<PAGE> 1
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
JOINT QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996
<TABLE>
<S> <C>
COMMISSION FILE NUMBER 0-21314 COMMISSION FILE NUMBER 33-43734
U.S. CAN CORPORATION UNITED STATES CAN COMPANY
(Exact name of registrant (Exact name of registrant
as specified in its charter) as specified in its charter)
06-1094196 06-1145011
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
DELAWARE DELAWARE
(State or Other Jurisdiction of (State or Other Jurisdiction of
Incorporation or Organization) Incorporation or Organization)
900 COMMERCE DRIVE 900 COMMERCE DRIVE
OAK BROOK, ILLINOIS 60521 OAK BROOK, ILLINOIS 60521
(Address of Principal Executive (Address of Principal Executive
Offices, Including Zip Code) Offices, Including Zip Code)
(630) 571-2500 (630) 571-2500
(Registrant's Telephone Number, (Registrant's Telephone Number,
Including Area Code) Including Area Code)
</TABLE>
Indicate by check mark whether the registrants (1) have filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") during the preceding 12 months (or for such shorter
period that the registrants were required to file such reports), and (2) have
been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
(Explanatory Note: United States Can Company (a wholly owned subsidiary of U.S.
Can Corporation) is not required by Section 13 or 15(d) of the Exchange Act to
file such reports, but has agreed, pursuant to the Indenture under which its
13 1/2% Senior Subordinated Notes Due 2002 were issued, to file all reports
required by Section 13 or 15(d) whether or not required by law.)
As of October 31, 1996, 12,926,696 shares of U.S. Can Corporation's common stock
were outstanding. As of October 31, 1996, 1,000 shares of United States Can
Company's common stock were outstanding.
- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
<PAGE> 2
U.S. CAN CORPORATION
UNITED STATES CAN COMPANY
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
U.S. Can Corporation Condensed Consolidated Balance Sheets September 29, 1996
and December 31, 1995........................................................ 3
United States Can Company Condensed Consolidated Balance Sheets September 29,
1996 and December 31, 1995................................................... 4
U.S. Can Corporation Condensed Consolidated Statements of Operations
Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 5
United States Can Company Condensed Consolidated Statements of Operations
Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 6
U.S. Can Corporation Condensed Consolidated Statements of Cash Flows
Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 7
United States Can Company Condensed Consolidated Statements of Cash Flows
Quarterly Periods Ended September 29, 1996 and October 1, 1995............... 8
Notes to Condensed Consolidated Financial Statements......................... 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations........................................................ 16
PART II OTHER INFORMATION
Item 1. Legal Proceedings............................................................ 20
Item 6. Exhibits and Reports on Form 8-K............................................. 20
</TABLE>
2
<PAGE> 3
U.S. CAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000'S OMITTED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 29, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents........................................... $ 3,940 $ 136
Accounts receivable, less allowances of $9,305 and $5,451 in 1996
and 1995, respectively............................................ 103,083 51,279
Inventories......................................................... 113,735 78,252
Prepaid expenses and other current assets........................... 10,794 10,786
Prepaid income taxes................................................ 4,274 6,732
--------- ---------
Total current assets.............................................. $ 235,826 $ 147,185
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land................................................................ 4,428 2,576
Buildings........................................................... 51,183 44,954
Machinery, equipment and construction in process.................... 394,475 306,319
--------- ---------
$ 450,086 $ 353,849
Less -- Accumulated depreciation and amortization................... (145,081) (123,748)
--------- ---------
Total property, plant and equipment............................... $ 305,005 $ 230,101
--------- ---------
MACHINERY REPAIR PARTS................................................ $ 5,888 $ 5,395
INTANGIBLES........................................................... 65,994 62,301
OTHER ASSETS.......................................................... 11,443 10,454
--------- ---------
Total assets...................................................... $ 624,156 $ 455,436
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt................................ $ 17,946 $ 17,216
Cash overdrafts..................................................... 10,142 5,395
Accounts payable.................................................... 56,433 32,560
Accrued payrolls and benefits....................................... 27,100 19,282
Accrued insurance................................................... 5,892 5,830
Other current liabilities........................................... 27,321 17,954
--------- ---------
Total current liabilities......................................... $ 144,834 $ 98,237
--------- ---------
SENIOR DEBT........................................................... $ 232,206 $ 127,360
SUBORDINATED DEBT..................................................... 100,000 100,000
--------- ---------
Total long-term debt.............................................. $ 332,206 $ 227,360
--------- ---------
OTHER LONG-TERM LIABILITIES:
Postretirement benefits............................................. $ 25,350 $ 25,080
Deferred income taxes............................................... 21,358 19,962
Other long-term liabilities......................................... 3,536 2,970
--------- ---------
Total other long-term liabilities................................. $ 50,244 $ 48,012
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value; 10,000,000 shares authorized, none
issued or outstanding............................................. $ -- $ --
Common stock, $.01 par value; 50,000,000 shares authorized
12,933,636 and 12,902,111 shares issued in 1996 and 1995,
respectively...................................................... 129 129
Paid-in capital..................................................... 104,557 103,913
Unearned restricted stock........................................... (1,735) (2,052)
Treasury common stock, at cost; 18,591 and 37,908 shares in 1996 and
1995, respectively................................................ (223) (319)
Retained deficit.................................................... (5,856) (19,844)
--------- ---------
Total stockholders' equity........................................ $ 96,872 $ 81,827
--------- ---------
Total liabilities and stockholders' equity..................... $ 624,156 $ 455,436
========= =========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these balance sheets.
3
<PAGE> 4
UNITED STATES CAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(000'S OMITTED, EXCEPT SHARE DATA)
<TABLE>
<CAPTION>
SEPTEMBER 29, DECEMBER 31,
ASSETS 1996 1995
- - -------------------------------------------------------------------- ------------- ------------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents......................................... $ 3,940 $ 136
Accounts receivable, less allowances of $9,305 and $5,451 in 1996
and 1995, respectively......................................... 103,083 51,279
Inventories....................................................... 113,735 78,252
Prepaid expenses and other current assets......................... 10,794 10,125
Prepaid income taxes.............................................. 2,977 6,096
--------- ---------
Total current assets......................................... $ 234,529 $ 145,888
--------- ---------
PROPERTY, PLANT AND EQUIPMENT:
Land.............................................................. 4,428 2,576
Buildings......................................................... 51,183 44,954
Machinery, equipment and construction in process.................. 394,475 306,319
--------- ---------
$ 450,086 $ 353,849
Less -- Accumulated depreciation and amortization................. (145,081) (123,748)
--------- ---------
Total property, plant and equipment.......................... $ 305,005 $ 230,101
--------- ---------
MACHINERY REPAIR PARTS.............................................. $ 5,888 $ 5,395
LONG-TERM RECEIVABLE FROM PARENT.................................... 622 1,472
INTANGIBLES......................................................... 65,994 62,301
OTHER ASSETS........................................................ 11,443 10,454
--------- ---------
Total assets................................................. $ 623,481 $ 455,611
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - --------------------------------------------------------------------
CURRENT LIABILITIES:
Current maturities of long-term debt.............................. $ 17,946 $ 17,216
Cash overdrafts................................................... 10,142 5,395
Accounts payable.................................................. 56,433 32,560
Payable to Parent................................................. 1,265 1,057
Accrued payrolls and benefits..................................... 27,100 19,282
Accrued insurance................................................. 5,892 5,830
Other current liabilities......................................... 27,321 17,954
--------- ---------
Total current liabilities.................................... $ 146,099 $ 99,294
--------- ---------
SENIOR DEBT......................................................... $ 232,206 $ 127,360
SUBORDINATED DEBT................................................... 100,000 100,000
--------- ---------
Total long-term debt......................................... $ 332,206 $ 227,360
--------- ---------
OTHER LONG-TERM LIABILITIES:
Postretirement benefits........................................... $ 25,350 $ 25,080
Deferred income taxes............................................. 22,097 20,701
Other long-term liabilities....................................... 3,536 2,970
--------- ---------
Total other long-term liabilities............................ $ 50,983 $ 48,751
--------- ---------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, 1,000 shares authorized and outstanding............. $ 1 $ 1
Paid-in capital................................................... 94,300 94,300
Retained deficit.................................................. (108) (14,095)
--------- ---------
Total stockholder's equity................................... $ 94,193 $ 80,206
--------- ---------
Total liabilities and stockholder's equity................ $ 623,481 $ 455,611
========= =========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these balance sheets.
4
<PAGE> 5
U.S. CAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000'S OMITTED, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
QUARTERLY PERIOD ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
SEPTEMBER 29, OCTOBER 1, SEPTEMBER 29, OCTOBER 1,
1996 1995 1996 1995
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
NET SALES....................................... $ 194,109 $ 154,345 $ 538,316 $ 474,387
COST OF SALES................................... 171,150 142,103 470,745 419,072
-------- -------- -------- --------
Gross income.................................. $ 22,959 $ 12,242 $ 67,571 $ 55,315
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.... 7,173 6,898 21,103 20,590
-------- -------- -------- --------
Operating income.............................. $ 15,786 $ 5,344 $ 46,468 $ 34,725
INTEREST EXPENSE ON BORROWINGS.................. 6,993 6,241 19,513 18,388
AMORTIZATION OF DEFERRED FINANCING COSTS........ 330 396 1,132 1,135
CONSOLIDATION EXPENSE........................... -- 81 -- 245
OTHER EXPENSE................................... 480 499 1,483 1,216
-------- -------- -------- --------
Income (loss) before income taxes............. $ 7,983 $ (1,873) $ 24,340 $ 13,741
PROVISION (BENEFIT) FOR INCOME TAXES............ 3,402 (593) 10,352 5,939
-------- -------- -------- --------
NET INCOME (LOSS)............................... $ 4,581 $ (1,280) $ 13,988 $ 7,802
======== ======== ======== ========
PER SHARE DATA:
Net income (loss)............................. $ 0.35 $ (0.10) $ 1.07 $ 0.61
======== ======== ======== ========
Weighted average shares and equivalent shares
outstanding (000's)........................ 13,120 12,756 13,070 12,833
======== ======== ======== ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
5
<PAGE> 6
UNITED STATES CAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
QUARTERLY PERIOD ENDED NINE MONTHS ENDED
--------------------------- ---------------------------
SEPTEMBER 29, OCTOBER 1, SEPTEMBER 29, OCTOBER 1,
1996 1995 1996 1995
------------- ---------- ------------- ----------
<S> <C> <C> <C> <C>
NET SALES....................................... $ 194,109 $ 154,345 $ 538,316 $ 474,387
COST OF SALES................................... 171,150 142,103 470,745 419,072
-------- -------- -------- --------
Gross income.................................. $ 22,959 $ 12,242 $ 67,571 $ 55,315
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.... 7,173 6,898 21,103 20,590
-------- -------- -------- --------
Operating income.............................. $ 15,786 $ 5,344 $ 46,468 $ 34,725
INTEREST EXPENSE ON BORROWINGS.................. 6,993 6,241 19,513 18,388
AMORTIZATION OF DEFERRED
FINANCING COSTS............................... 330 396 1,132 1,135
CONSOLIDATION EXPENSE........................... -- 81 -- 245
OTHER EXPENSE................................... 480 499 1,483 1,216
-------- -------- -------- --------
Income (loss) before income taxes............. $ 7,983 $ (1,873) $ 24,340 $ 13,741
PROVISION (BENEFIT) FOR
INCOME TAXES.................................. 3,402 (593) 10,352 5,939
-------- -------- -------- --------
NET INCOME (LOSS)............................... $ 4,581 $ (1,280) $ 13,988 $ 7,802
======== ======== ======== ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
6
<PAGE> 7
U.S. CAN CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 29, OCTOBER 1,
1996 1995
------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $ 13,988 $ 7,802
Adjustments to reconcile net income to net cash provided by
operating activities --
Depreciation and amortization.................................... 24,844 21,285
Plant consolidation costs paid................................... -- (1,966)
Consolidation expense............................................ -- 245
Deferred income taxes............................................ 2,484 1,425
Change in operating assets and liabilities, net of acquired
businesses --
Accounts receivable.............................................. (23,598) (9,295)
Inventories...................................................... (16,667) 9,257
Accounts payable................................................. 6,155 (16,771)
Accrued payrolls and benefits, insurance and other............... (3,463) (1,925)
Postretirement benefits.......................................... 139 213
Other, net....................................................... (1,085) 577
--------- --------
Net cash provided by operating activities................... $ 2,797 $ 10,847
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................ $ (23,400) $ (24,382)
Acquisition of businesses, net of cash acquired..................... (78,346) (29,167)
Proceeds from sale of property...................................... -- 600
Machinery repair parts usage, net................................... 118 62
--------- --------
Net cash used in investing activities....................... $(101,628) $ (52,887)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock............................................ $ 56 $ 100
Net borrowings under the revolving line of credit and changes in
cash overdrafts.................................................. 106,954 51,970
Borrowings of other long-term debt, including capital lease
obligations...................................................... 3,985 4,990
Payments of other long-term debt, including capital lease
obligations...................................................... (7,325) (13,993)
Payments of debt refinancing costs.................................. (835) (818)
Payments of common stock issuance costs............................. -- (22)
Purchase of treasury stock, net..................................... (200) (153)
--------- --------
Net cash provided by financing activities................... $ 102,635 $ 42,074
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS................................. $ 3,804 $ 34
CASH AND CASH EQUIVALENTS, beginning of period........................ 136 123
--------- --------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 3,940 $ 157
========= ========
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
7
<PAGE> 8
UNITED STATES CAN COMPANY AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(000'S OMITTED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 29, OCTOBER 1,
1996 1995
------------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.......................................................... $ 13,988 $ 7,802
Adjustments to reconcile net income to net cash provided by
operating activities--
Depreciation and amortization.................................... 24,844 21,285
Plant consolidation costs paid................................... -- (1,966)
Consolidation expense............................................ -- 245
Deferred income taxes............................................ 2,484 1,425
Change in operating assets and liabilities, net of acquired
businesses--
Accounts receivable.............................................. (23,598) (9,295)
Inventories...................................................... (16,667) 9,257
Accounts payable................................................. 6,155 (16,771)
Accrued payrolls and benefits, insurance and other............... (3,463) (1,925)
Postretirement benefits.......................................... 139 213
Other, net....................................................... (1,085) 577
--------- --------
Net cash provided by operating activities...................... $ 2,797 $ 10,847
--------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures................................................ $ (23,400) $ (24,382)
Acquisition of businesses, net of cash acquired..................... (78,346) (29,167)
Proceeds from sale of property...................................... -- 600
Machinery repair parts usage, net................................... 118 62
--------- --------
Net cash used in investing activities............................ $(101,628) $ (52,887)
--------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings under the revolving line of credit and changes in
cash overdrafts.................................................. 106,954 51,970
Changes in payable to Parent........................................ (144) (75)
Borrowings of other long-term debt, including capital lease
obligations...................................................... 3,985 4,990
Payments of other long-term debt, including capital lease
obligations...................................................... (7,325) (13,993)
Payments of debt refinancing costs.................................. (835) (818)
--------- --------
Net cash provided by financing activities........................ $ 102,635 $ 42,074
--------- --------
INCREASE IN CASH AND CASH EQUIVALENTS................................. $ 3,804 $ 34
CASH AND CASH EQUIVALENTS, beginning of period........................ 136 123
--------- --------
CASH AND CASH EQUIVALENTS, end of period.............................. $ 3,940 $ 157
--------- --------
</TABLE>
The accompanying Notes to Condensed Consolidated Financial Statements
are an integral part of these statements.
8
<PAGE> 9
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 29, 1996
(UNAUDITED)
(1) PRINCIPLES OF REPORTING
The condensed consolidated financial statements of U.S. Can Corporation
(the "Corporation") include the accounts of the Corporation and its wholly owned
subsidiary, United States Can Company ("U.S. Can"). The condensed consolidated
financial statements of U.S. Can include only the accounts of U.S. Can and its
wholly owned subsidiaries. The consolidated group including the Corporation is
hereinafter referred to as the Company. These financial statements have been
prepared in accordance with generally accepted accounting principles for interim
reporting. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. These financial statements, which, in the opinion of management,
include all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation, have not been audited by independent public
accountants. Operating results for any interim period are not necessarily
indicative of results that may be expected for the full year.
Certain information and footnote disclosure normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission; however, management believes that the
disclosures contained herein are adequate to make the information presented not
misleading. It is suggested that these financial statements be read in
conjunction with the previously filed financial statements and footnotes
included in the Corporation's and U.S. Can's Joint Annual Report on Form
10-K/A-1 for the year ended December 31, 1995.
Quarterly accounting periods are based upon two four-week periods and one
five-week period. Management believes that this technique provides a more
consistent view of accounting data resulting in greater comparability than the
calendar month basis would provide.
(2) ACQUISITIONS
In early 1995, the Company completed its acquisition of the stock of Metal
Litho International, Inc. and the portion of a related partnership not
previously owned by MLI (collectively, "MLI") for approximately $10.1 million in
cash, plus the assumption of approximately $4.2 million of debt. The former MLI
plant, located in Trenton, New Jersey, is a full service metal decorating
facility, providing coil shearing and tin plate coating and printing. In March
1995, the Company completed its acquisition of the stock of Plastite Corporation
("Plastite") for approximately $7.3 million, plus future contingent payments of
approximately $2.5 million. The former Plastite plant, located in Morrow,
Georgia, manufactures plastic paint cans and pails in two sizes.
In April 1995, the Company completed an acquisition of certain assets of
Prospect Industries Corporation ("Prospect") for approximately $8.8 million. The
acquired assets, located in North Brunswick, New Jersey, are used to manufacture
metal pails for the chemical and coatings industries. U.S. Can's North Brunswick
operation includes coil cutting, coating and lithography, as well as
manufacturing of tops and bottoms. In May 1995, the Company completed an
acquisition of the stock of Hunter Container Corporation ("Hunter") for
approximately $4.0 million, plus the assumption of $2.5 million of debt. The
former Hunter facility, located in Vernalis, California, manufactures a broad
line of proprietary and specialty metal containers.
In April 1996, the Company acquired from Alltrista Corporation
("Alltrista") substantially all of the machinery, equipment and coatings and
inks inventory of, as well as certain proprietary technology used in, Alltrista
Metal Services ("AMS"), a division of Alltrista (collectively referred to
hereinafter as the "Assets"), and assumed a liability of approximately $0.5
million. The Assets were purchased for approximately $9.6 million. The Company
also agreed to purchase the Chicago, Illinois, Baltimore, Maryland and
9
<PAGE> 10
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
Trussville, Alabama real property and buildings formerly used in AMS's business
for approximately $4.8 million. In a related transaction, in June 1996, the
Company completed the purchase of AMS's remaining inventory for approximately $8
million. AMS was engaged in the business of metal cutting and decorating, as
well as the manufacture, sale and licensure of certain proprietary products. In
July 1996, the Company discontinued operations at the former AMS operations in
Baltimore, Maryland and Trussville, Alabama.
On August 2, 1996, the Company completed the acquisition of all of the
outstanding stock of three related companies, CPI Plastics, Inc., CP Ohio, Inc.
and CP Illinois, Inc. (collectively, the "CPI Group"), engaged in manufacturing
molded plastic drums and pails and poultry products at locations in Newnan,
Georgia, Alliance, Ohio and Jerseyville, Illinois. To acquire the stock, the
Company paid approximately $15 million in cash to the stockholders of the CPI
Group, subject to adjustment for the change in net working capital (as defined
in the acquisition agreement) from December 31, 1995 through the closing date,
plus potential contingent payments (in an amount not to exceed $1 million) based
upon the CPI Group's financial performance for the years 1996 and 1997. This
acquisition was financed with borrowings under the Acquisition Facility. For
additional information regarding the Acquisition Facility, see Note (4) of the
Notes to Condensed Consolidated Financial Statements.
On September 11, 1996, the Company completed the acquisition of a portion
of Crown Cork & Seal Company, Inc.'s ("Crown's") European aerosol can businesses
("USC Europe") for $52.8 million and the assumption of net indebtedness of $5.8
million, subject to a post-closing adjustment for the change in working capital
from April 30, 1996 to the closing date. This acquisition included manufacturing
operations in the United Kingdom, France, Spain and Germany and the aerosol can
manufacturing equipment and assets from a Crown facility in Italy. USC Europe
produced approximately 24% of all European steel aerosol cans sold in 1995 and,
as a group, constituted the second largest manufacturer of steel aerosol cans in
Europe.
Each of the foregoing business acquisitions was accounted for as a purchase
for financial reporting purposes. Accordingly, certain recorded assets and
liabilities of the acquired companies were revalued at estimated fair values as
of the acquisition date. Such revaluation adjustments, all made pursuant to the
purchase method of accounting, resulted in increased amortization and
depreciation in periods following the acquisition. Management has used its best
judgment and available information in estimating the fair value of those assets
and liabilities. Any changes to these estimates are not expected to be material.
Amortization of any excess purchase price over the estimated fair value of the
net assets acquired is made over a period of forty years.
The following is a summary of the allocation of the aggregate purchase
price of the CPI Group and USC Europe acquisitions (000's omitted):
<TABLE>
<S> <C>
Current assets..................................................... $ 51,827
Net property, plant and equipment.................................. 55,199
Other assets....................................................... 1,087
Current liabilities................................................ (36,530)
Other liabilities.................................................. (8,189)
--------
Net assets....................................................... 63,394
Resulting goodwill................................................. 4,413
--------
Purchase price paid.............................................. $ 67,807
========
</TABLE>
10
<PAGE> 11
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
The following data represents the unaudited pro forma results of operations
as if the CPI Group and USC Europe acquisitions had occurred on January 1 of the
applicable period (000's omitted, except per share data):
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED FOR THE YEAR ENDED
SEPTEMBER 29, 1996 DECEMBER 31, 1995
-------------------------- --------------------------
AS REPORTED PRO FORMA AS REPORTED PRO FORMA
----------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Net Sales.................................. $ 538,316 $ 644,678 $ 626,485 $ 774,942
Net income................................. 13,988 14,823 3,939 5,277
Earnings per share......................... $ 1.07 $ 1.13 $ 0.31 $ 0.41
</TABLE>
The pro forma operating results include each company's results of
operations for the indicated periods with adjustments to reflect, among other
things, amortization of goodwill, interest expense on the acquisition borrowings
and the effect of income taxes thereon.
The pro forma information given above does not purport to be indicative of
the results that actually would have been obtained if the operations were
combined during the periods presented and is not intended to be a projection of
future results or trends. Other than the CPI Group and USC Europe, the
acquisitions described above were not significant to the Company or U.S. Can.
On August 16, 1996, the Company completed its acquisition of a site in the
Dallas, Texas area for the establishment of a paint and general line
manufacturing plant. The decision to expand manufacturing capabilities in the
Southwest followed the Company's agreement with one of its major coating
customers on the material terms of a long-term supply arrangement. In October
1996, the Company and this customer signed a definitive long-term supply
agreement. This Texas facility will initially produce gallon round paint cans
for the coatings industry. In the future, if circumstances warrant, the Company
may expand this facility to include production of certain of its other products.
The Company has selected Merthyr Tydfil, U.K. as the site of a new aerosol
container manufacturing facility. This plant, expected to be operational in
mid-1997, represents an initial investment of $20 million (spread over two to
three years), and will supply The Gillette Company's North Atlantic operations.
(3) INVENTORIES
Inventories are stated at cost determined by the last-in, first-out
("LIFO") cost method (for all but foreign inventories), not in excess of market.
Inventory costs include elements of material, labor and factory overhead.
Current (first-in, first-out) cost of such inventories approximated their LIFO
value at September 29, 1996, and December 31, 1995. Inventories of foreign
locations of approximately $17.3 million are valued at the lower of first-in,
first-out cost or market. Inventories reported in the accompanying balance
sheets were classified as follows (000's omitted):
<TABLE>
<CAPTION>
SEPTEMBER 29, DECEMBER 31,
1996 1995
------------- ------------
<S> <C> <C>
Raw materials....................................................... $ 35,898 $ 21,066
Work in process..................................................... 49,556 34,138
Finished goods...................................................... 24,079 19,549
Machine shop inventory.............................................. 4,202 3,499
-------- -------
$ 113,735 $ 78,252
======== =======
</TABLE>
11
<PAGE> 12
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
(4) CREDIT AGREEMENT
On April 29, 1994, U. S. Can entered into a four-year credit agreement (the
"Credit Agreement") with a group of banks providing a $130 million line of
credit consisting of a $95 million revolving credit line (the "Revolving Credit
Facility") and a $35 million term loan (the "Term Loan"). As of September 29,
1996, $9,000,000 of the Term Loan had been repaid under the terms of the Credit
Agreement. Funds available under the Credit Agreement are used for working
capital and other general corporate purposes. The loans outstanding under the
Credit Agreement bear interest at a floating rate equal to, at the election of
U.S. Can, one of the following: (i) the Base Rate per annum (currently 8.25%),
or (ii) based on the current pricing ratio, a reserve-adjusted Eurodollar rate
plus 1.0% per annum, for specified interest periods (selected by U.S. Can) of
one, two, three or six months. The "Base Rate" is the higher of: (i) the Federal
Funds rate plus 1/2 of 1% per annum or (ii) the rate of interest publicly
announced from time to time by Bank of America Illinois, Chicago, Illinois as
its "reference rate." For letters of credit issued under the Credit Agreement,
U.S. Can pays fees equal to: (a) the applicable Eurodollar Margin, currently
1.0% per annum, multiplied by the aggregate face amount outstanding on each such
letter of credit and (b) an amount payable to the issuing bank equal to 0.2% per
annum of the aggregate face amount outstanding on each such letter of credit,
both of which are payable quarterly in arrears. Currently, U.S. Can is required
to pay a commitment fee of .325% per annum of the average daily unused portion
of each lender's commitment under the Credit Agreement.
The Credit Agreement is secured by the accounts receivable and inventories
of U.S. Can. The Term Loan is also secured by a mortgage on U.S. Can's Elgin,
Illinois facility and certain equipment located at the Elgin facility. In early
April 1996, the lenders under the Credit Agreement provided U.S. Can a temporary
$10 million increase in the Revolving Credit Facility due to seasonal inventory
requirements. In late April 1996, these lenders provided U.S. Can an additional
temporary $20 million increase in the Revolving Credit Facility due to the
acquisition of certain assets from Alltrista. As of September 29, 1996,
borrowings under the Credit Agreement totaled $193.4 million, an additional
$11.7 million in letters of credit had been issued pursuant thereto, and $13.2
million of unused credit remained available thereunder.
In July 1996, the lenders under the Credit Agreement provided to U.S. Can a
supplemental $97 million credit facility (the "Acquisition Facility") to fund
certain permitted acquisitions and, at U.S. Can's option, prepay the Revolving
Credit Facility by an amount not to exceed $20 million on December 31, 1996.
While the Acquisition Facility is in place, U.S. Can may not use the Revolving
Credit Facility to fund acquisitions. The Acquisition Facility matures on April
30, 1997, but U.S. Can may, at its option and subject to certain restrictions,
elect to convert the outstanding borrowings thereunder to term loans with a
five-year amortization period. Base rate and Eurodollar loans outstanding under
the Acquisition Facility bear interest at a higher margin than other borrowings
under the Credit Agreement. Under the amended Credit Agreement, U.S. Can's
interest rate margins vary depending upon U.S. Can's ratio of total funded debt
to earnings, before interest, taxes, depreciation and amortization. In addition,
U.S. Can is required to pay an acquisition loan activation fee in an amount
equal to 0.25% of the amount by which the loans outstanding at any time under
the Acquisition Facility exceed $50 million. In connection with the Acquisition
Facility, U.S. Can pledged substantially all of its unencumbered personal
property (including machinery and equipment) and owned real estate to secure its
obligations under the Acquisition Facility. U.S. Can is also required to pledge
the stock and/or assets, and provide the guaranty, of any company or operations
acquired using a borrowing under the Acquisition Facility.
In connection with the USC Europe Acquisition, U.S. Can pledged 65% of the
stock of its European holding company to secure its obligations under the
Acquisition Facility and agreed that, so long as any obligations under the
Acquisition Facility remain outstanding, the European holding company shall not
12
<PAGE> 13
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
(i) own any assets other than the capital stock of foreign subsidiaries, (ii)
make any expenditures other than expenditures necessary to maintain its separate
corporate existence, (iii) incur any debt, (iv) have employees or engage in any
trade or business, (v) merge with any other person, (vi) dispose of any assets
or (vii) permit any lien on its assets. None of the companies included in USC
Europe have provided guaranties of U.S. Can's obligations under the Credit
Agreement.
The terms of the Credit Agreement impose restrictions that affect, among
other things, U.S. Can's ability to (i) incur additional indebtedness, (ii)
create liens on assets, (iii) sell assets, (iv) engage in mergers, acquisitions
or consolidations, (v) make investments, (vi) pay dividends or make
distributions and (vii) engage in certain transactions with affiliates and
subsidiaries. The Credit Agreement also requires U.S. Can to comply with certain
financial ratios and tests.
Under and pursuant to the Credit Agreement, U.S. Can may pay cash dividends
on account of any shares of any class of capital stock of U.S. Can (or on any
warrants, options or rights with respect thereto) in an amount not to exceed 25%
of Net Income (as defined in the Credit Agreement) in any given fiscal year, but
in any event not more than 25% of consolidated cumulative Net Income
attributable to the period commencing subsequent to April 29, 1994, and ending
on the date of such proposed cash dividends; provided that either: (i) the Term
Loan has been indefeasibly paid in full in cash or (ii) the Leverage Ratio (as
defined in the Credit Agreement) as of the last day of the last fiscal quarter
of such fiscal year does not exceed 3.50 to 1.00; and, provided further, that no
Default or Event of Default (as defined in the Credit Agreement) exists
immediately prior to any such cash dividend or would result therefrom.
Notwithstanding the foregoing, in no event may U.S. Can pay such cash dividends
prior to the delivery of the annual audited consolidated financial statements to
the banks for the fiscal year ended in which either of the conditions contained
in clauses (i) or (ii) above has been satisfied. Because amounts remain
outstanding under the Term Loan, the Credit Agreement currently prohibits U.S.
Can from paying cash dividends.
The Credit Agreement also contains subjective covenants providing that U.S.
Can would be in default if, in the judgment of the lenders, there is a material
adverse change in the financial condition of U.S. Can. Management is not aware
of, nor does it anticipate, any facts, events or occurrences which could
reasonably be expected to have a material adverse effect on the operations of
U.S. Can that would cause the lenders to demand repayment of the amounts
borrowed under the Credit Agreement prior to April 29, 1998. Accordingly, the
borrowings thereunder have been classified as long-term debt in the accompanying
balance sheets.
U.S. Can was in compliance with all terms and restrictive covenants of the
Credit Agreement and its other long-term debt agreements as of September 29,
1996.
(5) SUPPLEMENTAL CASH FLOW INFORMATION
U.S. Can paid interest on borrowings of $22,609,000 and $21,883,000 for the
nine-month periods ended September 29, 1996 and October 1, 1995, respectively.
The Corporation and U.S. Can paid approximately $3,847,000 and $5,046,000
of income taxes for the nine-month periods ended September 29, 1996 and October
1, 1995, respectively.
During the nine-month periods ended September 29, 1996 and October 1, 1995,
the Corporation issued stock valued at approximately $943,000 and $3,067,000,
respectively, into certain of its employee benefit plans. During the first
nine-months of 1996 the Company received no tax benefits on the exercise of
non-qualified stock options. The Company did receive approximately $87,000 of
such benefits during the first nine months of 1995.
13
<PAGE> 14
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
(6) LEGAL PROCEEDINGS
On February 28, 1995, Continental Holdings Inc. ("CHI"), an affiliate of
Peter Kiewit Sons', Inc. ("Kiewit"), filed a Complaint against U.S. Can and
others in the United States District Court of the State of New Jersey, asserting
claims based upon alleged indemnity and reimbursement obligations of U.S. Can to
Kiewit, as successor in interest to Continental Can Company, USA, Inc. ("CCC"),
arising from the 1987 acquisition by U.S. Can of the general packaging business
of CCC. These alleged obligations relate to environmental liabilities,
reimbursable insurance deductibles and reinsurance amounts, and certain personal
injury claims and employment discrimination claims. The Complaint includes
counts for breach of contract, declaratory judgment, indemnification and
contribution, CERCLA remedies, state environmental law remedies and unjust
enrichment. CHI seeks unspecified compensatory damages, consequential and
incidental damages, interest, attorneys' fees and costs of litigation, equitable
relief, environmental response costs, and restitution. No aggregate dollar
amount of damages is specified in the Complaint. However, in an initial
discovery disclosure served on U.S. Can, CHI alleged that its damages to the
date of such disclosure were approximately $4.4 million. U.S. Can has filed an
Answer to the Complaint, asserted affirmative defenses and made counterclaims
against CHI seeking reimbursement for expenses and accruals relating to
postretirement medical and life insurance benefits for former employees of CCC,
and expenses incurred as a result of CCC's breach of its contractual
indemnification obligations to U.S. Can. The case has been transferred to the
United States District Court for the Northern District of Illinois. U.S. Can
believes it has meritorious defenses to all of CHI's claims.
The National Labor Relations Board has issued a decision finding the
Company in violation of certain sections of the National Labor Relations Act as
a result of the Company's closure of certain facilities in 1991 and failure to
offer inter-plant job opportunities to affected employees. Management does not
believe that the resolution of this matter will have a material adverse effect
on the Company's financial condition or results of operations.
The Company understands that the groundwater in San Leandro, California is
contaminated at shallow and intermediate depths, and that the area of concern
partially extends to the groundwater below a facility formerly owned by the
Company. In late April 1996, the California Department of Toxic Substances
Control ("CDTSC") issued to certain of the past and present owners of this
facility, including U.S. Can, an order directing such owners to conduct
remediation activities at this site. Although there can be no assurance that the
Company will not incur material costs and expenses in connection with the CDTSC
order, extensive environmental testing has been performed at this facility and
management does not believe that substantial remediation activities at this
facility are justified. Representatives of the Company have met with the CDTSC
and agreed to undertake additional site assessment work. The San Leandro
facility was closed in 1989 and was sold, except for a related parcel of land,
in 1994. The remaining parcel was sold in 1995, and the Company agreed to
indemnify the purchaser against any environmental claims related to the
Company's ownership of the property.
On August 30, 1996, the Company received a general Notice of Potential
Liability from the Environmental Protection Agency (the "EPA") regarding the
Master Metals, Inc. site in Cleveland, Ohio. The letter alleges that the Company
is a Potentially Responsible Party ("PRP") in that it generated hazardous
materials disposed at this site. The Company is one of a number of PRPs and, as
of the date of this report, it is evaluating information regarding the site to
determine the extent, if any, of its liability.
The Company is involved in various other environmental and legal actions
and administrative proceedings. Management is of the opinion that their outcome
will not have a material effect on the Company's financial position or results
of operations.
14
<PAGE> 15
U.S. CAN CORPORATION AND SUBSIDIARY
UNITED STATES CAN COMPANY AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
SEPTEMBER 29, 1996
(UNAUDITED)
(7) SUBSEQUENT EVENTS
On October 17, 1996, the Corporation issued $275 million principal amount
of 10 1/8% Senior Subordinated Notes due 2006 (the "10 1/8% Notes") in a private
placement. The Noteholders have registration rights with respect to the 10 1/8%
Notes. Net proceeds from the issuance of the 10 1/8% Notes were $268.1 million
and were used to pay down amounts under the Credit Agreement ($158.4 million)
with $109.7 million being placed in an escrow account to be used to redeem the
$100 million principal amount of 13 1/2% Senior Subordinated Notes due 2002 (the
"13 1/2% Notes") and pay all remaining interest on the 13 1/2% Notes. The
10 1/8% Notes are fully and unconditionally guaranteed on an unsecured senior
subordinated basis by U.S. Can, excluding USC Europe. As the Corporation had no
assets or operations separate from its investment in U.S. Can and U.S. Can was
the Company's only subsidiary until the acquisition of USC Europe on September
11, 1996, separate financial statements of U.S. Can, excluding USC Europe, would
not provide additional information which would be useful in assessing the
financial composition of U.S. Can and, therefore, are not presented. The
Acquisition Facility and aggregate $30 million supplemental increases to the
Revolving Credit Facility were terminated on the closing date of the 10 1/8%
Note offering.
The amounts placed in the escrow account are invested in U.S. Government
obligations and must, pursuant to the amended and restated escrow agreement, be
used by the escrow agent to redeem the 13 1/2% Notes on or immediately after the
earliest redemption date (January 15, 1997) of such notes and pay all remaining
interest on the 13 1/2% Notes. Such redemption will include a $4 million premium
and unpaid interest earned on such notes through the redemption date.
Considering the interest income accruing on the funds in the escrow account, the
Company is not expected to make any additional payments for this redemption.
Accordingly, the Company recorded the early extinguishment of this debt as of
October 17, 1996, which resulted in an after-tax extraordinary charge in the
fourth quarter of 1996 of $5.5 million representing the difference between the
$109.7 million placed in escrow and the October 17, 1996, carrying value of the
13 1/2% Notes, related accrued interest and related unamortized deferred
financing costs.
15
<PAGE> 16
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following narrative discusses the results of operations, liquidity and
capital resources for the Corporation and U.S. Can on a consolidated basis. The
consolidated group including the Corporation is referred to herein as the
Company. The Corporation's only business interest is in its ownership of U.S.
Can's common stock. Operating results for the Company and U.S. Can are
identical. This section should be read in conjunction with the Corporation's and
U.S. Can's Joint Annual Report on Form 10-K/A-1 for the fiscal year ended
December 31, 1995. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" contained therein.
Inclusion of Forward-Looking Information
Certain statements under the caption "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere in this Report
constitute "forward-looking statements" within the meaning of Section 21E (i)(1)
of the Exchange Act. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors which may cause the actual results,
performance or achievements of the Company, or industry results, to be
materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. Such factors include,
among other things, the following: general economic and business and market
conditions, changes in product demand, changes in competition, the ability of
the Company to integrate acquisitions or complete future acquisitions, interest
rate fluctuations, currency fluctuations, dependence on raw material producers,
dependence on and availability of qualified personnel, changes in or failure to
comply with governmental regulations including environmental laws, ability to
obtain adequate financing in the future and other factors indicated in the
Company's registration statements and reports filed with the SEC. These
important factors may also cause the forward-looking statements made by the
Company in this Report, including but not limited to those contained under the
caption "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and elsewhere in this Report to be materially different from
actual results achieved by the Company. In light of these and other
uncertainties, the inclusion of a forward-looking statement herein should not be
regarded as a representation by the Company that the Company's plans and
objectives will be achieved.
RESULTS OF OPERATIONS
QUARTERLY PERIOD ENDED SEPTEMBER 29, 1996 VS. QUARTERLY PERIOD ENDED OCTOBER 1,
1995
Net Sales
Net sales for the quarterly period ended September 29, 1996 totaled $194.1
million, an increase of 25.8% over the corresponding period in 1995. In the
third quarter of 1996, the Company realized additional sales in its Metal
Services and Paint and General Line operations as a result of the 1996
acquisitions of AMS and the CPI Group. A return to more normal markets for the
Company's products compared to the third quarter of 1995 resulted in increased
unit volumes in Aerosol and Paint and General Line. These increased unit volumes
and increased sales of Custom and Specialty products also contributed to the
sales growth.
Gross Income
Gross income of $23.0 million for the third quarter of 1996 was $10.7
million, or 87.5%, higher than gross income for the third quarter of 1995. Gross
margin increased to 11.8% of net sales during the third quarter of 1996 from
7.9% in the third quarter of 1995. Increased net sales and stable costs were the
primary factors contributing to improved gross income.
Operating Income
The Company's operating income of $15.8 million for the third quarter of
1996 was $10.4 million, or 195.4%, higher than operating income for the third
quarter of 1995. Income was favorably impacted by the increased sales, improved
gross margins and decreased selling, general and administrative expenses as a
percent of net sales. Operating income as a percent of net sales was 8.1% for
the third quarter of 1996 as
16
<PAGE> 17
compared to 3.5% for the third quarter of 1995. Selling, general and
administrative expenses increased slightly period to period and decreased as a
percent of net sales from 4.5% of net sales in the third quarter of 1995 to 3.7%
of net sales in the third quarter of 1996. Increased diversification into metal
services, plastics and Europe is expected to temporarily restrain margin growth
until those new operations are assimilated into the Company.
Interest and Other Expenses
Interest expense on borrowings increased in the third quarter of 1996 as
compared to the third quarter of 1995 by approximately $750,000. The increase is
a result of increased borrowing under the Credit Agreement to finance the AMS,
CPI Group and USC Europe acquisitions. Amortization of deferred financing costs
and other expense decreased slightly in the third quarter of 1996 as compared to
the third quarter of 1995 due to completed amortization of older items.
Net Income
Due to the factors discussed above, net income in the third quarter of 1996
was $4.6 million, compared to a loss of $1.3 million in the third quarter of
1995. Primary earnings per share were $0.35 in the third quarter of 1996
compared to a loss of $0.10 in the third quarter of 1995. Weighted average
shares outstanding increased slightly from period to period.
NINE-MONTH PERIOD ENDED SEPTEMBER 29, 1996 VS. NINE-MONTH PERIOD ENDED OCTOBER
1, 1995
Net Sales
Net sales for the nine-month period ended September 29, 1996 totaled $538.3
million, an increase of 13.5% over the corresponding period in 1995. Sales gains
for the year-to-date period reflect volume gained through acquisitions
(approximately $25.7 million) as well as volume growth in substantially all of
the Company's products. U.S. Can has realized additional sales as a result of
the MLI, Plastite, Hunter and Prospect acquisitions in 1995 and the AMS and CPI
Group acquisitions in 1996.
Gross Income
Gross income of $67.6 million for the first nine months of 1996 was $12.3
million, or 22.2%, higher than gross income for the first nine months of 1995.
The AMS and CPI Group acquisitions and higher margins on certain products
contributed to this increase. Gross margin increased to 12.6% of net sales in
the first nine months of 1996 from 11.7% of net sales in the first nine months
of 1995 despite a significant advance purchase of steel in late 1994 which
resulted in the Company not realizing the full impact of the 1995 steel price
increase in the first quarter of 1995. Volume gains with stable costs
contributed to improved performance.
Operating Income
The Company's operating income of $46.5 million for the first nine months
of 1996 was $11.7 million, or 33.8%, higher than operating income for the first
nine months of 1995. Income was favorably impacted by increased sales, improved
margins and the effect of an overhead reduction program begun in late 1995.
Operating income as a percent of net sales was 8.6% for the first nine months of
1996 as compared to 7.3% for the first nine months of 1995. The Company
experienced a slight increase in selling, general and administrative expenses
period to period. However, these expenses as a percent of net sales decreased
from 4.3% of net sales in the first nine months of 1995 to 3.9% of net sales in
the first nine months of 1996. Increased diversification into metal services,
plastics and Europe is expected to temporarily restrain margin growth until
those new operations are assimilated into the Company.
Interest and Other Expenses
Interest expense on borrowings increased by approximately $1.1 million in
the first nine months of 1996 as compared to the first nine months of 1995. The
increase is a result of increased borrowing, primarily to
17
<PAGE> 18
finance the Company's acquisitions. Amortization of deferred financing costs and
other expense remained flat in the first nine months of 1996 as compared to the
first nine months of 1995.
Net Income
Due to the factors discussed above, net income was $14.0 million, up 79.3%,
in the first nine months of 1996. Primary earnings per share were $1.07 for the
first nine months of 1996, compared to $0.61 per share in the first nine months
of 1995. Weighted average shares outstanding increased slightly from period to
period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash requirements for operations, acquisitions and capital
expenditures during the nine-month period ended September 29, 1996 were financed
by internally generated cash flows and borrowings under the Revolving Credit
Facility and the Acquisition Facility provided to U.S. Can under the Credit
Agreement. For a more detailed discussion of the Credit Agreement, see Note (4)
of the unaudited Notes to Condensed Consolidated Financial Statements. Net cash
provided by operating activities decreased from $10.8 million for the first nine
months of 1995 to $2.8 million during the same period in 1996. The decrease is
primarily due to increases in accounts receivable and inventories as a result of
higher sales. A similar increase in accounts payable and higher 1996 earnings
partially offset the increase in current assets.
On October 17, 1996, U.S. Can Corporation sold $275 million principal
amount of 10 1/8% Notes in a private placement. Of the $268.1 million net
proceeds to the Company from the offering, (i) approximately $109.7 million was
deposited in an escrow account to be employed solely for the purpose of
redeeming the Company's outstanding 13 1/2% Notes on or immediately after
January 15, 1997, the first date for optional redemption thereof by the Company,
and for paying all remaining interest thereon; (ii) approximately $67.3 million
of the net proceeds were used to repay all outstanding indebtedness under the
Acquisition Facility; and (iii) approximately $91.1 million of the net proceeds
were used to repay a portion of the Revolving Credit Facility. Excluding
principal payments due under the Revolving Credit Facility and redemption of the
13 1/2% Notes, scheduled principal payments for 1997 and 1998 are $21.1 million
and $11.6 million, respectively.
In early April 1996, the lenders under the Credit Agreement provided U.S.
Can a temporary $10 million increase in the Revolving Credit Facility due to
seasonal inventory requirements. In late April 1996, these lenders provided U.S.
Can an additional temporary $20 million increase in the Revolving Credit
Facility due to the acquisition of certain assets from Alltrista. In July 1996,
the Company's lenders provided U.S. Can the Acquisition Facility to fund certain
permitted acquisitions. All of these supplemental facilities were terminated on
the closing date of the 10 1/8% Notes offering.
In August 1996, the Company completed the acquisition of all of the
outstanding stock of the CPI Group for approximately $15.0 million, subject to
certain post-closing adjustments and potential future contingent payments which
payments are not to exceed $1 million. The Company completed the USC Europe
Acquisition on September 11, 1996. The purchase price included $52.8 million in
cash and the assumption of net indebtedness totaling $5.8 million, subject to a
post-closing adjustment for changes in working capital between April 30, 1996
and the closing of the USC Europe Acquisition. The cash portion of the purchase
price for each acquisition was funded by the Acquisition Facility. For a more
detailed discussion of these acquisitions, see Note (2) of the unaudited Notes
to Condensed Consolidated Financial Statements.
Under the terms of the Credit Agreement, $11,000,000 of the term loan had
been repaid as of October 31, 1996. As of September 29, 1996, U.S. Can had
borrowings of $193.4 million outstanding under the Credit Agreement, $11.7
million in letters of credit had been issued pursuant thereto, and $13.2 million
of unused credit remained available thereunder. As of November 7, 1996, U.S. Can
had borrowings of $34.0 million outstanding under the Credit Agreement, $11.7
million in letters of credit had been issued pursuant thereto, and $73.3 million
of unused credit remained available thereunder. As of September 29, 1996, U.S.
Can was in compliance with all restrictive covenants of the Credit Agreement and
its other long-term debt agreements.
18
<PAGE> 19
Management believes that cash flow from operations, amounts available under
its revolving lines of credit and proceeds from equipment financings should
provide sufficient funds to meet short-term and long-term capital expenditure
and debt amortization requirements, and other cash needs in the ordinary course
of business. The Company believes it will be able to refinance the Revolving
Credit Facility on or prior to maturity. If future strategic acquisition
opportunities arise, the Company would expect to finance them though some
combination of cash, stock and/or debt financing.
USC EUROPE
As an indication of USC Europe's historic liquidity and capital resources,
USC Europe's liquidity needs since January 1995 have principally been met
through internally generated cash flows or advances from its previous owners.
Working capital increased to $25.1 million as of June 30, 1996, from $24.4
million and $15.0 million as of December 31, 1995 and 1994, respectively. Net
income plus depreciation and amortization charges and less the change in working
capital amounted to $4.5 million and ($0.5 million) for the six months ended
June 30, 1996 and the year ended December 31, 1995, respectively. Based on
information provided to the Company by USC Europe's previous owners, capital
expenditures for USC Europe were approximately $4.6 million, $8.5 million and
$4.8 million for the six months ended June 30, 1996, and the years ended
December 31, 1995 and 1994, respectively. Indebtedness of USC Europe decreased
from $12.6 million as of December 31, 1994 to $10.8 million as of December 31,
1995 and $8.9 million as of June 30, 1996. Changes to the previous owner's net
investment in USC Europe, excluding the effect of net income on such investment,
was an increase of $11.2 million during the year ended December 31, 1995 and a
decrease of $2.2 million during the six months ended June 30, 1996. Based on USC
Europe's performance in the six months ended June 30, 1996, the Company expects
that USC Europe will increase the Company's consolidated cash flows, enhance its
liquidity and improve consolidated results of operations.
19
<PAGE> 20
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On August 30, 1996, the Company received a General Notice of Potential
Liability from the EPA regarding the Master Metals, Inc. site in Cleveland,
Ohio. The letter alleges that the Company is a PRP in that it generated
hazardous materials disposed at the site. The Company is one of a number of PRPs
and, as of the date of this Report, it is evaluating information regarding the
site to determine the extent, if any, of its liability.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
<TABLE>
<CAPTION>
INCORPORATION
EXHIBIT BY REFERENCE
NUMBER DESCRIPTION OF DOCUMENT (IF APPLICABLE)
- - ------ ----------------------------------------------------------------------- ---------------
<C> <S> <C>
3.1 Restated Certificate of Incorporation of U.S. Can Corporation.......... *4.3
3.2 Restated Certificate of Incorporation of United States Can Company..... @3.1
3.3 By-Laws of U.S. Can Corporation........................................ &4.1
3.4 By-Laws of United States Can Company................................... X3.3
4.1 Amendment No. 8 to Credit Agreement, dated September 9, 1996...........
4.2 Indenture for 10 1/8% Notes............................................
10.1 Stock Purchase Agreement dated as of August 2, 1996, among U.S. Can,
Irving A. Rubin, Robert Bonczyk and the other stockholders of the CPI
Group.................................................................. **2.1
10.2 Acquisition Agreement between the Company and Crown, dated as of August
1, 1996................................................................ @@2.1
10.3 Newnan, Georgia Lease..................................................
10.4 Alliance, Ohio Lease...................................................
99.1 Purchase Agreement for 10 1/8% Notes...................................
99.2 Amended and Restated Escrow Agreement for 13 1/2% Notes................
99.3 Registration Rights Agreement for 10 1/8% Notes........................
27.1 Financial Data Schedule (EDGAR version only)...........................
</TABLE>
- - -------------------------
* Previously filed with Registration Statement on Form S-3 of the
Corporation, filed on June 1, 1994 (Registration No. 33-79556).
** Previously filed with Form 8-K Current Report of the Corporation and U.S.
Can, filed on August 9, 1996.
@ Previously filed with Form 10-K Annual Report of U.S. Can for the fiscal
year ended December 31, 1992.
@@ Previously filed with Form 8-K Current Report of the Corporation and U.S.
Can, filed on September 26, 1996.
& Previously filed with Registration Statement on Form S-8 of the
Corporation, filed on March 23, 1994 (Registration No. 33-76742).
X Previously filed with Registration Statement on Form S-1 of U.S. Can, filed
on November 1, 1991 (Registration No. 33-43734).
(b) U.S. Can Corporation and United States Can Company filed a joint report on
Form 8-K concerning the CPI Group acquisition on August 9, 1996, a joint
report on Form 8-K concerning the USC Europe acquisition on September 26,
1996, and a joint report on Form 8-K/A-1 including financial statements of
the CPI Group and USC Europe, as well as unaudited pro forma condensed
combined financials, on October 2, 1996.
20
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
U.S. CAN CORPORATION
Date: November 13, 1996 By /s/ TIMOTHY W. STONICH
-----------------------------------
Timothy W. Stonich
Executive Vice President-Finance,
Chief Financial Officer and
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the undersigned, in his capacity as the principal
financial officer of the registrant.
Date: November 13, 1996 /s/ TIMOTHY W. STONICH
------------------------------------
Timothy W. Stonich
Executive Vice President-Finance,
Chief Financial Officer and
Secretary
21
<PAGE> 22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
UNITED STATES CAN COMPANY
Date: November 13, 1996 By /s/ TIMOTHY W. STONICH
-----------------------------------
Timothy W. Stonich
Executive Vice President-Finance,
Chief Financial Officer and
Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the undersigned, in his capacity as the principal
financial officer of the registrant.
Date: November 13, 1996 /s/ TIMOTHY W. STONICH
------------------------------------
Timothy W. Stonich
Executive Vice President-Finance,
Chief Financial Officer and
Secretary
22
<PAGE> 23
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- - ------ -------------------------------------------------------------------------------------
<C> <S>
4.1 Amendment No. 8 to Credit Agreement, dated September 9, 1996
4.2 Indenture for 10 1/8% Notes
10.3 Newnan, Georgia Lease
10.4 Alliance, Ohio Lease
99.1 Purchase Agreement for 10 1/8% Notes
99.2 Amended and Restated Escrow Agreement for 13 1/2% Notes
99.3 Registration Rights Agreement for 10 1/8% Notes
27.1 Financial Data Schedule (EDGAR version only)
</TABLE>
<PAGE> 1
EXHIBIT 4.1
AMENDMENT NO. 8
THIS AMENDMENT NO. 8 (this "Amendment"), dated as of September 9, 1996,
among United States Can Company, a Delaware corporation (the "Borrower"), the
various financial institutions that are or may become parties to the Credit
Agreement described hereinbelow (individually, a "Lender" and collectively, the
"Lenders") and Bank of America Illinois, an Illinois banking corporation, as
agent for the Lenders (in such capacity, the "Agent"), is made pursuant to
Section 9.1 of that certain Credit Agreement, dated as of April 29, 1994 (as
amended or modified and in effect on the date hereof, the "Existing Credit
Agreement" and, as amended or otherwise modified in this Amendment, the
"Amended Credit Agreement"; capitalized terms used but not defined herein
having the same respective meanings as in the Amended Credit Agreement), among
the Borrower, the Lenders and the Agent.
WITNESSETH:
WHEREAS, the Borrower has requested that the Lenders amend the Existing
Credit Agreement in the manner hereinafter appearing; and, subject to the terms
and conditions set forth herein, the Lenders have agreed to so amend the
Existing Credit Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE 1. - AMENDMENTS
1.1. Section 2.8.1(e) of the Existing Credit Agreement is hereby amended
by inserting the phrase "the Parent," immediately before the phrase "the
Borrower" in the first line thereof.
1.2. Section 2.22(c)(iv) of the Existing Credit Agreement is hereby
amended by deleting the last word "and" therefrom.
1.3. Section 2.22(c)(v) of the Existing Credit Agreement is hereby
amended by deleting the final period and substituting the phrase "; and" in
lieu thereof.
1.4. The following new clause (vi) is hereby added to Section 2.22(c) of
the Existing Credit Agreement:
(vi) (A) guaranties by any or all of the European Subsidiaries of the
Obligations as the Majority Lenders may request in their sole
discretion, (B) such documents as the Majority Lenders may request
in their sole discretion to evidence and perfect security interests
in the stock and assets of any or all of the European Subsidiaries
or stock of Subsidiaries other than the European Subsidiaries
and assets having a substantially equivalent fair market
value to the stock and assets of such European
<PAGE> 2
Subsidiaries (the "European Collateral Documents"), and (C) the
Borrower and each applicable Subsidiary have taken all other steps
reasonably requested to grant to the Agent, for the benefit of the
Secured Parties, a first priority Lien in the collateral described
in the European Collateral Documents, subject to no Liens whatsoever
except for Liens permitted under the European Collateral Documents.
1.5. Section 4.4(c) of the Existing Credit Agreement is hereby amended by
inserting the following phrase immediately before the final period thereof:
"; provided that none of the foregoing in this clause (c) shall apply
with respect to the Acquisition of any Acquisition Target that is a
European Acquisition Target if the Borrower has made or caused to be made
the necessary filings (which shall not be withdrawn) with appropriate
governmental authorities within forty-five (45) days of the consummation
of such Acquisition such that the assets of such European Acquisition
Target will be owned (either directly or indirectly) by U.S.C. Europe
N.V."
1.6. Section 6.2(b)(i) of the Existing Credit Agreement is hereby amended
in its entirety to read as follows:
(i) Investments by the Borrower in any of its Subsidiaries (A)
owned on the date hereof, (B) acquired as permitted by Section 6.2(a) or
(C) that are European Subsidiaries, or by any such Subsidiary in any of
its Subsidiaries, in the form of contributions to capital or loans or
advances; provided that any Investments in the European Subsidiaries or
any Subsidiaries thereof shall either (X) be in the form of equity
contributions permitted by Section 6.2(n) or (Y) if not included in
clause (X), not exceed $10,000,000 in the aggregate at any one time
outstanding; and provided further, that no Investment permitted by this
paragraph shall be made at any time that a Default or Event of Default
shall have occurred and is continuing or would result therefrom;
1.7. Section 6.2(c)(v) of the Existing Credit Agreement is hereby amended
in its entirety to read as follows:
(v) the Borrower may refinance the Subordinated Notes with the
proceeds of any Approved Parent Debt; and
1.8. Section 6.2(c) of the Existing Credit Agreement is hereby amended by
inserting the following clause (vi) immediately before the phrase "provided
that no Default" in the third to last line thereof:
(vi) the Borrower may declare and simultaneously make Debt Service
Dividends;
1.9. Section 6.2(f) of the Existing Credit Agreement is hereby amended in
its entirety to read as follows:
-2-
<PAGE> 3
(f) Guaranties. The Borrower shall not, and shall not permit any
of its Subsidiaries to, create or become or be liable, whether directly
or indirectly, with respect to any Guaranty, except that the Borrower may
incur unsecured Guaranties (I) of the obligations of the Parent under any
Approved Parent Debt, (II) for the benefit of any supplier or vendor to
the European Subsidiaries to secure obligations incurred in the ordinary
course of business by the European Subsidiaries, and (III) unless
otherwise permitted in clauses (I) or (II), (i) for the benefit of the
Borrower or any Subsidiary if the primary obligation is permitted by this
Agreement, (ii) for the benefit of the Parent or any wholly-owned
subsidiary of the Parent, and (iii) for the benefit of any supplier or
vendor to the Borrower or its Subsidiaries to secure obligations incurred
in the ordinary course of business by the Borrower or its Subsidiaries
(provided that the aggregate amount of such Guaranties described in
clause (iii) outstanding at any time shall not exceed $5,000,000);
provided that (x) each Guaranty permitted under clauses (I) or (III) is
limited in amount to a stated maximum dollar liability, (y) each Guaranty
permitted under clause (II) is limited in amount to the aggregate
purchase price of goods purchased by the applicable European Subsidiary
from such supplier or vendor, and (z) after the incurrence of each such
Guaranty, there would exist no Default or Event of Default.
Notwithstanding anything in the foregoing sentence to the contrary, the
Guaranties permitted under clauses (III)(i), (ii) and (iii) above shall
in all cases be limited in amount to a stated maximum dollar liability of
$10,000,000 in the aggregate for the Borrower and the Subsidiaries at any
one time.
1.10. Section 6.2(i) of the Existing Credit Agreement is hereby
amended by deleting the proviso immediately after the words "twelve consecutive
months" in the seventh line thereof and substituting the following phrase in
lieu thereof:
"; provided that the Borrower may refinance the Subordinated Notes with
the proceeds of any Approved Parent Debt"
1.11. Section 6.2(n) of the Existing Credit Agreement is hereby
amended by inserting the following phrase immediately before the final period
thereto:
"; provided that the Borrower may make equity contributions of (i) the
assets or stock of an Acquisition Target, (ii) the proceeds of an
Acquisition Loan for the purpose of making an Acquisition, (iii) the
European Subsidiaries to U.S.C. Europe N.V., and (iv) $1,200,000 to
U.S.C. France Holding, S.A.S., provided that such amount is dividended to
the Borrower within sixty (60) days of such equity contribution.
1.12. Section 6.2 of the Existing Credit Agreement is hereby amended
by adding the following clause (r) thereto:
(r) U.S.C. Europe N.V. So long as any Obligations with respect to
Acquisition Loans shall remain outstanding, the Borrower shall not permit
its Subsidiary, U.S.C. Europe N.V., to (i) own any assets other than the
capital stock of (A) European Subsidiaries or (B) upon prior written
notice to the Agent, any other Subsidiary incorporated under the laws of
a jurisdiction other than the United States of America or any political
subdivision thereof, (ii) make any expenditures other than such minimal
expenditures necessary to maintain its separate corporate existence and
good standing in the Netherlands Antilles, (iii) create, incur,
-3-
<PAGE> 4
assume or otherwise become liable with respect to any Debt, (iv) have any
employees or engage in any trade or business, (v) merge or consolidate
with any other Person, (vi) sell or otherwise transfer any of its assets
or (vii) create, incur, assume or permit to exist any Lien on any of its
assets.
1.13. The definition of "Current Ratio" in Schedule I of the
Existing Credit Agreement is hereby amended by adding the following sentence to
the end thereof:
"Current Ratio", when used with respect to the Borrower, shall include
any current liabilities of the Parent with respect to any Approved Parent
Debt to the extent that the proceeds of such Approved Parent Debt are not
irrevocably deposited in a trust or similar escrow account until the
Subordinated Notes are callable on January 15, 1997.
1.14. The definition of "Net Securities Proceeds" in Schedule I of
the Existing Credit Agreement is hereby amended in its entirety to read as
follows:
"Net Securities Proceeds" means the net cash proceeds (i.e., gross
cash proceeds minus reasonable and customary underwriting commissions,
legal, accounting or other usual professional fees and taxes) received by
the Parent, the Borrower or any Subsidiary from any sale or issuance of
any debt or equity securities; provided that "Net Securities Proceeds"
shall not include the proceeds of any Approved Parent Debt applied to the
prepayment of the Subordinated Notes (or irrevocably deposited in a trust
or similar escrow account for such purpose until the Subordinated Notes
are callable on January 15, 1997) and any related prepayment premiums
required by the terms of the Subordinated Notes.
