<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-K
(Mark One)
[x] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 31, 1993
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
OWENS-ILLINOIS, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-9576 22-2781933
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) file number) Identification No.)
OWENS-ILLINOIS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware 33-13061 34-1559348
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) file number) Identification No.)
One SeaGate, Toledo, Ohio 43666
(Address of principal executive offices) (Zip Code)
Registrants' telephone number, including area code: (419) 247-5000
Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange on
Title of each class which registered
- ------------------- ------------------------
Common Stock, $.01 par value New York Stock Exchange
11% Senior Debentures due December 1, 2003 New York Stock Exchange
10-1/4% Senior Subordinated Notes due 1999 New York Stock Exchange
10-1/2% Senior Subordinated Notes due 2002 New York Stock Exchange
10% Senior Subordinated Notes due 2002 New York Stock Exchange
9-3/4% Senior subordinated Notes due 2004 New York Stock Exchange
9.95% Senior Subordinated Notes due 2004 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
(Cover page 1 of 2 pages)
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Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that
the registrants were required to file such reports) and (2) have been subject
to such filing requirements for the past 90 days.
Yes x No
--- ---
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrants' knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [x]
The aggregate market value (based on the consolidated tape closing price
on February 28, 1994) of the voting stock beneficially held by non-affiliates
of Owens-Illinois, Inc. was approximately $1,036,200,000. For the sole
purpose of making this calculation, the term "non-affiliate" has been
interpreted to exclude directors and executive officers of the Company. Such
interpretation is not intended to be, and should not be construed to be, an
admission by Owens-Illinois, Inc. or such directors or executive officers of
the Company that such directors and executive officers of the Company are
"affiliates" of Owens-Illinois, Inc., as that term is defined under the
Securities Act of 1934.
The number of shares of Common Stock, $.01 par value, of Owens-Illinois,
Inc. outstanding as of February 28, 1994, was 118,978,327.
The number of shares of Common Stock, $.01 par value, of Owens-Illinois,
Group, Inc. outstanding as of February 28, 1994, was 100, all of which were
owned by Owens-Illinois, Inc.
DOCUMENTS INCORPORATED BY REFERENCE
Part III Owens-Illinois, Inc. Proxy Statement for The Annual Meeting of
Share Owners To Be Held Wednesday, May 11, 1994 ("Proxy
Statement").
(Cover page 2 of 2 pages)
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TABLE OF CONTENTS
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ITEM 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . 1
ITEM 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . 12
ITEM 3. LEGAL PROCEEDINGS. . . . . . . . . . . . . . . . . 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY
HOLDERS. . . . . . . . . . . . . . . . . . . . . . 13
EXECUTIVE OFFICERS OF THE REGISTRANTS. . . . . . . 14
PART II. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ITEM 5. MARKET FOR OWENS-ILLINOIS, INC.'S COMMON STOCK
AND RELATED SHARE OWNER MATTERS. . . . . . . . . . 17
ITEM 6. SELECTED FINANCIAL DATA. . . . . . . . . . . . . . 18
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . 21
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. . . . 28
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE. . . . . . . . 65
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE
REGISTRANTS. . . . . . . . . . . . . . . . . . . . 66
ITEMS 11. EXECUTIVE COMPENSATION AND CERTAIN RELATIONSHIPS
and 13. AND RELATED TRANSACTIONS . . . . . . . . . . . . . 66
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT . . . . . . . . . . . . . . . . . . 66
PART IV. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND
REPORTS ON FORM 8-K. . . . . . . . . . . . . . . . 67
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SCHEDULES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S-1
EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . E-1
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PART I
ITEM 1. BUSINESS
General Development of Business
Owens-Illinois, Inc. (the "Company") is one of the world's leading and most
diversified manufacturers of packaging products and is considered to be the
world's leading producer of glass containers. Approximately one of every two
glass containers made worldwide is made by the Company, its affiliates or
licensees. In addition to being the largest manufacturer of glass bottles and
containers in the United States, the Company is a leading manufacturer of
plastic containers, plastic closures, plastic and glass prescription
containers, labels, and multipack plastic carriers for beverage containers.
Other products include pharmaceutical packaging and scientific and laboratory
ware through the Company's 49% ownership of Kimble.
During 1993, the Company expanded its South American glass container
operations by acquiring controlling interest in a Peruvian glass company and
increasing its investment in its Bolivian affiliate. The Company also
acquired control of a leading producer of plastic bottles and closures in
Mexico. In December 1993, the Company completed its first investment in
Eastern Europe by acquiring an equity interest in the largest glass container
manufacturer in Poland.
In June 1993, the Company completed the sale of all the issued and outstanding
shares of its Libbey subsidiary through an underwritten public offering.
Libbey operated the table glassware business of the Company. The Company sold
its remaining 50% interest in the television glass business in October 1993,
concluding a joint venture established in mid-1988. In addition, on December
31, 1993, the Company sold a 51% interest in its Kimble subsidiary to
Gerresheimer Glas, AG.
In the fourth quarter of 1993, the Company completed a comprehensive
reengineering study initiated in response to management's commitment to
enhance customer service, improve manufacturing efficiency and productivity,
and reduce costs. The resulting restructuring program, when fully
implemented, is expected to yield increases in operating profit of $75 million
or more on an annual basis. The Company recorded charges in the fourth
quarter of 1993 of $250 million, principally for the restructuring program,
and $325 million for the estimated uninsured future cost of claims related to
an asbestos-containing insulation material produced by one of the Company's
former business units, which was sold in 1958.
