global
Debentures shall not be entitled to receive physical delivery
of certificated Debentures. The Depositary for such Global
Debentures shall be The Depository Trust Company;
(o) The Debentures shall not be secured by any collateral;
(p) The Debentures shall not be guaranteed by any person;
(q) The Debentures shall be senior unsecured obligations of the
Company and shall rank pari passu in right of payment with all
existing and future senior unsecured indebtedness of the
Company and senior in right of payment to all subordinated
indebtedness of the Company;
(r) The provisions of Section 8.03 and 8.04 of the Indenture shall
be applicable to the Debentures; and
(s) In addition to the definitions set forth in Article 1 of the
Indenture, the Debentures shall include the definitions set
forth in Section 5 of this Officers' Certificate.
3. Additional Covenants and Provisions.
A. In addition to the covenants set forth in Article 4 of the
Indenture, the Debentures shall include the following additional covenants:
"4.08. Limitation on Transactions with Affiliates
The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, make any loan, advance, guaranty or capital contribution
to, or for the benefit of, or sell, lease, transfer or otherwise dispose of any
of its properties or assets to, or for the benefit of, or purchase or lease any
property or assets from, or enter into or amend any contract, agreement, or
understanding with, or for the benefit of, any Affiliate of the Company (each,
an "Affiliate Transaction") involving aggregate consideration in excess of $5.0
million for any one transaction, except on terms that are no less favorable to
the Company or the relevant Subsidiary, as the case may be, than those that
could have been obtained in a comparable transaction on an arm's length basis
from a person that is not such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to, (i)
transactions (x) in respect of which the Company or such Subsidiary delivers to
the Trustee a written opinion of a nationally recognized investment banking,
accounting, appraisal or consulting firm stating that the transaction is fair to
the Company or such Subsidiary from a financial point of view or (y) approved by
a majority of the disinterested members of the Board of Directors of the Company
or, if there are no such directors, a majority of the directors of the Company,
(ii)
<PAGE>
4
the payment of reasonable and customary regular fees paid to, and indemnity
provided on behalf of, officers, directors, employees and consultants to the
Company or its Subsidiaries, (iii) payments or loans to officers, directors and
employees of the Company for business or personal purposes and other loans and
advances to such officers, directors and employees for travel, entertainment,
moving and other relocation expenses made in the ordinary course of business of
the Company and its Subsidiaries, (iv) the payment by the Company or any of its
Subsidiaries to KKR and its Affiliates of (1) fees for any financial, advisory,
financing, underwriting or placement services or in respect of other investment
banking activities, including without limitation, in connection with
acquisitions or divestitures, which payments are approved by a majority of the
Board of Directors of the Company and (2) annual management, consulting and
advisory fees and related expenses, (v) any agreement in effect as of the
Closing Date or any amendment thereto (so long as such amendment is not
disadvantageous to the Holders in any material respect) or any transaction
contemplated thereby, (vi) transactions with customers, clients, suppliers or
purchasers or sellers of goods or services, in each case in the ordinary course
of business which are fair to the Company or its Subsidiaries, in the reasonable
determination of the Board of Directors of the Company or the senior management
thereof and (vii) transactions between or among any of the Company and its
Subsidiaries.
4.09. Limitation on Liens
The Company will not, and will not permit any Subsidiary to, create,
incur, assume or suffer to exist any Lien on any of its assets or properties of
any character, or any shares of Capital Stock or Indebtedness of any of its
Subsidiaries held by the Company or any of its Subsidiaries in order to secure
any Indebtedness of the Company, without making effective provision for all of
the Debentures and all other amounts due under the Indenture relating to the
Debentures to be directly secured equally and ratably with (or, if the
Indebtedness to be secured by such Lien is subordinated in right of payment to
the Debentures, prior to) the Indebtedness secured by such Lien.
The foregoing limitation does not apply to: (i) Liens existing on the
Closing Date; (ii) Liens granted after the Closing Date on any assets or
properties of the Company or its Subsidiaries, or any shares of Capital Stock or
Indebtedness of any of its Subsidiaries held by the Company or any of its
Subsidiaries, securing Indebtedness of the Company created in favor of the
Holders; (iii) Liens securing Indebtedness which is incurred to refinance
Indebtedness which is secured by Liens permitted to be incurred under the
Indenture; provided that such Liens do not extend to or cover any property or
assets of the Company or any of its Subsidiaries other than the property or
assets securing the Indebtedness being refinanced; or (iv) Permitted Liens.
4.10. Investments in Unrestricted Subsidiaries
The Company will not make, and will not permit any of its Subsidiaries to
make, any Investments in Unrestricted Subsidiaries if, at the time thereof, the
aggregate amount of such Investments would exceed the sum of $150,000,000.
<PAGE>
5
4.11. Payments for Consent
Neither the Company nor any Subsidiary 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 of these Debentures for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of the Indenture or these Debentures unless such consideration is offered to be
paid or agreed to be paid to all Holders of these Debentures which so consent,
waive or agree to amend in the time frame set forth in solicitation documents
relating to such consent, waiver or agreement."
4.12. Intercreditor Agreement
If the Company executes the Pledge Agreements and the Intercreditor
Agreement pursuant to the terms of the Amended Bank Credit Agreement, the
Trustee shall deliver to the collateral agent under the Pledge Agreements an
acknowledgement to the Intercreditor Agreement and shall execute such further
documents and instruments as may be necessary or desirable to create in favor of
the collateral agent under the Pledge Agreements a valid and perfected first
priority Lien on any collateral pledged pursuant to the Pledge Agreements.
B. In addition to the provisions set forth in Section 5.01 of the
Indenture, the Debentures shall include the following additional provision:
"Notwithstanding Section 5.01 of the Indenture, any Subsidiary of the
Company may consolidate with, merge into or transfer all or part of its
properties and assets to the Company."
4. Additional Events of Default. In addition to the Events of Default set
forth in Section 6.01 of the Indenture, the Debentures shall include the
following additional Event of Default:
"(6) except as a result of compliance with any court order to which the
Company is subject or any applicable law or any government decree, if an event
of default as defined in any mortgage, indenture or instrument, under which
there may be issued, or by which there may be secured or evidenced, any
Indebtedness of the Company (including a default under the Indenture with
respect to Securities of any series other than the Debentures) whether such
Indebtedness now exists or shall hereafter be created, shall happen and shall
result in such Indebtedness becoming or being declared due and payable prior to
the date on which it would otherwise become due and payable, and such
acceleration shall not have been rescinded or annulled by the holders of such
Indebtedness within 10 days after written notice to the Company from the Trustee
or to the Company and to the Trustee from the Holders of not less than a
majority of the principal amount of the Debentures then outstanding under the
Indenture; provided, however, that it shall not be a default hereunder if the
principal amount of Indebtedness the maturity of which is so accelerated is less
than $125,000,000, individually or in the aggregate; and provided, further, that
if, prior to a declaration of acceleration of the Maturity of such Debentures
then outstanding or the entry of judgment in favor of the Trustee in a suit
pursuant to Section 6.08 of the Indenture, such default shall be remedied or
cured by
<PAGE>
6
the Company or waived by the holders of such Indebtedness, or such Indebtedness
shall be discharged, then the default hereunder by reason thereof shall be
deemed likewise to have been thereupon remedied, cured or waived without further
action upon the part of either the Trustee or any of the Holders of such
Debentures."
5. Additional Definitions. In addition to the definitions set forth in
Article 1 of the Indenture, the Debentures shall include the following
additional definitions, which, in the event of a conflict with the definition of
terms in the Indenture, shall control:
"Affiliate" means, as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling," "controlled
"Bank Credit Agreement" means the Second Amended and Restated Credit
Agreement dated as of April 30, 1998 among the Company, certain of its
subsidiaries, Bankers Trust Company, as Administrative Agent, and the managing
agents, co-agents, lead managers, arrangers and the other agents and lenders
party thereto, as such agreement may be amended (including any amendment and
restatement thereof), supplemented or otherwise modified from time to time.
"Capitalized Lease Obligation" means, as applied to any Person, any lease
of any property (whether real, personal or mixed) by that Person as lessee
which, in conformity with GAAP, is required to be accounted for as a capital
lease on the balance sheet of that Person.
"Capital Stock" means any and all shares, interests, participations,
rights or other equivalents (however designated) of corporate stock.
"Closing Date" means the date on which the Debentures are originally
issued under the Indenture.
"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means, subject to certain provisions of the Indenture, generally
accepted accounting principals set forth in the opinions and pronouncements of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or in such other statements by such other entity as approved by
a significant segment of the accounting profession, which are applicable to the
circumstances as of the Closing Date.
