<PAGE> 1
EXHIBIT C(6)
SALOMON SMITH BARNEY INC.
399 PARK AVENUE
NEW YORK, NEW YORK 10043
BANC OF AMERICA BRIDGE LLC
100 N. TRYON STREET
CHARLOTTE, NORTH CAROLINA 28255
July 27, 2000
Pac Packaging Acquisition Corporation
900 Commerce Drive
Oak Brook, Illinois 60523
Berkshire Partners LLC
One Boston Place
Boston, Massachusetts 02108
United States Can Company
$150,000,000 Senior Subordinated Facility
Commitment Letter
Ladies and Gentlemen:
Berkshire Partners LLC ("Financial Buyer") and its affiliate, Pac Packaging
Acquisition Corporation ("Transitory Corp."), have advised Citi/SSB (as defined
below) and Banc of America Bridge LLC ("BAB") that Transitory Corp. intends to
be merged with (the "Recapitalization") U.S. Can Corporation (the "Recapitalized
Company" and, together with its subsidiaries, the "Recapitalized Business") in
order to recapitalize the Recapitalized Company and that United States Can
Company ("Borrower"), a wholly-owned subsidiary of the Recapitalized Company,
desires to establish the Senior Subordinated Facility, the proceeds of which
would be used to finance the Recapitalization, the refinancing of certain of the
outstanding funded indebtedness of the Recapitalized Company, including the
Recapitalized Company's 10 1/8% senior subordinated notes due 2006, and the
other transactions described in Exhibit A hereto (the "Transaction
Description"). Capitalized terms used in this letter agreement but not defined
herein shall have the meanings given to them in the Transaction Description.
Subject to the terms and conditions described in this letter agreement and the
attached Exhibits A, B and C (collectively, and together with the Fee Letter
referred to below, this "Commitment Letter"), Citi/SSB is pleased to inform
Financial Buyer and Transitory Corp. of Citi/SSB's commitment to provide
$120,000,000 of the Senior Subordinated Facility and BAB is pleased to inform
Financial Buyer and Transitory Corp. of BAB's commitment to provide $30,000,000
of the Senior Subordinated Facility; provided that (a) Citi/SSB's and BAB's
respective commitments shall be automatically reduced on a ratable basis by the
aggregate principal amount of Senior Subordinated Notes issued by Transitory
Corp. or the Recapitalized Business (the "Senior Subordinated Notes"), and (b)
prior to the 90 day anniversary of the Closing Date, Citi/SSB and BAB shall each
have the right to have their respective commitments hereunder reduced on the
"Agreed Basis" (as defined below) by the amount of the commitments of any other
prospective Lenders (as defined below) which execute commitment letters relating
to the Senior Subordinated Facility. "Agreed Basis" means that all reductions
shall be applied ratably to the loans/commitments of Citi/SSB and BAB.
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For purposes of this Commitment Letter, (i) "Citi/SSB" shall mean Citicorp North
America, Inc. and/or any affiliate thereof, including Salomon Smith Barney Inc.
("SSBI"), as Citi/SSB shall determine to be appropriate to provide the services
contemplated herein and (ii) "BAB" shall mean Banc of America Bridge LLC and/or
any affiliate thereof, including Bank of America Securities LLC ("BAS"), as BAB
shall determine to be appropriate to provide the services contemplated herein.
Conditions Precedent
Each of the commitments of Citi/SSB and BAB hereunder are subject to:
1. The preparation, execution and delivery of definitive documentation
with respect to (A) the Senior Subordinated Facility, including credit
agreements and guarantees incorporating substantially the terms and
conditions outlined in this Commitment Letter and otherwise satisfactory to
Citi/SSB and BAB and their respective counsel (the "Operative Documents"),
and (B) a $400,000,000 senior secured credit facility on substantially the
terms and conditions set forth in the Commitment Letter dated July 27, 2000
and attached term sheet relating thereto and otherwise satisfactory to
Citi/SSB and BAB and their respective counsel (the "Senior Secured
Facility"), in each case on or before November 30, 2000.
2. There not having occurred either (A) any material adverse change in
the business, assets, operations, properties, condition (financial or
otherwise), contingent liabilities, prospects or material agreements of
either Transitory Corp. or the Recapitalized Business, taken as a whole,
since December 31, 1999 (it being understood that for all purposes of this
Commitment Letter, the financial information disclosed in the Recapitalized
Company's Quarterly Report on Form 10-Q for the quarter ended April 2, 2000
shall not be deemed to evidence or constitute, in whole or in part, such a
material adverse change) or (B) any material disruption of or material
adverse change in loan syndication, financial, banking or capital market
conditions that, in Citi/SSB's or BAB's judgment, could materially impair
the syndication of the Senior Subordinated Facility or the Proposed
Financing, as defined in the letter agreement dated the date hereof (the
"Engagement Letter") among the Financial Buyer, Transitory Corp., Citi/SSB
and BAS.
3. The accuracy and completeness in all material respects of all
representations that Financial Buyer, Transitory Corp. and the
Recapitalized Business and their affiliates make to Citi/SSB and BAB and
all information that Financial Buyer, Transitory Corp. and the
Recapitalized Business and their affiliates furnish to Citi/SSB and BAB and
their compliance with the terms of this Commitment Letter.
4. The payment in full of all fees, expenses and other amounts payable
under this Commitment Letter.
5. Citi/SSB and BAB having received, by August 31, 2000 and at least
60 days before the date of the consummation of the Recapitalization, a
complete Registration Statement or a Rule 144A Offering Memorandum relating
to the Senior Subordinated Notes (including audited, pro forma and other
financial statements and schedules of Transitory Corp. and the
Recapitalized Business of the type that would be required in a registered
public offering of the Senior Subordinated Notes).
6. Citi/SSB and BAB having been afforded a period of at least 60 days
following the receipt of the final form of the documentation described in
the preceding clause to attempt to place the Senior Subordinated Notes with
qualified purchasers thereof (to the extent Citi/SSB and BAS have agreed to
provide the placement services for the Senior Subordinated Notes as
contemplated by the Engagement Letter).
7. Citi/SSB's and BAB's reasonable satisfaction in all respects with
(A) the structure of the Recapitalization and the other Transactions and
all related tax, legal and accounting matters, (B) the material terms of
the Merger Agreement and all other agreements to be entered into in
connection with the Transactions and (C) the capitalization, structure and
equity ownership of the Recapitalized Business after giving effect to the
Transactions. It is understood that Citi/SSB and BAB have reviewed the
Merger
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Agreement and are satisfied with the material terms thereof and the
Recapitalization structure embodied therein.
8. The execution and delivery of (A) the Engagement Letter and (B) the
Fee Letter, each in form and substance satisfactory to Citi/SSB and BAB.
Please note that the terms and conditions of Citi/SSB's and BAB's commitments
hereunder are not limited to those set forth in this Commitment Letter and that
those matters that are not covered or made clear in this Commitment Letter are
subject to mutual agreement of the parties.
Commitment Termination
Citi/SSB's and BAB's commitments set forth in this Commitment Letter will
terminate on the earlier of November 30, 2000 and the date of execution and
delivery of the Operative Documents. Before such date, Citi/SSB or BAB may
terminate their respective commitments under this Commitment Letter if any event
occurs or information becomes available that, in its judgment, results or is
likely to result in the failure to satisfy any condition set forth in the
immediately preceding section captioned "Conditions Precedent".
