Document:

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                                                                   EXHIBIT 10.3

                             SUBSCRIPTION AGREEMENT

         THIS SUBSCRIPTION AGREEMENT (the "AGREEMENT") is made as of April 5,
2000 between Compliance1, Inc., a Delaware corporation, with its principal
offices at 2010 Corporate Ridge Road, Suite 700, McLean, Virginia 22102 (the
"COMPANY"), and each of those persons and entities whose names are set forth
on the Schedule of Purchasers attached hereto as EXHIBIT A (which persons and
entities are hereinafter collectively referred to as "PURCHASERS" and each
individually as a "PURCHASER").

         WHEREAS, the Company has authorized the sale and issuance of up to
an aggregate of One Million Dollars ($1,000,000) of its convertible secured
notes at a 10% interest rate (each a "NOTE," and collectively, the "NOTES"),
substantially in the form annexed hereto as EXHIBIT B; and

         WHEREAS, the Company desires to sell to Purchasers and Purchasers
desire to purchase Notes having a principal amount as is set forth on the
signature page hereof.

         NOW, THEREFORE, in consideration of the premises and the covenants
herein contained and for other good and valuable consideration the receipt
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:

         SECTION 1. PURCHASE AND SALE OF NOTES. Subject to the terms and
conditions hereinafter set forth, Purchasers hereby subscribe for and agree
to purchase from the Company, Notes having the principal amount set forth on
the Schedule of Purchasers attached hereto as EXHIBIT A and the Company
hereby agrees to sell such Notes to Purchasers. The purchase price for each
Note shall be the stated principal amount of each Note (the "PURCHASE PRICE")
and the issue date of a Note shall be the Closing Date (as defined below) for
such Note and shall appear on such Note. The Purchase Price is payable by
certified or bank check made payable to the Company or by wire transfer of
funds, contemporaneously with the execution and delivery of this Subscription
Agreement. The Notes being purchased by Purchasers will be delivered by the
Company within two (2) days of the Closing Date (as defined below).
Purchasers hereby authorize and direct the Company to deliver the Notes
purchased pursuant to this Agreement to the address set forth on the
signature page hereto.

         SECTION 2.        DESCRIPTION OF THE NOTES.

                  2.1 INTEREST. Each Note shall bear interest at the rate of
ten percent (10%) per annum on its principal amount from its Closing Date.

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                  2.2      INTEREST PAYMENTS.

                  (a) Except as provided in subparagraph (b) of this
subsection 2.2, accrued interest on the Notes shall be payable quarterly, in
arrears, in immediately available funds on April 1, July 1, October 1 and
January 1.

                  (b) Accrued interest for the first year that the Notes are
outstanding shall be payable on April 1, 2001.

                  2.3 MATURITY DATE. The unpaid principal balance of a Note,
plus all accrued and unpaid interest thereon, shall be due in full three (3)
years from the Closing Date of the Note.

                  2.4 SECURITY. The Notes shall be secured by a security
agreement (the "Security Agreement") in the form attached hereto as EXHIBIT
C, creating a lien against certain collateral and security of the Company as
described therein.

                  2.5      CONVERSION.

                  (a) CONVERSION AT PURCHASERS' OPTION. Subject to and upon
compliance with the provisions of this subsection 2.5, a Purchaser shall have
the right, at such Purchaser's option, at any time to convert such Note, in
whole but not in part, into the number of shares of common stock of the
Company, par value $0.001 per share ("COMMON STOCK"), obtained by dividing
(i) the then outstanding principal amount of the Note by (ii) the Conversion
Price (as defined below) then in effect.

                  (b) CONVERSION PRICE. "CONVERSION PRICE" means the price at
which one share of Common Stock shall be deliverable upon conversion of a
Note without the payment of any additional consideration by the Purchaser.
Initially, the Conversion Price shall be equal to (i) the total principal
amount of the Notes DIVIDED BY (ii) the aggregate number of Conversion Shares
(as defined below) issuable upon conversion of such Notes. The Conversion
Price shall be subject to adjustment in accordance with subparagraph (d) of
this subsection.

                  (c) CONVERSION SHARES. "CONVERSION SHARES" means the
aggregate number of fully paid and nonassessable shares of Common Stock
issuable in exchange for the total principal amount of Notes sold by the
Company. The aggregate number of Conversion Shares shall be equal to 67.0% of
the number of fully diluted outstanding shares of Common Stock of the
Company; provided, however, that in the event that the Company achieves the
Milestones (as defined below) on or before June 30, 2000, the aggregate
number of Conversion Shares shall be equal to 36.9% of the number of fully
diluted outstanding shares of Common Stock of the Company. The total number
of shares of Common Stock outstanding to be calculated on the Closing Date
shall be calculated on a fully diluted basis, as if all securities
convertible into shares of Common Stock had been fully converted into shares
of Common Stock immediately prior to such calculation and any other options,
warrants, options or other rights for the purchase of shares of Common Stock
had been fully exercised immediately prior to such calculation (and the

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resulting securities fully converted into shares of Common Stock, if so
convertible) as of the date of such calculation.

                  (d) CONVERSION PRICE ADJUSTMENT. The Conversion Price of
each Note shall be adjusted from time to time as follows:

                               (i)  If the Company shall after the Closing
Date of such Note (A) pay a dividend or make a distribution on its capital
stock in shares of Common Stock, (B) subdivide its outstanding Common Stock
into a greater number of shares, (C) combine its outstanding Common Stock
into a smaller number of shares or (D) issue any shares of capital stock by
reclassification of its outstanding Common Stock, the Conversion Price in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or
distribution or at the opening of business on the day on which such
subdivision, combination or reclassification becomes effective, as the case
may be, shall be adjusted so that the Purchaser of any Note thereafter
converted shall be entitled to receive the number of shares of Common Stock
that such Purchaser would have owned or have been entitled to receive after
the happening of any of the events described above had such Note been
converted immediately prior to the record date in the case of a dividend or a
distribution or the effective date in the case of a subdivision, combination
or reclassification.

                               (ii) If the Company shall issue after the
Closing Date of such Note any Common Stock (except Common Stock issuable upon
conversion of the Notes) for a consideration per share of less than the
Conversion Price in effect immediately prior to the issuance of such Common
Stock, the Conversion Price shall immediately be adjusted to equal the price
determined by multiplying the Conversion Price by a fraction, the numerator
of which shall be the sum of (A) the number of shares of Common Stock
outstanding on the close of business on the date immediately preceding such
issuance and (B) the number of shares that could be purchased at the
Conversion Price from the aggregate proceeds to the Company of such issuance,
and the denominator of which shall be the number of shares of Common Stock
outstanding immediately following such issuance. In determining whether any
Common Stock was issued by the Company at less than the Conversion Price then
in effect, there shall be taken into account any consideration received by
the Company upon issuance, the value of such consideration, if other than
cash, to be determined in good faith by the Board of Directors.

                               (iii) If the Company shall issue after the
Closing Date of such Note rights or options or warrants exercisable for
Common Stock at a price per share less than the Conversion Price in effect on
the date that is the issue date for such rights, options or warrants, then
the Conversion Price shall be adjusted (effective on the first business day
following the issue date) to equal the price determined by multiplying the
Conversion Price in effect on such issue date by a fraction, the numerator of
which shall be the sum of (A) the number of shares of Common Stock
outstanding on the close of business on such issue date and (B) the number of
shares that could be purchased at the Conversion Price from the aggregate
proceeds to the Company from the issuance of such rights, options or warrants
plus the aggregate proceeds to be received by the Company upon the exercise
of such rights, options or warrants for Common Stock, and the denominator of
which shall be the sum of (AA) the number of shares of Common

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Stock outstanding on the close of business on the issue date and (BB) the
number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights, options or warrants. In determining whether
any rights, options or warrants entitle Purchaser s thereof to subscribe for
or purchase the Common Stock at less than the Conversion Price then in
effect, there shall be taken into account any consideration received by the
Company upon issuance, and any consideration expected to be received upon
exercise of such rights, options or warrants, the value of such
consideration, if other than cash, to be determined in good faith by the
Board of Directors.

                               (iv) Notwithstanding any other provision of
this subsection 2.5, the Conversion Price shall NOT be adjusted to reflect
the issuance by the Company to employees, officers, directors, or consultants
of the Company (either directly or pursuant to a stock option plan or
restricted stock plan approved by the shareholders and directors of the
Company) of up to an aggregate of twenty percent (20%) of the Company's
shares of Common Stock or of rights or options exercisable for up to an
aggregate of twenty percent (20%) of the Company's shares of Common Stock,
adjusted to reflect subsequent stock splits, stock dividends, combinations,
reverse stock splits, or reclassifications.

                               (v) If the Company intends to enter into any
consolidation with or merger of the Company with or into another corporation
or other entity, or in the case of any sale, lease or conveyance to another
corporation of the assets of the Company as an entirety or substantially as
an entirety, then the Company shall give each Purchaser not less than thirty
(30) days prior written notice of the closing date for such transaction, and
each Purchaser shall have the right to convert its Note into Common Stock of
the Company pursuant to the terms of this Agreement.

                  (e) DIVIDENDS. Each Purchaser shall, unless such Note is
paid in full on or before the record date for such dividend, be entitled to
receive a share of all assets (including cash) or securities (other than
Common Stock or rights, options or warrants referred to in subparagraph
(e)(iv) of this subsection 2.5) that are paid by dividend or distribution on
or after such Note's Closing Date to the holders of Common Stock, in each
case as if such Note had been converted into shares of Common Stock at the
Conversion Price in effect on the record date relating to such dividend or
distribution.

                  (f)  CONVERSION PROCEDURE.

                                    (i)  In order to exercise the conversion
right pursuant to paragraph (a) of this subsection 2.5, a Purchaser shall
deliver such Note to the Company accompanied by a written notice to the
Company that the Purchaser thereof elects to convert such Note.

                                    (ii) Within three (3) days after receipt
of a Note delivered for conversion, the Company shall deliver to such
Purchaser a certificate for the number of whole shares and any fractional
share of Common Stock issuable upon the conversion. Each conversion shall be
deemed to have been effected immediately prior to the close of business on

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the date on which the Notes shall have been delivered pursuant to section
11.2 hereof or, in the case of a mandatory conversion pursuant to paragraph
(b) of this subsection 2.5, in accordance with such subsection.

                  (g) TAXES ON CONVERSION. Subject to the restrictions on
transfer contained herein, the issuance of certificates for shares of Common
Stock upon the conversion of the Notes shall be made without charge to the
Purchasers for such certificates or any tax in respect of the issuance of
such certificates, and such certificates shall be issued in the respective
names of, or in such names as may be directed by, such Purchasers; PROVIDED,
HOWEVER, that in the event that certificates for shares of Common Stock are
to be issued in a name other than the name of the Purchaser, such Note when
surrendered for conversion, shall be accompanied by an instrument of
transfer, in form satisfactory to the Company, duly executed by such
Purchaser or his duly authorized attorney; and PROVIDED FURTHER, HOWEVER,
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issuance and delivery of any such
certificates in a name other than that of the Purchaser, and the Company
shall not be required to issue or deliver such certificates unless or until
the person or persons requesting the issuance thereof shall have paid to the
Company the amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid or is not applicable.