<PAGE>
7
"Indebtedness" of any Person means, without duplication, with respect to
any Person, any indebtedness, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or letters
of credit (or reimbursement agreements with respect thereto) or representing the
balance deferred and unpaid of the purchase price of any property (including
pursuant to Capitalized Lease Obligations), except any such balance that
constitutes an accrued expense or trade payable, if and to the extent any of the
foregoing indebtedness would appear as a liability upon a balance sheet of such
Person prepared in accordance with GAAP (but does not include contingent
liabilities which appear only in a footnote to a balance sheet), and shall also
include, to the extent not otherwise included, the guaranty by such Person of
items which would be included within this definition, obligations in respect of
Currency Agreements and Interest Rate Agreements and the maximum fixed
repurchase price of any Redeemable Stock. For purposes of the preceding
sentence, the maximum fixed repurchase price of any Redeemable Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Redeemable Stock as if such Redeemable Stock were repurchased on
any date of determination, provided that if such Redeemable Stock is not then
permitted to be repurchased, the repurchase price shall be the book value of
such Redeemable Stock.
"Intercreditor Agreement" means the Intercreditor Agreement to be entered
into under certain circumstances pursuant to subsection 5.8 of the Bank Credit
Agreement, substantially in the form of Exhibit XXII thereto, as such
Intercreditor Agreement may thereafter be amended, supplemented or otherwise
modified from time to time.
"Interest Rate Agreements" means the obligations of any Person pursuant to
any interest rate swap agreement, interest rate collar agreement or other
similar agreement or arrangement designed to protect such Person or any of its
Subsidiaries against fluctuations in interest rates.
"Investment" means any direct or indirect advance, loan (other than
advances to customers in the ordinary course of business, which are recorded as
accounts receivable on the balance sheet of any Person or its Subsidiaries) or
other extension of credit or capital contribution to (by means of any transfer
of cash or other property to others or any payment for property or services for
the account or use of others), or any purchase or acquisition of Capital Stock,
bonds, notes, debentures or other securities issued by any other Person. For the
purposes of the definition of "Unrestricted Subsidiary" and Section 4.10 set
forth in Section 3 of this Officers' Certificate, (i) the amount of any
"Investment" shall be 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 and shall exclude the fair market value of the net assets of any
Unrestricted Subsidiary that is designated a Subsidiary of the Company and (ii)
any property transferred to or from any Unrestricted Subsidiary shall be valued
at fair market value at the time of such transfer, in each case as determined by
the Board of Directors of the Company in good faith.
"KKR" means Kohlberg Kravis Roberts & Co., L.P.
<PAGE>
8
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Permitted Liens" means (i) Liens (including extensions and renewals
thereof) upon real or personal (whether tangible or intangible) property
acquired after the Closing Date; provided that (a) such Lien is created solely
for the purpose of securing Indebtedness incurred, (1) to finance the cost
(including the cost of improvement or construction) of the item of property or
assets subject thereto and such Lien is created prior to, at the time of or
within 12 months after the later of the acquisition, the completion of
construction or the commencement of full operation of such property or (2) to
refinance any Indebtedness previously so secured, (b) the principal amount of
the Indebtedness secured by such Lien does not exceed 100% of such cost and (c)
any such Lien shall not extend to or cover any property or assets other than
such item of property or assets and any improvements on such item; (ii) any
interest or title of a lessor in the property subject to any Capitalized Lease
Obligation or operating lease; (iii) Liens on property of, or on shares of
Capital Stock or Indebtedness of, any Person existing at the time such Person
becomes, or becomes a part of, the Company or any Subsidiary of the Company;
provided that such Liens do not extend to or cover any property or assets of the
Company or any Subsidiary of the Company other than the property or assets
acquired; (iv) Liens in favor of the Company or any Subsidiary; (v) Liens
securing reimbursement obligations with respect to letters of credit that
encumber documents and other property relating to such letters of credit and the
products and proceeds thereof; (vi) Liens encumbering customary initial deposits
and margin deposits, and other Liens that are either within the general
parameters customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate Agreements and
Currency Agreements and forward contracts, options, future contracts, futures
options or similar agreements or arrangements designed solely to protect the
Company or any of its Subsidiaries from fluctuations in interest rates,
currencies or the price of commodities; (vii) Liens arising out of conditional
sale, title retention, consignment or similar arrangements for the sale of goods
entered into by the Company or any of its Subsidiaries in the ordinary course of
business of the Company and its Subsidiaries; (viii) Liens on or sales of
receivables; (ix) Liens securing the Company's obligations in respect of
bankers' acceptances issued or created to facilitate the purchase, shipment or
storage of inventory or other goods; and (x) in addition to any other Liens
permitted to be incurred pursuant to the Indenture, Liens securing Indebtedness
in an amount not to exceed $500 million.
"Pledge Agreements" means the Company Pledge Agreement and the Subsidiary
Pledge Agreement to be executed and delivered by the Company under certain
circumstances pursuant to subsection 5.8 of the Bank Credit Agreement,
substantially in the form of Exhibits XX and XXI thereto, respectively, as such
Pledge Agreements may thereafter be amended, supplemented or otherwise modified
from time to time.
"Redeemable Stock" means any equity security that by its terms or
otherwise is required to be redeemed prior to the stated maturity of the
Debentures, or is redeemable at the option of the holder thereof at any time
prior to the stated maturity of the Debentures.
<PAGE>
9
"Subsidiary" means any corporation, association or other business entity
of which more than 50% of the total voting power of shares of Capital Stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof; provided that an
Unrestricted Subsidiary shall not be deemed to be a Subsidiary of the Company
for purposes of the Indenture.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company which at
the time of determination shall be an Unrestricted Subsidiary (as designated by
the Board of Directors of the Company, as provided below) and (2) 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) to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns, or holds any Liens on, any property of, the Company
or any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary to be so designated; provided that either (x) the fair market value
of the net assets of the Subsidiary to be so designated is $1,000 or less or (y)
if the fair market value of the net assets of such Subsidiary is greater than
$1,000, the amount of the Company's Investments in Unrestricted Subsidiaries at
the time of designation is less than $150,000,000. The Board of Directors may
designate any Unrestricted Subsidiary to be a Subsidiary. Any such designation
by the Board of Directors shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Board of Directors giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions."
6. Board Resolutions. Attached hereto as Annex B are true and correct
copies of the Resolutions; the Resolutions have not been amended, modified or
rescinded and remain in full force and effect; and the Resolutions are the only
resolutions adopted by the Company's Board of Directors or any committee thereof
relating to the Debentures and the transactions related thereto.
Each of the undersigned officers further states that he has read the
provisions of such Indenture setting forth the conditions precedent to the
issuance, authentication and delivery of the Debentures and the definitions
relating thereto, the Resolutions authorizing the issuance of the Debentures and
the Form of Debenture; that the statements made in this Certificate are based
upon the examination of the provisions of such Indenture, the Resolutions and
the Form of Debenture; that he has, in his opinion, made such examination or
investigation as is necessary to enable him to express an informed opinion as to
whether or not the conditions precedent for the issuance, authentication and
delivery of the Debentures have been complied with; and that, in his opinion,
such conditions have been complied with.
[Signature page follows]
<PAGE>
10
IN WITNESS WHEREOF, said officers have signed this certificate.
Dated: May 20, 1998
/s/ Lee A. Wesselmann /s/ David G. Van Hooser
- -------------------------------- --------------------------------------
By: Lee A. Wesselmann By: David G. Van Hooser
Title: Senior Vice President and Title: Senior Vice President, Director
Chief Financial Officer of Corporate Strategy
<PAGE>
ANNEX A
[FORM OF DEBENTURE]
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 ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN 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
SUCCESSOR'S NOMINEE AND LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE
RESTRICTIONS SET FORTH IN THE INDENTURE REFERRED TO HEREIN.
OWENS-ILLINOIS, INC.
7.80% SENIOR DEBENTURES DUE 2018
Number: 1 CUSIP No. 690768 BF 2 $200,000,000
OWENS-ILLINOIS, INC., a Delaware corporation (the "Company"), for
value received, hereby promises to pay to Cede & Co., as nominee of The
Depository Trust Company, or registered assigns, the principal sum of TWO
HUNDRED MILLION DOLLARS on May 15, 2018.
Interest Payment Dates: May 15 and November 15.
Record Dates: May 1 and November 1.
Additional provisions of this Security are set forth below following
the signatures of the authorized officers of the Company.
<PAGE>
2
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers.
OWENS-ILLINOIS, INC.
By:
--------------------------------------
Name: David G. Van Hooser
Title: Senior Vice President, Director
of Corporate Strategy
By:
-------------------------------------
Name: James W. Baehren
Title: Associate General Counsel and
Assistant Secretary
Dated: May 20, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:
-----------------------------
Authorized Signatory
<PAGE>
OWENS-ILLINOIS, INC.
