APTARGROUP INC (Form: 10-Q, Received: 08/01/2008 15:19:48)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004

FORM 10-Q


[X]		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2008


[ ]		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

COMMISSION FILE NUMBER 1-11846

AptarGroup, Inc.


DELAWARE		36-3853103
(State of Incorporation)		(I.R.S. Employer Identification No.)

475 WEST TERRA COTTA AVENUE, SUITE E, CRYSTAL LAKE, ILLINOIS 60014

815-477-0424

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Act. (Check one):


Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date (July 24, 2008).

Common Stock 67,862,004

AptarGroup, Inc.

Form 10-Q

Quarter Ended June 30, 2008

INDEX


Part I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Income — Three and Six Months Ended June 30, 2008 and 2007	1

	Condensed Consolidated Balance Sheets — June 30, 2008 and December 31, 2007	2

	Condensed Consolidated Statements of Cash Flows — Six Months Ended June 30, 2008 and 2007	4

	Notes to Condensed Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	20

Item 4.	Controls and Procedures	20

Part II.	OTHER INFORMATION

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	22

Item 4.	Submission of Matters to a Vote of Security Holders	22

Item 5.	Other Information	23

Item 6.	Exhibits	23

	Signature	25
EX-4.1
EX-4.2
EX-4.3
EX-10.4
EX-10.5
EX-10.6
EX-10.7
EX-10.8
EX-10.9
EX-10.10
EX-31.1
EX-31.2
EX-32.1
EX-32.2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

In thousands, except per share amounts


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net Sales	$	551,319		$	472,876		$	1,083,577		$	922,717

Operating Expenses :
Cost of sales (exclusive of depreciation shown below)		372,908			318,595			735,688			618,855
Selling, research & development and administrative		78,819			65,805			160,643			139,530
Depreciation and amortization		34,372			30,944			67,327			60,181

		486,099			415,344			963,658			818,566

Operating Income		65,220			57,532			119,919			104,151


Other Income (Expense) :
Interest expense		(4,336	)		(4,612	)		(8,943	)		(9,455	)
Interest income		3,410			1,756			6,859			3,378
Equity in results of affiliates		126			111			223			268
Minority interests		(3	)		1			19			18
Miscellaneous, net		259			(820	)		(685	)		(1,210	)

		(544	)		(3,564	)		(2,527	)		(7,001	)


Income Before Income Taxes		64,676			53,968			117,392			97,150

Provision for Income Taxes		19,403			17,000			35,218			30,602


Net Income	$	45,273		$	36,968		$	82,174		$	66,548


Net Income Per Common Share:
Basic	$	0.67		$	0.54		$	1.21		$	0.96

Diluted	$	0.64		$	0.52		$	1.16		$	0.93


Average Number of Shares Outstanding:
Basic		68,038			69,037			68,103			69,113
Diluted		70,563			71,443			71,032			71,886

Dividends Declared Per Common Share	$	0.13		$	0.13		$	0.26		$	0.24

See accompanying unaudited notes to condensed consolidated financial statements.

AptarGroup, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

In thousands, except per share amounts


	June 30,			December 31,
	2008			2007
Assets

Current Assets:
Cash and equivalents	$	296,629		$	313,739
Accounts and notes receivable, less allowance for doubtful accounts of $12,873 in 2008 and $11,139 in 2007		435,056			360,736
Inventories, net		298,861			272,556
Prepaid expenses and other current assets		64,907			56,414

		1,095,453			1,003,445


Property, Plant and Equipment:
Buildings and improvements		288,895			264,535
Machinery and equipment		1,555,782			1,408,761

		1,844,677			1,673,296
Less: Accumulated depreciation		(1,132,881	)		(1,033,544	)

		711,796			639,752
Land		17,986			16,756

		729,782			656,508


Other Assets:
Investments in affiliates		4,439			4,085
Goodwill		239,283			222,668
Intangible assets, net		17,192			17,814
Other non-current assets		8,137			7,430

		269,051			251,997

Total Assets	$	2,094,286		$	1,911,950

See accompanying unaudited notes to condensed consolidated financial statements.

AptarGroup, Inc.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)

In thousands, except per share amounts


	June 30,			December 31,
	2008			2007
Liabilities and Stockholders’ Equity

Current Liabilities:
Notes payable	$	220,192		$	190,176
Current maturities of long-term obligations		25,452			25,983
Accounts payable and accrued liabilities		374,265			349,030

		619,909			565,189


Long-Term Obligations		125,167			146,711


Deferred Liabilities and Other:
Deferred income taxes		28,963			28,613
Retirement and deferred compensation plans		47,848			42,787
Deferred and other non-current liabilities		9,552			9,079
Commitments and contingencies		—			—
Minority interests		743			553

		87,106			81,032


Stockholders’ Equity:
Preferred stock, $.01 par value, 1 million shares authorized, none outstanding		—			—
Common stock, $.01 par value		799			794
Capital in excess of par value		250,301			229,022
Retained earnings		1,015,023			950,566
Accumulated other comprehensive income		306,707			214,294
Less treasury stock at cost, 12.0 and 11.2 million shares as of June 30, 2008 and December 31, 2007, respectively		(310,726	)		(275,658	)

		1,262,104			1,119,018

Total Liabilities and Stockholders’ Equity	$	2,094,286		$	1,911,950

See accompanying unaudited notes to condensed consolidated financial statements.

AptarGroup, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

In thousands, brackets denote cash outflows


Six Months Ended June 30,	2008			2007

Cash Flows From Operating Activities:
Net income	$	82,174		$	66,548
Adjustments to reconcile net income to net cash provided by operations:
Depreciation		64,832			57,993
Amortization		2,495			2,188
Stock option based compensation		8,568			10,840
Provision for bad debts		1,348			621
Labor redeployment		—			(233	)
Minority interests		(19	)		(18	)
Deferred income taxes		(4,219	)		(5,168	)
Retirement and deferred compensation plans		(710	)		2,380
Equity in results of affiliates in excess of cash distributions received		(26	)		(268	)
Changes in balance sheet items, excluding effects from foreign currency adjustments:
Accounts receivable		(45,758	)		(49,955	)
Inventories		(8,260	)		(26,096	)
Prepaid and other current assets		(2,088	)		(5,335	)
Accounts payable and accrued liabilities		276			32,916
Income taxes payable		(5,336	)		7,296
Other changes, net		4,976			(1,470	)

Net Cash Provided by Operations		98,253			92,239


Cash Flows From Investing Activities:
Capital expenditures		(90,431	)		(56,198	)
Disposition of property and equipment		658			813
Intangible assets acquired		(443	)		(506	)
Acquisition of businesses		(13,166	)		(5,151	)
Collection of notes receivable, net		131			93

Net Cash Used by Investing Activities		(103,251	)		(60,949	)


Cash Flows From Financing Activities:
Proceeds from notes payable		29,336			51,478
Repayments of long-term obligations		(22,712	)		(23,000	)
Dividends paid		(17,718	)		(16,603	)
Proceeds from stock options exercises		10,602			10,919
Purchase of treasury stock		(36,875	)		(37,122	)
Excess tax benefit from exercise of stock options		3,559			2,774

Net Cash Used by Financing Activities		(33,808	)		(11,554	)


Effect of Exchange Rate Changes on Cash		21,696			4,911


Net (Decrease)/Increase in Cash and Equivalents		(17,110	)		24,647
Cash and Equivalents at Beginning of Period		313,739			170,576

Cash and Equivalents at End of Period	$	296,629		$	195,223

See accompanying unaudited notes to condensed consolidated financial statements.

AptarGroup, Inc.

Notes to Condensed Consolidated Financial Statements

(Amounts in Thousands, Except per Share Amounts, or Otherwise Indicated)

(Unaudited)

NOTE 1 — BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial statements include the accounts of AptarGroup, Inc. and its subsidiaries. The terms “AptarGroup” or “Company” as used herein refer to AptarGroup, Inc. and its subsidiaries.

In the opinion of management, the unaudited condensed consolidated financial statements include all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of consolidated financial position, results of operations, and cash flows for the interim periods presented. The accompanying unaudited condensed consolidated financial statements have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosure normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures made are adequate to make the information presented not misleading. Accordingly, these unaudited condensed consolidated financial statements and related notes should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. The results of operations of any interim period are not necessarily indicative of the results that may be expected for the year.

NOTE 2 — INVENTORIES

At June 30, 2008 and December 31, 2007, approximately 20% and 23%, respectively, of the total inventories are accounted for by using the LIFO method. Inventories, by component net of reserves, consisted of:


	June 30,			December 31,
	2008			2007

Raw materials	$	110,299		$	101,993
Work in progress		70,819			59,894
Finished goods		124,648			115,774

Total		305,766			277,661
Less LIFO Reserve		(6,905	)		(5,105	)

Total	$	298,861		$	272,556

NOTE 3 — GOODWILL AND OTHER INTANGIBLE ASSETS

The changes in the carrying amount of goodwill since the year ended December 31, 2007 are as follows by reporting segment:


	Pharma		Beauty & Home		Closures		Total

Balance as of December 31, 2007	$	25,413	$	158,537	$	38,718	$	222,668
Acquisitions (See Note 11)		3,714		3,381		—		7,095
Foreign currency exchange effects		1,850		5,855		1,815		9,520

Balance as of June 30, 2008	$	30,977	$	167,773	$	40,533	$	239,283

The table below shows a summary of intangible assets as of June 30, 2008 and December 31, 2007.


			June 30, 2008							December 31, 2007
	Weighted Average		Gross							Gross
	Amortization		Carrying		Accumulated			Net		Carrying		Accumulated			Net
	Period (Years)		Amount		Amortization			Value		Amount		Amortization			Value

Amortized intangible assets:
Patents		14	$	20,743	$	(13,973	)	$	6,770	$	19,194	$	(12,230	)	$	6,964
License agreements and other		7		25,518		(15,096	)		10,422		23,557		(12,707	)		10,850

Total intangible assets		10	$	46,261	$	(29,069	)	$	17,192	$	42,751	$	(24,937	)	$	17,814

Aggregate amortization expense for the intangible assets above for the quarters ended June 30, 2008 and 2007 was $1,267 and $1,114, respectively. Aggregate amortization expense for the intangible assets above for the six months ended June 30, 2008 and June 30, 2007 was $2,495 and $2,188, respectively.

Estimated amortization expense for the years ending December 31 is as follows:


2008	$	5,097
2009		4,423
2010		3,883
2011		2,306
2012		1,166

Future amortization expense may fluctuate depending on changes in foreign currency rates. The estimates for amortization expense noted above are based upon foreign exchange rates as of June 30, 2008.

NOTE 4 — TOTAL COMPREHENSIVE INCOME

AptarGroup’s total comprehensive income was as follows:


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008		2007

Net income	$	45,273		$	36,968		$	82,174	$	66,548
Add:Foreign currency translation adjustments		151			14,541			92,702		25,383
Net gain/loss on derivatives (net of tax)		(95	)		(85	)		21		(81	)
Pension liability adjustment (net of tax)		169			(33	)		318		64

Total comprehensive income	$	45,498		$	51,391		$	175,215	$	91,914

NOTE 5 — RETIREMENT AND DEFERRED COMPENSATION PLANS

Components of Net Periodic Benefit Cost:

Three months ended June 30,


	Domestic Plans						Foreign Plans
	2008			2007			2008			2007

Service cost	$	968		$	947		$	437		$	385
Interest cost		864			772			578			416
Expected return on plan assets		(777	)		(668	)		(220	)		(180	)
Amortization of net loss		6			161			199			194
Amortization of prior service cost		1			1			21			(50	)

Net periodic benefit cost	$	1,062		$	1,213		$	1,015		$	765

Six months ended June 30,


	Domestic Plans						Foreign Plans
	2008			2007			2008			2007

Service cost	$	1,936		$	1,924		$	856		$	768
Interest cost		1,728			1,510			1,133			819
Expected return on plan assets		(1,554	)		(1,355	)		(432	)		(352	)
Amortization of net loss		12			180			390			252
Amortization of prior service cost		2			2			41			33

Net periodic benefit cost	$	2,124		$	2,261		$	1,988		$	1,520

EMPLOYER CONTRIBUTIONS

In order to meet or exceed minimum funding levels required by U.S. law, the Company expects to contribute approximately $4.5 million to its domestic defined benefit plans in 2008 and has contributed $1.0 million as of June 30, 2008. During the quarter ended June 30, 2008, the Company decided that it will make contributions in 2008 to certain of its European pension plans that have not been funded in the past. Accordingly, the Company expects to contribute approximately $22 million to its foreign defined benefit plans in 2008 and as of June 30, 2008, has contributed approximately $0.3 million.

NOTE 6 — DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company maintains a foreign exchange risk management policy designed to establish a framework to protect the value of the Company’s non-functional denominated transactions from adverse changes in exchange rates. Sales of the Company’s products can be denominated in a currency different from the currency in which the related costs to produce the product are denominated. Changes in exchange rates on such inter-country sales impact the Company’s results of operations. The Company’s policy is not to engage in speculative foreign currency hedging activities, but to minimize its net foreign currency transaction exposure defined as firm commitments and transactions recorded and denominated in currencies other than the functional currency. The Company may use foreign currency forward exchange contracts, options and cross currency swaps to hedge these risks.

The Company maintains an interest rate risk management strategy to minimize significant, unanticipated earnings fluctuations that may arise from volatility in interest rates.

For derivative instruments designated as hedges, the Company formally documents the nature and relationships between the hedging instruments and the hedged items, as well as the risk management objectives, strategies for undertaking the various hedge transactions, and the method of assessing hedge effectiveness. Additionally, in order to designate any derivative instrument as a hedge of an anticipated transaction, the significant characteristics and expected terms of any anticipated transaction must be specifically identified, and it must be probable that the anticipated transaction will occur.

FAIR VALUE HEDGES

The Company has an interest rate swap to convert a portion of its fixed-rate debt into variable-rate debt. Under the interest rate swap contract, the Company exchanges, at specified intervals, the difference between fixed-rate and floating-rate amounts, which is calculated based on an agreed upon notional amount.

As of June 30, 2008, the Company recorded the fair value of derivative instrument of $0.9 million in other non-current assets with a corresponding increase to debt related to the fixed-to-variable interest rate swap agreement with a notional principal value of $15 million. No gain or loss related to the change in fair value was recorded in the income statement for the three and six months ended June 30, 2008 or 2007 as any hedge ineffectiveness for the period was immaterial.

CASH FLOW HEDGES

As of June 30, 2008, the Company had one foreign currency cash flow hedge. A French entity of AptarGroup, AptarGroup Holding SAS, has hedged the risk of variability in Euro equivalent associated with the cash flows of an intercompany loan granted in Brazilian Real. The forward contracts utilized were designated as a hedge of the changes in the cash flows relating to the changes in foreign currency rates relating to the loan and related forecasted interest. The notional amount of the foreign currency forward contracts utilized to hedge cash flow exposure was 5.5 million Brazilian Real ($3.4 million) as of June 30, 2008. The notional amount of the foreign currency forward contracts utilized to hedge cash flow exposure was 6.7 million Brazilian Real ($3.5 million) as of June 30, 2007.

During the six months ended June 30, 2008, the Company did not recognize any net gain (loss) as any hedge ineffectiveness for the period was immaterial, and the Company did not recognize any net gain (loss) related to the portion of the hedging instrument excluded from the assessment of hedge effectiveness. The Company’s foreign currency forward contracts hedge forecasted transactions for approximately four years (March 2012).

The Company entered into two treasury rate locks to hedge the changes in cash flows of anticipated interest payments from changes in treasury rates prior to the issuance of new debt instruments. The Company accounts for the treasury rate locks as cash flow hedges. At June 30, 2008, $0.6 million is included in accounts payable and other accrued liabilities with the offset in accumulated other comprehensive loss which will be amortized into interest expense during the life of the new debt instruments (5 and 10 years) related to these treasury locks.

HEDGE OF NET INVESTMENTS IN FOREIGN OPERATIONS

A significant number of the Company’s operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial condition and results of operations of the Company’s foreign entities. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on the Company’s financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive effect. The Company in some cases maintains debt in these subsidiaries to offset the net asset exposure. The Company does not otherwise actively manage this risk using derivative financial instruments. In the event the Company plans on a full or partial liquidation of any of its foreign subsidiaries where the Company’s net investment is likely to be monetized, the Company will consider hedging the currency exposure associated with such a transaction.

OTHER

As of June 30, 2008, the Company recorded the fair value of foreign currency forward exchange contracts of $1.4 million in accounts payable and accrued liabilities, $49 in prepayments and other and $2.4 million in deferred and other non-current liabilities in the balance sheet. All forward exchange contracts outstanding as of June 30, 2008 had an aggregate contract amount of $148.5 million.

NOTE 7 — COMMITMENTS AND CONTINGENCIES

The Company, in the normal course of business, is subject to a number of lawsuits and claims both actual and potential in nature. Management believes the resolution of these claims and lawsuits will not have a material adverse or positive effect on the Company’s financial position, results of operations or cash flow.

Under its Certificate of Incorporation, the Company has agreed to indemnify its officers and directors for certain events or occurrences while the officer or director is, or was serving, at its request in such capacity. The maximum potential amount of future payments the Company could be required to make under these indemnification agreements is unlimited; however, the Company has a directors and officers liability insurance policy that covers a portion of its exposure. As a result of its insurance

policy coverage, the Company believes the estimated fair value of these indemnification agreements is minimal. The Company had no liabilities recorded for these agreements as of June 30, 2008.

The Company had a commitment at June 30, 2008 to purchase a building it was leasing. The cost of the building was approximately $9.5 million and will be accounted for as a capital expenditure in the quarter ending September 30, 2008.

NOTE 8 — STOCK REPURCHASE PROGRAM

During the quarter ended June 30, 2008, the Company repurchased 459 thousand shares for an aggregate amount of $20.3 million. As of June 30, 2008, the Company had outstanding authorizations to repurchase up to approximately 1.1 million shares. The timing of and total amount expended for the share repurchase depends upon market conditions.

On July 17, 2008, the Company’s Board of Directors authorized the Company to repurchase an additional four million shares of its outstanding common stock. There is no expiration date for this repurchase program.

NOTE 9 — EARNINGS PER SHARE

AptarGroup’s authorized common stock consists of 199 million shares, having a par value of $.01 each. Information related to the calculation of earnings per share is as follows:


	Three months ended
	June 30, 2008				June 30, 2007
	Diluted		Basic		Diluted		Basic

Consolidated operations
Income available to common stockholders	$	45,273	$	45,273	$	36,968	$	36,968


Average equivalent shares
Shares of common stock		68,038		68,038		69,037		69,037
Effect of dilutive stock based compensation
Stock options		2,519		—		2,401		—
Restricted stock		6		—		5		—

Total average equivalent shares		70,563		68,038		71,443		69,037

Net income per share	$	0.64	$	0.67	$	0.52	$	0.54


	Six months ended
	June 30, 2008				June 30, 2007
	Diluted		Basic		Diluted		Basic

Consolidated operations
Income available to common stockholders	$	82,174	$	82,174	$	66,548	$	66,548


Average equivalent shares
Shares of common stock		68,103		68,103		69,113		69,113
Effect of dilutive stock based compensation
Stock options		2,920		—		2,764		—
Restricted stock		9		—		9		—

Total average equivalent shares		71,032		68,103		71,886		69,113

Net income per share	$	1.16	$	1.21	$	0.93	$	0.96

NOTE 10 — SEGMENT INFORMATION

The Company operates in the packaging components industry, which includes the development, manufacture and sale of consumer product dispensing systems. The Company is organized into three reporting segments. Operations that sell spray and lotion dispensing systems primarily to the personal care, fragrance/cosmetic and household markets form the Beauty & Home segment. Operations that sell dispensing systems to the pharmaceutical market form the Pharma segment. Operations that sell closures to each market served by AptarGroup form the Closures segment.