Syndication
Citi/SSB and BAB reserves the right, before or after the execution of the
Operative Documents, to syndicate after consultation with you all or a portion
of its commitment to one or more other financial institutions that will become
parties to the Operative Documents pursuant to syndications to be managed by
SSBI (the financial institutions becoming parties to the Operative Documents
being collectively referred to herein as the "Lenders"). SSBI intends to
commence such syndication efforts promptly; provided, that any syndication of
the Senior Subordinated Facility shall reduce Citi/SSB's and BAB's loans or
commitments, as the case may be, on the Agreed Basis (if it so elects to accept
such reduction) and such syndication shall cease on the 90 day anniversary of
the Closing Date.
SSBI will act as the syndication agent and BAB will act as documentation agent
with respect to the Senior Subordinated Facility. SSBI will manage all aspects
of the syndication, including the timing of all offers to potential Lenders, the
determination of all amounts offered to potential Lenders, the selection of
Lenders, the allocation of commitments among the Lenders, and the compensation
to be provided to the Lenders.
Financial Buyer and Transitory Corp. shall take all action that SSBI may
reasonably request to assist it in forming a syndicate acceptable to SSBI.
Financial Buyer's and Transitory Corp.'s assistance in forming such syndicate
shall include but not be limited to: (i) making senior management,
representatives, consultants and advisors of Financial Buyer, Transitory Corp.
and the Recapitalized Business available to participate in informational
meetings with potential Lenders at such times and places as SSBI may reasonably
request; (ii) using its reasonable best efforts to ensure that the syndication
efforts benefit from Financial Buyer's and the Recapitalized Business's existing
lending relationships; (iii) assisting (including using its reasonable best
efforts to cause its affiliates and advisors to assist) in the preparation of a
confidential information memorandum for the Senior Subordinated Facility and
other marketing materials to be used in connection with the syndication; and
(iv) promptly providing SSBI with all information reasonably deemed necessary by
it to successfully complete the syndication.
In addition, it is understood and agreed that Financial Buyer shall advise SSBI
of its involvement in any debt offering in excess of $100 million occurring on
or before the closing of the Transactions.
Financial Buyer and Transitory Corp. agree that Citi/SSB will act as the sole
agent bank for the Senior Subordinated Facility, that SSBI will act as sole
syndication agent and that BAB will act as sole documentation agent, and that no
additional agents, co-agents or arrangers will be appointed, or other titles
conferred, without the consent of SSBI after consultation with BAB. Financial
Buyer and Transitory Corp. agree that no Lender will receive any compensation of
any kind for its participation in the Senior Subordinated Facility, except as
expressly provided in the Fee Letter or in Exhibit A, B or C.
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Fees
In addition to the fees described in Exhibits B and C, Financial Buyer and
Transitory Corp. will pay the fees set forth in the letter agreement dated the
date hereof (the "Fee Letter") among Financial Buyer, Transitory Corp., Citi/SSB
and BAB. The terms of the Fee Letter are an integral part of Citi/SSB's and
BAB's commitments hereunder and constitute part of this Commitment Letter for
all purposes hereof. Each of the fees described in the Fee Letter and Exhibits B
and C shall be nonrefundable when paid.
Indemnification
Each of Financial Buyer and Transitory Corp. agrees, jointly and severally, to
indemnify and hold harmless Citi/SSB, BAB, each Lender and each of their
respective affiliates and each of their respective officers, directors,
employees, agents, advisors and representatives (each, an "Indemnified Person")
from and against any and all claims, damages, losses, liabilities and expenses
(including, without limitation, reasonable fees and disbursements of counsel),
joint or several, that may be incurred by or asserted or awarded against any
Indemnified Person, in each case arising out of or in connection with or
relating to any investigation, litigation or proceeding or the preparation of
any defense with respect thereto, arising out of or in connection with or
relating to this Commitment Letter (or the Predecessor Letter referred to below)
or the Operative Documents or the transactions contemplated hereby or thereby,
or any use made or proposed to be made with the proceeds of the Senior
Subordinated Facility, whether or not such investigation, litigation or
proceeding is brought by Financial Buyer, Transitory Corp., the Recapitalized
Business, any of their shareholders or creditors, an Indemnified Person or any
other person, or an Indemnified Person is otherwise a party thereto and whether
or not the transactions contemplated hereby are consummated, except to the
extent such claim, damage, loss, liability or expense resulted from such
Indemnified Person's gross negligence or willful misconduct.
No Indemnified Person shall have any liability (whether direct or indirect, in
contract, tort or otherwise) to Financial Buyer, Transitory Corp., the
Recapitalized Business or any of their shareholders or creditors for or in
connection with the transactions contemplated hereby, except for direct damages
(as opposed to special, indirect, consequential or punitive damages (including,
without limitation, any loss of profits, business or anticipated savings))
resulting from such Indemnified Person's gross negligence or willful misconduct.
Costs and Expenses
Transitory Corp. will pay or reimburse Citi/SSB and BAB on demand made at or
after the consummation of the Transactions for all out-of-pocket costs and
expenses incurred by Citi/SSB and BAB, respectively, in connection with the
Senior Subordinated Facility and the preparation, negotiation, execution and
delivery of this Commitment Letter, the Predecessor Letter and the Operative
Documents, including the reasonable fees and disbursements of counsel (whether
incurred before or after the date hereof). Each of Financial Buyer and
Transitory Corp. further agrees to pay, jointly and severally, on demand all
costs and expenses of Citi/SSB and BAB (including, without limitation,
reasonable fees and disbursements of counsel) incurred in connection with the
enforcement of any of their rights and remedies hereunder.
Confidentiality
By accepting delivery of this Commitment Letter, each of Financial Buyer and
Transitory Corp. agrees that this Commitment Letter is for its confidential use
only and that neither its existence nor the terms hereof will be disclosed by it
to any person other than their respective officers, directors, employees,
accountants, attorneys and other advisors, and then only on a confidential and
"need to know" basis in connection with the transactions contemplated hereby.
Notwithstanding the foregoing, following Financial Buyer's and Transitory
Corp.'s acceptance of the provisions hereof and their return of an executed
counterpart of this Commitment Letter to Citi/SSB and BAB as provided below, (i)
Financial Buyer and Transitory Corp. may disclose this Commitment Letter (other
than the Fee Letter) to the Recapitalized Company and its senior management,
officers, directors, employees, accountants, attorneys and other advisors on a
confidential and "need to know" basis in connection with the Recapitalization,
(ii) Financial Buyer and
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Transitory Corp. may file a copy of this Commitment Letter (other than the Fee
Letter) in any public record in which they are required by law to be filed and
(iii) Financial Buyer and Transitory Corp. may make such other public
disclosures of the terms and conditions hereof as Financial Buyer and Transitory
Corp. are required by law, in the opinion of their counsel, to make.
Representations and Warranties
Each of Financial Buyer and Transitory Corp. represents and warrants that (i)
all information (other than financial projections) that has been or will
hereafter be made available to Citi/SSB, BAB, any Lender or any potential Lender
by or on behalf of Financial Buyer, Transitory Corp. or any of their respective
representatives in connection with the transactions contemplated hereby when
taken as a whole is and will be complete and correct in all material respects
and does not and will not contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
contained therein not misleading in light of the circumstances under which such
statements were or are made and (ii) all financial projections, if any, that
have been or will be prepared by or on behalf of Financial Buyer, Transitory
Corp. or any of their respective representatives and made available to Citi/SSB,
BAB, any Lender or any potential Lender have been or will be prepared in good
faith based upon assumptions that are reasonable at the time made and at the
time the related financial projections are made available to Citi/SSB and BAB.
If, at any time from the date hereof until the execution and delivery of the
Operative Documents, any of the representations and warranties in the preceding
sentence would be incorrect if the information or financial projections were
being furnished, and such representations and warranties were being made, at
such time, then Financial Buyer and Transitory Corp. will promptly supplement
the information and the financial projections so that such representations and
warranties will be correct under those circumstances.