7.80% SENIOR DEBENTURES DUE 2018
Capitalized terms used herein shall have the meanings assigned to
them in the Indenture referred to below unless otherwise indicated.
1. Interest
OWENS-ILLINOIS, INC., a Delaware corporation (such entity, 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. Interest on the Securities shall
accrue from May 20, 1998 or from the most recent interest payment date to which
interest has been paid or provided for, as the case may be; interest on the
Securities shall be payable semi-annually on May 15 and November 15 of each year
until maturity, or, if such day is a Legal Holiday, on the next succeeding day
that is not a Legal Holiday (each, an "Interest Payment Date"), commencing on
November 15, 1998; and interest on the Securities shall be payable to holders of
record on the May 1 or November 1 immediately preceding the applicable Interest
Payment Date. Interest will be computed on the basis of a 360-day year of twelve
30-day months. The Company shall pay defaulted interest on overdue interest,
plus (to the extent lawful) any interest payable on the defaulted interest, as
provided in Section 2.11 of the Indenture.
2. Method of Payment
The Company will pay interest on the Securities (except defaulted
interest) to the Persons who are holders ("Holders") of record in the security
register of the Company (the "Security Register") of Securities at the close of
business on the May 1 or November 1 (each, a "Record Date") next preceding the
Interest Payment Date, in each case even if the Securities are cancelled solely
by virtue of registration of transfer or registration of exchange after such
Record Date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Company will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in the Borough of Manhattan, the City of New
York (which initially will be the Corporate Trust Office of the Trustee);
provided that, at the option of the Trustee); provided that, at the option of
the Company, payment of interest may be made by check mailed to the address of
each Holder as such address appears in the Security Register.
3. Paying Agent and Registrar
Initially, The Bank of New York, a New York banking corporation (the
"Trustee"), will act as Paying Agent and Registrar. The Company may appoint and
change any Paying Agent, Registrar or co-Registrar without notice to any Holder.
The Company or
<PAGE>
2
any of its Affiliates may act as Paying Agent, Registrar or co-Registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as of May
20, 1998 by and between the Company and the Trustee, the terms of which have
been established in an Officers' Certificate, dated May 20, 1998, pursuant to
Section 2.01 of the Indenture (collectively, the "Indenture"). The Securities
are a series designated as the "7.80% Senior Debentures due 2018" of the
Company, limited in aggregate principal amount to $250,000,000. 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. ss.ss.
77aaa-77bbbb) as in effect on May 20, 1998 (the "TIA"). The Securities are
subject to all such terms, and Securityholders are referred to the Indenture and
the TIA for a statement of those terms. Any conflict between the terms of this
Security and the Indenture will be governed by the Indenture.
The Securities are senior unsecured obligations of the Company and
rank pari passu in right of payment with all existing and future senior
unsecured indebtedness of the Company, and senior in right of payment to all
subordinated indebtedness of the Company.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to enter transactions with Affiliates, to create or incur
certain Liens on any of its assets or properties or any shares of Capital Stock
or Indebtedness of any Subsidiary, to make Investments in Unrestricted
Subsidiaries, to consolidate or merge, or transfer all or substantially all of
its property or assets, and to pay any fees to Holders for or as an inducement
to any consent, waiver or amendment of the Indenture.
5. Optional Redemption
The Securities may not be redeemed at the option of the Company
prior to maturity.
6. Sinking Fund
The Securities will not be subject to the operation of any sinking
fund.
7. Denominations; Transfer; Exchange
The Securities are in registered form, without coupons, in
denominations of $1,000 of principal amount and any integral multiple thereof. A
Holder may transfer or exchange Securities in accordance with the Indenture. No
service charge will be made for any registration of transfer or exchange of
Securities, but the Company may require the
<PAGE>
3
payment of a sum sufficient to cover any transfer tax or other similar
governmental charge payable in connection therewith, subject to and as permitted
by the Indenture.
8. Persons Deemed Owners
The registered Holder of this Security may be treated as the owner
of it for all purposes.
9. Repayment to Company
The Trustee and the Paying Agent shall pay to the Company upon the
Company's request any money held by them for the payment of principal or
interest that remains unclaimed for two years after the date upon which such
payment shall have become due. After payment to the Company, Securityholders
entitled to the money must look to the Company for payment as general creditors
unless an applicable abandoned property law designates another Person.
10. 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 money and/or U.S. Government Obligations for
the payment of principal and interest on the Securities to maturity.
11. Defaults and Remedies
Under the Indenture, Events of Default include (a) failure to pay
the principal of, or premium, if any, on such Securities when due and payable;
(b) failure to pay any interest on such Securities when due, continued for 30
days; (c) failure to perform or observe any other agreements of the Company in
such Indenture, including failure to comply with the provisions of the Indenture
applicable to consolidation, merger and sale of assets of the Company, continued
for 60 days after written notice; (d) acceleration of $125,000,000 or more,
individually or in the aggregate, in principal amount of Indebtedness of the
Company under the terms of the instrument under which such indebtedness is
issued or secured, except as a result of compliance with applicable laws, orders
or decrees, if such Indebtedness shall not have been discharged or such
acceleration is not annulled within ten days after written notice; and (e)
certain events of bankruptcy, insolvency or reorganization.
If an Event of Default (other than an Event or Default relating to
certain events of bankruptcy, insolvency or reorganization) shall occur and be
continuing, either the Trustee or the holders of at least 50% in principal
amount of the outstanding Securities by notice, as provided in the Indenture,
may declare the unpaid principal amount of, and any accrued and
<PAGE>
4
unpaid interest on, the Securities to be due and payable immediately. However,
at any time after a declaration of acceleration with respect to the Securities
has been made, the holders of a majority in principal amount of the outstanding
Securities of such series may, under certain circumstances, rescind and annul
such acceleration if the rescission would not conflict with any judgment or
decree and if all existing Events of Default with respect to such Securities
have been cured or waived except nonpayment of principal (or such lesser amount)
or interest that has become due solely because of the acceleration.
Subject to the duty of the Trustee during an Event of Default to act
with the required standard of care, the Trustee is under no obligation to
exercise any of its rights or powers under the Indenture at the request or
direction of any of the holders, unless such holders shall have offered to the
Trustee reasonable security or indemnity. Subject to certain provisions,
including those requiring security or indemnification of the Trustee, the
holders of a majority in principal amount of the outstanding Securities have the
right to direct the time, method and place of conducting any proceeding for any
remedy available to the Trustee, or exercising any trust or power conferred on
the Trustee, with respect to the Securities.
12. Supplements, Amendments and Waivers
Subject to certain exceptions, the Company and the Trustee may amend
the Indenture or the Securities with the written consent of the holders of a
majority in principal amount of the then outstanding Securities. The holders of
a majority in principal amount of the then outstanding Securities may also waive
compliance in a particular instance by the Company with any provision of the
Indenture with respect to the Securities; provided, however, that certain
amendments or waivers may not be made without the consent of each holder of
Securities affected as provided in the Indenture.
The Company and the Trustee may amend the Indenture or the
Securities without notice to or the consent of any holder of Securities in
certain circumstances described in the Indenture.
The holders of a majority in principal amount of the outstanding
Securities, by notice to the Trustee, may waive an existing Default or Event of
Default and its consequences except a Default or Event of Default in the payment
of the principal of, or any interest on, the Securities (provided, however, that
the holders of a majority in principal amount of the outstanding Securities may
rescind an acceleration and its consequences, including any related payment
default that resulted from such acceleration).
13. Trustee Dealings with the Company
Subject to certain limitations imposed by the TIA, the Trustee under
the Indenture, 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
<PAGE>
5
its Affiliates and may otherwise deal with the Company or its Affiliates with
the same rights it would have if it were not Trustee.
14. No Recourse Against Others
A past, present or future director, officer, employee, stockholder
or incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law
THE INTERNAL LAWS OF THE STATE OF NEW YORK SHALL GOVERN THE
INDENTURE AND THE SECURITIES, WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS
THEREOF.
16. Successors and Assigns.
All covenants and agreements of the Company in the Indenture and the
Securities shall bind its successors and assigns. All agreements of the Trustee
in the Indenture shall bind its successor.
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 hereon.
18. Abbreviations
Customary abbreviations may be used in the name of a Securityholder
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
<PAGE>
6
the Securities, and the Trustee may use CUSIP numbers in notices as a
convenience to Securityholders. No representation is made as to the accuracy of
such numbers either as printed on the Securities or as contained in any notice
and reliance may be placed only on the other identification numbers placed
thereon.
The Company will furnish to any Securityholder upon written request
and without charge to the Securityholder a copy of the Indenture. Such requests
may be addressed to:
Owens-Illinois, Inc.
One SeaGate
Toledo, Ohio 43666
Attention: Corporate Secretary
---------------------------------------------------
<PAGE>
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 [print or type agent's name] agent to transfer this
Security on the books of the Company. The agent may substitute another to act
for him.