The accounting policies of the segments are the same as those described in Note 1, Summary of Significant Accounting Policies in the Company’s Annual Report on Form 10-K for the year ended December 31, 2007. The Company evaluates performance of its business segments and allocates resources based upon earnings before interest expense in excess of interest income, stock option and corporate expenses, income taxes and unusual items (collectively referred to as “Segment Income”).

Financial information regarding the Company’s reportable segments is shown below:


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Total Sales:
Beauty & Home	$	291,591		$	253,030		$	579,768		$	497,426
Closures		144,638			122,102			279,208			242,563
Pharma		118,306			101,275			232,701			189,219
Other		92			385			173			701

Total Sales		554,627			476,792			1,091,850			929,909

Less: Intersegment Sales:
Beauty & Home	$	2,680		$	2,844		$	7,094		$	5,282
Closures		393			570			687			1,050
Pharma		144			118			324			161
Other		91			384			168			699

Total Intersegment Sales	$	3,308		$	3,916		$	8,273		$	7,192

Net Sales:
Beauty & Home	$	288,911		$	250,186		$	572,674		$	492,144
Closures		144,245			121,532			278,521			241,513
Pharma		118,162			101,157			232,377			189,058
Other		1			1			5			2

Net Sales	$	551,319		$	472,876		$	1,083,577		$	922,717


Segment Income:
Beauty & Home	$	26,843		$	26,443		$	56,203		$	52,575
Closures		12,831			13,363			24,053			27,344
Pharma		34,951			26,356			64,867			49,038
Corporate Expenses & Other		(9,023	)		(9,338	)		(25,647	)		(25,730	)

Income before interest and taxes	$	65,602		$	56,824		$	119,476		$	103,227
Interest expense, net		(926	)		(2,856	)		(2,084	)		(6,077	)

Income before income taxes	$	64,676		$	53,968		$	117,392		$	97,150

NOTE 11 — ACQUISITIONS

At the end of March 2008, the Company acquired 70% of the outstanding shares of Next Breath LLC (“Next Breath”) for approximately $4.1 million in cash. No debt was assumed in the transaction. Next Breath, located in Baltimore, Maryland, is a contract service organization specializing in analytical testing of nasal and inhalation products on behalf of pharmaceutical, biotech, drug delivery and device companies. Next Breath’s annual sales are approximately $2.0 million. The excess purchase price over the fair value of assets acquired and liabilities assumed was allocated to Goodwill. Goodwill of approximately $3.7 million was recorded on the transaction. Next Breath is included in the Pharma reporting segment.

In April 2008, the Company acquired the equipment, inventory and intellectual property of CCL Industries’ Bag-on-Valve business (“CCLBOV”) for approximately $9.3 million in cash. No debt was assumed in the transaction. CCLBOV’s annual revenues are approximately $9.0 million. The excess purchase price over the fair value of assets acquired was allocated to Goodwill. Goodwill of approximately $3.4 million was recorded on the transaction. CCLBOV is located in Canada but the assets purchased were transferred to existing AptarGroup facilities in the U.S. before the end of the second quarter. CCLBOV is included in the Beauty and Home reporting segment.

Neither of these acquisitions had a material impact on the results of operations in 2008.

NOTE 12 — STOCK-BASED COMPENSATION

SFAS 123(R) upon adoption requires the application of the non-substantive vesting approach which means that an award is fully vested when the employee’s retention of the award is no longer contingent on providing subsequent service. Under this approach, compensation costs are recognized over the requisite service period of the award instead of ratably over the vesting period stated in the grant. As such, costs would be recognized immediately, if the employee is retirement eligible on the date of grant or over the period from the date of grant until retirement eligibility if retirement eligibility is reached before the end of the vesting period stated in the grant. For awards granted prior to adoption, the Company will continue to recognize compensation costs ratably over the vesting period with accelerated recognition of the unvested portion upon actual retirement.

The Company issues stock options and restricted stock units to employees under Stock Awards Plans approved by shareholders. Stock options are issued to non-employee directors for their services as directors under Director Stock Option Plans approved by shareholders. Options are awarded with the exercise price equal to the market price on the date of grant and generally become exercisable over three years and expire 10 years after grant. Restricted stock units generally vest over three years.

Compensation expense recorded attributable to stock options for the first half of 2008 was approximately $8.6 million ($6.2 million after tax), or $0.09 per share (basic and diluted). Approximately $8.0 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales. Compensation expense recorded attributable to stock options for the first half of 2007 was approximately $10.8 million ($7.6 million after tax), or $0.11 per share (basic and diluted). Approximately $10.2 million of the compensation expense was recorded in selling, research & development and administrative expenses and the balance was recorded in cost of sales.

The Company uses historical data to estimate expected life and volatility. The weighted-average fair value of stock options granted under the Stock Awards Plans was $10.02 and $9.32 per share in 2008 and 2007, respectively. These values were estimated on the respective dates of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


Stock Awards Plans:
Six months ended June 30,	2008			2007

Dividend Yield		1.4	%		1.4	%
Expected Stock Price Volatility		22.4	%		24.6	%
Risk-free Interest Rate		3.7	%		4.8	%
Expected Life of Option (years)		7.0			7.0

The fair value of stock options granted under the Director Stock Option Plan during the second quarter of 2008 was $12.08. There were no stock options granted under the Director Stock Option Plans in 2007. These values were estimated on the respective date of the grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


Director Stock Option Plans:
Six months ended June 30,	2008			2007

Dividend Yield		1.3	%		—
Expected Stock Price Volatility		22.3	%		—
Risk-free Interest Rate		3.8	%		—
Expected Life of Option (years)		7.0			—

A summary of option activity under the Company’s stock option plans as of June 30, 2008, and changes during the period then ended is presented below:

Stock Awards Plans

Director Stock Option Plans

Weighted Average

Shares

Exercise Price

Shares

Exercise Price

Outstanding, January 1, 2008

7,405,338

21.34

153,000

22.70

Granted

1,252,000

37.52

4,000

44.16

Exercised

(641,270

)

15.31

—

Forfeited or expired

(15,530

)

32.87

—

Outstanding at June 30, 2008

8,000,538

24.33

157,000

23.25

Exercisable at June 30, 2008

5,537,269

20.26

153,000

22.70

Weighted-Average Remaining Contractual Term (Years):

Outstanding at June 30, 2008

6.5

5.6

Exercisable at June 30, 2008

5.4

5.6

Aggregate Intrinsic Value ($000):

Outstanding at June 30, 2008

140,260

2,945

Exercisable at June 30, 2008

120,088

2,945

Intrinsic Value of Options Exercised ($000) During the Six Months Ended:

June 30, 2008

17,499

—

June 30, 2007

13,140

1,024

The fair value of shares vested during the six months ended June 30, 2008 and 2007 was $10.4 million and $9.5 million, respectively. Cash received from option exercises was approximately $10.6 million and the actual tax benefit realized for the tax deduction from option exercises was approximately $4.7 million in the six months ended June 30, 2008. As of June 30, 2008, the remaining valuation of stock option awards to be expensed in future periods was $8.8 million and the related weighted-average period over which it is expected to be recognized is 1.3 years.

The fair value of restricted stock unit grants is the market price of the underlying shares on the grant date. A summary of restricted stock unit activity as of June 30, 2008, and changes during the period then ended is presented below:


				Weighted-Average
	Shares			Grant-Date Fair Value

Nonvested at January 1, 2008		21,098		$	29.36
Granted		9,824			34.44
Vested		(9,183	)		28.48

Nonvested at June 30, 2008		21,739		$	32.03

Compensation expense recorded attributable to restricted stock unit grants for the first half of 2008 and 2007 was approximately $0.4 million. The fair value of units vested during the six months ended June 30, 2008 and 2007 was $262 and $212, respectively. The intrinsic value of units vested during the six months ended June 30, 2008 and 2007 was $324 and $290, respectively. As of June 30, 2008 there was $49 of total unrecognized compensation cost relating to restricted stock unit awards which is expected to be recognized over a weighted average period of 1.4 years.

NOTE 13 — INCOME TAX UNCERTAINTIES

The Company adopted the provisions of FIN 48 on January 1, 2007. As a result of the implementation of FIN 48, the Company recognized a $1.6 million increase in the liability for income tax uncertainties. This increase was accounted for as a reduction to the January 1, 2007 balance of retained earnings, as required by FIN 48. The Company’s policy is to recognize interest and penalties accrued related to unrecognized tax benefits as a component of income taxes. The total amount of accrued interest and penalties as of June 30, 2008 was $1.2 million.

The Company had approximately $7.0 and $6.5 million recorded for income tax uncertainties as of June 30, 2008 and December 31, 2007, respectively. The amount, if recognized, that would impact the effective tax rate is $6.0 million. The Company anticipates that $0.9 million of the income tax uncertainties amount will be resolved with the settlement of income tax audits over the next 12 months.

NOTE 14 — FAIR VALUE

In September 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards SFAS No. 157, “Fair Value Measurements”, which defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. The provisions of SFAS No. 157 are effective as of the beginning of our 2008 fiscal year. However, the FASB deferred the effective date of SFAS No. 157, until the beginning of our 2009 fiscal year, as it relates to fair value measurement requirements for nonfinancial assets and liabilities that are not remeasured at fair value on a recurring basis. These nonfinancial assets and liabilities include goodwill, other nonamortizable intangible assets and unallocated purchase price for recent acquisitions which are included within other assets. We partially adopted SFAS No. 157 as it relates to financial assets and liabilities at the beginning of our 2008 fiscal year and our adoption did not have a material impact on our financial statements.

The fair value framework requires the categorization of assets and liabilities into three levels based upon the assumptions (inputs) used to price the assets or liabilities. Level 1 provides the most reliable measure of fair value, whereas Level 3 generally requires significant management judgment. The three levels are defined as follows:

	•		Level 1: Unadjusted quoted prices in active markets for identical assets and liabilities.
	•		Level 2: Observable inputs other than those included in Level 1. For example, quoted prices for similar assets or liabilities in active markets or quoted prices for identical assets or liabilities in inactive markets.
	•		Level 3: Unobservable inputs reflecting management’s own assumptions about the inputs used in pricing the asset or liability.

As of June 30, 2008, the fair values of our financial assets and liabilities were categorized as follows:


	Total		Level 1		Level 2		Level 3
*Assets*
Interest rate swap ^(a)	$	891	$	—	$	891		—
Forward exchange contracts ^(b)		49		—		49		—

Total assets at fair value	$	940	$	—	$	940	$	—


*Liabilities*
Forward exchange contracts ^(b)	$	3,796	$	—	$	3,796		—

Total liabilities at fair value	$	3,796	$	—	$	3,796	$	—


(a)		Based on third party quotation from financial institution and management’s evaluation of the quotation
(b)		Based on observable market transactions of spot and forward rates

NOTE 15 — SUBSEQUENT EVENTS

The Company refinanced $100 million of existing short-term borrowings with long-term private placement debt on July 31, 2008.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, OR OTHERWISE INDICATED)

RESULTS OF OPERATIONS


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net Sales		100.0	%		100.0	%		100.0	%		100.0	%
Cost of sales (exclusive of depreciation shown below)		67.7			67.4			67.9			67.1
Selling, research & development and administration		14.3			13.9			14.8			15.1
Depreciation and amortization		6.2			6.5			6.2			6.5

Operating Income		11.8			12.2			11.1			11.3
Other income (expense)		(0.1	)		(0.8	)		(0.3	)		(0.8	)

Income before income taxes		11.7			11.4			10.8			10.5


Net income		8.2	%		7.8	%		7.6	%		7.2	%


Effective Tax Rate		30.0	%		31.5	%		30.0	%		31.5	%

NET SALES

Net sales for the quarter and six months ended June 30, 2008 were a record $551.3 million and $1.1 billion, respectively, and represented an increase of 17% over the same periods a year ago. The average U.S. dollar exchange rate weakened compared to the Euro in 2008 compared to 2007, and as a result, changes in exchange rates positively impacted sales and accounted for approximately 11% of the 17% sales growth for the quarter and 10% of the 17% sales growth for the six months ended June 30, 2008. Sales from acquired companies were immaterial for the quarter and six months ended June 30, 2008. The remaining 6% and 7% of sales growth for the three and six months ended June 30, 2008, respectively, was due primarily to increased demand for our innovative dispensing systems.

For further discussion on net sales by reporting segment, please refer to the segment analysis of net sales and segment income on the following pages.

The following table sets forth, for the periods indicated, net sales by geographic location:


	Three Months Ended June 30,										Six Months Ended June 30,
	2008		% of Total			2007		% of Total			2008		% of Total			2007		% of Total

Domestic	$	132,157		24	%	$	124,816		26	%	$	263,416		24	%	$	247,442		27	%
Europe		353,653		64	%		295,984		63	%		695,219		64	%		575,833		62	%
Other Foreign		65,509		12	%		52,076		11	%		124,942		12	%		99,442		11	%

COST OF SALES (EXCLUSIVE OF DEPRECIATION SHOWN BELOW)

Our cost of sales as a percent of net sales increased to 67.7% in the second quarter of 2008 compared to 67.4% in the second quarter of 2007.

The following factors negatively impacted our cost of sales percentage in the second quarter of 2008:

Rising Input Costs. Input costs, in particular resin, utilities and transportation costs increased in the second quarter of 2008 over 2007, primarily in the U.S. While we attempt to pass these rising input costs along in our selling prices we experience the usual lag in the timing of passing on these cost increases.

Weakening of the U.S. Dollar. We are a net importer from Europe into the U.S. and other countries of products produced in Europe with costs denominated in Euros. As a result, when the U.S. dollar or other currencies weaken against the Euro, products produced in Europe (with costs denominated in Euros) and sold in currencies that are weaker compared to the Euro, have a negative impact on cost of sales as a percentage of net sales.

Underutilized Overhead Costs in Certain Operations. Certain of our business operations in the Closures business segment saw a decrease in unit volumes produced and sold and as a result of the lower production levels, overhead costs were underutilized, thus negatively impacting cost of goods sold as a percentage of net sales.

Increased Sales of Custom Tooling. We had a $4.7 million increase in sales of custom tooling in the second quarter of 2008. Traditionally, sales of custom tooling generate lower margins than our regular product sales and, thus, an increase in sales of custom tooling negatively impacts cost of sales as a percentage of sales.

The following factors positively impacted our cost of sales percentage in the second quarter of 2008:

Improved Product Mix. Sales to the pharmaceutical market in the second quarter of 2008 increased 17% compared to the prior year second quarter and therefore positively impacted or lowered our cost of sales as a percentage of net sales as margins on our pharmaceutical products typically are higher than the overall company average.

Our cost of sales as a percent of net sales increased to 67.9% in the first half of 2008 compared to 67.1% in the first half of 2007. The increase is primarily due to the same factors mentioned above. Sales of custom tooling increased $11.9 million in the first six months of 2008 compared to the comparable period in 2007.

SELLING, RESEARCH & DEVELOPMENT AND ADMINISTRATIVE

Our Selling, Research & Development and Administrative expenses (“SG&A”) increased by approximately $13.0 million in the second quarter of 2008 compared to the same period a year ago. Changes in currency rates accounted for approximately $7.1 million of the increase in SG&A in the quarter. The remainder of the increase is due primarily to higher bad debt expense, higher professional fees related to several corporate initiatives and inflationary cost increases. SG&A as a percentage of net sales increased to 14.3% compared to 13.9% of net sales in the same period of the prior year primarily due to the higher bad debts and professional fees.

SG&A increased by approximately $21.1 million in the first half of 2008 compared to the same period a year ago. Changes in currency rates accounted for approximately $13.5 million of the increase in SG&A in the first half. The remainder of the increase is due primarily to the reasons mentioned above as well as higher research and development costs in the first quarter. SG&A as a percentage of net sales decreased to 14.8% compared to 15.1% of net sales in the same period of the prior year primarily due to a reduction in stock option expense in the first half of 2008 of $2.2 million.

DEPRECIATION AND AMORTIZATION

Depreciation and amortization increased approximately $3.3 million in the second quarter of 2008 to $34.4 million compared to $30.9 million in the second quarter of 2007. Changes in currency rates accounted for all of the increase in depreciation and amortization in the second quarter. Depreciation and amortization as a percentage of net sales decreased to 6.2% in the second quarter of 2008 compared to 6.5% for the same period a year ago.

Depreciation and amortization increased approximately $7.1 million in the first half of 2008 to $67.3 million compared to $60.2 million in the first half of 2007. Changes in currency rates accounted for approximately $6.7 million of the increase in depreciation and amortization in the first half of 2008 compared to the prior year. Depreciation and amortization as a percentage of net sales decreased to 6.2% compared to 6.5% for the same period a year ago.

OPERATING INCOME

Operating income increased approximately $7.7 million in the second quarter of 2008 to $65.2 million compared to $57.5 million in the same period in the prior year. The increase is primarily due to the increase in sales of our products mentioned above and the continued strength of the Euro compared to the U.S. dollar which is having a positive impact on the translation of our results in U.S. dollars. This was partially offset by higher cost of goods sold and SG&A costs mentioned above. Operating income as a percentage of net sales decreased to 11.8% in the second quarter of 2008 compared to 12.2% for the same period in the prior year.

Operating income increased approximately $15.8 million in the first half of 2008 to $119.9 million compared to $104.2 million in the same period in the prior year. The increase is primarily due to the increase in sales of our products mentioned above and the continued strength of the Euro compared to the U.S. dollar. This was partially offset by rising input costs. Operating income as a percentage of sales decreased to 11.1% in the first half of 2008 compared to 11.3% for the same period in the prior year.

NET OTHER EXPENSE

Net other expenses in the second quarter of 2008 decreased to $0.5 million from $3.6 million in the same period in the prior year primarily reflecting increased interest income of $1.7 million and a decrease in foreign currency losses of approximately $1.1 million. The increase in interest income is due primarily to higher average cash and equivalents balance.

Net other expenses for the six months ended June 30, 2008 decreased to $2.5 million from $7.0 million in the same period in the prior year primarily reflecting increased interest income of $3.5 million and a decrease in foreign currency losses of approximately $0.6 million. The increase in interest income is due primarily to higher average cash and equivalents levels. In addition, interest expense decreased approximately $0.5 million in the first half of 2008 compared to the prior year primarily due to lower average interest rates.

EFFECTIVE TAX RATE

The reported effective tax rate decreased to 30% for the three and six months ended June 30, 2008 compared to 31.5% for the same periods of 2007 reflecting the reduction of the German and Italian statutory tax rates effective in 2008 as well as higher research and development credits expected to be received in France in 2008.

NET INCOME

We reported net income of $45.3 million and $82.2 million in the three and six months ended June 30, 2008, respectively, compared to $37.0 million and $66.5 million for the same periods in the prior year.

BEAUTY & HOME SEGMENT

Operations that sell spray and lotion dispensing systems primarily to the personal care, fragrance/cosmetic and household markets form the Beauty & Home segment.


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net Sales	$	288,911		$	250,186		$	572,674		$	492,144
Segment Income (1)		26,843			26,443			56,203			52,575
Segment Income as a percentage of Net Sales		9.3	%		10.6	%		9.8	%		10.7	%

(1) Segment income is defined as earnings before net interest, stock option and corporate expenses, income taxes and unusual items. The Company evaluates performance of its business units and allocates resources based upon segment income. For a reconciliation of segment income to income before income taxes, see Note 10 — Segment information to the Consolidated Financial Statements in Item 1.