1.15. The definition of "Net Worth" in Schedule I of the Existing
Credit Agreement is hereby amended by inserting the following phrase
immediately before the final period thereof:
"; provided, that for the purposes of calculating the consolidated Net
Worth of the Borrower under Section 6.3(f), Net Worth shall not include
any equity contributions made by the Parent to the Borrower which
constitute proceeds of any Approved Parent Debt"
1.16. The definition of "Required Debt Amortization" in Schedule I
of the Existing Credit Agreement is hereby amended by inserting the following
phrase immediately before the final period thereof:
"; provided that for the purposes of this definition, any payments of
Debt Service Dividends shall be treated as if the Borrower had incurred
the Approved Parent Debt and was making payments in an amount equal to
such Debt Service Dividends thereon"
1.17. The definition of "Subordinated Debt" in Schedule I of the
Existing Credit Agreement is hereby amended in its entirety to read as follows:
-4-
<PAGE> 5
"Subordinated Debt" means both (i) any Guaranties by the Borrower of
the obligations of the Parent under any Approved Parent Debt and (ii)
unsecured indebtedness of the Borrower, which in each case is
subordinated in right of payment to the Obligations and which contains
terms and conditions which are acceptable to the Agent and the Majority
Lenders in their reasonable discretion (including terms and conditions
with respect to amounts, maturities, covenants, defaults, remedies and
subordination); such definition to include the Subordinated Notes.
1.18. The last sentence of the definition of "Total Funded Debt" in
Schedule I of the Existing Credit Agreement is hereby amended by adding the
following phrase immediately before the final period thereof:
"; provided that such Total Funded Debt shall not include any Guaranties
by the Borrower of the obligations of the Parent under any Approved
Parent Debt to the extent that the proceeds of such Approved Parent Debt
are irrevocably deposited in a trust or similar escrow account until the
Subordinated Notes are callable on January 15, 1997"
1.19. Schedule I of the Existing Credit Agreement is hereby amended
by adding the following new definitions in the appropriate alphabetical order:
"Approved Parent Debt" means any Debt issued by the Parent, the
proceeds of which are applied to (a) the prepayment of the Subordinated
Notes (or irrevocably deposited in a trust or similar escrow account for
such purpose until the Subordinated Notes are callable on January 15,
1997), (b) any related prepayment premiums required by the terms of the
Subordinated Notes or (c) the prepayment of first, the Acquisition Loans,
and second, the Revolving Loans; provided that the terms and conditions
of any such Approved Parent Debt are as follows: (v) the principal
amortization is not shorter, (w) the interest rate is not greater, (x)
the covenants are not more restrictive, (y) the subordination provisions
are not less protective of senior debt of the Borrower and (z) the terms
and conditions are otherwise no less favorable to the Parent and the
Borrower than the terms and conditions of the Subordinated Notes.
"Debt Service Dividends" means cash dividends declared and made by
the Borrower to the Parent in such amounts and to the extent necessary to
allow the Parent to make any regularly scheduled payment of principal or
interest in respect of any Approved Parent Debt if and to the extent that
such payment is not prohibited at such time by the subordination
provisions or other applicable terms of such Approved Parent Debt or any
instrument governing such Approved Parent Debt.
"European Acquisition Target" means an Acquisition Target listed on
Schedule V.
"European Collateral Documents" has the meaning specified in Section
2.22(c)(vi).
"European Subsidiary" means a Subsidiary of the Borrower listed on
Schedule VI.
-5-
<PAGE> 6
1.20. The Existing Credit Agreement is hereby amended by adding to
the end thereof a new Schedule V in the form of Schedule V hereto.
1.21. The Existing Credit Agreement is hereby amended by adding to
the end thereof a new Schedule VI in the form of Schedule VI hereto.
ARTICLE 2. - CONDITIONS
2.1. This Amendment shall become effective as of the date hereof on
the date (the "Amendment Effective Date") that the Agent shall have received
each of the following, in form and substance satisfactory to it:
(a) counterparts hereof executed by the Borrower and the
Lenders;
(b) a certificate, dated as of the Amendment Effective
Date, of the Secretary or Assistant Secretary of the Borrower as to
resolutions of its Board of Directors then in full force and effect
authorizing the execution and delivery of this Amendment and the
incumbency and signatures of its officers signing this Amendment;
(c) a certificate, dated as of the Amendment Effective
Date, of an authorized officer of the Borrower as to (i) no Default or
Event of Default as of the Amendment Effective Date after giving
effect to this Amendment, (ii) the correctness of the representations
and warranties contained in the Loan Documents in all material
respects as of the Amendment Effective Date after giving effect to
this Amendment, (iii) no amendments or other modifications to the
Borrower's Certificate of Incorporation and By-Laws having occurred
since the date that the certified copies of such documents were
delivered by the Borrower pursuant to Sections 4.1(b) and 4.1(c) of
the Existing Credit Agreement, respectively, and (iv) the satisfaction
of each of the conditions precedent contained in this Article II;
(d) evidence that the Borrower shall have pledged
sixty-five percent (65%) of the outstanding capital stock of U.S.C.
Europe N.V. to the Agent, for the benefit of the Secured Parties,
pursuant to an amendment to the Pledge Agreement; and
(e) an opinion of counsel for the Borrower as to this
Amendment and the transactions contemplated hereby, in form and
substance satisfactory to the Agent.
2.2. The Agent agrees to notify the Borrower and the Lenders of such
Amendment Effective Date promptly after such Amendment Effective Date occurs.
ARTICLE 3. - GENERAL
3.1. To induce the Agent and the Lenders to enter into this
Amendment, the Borrower warrants to the Agent and the Lenders that: (a) the
warranties contained in the Loan Documents, as amended by the Amendment, are
-6-
<PAGE> 7
true and correct in all material respects as of the date hereof with the same
effect as though made on the date hereof; (b) after giving effect to this
Amendment, no Event of Default or Default exists; (c) this Amendment has been
duly authorized by all necessary corporate proceedings and duly executed and
delivered by the Borrower, and the Amended Credit Agreement and each of the
other Loan Documents are the legal, valid and binding obligations of the
applicable Loan Party, enforceable against such Loan Party in accordance with
their respective terms, except as enforceability may be limited by bankruptcy,
insolvency or other similar laws of general application affecting the
enforcement of creditors' rights or by general principles of equity; (d) no
consent, approval, authorization, order, registration or qualification with any
Governmental Authority or securities exchange is required for, and in the
absence of which would adversely affect, the legal and valid execution and
delivery or performance by the Borrower of this Amendment or the performance by
the Borrower of the Amended Credit Agreement or any other Loan Document to
which it is a party; and (e) the Agent has a first priority lien in the
Collateral subject to no other liens, claims or encumbrances whatsoever other
than the "Permitted Liens" (as defined in the Additional Security Agreement).
3.2. This Amendment may be executed in any number of counterparts
and by the different parties on separate counterparts and each such counterpart
shall be deemed to be an original, but all such counterparts shall together
constitute but one and the same Amendment.
3.3. Except as specifically provided above, the Existing Credit
Agreement and the other Loan Documents shall remain in full force and effect
and are hereby ratified and confirmed in all respects. The execution,
delivery, and effectiveness of this Amendment shall not, except as expressly
provided herein, operate as a waiver of any right, power, or remedy of the
Agent or any Lender under the Existing Credit Agreement or any of the other
Loan Documents, nor constitute a waiver or modification of any provision of any
of the other Loan Documents, and the Obligations shall continue to be secured
in all respects by the Collateral.
3.4. On and after the Amendment Effective Date, each reference in
the Existing Credit Agreement and related documents to "Credit Agreement,"
"this Agreement" or words of like import, shall, unless the context otherwise
requires, be deemed to refer to the Amended Credit Agreement.
3.5. The Borrower agrees to pay on demand all reasonable costs and
expenses incurred at any time by the Agent (including the reasonable attorney
fees and expenses for the Agent, including the allocated cost of internal
counsel) in connection with the preparation, negotiation, execution and
administration of this Amendment and all other instruments or documents
provided for herein or delivered or to be delivered hereunder or in connection
herewith.
3.6. This Amendment shall be binding upon the Borrower, the Agent,
the Lenders and their respective successors and assigns, and shall inure to the
benefit of the Borrower, the Agent, the Lenders and their respective successors
and assigns as provided in the Amended Credit Agreement.
* * * * *
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
UNITED STATES CAN COMPANY
By: /s/ Peter J. Andres
--------------------------------------
Name: Peter J. Andres
-------------------------------------
Title: Vice President
--------------------------------------
BANK OF AMERICA ILLINOIS, as Agent
By: /s/ David L. Graham
------------------------------------
Name: David L. Graham
------------------------------------
Title: Vice President
-------------------------------------
BANK OF AMERICA ILLINOIS, individually
By: /s/ Tracy J. Alfery
-------------------------------------
Name: Tracy J. Alfery
-------------------------------------
Title: Vice President
-------------------------------------
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Cory M. Helfand
------------------------------------
Name: Cory M. Helfand
------------------------------------
Title: Vice President
-------------------------------------
<PAGE> 9
HARRIS TRUST AND SAVINGS BANK
By: /s/ Ronald L. Dellartino
--------------------------------------
Name: Ronald L. Dellartino
-------------------------------------
Title: Vice President
-------------------------------------
FLEET NATIONAL BANK
By: /s/ Stephen P. Kanarian
------------------------------------
Name: Stephen P. Kanarian
------------------------------------
Title: V.P.
--------------------------------------
BANK OF SCOTLAND
By: /s/ Catherine M. Oniffrey
-------------------------------------
Name: Catherine M. Oniffrey
------------------------------------
Title: Vice President
-------------------------------------
THE NORTHERN TRUST COMPANY
By: /s/ Arthur J. Fogel
--------------------------------------
Name: Arthur J. Fogel
-------------------------------------
Title: Vice President
-------------------------------------
<PAGE> 10
SOCIETE GENERALE
By: /s/ Joseph A. Philbin
--------------------------------------
Name: Joseph A. Philbin
-------------------------------------
Title: Vice President
--------------------------------------
-10-
<PAGE> 11
SCHEDULE V
EUROPEAN ACQUISITION TARGETS
Name Jurisdiction
- - ---- ------------
CarnaudMetalbox Aerosols S.A. France
CMB Aerosoldosen Deutschland GmbH Germany
CMB Aerosoles S.A. Spain
<PAGE> 12
SCHEDULE VI
EUROPEAN SUBSIDIARIES
Name Jurisdiction
- - ---- ------------
U.S.C. Europe N.V. Netherlands Antilles
Thuvine Duiven B.V. Netherlands
U.S.C. Holding U.K. Ltd. England
U.K. Can Ltd. England
U.S.C. Europe U.K. Ltd. England
U.S.C. Europe Italia, S.r.l. Italy
U.S.C. France Holding, S.A.S. France
CarnaudMetalbox Aerosols S.A.
(to be known as U.S.C. Aerosols France, S.A.S.) France
Can Beteiligungs GmbH Germany
Can Verwaltungs GmbH Germany
U.S.C. Aerosoldosen Deutschland GmbH & Co. KG Germany
U.S. Can Espana Holding SCpA Spain
CMB Aerosoles S.A.
(to be known as U.S.C. Europe Espana SCpA) Spain
<PAGE> 1
EXHIBIT 4.2
================================================================================
U.S. CAN CORPORATION,
Issuer
10-1/8% Senior Subordinated Notes Due 2006
UNITED STATES CAN COMPANY,
Guarantor
_____________________
INDENTURE
Dated as of October 17, 1996
_____________________
HARRIS TRUST AND SAVINGS BANK,
Trustee
================================================================================
<PAGE> 2
CROSS-REFERENCE TABLE
<TABLE>
<CAPTION>
TIA INDENTURE
SECTION SECTION
- - ------- -----------
<S> <C>
310(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.08; 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.03
313(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.02
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.02; 4.10;
4.11; 12.02
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.05
(f) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.11
315(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.05; 12.02
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7.01
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316(a)(last sentence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.06
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.04
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
317(a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
"N.A." means Not Applicable.
</TABLE>
________________
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
<S> <C> <C>
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.03. Incorporation by Reference of Trust
Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SECTION 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.02. Execution and Authentication . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.03. Registrar and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 2.04. Paying Agent To Hold Money in Trust . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.05. Holder Lists . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.06. Replacement Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.07. Outstanding Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 2.08. Temporary Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.09. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.10. Defaulted Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 2.11. CUSIP Numbers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
SECTION 3.02. Selection of Securities To Be Redeemed . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.03. Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 3.04. Effect of Notice of Redemption . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 3.06. Securities Redeemed in Part . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.02. SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.03. Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 4.04. Limitation on Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.05. Limitation on Dividends and Other
Payment Restrictions Affecting
Restricted Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 4.06. Limitation on Asset Dispositions . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 4.07. Limitation on Transactions with
Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 4.08. Change of Control . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 4.09. Limitation on Layered Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.10. Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.11. Further Instruments and Acts . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.12. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 4.13. Ownership of United States Can Company . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.14. Future Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.15. Establishment of Escrow Account . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.16. Required Redemption of 13 1/2% Notes . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE 5
SURVIVING ENTITY
SECTION 5.01. Merger, Consolidation and Sale of Assets . . . . . . . . . . . . . . . . . . . . 34
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 6.07. Rights of Holders To Receive Payment . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.08. Collection Suit by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.09. Trustee May File Proofs of Claim . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.12. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 7.03. Individual Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . 40
</TABLE>
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<TABLE>
<CAPTION>
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<S> <C> <C>
SECTION 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.06. Reports by Trustee to Holders . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.07. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 7.08. Replacement of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.09. Successor Trustee by Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
SECTION 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 7.11. Preferential Collection of Claims
Against Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Securities;
Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 8.02. Conditions to Defeasance . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 8.03. Application of Trust Money . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.04. Repayment to Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.05. Indemnity for Government Obligations . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 8.06. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 9.02. With Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
SECTION 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.04. Revocation and Effect of Consents
and Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.05. Notation on or Exchange of Securities . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.06. Trustee To Sign Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 9.07. Payment for Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE 10
SUBORDINATION
SECTION 10.01. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.02. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.03. Default on Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 49
SECTION 10.04. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.05. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.07. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>
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<TABLE>
<CAPTION>
PAGE
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<S> <C> <C>
SECTION 10.08. Subordination May Not Be Impaired by
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 10.09. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.10. Distribution or Notice to Repre-
sentative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.11. Article 10 Not To Prevent Events of
Default or Limit Right To Accelerate . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.12. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.13. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 10.14. Trustee To Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.15. Trustee Not Fiduciary for Holders of
Senior Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 10.16. Reliance by Holders of Senior Indebt-
edness on Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE 11
SUBSIDIARY GUARANTIES; SUBORDINATION OF SUBSIDIARY GUARANTIES
SECTION 11.01. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11.02. Contribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 11.03. Agreement To Subordinate . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.04. Liquidation, Dissolution, Bankruptcy . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 11.05. Default on Senior Indebtedness of Sub-
sidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.06. Acceleration of Payment of Securities . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.07. When Distribution Must Be Paid Over . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.08. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 11.09. Relative Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.10. Subordination May Not Be Impaired by
the Subsidiary Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.11. Rights of Trustee and Paying Agent . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.12. Distribution or Notice to Repre-
sentative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.13. Article 11 Not to Prevent Events of
Default or Limit Right To Accelerate . . . . . . . . . . . . . . . . . . . . . 56
SECTION 11.14. Trust Moneys Not Subordinated . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.15. Trustee Entitled To Rely . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.16. Trustee to Effectuate Subordination . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.17. Trustee Not Fiduciary for Holders of
Senior Indebtedness of Subsidiary
Guarantors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.18. Reliance by Holders of Senior Indebt-
edness of Subsidiary Guarantors on
Subordination Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 11.19. Release of Subsidiary Guarantor . . . . . . . . . . . . . . . . . . . . . . . . . 58
</TABLE>
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<TABLE>
<CAPTION>
ARTICLE 12
MISCELLANEOUS PAGE
----
<S> <C> <C>
SECTION 12.01. Trust Indenture Act Controls . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 12.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 12.03. Communication by Holders with Other
Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.04. Certificate and Opinion as to Condi-
tions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.05. Statements Required in Certificate
or Opinion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 12.06. When Securities Disregarded . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.07. Rules by Trustee, Paying Agent and
Registrar . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.08. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.09. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.10. No Recourse Against Others . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.11. Successors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.12. Multiple Originals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
SECTION 12.13. Table of Contents; Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 12.14. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
</TABLE>
Exhibit A - Form of Initial Notes
Exhibit B - Form of Exchange Note
-v-
<PAGE> 8
INDENTURE dated as of October 17, 1996, among U.S. CAN
CORPORATION, a Delaware corporation (the "Company"), UNITED STATES CAN COMPANY,
a Delaware corporation (the "Guarantor") and HARRIS TRUST AND SAVINGS BANK, an
Illinois banking corporation (the "Trustee").
Each party agrees as follows for the benefit of the other
parties and for the equal and ratable benefit of the Holders (as defined
herein) of the Company's 10-1/8% Senior Subordinated Notes Due 2006 (the
"Initial Notes") and, if and when issued in exchange for the Initial Notes, the
Company's Series B 10-1/8% Senior Subordinated Notes Due 2006 (the "Exchange
Notes," and, together with the Initial Notes, the "Securities"):
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
"Additional Assets" means (i) any property or assets (other
than Indebtedness and Capital Stock) in a Related Business; (ii) Capital Stock
of a Person that becomes a Restricted Subsidiary as a result of the acquisition
of such Capital Stock by the Company or another Restricted Subsidiary; or (iii)
Capital Stock constituting a minority interest in any Person that at such time
is a Restricted Subsidiary; provided, however, that, in the case of clauses
(ii) and (iii), such Restricted Subsidiary is primarily engaged in a Related
Business.
"Affiliate" of any specified Person means (i) any other
Person, directly or indirectly, controlling or controlled by or under direct or
indirect common control with such specified Person or (ii) any other Person who
is a director or officer (a) of such specified Person, (b) of any subsidiary of
such specified Person or (c) of any Person described in clause (i) above. For
the purposes of this definition, "control" when used with respect to any Person
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing. For purposes of the Section 4.07 only,
"Affiliate" shall also mean any beneficial owner of shares representing 10% or
more of the total voting power of the Voting Stock (on a fully diluted basis)
of the Company or of rights or warrants to purchase such Voting Stock (whether
or not currently exercisable) and any Person who would be an Affiliate of any
such beneficial owner pursuant to the first sentence hereof.
"Asset Disposition" means any direct or indirect sale
including a Sale/Leaseback Transaction, lease, transfer, conveyance or other
disposition (or series of related sales, Sale/Leaseback Transactions, leases,
transfers, conveyances or dispositions) of shares of Capital Stock of a
Restricted Subsidiary (other than directors' qualifying shares), property or
other assets (each referred to for the purposes of this definition as a
"disposition") by the Company or any of its Restricted Subsidiaries other than
(i) a disposition by a Restricted Subsidiary to the Company or by the Company
or a Restricted Subsidiary to a Wholly Owned Subsidiary, (ii) a disposition of
property or assets at Fair Market Value in the ordinary course of business and
consistent with past practices of the Company or any of its Restricted
Subsidiaries, as applicable, (iii) a disposition with a Fair Market Value and a
sale price of less than $5 million, (iv) for purposes of Section 4.06, only, a
disposition subject to
<PAGE> 9
the limitations set forth under Section 4.04 and (v) when used with respect to
the Company or the Guarantor, any Asset Disposition pursuant to Section 5.01
which constitutes a disposition of all or substantially all of the Company's or
the Guarantor's property.
"Attributable Indebtedness" means Indebtedness deemed to be
Incurred in respect of a Sale/Leaseback Transaction and shall be, at the date
of determination, the greater of (i) the fair market value of the property
subject to such Sale/Leaseback Transaction (as determined in good faith by the
Board of Directors) or (ii) the present value (discounted at the actual rate of
interest implicit in such transaction, compounded annually) of the total
obligations of the lessee for rental payments during the remaining term of the
lease included in such Sale/Leaseback Transaction (including any period for
which such lease has been extended).
"Average Life" means, as of the date of determination, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multiplied by the amount of such payment by (ii) the sum of all
such payments.
"Bank Indebtedness" means any and all amounts payable under or
in respect of the Credit Agreement, as amended (or refinanced or replaced) from
time to time, including principal, premium (if any), interest (including
interest accruing on or after the filing of any petition in bankruptcy or for
reorganization relating to the Company or the Guarantor whether or not a claim
for post-filing interest is allowed in such proceedings), fees, charges,
expenses, reimbursement obligations, guarantees and all other amounts payable
thereunder or in respect thereof.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board
of Directors.
"Business Day" shall mean any Monday, Tuesday, Wednesday,
Thursday, or Friday which is not a Legal Holiday.
"Capital Expenditure Indebtedness" means Indebtedness issued
to finance the purchase or construction of any assets acquired (other than from
an Affiliate) or constructed after the Issue Date (i) to the extent the
purchase or construction prices for such assets are or should be included in
"addition to property, plant or equipment" in accordance with GAAP, (ii) if the
acquisition or construction of such assets is not part of any acquisition of a
person or business unit and (iii) if such Indebtedness is issued within 360
days of the acquisition or completion of construction of such assets.
"Capitalized Lease Obligations" means an obligation that is
required to be classified and accounted for as a capitalized lease for
financial reporting purposes in accordance with GAAP; and the amount of
Indebtedness represented by such obligation shall be the capitalized amount of
such obligation determined in accordance with GAAP; and the Stated Maturity
thereof shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be
terminated by the lessee without payment of a penalty.
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"Capital Stock" of any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however designated) equity of such Person,
including any Preferred Stock, but excluding any debt securities convertible or
exchangeable into such equity.
"Certified Resolution" means a duly adopted resolution of the
Board of Directors in full force and effect at the time of determination and
certified as such by the Secretary or an Assistant Secretary of the Company.
"Change of Control" means the occurrence of any of the
following events: (i) any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act), other than one or more Permitted Holders or an
underwriter engaged in a firm commitment underwriting in connection with a
public offering of the Voting Stock of the Company, is or becomes the
"beneficial owner" (as such term is used in Rules 13d-3 and 13d-5 under the
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 35% of the total voting power of the
Voting Stock of the Company; (ii) during any period of two consecutive years
after the date of this Indenture, individuals who at the beginning of such
period constituted the Board of Directors (together with any new directors
whose election by the Board of Directors or whose nomination for election by
the stockholders of the Company was approved by a vote of 66 2/3% of the
directors of the Company then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors then in office, (iii) the Company consolidates or merges
with or into any other Person, other than a consolidation or merger (a) with a
Wholly Owned Subsidiary or a Permitted Holder or (b) pursuant to a transaction
in which the outstanding Voting Stock of the Company is changed into or
exchanged for cash, securities or other property with the effect that the
beneficial owners of the outstanding Voting Stock of the Company immediately
prior to such transaction beneficially own, directly or indirectly, more than
50% of the total voting power of the Voting Stock of the surviving corporation
immediately following such transaction, or (iv) the Company or any of its
Restricted Subsidiaries, directly or indirectly, sells, assigns, conveys,
transfers, leases, or otherwise disposes of, in one transaction or a series of
related transactions, all or substantially all of the property or assets of the
Company and its Restricted Subsidiaries to any Person or group of related
Persons (as such terms are used in Section 13(d) of the Exchange Act), other
than the Company, a Wholly Owned Subsidiary or a Permitted Holder.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture
until a successor replaces it and, thereafter, means the successor and, for
purposes of any provision contained herein and required by the TIA, each other
obligor on the indenture securities.
"Company Order" means a written order signed in the name of
the Company by its Chairman of the Board, its President or a Vice President,
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary, and delivered to the Trustee.
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"Consolidated Coverage Ratio" as of any date of determination
means the ratio of (i) the aggregate amount of EBITDA for the period of the
most recent four consecutive fiscal quarters ending at least 45 days prior to
the date of such determination to (ii) Consolidated Interest Expense for such
four fiscal quarters; provided, however, that (a) if the Company or any
Restricted Subsidiary has Incurred any Indebtedness since the beginning of such
period that remains outstanding, or if the transaction giving rise to the need
to calculate the Consolidated Coverage Ratio is an Incurrence of Indebtedness,
or both, Consolidated Interest Expense for such period shall be calculated
after giving effect on a pro forma basis to such Indebtedness as if such
Indebtedness had been Incurred on the first day of such period, and the
discharge of any other Indebtedness repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness as if such discharge had
occurred on the first day of such period; (b) if, since the beginning of such
period, the Company or any Restricted Subsidiary shall have made any Asset
Disposition, or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Asset Disposition, or both, the EBITDA for
such period shall be reduced by an amount equal to the EBITDA (if positive)
directly attributable to the assets which are the subject of such Asset
Disposition for such period, or increased by an amount equal to the EBITDA (if
negative) directly attributable thereto for such period, as if such Asset
Disposition had occurred on the first day of such period, and Consolidated
Interest Expense for such period shall be reduced by an amount equal to the
Consolidated Interest Expense directly attributable to any Indebtedness of the
Company or any Restricted Subsidiary repaid, repurchased, defeased or otherwise
discharged with respect to the Company and its continuing Restricted
Subsidiaries in connection with such Asset Disposition for such period as if
such Asset Disposition had occurred on the first day of such period (or, if the
Capital Stock of any Restricted Subsidiary is sold, the Consolidated Interest
Expense for such period as if such Asset Disposition had occurred on the first
day of such period directly attributable to the Indebtedness of such Restricted
Subsidiary to the extent the Company and its continuing Restricted Subsidiaries
are no longer liable for such Indebtedness after such sale); (c) if, since the
beginning of such period the Company or any Restricted Subsidiary (by merger or
otherwise) shall have made an Investment in any Restricted Subsidiary (or any
Person which becomes a Restricted Subsidiary), or an acquisition of assets
(including any acquisition of assets occurring in connection with a transaction
causing a calculation to be made hereunder) which constitutes all or
substantially all of an operating unit of a business, EBITDA and Consolidated
Interest Expense for such period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness) as if such
Investment or acquisition occurred on the first day of such period; and (d) if
since the beginning of such period any Person (that subsequently became a
Restricted Subsidiary or was merged with or into the Company or any Restricted
Subsidiary since the beginning of such period) shall have made any Asset
Disposition or any Investment that would have required an adjustment pursuant
to clause (b) or (c) above if made by the Company or a Restricted Subsidiary
during such period, EBITDA and Consolidated Interest Expense for such period
shall be calculated after giving pro forma effect thereto as if such Asset
Disposition or Investment occurred on the first day of such period. For
purposes of this definition, whenever pro forma effect is to be given to an
acquisition of assets, the pro forma calculations of the amount of income or
earnings relating thereto and the amount of Consolidated Interest Expense
associated with any Indebtedness Incurred in connection therewith shall be
determined in good faith by a responsible financial or accounting officer of
the Company and as further contemplated by the definition of pro forma. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for
the entire
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period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).
"Consolidated Interest Expense" means, for any period, the
total interest expense of the Company and its consolidated Subsidiaries, plus,
to the extent not included in such interest expense, (i) interest expense
attributable to Capitalized Lease Obligations, (ii) amortization of debt
discount and debt issuance cost, (iii) capitalized interest, (iv) non-cash
interest expense, (v) accrued interest, (vi) commissions, discounts and other
fees and charges owed with respect to letters of credit and bankers' acceptance
financing, (vii) to the extent any Indebtedness of any Person is guaranteed by
the Company or any Subsidiary, the aggregate amount of interest paid or accrued
by such other Person during such period attributable to such Indebtedness,
(viii) net costs associated with Interest Rate Agreements and Currency Exchange
Agreements (including, in each case, amortization of fees), (ix) the interest
portion of any deferred obligation, (x) Preferred Stock dividends in respect of
all Preferred Stock of the Company and its Subsidiaries and Redeemable Stock of
the Company held by Persons other than the Company or a Wholly Owned
Subsidiary, (xi) fees payable in connection with financings to the extent not
included in (ii) above, including commitment, availability and similar fees and
(xii) the cash contributions to any employee stock ownership plan or similar
trust to the extent such contributions are used by such plan or trust to pay
interest or fees to any Person (other than the Company) in connection with
Indebtedness Incurred by such plan or trust; provided, however, that there
shall be excluded therefrom any such interest expense of any Unrestricted
Subsidiary to the extent the related Indebtedness is not Guaranteed or paid by
the Company or any Restricted Subsidiary.
"Consolidated Net Income" means, for any period, the net
income (loss) of the Company and its Subsidiaries; provided, however, that
there shall not be included in such Consolidated Net Income (i) any net income
(loss) of any Person if such Person is not a Restricted Subsidiary, except that
(a) subject to the limitations contained in clause (iv) below, the Company's
equity in the net income of any such Person for such period shall be included
in such Consolidated Net Income up to the aggregate amount of cash actually
distributed by such Person during such period to the Company or a Restricted
Subsidiary as a dividend or other distribution (subject, in the case of a
dividend or other distribution to a Restricted Subsidiary, to the limitations
contained in clause (iii) below) and (b) the Company's equity in a net loss of
any such Person (other than an Unrestricted Subsidiary) for such period shall
be included in determining such Consolidated Net Income, (ii) any net income
(loss) of any Person acquired by the Company or a Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition,
(iii) any net income (loss) of any Restricted Subsidiary if such Subsidiary is
subject to restrictions, directly or indirectly, on the payment of dividends or
the making of distributions by such Restricted Subsidiary, directly or
indirectly, to the Company, except that (a) subject to the limitations
contained in clause (iv) below, the Company's equity in the net income of any
such Restricted Subsidiary for such period shall be included in such
Consolidated Net Income up to the aggregate amount of cash that could have been
distributed by such Restricted Subsidiary during such period to the Company or
another Restricted Subsidiary as a dividend (subject, in the case of a dividend
to another Restricted Subsidiary, to the limitation contained in this clause)
and (b) the Company's equity in a net loss of any such Restricted Subsidiary
for such period shall be included in determining such Consolidated Net Income,
(iv) any gain (but not loss) realized upon the sale or other disposition of any
property, plant or equipment of the Company or its consolidated Subsidiaries
(including pursuant to any Sale/Leaseback Transaction) which is not sold or
otherwise disposed of in the ordinary course of business
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<PAGE> 13
and any gain (but not loss) realized upon the sale or other disposition of any
Capital Stock of any Person, (v) any extraordinary gain or loss and (vi) the
cumulative effect of a change in accounting principles.
Notwithstanding the provisions of clause (iii) in the
preceding paragraph, in the event that Consolidated Net Income is being
calculated with respect to the Company or any Surviving Entity (a) for purposes
of determining whether the Company or any Surviving Entity could Incur at least
$1.00 of additional Indebtedness pursuant to clause (i) of the definition of
Permitted Indebtedness for purposes of (i) clause (2) of Section 4.04 hereof,
(ii) clause (c) of Section 5.01(i) hereof or (iii) the definition of
"Unrestricted Subsidiary" or (b) pursuant to clause (3)(A) of Section 4.04
hereof, restrictions on the payment of dividends or the making of distributions
to the Company by United States Can Company referred to in clause (a)(3) of
Section 4.05(ii) shall be disregarded.
Notwithstanding the provisions of clause (iii) in the first
paragraph of this definition, in the event that Consolidated Net Income is
being calculated with respect to the Company for purposes of determining
whether the Incurrence of Indebtedness proposed to be Incurred is permissible
under clause (i) of the definition of Permitted Indebtedness, then (i) if such
proposed Indebtedness is proposed to be Incurred by United States Can Company
or any Subsidiary thereof that is a Restricted Subsidiary, restrictions on the
payment of dividends or the making of distributions to the Company by United
States Can Company referred to in clause (a)(3) of Section 4.05(ii) shall be
disregarded and (ii) if such proposed Indebtedness is proposed to be Incurred
by the Company or any Subsidiary of the Company (other than United States Can
Company and its Subsidiaries) that is a Restricted Subsidiary, restrictions on
the payment of dividends or the making of distributions to the Company by
United States Can Company referred to in clause (a)(3) of Section 4.05(ii)
shall be disregarded, provided that the lenders pursuant to the Credit
Agreement modify the Credit Agreement to allow for the payment of dividends or
the making of distributions to the Company in amounts sufficient to pay the
scheduled principal and interest payments on such proposed Indebtedness when
due and payable or, in the case of a proposed Incurrence of Indebtedness by a
Subsidiary, in an amount sufficient to fund capital contributions or other
Investments to or in such Subsidiary in amounts sufficient to pay the scheduled
principal and interest payments on such proposed Indebtedness when due and
payable so long as there does not exist an event which after notice or passage
of time or both would permit the lenders under the Credit Agreement to declare
all amounts thereunder due and payable.
"Credit Agreement" means that certain Credit Agreement, dated
April 29, 1994, as amended, among the Guarantor and the syndicate of banks
named therein, including the $97 million acquisition facility, and any
extensions, revisions, refinancings or replacements thereof by a bank or a
syndicate of banks.
"Currency Exchange Agreement" means any foreign currency swap
agreement or other agreement pursuant to which the Company or any of its
Subsidiaries hedge their exposure to foreign currency exchange rates in
connection with their business operations.
"Default" means any event which is, or after notice or passage
of time or both would be, an Event of Default.
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"Designated Senior Indebtedness" means any Senior Indebtedness
which, at the date of determination, has an aggregate principal amount
outstanding of, or under which, at the date of determination, the holders
thereof are committed to lend up to, at least $25 million, is specifically
designated by the Company in the instrument evidencing or governing such Senior
Indebtedness as "Designated Senior Indebtedness" for purposes of this Indenture
and has been designated as "Designated Senior Indebtedness" for purposes of
this Indenture in an Officers' Certificate received by the Trustee.
"Designated Senior Indebtedness of Subsidiary Guarantors"
means (i) with respect to the Guarantor, the Bank Indebtedness and (ii) any
other Senior Indebtedness of Subsidiary Guarantors which, at the date of
determination, has an aggregate principal amount outstanding of, or under
which, at the date of determination, the holders thereof are committed to lend
up to, at least $25 million, is specifically designated by such Subsidiary
Guarantor in the instrument evidencing or governing such Senior Indebtedness of
Subsidiary Guarantors as "Designated Senior Indebtedness of Subsidiary
Guarantors" for purposes of this Indenture and has been designated as
"Designated Senior Indebtedness of Subsidiary Guarantors" for purposes of this
Indenture in an Officers' Certificate received by the Trustee.
"Disinterested Director" means a director of the Company other
than a director (i) who is an employee of the Company or a Subsidiary of the
Company or (ii) who is a party, or who is a director, officer, employee or
Affiliate (or is related by blood or marriage to any such person) of a party,
to the transaction in question, and who is, in fact, independent in respect of
such transaction.
"Disqualified Stock" of a Person means Redeemable Stock of
such Person as to which the maturity, mandatory redemption, conversion or
exchange or redemption at the option of the holder thereof occurs, or may
occur, on or prior to the first anniversary of the Stated Maturity of the
Securities.
"Domestic Restricted Subsidiary" means any Restricted
Subsidiary of the Company other than a Foreign Restricted Subsidiary.
"EBITDA" means, for any Person for any period, the sum for
such Person for such period of Consolidated Net Income plus, to the extent
reflected in the income statement of such Person for such period from which
Consolidated Net Income is determined, without duplication, (i) Consolidated
Interest Expense, (ii) provision for plant closing, (iii) income tax expense,
(iv) depreciation expense, (v) amortization expense, and (vi) any charge
related to any premium or penalty paid in connection with redeeming or retiring
any Indebtedness prior to its Stated Maturity.
"Escrow Account" has the meaning given in the Escrow
Agreement.
"Escrow Agreement" means that certain Escrow Agreement dated
as of October 17, 1996 by and among the Company, The First National Bank of
Chicago, as escrow agent (the "Escrow Agent") and the Trustee, substantially in
the form of Exhibit C hereto.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
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<PAGE> 15
"Fair Market Value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined, except as otherwise provided, (i) if such
property or asset has a Fair Market Value of less than $3.0 million, by any
Officer of the Company or (ii) if such property or asset has a Fair Market
Value in excess of $3.0 million, by a majority of the Board of Directors and
evidenced by a Certified Resolution, dated within 30 days of the relevant
transaction.
"Foreign Restricted Subsidiary" means any Restricted
Subsidiary of the Company which is not organized under the laws of the United
States of America or any state thereof or the District of Columbia.
"Foreign Significant Subsidiary" means any foreign Restricted
Subsidiary of the Company meeting the standards specified in Rule 1-02(w) of
the Regulation S-X promulgated by the SEC as in effect on the Issue Date.
"GAAP" means generally accepted accounting principles in the
United States of America as in effect as of the Issue Date, including those set
forth in (i) the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, (ii) statements and
pronouncements of the Financial Accounting Standards Board and (iii) such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
this Indenture shall be computed in conformity with GAAP consistently applied.
"Guaranty" means any obligation, contingent or otherwise, of
any Person, directly or indirectly, guaranteeing any Indebtedness or other
obligation of any other Person and any obligation, direct or indirect,
contingent or otherwise, of such Person (i) to purchase or pay (or advance or
supply funds for the purchase or payment of) such Indebtedness or other
obligation of such other Person (whether arising by virtue of partnership
arrangements, or by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial statement
conditions or otherwise) or (ii) entered into for purposes of assuring in any
other manner the obligee of such Indebtedness or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); provided, however, that the term "Guaranty" shall not
include endorsements for collection or deposit in the ordinary course of
business. The term "Guaranty" used as a verb has a corresponding meaning.
"Holder" means the Person in whose name a Security is
registered on the Registrar's books.
"Incur" means issue, assume, Guaranty, incur or otherwise
become liable for; provided, however, that any Indebtedness or Capital Stock of
a Person existing at the time such Person becomes a Subsidiary (whether by
merger, consolidation, acquisition or otherwise) shall be deemed to be incurred
by such Subsidiary at the time it becomes a Subsidiary. The terms "Incurred",
"Incurrence" and "Incurring" shall each have a correlative meaning.
"Indebtedness" means, with respect to any Person on any date
of determination (without duplication),
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<PAGE> 16
(i) the principal of and premium (if any) in respect of
indebtedness of such Person for borrowed money;
(ii) the principal of and premium (if any) in respect of
obligations of such Person evidenced by bonds, debentures, notes or
other similar instruments;
(iii) all Capitalized Lease Obligations and Attributable
Indebtedness of such Person;
(iv) all obligations of such Person to pay the deferred
and unpaid purchase price of property or services (except Trade
Payables), which purchase price is due more than six months after the
date of placing such property in service or taking delivery and title
thereto or the completion of such services;
(v) all obligations of such Person in respect of letters
of credit, banker's acceptances or other similar instruments or credit
transactions (including reimbursement obligations with respect
thereto), other than obligations with respect to letters of credit
securing obligations (other than obligations described in clauses (i)
through (iv) above) entered into in the ordinary course of business of
such Person to the extent such letters of credit are not drawn upon,
or, if and to the extent drawn upon, such drawing is reimbursed no
later than the third Business Day following receipt by such Person of
a demand for reimbursement following payment on the letter of credit;
(vi) the amount of all obligations of such Person with
respect to the redemption, repayment or other repurchase of any
Disqualified Stock or, with respect to any Subsidiary, any Preferred
Stock (but excluding, in each case, any accrued dividends);
(vii) all Indebtedness of other Persons secured by a Lien
on any asset of such Person, whether or not such Indebtedness is
assumed by such Person; provided, however, that the amount of such
Indebtedness shall be the lesser of (a) the fair market value of such
asset at such date of determination and (b) the amount of such
Indebtedness of such other Persons;
(viii) all Indebtedness of other Persons to the extent
Guaranteed by such Person; and
(ix) to the extent not otherwise included in this
definition, obligations in respect of Interest Rate Agreements and
Currency Exchange Agreements.
The amount of Indebtedness of any Person at any date shall be the outstanding
balance at such date of all unconditional obligations as described above and
the maximum liability, upon the occurrence of the contingency giving rise to
the obligation, of any contingent obligations at such date.
"Indenture" means this instrument as originally executed or as
it may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof,
including, for all purposes of this
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<PAGE> 17
instrument and any such supplemental indenture, the provisions of the TIA that
are deemed to be a part of and govern this instrument and any such supplemental
indenture, respectively.
"Interest Rate Agreement" means, in respect of a Person, any
interest rate swap agreement, interest rate option agreement, interest rate cap
agreement, interest rate collar agreement, interest rate floor agreement or
other similar agreement or arrangement.
"Investment" in any Person means any direct or indirect
advance, loan (other than advances to customers in the ordinary course of
business that are recorded as accounts receivable on the balance sheet of such
Person) or other extension of credit (including by way of Guaranty or similar
arrangement) or capital contribution to (by means of any transfer of cash or
other property to others or any payment for property or services for the
account or use of others), or any purchase or acquisition of Capital Stock,
Indebtedness or other similar instruments issued by such Person. For purposes
of the definition of "Unrestricted Subsidiary" and the limitations set forth in
Section 4.04, (i) "Investment" shall include the portion (proportionate to the
Company's equity interest in such Subsidiary) of the Fair Market Value of the
net assets of any Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that, upon a
redesignation of such Subsidiary as a Restricted Subsidiary, the Company shall
be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (a) the Company's "Investment"
in such Subsidiary at the time of such redesignation less (b) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the Fair
Market Value of the net assets of such Subsidiary at the time that such
Subsidiary is so redesignated a Restricted Subsidiary; and (ii) any property
transferred to or from an Unrestricted Subsidiary shall be valued at its Fair
Market Value at the time of such transfer. In determining the amount of any
Investment in respect of any property or assets other than cash, such property
or asset shall be valued at its Fair Market Value at the time of such
Investment (unless otherwise specified in this definition), as determined in
good faith by the Board of Directors, whose determination shall be evidenced by
a Certified Resolution.
"Issue Date" means the date on which the Initial Notes are
originally issued.
"Lien" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or
other title retention agreement or lease in the nature thereof) or any
Sale/Leaseback Transaction.
"Net Available Cash" from an Asset Disposition means cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or otherwise,
but only as and when received, but excluding any other consideration received
in the form of assumption by the acquiring person of Indebtedness or other
obligations relating to such properties or assets or received in any other
noncash form) therefrom, in each case, net of (i) all legal, title and
recording tax expenses, commissions and other fees and expenses incurred, and
all federal, state, provincial, foreign and local taxes required to be paid or
accrued as a liability under GAAP, as a consequence of such Asset Disposition,
(ii) all payments made on any Indebtedness which is secured by any assets
subject to such Asset Disposition, in accordance with the terms of any Lien
upon such assets, or which must by its terms, or in order to obtain a necessary
consent to such Asset Disposition, or by applicable law, be repaid out of the
proceeds from such
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<PAGE> 18
Asset Disposition, (iii) all distributions and other payments required to be
made to minority interest holders in Subsidiaries or joint ventures as a result
of such Asset Disposition and (iv) the deduction of appropriate amounts to be
provided by the seller as a reserve, in accordance with GAAP, against any
liabilities associated with the assets disposed of in such Asset Disposition
and retained by the Company or any Restricted Subsidiary after such Asset
Disposition.
"Net Cash Proceeds", with respect to any issuance or sale of
Capital Stock, means the cash proceeds of such issuance or sale net of
attorneys' fees, accountants' fees, underwriters' or placement agents' fees,
discounts or commissions and brokerage, consultant and other fees actually
incurred in connection with such issuance or sale and net of taxes paid or
payable as a result thereof.
"Officer" means the Chairman of the Board, President,
Executive Vice President--Operations, Chief Financial Officer, Treasurer or
Controller of the Company.
"Officers' Certificate" means a certificate signed by two
Officers at least one of whom shall be the principal executive officer,
principal accounting officer or principal financial officer of the Company.
"Opinion of Counsel" means a written opinion from legal
counsel who is acceptable to the Trustee. The counsel may be outside counsel
to the Company or an employee of or outside counsel to the Trustee.
"pari passu", as applied to the ranking of any Indebtedness of
a Person in relation to other Indebtedness of such Person, means that each such
Indebtedness either (i) is not subordinate in right of payment to any
Indebtedness or (ii) is subordinate in right of payment to the same
Indebtedness as is the other, and is so subordinate to the same extent, and is
not subordinate in right of payment to each other or to any Indebtedness as to
which the other is not so subordinate.
"Permitted Holder" means each of William J. Smith, Ricardo
Poma, Carl Ferenbach and Francisco A. Soler, or any Person of which the
foregoing "beneficially owns" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act) voting securities representing at least 75% of the total voting
power of all classes of Capital Stock of such Person (exclusive of any matters
as to which class voting rights exist).
"Permitted Indebtedness" is defined to include: (i)
Indebtedness Incurred if, after giving pro forma effect to the Incurrence and
application of the proceeds thereof, the Consolidated Coverage Ratio exceeds
2.0 to 1.0, if such determination is being made prior to the third anniversary
of the Issue Date, or 2.5 to 1.0, if such determination is being made
thereafter; (ii) Indebtedness Incurred pursuant to the Credit Agreement in an
amount outstanding at any time not to exceed $130 million; (iii) Capital
Expenditure Indebtedness Incurred in an aggregate principal amount not to
exceed $15 million in any fiscal year of the Company; (iv) Indebtedness under
Interest Rate Agreements and Currency Exchange Agreements entered into for the
purpose of limiting interest rate or foreign exchange risk, as the case may be,
provided that the obligations under such agreements are related to payment
obligations on Permitted Indebtedness; (v) Indebtedness of the Company to any
Restricted Subsidiary or of any Restricted Subsidiary to the Company or any
other Restricted
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<PAGE> 19
Subsidiary (but only so long as such Indebtedness is held by the Company or
such Restricted Subsidiary); (vi) Indebtedness evidenced by the Securities and
the Subsidiary Guaranties; (vii) Indebtedness outstanding immediately after the
issuance of the Securities and the application of the proceeds thereof (other
than the 13 1/2% Notes); (viii) Indebtedness evidenced by the 13 1/2% Notes,
but only to the extent outstanding on or prior to the latest date on which the
Company may effect the Required Redemption in compliance with Section 4.16
hereof (regardless of whether such Required Redemption is actually so
effected); (ix) Indebtedness under reimbursement obligations in respect of
letters of credit Incurred in the ordinary course of business or pursuant to
self-insurance obligations; (x) Indebtedness Incurred by Foreign Restricted
Subsidiaries with respect to such Subsidiaries' working capital requirements
in an aggregate principal amount outstanding at any one time not to exceed $10
million; (xi) Refinancing Indebtedness Incurred with respect to Indebtedness
referred to in clauses (i), (iii), (vi), and (vii) of this paragraph; and
(xii) Indebtedness not otherwise permitted to be Incurred pursuant to Section
4.03 in an aggregate principal amount not to exceed at any one time outstanding
$15 million.
"Permitted Investment" means an Investment by the Company or
any Restricted Subsidiary in (i) a Restricted Subsidiary or a Person which
will, upon the making of such Investment, become a Restricted Subsidiary;
provided, however, that the primary business of such Restricted Subsidiary is a
Related Business; (ii) another Person if as a result of such Investment such
other Person is merged or consolidated with or into, or transfers or conveys
all or substantially all its assets to, the Company or a Restricted Subsidiary;
provided, however, that such Person's primary business is a Related Business;
(iii) Temporary Cash Investments; (iv) receivables owing to the Company or any
Restricted Subsidiary, if created or acquired in the ordinary course of
business and payable or dischargeable in accordance with customary trade terms;
provided, however, that such trade terms may include such concessionary trade
terms as the Company or any such Restricted Subsidiary deems reasonable under
the circumstances; (v) payroll, travel and similar advances to cover matters
that are expected at the time of such advances ultimately to be treated as
expenses for accounting purposes and that are made in the ordinary course of
business; (vi) loans or advances to employees made in the ordinary course of
business consistent with past practices of the Company or such Restricted
Subsidiary, as the case may be, not to exceed $1 million per employee and $3
million in the aggregate; and (vii) stock, obligations or securities received
in settlement of debts created in the ordinary course of business and owing to
the Company or any Restricted Subsidiary or in satisfaction of judgments.
"Permitted Liens" means, with respect to any Person, (i)
pledges or deposits by such Person under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith deposits in
connection with bids, tenders, contracts (other than for the payment of
Indebtedness) or leases to which such Person is a party, or deposits to secure
public or statutory obligations of such Person or deposits of cash or United
States government bonds to secure surety or appeal bonds to which such Person
is a party, or deposits as security for contested taxes or import duties or for
the payment of rent, in each case, Incurred in the ordinary course of business;
(ii) Liens imposed by law, such as carriers', warehousemen's and mechanics'
Liens, in each case, for sums not yet due or being contested in good faith by
appropriate proceedings, or other Liens arising out of judgments or awards
against such Person with respect to which such Person shall then be prosecuting
an appeal or other proceedings for review; (iii) Liens for property taxes not
yet due or payable or subject to penalties for non-payment and which are being
contested in good faith by
-12-
<PAGE> 20
appropriate proceedings; (iv) Liens in favor of issuers of surety bonds or
letters of credit issued pursuant to the request of and for the account of such
Person in the ordinary course of its business; (v) minor survey exceptions,
minor encumbrances, easements or reservations of, or rights of others for,
licenses, rights-of-way, sewers, electric lines, telegraph and telephone lines
and other similar purposes, or zoning or other restrictions as to the use of
real property or Liens incidental to the conduct of the business of such Person
or to the ownership of its properties which were not Incurred in connection
with Indebtedness and which do not in the aggregate materially adversely affect
the value of said properties or materially impair their use in the operation of
the business of such Person; (vi) Liens existing on the Issue Date; (vii) Liens
on property or shares of stock of a Person at the time such Person becomes a
Subsidiary; provided, however, that any such Lien may not extend to any other
property owned by the Company or any Restricted Subsidiary; provided further,
that such Liens are not Incurred in anticipation of or in connection with the
transaction or series of related transactions pursuant to which such Person
became a Subsidiary; and (viii) Liens on property at the time the Company or a
Subsidiary acquired the property, including any acquisition by means of a
merger or consolidation with or into the Company or any Restricted Subsidiary;
provided, however, that any such Lien may not extend to any other property
owned by the Company or any Restricted Subsidiary; provided further, that such
Liens are not Incurred in anticipation of or in connection with the acquisition
of such property; (ix) Liens to secure any refinancing, refunding, extension,
renewal or replacement (or successive refinancings, refundings, extensions,
renewals or replacements) as a whole, or in part, of any Indebtedness secured
by any Lien referred to in the foregoing clauses (vi), (vii) and (viii);
provided, however, that (a) such new Lien shall be limited to all or part of
the same property that secured the original Lien (plus improvements on such
property) and (b) the Indebtedness secured by such Lien at such time is not
increased to any amount greater than the sum of (1) the outstanding principal
amount or, if greater, committed amount of the Indebtedness described under
clauses (vi), (vii) and (viii) at the time the original Lien became a Permitted
Lien under this Indenture and (2) an amount necessary to pay any fees and
expenses, including premiums, related to such refinancing, refunding,
extension, renewal or replacement.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"principal" of a Security means the principal of the Security
plus the premium, if any, payable on the Security which is due or overdue or is
to become due at the relevant time.
"pro forma" means, with respect to any calculation made or
required to be made pursuant to the terms hereof, a calculation in accordance
with Article 11 of Regulation S-X promulgated under the Securities Act (to the
extent applicable), as interpreted in good faith by the Board of Directors
after consultation with the independent certified public accountants of the
Company, or otherwise a calculation made in good faith by the Board of
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<PAGE> 21
Directors after consultation with the independent certified public accountants
of the Company, as the case may be.
"Redeemable Stock" means, with respect to any Person, any
Capital Stock which by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable) or upon the happening of any
event (i) matures or is mandatorily redeemable pursuant to a sinking fund
obligation or otherwise, (ii) is convertible or exchangeable for Indebtedness
or Disqualified Stock, or (iii) is redeemable at the option of the holder
thereof, in whole or in part.
"Refinancing Indebtedness" means Indebtedness that refunds,
refinances, replaces, renews, repays or extends (including pursuant to any
defeasance or discharge mechanism) (collectively, "refinances," and
"refinanced" shall have a correlative meaning) any Indebtedness existing on the
date of this Indenture or Incurred in compliance with this Indenture (including
Indebtedness of the Company that refinances Indebtedness of any Restricted
Subsidiary and Indebtedness of any Restricted Subsidiary that refinances
Indebtedness of another Restricted Subsidiary) including Indebtedness that
refinances Refinancing Indebtedness; provided, however, that (i) the
Refinancing Indebtedness has a Stated Maturity no earlier than the Stated
Maturity of the Indebtedness being refinanced, (ii) the Refinancing
Indebtedness has an Average Life at the time such Refinancing Indebtedness is
Incurred that is equal to or greater than the Average Life of the Indebtedness
being refinanced, (iii) such Refinancing Indebtedness is Incurred in an
aggregate principal amount (or if issued with original issue discount, an
aggregate issue price) that is equal to or less than the aggregate principal
amount (or if issued with original issue discount, the aggregate accredit
value) then outstanding of the Indebtedness being refinanced and (iv) if the
Indebtedness of the Company or a Restricted Subsidiary being refinanced is
subordinated to other Indebtedness of the Company or a Restricted Subsidiary in
any respect, such Refinancing Indebtedness is subordinated at least to the same
extent; provided further, however, that Refinancing Indebtedness shall not
include (a) Indebtedness of a Subsidiary that refinances Indebtedness of the
Company or (b) Indebtedness of the Company or a Restricted Subsidiary that
refinances Indebtedness of an Unrestricted Subsidiary.
"Related Business" means any business related, or
complementary (as determined in good faith by the Board of Directors), to the
business of the Company and the Restricted Subsidiaries on the Issue Date.
"Representative" means the trustee, agent or representative
(if any) for an issue of Senior Indebtedness.
"Required Redemption" means the redemption of the entire
principal amount outstanding of the 13 1/2% Notes in accordance with the
provision of this Indenture and the indenture governing the 13 1/2% Notes.
"Restricted Subsidiary" means (i) United States Can Company,
(ii) U.S.C. Europe N.V., (iii) Thuvine Duiven B.V., (iv) U.S.C. Holding U.K.
Ltd., (v) U.K. Can Ltd., (vi) U.S.C. Europe U.K. Ltd., (vii) U.S.C. Europe
Italia, S.r.l., (viii) U.S.C. France Holding, S.A.S., (ix) CarnaudMetalbox
Aerosols S.A. (to be known as U.S.C. Aerosols France, S.A.S.), (x) Can
Beteilungs GmbH, (xi) Can Verwaltungs GmbH, (xii) U.S.C. Aerosoldosen
Deutschland GmbH & Co. KG, (xiii) U.S. Can Espana Holding SCpA, (xiv)
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<PAGE> 22
CMB Aerosoles S.A. (to be known as U.S.C. Europe Espana SCpA, (xv) any other
Subsidiary of the Company that is not designated by the Board of Directors to
be an Unrestricted Subsidiary and (xvi) an Unrestricted Subsidiary which is
redesignated as a Restricted Subsidiary as permitted pursuant to the definition
of "Unrestricted Subsidiary."
"Sale/Leaseback Transaction" means an arrangement relating to
property now owned or hereafter acquired whereby the Company or a Restricted
Subsidiary transfers such property to a Person and the Company or a Restricted
Subsidiary leases it from such Person.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" means all Indebtedness of the Company
including interest thereon, whether outstanding on the date of this Indenture
or thereafter issued, unless in the instrument creating or evidencing the same,
or pursuant to which the same is outstanding, it is provided that such
obligations are not superior in right of payment to the Securities; provided,
however, that Senior Indebtedness shall not include (i) any obligation of the
Company to any Subsidiary, (ii) any liability for federal, state, local or
other taxes owed or owing by the Company, (iii) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guaranties thereof or instruments evidencing such liabilities), (iv)
any Indebtedness, Guaranty or obligation of the Company which is subordinate or
junior in any respect to any other Indebtedness, Guaranty or obligation of the
Company, including any Senior Subordinated Indebtedness and any Subordinated
Obligations, (v) any Capital Stock or (vi) any Indebtedness Incurred in
violation of this Indenture.
"Senior Indebtedness of Subsidiary Guarantors" means (i) with
respect to the Guarantor, the Bank Indebtedness and (ii) all other Indebtedness
of the Subsidiary Guarantors including interest thereon, whether outstanding on
the date of this Indenture or thereafter issued, unless in the instrument
creating or evidencing the same or pursuant to which the same is outstanding it
is provided that such obligations are not superior in right of payment to the
Subsidiary Guaranties, provided, however, that Senior Indebtedness of
Subsidiary Guarantors shall not include (a) any obligation of any Subsidiary
Guarantor to any Subsidiary, (b) any liability for federal, state, local or
other taxes owed or owing by any Subsidiary Guarantor, (c) any accounts payable
or other liability to trade creditors arising in the ordinary course of
business (including Guaranties thereof or instruments evidencing such
liabilities), (d) any Indebtedness, Guaranty or obligation of any Subsidiary
Guarantor which is subordinate or junior in any respect to any other
Indebtedness, Guaranty or obligation of such Subsidiary Guarantor, including
Senior Subordinated Indebtedness of Subsidiary Guarantors and any Subordinated
Obligations, (e) any obligations with respect to any Capital Stock or (f) any
Indebtedness Incurred in violation of this Indenture.
"Senior Subordinated Indebtedness" means the Securities and
any other Indebtedness of the Company that specifically provides that such
Indebtedness is to rank pari passu with the Securities and is not subordinated
by its terms to any Indebtedness or other obligation of the Company which is
not Senior Indebtedness.
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<PAGE> 23
"Senior Subordinated Indebtedness of Subsidiary Guarantors"
means (i) with respect to the Guarantor, the 13 1/2% Notes, (ii) the Subsidiary
Guaranties and (iii) any other Indebtedness of any Subsidiary Guarantor that
specifically provides that such Indebtedness is to rank pari passu with the
Subsidiary Guaranties and is not subordinated by its terms to any Indebtedness
or other obligation of such Subsidiary Guarantor which is not Senior
Indebtedness of Subsidiary Guarantors.
"Stated Maturity" means, with respect to any security, the
date specified in such security as the fixed date on which the payment of
principal of such security is due and payable, including pursuant to any
mandatory redemption provision (but excluding any provision providing for the
repurchase of such security at the option of the holder thereof upon the
happening of any contingency beyond the control of the issuer unless such
contingency has occurred).
"Subordinated Obligation" means (i) any Indebtedness of the
Company (whether outstanding on the date of this Indenture or thereafter
Incurred) which is subordinate or junior in right of payment to the Securities
or (ii) any Indebtedness of the Subsidiary Guarantors (whether outstanding on
the date of this Indenture or thereafter Incurred) which is subordinate or
junior in right of payment to the Subsidiary Guaranties.
"Subsidiary" of any specified Person means any corporation,
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which at least 50% of the total voting power of the Voting Stock is held by
such first-named Person or any of its Subsidiaries and such first-named Person
or any of its Subsidiaries has the power to direct the management, policies and
affairs thereof; or (ii) in the case of a partnership, joint venture,
association, or other business entity, with respect to which such first-named
Person or any of its Subsidiaries has the power to direct or cause the
direction of the management and policies of such entity by contract or
otherwise if in accordance with GAAP such entity is consolidated with the
first-named Person for financial statement purposes.
"Subsidiary Guarantors" means (i) the Guarantor and (ii) each
Domestic Restricted Subsidiary that in the future executes a supplemental
indenture in which such Subsidiary agrees to be bound by the terms of this
Indenture as a Subsidiary Guarantor, provided that any Person constituting a
Subsidiary Guarantor as described above shall cease to constitute a Subsidiary
Guarantor when its respective Subsidiary Guaranty is released in accordance
with the terms of this Indenture.
"Temporary Cash Investments" means any of the following: (i)
investments in U.S. Government Obligations maturing within 90 days of the date
of acquisition thereof, (ii) investments in time deposit accounts, certificates
of deposit and money market deposits maturing within 90 days of the date of
acquisition thereof, issued by a bank or trust company which is organized under
the laws of the United States of America or any state thereof having capital,
surplus and undivided profits aggregating in excess of $500,000,000 and whose
long-term debt is rated "A-3" or A- or higher according to Moody's Investors
Service, Inc. or Standard and Poor's Corporation (or such similar equivalent
rating by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)), (iii) repurchase
obligations with a term of not more than 7 days for underlying securities of
the types described in clause (i) above entered into with a bank meeting the
qualifications described in clause (ii) above, and (iv) investments in
commercial
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<PAGE> 24
paper, maturing not more than 90 days after the date of acquisition, issued by
a corporation (other than an Affiliate of the Company) organized and in
existence under the laws of the United States of America with a rating at the
time as of which any investment therein is made of "P-1" (or higher) according
to Moody's Investors Service, Inc. or "A-1" (or higher) according to Standard
and Poor's Corporation.
"13 1/2% Notes" means the $100 million principal amount of 13
1/2% Senior Subordinated Notes due 2002 of the Guarantor.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Section
Section 77aaa-77bbbb) as in effect on the date of this Indenture; provided,
however, that, in the event the Trust Indenture Act of 1939 is amended after
such date, "TIA" means, to the extent required by any such amendment, the Trust
Indenture Act of 1939, as may be amended from time to time.
"Trade Payables" means, with respect to any Person, any
accounts payable or any indebtedness or monetary obligation to trade creditors
created, assumed or Guaranteed by such Person arising in the ordinary course of
business of such Person in connection with the acquisition of goods or
services.
"Trustee" means the party named as such in this Indenture
until a successor replaces it in accordance with the provisions of this
Indenture and, thereafter, means such successor.