During 1993, the Company redeemed $272.3 million of its Senior Notes and on
January 3, 1994, redeemed the remaining $268.9 million of the Senior Notes.
The Company also retired all outstanding 9.35% and 7-5/8% debentures totaling
$67.2 million. In December, the Company entered into a new credit agreement
with a group of banks which provides revolving loan commitments under which
the Company may borrow up to $1 billion through December 1998.
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The principal executive office of the Registrants is located at One SeaGate,
Toledo, Ohio 43666; the telephone number is (419) 247-5000.
Financial Information about Industry Segments
Information as to sales, operating profit, and identifiable assets by industry
segment is included on pages 60-63.
Narrative Description of Business
The Company has three industry segments: Glass Containers, Plastics and
Closures, and Specialized Glass. Below is a description of each of these
segments and information to the extent material to understanding the Company's
business taken as a whole.
Products and Services, Markets, Methods of Distribution, and Competitive
Conditions
GLASS CONTAINERS
The Company is the world's leading manufacturer of glass containers with an
approximate 40% share of the glass container segment of the U. S. rigid
packaging market. Marketing under the trade name Owens-Brockway, the
Company's 1993 glass container sales were substantially higher than the sales
of its nearest glass container competitor, Anchor Glass Container Corporation
("Anchor"), a subsidiary of Vitro, Sociedad Anonima. Glass container sales
represented 64%, 67% and 68% of the Company's consolidated net sales for the
years ended December 31, 1993, 1992, and 1991, respectively. The Company
believes that its internally developed machines are significantly more
productive than those used by its competitors and have helped to make it the
low-cost manufacturer and a recognized technological leader in the industry.
Products
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Glass containers are produced in a wide range of sizes, shapes and colors for
soft drinks, beer, liquor, wine, wine coolers, pharmaceuticals, and food and
for export. The Company has been a leader in product innovation, introducing
products including: long neck nonreturnable beer bottles; containers for wine
coolers; Plasti-Shield labeled containers for juice, soft drinks and seltzer
water and prepackaged mixed drinks.
New product lines designed to increase the demand for glass containers include
product extensions related to single service packages for soft drinks, wine,
tea, and juice and innovative secondary packaging systems such as labels,
carriers and closures that complement glass containers. The Company's product
development efforts in glass containers are aimed at providing value added
packaging systems to customers and consumers. For example, the Company
continued development of the Micro-Serve line of food containers designed
for use in microwave ovens. The Company has expanded the new pressure
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sensitive label system to replace applied ceramic labeling on glass. Plasti-
Shield labeling innovations have opened markets for clear labels as well as
new uses for standard Plasti-Shield labeling. The Company has been
particularly successful in applying these product developments to the New Age
beverage markets such as bottled waters, juices, and tea-based beverages.
Customers
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Brewers, soft drink bottlers, and food producers comprise approximately 90% of
industry demand for glass containers. The Company has leading positions
within all three of these customer groups, as well as strong positions in
smaller customer groups. The Company believes its position gives it the
ability to take advantage of new opportunities and areas of growth within each
customer group.
The following table sets forth the distribution of the Company's unit
shipments by customer group for the last three years:
Percent Unit Shipments
------------------------
Customer Group 1993 1992 1991
-------------- ---- ---- ----
Food producers . . . . . . . . . 38% 35% 34%
Brewers. . . . . . . . . . . . . 29 28 28
Soft drink bottlers. . . . . . . 20 25 26
Liquor and wine products . . . . 8 8 7
Other. . . . . . . . . . . . . . 5 4 5
---- ---- ----
100% 100% 100%
==== ==== ====
Most glass production is sold to customers under arrangements which specify
estimated quantities to be shipped as a percentage of the customers' total
annual requirements. Containers are typically scheduled for production in
response to customers' orders for their quarterly requirements.
Markets
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The Company has the leading market share of the glass segment of both United
States beer and soft drink packaging. Excluding E & J Gallo Winery Inc.,
which manufactures its own containers, the Company is also the leading
supplier of glass for wine and wine coolers. The Company believes it is the
leading supplier of glass food containers and the second largest supplier of
glass liquor containers. The Company's principal competitor in the glass
liquor containers segment is Anchor. The Company is also the second largest
supplier of glass containers for drug and chemical companies. Overall, the
Company's sales represent approximately 40% of the glass container segment of
the United States rigid packaging market.
Although glass containers' share of the United States rigid packaging market
declined from 1980 through 1985 due to the conversion to plastic containers,
principally in 32-ounce and large soft drink containers, United States glass
container shipments stabilized and remained relatively constant overall from
1986 through 1993. The Company's share (including Brockway's operations for
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all periods) of the glass container segment has remained relatively constant
during 1986 through 1993. Overall, the Company expects glass containers'
share of the United States rigid packaging market to remain relatively stable
and that the Company will maintain its share of the glass container segment
due in part to the Company's ongoing improvement in operating efficiencies.
The Company's glass products compete on the basis of quality, service and
price with other forms of rigid packaging, principally aluminum and steel cans
and plastic bottles, as well as glass containers produced by other large,
well-established manufacturers. Aluminum cans have a larger share of 12-ounce
containers for the beer and soft drink industries, and plastic containers
dominate 32-ounce and larger soft drink containers. Plastic containers also
have made significant inroads in the 16-ounce and 20-ounce soft drinks
container market. The principal competitors producing glass containers are
Anchor, Ball Corporation, and Foster-Forbes Glass Company (an affiliate of
Pechiney S. A.). The principal competitors producing metal containers are
American National Can Company (an affiliate of Pechiney S. A.,), Crown Cork &
Seal Company, Inc., Reynolds Metals Company, and Ball Corporation. In the
metal container market, no one competitor is dominant. The principal
competitors supplying plastic containers are Crown Cork & Seal Company, Inc.,
and Johnson Controls, Inc. In the plastic containers market, no one
competitor is dominant.