In issuing this Commitment Letter and in arranging the Senior Subordinated
Facility, including the syndication of the Senior Subordinated Facility,
Citi/SSB and BAB will be entitled to use, and to rely on the accuracy of, the
information furnished to it by or on behalf of Financial Buyer, Transitory
Corp., the Recapitalized Business or any of their respective representatives
without responsibility for independent verification thereof.
No Third Party Reliance, Etc.
The agreements of Citi/SSB and BAB hereunder and of any Lender that issues a
commitment to provide financing under the Senior Subordinated Facility are made
solely for the benefit of Financial Buyer and Transitory Corp. and may not be
relied upon or enforced by any other person. This Commitment Letter is not
intended to create a fiduciary relationship among the parties hereto.
Each of Financial Buyer and Transitory Corp. acknowledges that Citi/SSB and BAB
may provide debt financing, equity capital or other services (including
financial advisory services) to parties whose interests may conflict with either
Financial Buyer's or Transitory Corp.'s interests. Consistent with Citi/SSB's
and BAB's policy to hold in confidence the affairs of their customers, neither
Citi/SSB nor BAB will furnish confidential information obtained from Financial
Buyer or Transitory Corp. or their affiliates to any of their other customers.
Furthermore, neither Citi/SSB nor BAB has any obligation to use in connection
with the transactions contemplated hereby, or to furnish to Financial Buyer or
Transitory Corp., confidential information obtained by Citi/SSB or BAB from any
other person.
Assignments
Neither Financial Buyer nor Transitory Corp. may assign this Commitment Letter
or Citi/SSB's or BAB's commitments hereunder without Citi/SSB's and BAB's prior
written consent, and any attempted assignment without such consent shall be
void.
Amendments
This Commitment Letter may not be amended or any provision hereof waived or
modified except by an instrument in writing signed by each party hereto.
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Governing Law, Etc.
This Commitment Letter shall be governed by, and construed in accordance with,
the laws of the State of New York. This Commitment Letter sets forth the entire
agreement between the parties with respect to the matters addressed herein and
supersedes all prior communications, written or oral, with respect hereto,
including without limitation the Commitment Letter dated June 1, 2000 (the
"Predecessor Letter"). This Commitment Letter may be executed in any number of
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 Commitment
Letter. Delivery of an executed counterpart of a signature page to this
Commitment Letter by telecopier shall be as effective as delivery of a manually
executed counterpart of this Commitment Letter. The provisions of the first
sentence in the first paragraph of the section above captioned "Representations
and Warranties", and Financial Buyer's and Transitory Corp.'s obligations under
the sections captioned "Fees", "Indemnification", "Costs and Expenses" and
"Confidentiality" shall survive the expiration or termination of this Commitment
Letter whether or not the Operative Documents shall be executed and delivered;
provided, that Financial Buyer's obligations hereunder, except for obligations
with respect to the syndication as set forth above, shall terminate upon the
execution and delivery of the Operative Documents.
Waiver of Jury Trial; Consent to Jurisdiction
Each party hereto irrevocably waives all right to trial by jury in any action,
proceeding or counterclaim (whether based on contract, tort or otherwise)
arising out of or relating to this Commitment Letter or the transactions
contemplated hereby or the actions of the parties hereto in the negotiation,
performance or enforcement hereof. Any legal action or proceeding with respect
to this Commitment Letter or the transactions contemplated hereby may be brought
in the courts of the State of New York or of the United States for the Southern
District of New York, and each of the signatories hereto and, by their
acceptance hereof, each of Financial Buyer and Transitory Corp., consents, for
itself and in respect of its property, to the non-exclusive jurisdiction of
those courts.
Please indicate your acceptance of the provisions hereof by signing the enclosed
copy of this Commitment Letter and the Fee Letter and returning them to Whitner
H. Marshall, Vice President, Salomon Smith Barney Inc., 390 Greenwich Street,
New York, New York 10013 (telecopier: (212) 723-8589) and to Lynne E. Wertz,
Banc of America Bridge LLC, 100 N. Tryon Street, 7th Floor, Charlotte, North
Carolina 28255 (telecopier number: (704) 388-9941), at or before 11 p.m. (New
York City time) on July 27, 2000, the time at which the commitments of Citi/SSB
and BAB set forth above (if not so accepted prior thereto) will expire.
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If you elect to deliver this Commitment Letter by telecopier, please arrange for
the executed original to follow by next-day courier.
Citi/SSB and BAB are pleased to have been given the opportunity to assist you in
connection with the financing for the Recapitalization.
Very truly yours,
CITICORP NORTH AMERICA, INC.
By: /s/ David J. Wirdnam
-------------------------------------
Name: DAVID J. WIRDNAM
-----------------------------------
Title: Director
----------------------------------
SALOMON SMITH BARNEY INC.
By: /s/ David J. Wirdnam
-------------------------------------
Name: DAVID J. WIRDNAM
-----------------------------------
Title: Director
----------------------------------
BANC OF AMERICA BRIDGE LLC
By: By: /s/ Paul C. Keller
-------------------------------------
Name: PAUL C. KELLER, JR.
-----------------------------------
Title: Senior Vice President
----------------------------------
ACCEPTED AND AGREED on July 27, 2000:
BERKSHIRE PARTNERS LLC
By: Richard K. Lubin
-------------------------------------
Name: RICHARD K. LUBIN
-----------------------------------
Title: Managing Director
----------------------------------
PAC PACKAGING ACQUISITION CORPORATION
By: /s/ Paul W. Jones
-------------------------------------
Name: PAUL W. JONES
-----------------------------------
Title: President
----------------------------------
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CONFIDENTIAL EXHIBIT A
July 27, 2000
United States Can Company
$150,000,000 Senior Subordinated Facility
Transaction Description
All capitalized terms used herein but not defined herein shall have the meanings
provided in the Commitment Letter relating to this Transaction Description. The
following transactions, including the Recapitalization, are referred to herein
as the "Transactions".
1. Berkshire Partners LLC ("Financial Buyer") and certain members of the
management of U.S. Can Corporation (the "Recapitalized Company" and,
together with its subsidiaries, the "Recapitalized Business") (together
with Financial Buyer, such members of management are referred to as the
"Investors") will make equity contributions to Pac Packaging Acquisition
Corporation ("Transitory Corp.") in an aggregate amount of not less than
$160,000,000 (including rollover equity and with Financial Buyer's equity
contribution to be not less than $100,000,000 in cash of such aggregate
amount) in exchange for the issuance to the Investors (and possibly certain
other rollover shareholders) of all of the common stock of Transitory Corp.
and of all of the preferred stock of Transitory Corp. (the "Preferred
Stock") (collectively, the "Equity Investments").
2. Transitory Corp. will be merged with and into the Recapitalized Company
(the "Recapitalization") pursuant to the Agreement and Plan of Merger dated
as of June 1, 2000 between the Recapitalized Company and Transitory Corp.,
as amended by the First Amendment to Agreement and Plan of Merger dated
June 28, 2000 (the "Merger Agreement"), with the Recapitalized Company
being the surviving corporation. United States Can Company, a wholly-owned
subsidiary of the Recapitalized Business ("Borrower"), will be the borrower
under the Senior Secured Facility and the Senior Subordinated Facility and
concurrent with the effectiveness of the Recapitalization will advance
approximately $532,900,000 to the Recapitalized Company, representing
proceeds of the Senior Secured Facility and the Senior Subordinated
Facility which it has borrowed, which will be used by the Recapitalized
Company to make payments to its public shareholders pursuant to the Merger
Agreement and payments to consummate its tender for its 10 1/8% senior
subordinated notes.
3. Borrower will obtain new senior secured credit facilities in an aggregate
principal amount of $400,000,000 (the "Senior Secured Facility").