Net sales for the quarter ended June 30, 2008 increased 15% in the second quarter of 2008 to $288.9 million compared to $250.2 million in the second quarter of the prior year. The weakening U.S. dollar compared to the Euro positively impacted sales and represented approximately 11% of the 15% increase. Acquisitions were not material in the quarter. Sales excluding foreign currency changes to the personal care market increased approximately 3% in the second quarter of 2008 compared to the same period in the prior year. The general weak economic environment in the U.S. was the primary reason for the slowing growth in this market in the quarter. Sales of our products excluding foreign currency changes to the fragrance/cosmetic market increased 6% in the second quarter of 2008 compared to the second quarter of 2007. Demand for our innovative mini packaging products, airless dispensing systems and decorating accessories helped to offset weak demand in our traditional U.S. and Western Europe markets. General market demand in developing markets such as Latin America, Eastern Europe and Russia remained strong in the second quarter.

Net sales for the first six months of 2008 increased 16% in the first six months of 2008 to $572.7 million compared to $492.1 million in the first six months of the prior year. The weakening U.S. dollar compared to the Euro positively impacted sales and represented approximately 10% of the 16% increase in sales. Sales excluding foreign currency changes to the personal care market increased approximately 5% in the first half of 2008 compared to the first half of 2007. Sales of our products excluding foreign currency changes to the fragrance/cosmetic market increased more than 7% in the first half of 2008 compared to the first half of 2007.

Segment income in the second quarter of 2008 increased approximately 2% to $26.8 million compared to $26.4 million reported in the same period in the prior year. Rising input costs primarily in the U.S. negatively impacted the segment income in the quarter. Offsetting this negative impact was the positive impact coming from the weakening U.S. dollar and the increased sales volumes mentioned above.

Segment income in the first six months of 2008 increased approximately 7% to $56.2 million compared to $52.6 million reported in the same period in the prior year. The increase in segment income in the first half of 2008 was primarily due to the reasons mentioned above as well as a positive mix of products sold in the first quarter.

CLOSURES SEGMENT

The Closures segment designs and manufactures primarily dispensing closures. These products are sold primarily to the personal care, household and food/beverage markets.


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net Sales	$	144,245		$	121,532		$	278,521		$	241,513
Segment Income		12,831			13,363			24,053			27,344
Segment Income as a percentage of Net Sales		8.9	%		11.0	%		8.6	%		11.3	%

Net sales for the quarter ended June 30, 2008 increased approximately 19% in the second quarter of 2008 to $144.2 million compared to $121.5 million in the second quarter of the prior year. The weakening U.S. dollar compared to the Euro positively impacted sales and represented approximately 9% of the 19% increase. Resin related price increases also positively contributed to the increase in sales. Sales excluding changes in foreign currency to the personal care market increased approximately 10% in the second quarter of 2008 compared to the same period in the prior year. Approximately 8% of the 10% increase in sales to this market was due to sales of custom tooling. Sales excluding changes in foreign currency to the food/beverage market increased 15% reflecting continued customer acceptance of dispensing closures for condiments and other food and beverage related products. Sales excluding changes in foreign currency to the household market decreased 15%. The primary reason for the decrease was due to lower sales in Europe related to laundry care products.

Net sales for the first six months of 2008 increased approximately 15% in the first six months of 2008 to $278.5 million compared to $241.5 million in the first six months of the prior year. Once again, the weakening U.S. dollar compared to the Euro positively impacted sales and represented approximately 8% of the 15% increase. Resin related price increases also positively impacted the sales for the first half of the year. Sales excluding foreign currency changes to the personal care market increased approximately 3% in the first six months of 2008 compared to the same period in the prior year, primarily due to an increase in sales of custom tooling. Sales to the food/beverage market increased 22%, of which approximately 7% was due to higher sales of custom tooling. Sales to the household market decreased 10% due primarily to decreased sales in Europe of laundry care products.

Segment income in the second quarter of 2008 decreased approximately 4% to $12.8 million compared to $13.4 million reported in the same period in the prior year. The decrease in segment income is primarily due to the normal lag between rising resin costs and our ability to pass these increased costs on to our customers. In addition, softer demand in certain markets led to underutilized capacity and fixed overhead costs.

Segment income in the first six months of 2008 decreased approximately 12% to $24.1 million compared to $27.3 million reported in the same period of the prior year. The decrease in segment income is due primarily to the same reasons mentioned above.

PHARMA SEGMENT

Operations that sell dispensing systems to the pharmaceutical market form the Pharma segment.


	Three Months Ended June 30,						Six Months Ended June 30,
	2008			2007			2008			2007

Net Sales	$	118,162		$	101,157		$	232,377		$	189,058
Segment Income		34,951			26,356			64,867			49,038
Segment Income as a percentage of Net Sales		29.6	%		26.1	%		27.9	%		25.9	%

Our Net sales for the Pharma segment grew by 17% in the second quarter of 2008 to $118.2 million compared to $101.2 million in the second quarter of 2007. Changes in foreign currency rates positively impacted the sales growth and accounted for approximately 13% of the 17% sales growth. Sales of tooling to customers decreased in the second quarter of 2008 compared to the same period in the prior year and negatively impacted sales growth in the quarter by approximately 2%. The remainder of the increase in sales is due to increased sales of both our nasal spray pumps used primarily on allergy related products and metered dose inhaler valves used on asthma related products. The increased sales of metered dose inhaler valves also contributed to the sales growth.

Our Net sales for the Pharma segment grew by 23% in the first six months of 2008 to $232.4 million compared to $189.1 million in the first six months of 2007. Changes in foreign currency rates positively impacted the sales growth by approximately 13% for the first half of 2008. The remaining 10% increase in sales was primarily due to the strong demand for our nasal spray pumps, primarily for allergy related products. Sales of our metered dose inhaler valves for the first half of the year were lower than the prior year primarily due to weak sales in the first quarter of this year.

Segment income in the second quarter of 2008 increased approximately 33% to $35.0 million compared to $26.4 million reported in the same period in the prior year. The significant improvement in profitability is primarily due to the increase in product sales, more profitable mix of sales to customers and better utilization of fixed overheads due to the increased sales.

Segment income in the first six months of 2008 increased approximately 32% to $64.9 million compared to $49.0 million reported in the same period in the prior year. The increase in profitability for the first six months is due to the same reasons mentioned above.

FOREIGN CURRENCY

A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a significant impact on the translation of the financial statements of our foreign entities. Our primary foreign exchange exposure is to the Euro, but we have foreign exchange exposure to South American and Asian currencies, among others. We manage our exposures to foreign exchange principally with forward exchange contracts to hedge certain transactions and firm purchase and sales commitments denominated in foreign currencies. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial statements. Conversely, a strengthening U.S. dollar has a dilutive effect. In some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Changes in exchange rates on such inter-country sales could materially impact our results of operations.

QUARTERLY TRENDS

Our results of operations in the second half of the year typically are negatively impacted by customer plant shutdowns in the summer months in Europe and plant shutdowns in December. In the future, our results of operations in a quarterly period could be impacted by factors such as changes in product mix, changes in material costs, changes in growth rates in the industries to which our products are sold, recognition of equity based compensation expense for retirement eligible employees in the period of grant and changes in general economic conditions in any of the countries in which we do business.

Our estimated stock option expense on a pre-tax basis (in $ millions) for the year 2008 compared to the prior year is as follows:


	2008		2007
First Quarter		7.2		8.7
Second Quarter		1.4		2.1
Third Quarter		1.3		1.6
Fourth Quarter		1.3		1.6

LIQUIDITY AND CAPITAL RESOURCES

Our primary sources of liquidity are cash flow from operations and our revolving credit facility. Cash and equivalents decreased to $296.6 million from $313.7 million at December 31, 2007. Total short and long-term interest bearing debt increased slightly in the first six months of 2008 to $370.8 million from $362.9 million at December 31, 2007. The ratio of our Net Debt (interest bearing debt less cash and cash equivalents) to Net Capital (stockholder’s equity plus Net Debt) increased slightly at the end of June 2008 to 6% compared to the prior year end of 4%.

In the first six months of 2008, our operations provided approximately $98.3 million in cash flow compared to $92.2 million for the same period a year ago. The increase in cash flow is primarily attributable to an increase in earnings before depreciation partially offset by an increase in working capital needs to support the growth in the business. During the first six months of 2008, we utilized the majority of the operating cash flows to finance capital expenditures.

We used $103.3 million in cash for investing activities during the first six months of 2008, compared to $60.9 million during the same period a year ago. The increase in cash used for investing activities is due primarily to $34.2 million more spent on capital expenditures in the first half of 2008 compared to the first half of 2007. The increase in capital expenditures is primarily related to the timing of payments for the expansion of a facility in France for our Pharma segment, investment in a new worldwide ERP system, and investments related to capacity increases for certain of our product lines. In addition, the stronger Euro compared to the dollar in 2008 is also impacting the year over year comparison of capital expenditures. Cash outlays for capital expenditures for 2008 are estimated to be approximately $180 million but could vary due to changes in currency rates. In addition, approximately $9.3 million in cash was used to acquire the bag-on-valve business of CCL Industries described in Note 11.

We used approximately $33.8 million in cash from financing activities in the first half of 2008 compared to $11.6 million in the first half of the prior year. The increase in cash used from financing activities is due primarily to a decrease of approximately $22.1 million of proceeds from short term notes payable in the first half of 2008 compared to the prior year.

Dividends of approximately $44.6 million were received from Europe in the quarter ended June 30, 2008, which helped reduce our need for additional short-term debt proceeds.

Our revolving credit facility and certain long-term obligations require us to satisfy certain financial and other covenants including:


	Requirement	Level at June 30, 2008
Debt to total capital ratio	Maximum of 55%	23%

Based upon the above debt to total capital ratio covenant we would have the ability to borrow an additional $1.2 billion before the 55% requirement would be exceeded.

Our foreign operations have historically met cash requirements with the use of internally generated cash or borrowings. Foreign subsidiaries have financing arrangements with several foreign banks to fund operations located outside the U.S., but all these lines are uncommitted. Cash generated by foreign operations has generally been reinvested locally. The majority of our $296.6 million in cash and equivalents is located outside of the U.S.

We believe we are in a strong financial position and have the financial resources to meet business requirements in the foreseeable future. We have historically used cash flow from operations as our primary source of liquidity. In the event that customer demand would decrease significantly for a prolonged period of time and negatively impact cash flow from operations, we would have the ability to restrict and significantly reduce capital expenditure levels, which historically have been the most significant use of cash for us. A prolonged and significant reduction in capital expenditure levels could increase future repairs and maintenance costs as well as have a negative impact on operating margins if we were unable to invest in new innovative products.

We have refinanced $100 million of existing borrowings with private placement debt on July 31, 2008.

We anticipate that we will contribute before the end of 2008, approximately $22 million to certain of our European pension plans that have not been funded in the past.

On July 17, 2008, the Board of Directors declared an increase to the quarterly dividend from $0.13 per share to $0.15 per share payable on August 20, 2008 to stockholders of record as of July 30, 2008. In addition the Board authorized the repurchase of an additional 4 million shares of the Company’s common stock. There is no expiration for this repurchase program.

OFF-BALANCE SHEET ARRANGEMENTS

We lease certain warehouse, plant and office facilities as well as certain equipment under noncancelable operating leases expiring at various dates through the year 2055. Most of the operating leases contain renewal options and certain equipment leases include options to purchase during or at the end of the lease term. We had an option on one building lease to purchase the building during or at the end of the term of the lease at approximately the amount expended by the lessor for the purchase of the building and improvements, which was the fair value of the facility at the inception of the lease. This lease had been accounted for as an operating lease. The Company exercised its option to purchase this building in July of 2008 and will account for this transaction as a capital expenditure in the quarter ending September 30, 2008. The cost of the building is approximately $9.5 million. Other than operating lease obligations, we do not have any off-balance sheet arrangements.

ADOPTION OF ACCOUNTING STANDARDS

In December 2007, the FASB issued SFAS No. 141(R), “Business Combinations.” SFAS No. 141(R) establishes principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree and recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase. SFAS No. 141(R) also sets forth the disclosures required to be made in the financial statements to evaluate the nature and financial effects of the business combination. SFAS No. 141(R) applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. Accordingly, SFAS No. 141(R) will be applied by the Company to business combinations occurring on or after January 1, 2009.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements , an amendment of ARB No. 51.” SFAS No. 160 establishes accounting and reporting standards that require that the ownership interests in subsidiaries held by parties other than the parent be clearly identified, labeled, and presented in the consolidated statement of financial position within equity, but separate from the parent’s equity; the amount of consolidated net income attributable to the parent and to the noncontrolling interest be clearly identified and presented on the face of the consolidated statement of income; and changes in a parent’s ownership interest while the parent retains its controlling financial interest in its subsidiary be accounted for consistently. SFAS No. 160 also requires that any retained noncontrolling equity investment in the former subsidiary be initially measured at fair value when a subsidiary is deconsolidated. SFAS No. 160 also sets forth the disclosure requirements to identify and distinguish between the interests of the parent and the interests of the noncontrolling owners. SFAS No. 160 applies to all entities that prepare consolidated financial statements, except not-for-profit organizations, but will affect only those entities that have an outstanding noncontrolling interest in one or more subsidiaries or that deconsolidate a subsidiary. SFAS No. 160 is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008. Earlier adoption is prohibited. SFAS No. 160 must be applied prospectively as of the beginning of the fiscal year in which it is initially applied, except for the presentation and disclosure requirements. The presentation and disclosure requirements are applied retrospectively for all periods presented. The Company currently has immaterial noncontrolling interests in two subsidiaries. The Company does not believe that the adoption of SFAS No. 160 will materially impact the presentation of the financial results of the Company.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133,” (SFAS 161). SFAS 161 requires enhanced disclosures about an entity’s derivative and hedging activities, including (i) how and why an entity uses derivative instruments, (ii) how derivative instruments and related hedged items are accounted for under SFAS 133, and (iii) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This standard becomes effective on January 1, 2009. Earlier adoption of SFAS 161 and, separately, comparative disclosures for earlier periods at initial adoption are encouraged. As SFAS 161 only requires enhanced disclosures, this standard will have no impact on the financial position, results of operations, or cash flows of the Company.

In April 2008, the FASB issued FSP No. FAS 142-3, “Determination of the Useful Life of Intangible Assets,” (FSP FAS 142-3). FSP FAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under FASB Statement No. 142, “Goodwill and Other Intangible Assets,” (SFAS 142) in order to improve the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141(R) and other GAAP. FSP FAS 142-3 becomes effective on January 1, 2009. Management has concluded that the adoption of FSP FAS 142-3 will not have a material impact on the Financial Statements.

OUTLOOK

Due to the difficult economic environment in both the U.S. and Western Europe, we anticipate softer demand from the fragrance/cosmetic and personal care markets within the Beauty and Home segment in both of these geographic areas. Sales from the Pharma segment are expected to remain near the second quarter levels while sales from the Closures segment are expected to improve due to new customer product launches expected in the second half of the year.

We anticipate that the increased profit margin in the Pharma segment experienced in the second quarter will return to more historic levels in the third quarter.

Input costs are expected to continue to increase going into the third quarter. The cost of resin in the U.S. is expected to increase again in July from already historically high levels. Metal prices, particularly, tinplate and aluminum, are showing signs of increasing prices. Finally the cost to anodize our metal parts is increasing dramatically due to the increase in the market price of phosphoric acid (one of the chemicals used in the anodization process). Our ability to pass on these rising input costs to our customers within our normal delay will be an important factor in determining the third quarter results.

We anticipate that diluted earnings per share for the third quarter of 2008 will be in the range of $0.55 to $0.58 per share, compared to $0.56 per share in the prior year, which included a positive impact of $0.03 per share related to a reduction in net deferred tax liabilities stemming from a change in the German tax law.

FORWARD-LOOKING STATEMENTS

This Management’s Discussion and Analysis and certain other sections of this Form 10-Q contain forward-looking statements that involve a number of risks and uncertainties. Words such as “expects,” “anticipates,” “believes,” “estimates,” and other similar expressions or future or conditional verbs such as “will,” “should,” “would” and “could” are intended to identify such forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are based on our beliefs as well as assumptions made by and information currently available to us. Accordingly, our actual results may differ materially from those expressed or implied in such forward-looking statements due to known or unknown risks and uncertainties that exist in our operations and business environment, including but not limited to:

•		difficulties in product development and uncertainties related to the timing or outcome of product development;

•		the cost of materials and other input costs (particularly resin, metal, anodization costs and transportation and energy costs);

•		the availability of raw materials and components (particularly from sole sourced suppliers);

•		our ability to increase prices;

•		our ability to contain costs and improve productivity;

•		our ability to meet future cash flow estimates to support our goodwill impairment testing;

•		direct or indirect consequences of acts of war or terrorism;

•		difficulties in complying with government regulation;

•		competition and technological change;

•		our ability to protect and defend our intellectual property rights;

•		the timing and magnitude of capital expenditures;

•		our ability to identify potential new acquisitions and to successfully acquire and integrate such operations or products;

•		significant fluctuations in currency exchange rates;

•		economic and market conditions worldwide;

•		changes in customer and/or consumer spending levels;

•		work stoppages due to labor disputes;

•		the demand for existing and new products;

•		changes in worldwide tax rates;

•		our ability to manage worldwide customer launches of complex technical products, in particular in developing markets;

•		the success of our customers’ products, particularly in the pharmaceutical industry;

•		significant product liability claims;

•		our successful implementation of a new worldwide ERP system starting in 2009 without disruption to our operations; and

•		other risks associated with our operations.

Although we believe that our forward-looking statements are based on reasonable assumptions, there can be no assurance that actual results, performance or achievements will not differ materially from any future results, performance or achievements expressed or implied by such forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. We undertake no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. For additional risk factors affecting AptarGroup stock and AptarGroup’s operations or operating results, refer to Item 1A of the Company’s Annual Report on Form 10-K for the period ended December 31, 2007.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

A significant number of our operations are located outside of the United States. Because of this, movements in exchange rates may have a material impact on the translation of the financial condition and results of operations of our entities. Our primary foreign exchange exposure is to the Euro, but we also have foreign exchange exposure to South American and Asian currencies, among others. A weakening U.S. dollar relative to foreign currencies has an additive translation effect on our financial condition and results of operations. Conversely, a strengthening U.S. dollar has a dilutive effect.

Additionally, in some cases, we sell products denominated in a currency different from the currency in which the related costs are incurred. Any changes in exchange rates on such inter-country sales may impact our results of operations.

We manage our exposures to foreign exchange principally with forward exchange contracts to hedge certain firm purchase and sales commitments and intercompany cash transactions denominated in foreign currencies.

The table below provides information as of June 30, 2008 about our forward currency exchange contracts. The majority of the contracts expire before the end of the second quarter of 2009 with the exception of a few contracts on intercompany loans that expire in the third quarter of 2013.


	Contract Amount		Average Contractual
Buy/Sell	(inthousands)		Exchange Rate

Swiss Franc/Euro	$	45,757		0.6273
Euro/U.S. Dollar		37,886		1.5441
Euro/Swiss Franc		15,832		1.6038
Canadian Dollar/Euro		13,730		0.6957
Euro/Brazilian Real		9,342		4.2707
Euro/Canadian Dollar		6,926		1.5912
Euro/Russian Ruble		4,475		37.6822
Czech Koruna/Euro		4,408		0.0408
Euro/British Pound		3,534		0.7930
Canadian Dollar/U.S. Dollar		1,950		0.9854
Euro/Chinese Yuan		1,779		10.5267
U.S. Dollar/Euro		1,127		0.6436
Other		1,781

Total	$	148,527

As of June 30, 2008, we have recorded the fair value of foreign currency forward exchange contracts of $1.4 million in accounts payable and accrued liabilities, $49 in prepayments and other and $2.4 million in deferred and other non-current liabilities in the balance sheet.