                  (h) COMPANY TO PROVIDE STOCK. All shares of Common Stock
that may be issued upon conversion of the Notes shall be newly-issued, duly
authorized, validly issued, fully paid and non-assessable when so issued. The
Company agrees to take any and all actions that may be necessary to ensure
that it has a sufficient number of shares of Common Stock to issue upon the
conversion of the Notes.

                  2.6 EFFECT OF REORGANIZATION, CONSOLIDATION, SALE OR
MERGER. If there shall occur any capital reorganization or any
reclassification of the capital stock of the Company, consolidation, sale,
merger or other business combination of the Company with or into another
company or other entity, or the conveyance of all or substantially all of the
assets of the Company to another company or other entity, in each case with
the effect that the holders of the Company's capital stock possess less than
40% of the voting securities of the surviving entity, then the Purchaser
shall have the option to (a) receive the principal amount of the Notes plus
accrued and unpaid interest, or (b) treat each Note as convertible into the
number of shares or other securities or property to which a holder of the
number of shares of Common Stock deliverable upon conversion of each Note
would have been entitled upon such reorganization, reclassification,
consolidation, sale, merger or conveyance. In the case of (b) above,
appropriate adjustment (as determined by the Board) shall be made in the
application of the provisions hereof with respect to the rights of the
Purchaser such that the provisions hereof (including, without limitation,
provisions with respect to changes in and other adjustments of the Conversion
Price) shall thereafter be applicable, as nearly as reasonably practicable,
in relation to any shares or other property thereafter deliverable upon the
conversion of the Notes.

                  2.7 PREPAYMENT. With respect to any Note, the Company shall
not prepay all or any portion of the principal amount outstanding thereunder
at any time prior to the first anniversary of the Closing Date for such Note,
except that prepayment shall occur, whether before

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or after such anniversary, if such prepayment is required by the Purchaser by
reason of acceleration following default or any other acceleration event
under the Note. After such first anniversary, the Company may prepay all or
any portion of such principal amount of any such Note at any time and at the
prepayment prices set forth below (expressed as a percentage of principal
amount), plus accrued interest, provided that the Company first shall give
the Purchaser thereof not less than thirty (30) days prior written notice of
its intention to prepay an amount specified in such notice, such prepayment
shall occur in such amount and in no other amount, and such prepayment shall
occur on the date set forth in the notice which date shall be the first day
of a calendar month, PROVIDED, HOWEVER, that the Purchaser shall have the
right prior to the anticipated prepayment date set forth in the notice to
exercise its conversion option contained in Section 2.5(a) hereof and convert
its Note into Common Stock of the Company, in which case the prepayment
notice shall be of no further force or effect.

<TABLE>
<CAPTION>
                  Year              Price
                  ----              -----
                  <S>               <C>
                  First             104%
                  Second            102.5%
                  Third             101%
</TABLE>

                  2.8      DEFAULTS AND REMEDIES.

                  (a)  EVENTS OF DEFAULT.   Each of the following events is
herein referred to as an Event of Default:

                                    (i)  if any representation or warranty
made herein, or in the Notes, or in any report, certificate, financial
statement or other instrument furnished in connection with this Agreement,
shall be false, inaccurate or misleading in any material respect when made or
when deemed made hereunder;

                                    (ii) any default in the payment of any
principal or interest under any of the Notes or any other indebtedness of the
Company when the same shall be due and payable, whether at the due date
thereof or by acceleration or otherwise;

                                    (iii) any material default in the due
observance or performance of any other covenant, condition or agreement to be
observed or performed pursuant to the terms hereof, and the continuance of
such default unremedied for a period of fifteen (15) days after written
notice thereof to the Company setting forth in reasonable detail the
circumstances of such default; PROVIDED, HOWEVER that if such breach is
curable but is not capable of being cured within such period and if the
Company shall have commenced action to cure such breach within such period
and is diligently attempting to cure such breach, then the Company shall be
afforded an additional thirty (30) days to cure such breach;

                                    (iv) if the Company shall: (A) apply for
or consent to the appointment of a receiver, trustee, custodian or liquidator
of it or any of its properties, (B) admit

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in writing its inability to pay its debts as they mature, (C) make a general
assignment for the benefit of creditors, (D) be adjudicated a bankrupt or
insolvent or be the subject of an order for relief under Title 11 of the
United States Code, or any successor thereto, or (E) file a voluntary
petition in bankruptcy, or a petition or an answer seeking reorganization or
an arrangement with creditors or to take advantage or any bankruptcy,
reorganization, insolvency, readjustment of debt, dissolution or liquidation
law or statute, or an answer admitting the material allegations of a petition
filed against it in any proceeding under any such law, or (vi) take or permit
to be taken any action in furtherance of or for the purpose of effecting any
of the foregoing;

                                    (v)  if any order, judgment or decree
shall be entered, without the application, approval or consent of the
Company, by any court of competent jurisdiction, approving a petition seeking
reorganization of the Company, or appointing a receiver, trustee, custodian
or liquidator of the Company, or of all or any substantial part of its
assets, and such order, judgment or decree shall continue unstayed and in
effect for any period of sixty (60) days; or

                                    (vi) if final judgment(s) for the payment
of money in excess of $250,000 individually or $500,000 in the aggregate
shall be rendered against the Company, and the same shall remain undischarged
or unbonded for a period of thirty (30) consecutive days, during which
execution shall not be effectively stayed.

                  (b) REMEDIES. Upon the occurrence of any Event of Default,
and at all times thereafter during the continuance thereof: (i) the Notes
shall, at the option of the holders thereof, in accordance with Section 2.8
hereof (except in the case of any event described in Sections 2.8(a)(iv) and
(v) hereof, the occurrence of which shall automatically effect acceleration,
regardless of any action or forbearance in respect of any prior or ongoing
default or Event of Default which may be inconsistent with such automatic
acceleration), become immediately due and payable, as to principal, interest
and premium, without presentment, demand, protest, notice or other
requirement of any kind, all of which are hereby expressly waived, anything
contained herein or in the Notes to the contrary notwithstanding, (ii) all
outstanding obligations under the Notes, shall bear interest at the default
rate of interest of 18% as provided in the Notes, (iii) Purchasers may file
suit against the Company on the Notes and/or seek specific performance or
injunctive relief thereunder (whether or not a remedy exists at law or is
adequate), (iv) the Purchasers shall have the right to seek to exercise any
and all remedies as they may determine in their discretion (without any
requirement of marshalling of assets, or other such requirement) that may be
available at law or in equity.

         SECTION 3.   CLOSING.

                  3.1 CLOSING. The closing of the purchase and sale of
$325,000 of Notes ($300,000 to be purchased by Scherer Healthcare, Inc.
("SCHERER") and $25,000 to be purchased by Mr. and Mrs. Kenneth Robertson)
("CLOSING") shall take place at 10:00 a.m. on April 5, 2000, at the offices
of Katten Muchin Zavis, 1025 Thomas Jefferson Street, N.W., Suite 700-East,
Washington, D.C. 20007 or at such other time or place as the Company and
Purchasers may mutually agree (such date is hereinafter referred to as the
"CLOSING DATE"). The closing of the

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purchase and sale of $50,000 of Notes to be purchased by Richard S. Trenkmann
SEP shall take place as soon as possible after the Closing after approval of
such purchase has been approved by an appropriate trustee of the Richard S.
Trenkmann SEP.

                  3.2 SECOND CLOSING. In the event that the Company, as
determined by a majority vote of the Board of Directors of the Company,
achieves the milestones as set forth on EXHIBIT D attached hereto (the
"MILESTONES") on or before July 31, 2000, Scherer shall purchase and the
Company shall sell to Scherer, an additional Note in the amount of $625,000
(the "REMAINING NOTE") on the same terms and conditions as set forth herein.
The closing of the sale and purchase of the Remaining Note (the "SECOND
CLOSING") shall take place at the same location and on such date (the "SECOND
CLOSING DATE") and at such time as is mutually acceptable to the Company and
Scherer; provided, however, that the Second Closing shall take place as soon
as practicable after the Company has achieved the Milestones. All of the
terms and conditions of this Agreement shall apply to the Second Closing. For
purposes of the Second Closing, if any, the term "Closing," as used in this
Agreement, shall mean the Second Closing and the term "Closing Date," as used
in this Agreement, shall mean the Second Closing Date.

         SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company hereby represents and warrants to Purchaser, which representations
and warranties shall be true and correct as of the date hereof and as of the
Closing Date, as follows:

                  4.1 ORGANIZATION; STANDING AND POWER. The Company (a) is a
corporation duly organized, validly existing and in good standing under the
laws of the state of its incorporation, (b) has all requisite corporate power
and authority to own its properties and to carry on its businesses as now
conducted and as proposed hereafter to be conducted, (c) is duly qualified
and in good standing to do business as a foreign corporation in each and
every jurisdiction where its assets are located and wherever such
qualification is necessary to carry out its business and operations except
where the failure to so qualify or be in good standing would not have a
material adverse effect on the financial condition, business, operations,
assets or prospects of the Company and (d) has all requisite corporate power
and authority to own and operate its properties, to carry on its business as
now conducted, to execute and deliver, and perform all of its obligations
under this Agreement.

                  4.2 CAPITALIZATION; RESERVED STOCK, PREEMPTIVE RIGHTS. The
total authorized capital stock of the Company consists of 20,000,000 shares
of Common Stock, of which, as of the date hereof, 7,081,200 shares have been
duly and validly issued, are fully paid and nonassessable and are
outstanding. The Company has reserved for issuance and will continue to
reserve for issuance from time to time at least the number of shares of
Common Stock into which the Notes may be converted. Except for (i) the shares
of Common Stock issuable upon conversion of the Notes and (ii) the shares of
Common Stock issuable pursuant to the Company's Stock Option Plan, no other
shares have been reserved for issuance on the Closing Date and there are no
outstanding options, warrants or other rights to subscribe for or purchase
from the Company any shares of its capital stock or any securities
convertible into or exchangeable for its capital stock. Except for the
provisions of Section 9 hereof, there are, as of the date hereof, no
preemptive rights or rights of first refusal or similar rights that have not
been

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waived, which are binding on the Company permitting any person to subscribe
for or purchase from the Company shares of its capital stock pursuant to any
provision of law, the Certificate of Incorporation or Bylaws of the Company
or by agreement or otherwise. Attached hereto as EXHIBIT E is a table setting
forth the capitalization of the Company as of the date hereof on an actual
basis.