________________________________________________________________________________
Date:__________________________ Your Signature:________________________________
Signature Guarantee:____________________________________________________________
(Signature must be guaranteed)
________________________________________________________________________________
(Sign exactly as your name appears on the face of this Security)
<PAGE>
Exhibit 4.10
CERTIFICATE OF DESIGNATIONS, PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
OF
CONVERTIBLE PREFERRED STOCK
OF
OWENS-ILLINOIS, INC.
----------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
----------
Owens-Illinois, Inc., a Delaware corporation (the "Company"),
certifies that pursuant to the authority contained in Section A of ARTICLE IV of
its Restated Certificate of Incorporation (the "Certificate of Incorporation"),
and in accordance with the provisions of Section 151 of the General Corporation
Law of the State of Delaware (the "DGCL"), the Board of Directors of the Company
by unanimous written consent dated as of May 11, 1998, duly approved and adopted
the following resolution which resolution remains in full force and effect on
the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Company by the Restated Certificate of Incorporation, the Board
of Directors does hereby designate, create, authorize and provide for the issue
of a series of preferred stock having a par value of $0.01 per share, with a
liquidation preference of $50.00 per share (the "Liquidation Preference") which
shall be designated as Convertible Preferred Stock (the "Convertible Preferred
Stock") consisting of 9,050,000 shares having the following powers,
designations, preferences and relative, participating, optional and other
special rights, and qualifications, limitations and restrictions:
1. Ranking. The Convertible Preferred Stock shall rank, with respect
to dividend distributions and distributions upon the liquidation, winding-up and
dissolution of the Company, (i) senior to the Common Stock, par value $0.01 per
share, of the Company (the "Common Stock"), to the Series A Exchangeable
Preferred Stock, par value $0.01 per share, of the Company, to the Series B
Exchangeable Preferred Stock, par value $0.01 per share, of the Company, to the
Series C Exchangeable Preferred Stock, par value $0.01 per share, of the Company
(together with the Series A Exchangeable Preferred Stock and the Series B
Exchangeable Preferred Stock, the "Exchangeable Preferred Stock") and to each
other class or series of stock of the Company (including any series of preferred
stock established after May 14, 1998 by the Board of Directors) the terms of
which do not
<PAGE>
2
expressly provide that it ranks senior to or on a parity with the Convertible
Preferred Stock as to dividend distributions and distributions upon the
liquidation, winding-up and dissolution of the Company (collectively referred to
as "Junior Securities"); (ii) on a parity with any equity security, the terms of
which expressly provide that such class or series will rank on a parity with the
Convertible Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) junior to any equity security,
the terms of which expressly provide that such class or series will rank senior
to the Convertible Preferred Stock as to dividend distributions and
distributions upon liquidation, winding-up and dissolution of the Company
(collectively referred to as "Senior Equity Securities").
2. Dividends.
(A) The holders of shares of the Convertible Preferred Stock shall be
entitled to receive, when, as and if dividends are declared by the Board of
Directors of the Company out of funds of the Company legally available therefor,
cash dividends, accruing from the date of issuance (the "Convertible Preferred
Stock Issue Date") or the most recent Dividend Payment Date on which dividends
have been paid at the rate per annum of 4.75% of the Liquidation Preference per
share (equivalent to $2.375 per annum per share of Convertible Preferred
Stock,), payable quarterly in arrears on each May 15, August 15, November 15 and
February 15, commencing on August 15, 1998 (each a "Dividend Payment Date"). If
any such date is not a Business Day, such payment shall be made on the next
succeeding Business Day, to the holders of record as of the preceding May 1,
August 1, November 1 and February 1 (each, a "Record Date"). Dividends payable
on the Convertible Preferred Stock will be computed on the basis of a 360-day
year consisting of twelve 30-day months and will be deemed to accrue on a daily
basis.
(B) On each Dividend Payment Date all dividends which shall have accrued
on each share of Convertible Preferred Stock outstanding on such Dividend
Payment Date shall accumulate and be deemed to become "due" whether or not there
shall be funds legally available for payment thereof. Any dividend which shall
not be paid on the Dividend Payment Date on which it shall become due (whether
because of the absence of legally available funds for the payment thereof or
otherwise) shall be deemed to be "past due" until such dividend shall be paid or
until the share of Convertible Preferred Stock with respect to which such
dividend became due shall no longer be outstanding, whichever is the earlier to
occur. No interest, sum of money in lieu of interest, or other property or
securities shall be payable in respect of any dividend payment or payments which
are past due. Dividends paid on shares of Convertible Preferred Stock in an
amount less than the total amount of such dividends at the time accumulated and
payable on such shares shall be allocated pro rata on a share-by-share basis
among all such shares at the time outstanding.
(C) If dividends are not paid in full, or declared in full and sums set
aside for the payment thereof, upon the Convertible Preferred Stock and any
Parity Securities, subject to the prior rights of holders of any Senior Equity
Securities, all dividends declared upon shares of the Convertible Preferred
Stock and such Parity Securities will when, as and if declared, be declared pro
rata so that in all cases the amount of dividends declared and paid per share on
<PAGE>
3
the Convertible Preferred Stock and such Parity Securities will bear to each
other the same ratio that accumulated dividends per share on the shares of
Convertible Preferred Stock and such Parity Securities bear to each other.
Except as set forth above, unless full cumulative dividends on the Convertible
Preferred Stock have been paid, or declared and sums set aside for the payment
thereof, dividends (other than in Common Stock or other Junior Securities and
other than dividends or distributions on the Exchangeable Preferred Stock, so
long as such dividends or distributions accumulate on the Exchangeable Preferred
Stock and are not paid in cash) may not be paid, or declared and sums set aside
for payment thereof, and other distributions may not be made upon the Common
Stock or other Junior Securities; and no shares of Common Stock nor any other
Junior Securities may be redeemed, purchased or otherwise acquired for any
consideration by the Company (except by conversion into or exchange for other
Junior Securities and except for capital stock acquired by the Company in
connection with the payment of any amounts upon the exercise of the Company's
stock options).
(D) Dividends on the Convertible Preferred Stock shall accrue whether or
not the Company has earnings or profits, whether or not there are funds legally
available for the payment of such dividends and whether or not dividends are
declared. Dividends will accumulate to the extent they are not paid on the
Dividend Payment Date for the period to which they relate.
(E) Any reference to "distribution" contained in this Section 2 shall not
be deemed to include any distribution made in connection with any liquidation,
winding-up or dissolution of the Company.
3. Conversion.
(A) Subject to and upon compliance with the provisions of this Section 3,
each share of Convertible Preferred Stock shall, at the option of the holder
thereof, be convertible at any time (unless such share is called for redemption,
then to and including but not after the close of business on the date
immediately prior to the Redemption Date (as defined herein), unless the Company
shall default in payment due upon redemption thereof), into that number of fully
paid and non-assessable shares of Common Stock (calculated as to each conversion
to the nearest 1/100th of a share) obtained by dividing $50.00 by the Conversion
Price in effect at such time and by surrender of the certificate or certificates
representing such shares so to be converted in the manner provided in Section
3(B).
(B) To convert Convertible Preferred Stock, the holder of one or more
shares of Convertible Preferred Stock to be converted shall surrender the
certificate or certificates representing such shares at any of the offices or
agencies to be maintained for such purpose by the Company accompanied by the
funds, if any, required by the last paragraph of this Section 3(B) and shall
give written notice of conversion in the form provided on such shares of
Convertible Preferred Stock (or such other notice as is acceptable to the
Company) to the Company at such office or agency that the holder elects to
convert the shares of Convertible Preferred Stock specified in said notice. Such
notice shall also state the name or names, together with address or addresses,
in which the certificate or certificates for shares of
<PAGE>
4
Common Stock which shall be issuable in such conversion shall be issued. Each
certificate representing a share of Convertible Preferred Stock surrendered for
conversion shall, unless the shares issuable on conversion are to be issued in
the same name as the name in which such share is registered, be accompanied by
instruments of transfer, in form satisfactory to the Company, duly executed by
the holder or his duly authorized attorney and an amount sufficient to pay any
transfer or similar tax. As promptly as practicable after the surrender of
certificates representing such shares of Convertible Preferred Stock and the
receipt of such notice, instruments of transfer and funds, if any, as aforesaid,
the Company shall issue and shall deliver at such office or agency to such
holder, or as designated in such holder's written instructions, a certificate or
certificates for the number of full shares of Common Stock issuable upon the
conversion of such share of Convertible Preferred Stock in accordance with the
provisions of this Section 3 and a check or cash in respect of any fractional
interest in a share of Common Stock arising upon such conversion, as provided in
Section 3(C).