At June 30, 2008, we had a fixed-to-variable interest rate swap agreement with a notional principal value of $15 million which requires us to pay an average variable interest rate (which was 2.8% at June 30, 2008) and receive a fixed rate of 6.6%. The variable rate is adjusted semiannually based on London Interbank Offered Rates (“LIBOR”). Variations in market interest rates would produce changes in our net income. If interest rates increase by 100 basis points, net income related to the interest rate swap agreement would decrease by approximately $0.1 million assuming a tax rate of 30%. As of June 30, 2008, we recorded the fair value of the fixed-to-variable interest rate swap agreement of $0.9 million in miscellaneous other assets with an offsetting adjustment to debt. No gain or loss was recorded in the income statement in 2008 since there was no hedge ineffectiveness.

The Company also entered into two treasury rate locks to manage its exposure against changes in future interest payments attributable to changes in the U.S. Treasury rates. By entering into these agreements, the Company locked in an agreed upon interest rates until the settlement of the contracts. The Company accounts for the treasury rate locks as cash flow hedges. These contracts were closed on June 30, 2008. At June 30, 2008, $0.6 million is included in accounts payable and other accrued liabilities, and $0.6 million is included in accumulated other comprehensive loss which will be amortized into interest expense during the life of the new debt instruments (5 and 10 years) related to these treasury locks.

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

The Company’s management has evaluated, with the participation of the chief executive officer and chief financial officer of the Company, the effectiveness of the Company’s disclosure controls and procedures (as that term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934) as of June 30, 2008. Based on that evaluation, the chief executive officer and chief financial officer have concluded that these controls and procedures were effective as of such date.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

No change in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Securities Exchange Act of 1934) occurred during the Company’s fiscal quarter ended June 30, 2008 that materially affected, or is reasonably like to materially affect, the Company’s internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

RECENT SALES OF UNREGISTERED SECURITIES

During the quarter ended June 30, 2008, the FCP Aptar Savings Plan (the “Plan”) sold 780 shares of our common stock on behalf of the participants at an average price of $42.53 per share, for an aggregate amount of $33.2 thousand. At June 30, 2008, the Plan owns 16,604 shares of our common stock. The employees of AptarGroup S.A.S. and Valois S.A.S., our subsidiaries, are eligible to participate in the Plan. All eligible participants are located outside of the United States. An independent agent purchases shares of common stock available under the Plan for cash on the open market and we do not issue shares. We do not receive any proceeds from the purchase of Common Stock under the Plan. The agent under the Plan is Banque Nationale de Paris Paribas Asset Management. No underwriters are used under the Plan. All shares are sold in reliance upon the exemption from registration under the Securities Act of 1933 provided by Regulation S promulgated under that Act.

ISSUER PURCHASES OF EQUITY SECURITIES

The following table summarizes the Company’s purchases of its securities for the quarter ended June 30, 2008:


					Total Number Of Shares		Maximum Number Of
	Total Number				Purchased As Part Of		Shares That May Yet Be
	Of Shares		Average Price		Publicly Announced		Purchased Under The
Period	Purchased		Paid Per Share		Plans Or Programs		Plans Or Programs

4/1 – 4/30/08		—	$	—		—		1,542,400
5/1 – 5/31/08		250,043		44.20		250,043		1,292,357
6/1 – 6/30/08		208,600		44.30		208,600		1,083,757

Total		458,643	$	44.24		458,643		1,083,757

The Company announced the existing repurchase program on July 19, 2006. On July 17, 2008, the Company announced that its Board of Directors authorized the Company to repurchase an additional four million shares of its outstanding common stock. There is no expiration date for these repurchase programs.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

The annual meeting of stockholders was held on April 30, 2008. A vote was taken by ballot for the election of three directors to hold office until the 2011 Annual Meeting of Stockholders. The following nominees received the number of votes as set forth below:


Nominee	For		Withheld		Broker Non-Votes

King W. Harris		62,850,342		995,585		-0-
Peter H. Pfeiffer		62,259,078		986,849		-0-
Dr. Joanne C. Smith		63,022,136		823,791		-0-

Continuing as directors with terms expiring in 2009 are Stefan A. Baustert, Rodney L. Goldstein, Ralph Gruska, and Dr. Leo A. Guthart. Continuing as directors with terms expiring in 2010 are Alain Chevassus, Stephen J. Hagge, and Carl A. Siebel.

A vote was taken by ballot for the approval of the Annual Bonus Plan. The number of votes received is set forth below:


For	Against		Abstain		Broker Non-Votes
61,773,317		1,427,597		645,012		-0-

A vote was taken by ballot for the approval of the 2008 Stock Option Plan. The number of votes received is set forth below:


For	Against		Abstain		Broker Non-Votes
41,034,081		18,637,987		649,463		3,524,396

A vote was taken by ballot for the approval of the 2008 Director Stock Option Plan. The number of votes received is set forth below:


For	Against		Abstain		Broker Non-Votes
41,954,370		17,710,947		656,289		3,524,321

A vote was taken by ballot for the approval of an Amendment to the Certificate of Incorporation to increase the number of shares of Common Stock authorized for issuance to 199,000,000 shares is set forth below:


For	Against		Abstain		Broker Non-Votes
56,720,923		7,058,298		66,106		-0-

ITEM 5. OTHER INFORMATION

NOTE PURCHASE AGREEMENT

The Company entered into a Note Purchase Agreement, dated as of July 31, 2008 (the “Note Purchase Agreement”), among the Company and the purchasers listed on Schedule A thereto pursuant to which the Company issued and sold $25 million of its 5.41% Series 2008-A-1 Senior Notes due July 31, 2013 (the “Series 2008-A-1 Notes”) and $75 million of its 6.03% Series 2008-A-2 Senior Notes due July 31, 2018 (the “Series 2008-A-2 Notes,” and, together with the “Series 2008-A-1 Notes, the “Notes”) in private placement to various institutional investors. The Note Purchase Agreement contains customary terms and conditions.

The Company used the proceeds from the sale of the Notes to repay existing indebtedness of the Company.

Pursuant to the Note Purchase Agreement, the Company will pay interest on the outstanding balance of the Notes at the stated rates per annum from the date of the issuance of the Notes, payable semiannually commencing on January 31, 2009, until such principal becomes due and payable.

The Company may from time to time, at its option, upon notice, prepay prior to maturity all or any part of the principal amount of the Notes, together with accrued interest and the Make-Whole Amount (as defined in the Note Purchase Agreement), as specified in the Note Purchase Agreement.

The Notes will automatically become immediately due and payable without notice upon the occurrence of an event of default involving insolvency or bankruptcy of the Company or any Significant Subsidiary (as defined in the Note Purchase Agreement). In addition, by notice given to the Company, any holder or holders of more than 50% in principal amount of the Notes, at its or their option, may declare all of the Notes to be immediately due and payable upon the occurrence and continuation of any other event of default, and, by notice given to the Company, any holder of the Notes may, at its option, declare all of the Notes held by such holder to be immediately due and payable in the event that the Company defaults in the payment of any payment due and payable under the Note Purchase Agreement.

A copy of the Note Purchase Agreement is filed as Exhibit 4.1 to this report, a copy, of the form of the Series 2008-A-1 Notes is filed as Exhibit 4.2 to this report; and a copy of the form of the Series 2008-A-2 Notes is filed as Exhibit 4.3 to this report. The foregoing description of the Note Purchase Agreement and the Notes is qualified in its entirety by reference to the full text of the Note Purchase Agreement and the forms of the Notes, which is incorporated by reference herein.

ITEM 6. EXHIBITS


Exhibit 3.1		Amended and Restated Certificate of Incorporation of AptarGroup, Inc., as amended, filed as Exhibit 4(a) to AptarGroup Inc.’s Registration Statement on Form S-8, Registration Number 333-152525, filed on July 25, 2008 (the “Form S-8”), is hereby incorporated by reference.

Exhibit 4.1		Note Purchase Agreement dated as of July 31, 2008, among AptarGroup, Inc. and the purchasers listed on Schedule A thereto.

Exhibit 4.2		Form of AptarGroup, Inc. 5.41% Series 2008-A-1 Senior Notes Due July 31, 2013.

Exhibit 4.3		Form of AptarGroup, Inc. 6.03% Series 2008-A-2 Senior Notes Due July 31, 2018.

Exhibit 10.1		AptarGroup, Inc. Annual Bonus Plan, filed as Exhibit 10.2 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.

Exhibit 10.2		AptarGroup, Inc. 2008 Stock Option Plan, filed as Exhibit 10.3 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.

Exhibit 10.3		AptarGroup, Inc. 2008 Director Stock Option Plan, filed as Exhibit 10.1 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.

Exhibit 10.4		Form of AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2008 Stock Option Plan


Exhibit 10.5		Form of AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2008 Director Stock Option Plan

Exhibit 10.6		Form of AptarGroup, Inc. Restricted Stock Award Agreement pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan, as amended and restated to comply with Section 409A of the Internal Revenue Code.

Exhibit 10.7		Employment Agreement dated July 18, 2008 of Stephen J. Hagge, as amended and restated to comply with Section 409A of the Internal Revenue Code.

Exhibit 10.8		Employment Agreement dated July 18, 2008 of Eric Ruskoski, as amended and restated to comply with Section 409A of the Internal Revenue Code.

Exhibit 10.9		Employment Agreement dated January 18, 2008 of Olivier Fourment.

Exhibit 10.10		Employment Agreement dated January 18, 2008 of Olivier de Pous.

Exhibit 31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

AptarGroup, Inc.
(Registrant)

By /s/ Stephen J. Hagge
Stephen J. Hagge
Executive Vice President, Chief
Operating Officer and Chief
Financial Officer
(Duly Authorized Officer and
Principal Financial Officer)

Date: August 1, 2008

INDEX OF EXHIBITS


Exhibit
Number		Description

3.1		Amended and Restated Certificate of Incorporation of AptarGroup, Inc., as amended, filed as Exhibit 4(a) to AptarGroup Inc.’s Registration Statement on Form S-8, Registration Number 333-152525, filed on July 25, 2008 (the “Form S-8”), is hereby incorporated by reference.
4.1		Note Purchase Agreement dated as of July 31, 2008, among AptarGroup, Inc. and the purchasers listed on Schedule A thereto.
4.2		Form of AptarGroup, Inc. 5.41% Series 2006-A-1 Senior Notes due July 31, 2013.
4.3		Form of AptarGroup, Inc. 6.03% Series 2006-A-2 Senior Notes due July 31, 2018.
10.1		AptarGroup, Inc. Annual Bonus Plan, filed as Exhibit 10.2 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.
10.2		AptarGroup, Inc. 2008 Stock Option Plan, filed as Exhibit 10.3 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.
10.3		AptarGroup, Inc. 2008 Director Stock Option Plan, filed as Exhibit 10.1 to AptarGroup, Inc.’s Current Report on Form 8-K filed on May 1, 2008, is hereby incorporated by reference.
10.4		Form of AptarGroup, Inc. Stock Option Agreement for Employees pursuant to the AptarGroup, Inc. 2008 Stock Option Plan
10.5		Form of AptarGroup, Inc. Stock Option Agreement for Non-Employee Directors pursuant to the AptarGroup, Inc. 2008 Director Stock Option Plan
10.6		Form of AptarGroup, Inc. Restricted Stock Award Agreement pursuant to the AptarGroup, Inc. 2004 Stock Awards Plan, as amended and restated to comply with Section 409A of the Internal Revenue Code.
10.7		Employment Agreement dated July 18, 2008 of Stephen J. Hagge, as amended and restated to comply with Section 409A of the Internal Revenue Code.
10.8		Employment Agreement dated July 18, 2008 of Eric Ruskoski, as amended and restated to comply with Section 409A of the Internal Revenue Code.
10.9		Employment Agreement dated January 18, 2008 of Olivier Fourment.
10.10		Employment Agreement dated January 18, 2008 of Olivier de Pous.
31.1		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit 4.1

Execution Copy

AptarGroup, Inc.

Senior Notes Issuable in Series

$25,000,000 aggregate principal amount
5.41% Senior Notes, Series 2008-A-1, due July 31, 2013

$75,000,000 aggregate principal amount
6.03% Senior Notes, Series 2008-A-2, due July 31, 2018

Note Purchase Agreement

Dated as of July 31, 2008

Table of Contents

(Not a part of the Agreement)


Section	Heading	Page
Section 1.	Authorization of Notes		1

Section 1.1.	Series 2008-A Notes		1
Section 1.2.	Subsequent Series		1

Section 2.	Sale and Purchase of Notes; Subsequent Sales		2

Section 3.	Closing		3

Section 4.	Conditions to Closing		3

Section 4.1.	Representations and Warranties		3
Section 4.2.	Performance; No Default		3
Section 4.3.	Compliance Certificates		3
Section 4.4.	Opinions of Counsel		4
Section 4.5.	Purchase Permitted by Applicable Law, Etc.		4
Section 4.6.	Sale of Other Notes		4
Section 4.7.	Payment of Special Counsel Fees		4
Section 4.8.	Private Placement Number		4
Section 4.9.	Changes in Corporate Structure		4
Section 4.10.	Proceedings and Documents		5

Section 5.	Representations and Warranties of the Company		5

Section 5.1.	Organization; Power and Authority		5
Section 5.2.	Authorization, Etc.		5
Section 5.3.	Disclosure		5
Section 5.4.	Organization and Ownership of Shares of Subsidiaries; Affiliates		6
Section 5.5.	Financial Statements		6
Section 5.6.	Compliance with Laws, Other Instruments, Etc.		6
Section 5.7.	Governmental Authorizations, Etc.		7
Section 5.8.	Litigation; Observance of Agreements, Statutes and Orders		7
Section 5.9.	Taxes		7
Section 5.10.	Title to Property; Leases		8
Section 5.11.	Licenses, Permits, Etc.		8
Section 5.12.	Compliance with ERISA		8
Section 5.13.	Private Offering by the Company		9
Section 5.14.	Use of Proceeds; Margin Regulations		9
Section 5.15.	Existing Indebtedness; Future Liens		10
Section 5.16.	Foreign Assets Control Regulations, Etc.		10
Section 5.17.	Status under Certain Statutes		10
Section 5.18.	Environmental Matters		10

-i-


Section	Heading	Page
Section 6.	Representations of the Purchasers		11

Section 6.1.	Purchase for Investment		11
Section 6.2.	Source of Funds		11
Section 6.3.	Status as a Qualified Institutional Buyer		13

Section 7.	Information as to the Company		13

Section 7.1.	Financial and Business Information		13
Section 7.2.	Officer’s Certificate		15
Section 7.3.	Visitation		16

Section 8.	Prepayment of the Notes		17

Section 8.1.	Required Prepayments		17
Section 8.2.	Optional Prepayments with Make-Whole Amount		17
Section 8.3.	Allocation of Partial Prepayments		17
Section 8.4.	Maturity; Surrender, Etc.		17
Section 8.5.	Purchase of Notes		18
Section 8.6.	Make-Whole Amount		18
Section 8.7.	Change in Control		19

Section 9.	Affirmative Covenants		21

Section 9.1.	Compliance with Law		21
Section 9.2.	Insurance		21
Section 9.3.	Maintenance of Properties		21
Section 9.4.	Payment of Taxes and Claims		22
Section 9.5.	Legal Existence, Etc.		22

Section 10.	Negative Covenants		22

Section 10.1.	Indebtedness		22
Section 10.2.	Liens		23
Section 10.3.	Sale of Assets		24
Section 10.4.	Mergers, Consolidations, Etc.		25
Section 10.5.	Disposition of Stock of Subsidiaries		26
Section 10.6.	Nature of Business		26
Section 10.7.	Transactions with Affiliates		26

Section 11.	Events of Default		26

Section 12.	Remedies on Default, Etc.		28

Section 12.1.	Acceleration		28
Section 12.2.	Other Remedies		29
Section 12.3.	Rescission		29
Section 12.4.	No Waivers or Election of Remedies, Expenses, Etc.		30

Section 13.	Registration; Exchange; Substitution of Notes		30

Section 13.1.	Registration of Notes		30
Section 13.2.	Transfer and Exchange of Notes		30

-ii-


Section	Heading	Page
Section 13.3.	Replacement of Notes		31

Section 14.	Payments on Notes		31

Section 14.1.	Place of Payment		31
Section 14.2.	Home Office Payment		31

Section 15.	Expenses, Etc.		32

Section 15.1.	Transaction Expenses		32
Section 15.2.	Survival		32

Section 16.	Survival of Representations and Warranties; Entire Agreement		32

Section 17.	Amendment and Waiver		32

Section 17.1.	Requirements		32
Section 17.2.	Solicitation of Holders of Notes		33
Section 17.3.	Binding Effect, Etc.		33
Section 17.4.	Notes Held by Company, Etc.		33

Section 18.	Notices		34

Section 19.	Reproduction of Documents		34

Section 20.	Confidential Information		35

Section 21.	Substitution of Purchaser		36

Section 22.	Miscellaneous		36

Section 22.1.	Successors and Assigns		36
Section 22.2.	Payments Due on Non-Business Days		36
Section 22.3.	Severability		36
Section 22.4.	Construction, Etc.		36
Section 22.5.	Counterparts		37
Section 22.6.	Governing Law		37
Section 22.7.	Jurisdiction and Process; Waiver of Jury Trial		37

Signature			38

-iii-


Schedule A	—	Information Relating to Purchasers

Schedule B	—	Defined Terms

Schedule B-1	—	Existing Investments

Schedule 4.9	—	Changes in Corporate Structure, Mergers or Consolidations

Schedule 5.3	—	Disclosure Materials

Schedule 5.4	—	Subsidiaries of the Company and Ownership of Subsidiary Stock

Schedule 5.5	—	Financial Statements

Schedule 5.8	—	Certain Litigation

Schedule 5.11	—	Licenses, Permits, Etc.

Schedule 5.14	—	Use of Proceeds

Schedule 5.15	—	Existing Indebtedness

Schedule 10.2	—	Existing Liens

Exhibit 1.1( a)	—	Form of 5.41% Senior Note, Series 2008-A-1, due July 31, 2013

Exhibit 1.1( b )	—	F orm of 6.03% Senior Note, Series 2008-A-2, due July 31, 2018

Exhibit 1.2( A )	—	Form of Supplemental Note Purchase Agreement

Exhibit 1.2 (B)	—	Form of Supplemental Note

Exhibit 4.4( a )	—	Form of Opinion of Special Counsel for the Company

Exhibit 4.4( b )	—	Form of Opinion of Special Counsel for the Purchasers

-iv-

AptarGroup, Inc.
475 West Terra Cotta Avenue, Suite E
Crystal Lake, Illinois 60014
(815) 477-0424 Fax: (815) 477-0481

Senior Notes Issuable in Series

$25,000,000 aggregate principal amount
5.41% Senior Notes, Series 2008-A-1, due July 31, 2013

$75,000,000 aggregate principal amount
6.03% Senior Notes, Series 2008-A-2, due July 31, 2018

Dated as of July 31, 2008

To Each of the Purchasers Listed in
Schedule A Hereto:

Ladies and Gentlemen:

AptarGroup, Inc., a Delaware corporation (the “Company” ), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers” ) as follows:

Section 1. Authorization of Notes.