"Trust Officer" means the Chairman of the Board, the President
or any other officer or assistant officer of the Trustee assigned by the
Trustee to administer its corporate trust matters.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Subsidiary of the Company (including any newly acquired or newly formed
Subsidiary of the Company) to be an Unrestricted Subsidiary unless such
Subsidiary (i) owns any Capital Stock or Indebtedness of, or owns or holds any
Lien on any property of, the Company or any other Subsidiary of the Company
that is not a Subsidiary of the Subsidiary to be so designated or (ii) is
obligated under any Indebtedness or other obligation that, if in default, would
result (with the passage of time or the giving of notice or otherwise) in a
default on any Indebtedness of the Company or of any Restricted Subsidiary);
provided, however, that either (a) the Subsidiary to be so designated has total
assets of $1,000 or less or (b) if such Subsidiary has assets greater than
$1,000, then such designation would be permitted under Section 4.04 as a
Restricted Payment. Unless so designated as an Unrestricted Subsidiary, any
Person that becomes a Subsidiary of the Company or of any Restricted Subsidiary
shall be classified as a Restricted Subsidiary. Notwithstanding the foregoing
sentence, the Board of Directors may designate any Unrestricted Subsidiary to
be a Restricted Subsidiary; provided, however, that immediately after giving
pro forma effect to such designation (1) the Company could Incur $1.00
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<PAGE> 25
of additional Indebtedness pursuant to clause (i) of the definition of
"Permitted Indebtedness" and (2) no Default shall have occurred and be
continuing. Any such designation by the Board of Directors shall be evidenced
to the Trustee by promptly filing with the Trustee a copy of the Certified
Resolution giving effect to such designation and an Officers' Certificate
certifying that such designation complies with the foregoing provisions.
"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.
"Voting Stock" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
"Wholly Owned Subsidiary" means a Restricted Subsidiary of the
Company all the Capital Stock of which (other than directors' qualifying
shares) is owned by the Company or another Wholly Owned Subsidiary.
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<PAGE> 26
SECTION 1.02. Other Definitions.
<TABLE>
<CAPTION>
DEFINED IN
TERM SECTION
---- -----------
<S> <C>
"Bankruptcy Law" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Blockage Notice" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
"covenant defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Custodian" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Escrow Funds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.15
"Event of Default" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6.01
"Excess Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Exchange Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital
"incorporated provision" . . . . . . . . . . . . . . . . . . . . . . . . . . 12.01
"Initial Notes" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital
"legal defeasance option" . . . . . . . . . . . . . . . . . . . . . . . . . . 8.01
"Legal Holiday" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12.08
"Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offer Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offer Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Offered Price" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Pari Passu Debt Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Pari Passu Offer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"pay the Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
"Paying Agent" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Payment Blockage Period" . . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
"Purchase Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Redemption Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.16
"Registrar" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.03
"Reports" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Restricted Payment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.04
"Security Amount" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.06
"Subsidiary Guaranties" . . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
"Subsidiary Guarantors Blockage Notice" . . . . . . . . . . . . . . . . . . . 11.05
"Subsidiary Guarantors Payment Blockage Period" . . . . . . . . . . . . . . . 11.05
"Surviving Entity" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.01
</TABLE>
SECTION 1.03. Incorporation by Reference of Trust Indenture
Act. This Indenture is subject to the mandatory provisions of the TIA which
are incorporated by reference in and made a part of this Indenture. The
following TIA terms have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Securities.
"indenture security holder" means a Holder.
"indenture to be qualified" means this Indenture.
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<PAGE> 27
"indenture trustee" or "institutional trustee" means the
Trustee.
"obligor" on the indenture securities means the Company and
any other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by SEC rule
have the meanings assigned to them by such definitions.
SECTION 1.04. Rules of Construction. Unless the context
otherwise requires:
(i) a term has the meaning assigned to it;
(ii) an accounting term not otherwise defined has the
meaning assigned to it in accordance with GAAP;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in
the plural include the singular;
(vi) unsecured Indebtedness shall not be deemed to be
subordinate or junior to secured Indebtedness merely by virtue of its
nature as unsecured Indebtedness;
(vii) the principal amount of any noninterest bearing or
other discount security at any date shall be the principal amount
thereof that would be shown on a balance sheet of the issuer dated
such date prepared in accordance with GAAP and accretion of principal
on such security shall be deemed to be the Incurrence of Indebtedness;
and
(viii) the principal amount of any Preferred Stock shall be
the greater of (i) the maximum liquidation value of such Preferred
Stock, or (ii) the maximum mandatory redemption or mandatory
repurchase price with respect to such Preferred Stock.
ARTICLE 2
THE SECURITIES
SECTION 2.01. Form and Dating. The Initial Notes and the
Trustee's certificate of authentication shall be substantially in the form of
Exhibit A which is hereby incorporated in and expressly made a part of this
Indenture. The Exchange Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit B, which is hereby incorporated
in and expressly made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend
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<PAGE> 28
or endorsement is in a form acceptable to the Company). Each Security shall be
dated the date of its authentication. The terms of the Securities set forth in
Exhibit A and Exhibit B are part of the terms of this Indenture.
SECTION 2.02. Execution and Authentication. Two Officers
shall sign the Securities for the Company by manual or facsimile signature.
The Company's seal shall be impressed, affixed, imprinted or reproduced on the
Securities and may be in facsimile form.
If an Officer whose signature is on a Security no longer holds
that office at the time the Trustee authenticates the Security, the Security
shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of
the Trustee manually signs the certificate of authentication on the Security.
The signature shall be conclusive evidence that the Security has been
authenticated under this Indenture.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for
the authentication and delivery of such Securities; and the Trustee in
accordance with such Company Order shall authenticate and deliver such
Securities as provided in this Indenture and not otherwise.
The Trustee may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Securities. Unless limited by
the terms of such appointment, an authenticating agent may authenticate
Securities whenever the Trustee may do so. Each reference in this Indenture to
authentication by the Trustee includes authentication by such agent. An
authenticating agent has the same rights as any Registrar, Paying Agent or
agent for service of notices and demands.
SECTION 2.03. Registrar and Paying Agent. The Company shall
maintain an office or agency where Securities may be presented for registration
of transfer or for exchange (the "Registrar") and an office or agency where
Securities may be presented for payment (the "Paying Agent"). The Registrar
shall keep a register of the Securities and of their transfer and exchange.
The Company may have one or more co-registrars and one or more additional
paying agents; provided, however, that so long as Harris Trust and Savings Bank
shall be the Trustee, without the consent of the Trustee, there shall be no
more than one Registrar or Paying Agent. The term "Paying Agent" includes any
additional paying agent.
The Company shall enter into an appropriate agency agreement
with any Registrar, Paying Agent or co-registrar not a party to this Indenture,
which shall incorporate the terms of the TIA. The agreement shall implement
the provisions of this Indenture that relate to such agent. The Company shall
notify the Trustee of the name and address of any such agent. If the Company
fails to maintain a Registrar or Paying Agent, the Trustee shall act as such
and shall be entitled to appropriate compensation therefor pursuant to Section
7.07. The Company or any of its domestically incorporated Wholly Owned
Subsidiaries may act as Paying Agent, Registrar, co-registrar or transfer
agent.
The Company initially appoints the Trustee as Registrar and
Paying Agent in connection with the Securities.
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SECTION 2.04. Paying Agent To Hold Money in Trust. Prior to
each due date of the principal and interest on any Security, the Company shall
deposit with the Paying Agent a sum sufficient to pay such principal and
interest when so becoming due. The Company shall require each Paying Agent
(other than the Trustee) to agree in writing that the Paying Agent shall hold
in trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal of or interest on the Securities and shall
notify the Trustee of any default by the Company in making any such payment.
If the Company or a Subsidiary acts as Paying Agent, it shall segregate the
money held by it as Paying Agent and hold it as a separate trust fund. The
Company at any time may require a Paying Agent to pay all money held by it to
the Trustee and to account for any funds disbursed by the Paying Agent. Upon
complying with this Section, the Paying Agent shall have no further liability
for the money delivered to the Trustee.
SECTION 2.05. Holder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to
it of the names and addresses of Holders. If the Trustee is not the Registrar,
the Company shall furnish to the Trustee, in writing at least five Business
Days before each interest payment date and at such other times as the Trustee
may request in writing, a list in such form and as of such date as the Trustee
may reasonably require of the names and addresses of Holders.
SECTION 2.06. Replacement Securities. If a mutilated Security
is surrendered to the Registrar or if the Holder of a Security claims that the
Security has been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a replacement Security if the requirements
of Section 8-405 of the Uniform Commercial Code are met and the Holder
satisfies any other reasonable requirements of the Trustee. If required by the
Trustee or the Company, such Holder shall furnish an indemnity bond sufficient
in the judgment of the Company and the Trustee to protect the Company, the
Trustee, the Paying Agent, the Registrar and any co-registrar from any loss
which any of them may suffer if a Security is replaced. The Company and the
Trustee may charge the Holder for their expenses in replacing a Security.
Every replacement Security is an additional obligation of the
Company.
SECTION 2.07. Outstanding Securities. Securities outstanding
at any time are all Securities authenticated by the Trustee except for those
canceled by it, those delivered to it for cancellation and those described in
this Section as not outstanding. A Security does not cease to be outstanding
because the Company or an Affiliate of the Company holds the Security.
If a Security is replaced pursuant to Section 2.06, it ceases
to be outstanding unless the Trustee and the Company receive proof satisfactory
to them that the replaced Security is held by a bona fide purchaser, in which
event the replacement Security shall cease to be outstanding, subject to the
provisions of Section 8-405 of the Uniform Commercial Code.
If the Paying Agent segregates and holds in trust, in
accordance with this Indenture, on a redemption date or maturity date money
sufficient to pay all principal and interest payable on that date with respect
to the Securities (or portions thereof) to be redeemed or maturing, as the case
may be, and the Paying Agent is not prohibited from paying such money to the
Holders on that date pursuant to the terms of this Indenture, then on
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and after that date such Securities (or portions thereof) cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.08. Temporary Securities. Until definitive
Securities are ready for delivery, the Company may prepare and the Trustee
shall authenticate temporary Securities. Temporary Securities shall be
substantially in the form of definitive Securities but may have variations that
the Company considers appropriate for temporary Securities. Without
unreasonable delay, the Company shall prepare and the Trustee shall
authenticate definitive Securities and deliver them in exchange for temporary
Securities.
SECTION 2.09. Cancellation. The Company at any time may
deliver Securities to the Trustee for cancellation. The Registrar and the
Paying Agent shall forward to the Trustee any Securities surrendered to them
for registration of transfer, exchange or payment. The Trustee and no one else
shall cancel and destroy (subject to the record retention requirements of the
Exchange Act) all Securities surrendered for registration of transfer,
exchange, payment or cancellation and deliver a certificate of such destruction
to the Company. The Company may not issue new Securities to replace Securities
it has redeemed, paid or delivered to the Trustee for cancellation.
SECTION 2.10. Defaulted Interest. If the Company defaults in
a payment of interest on the Securities, the Company shall pay defaulted
interest (plus interest on such defaulted interest to the extent lawful) in any
lawful manner. The Company may pay the defaulted interest to the Persons who
are Holders on a subsequent special record date. The Company shall fix or
cause to be fixed any such special record date and payment date to the
reasonable satisfaction of the Trustee and shall promptly mail to each Holder a
notice that states the special record date, the payment date and the amount of
defaulted interest to be paid.
SECTION 2.11. CUSIP Numbers. The Company, in issuing the
Securities, may use "CUSIP" numbers (if then generally in use), and, if so, the
Trustee shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided, however, that any such notice may state that no
representation is made as to the correctness of such numbers either as printed
on the Securities or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
ARTICLE 3
REDEMPTION
SECTION 3.01. Notices to Trustee. If the Company elects to
redeem Securities pursuant to paragraph 6 of the Securities, it shall notify
the Trustee in writing of the redemption date, the principal amount of
Securities to be redeemed and the paragraph of the Securities pursuant to which
the redemption will occur.
The Company shall give each notice to the Trustee provided for
in this Section at least 45 days before the redemption date unless the Trustee
consents to a shorter period. Such notice shall be accompanied by an Officers'
Certificate and an Opinion of
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Counsel from the Company to the effect that such redemption will comply with
the conditions herein.
SECTION 3.02. Selection of Securities To Be Redeemed. If
fewer than all the Securities are to be redeemed, the Trustee shall select the
Securities to be redeemed pro rata or by lot or by a method that complies with
applicable legal and securities exchange requirements, if any, and that the
Trustee considers fair and appropriate and in accordance with methods generally
used at the time of selection by fiduciaries in similar circumstances. The
Trustee shall make the selection from outstanding Securities not previously
called for redemption. The Trustee may select for redemption portions of the
principal of Securities that have denominations larger than $1,000. Securities
and portions of them the Trustee selects shall be in amounts of $1,000 or a
whole multiple of $1,000. Provisions of this Indenture that apply to
Securities called for redemption also apply to portions of Securities called
for redemption. The Trustee shall notify the Company promptly of the
Securities or portions of Securities to be redeemed.
SECTION 3.3. Notice of Redemption. At least 30 days but not
more than 60 days before a date for redemption of Securities, the Company shall
mail a notice of redemption by first-class mail to each Holder of Securities to
be redeemed.
The notice shall identify the Securities to be redeemed and
shall state:
(i) the redemption date;
(ii) the redemption price;
(iii) the name and address of the Paying Agent;
(iv) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
(v) if fewer than all the outstanding Securities are to
be redeemed, the identification and principal amounts of the
particular Securities to be redeemed;
(vi) that, unless the Company defaults in making such
redemption payment or the Paying Agent is prohibited from making such
payment pursuant to the terms of this Indenture, interest on
Securities (or portion thereof) called for redemption ceases to accrue
on and after the redemption date; and
(vii) that no representation is made as to the correctness
or accuracy of the CUSIP number, if any, listed in such notice or
printed on the Securities.
At the Company's written request, the Trustee shall give the
notice of redemption in the Company's name and at the Company's expense. In
such event, the Company shall provide the Trustee with the information required
by this Section at least 45 days before the redemption date.
SECTION 3.04. Effect of Notice of Redemption. Once notice of
redemption is mailed, Securities called for redemption become due and payable
on the redemption date and at the redemption price stated in the notice. Upon
surrender to the Paying Agent,
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such Securities shall be paid at the redemption price stated in the notice,
plus accrued interest to the redemption date. Failure to give notice or any
defect in the notice to any Holder shall not affect the validity of the notice
to any other Holder.
SECTION 3.05. Deposit of Redemption Price. Prior to the
redemption date, the Company shall deposit with the Paying Agent (or, if the
Company or a Subsidiary is the Paying Agent, shall segregate and hold in trust)
money sufficient to pay the redemption price of and accrued interest on all
Securities to be redeemed on that date other than Securities or portions of
Securities called for redemption which have been delivered by the Company to
the Trustee for cancellation.
SECTION 3.06. Securities Redeemed in Part. Upon surrender of
a Security that is redeemed in part, the Company shall execute and the Trustee
shall authenticate for the Holder (at the Company's expense) a new Security
equal in principal amount to the unredeemed portion of the Security
surrendered.
ARTICLE 4
COVENANTS
SECTION 4.01. Payment of Securities. The Company shall
promptly pay the principal of and interest on the Securities on the dates and
in the manner provided in the Securities and in this Indenture due on such due
date. Principal and interest shall be considered paid on the date due if on
such date the Trustee or the Paying Agent holds in accordance with this
Indenture money sufficient to pay all principal and interest then due and the
Trustee or the Paying Agent, as the case may be, is not prohibited from paying
such money to the Holders on that date pursuant to the terms of this Indenture.
The Company shall pay interest on overdue principal at the
rate specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.
SECTION 4.02. SEC Reports. The Company and the Guarantor
shall file with the Trustee and provide Holders at the Company's and the
Guarantor's expense, within 15 days after it files them with the SEC, copies of
their annual report and other reports which the Company and the Guarantor are
required to file with the SEC pursuant to Section 13 or 15(d) of the Exchange
Act. Notwithstanding that the Company may not be required to remain subject to
the reporting requirements of Section 13 or 15(d) of the Exchange Act, the
Company shall continue to file with the SEC and provide the Trustee and Holders
and prospective Holders (upon request) with the annual reports and other
reports which are specified in Sections 13 and 15(d) of the Exchange Act;
provided, however, that the Company and the Guarantor shall not be required to
file any report, document or other information with the SEC if the SEC does not
permit such filing. The Company and the Guarantor also shall comply with the
other provisions of Section 314(a) of the TIA.
SECTION 4.03. Limitation on Indebtedness. The Company shall
not, and shall not permit any Restricted Subsidiary to, directly or indirectly,
Incur any Indebtedness, unless such Indebtedness is Permitted Indebtedness.
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SECTION 4.04. Limitation on Restricted Payments. (i) The
Company shall not, and shall not permit any Restricted Subsidiary to, directly
or indirectly (a) declare or pay any dividend on, or make any distribution in
respect of, any Capital Stock of the Company, except for dividends or
distributions payable solely in Capital Stock of the Company (other than
Disqualified Stock); (b) purchase, redeem, retire or acquire for value any
Capital Stock of the Company or any Affiliate of the Company (other than a
Restricted Subsidiary); (c) purchase, repurchase, redeem, defease or acquire
for value, prior to scheduled maturity, scheduled repayment or scheduled
sinking fund payment, any Subordinated Obligation (other than in anticipation
of satisfying a sinking fund obligation, principal installment or final
maturity, in each case, due within one year of the date of acquisition); or (d)
make any Investment (other than Permitted Investments) in any Person, (any such
dividend, distribution, purchase, redemption, repurchase, defeasance, other
acquisition, retirement or Investment being herein referred to as a "Restricted
Payment") if at the time of and after giving effect to the proposed Restricted
Payment:
(1) any Default or Event of Default has occurred and is
continuing;
(2) the Company could not Incur at least $1.00 of
additional Indebtedness pursuant to clause (i) of the definition of
Permitted Indebtedness; or
(3) the aggregate amount expended or declared for all
Restricted Payments after the Issue Date exceeds (without duplication)
the sum of:
(A) 50% of the Consolidated Net Income accrued
during the period (treated as one accounting period) from the
first day of the fiscal quarter in which the Issue Date occurs
to the end of the most recent fiscal quarter ending at least
45 days prior to the date of such Restricted Payment (or, in
case such Consolidated Net Income shall be a deficit, minus
100% of such deficit) and minus 100% of the amount of any
write-downs, write-offs, other negative revaluations and other
negative extraordinary charges not otherwise reflected in
Consolidated Net Income during such period;
(B) 100% of the aggregate Net Cash Proceeds
received by the Company from the issuance or sale of its
Capital Stock (other than Disqualified Stock) subsequent to
the Issue Date (other than an issuance or a sale to a
Subsidiary of the Company or an employee stock ownership plan
or trust);
(C) the amount by which Indebtedness of the
Company or its Restricted Subsidiaries is reduced on the
Company's balance sheet upon the conversion or exchange (other
than by a Subsidiary) subsequent to the Issue Date, of any
Indebtedness of the Company or its Restricted Subsidiaries
convertible or exchangeable for Capital Stock (other than
Disqualified Stock) of the Company;
(D) an amount equal to the net reduction in
Investments resulting from dividends, repayments of loans or
advances or other transfers of assets (to the extent not
included in Consolidated Net Income), in each case, to the
Company or any Restricted Subsidiary, not to exceed the amount
of Investments previously made that were included as
Restricted Payments; and
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(E) $40 million.
(ii) The provisions of Section 4.04(i) shall not prevent the
Company from:
(a) paying a dividend on its Capital Stock
within 60 days after the declaration thereof, if, on the
declaration date, the Company could have paid such dividend in
compliance with this Indenture;
(b) redeeming, repurchasing, defeasing,
acquiring or retiring for value Subordinated Obligations from
proceeds of Refinancing Indebtedness permitted by clause (xi)
of the definition of Permitted Indebtedness;
(c) acquiring, redeeming or retiring Capital
Stock or Subordinated Obligations of the Company in exchange
for, or in connection with a substantially concurrent issuance
of, Capital Stock of the Company (other than Disqualified
Stock); and
(d) repurchasing or redeeming shares of, or
options to purchase shares of, Capital Stock of the Company or
stock appreciation rights from officers, directors and
employees (or the heirs of such persons) of the Company or any
Restricted Subsidiary whose employment has terminated or who
have died or retired or become disabled or upon the vesting of
stock appreciation rights, so long as the aggregate amount of
such payments in any fiscal year does not exceed $5 million.
(iii) Payments made pursuant to Sections 4.04(ii)(b) and (c)
shall be excluded from the calculation of the amount available for Restricted
Payments, provided that the proceeds from the issuance of Capital Stock of the
Company pursuant to Section 4.04(ii)(c) shall not increase the amount available
for Restricted Payments.
SECTION 4.05. Limitation on Dividends and Other Payment
Restrictions Affecting Restricted Subsidiaries. (i) The Company shall not, and
shall not permit any Restricted Subsidiary to, directly or indirectly, cause to
exist or become effective or enter into any encumbrance or restriction (other
than pursuant to law or regulation) on the ability of any Restricted Subsidiary
(a) to pay dividends or make any other distributions in respect of its Capital
Stock or pay any debt or other obligation owed to the Company or any other
Restricted Subsidiary; (b) to make loans or advances to the Company or any
other Restricted Subsidiary; or (c) to transfer any of its property or assets
to the Company or any other Restricted Subsidiary.
(ii) The provisions of Section 4.05(i) shall not apply: (a)
with respect to Sections 4.05(i)(a), (b) and (c), to encumbrances and
restrictions (1) in existence under or by reason of any agreement (not
otherwise described in clause (3) below and other than those contained in the
indenture governing the 13 1/2% Notes) in effect on the Issue Date; (2)
relating to Indebtedness of a Restricted Subsidiary and existing at such
Restricted Subsidiary at the time it became a Restricted Subsidiary if such
encumbrance or restriction was not created in connection with or in
anticipation of the transaction or series of related transactions pursuant to
which such Restricted Subsidiary became a Restricted Subsidiary or was
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acquired by the Company; (3) pursuant to the Credit Agreement, provided that
such restrictions or encumbrances are no less favorable to the Holders than
those restrictions or encumbrances pursuant to the Credit Agreement as in
effect on the Issue Date, provided further, however, that the provisions of the
Credit Agreement permit distributions to the Company for the purpose of, and in
an amount sufficient to fund, the payment of principal due at maturity and
interest in respect of the Securities (provided that, in either case, such
payment is due or to become due within 30 days from the date of such
distribution) at a time when there does not exist an event which after notice
or passage of time or both would permit the lenders under the Credit Agreement
to declare all amounts thereunder due and payable; (4) which result from the
renewal, refinancing, extension or amendment of an agreement referred to in
Sections 4.05(ii)(a)(1), (2) and (6) and in Sections 4.05(ii)(b)(1) and (2)
provided that, such encumbrance or restriction is no more restrictive to such
Restricted Subsidiary and is not materially less favorable to the Holders than
those under or pursuant to the agreement evidencing the Indebtedness so
extended, renewed, refinanced or replaced; (5) pursuant to the indenture
governing the 13 1/2% Notes (while such 13 1/2% Notes remain outstanding as
permitted pursuant to Section 4.16 hereof), provided that such restrictions or
encumbrances are no less favorable to Holders than those restrictions or
encumbrances pursuant to such indenture as in effect on the Issue Date; or (6)
relating to Indebtedness Incurred pursuant to clause (xi) of the definition of
Permitted Indebtedness; and (b) with respect to Section 4.05(i)(c) only, to (1)
any encumbrance or restriction relating to Indebtedness that is permitted to be
Incurred and secured pursuant to the provisions of Sections 4.03 and 4.12 that
limit the right of the debtor to dispose of the assets or property securing
such Indebtedness; (2) any encumbrance or restriction in connection with an
acquisition of property, so long as such encumbrance or restriction relates
solely to the property so acquired and was not created in connection with or in
anticipation of such acquisition; (3) customary provisions restricting
subletting or assignment of leases and customary provisions in other agreements
that restrict assignment of such agreements or rights thereunder; or (4)
customary restrictions contained in asset sale agreements limiting the transfer
of such assets pending the closing of such sale.
SECTION 4.06. Limitation on Asset Dispositions. (i) The
Company shall not, and shall not permit any Restricted Subsidiary to, make any
Asset Disposition unless (a) the Company or such Restricted Subsidiary receives
consideration at the time of such Asset Disposition at least equal to the Fair
Market Value, as determined in good faith by the Board of Directors, the
determination of which shall be evidenced by a Certified Resolution (including
as to the value of all non-cash consideration), of the shares and assets
subject to such Asset Disposition; (b) at least 80% of the consideration
thereof received by the Company or such Restricted Subsidiary is in the form of
cash or cash equivalents, provided, however, that any securities or notes
received by the Company or such Restricted Subsidiary in connection with such
Asset Disposition that are converted by the Company or such Restricted
Subsidiary into cash or cash equivalents within 10 business days of the date of
such Asset Disposition shall be deemed to be cash equivalents; (c) the Company
delivers an Officers' Certificate to the Trustee certifying that such Asset
Disposition complies with subclauses (a) and (b); and (d) an amount equal to
100% of the Net Available Cash from such Asset Disposition is applied by the
Company (or such Restricted Subsidiary, as the case may be) (1) first, to the
extent the Company elects (or is required by the terms of any Senior
Indebtedness), to prepay, repay or purchase Senior Indebtedness or Senior
Indebtedness of Subsidiary Guarantors (in each case, other than Indebtedness
owed to the Company or an Affiliate of the Company) or, if the Asset
Disposition is made by a Foreign Restricted Subsidiary, Senior Indebtedness of
a Foreign Restricted Subsidiary, within 270 days from the later of the date of
such Asset Disposition or the receipt of such Net Available Cash; (2) second,
to the extent of the balance of Net Available Cash after application in
accordance with sub-subclause (1), to the extent the Company or such Restricted
Subsidiary elects, to reinvest in Additional Assets (including by means of an
Investment in Additional Assets by a Restricted Subsidiary with Net Available
Cash received by the Company or another Restricted Subsidiary) within 270 days
from
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the later of such Asset Disposition or the receipt of such Net Available Cash;
(3) third, to the extent of the balance of such Net Available Cash after
application in accordance with sub-subclauses (1) and (2) (which balance
constitutes "Excess Proceeds"), to make an Offer (as defined in the next
paragraph) to purchase Securities and other pari passu Indebtedness (if
required) pursuant to and subject to the conditions of the following paragraph;
provided, however, that in connection with any prepayment, repayment or
purchase of Indebtedness pursuant to Sections 4.06(i)(d)(1) or (3), the Company
or such Restricted Subsidiary shall retire such Indebtedness and shall cause
the related loan commitment (if any) to be permanently reduced in an amount
equal to the principal amount so prepaid, repaid or purchased. Pending
application of Net Available Cash pursuant to this provision, such Net
Available Cash shall be invested in Temporary Cash Investments.
(ii) When the aggregate amount of Excess Proceeds exceeds $15
million (including interest earned thereon), the Company shall apply the Excess
Proceeds to the repayment of the Securities and any other pari passu
Indebtedness outstanding with similar provisions requiring the Company to make
an offer to purchase such Indebtedness with the proceeds from any Asset
Disposition as follows: (a) the Company shall make an offer to purchase (an
"Offer") from all holders of the Securities in accordance with the procedures
set forth in this Indenture in the maximum principal amount (expressed as a
multiple of $1,000) of Securities that may be purchased out of an amount (the
"Security Amount") equal to the product of such Excess Proceeds multiplied by a
fraction, the numerator of which is the outstanding principal amount of the
Securities, and the denominator of which is the sum of the outstanding
principal amount of the Securities and such pari passu Indebtedness (subject to
proration in the event such amount is less than the aggregate Offered Price of
all Securities tendered) and (b) to the extent required by such pari passu
Indebtedness to reduce permanently the principal amount of such pari passu
Indebtedness, the Company shall make an offer to purchase or otherwise
repurchase or redeem pari passu Indebtedness (a "Pari Passu Offer") in an
amount (the "Pari Passu Debt Amount") equal to the Excess Proceeds over the
Security Amount; provided that in no event will the Company be required to make
a Pari Passu Offer in a Pari Passu Debt Amount exceeding the principal amount
of such pari passu Indebtedness plus the amount of any premium required to be
paid to repurchase such pari passu Indebtedness. The offer price for the
Securities shall be payable in cash in an amount equal to 100% of the principal
amount of the Securities plus accrued and unpaid interest, if any, to the date
(the "Offer Date") such Offer is consummated (the "Offered Price"), in
accordance with the procedures set forth in this Indenture. To the extent that
the aggregate Offered Price of the Securities tendered pursuant to the Offer is
less than the Security Amount relating thereto or the aggregate amount of pari
passu Indebtedness that is purchased in a Pari Passu Offer is less than the
Pari Passu Debt Amount, the Company may use any remaining Excess Proceeds for
general corporate purposes. If the aggregate principal amount of Securities
and pari passu Indebtedness surrendered by holders thereof exceeds the amount
of Excess Proceeds, the Trustee shall select the Securities to be purchased on
a pro rata basis. Upon the completion of the purchase of all the Securities
tendered pursuant to an Offer and the completion of a Pari Passu Offer, the
amount of Excess Proceeds, if any, shall be reset at zero.
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(iii) (a) Promptly, and in any event within 10 days after the
Company becomes obligated to make an Offer, the Company shall be obligated to
deliver to the Trustee and send, by first-class mail to each Holder, a written
notice stating that the Holder may elect to have his Securities purchased by
the Company, either in whole or in part, (subject to proration as hereinafter
described in the event the Offer is oversubscribed) in integral multiples of
$1,000 of principal amount, at the applicable purchase price. The notice shall
specify a purchase date not less than 30 days nor more than 60 days after the
date of such notice (the "Purchase Date") and shall contain information
concerning the business of the Company which the Company in good faith believes
will enable such Holders to make an informed decision (which at a minimum will
include (1) the most recently filed Annual Report on Form 10-K (including
audited consolidated financial statements) of the Company, the most recent
subsequently filed Quarterly Report on Form 10-Q and any Current Report on Form
8-K of the Company filed subsequent to such Quarterly Report, other than
Current Reports describing Asset Dispositions (or corresponding successor
reports) (collectively, the "Reports"), (2) a description of material
developments in the Company's business subsequent to the date of the latest of
the Reports, and (3) if material, appropriate pro forma financial information),
and all instructions and materials necessary to tender Securities pursuant to
the Offer, together with the information contained in Section 4.06(iii)(b).
(b) Not later than the date upon which written notice of an
Offer is delivered to the Trustee as provided below, the Company shall deliver
to the Trustee an Officers' Certificate as to (i) the Offered Price, (ii) the
allocation of the Net Available Cash from the Asset Dispositions pursuant to
which such Offer is being made and (iii) the compliance of such allocation with
the provisions described herein. On such date, the Company shall also
irrevocably deposit with the Trustee or with a paying agent (or, if the Company
is acting as its own paying agent, segregate and hold in trust) in Temporary
Cash Investments an amount equal to the Offered Price to be held for payment in
accordance with the provisions of this provision. Upon the expiration of the
period for which the Offer remains open (the "Offer Period"), the Company shall
deliver to the Trustee the Securities or portions thereof which have been
properly tendered to and are to be accepted by the Company. The Trustee shall,
on the Purchase Date, mail or deliver payment to each tendering Holder in the
amount of the purchase price. In the event that the aggregate purchase price
of the Securities delivered by the Company to the Trustee is less than the
Offered Price, the Trustee shall deliver the excess to the Company immediately
after the expiration of the Offer Period.
(c) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least five Business Days
prior to the Purchase Date. Holders will be entitled to withdraw their
election it the Trustee or the Company receives not later than three Business
Days prior to the Purchase Date, a telegram, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased. If, at the
expiration of the Offer Period, the aggregate principal amount of Securities
surrendered by Holders exceeds the Offered Price, the Company shall select the
Securities to be purchased on a pro rata basis (with such adjustments as may be
deemed appropriate by the Company so that only Securities in denominations of
$1,000, or integral multiples thereof, shall be purchased). Holders whose
Securities are purchased only in part will be issued new Securities equal in
principal amount to the unpurchased portion of the Securities surrendered.
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(d) At the time the Company delivers Securities which are to
be accepted for purchase to the Trustee, the Company shall also deliver an
Officers' Certificate stating that such Securities are to be accepted by the
Company pursuant to and in accordance with the terms of this provision. A
Security shall be deemed to have been accepted for purchase at the time the
Trustee, directly or through an agent, mails or delivers payment therefor to
the surrendering Holder.
(e) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
the covenant described hereunder. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the covenant
described hereunder, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under such covenant by virtue thereof.
SECTION 4.07. Limitation on Transactions with Affiliates. (i)
The Company shall not, and shall not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into any transaction or
series of transactions with or for the benefit of any Affiliate, unless the
terms of such transaction or series of transactions are (a) set forth in
writing, (b) in the best interest of the Company or such Restricted Subsidiary,
and (c) no less favorable to the Company or such Restricted Subsidiary than
those that could be obtained in a comparable arm's-length transaction with an
unrelated third party; and (ii) with respect to a transaction or series of
transactions involving aggregate payments or value in excess of $3 million, the
Board of Directors (including a majority of the Disinterested Directors
thereof) approves such transaction or series of transactions and, in its good
faith judgment, believes that such transaction or series of transactions
complies with Section 4.07(i), as evidenced by a Certified Resolution delivered
to the Trustee. Section 4.07(i) shall not prohibit (a) any Restricted Payment
permitted to be paid pursuant to Section 4.04, (b) any issuance of securities,
or other payments, awards or grants in cash, securities or otherwise pursuant
to, or the funding of, employment arrangements, stock options and stock
ownership plans approved by the Board of Directors (including a majority of the
Disinterested Directors thereof), (c) any transaction pursuant to any contract
in existence on the Issue Date, (d) loans or advances to employees in the
ordinary course of business in accordance with past practices of the Company,
not to exceed $1 million per employee and $3 million in the aggregate, (e) the
payment of reasonable fees to directors of the Company and its Restricted
Subsidiaries who are not employees of the Company or its Restricted
Subsidiaries, (f) any transaction between the Company and a Restricted
Subsidiary or between Restricted Subsidiaries and (g) the making of payments to
Salomon Brothers Inc or its Affiliates for investment banking services.
SECTION 4.08. Change of Control. (i) Upon a Change of
Control, each Holder shall have the right to require that the Company
repurchase all or any part of such Holder's Securities at a repurchase price in
cash equal to 101% of the principal amount thereof plus accrued and unpaid
interest, if any, through the date of repurchase. In the event that at the
time of such Change of Control the terms of the Bank Indebtedness or other
Senior Indebtedness restrict or prohibit the repurchase of Securities pursuant
to this provision, then prior to the mailing of the notice to Holders provided
for in the next paragraph below, but in any event within 30 days following any
Change of Control, the Company covenants to (a) repay in full all Bank
Indebtedness or such other Senior Indebtedness to the extent required to permit
the repurchase of Securities pursuant to this provision or (b)
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obtain the requisite consent under the agreements governing the Bank
Indebtedness or such other Senior Indebtedness to permit the repurchase of the
Securities as provided for in Section 4.08(ii).
(ii) Within 30 days following any Change of Control, the
Company shall send, by first-class mail to each Holder, a notice to each Holder
with a copy to the Trustee stating:
(a) that a Change of Control has occurred and that such
Holder has the right to require the Company to purchase such Holder's
Securities at a purchase price in cash equal to 101% of the principal
amount thereof plus accrued and unpaid interest, if any, to the date
of purchase;
(b) the circumstances and relevant facts regarding such
Change of Control which the Company in good faith believes will enable
Holders to make an informed decision (which at a minimum will include
information with respect to pro forma historical income, cash flow and
capitalization, each after giving effect to such Change of Control,
events causing such Change of Control and the date such Change of
Control is deemed to have occurred);
(c) the purchase date (which shall be no earlier than 30
days nor later than 60 days from the date such notice is mailed); and
(d) the instructions determined by the Company, consistent
with this provision, that a Holder must follow in order to have its
Securities purchased, together with the information contained in
Section 4.08(iii) (and including any related materials).
(iii) Holders electing to have a Security purchased will be
required to surrender the Security, with an appropriate form duly completed, to
the Company at the address specified in the notice at least five Business Days
prior to the purchase date. Holders will be entitled to withdraw their
election if the Trustee or the Company receives not later than three Business
Days prior to the purchase date a telegram, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Security
which was delivered for purchase by the Holder and a statement that such Holder
is withdrawing his election to have such Security purchased.
(iv) On the purchase date, all Securities purchased by the
Company under this provision shall be delivered by the Trustee for
cancellation, and the Company shall pay the purchase price plus accrued and
unpaid interest, if any, to the Holders entitled thereto.
(v) The Company shall comply, to the extent applicable, with
the requirements of Section 14(e) of the Exchange Act and any other securities
laws or regulations in connection with the repurchase of Securities pursuant to
the covenant described hereunder. To the extent that the provisions of any
securities laws or regulations conflict with the provisions of the covenant
described hereunder, the Company shall comply with the applicable securities
laws and regulations and shall not be deemed to have breached its obligations
under such covenant by virtue thereof.
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(vi) The Company's obligations to repurchase the Securities
upon a Change of Control will be guaranteed on a senior subordinated basis by
the Subsidiary Guarantors pursuant to the Subsidiary Guaranties. Such Guaranty
will be subordinated to Senior Indebtedness of Subsidiary Guarantors to the
same extent described in Article 11.
SECTION 4.09. Limitation on Layered Indebtedness. (i) The
Company shall not, and shall not permit any Subsidiary Guarantor to, directly
or indirectly, Incur any Indebtedness that is subordinate in right of payment
to any other Indebtedness of the Company or such Subsidiary Guarantor, as the
case may be, unless such Indebtedness is subordinate in right of payment to, or
ranks pari passu with, the Securities in the case of the Company or the
Subsidiary Guaranties in the case of the Subsidiary Guarantors.
(ii) The Subsidiary Guarantors shall not, directly or
indirectly, Guaranty any Indebtedness of the Company that is subordinated in
right of payment to any other Indebtedness of the Company unless such Guaranty
is subordinate in right of payment to, or ranks pari passu with, the Subsidiary
Guaranties.
SECTION 4.10. Compliance Certificate. The Company shall
deliver to the Trustee within 120 days after the end of each fiscal year of the
Company an Officers' Certificate stating that in the course of the performance
by the signers of their duties as Officers of the Company they would normally
have knowledge of any Default and whether or not the signers know of any
Default that occurred during such period. If they do, the certificate shall
describe the Default, its status and what action the Company is taking or
proposes to take with respect thereto. The Company also shall comply with
Section 314(a)(4) of the TIA.
SECTION 4.11. Further Instruments and Acts. Upon request of
the Trustee, the Company will execute and deliver such further instruments and
do such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
SECTION 4.12. Limitation on Liens. The Company shall not,
and shall not permit any Subsidiary Guarantor to, directly or indirectly, Incur
any Lien of any kind, other than Permitted Liens, on or with respect to any
property or assets now owned or hereafter acquired or any interest therein or
any income or profits therefrom to secure Indebtedness that is subordinate in
right of payment to, or ranks pari passu with, in the case of the Company, the
Securities, or, in the case of the Subsidiary Guarantors, the Subsidiary
Guaranties, unless the Notes are secured prior to (in the case of any
Indebtedness that is subordinated in right of payment), or equally and ratably
with (in the case of any Indebtedness that ranks pari passu), the Indebtedness
so secured.
SECTION 4.13. Ownership of United States Can Company. Except
as provided under Article 11, the Company shall at all times maintain its
ownership of 100% of the Capital Stock of United States Can Company.
SECTION 4.14. Future Subsidiary Guarantors. The Company
shall cause each Domestic Restricted Subsidiary created or acquired after the
Issue Date to execute and deliver to the Trustee a supplemental indenture
pursuant to which such Restricted Subsidiary will Guaranty payment of the
Securities on the same terms and conditions as those set forth in this
Indenture. Each Subsidiary Guaranty will be limited in amount to an amount not
to exceed the maximum amount that can be Guaranteed by the applicable
Subsidiary
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Guarantor without rendering such Subsidiary Guaranty voidable under applicable
law relating to fraudulent conveyance or fraudulent transfer or similar laws
affecting the rights of creditors generally. As of the Issue Date, United
States Can Company is the only Domestic Restricted Subsidiary.
SECTION 4.15. Establishment of Escrow Account. Immediately
upon the receipt by the Company of the proceeds from the issuance of the
Initial Notes hereunder, the Company shall deposit with the Escrow Agent (as
defined in the Escrow Agreement), by wire transfer of immediately available
funds to the Escrow Account, the amount of principal and call premium necessary
to redeem the 13 1/2% Notes on January 22, 1997, plus the amount of any
interest to be paid on the 13 1/2% Notes through January 22, 1997 (the "Escrow
Funds"). Except as provided in Section 4.16, such deposit shall be
irrevocable.
SECTION 4.16. Required Redemption of 13 1/2% Notes. (1) The
Company shall timely take all actions necessary or desirable to effect the
Required Redemption (including the giving of any notice to the holders of the
13 1/2% Notes in the manner in which such notice is required to be given to
effect such redemption pursuant to the indenture governing such 13 1/2% Notes),
and shall effect such Required Redemption, as promptly as practicable on or
after January 15, 1997 (but in no event later than January 22, 1997), and shall
use the Escrow Funds to effect such Required Redemption.
(2) No later than the date on which notice of the Required
Redemption is first given to the holders of the 13 1/2% Notes pursuant to the
preceding sentence, the Company shall deliver an Officer's Certificate to the
Trustee stating that the 13 1/2% Notes are to be redeemed pursuant to the
provisions hereof and setting forth the anticipated date of such Required
Redemption. Upon receipt of such Officer's Certificate, the Trustee shall join
with the Company in directing the Escrow Agent by written notice to release
from escrow (on the specified date and pursuant to the provisions of the Escrow
Agreement) sufficient funds to effect the Required Redemption and to transfer
such funds to the account specified in such written notice (the "Redemption
Account").
(3) If the date on which the Company is to effect the
Required Redemption pursuant to the notice to be given under paragraph (1) of
this Section 4.16 is after January 15, 1997, the Company shall, on January 15,
1997, cause to be paid from the Escrow Funds all interest then due and payable
on the 13 1/2% Notes. In such event, the Company shall specify in the
Officer's Certificate referred to in paragraph (2) of this Section 4.16 that
all interest due and payable on January 15, 1997 on the 13 1/2% Notes shall be
paid from the Escrow Funds on such date, and the Trustee shall timely join with
the Company in directing the Escrow Agent by written notice to release from the
Escrow Account on such date sufficient funds to make such interest payment in
full on such date.
(4) If on the date of the Required Redemption the Escrow
Funds are insufficient to effect the Required Redemption, the Company shall
immediately deliver, by wire transfer of immediately available funds to the
Redemption Account, funds in such amount that, when added to the Escrow Funds,
will be sufficient to effect the Required Redemption. Any portion of the
Escrow Funds remaining after the Required Redemption shall be immediately paid
over to the Company.
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ARTICLE 5
SURVIVING ENTITY
SECTION 5.01. Merger, Consolidation and Sale of Assets. (i)
Neither the Company nor the Guarantor shall merge or consolidate with or into
any other entity (other than a merger of a Subsidiary Guarantor into the
Company or another Subsidiary Guarantor) or sell, convey, assign, transfer,
lease or otherwise dispose of all or substantially all of their assets unless
(a) the entity formed by or surviving any such consolidation or merger (if
other than the Company or any Subsidiary Guarantor) or to which such sale,
transfer or conveyance is made (the "Surviving Entity") shall be a corporation
organized and existing under the laws of the United States of America and such
corporation expressly assumes, by supplemental indenture satisfactory to the
Trustee, all obligations of the Company or the Subsidiary Guarantor, as the
case may be, pursuant to this Indenture and the Escrow Agreement; (b)
immediately before and after giving effect to such transaction or series of
transactions on a pro forma basis, no Default or Event of Default (and no event
that, after notice or lapse of time, or both, would become an Event of Default)
shall have occurred and be continuing; (c) immediately after giving effect to
such transaction or series of transactions on a pro forma basis (including,
without limitation, any Indebtedness Incurred or anticipated to be Incurred in
connection with such transaction or series of transactions), the Company or the
Surviving Entity, as the case may be, would be able to Incur at least $1.00 of
additional debt pursuant to clause (i) of the definition of Permitted
Indebtedness; and (d) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture (if any)
comply with this Indenture. Notwithstanding the foregoing, no other Subsidiary
Guarantor shall merge or consolidate with or into any other entity, or sell,
convey, assign, transfer, lease or otherwise dispose of all or substantially
all of its assets, unless the Company and its remaining Restricted Subsidiaries
have complied with Sections 5.01(i)(b), (c) and (d).
(ii) The Surviving Entity shall succeed to, and be
substituted for, and may exercise every right and power of, the Company or the
Subsidiary Guarantor, as the case may be, under this Indenture and the Escrow
Agreement, but the predecessor Company, in the case of a lease, shall not be
released from the obligation to pay the principal of and interest on the Notes.
(iii) Notwithstanding Sections 5.01(i)(b), (c) and (d), any
Domestic Restricted Subsidiary may consolidate with, merge into or transfer all
or part of its properties and assets to the Company or any other Domestic
Restricted Subsidiary, and any Foreign Restricted Subsidiary may consolidate
with, merge into or transfer all or part of its properties or assets to (i) any
other Foreign Restricted Subsidiary or (ii) the Company or any Domestic
Restricted Subsidiary, provided that the surviving company or the transferee
entity, as the case may be, in such consolidation, merger or transfer is the
Company or such Domestic Restricted Subsidiary.
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ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. Events of Default. An "Event of Default" occurs
if:
(i) the Company and the Subsidiary Guarantors
default in any payment of interest on any Security when the same
becomes due and payable, and such default continues for a period of 30
days;
(ii) the Company and the Subsidiary Guarantors (a)
default in the payment of the principal of any Security when the same
becomes due and payable at its Stated Maturity, upon redemption, upon
declaration or otherwise, or (b) fail to redeem or purchase Securities
when required pursuant to this Indenture or the Securities;
(iii) the Company or any Subsidiary Guarantor fails
to comply with the provisions of Section 5.01;
(iv) the Company or any Subsidiary Guarantor, as the
case may be, fails to comply with Sections 4.03, 4.04, 4.05, 4.06,
4.07, 4.08, 4.09, 4.12, 4.13, 4.14 or 4.15 (other than a failure to
purchase Securities when required under Section 4.06 or 4.08) of this
Indenture and such failure continues for 30 days after the notice
specified below or the Company fails to give the notice specified
below;
(v) the Company or any Subsidiary Guarantor fails to
comply with any of its agreements in the Securities or this Indenture
(other than those referred to in clauses (i), (ii), (iii) or (iv)
above) and such failure continues for 60 days after the notice
specified below or the Company fails to give the notice specified
below;
(vi) the principal, any premium or accrued and
unpaid interest of Indebtedness of the Company or any Restricted
Subsidiary is not paid within any applicable grace period after final
maturity or is accelerated by the holders thereof because of a
default, the total amount of such Indebtedness unpaid or accelerated
exceeds $10 million at the time and such default continues for 10
days;
(vii) the Company, any Subsidiary Guarantor or any
Foreign Significant Subsidiary pursuant to or within the meaning of
any Bankruptcy Law: (a) commences a voluntary case; (b) consents to
the entry of an order for relief against it in an involuntary case;
(c) consents to the appointment of a Custodian of it or for any
substantial part of its property; or (d) makes a general assignment
for the benefit of its creditors; or takes any comparable action under
any foreign laws relating to insolvency;
(viii) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law that: (a) is for relief
against the Company, any Subsidiary Guarantor or any Foreign
Significant Subsidiary in an involuntary case; (b) appoints a
Custodian of the Company, any Subsidiary Guarantor or any Foreign
Significant Subsidiary or for any substantial part of the Company's,
any Subsidiary Guarantor's or any Foreign Significant Subsidiary's
property; or (c) orders the
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winding up or liquidation of the Company or any Subsidiary Guarantor
or any Foreign Significant Subsidiary; or any similar relief is
granted under any foreign laws and the order or decree remains
unstayed and in effect for 60 days;
(ix) any judgment or decree for the payment of money
in excess of $10 million at the time is entered against the Company or
any Restricted Subsidiary and is not discharged and either (a) an
enforcement proceeding has been commenced by any creditor upon such
judgment or decree or (b) there is a period of 60 days following the
entry of such judgment or decree during which such judgment or decree
is not discharged, waived or the execution thereof stayed and, in the
case of (a) or (b), such default continues for 10 days;
(x) any Subsidiary Guaranty is held to be
unenforceable or invalid or ceases to be in full force and effect;
(xi) the Required Redemption has not been
consummated by the latest date provided therefor in Section 4.16; or
(xii) the Company shall breach any material
representation, warranty or agreement set forth in, or otherwise not
comply with the provisions of, the Escrow Agreement, or the Escrow
Agreement shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and
effect (except as a result of the complete performance thereof).
The foregoing shall constitute Events of Default whatever the
reason for any such Event of Default and whether it is voluntary or involuntary
or is effected by operation of law or pursuant to any judgment, decree or order
of any court or any order, rule or regulation of any administrative or
governmental body.
The term "Bankruptcy Law" means Title 11, United States Code,
or any similar Federal or state law for the relief of debtors. The term
"Custodian" means any receiver, trustee, assignee, liquidator, custodian or
similar official under any Bankruptcy Law.
SECTION 6.02. Acceleration. If an Event of Default (other
than an Event of Default specified in Section 6.01(vii) or (viii) with respect
to the Company or any Subsidiary Guarantor) occurs and is continuing, the
Trustee by notice to the Company, or the Holders of at least 25% in principal
amount of the Securities by written notice to the Company and the Trustee, may
declare the principal of and accrued interest on all the Securities to be due
and payable. Upon such a declaration, such principal and interest shall be due
and payable immediately. If an Event of Default specified in Section 6.01(vii)
or (viii) with respect to the Company or any Subsidiary Guarantor occurs, the
principal of and interest on all the Securities shall ipso facto become and be
immediately due and payable without any declaration or other act on the part of
the Trustee or any Holders. The Holders of a majority in principal amount of
the Securities by written notice to the Trustee may rescind an acceleration and
its consequences if the rescission would not conflict with any judgment or
decree and if all existing Events of Default have been cured or waived except
nonpayment of principal or interest that has become due solely because of
acceleration. No such rescission shall affect any subsequent Default or impair
any right consequent thereto.
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SECTION 6.03. Other Remedies. If an Event of Default occurs
and is continuing, the Trustee may pursue any available remedy to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Securities or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder in exercising any
right or remedy accruing upon an Event of Default shall not impair the right or
remedy or constitute a waiver of or acquiescence in the Event of Default. No
remedy is exclusive of any other remedy. All available remedies are
cumulative.
SECTION 6.04. Waiver of Past Defaults. The Holders of a
majority in principal amount of the Securities by written notice to the Trustee
may waive an existing Default and its consequences except (i) a Default in the
payment of the principal of or interest on a Security or (ii) a Default in
respect of a provision that under Section 9.02 cannot be amended without the
consent of each Holder affected. When a Default is waived, it is deemed cured,
but no such waiver shall extend to any subsequent or other Default or impair
any consequent right.
SECTION 6.05. Control by Majority. The Holders of a majority
in principal amount of the Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. However, the Trustee
may refuse to follow any direction that conflicts with law or this Indenture
or, subject to Section 7.01, that the Trustee determines is unduly prejudicial
to the rights of other Holders, it being understood that the Trustee shall have
no duty to ascertain whether or not such actions or forebearances are unduly
prejudicial to such Holders, or would involve the Trustee in personal
liability; provided, however, that the Trustee may take any other action deemed
proper by the Trustee that is not inconsistent with such direction. Prior to
taking any action hereunder, the Trustee shall be entitled to indemnification
satisfactory to it in its sole discretion against all losses and expenses
caused by taking or not taking such action.
SECTION 6.06. Limitation on Suits. A Holder may not pursue
any remedy with respect to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written notice
stating that an Event of Default is continuing;
(2) the Holders of at least 25% in principal amount of
the Securities make a written request to the Trustee to pursue the
remedy;
(3) such Holder or Holders offer to the Trustee
reasonable security or indemnity against any loss, liability or
expense;
(4) the Trustee does not comply with the request within
60 days after receipt of the request and the offer of security or
indemnity; and
(5) the Holders of a majority in principal amount of the
Securities do not give the Trustee a direction inconsistent with the
request during such 60-day period.
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A Holder may not use this Indenture to prejudice the rights of
another Holder or to obtain a preference or priority over another Holder.
SECTION 6.07. Rights of Holders To Receive Payment.
Notwithstanding any other provision of this Indenture, the right of any Holder
to receive payment of principal of and interest on the Securities held by such
Holder on or after the respective due dates expressed in the Securities, or to
bring suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. Collection Suit by Trustee. If an Event of
Default in payment of interest or principal specified in Section 6.01(i) or
(ii) occurs and is continuing, the Trustee may recover judgment in its own name
and as trustee of an express trust against the Company for the whole amount of
principal and interest remaining unpaid (together with interest on such unpaid
interest to the extent lawful) and the amounts provided for in Section 7.07.
SECTION 6.09. Trustee May File Proofs of Claim. The Trustee
may file such proofs of claim and other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee and the Holders allowed
in any judicial proceedings relative to the Company, its creditors or its
property and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other
Person performing similar functions, and any Custodian in any such judicial
proceeding is hereby authorized by each Holder to make payments to the Trustee
and, in the event that the Trustee shall consent to the making of such payments
directly to the Holders, to pay to the Trustee any amount due it for the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and its counsel, and any other amounts due the Trustee under Section
7.07.
SECTION 6.10. Priorities. If the Trustee collects any money
or property pursuant to this Article 6, it shall pay out the money or property
in the following order:
FIRST: to the Trustee for amounts due under Section 7.07;
SECOND: to holders of Senior Indebtedness to the extent
required by Article 10;
THIRD: to Holders for amounts due and unpaid on the
Securities for principal and interest, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Securities for principal and interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for any
payment to Holders pursuant to this Section. At least 15 days before such
record date, the Company shall mail to each Holder and the Trustee a notice
that states the record date, the payment date and amount to be paid.
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SECTION 6.11. Undertaking for Costs. In any suit for the
enforcement of any right or remedy under this Indenture or in any suit against
the Trustee for any action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the suit of an
undertaking to pay the costs of the suit, and the court in its discretion may
assess reasonable costs, including reasonable attorneys' fees, against any
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not apply
to a suit by the Trustee, a suit by a Holder pursuant to Section 6.07 or a suit
by Holders of more than 10% in principal amount of the Securities.
SECTION 6.12. Waiver of Stay or Extension Laws. The Company
(to the extent it may lawfully do so) shall not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or advantage of,
any stay or extension law wherever enacted, now or at any time hereafter in
force, which may affect the covenants or the performance of this Indenture; and
the Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, and shall not hinder, delay or impede
the execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been
enacted.
ARTICLE 7
TRUSTEE
SECTION 7.01. Duties of Trustee. (i) If an Event of Default
has occurred and is continuing, the Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent Person would exercise or use under the
circumstances in the conduct of such Person's own affairs.
(ii) Except during the continuance of an Event of
Default: (a) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture and no implied covenants
or obligations shall be read into this Indenture against the Trustee; and (b)
in the absence of bad faith on its part, the Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Trustee and conforming
to the requirements of this Indenture. However, the Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(iii) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own wilful
misconduct, except that: (a) this Section 7.01(iii) does not limit the effect
of Section 7.01(ii); (b) the Trustee shall not be liable for any error of
judgment made in good faith by a Trust Officer unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts; and (c) the Trustee
shall not be liable with respect to any action it takes or omits to take in
good faith in accordance with a direction received by it pursuant to Section
6.05.
(iv) Every provision of this Indenture that in any way
relates to the Trustee is subject to Sections 7.01(i), (ii) and (iii).
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(v) The Trustee shall not be liable for interest on any
money received by it except as the Trustee may agree in writing with the
Company.
(vi) Money held in trust by the Trustee need not be
segregated from other funds except to the extent required by law.
(vii) No provision of this Indenture shall require the
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers if it shall have reasonable grounds to believe that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(viii) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
SECTION 7.02. Rights of Trustee. (i) The Trustee may rely on
any document believed by it to be genuine and to have been signed or presented
by the proper person. The Trustee need not investigate any fact or matter
stated in the document.
(ii) Before the Trustee acts or refrains from acting, it
may require an Officers' Certificate or an Opinion of Counsel. The Trustee
shall not be liable for any action it takes or omits to take in good faith in
reliance on the Officers' Certificate or Opinion of Counsel.
(iii) The Trustee may act through agents and shall not be
responsible for the misconduct or negligence of any agent appointed with due
care.
(iv) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Trustee's conduct does
not constitute wilful misconduct or negligence.
(v) The Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Securities shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder
in good faith and in accordance with the advice or opinion of such counsel.
(vi) The Trustee shall not be required to give any bond
or surety in respect of the performance of its powers and duties hereunder;
(vii) The Trustee shall not be bound to ascertain or
inquire as to the performance or observance of any covenants, conditions, or
agreements on the part of the Company, except as otherwise set forth herein,
but the Trustee may require of the Company full information and advice as to
the performance of the covenants, conditions and agreements contained herein;
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(viii) The permissive rights of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty and the Trustee
shall not be answerable for other than its negligence or willful misconduct;
(ix) Except for (i) a default under Sections 6.01(i) or
(ii) hereof, or (ii) any other event of which the Trustee has "actual
knowledge" and which event, with the giving of notice or the passage of time or
both, would constitute an Event of Default under this Indenture, the Trustee
shall not be deemed to have notice of any default or Event of Default unless
specifically notified in writing of such event by the Company or the Holders of
not less than 25% in aggregate principal amount of the Securities then
outstanding; as used herein, the term "actual knowledge" means the actual fact
or statement of knowing, without any duty to make any investigation with regard
thereto.
SECTION 7.03. Individual Rights of Trustee. The Trustee, in
its individual or any other capacity, may become the owner or pledgee of
Securities and may otherwise deal with the Company or its Affiliates with the
same rights it would have if it were not Trustee. Any Paying Agent, Registrar,
co-registrar or co-paying agent may do the same with like rights. However, the
Trustee must comply with Sections 7.10 and 7.11.
SECTION 7.04. Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Company's
use of the proceeds from the Securities, and it shall not be responsible for
any statement of the Company in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.
SECTION 7.05. Notice of Defaults. If a Default occurs and is
continuing and if it is known to the Trustee, the Trustee shall mail to each
Holder notice of the Default within 90 days after it occurs. Except in the
case of a Default in payment of principal of or interest on any Security
(including payments pursuant to the mandatory redemption provisions of such
Security, if any), the Trustee may withhold the notice if and so long as the
Trustee in good faith determines that withholding the notice is in the
interests of Holders.
SECTION 7.06. Reports by Trustee to Holders. At the expense
of the Company, as promptly as practicable after each August 15 beginning with
the August 15 following the date of this Indenture, and in any event prior to
October 15 in each year, the Trustee shall mail to each Holder a brief report
dated as of August 15 that complies with Section 313(a) of the TIA. The
Trustee also shall comply with Section 313(b) of the TIA.
A copy of each report at the time of its mailing to Holders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Company agrees to notify promptly the Trustee
whenever the Securities become listed on any stock exchange and of any
delisting thereof.
SECTION 7.07. Compensation and Indemnity. The Company shall
pay to the Trustee from time to time, and the Trustee shall be entitled to,
reasonable compensation for its services. The Trustee's compensation shall not
be limited by any law on compensation of a trustee of an express trust. The
Company shall reimburse the Trustee upon request
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for all reasonable out-of-pocket expenses incurred or made by it, including
costs of collection, in addition to the compensation for its services. Such
expenses shall include the reasonable compensation and expenses, disbursements
and advances of the Trustee's agents, counsel, accountants and experts. The
Company shall indemnify the Trustee and its agents, officers, directors and
employees for, and hold them harmless against, any and all loss, liability or
expense (including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder. The
Trustee shall notify the Company promptly of any claim for which it may seek
indemnity. Failure by the Trustee to so notify the Company shall not relieve
the Company of its obligations hereunder. The Company shall defend the claim
and the Trustee may have separate counsel and the Company shall pay the fees
and expenses of such counsel. The Company need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee
through the Trustee's own wilful misconduct or negligence. The Company need
not pay for any settlement made by the Trustee without the Company's consent,
such consent not to be unreasonably withheld.
To secure the Company's payment obligations in this Section,
the Trustee shall have a Lien prior to the Securities on all money or property
held or collected by the Trustee other than money or property held in trust to
pay principal of and interest on particular Securities.
The Company's payment obligations pursuant to this Section
shall survive the discharge of this Indenture. When the Trustee incurs
expenses after the occurrence of a Default specified in Section 6.01(vii) or
(viii) with respect to the Company, the expenses are intended to constitute
expenses of administration under the Bankruptcy Law.
SECTION 7.08. Replacement of Trustee. The Trustee may resign
at any time by so notifying the Company. The Holders of a majority in
principal amount of the Securities may remove the Trustee by so notifying the
Trustee and may appoint a successor Trustee. The Company shall remove the
Trustee if:
(1) the Trustee fails to comply with Section 7.10;
(2) the Trustee is adjudged bankrupt or insolvent;
(3) a receiver or other public officer takes charge of
the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns, is removed by the Company or by the
Holders of a majority in principal amount of the Securities and such Holders do
not reasonably promptly appoint a successor Trustee, or if a vacancy exists in
the office of Trustee for any reason (the Trustee in such event being referred
to herein as the "retiring Trustee"), the Company shall promptly appoint a
successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture. The successor Trustee shall mail a
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notice of its succession to Holders. The retiring Trustee shall promptly
transfer all property held by it as Trustee to the successor Trustee, subject
to the Lien provided for in Section 7.07.