Each conversion shall be deemed to have been effected immediately prior to
the close of business on the date on which certificates representing such shares
of Convertible Preferred Stock shall have been surrendered and such notice (and
any applicable instruments of transfer and any required taxes) received by the
Company as aforesaid, and the person or persons in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder or holders of record
of the shares represented thereby at such time on such date, and such conversion
shall be at the Conversion Price in effect at such time on such date, unless the
stock transfer books of the Company shall be closed on that date, in which event
such person or persons shall be deemed to have become such holder or holders of
record at the close of business on the next succeeding day on which such stock
transfer books are open, but such conversion shall be at the Conversion Price in
effect on the date upon which certificates representing such shares of
Convertible Preferred Stock shall have been surrendered and such notice received
by the Company.
Holders of Convertible Preferred Stock at the close of business on a
Record Date will be entitled to receive an amount equal to the dividend payable
on such shares on the corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such Record Date and prior to such Dividend
Payment Date; provided, however, that Convertible Preferred Stock surrendered
for conversion during the period between the close of business on any Record
Date and the opening of business on the corresponding Dividend Payment Date
(except shares converted after the issuance of a notice of redemption with
respect to a Redemption Date during such period or coinciding with such Dividend
Payment Date, which will be entitled to such dividend) must be accompanied by
payment of an amount equal to the dividend payable on such shares on such
Dividend Payment Date. A holder of Convertible Preferred Stock on a Record Date
who (or whose transferee) tenders any such shares for conversion into shares of
Common Stock on such Dividend Payment Date will receive the dividend payable by
the Company on such shares of Convertible Preferred Stock on such date, and the
converting holder need not include payment of the amount of such dividend upon
surrender of Convertible Preferred Stock for conversion. Except as provided
herein, the Company will make no payment or allowance for unpaid dividends,
<PAGE>
5
whether or not in arrears, on converted shares or for dividends on the Common
Stock issued upon such conversion.
(C) No fractional shares or scrip representing fractions of shares of
Common Stock shall be issued upon conversion of Convertible Preferred Stock. If
more than one share of Convertible Preferred Stock shall be surrendered for
conversion at one time by the same holder, the number of full shares of Common
Stock issuable upon conversion thereof shall be computed on the basis of the
aggregate of $50.00 for each such share so surrendered. In lieu of any
fractional interest in a share of Common Stock which would otherwise be
deliverable upon the conversion of any share of Convertible Preferred Stock, the
Company shall pay to the holder of such shares an amount in cash (computed to
the nearest cent) equal to the closing price (as defined in Section 5 hereof) on
the Business Day next preceding the day of conversion multiplied by the
fractional interest that otherwise would have been deliverable upon conversion
of such share.
(D) The "Conversion Price" shall mean and be $52.68, subject to adjustment
from time to time by the Company as follows:
(i) In case the Company shall (a) pay a dividend or make a
distribution on its Common Stock, each in shares of Common Stock, (b)
subdivide its outstanding shares of Common Stock into a greater number of
shares, (c) combine its outstanding shares of Common Stock into a smaller
number of shares, or (d) issue by reclassification of its Common Stock any
shares of capital stock of the Company, then in each such case the
Conversion Price in effect immediately prior to such action shall be
adjusted so that the holder of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or other capital stock of the Company
which such holder would have owned or been entitled to receive immediately
following such action had such share been converted immediately prior to
the occurrence of such event. An adjustment made pursuant to this
subsection (i) shall become effective immediately after the record date,
in the case of a dividend or distribution, or immediately after the
effective date, in the case of a subdivision, combination or
reclassification. If, as a result of an adjustment made pursuant to this
subsection (i), the holder of any share of Convertible Preferred Stock
thereafter surrendered for conversion shall become entitled to receive
shares of two or more classes of capital stock or shares of Common Stock
and other capital stock of the Company, the Board of Directors (whose
determination shall be conclusive and shall be described in a statement
filed by the Company with the Transfer Agent) shall determine the
allocation of the adjusted Conversion Price between or among shares of
such classes of capital stock or shares of Common Stock and other capital
stock.
(ii) In case the Company shall issue rights or warrants to all
holders of its outstanding shares of Common Stock entitling them (for a
period expiring within 45 days after the record date mentioned below) to
subscribe for or purchase shares of Common Stock at a price per share less
than the current market price per share (as determined pursuant to
subsection (iv) of this Section 3(D)) of the Common Stock
<PAGE>
6
(other than pursuant to any stock option, restricted stock or other
incentive or benefit plan or stock ownership or purchase plan for the
benefit of employees, directors or officers or any dividend reinvestment
plan of the Company in effect at the time hereof or any other similar plan
adopted or implemented hereafter), then the Conversion Price in effect
immediately prior thereto shall be adjusted so that it shall equal the
price determined by multiplying the Conversion Price in effect immediately
prior to the record date by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding on the record date plus the
number of shares which the aggregate proceeds to the Company from the
exercise of such rights or warrants would purchase at such current market
price, and of which the denominator shall be the number of shares of
Common Stock outstanding on the record date plus the number of additional
shares of Common Stock offered for subscription or purchase. Such
adjustment shall be made successively whenever any rights or warrants are
issued, and shall become effective immediately after the record date for
the determination of stockholders entitled to receive such rights or
warrants; provided, however, in the event that all the shares of Common
Stock offered for subscription or purchase are not delivered upon the
exercise of such rights or warrants, upon the expiration of such rights or
warrants the Conversion Price shall be readjusted to the Conversion Price
which would have been in effect had the numerator and the denominator of
the foregoing fraction and the resulting adjustment been made based upon
the number of shares of Common Stock actually delivered upon the exercise
of such rights or warrants rather than upon the number of shares of Common
Stock offered for subscription or purchase. In determining whether any
rights or warrants entitle the holders to subscribe for or purchase shares
of Common Stock at less than such current market price, and in determining
the aggregate offering price of such shares of Common Stock, there shall
be taken into account any consideration received by the Company for such
rights or warrants, the value of such consideration, if other than cash,
to be determined by the Board of Directors (whose determination shall be
conclusive and shall be described in a statement filed by the Company with
the Transfer Agent).
(iii) In case the Company shall, by dividend or otherwise,
distribute to all holders of its outstanding Common Stock any capital
stock (other than Common Stock), evidences of its indebtedness or assets
or rights or warrants to subscribe for or purchase securities of the
Company (excluding those referred to in subsection (ii) of this Section
3(D) and dividends or distributions payable in stock for which adjustment
is made pursuant to subsection (i) of this Section 3(D) and dividends and
distributions or rights or warrants to subscribe for or purchase
securities of the Company paid in cash out of the retained earnings of the
Company and distributions upon mergers or consolidations to which Section
3(H) applies), then in each such case the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effective immediately prior to the record date of
such distribution by a fraction of which the numerator shall be the
current market price per share as determined pursuant to subsection (iv)
of this Section 3(D) of the Common Stock less the fair market value on
such record date (as determined by the Board of Directors, whose
determination shall be conclusive and shall be described in
<PAGE>
7
a statement filed by the Company with the Transfer Agent) of the portion
of the capital stock or assets or the evidences of indebtedness or assets
so distributed to the holder of one share of Common Stock or of such
subscription rights or warrants applicable to one share of Common Stock,
and of which the denominator shall be such current market price per share
of Common Stock. Such adjustment shall become effective immediately after
the record date for the determination of stockholders entitled to receive
such distribution.
The occurrence of a distribution or the occurrence of any other
event as a result of which holders of Convertible Preferred Stock shall
not be entitled to receive rights, including exchange rights (the
"Rights"), pursuant to any stockholders protective rights agreement (the
"Rights Agreement") that may be adopted by the Company as if such holders
had converted such shares into Common Stock immediately prior to the
occurrence of such distribution or event shall not be deemed a
distribution of securities for the purpose of any Conversion Price
adjustment pursuant to this subparagraph (iii) or otherwise give rise to
any Conversion Price adjustment pursuant to this Section 3; provided,
however, that in lieu of any adjustment to the Conversion Price as a
result of any such a distribution or occurrence, the Company shall make
provision so that Rights, to the extent issuable at the time of conversion
of any shares of Convertible Preferred Stock into shares of Common Stock,
shall issue and attach to such shares of Common Stock then issued upon
conversion in the amount and manner and to the extent and as provided in
the Rights Agreement in respect of issuances at the time of Common Stock
other than upon conversion.
(iv) For the purpose of any computation under subsections (ii)
and (iii) of this Section 3(D), the current market price per share of
Common Stock on any date shall be deemed to be the average of the closing
price (as defined in Section 5) for the shorter of (a) 20 consecutive
trading days (as defined in Section 5) ending on the last full trading day
prior to the Time of Determination or (b) the period commencing on the
date next succeeding the first public announcement of the issuance of such
rights or warrants or such distribution through such last full trading day
prior to the Time of Determination. For purposes of the foregoing, the
term "Time of Determination" shall mean the time and date of the earlier
of (I) the record date for determining stockholders entitled to receive
the rights, warrants or distributions referred to in Section 3(D)(ii) and
(iii) or (II) the commencement of "ex-dividend" trading on the exchange or
market referred to in the definition of "closing price."