4. Borrower will either (i) borrow $150,000,000 in senior subordinated loans
from one or more lenders under a new senior subordinated facility (the
"Senior Subordinated Facility") or (ii) issue not less than $150,000,000 in
aggregate principal amount of its senior subordinated notes (the "Senior
Subordinated Notes") in a public offering or in a Rule 144A or other
private placement.
5. Approximately $290,748,000 of indebtedness of the Recapitalized Company in
existence before the Recapitalization, including the Recapitalized
Company's 10 1/8% senior subordinated notes due 2006 (the "Indebtedness to
be Paid"), will be repaid in full.
6. Costs and expenses incurred in connection with the foregoing transactions
(including bond tender premium) will be paid in an amount not to exceed
$47,000,000 (the "Transaction Costs").
7. After giving effect to the Recapitalization, all of the outstanding capital
stock of the Recapitalized Company will be held by the Investors (and
possibly certain other rollover shareholders), and all of the outstanding
capital stock of Borrower will be held by the Recapitalized Company.
8. The estimated sources and uses of the funds necessary to consummate the
Recapitalization and the other Transactions are set forth on Annex I hereto
(the "Sources and Uses of Funds").
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ANNEX I
to Transaction Description
United States Can Company
$150,000,000 Senior Subordinated Facility
Sources and Uses of Funds
<TABLE>
<CAPTION>
Sources Uses
------------------------------- --------------------------- ----------------------------- ---------------------------
<S> <C> <C> <C>
Term A Facility under the $80,000,000 Purchase Capital Stock(1) $276,900,000
Senior Secured Facility
Term B Facility under the $180,000,000 Indebtedness to be Paid(2) $290,748,000
Senior Secured Facility
Initial Drawing on the $40,648,000 Transaction Costs $45,000,000
Revolving Facility under the
Senior Secured Facility(3)
Senior Subordinated Facility $150,000,000
or Senior Subordinated Notes
Equity Financing $160,000,000 Assumed Debt $36,400,000
Assumed Debt $36,400,000
Balance Sheet Cash $2,000,000
--------------------------- ---------------------------
TOTAL SOURCES $649,048,000 TOTAL USES $649,048,000
=========================== ===========================
</TABLE>
--------
(1) Based on $20.00 per share.
(2) Includes $5,000,000 of accrued interest.
(3) Total amount of Revolving Facility will be $140,000,000.
<PAGE> 10
CONFIDENTIAL EXHIBIT B
July 27, 2000
United States Can Company
$150,000,000 Senior Subordinated Facility
Summary of Principal Terms and Conditions
All capitalized terms used herein but not defined herein shall have the meanings
provided in the Commitment Letter relating to this Summary of Principal Terms
and Conditions.
Borrower: United States Can Company, a Delaware
corporation.
Guaranties: Senior Subordinated Facility are to be
guaranteed, on a senior subordinated basis,
by the direct and indirect domestic
subsidiaries of Borrower and its parent and
by the foreign subsidiaries of Borrower and
its parent, if any, which guarantee the
Senior Secured Facility (collectively, the
"Guarantors").
Recapitalization: As described in the Transaction Description.
Administrative Agent: Citicorp North America, Inc. ("Citi/SSB" or
the "Agent").
Arranger and Syndication Agent: Salomon Smith Barney Inc. ("SSBI" or the
"Syndication Agent").
Arranger and Documentation Agent: Banc of America Bridge LLC ("BAB").
Subordinated Lenders: A syndicate of banking and financial
institutions, including Citi/SSB and BAB (the
"Initial Lenders"), arranged by SSBI.
Initial Loans: The Subordinated Lenders will make
loans (the "Initial Loans") to the Borrower
on the date the Recapitalization is
consummated (the "Closing Date") in an
aggregate principal amount not to exceed
$150,000,000.
Purpose and Availability The proceeds of the Initial Loans and the
initial loans made under the Senior Secured
Facility will be used solely as set forth in
the Sources and Uses of Funds. The
Subordinated Lenders will make the Initial
Loans simultaneously with (a) the
consummation of the Recapitalization, (b) the
initial funding under the Senior Secured
Facility and (c) the making of the Equity
Investments. Amounts borrowed under the
Senior Subordinated Facility and repaid or
prepaid may not be reborrowed.
Initial Maturity Date and
Exchange of the Initial Loans: The Initial Loans will initially mature on
the date that is one year following the
Closing Date (the "Initial Maturity Date"),
subject to extension as provided under "Final
Maturity Date" below.
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If any Initial Loan has not been previously
repaid in full on or before the Initial
Maturity Date, the Subordinated Lender in
respect of such Initial Loan will have the
option at any time or from time to time to
receive Exchange Securities (the "Exchange
Securities") in exchange for such Initial
Loan, provided that a Subordinated Lender may
not elect to exchange only a portion of its
outstanding Initial Loans for Exchange
Securities unless such Subordinated Lender
intends at the time of such partial exchange
of Initial Loans to promptly sell the
Exchange Securities received in such
exchange.
Availability of the
Exchange Securities: The Exchange Securities will be available
only in exchange for the Initial Loans. The
principal amount of any Exchange Security
will equal 100% of the aggregate principal
amount (including any accrued interest not
required to be paid in cash) of the Initial
Loan for which it is exchanged. The Borrower
will issue Exchange Securities under an
indenture which complies with the Trust
Indenture Act of 1939, as amended.
Exchange Securities Escrowed: The Exchange Securities will be delivered on
the Closing Date and held, undated, in escrow
by a fiduciary to be agreed upon.
Final Maturity Date: The Final Maturity Date of the Exchange
Securities and any outstanding Initial Loans
will be the tenth anniversary of the Closing
Date.
Interest Rates and Fees: As set forth on Annex I hereto and in the Fee
Letter and Engagement Letter relating to the
Senior Subordinated Notes.
Ranking: The Initial Loans and the Exchange Securities
shall be subordinated to all existing and
future senior debt and senior to all existing
and future subordinated debt.
With respect to the Senior Secured Facility,
the Initial Loans and the Exchange Securities
shall constitute senior subordinated debt
pursuant to subordination provisions
customary for high-yield securities.
Mandatory Redemption: The Borrower will be required to prepay the
Initial Loans and redeem the Exchange
Securities (or in the case of Fixed Rate
Exchange Securities (as defined below), offer
to purchase such Fixed Rate Exchange
Securities) on a pro rata basis subject, in
certain circumstances, to the non-call
provisions of any Fixed Rate Exchange
Security, at par plus accrued and unpaid
interest (or, in the case of Fixed Rate
Exchange Securities, at par plus accrued and
unpaid interest plus any applicable
premiums), from the net proceeds from the
incurrence of any debt (subject to exceptions
to be agreed upon), from the issuance of any
equity or from all non-ordinary course asset
sales (to the extent, in the case of asset
sales, not required to permanently reduce
borrowings under the Senior Secured
Facility).
2
<PAGE> 12
The Borrower will be required to purchase
from any holder of Exchange Securities
wishing to have its Exchange Securities
redeemed any or all of the Exchange
Securities of such holder at 100% (but 101%
in the case of Fixed Rate Exchange
Securities) of par plus accrued and unpaid
interest, upon the occurrence of a change of
control or ownership.
Optional Prepayment: The Initial Loans may be prepaid and the
Exchange Securities may be redeemed (subject
to provisions relating to Fixed Rate Exchange
Securities), in whole or in part, at the
option of the Borrower, at any time upon 10
days' prior notice, at par plus accrued and
unpaid interest, subject in the case of
Initial Loans to reimbursement of the
Subordinated Lenders' actual redeployment
costs in the case of a prepayment of LIBOR
borrowings other than on the last day of the
relevant Interest Period.