                  4.3 AUTHORIZATION. The execution and delivery by the
Company of this Agreement, the performance of the Company's obligations
hereunder and the consummation of the transactions contemplated hereby have
been duly authorized by all necessary corporate action and will not, either
prior to or as a result of the consummation of the transactions contemplated
by this Agreement: (a) violate any provisions of any law or any governmental
rule or regulation applicable to the Company, any provision of the
Certificate of Incorporation or Bylaws of the Company, or any contract,
indenture, agreement or other instrument to which the Company is a party, or
by which the Company or any of its or their assets or properties are bound,
or (b) be in conflict with, result in a breach of, or constitute (after the
giving of notice or lapse of time or both) a default under, or result in the
creation or imposition of any lien of any nature whatsoever upon any of the
property or assets of the Company pursuant to the provisions of any contract,
indenture, agreement or other instrument to which the Company is a party or
by which it or its property is bound. The Company is not required to obtain
any approval of stockholders nor any approval, consent or authorization from,
or to file any declaration or statement with, any governmental
instrumentality or agency in connection with or as a condition to the
execution, delivery or performance of this Agreement other than the filing of
Form D and any applicable state securities law filings, which filing or
filings, as the case may be, will be made in accordance with applicable laws
and regulations.

                  4.4 BINDING OBLIGATION. This Agreement has been duly
executed and delivered by the Company and is the legally valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.

                  4.5 NON-CONTRAVENTION. To the best of its knowledge, the
Company is not in violation or breach of or in default with respect to,
complying with any material provision of any contract, agreement, instrument,
lease, license, arrangement or understanding to which it is a party, and each
such contract, agreement, instrument, lease, license, arrangement and
understanding is in full force and effect and is the legal, valid and binding
obligation of the Company enforceable as to the Company in accordance with
its terms (except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability).

                  4.6 LITIGATION. There is no action, suit or litigation,
administrative proceeding, arbitration or other proceeding to which the
Company is a party or of which the Company is aware, pending or threatened in
writing, which might materially and adversely affect the financial condition,
proposed business, property, assets or prospects of the Company.

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                  4.7 THE NOTES AND THE SHARES OF COMMON STOCK UNDERLYING THE
NOTES. The sale, issuance and delivery of the Notes have been duly authorized
by all necessary corporate action and when issued the Notes will be the
legally valid and binding obligations of the Company enforceable in
accordance with their terms (except as may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws relating to or
limiting creditors' rights generally or by equitable principles relating to
enforceability). The shares of Common Stock issuable upon conversion of the
Notes have been duly authorized and, when issued and delivered upon
conversion of the Notes, will be duly and validly issued, fully paid and
non-assessable, free and clear of any restrictions on transfer (other than
any restrictions under the Securities Act of 1933, as amended (the
"SECURITIES ACT") and state securities laws), and any taxes, security
interests, options, warrants, purchase rights, preemptive rights, contracts,
commitments, equities, claims, or demands.

                  4.8 SECURITIES LAW EXEMPTION. Assuming the accuracy of
Purchaser's representations and warranties set forth herein, the sale of the
Notes pursuant to this Agreement has been made in accordance with the
provisions and requirements of the Securities Act and any applicable state
law. All securities issued by the Company prior to the date hereof have been
issued in transactions exempt from registration under the Securities Act and
in compliance with applicable state securities or Blue Sky laws.

                  4.9 USE OF PROCEEDS. Except as otherwise set forth in this
Agreement, the proceeds from the sale of the Notes shall be used solely for
working capital and other general corporate purposes other than the repayment
of indebtedness or other obligations; provided, however, that up to $12,000
of the proceeds from the sale of the Notes may be used for the repayment of
certain indebtedness of Gunnison, Inc.

                  4.10 COMPLIANCE WITH LAWS. The Company is in compliance in
all material respects with all occupational safety, health, wage and hour,
employment discrimination, environmental, flammability, labeling, usury and
other applicable laws which are material to its businesses, and the Company
is not aware of any state of facts, events, conditions or occurrences which
may now or hereafter constitute or result in a violation of any of such
applicable laws, or which may give rise to the assertion of any such
violation, the effect of which could have a material adverse effect on the
Company's business, operations or financial condition.

                  4.11 LICENSES AND PERMITS. The Company has obtained or is
in the process of obtaining all federal, state and local licenses and permits
required to be maintained in connection with and material to its operations,
and all such licenses and permits obtained are valid and in full force and
effect.

         SECTION 5.   REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser
hereby represents and warrants to the Company, which representations and
warranties shall be true and correct as of the date hereof and the Closing
Date, as follows:

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                  5.1 AUTHORIZATION OF AGREEMENT. The execution, delivery and
performance of this Agreement has been duly authorized by all necessary
action on the part of Purchaser, does not violate any laws or regulations
applicable to Purchaser and is the valid binding and enforceable obligation
of Purchaser in accordance with its terms.

                  5.2 NON-CONTRAVENTION. To the best of Purchaser's actual
knowledge, neither the execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will (a) violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency,
or court to which Purchaser is subject or (b) conflict with, result in a
breach of, constitute a default under, result in the acceleration of, create
in any party the right to accelerate, terminate, modify, or cancel, or
require any notice under any agreement, contract, lease, license, instrument,
or other arrangement to which Purchaser is a party or by which Purchaser is
bound or to which any of Purchaser's assets are subject.

                  5.3 ACCREDITED INVESTOR. Purchaser is an "accredited
investor" as that term is defined in Rule 501(a) of the Securities Act, and
the rules promulgated thereunder, and Purchaser has accurately completed a
confidential Purchaser Questionnaire, a copy of which is attached hereto as
EXHIBIT F.

                  5.4 INVESTMENT. Purchaser acknowledges that this offering
of Notes has not been reviewed by the United States Securities and Exchange
Commission ("SEC") and that the sale of the Notes pursuant hereto is intended
to be a nonpublic offering pursuant to Sections 4(2) or 3(b) of the
Securities Act. Purchaser represents that the Notes are being purchased for
its own account, for investment and not for distribution or resale to others.
Purchaser agrees that Purchaser will not sell or otherwise transfer the Notes
or the shares of the Common Stock issuable upon conversion of the Notes
unless such securities, as the case may be, are registered under the
Securities Act or unless an exemption from such registration is available.
Purchaser understands that neither the Notes nor the shares of Common Stock
issuable upon conversion of the Notes have been registered under the
Securities Act and they are or will be issued pursuant to a specific
exemption from the registration provisions of the Securities Act which
depends upon, among other things, the bona fide nature of the investment
intent as expressed herein.

                  5.5 ACCESS TO DATA. Purchaser has had an opportunity to
discuss the Company's business, management and financial affairs with the
Company's management and the opportunity to review the Company's facilities,
each to Purchaser's satisfaction. Purchaser understands that such
discussions, as well as any written information issued or provided by the
Company, were intended to describe the aspects of the Company's business and
prospects which the Company believes to be material but were not necessarily
an exhaustive description thereof. Purchaser has received from the Company
all materials and information it deems necessary for it to make its
investment decision with respect to the Notes offered hereby.

                  5.6 SPECULATIVE NATURE OF INVESTMENT. Purchaser
acknowledges that the purchase of the Notes involves (i) a high degree of
risk; (ii) the Company requires additional

                                      11
<PAGE>

capital to fully design, develop, launch and commercialize the Company's
business and does not have any commitment for additional funds; (iii) an
investment in the Company is highly speculative and only investors who can
afford the loss of their entire investment should consider investing in the
Company and purchasing Notes; (iv) Purchaser may not be able to liquidate its
investment; (v) transferability of the Notes and the shares of Common Stock
issuable upon conversion of the Notes is extremely limited; and (vi)
Purchaser could sustain the loss of its entire investment.

                  5.7 EXPERIENCE. Purchaser acknowledges that it has prior
investment experience, including investment in non-listed and non-registered
securities, or has employed the services of an investment advisor, attorney
or accountant to review all of the documents furnished or made available by
the Company and to evaluate the merits and risks of such an investment on
Purchaser's behalf.

                  5.8 LACK OF LIQUIDITY. Purchaser understands that there is
no public market for the Notes or the Common Stock. Purchaser further
understands that even if a public market develops for any of the Company's
securities, Rule 144 (the "RULE") promulgated under the Securities Act limits
Purchaser's ability to sell any of the Company's securities owned by
Purchaser. Purchaser acknowledges that the Company may, if it desires, permit
the transfer of the Notes or shares of Common Stock issuable upon conversion
of the Notes out of its name only when its request for transfer is
accompanied by an opinion of counsel reasonably satisfactory to the Company
that neither the sale nor the proposed transfer results in a violation of the
Securities Act or any applicable state "blue sky" laws (collectively
"SECURITIES LAWS"). Purchaser agrees to hold the Company and its directors,
officers and controlling persons and their respective heirs, representatives,
successors and assigns harmless and to indemnify them against all
liabilities, costs and expenses incurred by them as a result of any
misrepresentation made by Purchaser contained herein or in the confidential
Purchaser Questionnaire or any sale or distribution by Purchaser in violation
of any Securities Laws. Purchaser acknowledges that at such time, if ever, as
any of the Notes or the shares of Common Stock issuable upon conversion of
the Notes are registered, sales of such securities will be subject to state
securities laws, including those of states which may require any securities
sold therein to be sold through a registered broker-dealer or in reliance
upon an exemption from registration.

                  5.9 LEGENDS; STOP TRANSFER ORDERS. Purchaser consents to
the placement of a legend on the Notes and on any certificate evidencing the
shares of Common Stock issuable upon conversion of the Notes as set forth in
Section 6 hereof. In addition, Purchaser consents to the entrance of stop
transfer orders with respect to the shares of Common Stock issuable upon
conversion of the Notes.

                  5.10 RIGHT TO REJECT SUBSCRIPTION. Purchaser understands
that the Company will review this Agreement and the confidential Purchaser
Questionnaire and is hereby given authority by the undersigned to call his
banks or place of employment or otherwise review the financial standing of
Purchaser; and it is further agreed that the Company reserves the
unrestricted right to reject or limit any subscription and to close the offer
at any time prior to the Closing Date of such subscription.

                                      12
<PAGE>

                  5.11 ADDRESS. Purchaser hereby represents that the address
of Purchaser furnished by him at the end of this Agreement is Purchaser's
principal residence if Purchaser is an individual or Purchaser's principal
business address if it is a corporation or other entity.

                  5.12 NO OTHER REPRESENTATIONS. Purchaser hereby represents
that, except as set forth herein, no representations or warranties have been
made to the Purchaser by the Company or any agent, employee or affiliate of
the Company and in entering into this transaction, Purchaser is not relying
on any information, other than that contained herein and the results of
independent investigation by the Purchaser.

                  5.13 PURPOSE. If Purchaser is a partnership, corporation,
trust or other entity, it was not formed for the purpose of investing in the
Company.

                  5.14 NO BROKER. There is no firm, corporation, agency or
other entity or person that is entitled to a finder's fee or any type of
commission in relation to or in connection with the transactions contemplated
by this Agreement as a result of any agreement or understanding with
Purchaser or any of its directors, officers, employees or agents.

         SECTION 6.   LEGENDS.