If a successor Trustee does not take office within 60 days
after the retiring Trustee resigns or is removed, the retiring Trustee or the
Holders of 25% in principal amount of the Securities may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
If the Trustee fails to comply with Section 7.10, any Holder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Notwithstanding the replacement of the Trustee pursuant to
this Section, the Company's obligations under Section 7.07 shall continue for
the benefit of the retiring Trustee.
SECTION 7.09. Successor Trustee by Merger. If the Trustee
consolidates with, merges or converts into, or transfers all or substantially
all its corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation or banking
association without any further act shall be the successor Trustee.
In case at the time such successor or successors by merger,
conversion or consolidation to the Trustee shall succeed to the trusts created
by this Indenture any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and, in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of
the successor to the Trustee; and, in all such cases, such certificates shall
have the full force which it is anywhere in the Securities or in this Indenture
provided that the certificate of the Trustee shall have.
SECTION 7.10. Eligibility; Disqualification. The Trustee
shall at all times satisfy the requirements of Section 310(a) of the TIA. The
Trustee shall have a combined capital and surplus of at least $50 million as
set forth in its most recent published annual report of condition. The Trustee
shall comply with Section 310(b) of the TIA; provided, however, that there
shall be excluded from the operation of Section 310(b)(1) of the TIA any
indenture or indentures under which other securities or certificates of
interest or participation in other securities of the Company are outstanding if
the requirements for such exclusion set forth in Section 310(b)(1) of the TIA
are met.
SECTION 7.11. Preferential Collection of Claims Against
Company. The Trustee shall comply with Section 311(a) of the TIA, excluding
any creditor relationship listed in Section 311(b) of the TIA. A Trustee who
has resigned or been removed shall be subject to Section 311(a) of the TIA to
the extent indicated.
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ARTICLE 8
DISCHARGE OF INDENTURE; DEFEASANCE
SECTION 8.01. Discharge of Liability on Securities;
Defeasance. (i) When (a) the Company delivers to the Trustee all outstanding
Securities (other than Securities replaced pursuant to Section 2.06) for
cancellation or (b) all outstanding Securities have become due and payable,
whether at maturity or as a result of the mailing of a notice of redemption
pursuant to Article 3 hereof and the Company irrevocably deposits with the
Trustee funds sufficient to pay at maturity or upon redemption all outstanding
Securities, including interest thereon (other than Securities replaced pursuant
to Section 2.06), and, if in either case, the Company pays all other sums
payable hereunder by the Company, then this Indenture shall, subject to
Sections 8.01(iii) and 8.06, cease to be of further effect. The Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the
Company accompanied by an Officers' Certificate and an Opinion of Counsel and
at the cost and expense of the Company.
(ii) Subject to Sections 8.01(iii), 8.02 and 8.06, the
Company at any time may terminate (a) all its obligations under the Securities
and this Indenture ("legal defeasance option") or (b) its obligations under
Sections 4.02 (to the extent that the failure to comply with such Section 4.02
shall not violate the TIA), 4.03, 4.04, 4.05, 4.06, 4.07, 4.08, 4.09, 4.11,
4.12, 4.13, 4.14, 4.15 and 4.16 or Article 5 and the related operation of
Sections 6.01(iii), (iv), (v), (vi), (ix) and (xi) ("covenant defeasance
option"). The Company may exercise its legal defeasance option notwithstanding
its prior exercise of its covenant defeasance option.
If the Company exercises its legal defeasance option, payment
of the Securities may not be accelerated because of an Event of Default. If
the Company exercises its covenant defeasance option, payment of the Securities
may not be accelerated because of an Event of Default specified in Sections
6.01(iii), (iv), (v), (vi), (ix) and (xi) (except to the extent covenants or
agreements referenced in such Sections remain applicable).
Upon satisfaction of the conditions set forth herein and upon
written request of the Company, the Trustee shall acknowledge in writing the
discharge of those obligations that the Company terminates.
(iii) Notwithstanding clauses (i) and (ii) above, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 7.07, 7.08, 8.04,
8.05 and 8.06 shall survive until the Securities have been paid in full.
Thereafter, the Company's obligations in Sections 7.07, 8.04 and 8.05 shall
survive.
SECTION 8.02. Conditions to Defeasance. The Company may
exercise its legal defeasance option or its covenant defeasance option only if:
(i) the Company irrevocably deposits in trust with the
Trustee money or U.S. Government Obligations for the payment of
principal and interest on the Securities to maturity or redemption, as
the case may be;
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(ii) the Company delivers to the Trustee a certificate
from a nationally recognized firm of independent accountants
expressing their opinion that the payments of principal and interest
when due and without reinvestment on the deposited U.S. Government
Obligations plus any deposited money without investment will provide
cash at such times and in such amounts as will be sufficient to pay
principal and interest when due on all the Securities to maturity or
redemption, as the case may be;
(iii) 123 days pass after the deposit is made and during
the 123-day period no Default specified in Section 6.01(vii) or (viii)
with respect to the Company occurs which is continuing at the end of
the period;
(iv) no Default has occurred and is continuing on the date
of such deposit and after giving effect thereto;
(v) the deposit does not constitute a default under any
other agreement binding on the Company and is not prohibited by
Article 10 or 11;
(vi) the Company delivers to the Trustee an Opinion of
Counsel to the effect that the trust resulting from the deposit does
not constitute, or is qualified as, a regulated investment company
under the Investment Company Act of 1940;
(vii) in the case of the legal defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel
stating that (a) the Company has received from, or there has been
published by, the Internal Revenue Service a ruling, or (b) since the
date of this Indenture there has been a change in the applicable
federal income tax law, in either case, to the effect that, and based
thereon such Opinion of Counsel shall confirm that, the Holders will
not recognize income, gain or loss for federal income tax purposes as
a result of such defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as would
have been the case if such legal defeasance had not occurred;
(viii) in the case of the covenant defeasance option, the
Company shall have delivered to the Trustee an Opinion of Counsel to
the effect that the Holders will not recognize income, gain or loss
for federal income tax purposes as a result of such covenant
defeasance and will be subject to federal income tax on the same
amounts, in the same manner and at the same times as would have been
the case if such covenant defeasance had not occurred; and
(ix) the Company delivers to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all
conditions precedent to the defeasance and discharge of the Securities
as contemplated by this Article 8 have been complied with.
Before or after a deposit, the Company may make arrangements
satisfactory to the Trustee for the redemption of Securities at a future date
in accordance with Article 3.
SECTION 8.03. Application of Trust Money. The Trustee shall
hold in trust money or U.S. Government Obligations deposited with it pursuant
to this Article 8. It shall apply the deposited money and the money from U.S.
Government Obligations through
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the Paying Agent and in accordance with this Indenture to the payment of
principal of and interest on the Securities. Money and securities so held in
trust are not subject to Article 10.
SECTION 8.04. Repayment to Company. The Trustee and the
Paying Agent shall promptly turn over to the Company upon request any excess
money or securities held by them at any time.
Subject to any applicable abandoned property law, the Trustee
and the Paying Agent shall pay to the Company upon request any money held by
them for the payment of principal or interest that remains unclaimed for two
years, and, thereafter, Holders entitled to the money must look to the Company
for payment as general creditors.
SECTION 8.05. Indemnity for Government Obligations. The
Company shall pay and shall indemnify the Trustee against any tax, fee or other
charge imposed on or assessed against deposited U.S. Government Obligations or
the principal and interest received on such U.S. Government Obligations.
SECTION 8.06. Reinstatement. If the Trustee or Paying Agent
is unable to apply any money or U.S. Government Obligations in accordance with
this Article 8 by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article 8 until such time as the Trustee
or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article 8; provided, however, that, if the
Company has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the Trustee or
Paying Agent.
ARTICLE 9
AMENDMENTS
SECTION 9.01. Without Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture, the Subsidiary
Guaranty, the Escrow Agreement or the Securities without notice to or consent
of any Holder:
(1) to cure any ambiguity, omission, defect or
inconsistency;
(2) to comply with Article 5;
(3) to provide for uncertificated Securities in addition
to or in place of certificated Securities; provided, however, that the
uncertificated Securities are issued in registered form for purposes
of Section 163(f) of the Code or in a manner such that the
uncertificated Securities are described in Section 163(f)(2)(B) of the
Code;
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(4) to make any change in Article 10 that would limit or
terminate the benefits available to any holder of Senior Indebtedness
(or Representatives therefor) under Articles 10 and 11;
(5) to add guarantees with respect to the Securities or
to secure the Securities;
(6) to add to the covenants of the Company for the
benefit of the Holders or to surrender any right or power herein
conferred upon the Company;
(7) to comply with any requirements of the SEC in
connection with qualifying this Indenture under the TIA; or
(8) to make any change that does not adversely affect the
rights of any Holder.
An amendment under this Section may not make any change that
adversely affects the rights under Articles 10 and 11 of any holder of Senior
Indebtedness then outstanding unless the holders of such Senior Indebtedness
(or any group or representative thereof authorized to give a consent), consent
to such change.
After an amendment under this Section becomes effective, the
Company or the Trustee at the Company's request and expense, shall mail to
Holders a notice briefly describing such amendment. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.
SECTION 9.02. With Consent of Holders. The Company, the
Subsidiary Guarantors and the Trustee may amend this Indenture, the Subsidiary
Guaranty, the Escrow Agreement or the Securities without notice to any Holder
but with the written consent of the Holders of at least a majority in principal
amount of the Securities; provided, however, that no amendment may be made to
Section 4.08 without the written consent of the Holders of at least 75% in
principal amount of the Securities. However, without the consent of each
Holder affected, an amendment may not:
(1) reduce the amount of Securities whose Holders must
consent to an amendment;
(2) reduce the rate of or extend the time for payment of
interest on any Security;
(3) reduce the principal of or extend the Stated Maturity
of any Security;
(4) reduce the premium payable upon the redemption of any
Security or change the time at which any Security may be redeemed in
accordance with Article 3;
(5) make any Security payable in money other than that
stated in the Security;
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(6) make any change in Article 10 or 11 that adversely
affects the rights of any Holder under Article 10 or 11; or
(7) make any change in Section 6.04 or 6.07 or the second
sentence of this Section.
It shall not be necessary for the consent of the Holders under
this Section to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent approves the substance thereof.
An amendment under this Section may not make any change that
adversely affects the rights under Article 10 or 11 of any holder of Senior
Indebtedness or Senior Indebtedness of Subsidiary Guarantors then outstanding
unless the holders of such Senior Indebtedness or Senior Indebtedness of
Subsidiary Guarantors, as the case may be (or any group or representative
thereof authorized to give a consent), consent to such change.
After an amendment under this Section becomes effective, the
Company, or the Trustee at the Company's request and expense, shall mail to
Holders a notice briefly describing such amendment. The failure to give such
notice to all Holders, or any defect therein, shall not impair or affect the
validity of an amendment under this Section.
SECTION 9.03. Compliance with Trust Indenture Act. Every
amendment to this Indenture or the Securities shall comply with the TIA as then
in effect.
SECTION 9.04. Revocation and Effect of Consents and Waivers.
A consent to an amendment or a waiver by a Holder of a Security shall bind the
Holder and every subsequent Holder of that Security or portion of the Security
that evidences the same debt as the consenting Holder's Security, even if
notation of the consent or waiver is not made on the Security. However, any
such Holder or subsequent Holder may revoke the consent or waiver as to such
Holder's Security or portion of the Security if the Trustee receives the notice
of revocation before the date the amendment or waiver becomes effective. After
an amendment or waiver becomes effective, it shall bind every Holder.
The Company may, but shall not be obligated to, fix a record
date for the purpose of determining the Holders entitled to give their consent
or take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding
the immediately preceding paragraph, those Persons who were Holders at such
record date (or their duly designated proxies), and only those Persons, shall
be entitled to give such consent or to revoke any consent previously given or
to take any such action, whether or not such Persons continue to be Holders
after such record date. No such consent shall be valid or effective for more
than 120 days after such record date.
SECTION 9.05. Notation on or Exchange of Securities. If an
amendment changes the terms of a Security, the Trustee may require the Holder
of the Security to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security regarding the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company, in exchange for the Security, shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or to issue a new Security shall not affect the
validity of such amendment.
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SECTION 9.06. Trustee To Sign Amendments. The Trustee shall
sign any amendment authorized pursuant to this Article 9 if the amendment does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. If it does, the Trustee may but need not sign it. In signing such
amendment the Trustee shall be entitled to receive indemnity reasonably
satisfactory to it and to receive, and (subject to Section 7.01) shall be fully
protected in relying upon, an Officers' Certificate and an Opinion of Counsel
stating that such (i) amendment is authorized or permitted by this Indenture
and that all conditions precedent to the execution, delivery and performance of
such amendment have been satisfied; (ii) the Company has all necessary
corporate power and authority to execute and deliver the amendment and that the
execution, delivery and performance of such amendment has been duly authorized
by all necessary corporate action; (iii) the execution, delivery and
performance of the amendment do not conflict with, or result in the breach of
or constitute a default under any of the terms, conditions or provisions of (a)
this Indenture, (b) the Certificate of Incorporation or By-laws of the Company,
(c) any law or regulation applicable to the Company, (d) any material order,
writ, injunction or decree of any court or governmental instrumentality
applicable to the Company or (e) any material agreement or instrument to which
the Company is subject; (iv) such amendment has been duly and validly executed
and delivered by the Company, and this Indenture together with such amendment
constitutes a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and general equitable
principles; and (v) this Indenture together with such amendment complies with
the TIA.
SECTION 9.07. Payment for Consent. Neither the Company nor
any Affiliate of the Company shall, directly or indirectly, pay or cause to be
paid any consideration, whether by way of interest, fee or otherwise, to any
Holder for or as an inducement to any consent, waiver or amendment of any of
the terms or provisions of this Indenture or the Securities unless such
consideration is offered to be paid to all Holders that so consent, waive or
agree to amend in the time frame set forth in solicitation documents relating
to such consent, waiver or agreement.
ARTICLE 10
SUBORDINATION OF SECURITIES
SECTION 10.01. Agreement To Subordinate. The Company agrees,
and each Holder by accepting a Security agrees, that the Indebtedness evidenced
by the Securities is subordinated in right of payment, to the extent and in the
manner provided in this Article 10, to the prior payment of all Senior
Indebtedness and that the subordination is for the benefit of and enforceable
by the holders of Senior Indebtedness. The Securities shall in all respects
rank pari passu with all other Senior Subordinated Indebtedness of the Company
and only Indebtedness of the Company which is Senior Indebtedness shall rank
senior to the Securities in accordance with the provisions set forth herein.
All provisions of this Article 10 shall be subject to Section 10.12.
SECTION 10.02. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Company to creditors upon a total
or partial liquidation or
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a total or partial dissolution of the Company or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Company or its property:
(1) holders of Senior Indebtedness shall be entitled to
receive payment in full of the Senior Indebtedness before Holders
shall be entitled to receive any payment of principal of or interest
on the Securities; and
(2) until the Senior Indebtedness is paid in full, any
distribution to which Holders would be entitled but for this Article
10 shall be made to holders of Senior Indebtedness as their interests
may appear, except that Holders may receive shares of stock and any
debt securities that are subordinated to Senior Indebtedness to at
least the same extent as the Securities.
SECTION 10.03. Default on Senior Indebtedness. The Company
may not pay the principal of or interest on the Securities, or make any deposit
pursuant to Section 8.01, and may not repurchase, redeem or otherwise retire
any Securities (collectively, "pay the Securities") if (i) any Senior
Indebtedness is not paid when due or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, (a) the default has been
cured or waived and any such acceleration has been rescinded or (b) such Senior
Indebtedness has been paid in full. During the continuance of any default
(other than a default described in clause (i) or (ii) of the preceding
sentence) with respect to any Designated Senior Indebtedness pursuant to which
the maturity thereof may be accelerated immediately without further notice
(except such notice as may be required to effect such acceleration) or the
expiration of any applicable grace periods, the Company may not pay the
Securities for a period (a "Payment Blockage Period") commencing upon the
receipt by the Company and the Trustee of written notice of such default from
the Representative of any Designated Senior Indebtedness specifying an election
to effect a Payment Blockage Period (a "Blockage Notice") and ending 179 days
thereafter (or earlier, if such Payment Blockage Period is terminated (i) by
written notice to the Trustee and the Company from the Person or Persons who
gave such Blockage Notice, (ii) by repayment in full of such Designated Senior
Indebtedness or (iii) because the default giving rise to such Blockage Notice
is no longer continuing). Notwithstanding the provisions described in the
immediately preceding sentence (but subject to the provisions contained in the
first sentence of this Section), unless the holders of such Designated Senior
Indebtedness or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness, the Company may resume
payments on the Securities after such Payment Blockage Period. Not more than
one Blockage Notice may be given in any consecutive 360-day period,
irrespective of the number of defaults with respect to Designated Senior
Indebtedness during such period.
SECTION 10.04. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company or the Trustee shall promptly notify the holders of the Designated
Senior Indebtedness (or their Representatives) of the acceleration.
SECTION 10.05. When Distribution Must Be Paid Over. If a
distribution is made to Holders that because of this Article 10 should not have
been made to them, the Holders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness and pay it over to them as their
interests may appear.
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SECTION 10.06. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness to receive
distributions applicable to Senior Indebtedness. A distribution made under
this Article 10 to holders of Senior Indebtedness which otherwise would have
been made to Holders is not, as between the Company and Holders, a payment by
the Company on Senior Indebtedness.
SECTION 10.07. Relative Rights. This Article 10 defines the
relative rights of Holders and holders of Senior Indebtedness. Nothing in this
Indenture shall:
(1) impair, as between the Company and Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their
terms; or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness to receive distributions otherwise payable to
Holders.
SECTION 10.08. Subordination May Not Be Impaired by Company.
No right of any holder of Senior Indebtedness to enforce the subordination of
the Indebtedness evidenced by the Securities shall be impaired by any act or
failure to act by the Company or by its failure to comply with this Indenture.
SECTION 10.09. Rights of Trustee and Paying Agent.
Notwithstanding Section 10.03, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives written notice satisfactory to it that payments
may not be made under this Article 10. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative of holders of or a holder or
holders holding a majority of Senior Indebtedness may give the written notice;
provided, however, that, if holders of Senior Indebtedness have a
Representative, only such Representative may give the notice.
The Trustee, in its individual or any other capacity, may hold
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 10 with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article 7 shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article 10 shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 7.07.
SECTION 10.10. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness, the distribution may be made and the notice given to their
Representative (if any).
SECTION 10.11. Article 10 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 10 shall not be construed
as preventing the occurrence of a
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Default. Nothing in this Article 10 shall have any effect on the right of the
Holders or the Trustee to accelerate the maturity of the Securities.
SECTION 10.12. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from money
or the proceeds of U.S. Government Obligations held in trust under Article 8 by
the Trustee for the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment of any Senior Indebtedness or
subject to the restrictions set forth in this Article 10, and none of the
Holders shall be obligated to pay over any such amount to the Company or any
holder of Senior Indebtedness of the Company or any other creditor of the
Company.
SECTION 10.13. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 10, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
10.02 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders or (iii) upon the Representatives for the holders of Senior
Indebtedness for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other Indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article 10. In the event that the
Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article 10, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article 10,
and, if such evidence is not furnished, the Trustee may defer any payment to
such Person pending judicial determination as to the right of such Person to
receive such payment. The provisions of Sections 7.01 and 7.02 shall be
applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 10.
SECTION 10.14. Trustee To Effectuate Subordination. Each
Holder by accepting a Security authorizes and directs the Trustee on his, her
or its behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holders and the holders
of Senior Indebtedness as provided in this Article 10 and appoints the Trustee
as attorney-in-fact for any and all such purposes.
SECTION 10.15. Trustee Not Fiduciary for Holders of Senior
Indebtedness. The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and shall not be liable to any such holders if
it shall mistakenly pay over or distribute to Holders or the Company or any
other Person money or assets to which any holders of Senior Indebtedness shall
be entitled by virtue of this Article 10 or otherwise.
SECTION 10.16. Reliance by Holders of Senior Indebtedness on
Subordination Provisions. Each Holder by accepting a Security acknowledges and
agrees that the foregoing subordination provisions are, and are intended to be,
an inducement and a consideration to each holder of any Senior Indebtedness,
whether such Senior Indebtedness was created or acquired before or after the
issuance of the Securities, to acquire and continue to
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hold, or to continue to hold, such Senior Indebtedness and such holder of
Senior Indebtedness shall be deemed conclusively to have relied on such
subordination provisions in acquiring and continuing to hold, or in continuing
to hold, such Senior Indebtedness.
ARTICLE 11
SUBSIDIARY GUARANTIES; SUBORDINATION OF SUBSIDIARY GUARANTIES
SECTION 11.01. Subsidiary Guaranties. Subject to the
provisions of this Article 11, each Subsidiary Guarantor hereby unconditionally
guarantees to each Holder and to the Trustee on behalf of the Holders (i) the
due and punctual payment of principal of and interest on each Security when and
as the same shall become due and payable whether at the date of maturity or by
declaration of acceleration or otherwise, (ii) the due and punctual payment of
interest on the overdue principal of and interest, if any, on the Securities,
to the extent lawful, and (iii) the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee, all in accordance
with the terms of the Securities and this Indenture (the "Subsidiary
Guaranties"). In case of the failure of the Company punctually to make any
such principal or interest payment, the Subsidiary Guarantors hereby agree to
cause any such payment to be made punctually when and as the same shall become
due and payable, whether at the date of maturity or by declaration of
acceleration or otherwise, and as if such payment were made by the Company.
Each Subsidiary Guarantor hereby agrees that its obligations hereunder shall be
unconditional, irrespective of and unaffected by the validity, regularity or
enforceability of the Securities or this Indenture, or of any amendment thereto
or hereto, the absence of any action to enforce the same, the waiver or consent
by any Holder or by the Trustee with respect to any provisions thereof or of
this Indenture, the recovery of any judgment against the Company or any action
to enforce the same or any other circumstance which might otherwise constitute
a legal or equitable discharge or defense of a guarantor. The Company hereby
waives diligence, presentment, demand of payment, filing of claims with a court
in the event of merger, insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest or notice with respect
to the Securities or the Indebtedness evidenced thereby and all demands
whatsoever, and covenants that the Subsidiary Guaranties will not be discharged
except by complete performance of the obligations contained in the Securities,
in this Indenture and pursuant to the Subsidiary Guaranties. The Subsidiary
Guarantors further agree that, as between the Subsidiary Guarantors, on the one
hand, and Holders and the Trustee, on the other hand, (i) for purposes of the
Subsidiary Guaranties, the maturity of the obligations guaranteed by the
Subsidiary Guaranties may be accelerated as provided in Article 6,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed thereby, and (ii) in the
event of any acceleration of such obligations (whether or not due and payable),
such obligations shall forthwith become due and payable by the Subsidiary
Guarantors for purposes of the Subsidiary Guaranties.
The Subsidiary Guaranties shall continue to be effective or
shall be reinstated, as the case may be, if at any time any payment, or any
part thereof, of principal of or interest on any of the Securities is rescinded
or must otherwise be returned by the Holders or the Trustee upon the
insolvency, bankruptcy or reorganization of the Company or the Subsidiary
Guarantors or otherwise, all as though such payment had not been made.
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The Subsidiary Guarantors shall be subrogated to all rights of
the Holders against the Company in respect of any amounts paid by the
Subsidiary Guarantors pursuant to the provisions of the Subsidiary Guaranties
or this Indenture; provided, however, that the Subsidiary Guarantors shall not
be entitled to enforce or to receive any payments until the principal of and
interest on all Securities issued hereunder shall have been paid in full.
The Subsidiary Guaranties are specifically designated by the
Subsidiary Guarantors as Indebtedness of the Subsidiary Guarantors for purposes
of this Indenture.
Any term or provision of this Indenture to the contrary
notwithstanding, the maximum aggregate amount of the obligations guaranteed
hereunder by any Subsidiary Guarantor shall not exceed the maximum amount that
can be hereby guaranteed without rendering this Indenture, as it relates to
such Subsidiary Guarantor, voidable under the applicable law relating to
fraudulent conveyance or fraudulent transfer or similar laws affecting the
rights of creditors generally.
SECTION 11.02. Contribution. In order to provide for just and
equitable contribution among the Subsidiary Guarantors, the Subsidiary
Guarantors agree, inter se, that in the event any payment or distribution is
made by a Subsidiary Guarantor (a "Funding Subsidiary Guarantor") under the
Guaranty, such Funding Subsidiary Guarantor shall be entitled to a contribution
form all other Subsidiary Guarantors in a pro rata amount based upon the
Adjusted Net Assets of each Subsidiary Guarantor (including the Funding
Subsidiary Guarantor) for all payments, damanges and expenses incurred by that
Funding Subsidiary Guarantor in discharging the Company's obligations with
respect to the Securities or any other Subsidiary Guarantor's obligations with
respect to the Guaranty.
"Adjusted Net Assets" of such Subsidiary Guarantor at any date
shall mean the lesser of the amount by which (x) the fair value of the property
of such Subsidiary Guarantor exceeds the total amount of liabilities,
including, without limitation, contingent liabilities (after giving effect to
all other fixed and contingent liabiities Incurred or assumed on such date),
but excluding liabilities under the Guaranty, of such Subsidiary Guarantor at
such date and (y) the present fair saleable value of the assets of such
Subsidiary Guarantor at such date exceeds the amount that will be required to
pay the probable liability of such Subsidiary Guarantor on its debts including,
without limitation, Senior Indebtedness of Subsidiary Guarantors (after giving
effect to all other fixed and contingent liabilities Incurred or assumed on
such date and after giving effect to any collection from any Subsidiary of such
Subsidiary Guarantor in respect of the obligations of such Subsidiary under the
Guaranty), excluding debt in respect of the Guaranty of such Subsidiary
Guarantor, as they become absolute and matured.
SECTION 11.03. Agreement To Subordinate. The Subsidiary
Guarantors agree, and each Holder, by accepting a Security, agrees, that the
Subsidiary Guaranties are subordinated in right of payment, to the extent and
in the manner provided in this Article 11, to the prior payment of all Senior
Indebtedness of Subsidiary Guarantors and that the subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness of Subsidiary
Guarantors. The Securities shall in all respects rank pari passu with all
other Senior Subordinated Indebtedness of Subsidiary Guarantors and only
Indebtedness of Subsidiary Guarantors which is Senior Indebtedness of
Subsidiary Guarantors shall rank senior to the Securities in accordance with
the provisions set forth herein. All provisions of this Article 11 shall be
subject to Section 11.14.
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SECTION 11.04. Liquidation, Dissolution, Bankruptcy. Upon any
payment or distribution of the assets of the Subsidiary Guarantors to creditors
upon a total or partial liquidation or a total or partial dissolution of the
Subsidiary Guarantors, or in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Subsidiary Guarantors or
their property:
(1) holders of Senior Indebtedness of Subsidiary Guarantors
shall be entitled to receive payment in full of the Senior
Indebtedness of Subsidiary Guarantors before Holders shall be entitled
to receive any payment of principal of or interest on the Securities
pursuant to the Subsidiary Guaranties; and
(2) until the Senior Indebtedness of Subsidiary Guarantors is
paid in full, any distribution to which Holders would be entitled but
for this Article 11 shall be made to holders of Senior Indebtedness of
Subsidiary Guarantors as their interests may appear, except that
Holders may receive shares of stock and any debt securities that are
subordinated to Senior Indebtedness of Subsidiary Guarantors to at
least the same extent as under the Subsidiary Guaranties.
SECTION 11.05. Default on Senior Indebtedness of Subsidiary
Guarantors. The Subsidiary Guarantors may not pay the principal of or interest
on the Securities pursuant to the Subsidiary Guaranties if (i) any Senior
Indebtedness of Subsidiary Guarantors is not paid when due or (ii) any other
default on Senior Indebtedness of Subsidiary Guarantors occurs and the maturity
of such Senior Indebtedness of Subsidiary Guarantors is accelerated in
accordance with its terms unless, in either case, (a) the default has been
cured or waived and any such acceleration has been rescinded or (b) such Senior
Indebtedness of Subsidiary Guarantors has been paid in full. During the
continuance of any default (other than a default described in clause (i) or
(ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness of Subsidiary Guarantors pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration) or the expiration of any
applicable grace periods, the Subsidiary Guarantors may not pay the Securities
for a period (a "Subsidiary Guarantors Payment Blockage Period") commencing
upon the receipt by the Subsidiary Guarantors and the Trustee of written notice
of such default from the Representative of any Designated Senior Indebtedness
of Subsidiary Guarantors specifying an election to effect a Subsidiary
Guarantors Payment Blockage Period (a "Subsidiary Guarantors Blockage Notice")
and ending 179 days thereafter (or earlier, if such Subsidiary Guarantors
Payment Blockage Period is terminated (i) by written notice to the Trustee and
the Subsidiary Guarantors from the Person or Persons who gave such Subsidiary
Guarantors Blockage Notice, (ii) by repayment in full of such Designated Senior
Indebtedness of Subsidiary Guarantors or (iii) because the default giving rise
to such Subsidiary Guarantors Blockage Notice is no longer continuing).
Notwithstanding the provisions described in the immediately preceding sentence
(but subject to the provisions contained in the first sentence of this Section
11.05), unless the holders of such Designated Senior Indebtedness of Subsidiary
Guarantors or the Representative of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness of Subsidiary Guarantors, the
Subsidiary Guarantors may resume payments on the Securities pursuant to the
Subsidiary Guaranties after such Payment Blockage Period. Not more than one
Subsidiary Guarantors Blockage Notice may be given in any consecutive 360-day
period, irrespective of the number of defaults with respect to Designated
Senior Indebtedness of Subsidiary Guarantors during such period.
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SECTION 11.06. Acceleration of Payment of Securities. If
payment of the Securities is accelerated because of an Event of Default, the
Company shall promptly notify the holders of the Designated Senior Indebtedness
of Subsidiary Guarantors (or their Representatives) of the acceleration.
SECTION 11.07. When Distribution Must Be Paid Over. If a
distribution is made to Holders that because of this Article 11 should not have
been made to them, the Holders who receive the distribution shall hold it in
trust for holders of Senior Indebtedness of Subsidiary Guarantors and pay it
over to them as their interests may appear.
SECTION 11.08. Subrogation. After all Senior Indebtedness is
paid in full and until the Securities are paid in full, Holders shall be
subrogated to the rights of holders of Senior Indebtedness of Subsidiary
Guarantors to receive distributions applicable to Senior Indebtedness of
Subsidiary Guarantors. A distribution made under this Article 11 to holders of
Senior Indebtedness of Subsidiary Guarantors which otherwise would have been
made to Holders is not, as between the Company and Holders, a payment by the
Subsidiary Guarantors on Senior Indebtedness of Subsidiary Guarantors.
SECTION 11.09. Relative Rights. This Article 11 defines the
relative rights of Holders and holders of Senior Indebtedness of Subsidiary
Guarantors. Nothing in this Indenture shall:
(1) impair, as between the Subsidiary Guarantors and Holders,
the obligation of the Subsidiary Guarantors, which is absolute and
unconditional, to pay principal of and interest on the Securities
pursuant to the Subsidiary Guaranties in accordance with their terms;
or
(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default, subject to the rights of holders of
Senior Indebtedness of Subsidiary Guarantors to receive distributions
otherwise payable to Holders.
SECTION 11.10. Subordination May Not Be Impaired by the
Subsidiary Guarantors. No right of any holder of Senior Indebtedness of
Subsidiary Guarantors to enforce the subordination of the Indebtedness
evidenced by the Securities shall be impaired by any act or failure to act by
any Subsidiary Guarantor or by its failure to comply with this Indenture.
SECTION 11.11. Rights of Trustee and Paying Agent.
Notwithstanding Section 11.05, the Trustee or Paying Agent may continue to make
payments on the Securities and shall not be charged with knowledge of the
existence of facts that would prohibit the making of any such payments unless,
not less than two Business Days prior to the date of such payment, a Trust
Officer of the Trustee receives notice satisfactory to it that payments may not
be made under this Article 11. The Subsidiary Guarantors, the Registrar or
co-registrar, the Paying Agent, a Representative of holders of, or holders
holding a majority of Senior Indebtedness may give the notice; provided,
however, that, if holders of Senior Indebtedness of Subsidiary Guarantors have
a Representative, only such Representative may give the notice.
The Trustee, in its individual or any other capacity, may hold
Senior Indebtedness of Subsidiary Guarantors with the same rights it would have
if it were not Trustee.
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The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article 11 with respect to any Senior Indebtedness of Subsidiary Guarantors
which may at any time be held by it, to the same extent as any other holder of
Senior Indebtedness of Subsidiary Guarantors; and nothing in Article 7 shall
deprive the Trustee of any of its rights as such holder. Nothing in this
Article 11 shall apply to claims of, or payments to, the Trustee under or
pursuant to Section 7.07.
SECTION 11.12. Distribution or Notice to Representative.
Whenever a distribution is to be made or a notice given to holders of Senior
Indebtedness of Subsidiary Guarantors, the distribution may be made and the
notice given to their Representative (if any).
SECTION 11.13. Article 11 Not To Prevent Events of Default or
Limit Right To Accelerate. The failure to make a payment pursuant to the
Securities by reason of any provision in this Article 11 shall not be construed
as preventing the occurrence of a Default. Nothing in this Article 11 shall
have any effect on the right of the Holders or the Trustee to accelerate the
maturity of the Securities.
SECTION 11.14. Trust Moneys Not Subordinated.
Notwithstanding anything contained herein to the contrary, payments from money
or the proceeds of U.S. Government Obligations held in trust under Article 8 by
the Trustee for the payment of principal of and interest on the Securities
shall not be subordinated to the prior payment of any Senior Indebtedness or
subject to the restrictions set forth in this Article 11, and none of the
Holders shall be obligated to pay over any such amount to the Subsidiary
Guarantors or any holder of Senior Indebtedness of Subsidiary Guarantors or any
other creditor of the Subsidiary Guarantors.
SECTION 11.15. Trustee Entitled To Rely. Upon any payment or
distribution pursuant to this Article 11, the Trustee and the Holders shall be
entitled to rely (i) upon any order or decree of a court of competent
jurisdiction in which any proceedings of the nature referred to in Section
11.04 are pending, (ii) upon a certificate of the liquidating trustee or agent
or other Person making such payment or distribution to the Trustee or to the
Holders, or (iii) upon the Representatives for the holders of Senior
Indebtedness of Subsidiary Guarantors for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
the Senior Indebtedness of Subsidiary Guarantors and other Indebtedness of the
Subsidiary Guarantors, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or to
this Article 11. In the event that the Trustee determines, in good faith, that
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness of Subsidiary Guarantors to participate in any payment or
distribution pursuant to this Article 11, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness of Subsidiary Guarantors held by such Person, the
extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article 11, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment. The provisions of Sections 7.01 and 7.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article 11.
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SECTION 11.16. Trustee To Effectuate Subordination. Each
Holder by accepting a Security authorizes and directs the Trustee on its behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination between the Holders and the holders of Senior
Indebtedness of Subsidiary Guarantors as provided in this Article 11 and
appoints the Trustee as attorney-in-fact for any and all such purposes.
SECTION 11.17. Trustee Not Fiduciary for Holders of Senior
Indebtedness of Subsidiary Guarantors. The Trustee shall not be deemed to owe
any fiduciary duty to the holders of Senior Indebtedness of Subsidiary
Guarantors and shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Holders or the Subsidiary Guarantors or any other
Person money or assets to which any holders of Senior Indebtedness of
Subsidiary Guarantors shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.18. Reliance by Holders of Senior Indebtedness of
Subsidiary Guarantors on Subordination Provisions. Each Holder by accepting a
Security acknowledges and agrees that the foregoing subordination provisions
are, and are intended to be, an inducement and a consideration to each holder
of any Senior Indebtedness of Subsidiary Guarantors, whether such Senior
Indebtedness of Subsidiary Guarantors was created or acquired before or after
the issuance of the Securities, to acquire and continue to hold, or to continue
to hold, such Senior Indebtedness of Subsidiary Guarantors and such holder of
Senior Indebtedness of Subsidiary Guarantors shall be deemed conclusively to
have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Senior Indebtedness of Subsidiary
Guarantors.
SECTION 11.19. Release of Subsidiary Guarantor. This
Subsidiary Guaranty as to any Subsidiary Guarantor other than the Guarantor
shall terminate and be of no further force or effect on the sale or other
transfer (i) by such Subsidiary Guarantor of all or substantially all of its
assets in compliance with the terms of this Indenture or (ii) by the Company of
all of its stock or other equity interests in such Subsidiary Guarantor, in
each case to a Person that is not an Affiliate of the Company; provided,
however, that such sale or transfer shall be deemed to constitute an Asset
Disposition and the Company shall comply with all applicable provisions of
Section 4.06 with respect to such Asset Disposition.
ARTICLE 12
MISCELLANEOUS
SECTION 12.01. Trust Indenture Act Controls. If and to the
extent that any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by, or with another provision (an "incorporated provision")
included in this Indenture by operation of, Sections 310 to 318, inclusive, of
the TIA, such imposed duties or incorporated provision shall control. If any
provision of this Indenture modifies or excludes any provision of the TIA that
may be so modified or excluded, the latter provision shall be deemed to apply
to this Indenture as so modified or excluded, as the case may be.
SECTION 12.02. Notices. Any notice or communication shall be
in writing and delivered in person or mailed by first-class mail addressed as
follows:
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If to the Company or any Subsidiary Guarantor:
U.S. Can Corporation
900 Commerce Drive
Oak Brook, Illinois 60521
Attention: Timothy W. Stonich
With a copy to:
Ross & Hardies
150 North Michigan Avenue
Chicago, Illinois 60601
Attention: Lawrence R. Samuels, Esq.
If to the Trustee:
Harris Trust & Savings Bank
Attention: Indenture Trust Administration
311 West Monroe, 12th Floor
Chicago, IL 60606
If to the Paying Agent:
Harris Trust & Savings Bank
Attention: Indenture Trust Administration
311 West Monroe, 12th Floor
Chicago, IL 60606
The Company or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Holder shall be mailed
to the Holder at the Holder's address as it appears on the registration books
of the Registrar and shall be sufficiently given if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to other Holders.
If a notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it. If the Company or a
Subsidiary Guarantor mails a notice or communication to Holders, it shall mail
a copy to the Trustee and each Paying Agent at the same time.
SECTION 12.03. Communication by Holders with Other Holders.
Holders may communicate pursuant to TIA Section 312(b) with other Holders with
respect to their rights under this Indenture or the Securities. The Company,
the Trustee, the Registrar and anyone else shall have the protection of TIA
Section 312(c).
SECTION 12.04. Certificate and Opinion as to Conditions
Precedent. Upon any request or application by the Company to the Trustee to
take or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee:
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(1) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee and complying with Section 12.05 stating
that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have
been complied with; and
(2) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee stating that, in the opinion of such
counsel, all such conditions precedent have been complied with.
SECTION 12.05. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a covenant or
condition provided for in this Indenture (other than a certificate pursuant to
Section 3.14(a)(4) of the TIA) shall comply with the provisions of Section
3.14(e) of the TIA and shall include:
(1) a statement that the individual making such certificate
or opinion has read such covenant or condition;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of such individual, he
or she or such individual has made such examination or investigation
as is necessary to enable him or her to express an informed opinion as
to whether or not such covenant or condition has been complied with;
and
(4) a statement as to whether or not, in the opinion of such
individual, such covenant or condition has been complied with or
satisfied.
SECTION 12.06. When Securities Disregarded. In determining
whether the Holders of the required principal amount of Securities have
concurred in any direction, waiver or consent, Securities owned by the Company
or by any Person, directly or indirectly, controlling or controlled by or
under, direct or indirect, common control with the Company shall be disregarded
and deemed not to be outstanding, except that, for the purpose of determining
whether the Trustee shall be protected in relying on any such direction, waiver
or consent, only Securities which the Trustee has actual knowledge to be so
owned shall be so disregarded. Also, subject to the foregoing, only Securities
outstanding at the time shall be considered in any such determination.
SECTION 12.07. Rules by Trustee, Paying Agent and Registrar.
The Trustee may make reasonable rules for action by or a meeting of Holders.
The Registrar and the Paying Agent may make reasonable rules for their
functions.
SECTION 12.08. Legal Holidays. A "Legal Holiday" is a
Saturday, a Sunday or a day on which banking institutions are not required to
be open in the State of New York or the State of Illinois. If a payment date
is a Legal Holiday, payment shall be made on the next succeeding day that is
not a Legal Holiday, and no interest shall accrue for the intervening period.
If a regular record date is a Legal Holiday, the record date shall not be
affected.
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<PAGE> 69
SECTION 12.09. GOVERNING LAW. THIS INDENTURE AND THE
SECURITIES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK BUT WITHOUT GIVING EFFECT TO APPLICABLE PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.
SECTION 12.10. No Recourse Against Others. A director,
officer, employee or stockholder, as such, of the Company, the Subsidiary
Guarantors or the Trustee shall not have any liability for any obligations of
the Company, the Subsidiary Guarantors or the Trustee (as the case may be)
under the Securities or this Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Holder shall waive and release all such liability. The waiver and release
shall be part of the consideration for the issue of the Securities.
SECTION 12.11. Successors. All agreements of each of the
Company and the Subsidiary Guarantors in this Indenture and the Securities
shall bind its successors. All agreements of the Trustee in this Indenture
shall bind its successors.
SECTION 12.12. Multiple Originals. The parties may sign any
number of copies of this Indenture. Each signed copy shall be an original, but
all of them together represent the same agreement. One signed copy is enough
to prove this Indenture.
SECTION 12.13. Table of Contents; Headings. The table of
contents, cross-reference sheet and headings of the Articles and Sections of
this Indenture have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 12.14. Severability. In case any provision in this
Indenture or in the Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
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<PAGE> 70
IN WITNESS WHEREOF, the parties have caused this Indenture to
be duly executed as of the date first written above.
U.S. CAN CORPORATION
by /s/ Timothy W. Stonich
----------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President,
Finance, Chief Financial
Officer and Secretary
UNITED STATES CAN COMPANY
by /s/ Timothy W. Stonich
----------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President,
Finance, Chief Financial
Officer and Secretary
HARRIS TRUST AND SAVINGS BANK,
as Trustee
by /s/ J. Bartolini
----------------------------------------
Name: J. Bartolini
Title: Vice President
[Indenture]
<PAGE> 71
EXHIBIT A
[FORM OF FACE OF INITIAL NOTES]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSORS NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
[Restricted Security Legend]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING
THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT
BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE THIRD ANNIVERSARY
OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY
HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX
CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER
THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) OR (4) TO AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT
IS ACQUIRING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION,
AND A CERTIFICATE IN THE FORM ATTACHED TO THIS SECURITY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRUSTEE, IN EACH CASE IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. AN INSTITUTIONAL
ACCREDITED INVESTOR HOLDING THIS SECURITY AGREES THAT IT WILL FURNISH TO THE
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<PAGE> 72
COMPANY AND THE TRUSTEE SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY
REASONABLY REQUIRE TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES
WITH THE FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2),
(3) OR (7) UNDER THE SECURITIES ACT AND THAT IS HOLDING THIS SECURITY FOR
INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-U.S. PERSON OUTSIDE
THE UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (0)(2) OF RULE 902 UNDER) REGULATION S UNDER THE
SECURITIES ACT.
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<PAGE> 73
CUSIP NO.
No. $
10-1/8% SENIOR SUBORDINATED NOTES DUE 2006
U.S. Can Corporation, a Delaware corporation, promises to pay to
______________________________, or registered assigns, the principal sum of
________________________________________________________________ on
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated:
U.S. CAN CORPORATION
by: ______________________________
President
by: ______________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
HARRIS TRUST AND SAVINGS BANK
as Trustee, certifies that this is one
of the Securities referred to in the
Indenture.
[seal]
by: __________________________
Authorized Signatory
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<PAGE> 74
[FORM OF REVERSE SIDE OF INITIAL NOTES]
10-1/8% Senior Subordinated Note Due 2006
1. Interest
U.S. Can Corporation, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security (the "Security") at the rate per annum
shown above. The Company will pay interest semiannually on April 15 and
October 15 of each year. Interest on the Securities will accrue from the most
recent date to which interest has been paid or, if no interest has been paid,
from the Issue Date. Interest will be computed on the basis of a 360-day year
of 12 30-day months. The Company shall pay interest on overdue principal at
the rate borne by the Securities plus 1% per annum, and it shall pay interest
on overdue installments of interest at the same rate to the extent lawful.
2. Special Interest
The holder of this Security is entitled to the benefits of a
Registration Rights Agreement, dated as of October 17, 1996, among the Company,
United States Can Company (the "Guarantor") and the Initial Purchasers (the
"Registration Agreement"). Pursuant to the Registration Agreement, the Company
and the Guarantor have agreed as follows:
(1) If neither a registration statement (the
"Exchange Offer Registration Statement") in respect of a registed
offered to exchange the Securities (the "Exchange Offer") nor a
registration statement permitting public resale of the Securities (the
"Shelf Registration Statement") has been filed on or prior to the 60th
day (the "Filing Date") after the date the Initial Notes were issued
(the "Issue Date"), then, commencing on the 61st day after the Issue
Date, additional interest on the Securities ("Liquidated Damages")
shall accrue on the Securities over and above the stated interest at a
rate of 0.50% per annum of the principal amount of the Securities for
the first 90 days immediately following the Filing Date, such
Liquidated Damages rate increasing by an additional 0.25% per annum of
the principal amount of the Securities at the beginning of each
subsequent 90-day period;
(2) If the Exchange Offer Registration Statement
is not declared effective by the SEC on or prior to the 120th day (the
"Effectiveness Date") after the Issue Date, then, commencing on the
121st day after the Issue Date, Liquidated Damages shall accrue on the
Securities included or which should have been included in such
Registration Statement over and above the stated interest at a rate of
0.50% per annum of the principal amount of the Securities for the
first 90 days immediately following the Effectiveness Date, such
Liquidated Damages increasing by an additional 0.25% per annum of the
principal amount of the Securities at the beginning of each subsequent
90-day period; and
(3) If (A) the Exchange Offer has not been
consummated, and the Shelf Registration Statement has not been
declared effective by the SEC, on or prior to the 150th day after the
Issue Date or (B) the Exchange Offer Registration Statement or, if
applicable, the Shelf Registration Statement has been declared
effective and such Registration Statement ceases to be effective at
any time during the periods specified in the Registration Rights
Agreement (unless all the Securities have previously been sold
thereunder), then Liquidated Damages shall accrue (over and above any
interest otherwise payable on such Securities) at a rate of 0.50% per
annum of
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<PAGE> 75
the principal amount of the Securities for the first 90 days
commencing on (x) the 151st day after the Issue Date with respect to
the Securities validly tendered and not exchanged by the Company, in
the case of (A) above, or (y) the day such Exchange Offer Registration
Statement or Shelf Registration Statement ceases to be effective in
the case of (B) above, such Liquidated Damages rate increasing by an
additional 0.25% per annum of the principal amount of the Securities
at the beginning of each such subsequent 90-day period (it being
understood and agreed that, in the case of (B) above, so long as any
Security is then covered by an effective Shelf Registration Statement,
no Liquidated Damages shall accrue on such Security);
provided, however, that the Liquidated Damages rate on any affected Security
may not exceed at any one time in the aggregate 2.0% per annum of the principal
amount of the Securities; and provided further, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of clause (1) of this Section 2), (2) upon the effectiveness of the
Exchange Offer Registration Statement (in the case of clause (2) of this
Section 2), or (3) upon the exchange of all Securities tendered or the
effectiveness of the Shelf Registration Statement (in the case of clause (3)(A)
of this Section 2), or upon the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement which had ceased to
remain effective (in the case of clause (3)(B) of this Section 2), Liquidated
Damages on the affected Securities as a result of such clause (or the relevant
subclause thereof), as the case may be, shall cease to accrue.
3. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities
(each, a "Holder") at the close of business on the April 1 or October 1 next
preceding the interest payment date even if Securities are concealed after the
record date and on or before the interest payment date. Holders must surrender
Securities to an office or agency where Securities may be presented for payment
(the "Paying Agent") to collect principal payments. The Company will pay
principal and interest in money of the United States of America that at the
time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by check payable in such
money. It may mail an interest check to a Holder's registered address.
4. Paying Agent and Registrar
Initially, Harris Trust and Savings Bank, an Illinois banking
corporation ("Trustee"), will act as Paying Agent and the office or agency
where Securities may be presented for registration or transfer or for exchange
(the "Registrar"). The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any of its
domestically incorporated wholly owned subsidiaries may act as Paying Agent,
Registrar or co-registrar.
5. Indenture
The Company issued the Securities under an Indenture dated as
of October 17, 1996 (the "Indenture"), between the Company, the Guarantor and
the Trustee. The terms of the Securities include those stated in the Indenture
and those made part of the Indenture by reference to the Trust Indenture Act of
1939 (15 U.S.C. Section Section 77aaa-77bbbb) as in effect on the date of the
Indenture (the "Act"). Terms defined in the Indenture and not defined herein
have the meanings ascribed thereto in the Indenture. The Securities are
subject to all such terms, and Holders are referred to the Indenture and the
Act for a statement of those terms.
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<PAGE> 76
The Securities are general unsecured obligations of the
Company limited to $275,000,000 aggregate principal amount (subject to Section
2.07 of the Indenture). This Security is one of the Initial Notes referred to
in the Indenture. The Securities include the Initial Notes and any notes
issued in exchange for the Initial Notes pursuant to the Registration Rights
Agreement (the "Exchange Notes"). The Initial Notes and the Exchange Notes are
treated as a single class of securities under the Indenture. The Indenture
imposes certain limitations on the Company and the Restricted Subsidiaries,
including the Incurrence of additional Indebtedness, payment of dividends or
other distributions with respect to Capital Stock of the Company, sale of
assets of the Company or its Restricted Subsidiaries, or restrictions on the
ability of any Restricted Subsidiary to pay dividends or make any other
distributions in respect of its Capital Stock. In addition, the Indenture
contains certain covenants that, among other things, limit the ability of the
Company and its Subsidiary Guarantors to Incur Indebtedness which is senior to
or ranks pari passu with the Securities or the Subsidiary Guaranties, as the
case may be, create certain Liens, or enter into certain mergers and
consolidations.
The payment of principal and interest on the Securities is
unconditionally guaranteed on a senior subordinated and unsecured basis by the
Subsidiary Guarantors.
6. Optional Redemption
Except as set forth in paragraphs 7 and 8, the Securities may
not be redeemed prior to October 15, 2001. On and after that date, the Company
may redeem the Securities in whole at any time or in part from time to time at
the following redemption prices (expressed in percentages of principal amount),
plus accrued interest to the redemption date (subject to the right of Holders
of record on the relevant record date to receive interest due on the related
interest payment date):
if redeemed during the 12-month period beginning October 15
of the years below.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . 105.063%
2002 . . . . . . . . . . . . . . . . . . . 103.375%
2003 . . . . . . . . . . . . . . . . . . . 101.688%
2004 and thereafter . . . . . . . . . . . 100.000%
</TABLE>
In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee on a pro rata basis, by
lot or by such other method as the Trustee, in its sole discretion, shall deem
to be fair and appropriate (and which complies with applicable legal and
securities exchange requirements), although no Security of $1,000 in original
principal amount or less will be redeemed in part. If any Security is to be
redeemed in part only, the notice of redemption relating to such Security shall
state the portion of the principal amount thereof to be redeemed. A new
Security in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Security.
7. Notice of Redemption
A notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at such
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<PAGE> 77
Holder's registered address. Securities in denominations larger than $1,000
may be redeemed in part but only in whole multiples of $1,000. If money
sufficient to pay the redemption price of and accrued interest on all
Securities (or portions thereof) to be redeemed on the redemption date is
deposited with the Paying Agent on or before the redemption date and certain
other conditions are satisfied, on and after such date interest ceases to
accrue on such Securities (or such portions thereof) called for redemption.
8. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions, to cause the Company to repurchase
all or any part of the Securities of such Holder at a repurchase price equal to
101% of the principal amount of the Securities to be repurchased plus accrued
interest to the date of repurchase (subject to the right of holders of record
in the relevant record date to receive interest due on the related interest
payment date) as provided in, and subject to the terms of, the Indenture.
9. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture, and the Subsidiary Guaranties are subordinated to
Senior Indebtedness of the Subsidiary Guarantors, as defined in the Indenture.
To the extent provided in the Indenture, Senior Indebtedness or Senior
Indebtedness of the Subsidiary Guarantors must be paid before the Securities
may be paid. The Company and the Subsidiary Guarantors agree, and each Holder
by accepting a Security agrees, to the subordination provisions contained in
the Indenture and authorizes the Trustee to give effect to such provisions and
appoints the Trustee as attorney-in-fact for such purpose.
10. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar need not register the transfer of or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
11. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
12. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
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<PAGE> 78
13. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee payment of principal and interest on
the Securities to redemption or maturity, as the case may be.
14. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Holder, the Company and the
Trustee may amend the Indenture or the Securities to cure any ambiguity,
omission, defect or inconsistency, or to comply with Article 5 of the
Indenture, or to provide for uncertificated Securities in addition to or in
place of certificated Securities, or to add guarantees with respect to the
Securities or to secure the Securities, or to add additional covenants or
surrender rights and powers conferred on the Company, or to comply with any
request of the SEC in connection with qualifying the Indenture under the Act,
or to make certain changes in the subordination provisions, or to make any
change that does not adversely affect the rights of any Holder.
15. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption, upon declaration or
otherwise, or failure by the Company and the Subsidiary Guarantor to redeem or
purchase Securities when required; (iii) failure by the Company or the
Subsidiary Guarantor to comply with the provisions of Section 5.01 of the
Indenture; (iv) failure by the Company or any Subsidiary Guarantor to comply
with certain other sections of the Indenture; (v) failure by the Company or any
Subsidiary Guarantor to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (vi) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $10 million and the default continues for 10 days; (vii)
certain events of bankruptcy or insolvency with respect to the Company and any
Subsidiary Guarantor or any Foreign Significant Subsidiary; (viii) certain
judgments or decrees for the payment of money in excess of $10 million; (ix)
any Subsidiary Guaranty is held to be unenforceable or is valid or ceases to be
in full force and effect; (x) the Required Redemption has not been consummated;
(xi) the Company breaches any provision or otherwise does not comply with the
Escrow Agreement, or such agreement is held unenforceable, invalid or ceases
for any reason to be in full force and effect (except as a result of the
complete performance thereof). If an Event of Default (other than certain
Events of Default specified in (vii) above) occurs and is continuing, the
Trustee or the Holders of at least 25% in principal amount of the Securities
may, by notice to the Company, declare the principal amount of and accrued
interest on the Securities to be due and payable immediately upon the
occurrence of such Event of Default.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing Default
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<PAGE> 79
(except a Default in payment of principal or interest) if it determines that
withholding notice is in the interest of the Holders.
16. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
17. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, any Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company, any Subsidiary Guarantor or the Trustee
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Holder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
18. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
19. Abbreviations
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
20. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures, the Company has caused CUSIP
numbers to be printed on the Securities and has directed the Trustee to use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY HOLDER, UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE HOLDER, A COPY OF THE INDENTURE WHICH HAS IN IT THE
TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: U.S. CAN
CORPORATION, 900 COMMERCE DRIVE, OAK BROOK, ILLINOIS 60521, ATTENTION: CHIEF
FINANCIAL OFFICER.
________________________________________________________________________________
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<PAGE> 80
[FORM OF NOTATION ON INITIAL NOTE RELATING TO GUARANTY]
SENIOR SUBORDINATED GUARANTY
UNITED STATES CAN COMPANY (the "Guarantor") has
unconditionally guaranteed on a senior subordinated basis (such guaranty by
each Guarantor being referred to herein as the "Guaranty") (i) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article 11 of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holders and to the
Trustee pursuant to the Guaranty and the Indenture are expressly set forth and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness of Subsidiary Guarantors to the extent and
in the manner provided in Article 11 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guaranty therein made.
No director, officer, employee or stockholder, as such, of any
of the Subsidiary Guarantors shall have any liability under the Guaranty of
such Subsidiary Guarantor by reason of such person's status as director,
officer, employee or stockholder. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Guaranty.
The Guaranty shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guaranty is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
UNITED STATES CAN COMPANY
By:_____________________________
Name:
Title:
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<PAGE> 81
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: __________ Your Signature: _____________________________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guaranty:_____________________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust
company)
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<PAGE> 82
In connection with any transfer of any of the Securities
evidenced by this certificate occurring prior to the date that is three years
after the later of the date of original issuance of such Securities and the
last date, if any, on which such Securities were owned by the Company or any
Affiliate of the Company, the undersigned confirms that such Securities are
being transferred:
(CHECK ONE BOX BELOW)
(1) / / to the Company or a subsidiary thereof
(2) / / to an institutional "accredited investor" (as
defined in rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933, as amended) that has furnished to the
Holder a signed letter containing certain representations
and agreements (the form of which letter can be obtained
from the Trustee)
(3) / / pursuant to effective registration statement under the
Securities Act of 1933, as amended
(4) / / inside the United States to a "qualified institutional
buyer" (as defined in Rule 144A under the Securities Act of
1933, as amended) that purchases for its own account or for
the account of a qualified institutional buyer to whom
notice is given that such transfer is being made in
reliance on Rule 144A, in each case, pursuant to and in
compliance with Rule 144A under the Securities Act of 1933,
as amended
(5) / / outside the United States in an offshore transaction to a
"foreign person" in accordance with Rule 904 of Regulation S
under the Securities Act of 1933, as amended
(6) / / pursuant to the exemption from registration provided by
Rule 144 under the Securities Act of 1933, as amended
(7) / / pursuant to another available exemption from the
registration requirements of the Securities Act of 1933, as
amended
Unless one of the boxes is checked, the Trustee will refuse to
register any of the Securities evidenced by this certificate in the name of any
person other than the registered holder thereof; provided, however, that if box
(2), (5), (6) or (7) is checked, the Trustee may require, prior to registering
any such transfer of the Securities such legal opinions, certifications and
other information as the Company has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, as
amended, such as the exemption provided by Rule 144 under such Securities Act
of 1933, as amended.
___________________________
Signature
-12-
<PAGE> 83
TO BE COMPLETED BY PURCHASER IF (4) ABOVE IS CHECKED
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A ("Rule 144A")
under the Securities Act of 1933, as amended, and is aware that the sale to it
is being made in reliance on Rule 144A and acknowledges that it has received
such information regarding the Company as the undersigned has requested
pursuant to Rule 144A or has determined not to request such information and
that it is aware that the transferor is relying upon the undersigned's
foregoing representations in order to claim the exemption from registration
provided by Rule 144A.
Date: ________________ ___________________________________________
NOTICE: To be executed by an
executive officer
-13-
<PAGE> 84
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease Amount of Increase Principal Amount Signature of
in Principal in Principal [at Maturity] of authorized officer
Amount [at Amount [at this Global of Trustee or
Maturity] of this Maturity] of this Security following Securities
Global Security Global Security such decrease or Custodian
increase
</TABLE>
-14-
<PAGE> 85
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $_________________
Date: ______________ Your Signature: _______________________________________
(Sign exactly as your name appears on
the other side of the Security)
Signature Guaranty: __________________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust
company)
-15-
<PAGE> 86
EXHIBIT B
[FORM OF FACE OF EXCHANGE NOTE]
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSORS NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE INDENTURE REFERRED TO ON THE REVERSE HEREOF.
<PAGE> 87
No. $
CUSIP No.:
SERIES B 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006
U.S. Can Corporation, a Delaware corporation, promises to pay to
_____________________________, or registered assigns, the principal sum of
____________________________________________________________________ on
Interest Payment Dates: April 15 and October 15
Record Dates: April 1 and October 1
Additional provisions of this Security are set forth on the
other side of this Security.
Dated: U.S. CAN CORPORATION
by: _________________________
President
by: _________________________
Secretary
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
HARRIS TRUST AND SAVINGS BANK
as Trustee, certifies that this is
one of the Securities referred to
in the Indenture.
[seal]
by: _______________________________
Authorized Signatory
-2-
<PAGE> 88
[FORM OF REVERSE SIDE OF EXCHANGE NOTE]
SERIES B 10-1/8% SENIOR SUBORDINATED NOTES DUE 2006
1. Interest
U.S. Can Corporation, a Delaware corporation (such
corporation, and its successors and assigns under the Indenture hereinafter
referred to, being herein called the "Company"), promises to pay interest on
the principal amount of this Security at the rate per annum shown above. The
Company will pay interest semiannually on April 15 and October 15 of each year.
Interest on the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from the Issue Date.
Interest will be computed on the basis of a 360-day year of 12 30-day months.
The Company shall pay interest on overdue principal at the rate borne by the
Securities plus 1% per annum, and it shall pay interest on overdue installments
of interest at the same rate to the extent lawful.
2. Method of Payment
The Company will pay interest on the Securities (except
defaulted interest) to the persons who are registered holders of Securities
("Holder" or "Holder") at the close of business on the April 1 or October 1
next preceding the interest payment date even if Securities are concealed after
the record date and on or before the interest payment date. Holders must
surrender Securities to an office or agency where Securities may be presented
for payment (the "Paying Agent") to collect principal payments. The Company
will pay principal and interest in money of the United States of America that
at the time of payment is legal tender for payment of public and private debts.
However, the Company may pay principal and interest by check payable in such
money. It may mail an interest check to a Holder's registered address.
3. Paying Agent and Registrar
Initially, Harris Trust and Savings Bank, an Illinois banking
corporation ("Trustee"), will act as Paying Agent and the office or agency
where Securities may be presented for registration or transfer or for exchange
(the "Registrar"). The Company may appoint and change any Paying Agent,
Registrar or co-registrar without notice. The Company or any of its
domestically incorporated wholly owned subsidiaries may act as Paying Agent,
Registrar or co-registrar.