Fixed Rate Exchange Securities: If any Exchange Security is sold by a
Subordinated Lender to a third party
purchaser, such Subordinated Lender shall
have the right to fix the interest rate on
such Exchange Security (each such Exchange
Security being a "Fixed Rate Exchange
Security") at a rate not higher than the then
applicable rate of interest and, if such
Subordinated Lender exercises such right,
such Fixed Rate Exchange Security will be
non-callable for five years from the date of
its sale to such third party and will be
callable thereafter at par plus accrued
interest plus a premium equal to one-half of
the coupon in effect on the date of sale of
the Fixed Rate Exchange Securities, which
premium shall decline ratably on each yearly
anniversary of the date of such sale to zero
one year before the maturity of the Exchange
Securities (except that if such period has
not ended before the date that is one year
before such maturity, such premium shall fall
immediately to zero on the date that is one
year before such maturity).
Refinancing of the Senior
Subordinated Facility: The documentation of the Senior Secured
Facility will expressly permit the
refinancing of the Senior Subordinated
Facility with securities that are
subordinated on terms and conditions no more
favorable than those of the Senior
Subordinated Facility and with a maturity
date later than that of the Senior Secured
Facility.
Representations and Warranties: Usual for facilities and transactions of this
type and others to be reasonably specified by
the Agent and the Initial Lenders, including,
without limitation:
1. Corporate status and authority.
2. Legality, validity, binding effect and
enforceability of the loan documents.
3. Execution, delivery, and performance of
loan documents do not violate law or
other agreements.
3
<PAGE> 13
4. No litigation which would have a
material adverse effect on the business,
assets, operations, properties,
condition (financial or otherwise),
contingent liabilities, prospects or
material agreements of the Recapitalized
Company and its subsidiaries taken as a
whole, which would affect the legality,
validity and enforceability of the loan
documents or which would impair the
ability of the Borrower or any
subsidiary to perform its obligations
under the loan documents to which it is
a party.
5. Accuracy of financial statements and
other information.
6. No material adverse change in the
business, assets, operations,
properties, condition (financial or
otherwise), contingent liabilities,
prospects or material agreements of the
Recapitalized Company and its
subsidiaries, taken as a whole since
December 31, 1999.
7. No government or regulatory approvals
required, other than approvals in effect.
8. Inapplicability of the Investment
Company Act and Public Utility Holding
Company Act.
9. Material compliance with laws and
regulations, including ERISA, margin
regulations and all applicable
environmental laws and regulations.
10. Payment of taxes.
11. Solvency.
Conditions Precedent
to Initial Loans: Usual for facilities and transactions of this
type, including those specified in the
Summary of Additional Conditions Precedent,
and others to be reasonably specified by the
Initial Lenders.
Affirmative Covenants: In the case of the Initial Loans, usual for
facilities and transactions of this type and
others to be reasonably specified by the
Initial Lenders (to be applicable to the
Borrower and its subsidiaries), including but
not limited to, and subject, in each case, to
customary exceptions to be agreed:
1. Delivery of audited annual consolidated
and consolidating financial statements
and unaudited quarterly and monthly
consolidated and consolidating financial
statements together with other unaudited
financial information for each of the
Borrower's product categories and
business lines as any Subordinated
Lender may request.
4
<PAGE> 14
2. Other reporting requirements and notices
of default and litigation.
3. Material compliance with laws (including
ERISA and applicable environmental
laws).
4. Payment of taxes.
5. Maintenance of insurance.
6. Payment or performance of obligations.
7. Preservation of corporate existence.
8. Visitation rights.
9. Maintenance of books and records.
10. Maintenance of properties.
11. Use of proceeds.
12. Compliance by the Recapitalized Company
and Financial Buyer with the terms of
the Engagement Letter.
In the case of the Exchange Securities, usual
for facilities and transactions of this type
and others to be reasonably specified by the
Initial Lenders (to be applicable to the
Borrower and its subsidiaries), including but
not limited to, and subject, in each case, to
customary exceptions to be agreed:
1. Performance of obligations.
2. Delivery of reports filed with the
Securities and Exchange Commission.
3. Delivery of compliance certificates.
4. Delivery of other financial reports
reasonably requested by the Initial
Lenders.
Following the Initial Maturity Date, all
outstanding Initial Loans will be
automatically modified to bear affirmative
covenants substantially similar to the
affirmative covenants of the Exchange
Securities.
Negative Covenants: In the case of the Initial Loans, usual for
facilities and transactions of this type and
others to be reasonably specified by the
Initial Lenders (to be applicable to the
Borrower and its subsidiaries), including but
not limited to, and subject in each case to
customary exceptions to be agreed:
1. Limitations on liens.
5
<PAGE> 15
2. Limitations on mergers, consolidations,
acquisitions, asset dispositions and
sale/leaseback transactions.
3. Limitations on debt (including
obligations in respect of foreign
currency exchange and other hedging
arrangements).
4. Limitations on dividends, redemptions
and repurchases with respect to capital
stock.
5. Limitations on prepayments, redemptions
and repurchases of debt (other than
loans under the Senior Secured Facility
and loans under the Senior Subordinated
Facility).
6. Limitations on loans and investments.
7. Limitations on transactions with
affiliates.
8. Limitations on capital expenditures.
9. Limitations on changes in business
conducted by the Borrower and its
subsidiaries.
10. Limitations on amendment of debt and
other material agreements.
11. Limitations on layered debt.
12. Limitations on the issuance and sale of
capital stock of restricted
subsidiaries.
13. Limitations on restrictions on (a)
distributions from subsidiaries and (b)
the ability of the Borrower to prepay
the loans under the Senior Subordinated
Facility as described in paragraph 5
above.
14. Limitations on the payment of management
fees.
In the case of the Exchange Securities, usual
for facilities and transactions of this type
and others to be reasonably specified by the
Initial Lenders (to be applicable to the
Borrower and its subsidiaries), including but
not limited to, and subject in each case to
customary exceptions to be agreed:
1. Limitations on debt.
2. Limitations on liens (other than liens
securing senior debt).
3. Limitations on mergers, consolidations,
acquisitions, asset dispositions and
sale/leaseback transactions.
4. Limitations on the issuance and sale of
capital stock of restricted
subsidiaries.
6
<PAGE> 16
5. Limitations on restrictions on
distributions from subsidiaries.
6. Limitations on transactions with
affiliates.
7. Limitations on restricted payments.
8. Limitations on layered debt.
9. Limitations on the payment of management
fees.
The Recapitalized Company shall engage in no
activities other than (1) continuing to own
all of the capital stock of the Borrower and
(2) certain activities reasonably incidental
thereto.
Following the Initial Maturity Date, all
outstanding Initial Loans will be
automatically modified to bear negative
covenants substantially similar to the
negative covenants of the Exchange
Securities.
Events of Default: In the case of the Initial Loans, usual for
facilities and transactions of this type and
others to be reasonably specified by the
Initial Lenders, including but not limited
to, and subject, in each case, to customary
exceptions to be agreed:
1. Failure to pay principal, interest or
any other amount when due (with a grace
period on interest to be negotiated).
2. Failure to comply with covenants (with
notice and cure periods as applicable).
3. Representations or warranties materially
incorrect when given.
4. Cross-acceleration to indebtedness
aggregating $5,000,000.
5. Bankruptcy or insolvency.
6. Unsatisfied judgment or order in excess
of $5,000,000 individually or of
$10,000,000 in the aggregate.
7. ERISA events.
8. Actual or asserted invalidity of any
guarantee agreement.
9. Change of control.
Following the occurrence of an event of
default, the Initial Loans may be accelerated
at the request of the holders of 25% of the
Initial Loans, by the Agent acting on behalf
of such holders or, so long as all of the
Initial Loans are held by
7
<PAGE> 17
Citi/SSB and BAB, by either of such Initial
Lenders; provided, that the Initial Loans
shall be automatically accelerated upon the
occurrence of any bankruptcy or insolvency
event.