Section 1.1. Series 2008-A Notes . (a) The Company is contemplating the issue and sale of up to $300,000,000 aggregate principal amount of its senior notes issuable in series (the “Notes” , such term to include any such Notes issued in substitution therefor pursuant to Section 13 of this Agreement). The Notes may be issued in one or more series as provided in Section 1.2 . Certain capitalized and other terms used in this Agreement are defined in Schedule B , and references to a “ Schedule ” or an “ Exhibit ” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

(b) The Company has authorized, as the initial series of Notes hereunder, the issue and sale of (i) $25,000,000 aggregate principal amount of Notes to be designated as its 5.41% Senior Notes, Series 2008-A-1, due July 31, 2013 (the “Series 2008-A-1 Notes” ) and (ii) $75,000,000 aggregate principal amount of Notes to be designated as its 6.03% Senior Notes, Series 2008-A-2, due July 31, 2018 (the “Series 2008-A-2 Notes” , and together with the Series 2008-A-1 Notes, the “Series 2008-A Notes” , such term to include any such Notes issued in substitution therefor pursuant to Section 13 ). The Series 2008-A-1 Notes and the Series-A-2 Notes shall be substantially in the form set out in Exhibit 1. 1(a) and Exhibit 1.1( b) , respectively, with such changes therefrom, if any, as may be approved by the Purchasers and the Company.

Section 1.2. Subsequent Series . Each series of Notes, other than the Series 2008-A Notes, will be issued pursuant to an agreement substantially in the form of the Supplemental

Note Purchase Agreement attached hereto as Exhibit 1.2(A) (a “Supplemental Note Purchase Agreement” ) and will be subject to the following terms and conditions:

(a) the designation of each series of Notes shall distinguish the Notes of one series from the Notes of all other series and may consist of more than one different and separate tranches, but all such different and separate tranches of the same series shall constitute one series;

(b) Notes of each series shall rank pari passu with each other series of the Notes and with the Company’s other outstanding senior unsecured Indebtedness;

(c) each series of Notes shall be dated the date of issue, bear interest at such rate or rates, mature on such date or dates, be subject to such prepayments on the dates and with the premiums, if any, as are provided herein and in the Supplemental Note Purchase Agreement under which such Notes are issued, and shall have such additional or different conditions precedent to closing and such additional or different representations and warranties or, subject to Section 1.2(d) , other terms and provisions as shall be specified in such Supplemental Note Purchase Agreement;

(d) any additional covenants, Defaults, Events of Default, rights or similar provisions that are added by a Supplemental Note Purchase Agreement for the benefit of the series of Notes to be issued pursuant to such Supplemental Note Purchase Agreement shall apply to all outstanding Notes, whether or not the Supplemental Note Purchase Agreement so provides; and

(e) except to the extent provided in foregoing clause (c), all of the provisions of this Agreement shall apply to the Notes of each series.

Each series of Notes, other than the Series 2008-A Notes, shall be substantially in the form set out in Exhibit 1.2(B) , with such changes therefrom, if any, as may be approved by the purchasers of such Notes and the Company. The Purchasers of the Series 2008-A Notes need not purchase subsequent series of Notes.

Section 2. Sale and Purchase of Notes; Subsequent Sales.

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3 , Series 2008-A Notes in the principal amount and of the tranche specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof. Each Purchaser’s obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

-2-

Section 3 . Closing.

The sale and purchase of the Series 2008-A Notes to be purchased by the Purchasers shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603, at 10:00 a.m ., Chicago time, at a closing (the “Closing” ) on July 31, 2008. At the Closing, the Company will deliver to each Purchaser the 2008-A Notes of the tranche to be purchased by such Purchaser in the form of a single Series 2008-A Note (or such greater number of Series 2008-A Notes in denominations of at least $500,000 as such Purchaser may request), dated the date of the Closing and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser to the Company or its order of immediately available funds in the amount of the purchase price therefor by wire transfer of immediately available funds for the account of the Company to account number 8188-9-00150 at Bank of America, 231 South LaSalle Street, Chicago, IL 60697, ABA #026009593. If at the Closing the Company shall fail to tender such Series 2008-A Notes to any Purchaser as provided above in this Section 3 , or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

Section 4. Conditions to Closing.

Each Purchaser’s obligation to purchase and pay for the Series 2008-A Notes to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s satisfaction, prior to or at the Closing, of the following conditions:

Section 4.1. Representations and Warranties . The representations and warranties of the Company in this Agreement shall be correct when made and at the time of the Closing.

Section 4.2. Performance; No Default . The Company shall have performed and complied with all agreements and conditions contained in this Agreement required to be performed or complied with by it prior to or at the Closing, and after giving effect to the issue and sale of the Series 2008-A Notes (and the application of the proceeds thereof as contemplated by Schedule 5.14 ), no Default or Event of Default shall have occurred and be continuing. Neither the Company nor any Subsidiary shall have entered into any transaction since March 31, 2008 that would have been prohibited by Sections 10.1 through 10.7 had such Sections applied since such date.

Section 4.3. Compliance Certificates .

(a) Officer’s Certificate . The Company shall have delivered to such Purchaser an Officer’s Certificate, dated the date of the Closing, certifying that the conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.

(b) Secretary’s Certificate . The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated as of the date of the Closing, certifying as

-3-

to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Series 2008-A Notes and this Agreement.

Section 4.4. Opinions of Counsel . Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) from Sidley Austin LLP, special counsel for the Company, covering the matters set forth in Exhibit 4. 4(a) and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its special counsel to deliver such opinion to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4. 4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

Section 4.5. Purchase Permitted by Applicable Law, Etc . On the date of the Closing such Purchaser’s purchase of Series 2008-A Notes shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is subject, without recourse to provisions (including, without limitation, Section 1405(a)(8) of the New York Insurance Law) permitting limited investments by insurance companies without restriction as to the character of the particular investment, (b) not violate any applicable law or regulation (including, without limitation, Regulation T, U or X of the Board of Governors of the Federal Reserve System) and (c) not subject such Purchaser to any tax, penalty or liability under or pursuant to any applicable law or regulation, which law or regulation was not in effect on the date hereof. If requested by such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

Section 4.6. Sale of Other Notes . Contemporaneously with the Closing, the Company shall sell to each other Purchaser, and each other Purchaser shall purchase, the Series 2008-A Notes to be purchased by it at the Closing as specified in Schedule A hereto.

Section 4.7. Payment of Special Counsel Fees . Without limiting the provisions of Section 15.1 , the Company shall have paid on or before the Closing the fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the Closing.

Section 4.8. Private Placement Number . A Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the Securities Valuation Office of the National Association of Insurance Commissioners) shall have been obtained for each tranche of the Series 2008-A Notes by Chapman and Cutler LLP.

Section 4.9. Changes in Corporate Structure . Except as specified in Schedule 4.9 , the Company shall not have changed its jurisdiction of incorporation or been a party to any merger or consolidation and shall not have succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5 .

-4-

Section 4.10. Proceedings and Documents . All corporate and other proceedings in connection with the transactions contemplated by this Agreement and all documents and instruments incident to such transactions shall be satisfactory to such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

Section 5 . Representations and Warranties of the Company.

The Company represents and warrants to each Purchaser that:

Section 5.1. Organization; Power and Authority . The Company is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, and is duly qualified as a foreign corporation and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. The Company has the corporate power and authority to own or hold under lease the properties it purports to own or hold under lease, to transact the business it transacts and proposes to transact, to execute and deliver this Agreement and the Series 2008-A Notes and to perform the provisions hereof and thereof.

Section 5.2. Authorization, Etc . This Agreement and the Series 2008-A Notes have been duly authorized by all necessary corporate action on the part of the Company, and this Agreement constitutes, and upon execution and delivery thereof each Series 2008-A Note will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (a) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (b) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

Section 5.3. Disclosure . The Company, through its agent, Banc of America Securities Inc., has delivered to each Purchaser a copy of a Confidential Offering Memorandum dated June 2008 (the “Memorandum" ), relating to the transactions contemplated hereby. The Memorandum fairly describes, in all material respects, the general nature of the business of the Company and its Subsidiaries. Except as disclosed in Schedule 5.3 of this Agreement, this Agreement, the Memorandum, including the exhibits to the Memorandum, and the documents delivered to each Purchaser by the Company at the Closing and the financial statements listed in Schedule 5.5 , taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein not misleading in light of the circumstances under which they were made. Except as disclosed in the Memorandum or as expressly described in Schedule 5.3 , or in one of the documents identified therein, or in the financial statements listed in Schedule 5.5 , since December 31, 2007, there has been no change in the financial condition, operations, business or properties of the Company or any Subsidiary except changes that individually or in the aggregate would not reasonably be expected to have a Material Adverse Effect. There is no fact known to the Company that would reasonably be

-5-

expected to have a Material Adverse Effect that has not been set forth herein or in the Memorandum or in the other documents delivered to the Purchasers by the Company specifically for use in connection with the transactions contemplated hereby.

Section 5.4. Organization and Ownership of Shares of Subsidiaries; Affiliates . (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (i) of the Company’s Subsidiaries, showing, as to each Subsidiary, the correct name thereof, the jurisdiction of its organization, and the percentage of shares of each class of its capital stock or similar equity interests outstanding owned by the Company and each other Subsidiary, (ii) of the Company’s Affiliates, other than Subsidiaries, and (iii) of the Company’s directors and executive officers.

(b) All of the outstanding shares of capital stock or similar equity interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company and its Subsidiaries have been validly issued, are fully paid and nonassessable and are owned by the Company or another Subsidiary free and clear of any Lien (except as otherwise permitted by Section 10.2 ).

(c) Each Subsidiary identified in Schedule 5.4 is a corporation or other legal entity duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, and is duly qualified as a foreign corporation or other legal entity and is in good standing in each jurisdiction in which such qualification is required by law, other than those jurisdictions as to which the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Each such Subsidiary has the corporate or other power and authority to own or hold under lease the properties it purports to own or hold under lease and to transact the business it transacts and proposes to transact.

(d) No Subsidiary is a party to, or otherwise subject to, any legal restriction or any agreement (other than this Agreement, the agreements listed on Schedule 5.3 and customary limitations imposed by corporate law statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

Section 5.5. Financial Statements . The Company has delivered to each Purchaser or made available on “EDGAR” copies of the financial statements of the Company and its Subsidiaries listed on Schedule 5.5 . All of said financial statements (including in each case the related schedules and notes) fairly present in all material respects the consolidated financial condition of the Company and its Subsidiaries as of the respective dates specified in such financial statements and the consolidated results of their operations and cash flows for the respective periods so specified and have been prepared in accordance with GAAP consistently applied throughout the periods involved except as set forth in the notes thereto (subject, in the case of any interim financial statements, to normal year-end adjustments).

Section 5.6. Compliance with Laws, Other Instruments, Etc . The execution, delivery and performance by the Company of this Agreement and the Series 2008-A Notes will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of

-6-

any Lien in respect of any property of the Company or any Subsidiary under, any Material indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, corporate charter or by-laws, or any other Material agreement or instrument to which the Company or any Subsidiary is bound or by which any of their respective properties may be bound or affected, (b) violate or result in a breach of any of the terms, conditions or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental Authority applicable to the Company or any Subsidiary or (c) violate any provision of any statute or other rule or regulation of any Governmental Authority applicable to the Company or any Subsidiary, other than violations that would not reasonably be expected to have a Material Adverse Effect.

Section 5.7. Governmental Authorizations, Etc . No consent, approval or authorization of, or registration, filing or declaration with, any Governmental Authority is required in connection with the execution, delivery or performance by the Company of this Agreement or the Series 2008-A Notes.

Section 5.8. Litigation; Observance of Agreements, Statutes and Orders. (a) Except as disclosed in Schedule 5.8 , there are no actions, suits or proceedings pending or, to the knowledge of the Company, threatened against or affecting the Company or any Subsidiary or any property of the Company or any Subsidiary in any court or before any arbitrator of any kind or before or by any Governmental Authority that, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

(b) Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or any order, judgment, decree or ruling of any court, arbitrator or Governmental Authority or is in violation of any applicable law, ordinance, rule or regulation (including, without limitation, Environmental Laws or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, would reasonably be expected to have a Material Adverse Effect.

Section 5.9. Taxes . The Company and its Subsidiaries have filed all Material required income tax returns, including all federal income tax returns, and all other Material tax returns that are required to have been filed in any jurisdiction, and have paid all taxes shown to be due and payable on such returns and all other taxes and assessments levied upon them or their properties, assets, income or franchises, to the extent such taxes and assessments have become due and payable and before they have become delinquent, except for any taxes and assessments (a) the amount of which is not individually or in the aggregate Material or (b) the amount, applicability or validity of which is currently being contested in good faith by appropriate proceedings and with respect to which the Company or a Subsidiary, as the case may be, has established adequate reserves in accordance with GAAP. The Company knows of no basis for any other tax or assessment that would reasonably be expected to have a Material Adverse Effect. The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of federal, state or other taxes for all fiscal periods are adequate under GAAP. The federal income tax liabilities of the Company and its Subsidiaries have been determined by the Internal Revenue Service for all fiscal years up to and including the fiscal year ended December 31, 2002.

-7-

Section 5.10. Title to Property; Leases . The Company and its Subsidiaries have good and sufficient title to the properties that they own or purport to own and that individually or in the aggregate are Material, including all such properties reflected in the most recent audited balance sheet referred to in Section 5.5 or purported to have been acquired by the Company or any Subsidiary after said date (except as sold or otherwise disposed of in the ordinary course of business), in each case free and clear of Liens prohibited by this Agreement. All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

Section 5.11. Licenses, Permits, Etc. Except as disclosed in Schedule 5.11 ,

(a) the Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known material conflict with the rights of others;

(b) to the knowledge of the Company, no product of the Company or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person; and

(c) to the knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.

Section 5.12. Compliance with ERISA . (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and would not reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans (as defined in Section 3 of ERISA), and no event, transaction or condition has occurred or exists that would reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions or to Code sections 401(a)(29) or 412 (replaced by Code sections 436 and 430, respectively, effective January 1, 2008), other than such liabilities or Liens as would not be individually or in the aggregate Material.

(b) The present value of the aggregate benefit liabilities under each of the Plans (other than Multiemployer Plans), determined as of the end of such Plan’s most recently ended plan year on the basis of the actuarial assumptions used to determine the actuarial accrued liability on an ongoing funding basis in such Plan’s most recent actuarial valuation report, did not exceed the aggregate current value of the assets of such Plan allocable to such benefit liabilities. The term

-8-

“benefit liabilities” has the meaning specified in Section 4001 of ERISA and the terms “current value” and “present value” have the meaning specified in Section 3 of ERISA.

(c) The Company and its ERISA Affiliates have not incurred withdrawal liabilities (and are not subject to contingent withdrawal liabilities) under Section 4201 or 4204 of ERISA in respect of Multiemployer Plans that have not been paid, or if contingent, that individually or in the aggregate are Material.

(d) The expected post retirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year in accordance with Financial Accounting Standards Board Statement No. 106, as amended by Financial Accounting Standards Board Statement No. 132, as revised, without regard to liabilities attributable to continuation coverage mandated by Section 4980B of the Code) of the Company and its Subsidiaries is not Material.

(e) The execution and delivery of this Agreement and the issuance and sale of the Series 2008-A Notes hereunder will not involve any transaction that is subject to the prohibitions of Section 406 of ERISA or in connection with which a tax could be imposed pursuant to Section 4975(c)(1)(A)-(D) of the Code. The representation by the Company in the first sentence of this Section 5. 12(e) is made in reliance upon and subject to the accuracy of each Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Series 2008-A Notes to be purchased by such Purchaser.

Section 5.13. Private Offering by the Company . Neither the Company nor anyone acting on its behalf has offered the Series 2008-A Notes or any similar securities for sale to, or solicited any offer to buy any of the same from, or otherwise approached or negotiated in respect thereof with, any Person other than the Purchasers and not more than 40 other Institutional Investors, each of which has been offered the Series 2008-A Notes at a private sale for investment. Neither the Company nor anyone acting on its behalf has taken, or will take, any action that would subject the issuance or sale of the Series 2008-A Notes to the registration requirements of Section 5 of the Securities Act.

Section 5.14. Use of Proceeds; Margin Regulations . The Company will apply the proceeds of the sale of the Series 2008-A Notes to refinance Indebtedness of the Company and its Subsidiaries and for general corporate purposes as set forth in Schedule 5.14 . No part of the proceeds from the sale of the Series 2008-A Notes hereunder will be used, directly or indirectly, for the purpose of buying or carrying any margin stock within the meaning of Regulation U of the Board of Governors of the Federal Reserve System (12 CFR 221), or for the purpose of buying or carrying or trading in any securities under such circumstances as to involve the Company in a violation of Regulation X of said Board (12 CFR 224) or to involve any broker or dealer in a violation of Regulation T of said Board (12 CFR 220). Margin stock does not constitute more than 1.0% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 1.0% of the value of such assets. As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U. For purposes of the foregoing, margin stock shall not include common stock of the Company held in its treasury.

-9-

Section 5.15. Existing Indebtedness; Future Liens . (a) Except as described therein, Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of June 30, 2008, since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company or its Subsidiaries. Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary that is outstanding in an aggregate principal amount in excess of $2,000,000 and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary that is outstanding in an aggregate principal amount in excess of $2,000,000 and that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

(b) Except as disclosed in Schedule 5.15 , neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien not permitted by Section 10.2 .

Section 5.16. Foreign Assets Control Regulations, Etc . (a) Neither the sale of the Series 2008-A Notes by the Company hereunder nor its use of the proceeds thereof will violate the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto.

(b) Neither the Company nor any Subsidiary is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order. The Company and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

(c) To the knowledge of the Company, no part of the proceeds from the sale of the Series 2008-A Notes hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Company.

Section 5.17. Status under Certain Statutes . Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the ICC Termination Act of 1995, as amended, or the Federal Power Act, as amended.

Section 5.18. Environmental Matters . Neither the Company nor any Subsidiary has knowledge of any Material claim or has received any notice of any Material claim, and no proceeding has been instituted asserting any Material claim against the Company or any of its Subsidiaries or any of their respective real properties now owned, leased or operated by any of them or other assets nor, to the knowledge of the Company or any Subsidiary, has any such proceeding been instituted against any of their respective real properties formerly owned, leased

-10-

or operated thereby, respectively, for damage to the environment or violation of any Environmental Laws, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect. Except as otherwise disclosed to each Purchaser in writing;

(a) neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim for violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or, to the Company’s or such Subsidiary’s knowledge, formerly owned, leased or operated by any of them or other assets or their use, except, in each case, such as would not reasonably be expected to result in a Material Adverse Effect;

(b) neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them or has disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that would reasonably be expected to result in a Material Adverse Effect; and

(c) all buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply would not reasonably be expected to result in a Material Adverse Effect.

Section 6. Representations of the Purchasers.

Section 6.1. Purchase for Investment . Each Purchaser severally represents that it is purchasing the Series 2008-A Notes to be purchased by it for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof; provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control. Each Purchaser understands that the Series 2008-A Notes to be purchased by it have not been registered under the Securities Act and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available, except under circumstances where neither such registration nor such an exemption is required by law, and that the Company is not required to register the Series 2008-A Notes.