                  6.1.     NOTES.  The Notes shall be endorsed with the
following legend:

                  THIS NOTE HAS BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND
                  MAY NOT BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT
                  UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") SHALL
                  HAVE BECOME EFFECTIVE WITH RESPECT THERETO OR (II) RECEIPT BY
                  THE COMPANY AT THE COMPANY'S SOLE COST AND EXPENSE OF AN
                  OPINION OF COUNSEL REASONABLY SATISFACTORY TO THE COMPANY TO
                  THE EFFECT THAT REGISTRATION UNDER THE ACT IS NOT REQUIRED IN
                  CONNECTION WITH SUCH PROPOSED TRANSFER AND THAT SUCH ISSUANCE
                  IS NOT VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS
                  LEGEND SHALL BE ENDORSED UPON ANY NOTE ISSUED IN EXCHANGE FOR
                  THIS NOTE.

                  6.2. COMMON STOCK. Until such time as the shares of Common
Stock issuable upon conversion of the Notes are registered under the
Securities Act, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such shares and the certificates representing
such shares shall be endorsed with the following legend:

                  "THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
                  REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
                  THE "BLUE SKY" OR SECURITIES LAWS OF

                                      13
<PAGE>

                  ANY STATE AND MAY NOT BE OFFERED, SOLD, ASSIGNED,
                  TRANSFERRED, PLEDGED, HYPOTHECATED, DISTRIBUTED OR OTHERWISE
                  DISPOSED OF UNLESS THERE IS AN EFFECTIVE REGISTRATION
                  STATEMENT UNDER SUCH ACT COVERING SUCH SALE OR AN EXEMPTION
                  FROM SUCH REGISTRATION REQUIREMENT IS AVAILABLE, AND IF AN
                  EXEMPTION SHALL BE AVAILABLE, THE COMPANY RECEIVES AN OPINION
                  OF COUNSEL AT ITS SOLE COST AND EXPENSE STATING THAT SUCH
                  OFFER, SALE, TRANSFER, ASSIGNMENT, PLEDGE, HYPOTHECATION,
                  DISTRIBUTION OR OTHER DISPOSITION IS EXEMPT FROM THE
                  REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH
                  ACT. THE RESTRICTIONS CONTAINED HEREIN ARE BINDING ON THE
                  HOLDER HEREOF AND HIS SUCCESSORS AND ASSIGNS."

         SECTION 7.   COVENANTS OF THE COMPANY.

                  7.1 RESTRICTED PAYMENTS; LIMITATION ON INCURRENCE OF
INDEBTEDNESS. At any time after July 31, 2000 and so long as Notes in the
aggregate principal amount of $500,000 or more shall be outstanding:

                  (a) the Company shall not make any principal payment on, or
redemption, repurchase, defeasance or other acquisition or retirement for
value, prior to scheduled principal payment or maturity, of any indebtedness
of the Company that is PARI PASSU with or subordinate in right of payment to
the Notes or any deposit with respect to the foregoing; PROVIDED, HOWEVER,
that this subparagraph (a) of subsection 7.1 shall not apply to any principal
payment or redemption of such indebtedness prior to maturity (i) pursuant to
a refinancing of such indebtedness on substantially similar terms or terms
more favorable to the Company, or (ii) pursuant to a conversion into, or out
of proceeds of a substantially concurrent issue or sale of, Common Stock; and

                  (b) the Company shall not create or suffer to exist or
permit any of its subsidiaries to create or suffer to exist any indebtedness,
deferred purchase price obligation or obligations under direct or indirect
guaranties of indebtedness except for the Notes.

                  7.2 DELIVERY OF FINANCIAL STATEMENTS AND REPORTS.  The
Company shall deliver to each Purchaser :

                  (a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year, a balance sheet of the Company
as of the end of such year, and an income statement and statement of cash
flow for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with GAAP and audited and certified by an
independent public accountant;

                                      14
<PAGE>

                  (b) as soon as practicable, but in any event within
forty-five (45) days after the end of each fiscal quarter, a balance sheet of
the Company as of the end of such quarter, and an income statement and
statement of cash flows for such quarter, each to be in reasonable detail,
prepared in accordance with GAAP;

                  (c) with respect to the balance sheet, income statement,
and statement of cash flows called for in subsection (b) of this Section 7.2,
an instrument executed by the Chief Financial Officer or President of the
Company certifying that such financial statements were prepared in accordance
with GAAP consistently applied with prior practice for earlier periods and
fairly present the financial condition of the Company and its results of
operations for the period specified, subject to normal year-end audit
adjustment in the case of quarterly financial statements;

                  (d) a budget and operating plan of the Company for the
Company's upcoming fiscal year at least 45 days prior to the start of each
fiscal year;

                  (e) copies of all reports sent to stockholders or filed
with the Securities Exchange Commission;

                  (f) prompt written notification of all material pending or
actual litigation to which the Company is or is anticipated to be a party; and

                  (g) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as a
Purchaser may from time to time reasonably request; PROVIDED, HOWEVER, that
the Company shall not be obligated to provide any information that it
reasonably considers to be a trade secret, the disclosure of which the
Company reasonably believes may adversely affect its business.

                  7.3INSPECTION RIGHTS. The Company shall permit each
Purchaser or a representative of any such Purchaser, to visit and inspect the
Company's properties, to examine its books of account and records, and to
discuss the Company's affairs, finances, and accounts with its officers, all
at such reasonable times as may be requested by such representatives.

                  7.4 REGULAR COURSE OF BUSINESS. The Company will operate
its business in accordance with the reasonable judgment of its management
diligently and in good faith, and the Company will continue to use its
reasonable efforts to keep available the services of present officers and
employees (other than planned retirements) and to preserve its present
relationships with persons having business dealings with it.

                  7.5 ASSETS. The assets, property, and rights now owned by
the Company will be used, preserved, and maintained, as far as practicable,
in the ordinary course of business, to the same extent and in the same
condition as said assets, property, and rights are on the date of this
Agreement, and no unusual or novel methods of manufacture, purchase, sale,
management, or operation of said properties or business or accumulation or
valuation of inventory will be made or instituted. Without the prior consent
of Purchaser, the Company will not encumber any

                                      15
<PAGE>

of its assets or make any commitments relating to such assets, property, or
business, except in the ordinary course of its business.

                  7.6 TAXES. The Company shall cause all of its tax returns,
schedules and filings to be timely (including any lawful extensions) filed
and all amounts shown to be due thereon to be fully paid, including any
deficiencies, penalties or other charges thereafter arising. The Company has
not filed, and will not file on or before the Closing Date, any election
under Section 338(h)(10) or consent under Section 341(f) of the Internal
Revenue Code.

                  7.7 INSURANCE. The Company will continue to carry its
existing insurance, subject to variation in amounts required by the ordinary
operations of its business. At the request of Purchaser and at the Company's
sole expense, the amount of insurance against fire and other casualties
which, at the date of this agreement, the Company carries on any of its
properties or in respect of its operations shall be increased by such amount
or amounts as Purchaser shall reasonably specify.

                  7.8 NO VIOLATIONS. The Company will comply in all material
respects with all statutes, laws, ordinances, rules, and regulations
applicable to it in the ordinary course of business.

                  7.9 PUBLIC ANNOUNCEMENTS. No press release or other
announcement to the employees, customers, or suppliers of the Company related
to this Agreement or this purchase will be issued without the joint approval
of the parties mentioned or referred to in such press release or
announcement, which approval shall not be unreasonably withheld or delayed,
unless required by law, in which case Purchasers and the Company will consult
with each other regarding the announcement.

                  7.10 CORPORATE EXISTENCE. The Company shall at all times
maintain its corporate existence in good standing in the jurisdiction of its
formation, and shall qualify to do business in all jurisdictions in which the
failure to so qualify would materially impair its ability to conduct business
in such jurisdictions. Until Conversion, the Company shall not revise, alter,
or restate its articles or certificate of incorporation or bylaws without the
prior written consent of the Purchasers of a majority of the then outstanding
principal amount of Notes, which consent shall not be unreasonably withheld
or delayed; PROVIDED, HOWEVER that the Company shall be permitted to revise,
alter or restate its articles or certificate of incorporation without the
prior written consent of Purchasers to the extent of necessary to ensure that
the Company has a sufficient number of shares of Common Stock to issue upon
the conversion of the Notes or otherwise necessary to offer any shares of, or
securities convertible into or exercisable for any shares of, Common Stock.

                  7.11 RULE 144. If the Company files a registration
statement pursuant to the requirements of Section 12 of the Securities
Exchange Act of 1934 (the "EXCHANGE ACT") and/or pursuant to the requirements
of the Securities Act, it will file all reports required to be filed by it
under the Securities Act and the Exchange Act and the rules and regulations
adopted by the Securities and Exchange Commission (the "COMMISSION")
thereunder. The Company will take

                                      16
<PAGE>

such further action as Purchaser may reasonably request to the extent
required from time to time to enable Purchaser to sell the shares of Common
Stock issuable upon conversion of the Notes without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rules
144 and 144A under the Securities Act, as such Rules may be amended from time
to time, or (b) any similar rule or regulation hereafter adopted by the
Commission. Upon the request of Purchaser, the Company will deliver to
Purchaser a written statement as to whether it has complied with such
requirements.

                  7.12 RESERVE FOR CONVERSION OF SHARES. The Company shall at
all times reserve and keep available out of its authorized but unissued
shares of Common Stock, for the purpose of effecting the conversion of the
Notes and otherwise complying with the terms of this Agreement, such number
of its duly authorized shares of Common Stock as shall be sufficient to
effect the conversion of the Notes from time to time outstanding or otherwise
to comply with the terms of this Agreement. If at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to
effect the conversion of the Notes or otherwise to comply with the terms of
this Agreement, without limitation on any remedies available to the
Purchaser, the Company will forthwith take such corporate action as may be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes. The Company
will obtain any authorization, consent, approval or other action by or make
any filing with any court or administrative body that may be required under
applicable state securities laws in connection with the issuance of shares of
Common Stock upon conversion of the Notes.

                  7.13 TRANSACTIONS WITH AFFILIATES. Except for agreements or
transactions contemplated by this Agreement or as otherwise approved by the
Company's Board of Directors (which shall include approval by a majority of
the directors of the Company without a direct or indirect interest in the
agreement or transaction if there are disinterested directors on the Board),
the Company shall not enter into any agreement or transaction with any
director, officer, employee or holder of more than 5% of the outstanding
capital stock of any class or series of capital stock of the Company, any
member of the family of any such person, or any corporation, partnership,
trust or other entity in which any such person, or member of the family of
any such person, is a director, officer, trustee, partner or holder of more
than 5% of the outstanding capital stock thereof, except for agreements or
transactions (i) entered into or consummated prior to the date hereof and
previously disclosed to Purchaser, (ii) which are nonmaterial and in the
ordinary course of business, (iii) on customary terms related to such
person's employment, or (iv) are no less favorable to the Company as would be
obtainable by the Company in an arms-length transaction with an independent
third party. For purposes hereof, an agreement or transaction shall be deemed
to be nonmaterial if it and all other agreements or transactions (excluding,
for this purpose, compensation under agreements relating to employment and
other compensation arrangements approved by the Company's Board of Directors)
between the Company and the person or entity in question during the fiscal
year do not involve an amount in excess of $20,000.

         SECTION 8.   PURCHASER COVENANTS.