In the case of the Exchange Securities, usual
for facilities and transactions of this type
and others to be reasonably specified by the
Initial Lenders, including but not limited
to, and subject, in each case, to customary
exceptions to be agreed:
1. Failure to pay principal, interest or
any other amount when due (with a grace
period on interest to be negotiated).
2. Representations or warranties materially
incorrect when given.
3. Failure to comply with covenants (with
notice and cure periods as applicable).
4. Cross-acceleration to indebtedness
aggregating $5,000,000.
5. Unsatisfied judgment or order in excess
of $5,000,000 individually or of
$10,000,000 in the aggregate.
6. Bankruptcy or insolvency.
7. ERISA events.
8. Actual or asserted invalidity of any
guarantee agreement.
Following the occurrence of an event of
default, the Exchange Securities may be
accelerated at the request of the holders of
25% of the outstanding principal amount of
the Exchange Securities, by the Agent acting
on behalf of such holders or, so long as all
of the Exchange Securities and Initial Loans
are held by Citi/SSB and BAB, by either of
such Initial Lenders; provided, that the
Exchange Securities shall be automatically
accelerated upon the occurrence of any
bankruptcy or insolvency event.
Following the Initial Maturity Date, all
outstanding Initial Loans will be
automatically modified to bear events of
default substantially similar to the events
of default of the Exchange Securities.
Registration Rights with
Respect to Exchange Securities: The Borrower will file no later than 30 days
prior to the Initial Maturity Date, and will
use its best efforts to cause to become
effective as soon thereafter as practicable,
a shelf registration statement with respect
to the Exchange Securities (a "Shelf
Registration Statement") and/or a
registration statement relating to a
Registered Exchange Offer (as described
below). If a Shelf Registration Statement is
filed, the Borrower will
8
<PAGE> 18
keep such registration statement effective
and available (subject to customary
exceptions) until it is no longer needed to
permit unrestricted resales of Exchange
Securities (but in no event longer than two
years from the Initial Maturity Date).
If within 90 days from the Initial Maturity
Date,
(a) a Shelf Registration Statement for the
Exchange Securities has not been
declared effective, or
(b) the Borrower has not effected an
exchange offer (a "Registered Exchange
Offer") whereby the Borrower has offered
registered notes having terms
substantially identical to the Exchange
Securities (the "Substitute Notes") in
exchange for all outstanding Exchange
Securities and Initial Loans, or
(c) the holders of Exchange Securities have
not received Substitute Notes through
the Registered Exchange Offer which, in
the opinion of counsel, would be freely
saleable by such holders without
registration or requirement for delivery
of a current prospectus under the
Securities Act (other than a prospectus
delivery requirement imposed on a
broker-dealer who is exchanging Exchange
Securities acquired for its own account
as a result of market making or other
trading activities) and the Borrower has
not made available a Shelf Registration
Statement with respect to such Exchange
Securities,
then the Borrower will pay liquidated damages
of $0.192 per week per $1,000 principal
amount of Exchange Securities and Initial
Loans outstanding to holders of such Exchange
Securities and Initial Loans who are unable
freely to transfer Exchange Securities from
and including the 91st day after the Initial
Maturity Date of Exchange Securities to but
excluding the earlier of the effective date
of such Shelf Registration Statement or the
date of consummation of such Registered
Exchange Offer (such damages to be payable in
the form of additional Initial Loans or
Exchange Securities, as applicable, if the
then interest rate thereon exceeds the
applicable interest rate cap). The Borrower
will also pay such liquidated damages for any
period of time (subject to customary
exceptions) following the effectiveness of a
Shelf Registration Statement that such Shelf
Registration Statement is not available for
resales thereunder. In addition, unless and
until the Borrower has consummated the
Registered Exchange Offer and, if required,
caused the Shelf Registration Statement to
become effective, the holders of the Exchange
Securities will have the right to
"piggy-back" the Exchange Securities in the
registration of any debt securities (subject
to customary scale-back provisions) that are
registered by the Borrower (other than on a
Form S-4) unless all of the Exchange
Securities and Initial Loans will be redeemed
or repaid from the proceeds of such
securities.
9
<PAGE> 19
Voting: Amendments and waivers of the documentation
for the Initial Loans and the other
definitive credit documentation related
thereto will require the approval of
Subordinated Lenders holding at least a
majority of the outstanding Initial Loans and
Exchange Securities unless the Agent
determines that a greater percentage (but not
greater than 66-2/3%) is necessary for
successful syndication of the Senior
Subordinated Facility (the "Required
Lenders"), except that (a) the consent of
each affected Subordinated Lender and holder
of an Exchange Security shall be required
with respect to reductions of principal and
interest rates, and (b) the consent of each
affected Subordinated Lender will be required
for, among other things, (i) waiver of any
condition precedent to the initial borrowing,
(ii) extensions of the Initial Maturity Date,
(iii) additional restrictions on the right to
exchange Initial Loans for Exchange
Securities or any amendment of the rate of
such exchange or (iv) any amendment to the
Exchange Securities that requires (or would,
if any Exchange Securities were outstanding,
require) the approval of all holders of
Exchange Securities
Assignment and Participation
of Loans: The Subordinated Lenders will have the right
to assign loans and commitments to their
affiliates and to other Subordinated Lenders
or to any Federal Reserve Bank without
restriction or to other financial
institutions ("New Lenders"), with the
consent, not to be unreasonably withheld, of
the Agent; provided, that all assignments to
New Lenders prior to the 90 day anniversary
of the Closing Date shall be managed
exclusively by the Agent and each
Subordinated Lender shall have the right to
reduce its loans and commitment on the Agreed
Basis (without regard to minimum assignment
levels). Minimum aggregate assignment level
(except to affiliates or other Subordinated
Lenders) of $1,000,000 and increments of
$1,000,000 in excess thereof. The parties to
the assignment (other than the Borrower)
shall pay to the Agent an administrative fee
of $3,500.
Following the 90 day anniversary of the
Closing Date, each Subordinated Lender will
have the right to sell participations in its
rights and obligations under the loan
documents, subject to customary restrictions
on the participants' voting rights.
Right to Transfer
Exchange Securities: The holders of the Exchange Securities shall
have the absolute and unconditional right to
transfer such Exchange Securities in
compliance with applicable law to any third
parties.
Yield Protection, Taxes
and Other Deductions: (1) The loan documents will contain yield
protection provisions, customary for
facilities of this nature, protecting
the Subordinated Lenders in the event of
unavailability of funding, funding
losses, reserve and capital adequacy
requirements.
10
<PAGE> 20
(2) All payments to be free and clear of any
present or future taxes, withholdings or
other deductions whatsoever (subject to
customary exceptions). The Subordinated
Lenders will use reasonable efforts to
minimize to the extent possible any
applicable taxes and the Borrower will
indemnify the Subordinated Lenders and
the Agent for such taxes paid by the
Subordinated Lenders or the Agent.
Expenses: The Borrower will reimburse all reasonable
out-of-pocket expenses (including, without
limitation, expenses incurred in connection
with due diligence and fees and expenses of
counsel) of (a) Citi/SSB, SSBI and BAB
incurred by them in connection with the
preparation, syndication and execution of the
Senior Subordinated Facility and the
Operative Documents and of (b) Citi/SSB,
SSBI, BAB and the Subordinated Lenders
incurred by them in connection with the
waiver, modification and enforcement of the
Senior Subordinated Facility and the
Operative Documents. Such amounts shall be
reimbursed by the Borrower upon presentation
of a statement of account upon consummation
of the Transactions.