(v) In any case in which this Section 3(D) shall require that
an adjustment be made immediately following a record date or an effective
date the Company may elect to defer (but only until the filing by the
Company with the Transfer Agent of the certificate required by subsection
(vii) of this Section 3(D)) issuing to the holder of any share of
Convertible Preferred Stock converted after such record date or effective
date the shares of Common Stock issuable upon such conversion over and
above the shares of Common Stock issuable upon such conversion on the
basis of the Conversion Price prior to adjustment, and paying to such
holder any amount of cash in lieu of a fractional share.
<PAGE>
8
(vi) No adjustment in the Conversion Price shall be required
to be made unless such adjustment would require an increase or decrease of
at least one percent of such price; provided, however, that any adjustment
which by reason of this subsection (vi) are not required to be made shall
be carried forward and taken into account in any subsequent adjustment.
All calculations under this Section 3(D) shall be made to the nearest cent
or to the nearest 1/100th of a share, as the case may be. Anything in this
Section 3(D) to the contrary notwithstanding, the Company shall be
entitled to make such reduction in the Conversion Price, in addition to
those required by this Section 3(D), as it in its discretion shall
determine to be advisable in order that any stock dividend, subdivision of
shares, distribution of rights to purchase stock or securities, or
distribution of securities convertible into or exchangeable for stock
hereafter made by the Company to its stockholders shall not be taxable to
the recipients. Except as set forth in subsections (i), (ii) and (iii)
above, the Conversion Price shall not be adjusted for the issuance of
Common Stock, or any securities convertible into or exchangeable for
Common Stock or carrying the right to purchase any of the foregoing, in
exchange for cash, property or services.
(vii) Whenever the Conversion Price is adjusted as herein
provided, (A) the Company shall promptly file with the Transfer Agent a
certificate setting forth the Conversion Price after such adjustment and a
brief statement of the facts requiring such adjustment and the manner of
computing the same, which certificate shall be conclusive evidence of the
correctness of such adjustment, and (B) the Company shall also mail or
cause to be mailed by first class mail, postage prepaid, as soon as
practicable to each holder of record of shares of Convertible Preferred
Stock a notice stating that the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price. The Transfer Agent shall not
be under any duty or responsibility with respect to the certificate
required by this subsection (vii) except to exhibit the same to any holder
of shares of Convertible Preferred Stock who requests to inspect it.
(viii) In the event that at any time, as a result of an
adjustment made pursuant to subsection (i) of this Section 3(D), the
holder of any share of Convertible Preferred Stock thereafter surrendered
for conversion shall become entitled to receive any shares of the Company
other than shares of Common Stock, thereafter the Conversion Price of such
other shares so receivable upon conversion of any share of Convertible
Preferred Stock shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions
with respect to Common Stock contained in this Section.
(ix) The Company from time to time may decrease the Conversion
Price by any amount for any period of time if the period is at least 20
days and if the decrease is irrevocable during the period. Whenever the
Conversion Price is so decreased, the Company shall mail to holders of
record of shares of Convertible Preferred Stock a notice of the decrease
at least 15 days before the date the decreased Conversion Price takes
effect, and such notice shall state the decreased Conversion Price and the
period it will be in effect.
<PAGE>
9
(E) In Case:
(i) the Company shall take any action which would require an
adjustment in the Conversion Price pursuant to Section 3(D); or
(ii) the Company shall authorize the granting to the holders
of its Common Stock generally of rights or warrants to subscribe for or
purchase any shares of stock of any class or of any other rights (other
than Rights to which the second paragraph of subparagraph (D)(iii) of this
Section 3 applies); or
(iii) there shall be any reorganization or reclassification of
the Common Stock (other than an event to which subparagraph (D)(i) of this
Section 3 applies) or any merger or consolidation to which the Company is
a party or any sale or transfer of all or substantially all of the
property and assets of the Company, in each case for which approval of any
stockholders of the Company is required; or
(iv) there shall be a voluntary or involuntary dissolution,
liquidation or winding-up of the Company;
then in each such case the Company shall cause to be given to the holders of
shares of Convertible Preferred Stock and the Transfer Agent as promptly as
possible, but in any event at least 15 days prior to the applicable date
hereinafter specified, a notice stating (i) the date on which a record is to be
taken for the purpose of such action or granting of rights or warrants, or, if a
record is not to be taken, the date as of which the holders of Common Stock of
record to be entitled to such distribution, rights or warrants are to be
determined, or (ii) the date on which such reorganization, reclassification,
merger, consolidation, sale, transfer, dissolution, liquidation or winding-up is
expected to become effective or occur, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reorganization, reclassification, merger, consolidation, sale, transfer,
dissolution, liquidation or winding-up. Failure to give such notice or any
defect therein shall not affect the legality or validity or the proceedings
described in subsection (i), (ii), (iii) or (iv) of this Section 3(E).
(F) The Company covenants that it will at all times reserve and keep
available, free from preemptive rights, out of the aggregate of its authorized
but unissued shares of Common Stock or its issued shares of Common Stock held in
its treasury, or both, for the purpose of effecting conversions of shares of
Convertible Preferred Stock, the full number of shares of Common Stock
deliverable upon the conversion of all outstanding shares of Convertible
Preferred Stock not theretofore converted and on or before (and as a condition
of) taking any action that would cause an adjustment of the Conversion Price
resulting in an increase in the number of shares of Common Stock deliverable
upon conversion above the number thereof previously reserved and available
therefor, the Company shall take all such action so required. For purposes of
this Section 3(F), the number of shares of Common Stock which shall be
deliverable upon the conversion of all outstanding shares of Convertible
Preferred Stock shall
<PAGE>
10
be computed as if at the time of computation all outstanding shares of
Convertible Preferred Stock were held by a single holder.
Before taking any action which would cause an adjustment reducing the
Conversion Price below the then par value (if any) of the shares of Common Stock
deliverable upon conversion of the shares of Convertible Preferred Stock, the
Company shall take any corporate action which may, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and non-assessable shares of Common Stock at such adjusted Conversion
Price.
(G) The Company shall pay any and all documentary stamp, issue or transfer
taxes, and any other similar taxes payable in respect of the issue or delivery
of shares of Common Stock upon conversion of shares of Convertible Preferred
Stock pursuant hereto; provided, however, that the Company shall not be required
to pay any tax which may be payable in respect of any transfer involved in the
issue or delivery of shares of Common Stock in a name other than that of the
holder of the shares of Convertible Preferred Stock to be converted and no such
issue or delivery shall be made unless and until the person requesting such
issue or delivery has paid to the Company the amount of any such tax or has
established, to the satisfaction of the Company, that such tax has been paid.
(H) Notwithstanding any other provision herein to the contrary, in case of
any merger or consolidation to which the Company is a party (other than a merger
or consolidation in which the Company is the continuing entity and in which the
Common Stock outstanding immediately prior to the merger or consolidation is not
exchanged for cash, or the securities or other property of another entity), or
in the case of any sale or transferof all or substantially all of the Company's
property and assets to another entity, there will be no adjustment of the
Conversion Price, and lawful provision shall be made by the entity formed by
such consolidation or the entity whose securities, cash or other property will
immediately after the merger or consolidation be owned, by virtue of the merger
or consolidation, by the holders of Common Stock immediately prior to the merger
or consolidation, or the entity which shall have acquired such assets of the
Company, such that each share of Convertible Preferred Stock then outstanding
will, without the consent of the holder thereof become convertible into the kind
and amount of securities, cash or other property receivable upon such merger,
consolidation, sale or transfer by a holder of the number of shares of Common
Stock into which such share of Convertible Preferred Stock was convertible
immediately prior to such merger, consolidation, sale or transfer assuming such
holder of Common Stock did not exercise his rights of election, if any, as to
the kind or amount of securities, cash or other property receivable upon such
merger, consolidation, sale or transfer. In the case of a cash merger of the
Company into another entity or any other cash transaction of the type mentioned
in this Section 3(H), each share of Convertible Preferred Stock will thereafter
be convertible at the Conversion Price in effect at such time into the same
amount of cash per share into which each share of Convertible Preferred Stock
would have been convertible had such share been converted into Common Stock
immediately prior to the effective date of such cash merger or transaction.
<PAGE>
11
The above provisions of this Section 3(H) shall similarly apply to
successive mergers, consolidations, sales or transfers.