                                      17

<PAGE>

                  8.1 CONFIDENTIALITY. Purchaser covenants and agrees that
none of Purchaser, its agents and representatives will use for their own
benefit, convey or disclose to any third party any information provided by
the Company concerning its current or proposed business, operations and
financial condition, other than information which is already publicly
available and to the extent required by law.

         SECTION 9. CONDITIONS OF PURCHASERS' OBLIGATIONS TO CLOSE. The
obligations of each Purchaser under Section 3 of this Agreement are subject
to the fulfillment at or before the Closing of each of the following
conditions:

                  9.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of the Company contained in Section 4 hereof
shall be true when made and shall be true on and as of the Closing Date with
the same effect as though such representations had been made on and as of the
Closing Date.

                  9.2 PERFORMANCE. The Company shall have performed and
complied with all agreements and conditions contained herein required to be
performed and complied with by it on or before the Closing Date.

                  9.3 PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated at the Closing
and all documents incident thereto shall be satisfactory in form and
substance to each Purchaser.

                  9.4 SHAREHOLDERS' AGREEMENT; CONTRIBUTION AND ASSUMPTION
AGREEMENT AND SECURITY Agreement. The Purchasers, the Company and certain
holders of the Company's Common Stock shall enter into a Shareholders'
Agreement in the form attached hereto as EXHIBIT G. The Company and certain
holders of the Company's Common Stock shall enter into a Contribution and
Assumption Agreement in the form attached hereto as EXHIBIT H. The Company
and the Purchasers shall enter into the Security Agreement.

                  9.5 PURCHASERS' RIGHTS AGREEMENT. The Purchasers and the
Company shall enter into a Purchasers' Rights Agreement in the form attached
hereto as EXHIBIT I.

                  9.6 CO-SALE AGREEMENT. Each officer, director or five
percent or greater holder of the Company shall enter into a Co-Sale Agreement
in the form attached hereto as EXHIBIT J.

                  9.7 BLUE SKY. The Company shall have obtained all necessary
Blue Sky law permits and qualifications, or secured an exemption therefrom,
required by any state for the offer and sale of the Notes, and the Common
Stock issuable upon conversion of the Notes.

                  9.8 LEGAL MATTERS. All matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been approved by counsel to the Purchaser.

                                      18
<PAGE>

         SECTION 10.   CONDITIONS OF COMPANY'S OBLIGATIONS TO CLOSE.  The
obligations of the Company under Section 3 of this Agreement are subject to
the fulfillment at or before the Closing of each of the following conditions:

                  10.1 REPRESENTATIONS AND WARRANTIES TRUE AT CLOSING. The
representations and warranties of each of the Purchasers contained in Section
5 hereof shall be true when made and shall be true on and as of the Closing
Date with the same effect as though said representations and warranties had
been made on and as of the Closing Date.

                  10.2 PERFORMANCE. All matters of a legal nature which
pertain to this Agreement and the transactions contemplated hereby shall have
been approved by Company counsel.

         SECTION 11.       GENERAL PROVISIONS.

                  11.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS. The representations, warranties, covenants and agreements
contained in this Agreement shall survive the execution of this Agreement.

                  11.2 NOTICES. All notices, requests, demands and other
communications which are required to be or may be given under this Agreement
to any party by any of the other parties shall be in writing and shall be
deemed to have been duly given when (a) delivered in person, (b) the day
following dispatch by a nationally recognized overnight courier service (such
as Federal Express or UPS, etc.) for next day delivery or (c) five (5) days
after dispatch by certified or registered first class mail, postage prepaid,
return receipt requested, to the party to whom the same is so given or made.
Any notice or other communication given hereunder shall be addressed to the
Company, at its principal offices as set forth above or to the Purchaser at
his address indicated on the signature page hereto.

                  11.3 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.

                  11.4 HEADINGS. All headings are inserted for convenience of
reference only and shall not affect the meaning or interpretation of any such
provisions or of this Agreement, taken as an entirety.

                  11.5 SEVERABILITY. If and to the extent that any court of
competent jurisdiction holds any provision (or any part thereof) of this
Agreement to be invalid or unenforceable, such holding shall in no way affect
the validity of the remainder of this Agreement.

                  11.6 CHANGES, WAIVERS, ETC. Subject to Section 11.13,
neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but rather

                                      19

<PAGE>

may only be changed by a statement in writing signed by the party against
which enforcement of the change, waiver, discharge or termination is sought.
It is agreed that a waiver by either party of a breach of any provision of
this Agreement shall not operate, or be construed, as a waiver of any
subsequent breach by that same party.

                  11.7 EXPENSES. Each party hereto shall bear its own legal
and other expenses in connection with the preparation of this Agreement and
any other documents or certificates executed concurrently herewith and the
closing of the transactions contemplated hereby.

                  11.8 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware. The parties
hereby agree that any dispute which may arise between them arising out of or
in connection with this Agreement shall be adjudicated before a court located
in Wilmington, Delaware and they hereby submit to the exclusive jurisdiction
of the courts of the State of Delaware located in Wilmington, Delaware and of
the federal courts in the State of Delaware with respect to any action or
legal proceeding commenced by any party, and irrevocably waive any objection
they now or hereafter may have respecting the venue of any such action or
proceeding brought in such a court or respecting the fact that such court is
an inconvenient forum, relating to or arising out of this Agreement or any
acts or omissions relating to the sale of the securities hereunder, and
consent to the service of process in any such action or legal proceeding by
means of registered or certified mail, return receipt requested, in care of
the address set forth below or such other address as the undersigned shall
furnish in writing to the other.

                  11.9 BINDING EFFECT. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective
successors, legal representatives and assigns.

                  11.10 INDEMNIFICATION. The Company agrees to indemnify and
hold harmless the Purchasers and their affiliates, and their respective
partners, officers, directors, representatives, employees and agents from and
against all losses, claims, damages and liabilities in connection with or
arising out of this Agreement or the Purchasers' Rights Agreement, Co-Sale
Agreement or the transactions contemplated hereby or thereby or in connection
with or arising out of any litigation, investigation or proceeding initiated
or brought by any third party (other than any affiliate, partner, officer,
director, agent, employee or representative of a Purchaser) relating hereto
or thereto, and to reimburse upon demand each of such indemnifiable parties
currently and from time to time for any reasonable legal or other expenses
incurred in connection with investigating or defending any of the foregoing;
provided that the foregoing indemnity shall not apply to any losses, claims,
damages, liabilities or related expenses to the extent a court of competent
jurisdiction shall have determined in a final judgment that is not subject to
further appeal that the foregoing shall have resulted primarily and directly
from the willful misconduct or gross negligence of such indemnifiable party.

                  11.11 ENTIRE AGREEMENT. This Agreement sets forth the
entire agreement and understanding between the parties as to the subject
mater thereof and incorporates and supersedes all prior discussions,
agreements and understandings of any and every nature among them.

                                      20
<PAGE>

                  11.12 FURTHER ASSURANCES. The parties agree to execute and
deliver all such further documents, agreements and instruments and take such
other and further action as may be necessary or appropriate to carry out the
purposes and intent of this Agreement.

                  11.13 WAIVERS AND AMENDMENTS. With the written consent of
Purchasers holding a majority of the then outstanding principal amount of the
Notes, the obligations of the Company under this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), and with the same consent the Company may enter into a
supplementary agreement for the purpose of adding any provisions to this
Agreement or to any supplemental agreement or modifying in any manner the
rights and obligations of the holders of the Notes and of the Company;
PROVIDED, HOWEVER, that no such waiver or supplemental agreement shall reduce
the aforesaid percentage of holders of the Notes who are required to consent
to any waiver or supplemental agreement without the consent of all of the
holders of the Notes. Written notice of any such waiver, consent or agreement
of amendment, modification or supplement shall be given by the Company to
holders of the Notes who have not previously consented thereto in writing.

                  11.13 SUCCESSORS AND ASSIGNS. The terms and conditions of
this Subscription Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties. Nothing in this
Agreement, express or implied, is intended to confer upon any party other
than the parties hereto or their respective successors and assigns any
rights, remedies, obligations, or liabilities under or by reason of this
Subscription Agreement, except as expressly provided in this Subscription
Agreement. Neither this Subscription Agreement, nor its rights and
obligations hereunder can be assigned by the Company, and any such attempted
assignment will be void.

                                      21
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have executed this
Subscription Agreement as of the day and year first above written.

COMPANY:

COMPLIANCE1, INC.

By:  /s/ Robert D. Wilson
     ---------------------
     Name: Robert D. Wilson
     Its:  President

Address:

2010 Corporate Ridge Road
Suite 700
McLean, Virginia 22102

                                      22
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Subscription
Agreement as of the day and year first above written.

PURCHASER:

SCHERER HEALTHCARE, INC.

By:      /s/ Robert P. Scherer, Jr.
         ---------------------------
Name:    Robert P. Scherer, Jr.
Its:     Chairman and Chief Executive Officer
Address: 200 Galleria Parkway
         Suite 220
         Atlanta, GA 30339

                                      23
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the day and year first above written.

PURCHASER:

RICHARD S. TRENKMANN SEP

By:      /s/ Richard S. Trenkmann
         ----------------------------
         Name:  Richard S. Trenkmann
         Its:   Owner

Address:  Suite 3801
405 north Wabash
Chicago, IL 60611

                                      24
<PAGE>

IN WITNESS WHEREOF, the parties hereto have executed this Subscription Agreement
as of the day and year first above written.

PURCHASER:

/s/ Kenneth Robertson
-----------------------
KENNETH ROBERTSON

Address:

                                      25
<PAGE>

                                      26

<PAGE>
                            LIST OF EXHIBITS

<TABLE>
<S>                                                        <C>
SCHEDULE OF PURCHASERS                                     EXHIBIT A
FORM OF 10% CONVERTIBLE SECURED NOTE                       EXHIBIT B
SECURITY AGREEMENT                                         EXHIBIT C
CAPITALIZATION MILESTONES                                  EXHIBIT D
CAPITALIZATION TABLE                                       EXHIBIT E
PURCHASER QUESTIONNAIRE                                    EXHIBIT F
SHAREHOLDERS' AGREEMENT                                    EXHIBIT G
CONTRIBUTION AND ASSUMPTION AGREEMENT                      EXHIBIT H
PURCHASERS' RIGHTS AGREEMENT                               EXHIBIT I
CO-SALE AGREEMENT                                          EXHIBIT J
</TABLE>

                                      27
<PAGE>

                                    EXHIBIT A

                             SCHEDULE OF PURCHASERS

<TABLE>
<CAPTION>
NAME                                                 AGGREGATE PURCHASE PRICE
----                                                 ------------------------
<C>                                                  <C>
CLOSING

Scherer Healthcare, Inc.                             $300,000

Mr. and Mrs. Kenneth Robertson                       $25,000

Richard S. Trenkmann SEP                             $50,000
(as soon as possible after Closing)

SECOND CLOSING

Scherer Healthcare, Inc.                             $625,000
</TABLE>

                                      28
<PAGE>

                                    EXHIBIT B

                      FORM OF 10% CONVERTIBLE SECURED NOTE

                          BEGINS ON THE FOLLOWING PAGE

                                      29<PAGE>
                                                                     Exhibit 4.2

                            UNITED STATES CAN COMPANY

              12 3/8% Senior Subordinated Notes due October 1, 2010

                          REGISTRATION RIGHTS AGREEMENT

                                                              New York, New York
                                                                 October 4, 2000

Salomon Smith Barney Inc.
Banc of America Securities LLC
As Representatives of the Initial Purchasers
c/o Salomon Smith Barney Inc.
388 Greenwich Street
New York, New York 10013

Dear Sirs:

                  United States Can Company, a corporation organized under
the laws of the state of Delaware (the "Company"), proposes to issue and sell
(the "Initial Placement") to certain purchasers (the "Initial Purchasers"),
upon the terms set forth in a purchase agreement, dated as of September 26,
2000 (the "Purchase Agreement"), $175,000,000 aggregate principal amount of
the Company's 12 3/8% Senior Subordinated Notes due October 1, 2010 (the
"Notes"), which will be guaranteed by each of the Guarantors (as defined
herein) (the "Guarantees" and, together with the Notes, the "Securities"). To
induce the Initial Purchasers to enter into the Purchase Agreement and to
satisfy a condition of your obligations thereunder, the Company and the
Guarantors (collectively, the "Issuers") agree with you for your benefit and
the benefit of the holders from time to time of the Securities (including the
Initial Purchasers) (each a "Holder" and, together, the "Holders"), 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" shall mean the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.