Governing Law and Forum: New York.
Counsel for Citi/SSB and SSBI: Winston & Strawn.
11
<PAGE> 21
ANNEX I
to Exhibit B
United States Can Company
$150,000,000 Senior Subordinated Facility
Interest Rates and Fees
Initial Loans: Before the Initial Maturity Date, the Initial
Loans will accrue interest at a rate per
annum equal to, at the Borrower's option, 3
month reserve-adjusted LIBOR plus a spread
(the "LIBOR Spread," as defined below) or the
Alternate Base Rate (as defined below) plus a
spread (the "ABR Spread," as defined below).
The LIBOR Spread will initially be 700 basis
points. If the Initial Loans are not repaid
in whole within the three-month period
following the Closing Date, the LIBOR Spread
will increase by 50 basis points at the end
of such three-month period and shall increase
by an additional 50 basis points at the end
of each three-month period thereafter until,
but excluding, the Initial Maturity Date.
The ABR Spread will initially be 600 basis
points. If the Initial Loans are not repaid
in whole within the three-month period
following the Closing Date, the ABR Spread
will increase by 50 basis points at the end
of such three-month period and shall increase
by an additional 50 basis points at the end
of each three-month period thereafter until,
but excluding, the Initial Maturity Date.
"Alternate Base Rate" means the higher of (i)
the corporate base rate of Citibank, N.A.,
and (ii) the Federal Funds Effective Rate
plus 1/2 of 1%.
Notwithstanding the foregoing, (a) the
interest rate in effect at any time before
the Initial Maturity Date shall not exceed
16% per annum, (b) the interest rate in
effect at any time before the Initial
Maturity Date shall not be less than 10% per
annum and (c) to the extent the interest
payable before the Initial Maturity Date on
any Initial Loan exceeds a rate of 14% per
annum, the Borrower may, at its option, cause
such excess interest to be paid by adding
such excess interest to the principal amount
of such Initial Loan. In no event shall the
interest rate on the Initial Loans exceed the
highest rate permitted under applicable law.
On and after the Initial Maturity Date, all
outstanding Initial Loans will accrue
interest at the rate provided for in the
Exchange Securities, subject to the absolute
and cash caps applicable to the Exchange
Securities.
Calculation of interest shall be on the basis
of actual days elapsed in a year of 360 days
(or 365 or 366 days, as the case
<PAGE> 22
may be, in the case of Initial Loans accruing
interest at a rate based on the Alternate
Base Rate).
LIBOR will at all times include statutory
reserves.
Interest will be payable (a) for Initial
Loans accruing interest at a rate based on
LIBOR, at the end of each LIBOR period and on
the Initial Maturity Date, (b) for Initial
Loans accruing interest at a rate based on
the Alternate Base Rate, quarterly in arrears
and on the Initial Maturity Date, and (c) for
Initial Loans outstanding after the Initial
Maturity Date, quarterly in arrears.
Exchange Securities: The Exchange Securities will bear interest at
a rate equal to the Initial Rate (as defined
below) plus the Exchange Spread (as defined
below). Notwithstanding the foregoing, the
interest rate in effect at any time shall not
exceed 16% per annum nor be less than 10% per
annum, and to the extent the interest payable
on any Exchange Security exceeds a rate of
14% per annum, the Borrower may, at its
option, cause such excess interest to be paid
by issuing additional Exchange Securities in
a principal amount equal to such excess
portion of interest. In no event shall the
interest rate on the Exchange Securities
exceed the highest rate permitted under
applicable law.
"Exchange Spread" means 0 basis points during
the 3 month period commencing on the Initial
Maturity Date and shall increase by 50 basis
points at the beginning of each subsequent 3
month period.
"Initial Rate" shall be determined on the
Initial Maturity Date and shall equal the
greatest of (a) the interest rate borne by
the Initial Loans on the day immediately
preceding the Initial Maturity Date plus 50
basis points, (b) the Treasury Rate (as
defined below) on the Initial Maturity Date,
plus 850 basis points and (c) the Salomon
Smith Barney High Yield Index Rate, on the
Initial Maturity Date, plus 300 basis points.
"Treasury Rate" means (i) the rate borne by
direct treasury obligations of the United
States maturing on the tenth anniversary of
the Closing Date and (ii) if there are no
such obligations, the rate determined by
linear interpolation between the rates borne
by the two direct treasury obligations of the
United States maturing closest to, but
straddling, the tenth anniversary of the
Closing Date, in each case as published by
the Board of Governors of the Federal Reserve
System.
Interest on the Exchange Securities will be
payable quarterly in arrears (or semiannually
in arrears for Fixed Rate Exchange
Securities).
2
<PAGE> 23
CONFIDENTIAL EXHIBIT C
July 27, 2000
United States Can Company
$150,000,000 Senior Subordinated Facility
Summary of Additional Conditions Precedent
All capitalized terms used herein but not defined herein shall have the meanings
provided in the Transaction Description relating to this Summary of Additional
Conditions Precedent.
The initial borrowing under the Senior Subordinated Facility shall be subject to
the following additional conditions precedent:
1. Consummation of Recapitalization. The Recapitalization shall have been
consummated, or shall be consummated, simultaneously with or immediately
following the closing under the Senior Secured Facility and the Senior
Subordinated Facility, in accordance with the Merger Agreement and all other
related documentation, and the Subordinated Lenders shall be reasonably
satisfied with (a) the structure of the Recapitalization, the Merger Agreement
and all such related documentation, (b) the capitalization, structure and equity
ownership of Transitory Corp. and the Recapitalized Business, before and after
giving effect to the Recapitalization, and (c) the sources and uses of funds
relating to the Transactions. It is understood that Citi/SSB and BAB have
reviewed the Merger Agreement and are satisfied with the material terms thereof
and the Recapitalization structure embodied therein.
2. Equity Investments. The Equity Investments described in the Transaction
Description shall have been made. The terms and conditions of the Preferred
Stock (including but not limited to terms and conditions relating to the
dividend rate and redemption) shall be satisfactory in all respects to the
Subordinated Lenders.
3. Indebtedness to be Paid. The Subordinated Lenders shall have received
satisfactory evidence that all loans outstanding under, and all other amounts
due in respect of, the Indebtedness to be Paid shall have been repaid in full
(or satisfactory arrangements made for such repayment), any collateral therefor
shall have been released and the commitments thereunder shall have been
permanently terminated.
4. Outstanding Indebtedness. The Subordinated Lenders shall have received
satisfactory evidence that, after giving effect to the Transactions, neither
Transitory Corp. nor the Recapitalized Business shall have outstanding any
indebtedness or preferred stock other than (a) the loans and other extensions of
credit under the Senior Secured Facility, (b) the Senior Subordinated Notes or
loans under the Senior Subordinated Facility, (c) the Preferred Stock issued in
connection with the Transactions, and (d) other limited indebtedness to be
agreed upon, including the debt assumed in connection with the Transactions. The
terms and conditions of all indebtedness of the Recapitalized Company and its
subsidiaries that will remain outstanding after the Closing Date (including but
not limited to terms and conditions relating to the interest rate, fees,
amortization, maturity, subordination, covenants, events of defaults and
remedies) shall be reasonably satisfactory in all respects to the Subordinated
Lenders.