4. Indenture
The Company issued the Securities under an Indenture dated as
of October __, 1996 (the "Indenture"), between the Company, United States Can
Company (the "Guarantor") and the Trustee. The terms of the Securities include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939 (15 U.S.C. Section Section 77aaa-77bbbb) as
in effect on the date of the Indenture (the "Act"). Terms defined in the
Indenture and not defined herein have the meanings ascribed thereto in the
Indenture. The Securities are subject to all such terms, and Holders are
referred to the Indenture and the Act for a statement of those terms.
The Securities are general unsecured obligations of the
Company limited to $275,000,000 aggregate principal amount (subject to Section
2.07 of the Indenture). This Security is one of 10-1/8% Series B Senior
Subordinated Notes due 2006 (the "Exchange
-3-
<PAGE> 89
Notes") referred to in the Indenture. The Securities include the 10-1/8%
Senior Subordinated Notes due 2006 originally issued under the Indenture (the
"Initial Notes") and any Exchange Notes issued in exchange for the Initial
Notes. The Initial Notes and the Exchange Notes are treated as a single class
of securities under the Indenture. The Indenture imposes certain limitations
on the Company and the Restricted Subsidiaries, including the Incurrence of
additional Indebtedness, payment of dividends or other distributions with
respect to Capital Stock of the Company, sale of assets of the Company or its
Restricted Subsidiaries, or restrictions on the ability of any Restricted
Subsidiary to pay dividends or make any other distributions in respect of its
Capital Stock. In addition, the Indenture contains certain covenants that,
among other things, limit the ability of the Company and its Subsidiary
Guarantors to Incur Indebtedness which is senior to or ranks pari passu with
the Securities or the Subsidiary Guaranties, as the case may be, create certain
Liens, or enter into certain mergers and consolidations.
The payment of principal and interest on the Securities is
unconditionally guaranteed on a senior subordinated and unsecured basis by the
Subsidiary Guarantors.
5. Optional Redemption
Except as set forth in paragraphs 6 and 7, the Securities may
not be redeemed prior to October, 2001. On and after that date, the Company
may redeem the Securities in whole at any time or in part from time to time at
the following redemption prices (expressed in percentages of principal amount),
plus accrued interest to the redemption date (subject to the right of Holders
of record on the relevant record date to receive interest due on the related
interest payment date):
if redeemed during the 12-month period beginning October 15
of the years below.
<TABLE>
<CAPTION>
Year Percentage
---- ----------
<S> <C>
2001 . . . . . . . . . . . . . . . . . . . 105.063%
2002 . . . . . . . . . . . . . . . . . . . 103.375%
2003 . . . . . . . . . . . . . . . . . . . 101.688%
2004 and thereafter . . . . . . . . . . . . 100.000%
</TABLE>
In the case of any partial redemption, selection of the
Securities for redemption will be made by the Trustee on a pro rata basis, by
lot or by such other method as the Trustee, in its sole discretion, shall deem
to be fair and appropriate (and which complies with applicable legal and
securities exchange requirements), although no Security of $1,000 in original
principal amount or less will be redeemed in part. If any Security is to be
redeemed in part only, the notice of redemption relating to such Security shall
state the portion of the principal amount thereof to be redeemed. A new
Security in principal amount equal to the unredeemed portion thereof will be
issued in the name of the Holder thereof upon cancellation of the original
Security.
6. Notice of Redemption
A notice of redemption will be mailed at least 30 days but not
more than 60 days before the redemption date to each Holder of Securities to be
redeemed at such Holder's registered address. Securities in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000. If money sufficient to pay the redemption price of and accrued
interest on all Securities (or portions thereof) to be redeemed on the
redemption date is deposited with the Paying Agent on or before the redemption
date
-4-
<PAGE> 90
and certain other conditions are satisfied, on and after such date interest
ceases to accrue on such Securities (or such portions thereof) called for
redemption.
7. Put Provisions
Upon a Change of Control, any Holder of Securities will have
the right, subject to certain conditions, to cause the Company to repurchase
all or any part of the Securities of such Holder at a repurchase price equal to
101% of the principal amount of the Securities to be repurchased plus accrued
interest to the date of repurchase (subject to the right of holders of record
on the relevant record date to receive interest due on the related interest
payment date) as provided in, and subject to the terms of, the Indenture.
8. Subordination
The Securities are subordinated to Senior Indebtedness, as
defined in the Indenture, and the Subsidiary Guaranties are subordinated to
Senior Indebtedness of Subsidiary Guarantors, as defined in the Indenture. To
the extent provided in the Indenture, Senior Indebtedness or Senior
Indebtedness of Subsidiary Guarantors must be paid before the Securities may be
paid. The Company and the Subsidiary Guarantors agree, and each Holder by
accepting a Security agrees, to the subordination provisions contained in the
Indenture and authorizes the Trustee to give effect to such provisions and
appoints the Trustee as attorney-in-fact for such purpose.
9. Denominations; Transfer; Exchange
The Securities are in registered form without coupons in
denominations of $1,000 and whole multiples of $1,000. A Holder may transfer
or exchange Securities in accordance with the Indenture. The Registrar may
require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted
by the Indenture. The Registrar need not register the transfer of or exchange
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) or any
Securities for a period of 15 days before a selection of Securities to be
redeemed or 15 days before an interest payment date.
10. Persons Deemed Owners
The registered Holder of this Security may be treated as the
owner of it for all purposes.
11. Unclaimed Money
If money for the payment of principal or interest remains
unclaimed for two years, the Trustee or Paying Agent shall pay the money back
to the Company at its request unless an abandoned property law designates
another Person. After any such payment, Holders entitled to the money must
look only to the Company and not to the Trustee for payment.
12. Discharge and Defeasance
Subject to certain conditions, the Company at any time may
terminate some or all of its obligations under the Securities and the Indenture
if the Company deposits with the Trustee payment of principal and interest on
the Securities to redemption or maturity, as the case may be.
-5-
<PAGE> 91
13. Amendment, Waiver
Subject to certain exceptions set forth in the Indenture, (i)
the Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount outstanding of the
Securities and (ii) any default or noncompliance with any provision may be
waived with the written consent of the Holders of a majority in principal
amount outstanding of the Securities. Subject to certain exceptions set forth
in the Indenture, without the consent of any Holder, the Company, the
Subsidiary Guarantors and the Trustee may amend the Indenture or the Securities
to cure any ambiguity, omission, defect or inconsistency, or to comply with
Article 5 of the Indenture, or to provide for uncertificated Securities in
addition to or in place of certificated Securities, or to add guarantees with
respect to the Securities or to secure the Securities, or to add additional
covenants or surrender rights and powers conferred on the Company, or to comply
with any request of the SEC in connection with qualifying the Indenture under
the Act, or to make certain changes in the subordination provisions, or to make
any change that does not adversely affect the rights of any Holder.
14. Defaults and Remedies
Under the Indenture, Events of Default include (i) default for
30 days in payment of interest on the Securities; (ii) default in payment of
principal on the Securities at maturity, upon redemption, upon declaration or
otherwise, or failure by the Company and the Subsidiary Guarantor to redeem or
purchase Securities when required; (iii) failure by the Company or the
Subsidiary Guarantor to comply with the provisions of Section 5.01 of the
Indenture; (iv) failure by the Company or any Subsidiary Guarantor to comply
with certain other sections of the Indenture; (v) failure by the Company or any
Subsidiary Guarantor to comply with other agreements in the Indenture or the
Securities, in certain cases subject to notice and lapse of time; (vi) certain
accelerations (including failure to pay within any grace period after final
maturity) of other Indebtedness of the Company if the amount accelerated (or so
unpaid) exceeds $10 million and continue for 10 days; (vii) certain events of
bankruptcy or insolvency with respect to the Company and any Subsidiary
Guarantor or any Foreign Significant Subsidiary; (viii) certain judgments or
decrees for the payment of money in excess of $10 million; (ix) any Subsidiary
Guaranty being held unenforceable or invalid or ceasing to be in full force and
effect; (x) the Required Redemption not been consummated pursuant to the terms
of the Indenture; (xi) the Company breaching any provision or otherwise not
complying with the Escrow Agreement, or such agreement being held
unenforceable, invalid or ceasing for any reason to be in full force and effect
(except as a result of the complete performance thereof). If an Event of
Default (other than an Event of Default specified in (vii) above) occurs and is
continuing, the Trustee or the Holders of at least 25% in principal amount of
the Securities may, by notice to the Company, declare the principal amount of
and accrued interest on the Securities to be due and payable immediately upon
the occurrence of such Events of Default.
Holders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture
or the Securities unless it receives reasonable indemnity or security. Subject
to certain limitations, Holders of a majority in principal amount of the
Securities may direct the Trustee in its exercise of any trust or power. The
Trustee may withhold from Holders notice of any continuing Default (except a
Default in payment of principal or interest) if it determines that withholding
notice is in the interest of the Holders.
-6-
<PAGE> 92
15. Trustee Dealings with the Company
Subject to certain limitations imposed by the Act, the
Trustee, in its individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with and collect obligations owed
to it by the Company or its Affiliates and may otherwise deal with the Company
or its Affiliates with the same rights it would have if it were not Trustee.
16. No Recourse Against Others
A director, officer, employee or stockholder, as such, of the
Company, any Subsidiary Guarantor or the Trustee shall not have any liability
for any obligations of the Company, any Subsidiary Guarantor or the Trustee
under the Securities or the Indenture or for any claim based on, in respect of
or by reason of such obligations or their creation. By accepting a Security,
each Holder waives and releases all such liability. The waiver and release are
part of the consideration for the issue of the Securities.
17. Authentication
This Security shall not be valid until an authorized signatory
of the Trustee (or an authenticating agent) manually signs the certificate of
authentication on the other side of this Security.
18. Abbreviations
Customary abbreviations may be used in the name of a Holder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entireties), JT TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=custodian), and U/G/M/A (=Uniform Gift to Minors
Act).
19. CUSIP Numbers
Pursuant to a recommendation promulgated by the Committee on
Uniform Security Identification Procedures the Company has caused CUSIP numbers
to be printed on the Securities and has directed the Trustee to use CUSIP
numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the Securities or as contained in any notice of redemption and reliance may be
placed only on the other identification numbers placed thereon.
THE COMPANY WILL FURNISH TO ANY HOLDER, UPON WRITTEN REQUEST
AND WITHOUT CHARGE TO THE HOLDER, A COPY OF THE INDENTURE WHICH HAS IN IT THE
TEXT OF THIS SECURITY IN LARGER TYPE. REQUESTS MAY BE MADE TO: U.S. CAN
CORPORATION, 900 COMMERCE DRIVE, OAK BROOK, ILLINOIS 60521, ATTENTION: CHIEF
FINANCIAL OFFICER.
________________________________________________________________________________
-7-
<PAGE> 93
[FORM OF NOTATION ON EXCHANGE NOTE RELATING TO GUARANTY]
SENIOR SUBORDINATED GUARANTY
UNITED STATES CAN COMPANY (the "Guarantor") has
unconditionally guaranteed on a senior subordinated basis (such guaranty by
each Guarantor being referred to herein as the "Guaranty") (i) the due and
punctual payment of the principal of and interest on the Securities, whether at
maturity, by acceleration or otherwise, the due and punctual payment of
interest on the overdue principal and interest, if any, on the Securities, to
the extent lawful, and the due and punctual performance of all other
obligations of the Company to the Holders or the Trustee all in accordance with
the terms set forth in Article 11 of the Indenture and (ii) in case of any
extension of time of payment or renewal of any Securities or any of such other
obligations, that the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise.
The obligations of the Guarantor to the Holders and to the
Trustee pursuant to the Guaranty and the Indenture are expressly set forth and
are expressly subordinated and subject in right of payment to the prior payment
in full of all Senior Indebtedness of Subsidiary Guarantors to the extent and
in the manner provided in Article 11 of the Indenture, and reference is hereby
made to such Indenture for the precise terms of the Guaranty therein made.
No director, officer, employee or stockholder, as such, of any
of the Subsidiary Guarantors shall have any liability under the Guaranty of
such Subsidiary Guarantor by reason of such person's status as director,
officer, employee or stockholder. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and release are
part of the consideration for the issuance of the Guaranty.
The Guaranty shall not be valid or obligatory for any purpose
until the certificate of authentication on the Securities upon which the
Guaranty is noted shall have been executed by the Trustee under the Indenture
by the manual signature of one of its authorized signatories.
UNITED STATES CAN COMPANY
By: _____________________________
Name:
Title:
-8-
<PAGE> 94
ASSIGNMENT FORM
To assign this Security, fill in the form below:
I or we assign and transfer this Security to
________________________________________________________________________________
(Print or type assignee's name, address and zip code)
________________________________________________________________________________
(Insert assignee's soc. sec. or tax I.D. No.)
and irrevocably appoint ______________________________________________________
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.
________________________________________________________________________________
Date: __________ Your Signature: _____________________________________________
________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.
Signature Guaranty:_____________________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust
company)
-9-
<PAGE> 95
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY
The following increases or decreases in this Global Security
have been made:
<TABLE>
<S> <C> <C> <C> <C>
Date of Exchange Amount of decrease Amount of Increase Principal Amount Signature of
in Principal in Principal [at Maturity] of authorized officer
Amount [at Amount [at this Global of Trustee or
Maturity] of this Maturity] of this Security following Securities
Global Security Global Security such decrease or Custodian
increase
</TABLE>
-10-
<PAGE> 96
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased by the
Company pursuant to Section 4.06 or 4.08 of the Indenture, check the box:
/ /
If you want to elect to have only part of this Security
purchased by the Company pursuant to Section 4.06 or 4.08 of the Indenture,
state the amount: $_________________
Date: ______________ Your Signature: _______________________________________
(Sign exactly as your name appears on
the other side of the Security)
Signature Guaranty: __________________________________________________________
(Signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust
company)
-11-
<PAGE> 1
EXHIBIT 10.3
NEWNAN, GEORGIA
A G R E E M E N T
F O R
B U I L D I N G L E A S E
DATED AUGUST 1, 1996
BY AND BETWEEN
CPI PLASTICS, L.L.C.,
A MICHIGAN LIMITED LIABILITY COMPANY
LANDLORD,
AND
UNITED STATES CAN COMPANY,
A DELAWARE CORPORATION
TENANT
<PAGE> 2
A G R E E M E N T
F O R
B U I L D I N G L E A S E
CPI PLASTICS, L.L.C., a Michigan limited liability company
("Landlord"), hereby leases to UNITED STATES CAN COMPANY, a Delaware
Corporation ("Tenant"), and Tenant hereby accepts, subject to the terms and
conditions of this Lease, that certain building containing approximately 95,000
square feet (the "Building") located at 434 Corinth Road, Newnan, Georgia, and
the surrounding land containing approximately 9.1 acres and legally described
on Exhibit A which is attached hereto and made a part hereof (the Building and
the surrounding property used as the parking areas and driveway shall be
referred to as the "Premises" and the said property and Building and Landlord's
interest therein shall be referred to as the "Property"), for an initial term
(the "Term") of fifteen (15) years commencing on August 1, 1996 (the
"Commencement Date"), and ending on July 31, 2011 or such other date as the
Term is extended pursuant to Article IX hereof (the "Termination Date").
RECITALS
WHEREAS, Tenant has entered into a certain Stock Purchase
Agreement dated August 2, 1996 with Irving A. Rubin, Robert Bonczyk et al. (the
"Stock Purchase Agreement") pursuant to which Tenant has agreed to purchase,
all of the stock of CPI PLASTICS INC., CP OHIO, Inc. and CP Illinois, Inc.
WHEREAS, in connection therewith, Landlord and Tenant have
agreed to enter into this Lease;
WHEREAS, if requested by either party to this Lease, a
memorandum of this Lease in recordable form duly executed and acknowledged
shall be entered into and recorded by the parties hereto;
NOW, THEREFORE, IN CONSIDERATION of the above demise, and the
acceptance of the mutual covenants herein contained, Landlord and Tenant
covenant and agree as follows:
ARTICLE I
RENTAL
1.1. Rental. Tenant shall pay to Landlord, at such place
as Landlord may designate to Tenant in writing, the rent and other payments
reserved and required under this Article I, which rent and other payments,
together with all other amounts becoming due from Tenant to Landlord hereunder,
are herein collectively referred to as the "Rent" or "Rental." Except as set
forth in Section 10.4 of the Stock Purchase Agreement, all Rental shall be paid
without notice or demand, and without abatement, deduction, counterclaim or
set-off. In the
<PAGE> 3
event Tenant does not make Rental payments within ten (10) days of receipt of
notice that such amount is unpaid, Tenant shall pay to Landlord Three Hundred
Dollars ($300.00) as a late fee.
1.2. Base Rent. Subject to rent adjustments in accordance
with Section 1.3 hereof, Tenant shall pay to Landlord an annual Base Rent (the
"Base Rent") set forth on Exhibit B attached hereto and made a part hereof.
Base Rent shall be paid in advance on the first day of each and every calendar
month during the Term.
1.3. Additional Payments. In addition to Base Rent,
Tenant shall pay all of the Expenses (as hereafter defined) assessed or
incurred in connection with the Premises on or before the respective due dates
thereof. Tenant's obligation to pay the Expenses shall survive the expiration
of the Term. For purposes of this Section 1.3, Expenses shall mean, for any
calendar year, all reasonable and customary expenses, costs and disbursements
which Landlord shall pay or become obligated to pay because of or in connection
with the operation, maintenance, repair and replacement, of the Premises (other
than the items which are Landlord's responsibility pursuant to Section 2.2 of
this Lease) and of the personal property, fixtures, machinery, equipment,
systems and apparatus located therein or used in connection therewith,
including, but not limited to, the cost of utilities to the Premises.
Notwithstanding the foregoing, payments made or incurred by Landlord or Tenant
prior to the Commencement Date shall not be included in Expenses.
1.4. Triple Net Lease. Except for Landlord's obligations
delineated in Section 2.2 hereof, the parties hereto intend that the Rental
payable hereunder shall be an absolute net return to Landlord and that, except
as expressly provided to the contrary herein or the Stock Purchase Agreement,
all costs, expenses and obligations of whatever kind, whether foreseen or
unforeseen, general or special, ordinary or extraordinary, that may arise in
connection with the use, occupancy, maintenance or operation of the Premises
shall be paid or performed by Tenant. Tenant shall not be obligated to pay any
income or franchise taxes which may be levied against Landlord.
1.5. Taxes. (a) Tenant shall pay, as Additional Rent and
prior to delinquency, all ad valorem real estate taxes, special assessments and
personal property taxes (including any rental or similar taxes and license,
building, occupancy or similar fees levied or imposed in lieu of or in addition
to general real or personal property taxes) which may be levied or imposed
during the Term against the Premises or any part thereof. Tenant shall pay
before delinquency all taxes, assessments, license fees and other public
charges levied, assessed or imposed upon its business operations and its
leasehold improvements, merchandise and other personal property in or about the
Premises (collectively, the "Taxes"). Tenant shall deliver to Landlord copies
of receipts showing payment of said real estate taxes within thirty (30) days
after request by Landlord.
(b) Tenant shall have the right to contest at Tenant's
expense, all Taxes levied against the Premises by legal proceedings provided
that such proceedings have the effect of preventing the forfeiture of the
Premises or any part thereof to satisfy the same. All contest proceedings
shall be conducted in good faith and with due diligence by Tenant. Tenant
shall
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give Landlord such security as Landlord may reasonably require to insure the
payment of the Taxes so contested, and all interest and penalties thereon.
Landlord shall cooperate in any such proceedings.
(c) Taxes with respect to the years in which the Term
commences and expires shall be prorated between Landlord and Tenant, and
together with the first installment of Rental hereunder, Tenant shall pay to
Landlord the portion of Taxes, if any, which have been paid by Landlord and
which are attributable to the Term of this Lease and upon expiration of the
term (except in the event Tenant purchases the property pursuant to the Option
Agreement as hereinafter defined), Landlord shall pay to Tenant the portion of
any Taxes, if any, which have been paid by Tenant and which are attributable
after the Term of this Lease.
ARTICLE II
TENANT'S ACCEPTANCE AND USE OF PROPERTY
2.1. Use. Subject to the Permitted Exceptions (as
hereafter defined), Tenant shall have the exclusive right to and shall occupy
and use the Property for its business operations and any other use reasonably
related thereto. Tenant shall not occupy or use the Premises or permit the
Premises to be occupied or used for any purpose, act, or thing which is in
violation of any public law, ordinance, or governmental regulation.
2.2. Maintenance and Repair and Replacement. Except for
damage caused by Tenant, Landlord shall, in full compliance with all applicable
laws and ordinances, maintain and make all necessary structural repairs,
replacements and alterations to the Building, including but not limited to
foundations, roofs, exterior and load bearing walls, structural columns and
structural beams, ordinary wear and tear excepted, Landlord shall proceed
promptly with such maintenance, repairs and replacements.
Tenant shall, at its own cost and expense subject to the
provisions of Section 2.3, (i) keep the interior of the Premises in a clean and
tenantable condition during the Term and (ii) maintain in good operating
condition and repair, ordinary wear and tear excepted, all electrical,
mechanical and plumbing fixtures located within the Premises, all system and
fixtures serving the Premises, and the ventilating, heating and air
conditioning, if any, systems serving the Premises, the floors, the parking lot
and parking areas during the Term. Tenant shall also repair any damage to the
Premises caused by Tenant, or its agents or employees, ordinary wear and tear
excepted.
If either party fails to make or commence to make such repairs
after written notice thereof from the other party and applicable grace periods,
the notifying party may, in its sole discretion, do so and the defaulting party
shall pay to the notifying party the reasonable cost thereof within thirty (30)
days of being billed therefor. In the event the defaulting party does not
reimburse the notifying party within the aforesaid thirty (30) day period, such
failing shall be deemed to be a further default hereunder and such amount shall
bear interest from the date of the statement at the rate set forth in Section
13.3(b). Landlord may enter the Premises at reasonable times to inspect, to
show the Property to prospective tenants during the last six (6)
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months of the Term or the extended Term, if applicable (so long as the option
to extend set forth in Section 9.1 has not been exercised), or to make such
repairs to the Premises as Landlord shall reasonably deem necessary, or as
required in order to comply with its obligations hereunder or as required by
any governmental authority or judicial order. In making such entry, Landlord
shall use its best efforts not to unreasonably interfere with Tenant's use and
occupancy of the Premises, and, except in the event of an emergency, shall
enter only upon reasonable prior notice to Tenant explaining the reasons
therefor.
2.3. Alterations. Tenant shall not, without Landlord's
prior written consent, alter or remodel the Premises, which consent shall not
be unreasonably withheld or delayed; provided, however, that Tenant may make
non-structural alterations at a cost of less than $25,000 without Landlord's
prior written consent. In the event that Landlord consents to any proposed
alteration or remodeling of the Premises, Tenant shall not have the obligation
to restore such proposed alteration or remodelling unless such consent
specifies that Landlord will require Tenant to remove the same upon expiration
of the Term. All work performed by or on behalf of Tenant shall be in
accordance with good construction practices, all applicable laws, insurance
requirements, and Landlord's reasonable rules and regulations.
Prior to the commencement of any work by Tenant, Tenant shall
(i) obtain or cause to be obtained public liability and workmen's compensation
insurance to cover every contractor to be employed by Tenant and such
contractor's subcontractors, and shall deliver duplicate originals of all
certificates of such insurance to Landlord for approval; (ii) furnish Landlord
with all necessary permits, licenses, approvals, certificates and
authorizations for prosecution and completion of such work; and (iii) furnish
Landlord with such other documents as may be reasonably requested by Landlord.
Tenant shall have the right to install signage on the Premises provided that
Tenant also pay the cost of all signage and the installation thereof. Landlord
shall have the right, but not the duty, to inspect construction operations in
connection with any work completed or being completed on the Premises.
Tenant shall indemnify and hold Landlord harmless from and
against any and all loss, cost or expense incurred by Landlord as a result of
such alterations or remodelling. In the event any construction or other lien
is filed against the Premises as a result of such alteration or remodelling,
Tenant shall either pay such lien claim or if Tenant elects to contest such
claim, provide a bond, title indemnity or other security reasonably
satisfactory to Landlord protecting Landlord's interest in the Premises.
Nothing herein shall give Landlord any interest in Tenant's
personal property, machinery, equipment, inventory, raw materials, office
furniture, office equipment, trade fixtures, cables, data processing equipment
or appliances, which shall remain the property of Tenant.
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ARTICLE III
LANDLORD'S RIGHTS
Landlord reserves and shall have the following rights,
exercisable, unless otherwise herein provided, without notice, without
liability to Tenant for damage or injury to person, property or business,
without being deemed an eviction or disturbance in any manner of Tenant's use
or possession of the Premises and without relieving Tenant from its obligation
to pay Rental when due or from any other obligation hereunder:
(a) To display the Premises to prospective tenants upon prior
notice at reasonable hours during the last three (3) months of
the Term or the extended term if the Option to Extend set
forth in Article IX is exercised, to display the Premises to
prospective purchasers, mortgagees or investors upon prior
notice and at reasonable hours at any time during the Term,
and, if the Premises are abandoned during the Term, to
decorate, remodel, repair or otherwise prepare the Premises
for reoccupancy, provided it will not unreasonably disrupt
Tenant's normal business activities;
(b) To have and retain paramount title to the Premises free and
clear of any act of Tenant purporting to burden or encumber it
(excluding Permitted Liens, as hereafter defined); and
(c) To take any and all reasonable measures, including
inspections, repairs and alterations to the Premises as may be
reasonably necessary for the safety, protection or
preservation thereof or Landlord's interest therein.
ARTICLE IV
DAMAGE - CONDEMNATION
4.1. Fire or Casualty. If the Premises or the Building is
damaged by fire or other casualty (regardless of whether the Premises are made
substantially untenantable), then Landlord shall proceed with due diligence,
but subject to the remainder of this Section 4.1, to repair and restore the
Building or the Premises, as the case may be with the insurance proceeds from
the policy referred in Section 6.2 below. In the event the insurance proceeds
are insufficient to restore such damage, Landlord shall have no obligation to
expend sums in excess of such proceeds. Notwithstanding the foregoing, if such
damage renders the Premises untenantable and it is estimated by Landlord in its
reasonable judgment that the time to repair and restore the Premises will
exceed one hundred eighty (180) days or if such damage occurs during the last
twelve (12) months of the Term of this Lease (or, if the Term of this Lease has
been extended pursuant to Article IX hereof, during the last twelve (12) months
of the Term of this Lease as extended), both Tenant and Landlord shall have the
right to terminate this Lease by delivery to the other of written notice of
such termination within thirty (30) days following the damage, and all Rental
and other charges hereunder for the remainder of the Term shall
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abate. If neither Tenant nor Landlord elects to terminate the Lease as
hereinabove provided then the insurance proceeds, if any, shall be utilized by
Landlord to commence repairing the damage and Landlord shall repair the damage
so that the Premises are in substantially the same condition as they were prior
to being damaged. All Rental and other charges shall abate from the date of
casualty until such restoration is completed.
4.2. Condemnation. In the event that the whole of the
Premises shall be taken in any proceeding by any public authority by
condemnation or otherwise, or be acquired for public or quasi-public purposes
(all of which are hereinafter collectively referred to as "Condemnation"), this
Lease shall terminate as of the date of the taking of possession by the
condemning authority and the Rental and other charges payable by Tenant shall
cease as of the date possession of the Premises is delivered to such condemning
authority. In the event any part of the Premises shall be so taken and such
taking substantially interferes with the Tenant's continued use of the Premises
as reasonably determined by Tenant, Tenant may, at Tenant's option terminate
this Lease as of the date of the taking of possession by the condemning
authority and the Rental and other charges payable by Tenant shall cease as of
the date possession of the Premises is delivered to such condemning authority.
If Tenant, pursuant to the preceding sentence, desires to
exercise its option of terminating the Term of this Lease, such termination
shall be effective (without any payment by Landlord to Tenant therefor) by
Tenant giving notice to Landlord provided that such notice shall be given not
more than thirty (30) days subsequent to the date on which Tenant shall have
been deprived of possession of the part so taken as determined as an equitable
basis. If this Lease is not so terminated, then Rental shall abate as to the
portion of the Premises so taken. If the Lease is terminated pursuant to this
paragraph, Rental and other charges payable by Tenant shall cease as of the
date of such taking.
Tenant shall have the right to make a claim to the condemning
authority for relocation expenses, its leasehold value and the unamortized
value of any improvements, alterations or additions to the Premises paid for by
Tenant. Except for any claim awarded to Tenant in accordance with the
preceding sentence, Tenant hereby assigns to Landlord, Tenant's interest in any
condemnation award.
ARTICLE V
LANDLORD'S AND TENANT'S REMEDIES
5.1. Events of Default. Each of the following shall be an
"Event of Default."
(a) If Tenant fails to pay any installment of Rental, or any other
payment or money to be paid by Tenant under this Lease within
ten (10) days after receipt of notice that the Rental is
unpaid; or
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(b) If Tenant fails to observe or perform one or more of the other
terms, conditions, covenants or agreements of this Lease and
such failure shall continue for a period of thirty (30) days
after written notice from Landlord specifying such failure
(unless such failure requires work to be performed, acts to be
done, or conditions to be removed which cannot by their nature
reasonably be performed, done or removed, as the case may be,
within such thirty (30) day period, in which case, no Event of
Default shall be deemed to exist so long as Tenant shall have
commenced the same within such thirty (30) day period and
shall diligently and continuously prosecute the same to
completion); or
(c) If Tenant makes an assignment for the benefit of creditors,
admits its inability to pay its debts or takes any action
towards a general compromise of its debts or a composition
with its creditors; or
(d) If all or any substantial part of the assets of Tenant,
including the leasehold interest hereunder of Tenant, are
attached, seized or become subject to a writ or distress
warrant, are levied upon or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of
creditors and such attachment, seizure, writ, warrant or levy
is not withdrawn or removed within ninety (90) days after
becoming effective; or
(e) If a notice of lien or levy is filed with respect to all or
substantially all of Tenant's assets located on the Premises
by any federal, state, county or municipal body, department,
agency or instrumentality for taxes or debts then owing by
Tenant and such notice is not released or withdrawn within
ninety (90) days of its filing (unless such lien is a
"Permitted Lien" (as hereafter defined)); or
(f) If any involuntary petition or similar pleading is filed in
any court under any section of the Federal Bankruptcy Code
seeking to declare Tenant bankrupt, or seeking a plan of
reorganization for Tenant under Chapter 11 of the Bankruptcy
Code, or a similar proceeding under state law and such
petition or pleading is not withdrawn or denied within ninety
(90) days after its filing, or if any voluntary petition or
similar pleading is filed in any court under any section of
the Federal Bankruptcy Code; or
(g) If Tenant fails to comply with any single obligation under
this Lease more than three (3) times during a calendar year
after having received notice of the previous defaults, such
event shall be deemed to be a default without a cure period;
provided, however, that any such event must be a separate
incident such as the failure to pay Base Rent when due.
5.2. Termination. Upon the occurrence of an Event of
Default under Section 5.1, Landlord may, at its option, at any time thereafter,
without notice (i) terminate this Lease, or (ii) without terminating this
Lease, forthwith terminate the Tenant's right to possession of the
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Premises, or (iii) pursue any other remedy now or hereafter available to
Landlord under the laws of the State of Georgia.
(a) Upon Landlord's termination of this Lease as a result
of the occurrence of an Event of Default, Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant's default,
including (i) the unpaid Rental discounted to present value at the rate of
eight percent (8%) per annum, and other charges which had been earned as of the
date of termination; and (ii) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease, including, but not limited to, any reasonable
costs or expenses incurred by Landlord in maintaining or preserving the
Premises after the occurrence of such Event of Default, the reasonable cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation or alteration of the Premises, Landlord's reasonable
attorneys' fees incurred in connection therewith, and any reasonable real
estate commission paid or payable.
(b) Upon and after Landlord's termination of this Lease
or Tenant's right to possession of the Premises, Landlord shall make reasonable
efforts to relet the Premises or any part thereof to any person, firm or
corporation other than Tenant for such rent, for such term and upon such
conditions as Landlord shall determine, in Landlord's reasonable discretion,
and Landlord shall not be required to accept any tenant offered by Tenant
(provided that such acceptance shall not be unreasonably refused) or to observe
any instructions given by Tenant covering such reletting. In any such case,
Landlord may incur reasonable expenses for repairs, alterations, improvements,
additions and decoration of or to the Premises to the extent reasonably deemed
necessary or desirable by Landlord for the purpose of reletting the Premises.
All such reasonable expenses, plus all reasonable brokers' commissions and
reasonable attorneys' fees incurred by Landlord in connection with any
reletting of the Premises, shall be paid by Tenant to Landlord upon demand. In
addition, Tenant shall, for the remainder of the Term, reimburse Landlord, on
demand, for any deficiency between Rental and other charges reserved hereunder
and the rent received by Landlord upon reletting the Premises. In the event
Tenant does not pay such sums when due, such sums shall accrue interest as set
forth in Section 13.3(b) below.
5.3. Surrender of Possession. Upon termination of this
Lease, whether by lapse of time or otherwise, or upon any termination of
Tenant's right to possession of the Premises without termination of the Lease,
Tenant shall surrender and vacate the Premises immediately and deliver
possession thereof to Landlord in clean, good and tenantable condition,
ordinary wear and damage by fire or other casualty excepted. Upon any
termination for a thirty (30) day period, Tenant shall be entitled to remove
from the Premises any machinery, equipment, inventory, raw materials, built-in
furniture, computers, data or word processing or duplicating equipment, trade
fixtures, cables or appliances, provided that Tenant shall repair all damage
resulting from such removal and shall restore the Premises to a tenantable
condition.
5.4. Holding Over. If Tenant retains possession of the
Premises or any part thereof after the termination of this Lease by lapse of
time or otherwise Tenant shall pay to
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Landlord, Rental at one and one half times the per diem rate payable for the
month immediately preceding said holding over, computed on a per diem basis,
for each day or part thereof that Tenant thus remains in possession. The
provisions of this Section 5.4 shall not be deemed to limit or exclude any of
Landlord's rights of re-entry or any other right granted to Landlord hereunder
or under law.
5.5. Payment of Expenses in Enforcing Obligations. In the
event of any dispute between Landlord and Tenant to enforce any of the
provisions and/or rights hereunder, the unsuccessful party covenants and agrees
to pay to the successful party all costs and expenses, including reasonable
attorneys' fees, incurred therein by the successful party, which costs and
expenses shall be included in and as a part of a judgment if litigation is
involved. If Landlord, without fault on its part, shall be made a party to any
litigation instituted by or against the Tenant by reason of this Lease, then
Landlord shall be entitled to receive from the Tenant upon demand all costs,
expenses and reasonable attorneys' fees incurred by Landlord in or in
connection with such litigation. If Tenant, without fault on its part, shall
be made a party to any litigation instituted by or against Landlord by reason
of this Lease, then Tenant shall be entitled to receive from the Landlord upon
demand all costs, expenses and reasonable attorneys' fees incurred by Tenant in
or in connection with such litigation.
5.6. Landlord's Performance of Tenant's Obligations. If
Tenant shall default in the performance of any of its obligations hereunder and
such default shall continue after the expiration of any notice or grace period
herein provided, Landlord may perform such obligation for the account and
expense of Tenant upon thirty (30) days written notice except in cases of
emergency, and Tenant shall reimburse Landlord therefor upon demand plus
Landlord's reasonable costs and expenses, including attorneys' fees.
5.7. Non-Waiver. No waiver of any agreement or condition
expressed in this Lease shall be implied by any neglect of Landlord or Tenant
to enforce any remedy on account of the violation of such agreement or
condition if such violation be continued or repeated subsequently, and no
express waiver shall affect any agreement or condition other than the one
specified in such waiver and that one only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination in any way of the Term or of Tenant's right of possession
hereunder, or after the giving of any notice, shall reinstate, continue or
extend the Term or affect any notice given to Tenant prior to the receipt of
such monies, it being agreed that after the service or notice or the
commencement of a suit or after final judgment for possession of the Premises
Landlord may receive and collect any Rental due, and the payment of said Rental
shall not waive or affect said notice, suit or judgment.
5.8. Rights and Remedies Cumulative. All rights and
remedies of Landlord and Tenant under this Article and elsewhere in this Lease
shall be distinct, separate and cumulative and none shall exclude any other
right or remedy of Landlord or Tenant as set forth in this Lease or allowed by
law. Landlord's and Tenant's obligations under this Article shall survive the
expiration of the Term.
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5.9. Tenant's Performance of Landlord's Obligations. If
Landlord shall default in the performance of any of its obligations hereunder
and such default shall continue after the expiration of any notice or grace
period herein provided, Tenant may perform such obligation for the account and
expense of Landlord upon thirty (30) days written notice except in cases of
emergency, and Landlord shall reimburse Tenant therefor upon demand, plus
Tenant's reasonable costs and expenses, including attorneys' fees.
ARTICLE VI
WAIVER OF CLAIMS AND INDEMNIFICATION
AND RIGHTS OF RECOVERY ON INSURANCE
6.1. Waiver of Claims and Indemnity. Tenant hereby
releases and waives all claims against Landlord, agents, employees and servants
for injury or damage to person, property or business sustained in or about the
Property by Tenant, its agents, employees or servants, which injury or damage
results from any act, neglect, occurrence or conditions in or about the
Property, except to the extent that such injury or damage is caused by the
negligence or willful or wanton act or omission by Landlord, or its agents,
employees or servants. To the extent any of the foregoing is covered by
insurance, Landlord or Tenant, as the case may be, shall have but one (1)
recovery, but any such recovery shall not be limited to the amount of such
insurance.
Tenant hereby agrees to indemnify and hold Landlord, its
agents, employees and servants harmless against any and all claims, damage,
demands, costs and expenses of every kind and nature, including reasonable
attorneys' fees for the defense thereof, arising from Tenant's occupancy of the
Property or from any breach or default on the part of Tenant in the performance
of any agreement of Tenant to be performed pursuant to the terms of this Lease,
or from any act, omission or negligence of the Tenant, its employees, servants
and agents, subtenants and/or assignees in or about the Property during the
term of the Lease. To the extent any of the foregoing is covered by insurance,
Landlord shall have but one (1) recovery. In case any such proceeding is
brought against Landlord, its agents, employees or servants, Tenant covenants
to defend such proceeding at its sole cost and expense by legal counsel
reasonably satisfactory to Landlord.
Landlord hereby agrees to indemnify and hold Tenant, its
agents, employees and servants harmless against any and all claims, damage,
demands, costs and expenses of every kind and nature, including reasonable
attorneys' fees for the defense thereof, arising from any breach or default on
the part of Landlord in the performance of any agreement of Landlord to be
performed pursuant to the terms of this Lease, or from any act, omission or
negligence of Landlord, its employees, servants and agents in or about the
Property. To the extent any of the foregoing is covered by insurance, Tenant
shall have but one (1) recovery. In case any such proceeding is brought
against Tenant, its agents, employees or servants, Landlord covenants to defend
such proceeding at its sole cost and expense by legal counsel reasonably
satisfactory to Tenant
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In the event of any conflict or in consistency between the
indemnification provisions hereof and those contained in the Stock Purchase
Agreement, those contained in the Stock Purchase Agreement shall govern.
6.2. Insurance Coverage. Tenant, at Tenant's sole cost
and expense, shall obtain and maintain, for the Term of this Lease, as
extended, insurance policies in form and content, and issued by an insurer,
reasonably acceptable to Landlord, providing the following coverage: (i) all
perils included in the classification "fire and extended coverage" under
insurance industry practices in effect from time to time in the jurisdiction in
which the Building is located covering the Building and all fixtures and
property located therein, including without limitation, Tenant's fixtures,
machinery, equipment, furnishings, merchandise, alterations, improvements and
other contents in the Premises, for 100% of the full replacement value of said
Building and items; and (ii) comprehensive generally liability insurance
(including contractual liability) naming Landlord, and any mortgagee, as
additional insureds, which policy is to be in the minimum amount of Two Million
Dollars ($2,000,000.00) with respect to any one person, in the minimum amount
of Three Million Dollars ($3,000,000.00) with respect to any one accident, and
in the minimum amount of Five Hundred Thousand Dollars ($500,000.00) with
respect to personal property damage. Each policy described in this Section 6.2
shall name Landlord and any mortgagee of the Premises as additional insureds
and as loss payees and shall contain a provision that it shall (i) not be
cancelable and that it shall continue in full force and effect unless Landlord
has received at least thirty (30) days prior written notice of such
cancellation or termination, and (ii) not be materially changed without thirty
(30) days prior notice to Landlord. Insurance coverage under umbrella policies
shall be acceptable. Landlord shall be named as loss payee on the casualty
policy with respect to the Building.
6.3. Rights of Recovery on Insurance. Landlord and Tenant
agree to have all fire and extended coverage and material damage insurance
which may be carried with respect to the Building, the Premises or to the
property located therein endorsed with a clause substantially as follows: "This
insurance shall not be invalidated should the insured waive in writing prior to
a loss any or all rights of recovery against any party for loss occurring to
the property described herein." Landlord and Tenant hereby waive all claims
for recovery from each other for any loss or damage to them or to any of their
property insured under valid and collectible insurance policies to the extent
of the proceeds collected under such insurance policies.
ARTICLE VII
TITLE MATTERS
7.1. Subordination of Lease. This Lease and the rights of
Tenant hereunder shall become subject and subordinate at all times to the lien
of the mortgage or deed of trust existing against the Property referred to on
Exhibit C attached hereto and made a part hereof, and to all advances made or
hereafter to be made upon the security thereof, and to all future mortgages or
deeds of trust made to an institutional lender such as a bank, savings and
loan, or
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insurance company; provided that the mortgagee or trustee under any such
existing and future mortgage or deed of trust provides a non-disturbance
agreement reasonably satisfactory to Tenant and which provides that such
mortgagee or trustee recognizes all of Tenant's rights hereunder, including but
not limited to Tenant's options to expand, purchase and extend the Term of this
Lease. In the event any proceedings are brought to foreclose any mortgage or
deed of trust, Tenant will attorn to the purchaser upon any foreclosure sale
and recognize such purchaser as the landlord under this Lease. Tenant agrees
to execute and deliver at any time any instrument to further evidence such
attornment as may be reasonably requested in writing by any holder of such
mortgage, or the trustee under any such deed of trust.
7.2. Estoppel Certificate. Landlord and Tenant agree that
from time to time upon not less than fifteen (15) business days prior request
by the other, the non-requesting party, or its duly authorized representative
having knowledge of the following facts, will deliver to the requesting party,
or to such person as the requesting party may designate, a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect, or,
if there have been modifications, that the Lease as modified is in full force
and effect; (ii) the dates to which the Rental and other charges have been
paid; (iii) that to the best of the non-requesting party's knowledge, the
requesting party is not in default under any provision of this Lease, or, if in
default, the nature thereof in detail; and (iv) such other provisions
reasonably requested by the requesting party.
7.3. Assignment and Subletting. Except as otherwise
permitted in Section 7.4 and this Section 7.3, Tenant shall not without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed, (i) assign or convey this Lease or any interest under this
Lease, provided, however, Tenant may provide a leasehold mortgage to an
institutional lender with assets in excess of $500,000,000; (ii) sublease all
or any portion of the Premises; or (iii) permit the use or occupancy of the
Premises by any party other than Tenant, its agents, employees, guests,
invitees and licensees.
Notwithstanding the limitations set forth above, Tenant may
assign this Lease or sublet all or any portion of the Tenant Premises without
Landlord's consent:
(a) To a corporation controlling, controlled by or under common
control with Tenant, (hereinafter an "Affiliated
Corporation"); provided that any such assignment or sublease
shall be subject to the terms and conditions of this Lease.
For purposes hereof, "control" shall mean the ownership,
either directly or indirectly, of fifty percent (50%) or more
of all shares entitled to vote of such other corporation; and
(b) To the surviving corporation in a merger, reorganization or
consolidation or other corporate action involving Tenant
provided that any such assignment or sublease shall be subject
to the terms and conditions of this Lease.
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No assignment of this Lease or sublease of the Premises
pursuant to the provisions of this Section 7.3 shall be effective unless and
until the assignee or sublessee shall have executed an appropriate instrument,
in form reasonably satisfactory to Landlord, assuming all of the obligations of
Tenant hereunder to the extent of the Premises assigned or subleased, and shall
have delivered a copy thereof, or an executed counterpart thereof, to Landlord.
In the event of any permitted assignment of this Lease or subletting of the
Premises, Tenant shall remain fully liable for all of the obligations of Tenant
under this Lease, except for additional obligations entered into as a result of
a lease amendment between Landlord and any assignee.
7.4. Covenant Against Mechanic's Liens. Tenant covenants
and agrees not to suffer or permit any lien of mechanics or materialmen to be
placed against the Property or any part thereof arising from work done by or on
behalf of Tenant. If any such lien shall attach to the Property or any part
thereof, Tenant shall either (i) pay off and remove the same or (ii) if Tenant
desires to contest such lien in a court of competent jurisdiction, Tenant shall
either (1) file with Landlord a bond or other security in an amount and with an
independent surety, reasonably satisfactory to Landlord or (2) maintain a title
indemnity with appropriate security to protect against an exception to title
with a title insurance company reasonably designated by Landlord and in such
amount and on such terms as are reasonably satisfactory to Landlord and such
title insurance company, in which event such a lien shall be a "Permitted
Lien". Other than a Permitted Lien, Tenant has no authority or power to cause
or permit any lien or encumbrance of any kind whatsoever, whether created by
act of Tenant, operation of law or otherwise, to attach to or be placed upon
the Property or any part thereof. Any and all liens and encumbrances created
by Tenant shall attach only to Tenant's interest in the Premises.
7.5. Covenant of Quiet Enjoyment. Landlord covenants,
represents and warrants that it has full power and proper authority to execute
this Lease and to grant the rights provided to Tenant hereunder and further
covenants that, upon paying the Rental and keeping the agreements of this Lease
on its part to be kept and performed, Tenant shall have peaceful and quiet
possession of the Premises and full enjoyment of all of its rights herein
granted for the Term of this Lease (or, if the Term of this Lease has been
extended pursuant to Article IX hereof, for the Term of this Lease as
extended).
7.6. Permitted Title Exceptions. The leasehold interest
conveyed hereby shall be subject to the following exceptions (the "Permitted
Exceptions"):
a. Taxes for the year 1996 and subsequent years, not yet
due and payable;
b. Acts done or suffered by Tenant, pursuant to this
Lease or otherwise;
c. Zoning laws and ordinances, provided that Tenant's
use of the Premises complies with such laws and ordinances;
d. Mortgage or deed of trust described in Section 7.1
above; and
- 13 -
<PAGE> 15
e. Easements for public utilities which do not or will
not underlie the improvements as built, provided same are recorded in the
public records of Coweta County, Georgia.
Landlord agrees that Landlord shall not further encumber the
Property without Tenant's prior written consent except with respect to
Landlord's right to mortgage the Property so long as such financing complies
with the requirement set forth in Section 7.1 above. Tenant shall not be
responsible for correcting any violation of the above Permitted Exceptions if
such violation was not caused by Tenant or if it existed on or before the
Commencement Date. Landlord shall not further encumber title to the Property.
ARTICLE VIII
TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE
In the event of any sale or other transfer of the Property
effective after the Commencement Date of this Lease, Landlord and the seller or
transferor shall be entirely freed and relieved of all agreements and
obligations of Landlord hereunder accruing after the date of such sale or
transfer, provided, such purchaser or transferee shall have assumed and agreed
to perform all agreements and obligations of the Landlord hereunder accruing
from and after the date of such sale or transfer and shall take title subject
to this Lease. Subject to the provisions of the preceding sentence, Tenant
hereby consents to any future assignment by Landlord of any part or all of its
rights under this Lease.
ARTICLE IX
TENANT'S OPTION TO EXTEND LEASE
9.1. Option. Tenant shall have the right and option to
extend the Term of this Lease for two additional consecutive five (5) year
periods (the "Option Periods") commencing immediately following the Termination
Date provided that (i) Tenant sends notice of its election to extend the Term
of the Lease to Landlord not less than one hundred eighty (180) days prior to
the end of the Term of the Lease or the extended Term; (ii) at the time Tenant
sends such notice, Tenant is not then in default in the performance of any
term, condition, covenant or agreement of this Lease as to which notice of
default has been given to Tenant unless such default cannot, with due
diligence, be cured, prior to the last date on which Tenant is entitled to
exercise such option and Tenant has proceeded promptly and with due diligence
after service of the notice of default to cure such default; and (iii) at the
date of commencement of the Option Period, or the Second Option Period Tenant
is not in default in the performance of any term, condition, covenant or
agreement of this Lease as to which notice of default has been given to Tenant
or, if notice of default has been given, Tenant has proceeded promptly and with
due diligence after service of the notice of default to cure such default, and
no event is occurring which, with the passage of time or the giving of notice,
or both, would constitute a default hereunder.
- 14 -
<PAGE> 16
9.2. Rent During Option Years.
(a) The Base Rent due and payable during the Option Periods
shall be agreed to by the parties within thirty (30) days of Tenant's notice to
Landlord, or if the parties cannot agree within the aforesaid thirty (30) day
period, in accordance with Section 9.2(b). All the terms and conditions of
this Lease shall be applicable to such extended terms except (i) for those
matters that have expired by their own terms or have been performed and (ii)
the Base Rent for such extended terms shall be as set forth below. Such Lease
shall be deemed extended without any further lease or instrument.
(b) The Base Rent for the option periods shall be adjusted by
50% of the increase in the Index now known as "United States Bureau of Labor
Statistics, Consumer Price Index, for all Urban Consumers (the "CPI-U"), All
Items for Atlanta Average (1967 = 100)" hereinafter referred to as the "Index",
provided, that the amount payable by Tenant under this Lease as Base Rent shall
not be less than the annual Base Rent payable for the preceding lease year.
Such adjustment shall be accomplished by multiplying the aforementioned Base
Rent by one half of the increase in the Index from the monthly Index preceding
the first day of the option period for which the adjustment is made over the
corresponding monthly Index for the month of the Commencement Date of this
Lease. If such Index shall be discontinued with no successor or comparable
successor Index, the parties shall attempt to agree upon a substitute or
comparable successor Index, but if the parties are unable to agree upon a
substitute formula, then the manner in which the Base Rent shall be adjusted to
take into account changes in the cost of living shall be determined by
arbitration in accordance with the rules of the American Arbitration
Association then prevailing.
ARTICLE X
ENVIRONMENTAL MATTERS
10.1. Environmental Matters. Except as described in the
environmental reports all delivered by Landlord to Tenant and referred to on
Exhibit D attached hereto and made a part hereof, prior to the Commencement
Date, (i) no Hazardous Materials have been located on the Property or have been
released in the environment, or discharged, placed or disposed of at, on or
under the Property; (ii) no underground storage tanks have been located on the
Property; (iii) the Property has never been used as a dump for waste material;
and (iv) the Property and its prior uses comply with and at all times have
complied with, all applicable governmental laws, regulations or requirements
relating to environmental and occupational, health and safety matters and
Hazardous Materials.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any local
governmental authority, the State of Georgia, or the United States Government,
including, but not limited to, any material or substance which is (i) defined
as a "hazardous waste," "hazardous material," "hazardous
- 15 -
<PAGE> 17
substance," "extremely hazardous waste," or "restricted hazardous waste" under
any provision of Georgia law, (ii) petroleum, (iii) asbestos, (iv)
polychlorinated biphenyl, (v) radioactive material, (vi) designated as a
"hazardous substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section 1251 et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous
waste" pursuant to Section 1004 of the Resource Conservation and Recovery Act
42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as
a "hazardous substance" pursuant to Section 101 of the Comprehensive
Environmental Response, Compensation, and Liability Act, 42 U.S.C. Section
9601 et seq. (42 U.S.C Section 9601). The term "Environmental Laws" shall mean
all statutes specifically described in the foregoing sentence and all federal,
state and local environmental health and safety statutes, ordinances, codes,
rules, regulations, orders and decrees regulating, relating to or imposing
liability or standards concerning or in connection with Hazardous Materials.
Additionally, but not in lieu of Landlord's affirmative
undertakings set forth herein, Landlord agrees to indemnify, defend and hold
harmless Tenant and its successors and assigns hereunder in accordance with the
environmental indemnities set forth in Section 10.2 of the Stock Purchase
Agreement for the full term of this Lease.
ARTICLE XI
OPTION TO PURCHASE
11.1. Option. (a) Tenant shall have the right and option
to purchase the Property (the "Purchase Option") at a purchase price equal to
Fair Market Value, disregarding the fact that the Property is encumbered with
this Lease (as hereinafter defined), which Purchase Option shall be exercisable
on the earlier of (i) the last day of the fifth year of the Term hereof, and
(ii) the date on which the environmental condition of the Property is
acceptable to Tenant, and which Purchase Option shall be exercisable at any
time during each year thereafter during the Term hereof on any extended Term,
if applicable. In the event Tenant elects to exercise its Purchase Option,
Tenant shall so notify Landlord of its election on or before the date which is
ninety (90) days prior to the date on which such purchase is to occur (the
"Closing Date"). The terms of the sale by Landlord and the purchase by Tenant
of the Property shall be in accordance with the provisions of Exhibit E
attached hereto and made a part hereof.
(b) Determination of Fair Market Value. "Fair Market
Value" as used herein shall be determined as follows: If Landlord and Tenant
shall fail to agree upon the Fair Market Value within thirty (30) days of the
exercise of Tenant's option to purchase the Property, then Landlord and Tenant
each shall give notice to the other setting forth the name and address of an
arbitrator designated by the party giving such notice. If either party shall
fail to give notice of such designation within forty-five (45) days after the
thirty (30) day period, then the arbitrator chosen shall make the determination
alone. If two arbitrators shall have been designated, such two arbitrators
shall, within thirty (30) days, make their determination of Fair Market Value
in writing and give notice thereof to each other and to Landlord and Tenant.
Such two arbitrators shall have thirty (30) days after the receipt of notice of
each other's determination to confer with each other and attempt to reach a
determination as to Fair Market Value. If such two arbitrators
- 16 -
<PAGE> 18
shall concur as to the determination of the Fair Market Value, such concurrence
shall be final and binding upon Landlord and Tenant. If the Fair Market Value
of such two arbitrators are within ten percent (10%) of each other, the Fair
Market Value during the option period shall be the average of the two
arbitrator's Fair Market Values. If such two arbitrators shall fail to concur
and their respective Fair Market Values are more than ten percent (10%)
different, then such two arbitrators shall immediately designate a third
arbitrator, who shall satisfy the requirements set forth herein for an
arbitrator and shall also be an American Arbitration Association or any
successor thereto having jurisdiction for the designation of such arbitrator.
All arbitrators shall be non-affiliated industrial real estate appraisers, who
shall have at least ten (10) years experience in the business of appraising
industrial real estate in the State of Georgia and who shall have not worked
for either party hereto or for an affiliate or owner of either party hereto for
ten (10) years. The third arbitrator shall conduct such hearings and
investigations as he may deem appropriate, and shall, within thirty (30) days
of the designation of the third arbitrator, choose one of the determinations of
the two arbitrators originally selected by the parties and that choice by the
third arbitrator shall be binding upon Landlord and Tenant. Each party shall
pay its own counsel fees and expenses, if any, in connection with any
arbitration under this Section 11 including the expenses and fees of any
arbitrator selected by it and the parties shall share equally all other
expenses and fees of any such arbitration.
ARTICLE XII
OPTION TO EXPAND
12.1. Expansion Option. Tenant shall have the option
to be exercised at any time during the Term to require Landlord to finance the
expansion of the improvements on the Property. Upon exercise of such option,
an officer of Tenant and Irving Rubin, Robert Bonczyk, or their successors and
assigns, shall negotiate in good faith and on a reasonable basis for a period
of thirty (30) days an amendment to this Lease which provides for a lease term
and rental sufficient to allow financing of such expansion. In the event
Landlord and Tenant are unable to agree upon a lease amendment after such
thirty (30) day period, either party shall have the right to submit the matter
to arbitration which arbitration shall be conducted in accordance with the
arbitration provisions of the Stock Purchase Agreement.
ARTICLE XIII
GENERAL
13.1. Notices. All notices, waivers, demands, requests or
other communications required or permitted hereunder shall, unless otherwise
expressly provided, be in writing and be deemed to have been properly given,
served and received (i) if delivered by messenger, when delivered, (ii) if
mailed, on the third (3rd) business day after deposit in the United States
Mail, certified or registered, postage prepaid, return receipt requested, (iii)
if telexed, telegraphed or telecopied, three (3) hours after being dispatched
by telex, telegram or telecopy, if such third (3rd) hour falls on a business
day within the hours of 8:00 a.m. through 5:00 p.m. of the time in effect at
the place of receipt, or at 8:00 a.m. on the next business day thereafter if
such third
- 17 -
<PAGE> 19
(3rd) hour is later than 5:00 p.m., or (iv) if delivered by reputable overnight
express courier, freight prepaid, the next business day after delivery to such
courier; in every case addressed to the party to be notified as follows:
If to Landlord:
CPI Plastics, L.L.C.
29200 Southfield Road
Suite 209
Southfield, Michigan 48076-1925
Attention: Irving A. Rubin
And to:
Robert Bonczyk
314 Buchner Hill
Northville, Michigan 48167
With a copy to:
Maddin, Hauser, Wartell, Roth, Heller & Pesses, P.C.
28400 Northwestern Highway
Third Floor - Essex Centre
Southfield, Michigan 48034-8004
Attention: Richard Roth
If to Tenant:
United States Can Company
900 Commerce Drive
Oak Brook, Illinois 60521
Attn: Vice President of Materials & Logistics
With a copy to:
Ross & Hardies
150 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601-7567
(312) 558-1000
Attn: Patrick E. Brady
or at such other address as the party to receive said notice may theretofore
have furnished by written notice as set forth above.
- 18 -
<PAGE> 20
13.2. Brokers. Tenant and Landlord represent and warrant to
each other that they have not dealt with any broker or finder in connection
with this Lease, and to their knowledge, no other broker or finder initiated or
participated in the negotiation of this Lease, submitted or showed the Premises
to Tenant or is entitled to any commission in connection with this Lease.
Tenant and Landlord hereby indemnify and hold each other harmless from and
against any and all claims, damages and expenses based upon or arising out of
any claim by any person with whom it is ultimately determined that Landlord or
Tenant has dealt in violation of the foregoing representations and warranties
of any other real estate broker for commissions resulting from a breach of the
foregoing representations and warranties.
13.3. General.
(a) All rights and remedies of Landlord or Tenant, as the
case may be, under this Lease shall be cumulative and none shall exclude any
other rights and remedies allowed by laws.
(b) All installments of Rental and any other sums which
are unpaid when due and remain unpaid for ten (10) days after notice, shall
bear interest at a rate of ten percent (10%) per annum from the date due until
paid.
(c) Each of the provisions of this Lease shall extend to
and shall, as the case may require, bind or inure to the benefit, not only of
Landlord and of Tenant, but also of their respective heirs, legal
representatives, successors and assigns, subject to Section 7.4. hereof.
(d) All of the representations, agreements and
obligations of Landlord and Tenant are contained herein, and no modification,
waiver or amendment of this Lease or of any of its conditions or provisions
shall be binding upon the Landlord or Tenant unless in writing signed by such
party.
(e) No receipt of money by Landlord from Tenant after the
termination of this Lease or after the service of any notice or after the
commencement of any suit, or after final judgment for possession of the
Premises shall reinstate, continue or extend the Term of this Lease or affect
any such notice, demand or suit.
(f) The officers of Tenant and Landlord executing this
Lease each represent that he has been duly authorized by his respective Boards
of Directors to execute this Lease in this form and containing the aforesaid
covenants.
(g) The headings or captions of Sections are for
convenience only, are not part of this Lease, and shall not affect the
interpretation of this Lease.
(h) This lease may be executed in any number of
counterparts, all of which when put together shall be deemed an original.
- 19 -
<PAGE> 21
(i) This Lease shall be governed by and construed in
accordance with the laws of the State of Georgia. If any provision or part of
this Lease or the application thereof to any persons or circumstances shall, to
any extent, be invalid, illegal or unenforceable, the remainder of this Lease,
or the application of such provision or part to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable, shall not
be affected thereby, and each term and provision of this Lease shall be valid
and enforced to the fullest extent permitted by law.
IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement for
Building Lease to be executed as of the first day written above.
LANDLORD:
CPI PLASTICS, L.L.C., a Michigan limited
liability company
By: /s/ Irving A. Rubin
--------------------------------------------
Name: Irving A. Rubin
Title: Member
TENANT:
UNITED STATES CAN COMPANY, a Delaware
corporation
By: /s/ Timothy W. Stonich
--------------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President
Chief Financial Officer
- 20 -
<PAGE> 22
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 23
EXHIBIT B
BASE RENT
Tenant shall pay the monthly installments of Base Rent in advance on
the first day of each calendar month during the Term subject to the following
schedule:
Time Period Monthly Rent
----------- ------------
August 1, 1996 through July 31, 2011 $ 25,000.00/month
<PAGE> 24
EXHIBIT C
LANDLORD'S EXISTING MORTGAGE
NONE
<PAGE> 25
EXHIBIT D
ENVIRONMENTAL REPORTS
Environmental Reports dated July 30, 1996 prepared by Environmental Resources
Management, Inc.
<PAGE> 26
EXHIBIT E
TERMS OF AGREEMENT OF SALE
Upon Tenant's exercise of the Option to Purchase in conformity with
Article XI of the attached Lease, without further action of the Landlord or
Tenant, there shall be a Binding Agreement of Sale for the Property between
Landlord, as Seller, and Tenant, as Buyer, upon the following terms and
conditions:
PROPERTY AND TERMS
1. Seller hereby agrees to sell and convey to Buyer, who hereby
agrees to purchase ALL THAT CERTAIN lot or piece of ground, more particularly
described in Exhibit "A" to the Lease attached hereto and made a part hereof
and known by street address of 434 Corinth Road, Newnan, Georgia, together with
all improvements thereon, including one (1) building with approximately 95,000
square feet of interior area, together with all fixtures owned by Seller and
located therein ("Property"), for the Purchase Price set forth in Article XI of
the attached Lease in cash, wire transfer on other immediately available funds.