The Company markets its glass container products throughout the United States,
with a sales and marketing staff of approximately 150 salaried employees at
January 31, 1994, operating out of 25 sales offices. Glass container sales
employees are generally eligible for bonuses based on sales and the Company's
overall performance. The Company's glass container sales personnel are not
subject to minimum sales quota requirements.
Facilities and Production Processes
- -----------------------------------
Due to the significance of transportation costs and the importance of timely
delivery, manufacturing facilities are located close to customers. Most of
the Company's product is shipped by common carrier to customers within a 250-
mile radius of a given production site. In addition to 21 domestic glass
container manufacturing facilities, the Company operates a limestone plant,
two machine shops which manufacture high-productivity glass-making machines,
and a sand plant. The Company closed one of its less efficient glass
container facilities in Huntington, West Virginia, during 1993. The Company's
remaining domestic glass container facilities operated at rates in excess of
90% of capacity in 1993 and the Company expects similar rates in 1994.
A press and blow process for producing lightweight narrow neck bottles is also
in operation at ten locations. It provides the best combination of high speed
production and lighter weight for soft drink and beer bottles. This process
can reduce container weight 8% to 15%, providing savings in raw materials and
energy. Under development is the application of technology which allows for
similar weight and productivity gains for other segments of the glass
container market.
<PAGE>5
The Company's total systems approach to production technology and process
control improvements have contributed to significant annual productivity gains
experienced since the mid-1970's. From 1980 to 1993, for example, the
Company's machine productivity increased by approximately 60% and labor
productivity improved by approximately 55%. During the same period, the
Company's process efficiency (as measured by tons of glass packed as a percent
of tons of glass melted) has improved by almost 7 percentage points. From
1988 through 1993, the Company invested over $415 million in capital
expenditures for its domestic glass container business.
The trend in the United States towards greater recycling of used containers
has also changed the Company's glass container business. In each of the last
three years, the Company has recycled substantial tonnage of glass containers.
During 1993 and 1992, glass industry demands for recycled glass grew at higher
than historical rates and generally exceeded the availability of furnace-ready
cullet. The following table sets forth the approximate recycled glass
component of the Company's domestic glass container output for the last three
years:
1993 1992 1991
------ ------ ------
36-39% 39-41% 40-43%
The Company believes that the percentage of recycled glass used could increase
in the future as recycling becomes more widespread. The Company also believes
that, eventually, as recycled glass becomes more available, it may offer a
cost advantage over producing new glass.
The Company's cost reduction and product improvement programs are supported
through continued investment in research and development and capital
equipment. The Company has maintained a leadership role in the engineering
and research function through substantial investments in capital equipment,
processes and engineering to increase machine output, process quality and cost
control. There were approximately 260 domestic employees at January 31, 1994,
involved in research, development and engineering for the Glass Containers
segment. The Company believes its investment in technology and capital has
enabled it to remain the technological leader and low-cost producer in the
domestic glass container industry. In addition, as the industry's
technological leader, the Company licenses technology to foreign and domestic
affiliates and licensees.
The Company currently has technical assistance agreements with 33 different
companies in 33 countries. These agreements, which cover areas ranging from
manufacturing and engineering assistance to support in functions such as
marketing, sales, and administration, allow the Company to participate in the
worldwide growth of the glass container industry. The Company believes these
associations and its technical expertise will afford it opportunities to
participate in the glass business in regions of the world where the Company
does not currently have a presence.
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International Glass Operations
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The Company has significant ownership positions in eleven companies located in
eight foreign countries and Puerto Rico. Most of the Company's international
glass affiliates are the leading container manufacturers in their respective
countries, producing a full line of containers for the soft drink, beer, wine,
liquor, food, drug and chemical industries. Some of these companies also
produce molds, mold parts, sand and feldspar, limestone, machines and machine
parts, rolled glass, sheet glass, closures and labels. The Company's
principal international glass affiliates are in Latin America and the United
Kingdom.
Outside of the United States, unit shipments of glass containers have grown
substantially in recent years. In Colombia and Venezuela, unit shipments of
the Company's affiliates increased by over 6% on a compound annual basis
during the period 1985 - 1993. Sales growth in countries where the Company
does not have a direct ownership position, such as Japan and Germany, may
provide a benefit to the Company in the form of technical assistance royalties
tied to sales volumes.
In the United Kingdom, the Company is a leader in glass container
manufacturing through its 100% ownership of United Glass. United Glass'
principal competitors in the glass container segment of the rigid packaging
product market include Rockware Group PLC and Redfern (PLM). The Company has
increased the plant efficiency and productivity of United Glass over the last
several years and believes that further gains are possible.
The Company's significant ownership positions in international glass
affiliates are summarized below:
Owens-Illinois
Company/Country Ownership
- --------------- --------------
Manufacturera de Vidrios Planos, C.A., Venezuela 100.0%
United Glass Ltd., United Kingdom 100.0
Centro Vidriero de Venezuela, C.A., Venezuela 100.0
Owens-Illinois de Venezuela, C.A., Venezuela 92.2
Owens-Illinois de Puerto Rico, Puerto Rico 80.0
Companhia Industrial Sao Paulo e Rio, Brazil 79.4
Cristaleria del Ecuador, S.A., Ecuador 58.6
Cristaleria Peldar, S.A., Colombia 57.4
Vidrios Industriales, S.A., Peru 50.3
Fabrica Boliviana de Vidrios, S. A., Bolivia 50.0
Huta Szkla Jaroslaw S.A., Poland 36.0
PLASTICS AND CLOSURES
The Company is a leading plastic container manufacturer in the United States.