                  "Affiliate" of any specified Person shall mean (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.

<PAGE>

                  "Broker-Dealer" shall mean any broker or dealer registered as
such under the Exchange Act.

                  "Business Day" shall mean any day other than a Saturday, a
Sunday or a legal holiday or a day on which banking institutions or trust
companies are authorized or obligated by law to close in New York City.

                  "Commission" shall mean the Securities and Exchange
Commission.

                  "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder.

                  "Exchange Offer Registration Period" shall mean 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" shall mean 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 thereto, in each
case including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.

                  "Exchanging Dealer" shall mean any Holder (which may include
any Initial Purchaser) that is a Broker-Dealer and elects to exchange for New
Securities any Securities that it acquired for its own account as a result of
market-making activities or other trading activities (but not directly from the
Company or any Affiliate of the Company) for New Securities.

                  "Final Memorandum" shall have the meaning set forth in the
Purchase Agreement.

                  "Guarantors" shall mean, collectively, the Parent Guarantor
and the Subsidiary Guarantor.

                  "Holder" shall have the meaning set forth in the preamble
hereto.

                  "Indenture" shall mean the Indenture relating to the
Securities, dated as of October 4, 2000, among the Issuers and Bank One Trust
Company, N.A., as trustee, as the same may be amended from time to time in
accordance with the terms thereof.

                  "Initial Purchaser" shall have the meaning set forth in the
preamble hereto.

                  "Initial Placement" shall have the meaning set forth in the
preamble hereto.

                  "Issuers" shall mean, collectively, the Company, the Parent
Guarantor and the Subsidiary Guarantor.

                  "Losses" shall have the meaning set forth in Section 6(d)
hereof.

                                       2
<PAGE>

                  "Majority Holders" shall mean the Holders of a majority of the
aggregate principal amount of Securities registered under a Registration
Statement.

                  "Managing Underwriters" shall mean the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.

                  "New Securities" shall mean debt securities of the Company
identical in all material respects to the Securities (except that the cash
interest and interest rate step-up provisions and the transfer restrictions
shall be modified or eliminated, as appropriate) and to be issued under the
Indenture.

                  "Parent Guarantor" shall mean U.S. Can Corporation, a Delaware
corporation and the Company's sole stockholder.

                  "Prospectus" shall mean 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 Securities or the New Securities covered
by such Registration Statement, and all amendments and supplements thereto and
all material incorporated by reference therein.

                     "Purchase Agreement" shall have the meaning set forth in
the preamble hereto.

                  "Registered Exchange Offer" shall mean the proposed offer of
the Issuers to issue and deliver to the Holders of the Securities that are not
prohibited by any law or policy of the Commission from participating in such
offer, in exchange for the Securities, a like aggregate principal amount of the
New Securities.

                  "Registration Statement" shall mean any Exchange Offer
Registration Statement or Shelf Registration Statement that covers any of the
Securities or the New Securities pursuant to the provisions of this Agreement,
any 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" shall have the meaning set forth in the preamble
hereto.

                  "Shelf Registration" shall mean a registration effected
pursuant to Section 3 hereof.

                  "Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.

                  "Shelf Registration Statement" shall mean a "shelf"
registration statement of the Company pursuant to the provisions of Section 3
hereof which covers some or all of the Securities or New Securities, 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

                                       3
<PAGE>

Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.

                  "Subsidiary Guarantor" shall mean May Verpackungen
Holding Inc., a Delaware corporation and wholly-owned subsidiary of the Company.

                  "Trustee" shall mean the trustee with respect to the
Securities under the Indenture.

                  "Underwriter" shall mean any underwriter of Securities in
connection with an offering thereof under a Shelf Registration Statement.

                  2.       REGISTERED EXCHANGE OFFER. (a) The Issuers shall
prepare and, not later than 120 days following the date of the original issuance
of the Securities (or if such 120th day is not a Business Day, the next
succeeding Business Day), shall file with the Commission the Exchange Offer
Registration Statement with respect to the Registered Exchange Offer. The
Issuers shall use their best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 150 days of the date of the
original issuance of the Securities (or if such 150th day is not a Business Day,
the next succeeding Business Day).

                  (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 Securities for New Securities (assuming
that such Holder is not an Affiliate of the Issuers, acquires the New Securities
in the ordinary course of such Holder's business, has no arrangements with any
Person to participate in the distribution of the New Securities and is not
prohibited by any law or policy of the Commission from participating in the
Registered Exchange Offer) to trade such New Securities 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, or shall cause the Trustee to:

                  (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 20 days after the date notice thereof is mailed to the Holders
         (or, in each case, longer if required by applicable law);

                  (iii)    keep the Exchange Offer Registration Statement
         continuously effective under the Act, supplemented and amended as
         required, under the Act to ensure that it is available for sales of New
         Securities by Exchanging Dealers during the Exchange Offer Registration
         Period;

                                       4
<PAGE>

                  (iv)     utilize the services of a depositary for the
         Registered Exchange Offer with an address in the Borough of Manhattan
         in New York City, which may be the Trustee or an Affiliate of the
         Trustee;

                  (v)      permit Holders to withdraw tendered Securities at any
         time prior to the close of business, New York time, on the last
         Business Day on which the Registered Exchange Offer is open;

                  (vi)     prior to effectiveness of the Exchange Offer
         Registration Statement, provide a supplemental letter to the Commission
         (A) stating that the Issuers are conducting the Registered Exchange
         Offer in reliance on the position of the Commission in EXXON CAPITAL
         HOLDINGS CORPORATION (pub. avail. May 13, 1988) and MORGAN STANLEY AND
         CO., INC. (pub. avail. June 5, 1991); and (B) including a
         representation that the Issuers have not entered into any arrangement
         or understanding with any Person to distribute the New Securities to be
         received in the Registered Exchange Offer and that, to the best of the
         Issuers' information and belief, each Holder participating in the
         Registered Exchange Offer is acquiring the New Securities in the
         ordinary course of business and has no arrangement or understanding
         with any Person to participate in the distribution of the New
         Securities; and

                  (vii)    comply in all material 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 Securities tendered and not
         validly withdrawn pursuant to the Registered Exchange Offer;

                  (ii)     deliver to the Trustee for cancellation in accordance
         with Section 4(s) all Securities so accepted for exchange; and

                  (iii)    cause the Trustee promptly to authenticate and
         deliver to each Holder of Securities a principal amount of New
         Securities equal to the principal amount of the Securities of such
         Holder so accepted for exchange.

                  (e)      Each Holder hereby acknowledges and agrees that any
Broker-Dealer and any such Holder using the Registered Exchange Offer to
participate in a distribution of the New Securities (x) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission in MORGAN STANLEY AND CO., INC. (pub. avail. June 5,
1991) and EXXON CAPITAL HOLDINGS CORPORATION (pub. avail. May 13, 1988), as
interpreted in the Commission's letter to Shearman & Sterling dated July 2, 1993
and similar no-action letters; and (y) must comply with the registration and
prospectus delivery requirements of the Act in connection with any secondary
resale transaction unless such transaction is exempt from such requirements.
Absent such exemption, any secondary resale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K under
the Act if the resales are of New Securities obtained by such Holder in exchange
for Securities acquired by such Holder directly from the Issuers or one of their
Affiliates. Accordingly, each Holder participating in the

                                       5
<PAGE>

Registered Exchange Offer shall be required to represent to the Issuers that,
at the time of the consummation of the Registered Exchange Offer:

                  (i)      any New Securities received by such Holder will be
         acquired in the ordinary course of business;

                  (ii)     such Holder will have no arrangement or understanding
         with any Person to participate in the distribution of the Securities or
         the New Securities within the meaning of the Act; and

                  (iii)    such Holder is not an Affiliate of the Issuers.

                  (f)      If any Initial Purchaser determines that it is not
eligible to participate in the Registered Exchange Offer with respect to the
exchange of Securities 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 Person purchasing New Securities registered under a
Shelf Registration Statement as contemplated by Section 3 hereof from such
Initial Purchaser, in exchange for such Securities, a like principal amount of
New Securities. The Issuers shall use their best efforts to cause the CUSIP
Service Bureau to issue the same CUSIP number for such New Securities as for New
Securities issued pursuant to the Registered Exchange Offer.

                  3.       SHELF REGISTRATION. (a) If (i) due to any change in
law or applicable interpretations thereof by the Commission's staff, the Issuers
determine upon advice of their outside counsel that they 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 180 days of the date hereof; (iii) any Initial Purchaser so requests with
respect to Securities that are not eligible to be exchanged for New Securities
in the Registered Exchange Offer and that are held by it following consummation
of the Registered Exchange Offer; (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 New Securities pursuant to Section 2(f) hereof, such
Initial Purchaser does not receive freely tradeable New Securities in exchange
for Securities constituting any portion of an unsold allotment (it being
understood that (x) the requirement that an Initial Purchaser deliver a
Prospectus containing the information required by Item 507 or 508 of Regulation
S-K under the Act in connection with sales of New Securities acquired in
exchange for such Securities shall result in such New Securities being not
"freely tradeable"; and (y) the requirement that an Exchanging Dealer deliver a
Prospectus in connection with sales of New Securities acquired in the Registered
Exchange Offer in exchange for Securities acquired as a result of market-making
activities or other trading activities shall not result in such New Securities
being not "freely tradeable"), the Issuers shall effect a Shelf Registration
Statement in accordance with subsection (b) below.