TITLE
2. At Closing, title to the Property shall convey by general
warranty deed good and marketable and such as will be insured in the amount of
the purchase price by title insurance company selected by Buyer (the "Title
Company") and reasonably acceptable to the Seller, at Seller's expense, free
and clear of all mortgages, liens, encumbrances and easements, excepting only
those listed on Exhibit 1 of this Agreement.
In the event the Seller is unable to give a good and marketable title
and such as will be insured by the Title Company, subject as aforesaid, Buyer
shall have the option of taking such title as the Seller can give by deducting
from the Purchase Price liens of a definite or ascertainable amount or of
terminating this Agreement of Sale upon written notice to Seller; and in the
latter event there shall be no further liability or obligation on either of the
parties hereto and this Agreement of Sale shall become null and void.
Within thirty (30) days of exercise of this option, Buyer shall obtain
a then current survey of the Property certified to Buyer, the Title Company and
Buyer's lender, as having been made in accordance with the Minimum Land Survey
Standard Detail Requirements for Land Title Surveys jointly established and
adopted by ALTA and ACSM (the "Survey"). The Survey shall show that the
Property is not in a flood plain. Within thirty (30) days following receipt of
the Survey, Buyer shall notify Seller of any discrepancies or conflicts in
boundary lines, shortages in area, and encroachments as may be shown by the
Survey. Seller shall have twenty-five (25) days following receipt of Buyer's
notice to advise Buyer if Seller can remove or clear the discrepancy or
conflict. If Seller is unable to remove or clear such discrepancies in title,
Buyer shall have the option of either taking such title as Seller can give
without abatement of price or of terminating this Agreement of Sale upon
written notice to Seller. In the latter event, there
<PAGE> 27
shall be no further liability or obligation on either of the parties hereto and
this Agreement of Sale shall become null and void. Notwithstanding anything to
the contrary contained herein, Seller shall not further encumber title to the
Property without Buyer's consent.
Seller shall provide Buyer with a title insurance policy at closing
insuring Buyer's interest as the owner of the Property from a title insurance
company designated by Buyer (the "Title Insurer") in the amount of the Purchase
Price with extended coverage over the general exceptions, a 3.1 zoning
endorsement, amended to include parking and approving Buyer's current use of
the Property and such other endorsements reasonably requested by Buyer. The
cost of the extended coverage shall be paid for by Buyer. Within fifteen (15)
days of the exercise of this option to Purchase, Buyer shall order a title
commitment. At closing, Buyer shall deduct from the proceeds of sale the cost
for all survey, title charges and title insurance.
CONDITION OF PROPERTY
3. Except for the provisions of Section 7, Buyer shall accept the
Property in their "as-is" condition on the date of Closing, provided that if
Buyer determines at any time prior to Closing that the Property or the lands in
the vicinity of the Property are not free of toxic and hazardous substances and
materials, Buyer shall have the option of terminating this Agreement upon
notice to Seller.
ASSESSMENT
4. Excepting notices previously delivered by Seller to Buyer
during the term of the Lease, Seller covenants and represents as of the
Exercise Date that no notice by any governmental agency or body regarding the
Property, including, without limitation, notices pertaining to Environmental
Laws and other governmental statutes, rules, regulations or directives
affecting the Property, have been served upon Seller or anyone on the Seller's
behalf.
POSSESSION
5. Possession is to be delivered and physical possession at day
and time of Closing.
TAXES AND ADJUSTMENTS
6. All apportionable debits and credits, including assessments,
taxes (subject to Buyer's obligation to pay taxes pursuant to the Lease) and
sewer rent (if any) for the current term shall be calculated as levied and
pro-rated as of the date of Closing. All real estate transfer taxes imposed by
a governmental authority shall be paid for by Seller.
ENVIRONMENTAL INDEMNITY
7. Except as described in the environmental reports all delivered
by Seller to Buyer and referred to on Exhibit D to the Lease and made a part
thereof, prior to the Commencement Date (as defined in the Lease), (i) no
Hazardous Materials have been located on the Property or have been released in
the environment, or discharged, placed or disposed of at, on or under
<PAGE> 28
the Property; (ii) no underground storage tanks have been located on the
Property; (iii) the Property has never been used as a dump for waste material;
and (iv) the Property and its prior uses comply with and at all times have
complied with, all applicable governmental laws, regulations or requirements
relating to environmental and occupational, health and safety matters and
Hazardous Materials.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any
local governmental authority, the State of Georgia, or the United
States Government, including, but not limited to, any material or
substance which is (i) defined as a "hazardous waste," "hazardous
material," "hazardous substance," "extremely hazardous waste," or
"restricted hazardous waste" under any provision of Georgia law, (ii)
petroleum, (iii) asbestos, (iv) polychlorinated biphenyl, (v)
radioactive material, (vi) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251
et seq. (33 U.S.C. Section 1317), (vii) defined as a "hazardous
waste" pursuant to Section 1004 of the Resource Conservation and
Recovery Act 42 U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903),
or (viii) defined as a "hazardous substance" pursuant to Section
101 of the Comprehensive Environmental Response, Compensation, and
Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C Section
9601). The term "Environmental Laws" shall mean all statutes
specifically described in the foregoing sentence and all federal,
state and local environmental health and safety statutes, ordinances,
codes, rules, regulations, orders and decrees regulating, relating to
or imposing liability or standards concerning or in connection with
Hazardous Materials.
Additionally, but not in lieu of Seller's affirmative
undertakings set forth herein, Seller agrees to indemnity, defend and hold
harmless Buyer and its grantees in accordance with the environmental
indemnities set forth in Section 10.2 of the Stock Purchase Agreement. The
indemnity and the obligation to defend and hold Buyer harmless set forth herein
shall survive for a period of four years from the closing date of the Stock
Purchase Agreement.
RISK OF LOSS
8. Any loss or damage to the Property caused by fire, or loss
commonly covered by the extended coverage endorsement of a reputable insurance
companies between the Exercise Date and the date of Closing shall not in any
way void or impair the conditions and obligations thereof, except that should
the Property suffer loss or damage due to fire or other casualties, not
repaired or replaced prior to Closing, Buyer shall have the option of
terminating this Agreement upon notice to Seller; provided, however, that
Seller shall have the right to reconstruct improvements so long as such
reconstruction is completed within one hundred eighty (180) days of the date of
casualty. In such event, there shall be no further liability or obligation on
either of the parties hereto and this Agreement shall become null and void.
WHOLE AGREEMENT
9. This Agreement contains the whole Agreement between the Seller
and the Buyer and there are no other terms, obligations, covenants,
representations, statements or conditions,
<PAGE> 29
oral or otherwise of any kind whatsoever concerning this sale. Any changes or
additions to this Agreement must be made in writing and executed by the parties
hereto.
ASSIGNMENT
10. This Agreement shall be binding upon the respective successors
and, to the extent assignable on the assigns of the parties hereto. This
Agreement is to be construed and interpreted in accordance with the laws of the
State of Georgia.
BROKERS
11. Buyer and Seller each represent and warrant to the other that
the transactions contemplated hereby have been carried out by Buyer directly
with Seller in such manner as not to give rise to any valid claims against any
of the parties hereto for a brokerage commission, finders fee, or other like
payment. Buyer and Seller each shall indemnify and hold the other harmless
from any breach of the above stated representation and warranty.
TIME OF ESSENCE
12. The date for Closing and all other dates referred to for the
performance of any of the obligations of this Agreement are hereby agreed to be
of the essence of this Agreement.
DESCRIPTIVE HEADING
13. The descriptive headings used here are for convenience only
and they are not intended to indicate the matter in the sections which follow
them. Accordingly, they shall have no effect whatsoever in determining the
rights or obligations of the parties.
<PAGE> 30
EXHIBIT 1
LIST OF ENCUMBRANCE
Real Estate taxes not yet due and payable.
<PAGE> 31
AGREEMENT
FOR
BUILDING LEASE
Dated as of August 1, 1996
By and Between
CPI PLASTICS, L.L.C.,
a Michigan limited liability company
Landlord,
and
UNITED STATES CAN COMPANY,
a Delaware corporation
Tenant
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE NO. PAGE NO.
- - ---------- -------
<S> <C> <C>
ARTICLE I RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III LANDLORD'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV DAMAGE - CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V LANDLORD'S AND TENANT'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND
RIGHTS OF RECOVERY ON INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE VII TITLE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
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<TABLE>
<S> <C>
ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN
BUILDING AND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX TENANT'S OPTION TO EXTEND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE X ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE XI OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XII OPTION TO EXPAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XIII GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
SCHEDULE OF EXHIBITS
Exhibit A Legal Description
Exhibit B Base Rent
Exhibit C Landlord's Existing Mortgage
Exhibit D Environmental Report
Exhibit E Terms of Agreement of Sale
</TABLE>
<PAGE> 1
EXHIBIT 10.4
ALLIANCE, OHIO
A G R E E M E N T
F O R
B U I L D I N G L E A S E
DATED AUGUST 1, 1996
BY AND BETWEEN
CP ALLIANCE, INC.,
A MICHIGAN CORPORATION
LANDLORD,
AND
UNITED STATES CAN COMPANY,
A DELAWARE CORPORATION
TENANT
<PAGE> 2
A G R E E M E N T
F O R
B U I L D I N G L E A S E
CP ALLIANCE, INC., a Michigan corporation ("Landlord"), hereby
leases to UNITED STATES CAN COMPANY, a Delaware Corporation ("Tenant"), and
Tenant hereby accepts, subject to the terms and conditions of this Lease, those
certain buildings containing approximately 52,000 square feet (the "Building")
located at 12240 Rockhill Road, Alliance, Ohio 44601, and the surrounding land
containing approximately 10.5 acres and legally described on Exhibit A which is
attached hereto and made a part hereof (the Building and the surrounding
property used as the parking areas and driveway shall be referred to as the
"Premises" and the said property and Building and Landlord's interest therein
shall be referred to as the "Property"), for an initial term (the "Term") of
five (5) years commencing on August 1, 1996 (the "Commencement Date"), and
ending on July 31, 2001 or such other date as the Term is extended pursuant to
Article IX hereof (the "Termination Date").
RECITALS
WHEREAS, Tenant has entered into a certain Stock Purchase
Agreement dated August 2, 1996 with Irving A. Rubin, Robert Bonczyk et al. (the
"Stock Purchase Agreement") pursuant to which Tenant has agreed to purchase all
of the stock of CPI Plastics, Inc., CP Ohio, Inc. and CP Illinois, Inc.
WHEREAS, in connection therewith, Landlord and Tenant have
agreed to enter into this Lease;
WHEREAS, if requested by either party to this Lease, a
memorandum of this Lease in recordable form duly executed and acknowledged
shall be entered into and recorded by the parties hereto;
NOW, THEREFORE, IN CONSIDERATION of the above demise, and the
acceptance of the mutual covenants herein contained, Landlord and Tenant
covenant and agree as follows:
ARTICLE I
RENTAL
1.1. Rental. Tenant shall pay to Landlord, at such place
as Landlord may designate to Tenant in writing, the rent and other payments
reserved and required under this Article I, which rent and other payments,
together with all other amounts becoming due from
<PAGE> 3
Tenant to Landlord hereunder, are herein collectively referred to as the "Rent"
or "Rental." Except as set forth in Section 10.4 of the Stock Purchase
Agreement, all Rental shall be paid without notice or demand, and without
abatement, deduction, counterclaim or set-off. In the event Tenant does not
make Rental payments within ten (10) days of receipt of notice that such amount
is unpaid, Tenant shall pay to Landlord Three Hundred Dollars ($300.00) as a
late fee.
1.2. Base Rent. Subject to rent adjustments in accordance
with Section 1.3 hereof, Tenant shall pay to Landlord an annual Base Rent (the
"Base Rent") set forth on Exhibit B attached hereto and made a part hereof.
Base Rent shall be paid in advance on the first day of each and every calendar
month during the Term.
1.3. Additional Payments. In addition to Base Rent,
Tenant shall pay all of the Expenses (as hereafter defined) assessed or
incurred in connection with the Premises on or before the respective due dates
thereof. Tenant's obligation to pay the Expenses shall survive the expiration
of the Term. For purposes of this Section 1.3, Expenses shall mean, for any
calendar year, all reasonable and customary expenses, costs and disbursements
which Landlord shall pay or become obligated to pay because of or in connection
with the operation, maintenance, repair and replacement, of the Premises (other
than the items which are Landlord's responsibility pursuant to Section 2.2 of
this Lease) and of the personal property, fixtures, machinery, equipment,
systems and apparatus located therein or used in connection therewith,
including, but not limited to, the cost of utilities to the Premises.
Notwithstanding the foregoing, payments made or incurred by Landlord or Tenant
prior to the Commencement Date shall not be included in Expenses.
1.4. Triple Net Lease. Except for Landlord's obligations
delineated in Section 2.2 hereof, the parties hereto intend that the Rental
payable hereunder shall be an absolute net return to Landlord and that, except
as expressly provided to the contrary herein or the Stock Purchase Agreement,
all costs, expenses and obligations of whatever kind, whether foreseen or
unforeseen, general or special, ordinary or extraordinary, that may arise in
connection with the use, occupancy, maintenance or operation of the Premises
shall be paid or performed by Tenant. Tenant shall not be obligated to pay any
income or franchise taxes which may be levied against Landlord.
1.5. Taxes. (a) Tenant shall pay, as Additional Rent and
prior to delinquency, all ad valorem real estate taxes, special assessments and
personal property taxes (including any rental or similar taxes and license,
building, occupancy or similar fees levied or imposed in lieu of or in addition
to general real or personal property taxes) which may be levied or imposed
during the Term against the Premises or any part thereof. Tenant shall pay
before delinquency all taxes, assessments, license fees and other public
charges levied, assessed or imposed upon its business operations and its
leasehold improvements, merchandise and other personal property in or about the
Premises (collectively, the "Taxes"). Tenant shall deliver to Landlord copies
of receipts showing payment of said real estate taxes within thirty (30) days
after request by Landlord.
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<PAGE> 4
(b) Tenant shall have the right to contest at Tenant's
expense, all Taxes levied against the Premises by legal proceedings provided
that such proceedings have the effect of preventing the forfeiture of the
Premises or any part thereof to satisfy the same. All contest proceedings
shall be conducted in good faith and with due diligence by Tenant. Tenant
shall give Landlord such security as Landlord may reasonably require to insure
the payment of the Taxes so contested, and all interest and penalties thereon.
Landlord shall cooperate in any such proceedings.
(c) Taxes with respect to the years in which the Term
commences and expires shall be prorated between Landlord and Tenant, and
together with the first installment of Rental hereunder, Tenant shall pay to
Landlord the portion of Taxes, if any, which have been paid by Landlord and
which are attributable to the Term of this Lease and upon expiration of the
term (except in the event Tenant purchases the property pursuant to the Option
Agreement as hereinafter defined), Landlord shall pay to Tenant the portion of
any Taxes, if any, which have been paid by Tenant and which are attributable
after the Term of this Lease.
ARTICLE II
TENANT'S ACCEPTANCE AND USE OF PROPERTY
2.1. Use. Subject to the Permitted Exceptions (as
hereafter defined), Tenant shall have the exclusive right to and shall occupy
and use the Property for its business operations and any other use reasonably
related thereto. Tenant shall not occupy or use the Premises or permit the
Premises to be occupied or used for any purpose, act, or thing which is in
violation of any public law, ordinance, or governmental regulation.
2.2. Maintenance and Repair and Replacement. Except for
damage caused by Tenant, Landlord shall, in full compliance with all applicable
laws and ordinances, maintain and make all necessary structural repairs,
replacements and alterations to the Building, including but not limited to
foundations, roofs, exterior and load bearing walls, structural columns and
structural beams. Landlord shall proceed promptly with such maintenance,
repairs and replacements.
Tenant shall, at its own cost and expense subject to the
provisions of Section 2.3, (i) keep the interior of the Premises in a clean and
tenantable condition during the Term and (ii) maintain in good operating
condition and repair, ordinary wear and tear excepted, all electrical,
mechanical and plumbing fixtures located within the Premises, all system and
fixtures serving the Premises, and the ventilating, heating and air
conditioning, if any, systems serving the Premises the floors, the parking lot
and the parking area during the Term; provided however, Tenant shall have no
responsibility with respect to the maintenance of the tin outbuilding
containing less than 1000 square feet and shall have the right to tear down
such building at Tenant's option. Tenant shall also repair any damage to the
Premises caused by Tenant, or its agents or employees, ordinary wear and tear
excepted.
If either party fails to make or commence to make such repairs
after written notice thereof from the other party and applicable grace periods,
the notifying party may, in its sole
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<PAGE> 5
discretion, do so and the defaulting party shall pay to the notifying party the
reasonable cost thereof within thirty (30) days of being billed therefor. In
the event the defaulting party does not reimburse the notifying party within
the aforesaid thirty (30) day period, such failing shall be deemed to be a
further default hereunder and such amount shall bear interest from the date of
the statement at the rate set forth in Section 13.3(b). Landlord may enter the
Premises at reasonable times to inspect or show the Property to prospective
tenants during the last six (6) months of the Term or the extended Term if
applicable (so long as the option to extend set forth in Section 9.1 has not
been exercised) or to make such repairs to the Premises as Landlord shall
reasonably deem necessary, or as required in order to comply with its
obligations hereunder or as required by any governmental authority or judicial
order. In making such entry, Landlord shall use its best efforts not to
unreasonably interfere with Tenant's use and occupancy of the Premises, and,
except in the event of an emergency, shall enter only upon reasonable prior
notice to Tenant explaining the reasons therefor.
2.3. Alterations. Tenant shall not, without Landlord's
prior written consent, alter or remodel the Premises, which consent shall not
be unreasonably withheld or delayed; provided, however, that Tenant may make
non-structural alterations at a cost of less than $25,000 without Landlord's
prior written consent. In the event that Landlord consents to any proposed
alteration or remodeling of the Premises, Tenant shall not have the obligation
to restore such proposed alteration or remodelling unless such consent
specifies that Landlord will require Tenant to remove the same upon expiration
of the Term. All work performed by or on behalf of Tenant shall be in
accordance with good construction practices, all applicable laws, insurance
requirements, and Landlord's reasonable rules and regulations.
Prior to the commencement of any work by Tenant, Tenant shall
(i) obtain or cause to be obtained public liability and workmen's compensation
insurance to cover every contractor to be employed by Tenant and such
contractor's subcontractors, and shall deliver duplicate originals of all
certificates of such insurance to Landlord for approval; (ii) furnish Landlord
with all necessary permits, licenses, approvals, certificates and
authorizations for prosecution and completion of such work; and (iii) furnish
Landlord with such other documents as may be reasonably requested by Landlord.
Tenant shall have the right to install signage on the Premises provided that
Tenant also pay the cost of all signage and the installation thereof. Landlord
shall have the right, but not the duty, to inspect construction operations in
connection with any work completed or being completed on the Premises.
Tenant shall indemnify and hold Landlord harmless from and
against any and all loss, cost or expense incurred by Landlord as a result of
such alterations or remodelling. In the event any construction or other lien
is filed against the Premises as a result of such alteration or remodelling,
Tenant shall either pay such lien claim or if Tenant elects to contest such
claim, provide a bond, title indemnity or other security reasonably
satisfactory to Landlord protecting Landlord's interest in the Premises.
Nothing herein shall give Landlord any interest in Tenant's
personal property, machinery, equipment, inventory, raw materials, office
furniture, office equipment, trade
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<PAGE> 6
fixtures, cables, data processing equipment or appliances, which shall remain
the property of Tenant.
ARTICLE III
LANDLORD'S RIGHTS
Landlord reserves and shall have the following rights,
exercisable, unless otherwise herein provided, without notice, without
liability to Tenant for damage or injury to person, property or business,
without being deemed an eviction or disturbance in any manner of Tenant's use
or possession of the Premises and without relieving Tenant from its obligation
to pay Rental when due or from any other obligation hereunder:
(a) To display the Premises to prospective tenants upon prior
notice at reasonable hours during the last three (3) months of
the Term or the extended term if the Option to Extend set
forth in Article IX is exercised, to display the Premises to
prospective purchasers, mortgagees or investors upon prior
notice and at reasonable hours at any time during the Term,
and, if the Premises are abandoned during the Term, to
decorate, remodel, repair or otherwise prepare the Premises
for reoccupancy, provided it will not unreasonably disrupt
Tenant's normal business activities;
(b) To have and retain paramount title to the Premises free and
clear of any act of Tenant purporting to burden or encumber it
(excluding Permitted Liens, as hereafter defined); and
(c) To take any and all reasonable measures, including
inspections, repairs and alterations to the Premises as may be
reasonably necessary for the safety, protection or
preservation thereof or Landlord's interest therein.
ARTICLE IV
DAMAGE - CONDEMNATION
4.1. Fire or Casualty. If the Premises or the Building is
damaged by fire or other casualty (regardless of whether the Premises are made
substantially untenantable), then Landlord shall proceed with due diligence,
but subject to the remainder of this Section 4.1, to repair and restore the
Building or the Premises, as the case may be with the insurance proceeds from
the policy referred in Section 6.2 below. In the event the insurance proceeds
are insufficient to restore such damage, Landlord shall have no obligation to
expend sums in excess of such proceeds. Notwithstanding the foregoing, if such
damage renders the Premises untenantable and it is estimated by Landlord in its
reasonable judgment that the time to repair and restore the Premises will
exceed one hundred eighty (180) days or if such damage occurs during the last
twelve (12) months of the Term of this Lease (or, if the Term of this Lease has
-5-
<PAGE> 7
been extended pursuant to Article IX hereof, during the last twelve (12) months
of the Term of this Lease as extended), both Tenant and Landlord shall have the
right to terminate this Lease by delivery to the other of written notice of
such termination within thirty (30) days following the damage, and all Rental
and other charges hereunder for the remainder of the Term shall abate. If
neither Tenant nor Landlord elects to terminate the Lease as hereinabove
provided then the insurance proceeds, if any, shall be utilized by Landlord to
commence repairing the damage and Landlord shall repair the damage so that the
Premises are in substantially the same condition as they were prior to being
damaged. All Rental and other charges shall abate from the date of casualty
until such restoration is completed.
4.2. Condemnation. In the event that the whole of the
Premises shall be taken in any proceeding by any public authority by
condemnation or otherwise, or be acquired for public or quasi-public purposes
(all of which are hereinafter collectively referred to as "Condemnation"), this
Lease shall terminate as of the date of the taking of possession by the
condemning authority and the Rental and other charges payable by Tenant shall
cease as of the date possession of the Premises is delivered to such condemning
authority. In the event any part of the Premises shall be so taken and such
taking substantially interferes with the Tenant's continued use of the Premises
as reasonably determined by Tenant, Tenant may, at Tenant's option terminate
this Lease as of the date of the taking of possession by the condemning
authority and the Rental and other charges payable by Tenant shall cease as of
the date possession of the Premises is delivered to such condemning authority.
If Tenant, pursuant to the preceding sentence, desires to
exercise its option of terminating the Term of this Lease, such termination
shall be effective (without any payment by Landlord to Tenant therefor) by
Tenant giving notice to Landlord provided that such notice shall be given not
more than thirty (30) days subsequent to the date on which Tenant shall have
been deprived of possession of the part so taken as determined as an equitable
basis. If this Lease is not so terminated, then Rental shall abate as to the
portion of the Premises so taken. If the Lease is terminated pursuant to this
paragraph, Rental and other charges payable by Tenant shall cease as of the
date of such taking.
Tenant shall have the right to make a claim to the condemning
authority for relocation expenses, its leasehold value and the unamortized
value of any improvements, alterations or additions to the Premises paid for by
Tenant. Except for any claim awarded to Tenant in accordance with the
preceding sentence, Tenant hereby assigns to Landlord, Tenant's interest in any
condemnation award.
ARTICLE V
LANDLORD'S AND TENANT'S REMEDIES
5.1. Events of Default. Each of the following shall be an "Event of
Default."
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<PAGE> 8
(a) If Tenant fails to pay any installment of Rental, or any other
payment or money to be paid by Tenant under this Lease within
ten (10) days after receipt of notice that the Rental is
unpaid; or
(b) If Tenant fails to observe or perform one or more of the other
terms, conditions, covenants or agreements of this Lease and
such failure shall continue for a period of thirty (30) days
after written notice from Landlord specifying such failure
(unless such failure requires work to be performed, acts to be
done, or conditions to be removed which cannot by their nature
reasonably be performed, done or removed, as the case may be,
within such thirty (30) day period, in which case, no Event of
Default shall be deemed to exist so long as Tenant shall have
commenced the same within such thirty (30) day period and
shall diligently and continuously prosecute the same to
completion); or
(c) If Tenant makes an assignment for the benefit of creditors,
admits its inability to pay its debts or takes any action
towards a general compromise of its debts or a composition
with its creditors; or
(d) If all or any substantial part of the assets of Tenant,
including the leasehold interest hereunder of Tenant, are
attached, seized or become subject to a writ or distress
warrant, are levied upon or come within the possession of any
receiver, trustee, custodian or assignee for the benefit of
creditors and such attachment, seizure, writ, warrant or levy
is not withdrawn or removed within ninety (90) days after
becoming effective; or
(e) If a notice of lien or levy is filed with respect to all or
substantially all of Tenant's assets located on the Premises
by any federal, state, county or municipal body, department,
agency or instrumentality for taxes or debts then owing by
Tenant and such notice is not released or withdrawn within
ninety (90) days of its filing (unless such lien is a
"Permitted Lien" (as hereafter defined)); or
(f) If any involuntary petition or similar pleading is filed in
any court under any section of the Federal Bankruptcy Code
seeking to declare Tenant bankrupt, or seeking a plan of
reorganization for Tenant under Chapter 11 of the Bankruptcy
Code, or a similar proceeding under state law and such
petition or pleading is not withdrawn or denied within ninety
(90) days after its filing, or if any voluntary petition or
similar pleading is filed in any court under any section of
the Federal Bankruptcy Code; or
(g) If Tenant fails to comply with any single obligation under
this Lease more than three (3) times during a calendar year
after having received notice of the previous defaults, such
event shall be deemed to be a default without a cure period;
provided, however, that any such event must be a separate
incident such as the failure to pay Base Rent when due.
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<PAGE> 9
5.2. Termination. Upon the occurrence of an Event of
Default under Section 5.1, Landlord may, at its option, at any time thereafter,
without notice (i) terminate this Lease, or (ii) without terminating this
Lease, forthwith terminate the Tenant's right to possession of the Premises, or
(iii) pursue any other remedy now or hereafter available to Landlord under the
laws of the State of Ohio.
(a) Upon Landlord's termination of this Lease as a result
of the occurrence of an Event of Default, Landlord shall be entitled to recover
from Tenant all damages incurred by Landlord by reason of Tenant's default,
including (i) the unpaid Rental discounted to present value at the rate of
eight percent (8%) per annum, and other charges which had been earned as of the
date of termination; and (ii) any other amount necessary to compensate Landlord
for all the detriment proximately caused by Tenant's failure to perform its
obligations under this Lease, including, but not limited to, any reasonable
costs or expenses incurred by Landlord in maintaining or preserving the
Premises after the occurrence of such Event of Default, the reasonable cost of
recovering possession of the Premises, expenses of reletting, including
necessary renovation or alteration of the Premises, Landlord's reasonable
attorneys' fees incurred in connection therewith, and any reasonable real
estate commission paid or payable.
(b) Upon and after Landlord's termination of this Lease
or Tenant's right to possession of the Premises, Landlord shall make reasonable
efforts to relet the Premises or any part thereof to any person, firm or
corporation other than Tenant for such rent, for such term and upon such
conditions as Landlord shall determine, in Landlord's reasonable discretion,
and Landlord shall not be required to accept any tenant offered by Tenant
(provided that such acceptance shall not be unreasonably refused) or to observe
any instructions given by Tenant covering such reletting. In any such case,
Landlord may incur reasonable expenses for repairs, alterations, improvements,
additions and decoration of or to the Premises to the extent reasonably deemed
necessary or desirable by Landlord for the purpose of reletting the Premises.
All such reasonable expenses, plus all reasonable brokers' commissions and
reasonable attorneys' fees incurred by Landlord in connection with any
reletting of the Premises, shall be paid by Tenant to Landlord upon demand. In
addition, Tenant shall, for the remainder of the Term, reimburse Landlord, on
demand, for any deficiency between Rental and other charges reserved hereunder
and the rent received by Landlord upon reletting the Premises. In the event
Tenant does not pay such sums when due, such sums shall accrue interest as set
forth in Section 13.3(b) below.
5.3. Surrender of Possession. Upon termination of this
Lease, whether by lapse of time or otherwise, or upon any termination of
Tenant's right to possession of the Premises without termination of the Lease,
Tenant shall surrender and vacate the Premises immediately and deliver
possession thereof to Landlord in clean, good and tenantable condition,
ordinary wear and damage by fire or other casualty excepted. Upon any
termination for a thirty (30) day period, Tenant shall be entitled to remove
from the Premises any machinery, equipment, inventory, raw materials, built-in
furniture, computers, data or word processing or duplicating equipment, trade
fixtures, cables or appliances, provided that Tenant shall repair all damage
resulting from such removal and shall restore the Premises to a tenantable
condition.
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<PAGE> 10
5.4. Holding Over. If Tenant retains possession of the
Premises or any part thereof after the termination of this Lease by lapse of
time or otherwise Tenant shall pay to Landlord, Rental at one and one half
times the per diem rate payable for the month immediately preceding said
holding over, computed on a per diem basis, for each day or part thereof that
Tenant thus remains in possession. The provisions of this Section 5.4 shall
not be deemed to limit or exclude any of Landlord's rights of re-entry or any
other right granted to Landlord hereunder or under law.
5.5. Payment of Expenses in Enforcing Obligations. In the
event of any dispute between Landlord and Tenant to enforce any of the
provisions and/or rights hereunder, the unsuccessful party covenants and agrees
to pay to the successful party all costs and expenses, including reasonable
attorneys' fees, incurred therein by the successful party, which costs and
expenses shall be included in and as a part of a judgment if litigation is
involved. If Landlord, without fault on its part, shall be made a party to any
litigation instituted by or against the Tenant by reason of this Lease, then
Landlord shall be entitled to receive from the Tenant upon demand all costs,
expenses and reasonable attorneys' fees incurred by Landlord in or in
connection with such litigation. If Tenant, without fault on its part, shall
be made a party to any litigation instituted by or against Landlord by reason
of this Lease, then Tenant shall be entitled to receive from the Landlord upon
demand all costs, expenses and reasonable attorneys' fees incurred by Tenant in
or in connection with such litigation.
5.6. Landlord's Performance of Tenant's Obligations. If
Tenant shall default in the performance of any of its obligations hereunder and
such default shall continue after the expiration of any notice or grace period
herein provided, Landlord may perform such obligation for the account and
expense of Tenant upon thirty (30) days written notice except in cases of
emergency, and Tenant shall reimburse Landlord therefor upon demand plus
Landlord's reasonable costs and expenses, including attorneys' fees.
5.7. Non-Waiver. No waiver of any agreement or condition
expressed in this Lease shall be implied by any neglect of Landlord or Tenant
to enforce any remedy on account of the violation of such agreement or
condition if such violation be continued or repeated subsequently, and no
express waiver shall affect any agreement or condition other than the one
specified in such waiver and that one only for the time and in the manner
specifically stated. No receipt of monies by Landlord from Tenant after the
termination in any way of the Term or of Tenant's right of possession
hereunder, or after the giving of any notice, shall reinstate, continue or
extend the Term or affect any notice given to Tenant prior to the receipt of
such monies, it being agreed that after the service or notice or the
commencement of a suit or after final judgment for possession of the Premises
Landlord may receive and collect any Rental due, and the payment of said Rental
shall not waive or affect said notice, suit or judgment.
5.8. Rights and Remedies Cumulative. All rights and
remedies of Landlord and Tenant under this Article and elsewhere in this Lease
shall be distinct, separate and cumulative and none shall exclude any other
right or remedy of Landlord or Tenant as set forth in this
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<PAGE> 11
Lease or allowed by law. Landlord's and Tenant's obligations under this
Article shall survive the expiration of the Term.
5.9. Tenant's Performance of Landlord's Obligations. If
Landlord shall default in the performance of any of its obligations hereunder
and such default shall continue after the expiration of any notice or grace
period herein provided, Tenant may perform such obligation for the account and
expense of Landlord upon thirty (30) days written notice except in cases of
emergency, and Landlord shall reimburse Tenant therefor upon demand, plus
Tenant's reasonable costs and expenses, including attorneys' fees.
ARTICLE VI
WAIVER OF CLAIMS AND INDEMNIFICATION
AND RIGHTS OF RECOVERY ON INSURANCE
6.1. Waiver of Claims and Indemnity. Tenant hereby
releases and waives all claims against Landlord, agents, employees and servants
for injury or damage to person, property or business sustained in or about the
Property by Tenant, its agents, employees or servants, which injury or damage
results from any act, neglect, occurrence or conditions in or about the
Property, except to the extent that such injury or damage is caused by the
negligence or willful or wanton act or omission by Landlord, or its agents,
employees or servants. To the extent any of the foregoing is covered by
insurance, Landlord or Tenant, as the case may be, shall have but one (1)
recovery, but any such recovery shall not be limited to the amount of such
insurance.
Tenant hereby agrees to indemnify and hold Landlord, its
agents, employees and servants harmless against any and all claims, damage,
demands, costs and expenses of every kind and nature, including reasonable
attorneys' fees for the defense thereof, arising from Tenant's occupancy of the
Property or from any breach or default on the part of Tenant in the performance
of any agreement of Tenant to be performed pursuant to the terms of this Lease,
or from any act, omission or negligence of the Tenant, its employees, servants
and agents, subtenants and/or assignees in or about the Property during the
term of the Lease. To the extent any of the foregoing is covered by insurance,
Landlord shall have but one (1) recovery. In case any such proceeding is
brought against Landlord, its agents, employees or servants, Tenant covenants
to defend such proceeding at its sole cost and expense by legal counsel
reasonably satisfactory to Landlord.
Landlord hereby agrees to indemnify and hold Tenant, its
agents, employees and servants harmless against any and all claims, damage,
demands, costs and expenses of every kind and nature, including reasonable
attorneys' fees for the defense thereof, arising from any breach or default on
the part of Landlord in the performance of any agreement of Landlord to be
performed pursuant to the terms of this Lease, or from any act, omission or
negligence of Landlord, its employees, servants and agents in or about the
Property. To the extent any of the foregoing is covered by insurance, Tenant
shall have but one (1) recovery. In case any such
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<PAGE> 12
proceeding is brought against Tenant, its agents, employees or servants,
Landlord covenants to defend such proceeding at its sole cost and expense by
legal counsel reasonably satisfactory to Tenant.
In the event of any conflict or inconsistency between the
indemnification provisions hereof and those contained in the Stock Purchase
Agreement, those contained in the Stock Purchase Agreement shall govern.
6.2. Insurance Coverage. Tenant, at Tenant's sole cost
and expense, shall obtain and maintain, for the Term of this Lease, as
extended, insurance policies in form and content, and issued by an insurer,
reasonably acceptable to Landlord, providing the following coverage: (i) all
perils included in the classification "fire and extended coverage" under
insurance industry practices in effect from time to time in the jurisdiction in
which the Building is located covering the Building and all fixtures and
property located therein, including without limitation, Tenant's fixtures,
machinery, equipment, furnishings, merchandise, alterations, improvements and
other contents in the Premises, for 100% of the full replacement value of said
Building and items; and (ii) comprehensive generally liability insurance
(including contractual liability) naming Landlord, and any mortgagee, as
additional insureds, which policy is to be in the minimum amount of Two Million
Dollars ($2,000,000.00) with respect to any one person, in the minimum amount
of Three Million Dollars ($3,000,000.00) with respect to any one accident, and
in the minimum amount of Five Hundred Thousand Dollars ($500,000.00) with
respect to personal property damage. Each policy described in this Section 6.2
shall name Landlord and any mortgagee of the Premises as additional insureds
and as loss payees and shall contain a provision that it shall (i) not be
cancelable and that it shall continue in full force and effect unless Landlord
has received at least thirty (30) days prior written notice of such
cancellation or termination, and (ii) not be materially changed without thirty
(30) days prior notice to Landlord. Insurance coverage under umbrella policies
shall be acceptable. Landlord shall be named as loss payee on the casualty
policy with respect to the Building.
6.3. Rights of Recovery on Insurance. Landlord and Tenant
agree to have all fire and extended coverage and material damage insurance
which may be carried with respect to the Building, the Premises or to the
property located therein endorsed with a clause substantially as follows: "This
insurance shall not be invalidated should the insured waive in writing prior to
a loss any or all rights of recovery against any party for loss occurring to
the property described herein." Landlord and Tenant hereby waive all claims
for recovery from each other for any loss or damage to them or to any of their
property insured under valid and collectible insurance policies to the extent
of the proceeds collected under such insurance policies.
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<PAGE> 13
ARTICLE VII
TITLE MATTERS
7.1. Subordination of Lease. This Lease and the rights of
Tenant hereunder shall become subject and subordinate at all times to the lien
of the mortgage or deed of trust existing against the Property referred to on
Exhibit C attached hereto and made a part hereof, and to all advances made or
hereafter to be made upon the security thereof, and to all future mortgages or
deeds of trust made to an institutional lender such as a bank, savings and
loan, or insurance company; provided that the mortgagee or trustee under any
such existing and future mortgage or deed of trust provides a non-disturbance
agreement reasonably satisfactory to Tenant and which provides that such
mortgagee or trustee recognizes all of Tenant's rights hereunder, including but
not limited to Tenant's options to expand, purchase and extend the Term of this
Lease. In the event any proceedings are brought to foreclose any mortgage or
deed of trust, Tenant will attorn to the purchaser upon any foreclosure sale
and recognize such purchaser as the landlord under this Lease. Tenant agrees
to execute and deliver at any time any instrument to further evidence such
attornment as may be reasonably requested in writing by any holder of such
mortgage, or the trustee under any such deed of trust.
7.2. Estoppel Certificate. Landlord and Tenant agree that
from time to time upon not less than fifteen (15) business days prior request
by the other, the non-requesting party, or its duly authorized representative
having knowledge of the following facts, will deliver to the requesting party,
or to such person as the requesting party may designate, a statement in writing
certifying (i) that this Lease is unmodified and in full force and effect, or,
if there have been modifications, that the Lease as modified is in full force
and effect; (ii) the dates to which the Rental and other charges have been
paid; (iii) that to the best of the non-requesting party's knowledge, the
requesting party is not in default under any provision of this Lease, or, if in
default, the nature thereof in detail; and (iv) such other provisions
reasonably requested by the requesting party.
7.3. Assignment and Subletting. Except as otherwise
permitted in Section 7.4 and this Section 7.3, Tenant shall not without
Landlord's prior written consent, which consent shall not be unreasonably
withheld or delayed, (i) assign or convey this Lease or any interest under this
Lease, provided, however, Tenant may provide a leasehold mortgage to an
institutional lender with assets in excess of $500,000,000; (ii) sublease all
or any portion of the Premises; or (iii) permit the use or occupancy of the
Premises by any party other than Tenant, its agents, employees, guests,
invitees and licensees.
Notwithstanding the limitations set forth above, Tenant may
assign this Lease or sublet all or any portion of the Tenant Premises without
Landlord's consent:
(a) To a corporation controlling, controlled by or under common
control with Tenant, (hereinafter an "Affiliated
Corporation"); provided that any such assignment or sublease
shall be subject to the terms and conditions of this Lease.
For purposes hereof, "control" shall mean the ownership,
either directly or
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<PAGE> 14
indirectly, of fifty percent (50%) or more of all shares
entitled to vote of such other corporation; and
(b) To the surviving corporation in a merger, reorganization or
consolidation or other corporate action involving Tenant
provided that any such assignment or sublease shall be subject
to the terms and conditions of this Lease.
No assignment of this Lease or sublease of the Premises
pursuant to the provisions of this Section 7.3 shall be effective unless and
until the assignee or sublessee shall have executed an appropriate instrument,
in form reasonably satisfactory to Landlord, assuming all of the obligations of
Tenant hereunder to the extent of the Premises assigned or subleased, and shall
have delivered a copy thereof, or an executed counterpart thereof, to Landlord.
In the event of any permitted assignment of this Lease or subletting of the
Premises, Tenant shall remain fully liable for all of the obligations of Tenant
under this Lease, except for additional obligations entered into as a result of
a lease amendment between Landlord and any assignee.
7.4. Covenant Against Mechanic's Liens. Tenant covenants
and agrees not to suffer or permit any lien of mechanics or materialmen to be
placed against the Property or any part thereof arising from work done by or on
behalf of Tenant. If any such lien shall attach to the Property or any part
thereof, Tenant shall either (i) pay off and remove the same or (ii) if Tenant
desires to contest such lien in a court of competent jurisdiction, Tenant shall
either (1) file with Landlord a bond or other security in an amount and with an
independent surety, reasonably satisfactory to Landlord or (2) maintain a title
indemnity with appropriate security to protect against an exception to title
with a title insurance company reasonably designated by Landlord and in such
amount and on such terms as are reasonably satisfactory to Landlord and such
title insurance company, in which event such a lien shall be a "Permitted
Lien". Other than a Permitted Lien, Tenant has no authority or power to cause
or permit any lien or encumbrance of any kind whatsoever, whether created by
act of Tenant, operation of law or otherwise, to attach to or be placed upon
the Property or any part thereof. Any and all liens and encumbrances created
by Tenant shall attach only to Tenant's interest in the Premises.
7.5. Covenant of Quiet Enjoyment. Landlord covenants,
represents and warrants that it has full power and proper authority to execute
this Lease and to grant the rights provided to Tenant hereunder and further
covenants that, upon paying the Rental and keeping the agreements of this Lease
on its part to be kept and performed, Tenant shall have peaceful and quiet
possession of the Premises and full enjoyment of all of its rights herein
granted for the Term of this Lease (or, if the Term of this Lease has been
extended pursuant to Article IX hereof, for the Term of this Lease as
extended).
7.6. Permitted Title Exceptions. The leasehold interest
conveyed hereby shall be subject to the following exceptions (the "Permitted
Exceptions"):
a. Taxes for the year 1996 and subsequent years, not yet
due and payable;
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<PAGE> 15
b. Acts done or suffered by Tenant, pursuant to this
Lease or otherwise;
c. Zoning laws and ordinances, provided that Tenant's
use of the Premises complies with such laws and ordinances;
d. Mortgage or deed of trust described in Section 7.1
above; and
e. Easements for public utilities which do not or will
not underlie the improvements as built, provided same are recorded in the
public records of Stark County, Ohio.
Landlord agrees that Landlord shall not further encumber the
Property without Tenant's prior written consent except with respect to
Landlord's right to mortgage the Property so long as such financing complies
with the requirements set forth in Section 7.1 above. Tenant shall not be
responsible for correcting any violation of the above Permitted Exceptions if
such violation was not caused by Tenant or if it existed on or before the
Commencement Date. Landlord shall not further encumber title to the Property.
ARTICLE VIII
TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE
In the event of any sale or other transfer of the Property
effective after the Commencement Date of this Lease, Landlord and the seller or
transferor shall be entirely freed and relieved of all agreements and
obligations of Landlord hereunder accruing after the date of such sale or
transfer, provided, such purchaser or transferee shall have assumed and agreed
to perform all agreements and obligations of the Landlord hereunder accruing
from and after the date of such sale or transfer and shall take title subject
to this Lease. Subject to the provisions of the preceding sentence, Tenant
hereby consents to any future assignment by Landlord of any part or all of its
rights under this Lease.
ARTICLE IX
TENANT'S OPTION TO EXTEND LEASE
9.1. Option. Tenant shall have the right and option to
extend the Term of this Lease for two additional consecutive five (5) year
periods (the "Option Periods") commencing immediately following the Termination
Date provided that (i) Tenant sends notice of its election to extend the Term
of the Lease to Landlord not less than one hundred eighty (180) days prior to
the end of the Term of the Lease or the extended Term; (ii) at the time Tenant
sends such notice, Tenant is not then in default in the performance of any
term, condition, covenant or agreement of this Lease as to which notice of
default has been given to Tenant unless such default cannot, with due
diligence, be cured, prior to the last date on which Tenant is entitled to
exercise such option and Tenant has proceeded promptly and with due diligence
after service of the notice of default to cure such default; and (iii) at the
date of commencement of the Option
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<PAGE> 16
Period, or the Second Option Period Tenant is not in default in the performance
of any term, condition, covenant or agreement of this Lease as to which notice
of default has been given to Tenant or, if notice of default has been given,
Tenant has proceeded promptly and with due diligence after service of the
notice of default to cure such default, and no event is occurring which, with
the passage of time or the giving of notice, or both, would constitute a
default hereunder.
9.2. Rent During Option Years.
(a) The Base Rent due and payable during the Option Periods
shall be agreed to by the parties within thirty (30) days of Tenant's notice to
Landlord, or if the parties cannot agree within the aforesaid thirty (30) day
period, in accordance with Section 9.2(b). All the terms and conditions of
this Lease shall be applicable to such extended terms except (i) for those
matters that have expired by their own terms or have been performed and (ii)
the Base Rent for such extended terms shall be as set forth below. Such Lease
shall be deemed extended without any further lease or instrument.
(b) If Landlord and Tenant shall fail to agree upon the rent
within thirty (30) days of the exercise of Tenant's option to extend the Lease
term, then the Base Rent for the option periods shall be adjusted by 50% of the
increase in the Index now known as "United States Bureau of Labor Statistics,
Consumer Price Index, for all Urban Consumers (the "CPU-U"), All Items for
Atlanta Average (1967 = 100)" hereinafter referred to as the "Index", provided,
that the amount payable by Tenant under this Lease as Base Rent shall not be
less than the annual Base Rent payable for the preceding lease year. Such
adjustment shall be accomplished by multiplying the aforementioned Base Rent by
one half of the increase in the Index from the most recently published monthly
Index preceding the first day of the Option Period for which the adjustment is
made over the corresponding monthly Index for the month of the Commencement
Date of this Lease. If such Index shall be discontinued with no successor or
comparable successor Index, the parties shall attempt to agree upon a
substitute or comparable successor Index, but if the parties are unable to
agree upon a substitute formula, then the manner in which the Base Rent shall
be adjusted to take into account changes in the cost of living shall be
determined by arbitration in accordance with the rules of the American
Arbitration Association then prevailing.
ARTICLE X
ENVIRONMENTAL MATTERS
10.1. Environmental Matters. Except as described in the
environmental reports all delivered by Landlord to Tenant and referred to on
Exhibit D attached hereto and made a part hereof, prior to the Commencement
Date, (i) no Hazardous Materials have been located on the Property or have been
released in the environment, or discharged, placed or disposed of at, on or
under the Property; (ii) no underground storage tanks have been located on the
Property; (iii)
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<PAGE> 17
the Property has never been used as a dump for waste material; and (iv) the
Property and its prior uses comply with and at all times have complied with,
all applicable governmental laws, regulations or requirements relating to
environmental and occupational, health and safety matters and Hazardous
Materials.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any
local governmental authority, the State of Ohio, or the United States
Government, including, but not limited to, any material or substance which is
(i) defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste," or "restricted hazardous waste" under
any provision of Ohio law, (ii) petroleum, (iii) asbestos, (iv) polychlorinated
biphenyl, (v) radioactive material, (vi) designated as a "hazardous substance"
pursuant to Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq.
(33 U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant to
Section 1004 of the Resource Conservation and Recovery Act 42 U.S.C. Section
6901 et seq. (42 U.S.C. Section 6903), or (viii) defined as a "hazardous
substance" pursuant to Section 101 of the Comprehensive Environmental Response,
Compensation, and Liability Act, 42 U.S.C. Section 9601 et seq. (42 U.S.C
Section 9601). The term "Environmental Laws" shall mean all statutes
specifically described in the foregoing sentence and all federal, state and
local environmental health and safety statutes, ordinances, codes, rules,
regulations, orders and decrees regulating, relating to or imposing liability
or standards concerning or in connection with Hazardous Materials.
Additionally, but not in lieu of Landlord's affirmative
undertakings set forth herein, Landlord agrees to indemnify, defend and hold
harmless Tenant and its successors and assigns hereunder in accordance with the
environmental indemnities set forth in Section 10.2 of the Stock Purchase
Agreement for the full term of this Lease.
ARTICLE XI
OPTION TO PURCHASE
11.1. Option. (a) Tenant shall have the right and option
to purchase the Property (the "Purchase Option") at a purchase price equal to
Fair Market Value, disregarding the fact that the Property is encumbered with
this Lease (as hereinafter defined), which Purchase Option shall be exercisable
on the earlier of (i) the last day of the fifth year of the Term hereof, and
(ii) the date on which the environmental condition of the Property is
acceptable to Tenant, and which Purchase Option shall be exercisable at any
time during each year thereafter during the Term hereof on any extended Term,
if applicable. In the event Tenant elects to exercise its Purchase Option,
Tenant shall so notify Landlord of its election on or before the date which is
ninety (90) days prior to the date on which such purchase is to occur (the
"Closing Date"). The terms of the sale by Landlord and the purchase by Tenant
of the Property shall be in accordance with the provisions of Exhibit E
attached hereto and made a part hereof.
(b) Determination of Fair Market Value. "Fair Market Value"
as used herein shall be determined as follows: If Landlord and Tenant shall
fail to agree upon the Fair Market Value within thirty (30) days of the
exercise of Tenant's option to purchase the Property, then
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<PAGE> 18
Landlord and Tenant each shall give notice to the other setting forth the name
and address of an arbitrator designated by the party giving such notice. If
either party shall fail to give notice of such designation within forty-five
(45) days after such thirty (30) day period, then the arbitrator chosen shall
make the determination alone. If two arbitrators shall have been designated,
such two arbitrators shall, within thirty (30) days, make their determination
of Fair Market Value in writing and given notice thereof to each other and to
Landlord and Tenant. Such two arbitrators shall have thirty (30) days after
the receipt of notice of each other's determination to confer with each other
and attempt to reach a determination as to Fair Market Value. If such two
arbitrators shall concur as to the determination of the Fair Market Value, such
concurrence shall be final and binding upon Landlord and Tenant. If the Fair
Market Value of such two arbitrators are within ten percent (10%) of each
other, the Fair Market Value during the option period shall be the average of
the two arbitrators' Fair Market Values. If such two arbitrators shall fail to
concur and their respective Fair Market Value are more than ten percent (10%)
different, then such two arbitrators shall immediately designate a third
arbitrator, who shall satisfy the requirements set forth herein for an
arbitrator and shall also be an American Arbitration Association arbitrator.
If the two arbitrators shall fail to agree upon the designation of such third
arbitrator within ten (10) days of such notice, then either party may apply to
the American Arbitration Association or any successor thereto having
jurisdiction for the designation of such arbitrator. All arbitrators shall be
non-affiliated industrial real estate appraisers, who shall have at least ten
(10) years experience in the business of appraising industrial real estate in
the State of Ohio and who shall have not worked for either party hereto or for
an affiliate or owner of either party hereto for ten (10) years. The third
arbitrator shall conduct such hearings and investigations as he may deem
appropriate, and shall, within thirty (30) days of the designation of the third
arbitrator, choose one of the determinations of the two arbitrators originally
selected by the parties and that choice by the third arbitrator shall be
binding upon Landlord and Tenant. Each party shall pay its own counsel fees
and expenses, if any, in connection with any arbitration under this Section 11
including the expenses and fees of any arbitrator selected by it and the
parties shall share equally all other expenses and fees of any such
arbitration.
ARTICLE XII
OPTION TO EXPAND
12.1. Expansion Option. Tenant shall have the option
to be exercised at any time during the Term to require Landlord to finance the
expansion of the improvements on the Property. Upon exercise of such option an
officer of Tenant and Irving Rubin, Robert Bonczyk, or their successors and
assigns, shall negotiate in good faith and on a reasonable basis for a period
of thirty (30) days, an amendment to this Lease which provides for a lease term
and rental sufficient to allow financing of such expansion. In the event
Landlord and Tenant are unable to agree upon a lease amendment after such
thirty (30) day period, either party shall have the right to submit the matter
to arbitration which arbitration shall be conducted in accordance with the
arbitration provisions of the Stock Purchase Agreement.
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<PAGE> 19
ARTICLE XIII
GENERAL
13.1. Notices. All notices, waivers, demands, requests or
other communications required or permitted hereunder shall, unless otherwise
expressly provided, be in writing and be deemed to have been properly given,
served and received (i) if delivered by messenger, when delivered, (ii) if
mailed, on the third (3rd) business day after deposit in the United States
Mail, certified or registered, postage prepaid, return receipt requested, (iii)
if telexed, telegraphed or telecopied, three (3) hours after being dispatched
by telex, telegram or telecopy, if such third (3rd) hour falls on a business
day within the hours of 8:00 a.m. through 5:00 p.m. of the time in effect at
the place of receipt, or at 8:00 a.m. on the next business day thereafter if
such third (3rd) hour is later than 5:00 p.m., or (iv) if delivered by
reputable overnight express courier, freight prepaid, the next business day
after delivery to such courier; in every case addressed to the party to be
notified as follows:
If to Landlord:
CP Alliance, Inc.
29200 Southfield Road
Suite 209
Southfield, Michigan 48076-1925
Attention: Irving A. Rubin
and to:
Robert Bonczyk
314 Buchner Hill
Northville, Michigan 48167
With a copy to:
Maddin, Hauses, Wartell, Roth, Heller & Pesses, P.C.
28400 Northwestern Highway
Third Floor - Essex Centre
Southfield, Michigan 48034-8004
Attention: Richard Roth
If to Tenant:
United States Can Company
900 Commerce Drive
Oak Brook, Illinois 60521
Attn: Vice President of Materials & Logistics
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<PAGE> 20
With a copy to:
Ross & Hardies
150 North Michigan Avenue
Suite 2500
Chicago, Illinois 60601-7567
(312) 558-1000
Attn: Patrick E. Brady
or at such other address as the party to receive said notice may theretofore
have furnished by written notice as set forth above.
13.2. Brokers. Tenant and Landlord represent and warrant to
each other that they have not dealt with any broker or finder in connection
with this Lease, and to their knowledge, no other broker or finder initiated or
participated in the negotiation of this Lease, submitted or showed the Premises
to Tenant or is entitled to any commission in connection with this Lease.
Tenant and Landlord hereby indemnify and hold each other harmless from and
against any and all claims, damages and expenses based upon or arising out of
any claim by any person with whom it is ultimately determined that Landlord or
Tenant has dealt in violation of the foregoing representations and warranties
of any other real estate broker for commissions resulting from a breach of the
foregoing representations and warranties.
13.3. General.
(a) All rights and remedies of Landlord or Tenant, as the
case may be, under this Lease shall be cumulative and none shall exclude any
other rights and remedies allowed by laws.
(b) All installments of Rental and any other sums which
are unpaid when due and remain unpaid for ten (10) days after notice, shall
bear interest at a rate of ten percent (10%) per annum from the date due until
paid.
(c) Each of the provisions of this Lease shall extend to
and shall, as the case may require, bind or inure to the benefit, not only of
Landlord and of Tenant, but also of their respective heirs, legal
representatives, successors and assigns, subject to Section 7.4. hereof.
(d) All of the representations, agreements and
obligations of Landlord and Tenant are contained herein, and no modification,
waiver or amendment of this Lease or of any of its conditions or provisions
shall be binding upon the Landlord or Tenant unless in writing signed by such
party.
(e) No receipt of money by Landlord from Tenant after the
termination of this Lease or after the service of any notice or after the
commencement of any suit, or after final
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<PAGE> 21
judgment for possession of the Premises shall reinstate, continue or extend the
Term of this Lease or affect any such notice, demand or suit.
(f) The officers of Tenant and Landlord executing this
Lease each represent that he has been duly authorized by his respective Boards
of Directors to execute this Lease in this form and containing the aforesaid
covenants.
(g) The headings or captions of Sections are for
convenience only, are not part of this Lease, and shall not affect the
interpretation of this Lease.
(h) This lease may be executed in any number of
counterparts, all of which when put together shall be deemed an original.
(i) This Lease shall be governed by and construed in
accordance with the laws of the State of Ohio. If any provision or part of
this Lease or the application thereof to any persons or circumstances shall, to
any extent, be invalid, illegal or unenforceable, the remainder of this Lease,
or the application of such provision or part to persons or circumstances other
than those as to which it is held invalid, illegal or unenforceable, shall not
be affected thereby, and each term and provision of this Lease shall be valid
and enforced to the fullest extent permitted by law.
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<PAGE> 22
IN WITNESS WHEREOF, Landlord and Tenant have caused this Agreement for
Building Lease to be executed as of the first day written above.
LANDLORD:
CP ALLIANCE, INC., a Michigan corporation
By: /s/ Irving A. Rubin
---------------------------------------
Name: Irving A. Rubin
Title: Chairman & CEO
TENANT:
UNITED STATES CAN COMPANY, a Delaware
corporation
By: /s/ Timothy W. Stonich
-----------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President
Chief Financial Officer
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<PAGE> 23
EXHIBIT A
LEGAL DESCRIPTION
<PAGE> 24
EXHIBIT B
BASE RENT
Tenant shall pay the monthly installments of Base Rent in advance on
the first day of each calendar month during the Term subject to the following
schedule:
Time Period Monthly Rent
----------- ------------
August 1, 1996 through July 31, 2001 $5,400.00
<PAGE> 25
EXHIBIT C
LANDLORD'S EXISTING MORTGAGE
None.
<PAGE> 26
EXHIBIT D
ENVIRONMENTAL REPORTS
Environmental Report dated July 26, 1996, prepared by Environmental Resources
Management, Inc.
<PAGE> 27
EXHIBIT E
TERMS OF AGREEMENT OF SALE
Upon Tenant's exercise of the Option to Purchase in conformity with
Article XI of the attached Lease, without further action of the Landlord or
Tenant, there shall be a Binding Agreement of Sale for the Property between
Landlord, as Seller, and Tenant, as Buyer, upon the following terms and
conditions:
PROPERTY AND TERMS
1. Seller hereby agrees to sell and convey to Buyer, who hereby
agrees to purchase ALL THAT CERTAIN lot or piece of ground, more particularly
described in Exhibit "A" to the Lease attached hereto and made a part hereof
and known by street address of 12240 Rockhill Road, Alliance, Ohio, together
with all improvements thereon, including ______ (__) building(s) with
approximately 52,000 square feet of interior area, together with all fixtures
owned by Seller and located therein ("Property"), for the Purchase Price set
forth in Article XI of the attached Lease in cash, wire transfer on other
immediately available funds.
TITLE
2. At Closing, title to the Property shall convey by general
warranty deed good and marketable and such as will be insured in the amount of
the purchase price by title insurance company selected by Buyer (the "Title
Company") and reasonably acceptable to the Seller, at Seller's expense, free
and clear of all mortgages, liens, encumbrances and easements, excepting only
those listed on Exhibit 1 of this Agreement.
In the event the Seller is unable to give a good and marketable title
and such as will be insured by the Title Company, subject as aforesaid, Buyer
shall have the option of taking such title as the Seller can give by deducting
from the Purchase Price liens of a definite or ascertainable amount or of
terminating this Agreement of Sale upon written notice to Seller; and in the
latter event there shall be no further liability or obligation on either of the
parties hereto and this Agreement of Sale shall become null and void.
Within thirty (30) days of exercise of this option, Purchaser shall
obtain a then current survey of the Property certified to Buyer, the Title
Company and Buyer's lender, as having been made in accordance with the Minimum
Land Survey Standard Detail Requirements for Land Title Surveys jointly
established and adopted by ALTA and ACSM (the "Survey"). The Survey shall show
that the Property is not in a flood plain. Within thirty (30) days following
receipt of the Survey, Buyer shall notify Seller of any discrepancies or
conflicts in boundary lines, shortages in area, and encroachments as may be
shown by the Survey. Seller shall have twenty-five (25) days following receipt
of Buyer's notice to advise Buyer if Seller can remove or clear the discrepancy
or conflict. If Seller is unable to remove or clear such discrepancies in
title, Buyer shall have the option of either taking such title as Seller can
give without abatement of
<PAGE> 28
price or of terminating this Agreement of Sale upon written notice to Seller.
In the latter event, there shall be no further liability or obligation on
either of the parties hereto and this Agreement of Sale shall become null and
void. Notwithstanding anything to the contrary contained herein, Seller shall
not further encumber title to the Property without Buyer's consent.
Seller shall provide Buyer with a title insurance policy at closing
insuring Buyer's interest as the owner of the Property from a title insurance
company designated by Buyer (the "Title Insurer") in the amount of the Purchase
Price with extended coverage over the general exceptions, a 3.1 zoning
endorsement, amended to include parking and approving Buyer's current use of
the Property and such other endorsements reasonably requested by Buyer. The
cost of the extended coverage shall be paid for by Buyer. Within fifteen (15)
days of the exercise of the option to purchase, Buyer shall order a title
commitment. At closing, Purchaser shall deduct from the proceeds of sale the
cost for all survey, title charges and title insurance.
CONDITION OF PROPERTY
3. Except for the provisions of Section 7, Buyer shall accept the
Property in their "as-is" condition on the date of Closing, provided that if
Buyer determines at any time prior to Closing that the Property or the lands in
the vicinity of the Property are not free of toxic and hazardous substances and
materials, Buyer shall have the option of terminating this Agreement upon
notice to Seller.
ASSESSMENT
4. Excepting notices previously delivered by Seller to Buyer
during the term of the Lease, Seller covenants and represents as of the
Exercise Date that no notice by any governmental agency or body regarding the
Property, including, without limitation, notices pertaining to Environmental
Laws and other governmental statutes, rules, regulations or directives
affecting the Property, have been served upon Seller or anyone on the Seller's
behalf.