The Company is the market leader in all plastic segments in which it competes
except for Hi-Cone, in which it is second. Plastic container sales
represented 19%, 17% and 18% of the Company's consolidated net sales for the
years ended December 31, 1993, 1992, and 1991, respectively. The Company's
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Plastics and Closures segment operates under the Owens-Brockway trade name and
is comprised of five business units.
Plastic Products. This unit, with 22 factories, manufactures rigid, semi-rigid
and multi-layer plastic packages for a wide variety of uses, including
household products, personal care products, chemicals and automotive products,
health care and food.
Closure Products. This unit produces closures and develops closure systems
which incorporate functional features such as tamper evidence, child resistance
and dispensing. The recent acquisition of Specialty Packaging Products, Inc.,
has extended the unit's product line to include trigger sprayers, finger pumps,
and lotion pumps, as well as metal closures and finger pumps for the fragrance
and cosmetic industry. In the United States, the Company has a sole license
for Alcoa's technology for compression molded, tamper evident, thermoplastic
closures. This unit also manufactures custom injection molded containers,
such as deodorant packages and pump dispensers.
Prescription Products. The Company's Prescription Products unit manufactures
prescription containers. These products are sold primarily to drug
wholesalers, major drug chains and the government. Containers for
prescriptions include plastic and glass ovals, vials, rounds, squares and
ointment jars. The only other major producer of such prescription containers
is Kerr Group, Inc.
Label Products. The main product of this unit is the patented Plasti-Shield
label that can be heat shrunk around glass or plastic containers. The
following table shows Plasti-Shield labels sales as an approximate percentage
of total Label Products sales for the last three years:
1993 1992 1991
---- ---- ----
59% 67% 75%
Multi-Pack Carriers. This unit currently produces two proprietary product
lines, both of which are predominantly used as six-pack carriers -- Hi-Cone (a
registered trademark of Illinois Tool Works Inc.) plastic carriers for cans
and Contour-Pak plastic carriers for bottles. The combination of the
Contour-Pak carrier used in connection with the Plasti-Shield label provides
the bottler with a highly cost-effective multi-pack system.
Markets. Major markets for these units include the household products,
personal care products, health care, food and beverage industries.
Labels are sold internally and to other glass container manufacturers. The
following table shows the approximate percentage of labels manufactured by the
Company which were sold to other units of the Company, principally the
Company's glass container operations, for the last three years:
1993 1992 1991
---- ---- ----
47% 51% 55%
<PAGE>8
The plastic segment of the rigid packaging market is highly competitive and
fragmented due to generally available technology, low costs of entry and
customer emphasis on low package cost. A large number of competitors exists
on both a national and regional basis. The Company competes by emphasizing
total package supply, proprietary technology, new package development, and
packaging innovation. The Company is one of two producers of each of the
Plasti-Shield label, the Hi-Cone multi-pack carrier (produced under a license
agreement with the only other producer, Illinois Tool Works Inc.) and the
Contour-Pak carrier. The market for closures is divided into various
categories in which several suppliers compete for business on the basis of
price and product design.
The Company's strategy has been to compete in the higher growth segments of
the plastic bottle category where customers seek to use brand-specific
packaging to differentiate their products. The Company believes it is a
leader in technology and development of custom products and has a leading
market position for such products. The Company's product innovations in
plastic containers and closures include in-mold labeling for custom molded
bottles, Contour-Pak carriers for 4, 6 and 8-pack applications, printed
Contour-Pak carriers, multilayer structured bottles containing post consumer
recycled resin, Flex-Band and PlasTop tamper-evident closures, Clic Loc
child-resistant closures and Pharmacy Mate reversible prescription container
closures. The Company believes that unit sales of closure products have
benefitted from the conversion of over 50% of the soft drink closures segment
from aluminum to plastic since 1987.
The Company believes that its plastic business may be increasingly affected by
recycling and recycling content legislation as they become more widespread.
Content legislation, recently enacted in several states requires that a
certain specified minimum percentage of recycled plastic be included in new
plastic products. The Company believes that it is well positioned to meet
such legislated standards in part due to its material and multilayer process
technology. Due in part to some of the process and product changes which will
be required if recycling content legislation becomes more widespread, the
Company also believes that certain consumer products companies which currently
produce their own plastic containers may choose to exit the production of
containers, which should enable the Company to increase its sales to such
companies.
The Company's Plastics and Closures segment currently has technical assistance
agreements with 17 companies in 12 countries. These agreements, which cover
areas ranging from manufacturing and engineering assistance to support in
functions such as marketing, sales, and administration, allow the Company to
participate in the worldwide growth of the plastic packaging industry.
SPECIALIZED GLASS
The Company's Specialized Glass segment consisted of Kimble Glass Inc.
("Kimble"), which manufactures both glass and plastic specialty packaging and
laboratory ware; and a 50% equity interest in OI-NEG TV Products, Inc. ("OI-
NEG TV Products"). Amounts related to the Company's former table glassware
business have been reclassified from the Specialized Glass segment to
<PAGE>9
discontinued operations as a result of the June 1993 sale of Libbey. The
Company sold its remaining interest in OI-NEG TV Products in October 1993. In
addition, as a result of the December 31, 1993 sale of 51% of Kimble, the
Company will record its share of Kimble's operations on an equity basis
beginning in 1994.