(I) The Company covenants that all shares of Common Stock which may be
delivered upon conversion of shares of Convertible Preferred Stock will upon
delivery be duly and validly issued and fully paid and non-assessable.
The Company covenants that if any shares of Common Stock to be provided
for the purpose of conversion of shares of Convertible Preferred Stock hereunder
require registration with or approval of any governmental authority under any
Federal or State law before such shares may be validly issued upon conversion,
the Company will in good faith and as expeditiously as possible endeavor to
secure such registration or approval, as the case may be.
The Company further covenants that so long as the Common Stock shall be
listed on the New York Stock Exchange or any other national securities exchange
or the Nasdaq National Market, the Company will, if permitted by the rules of
such exchange or market, list and keep listed so long as the Common Stock shall
be so listed on such exchange or market, all Common Stock issuable upon
conversion of the shares of Convertible Preferred Stock.
4. Liquidation Rights. Upon any voluntary or involuntary liquidation,
dissolution or winding-up of the Company, each holder of shares of the
Convertible Preferred Stock will be entitled to payment out of the assets of the
Company available for distribution of an amount equal to the Liquidation
Preference per share of Convertible Preferred Stock held by such holder, plus an
amount equal to accrued and unpaid dividends, if any, to the date fixed for
liquidation, dissolution or winding-up before any distribution is made on any
Junior Securities, including, without limitation, the Common Stock. After
payment in full of the Liquidation Preference and an amount equal to all accrued
and unpaid dividends, if any, to which holders of Convertible Preferred Stock
are entitled, such holders will not be entitled to any further participation in
any distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to the Convertible Preferred Stock and all other Parity Securities are
not paid in full, the holders of the Convertible Preferred Stock and the Parity
Securities will share equally and ratably in any distribution of assets of the
Company in proportion to the full liquidation preference and accumulated and
unpaid dividends, if any, to which each is entitled. However, the voluntary
sale, conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company, or the consolidation or merger of the Company with or into one or
more Persons will not be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Company, unless such sale, conveyance, exchange
or transfer shall be in connection with a liquidation, dissolution or winding-up
of the business of the Company.
The holder of any shares of Convertible Preferred Stock shall not be
entitled to receive any payment owed for such shares under this Section 4 until
such holder shall cause to be delivered to the Company (i) the certificate(s)
representing such shares of Convertible Preferred Stock and (ii) transfer
instrument(s) satisfactory to the Company and sufficient to transfer such shares
of Convertible Preferred Stock to the Company free of any adverse
<PAGE>
12
interest. As in the case of the Redemption Price referred to below, no interest
shall accrue on any payment upon liquidation after the date thereof.
5. Optional Redemption.
(A) The Company may not redeem the Convertible Preferred Stock prior to
May 15, 2001. Subject to the requirement of legally available funds therefor,
the Convertible Preferred Stock may be redeemed for shares of Common Stock, in
whole or from time to time in part, at the option of the Company on or after May
15, 2001, on any date set by the Board of Directors, at the redemption prices
specified below, if redeemed during the 12-month period commencing May 15 of
the year set forth below:
Year Price Per Share
---- ---------------
2001............................ $51.6625
2002............................ $51.4250
2003............................ $51.1875
2004............................ $50.9500
2005............................ $50.7125
2006............................ $50.4750
2007............................ $50.2375
and thereafter at $50.00 per share plus, in each case, an amount equal to all
dividends on the Convertible Preferred Stock accrued and unpaid thereon, whether
or not declared or due, to the date fixed for redemption, such sum being
hereinafter referred to as the "Redemption Price" (subject to the right of the
holder of record of shares of Convertible Preferred Stock on a Record Date to
receive the dividend due on such shares of Convertible Preferred Stock on the
corresponding Dividend Payment Date). At no time shall the Convertible Preferred
Stock be redeemable for cash.
(B) The Company shall issue in payment of the Redemption Price for each
share of Convertible Preferred Stock to be redeemed such number of shares of
Common Stock as equals (x) the then-current Redemption Price of the Convertible
Preferred Stock, divided by (y) the market price (the "Market Price") of the
Common Stock. The Market Price shall be equal to the lower of (i) the average of
the daily closing prices of the Common Stock for the 20 consecutive trading days
immediately preceding the first Business Day immediately preceding the date of
the applicable redemption notice, or (ii) the closing price of the Common Stock
on the trading day immediately preceding the first Business Day immediately
preceding the date of the applicable redemption notice. The "closing price" for
each day shall be the last reported sale price regular way of the Common Stock
on the New York Stock Exchange or, if the Common Stock is not listed on The New
York Stock Exchange, the
<PAGE>
13
average of the closing sale prices on such day of the Common Stock on all
domestic exchanges on which the shares of Common Stock may at the time be
listed, or if there have been no sales on any such exchange on such day, the
average of the highest bid and lowest asked prices of the Common Stock on all
such exchanges or, if on such day such shares of Common Stock shall not be so
listed, the average of the comparative bid and asked prices quoted for the
Common Stock in the National Association of Securities Dealers, Inc. Automated
Quotation ("NASDAQ") System as of 4:00 P.M., New York City time on such day, or
if such shares shall not be quoted in the NASDAQ System, the average of the high
and low bid and asked price of the Common Stock on such day in the domestic
over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any other successor organization. If at any time such shares of
Common Stock are not listed on any domestic exchange or quoted in the NASDAQ
System or the domestic over-the-counter market, the Market Price shall be the
fair market value thereof determined by the Board of Directors of the Company in
good faith. For the purposes of this Section 5, "trading day" shall mean a day
on which the securities exchange specified for purposes of this Section 5 shall
be open for business or, if the shares of Common Stock shall not be listed on
such exchange for such period, a day with respect to which quotations of the
character referred to in the next preceding sentence shall be reported. In lieu
of any fractional share of Common Stock which would otherwise be issued upon any
redemption of Convertible Preferred Stock, the Company shall pay a cash
adjustment in respect of such fractional interest in an amount in cash (computed
to the nearest cent) equal to the Market Price multiplied by the fractional
interest to the nearest 1/100th of a percent that otherwise would have been
deliverable upon such redemption of such Convertible Preferred Stock.
(C) In case of the redemption of less than all of the then outstanding
Convertible Preferred Stock, the shares of Convertible Preferred Stock to be
redeemed shall be redeemed pro rata or by lot or in such other manner as the
Board of Directors may determine. Notwithstanding the foregoing, the Company
shall not redeem less than all of the Convertible Preferred Stock at any time
outstanding until all dividends accrued and in arrears upon all Convertible
Preferred Stock then outstanding shall have been paid for the current and all
past dividend periods.
(D) Not more than 60 nor less than 30 days prior to the date specified
therein for redemption (the "Redemption Date"), notice by first class mail,
postage prepaid, shall be given to each holder of record of the Convertible
Preferred Stock to be redeemed, at such holder's address as it shall appear upon
the stock transfer books of the Company. Each such notice of redemption shall
specify the date fixed for redemption, the Redemption Price, the place or places
of payment, that delivery of shares of Common Stock will be made upon
presentation and surrender of the certificate(s) evidencing the shares of
Convertible Preferred Stock to be redeemed, that on and after the redemption
date, dividends will cease to accrue on such shares, the then effective
Conversion Price pursuant to Section 3 and that the right of holders to convert
shall terminate at the close of business on the date immediately prior to the
redemption date (unless the Company defaults in the payment of the Redemption
Price).
(E) Any notice that is mailed as herein provided shall be conclusively
presumed to have been duly given, whether or not the holder of the Convertible
Preferred Stock receives
<PAGE>
14
such notice; and failure to give such notice by mail, or any defect in such
notice, to the holders of any shares designated for redemption shall not affect
the validity of the proceedings for the redemption of any other shares of
Convertible Preferred Stock. On or after the date fixed for redemption as stated
in such notice, each holder of the shares called for redemption shall surrender
the certificate evidencing such shares to the Company at the place designated in
such notice and shall thereupon be entitled to receive delivery of shares of
Common Stock as herein provided. If less than all the shares represented by any
such surrendered certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares. If, on the date fixed for redemption, shares
of Common Stock and funds necessary for the redemption shall be available
therefor and shall have been irrecoverably deposited or set aside, then,
notwithstanding that the certificates evidencing any shares so called for
redemption shall not have been surrendered the dividends with respect to the
shares so called shall cease to accrue after the date fixed for redemption, the
shares shall no longer be deemed outstanding, the holders thereof shall cease to
be holders of Convertible Preferred Stock, and all rights whatsoever with
respect to the shares so called for redemption (except the right of the holders
to receive delivery of shares of Common Stock as herein provided without
interest or adjustment upon surrender of their certificates representing shares
of Convertible Preferred Stock) shall terminate. At the close of business on the
redemption date, each holder of Convertible Preferred Stock so redeemed (unless
the Company defaults on its obligations to deliver shares of Common Stock or
cash) shall be, without any further action, deemed a holder of the number of
shares of Common Stock for which such Convertible Preferred Stock is redeemable.