Section 6.2. Source of Funds . Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source” ) to be used by such Purchaser to pay the purchase price of the Notes to be purchased by such Purchaser hereunder:

(a) the Source is an “insurance company general account” as such term is defined in the Department of Labor Prohibited Transaction Class Exemption 95-60 (issued July 12, 1995) ( “PTE 95-60” ) and there is no “employee benefit plan” with respect to which the aggregate amount of such general account’s reserves and liabilities for the contracts held by or on behalf of such employee benefit plan and all other employee benefit plans maintained by the same employer (and affiliates thereof as defined in Section V(a)(1) of PTE 95-60) or by the same employee organization (in each case determined in accordance with the provisions of PTE 95-60) exceeds 10% of the

-11-

total reserves and liabilities of such general account (as determined under PTE 95-60) (exclusive of separate account liabilities) plus surplus as set forth in the National Association of Insurance Commissioners Annual Statement filed with the state of domicile of such Purchaser; or

(b) if such Purchaser is an insurance company, the Source does not include assets allocated to any separate account maintained by such Purchaser in which any employee benefit plan (or its related trust) has any interest, other than a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to such plan and to any participant or beneficiary of such plan (including any annuitant) are not affected in any manner by the investment performance of the separate account; or

(c) the Source is either (i) an insurance company pooled separate account, within the meaning of Prohibited Transaction Exemption ( “PTE” ) 90-1 (issued January 29, 1990), or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 (issued July 12, 1991) and, except as such Purchaser has disclosed to the Company in writing pursuant to this Section 6.2(c) , no employee benefit plan or group of plans maintained by the same employer or employee organization beneficially owns more than 10% of all assets allocated to such pooled separate account or collective investment fund; or

(d) the Source constitutes assets of an “investment fund” (within the meaning of Part V of the QPAM Exemption) managed by a “qualified professional asset manager” or “QPAM” (within the meaning of Part V of the QPAM Exemption), no employee benefit plan’s assets that are included in such investment fund, when combined with the assets of all other employee benefit plans established or maintained by the same employer or by an affiliate (within the meaning of Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee organization and managed by such QPAM, exceed (i) 20% of the total client assets managed by such QPAM, or (ii) 10% of the assets of the investment fund, the conditions of Parts I(c), (d), (f) and (g) of the QPAM Exemption are satisfied, as of the last day of its most recent calendar quarter, the QPAM does not own a 10% or more interest in the Company and no Person controlling or controlled by the QPAM (applying the definition of “control” in Section V(e) of the QPAM Exemption) owns a 20% or more interest in the Company (or less than 20% but greater than 10%, if such person exercises control over the management or policies of the Company by reason of its ownership interest) and (x) the identity of such QPAM and (y) the names of all employee benefit plans whose assets are included in such investment fund have been disclosed to the Company in writing pursuant to this Section 6.2(d) ; or

(e) the Source is a governmental plan; or

(f) the Source is one or more employee benefit plans, or a separate account or trust fund comprised of one or more employee benefit plans, each of which has been identified to the Company in writing pursuant to this Section 6.2(f) ; or

-12-

(g) the Source does not include assets of any employee benefit plan, other than a plan exempt from the coverage of ERISA.

As used in this Section 6.2 , the terms “employee benefit plan”, “governmental plan”, “party in interest” and “separate account” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

Section 6.3. Status as a Qualified Institutional Buyer . Each Purchaser severally represents that it is a “qualified institutional buyer” within the meaning of Rule 144A of the Securities Act.

Section 7. Information as to the Company.

Section 7.1. Financial and Business Information . The Company shall deliver to each holder of Notes that is an Institutional Investor:

(a) Quarterly Statements — within 60 days after the end of each quarterly fiscal period in each fiscal year of the Company (other than the last quarterly fiscal period of each such fiscal year), duplicate copies of:

(i) an unaudited consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

(ii) unaudited consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries for such quarter and (in the case of the second and third quarters) for the portion of the fiscal year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP applicable to quarterly financial statements generally, and certified by a Senior Financial Officer as fairly presenting, in all material respects, the consolidated financial condition of the Company and its Subsidiaries as of the specified dates being reported on and their consolidated results of operations and cash flows for the respective periods specified, subject to changes resulting from year-end adjustments; provided that delivery within the time period specified above of copies of the Company’s Quarterly Report on
Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a) ; provided, further, that the Company shall be deemed to have made such delivery of such Form 10-Q if (x) it shall have timely made such Form 10-Q available on “EDGAR” and via the “Investor Relations” link on the Company’s home page on the worldwide web (at the date of this Agreement located at: http//www.aptargroup.com) and (y) by email to each Purchaser, the Company shall have given each Purchaser prior notice of such availability on EDGAR and via the Company’s home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery” );

-13-

(b) Annual Statements — within 120 days after the end of each fiscal year of the Company, duplicate copies of,

(i) an audited consolidated balance sheet of the Company and its Subsidiaries, as at the end of such year, and

(ii) audited consolidated statements of income, changes in shareholders’ equity and cash flows of the Company and its Subsidiaries, for such year,

setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail, prepared in accordance with GAAP, and accompanied by an opinion thereon of independent public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the consolidated financial condition of the Company and its Subsidiaries as of the specified dates being reported upon and their consolidated results of operations and cash flows for the respective periods specified, and have been prepared in conformity with GAAP, and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and that such audit provides a reasonable basis for such opinion in the circumstances; provided that the delivery within the time period specified above of the Company’s Annual Report on Form 10-K for such fiscal year (or the Company’s annual report to stockholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, together with such accountant’s opinion, shall be deemed to satisfy the requirements of this Section 7.1(b) ; provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof;

(c) SEC and Other Reports — promptly upon their becoming available, one copy of each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto containing information of a financial nature filed by the Company or any Subsidiary with the SEC and of all press releases and other statements concerning a Material development made available generally by the Company or any Subsidiary to the public;

(d) Notice of Default or Event of Default — promptly, and in any event within five Business Days after a Responsible Officer obtains actual knowledge of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed default of the type referred to in Section 11(f) , a written notice specifying the nature and period of existence thereof and what action the Company is taking or proposes to take with respect thereto;

(e) ERISA Matters — promptly, and in any event within five days after a Responsible Officer becoming aware of any of the following, a written notice setting

-14-

forth the nature thereof and the action, if any, that the Company or an ERISA Affiliate proposes to take with respect thereto:

(i) with respect to any Plan, any reportable event, as defined in Section 4043(c) of ERISA and the regulations thereunder, for which notice thereof has not been waived pursuant to such regulations as in effect on the date hereof; or

(ii) the taking by the PBGC of steps to institute, or the threatening by the PBGC of the institution of, proceedings under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Plan, or the receipt by the Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such action has been taken by the PBGC with respect to such Multiemployer Plan; or

(iii) any event, transaction or condition that would result in the incurrence of any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of ERISA or such penalty or excise tax provisions, if such liability or Lien, taken together with any other such liabilities or Liens then existing, would reasonably be expected to have a Material Adverse Effect;

(f) Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that would reasonably be expected to have a Material Adverse Effect;

(g) Requested Information — with reasonable promptness, such other data and information relating to the business, operations, affairs, financial condition, assets or properties of the Company or any of its Subsidiaries or relating to the ability of the Company to perform its obligations hereunder and under the Notes as from time to time may be reasonably requested by any such holder of Notes; and

(h) Supplemental Note Purchase Agreements — in the event an additional series of Notes is, or is proposed to be, issued under this Agreement, promptly, and in any event within 10 Business Days after execution and delivery thereof, a true copy of the Supplemental Note Purchase Agreement pursuant to which such Notes are to be, or were, issued.

Section 7.2. Officer’s Certificate . Each set of financial statements delivered to a holder of Notes pursuant to Section 7. 1(a) or Section 7. 1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of such financial statements, shall be by separate delivery of such certificate to each holder of Notes):

-15-

(a) Covenant Compliance — the information (including detailed calculations) required in order to establish whether the Company was in compliance with the requirements of Section 10.1 through Section 10.4 , inclusive, during the quarterly or annual period covered by the statements then being furnished (including with respect to each such Section, where applicable, the calculations of the maximum or minimum amount, ratio or percentage, as the case may be, permissible under the terms of such Sections, and the calculation of the amount, ratio or percentage then in existence); and

(b) Event of Default — a statement that such Senior Financial Officer has reviewed the relevant terms hereof and has made, or caused to be made, under his or her supervision, a review of the transactions and conditions of the Company and its Subsidiaries from the beginning of the quarterly or annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have disclosed the existence during such period of any condition or event that constitutes a Default or an Event of Default or, if any such condition or event existed or exists (including, without limitation, any such event or condition resulting from the failure of the Company or any Subsidiary to comply with any Environmental Law), specifying the nature and period of existence thereof and what action the Company shall have taken or proposes to take with respect thereto.

Section 7.3. Visitation . The Company shall permit the representatives of each holder of Notes that is an Institutional Investor:

(a) No Default — if no Default or Event of Default then exists, at the expense of such holder and upon reasonable prior notice to the Company, to visit the principal executive office of the Company, to discuss the affairs, finances and accounts of the Company and its Subsidiaries with the Company’s officers and (with the consent of the Company, which consent will not be unreasonably withheld) to visit the other offices and properties of the Company and each Subsidiary, all at such reasonable times during business hours and as often as may be reasonably requested in writing; and

(b) Default — if a Default or Event of Default then exists, at the expense of the Company and upon reasonable prior notice to the Company, to visit the principal executive office of the Company or any Subsidiary, to examine all their respective books of account, records, reports and other papers, to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and (with the consent of the Company, which consent will not be unreasonably withheld) independent public accountants at the Company’s offices (and by this provision the Company authorizes such accountants to discuss with each holder of the Notes or representative thereof the affairs, finances and accounts of the Company and its Subsidiaries), all at such reasonable times during business hours and as often as may be reasonably requested in writing.

-16-

Section 8. Prepayment of the Notes.

Section 8.1. Required Prepayments . No prepayment, purchase or redemption of any tranche of the Series 2008-A Notes shall be made except to the extent and in the manner expressly provided in this Section 8 .

Section 8.2. Optional Prepayments with Make-Whole Amount . The Company may, at its option, upon notice as provided below, prepay at any time all, or from time to time any part of, the Notes of any series, including the Series 2008-A Notes (but if in the case of a partial prepayment, then against each tranche within a series of Notes in proportion to the aggregate principal amount outstanding of each tranche of such series), at 100% of the principal amount so prepaid, together with interest accrued thereon to the date of such prepayment, and the Make-Whole Amount determined for the prepayment date with respect to such principal amount. The Company will give each holder of Notes of the series to be prepaid written notice of each optional prepayment under this Section 8.2 not less than 30 days and not more than 60 days prior to the date fixed for such prepayment. Each such notice shall specify such date (which shall be a Business Day), the aggregate principal amount of the Notes to be prepaid on such date, the principal amount of each Note held by such holder to be prepaid (determined in accordance with Section 8.3 ), and the interest to be paid on the prepayment date with respect to such principal amount being prepaid, and shall be accompanied by a certificate of a Senior Financial Officer as to the estimated Make-Whole Amount due in connection with such prepayment (calculated as if the date of such notice were the date of the prepayment), setting forth the details of such computation. Two Business Days prior to such prepayment, the Company shall deliver to each holder of Notes of the series to be prepaid a certificate of a Senior Financial Officer specifying the calculation of such Make-Whole Amount as of the specified prepayment date.

Section 8.3. Allocation of Partial Prepayments . In the case of each partial prepayment of the Notes of a series pursuant to Section 8.2 , the principal amount of the Notes to be prepaid shall be allocated among all of the Notes of such series at the time outstanding in proportion, as nearly as practicable, to the respective unpaid principal amounts thereof not theretofore called for prepayment. Each such partial prepayment pursuant to Section 8.2 shall be applied first to the payment due on such Notes at final maturity and thereafter to any required prepayments on such Notes, in inverse order of maturity.

Section 8.4. Maturity; Surrender, Etc . In the case of each prepayment of Notes pursuant to this Section 8 , the principal amount of each Note to be prepaid shall mature and become due and payable on the date fixed for such prepayment (which shall be a Business Day), together with interest on such principal amount accrued to such date and the applicable Make-Whole Amount (which may in no event be less than zero), if any. From and after such date, unless the Company shall fail to pay such principal amount when so due and payable, together with the interest and Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall cease to accrue. Any Note paid or prepaid in full shall be surrendered to the Company and cancelled and shall not be reissued, and no Note shall be issued in lieu of any prepaid principal amount of any Note.

-17-

Section 8.5. Purchase of Notes . The Company will not and will not permit any Subsidiary to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Notes except upon the payment or prepayment of the Notes in accordance with the terms of this Agreement and the Notes. The Company will promptly cancel all Notes acquired by it or any Subsidiary pursuant to any payment, prepayment or purchase of Notes pursuant to any provision of this Agreement and no Notes may be issued in substitution or exchange for any such Notes.

Section 8.6. Make-Whole Amount . The term “Make-Whole Amount” means, with respect to any Note, an amount equal to the excess, if any, of the Discounted Value of the Remaining Scheduled Payments with respect to the Called Principal of such Note over the amount of such Called Principal; provided that the Make-Whole Amount may in no event be less than zero. For the purposes of determining the Make-Whole Amount, the following terms have the following meanings:

“Called Principal” means, with respect to any Note, the principal of such Note that is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1 , as the context requires.

“Discounted Value” means, with respect to the Called Principal of any Note, the amount obtained by discounting all Remaining Scheduled Payments with respect to such Called Principal from their respective scheduled due dates to the Settlement Date with respect to such Called Principal, in accordance with accepted financial practice and at a discount factor (applied on the same periodic basis as that on which interest on the Notes is payable) equal to the Reinvestment Yield with respect to such Called Principal.

“Reinvestment Yield” means, with respect to the Called Principal of any Note, .50% (50 basis points) over the yield to maturity implied by (i) the yields reported as of 10:00 a.m. (New York City time) on the second Business Day preceding the Settlement Date with respect to such Called Principal, on the display designated as the “Page PX1 Screen” on the Bloomberg Financial Market Service (or such other display as may replace the Page PX1 Screen on the Bloomberg Financial Market Service) for actively traded U.S. Treasury securities having a maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date, or (ii) if such yields are not reported as of such time or the yields reported as of such time are not ascertainable, the Treasury Constant Maturity Series Yields reported, for the latest day for which such yields have been so reported as of the second Business Day preceding the Settlement Date with respect to such Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any comparable successor publication) for actively traded U.S. Treasury securities having a constant maturity equal to the Remaining Average Life of such Called Principal as of such Settlement Date. In the case of each determination under clause (i) or clause (ii), as the case may be, of this paragraph, such implied yield will be determined, if necessary, by (a) converting U.S. Treasury bill quotations to bond-equivalent yields in accordance with accepted financial practice and (b) interpolating linearly between (1) the actively traded U.S. Treasury security with the maturity closest to and greater than the Remaining Average Life and (2) the actively traded U.S. Treasury security with the maturity closest

-18-

to and less than the Remaining Average Life. The Reinvestment Yield shall be rounded to the number of decimal places as appears in the interest rate of the applicable Note.

“Remaining Average Life” means, with respect to any Called Principal, the number of years (calculated to the nearest one-twelfth year) obtained by dividing (a) such Called Principal into (b) the sum of the products obtained by multiplying (i) the principal component of each Remaining Scheduled Payment with respect to such Called Principal by (ii) the number of years (calculated to the nearest one-twelfth year) that will elapse between the Settlement Date with respect to such Called Principal and the scheduled due date of such Remaining Scheduled Payment.

“Remaining Scheduled Payments” means, with respect to the Called Principal of any Note, all payments of such Called Principal and interest thereon that would be due after the Settlement Date with respect to such Called Principal if no payment of such Called Principal were made prior to its scheduled due date; provided that if such Settlement Date is not a date on which interest payments are due to be made under the terms of the Notes in question, then the amount of the next succeeding scheduled interest payment will be reduced by the amount of interest accrued to such Settlement Date and required to be paid on such Settlement Date pursuant to Section 8.2 or 12.1 .

“Settlement Date” means, with respect to the Called Principal of any Note, the date on which such Called Principal is to be prepaid pursuant to Section 8.2 or has become or is declared to be immediately due and payable pursuant to Section 12.1 , as the context requires.

Section 8.7. Change in Control . (a) Notice of Change in Control or Control Event. The Company will, within 15 Business Days after any Responsible Officer has knowledge of the occurrence of any Change in Control or Control Event, give written notice of such Change in Control or Control Event to each holder of Notes unless notice in respect of such Change in Control (or the Change in Control contemplated by such Control Event) shall have been given pursuant to subparagraph (b) of this Section 8.7 . If a Change in Control has occurred, such notice shall contain and constitute an offer to prepay Notes of each Series as described in subparagraph (c) of this Section 8.7 and shall be accompanied by the certificate described in subparagraph (g) of this Section 8.7 .

(b) Condition to Company Action. The Company will not take any action, directly or indirectly, that consummates or finalizes a Change in Control unless (i) at least 15 Business Days prior to such action it shall have given to each holder of Notes written notice containing and constituting an offer to prepay Notes as described in subparagraph (c) of this Section 8.7 , accompanied by the certificate described in subparagraph (g) of this Section 8.7 , and (ii) contemporaneously with such action, it prepays all Notes required to be prepaid in accordance with this Section 8.7 .

(c) Offer to Prepay Notes. The offer to prepay Notes contemplated by subparagraphs (a) and (b) of this Section 8.7 shall be an offer to prepay, in accordance with and subject to this Section 8.7 , all, but not less than all, of the Notes held by each holder (in this case only,

-19-

“holder” in respect of any Note registered in the name of a nominee for a disclosed beneficial owner shall mean such beneficial owner) on a date specified in such offer (the “Proposed Prepayment Date” ). If such Proposed Prepayment Date is in connection with an offer contemplated by subparagraph (a) of this Section 8.7 , such date shall be not less than 20 days and not more than 30 days after the date of such offer (if the Proposed Prepayment Date shall not be specified in such offer, the Proposed Prepayment Date shall be the 20th day after the date of such offer).

(d) Acceptance; Rejection. A holder of Notes may accept or reject the offer to prepay made pursuant to this Section 8.7 by causing a notice of such acceptance or rejection to be delivered to the Company at least 5 Business Days prior to the Proposed Prepayment Date. A failure by a holder of Notes to respond to an offer to prepay made pursuant to this Section 8.7 shall be deemed to constitute a rejection of such offer by such holder.

(e) Prepayment. Prepayment of the Notes to be prepaid pursuant to this Section 8.7 shall be at 100% of the principal amount of such Notes, together with interest on such Notes accrued to the date of prepayment, but without the Make-Whole Amount or other premium. The prepayment shall be made on the Proposed Prepayment Date except as provided in subparagraph (f) of this Section 8.7 .

(f) Deferral Pending Change in Control. The obligation of the Company to prepay Notes pursuant to the offers required by subparagraph (b) and accepted in accordance with subparagraph (d) of this Section 8.7 is subject to the occurrence of the Change in Control in respect of which such offers and acceptances shall have been made. In the event that such Change in Control does not occur on the Proposed Prepayment Date in respect thereof, the prepayment shall be deferred until and shall be made on the date on which such Change in Control occurs. The Company shall keep each holder of Notes reasonably and timely informed of (i) any such deferral of the date of prepayment, (ii) the date on which such Change in Control and the prepayment are expected to occur, and (iii) any determination by the Company that efforts to effect such Change in Control have ceased or been abandoned (in which case the offers and acceptances made pursuant to this Section 8.7 in respect of such Change in Control shall be deemed rescinded).

(g) Officer’s Certificate. Each offer to prepay the Notes pursuant to this Section 8.7 shall be accompanied by a certificate, executed by a Senior Financial Officer of the Company and dated the date of such offer, specifying: (i) the Proposed Prepayment Date; (ii) that such offer is made pursuant to this Section 8.7 ; (iii) the principal amount of each Note offered to be prepaid; (iv) the interest that would be due on each Note offered to be prepaid, accrued to the Proposed Prepayment Date; (v) that the conditions of this Section 8.7 have been fulfilled; and (vi) in reasonable detail, the nature and date or proposed date of the Change in Control.

(h) Effect on Required Payments. The amount of each payment of the principal of the Notes made pursuant to this Section 8.7 shall be applied against and reduce each of the then remaining principal payments, if any, due pursuant to any Supplemental Note Purchase Agreement (if any such Supplemental Note Purchase Agreement provides for amortization or required prepayments of principal in respect to the Notes issued pursuant thereto) by a

-20-

percentage equal to the aggregate principal amount of the Notes so paid divided by the aggregate principal amount of the Notes outstanding immediately prior to such payment.