Kimble is a producer of glass packaging for pharmaceutical and diagnostic uses
and laboratory ware for clinical and research applications. Products for
pharmaceutical and diagnostic uses include ampuls, vials, syringe barrels and
syringe cartridges which are sold through Kimble's direct sales force. In
addition, some consumer and industrial products are sold through the same
direct sales force, including glass tubing, coffee carafes, cosmetic packages
and miscellaneous blown and cut industrial parts.
Kimble is also a major producer of reusable and disposable glass and plastic
laboratory apparatus and supplies, producing over 4,000 different products
including traditional reusable laboratory glassware (beakers, pipets, burets
and flasks) as well as disposable products (glass culture tubes, pipets and
scintillation vials) used in clinical laboratory applications. The Kontes
Glass Company, a Kimble subsidiary, manufactures specialty glassware,
including filtration, distillation and environmental products.
Generally, pharmaceutical and personal care packaging products are sold
directly to customers, while scientific products are primarily marketed
through laboratory distributors.
The market for Kimble's products is worldwide. Competition in Kimble's
principal product lines is based primarily on quality, service and price.
Major competitors include Wheaton Glass Company, The West Company,
Incorporated, Corning Glass Works, and a number of other domestic and foreign
manufacturers. No one competitor is dominant.
Kimble's sales personnel are salaried employees who are generally eligible for
bonuses based on the Company's overall performance. The Kimble sales
personnel are not subject to minimum sales quota requirements.
ADDITIONAL INFORMATION
New Products
New products and numerous refinements of existing products are developed and
introduced in each segment every year. No single new product or refinement,
or group of new products and refinements, have been recently introduced or are
scheduled for introduction which required the investment of a material amount
of the Company's assets or which otherwise would be considered material.
Sources and Availability of Raw Materials
All of the raw materials the company uses have historically been available in
adequate supply from multiple sources. However, for certain raw materials,
there may be temporary shortages due to weather or other factors, including
disruptions in supply caused by raw material transportation or production
<PAGE>10
delays; such shortages are not expected to have a material effect on the
Company's operations.
Patents and Licenses
The Company has a large number of patents which relate to a wide variety of
products and processes, has pending a substantial number of patent
applications, and is licensed under several patents of others. While in the
aggregate its patents are of material importance to its business, the Company
does not consider that any patent or group of patents relating to a particular
product or process is of material importance when judged from the standpoint
of any segment or its business as a whole.
Seasonality
Sales of particular products of the Glass Containers and Plastics and Closures
business segments such as beer, soft drink, and certain food containers are
seasonal, with shipments typically greater in the second and third quarters of
the year.
Working Capital
In general, the working capital practices followed by the Company are typical
of the businesses in which it operates. During the first and second quarters
of the year the accumulation of inventories of certain products in advance of
expected shipments reflects the seasonal nature of those businesses and may
require periodic borrowings.
Customers
Major customers exist for each of the Company's industry segments, and in each
industry segment the loss of a few of these customers might have a material
adverse effect on the segment. No single customer accounts for 10% or more of
the consolidated net sales of the Company.
Research and Development
Research and development constitutes an important part of the Company's
activities. Research and development expenditures for continuing operations
were $23.1 million, $22.9 million, and $20.4 million for 1993, 1992, and 1991,
respectively. Operating engineering expenditures were $19.2 million, $23.1
million, and $21.9 million for 1993, 1992, and 1991, respectively. In
addition to new product development, substantial portions of the technical
effort are devoted to increased process control, automatic inspection, and
automation. Also, there is continued emphasis on reduction in energy use per
unit of production. No material amount of money was spent on customer-
sponsored research activities during 1993, 1992, or 1991.
Environment
The Company's operations in common with those of the industry generally, are
subject to numerous existing and proposed laws and governmental regulations
<PAGE>11
designed to protect the environment, particularly regarding plant wastes and
emissions and solid waste disposal. Capital expenditures for property, plant,
and equipment for environmental control activities were not material during
1993.
In addition, sales of non-refillable glass beverage bottles and other
convenience packages are affected by mandatory deposit laws and other types of
restrictive legislation. As of January 31, 1994, there are nine states with
mandatory deposit laws in effect.
Plastic containers have also been the subject of legislation in two states.
In anticipation of this legislation and through coordination with certain
customers, the Company has initiated procedures to utilize recycled plastic
resin in its manufacturing processes. During 1993, many plastic containers
for products other than food, drugs, and cosmetics converted to 25% of post
consumer resin. The Company believes it is the industry leader in such
technology.
A number of states are considering legislation to promote curbside recycling
and recycled content legislation as alternatives to mandatory deposit laws.
Although such legislation is not uniformly developed, the Company believes
that curbside recycling and recycling content legislation could become more
significant during the next five years.
Although the Company is unable to predict what legislation or regulations may
be adopted in the future with respect to environmental protection and waste
disposal, compliance with existing legislation and regulations has not had,
and is not expected to have, a material adverse effect on its capital
expenditures, results of operations, or competitive position.
Number of Employees
The Company's operations employed approximately 28,900 persons at December 31,
1993. A majority of these employees are hourly workers covered by collective
bargaining agreements, the principal one of which was renewed early in 1993
for three years. The Company considers it employee relations to be good. The
Company has not had any material labor disputes in the last five years, and
does not anticipate any material work stoppages in the near term.