5. Recapitalized Business Financial Statements. The Subordinated Lenders
shall have received (a) not later than ten Business Days before the Closing
Date, audited consolidated and unaudited consolidating balance sheets and
related statements of income, stockholders' equity and cash flows of the
Recapitalized Business for the three fiscal years ended before the Closing Date,
(b) not later than ten Business Days before the Closing Date, and to the extent
available, unaudited consolidated and consolidating balance sheets and related
statements of income, stockholders' equity and cash flows of the Recapitalized
Business for each completed fiscal quarter since the date of such audited
financial statements and (c) for each completed month since the last such
quarter and prior to the Closing Date, (i) estimated consolidated monthly
financial statements (which shall be made available for each month by the 15th
day of the succeeding month), and (ii) internal consolidated monthly financial
statements (which shall be made available for each month by the 25th day of the
succeeding month), which audited and unaudited financial statements (x) shall be
in form and scope satisfactory to the Subordinated Lenders and (y) shall not be
materially inconsistent with the financial statements previously provided to the
Subordinated Lenders.
<PAGE> 24
6. Pro Forma Financial Statements. The Subordinated Lenders shall have
received pro forma consolidated financial statements of the Recapitalized
Business for the period of four fiscal quarters ending with the most
recently-ended fiscal quarter and as of such quarter end date, after giving
effect to the Transactions and other completed acquisitions and divestitures in
accordance with the requirements of Regulation S-X under the Securities Act of
1933, as amended, applicable to a registration statement under such act on Form
S-1 and as further adjusted for (a) the disposition of the assets of the
Wheeling closure facility and the Warren lithography facility and other similar
divestitures to the extent not previously adjusted for and (b) the annual
management fee payable to Financial Buyer of $750,000 (to the extent not already
reflected therein), but without adjustment for expense reductions associated
with the reduction in force which occurred in July 2000 for any period prior to
such month or the first $3,300,000 of any special charges relating to such
reduction in force (the "Adjusted Pro Forma Financial Statements"), together
with a certificate of the chief financial officer of the Recapitalized Company
to the effect that such statements accurately present the pro forma financial
position of the Recapitalized Company and its subsidiaries in accordance with
generally accepted accounting principles, and the Subordinated Lenders shall be
satisfied that such financial statements are not materially inconsistent with
the forecasts previously provided to the Subordinated Lenders.
7. Adjusted Pro Forma Consolidated EBITDA of the Recapitalized Business.
The Subordinated Lenders shall have received (a) an agreed procedures letter
from the Recapitalized Company's independent accountants demonstrating that (i)
the consolidated EBITDA of the Recapitalized Business for the immediately
preceding fiscal year, as determined pursuant to the Adjusted Pro Forma
Financial Statements (the "Adjusted Pro Forma Consolidated EBITDA"), was at
least $107,000,000 and (ii) the Adjusted Pro Forma Consolidated EBITDA of the
Recapitalized Business for the period of 12 months (A) ended as of June 30, 2000
was at least $101,500,000, and (B) ending as of the most recent month prior to
the Closing Date for which financial statements are available in accordance with
paragraph 5 above is at least $101,500,000, and (b) a written certification of
the chief financial officer of the Recapitalized Company that the Adjusted Pro
Forma Consolidated EBITDA of the Recapitalized Business for each fiscal month
after the end of the most recent fiscal quarter for which unaudited financial
statements have been provided was not materially inconsistent with the revised
second half fiscal year 2000 forecasts previously provided to the Subordinated
Lenders.
8. Ratio of Total Debt to Adjusted Pro Forma Consolidated EBITDA. The
Subordinated Lenders shall have received evidence that the ratio of (i) the
consolidated total indebtedness of the Recapitalized Business on a pro forma
basis as at the end of the most recent fiscal quarter for which unaudited
financial statements have been provided, after giving effect to the
Transactions, to (ii) the Adjusted Pro Forma Consolidated EBITDA of the
Recapitalized Business for the period of four fiscal quarters ending as of the
most recent fiscal quarter for which unaudited financial statements have been
provided would not exceed 4.85 to 1.0.
9. Due Diligence. The Subordinated Lenders and their counsel shall have
completed and be satisfied with the results of their business, legal,
environmental, tax, pension, regulatory and accounting due diligence review of
the business, assets, liabilities (actual and contingent), operations,
properties, condition (financial or otherwise), management, material agreements,
prospects and value of the Recapitalized Business; it being understood that the
Subordinated Lenders have substantially completed and are satisfied with the
results of their due diligence investigation of the Recapitalized Business to
date. This condition is deemed satisfied or waived unless any additional
information is disclosed to or discovered by the Subordinated Lenders after the
date hereof which the Subordinated Lenders deem materially adverse in respect of
the business, assets, liabilities (actual or contingent), operations,
properties, condition (financial or otherwise), management, material agreements,
or prospects of the Recapitalized Business.
10. Environmental and Employee Health and Safety. The Subordinated Lenders
shall be reasonably satisfied as to the amount and nature of any environmental
and employee health and safety liabilities and exposures to which the Borrower
and its subsidiaries may be subject after giving effect to the Transactions, and
with the plans of the Borrower with respect thereto, and the Subordinated
Lenders shall have received environmental assessments (including Phase I
reports) reasonably satisfactory to the Subordinated Lenders from an
environmental consulting firm satisfactory to Subordinated Lenders. This
condition is deemed satisfied or waived unless any additional information is
disclosed to or discovered by the Subordinated Lenders after the date hereof
which the Subordinated Lenders deem materially adverse in respect of the
environmental and employee health and safety liabilities and exposures of the
Recapitalized Business.
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<PAGE> 25
11. Litigation. There shall be no litigation or administrative proceeding
that could reasonably be expected to have a material adverse effect on the
condition (financial or otherwise), prospects, earnings, business or properties
of Transitory Corp. or the Recapitalized Company and its subsidiaries, taken as
a whole, or on the ability of the parties to consummate the Recapitalization or
the other transactions contemplated hereby.
12. Solvency. The Subordinated Lenders shall have received a solvency
letter, in form and substance and from an independent evaluation firm
satisfactory to the Subordinated Lenders, together with such other evidence
reasonably requested by the Subordinated Lenders, confirming the solvency of the
Borrower and its subsidiaries on a consolidated basis after giving effect to the
Transactions.
13. Existing Management. Management of the Recapitalized Business (after
giving effect to the Transactions) shall be satisfactory to the Subordinated
Lenders in all material respects. It is understood that existing management is
satisfactory.
14. No Conflicts. The consummation of the Transactions shall not (a)
violate any applicable law, statute, rule or regulation or (b) conflict with, or
result in a default or event of default or an acceleration of any rights or
benefits under, any material agreement of Transitory Corp. or the Recapitalized
Business, and the Subordinated Lenders shall have received one or more legal
opinions to such effect, satisfactory to the Subordinated Lenders, from counsel
to Transitory Corp., the Recapitalized Company and the Borrower satisfactory to
the Subordinated Lenders.
15. Consents. All requisite material governmental authorities and third
parties shall have approved or consented to the Transactions to the extent
required, all applicable appeal periods shall have expired and there shall be no
governmental or judicial action, actual or threatened, that could reasonably be
expected to restrain, prevent or impose burdensome conditions on the
Transactions or the other transactions contemplated hereby.
16. Material Adverse Change. Absence of material adverse change in the
condition (financial or otherwise), prospects, earnings, business or properties
of either Transitory Corp. or the Recapitalized Business, taken as a whole,
since December 31, 1999.
17. Rating. The Senior Subordinated Notes shall have received a rating from
Standard and Poor's Rating Services of at least B- and a rating from Moody's
Investor Services, Inc. of at least B3.
18. Miscellaneous Closing Conditions. Other customary closing conditions,
including delivery of satisfactory legal opinions of the Borrower's counsel;
other financial information to be agreed; accuracy of representations and
warranties; absence of defaults, prepayment events or creation of liens under
debt instruments or other agreements as a result of the transactions
contemplated hereby; evidence of authority; compliance with applicable laws and
regulations (including but not limited to ERISA, margin regulations and
environmental laws); payment of fees and expenses; and obtaining of satisfactory
insurance.
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