POSSESSION
5. Possession is to be delivered and physical possession at day
and time of Closing.
TAXES AND ADJUSTMENTS
6. All apportionable debits and credits, including assessments,
taxes (subject to Buyer's obligation to pay taxes pursuant to the Lease) and
sewer rent (if any) for the current term shall be calculated as levied and
pro-rated as of the date of Closing. All real estate transfer taxes imposed by
a governmental authority shall be paid for by Seller.
ENVIRONMENTAL INDEMNITY
-2-
<PAGE> 29
7. Except as described in the environmental reports all delivered
by Seller to Buyer and referred to on Exhibit D to the Lease and made a part
thereof, prior to the Commencement Date (as defined in the Lease), (i) no
Hazardous Materials have been located on the Property or have been released in
the environment, or discharged, placed or disposed of at, on or under the
Property; (ii) no underground storage tanks have been located on the Property;
(iii) the Property has never been used as a dump for waste material; and (iv)
the Property and its prior uses comply with and at all times have complied
with, all applicable governmental laws, regulations or requirements relating to
environmental and occupational, health and safety matters and Hazardous
Materials.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any
local governmental authority, the State of Ohio, or the United States
Government, including, but not limited to, any material or substance
which is (i) defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," or "restricted
hazardous waste" under any provision of Ohio law, (ii) petroleum,
(iii) asbestos, (iv) polychlorinated biphenyl, (v) radioactive
material, (vi) designated as a "hazardous substance" pursuant to
Section 311 of the Clean Water Act, 33 U.S.C. Section 1251 et seq. (33
U.S.C. Section 1317), (vii) defined as a "hazardous waste" pursuant
to Section 1004 of the Resource Conservation and Recovery Act 42
U.S.C. Section 6901 et seq. (42 U.S.C. Section 6903), or (viii)
defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act,
42 U.S.C. Section 9601 et seq. (42 U.S.C Section 9601). The term
"Environmental Laws" shall mean all statutes specifically described in
the foregoing sentence and all federal, state and local environmental
health and safety statutes, ordinances, codes, rules, regulations,
orders and decrees regulating, relating to or imposing liability or
standards concerning or in connection with Hazardous Materials.
Additionally, but not in lieu of Seller's affirmative
undertakings set forth herein, Seller agrees to indemnity, defend and hold
harmless Buyer and its grantees in accordance with the environmental
indemnities set forth in Section 10.2 of the Stock Purchase Agreement. The
indemnity and the obligation to defend and hold Buyer harmless set forth herein
shall survive for a period of four years from the closing date of the Stock
Purchase Agreement.
RISK OF LOSS
8. Any loss or damage to the Property caused by fire, or loss
commonly covered by the extended coverage endorsement of a reputable insurance
companies between the Exercise Date and the date of Closing shall not in any
way void or impair the conditions and obligations thereof, except that should
the Property suffer loss or damage due to fire or other casualties, not
repaired or replaced prior to Closing, Buyer shall have the option of
terminating this Agreement upon notice to Seller; provided, however, that
Seller shall have the right to reconstruct improvements so long as such
reconstruction is completed within one hundred eighty (180) days of the date of
casualty. In such event, there shall be no further liability or obligation on
either of the parties hereto and this Agreement shall become null and void.
-3-
<PAGE> 30
WHOLE AGREEMENT
9. This Agreement contains the whole Agreement between the Seller
and the Buyer and there are no other terms, obligations, covenants,
representations, statements or conditions, oral or otherwise of any kind
whatsoever concerning this sale. Any changes or additions to this Agreement
must be made in writing and executed by the parties hereto.
ASSIGNMENT
10. This Agreement shall be binding upon the respective successors
and, to the extent assignable on the assigns of the parties hereto. This
Agreement is to be construed and interpreted in accordance with the laws of the
State of Ohio.
BROKERS
11. Buyer and Seller each represent and warrant to the other that
the transactions contemplated hereby have been carried out by Buyer directly
with Seller in such manner as not to give rise to any valid claims against any
of the parties hereto for a brokerage commission, finders fee, or other like
payment. Buyer and Seller each shall indemnify and hold the other harmless
from any breach of the above stated representation and warranty.
TIME OF ESSENCE
12. The date for Closing and all other dates referred to for the
performance of any of the obligations of this Agreement are hereby agreed to be
of the essence of this Agreement.
DESCRIPTIVE HEADING
13. The descriptive headings used here are for convenience only
and they are not intended to indicate the matter in the sections which follow
them. Accordingly, they shall have no effect whatsoever in determining the
rights or obligations of the parties.
-4-
<PAGE> 31
EXHIBIT 1
LIST OF ENCUMBRANCE
Real Estate taxes not yet due and payable.
<PAGE> 32
AGREEMENT
FOR
BUILDING LEASE
Dated as of August 1, 1996
By and Between
CP ALLIANCE, INC.,
a Delaware corporation
Landlord,
and
UNITED STATES CAN COMPANY,
a Delaware corporation
Tenant
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE NO. PAGE NO.
- - ---------- -------
<S> <C> <C>
ARTICLE I RENTAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II TENANT'S ACCEPTANCE AND USE OF PROPERTY . . . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III LANDLORD'S RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE IV DAMAGE - CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE V LANDLORD'S AND TENANT'S REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ARTICLE VI WAIVER OF CLAIMS AND INDEMNIFICATION AND RIGHTS OF RECOVERY ON INSURANCE . . . . . . . 10
ARTICLE VII TITLE MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
</TABLE>
<PAGE> 33
<TABLE>
<S> <C>
ARTICLE VIII TRANSFER OF LANDLORD'S INTEREST IN BUILDING AND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE IX TENANT'S OPTION TO EXTEND LEASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE X ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE XI OPTION TO PURCHASE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE XII OPTION TO EXPAND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE XIII GENERAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
SCHEDULE OF EXHIBITS
Exhibit A Legal Description
Exhibit B Base Rent
Exhibit C Landlord's Existing Mortgage
Exhibit D Environmental Report
Exhibit E Terms of Agreement of Sale
</TABLE>
<PAGE> 1
EXHIBIT 99.1
U.S. CAN CORPORATION
10-1/8% Senior Subordinated Notes Due October 15, 2006
PURCHASE AGREEMENT
New York, New York
October 10, 1996
SALOMON BROTHERS INC
CS FIRST BOSTON CORPORATION
BA SECURITIES, INC.
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Dear Sirs:
U.S. Can Corporation, a Delaware corporation (the "Company"),
proposes to issue and sell to you (the "Initial Purchasers") $275,000,000
principal amount of its 10-1/8% Senior Subordinated Notes Due October 15, 2006
(the "Notes") to be guaranteed (the "Guaranty") on a senior subordinated and
unsecured basis by United States Can Company, a Delaware corporation and the
sole direct and only United States subsidiary of the Company (the
"Guarantor"), and to be issued under an indenture (the "Indenture") to be dated
as of October 17, 1996, between the Company, the Guarantor and Harris Trust and
Savings Bank, as trustee (the "Trustee"). References herein to the Notes shall
be deemed to also include the Guaranty unless the context otherwise requires.
The sale of the Notes to you will be made without registration
of the Notes under the Securities Act of 1933, as amended (the "Act"), in
reliance upon the exemption from the registration requirements of the Act
provided by Section 4(2) thereof. You have advised the Company that you will
make an offering of the Notes purchased by you hereunder in accordance with
Section 4 hereof on the terms set forth in the Final Memorandum (as defined
below), as soon as you deem advisable after this Agreement has been executed
and delivered.
In connection with the sale of the Notes, the Company has
prepared a preliminary offering memorandum, dated September 24, 1996 (the
"Preliminary Memorandum"), and a final offering memorandum, dated October 10,
1996 (the "Final Memorandum"). Each of the Preliminary Memorandum and the
Final Memorandum sets forth certain information concerning the Company and the
Notes. The Company hereby confirms that it has authorized the use of the
Preliminary Memorandum and the Final Memorandum in connection with the offering
and resale by the Initial Purchasers of the Notes. Any references herein to
the Preliminary Memorandum or the Final Memorandum shall be deemed to include
all exhibits thereto and all documents (if any) incorporated by reference and
filed by the Company or the Guarantor pursuant to the Securities Exchange Act
of 1934, as amended (the "Exchange Act"), on or before the execution and
delivery of this Agreement by each of the parties hereto (the "Execution
Time"); and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Final Memorandum shall be
<PAGE> 2
deemed to refer to and include the filing of any document under the Exchange
Act after the Execution Time which is incorporated by reference therein (if
any).
The Initial Purchasers and their direct and indirect
transferees of the Notes will be entitled to the benefits of the Registration
Rights Agreement, substantially in the form attached hereto as Exhibit C (the
"Registration Rights Agreement"), pursuant to which the Company and the
Guarantor have agreed, among other things, to file a registration statement
(the "Registration Statement") with the Securities and Exchange Commission (the
"Commission") registering the Notes under the Act. In connection with the sale
of the Notes, the Company, the Trustee and The First National Bank of Chicago
will enter into the Escrow Agreement prior to the Closing Date pursuant to
which the funds necessary to redeem the Guarantor's 13 1/2% Senior Subordinated
Notes due 2002 (the "13 1/2% Notes") will be escrowed to provide for such
redemption prior to January 22, 1997.
1. Representations and Warranties. Each of the Company
and the Guarantor, jointly and severally, represents and warrants to, and
agrees with, the Initial Purchasers as set forth below in this Section 1.
(a) Each of the Preliminary Memorandum and the Final
Memorandum as of its date did not, and the Final Memorandum (as the
same may have been amended or supplemented) as of the Closing Date (as
defined in Section 3 hereof) will not, contain any untrue statement of
a material fact or omit to state any material fact necessary to make
the statements therein, in the light of the circumstances under which
they were made, not misleading;
provided, however, that the Company and
the Guarantor make no representations or warranties as to the
information contained in or omitted from the Preliminary Memorandum or
the Final Memorandum in reliance upon and in conformity with
information furnished in writing to the Company or the Guarantor by
the Initial Purchasers specifically for inclusion in the Preliminary
Memorandum or the Final Memorandum (and any amendment or supplement
thereof or thereto). No forward looking statement within the meaning
of Section 27A of the Act and Section 21E of the Exchange Act
contained in the Final Memorandum has been made or reaffirmed without
a reasonable basis or has been disclosed other than in good faith.
(b) The audited financial statements of the Company and
its subsidiaries included in the Final Memorandum present fairly in
all material respects the financial position, results of operations
and cash flows of the Company and its subsidiaries at the dates and
for the periods to which they relate. The audited financial
statements of the CPI Group (as hereinafter defined) included in the
Final Memorandum present fairly in all material respects the financial
position, results of operations and cash flows of the CPI Group at the
dates and for the periods to which they relate. The audited financial
statements of USC Europe (as defined in the Final Memorandum) included
in the Final Memorandum present fairly in all material respects the
financial position and results of operations of USC Europe at the
dates and for the periods to which they relate. All of such financial
statements have been prepared in conformity with generally accepted
accounting principles in accordance with the Act and the rules and
regulations promulgated thereunder, except as otherwise expressly
indicated in the Final Memorandum. The unaudited financial statements
of the Company, the CPI Group and USC Europe included in the Final
Memorandum
-2-
<PAGE> 3
fairly present the financial position of the Company, the CPI Group
and USC Europe, respectively, as of the dates indicated and the
results of operation, changes in cash flows and stockholders' equity
of the Company, the CPI Group and, except for changes in cash flows,
USC Europe, respectively, for the portions of the respective fiscal
years ending on such dates, in each case subject to year-end audit
adjustments. The summary and selected financial data in the Final
Memorandum present fairly in all material respects the information
shown therein and the summary and selected financial data have been
prepared and compiled on a basis consistent with the audited financial
statements included therein, except as otherwise expressly stated
therein. Arthur Andersen LLP, Befec-Price Waterhouse and Plante &
Moran LLP are independent public accounting firms within the meaning
of the Act and the rules and regulations promulgated thereunder.
(c) The Company and the Guarantor have not taken and will
not take, directly or indirectly, any action prohibited by Rule 10b-6
under the Exchange Act in connection with the offering of the Notes.
(d) None of the Company, the Guarantor or any affiliate
(as defined in Rule 501(b) of Regulation D under the Act ("Regulation
D")) (other than Salomon Brothers Inc, as to which the Company and the
Guarantor make no representation or warranty as to the matters covered
by this Section 1(d)) of the Company or the Guarantor has directly, or
through any agent, (i) sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any security (as defined in the
Act) which is or will be integrated with the sale of the Notes in a
manner that would require the registration of the Notes under the Act
or (ii) engaged in any form of general solicitation or general
advertising (within the meaning of Regulation D) in connection with
the offering of the Notes.
(e) It is not necessary in connection with the offer,
sale and delivery of the Notes in the manner contemplated by this
Agreement and the Final Memorandum to register the Notes under the Act
or to qualify the Indenture under the Trust Indenture Act of 1939, as
amended (the "TIA").
(f) None of the Company, the Guarantor, their affiliates
(other than Salomon Brothers Inc, as to which the Company and the
Guarantor make no representation or warranty as to the matters covered
by this Section 1(f)) or any person acting on behalf of the Company,
the Guarantor or such affiliates has engaged in any directed selling
efforts (as that term is defined in Regulation S under the Act
("Regulation S")) with respect to the Notes, and the Company, the
Guarantor and such affiliates and any person acting on their behalf
have complied with the offering restrictions requirement of Regulation
S.
(g) The Company is subject to the reporting requirements
of Section 13 or Section 15(d) of the Exchange Act. The Company meets
the requirements for the use of Form S-3 under the Act in connection
with the Registration Rights Agreement.
(h) The Notes satisfy the requirements set forth in Rule
144A(d)(3) under the Act. The Company has been advised by the
National Association of Securities Dealers, Inc. ("NASD") Private
Offerings, Resales and Trading through Automatic
-3-
<PAGE> 4
Linkages ("PORTAL") Market that the Notes have or will be designated
PORTAL eligible securities in accordance with the rules and
regulations of the NASD.
(i) Each of the Company and the Guarantor has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Final
Memorandum, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business. Each of the
Guarantor's subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and conduct its
business, and is duly qualified to do business as a foreign
corporation and is in good standing under the laws of each
jurisdiction which requires such qualification wherein it owns or
leases material properties or conducts material business. Exhibit E
is a complete list of all of the Company's and the Guarantor's direct
or indirect subsidiaries, (collectively, the "Subsidiaries") as of the
Execution Time and as of the Closing Date, including each Subsidiary's
jurisdiction of incorporation.
(j) All of the outstanding shares of capital stock of
each of the Company and the Guarantor have been duly and validly
authorized and issued and are fully paid and nonassessable, and all
outstanding shares of capital stock of the Company's subsidiaries are
owned by the Company, directly or indirectly, free and clear of any
perfected security interest and any other security interests, claims,
liens or encumbrances, other then the pledge by the Company of 65% of
the common stock of U.S.C. Europe N.V. outstanding as of the date
hereof to Bank of America Illinois for the benefit of the Senior
Lenders (as defined in the Final Memorandum).
(k) The Company's authorized equity capitalization is as
set forth in the Final Memorandum; and the Notes, the Exchange Notes
(as defined in the Registration Rights Agreement), the Indenture, the
Registration Rights Agreement and the Senior Credit Agreement (as
defined in the Final Memorandum) conform in all material respects to
the descriptions thereof contained in the Final Memorandum.
(l) The Company and the Guarantor have full corporate
power and authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly
authorized, executed and delivered by each of the Company and the
Guarantor and (assuming the due authorization, execution and delivery
thereof by the Initial Purchasers) constitutes a valid and binding
obligation of each of the Company and the Guarantor enforceable in
accordance with its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and
except as to those provisions relating to indemnity or contribution
for liabilities arising under federal and state securities laws.
(m) The Company and the Guarantor have full corporate
power and authority to enter into the Indenture and perform the
transactions contemplated thereby. The Indenture meets the
requirements for qualification under the TIA. The Indenture has been
duly authorized by each of the Company the Guarantor and, when
-4-
<PAGE> 5
executed and delivered by each of the Company and the Guarantor
(assuming the due authorization, execution and delivery by the
Trustee) will constitute a valid and binding obligation of each of the
Company and the Guarantor, enforceable in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for liabilities
arising under federal and state securities laws.
(n) The Notes are in the form contemplated by the
Indenture. Each of the Company and the Guarantor has full corporate
power and authority to execute, deliver and perform each of its
obligations under the Notes and the Exchange Notes, including the
Guaranty. The Notes and the Exchange Notes have each been duly and
validly authorized by each of the Company and the Guarantor and, when
executed by each of the Company and the Guarantor and authenticated by
the Trustee in accordance with the provisions of the Indenture and, in
the case of the Notes, when delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will
constitute valid and binding obligations of each of the Company and
the Guarantor, entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as enforceability
may be limited by general equitable principles, bankruptcy,
insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and except as to those provisions relating
to indemnity or contribution for liabilities arising under federal and
state securities laws.
(o) The Company and the Guarantor have full corporate
power and authority to enter into the Registration Rights Agreement
and perform the transactions contemplated thereby. The Registration
Rights Agreement has been duly authorized by each of the Company the
Guarantor and, when executed and delivered by each of the Company and
the Guarantor (assuming the due authorization, execution and delivery
thereof by the Initial Purchasers) will constitute a valid and binding
obligation of each of the Company and the Guarantor enforceable in
accordance with its terms, except as enforceability may be limited by
general equitable principles, bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally and
except as to those provisions relating to indemnity or contribution
for liabilities arising under federal and state securities laws.
(p) The Company has full corporate power and authority to
enter into the Escrow Agreement and perform the transactions
contemplated thereby. The Escrow Agreement has been duly authorized
by the Company and, when executed and delivered by each of the Company
(assuming the due authorization, execution and delivery thereof by the
Trustee and the Escrow Agent) will constitute a valid and binding
obligation of the Company enforceable in accordance with its terms,
except as enforceability may be limited by general equitable
principles, bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally and except as to
those provisions relating to indemnity or contribution for liabilities
arising under federal and state securities laws.
(q) The issuance and sale of the Notes, the execution,
delivery and performance of this Agreement, the Indenture and the
Registration Rights Agreement by each of the Company and the Guarantor
and the consummation of the transactions
-5-
<PAGE> 6
contemplated hereby and thereby (including, without limitation, the
Required Redemption (as defined in the Indenture)) (i) will not
violate any provisions of the certificate of incorporation, bylaws or
other organizational documents of the Company or any of its
subsidiaries and (ii) will not conflict with, result in a breach or
violation of, or constitute, either by itself or upon notice or the
passage of time or both, a default under (A) any indenture, mortgage,
deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate, contract or other agreement or
instrument to which any of them or their subsidiaries is a party or to
which any of them or their respective properties or assets (or those
of their subsidiaries) is subject (each, a "Contract") or (B) any
statute or any authorization, judgment, decree, order, rule or
regulation of any court or any regulatory body, administrative agency
or other governmental body applicable to the Company or any of its
subsidiaries or any of their respective properties except, in the case
of clause (ii) above, any such conflict, breach, violation or default
that would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), properties,
business, operations, assets, results of operations or prospects of
the Company or its Subsidiaries, taken as a whole (a "Material Adverse
Effect").
(r) No consent, approval, authorization or other order of
any court, regulatory body, administrative agency, other governmental
body or any third party which has not already been obtained is
required for the execution and delivery of this Agreement or the
consummation of the transactions contemplated by this Agreement,
except for compliance with state securities or "Blue Sky" laws in
connection with the purchase and resale of the Notes by the Initial
Purchasers. Neither the Company nor the Guarantor is (i) in violation
of its certificate of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute,
judgment, decree, order, rule or regulation applicable to any of them
or any of their respective properties or assets, except for any such
breach or violation which would not, individually or in the aggregate,
have a Material Adverse Effect, or (iii) in breach of or default under
(nor has any event occurred which, with notice or passage of time or
both, would constitute a default under) or in violation of any of the
terms or provisions of any Contract, except for any such breach,
default, violation or event which would not, individually or in the
aggregate, have a Material Adverse Effect or result in the creation of
any mortgage, lien, charge or encumbrance upon any of the properties
or assets of the Company or the Guarantor in any manner which would
reasonably be expected to have a Material Adverse Effect. There is no
such term or provision which affects or in the future is reasonably
likely to (so far as the Company or the Guarantor can now foresee)
affect the Company or the Guarantor in any manner which is reasonably
likely to have a Material Adverse Effect.
(s) Except as disclosed in the Final Memorandum, there
are no legal or governmental actions, suits or proceedings pending or,
to the best of the Company's knowledge, threatened to which the
Company or any of its subsidiaries is or is threatened to be made a
party or of which property owned or leased by the Company or any of
its subsidiaries is or is threatened to be made the subject, which
actions, suits or proceedings could, individually or in the aggregate,
prevent or adversely affect the transactions contemplated by this
Agreement or have a Material Adverse Effect or which seek to restrain,
enjoin, prevent the consummation of or otherwise challenge the
issuance or sale of the Notes to be sold hereunder or the consummation
-6-
<PAGE> 7
of the other transactions described in the Final Memorandum; and no
labor disturbance by the employees of the Company or any of its
subsidiaries exists or is imminent which could have a Material Adverse
Effect. Except as disclosed in the Final Memorandum, neither the
Company nor any of its Subsidiaries is a party or subject to the
provisions of any material injunction, judgment, decree or order of
any court, regulatory body, administrative agency or other
governmental body. The Company and the Guarantor have no reason to
believe that any governmental agencies are investigating the Company,
the Guarantor, any Subsidiary or any related parties, other than as
described in the Final Memorandum or in ordinary course administrative
reviews or in any ordinary course review of the transactions
contemplated hereby.
(t) Except as disclosed in the Final Memorandum, the
Company and its Subsidiaries have sufficient trademarks, trade names,
patent rights, copyrights, licenses, approvals and governmental
authorizations to conduct their businesses as now conducted without
any known conflict with the rights of others; the Company's and its
Subsidiaries' controlling persons, key employees and stockholders have
all necessary permits, licenses and other authorizations required by
applicable law for the Company and its Subsidiaries to conduct their
businesses as now conducted; each of the Company and the Guarantor is
in compliance in all material respects with all material franchises,
grants, authorizations, licenses, permits, easements, consents,
certificates and orders of any governmental or regulatory body,
domestic or foreign, required for the conduct of its business; and the
expiration of any trademarks, trade names, patent rights, copyrights,
licenses, approvals or governmental authorizations would not have a
Material Adverse Effect.
(u) The Company and its subsidiaries are conducting
business in compliance with all applicable laws, rules and regulations
of the jurisdictions in which they are conducting business, except
where the failure to be so in compliance would not have a Material
Adverse Effect.
(v) In connection with the Company's request, as set
forth in a letter (the "Waiver Request") dated August 27, 1996 from
John R. McGowan, Vice President and Controller of United States Can
Company, to Craig Olinger, Associate Chief Accountant, Division of
Corporate Finance, Securities and Exchange Commission (the
"Commission"), that the Commission waive compliance by the Company
with Rules 3-02 and 3-04 of Regulation S-X with respect to reporting
certain financial information specified in the Waiver Request relating
to USC Europe and the acquisition thereof by the Company, (i) the
Company has received a response from the Commission that is responsive
in all respects to the matters set forth in the Waiver Request and is
set forth as Exhibit F hereto (the "Commission Response"), (ii) the
Commission Response is in full force and effect as of the date hereof,
(iii) neither the Company nor the Guarantor has taken or failed to
take any action, nor is the Company or the Guarantor aware of any
fact, that could result in such Commission Response being revoked by
the Commission or otherwise becoming ineffective in whole or in part,
(iv) any related disclosure in the Preliminary Memorandum and the
Final Memorandum would comply in all respects with the conditions and
requirements set forth in the Commission Response if such disclosure
were included in a prospectus filed under the Act or a report filed
under the Exchange Act and (v) the consolidated financial statements
of the Company, the historical financial statements
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<PAGE> 8
of the CPI Group and USC Europe and any related disclosure included in
reports or other documents filed or to be filed with the Commission
otherwise comply, or will otherwise comply, with the applicable
requirements of Regulation S-X.
(w) Neither the Company nor any Subsidiary has sustained
since December 31, 1995 any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Final Memorandum; and, since the respective dates
as of which information is given in the Final Memorandum, there has
not been and there is not reasonably expected to be any change in the
capital stock or long-term debt of the Company or any Material Adverse
Effect, otherwise than as set forth or contemplated in the Final
Memorandum.
(x) All foreign and federal, state and city tax returns
and tax reports of each of the Company and the Guarantor required to
be filed have been duly filed, and all taxes and all material
assessments, fees and other governmental charges upon each of the
Company and the Guarantor and upon their respective properties,
assets, income and franchises which are due thereunder have been paid,
other than those presently payable without penalty or interest, or
which the Company or the Guarantor, as the case may be, is contesting
in good faith and as to which adequate reserves have been made. The
federal income tax liability of the Company has been finally
determined and satisfied for all fiscal periods through the fiscal
year ended December 31, 1992. Adequate charges, accruals and reserves
have been made in the applicable financial statements referred to in
Section 1(b) hereof in respect of federal income tax for all periods
subsequent to December 31, 1992 and ending on or before June 30, 1996,
and adequate charges, accruals and reserves have been made on the
books of the Company in respect of all such taxes. To the best of
each of the Company's and the Guarantor's knowledge, no material
unpaid assessment for additional federal or foreign income tax is due
from the Company or the Guarantor for any fiscal period, except for
assessments which the Company or the Guarantor is contesting in good
faith and as to which adequate reserves have been made.
(y) Each of the Company and the Guarantor is not in
default with respect to any short-term or long-term borrowing or any
funded debt or any instrument or agreement relating thereto, or in
arrears in the payment of any dividends or other distributions due in
respect of any securities. Complete and correct copies of all
instruments and agreements relating to any short-term or long-term
borrowings, mortgages, funded debt or other securities of the Company,
the Guarantor and the Subsidiaries have been provided to Wachtell,
Lipton, Rosen & Katz, special counsel for the Initial Purchasers.
(z) Each of the Company and the Guarantor has good and
marketable title in fee simple to all real property and good and
marketable title to all personal property and assets owned by it on
the date hereof, in each case subject to no material mortgage or
material encumbrance except as set forth on Schedule 1(z) hereto or as
do not materially affect the value of such property and do not
interfere with the use made and proposed to be made of such property
by the Company or the Guarantor, as the case may be. As to any
property held under lease by the Company or the Guarantor, the Company
or the Guarantor, as the case may be, enjoys peaceful
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<PAGE> 9
undisturbed possession under all such leases which are material to the
Company or the Guarantor, as the case may be; all such leases are
valid, subsisting and enforceable, with no material default on the
part of the lessee existing thereunder; and none of such leases
contains any unusual or burdensome provision which materially
adversely affects or in the future may (so far as the Company or the
Guarantor can now foresee) affect the operations of the Company or the
Guarantor in any manner which is reasonably likely to have a Material
Adverse Effect.
(aa) To the best of the Company's and the Guarantor's
knowledge, the Company and the Guarantor have not engaged in any
transaction in connection with which the Company or the Guarantor
could be subject to either a civil penalty assessed pursuant to
Section 502(i) or 501(l) of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA") or a tax imposed by Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code"). No
defined benefit pension plan of the Company or the Guarantor which is
subject to ERISA (a "Plan") has been terminated since June 30, 1996.
No material liability to the Pension Benefit Guaranty Corporation has
been or is expected by the Company or the Guarantor to be incurred
with respect to any Plan by the Company or the Guarantor. There has
been no "reportable event" (within the meaning of Section 4043(b) of
ERISA or the regulations thereunder) with respect to any Plan, or any
event or condition, which presents a material risk of termination of
any Plan by the Pension Benefit Guaranty Corporation. Full payment
has been made of all amounts which the Company or the Guarantor is
required, under the terms of each pension plan of the Company or the
Guarantor which is subject to ERISA (an "Employee Plan"), to have paid
as contributions to such Employee Plan as of the last day of the most
recent fiscal year of such Employee Plan ended prior to the date
hereof, and no accumulated funding deficiency (as defined in Section
302 of ERISA and Section 412 of the Code), whether or not waived,
exists with respect to any Employee Plan. As of January 1, 1996, the
present value of accrued benefits under the Pension Plan for
Hourly-Rated Employees of the Guarantor did not exceed the current
value of all of the assets of such Plan allocable to such accrued
benefits by more than $10 million. For purposes of the representation
in the preceding sentence, the terms "present value," "current value"
and "accrued benefit" have the meanings specified in Section 3 of
ERISA, and the determination of such amounts is pursuant to
assumptions used by the enrolled actuaries for such Plan in the
actuarial report prepared for the most recent Plan year. There has
been no withdrawal liability or liabilities assessed against the
Company or the Guarantor with respect to any multi-employer plan to
which the Company or the Guarantor contributes. The Company and the
Guarantor have not engaged in any material violations of the
requirements of Section 4980B of the Code or of Part 6 of Title I of
ERISA which have resulted in or could result in liabilities or the
imposition of penalties or sanctions under said Sections.
(bb) There are no legal or governmental proceedings
affecting the Company or any of its subsidiaries or any of their
respective properties or assets which would be required to be
described in a prospectus pursuant to the Act and the rules and
regulations promulgated thereunder that are not described in the Final
Memorandum, nor are there any material Contracts or other documents
which would be required to be described in a prospectus pursuant to
the Act that are not described in the Final Memorandum.
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<PAGE> 10
(cc) Except as disclosed in the Final Memorandum and
except as would not individually or in the aggregate have a Material
Adverse Effect, (A) the Company and the Subsidiaries are each in
compliance with all applicable Environmental Laws, (B) the Company and
the Subsidiaries have all permits, authorizations and approvals
required under any applicable Environmental Laws and are each in
compliance with their requirements, (C) there are no pending or
threatened Environmental Claims against the Company or any Subsidiary,
and (D) with respect to the property or operations of the Company or
the Subsidiaries, there are no circumstances that could reasonably be
anticipated to form the basis of an Environmental Claim against the
Company or the Subsidiaries.
For the purposes of this Agreement, the following
terms shall have the following meanings: "Environmental Law" means any
United States (or other applicable jurisdiction's) federal, state,
local or municipal statute, law, rule, regulation, ordinance, code,
policy or rule of common law and any judicial or administrative
interpretation thereof including any judicial or administrative order,
consent decree or judgment, relating to the environment, health,
safety or any chemical, material or substance, exposure to which is
prohibited, limited or regulated by any governmental authority.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigations or proceedings
relating in any way to any Environmental Law.
(dd) To the best knowledge of the Company and the
Guarantor, none of the Company, the Guarantor, or any Subsidiary, or
any employee or agent of the Company or the Guarantor, or any
Subsidiary, has made any payment from funds of the Company or the
Guarantor, or any Subsidiary, or received or retained any funds in
violation of any rule or regulations, which payment, receipt or
retention of funds would be required to be disclosed in a prospectus
pursuant to the Act and the rules and regulations promulgated
thereunder, or has individually or in the aggregate had a Material
Adverse Effect.
(ee) No holders of securities of the Company or the
Guarantor have preemptive rights, rights of first refusal triggered by
the transactions contemplated hereby or rights to the registration of
such securities under the Registration Rights Agreement or pursuant to
any of the obligations of the Company or the Guarantor thereunder.
(ff) None of the transactions contemplated by this
Agreement, the Registration Rights Agreement or the Indenture
(including, without limitation, the use of the proceeds from the sale
of the Notes) will violate or result in a violation of Section 7 of
the Exchange Act, or any rule or regulation promulgated thereunder,
including, without limitation, Regulations G, T, U and X of the Board
of Governors of the Federal Reserve System.
(gg) None of the Company or its Subsidiaries is, or upon
the closing of the offering contemplated by this Agreement will be, an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended, nor are any of the foregoing subject to
regulation under the Interstate Commerce Act or any federal
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<PAGE> 11
or state statute or regulation limiting its ability to incur
indebtedness for borrowed money.
(hh) To the best knowledge of the Company, except as
disclosed in the Final Memorandum, no executive officer or key
employee of the Company or the Guarantor intends to resign or to
retire.
(ii) To the best knowledge of the Company, except as
disclosed in the Final Memorandum, no group of salaried or hourly
employees of the Company or any Subsidiary is currently participating
in a work stoppage or is threatening to participate in a work stoppage
at any of the Company's or any Subsidiary's facilities.
(jj) Except as disclosed in the Final Memorandum, there
are no contracts, agreements or understandings between the Company or
the Guarantor and any person providing for a brokerage commission,
finder's fee or other like payment to such person from the Company or
the Guarantor in connection with the offering of the Notes.
2. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Initial Purchaser, and each Initial
Purchaser agrees, severally and not jointly, to purchase from the Company, at a
purchase price of 97.5% of the principal amount thereof, plus accrued interest,
if any, from October 17, 1996, to the Closing Date, the principal amount of the
Notes set forth opposite such Initial Purchaser's name in Schedule I hereto.
3. Delivery and Payment. Delivery of and payment for
the Notes shall be made at 12:00 PM, New York City time, on October 17, 1996,
or such later date as the Initial Purchasers designate, which date and time may
be postponed by agreement between the Initial Purchasers and the Company (such
date and time of delivery and payment for the Notes being herein called the
"Closing Date"). Delivery of the Notes shall be made to the Initial Purchasers
against payment by the Initial Purchasers of the purchase price thereof by wire
transfer in federal (same-day) funds, provided that the Company shall reimburse
the Initial Purchasers for the difference between making such payment in
same-day and next-day funds. Delivery of the Notes shall be made at such
location as the Initial Purchasers shall reasonably designate at least one
business day in advance of the Closing Date and payment for the securities
shall be made at the offices of Wachtell, Lipton, Rosen & Katz, 51 West 52nd
Street, New York, New York. Certificates for the Notes shall be registered in
such names and in such denominations as the Initial Purchasers may request not
less than one full business day in advance of the Closing Date.
The Company agrees to have the Notes available for inspection,
checking and packaging by the Initial Purchasers in New York, New York, not
later than 1:00 PM on the business day prior to the Closing Date.
4. Offering of Notes; Restrictions on Transfer. A.
Each Initial Purchaser, as to itself and not as to any other Initial Purchaser,
represents and warrants to and agrees with the Company that (i) it has not
solicited and will not solicit any offer to buy or offer to sell the Notes by
means of any form of general solicitation or general advertising (within
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<PAGE> 12
the meaning of Regulation D) or in any manner involving a public offering
within the meaning of Section 4(2) of the Act or, with respect to Notes sold in
reliance on Regulation S, by means of any directed selling efforts, (ii) it has
solicited and will solicit offers to buy the Notes only from, and have offered
and will offer, sell or deliver the Notes only to, (A) persons who it
reasonably believes to be qualified institutional buyers (as defined in Rule
144A under the Act) or, if any such person is buying for one or more
institutional accounts for which such person is acting as fiduciary or agent,
only when such person has represented to it that each such account is a
qualified institutional buyer, to whom notice has been given that such sale or
delivery is being made in reliance on Rule 144A, and, in each case, in
transactions under Rule 144A, (B) persons who it reasonably believes to be
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D), and who provide to it a letter in the form of Exhibit A
hereto or (C) persons to whom, and under circumstances which, it reasonably
believes offers and sales of Notes may be made without registration of the
Notes under the Act in reliance upon Regulation S thereunder and (iii) it has
offered and will offer to sell the Notes only to, and has solicited and will
solicit offers to buy the Notes only from, persons that in purchasing such
Notes will be deemed to have represented and agreed as provided under "Investor
Representations and Restrictions on Resale" in Exhibit B hereto.
(b) The Initial Purchasers represent and warrant that (i)
they have not offered or sold and will not offer or sell any Securities in the
United Kingdom by means of any document other than to persons whose ordinary
business it is to buy, hold, manage or dispose of investments, whether as
principal or agent, for the purposes of their businesses or otherwise in
circumstances which do not constitute an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations 1995,
(ii) they have complied and will comply with all applicable provisions of the
Financial Services Act 1986 of the United Kingdom with respect to anything done
by them in relation to the Notes in, from or otherwise involving the United
Kingdom and (iii) they have only issued or passed on, and will only issue or
pass on, to any person in the United Kingdom any document received by them in
connection with the issue of the Securities if that person is of the kind
described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
5. Agreements. Each of the Company and the Guarantor,
jointly and severally, agrees with the Initial Purchasers that:
(a) The Company or the Guarantor will furnish to the
Initial Purchasers, without charge, as many copies of the Final
Memorandum and any supplements and amendments thereof or thereto as
the Initial Purchasers may reasonably request. The Company or the
Guarantor will pay the expenses of printing or other production of all
documents relating to the offering.
(b) The Company and the Guarantor will not amend or
supplement the Final Memorandum unless the Company has furnished to
the Initial Purchasers a copy for their review prior to printing and
distribution and will not make any such amendment or supplement to
which the Initial Purchasers reasonably and timely object.
(c) If at any time prior to the completion of the sale of
the Notes by the Initial Purchasers, any event occurs as a result of
which the Final Memorandum as
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<PAGE> 13
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they
were made not misleading, or if it shall be necessary to amend or
supplement the Final Memorandum to comply with the Exchange Act or the
rules thereunder or other applicable law, the Company and the
Guarantor promptly will notify the Initial Purchasers of the same and,
subject to paragraph (b) of this Section 5, will prepare and provide
to the Initial Purchasers pursuant to paragraph (a) of this Section 5
an amendment or supplement which will correct such statement or
omission or effect such compliance.
(d) The Company and the Guarantor will arrange for the
qualification of the Notes for sale under the laws of such
jurisdictions as the Initial Purchasers may reasonably designate, will
maintain such qualifications in effect so long as reasonably required
for the sale of the Notes and will arrange for the determination of
the legality of the Notes for purchase by institutional investors.
The Company and the Guarantor will promptly advise the Initial
Purchasers of the receipt by the Company or the Guarantor of any
notification with respect to the suspension of the qualification of
the Notes for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company or the
Guarantor will pay the expenses of such qualification and
determination.
(e) None of the Company, the Guarantor or any affiliate
(as defined in Rule 501(b) of Regulation D) of the Company or the
Guarantor will solicit any offer to buy or offer or sell the Notes by
means of any form of general solicitation or general advertising
(within the meaning of Regulation D).
(f) None of the Company, the Guarantor, their affiliates
nor any person acting on behalf of the Company, the Guarantor or their
affiliates will engage in any directed selling efforts with respect to
the Notes within the meaning of Regulation S, and the Company, the
Guarantor, their affiliates and each such person acting on their
behalf will comply with the offering restrictions requirement of
Regulation S.
(g) The Company and the Guarantor shall, during any
period in the three years after the Closing Date in which the Company
is not subject to Section 13 or 15(d) of the Exchange Act, make
available, upon request, to any holder of such Notes in connection
with any sale thereof and any prospective purchaser of Notes from such
holder the information ("Rule 144A Information") specified in Rule
144A(d)(4) under the Act.
(h) The Company and the Guarantor will not, and will not
permit any of their respective affiliates (as defined in Rule 501(b)
of Regulation D) to, resell any Notes which constitute "restricted
securities" under Rule 144 that have been reacquired by any of them.
(i) None of the Company, the Guarantor or any affiliate
(as defined in Rule 501(b) of Regulation D) of the Company of the
Guarantor will sell, offer for sale or solicit offers to buy or
otherwise negotiate in respect of any security (as defined in the Act)
the offering of which security will be integrated with the sale of the
Notes in a manner which would require the registration of the Notes
under the Act.
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<PAGE> 14
(j) The Company and the Guarantor shall include
information substantially in the form set forth in Exhibit B in each
Final Memorandum.
(k) The Company and the Guarantor shall use their best
efforts in cooperation with the Initial Purchasers to permit the Notes
to be eligible for clearance and settlement through The Depository
Trust Company.
(l) The Company and the Guarantor will not, for a period
of 180 days following the Execution Time without prior written consent
of the Initial Purchasers (which consent will not be unreasonably
withheld), offer, sell or contract to sell, grant any other option to
purchase or otherwise dispose of, directly or indirectly, or announce
the offering of, any debt securities issued or guaranteed by the
Company or the Guarantor, other than with respect to the Exchange
Notes in the manner contemplated by the Registration Rights Agreement.
(m) The Company and the Guarantor will apply the net
proceeds from the sale of the Notes sold by the Company in accordance
with the statements under the caption "Use of Proceeds" in the Final
Memorandum.
6. Conditions to the Obligations of the Initial
Purchasers. The obligations of the Initial Purchasers to purchase the Notes
shall be subject to the accuracy of the representations and warranties on the
part of the Company and the Guarantor contained herein as of the Execution Time
and the Closing Date, to the accuracy of the statements of the Company and the
Guarantor made in any certificates pursuant to the provisions hereof, to the
performance by each of the Company and the Guarantor of its obligations
hereunder and to the following additional conditions:
(a) The Initial Purchasers shall have received the
opinion of Ross & Hardies, counsel for the Company and the Guarantor,
addressed to the Initial Purchasers and dated the Closing Date, to the
effect that:
(i) each of the Company and the
Guarantor has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum, and
is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction which
requires such qualification, except where the failure so to be
qualified would not have a material adverse effect on the
business of the Company or the Guarantor in such jurisdiction;
(ii) all the outstanding shares of
capital stock of the Company and the Guarantor have been duly
and validly authorized and issued and are fully paid and
nonassessable, and all outstanding shares of capital stock of
the Company's subsidiaries (except, with respect to
subsidiaries other than the Guarantor, any director qualifying
shares thereof) are owned by the Company, free and clear of
any perfected security interest and, to the best of such
counsel's knowledge, after due inquiry, any other security
interests, claims, liens or encumbrances except as set forth
in the Final Memorandum;
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<PAGE> 15
(iii) the Company's authorized equity
capitalization is as set forth in the Final Memorandum; and
the Notes, the Exchange Notes, the Indenture and the
Registration Rights Agreement conform to the description
thereof contained in the Final Memorandum;
(iv) each of the Company and the
Guarantor has full corporate power and authority to enter into
this Agreement and perform the transactions contemplated
hereby; this Agreement has been duly authorized, executed and
delivered by each of the Company and the Guarantor and
(assuming the due authorization, execution and delivery
thereof by the Initial Purchasers) constitutes a valid and
binding obligation of each of the Company and the Guarantor
enforceable in accordance with its terms;
(v) the Company and the Guarantor have
full corporate power and authority to enter into the Indenture
and perform the transactions contemplated thereby; the
Indenture meets the requirements for qualification under the
TIA; and the Indenture has been duly authorized by each of the
Company and the Guarantor and, when executed and delivered by
each of the Company and the Guarantor (assuming the due
authorization, execution and delivery thereof by the Trustee)
will constitute a valid and binding obligation of each of the
Company and the Guarantor enforceable in accordance with its
terms;
(vi) the Notes are in the form
contemplated by the Indenture; each of the Company and the
Guarantor has full corporate power and authority to execute,
deliver and perform each of its obligations under the Notes
and the Exchange Notes, including the Guaranty; and the Notes
and the Exchange Notes have each been duly and validly
authorized by each of the Company and the Guarantor and, when
executed by each of the Company and the Guarantor and
authenticated by the Trustee in accordance with the provisions
of the Indenture and, in the case of the Notes, when delivered
to and paid for by the Initial Purchasers in accordance with
the terms of this Agreement, will constitute valid and binding
obligations of each of the Company and the Guarantor, entitled
to the benefits of the Indenture and enforceable in accordance
with their terms;
(vii) the Company and the Guarantor have
full corporate power and authority to enter into the
Registration Rights Agreement and perform the transactions
contemplated thereby; the Registration Rights Agreement has
been duly authorized by each of the Company and the Guarantor
and, when executed and delivered by each of the Company and
the Guarantor (assuming the due authorization, execution and
delivery thereof by the Initial Purchasers) will constitute a
valid and binding obligation of each of the Company and the
Guarantor enforceable in accordance with its terms;
(viii) the Company has full corporate power
and authority to enter into the Escrow Agreement and perform
the transactions contemplated thereby. The Escrow Agreement
has been duly authorized by the Company and when executed and
delivered by the Company (assuming the due authorization,
execution and delivery thereof by the Trustee and the Escrow
Agent)
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<PAGE> 16
will constitute a valid and binding obligation of the Company
enforceable in accordance with its terms;
(ix) the statements in the Final
Memorandum under the headings "Description of Capital Stock,"
"Description of Certain Indebtedness" and "Description of
Notes" fairly summarize the matters therein described and, to
the best of such counsel's knowledge, the statements in the
Final Memorandum under the headings "Risk
Factors--Environmental Matters," "Management's Discussion and
Analysis of Financial Condition and Results of
Operations--Environmental Matters," "Management's Discussion
and Analysis of Financial Condition and Results of
Operations--Litigation," "Business--Labor," "Business--Legal
Proceedings and Regulatory Matters" fairly summarize the
matters therein described;
(x) such counsel has no reason to
believe that, as of the Execution Time, the Final Memorandum
contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or
that the Final Memorandum contains any untrue statement of a
material fact or omits to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading, or that any
forward looking statement within the meaning of Section 27A of
the Act and Section 21E of the Exchange Act contained in the
Final Memorandum has been made or reaffirmed without a
reasonable basis or has been disclosed other than in good
faith;
(xi) the issuance and sale of the Notes,
the execution, delivery and performance of this Agreement, the
Indenture and the Registration Rights Agreement by each of the
Company and the Guarantor, and the Escrow Agreement by the
Company, and the consummation of the transactions contemplated
hereby and thereby (i) will not violate any provisions of the
certificate of incorporation, bylaws or other organizational
documents of the Company or any of its subsidiaries, and (ii)
will not conflict with, result in a material breach or
violation of, or constitute, either by itself or upon notice
or the passage of time or both, a material default under (A)
any Contract or (B) any statute or any authorization,
judgment, decree, order, rule or regulation of any court or
any regulatory body, administrative agency or other
governmental body applicable to the Company or any of its
subsidiaries or any of their respective properties;
(xii) no consent, approval, authorization
or other order of any court, regulatory body, administrative
agency, other governmental body or any third party which has
not already been obtained is required for the execution and
delivery of this Agreement or the consummation of the
transactions contemplated by this Agreement, except for
compliance with the Act and state securities or "Blue Sky"
laws in connection with the purchase and resale of the Notes
by the Initial Purchasers; and neither the Company nor the
Guarantor is (i) in violation of its certificate of
incorporation or bylaws (or similar organizational document),
(ii) in breach or violation of any statute, judgment, decree,
order, rule or regulation applicable to either of them
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<PAGE> 17
or any of their respective properties or assets, except for
any such breach or violation which would not, individually or
in the aggregate, have a Material Adverse Effect, or (iii) in
breach of or default under (nor has any event occurred which,
with notice or passage of time or both, would constitute a
default under) or in violation of any of the terms or
provisions of any Contract, except for any such breach,
default, violation or event which would not, individually or
in the aggregate, have a Material Adverse Effect;
(xiii) it is not necessary in connection
with the offer, sale and delivery of the Notes in the manner
contemplated by this Agreement to register the Notes under the
Act or to qualify the Indenture under the TIA;
(xiv) to the best of such counsel's
knowledge: (a) except as disclosed in the Final Memorandum,
there are no legal or governmental actions, suits or
proceedings pending or threatened to which the Company or any
of its subsidiaries is or is threatened to be made a party or
of which property owned or leased by the Company or any of its
subsidiaries is or is threatened to be made the subject, which
actions, suits or proceedings could, individually or in the
aggregate, prevent or adversely affect the transactions
contemplated by this Agreement or have a Material Adverse
Effect or which seek to restrain, enjoin, prevent the
consummation of or otherwise challenge the issuance or sale of
the Notes to be sold hereunder or the consummation of the
other transactions described in the Final Memorandum; (b) no
labor disturbance by the employees of the Company or any of
its subsidiaries exists or is imminent which could have a
Material Adverse Effect; (c) neither the Company nor any of
its subsidiaries is a party or subject to the provisions of
any material injunction, judgment, decree or order of any
court, regulatory body, administrative agency or other
governmental body; and (d) no governmental agencies are
investigating the Company, the Guarantor or any related
parties, other than as described in the Final Memorandum or in
ordinary course administrative reviews or in any ordinary
course review of the transactions contemplated hereby;
(xv) to the best of such counsel's
knowledge, there are no legal or governmental proceedings
affecting the Company or any of its subsidiaries or any of
their respective properties or assets which would be required
to be described in a prospectus pursuant to the Act and the
rules and regulations promulgated thereunder that are not
described in the Final Memorandum, nor are there any material
Contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not
described in the Final Memorandum;
(xvi) none of the Company or its
subsidiaries is, or upon the closing of the offering
contemplated by this Agreement will be, an "investment
company" within the meaning of the Investment Company Act of
1940, as amended, nor are any of the foregoing subject to
regulation under the Interstate Commerce Act or any federal or
state statute or regulation limiting its ability to incur
indebtedness for borrowed money;
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<PAGE> 18
(xvii) to the best of such counsel's
knowledge, no holders of securities of the Company or the
Guarantor have preemptive rights, rights of first refusal
triggered by the transactions contemplated hereby or rights to
the registration of such securities under the Registration
Rights Agreement or pursuant to any of the obligations of the
Company or the Guarantor thereunder;
(xviii) to the best of such counsel's
knowledge, none of the transactions contemplated by this
Agreement, the Registration Rights Agreement or the Indenture
(including, without limitation, the use of the proceeds from
the sale of the Notes) will violate or result in a violation
of Section 7 of the Exchange Act, or any rule or regulation
promulgated thereunder, including, without limitation,
Regulations G, T, U and X of the Board of Governors of the
Federal Reserve System; and
(xix) the Company has received an
affirmative response from the Commission that is responsive in
all respects to the matters set forth in the Waiver Request,
and to the best of such counsel's knowledge, the Commission
Response is in full force and effect as of the date of this
Agreement and neither the Company nor the Guarantor has taken
or failed to take any action (nor is such counsel aware of any
other fact) that could result in such Waiver being revoked by
the Commission or otherwise becoming ineffective in whole or
in part.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the
State of New York, the State of Delaware, or the United States, to the
extent they deem proper and specified in such opinion, upon the
opinion of other counsel of good standing whom they believe to be
reliable and who are satisfactory to counsel for the Initial Purchaser
and (B) as to matters of fact, to the extent they deem proper, on
certificates of responsible officers of the Company and the Guarantor
and public officials. References to the Final Memorandum in this
paragraph (a) include any amendments or supplements thereof or thereto
at the Closing Date.
(b) The Initial Purchasers shall have received from
Wachtell, Lipton, Rosen & Katz, counsel for the Initial Purchasers,
such opinion or opinions, dated the Closing Date, with respect to the
issuance and sale of the Notes, the Indenture, the Final Memorandum
(together with any amendment or supplement thereof or thereto) and
other related matters as the Initial Purchasers may reasonably
require, and the Company and the Guarantor shall have furnished to
such counsel such documents as they request for the purpose of
enabling them to pass upon such matters.
(c) Each of the Company and the Guarantor shall have
furnished to the Initial Purchasers its certificate, signed by its
Chairman of the Board or President and its principal financial or
accounting officer, dated the Closing Date, to the effect that the
signers of each such certificate have carefully examined the Final
Memorandum, any amendment or supplement to the Final Memorandum and
this Agreement and that:
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<PAGE> 19
(i) the representations and warranties
of the Company or the Guarantor (as the case may be) in this
Agreement are true and correct in all material respects on and
as of the Closing Date with the same effect as if made on the
Closing Date and the Company or the Guarantor (as the case may
be) has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date; and
(ii) since the date of the most recent
financial statements included in the Final Memorandum
(exclusive of any amendment or supplement thereof or thereto),
there has been no event that has had a Material Adverse
Effect, whether or not arising from transactions in the
ordinary course of business, except as set forth in or
contemplated in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
(d) At the Execution Time and at the Closing Date, Arthur
Andersen LLP shall have furnished to the Initial Purchasers a letter
or letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent certified public
accountants with respect to the Company under Rule 101 of the AICPA's
Code of Professional Conduct and its interpretations and rulings and
stating in effect that:
(i) in their opinion the consolidated
financial statements included in the Final Memorandum and
audited by them comply in form in all material respects with
the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations
thereunder;
(ii) on the basis of a reading of the
latest unaudited financial statements made available by the
Company and its subsidiaries; their limited review in
accordance with the standards established by the AICPA of the
unaudited interim financial information as indicated in their
reports included in the Final Memorandum; carrying out certain
specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and committees of
the Board of Directors of the Company and its subsidiaries;
and inquiries of certain officials of the Company and the
Guarantor who have responsibility for financial and accounting
matters of the Company, the Guarantor and their respective
subsidiaries as to transactions and events subsequent to
December 31, 1995, nothing came to their attention which
caused them to believe that:
(1) any unaudited financial statements
included in the Final Memorandum do not comply in
form in all material respects with applicable
accounting requirements and with the published rules
and regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not,
in all material respects, in conformity with
generally accepted accounting
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<PAGE> 20
principles applied on a basis substantially
consistent with that of the audited financial
statements included in the Final Memorandum; or
(2) with respect to the periods subsequent
to June 30, 1996, there were any changes, at a
specified date not more than five business days
prior to the date of the letter, in the net Current
Assets, Total Long-term Debt and Total Other
Long-term Liabilities or capital stock of the Company
or decreases in Total Stockholders' Equity of the
Company as compared with the amounts shown on the
June 30, 1996 consolidated balance sheet included or
incorporated in the Final Memorandum, or for the
period from July 1, 1996 to such specified dates
there were any decreases, as compared with the
corresponding period in the preceding year, in Net
Sales, Operating Income or Income Before Income Taxes
and Extraordinary Item, or in total or per share
amounts of Net Income of the Company, except in all
instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied
by an explanation by the Company as to the
significance thereof unless said explanation is not
deemed necessary by the Initial Purchasers; or
(3) except as otherwise expressly indicated
therein, the information included under the headings
"Selected Consolidated Historical Data" is not in
conformity with the disclosure requirements of
Regulation S-K; or
(4) the pro forma adjustments have not been
properly applied to the historical amounts in the
compilation of the unaudited pro forma condensed
combined financial statements; and
(iii) they have performed certain other
specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical
nature (which is limited to accounting, financial or
statistical information derived from the general accounting
records of the Company and its subsidiaries) set forth in the
Final Memorandum, including the information set forth under
the captions "Selected Consolidated Historical Data" and
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the Final Memorandum, agree with
the accounting records of the Company and its subsidiaries,
excluding any questions of legal interpretation.
(e) At the Execution Time and at the Closing Date,
Befec-Price Waterhouse shall have furnished to the Initial Purchasers
a letter or letters, dated respectively as of the Execution Time and
as of the Closing Date, in form and substance satisfactory to the
Initial Purchasers, confirming that they are independent certified
public accountants with respect to USC Europe under Rule 101 of the
AICPA's Code of Professional Conduct and its interpretations and
rulings and stating in effect that:
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<PAGE> 21
(i) on the basis of a reading of the
latest unaudited financial statements made available by USC
Europe; their limited review in accordance with the standards
established by the AICPA of the unaudited interim financial
information as indicated in their reports included in the
Final Memorandum; carrying out certain specified procedures
(but not an examination in accordance with generally accepted
auditing standards) which would not necessarily reveal matters
of significance with respect to the comments set forth in such
letter; a reading of the minutes of the meetings of the
stockholders, directors and committees of the Board of
Directors of Crown Cork & Seal Company, Inc. ("Crown") and its
subsidiaries; and inquiries of certain officials of Crown who
have responsibility for financial and accounting matters of
Crown as to transactions and events subsequent to December 31,
1995, nothing came to their attention which caused them to
believe that, except as otherwise expressly indicated in the
Final Memorandum, any unaudited financial statements included
in the Final Memorandum do not comply in form in all material
respects with applicable accounting requirements and said
unaudited financial statements are not, in all material
respects, in conformity with international accounting
standards; and
(ii) they have performed certain other
specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical
nature (which is limited to accounting, financial or
statistical information derived from the general accounting
records of USC Europe) set forth in the Final Memorandum,
including the information set forth under the captions
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Unaudited Pro Forma Condensed
Combined Financial Statements" in the Final Memorandum, agree
with the accounting records of USC Europe its subsidiaries,
excluding any questions of legal interpretation.
(f) At the Execution Time and at the Closing Date, Plante
& Moran LLP shall have furnished to the Initial Purchasers a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the Initial
Purchasers, confirming that they are independent certified public
accountants with respect to the CPI Group (as defined below) under
Rule 101 of the AICPA's Code of Professional Conduct and its
interpretations and rulings and stating in effect that:
(i) in their opinion the combined
balance sheet of CPI Plastics, Inc., CP Illinois, Inc. and CP
Ohio Inc. (the "CPI Group") as of December 31, 1994 and 1995
and the related combined statements of income, stockholders'
equity and cash flows for each year in the three-year period
ended December 31, 1995 included in the Final Memorandum and
audited by them comply in form in all material respects with
the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations
thereunder;
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<PAGE> 22
(ii) on the basis of a reading of the
latest unaudited financial statements made available by the
CPI Group; their limited review in accordance with the
standards established by the AICPA of the unaudited interim
financial information as indicated in their reports included
in the Final Memorandum; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and committees of
the Board of Directors of the CPI Group; and inquiries of
certain officials of the CPI Group who have responsibility for
financial and accounting matters of the CPI Group as to
transactions and events subsequent to December 31, 1995,
nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements
included in the Final Memorandum do not comply in
form in all material respects with applicable
accounting requirements and with the published rules
and regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not,
in all material respects, in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited financial statements included in the Final
Memorandum; or
(2) with respect to the period
subsequent to June 30, 1996 and prior to the
consummation of the merger of the CPI Group into the
Guarantor, there were any changes in the net Current
Assets, Long-term Liabilities or capital stock of the
CPI Group or decreases in Total Stockholders' Equity
of the CPI Group as compared with the amounts shown
on the June 30, 1996 combined interim balance sheet
included in the Final Memorandum, or for the period
from July 1, 1996 to the date of the consummation of
such merger there were any decreases, as compared
with the corresponding period in the preceding year,
in Net Sales, Operating Income or in total or per
share amounts of Net Income of the CPI Group, except
in all instances for changes or decreases set forth
in such letter, in which case the letter shall be
accompanied by an explanation by the CPI Group or the
Company as to the significance thereof unless said
explanation is not deemed necessary by the Initial
Purchasers; and
(iii) they have performed certain other
specified procedures as a result of which they determined that
certain information of an accounting, financial or statistical
nature (which is limited to accounting, financial or
statistical information derived from the general accounting
records of the CPI Group) set forth in the Final Memorandum,
including the information set forth under the captions
"Management's Discussion and Analysis of Financial Condition
and Results of Operations" and "Unaudited Pro Forma Condensed
Combined Financial Statements" in the Final Memorandum, agree
with the accounting records of the CPI Group, excluding any
questions of legal interpretation.
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<PAGE> 23
(g) References to the Final Memorandum in paragraphs (d),
(e) and (f) of this Section 6 include any amendment or supplement
thereof or thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Final Memorandum
(exclusive of any amendment or supplement thereof or thereto), there
shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (d) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impractical or inadvisable to
market the Notes as contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereof or thereto).
(i) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of any of the Company's debt
securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act)
or any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(j) On the Closing Date, the Initial Purchasers shall
have received the Registration Rights Agreement duly executed and
delivered by each of the Company and the Guarantor, and such agreement
shall be in full force and effect according to its terms at all times
from and after the Closing Date.
(k) Prior to the Closing Date, the Company and the
Guarantor shall have furnished to the Initial Purchasers such further
information, certificates and documents as the Initial Purchasers may
reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for
the Initial Purchasers, this Agreement and all obligations of the Initial
Purchasers hereunder may be canceled at, or at any time prior to, the Closing
Date by the Initial Purchasers. Notice of such cancellation shall be given to
the Company in writing or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall
be delivered at the office of Wachtell, Lipton, Rosen & Katz, counsel for the
Initial Purchasers, at 51 West 52nd Street, New York, New York on the Closing
Date.
7. Reimbursement of Initial Purchaser's Expenses. If
the sale of the Notes provided for herein is not consummated because any
condition to the obligations of the Initial Purchasers set forth in Section 6
hereof is not satisfied, because of any termination pursuant to Section 10(i)
hereof or because of any refusal, inability or failure on the part of the
Company or the Guarantor to perform any agreement herein or comply with any
provision hereof other than by reason of a default by the Initial Purchasers,
the Company and the
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<PAGE> 24
Guarantor will reimburse the Initial Purchasers upon demand for all reasonable
out-of-pocket expenses (including reasonable fees and reasonable disbursements
of counsel) that shall have been incurred by them in connection with the
proposed purchase and sale of the Notes.
8. Indemnification and Contribution. B. The Company
and the Guarantor, jointly and severally, agree to indemnify and hold harmless
the Initial Purchasers, the directors, officers, employees and agents of the
Initial Purchasers and each person who controls the Initial Purchasers within
the meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Memorandum, the Final Memorandum or
any Rule 144A Information provided by the Company or the Guarantor to any
holder or prospective purchaser of Notes pursuant to Section 5(g), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
agree to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that neither the Company nor the Guarantor will be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue statement or omission or
alleged omission made in the Preliminary Memorandum or the Final Memorandum, or
in any amendment thereof or supplement thereto, in reliance upon and in
conformity with written information furnished to the Company or the Guarantor
by or on behalf of the Initial Purchasers specifically for inclusion therein.
This indemnity agreement will be in addition to any liability which the Company
or the Guarantor may otherwise have.