Financial Information about Foreign and Domestic Operations and Export Sales
Information as to net sales, operating profit, and identifiable assets of the
Company's operating and geographic segments is included on pages 60-63.
Export sales, in the aggregate or by geographic area, were not material for
the years 1993, 1992, or 1991.
<PAGE>12
ITEM 2. PROPERTIES
The principal manufacturing facilities and other material important physical
properties of the continuing operations of the Company at December 31, 1993
are listed below and grouped by industry segment. All properties shown are
owned in fee except where otherwise noted.
Limestone Plant
Glass Containers Volcano, CA (2)
Glass Container Plants
Atlanta, GA Sand Plants
Brockway, PA Ione, CA (2)
Charlotte, MI Devilla, United Kingdom
Chicago Heights, IL (1)
Clarion, PA (1) Flat Glass Plants
Crenshaw, PA La Victoria, Venezuela
Danville, VA
Lakeland, FL Plastics and Closures
Lapel, IN Plastic Container Plants
Los Angeles, CA Atlanta, GA
Muskogee, OK (1) Baltimore, MD
Oakland, CA Belvidere, NJ
Pomona, CA (1) Charlotte, NC
Portland, OR Chicago, IL
Streator, IL Cincinnati, OH (1)
Toano, VA Dallas, TX
Tracy, CA Edison, NJ
Volney, NY Fairfield, CA
Waco, TX Findlay, OH (1), (2)
Winston-Salem, NC Florence, KY (1)
Zanesville, OH Greenville, SC
Rio de Janeiro, Brazil Harrisonburg, VA
Sao Paulo, Brazil Kansas City, MO (2)
Envigado, Colombia La Mirada, CA (2)
Zipaquira, Colombia Nashua, NH
Guayaquil, Ecuador Newburyport, MA
Callao, Peru Rossville, GA (2)
Vega Alta, Puerto Rico St. Louis, MO (2)
St. Albans, United Kingdom Sullivan, IN
Alloa, United Kingdom Vandalia, IL (1)
Harlow, United Kingdom Washington, NJ (2)
Peasley, United Kingdom
Cagua, Venezuela Mold Shop
Caracas, Venezuela Kansas City, MO (2)
Valencia, Venezuela
Valera, Venezuela Label Products Plant
Bardstown, KY (1)
Machine Shops Closure & Specialty Products Plants
Brockway, PA Bridgeport, CT
Godfrey, IL Brookville, PA
Manaus, Brazil Chattonooga, TN
Constantine, MI (1)
<PAGE>13
El Paso, TX (2) Corporate Facilities
Erie, PA World Headquarters Building
Hamlet, NC Toledo, OH (2)
Maumee, OH (2)
North Riverside, IL (2) Levis Development Park
Waterbury, CT Perrysburg, OH
Mexico City, Mexico
Las Piedras, Puerto Rico
Prescription Products Plant
Berlin, OH (1)
__________________
(1) This facility is financed in whole or in part under tax-exempt financing
agreements.
(2) This facility is leased in whole or in part.
The Company believes that its facilities are well maintained and currently
adequate for its planned production requirements over the next three to five
years.
ITEM 3. LEGAL PROCEEDINGS
See the second through last paragraphs of the section entitled "Contingencies"
on pages 55 - 60.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
<PAGE>14
EXECUTIVE OFFICERS OF THE REGISTRANTS
Set forth below are the names and the ages, positions, and offices held (as of
the date hereof), and a brief account of the business experience of each
executive officer. Each officer listed below holds the same position or
positions with Owens-Illinois Group, Inc. as he does with the Company.
Officers serve at the discretion of the Board of Directors.
Name and Age Position
- ------------ --------
Joseph H. Lemieux (63) . . . . . Chairman since 1991; Chief Executive
Officer since 1990; President and Chief
Operating Officer, 1986-1990; Director
since 1984. Member of Class III of the
Board of Directors of the Company, with a
term expiring in 1994.
Lee A. Wesselmann (58) . . . . . Senior Vice President and Chief Financial
Officer since 1988; Secretary, 1988-1990;
Vice President - Finance, 1988; Director
since 1988. Member of Class I of the
Board of Directors of the Company, with a
term expiring in 1995.
R. Scott Trumbull (45) . . . . . Executive Vice President, International
Operations since 1993; Vice President and
Director of Corporate Planning 1992-1993;
Vice President and General Manager of
Plastics and Closure Operations, 1986 -
1992.
Terry L. Wilkison (52) . . . . . Executive Vice President, Domestic
Packaging Operations since 1993; Vice
President and General Manager of
Plastics, Closures, and Prescription
Products 1992-1993; Vice President and
General Manager of Specialty Glass
Operations 1987-1992.
Thomas L. Young (50) . . . . . . Executive Vice President, Administration,
General Counsel and Secretary since 1993;
Vice President, General Counsel, General
Manager - Operations Administration and
Secretary 1992-1993; Vice President,
General Counsel and Secretary, 1990-1992;
Vice President and General Counsel -
Operations, 1988-1990.
<PAGE>15
Name and Age Position
- ------------ --------
Russell C. Berkoben (52) . . . . Vice President and General Manager of
Plastic Operations since 1991; Vice
President and Plastic Container Business
Unit Manager, 1985-1991.
Gary R. Clinard (55) . . . . . . Vice President and General Manager of
International Operations since 1990; Vice
President of International Operations and
Technical Assistance, 1987-1990.