                  (b)(i)   The Issuers shall as promptly as practicable (but in
         no event more than 120 days after so required or requested pursuant to
         this Section 3), file with the Commission and thereafter shall use its
         best efforts to cause to be declared effective under the Act a Shelf
         Registration Statement relating to the offer and sale of the Securities
         or the New Securities, as applicable, by the Holders thereof from time
         to time

                                       6
<PAGE>

         in accordance with the methods of distribution elected by such Holders
         and set forth in such Shelf Registration Statement; PROVIDED, HOWEVER,
         that no Holder (other than an Initial Purchaser) shall be entitled to
         have the Securities held by it covered by such Shelf Registration
         Statement unless such Holder agrees in writing to be bound by all of
         the provisions of this Agreement applicable to such Holder; and
         PROVIDED FURTHER, that with respect to New Securities received by an
         Initial Purchaser in exchange for Securities 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 Item 507 or 508 of Regulation S-K, as
         applicable, in satisfaction of its obligations under this subsection
         with respect thereto, and any such Exchange Offer Registration
         Statement, as so amended, shall be referred to herein as, and governed
         by the provisions herein applicable to, a Shelf Registration Statement.

                  (ii)     The Issuers shall use their best efforts to keep the
         Shelf Registration Statement continuously effective, supplemented and
         amended as required by the Act, in order to permit the Prospectus
         forming part thereof to be usable by Holders for a period of two years
         from the date the Shelf Registration Statement is declared effective by
         the Commission (or for a period of one year from such effective date if
         such Shelf Registration Statement is filed at the request of an Initial
         Purchaser) or such shorter period that will terminate when all the
         Securities or New Securities, as applicable, covered by the Shelf
         Registration Statement have been sold pursuant to the Shelf
         Registration Statement (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 they voluntarily take any
         action that would result in Holders of Securities covered thereby not
         being able to offer and sell such Securities during that period, unless
         (A) such action is required by applicable law; or (B) such action is
         taken by the Issuers in good faith and for valid business reasons (not
         including avoidance of the Issuers' obligations hereunder), including
         the acquisition or divestiture of assets, so long as the Issuers
         promptly thereafter comply with the requirements of Section 4(k)
         hereof, if applicable.

                  (iii)    The Issuers shall cause the Shelf Registration
         Statement and the related Prospectus and any amendment or supplement
         thereto, as of the effective date of the Shelf Registration Statement
         or such amendment or supplement, (A) to comply in all material respects
         with the applicable requirements of the Securities Act and the rules
         and regulations of the Commission; and (B) not to contain any untrue
         statement of a material fact or omit to state a material fact required
         to be stated therein or necessary in order to make the statements
         therein, in the light of the circumstances under which they were made,
         not misleading.

                  4.       ADDITIONAL REGISTRATION PROCEDURES. In connection
with any Shelf Registration Statement and, to the extent applicable, any
Exchange Offer Registration Statement, the following provisions shall apply.

                                       7
<PAGE>

                  (a)      The Issuers shall:

                  (i)      furnish to you, not less than five Business Days
         prior to the filing thereof with the Commission, a copy of any Exchange
         Offer Registration Statement and any Shelf Registration Statement, and
         each amendment thereof and each amendment or supplement, if any, to the
         Prospectus included therein (including all documents incorporated by
         reference therein after the initial filing) and shall use their best
         efforts to reflect in each such document, when so filed with the
         Commission, such comments as you reasonably propose;

                  (ii)     include the information set forth in Annex A hereto
         on the facing page 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, in
         Annex C hereto in the underwriting or plan of distribution section of
         the Prospectus contained in the Exchange Offer Registration Statement,
         and in Annex D hereto in the letter of transmittal delivered pursuant
         to the Registered Exchange Offer;

                  (iii)    if requested by an Initial Purchaser, include the
         information required by Item 507 or 508 of Regulation S-K, as
         applicable, in the Prospectus contained in the Exchange Offer
         Registration Statement; and

                  (iv)     in the case of a Shelf Registration Statement,
         include the names of the Holders that propose to sell Securities
         pursuant to the Shelf Registration Statement as selling security
         holders.

                  (b)      The Issuers covenant that:

                  (i)      any Registration Statement and any amendment thereto
         and any Prospectus forming part thereof and any amendment or supplement
         thereto shall comply in all material respects with the Act and the
         rules and regulations thereunder; and

                  (ii)     any Registration Statement and any amendment thereto
         shall 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.

                  (c)      The Issuers shall advise you, the Holders of
Securities covered by any Shelf Registration Statement and any Exchanging Dealer
under any Exchange Offer Registration Statement that has provided in writing to
the Issuers a telephone or facsimile number and address for notices, and, if
requested by you or any such Holder or Exchanging Dealer, shall confirm such
advice in writing (which notice pursuant to clauses (ii)-(v) hereof shall be
accompanied by an instruction to suspend the use of the Prospectus until the
Issuers shall have remedied the basis for such suspension):

                  (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;

                                       8
<PAGE>

                  (ii)     of any request by the Commission for any amendment or
         supplement to the Registration Statement or the Prospectus or for
         additional information;

                  (iii)    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;

                  (iv)     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 of any
         proceeding for such purpose; and

                  (v)      of the happening of any event that requires any
         change 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 the
         light of the circumstances under which they were made) not misleading.

                  (d)      The Issuers shall use their reasonable best efforts
to obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement or the qualification of the securities therein for sale
in any jurisdiction at the earliest possible time.

                  (e)      The Issuers shall furnish to each Holder of
Securities covered by any Shelf Registration Statement, without charge, at least
one copy of such Shelf Registration Statement and any post-effective amendment
thereto, including all material incorporated therein by reference, and, if the
Holder so requests in writing, all exhibits thereto.

                  (f)      The Issuers shall, during the Shelf Registration
Period, deliver to each Holder of Securities covered by 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. 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, included in the Shelf Registration Statement in
accordance with applicable law.

                  (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 all
material incorporated by reference therein, and, if the Exchanging Dealer so
requests in writing, all exhibits thereto (including exhibits incorporated by
reference therein).

                  (h)      The Issuers shall promptly deliver to each Initial
Purchaser, each Exchanging Dealer and each other Person required to deliver a
Prospectus during the Exchange Offer Registration Period, without charge, as
many copies of the Prospectus included in such Exchange Offer Registration
Statement and any amendment or supplement thereto as any such Person may
reasonably request. The Issuers consent to the use of the Prospectus or any
amendment or supplement thereto by any Initial Purchaser, any Exchanging Dealer
and any such other Person that may be required to deliver a Prospectus following
the Registered Exchange

                                       9
<PAGE>

Offer in connection with the offering and sale of the New Securities covered
by the Prospectus, or any amendment or supplement thereto, included in the
Exchange Offer Registration Statement in accordance with applicable law.

                  (i)      Prior to the Registered Exchange Offer or any other
offering of Securities pursuant to any Registration Statement, the Issuers shall
arrange, if necessary, for the qualification of the Securities or the New
Securities for sale under the laws of such jurisdictions as any Holder shall
reasonably request and will maintain such qualification in effect so long as
required; PROVIDED that in no event shall the Issuers be obligated to qualify to
do business in any jurisdiction where they are not then so qualified or to take
any action that would subject them to service of process in suits, other than
those arising out of the Initial Placement, the Registered Exchange Offer or any
offering pursuant to a Shelf Registration Statement, in any such jurisdiction
where it is not then so subject.

                  (j)      The Issuers shall cooperate with the Holders of
Securities to facilitate the timely preparation and delivery of certificates
representing New Securities or Securities to be issued or sold pursuant to any
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as Holders may request.

                  (k)      Upon the occurrence of any event contemplated by
subsections (c)(ii) through (v) above, the Issuers shall promptly prepare a
post-effective amendment to the applicable Registration Statement or an
amendment or supplement to the related Prospectus or file any other required
document so that, as thereafter delivered to Initial 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. In such circumstances, the period of effectiveness of the
Exchange Offer Registration Statement provided for in Section 2 and the Shelf
Registration Statement provided for in Section 3(b) shall each be extended by
the number of days from and including the date of the giving of a notice of
suspension pursuant to Section 4(c) to and including the date when the Initial
Purchasers, the Holders of the Securities and any known Exchanging Dealer shall
have received such amended or supplemented Prospectus pursuant to this Section.

                  (l)      Not later than the effective date of any Registration
Statement, the Issuers shall provide a CUSIP number for the Securities or the
New Securities, as the case may be, registered under such Registration Statement
and provide the Trustee with printed certificates for such Securities or New
Securities, in a form eligible for deposit with The Depository Trust Issuers.

                  (m)      The Issuers shall 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.

                                       10
<PAGE>

                  (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. The Issuers may exclude from such Shelf Registration
Statement the Securities of any Holder that unreasonably fails to furnish such
information within a reasonable time after receiving such request.

                  (p)      In the case of any Shelf Registration Statement, the
Issuers shall enter into such and take all other appropriate actions (including
if requested an underwriting agreement in customary form) 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 6 (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 6).

                  (q)      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 such underwriter, attorney, accountant or agent in connection
         with any such Registration Statement as is customary for similar due
         diligence examinations during normal business hours; 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 through no fault
         of the Holder 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;

                                       11
<PAGE>

                  (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 4(k) and with any customary conditions contained in the
         underwriting agreement or other agreement entered into by the Issuers.

The actions set forth in clauses (iii), (iv), (v) and (vi) of this Section 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.

                  (r)      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 the Issuers 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 during normal business hours; 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 through no fault
         of the Holder 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 to the Issuers and updates
         thereof (which counsel and opinions (in form, scope and substance)
         shall be reasonably satisfactory to such Initial Purchaser and its
         counsel, addressed to such Initial Purchaser, covering such matters as
         are customarily covered in opinions requested in underwritten offerings
         and

                                       12

<PAGE>

         such other matters as may be reasonably requested by such Initial
         Purchaser or its 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 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 its 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 its
         counsel; and

                  (vi)     deliver such documents and certificates as may be
         reasonably requested by such Initial Purchaser or its counsel,
         including those to evidence compliance with Section 4(k) and with
         conditions customarily contained in underwriting agreements.

The foregoing actions set forth in clauses (iii), (iv), (v), and (vi) of this
Section 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.

                  (s)      If a Registered Exchange Offer is to be consummated,
upon delivery of the Securities by Holders to the Issuers (or to such other
Person as directed by the Issuers) in exchange for the New Securities, the
Issuers shall mark, or caused to be marked, on the Securities so exchanged that
such Securities are being canceled in exchange for the New Securities. In no
event shall the Securities be marked as paid or otherwise satisfied.

                  (t)      The Issuers will use their best efforts (i) if the
Securities have been rated prior to the initial sale of such Securities, to
confirm such ratings will apply to the Securities or the New Securities, as the
case may be, covered by a Registration Statement; or (ii) if the Securities were
not previously rated, to cause the Securities covered by a Registration
Statement to be rated with at least one nationally recognized statistical rating
agency, if so requested by Majority Holders with respect to the related
Registration Statement or by any Managing Underwriters.