(b) The Initial Purchasers agree to indemnify and hold
harmless the Company, the Guarantor, their directors, their officers, and each
person who controls the Company or the Guarantor within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity from
the Company and the Guarantor to the Initial Purchasers, but only with
reference to written information relating to the Initial Purchasers furnished
in writing to the Company or the Guarantor by or on behalf of the Initial
Purchasers specifically for inclusion in the Preliminary Memorandum or the
Final Memorandum, or in any amendment thereof or supplement thereto. This
indemnity agreement will be in addition to any liability which the Initial
Purchasers may otherwise have. The Company and the Guarantor acknowledge that
the statements set forth in the last paragraph of the cover page and under the
heading "Plan of Distribution" in the Preliminary Memorandum and the Final
Memorandum constitute the only information furnished in writing by or on behalf
of the Initial Purchasers for inclusion in the Preliminary Memorandum or the
Final Memorandum.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure to so notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above
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<PAGE> 25
unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial
rights and defenses and (ii) will not, in any event, relieve the indemnifying
party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnified party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company, the Guarantor and the Initial
Purchasers agree to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in
connection with investigating or defending same) (collectively "Losses") to
which the Company and the Guarantor, on the one hand, and the Initial
Purchasers, on the other, may be subject in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Guarantor, on
the one hand, and by the Initial Purchasers, on the other, from the offering of
the Notes; provided, however, that in no case shall the Initial Purchasers be
responsible for any amount in excess of the purchase discount or commission
applicable to the Notes purchased by the Initial Purchasers hereunder. If the
allocation provided by the immediately preceding sentence is unavailable for
any reason, the Company and the Guarantor, on the one hand, and the Initial
Purchasers, on the other, shall contribute in such proportion as is appropriate
to reflect not only such relative benefits but also the relative fault of the
Company and the Guarantors, on the one hand, and of the Initial Purchasers, on
the other, in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. The
aggregate benefits received by the Company and the Guarantor shall be deemed to
be equal to the total net proceeds from the offering (before deducting
expenses), and aggregate benefits received by the Initial Purchasers shall be
deemed to be equal to the total purchase discounts and
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<PAGE> 26
commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
Company or the Guarantor, on the one hand, or the Initial Purchasers, on the
other. The Company, the Guarantor and the Initial Purchasers agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 8, each person who controls the Initial Purchasers
within the meaning of either the Act or the Exchange Act and each director,
officer, employee and agent of a Initial Purchaser shall have the same rights
to contribution as such Initial Purchaser, and each person who controls the
Company or the Guarantor within the meaning of either the Act or the Exchange
Act and each officer and director of the Company or the Guarantor shall have
the same rights to contribution as the Company or the Guarantor, respectively,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Initial Purchaser. If any one or more
Initial Purchasers shall fail to purchase and pay for any of the Notes agreed
to be purchased by such Initial Purchaser hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Initial Purchasers shall be
obligated severally to take up and pay for (in the respective proportions which
the principal amount of Notes set forth opposite their names in Schedule I
hereto bears to the aggregate principal amount of Notes set forth opposite the
names of all the remaining Initial Purchasers) the Notes which the defaulting
Initial Purchaser or Initial Purchasers agreed but failed to purchase;
provided, however, that in the event that the aggregate principal amount of
Notes which the defaulting Initial Purchaser or Initial Purchasers agreed but
failed to purchase shall exceed 10% of the aggregate principal amount of Notes
set forth in Schedule I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any,
of the Notes, and if such non-defaulting Initial Purchasers do not purchase all
the Notes, this Agreement will terminate without liability to any
non-defaulting Initial Purchaser or the Company. In the event of a default by
any Initial Purchaser as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as Salomon Brothers Inc
shall determine in order that the required changes in the Final Memorandum or
in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Initial Purchaser of its liability,
if any, to the Company or any non-defaulting Initial Purchaser for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, by notice
given to the Company prior to delivery of and payment for the Notes, if prior
to such time (i) trading in the Company's Common Stock shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange or the National Association
of Securities Dealers Automated Quotation National Market System shall have
been suspended or limited or minimum prices shall have been established on
either of such Exchange or Market System, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or
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<PAGE> 27
other calamity or crisis the effect of which on financial markets is such as to
make it, in the judgment of the Initial Purchasers, impracticable or
inadvisable to proceed with the offering or delivery of the Notes as
contemplated by the Final Memorandum (exclusive of any amendment or supplement
thereof or thereto).
11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company, the Guarantor or their officers and of the Initial
Purchasers set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of the
Initial Purchasers or the Company, the Guarantor or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Notes. The provisions of Sections 7, 8
and 14 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Initial Purchasers,
will be mailed or delivered to them c/o Salomon Brothers Inc, Seven World Trade
Center, New York, New York, 10048, and a copy to Wachtell, Lipton, Rosen &
Katz, 51 West 52nd Street, New York, New York 10019, attention: David A. Katz,
Esq.; or, if sent to the Company or the Guarantor, will be mailed or delivered
to it c/o U.S. Can Corporation, 900 Commerce Drive, Oak Brook, Illinois 60521,
attention: Timothy W. Stonich, and a copy to Ross & Hardies, 150 North
Michigan Avenue, Chicago Illinois 60601, attention: Lawrence R. Samuels, Esq.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, first-class postage prepaid, if mailed;
and one business day after being timely delivered to a next-day air courier.
13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons, employees and agents
referred to in Section 8 hereof, and no other person will have any right or
obligation hereunder.
14. Applicable Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York applicable
to contracts made and to be performed wholly therein, without giving effect to
any provisions thereof relating to conflicts of law.
15. Business Day. For purposes of this Agreement,
"business day" means each Monday, Tuesday, Wednesday, Thursday and Friday that
is not a day on which banking institutions in The City of New York, New York
are authorized or obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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<PAGE> 28
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
between the Company, the Guarantor and the Initial Purchasers.
Very truly yours,
U.S. CAN CORPORATION
By: /s/ Timothy W. Stonich
-------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President,
Chief Financial Officer and
Secretary
UNITED STATES CAN COMPANY
By: /s/ Timothy W. Stonich
-------------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President,
Chief Financial Officer and
Secretary
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
CS FIRST BOSTON CORPORATION
BA SECURITIES, INC.
By: Salomon Brothers Inc
By: /s/ Paul Lipari
-------------------------------
Name: Paul Lipari
Title: Associate
[Purchase Agreement]
<PAGE> 1
EXHIBIT 99.2
________________________________________________________________________________
AMENDED AND RESTATED
ESCROW AGREEMENT
by and among
U.S. CAN CORPORATION,
HARRIS TRUST AND SAVINGS BANK,
as Trustee
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Escrow Agent
Dated as of October 17, 1996
________________________________________________________________________________
<PAGE> 2
ESCROW AGREEMENT
THIS AMENDED AND RESTATED ESCROW AGREEMENT (this "Agreement"),
dated as of October 17, 1996, is by and among U.S. CAN CORPORATION (the
"Company"), HARRIS TRUST AND SAVINGS BANK, as trustee under the Indenture
referred to below (the "Trustee"), and THE FIRST NATIONAL BANK OF CHICAGO, as
escrow agent (the "Escrow Agent").
RECITALS
A. Amendment and Restatement. Each of the parties hereto has
previously entered into that certain Escrow Agreement, dated as of October 17,
1996 (the "Escrow Agreement"), and each of such parties desires to amend such
Escrow Agreement and, pursuant thereto, to restate the Escrow Agreement in its
entirety as set forth in this Agreement (such restatement to be effective as of
the date of the Escrow Agreement).
A. The Securities. Pursuant to that certain Indenture (the
"Indenture") dated as of October 17, 1996 by and between the Company, the
Trustee and United States Can Company, a wholly owned Subsidiary of the
Company, as Guarantor, the Company will issue $275,000,000 in aggregate
principal amount of 10-1/8% Senior Subordinated Notes due 2006 (the
"Securities"). Simultaneously with receipt of payment for the Securities (the
"Deposit Time"), $109,732,095 (or such other amount as is sufficient to effect
the Required Redemption) received as proceeds by the Company from the sale of
the Securities (the "Escrow Funds") will be deposited into a segregated cash
account with the Escrow Agent at its office at 1 First National Plaza, Suite
0673, Chicago IL 60670, Account No. 22-203607, in the name of United States Can
Company 13 1/2% Senior Subordinated Notes Redemption Escrow Account (the
"Escrow Account"). The Escrow Account and all balances and investments from
time to time therein shall be under the dominion and control of the Trustee and
the Escrow Agent. The Escrow Funds will be invested as directed by the Company
or an agent appointed by the Company subject to the provisions of this
Agreement. Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Indenture.
B. The Required Redemption. Pursuant to the Indenture, the
Company has covenanted and agreed that it will set aside the Escrow Funds and
use such funds to redeem (including the payment of interest accrued or payable
from the date hereof through the date of redemption, the "Required Redemption")
the Company's 13 1/2% Senior Subordinated Notes due 2002 (the "13 1/2% Notes")
by January 22, 1997, pursuant to the terms of the indenture under which the 13
1/2% Notes were issued.
C. Purpose. The parties hereto desire to set forth their
agreement with regard to the administration of the Escrow Account and the
conditions upon which funds will be released from the Escrow Account.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 3
1. Maintenance of the Escrow Account. So long as this Agreement is
in full force and effect:
1.1 the Company shall establish and maintain the Escrow
Account with the Escrow Agent in Chicago, Illinois, and the Escrow Account
shall at all times remain under the dominion and control of the Trustee and the
Escrow Agent; and
1.2 it shall be a term and condition of the Escrow Account,
notwithstanding any term or condition to the contrary in any other agreement
relating to the Escrow Account and except as otherwise provided by the
provisions of Article 3 of this Agreement, that no amount (including, without
limitation, interest on or other proceeds of the Escrow Account or on any
Temporary Cash Investments held therein) shall be paid or released to or for
the account of, or withdrawn by or for the account of, the Company or any other
person or entity other than the Trustee or its designated agent from the Escrow
Account (other than customary brokerage or similar fees, discounts or
commissions payable in connection with investments of funds pursuant to Section
2.1 hereof).
2. Investment and Liquidation of Funds in Escrow Account. Funds
deposited in the Escrow Account shall be invested and reinvested by the Escrow
Agent on the following terms and conditions:
2.1 Allowable Investments. Subject to the provisions of
Articles 2 and 3, funds held by the Escrow Agent in the Escrow Account may, at
the direction of the Company or an agent appointed by the Company, be invested
and reinvested in the following ("Temporary Cash Investments"):
(i) investments in U.S. Government Obligations with maturities
no later than January 15, 1997 maturing within 90 days of the
date of acquisition thereof, (ii) investments in time deposit
accounts, certificates of deposit and money market deposits
with maturities no later than January 15, 1997, issued by a
bank or trust company which is organized under the laws of the
United States of America or any state thereof having capital,
surplus and undivided profits aggregating in excess of
$500,000,000 and whose long-term debt is rated "A-3" or A- or
higher according to Moody's Investors Service, Inc. or
Standard & Poor's Corporation (or such similar equivalent
rating by at least one "nationally recognized statistical
rating organization" (as defined in Rule 436 under the
Securities Act)), (iii) repurchase obligations with a term of
not more than 7 days for underlying securities of the types
described in clause (i) above entered into with a bank meeting
the qualifications described in clause (ii) above, and (iv)
investments in commercial paper, with maturities no later than
January 15, 1997, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the
laws of the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or
higher) according to Moody's Investors Service, Inc. or "A-1"
(or higher) according to Standard & Poor's Corporation.
Investment instructions may instruct the Escrow Agent to
purchase or sell specific securities to or from specific persons and/or on
specific terms negotiated by the Company or its agent. If the Company or such
agent fails to give investment instructions to the Escrow Agent by 12:00 noon
(Chicago time) on any Business Day on which there is
-2-
<PAGE> 4
uninvested cash and/or maturing Temporary Cash Investments in the Escrow
Account, the Trustee is hereby authorized and directed to direct the Escrow
Agent to invest any such cash or the proceeds of any maturing Temporary Cash
Investments in Temporary Cash Investments maturing on the next Business Day.
The Company's or such agent's failure to give such investment instructions
shall not constitute a default or an event of default hereunder.
All of the Temporary Cash Investments shall mature on or prior
to January 15, 1997; provided, however, that if the Trustee receives from the
Company a certificate substantially in the form of Exhibit A hereto (a
"Preliminary Release Certificate") that: (x) sets forth the date (the "Closing
Date") set for the Required Redemption, which shall not be earlier than five
(5) Business Days after receipt of such Preliminary Release Certificate; (y)
states that the Company reasonably believes that the Required Redemption will
be consummated on the specified Closing Date; and (z) directs the liquidation
of all of the Temporary Cash Investments in accordance with Section 3.2, the
Trustee shall direct the Escrow Agent to only invest in Temporary Cash
Investments such that the funds held in the Escrow Account will be available
for release no later than 12:00 noon (Chicago time) on the Closing Date.
2.2 Interest. All interest earned on funds invested in
Temporary Cash Investments shall be held in the Escrow Account and reinvested
in accordance with the terms hereof and will be subject to the security
interest granted hereunder to the Trustee.
2.3 Limitation of Trustee's and Escrow Agent's Liability. In
no event shall the Trustee or the Escrow Agent have any liability to the
Company or any other person for investing the funds from time to time in the
Escrow Account in accordance with the provisions of this Article 2, regardless
of whether greater income or a higher yield could have been obtained had the
Escrow Agent invested such funds in different Temporary Cash Investments, or
for any loss associated with the sale or liquidation of Temporary Cash
Investments in accordance with the terms of this Agreement.
3. Disposition of Escrow Funds Upon Certain Events
3.1 Use of Escrow Funds. Other than pursuant to Section 3.6
and the Temporary Cash Investments, the funds invested in the Escrow Account
shall, as provided in Section 3.3 and following, irrevocably be used for the
Required Redemption.
3.2 Transfer of Escrow Proceeds for the Required Redemption.
When, on or prior to January 7, 1997, the Company delivers to the Trustee a
Preliminary Release Certificate stating that the Required Redemption will
occur, the Trustee shall direct the Escrow Agent to: (a) liquidate, within five
(5) Business Days after the Trustee's receipt of such Preliminary Release
Certificate, all of the Temporary Cash Investments in the Escrow Account and,
(b) transfer, on the Closing Date, such amount of funds as specified pursuant
to Section 3.3 sufficient to complete the Required Redemption (including the
payment of any interest accrued and/or payable with respect to the 13 1/2%
Notes), and the Escrow Agent hereby agrees to liquidate such amount of
Temporary Cash Investments and to make such funds transfer, subject to Section
3.3.
3.3 Release of Funds. On the Closing Date, the Company shall
deliver to the Trustee (x) confirmation of the amounts required to be
transferred by the Escrow Agent
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<PAGE> 5
pursuant to Section 3.2 (including any amounts with respect to interest accrued
and/or payable with respect to the 13 1/2% Notes), (y) an opinion of Ross &
Hardies, counsel to the Company in the form of Exhibit B hereto, to the effect
that the Required Redemption complies with all of the conditions in the
Indenture and the terms of the indenture governing the 13 1/2% Notes, and that
the Company has duly authorized, executed and delivered the confirmation
identified in clause (x) and the Release Certificate (as defined below), and
(z) a certificate substantially in the form of Exhibit C hereto (a "Release
Certificate") stating that (1) all conditions to the Required Redemption have
been satisfied or waived, (2) that the Required Redemption will be consummated
on such date on substantially the terms described in the Indenture and (3) that
no Event of Default (as defined in the Indenture) has occurred and is
continuing or will occur as a result of the release of funds contemplated
hereby, and instructing the Trustee to direct the Escrow Agent to release the
appropriate dollar amount of the Escrow Funds in accordance with this Section
3.3. Upon receipt of the foregoing and in good faith reliance thereon, the
Trustee shall direct the Escrow Agent to transfer the amount specified by the
applicable terms of such Release Certificate in immediately available funds in
accordance with the terms of such Release Certificate. The delivery of the
items identified in clauses (x), (y) and (z) shall be the only conditions
precedent to the release of funds pursuant to this Agreement.
3.4 Payment of Interest on 13 1/2% Notes. If the Closing
Date set forth in the Preliminary Release Certificate is not January 15, 1997,
(i) the Company shall include in such Preliminary Release Certificate the
amount of the interest payment required to be made in respect of the 13 1/2%
Notes on January 15,1997 and (ii) the Trustee shall direct the Escrow Agent to
transfer, on January 15, 1997, such amount of funds to the account specified by
the Company in such Preliminary Release Certificate in order to make the
required interest payment with respect to the 13 1/2% Notes, and the Escrow
Agent hereby agrees to liquidate such amount of Temporary Cash Investments and
to make such funds transfer.
3.5 Release of Remaining Funds in Escrow Account. Upon such
date as the Escrow Funds have been released in accordance with Sections 3.2 and
3.3 hereof and upon receipt of a request by the Company, the Escrow Agent shall
transfer by wire transfer of immediately available funds any funds remaining in
the Escrow Account to an account designated by the Company.
3.6 Funds Continuously Held. In the event that the Escrow
Funds are not released pursuant to Sections 3.2, 3.3 and 3.4, the Escrow Funds
shall be continuously held as provided herein until receipt by the Escrow Agent
of a final order of a court of competent jurisdiction directing Escrow Agent to
withdraw the Escrow Funds.
4. Representations and Warranties. The Company hereby makes all
representations and warranties applicable to the Company contained in the
Indenture. The Company further represents and warrants that:
4.1 The execution, delivery and performance by the Company of
this Agreement are within the Company's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene, or
constitute a default under, any provision of applicable law or regulation or of
the certificate of incorporation or bylaws of the Company or of any agreement,
judgment, injunction, order, decree or other instrument binding upon the
Company, or result in the creation or imposition of any Lien on any assets of
the Company.
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<PAGE> 6
4.2 This Agreement has been duly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
4.3 No litigation, investigation or proceeding of or before
any arbitrator or governmental authority is pending or, to the best knowledge
of the Company, threatened by or against the Company or against any of its
properties or revenues with respect to this Agreement or any of the
transactions contemplated hereby.
5. Indemnity. The Company shall indemnify and hold harmless the
Trustee, the Escrow Agent and their respective directors, officers, agents and
employees, from and against any and all claims, actions, obligations,
liabilities and expenses, including, without limitation, defense costs,
investigative fees and costs, legal fees and claims for damages incurred in any
action or proceeding between the parties hereto or in disputes with third
parties or otherwise, arising from or in connection with the Trustee's and/or
the Escrow Agent's acceptance of, or performance under, this Agreement, except
to the extent that such liability, expense or claim is directly attributable to
the gross negligence or bad faith of the Trustee or the Escrow Agent.
6. Termination. This Agreement shall terminate automatically upon the
release of all of the Escrow Funds pursuant to Sections 3.2, 3.3, 3.4 and 3.5
hereof.
7. Miscellaneous.
7.1 Waiver. Any party hereto may specifically waive any
breach of this Agreement by any other party, but no such waiver shall be deemed
to have been given unless such waiver is in writing, signed by the waiving
party, and specifically designates the breach waived, nor shall any such waiver
constitute a continuing waiver of similar or other breaches.
7.2 Invalidity. If, for any reason whatsoever, any one or
more of the provisions of this Agreement shall be held or deemed to be
inoperative, unenforceable or invalid in a particular case or in all cases,
such circumstances shall not have the effect of rendering any of the other
provisions of this Agreement inoperative, unenforceable or invalid, and the
inoperative, unenforceable or invalid provision shall be construed as if it
were written so as to effectuate, to the maximum extent possible, the parties'
intent.
7.3 Assignment. This Agreement shall inure to and be binding
upon the parties and their respective successors and permitted assigns;
provided, however, that the Company may not assign its rights or obligations
hereunder without the express prior written consent of the Trustee.
7.4 Choice of Law. The existence, validity, construction,
operation and effect of any and all terms and provisions of this Agreement
shall be determined in accordance with and governed by the internal laws of the
State of New York including, without limitation, the Uniform Commercial Code in
effect in the State of New York, without giving effect to the conflicts of law
principles of such State.
7.5 Entire Agreement; Amendments. This Agreement and the
Indenture contain the entire agreement among the parties with respect to the
subject matter hereof and
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<PAGE> 7
supersede any and all prior agreements, understandings and commitments with
respect thereto, whether oral or written; provided, however, that this
Agreement is executed and accepted by the Trustee subject to all terms and
conditions of its acceptance of the trust under the Indenture, as fully as if
said terms and conditions were set forth at length herein. This Agreement may
be amended only by a writing signed by duly authorized representatives of all
parties. The Trustee and the Escrow Agent may not execute any amendment to
this Agreement that would adversely affect the rights of the holders of the
Securities.
7.6 Notices. All notices, requests, instructions, orders and
other communications required or permitted to be given or made under this
Agreement to any party hereto shall be delivered in writing by hand delivery or
overnight delivery, or shall be delivered by facsimile or telephonically with
confirmation in writing not more than twenty-four hours following such
facsimile or telephonic notice. A notice given in accordance with the
preceding sentence shall be deemed to have been duly given upon the sending
thereof, except for notice to the Trustee or the Escrow Agent, which shall be
deemed given only when received. Notices should be addressed as follows:
To the Company:
U.S. Can Corporation
900 Commerce Drive
Oak Brook, IL 60521
Attention: Secretary
Facsimile number: (708) 571-2500
Telephone number: (708) 573-0715
With copies to:
Ross & Hardies
150 North Michigan Avenue
Chicago, IL 60601
Attention: Lawrence R. Samuels, Esq.
Facsimile number: (312) 750-8600
Telephone number: (312) 558-1000
and
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: David A. Katz, Esq.
Facsimile number: (212) 403-2000
Telephone number: (212) 403-1000
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<PAGE> 8
To the Trustee:
Harris Trust and Savings Bank
Attention: Indenture Trust Administration
311 West Monroe, 12th Floor
Chicago, IL 60606
Facsimile number: (312) 461-3525
Telephone number: (312) 461-2908
To the Escrow Agent:
The First National Bank of Chicago
Attention: Corporate Trust Administration/
Escrow Unit
U.S. Mail Delivery:
1 First National Plaza, Suite 0673
Chicago, IL 60670
Courier Delivery:
1 North State Street, 9th Floor, Suite 0673
Chicago, IL 60602
Facsimile number: (312) 407-1708
Telephone number: (312) 407-1844
or at such other address, facsimile number or phone number as the specified
entity most recently may have designated in writing in accordance with this
paragraph to the other parties.
7.7 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Agreement by facsimile shall be
effective as delivery of a manually executed counterpart of this Agreement.
-7-
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the day first written above.
COMPANY: U.S. CAN CORPORATION
By /s/ Timothy W. Stonich
---------------------------------
Name: Timothy W. Stonich
Title: Executive Vice President,
Finance, Chief Financial
Officer and Secretary
TRUSTEE: HARRIS TRUST AND SAVINGS BANK,
as Trustee
By /s/ Daniel Donovan
---------------------------------
Name: Daniel Donovan
Title: Assistant Vice President
ESCROW AGENT: THE FIRST NATIONAL BANK OF CHICAGO,
as Escrow Agent
By /s/ J.T. Cahill
---------------------------------
Name: J.T. Cahill
Title: Assistant Vice President
[Escrow Agreement]
<PAGE> 1
EXHIBIT 99.3
U.S. CAN CORPORATION
10-1/8% SENIOR SUBORDINATED NOTES DUE 2006
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is dated
as of October 17, 1996, by and among U.S. Can Corporation, a Delaware
corporation (the "Company"), United States Can Company, a Delaware corporation
(the "Guarantor"), and Salomon Brothers Inc, CS First Boston Corporation and BA
Securities, Inc. (the "Initial Purchasers").
This Agreement is entered into in connection with the Purchase
Agreement, dated October 10, 1996, among the Company, the Guarantor and the
Initial Purchasers (the "Purchase Agreement"), which provides, among other
things, for the sale (the "Initial Placement") by the Company to the Initial
Purchasers of $275,000,000 aggregate principal amount of the Company's 10-1/8%
Senior Subordinated Notes due 2006 (the "Notes"), which Notes will be
guaranteed by the Guarantor. The Company and the Guarantor are collectively
referred to herein as the "Issuers". In order to induce the Initial Purchasers
to enter into the Purchase Agreement, the Issuers have agreed to provide the
registration rights set forth in this Agreement for the benefit of the Initial
Purchasers and their direct and indirect transferees (collectively, the
"Holders"). The execution and delivery of this Agreement is a condition to the
obligation of the Initial Purchasers to purchase the Notes under the Purchase
Agreement.
The parties hereby agree as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
"control" of a person means the power, direct or indirect, to direct or cause
the direction of the management and policies of such person whether by contract
or otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Commission" means the Securities and Exchange Commission.
"Effectiveness Date" means the 120th day after the Issue Date.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder.
<PAGE> 2
"Exchange Notes" means debt securities of the Company
identical in all material respects to the Notes (except that the cash interest
and interest rate step-up provisions and the transfer restrictions will be
modified or eliminated, as appropriate) to be issued under the Indenture.
"Exchange Notes Trustee" means a bank or trust company
reasonably satisfactory to the Initial Purchaser, as trustee with respect to
the Exchange Notes under the Indenture.
"Exchange Offer Registration Period" means the one year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include the
Initial Purchasers) which is a broker-dealer, electing to exchange Notes
acquired for its own account as a result of market-making activities or other
trading activities, for Exchange Notes.
"Filing Date" means the date 60 days after the Issue Date.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holders" has the meaning set forth in the preamble hereto.
"Indenture" means the Indenture relating to the Notes dated as
of October 17, 1996, between the Company, the Guarantor and Harris Trust and
Savings Bank, as trustee, as the same may be amended from time to time in
accordance with the terms thereof.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Issue Date" has the meaning set forth in the Indenture.
"Liquidated Damages" has the meaning set forth in Section 4(a)
hereof.
"Losses" has the meaning set forth in Section 7(d) hereof.
"Majority Holders" means the Holders of a majority of the
aggregate principal amount of securities registered under a Registration
Statement.
"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an
underwritten offering.
"Notes" has the meaning set forth in the preamble hereto.
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<PAGE> 3
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Notes or the Exchange Notes, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Notes, a like
principal amount of the Exchange Notes.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Notes or the
Exchange Notes pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective
amendments, in each case including the Prospectus contained therein, all
exhibits thereto and all material incorporated by reference therein.
"Securities" means the Notes and the Exchange Notes.
"Shelf Registration" means a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Notes or Exchange Notes, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"Trustee" means the trustee with respect to the Notes under
the Indenture.
"underwriter" means any underwriter of Notes in connection
with an offering thereof under a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of Exchange Notes by
Exchanging Dealers; Private Exchange. A. The Issuers shall prepare and, not
later than the Filing Date, shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The
Issuers shall cause the Exchange Offer Registration Statement to become
effective under the Act within 120 days of the Issue Date.
(b) Upon the effectiveness of the Exchange Offer
Registration Statement, the Issuers shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder electing to exchange Notes for Exchange Notes (assuming that
such Holder is not an affiliate of the Issuers within the meaning of the Act,
acquires the Exchange Notes in the ordinary course of such Holder's business
and has no arrangements with any person to participate in the distribution of
the
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<PAGE> 4
Exchange Notes) to trade such Exchange Notes from and after their receipt
without any limitations or restrictions under the Act and without material
restrictions under the securities laws of a substantial proportion of the
several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Issuers shall:
(i) mail to each Holder a copy of the
Prospectus forming part of the Exchange Offer Registration
Statement, together with an appropriate letter of transmittal
and related documents;
(ii) keep the Registered Exchange Offer
open for not less than 30 days and not more than 45 days after
the date notice thereof is mailed to the Holders (or longer if
required by applicable law);
(iii) utilize the services of a depositary
for the Registered Exchange Offer with an address in the
Borough of Manhattan, The City of New York; and
(iv) comply in all respects with all
applicable laws.
(d) As soon as practicable after the close of the
Registered Exchange Offer, the Issuers shall:
(i) accept for exchange all Notes
tendered and not validly withdrawn pursuant to the Registered
Exchange Offer;
(ii) deliver to the Trustee for
cancellation all Notes so accepted for exchange; and
(iii) cause the Trustee or the Exchange
Notes Trustee, as the case may be, promptly to authenticate
and deliver to each Holder of Exchange Notes equal in
principal amount to the Notes of such Holder so accepted for
exchange.
(e) The Initial Purchasers and the Issuers acknowledge
that, pursuant to interpretations by the Commission's staff of Section 5 of the
Act, and in the absence of an applicable exemption therefrom, each Exchanging
Dealer is required to deliver a Prospectus in connection with a sale of any
Exchange Notes received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Notes acquired for its own account as a result
of market-making activities or other trading activities. Accordingly, the
Issuers shall:
(i) include the information set forth in
Annex A hereto on the cover of the Exchange Offer Registration
Statement, in Annex B hereto in the forepart of the Exchange
Offer Registration Statement in a section setting forth
details of the Exchange Offer, and in Annex C hereto in the
underwriting or plan of distribution section of the Prospectus
forming a part of the Exchange Offer Registration Statement,
and include the information set forth in Annex D hereto in the
Letter of Transmittal delivered pursuant to the Registered
Exchange Offer; and
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<PAGE> 5
(ii) use their best efforts to keep the
Exchange Offer Registration Statement continuously effective
under the Act during the Exchange Offer Registration Period
for delivery of the Prospectus contained therein by Exchanging
Dealers in connection with sales of Exchange Notes received
pursuant to the Registered Exchange Offer, as contemplated by
Section 5(h) below.
(f) In the event that any Initial Purchaser determines
that it is not eligible to participate in the Registered Exchange Offer with
respect to the exchange of Notes constituting any portion of an unsold
allotment, at the request of such Initial Purchaser, the Issuers shall issue
and deliver to such Initial Purchaser or the party purchasing Exchange Notes
registered under a Shelf Registration Statement as contemplated by Section 3
hereof from such Initial Purchaser, in exchange for such Notes, a like
principal amount of Exchange Notes. The Issuers shall seek to cause the CUSIP
Service Bureau to issue the same CUSIP number for such Exchange Notes as for
Exchange Notes issued pursuant to the Registered Exchange Offer.
3. Shelf Registration. If (i) because of any change in
law or applicable interpretations thereof by the Commission's staff the Issuers
determine upon advice of outside counsel that the Issuers are not permitted to
effect the Registered Exchange Offer as contemplated by Section 2 hereof, or
(ii) for any other reason the Registered Exchange Offer is not consummated
within 150 days of the date hereof, or (iii) any Initial Purchaser so requests
with respect to Notes held by it following consummation of the Registered
Exchange Offer, or (iv) any Holder (other than an Initial Purchaser) is not
eligible to participate in the Registered Exchange Offer, or (v) in the case of
any Initial Purchaser that participates in the Registered Exchange Offer or
acquires Exchange Notes pursuant to Section 2(f) hereof such Initial Purchaser
does not receive freely tradeable Exchange Notes in exchange for Notes
constituting any portion of an unsold allotment (it being understood that, for
purposes of this Section 3, (x) the requirement that an Initial Purchaser
deliver a Prospectus containing the information required by Items 507 and/or
508 of Regulation S-K under the Act in connection with sales of Exchange Notes
acquired in exchange for such Notes shall result in such Exchange Notes being
not "freely tradeable" but (y) the requirement that an Exchanging Dealer
deliver a Prospectus in connection with sales of Exchange Notes acquired in the
Registered Exchange Offer in exchange for Notes acquired as a result of
market-making activities or other trading activities shall not result in such
Exchange Notes not being "freely tradeable"), then the following provisions
shall apply:
(a) The Issuers shall as promptly as practicable (but in
no event more than 30 days after so required or requested pursuant to this
Section 3), file with the Commission and thereafter shall cause to be declared
effective under the Act a Shelf Registration Statement relating to the offer
and sale of the Notes or the Exchange Notes, as applicable, by the Holders from
time to time in accordance with the methods of distribution elected by such
Holders and set forth in such Shelf Registration Statement; provided, that,
with respect to Exchange Notes received by an Initial Purchaser in exchange for
Notes constituting any portion of an unsold allotment, the Issuers may, if
permitted by current interpretations by the Commission's staff, file a
post-effective amendment to the Exchange Offer Registration Statement
containing the information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of their obligations under this paragraph (a) with
respect thereto, and any such Exchange Offer Registration Statement, as so
amended, shall be referred to
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herein as, and governed by the provisions herein applicable to, a Shelf
Registration Statement.
(b) The Issuers shall use their best efforts to keep the
Shelf Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for (x) a period of
three years from the date the Shelf Registration Statement is declared
effective by the Commission or such shorter period that will terminate when all
the Notes or Exchange Notes, as applicable, covered by the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement or (y) a
period of one year from the date the Shelf Registration Statement is declared
effective by the Commission, if such Shelf Registration Statement has been
filed at the request of an Initial Purchaser pursuant to clause (iii) of the
first paragraph of this Section 3 (in any such case, such period being called
the "Shelf Registration Period"). The Issuers shall be deemed not to have used
their best efforts to keep the Shelf Registration Statement effective during
the requisite period if either Issuer voluntarily takes any action that would
result in Holders of securities covered thereby not being able to offer and
sell such securities during that period, unless (i) such action is required by
applicable law or (ii) such action is taken by such Issuer in good faith and
for valid business reasons (not including avoidance of such Issuer's
obligations hereunder), including the acquisition or divestiture of assets, so
long as such Issuer promptly thereafter complies with the requirements of
Section 5(k) hereof, if applicable.
4. Liquidated Damages.
(a) The Issuers and the Initial Purchasers agree that
the Holders will suffer damages if the Issuers fail to fulfill their
obligations under Section 2 or Section 3 hereof and that it would not be
feasible to ascertain the extent of such damages with precision. Accordingly,
the Issuers agree to pay, as liquidated damages, additional interest on the
Notes ("Liquidated Damages") under the circumstances and to the extent set
forth below:
(i) if neither the Exchange Offer Registration Statement
nor the Shelf Registration Statement has been filed on or prior to the
Filing Date, then, commencing on the 61st day after the Issue Date,
Liquidated Damages shall accrue on the Notes over and above the stated
interest at a rate of 0.50% per annum of the principal amount of the
Notes for the first 90 days immediately following the Filing Date,
such Liquidated Damages rate increasing by an additional 0.25% per
annum of the principal amount of the Notes at the beginning of each
subsequent 90-day period;
(ii) if the Exchange Offer Registration Statement is not
declared effective by the Commission on or prior to the Effectiveness
Date, then, commencing on the 121st day after the Issue Date,
Liquidated Damages shall accrue on the Notes included or which should
have been included in such Registration Statement over and above the
stated interest at a rate of 0.50% per annum of the principal amount
of the Notes for the first 90 days immediately following the
Effectiveness Date, such Liquidated Damages increasing by an
additional 0.25% per annum of the principal amount of the Notes at the
beginning of each subsequent 90-day period; and
(iii) if (A) the Issuers have not exchanged Exchange Notes
for all Notes validly tendered in accordance with the terms of the
Registered Exchange Offer and the Shelf Registration Statement has not
been declared effective by the Commission
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<PAGE> 7
on or prior to the 150th day after the Issue Date or (B) the Exchange
Offer Registration Statement, or, if applicable, the Shelf
Registration Statement, has been declared effective and such
Registration Statement ceases to be effective at any time during the
period specified in Section 2(c)(ii) hereof (in the case of the
Exchange Offer Registration Statement) or during the Shelf
Registration Period (in the case of the Shelf Registration Statement)
unless all the Notes have previously been sold or exchanged
thereunder, as the case may be, then Liquidated Damages shall accrue
(over and above any interest otherwise payable on such Notes) at a
rate of 0.50% per annum of the principal amount of the Notes for the
first 90 days commencing on (x) the 151st day after the Issue Date
with respect to the Notes validly tendered and not exchanged by the
Company, in the case of (A) above, or (y) the day such Exchange Offer
Registration Statement or Shelf Registration Statement ceases to be
effective in the case of (B) above, such Liquidated Damages rate
increasing by an additional 0.25% per annum of the principal amount of
the Notes at the beginning of each such subsequent 90-day period (it
being understood and agreed that, in the case of (B) above, so long as
any Note is then covered by an effective Shelf Registration Statement,
no Liquidated Damages shall accrue on such Note);
provided, however, that the Liquidated Damages rate on any affected Note may
not exceed at any one time in the aggregate 2.0% per annum of the principal
amount of the Notes; and provided, further, that (1) upon the filing of the
Exchange Offer Registration Statement or a Shelf Registration Statement (in the
case of clause (i) of this Section 4(a)), (2) upon the effectiveness of the
Exchange Offer Registration Statement (in the case of clause (ii) of this
Section 4(a)), (3) upon the exchange of Exchange Notes for all Notes tendered
or the effectiveness of the Shelf Registration Statement (in the case of clause
(iii)(A) of this Section 4(a)), or (4) upon the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement which had
ceased to remain effective (in the case of clause (iii)(B) of this Section
4(a)), Liquidated Damages on the affected Notes as a result of such clause (or
the relevant subclause thereof), as the case may be, shall cease to accrue.
(b) The Issuers shall notify the Trustee within one
business day after each and every date on which an event occurs in respect of
which Liquidated Damages are required to be paid (an "Event Date"). Any
Liquidated Damages due pursuant to clauses (a)(i), (a)(ii) or (a)(iii) of this
Section 4 will be payable to the Holders of affected Notes in cash
semi-annually on each April 15 and October 15 (to the holders of record on the
April 1 and October 1 immediately preceding such dates), commencing with the
first such date occurring after any such Liquidated Damages commence to accrue.
The amount of Liquidated Damages will be determined by multiplying the
applicable Liquidated Damages rate by the principal amount of the affected
Notes of such Holders, multiplied by a fraction, the numerator of which is the
number of days such Liquidated Damages rate was applicable during such period
(determined on the basis of a 360-day year comprised of twelve 30-day months
and, in the case of a partial month, the actual number of days elapsed), and
the denominator of which is 360.
5. Registration Procedures. In connection with any
Shelf Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Issuers shall furnish to the Initial Purchasers,
prior to the filing thereof with the Commission, a copy of any Shelf
Registration Statement and any Exchange
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<PAGE> 8
Offer Registration Statement, and each amendment thereof and each amendment or
supplement, if any, to the Prospectus included therein and shall use their best
efforts to reflect in each such document, when so filed with the Commission,
such comments as the Initial Purchasers reasonably may propose.
(b) The Issuers shall ensure that (i) any Registration
Statement and any amendment thereto and any Prospectus forming part thereof and
any amendment or supplement thereto complies in all material respects with the
Act and the rules and regulations thereunder, (ii) any Registration Statement
and any amendment thereto does not, when it becomes effective, contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) any Prospectus forming part of any Registration Statement, and any
amendment or supplement to such Prospectus, does not include an untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements, in the light of the circumstances under which
they were made, not misleading.
(c) (1) The Issuers shall advise the Initial
Purchasers and, in the case of a Shelf Registration Statement, the Holders of
securities covered thereby, and, if requested by the Initial Purchasers or any
such Holder, confirm such advice in writing:
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the Registration
Statement or any post-effective amendment thereto has become
effective; and
(ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus included
therein or for additional information.
(2) The Issuers shall advise the Initial Purchasers and,
in the case of a Shelf Registration Statement, the Holders of securities
covered thereby, and, in the case of an Exchange Offer Registration Statement,
any Exchanging Dealer which has provided in writing to the Company a telephone
or facsimile number and address for notices, and, if requested by the Initial
Purchasers or any such Holder or Exchanging Dealer, confirm such advice in
writing:
(i) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose;
(ii) of the receipt by the Issuers of any notification
with respect to the suspension of the qualification of the securities
included therein for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(iii) of the happening of any event that requires the
making of any changes in the Registration Statement or the Prospectus
so that, as of such date, the statements therein are not misleading
and do not omit to state a material fact required to be stated therein
or necessary to make the statements therein (in the case of the
Prospectus, in light of the circumstances under which they were made)
not misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have
been made).
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<PAGE> 9
(d) The Issuers shall use their best efforts to obtain
the withdrawal of any order suspending the effectiveness of any Registration
Statement at the earliest possible time.
(e) The Issuers shall furnish to each Holder of
securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits (including those
incorporated by reference).
(f) The Issuers shall, during the Shelf Registration
Period, deliver to each Holder of securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Issuers consent to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders of
securities in connection with the offering and sale of the securities covered
by the Prospectus or any amendment or supplement thereto.
(g) The Issuers shall furnish to each Exchanging Dealer
which so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules, any documents incorporated by reference
therein, and, if the Exchanging Dealer so requests in writing, all exhibits
(including those incorporated by reference).
(h) The Issuers shall, during the Exchange Offer
Registration Period, promptly deliver to each Exchanging Dealer, without
charge, as many copies of the Prospectus included in such Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer may reasonably request for delivery by such Exchanging Dealer
in connection with a sale of Exchange Notes received by it pursuant to the
Registered Exchange Offer; and the Issuers consent to the use of the Prospectus
or any amendment or supplement thereto by any such Exchanging Dealer, as
aforesaid.
(i) Prior to the Registered Exchange Offer or any other
offering of securities pursuant to any Registration Statement, the Issuers
shall register or qualify or cooperate with the Holders of securities included
therein and their respective counsel in connection with the registration or
qualification of such securities for offer and sale under the securities or
blue sky laws of such jurisdictions as any such Holders reasonably request in
writing and shall do any and all other acts or things necessary or advisable to
enable the offer and sale in such jurisdictions of the securities covered by
such Registration Statement; provided, however, that the Issuers will not be
required to qualify generally to do business in any jurisdiction where they are
not then so qualified or to take any action which would subject them to general
service of process or to taxation in any such jurisdiction where they are not
then so subject.
(j) The Issuers shall cooperate with the Holders of
Securities to facilitate the timely preparation and delivery of certificates
representing Securities to be sold pursuant to any Registration Statement free
of any restrictive legends and in such denominations and registered in such
names as Holders may request prior to sales of Securities pursuant to such
Registration Statement.
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<PAGE> 10
(k) Upon the occurrence of any event contemplated by
paragraph (c)(2)(iii) above, the Issuers shall promptly prepare a
post-effective amendment to any Registration Statement or an amendment or
supplement to the related Prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Securities included therein,
the Prospectus will not include an untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such
Registration Statement hereunder, the Issuers shall provide a CUSIP number for
the Notes or Exchange Notes, as the case may be, registered under such
Registration Statement, and provide the applicable trustee with printed
certificates for such Notes or Exchange Notes, in a form eligible for deposit
with The Depository Trust Company.
(m) The Issuers shall use their best efforts to comply
with all applicable rules and regulations of the Commission and shall make
generally available to their security holders as soon as practicable after the
effective date of the applicable Registration Statement an earnings statement
satisfying the provisions of Section 11(a) of the Act.
(n) The Issuers shall cause the Indenture to be qualified
under the Trust Indenture Act in a timely manner.
(o) The Issuers may require each Holder of Securities to
be sold pursuant to any Shelf Registration Statement to furnish to the Issuers
such information regarding the Holder and the distribution of such Securities
as the Issuers may from time to time reasonably require for inclusion in such
Registration Statement.
(p) The Issuers shall, if requested, promptly incorporate
in a Prospectus supplement or post-effective amendment to a Shelf Registration
Statement, such information as the Managing Underwriters and Majority Holders
reasonably agree should be included therein and shall make all required filings
of such Prospectus supplement or post-effective amendment as soon as notified
of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(q) In the case of any Shelf Registration Statement, the
Issuers shall enter into such agreements (including underwriting agreements)
and take all other appropriate actions in order to expedite or facilitate the
registration or the disposition of the Securities, and in connection therewith,
if an underwriting agreement is entered into, cause the same to contain
indemnification provisions and procedures no less favorable than those set
forth in Section 7 (or such other provisions and procedures acceptable to the
Majority Holders and the Managing Underwriters, if any) with respect to all
parties to be indemnified pursuant to Section 7.
(r) In the case of any Shelf Registration Statement, the
Issuers shall (i) make reasonably available for inspection by the Holders of
Securities to be registered thereunder, any underwriter participating in any
disposition pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by the Holders or any such underwriter all
relevant financial and other records, pertinent corporate documents and
properties of the Issuers and their subsidiaries; (ii) cause the Issuers'
officers, directors and employees to supply all relevant information reasonably
requested by the Holders or any
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<PAGE> 11
such underwriter, attorney, accountant or agent in connection with any such
Registration Statement as is customary for similar due diligence examinations;
provided, however, that any information that is designated in writing by
the Issuers, in good faith, as confidential at the time of delivery of such
information shall be kept confidential by the Holders or any such underwriter,
attorney, accountant or agent, unless such disclosure is made in connection
with a court proceeding or required by law, or such information becomes
available to the public generally or through a third party without an
accompanying obligation of confidentiality; (iii) make such representations and
warranties to the Holders of Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering matters
including, but not limited to, those set forth in the Purchase Agreement; (iv)
obtain opinions of counsel to the Issuers and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably satisfactory to
the Managing Underwriters, if any) addressed to each selling Holder and the
underwriters, if any, covering such matters as are customarily covered in
opinions requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and underwriters; (v) obtain "cold
comfort" letters and updates thereof from the independent certified public
accountants of the Issuers (and, if necessary, any other independent certified
public accountants of any subsidiary of the Issuers or of any business acquired
by the Issuers for which financial statements and financial data are, or are
required to be, included in the Registration Statement), addressed to each
selling Holder of Securities registered thereunder and the underwriters, if
any, in customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten offerings; and
(vi) deliver such documents and certificates as may be reasonably requested by
the Majority Holders and the Managing Underwriters, if any, including those to
evidence compliance with Section 5(k) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Issuers. The foregoing actions set forth in clauses (iii), (iv), (v) and (vi)
of this Section 5(r) shall be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and (B) each
closing under any underwriting or similar agreement as and to the extent
required thereunder.
(s) In the case of any Exchange Offer Registration
Statement, the Issuers shall (i) make reasonably available for inspection by
such Initial Purchaser, and any attorney, accountant or other agent retained by
such Initial Purchaser, all relevant financial and other records, pertinent
corporate documents and properties of each Issuer and their subsidiaries; (ii)
cause the Issuers' officers, directors and employees to supply all relevant
information reasonably requested by such Initial Purchaser or any such
attorney, accountant or agent in connection with any such Registration
Statement as is customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the Issuers, in
good faith, as confidential at the time of delivery of such information shall
be kept confidential by such Initial Purchaser or any such attorney, accountant
or agent, unless such disclosure is made in connection with a court proceeding
or required by law, or such information becomes available to the public
generally or through a third party without an accompanying obligation of
confidentiality; (iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by issuers to
underwriters in primary underwritten offerings and covering matters including,
but not limited to, those set forth in the Purchase Agreement; (iv) obtain
opinions of counsel
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<PAGE> 12
to the Issuers and updates thereof (which counsel and opinions (in form, scope
and substance) shall be reasonably satisfactory to such Initial Purchaser and
their counsel) addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings and
such other matters as may be reasonably requested by such Initial Purchaser or
their counsel; (v) obtain "cold comfort" letters and updates thereof from the
independent certified public accountants of the Issuers (and, if necessary, any
other independent certified public accountants of any subsidiary of the Issuers
or of any business acquired by any of the Issuers for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to such Initial Purchaser, in customary form
and covering matters of the type customarily covered in "cold comfort" letters
in connection with primary underwritten offerings, or if requested by such
Initial Purchaser or their counsel in lieu of a "cold comfort" letter, an
agreed-upon procedures letter under Statement on Auditing Standards No. 35,
covering matters requested by such Initial Purchaser or their counsel; and (vi)
deliver such documents and certificates as may be reasonably requested by such
Initial Purchaser or their counsel, including those to evidence compliance with
Section 5(k) and with conditions customarily contained in underwriting
agreements. The foregoing actions set forth in clauses (iii), (iv), (v), and
(vi) of this Section 5(s) shall be performed at the close of the Registered
Exchange Offer and the effective date of any post-effective amendment to the
Exchange Offer Registration Statement.
6. Registration Expenses. The Issuers shall bear all
expenses incurred in connection with the performance of their obligations under
Sections 2, 3, 4 and 5 hereof and, in the event of any Shelf Registration
Statement, will reimburse the Holders for the reasonable fees and disbursements
of one firm or counsel designated by the Majority Holders to act as counsel for
the Holders in connection therewith, and, in the case of any Exchange Offer
Registration Statement, will reimburse the Initial Purchasers for the
reasonable fees and disbursements of counsel acting in connection therewith.
7. Indemnification and Contribution. (a) In connection
with any Registration Statement, the Issuers, jointly and severally, agree to
indemnify and hold harmless each Holder of Securities covered thereby
(including each Initial Purchaser and, with respect to any Prospectus delivery
as contemplated in Section 5(h) hereof, each Exchanging Dealer), the directors,
officers, employees and agents of each such Holder and each person who controls
any such Holder within the meaning of either the Act or the Exchange Act
against any and all losses, claims, damages or liabilities, joint or several,
to which they or any of them may become subject under the Act, the Exchange Act
or other Federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement as originally filed or in any amendment thereof, or in any
preliminary Prospectus or Prospectus, or in any amendment thereof or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and agree to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by it in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the Issuers will
not be liable in any case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Issuers by or
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on behalf of any such Holder specifically for inclusion therein. This
indemnity agreement will be in addition to any liability which the Issuers may
otherwise have.
The Issuers, jointly and severally, also agree to indemnify or
contribute to Losses of, as provided in Section 7(d), any underwriters of
Securities registered under a Shelf Registration Statement, their officers and
directors and each person who controls such underwriters on substantially the
same basis as that of the indemnification of the Initial Purchasers and the
selling Holders provided in this Section 7(a) and shall, if requested by any
Holder, enter into an underwriting agreement reflecting such agreement, as
provided in Section 5(q) hereof.
(b) Each Holder of Securities covered by a Registration
Statement (including each Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 5(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless (i) the Issuers, (ii) each of
their respective directors, (iii) each of their respective officers who signs
such Registration Statement and (iv) each person who controls the Issuers
within the meaning of either the Act or the Exchange Act to the same extent as
the foregoing indemnity from the Issuers to each such Holder, but only with
reference to written information relating to such Holder furnished to the
Issuers by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement
will be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under
this Section 7 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 7, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the
indemnifying party in any action for which indemnification is sought (in which
case the indemnifying party shall not thereafter be responsible for the fees
and expenses of any separate counsel retained by the indemnified party or
parties except as set forth below); provided, however, that such counsel shall
be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel (and
local counsel) if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets of, any such
action include both the indemnified party and the indemnifying party and
counsel to the indemnified party shall have reasonably concluded that there may
be legal defenses available to such indemnified party and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the
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<PAGE> 14
indemnified party to employ separate counsel at the expense of the indemnifying
party. An indemnifying party will not, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 7 is unavailable to, or insufficient to hold
harmless, an indemnified party for any reason, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall have
a joint and several obligation to contribute to the aggregate losses, claims,
damages and liabilities (including legal or other expenses reasonably incurred
in connection with investigating or defending same) (collectively "Losses") to
which such indemnified party may be subject in such proportion as is
appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Registration Statement which resulted in such Losses;
provided, however, that in no case shall any Initial Purchaser or any
subsequent Holder of any Note or Exchange Note be responsible, in the
aggregate, for any amount in excess of the purchase discount or commission
applicable to such Note, or in the case of an Exchange Note, applicable to the
Note which was exchangeable into such Exchange Note, as set forth on the cover
page of the Final Memorandum, nor shall any underwriter be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such underwriter under the Registration Statement which
resulted in such Losses. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the indemnifying party and
the indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Benefits
received by the Issuers shall be deemed to be equal to the total net proceeds
from the Initial Placement (before deducting expenses) as set forth on the
cover page of the Final Memorandum. Benefits received by the Initial
Purchasers shall be deemed to be equal to the total purchase discounts and
commissions as set forth on the cover page of the Final Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Notes or Exchange Notes, as applicable, registered under the Act.
Benefits received by any underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, as set forth on the cover page of the
Prospectus forming a part of the Registration Statement which resulted in such
Losses. Relative fault shall be determined by reference to whether any alleged
untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty
of such fraudulent misrepresentation. For purposes of this Section 7, each
person who controls a Holder within the meaning of either the Act or the
Exchange Act and each director, officer, employee and agent of such Holder
shall have the same rights to contribution as such
-14-
<PAGE> 15
Holder, and each person who controls the Company or the Guarantor within the
meaning of either the Act or the Exchange Act, each officer of the Company or
the Guarantor who shall have signed the Registration Statement and each
director of the Company or the Guarantor shall have the same rights to
contribution as the Company or the Guarantor, respectively, subject in each
case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 7 will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Holder or the Issuers or any of the officers, directors or controlling persons
referred to in Section 7 hereof, and will survive the sale by a Holder of
Securities covered by a Registration Statement.
8. Market Making. The Company will, if requested to do
so by any of the Initial Purchasers in the good faith belief that such actions
are required in order to make a market in the Securities pursuant to applicable
law, regulation or administrative practice, and for so long as any of the
Securities are outstanding and any of the Initial Purchasers or any of their
Affiliates (as defined in the Rules and Regulations under the Act) owns
beneficially 5% or more of the equity securities of the Company or has a
representative serving on the board of directors of the Company:
(a) (i) Periodically amend the Registration Statement (which,
for purposes of this Section 8 shall include a Shelf Registration
Statement) so that the information contained in the Registration
Statement complies with the requirements of Section 10(a) under the
Act; (ii) if requested by any of the Initial Purchasers and if not
otherwise incorporated therein by reference, within 45 days following
the end of the Company's most recent fiscal quarter, file a supplement
to the Prospectus which sets forth the financial results of the
Company for the previous quarter; (iii) amend the Registration
Statement or supplement the Prospectus when necessary to reflect any
material changes in the information provided therein that are not
otherwise incorporated therein by reference; (iv) amend the
Registration Statement when required to do so in order to comply with
Section 10(a)(3) of the Act as described in Part II, Item 22 of the
Registration Statement (or in Part II, Item 17 of any registration
statement on Form S-3 covering the Securities); and (v) comply with
the provisions of the Act and the Exchange Act with regard to the
foregoing; provided, however, that (A) a reasonable time prior to
filing any post-effective amendment to the Registration Statement or
any supplement to the Prospectus, the Company will furnish to the
Initial Purchasers copies of all such documents proposed to be
filed, which documents will be subject to the review of such Initial
Purchasers' counsel and the Initial Purchasers, (B) the Company will
not file any post-effective amendment to the Registration Statement or
any supplement to the Prospectus to which such Initial Purchasers'
counsel or the Initial Purchasers shall reasonably object, and (C) the
Company will provide such Initial Purchasers' counsel and the Initial
Purchasers with copies of each amendment or supplement as filed.
(b) Notify the Initial Purchasers and, if requested,
confirm such advice in writing, (i) when any Prospectus supplement or
amendment or post-effective amendment has been filed, and, with
respect to any post-effective amendment, when the same has become
effective; (ii) of any request by the Commission for any
post-effective amendment or supplement to the Registration Statement,
any supplement or amendment to the Prospectus or for additional
information; (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration
-15-
<PAGE> 16
Statement or the initiation of any proceedings for that purpose; (iv)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceedings for
such purpose; and (v) of the happening of any event which makes any
material statement made in the Registration Statement, the Prospectus
or any amendment or supplement thereto untrue or which requires the
making of any changes in the Registration Statement, the Prospectus or
any amendment or supplement thereto, in order to make the statements
therein not materially misleading.
(c) Furnish to any of the Initial Purchasers, without
charge, (i) at least one conformed copy of any post-effective
amendment to the Registration Statement; and (ii) as many copies of
any amendment or supplement to the Prospectus as each such person may
reasonably request.
(d) Consent to the use of the Prospectus or any amendment
or supplement thereto by the Initial Purchasers in connection with the
offering and sale of the Securities.
(e) Agree to indemnify the Initial Purchasers, as well as
the other indemnified persons referred to in Section 7(a), and if
applicable, contribute to the Initial Purchasers, as well as the other
indemnified persons referred to in Section 7(a), in the manner
specified in Section 7 (with appropriate modifications).
The Initial Purchasers agree to indemnify the Company against
any losses, claims, damages or liabilities (or actions in respect thereof) to
the extent that any such loss, claim, damage or liability (or action in respect
thereof) arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in the Registration Statement or
Prospectus, or in any amendment or post-effective amendment thereof or
supplement thereto in reliance upon and in conformity with written information
furnished to the Company by the Initial Purchasers specifically for inclusion
therein, and, if applicable, to contribute to the losses, claims, damages or
liabilities to which the Company may be subject, in such proportion as is
appropriate to reflect the relative benefits received by the Initial Purchasers
from the offering of the Securities; provided, however, that in no case shall
any Initial Purchaser (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Initial Purchaser, and, if necessary, the relative
fault of the Initial Purchaser, determined by reference to whether any alleged
untrue statement or omission relates to information provided by the Initial
Purchaser. Such indemnification and contribution shall be in the manner
specified in Section 7 (with appropriate modifications).
The Company will comply with the provisions of this Section 8
at its own expense and will reimburse the Initial Purchasers for their
reasonable expenses paid or incurred in furtherance of the offering, sale or
market-making in the Securities (including reasonable fees and disbursements of
counsel to the Initial Purchasers).
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company and the
Guarantor have not, as of the date hereof, entered into, nor shall either of
them, on or after the date hereof,
-16-
<PAGE> 17
enter into, any agreement with respect to their securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof.
(b) Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
qualified, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, unless the Issuers have obtained the
written consent of the Holders of at least a majority of the then outstanding
aggregate principal amount of Notes (or, after the consummation of any Exchange
Offer in accordance with Section 2 hereof, of Exchange Notes); provided that,
with respect to any matter that directly or indirectly affects the rights of
any Initial Purchaser hereunder, the Issuers shall obtain the written consent
of each such Initial Purchaser against which such amendment, qualification,
supplement, waiver or consent is to be effective. Notwithstanding the
foregoing (except the foregoing proviso), a waiver or consent to departure from
the provisions hereof with respect to a matter that relates exclusively to the
rights of Holders whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the rights of other
Holders may be given by the Majority Holders, determined on the basis of
securities being sold rather than registered under such Registration Statement.
(c) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telex, telecopier, or air courier guaranteeing overnight
delivery:
(1) if to a Holder, at the most current address
given by such holder to the Company in accordance with the
provisions of this Section 9(c), which address initially is,
with respect to each Holder, the address of such Holder
maintained by the Registrar under the Indenture, with a copy
in like manner to Salomon Brothers Inc;
(2) if to an Initial Purchaser, initially at the
respective addresses set forth in the Purchase Agreement, with
copies as indicated therein; and
(3) if to Issuers, initially at the address of
the Company set forth in the Purchase Agreement, with copies
as indicated therein.
All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, first-class postage prepaid, if mailed;
and one business day after being timely delivered to a next-day air courier.
The Initial Purchasers or the Issuers by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure
to the benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent
by the Issuers thereto, subsequent Holders of Notes and/or Exchange Notes. The
Issuers hereby agree to extend the benefits of this Agreement to any Holder of
Notes and/or Exchange Notes and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
-17-
<PAGE> 18
(e) Counterparts. This Agreement may be executed in any
number of counterparts and by the parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) Severability. In the event that any one or more of
the provisions contained herein, or the application thereof in any
circumstances, is held invalid, illegal or unenforceable in any respect for any
reason, the validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions hereof shall not be in any
way impaired or affected thereby, it being intended that all of the rights and
privileges of the parties shall be enforceable to the fullest extent permitted
by law.
(i) Notes Held by the Company, etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of Notes
or Exchange Notes is required hereunder, Notes or Exchange Notes, as
applicable, held by the Company or its Affiliates (other than the Initial
Purchasers or subsequent Holders of Notes or Exchange Notes if such subsequent
Holders are deemed to be Affiliates solely by reason of their holdings of such
Notes or Exchange Notes) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
-18-
<PAGE> 19
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above:
U. S. CAN CORPORATION
By: /s/ Timothy W. Stonich
------------------------
Name: Timothy W. Stonich
Title: Executive Vice
President, Finance,
Chief Financial Officer
and Secretary
UNITED STATES CAN COMPANY
By: /s/ Timothy W. Stonich
------------------------
Name: Timothy W. Stonich
Title: Executive Vice
President, Finance,
Chief Financial Officer
and Secretary
SALOMON BROTHERS INC
CS FIRST BOSTON CORPORATION
BA SECURITIES, INC.
by Salomon Brothers Inc
By: /s/ Paul Lipari
------------------------
Name: Paul Lipari
Title: Associate
Salomon Brothers Inc
[Registration Rights Agreement]
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Consolidated Balance Sheets at September 29, 1996 (Unaudited) and
condensed consolidated Statement of Operations for the Quarterly Period ended
September 29, 1996 (Unaudited) and is qualified in its entirely by reference
to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> SEP-29-1996
<CASH> 3,940
<SECURITIES> 0
<RECEIVABLES> 112,388
<ALLOWANCES> 9,305
<INVENTORY> 113,735
<CURRENT-ASSETS> 235,826
<PP&E> 450,086
<DEPRECIATION> 145,081
<TOTAL-ASSETS> 624,156
<CURRENT-LIABILITIES> 144,834
<BONDS> 332,206
0
0
<COMMON> 129
<OTHER-SE> 96,743
<TOTAL-LIABILITY-AND-EQUITY> 624,156
<SALES> 538,316
<TOTAL-REVENUES> 538,316
<CGS> 470,745
<TOTAL-COSTS> 491,848
<OTHER-EXPENSES> 2,360
<LOSS-PROVISION> 255
<INTEREST-EXPENSE> 19,513
<INCOME-PRETAX> 24,340
<INCOME-TAX> 10,352
<INCOME-CONTINUING> 13,988
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,988
<EPS-PRIMARY> 1.07
<EPS-DILUTED> 1.07
</TABLE>