Larry A. Griffith (48) . . . . . Vice President and General Manager of
Kimble since 1992; Vice President, 1990-
1992; Vice President of Corporate Staff
and Director of Corporate Planning, 1988-
1990;
John L. Hodges (54). . . . . . . Vice President and General Manager of
Glass Container Operations since 1993;
Vice President of Glass Container Sales
and Marketing, 1991-1993; Vice President
and General Manager of Glass Container
Manufacturing, 1984-1991.
Dale W. Leidy (54) . . . . . . . Vice President and Technical Director -
Glass Container since 1993; Vice
President and General Manager of Glass
Container Manufacturing 1991-1993; Vice
President and Technical Director -
Packaging, 1990-1991; Vice President and
Director of Manufacturing and Engineering
of Plastic Products, 1989-1990; Vice
President and Director of Manufacturing
of Plastic Products, 1986-1989.
Michael D. McDaniel (45) . . . . Vice President and General Manager of
Closure Operations since 1991; Vice
President and Director of Manufacturing
and Engineering of Closure Operations,
1990-1991; Vice President and
Manufacturing Manager of Closure
Operations, 1985-1990.
Philip McWeeny (54). . . . . . . Vice President and General Counsel -
Corporate since 1988.
<PAGE>16
Name and Age Position
- ------------ --------
Ronald H. Pfenning (45). . . . . Vice President of Glass Container Sales
and Marketing since 1993; Glass Container
Vice President and Industry Manager,
Food, 1992-1993; Glass Container Vice
President and Industry Manager, Brewing &
Liquor, 1989-1991.
B. Calvin Philips (52) . . . . . Vice President since 1990; Vice President
and General Manager of Closure and
Specialty Products, 1987-1990.
Robert A. Smith (52) . . . . . . Vice President and General Manager of
Glass Container Manufacturing since 1993;
Vice President and General Manager, West
Coast, 1990-1993; Vice President and Area
Manufacturing Manager, 1986-1990.
Larry C. Tollstam (51) . . . . . Vice President and General Manager of
Prescription Products Operations since
1988.
David G. Van Hooser (47) . . . . Vice President, Treasurer and Comptroller
since 1990; Vice President and Treasurer,
1988-1990.
<PAGE>17
PART II
ITEM 5. MARKET FOR OWENS-ILLINOIS, INC.'S COMMON STOCK
AND RELATED SHARE OWNER MATTERS
The price range for the Company's Common Stock on the New York Stock Exchange,
as reported by National Association of Securities Dealers, was as follows:
1993 1992
------------------ ----------------
High Low High Low
------ ------ ------ ------
First Quarter 12-1/4 10 14-1/2 11-1/2
Second Quarter 12 10 14 11-1/4
Third Quarter 11-5/8 9 12-1/8 8-1/4
Fourth Quarter 12-3/8 9-1/4 10-1/2 7-7/8
On February 28, 1994, there were 797 common share owners of record. No
dividends have been declared or paid since the Company's initial public
offering in December 1991. For restrictions on payment of dividends on Common
Stock, see Restriction on Retained Earnings included on page 50.
<PAGE>18
ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial data presented below relates to each of
the five years in the period ended December 31, 1993. Such data was derived
from the Consolidated Financial Statements, of which the most recent three
years are included elsewhere in this document, and were audited by Ernst &
Young, independent auditors, whose report with respect to the financial
statements appears elsewhere in this document. See Consolidated Financial
Statements -- Statement of Significant Accounting Policies -- and Financial
Review.
Year Ended December 31,
----------------------------------------------------
1993 1992 (b) 1991 (c) 1990 1989
-------- -------- -------- -------- --------
Consolidated Operating (Dollar amounts in millions)
Results (a):
Net sales. . . . . . $3,535.0 $3,392.6 $3,284.3 $3,383.3 $3,053.8
Other (d). . . . . . 127.1 81.6 83.3 84.4 83.4
-------- -------- -------- -------- --------
3,662.1 3,474.2 3,367.6 3,467.7 3,137.2
Costs and expenses:
Manufacturing, shipping
and delivery . . . 2,823.8 2,744.1 2,636.8 2,691.0 2,496.6
Research, engineering,
selling, administra-
tive and other (d) 842.8 260.3 223.6 315.1 230.5
Earnings (loss) from -------- -------- -------- -------- --------
continuing operations
before interest
expense and items
below. . . . . . . (4.5) 469.8 507.2 461.6 410.1
Interest expense . . 290.0 312.9 452.5 446.4 417.5
-------- -------- -------- -------- --------
Earnings (loss) from
continuing operations
before items
below. . . . . . . (294.5) 156.9 54.7 15.2 (7.4)
Provision (credit)
for income taxes . (113.1) 64.0 53.7 60.4 42.1
Minority share owners'
interests in
earnings of
subsidiaries . . . 19.4 14.6 11.8 8.6 7.9
Earnings (loss) from -------- -------- -------- -------- -------
continuing operations
before extraordinary
items and cumulative
effect of accounting
changes. . . . . . (200.8) 78.3 (10.8) (53.8) (57.4)
Net earnings (loss)
of discontinued
operations . . . . 1.4 18.4 3.8 (2.4) (10.2)
<PAGE>19
SELECTED FINANCIAL DATA -- continued
Year Ended December 31,
---------------------------------------------------
1993 1992 (b) 1991 (c) 1990 1989
------ --------- --------- ------- ------
(Dollar amounts in millions, except per share data)
Gain (loss) on sales of
discontinued operations,
net of applicable
income taxes . . . 217.0 (123.1)
Extraordinary charges
from early
extinguishment of
debt, net of
applicable income
taxes. . . . . . . (12.7) (31.5) (143.5) (40.5)
Cumulative effect on
prior years of
changes in methods
of accounting for
income taxes and