                  (u)      In the event that any Broker-Dealer shall underwrite
any Securities or participate as a member of an underwriting syndicate or
selling group or "assist in the distribution" (within the meaning of the Rules
of Fair Practice and the By-Laws of the National Association of Securities
Dealers, Inc.) thereof, whether as a Holder of such Securities or as an
underwriter, a placement or sales agent or a broker or dealer in respect
thereof, or otherwise, assist such Broker-Dealer in complying with the
requirements of such Rules and By-Laws, including, without limitation, by:

                  (i)      if such Rules or By-Laws shall so require, engaging a
         "qualified independent underwriter" (as defined in such Rules) to
         participate in the preparation of the Registration Statement, to
         exercise usual standards of due diligence with respect

                                       13

<PAGE>

         thereto and, if any portion of the offering contemplated by such
         Registration Statement is an underwritten offering or is made through
         a placement or sales agent, to recommend the yield of such Securities;

                  (ii)     indemnifying any such qualified independent
         underwriter to the extent of the indemnification of underwriters
         provided in Section 6 hereof; and

                  (iii)    providing such information to such Broker-Dealer as
         may be required in order for such Broker-Dealer to comply with the
         requirements of such Rules.

                  (v)      The Issuers shall use their best efforts to take all
         other steps necessary to effect the registration of the Securities or
         the New Securities, as the case may be, covered by a Registration
         Statement.

                  5.       REGISTRATION EXPENSES. The Issuers shall bear all
expenses incurred in connection with the performance of their obligations
under Sections 2, 3 and 4 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.

                  6.       INDEMNIFICATION AND CONTRIBUTION. (a) Each of the
Issuers, jointly and severally, agrees to indemnify and hold harmless each
Holder of Securities or New Securities, as the case may be, covered by any
Registration Statement (including each Initial Purchaser and, with respect to
any Prospectus delivery as contemplated in Section 4(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 the
Prospectus, or in any amendment thereof or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and agrees to reimburse each such
indemnified party, as incurred, for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action; PROVIDED, HOWEVER, that the 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 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.

                  Each of the Issuers, jointly and severally, also agrees to
indemnify or contribute as provided in Section 6(d) to Losses of each any
underwriter of Securities or New Securities, as

                                       14

<PAGE>

the case may be, registered under a Shelf Registration Statement, their
directors, officers, employees or agents and each Person who controls such
underwriter on substantially the same basis as that of the indemnification of
the Initial Purchasers and the selling Holders provided in this Section 6(a)
and shall, if requested by any Holder, enter into an underwriting agreement
reflecting such agreement, as provided in Section 4(p) 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 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless each of the Issuers, each of
their directors, each of their officers who signs such Registration Statement
and 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 each of 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 6 or 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, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such
action and such failure results in the forfeiture by the indemnifying party
of substantial rights and defenses; and (ii) will not, in any event, relieve
the indemnifying party from any obligations to any indemnified party other
than the indemnification obligation provided in paragraph (a) or (b) above.
The indemnifying party shall be entitled to appoint counsel of the
indemnifying party's choice at the indemnifying party's expense to represent
the indemnified party in any action for which indemnification is sought (in
which case the indemnifying party shall not thereafter be responsible for the
fees and expenses of any separate counsel retained by the indemnified party
or parties except as set forth below); PROVIDED, HOWEVER, that such counsel
shall be satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including local counsel), and the indemnifying party shall
bear the reasonable fees, costs and expenses of such separate counsel if (i)
the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest;
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party; (iii) the
indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action; or (iv) the indemnifying
party shall authorize the indemnified party to employ separate counsel at the
expense of the indemnifying party. An indemnifying party will not, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such

                                       15

<PAGE>

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 is unavailable to or insufficient to
hold harmless an indemnified party for any reason, then each applicable
indemnifying 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
Security or New Security be responsible, in the aggregate, for any amount in
excess of the purchase discount or commission applicable to such Security, or
in the case of a New Security, applicable to the Security that was
exchangeable into such New Security, 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 sum of (x) the
total net proceeds from the Initial Placement (before deducting expenses) as
set forth on the cover page of the Final Memorandum and (y) the total amount
of additional interest which the Issuers were not required to pay as a result
of registering the securities covered by the Registration Statement which
resulted in such Losses. 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
Securities or New Securities, 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, among other
things, 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 intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. The parties agree that it would
not be just and equitable if contribution were determined by pro rata
allocation (even if the Holders were treated as one entity for such purpose)
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, 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 Holder, and each Person who

                                       16

<PAGE>

controls the Company, the Parent Guarantor or the Subsidiary Guarantor within
the meaning of either the Act or the Exchange Act, each officer of the
Company, the Parent Guarantor or the Subsidiary Guarantor who shall have
signed the Registration Statement and each director of the Company, the
Parent Guarantor or the Subsidiary Guarantor shall have the same rights to
contribution as the Company, the Parent Guarantor or the Subsidiary
Guarantor, subject in each case to the applicable terms and conditions of
this paragraph (d).

                  (e)      The provisions of this Section will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Holder or any of the Issuers or any of the officers, directors or controlling
Persons referred to in this Section hereof, and will survive the sale by a
Holder of securities covered by a Registration Statement.

                  7.       UNDERWRITTEN REGISTRATIONS. (a) If any of the
Securities or New Securities, as the case may be, covered by any Shelf
Registration Statement are to be sold in an underwritten offering, the
Managing Underwriters shall be selected by the Majority Holders.

                  (b)      No Person may participate in any underwritten
offering pursuant to any Shelf Registration Statement, unless such Person (i)
agrees to sell such Person's Securities or New Securities, as the case may
be, on the basis reasonably provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements; and
(ii) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements.

                  8.       NO INCONSISTENT AGREEMENTS. The Issuers have not,
as of the date hereof, entered into, nor shall any of them, on or after the
date hereof, enter into, any agreement with respect to any of their
securities that is inconsistent with the rights granted to the Holders herein
or otherwise conflicts with the provisions hereof.

                  9.       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 Majority Holders (or, after the consummation of
any Registered Exchange Offer in accordance with Section 2 hereof, of New
Securities); 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 or
New Securities, as the case may be, 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 or New Securities, as the case may be, being sold rather than
registered under such Registration Statement.

                  10.      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:

                                       17

<PAGE>

                  (a)      if to a Holder, at the most current address given
by such holder to the Company in accordance with the provisions of this
Section, 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;

                  (b)      if to you, initially at the respective addresses
set forth in the Purchase Agreement; and

                  (c)      if to the Issuers, initially at the Company's
address set forth in the Purchase Agreement, with a copy to Ropes & Gray, One
International Place, Boston, Massachusetts 02110.

                  All such notices and communications shall be deemed to have
been duly given when received.

                  The Initial Purchasers or the Issuers by notice to the
other parties may designate additional or different addresses for subsequent
notices or communications.

                  11.      SUCCESSORS. 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 Securities and the New
Securities. The Issuers hereby agree to extend the benefits of this Agreement
to any Holder of Securities and the New Securities, and any such Holder may
specifically enforce the provisions of this Agreement as if an original party
hereto.

                  12.      COUNTERPARTS. This agreement may be in signed
counterparts, each of which shall an original and all of which together shall
constitute one and the same agreement.

                  13.      HEADINGS. The headings used herein are for
convenience only and shall not affect the construction hereof.

                  14.      APPLICABLE LAW. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York
applicable to contracts made and to be performed in the State of New York.

                  15.      SEVERABILITY. In the event that any one of 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.

                  16.      SECURITIES HELD BY THE ISSUERS, ETC. Whenever the
consent or approval of Holders of a specified percentage of principal amount
of Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Issuers or their Affiliates (other
than subsequent Holders of Securities or New Securities if such subsequent
Holders are deemed to be Affiliates solely by reason of their holdings of
such Securities or New Securities)

                                       18
<PAGE>

shall not be counted in determining whether such consent or approval was given
by the Holders of such required percentage.

                            [signature page follows]

                                       19

<PAGE>

                  If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Issuers and the several Initial Purchasers.

                                   Very truly yours,

                                   UNITED STATES CAN COMPANY

                                   By: /s/ John Workman
                                       --------------------------------------

                                   U.S. CAN CORPORATION

                                   By: /s/ John Workman
                                       --------------------------------------

                                   MAY VERPACKUNGEN HOLDING INC.

                                   By: /s/ John Workman
                                       --------------------------------------

The foregoing Agreement is hereby confirmed and
accepted as of the date first above written.

SALOMON SMITH BARNEY INC.
BANC OF AMERICA SECURITIES LLC

By:        SALOMON SMITH BARNEY INC.

By: /s/ Michael S. Canmann
    --------------------------------------
    Name:
    Title:

                                       20

<PAGE>

ANNEX A

Each Broker-Dealer that receives New Securities for its own account pursuant
to the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Securities. The Letter of Transmittal
states that by so acknowledging and by delivering a prospectus, a
Broker-Dealer will not be deemed to admit that it is an "underwriter" within
the meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a Broker-Dealer in connection
with resales of New Securities received in exchange for Securities where such
Securities were acquired by such Broker-Dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting
on the Expiration Date (as defined herein) and ending on the close of
business one year after the Expiration Date, it will make this Prospectus
available to any Broker-Dealer for use in connection with any such resale.
See "Plan of Distribution".

                                       21

<PAGE>

ANNEX B

Each Broker-Dealer that receives New Securities for its own account in exchange
for Securities, where such Securities were acquired by such Broker-Dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Securities. See "Plan of Distribution".

                                       22

<PAGE>

ANNEX C

                              PLAN OF DISTRIBUTION

                  Each Broker-Dealer that receives New Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver
a prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be
used by a Broker-Dealer in connection with resales of New Securities received
in exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business one
year after the Expiration Date, it will make this Prospectus, as amended or
supplemented, available to any Broker-Dealer for use in connection with any
such resale. In addition, until __________, 2000, all dealers effecting
transactions in the New Securities may be required to deliver a prospectus.

                  The Company will not receive any proceeds from any sale of New
Securities by brokers-dealers. New Securities received by Broker-Dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such Broker-Dealer and/or the purchasers of any such New
Securities. Any Broker-Dealer that resales New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such Persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a Broker-Dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.

                  For a period of one year after the Expiration Date, the
Company will promptly send additional copies of this Prospectus and any
amendment or supplement to this Prospectus to any Broker-Dealer that requests
such documents in the Letter of Transmittal. The Company has agreed to pay all
expenses incident to the Exchange Offer (including the expenses of one counsel
for the holder of the Securities) other than commissions or concessions of any
brokers or dealers and will indemnify the holders of the Securities (including
any Broker-Dealers) against certain liabilities, including liabilities under the
Securities Act.

                                       23

<PAGE>

ANNEX D

RIDER A

             CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
             10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
             AMENDMENTS OR SUPPLEMENTS THERETO.

             Name:
                       ---------------------------------------------------
             Address:
                       ---------------------------------------------------

                       ---------------------------------------------------

RIDER B

If the undersigned is not a Broker-Dealer, the undersigned represents that it
acquired the New Securities in the ordinary course of its business, it is not
engaged in, and does not intend to engage in, a distribution of New Securities
and it has not arrangements or understandings with any Person to participate in
a distribution of the New Securities. If the undersigned is a Broker-Dealer that
will receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchange for New Securities were acquired
by it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a prospectus in connection with any resale of
such New Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

                                       24

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