(i) “Control Event” Defined. “Control Event” means:

(i) the execution by the Company or any of its Subsidiaries or Affiliates of any agreement with respect to any proposed transaction or event or series of transactions or events which, individually or in the aggregate, would result in a Change in Control,

(ii) the execution of any written agreement which, when fully performed by the parties thereto, would result in a Change in Control, or

(iii) the acceptance by the requisite number of holders of any written offer by any person (as such term is used in section 13(d) and section 14(d)(2) of the Exchange Act as in effect on the date of the Closing) or related persons constituting a group (as such term is used in Rule 13d-5 under the Exchange Act as in effect on the date of the Closing) to the holders of the common stock of the Company, which would result in a Change in Control.

Section 9. Affirmative Covenants.

The Company covenants that so long as any of the Notes are outstanding:

Section 9.1. Compliance with Law . The Company will, and will cause each of its Subsidiaries to, comply with all laws, ordinances or governmental rules or regulations to which each of them is subject, including, without limitation, ERISA, the USA Patriot Act and Environmental Laws, and will obtain and maintain in effect all licenses, certificates, permits, franchises and other governmental authorizations necessary to the ownership of their respective properties or to the conduct of their respective businesses, in each case to the extent necessary to ensure that non-compliance with such laws, ordinances or governmental rules or regulations or failures to obtain or maintain in effect such licenses, certificates, permits, franchises and other governmental authorizations would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.2. Insurance . The Company will, and will cause each of its Subsidiaries to, maintain, with financially sound and reputable insurers, insurance with respect to their respective properties and businesses against such casualties and contingencies, of such types, on such terms and in such amounts (including deductibles, co-insurance and self-insurance, if adequate reserves are maintained with respect thereto) as is customary in the case of entities of established reputations engaged in the same or a similar business and similarly situated.

Section 9.3. Maintenance of Properties . The Company will, and will cause each of its Subsidiaries to, maintain and keep, or cause to be maintained and kept, their respective properties in good repair, working order and condition (other than ordinary wear and tear), so that the business carried on in connection therewith may be properly conducted at all times; provided that this Section 9.3 shall not prevent the Company or any Subsidiary from

-21-

discontinuing the operation and the maintenance of any of its properties if such discontinuance is desirable in the conduct of its business and the Company has concluded that such discontinuance would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

Section 9.4. Payment of Taxes and Claims . The Company will, and will cause each of its Subsidiaries to, file all tax returns required to be filed in any jurisdiction and to pay and discharge all taxes shown to be due and payable on such returns and all other taxes, assessments, governmental charges, or levies imposed on them or any of their properties, assets, income or franchises, to the extent the same have become due and payable and before they have become delinquent and all claims for which sums have become due and payable that have or might become a Lien on properties or assets of the Company or any Subsidiary; provided that neither the Company nor any Subsidiary need file any such return or pay any such tax, assessment, charge, levy or claim if (a) the amount, applicability or validity thereof is contested by the Company or such Subsidiary on a timely basis in good faith and in appropriate proceedings, and the Company or a Subsidiary has established adequate reserves therefor in accordance with GAAP on the books of the Company or such Subsidiary or (b) the nonfiling of all such returns and the nonpayment of all such taxes, assessments, charges, levies and claims in the aggregate would not reasonably be expected to have a Material Adverse Effect.

Section 9.5. Legal Existence, Etc . Subject to Section 10.4 , the Company will at all times preserve and keep in full force and effect its legal existence. Subject to Sections 10.3 and 10.4 , the Company will at all times preserve and keep in full force and effect the legal existence of each of its Subsidiaries (unless merged into the Company or a Subsidiary) and all rights and franchises of the Company and its Subsidiaries unless, in the good faith judgment of the Company, the termination of or failure to preserve and keep in full force and effect such legal existence, right or franchise would not, individually or in the aggregate, be reasonably expected to have a Material Adverse Effect.

Section 10. Negative Covenants.

The Company covenants that so long as any of the Notes are outstanding:

Section 10.1. Indebtedness . The Company will not, and will not permit any Subsidiary to, create, assume or incur or in any manner become liable for any Indebtedness, except:

(a) the Notes;

(b) Indebtedness of the Company and its Subsidiaries outstanding as of June 30, 2008 and reflected on Schedule 5.15 ;

(d) additional unsecured Indebtedness of the Company and its Subsidiaries and additional Indebtedness of the Company and its Subsidiaries secured by Liens

-22-

permitted by Section 10.2(g) , (h) or (i) , provided that at the time of incurrence thereof and after giving effect thereto and to the application of the proceeds thereof:

(i) no Default or Event of Default exists and Consolidated Indebtedness does not exceed 60% of Consolidated Total Capitalization; and

(ii) in the case of Indebtedness of a Subsidiary, the aggregate principal amount of all Indebtedness of the Subsidiaries (other than Indebtedness permitted by Section 10.1(c) ) does not exceed 45% of Consolidated Net Worth; and

(iii) in the case of Indebtedness of the Company or a Subsidiary secured by Liens described in Section 10.2(i) , the aggregate principal amount of all such Indebtedness so secured does not exceed 15% of Consolidated Net Worth.

For all purposes of this Section 10.1 , any Person that becomes a Subsidiary after the date of this Agreement shall be deemed to have incurred, at the time it becomes a Subsidiary, all Indebtedness of such Person outstanding immediately after it becomes a Subsidiary.

Section 10.2. Liens . The Company will not, and will not permit any Subsidiary to, permit to exist, create, assume or incur, directly or indirectly, any Lien on its properties or assets, whether now owned or hereafter acquired except:

(a) Liens for taxes, assessments or governmental charges not then due and payable or the nonpayment of which is permitted by Section 9.4 ;

(b) Liens incidental to the conduct of business or the ownership of properties and assets (including landlords’, lessors’, carriers’, warehousemen’s, mechanics’, materialmen’s and other similar liens) and Liens to secure the performance of bids, tenders, leases or trade contracts, or to secure statutory obligations (including obligations under workers compensation, unemployment insurance and other social security legislation), surety or appeal bonds or other Liens of like general nature incurred in the ordinary course of business and not in connection with the borrowing of money;

(c) any attachment or judgment Lien, unless the judgment it secures has not, within 60 days after the entry thereof, been discharged or execution thereof stayed pending appeal, or has not been discharged within 60 days after the expiration of any such stay;

(d) Liens securing Indebtedness of a Subsidiary to the Company or to another Wholly-Owned Subsidiary;

(e) Liens existing on property or assets of the Company or any Subsidiary as of the date of this Agreement that are described in Schedule 10.2 ;

-23-

(f) encumbrances in the nature of leases, subleases, zoning restrictions, easements, rights-of-way and other rights and restrictions of record on the use of real property, minor survey exceptions and defects in title incidental to the ownership of property or assets or to the ordinary conduct of business, which, individually and in the aggregate, do not Materially impair the use or value of the property or assets subject thereto;

(g) Liens (i) existing on property at the time of its acquisition or construction by the Company or any Subsidiary and not created in contemplation thereof, whether or not the Indebtedness secured by such Lien is assumed by the Company or a Subsidiary; or (ii) on property created contemporaneously with its acquisition or construction or within 180 days of the acquisition or completion of construction or improvement thereof to secure or provide for all or a portion of the purchase price or cost of construction or improvement of such property after the date of Closing; or (iii) existing on property of a Person at the time such Person is merged or consolidated with, or becomes a Subsidiary of, or substantially all of its assets are acquired by, the Company or a Subsidiary and not created in contemplation thereof; provided that, in the case of clauses (i), (ii) and (iii), such Liens do not extend to additional property of the Company or any Subsidiary and that the aggregate principal amount of Indebtedness secured by each such Lien does not exceed the lesser of the cost of acquisition or construction or the fair market value (as determined in good faith by one or more officers to whom authority to enter into the transaction has been delegated by the Board of Directors of the Company) of the property subject thereto;

(h) Liens resulting from extensions, renewals or replacements of Liens permitted by paragraphs (e) and (g), provided that (i) there is no increase in the principal amount or decrease in maturity of the Indebtedness secured thereby at the time of such extension, renewal or replacement, (ii) any new Lien attaches only to the same property theretofore subject to such earlier Lien, and (iii) immediately after such extension, renewal or replacement no Default or Event of Default would exist; and

(i) Additional Liens securing Indebtedness not otherwise permitted by paragraphs (a) through (h) above, provided that, at the time of creation, assumption or incurrence thereof and immediately after giving effect thereto and to the application of the proceeds therefrom, the aggregate principal amount of such Indebtedness so secured does not exceed 15% of Consolidated Net Worth.

Section 10.3. Sale of Assets . Except as permitted by Section 10.4 , the Company will not, and will not permit any Subsidiary to, sell, lease, transfer or otherwise dispose of, including by way of merger (collectively a “Disposition” ), any assets, including capital stock of Subsidiaries, in one or more transactions, to any Person, other than (a) Dispositions in the ordinary course of business, (b) Dispositions by the Company to a Subsidiary or by a Subsidiary to the Company or another Subsidiary or (c) Dispositions not otherwise permitted by this Section 10.3 , provided that the aggregate net book value of all assets so disposed of in any fiscal year pursuant to this Section 10. 3(c) does not exceed 10% of Consolidated Total Assets as of the end of the immediately preceding fiscal year. Notwithstanding the foregoing, the Company may, or may

-24-

permit any Subsidiary to, make a Disposition and the assets subject to such Disposition shall not be subject to or included in the foregoing limitation and computation contained in clause (c) of the preceding sentence to the extent that (x) such assets are leased back by the Company or any Subsidiary, as lessee, within 180 days of the original acquisition or construction thereof by the Company or such Subsidiary, or (y) the net proceeds from such Disposition are within 180 days of such Disposition (A) reinvested in productive assets by the Company or a Subsidiary consistent with Section 10.6 or (B) applied to the payment or prepayment of any outstanding Indebtedness of the Company or any Subsidiary that is not subordinated to the Notes. Any prepayment of Notes pursuant to this Section 10.3 shall be in accordance with Sections 8.2 and 8.3 .

Section 10.4. Mergers, Consolidations, Etc. The Company will not, and will not permit any Subsidiary to, consolidate with or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person except that:

(a) The Company may consolidate or merge with any other Person or convey, transfer, sell or lease all or substantially all of its assets in a single transaction or series of transactions to any Person, provided that:

(i) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer, sale or lease of all or substantially all of the assets of the Company as an entirety, as the case may be, shall be a solvent corporation organized and existing under the laws of the United States or any State thereof (including the District of Columbia), and, if the Company is not such corporation, such corporation (x) shall have executed and delivered to each holder of any Notes its assumption of the due and punctual performance and observance of each covenant and condition of this Agreement and the Notes and (y) shall have caused to be delivered to each holder of any Notes an opinion of independent counsel reasonably satisfactory to the Required Holders, to the effect that all agreements or instruments effecting such assumption are enforceable in accordance with their terms and comply with the terms hereof;

(ii) the successor formed by such consolidation or the survivor of such merger or the Person that acquires by conveyance, transfer, sale or lease all or substantially all of the assets of the Company as an entirety, as the case may be, could incur immediately thereafter $1.00 of additional Indebtedness pursuant to Section 10.1(d) ;

(iii) immediately before and after giving effect to such transaction, no Default or Event of Default shall exist; and

(b) Any Subsidiary may (x) merge into the Company (provided that the Company is the surviving corporation) or another Wholly-Owned Subsidiary or (y) sell, transfer or lease all or any part of its assets to the Company or another Wholly-Owned Subsidiary, or (z) merge or consolidate with, or sell, transfer or lease all or substantially

-25-

all of its assets to, any Person in a transaction that is permitted by Section 10.3 or, as a result of which, such Person becomes a Subsidiary; provided in each instance set forth in clauses (x) through (z) that, immediately before and after giving effect thereto, there shall exist no Default or Event of Default;

No such conveyance, transfer, sale or lease of all or substantially all of the assets of the Company shall have the effect of releasing the Company or any successor corporation that shall theretofore have become such in the manner prescribed in this Section 10.4 from its liability under this Agreement or the Notes.

Section 10.5. Disposition of Stock of Subsidiaries . The Company (a) will not permit any Subsidiary to issue its capital stock, or any warrants, rights or options to purchase, or securities convertible into or exchangeable for, such capital stock, to any Person other than the Company or another Wholly-Owned Subsidiary, and (b) will not, and will not permit any Subsidiary to, sell, transfer or otherwise dispose of any shares of capital stock of a Subsidiary if such sale would be prohibited by Section 10.3 . If a Subsidiary at any time ceases to be such as a result of a sale or issuance of its capital stock, any Liens on property of the Company or any other Subsidiary securing Indebtedness owed to such Subsidiary, which is not contemporaneously repaid, together with such Indebtedness, shall be deemed to have been incurred by the Company or such other Subsidiary, as the case may be, at the time such Subsidiary ceases to be a Subsidiary.

Section 10.6. Nature of Business. The Company will not, and will not permit any Subsidiary to, engage in any business if, as a result, the general nature of the business in which the Company and its Subsidiaries, taken as a whole, would then be engaged would be substantially changed from the general nature of the business in which the Company and its Subsidiaries, taken as a whole, are engaged on the date of this Agreement.

Section 10.7. Transactions with Affiliates . The Company will not and will not permit any Subsidiary to enter into directly or indirectly any Material transaction or Material group of related transactions (including the purchase, lease, sale or exchange of properties of any kind or the rendering of any service) with any Affiliate (other than the Company or another Subsidiary), except upon fair and reasonable terms no less favorable to the Company or such Subsidiary than would be obtainable in a comparable arm’s-length transaction with a Person not an Affiliate.

Section 11. Events of Default.

An “Event of Default” shall exist if any of the following conditions or events shall occur and be continuing:

(a) the Company defaults in the payment of any principal or Make-Whole Amount, if any, on any Note when the same becomes due and payable, whether at maturity or at a date fixed for prepayment or by declaration or otherwise; or

(b) the Company defaults in the payment of any interest on any Note for more than five (5) Business Days after the same becomes due and payable; or

-26-

(c) the Company defaults in the performance of or compliance with any term contained in Sections 10.3 (Sale of Assets) or 10.4 (Mergers, Consolidations, etc.); or

(d) the Company defaults in the performance of or compliance with any term contained herein (other than those referred to in Sections 11(a) , (b) and (c) ) and such default is not remedied within 30 days after the earlier of (i) a Responsible Officer obtaining actual knowledge of such default and (ii) the Company receiving written notice of such default from any holder of a Note (any such written notice to be identified as a “notice of default” and to refer specifically to this Section 11(d) ); or

(e) any representation or warranty made in writing by or on behalf of the Company or by any officer of the Company in this Agreement or in any writing furnished in connection with the transactions contemplated hereby proves to have been false or incorrect in any material respect on the date as of which made; or

(f) (i) the Company or any Significant Subsidiary is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount or interest aggregating $100,000 or more on any Indebtedness that is outstanding in an aggregate principal amount in excess of 5% of Adjusted Consolidated Net Worth (as of the end of the most recently completed fiscal period of the Company) beyond any period of grace provided with respect thereto, or (ii) the Company or any Significant Subsidiary is in default in the performance of or compliance with any term of any evidence of any Indebtedness that is outstanding in an aggregate principal amount in excess of 5% of Adjusted Consolidated Net Worth (as of the end of the most recently completed fiscal period of the Company) or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and as a consequence of such default or condition such Indebtedness has become, or has been declared, due and payable before its stated maturity or before its regularly scheduled dates of payment; or

(g) the Company or any Significant Subsidiary (i) is generally not paying, or admits in writing its inability to pay, its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for the purpose of any of the foregoing; or

(h) a court or Governmental Authority of competent jurisdiction enters an order appointing, without consent by the Company or any of its Significant Subsidiaries, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction,

-27-

or ordering the dissolution, winding-up or liquidation of the Company or any of its Significant Subsidiaries, or any such petition shall be filed against the Company or any of its Significant Subsidiaries and such petition shall not be dismissed within 60 days; or

(i) a final judgment or judgments for the payment of money aggregating 5% or more of Adjusted Consolidated Net Worth (as of the end of the most recently completed fiscal period of the Company) are rendered against one or more of the Company and its Significant Subsidiaries and which judgments are not, within 60 days after entry thereof, bonded, discharged or stayed pending appeal, or are not discharged within 60 days after the expiration of such stay; or

(j) if (i) any Plan shall fail to satisfy the minimum funding standards of ERISA or the Code for any plan year or part thereof or a waiver of such standards or extension of any amortization period is sought or granted under Section 412 of the Code, (ii) a notice of intent to terminate any Plan shall have been or is reasonably expected to be filed with the PBGC or the PBGC shall have instituted proceedings under ERISA Section 4042 to terminate or appoint a trustee to administer any Plan or the PBGC shall have notified the Company or any ERISA Affiliate that a Plan may become a subject of any such proceedings, (iii) the aggregate “amount of unfunded benefit liabilities” (within the meaning of Section 4001(a)(18) of ERISA) under all Plans, determined in accordance with Title IV of ERISA, shall equal or exceed 5% of Adjusted Consolidated Net Worth (as of the end of the most recently completed fiscal period of the Company), (iv) the Company or any ERISA Affiliate shall have incurred or is reasonably expected to incur any liability pursuant to Title I or IV of ERISA or the penalty or excise tax provisions of the Code relating to employee benefit plans, (v) the Company or any ERISA Affiliate withdraws from any Multiemployer Plan, or (vi) the Company or any Significant Subsidiary establishes or amends any employee welfare benefit plan that provides post-employment welfare benefits in a manner that would increase the liability of the Company or any Significant Subsidiary thereunder; and any such event or events described in clauses (i) through (vi) above, either individually or together with any other such event or events, would reasonably be expected to have a Material Adverse Effect.

As used in Section 11(j) , the terms “employee benefit plan” and “employee welfare benefit plan” shall have the respective meanings assigned to such terms in Section 3 of ERISA.

Section 12. Remedies on Default, Etc.

Section 12.1. Acceleration . (a) If an Event of Default with respect to the Company described in Section 11(g) or (h) (other than an Event of Default described in clause (i) of Section 11(g) or described in clause (vi) of Section 11(g) by virtue of the fact that such clause encompasses clause (i) of Section 11(g) ) has occurred, all the Notes then outstanding shall automatically become immediately due and payable.

(b) If any other Event of Default has occurred and is continuing, any holder or holders of more than 50% in principal amount of the Notes, collectively, at the time outstanding may at

-28-

any time at its or their option, by notice or notices to the Company, declare all the Notes then outstanding to be immediately due and payable.

(c) If any Event of Default described in Section 11(a) or (b) has occurred and is continuing, any holder or holders of Notes at the time outstanding affected by such Event of Default may at any time, at its or their option, by notice or notices to the Company, declare all the Notes held by it or them to be immediately due and payable.

Upon any Notes becoming due and payable under this Section 12.1 , whether automatically or by declaration, such Notes will forthwith mature and the entire unpaid principal amount of such Notes, plus (i) all accrued and unpaid interest thereon (including, without limitation, interest accrued thereon at the Default Rate) and (ii) the Make-Whole Amount determined in respect of such principal amount (to the full extent permitted by applicable law), shall all be immediately due and payable, in each and every case without presentment, demand, protest or further notice, all of which are hereby waived. The Company acknowledges, and the parties hereto agree, that each holder of a Note has the right to maintain its investment in the Notes free from repayment by the Company (except as herein specifically provided for), and that the provision for payment of a Make-Whole Amount by the Company in the event that the Notes are prepaid or are accelerated as a result of an Event of Default, is intended to provide compensation for the deprivation of such right under such circumstances.