(F) The shares of Convertible Preferred Stock shall not be subject to the
operation of any purchase, retirement, mandatory redemption or sinking fund.
(G) The holder of any shares of Convertible Preferred Stock redeemed upon
any exercise of the Company's redemption right shall not be entitled to receive
shares of Common Stock for such shares until such holder shall cause to be
delivered to the place specified in the notice given with respect to such
redemption (i) the certificate(s) representing such shares of Convertible
Preferred Stock redeemed and (ii) transfer instrument(s) satisfactory to the
Company and sufficient to transfer such shares of Convertible Preferred Stock to
the Company free of any adverse interest.
(H) All shares of Common Stock which may be delivered upon redemption of
the Convertible Preferred Stock will upon delivery be duly and validly issued
and fully paid and non-assessable, and prior to giving any notice of redemption
the Company shall take any corporate action necessary therefor.
(I) In the event that any shares of Convertible Preferred Stock shall be
converted into Common Stock prior to any Redemption Date pursuant to Section 3,
then (i) the Company shall not have the right to redeem such shares and (ii)
shares of Common Stock and any funds which shall have been deposited for the
payment of the Redemption Price for such shares of Convertible Preferred Stock
shall be returned to the Company immediately after such conversion (subject to
declared dividends payable pursuant to Section 3(B) hereof).
<PAGE>
15
6. Voting Rights
(A) The holders of record of shares of the Convertible Preferred Stock
shall have no voting rights, except as required by law and as hereinafter
provided in this Section 6. In exercising any such voting rights, each
outstanding share of Convertible Preferred Stock will be entitled to one vote,
excluding shares of its own capital stock belonging to the Company or to another
corporation, if a majority of the shares entitled to vote in the election of
directors of such other corporation is held, directly or indirectly, by the
Company, which shares will have no voting rights.
(B) Whenever dividends on the Convertible Preferred Stock shall be in
arrears in an amount equal to at least six quarterly dividends (whether or not
consecutive), (i) the number of members of the Board of Directors of the Company
shall be increased by two, effective as of the time of election of such
directors as hereinafter provided, and (ii) the holders of the Convertible
Preferred Stock (voting separately as a class with all other affected classes or
series of the Parity Securities upon which like voting rights have been
conferred and are exercisable) will have the exclusive right to vote for and
elect such two additional directors of the Company at any meeting of
stockholders of the Company at which directors are to be elected held during the
period such dividends remain in arrears. The right of the holders of the
Convertible Preferred Stock to vote for such two additional directors shall
terminate when all accrued and unpaid dividends on the Convertible Preferred
Stock have been declared and paid or set aside for payment. The term of office
of all directors so elected shall terminate immediately upon the termination of
the right of the holders of the Convertible Preferred Stock and such Parity
Securities to vote for such two additional directors.
The foregoing right of the holders of the Convertible Preferred Stock with
respect to the election of two directors may be exercised at any annual meeting
of stockholders or at any special meeting of stockholders held for the purpose
of electing directors. If the right to elect directors shall have accrued to the
holders of the Convertible Preferred Stock more than 90 days preceding the date
established for the next annual meeting of stockholders, the Board of Directors
of the Company shall, within 20 days after the delivery to the Company at its
principal office of a written request for a special meeting signed by the
holders of at least twenty-five percent (25%) of the Convertible Preferred Stock
then outstanding, call a special meeting of the holders of the Convertible
Preferred Stock to be held within 60 days after the delivery of such request for
the purpose of electing such additional directors.
The holders of the Convertible Preferred Stock and any Parity Securities
referred to above voting as a class shall have the right to remove without cause
at any time and replace any directors such holders have elected pursuant to this
Section 6, and such directors shall not be removed without cause except by such
holders.
(C) So long as the Convertible Preferred Stock is outstanding, the Company
shall not, without the affirmative vote of the holders of at least 66 2/3
percent of all outstanding Convertible Preferred Stock (unless the vote of a
greater percentage is required by applicable
<PAGE>
16
law or the Certificate of Incorporation), voting separately as a class, (i)
amend, alter or repeal (by merger, consolidation or otherwise) any provision of
the Certificate of Incorporation or the By-laws of the Company, as amended, so
as to affect materially and adversely the relative rights, preferences,
qualifications, limitations or restrictions of the Convertible Preferred Stock
or (ii) authorize, or increase the authorized amount of, any additional class or
series of Senior Equity Securities, or any security convertible into stock of
such class or series of Senior Equity Securities. Except as otherwise set forth
herein or in the Certificate of Incorporation or as otherwise required by law,
(i) the creation, authorization or issuance of any shares or series of preferred
stock or (ii) the increase or decrease in the amount of authorized capital stock
of any class or series, including any preferred stock, shall not require the
consent of the holders of Convertible Preferred Stock and shall not be deemed to
affect adversely the rights, preferences, privileges or voting rights of the
Convertible Preferred Stock.
The foregoing voting provisions will not apply if, at or prior to the time
when the act with respect to which such vote would otherwise be required shall
be effected, all outstanding shares of Convertible Preferred Stock shall have
been redeemed or called for redemption upon proper notice and sufficient shares
of Common Stock shall have been reserved by the Company to effect such
redemption.
7. Exclusion of Other Rights. Except as may otherwise be required by law,
the shares of Convertible Preferred Stock shall not have any voting powers,
preferences and relative, participating, optional or other special rights, other
than those specifically set forth in this Certificate of Designation or the
Certificate of Incorporation. The shares of Convertible Preferred Stock shall
have no preemptive or subscription rights.
8. Headings of Subdivisions. The headings of the various subdivisions
hereof are for convenience of reference only and shall not affect the
interpretation of any of the provisions hereof.
9. Severability of Provisions. If any of the voting powers, preferences
and relative, participating, optional and other special rights of the
Convertible Preferred Stock and qualifications, limitations and restrictions
thereof set forth herein is invalid, unlawful or incapable of being enforced by
reason of any rule of law or public policy, all other voting powers, preferences
and relative, participating, optional and other special rights of Convertible
Preferred Stock and qualifications, limitations and restrictions thereof set
forth herein which can be given effect without the invalid, unlawful or
unenforceable voting powers, preferences and relative, participating, optional
and other special rights of Convertible Preferred Stock and qualifications,
limitations and restrictions thereof shall, nevertheless, remain in full force
and effect, and no voting powers, preferences and relative, participating,
optional or other special rights of Convertible Preferred Stock and
qualifications, limitations and restrictions thereof herein set forth shall be
deemed dependent upon any other such voting powers, preferences and relative,
participating, optional or other special rights of Convertible Preferred Stock
and qualifications, limitations and restrictions thereof unless so expressed
herein.
<PAGE>
17
10. Reissuance of Convertible Preferred Stock. Shares of Convertible
Preferred Stock that have been issued and reacquired in any manner, including
shares purchased or redeemed or exchanged or converted, shall (upon compliance
with any applicable provisions of the laws of Delaware) have the status of
authorized but unissued shares of preferred stock of the Company undesignated as
to series and may be designated or redesignated and issued or reissued, as the
case may be, as part of any series of preferred stock of the Company, provided
that any issuance of such shares as Convertible Preferred Stock must be in
compliance with the terms hereof.
11. Mutilated or Missing Convertible Preferred Stock Certificates. If any
of the Convertible Preferred Stock certificates shall be mutilated, lost, stolen
or destroyed, the Company shall issue, in exchange and in substitution for and
upon cancellation of the mutilated Convertible Preferred Stock certificate, or
in lieu of and substitution for the Convertible Preferred Stock certificate
lost, stolen or destroyed, a new Convertible Preferred Stock certificate of like
tenor and representing an equivalent amount of shares of Convertible Preferred
Stock, but only upon receipt of evidence of such loss, theft or destruction of
such Convertible Preferred Stock certificate and indemnity, if requested,
satisfactory to the Company and the Transfer Agent.
12. Certain Definitions. As used in this Certificate of Designation, the
following terms shall have the following meanings (with terms defined in the
singular having comparable meanings when used in the plural and vice versa),
unless the context otherwise requires:
"Business Day" means any day except a Saturday, a Sunday, or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"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.
"Transfer Agent" shall be the First Chicago Trust Company of New York
unless and until a successor is selected by the Company.
<PAGE>
18
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by Lee A. Wesselmann, Senior Vice President and Chief Financial Officer
of the Company, this 15th day of May, 1998.
OWENS-ILLINOIS, INC.
By: /s/ Lee A. Wesselmann
----------------------------------
Name: Lee A. Wesselmann
Title: Senior Vice President and Chief
Financial Officer