Section 12.2. Other Remedies . If any Default or Event of Default has occurred and is continuing, and irrespective of whether any Notes have become or have been declared immediately due and payable under Section 12.1 , the holder of any Note at the time outstanding may proceed to protect and enforce the rights of such holder by an action at law, suit in equity or other appropriate proceeding, whether for the specific performance of any agreement contained herein or in any Note, or for an injunction against a violation of any of the terms hereof or thereof, or in aid of the exercise of any power granted hereby or thereby or by law or otherwise.

Section 12.3. Rescission . At any time after any Notes have been declared due and payable pursuant to Section 12. 1(b) or (c) , the holders of more than 50% in principal amount of the Notes then outstanding, by written notice to the Company, may rescind and annul any such declaration and its consequences if (a) the Company has paid all overdue interest on the Notes, all principal of and Make-Whole Amount, if any, on any Notes that are due and payable and are unpaid other than by reason of such declaration, and all interest on such overdue principal and Make-Whole Amount, if any, and (to the extent permitted by applicable law) any overdue interest in respect of the Notes, at the Default Rate, (b) such holders have refunded to the Company any amounts that shall have been paid by the Company or any other Person on the Company’s behalf solely by reason of the amounts having become due and payable pursuant to such declaration, (c) all Events of Default and Defaults, other than non-payment of amounts that have become due solely by reason of such declaration, have been cured or have been waived pursuant to Section 17 , and (d) no judgment or decree has been entered for the payment of any monies due pursuant hereto or to the Notes. No rescission and annulment under this Section 12.3 will extend to or affect any subsequent Event of Default or Default or impair any right consequent thereon.

-29-

Section 12.4. No Waivers or Election of Remedies, Expenses, Etc . No course of dealing and no delay on the part of any holder of any Note in exercising any right, power or remedy shall operate as a waiver thereof or otherwise prejudice such holder’s rights, powers or remedies. No right, power or remedy conferred by this Agreement or by any Note upon any holder thereof shall be exclusive of any other right, power or remedy referred to herein or therein or now or hereafter available at law, in equity, by statute or otherwise. Without limiting the obligations of the Company under Section 15 , the Company will pay to the holder of each Note on demand such further amount as shall be sufficient to cover all costs and expenses of such holder incurred in any enforcement or collection under this Section 12 , including, without limitation, reasonable attorneys’ fees, expenses and disbursements.

Section 13. Registration; Exchange; Substitution of Notes.

Section 13.1. Registration of Notes . The Company shall keep at its principal executive office a register for the registration and registration of transfers of Notes. The name and address of each holder of one or more Notes, each transfer thereof and the name and address of each transferee of one or more Notes shall be registered in such register. Prior to due presentment for registration of transfer, the Person in whose name any Note shall be registered shall be deemed and treated as the owner and holder thereof for all purposes hereof, and the Company shall not be affected by any notice or knowledge to the contrary. The Company shall give to any holder of a Note that is an Institutional Investor promptly upon request therefor, a complete and correct copy of the names and addresses of all registered holders of Notes.

Section 13.2. Transfer and Exchange of Notes . Upon surrender of any Note to the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii)) for registration of transfer or exchange (and in the case of a surrender for registration of transfer, duly endorsed or accompanied by a written instrument of transfer duly executed by the registered holder of such Note or such holder’s attorney duly authorized in writing and accompanied by the relevant name, address and other information for notices of each transferee of such Note or part thereof), within ten Business Days after the Company receives such surrendered Note, the Company shall execute and deliver, at the Company’s expense (except as provided below), one or more new Notes (as requested by the holder thereof) of the same series (and of the same tranche if such series has separate tranches) in exchange therefor, in an aggregate principal amount equal to the unpaid principal amount of the surrendered Note. Each such new Note shall be payable to such Person as such holder may request and shall be substantially in the form of the Note established for such tranche or series. Each such new Note shall be dated and bear interest from the date to which interest shall have been paid on the surrendered Note or dated the date of the surrendered Note if no interest shall have been paid thereon. The Company may require payment of a sum sufficient to cover any stamp tax or governmental charge imposed in respect of any such transfer of Notes. Notes shall not be transferred in denominations of less than $500,000; provided that if necessary to enable the registration of transfer by a holder of its entire holding of Notes, one Note may be in a denomination of less than $500,000. Any transferee, by its acceptance of a Note registered in its name (or the name of its nominee), shall be deemed to have made the representations set forth in Section 6 .

-30-

Section 13.3. Replacement of Notes . Upon receipt by the Company at the address and to the attention of the designated officer (all as specified in Section 18(iii) ) of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of any Note (which evidence shall be, in the case of an Institutional Investor, notice from such Institutional Investor of such ownership and such loss, theft, destruction or mutilation), and

(a) in the case of loss, theft or destruction, of indemnity reasonably satisfactory to it ( provided that if the holder of such Note is, or is a nominee for, an original Purchaser or another Institutional Investor holder of a Note with a minimum net worth of at least $50,000,000, such Person’s own unsecured agreement of indemnity shall be deemed to be satisfactory), or

(b) in the case of mutilation, upon surrender and cancellation thereof,

within ten Business Days after such receipt by the Company, the Company at its own expense shall execute and deliver, in lieu thereof, a new Note of the same series (and of the same tranche if such series has separate tranches), dated and bearing interest from the date to which interest shall have been paid on such lost, stolen, destroyed or mutilated Note or dated the date of such lost, stolen, destroyed or mutilated Note if no interest shall have been paid thereon.

Section 14. Payments on Notes.

Section 14.1. Place of Payment . Subject to Section 14.2 , payments of principal, Make-Whole Amount, if any, and interest becoming due and payable on the Notes shall be made in Chicago, Illinois at the principal office of Bank of America, in such jurisdiction. The Company may at any time, by notice to each holder of a Note, change the place of payment of the Notes so long as such place of payment shall be either the principal office of the Company in such jurisdiction or the principal office of a bank or trust company in such jurisdiction.

Section 14.2. Home Office Payment . So long as any Purchaser or its nominee shall be the holder of any Note, and notwithstanding anything contained in Section 14.1 or in such Note to the contrary, the Company will pay all sums becoming due on such Note for principal, Make-Whole Amount, if any, and interest by the method and at the address specified for such purpose below such Purchaser’s name in Schedule A hereto or any Supplemental Note Purchase Agreement, as the case may be, or by such other method or at such other address as such Purchaser shall have from time to time specified to the Company in writing for such purpose, without the presentation or surrender of such Note or the making of any notation thereon, except that upon written request of the Company made concurrently with or reasonably promptly after payment or prepayment in full of any Note, such Purchaser shall surrender such Note for cancellation, reasonably promptly after any such request, to the Company at its principal executive office or at the place of payment most recently designated by the Company pursuant to Section 14.1 . Prior to any sale or other disposition of any Note held by a Purchaser or its nominee, such Purchaser will, at its election, either endorse thereon the amount of principal paid thereon and the last date to which interest has been paid thereon or surrender such Note to the Company in exchange for a new Note or Notes of the same series and tranche pursuant to Section 13.2 . The Company will afford the benefits of this Section 14.2 to any Institutional

-31-

Investor that is the direct or indirect transferee of any Note purchased by a Purchaser under this Agreement and that has made the same agreement relating to such Note as the Purchasers have made.

Section 15. Expenses, Etc.

Section 15.1. Transaction Expenses . Whether or not the transactions contemplated hereby are consummated, the Company will pay all reasonable costs and expenses (including reasonable attorneys’ fees of a special counsel and, if reasonably required by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Note in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of this Agreement or the Notes (whether or not such amendment, waiver or consent becomes effective), including, without limitation: (a) the reasonable costs and expenses incurred in enforcing or defending (or determining whether or how to enforce or defend) any rights under this Agreement or the Notes or in responding to any subpoena or other legal process or informal investigative demand issued in connection with this Agreement or the Notes, or by reason of being a holder of any Note, and (b) the reasonable costs and expenses, including financial advisors’ fees, incurred in connection with the insolvency or bankruptcy of the Company or any Subsidiary or in connection with any work-out or restructuring of the transactions contemplated hereby and by the Notes. The Company will pay, and will save each Purchaser and each other holder of a Note harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder of a Note in connection with its purchase of the Notes).

Section 15.2. Survival . The obligations of the Company under this Section 15 will survive the payment or transfer of any Note, the enforcement, amendment or waiver of any provision of this Agreement or the Notes, and the termination of this Agreement.

Section 16. Survival of Representations and Warranties; Entire Agreement.

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Notes, the purchase or transfer by any Purchaser of any Note or portion thereof or interest therein and the payment of any Note, and may be relied upon by any subsequent holder of a Note, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Note. All statements contained in any certificate or other instrument delivered by or on behalf of the Company pursuant to this Agreement shall be deemed representations and warranties of the Company under this Agreement. Subject to the preceding sentence, this Agreement and the Notes embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

Section 17. Amendment and Waiver.

Section 17.1. Requirements . This Agreement and the Notes may be amended, and the observance of any term hereof or of the Notes may be waived (either retroactively or

-32-

prospectively), with (and only with) the written consent of the Company and the Required Holders, except that (a) no amendment or waiver of any of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it is used therein), will be effective as to any Purchaser unless consented to by such Purchaser in writing, and (b) no such amendment or waiver may, without the written consent of the holder of each Note at the time outstanding affected thereby, (i) subject to the provisions of Section 12 relating to acceleration or rescission, change the amount or time of any prepayment or payment of principal of, or reduce the rate or change the time of payment or method of computation of interest or of the Make-Whole Amount on, the Notes, (ii) change the percentage of the principal amount of the Notes the holders of which are required to consent to any such amendment or waiver, or (iii) amend any of Section 8, 11(a), 11(b), 12, 17 or 20 .

Section 17.2. Solicitation of Holders of Notes .

(a) Solicitation . The Company will provide each holder of the Notes (irrespective of the amount, series or tranche of Notes then owned by it) with sufficient information, sufficiently far in advance of the date a decision is required, to enable such holder to make an informed and considered decision with respect to any proposed amendment, waiver or consent in respect of any of the provisions hereof or of the Notes. The Company will deliver executed or true and correct copies of each amendment, waiver or consent effected pursuant to the provisions of this Section 17 to each holder of outstanding Notes promptly following the date on which it is executed and delivered by, or receives the consent or approval of, the requisite holders of Notes.

(b) Payment . The Company will not directly or indirectly pay or cause to be paid any remuneration, whether by way of supplemental or additional interest, fee or otherwise, or grant any security or provide other credit support, to any holder of Notes as consideration for or as an inducement to the entering into by any holder of Notes of any waiver or amendment of any of the terms and provisions hereof unless such remuneration is concurrently paid, or security is concurrently granted or other credit support concurrently provided, on the same terms, ratably to each holder of Notes then outstanding even if such holder did not consent to such waiver or amendment.

Section 17.3. Binding Effect, Etc . Any amendment or waiver consented to as provided in this Section 17 applies equally to all holders of Notes and is binding upon them and upon each future holder of any Note and upon the Company without regard to whether such Note has been marked to indicate such amendment or waiver. No such amendment or waiver will extend to or affect any obligation, covenant, agreement, Default or Event of Default not expressly amended or waived or impair any right consequent thereon. No course of dealing between the Company and the holder of any Note nor any delay in exercising any rights hereunder or under any Note shall operate as a waiver of any rights of any holder of such Note. As used herein, the term “this Agreement” and references thereto shall mean this Agreement as it may from time to time be amended or supplemented.

Section 17.4. Notes Held by Company, Etc . Solely for the purpose of determining whether the holders of the requisite percentage of the aggregate principal amount of Notes then outstanding approved or consented to any amendment, waiver or consent to be given under this

-33-

Agreement or the Notes, or have directed the taking of any action provided herein or in the Notes to be taken upon the direction of the holders of a specified percentage of the aggregate principal amount of Notes then outstanding, Notes directly or indirectly owned by the Company or any of its Subsidiaries shall be deemed not to be outstanding.

Section 18. Notices.

Except as set forth in Section 7.1 , all notices and communications provided for hereunder shall be in writing and sent (a) by telefacsimile if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid). Any such notice must be sent:

(i) if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A hereto or any Supplemental Note Purchase Agreement, as the case may be, or at such other address as such Purchaser or nominee shall have specified to the Company in writing in accordance with this Section 18 ,

(ii) if to any other holder of any Note, to such holder at such address as such other holder shall have specified to the Company in writing, or

(iii) if to the Company, to the Company at its address set forth at the beginning hereof to the attention of Senior Financial Officer, or at such other address as the Company shall have specified to the holder of each Note in writing.

Notices under this Section 18 will be deemed given only when actually received.

Section 19. Reproduction of Documents.

This Agreement and all documents relating hereto, including, without limitation, (a) consents, waivers and modifications that may hereafter be executed, (b) documents received by any Purchaser at any Closing (except the Notes themselves), and (c) financial statements, certificates and other information previously or hereafter furnished to any Purchaser, may be reproduced by such Purchaser by any photographic, photostatic, electronic, digital or other similar process and such Purchaser may destroy any original document so reproduced. The Company agrees and stipulates that, to the extent permitted by applicable law, any such reproduction shall be admissible in evidence as the original itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by such Purchaser in the regular course of business) and any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. This Section 19 shall not prohibit the Company or any other holder of Notes from contesting any such reproduction to the same extent that it could contest the original, or from introducing evidence to demonstrate the inaccuracy of any such reproduction.

-34-

Section 20. Confidential Information.

For the purposes of this Section 20 , “Confidential Information” means information delivered to any Purchaser by or on behalf of the Company or any Subsidiary in connection with the transactions contemplated by or otherwise pursuant to this Agreement that is proprietary in nature and that was clearly marked or labeled or otherwise adequately identified when received by such Purchaser as being confidential information of the Company or such Subsidiary; provided that such term does not include information that (a) was publicly known or otherwise known to such Purchaser prior to the time of such disclosure, (b) subsequently becomes publicly known through no act or omission by such Purchaser or any Person acting on such Purchaser’s behalf, (c) otherwise becomes known to such Purchaser other than through disclosure by the Company or any Subsidiary or (d) constitutes financial statements delivered to such Purchaser under Section 7.1 that are otherwise publicly available. Each Purchaser will maintain the confidentiality of such Confidential Information in accordance with procedures adopted by such Purchaser in good faith to protect confidential information of third parties delivered to such Purchaser; provided that such Purchaser may deliver or disclose Confidential Information to (i) its directors, trustees, officers, employees, agents, attorneys and affiliates (to the extent such disclosure reasonably relates to the administration of the investment represented by its Notes), (ii) its financial advisors and other professional advisors who agree to hold confidential the Confidential Information substantially in accordance with the terms of this Section 20 , (iii) any other holder of any Note, (iv) any Institutional Investor to which it sells or offers to sell such Note or any part thereof or any participation therein (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20 ), (v) any Person from which it offers to purchase any security of the Company (if such Person has agreed in writing prior to its receipt of such Confidential Information to be bound by the provisions of this Section 20 ), (vi) any federal or state regulatory authority having jurisdiction over such Purchaser, (vii) the National Association of Insurance Commissioners or the Securities Valuation Office of the National Association of Insurance Commissioners or, in each case, any similar organization, or any nationally recognized rating agency that requires access to information about such Purchaser’s investment portfolio or (viii) any other Person to which such delivery or disclosure may be necessary or appropriate (w) to effect compliance with any law, rule, regulation or order applicable to such Purchaser, (x) in response to any subpoena or other legal process, (y) in connection with any litigation to which such Purchaser is a party or (z) if an Event of Default has occurred and is continuing, to the extent such Purchaser may reasonably determine such delivery and disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under such Purchaser’s Notes and this Agreement. Each holder of a Note, by its acceptance of a Note, will be deemed to have agreed to be bound by and to be entitled to the benefits of this Section 20 as though it were a party to this Agreement. On reasonable request by the Company in connection with the delivery to any holder of a Note of information required to be delivered to such holder under this Agreement or requested by such holder (other than a holder that is a party to this Agreement or its nominee), such holder will enter into an agreement with the Company embodying the provisions of this Section 20 .

-35-

Section 21. Substitution of Purchaser.

Each Purchaser shall have the right to substitute any one of its Affiliates as the purchaser of the Notes that it has agreed to purchase hereunder, by written notice to the Company, which notice shall be signed by both such Purchaser and such Affiliate, shall contain such Affiliate’s agreement to be bound by this Agreement and shall contain a confirmation by such Affiliate of the accuracy with respect to it of the representations set forth in Section 6 . Upon receipt of such notice, any reference to such Purchaser, the Purchasers or “you” in this Agreement (other than in this Section 21 ) shall be deemed to refer to such Affiliate in lieu of such original Purchaser. In the event that such Affiliate is so substituted as a purchaser of any Notes hereunder and such Affiliate thereafter transfers to such original Purchaser all of the Notes then held by such Affiliate, upon receipt by the Company of notice of such transfer, any reference to such Affiliate in this Agreement (other than in this Section 21 ) by virtue of the immediately preceding sentence shall no longer be deemed to refer to such Affiliate, but shall refer to such original Purchaser, and such original Purchaser shall again have all the rights of an original holder of the Notes under this Agreement.

Section 22. Miscellaneous.

Section 22.1. Successors and Assigns . All covenants and other agreements contained in this Agreement by or on behalf of any of the parties hereto bind and inure to the benefit of their respective successors and assigns (including, without limitation, any subsequent holder of a Note) whether so expressed or not.

Section 22.2. Payments Due on Non-Business Days . Anything in this Agreement or the Notes to the contrary notwithstanding (but without limiting the requirement in Section 8.4 that the notice of any optional prepayment specify a Business Day as the date fixed for such prepayment), any payment of principal of or Make-Whole Amount or interest on any Note that is due on a date other than a Business Day shall be made on the next succeeding Business Day without including the additional days elapsed in the computation of the interest payable on such next succeeding Business Day.

Section 22.3. Severability . Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall (to the full extent permitted by law) not invalidate or render unenforceable such provision in any other jurisdiction.

Section 22.4. Construction, Etc . Each covenant contained herein shall be construed (absent express provision to the contrary) as being independent of each other covenant contained herein, so that compliance with any one covenant shall not (absent such an express contrary provision) be deemed to excuse compliance with any other covenant. Where any provision herein refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person.

-36-

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.

Section 22.5. Counterparts . This Agreement may be executed in any number of counterparts, each of which shall be an original but all of which together shall constitute one instrument. Each counterpart may consist of a number of copies hereof, each signed by less than all, but together signed by all, of the parties hereto.

Section 22.6. Governing Law . This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the law of the State of Illinois , excluding choice-of-law principles of the law of such State that would permit or require the application of the laws of a jurisdiction other than such State.

Section 22.7. Jurisdiction and Process; Waiver of Jury Trial. (a) The Company irrevocably submits to the non-exclusive jurisdiction of any Illinois State or federal court sitting in Cook County, over any suit, action or proceeding arising out of or relating to this Agreement or the Notes. To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

(b) The Company consents to process being served by or on behalf of any holder of Notes in any suit, action or proceeding of the nature referred to in Section 22.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 18 or at such other address of which such holder shall then have been notified pursuant to Section 18 . The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it. Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

(c) Nothing in this Section 22.7 shall affect the right of any holder of a Note to serve process in any manner permitted by law, or limit any right that the holders of any of the Notes may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

(d) The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Notes or any other document executed in connection herewith or therewith .

* * * * *

-37-

If you are in agreement with the foregoing, please sign a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.


	Very truly yours, AptarGroup, Inc.
	By	/s/ Stephen J. Hagge
		Executive Vice President, Chief Financial
		Officer, Chief Operating Officer and Secretary