postretirement
benefits, net
of applicable
income taxes (b) . (199.4)
-------- -------- -------- -------- --------
Net earnings (loss). $ 4.9 $ (134.2) $ (273.6) $ (56.2) $ (108.1)
======== ======== ======== ======== ========
Earnings (loss) per
share of common
stock:
Earnings (loss)
from continuing
operations before
extraordinary
items and cumula-
tive effect of
accounting changes $ (1.70) $ 0.66 $ (0.27) $ (1.46) $ (1.55)
Net earnings (loss)
of discontinued
operations . . . 0.01 0.15 0.09 (0.06) (0.28)
Gain (loss) on sales
of discontinued
operations . . . 1.82 (3.07)
Extraordinary charges (0.10) (0.26) (3.58) (1.10)
Cumulative effect of
accounting
changes (b). . . (1.68)
-------- -------- -------- -------- --------
Net earnings (loss). $ 0.03 $ (1.13) $ (6.83) $ (1.52) $ (2.93)
======== ======== ======== ======== ========
<PAGE>20
SELECTED FINANCIAL DATA -- continued
Year Ended December 31,
----------------------------------------------------
1993 1992 (b) 1991 (c) 1990 1989
-------- -------- -------- -------- --------
Other Data: (Dollar amounts in millions)
The following are included in the
results from continuing operations:
Depreciation . . . $ 180.0 $ 181.9 $ 154.0 $ 150.3 $ 135.6
Amortization of
excess cost and
intangibles. . . 40.8 38.6 36.3 36.3 34.8
Amortization of
deferred finance
fees (included
in interest
expense) . . . . 11.5 12.0 13.6 13.7 14.3
-------- -------- -------- -------- --------
$ 232.3 $ 232.5 $ 203.9 $ 200.3 $ 184.7
======== ======== ======== ======== ========
Weighted average
shares outstanding
(in thousands) . . 118,978 118,980 40,089 36,940 36,890
Balance Sheet Data (at end of period):
Working capital. . $ 234 $ 245 $ 195 $ 339 $ 315
Total assets . . . 4,901 5,151 4,399 5,191 5,098
Total debt . . . . 2,487 3,107 2,932 4,005 3,904
Share owners' equity 295 299 415 (153) (98)
(a) Results of operations have been restated to reflect the effects of the
sale of the Libbey business, which was consummated on June 24, 1993, and
of the Health Care segment, which was consummated on October 24, 1991, as
discontinued operations.
(b) In the fourth quarter of 1992, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes," and
SFAS No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," each as of January 1, 1992. The impact of the changes on
1992 earnings from continuing operations consists of an additional $39.2
million of non-cash expenses partially offset by additional deferred tax
credits of $26.3 million. See Statement of Significant Accounting
Policies on page 37, Income Taxes on page 45, and Postretirement Benefits
Other Than Pensions on page 52 for explanations of these changes.
(c) The Company completed a recapitalization in the fourth quarter of 1991,
the effects of which are included in the Balance Sheet Data as of
December 31, 1991. For a discussion of the pro forma effects on the full
year 1991 results of operations, see Recapitalization on page 39.
(d) Other revenues in 1993 includes gains of $46.1 million (approximately
$34.6 million after tax) from divestitures. In the fourth quarter of
<PAGE>21
1993, the Company recorded charges totaling $578.2 million (approximately
$357.0 million after tax) principally for estimated uninsured future
asbestos-related costs and costs associated with its restructuring
program. Other revenues in 1990 includes gains of $29.6 million
(approximately $16.4 million after tax) from divestitures. In the fourth
quarter of 1990, the Company recorded a charge of $48.4 million
(approximately $31.0 million after tax) for special separation and
retirement benefits. See Other Revenues and Other Costs and Expenses on
page 53.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Results of Operations
Comparison of 1993 with 1992
The Company had a loss from continuing operations for 1993 of $200.8 million,
reflecting the $322.4 million net after tax effect of several unusual fourth
quarter charges and gains, which are discussed below. Excluding these unusual
fourth quarter items, the Company had earnings from continuing operations of
$121.6 million representing an increase of $43.3 million, or 55.3%, over 1992
earnings of $78.3 million. Results of operations for 1992 have been restated
to reflect the Libbey business, which was sold in June 1993, as a discontinued
operation. Generally improved operating results, particularly in the Glass
Containers segment, along with reduced interest expense, were principally
responsible for the increase.
Net earnings for 1993 were $4.9 million compared to a net loss of $134.2
million in 1992. The 1993 results include the net gain of $217.0 million from
the sale of the Libbey business while the 1992 loss includes a charge for the
cumulative effect of accounting changes of $199.4 million. Earnings of the
discontinued Libbey business were $1.4 million in 1993 and $18.4 million in
1992, including an after tax gain of $10.5 million on an asset sale.
Extraordinary charges from the early extinguishment of debt amounted to $12.7
million in 1993 and $31.5 million in 1992. For additional information see
Extraordinary Charges on page 53 and Discontinued Operations on page 54.
Capsule segment results (in millions of dollars) for 1993 and 1992 are as
follows (a):
- ------------------------------------------------------------------------------
Net sales to unaffiliated customers 1993 1992
- ------------------------------------------------------------------------------
Glass Containers $2,427.3 $2,421.7
Plastics and Closures 908.6 781.0
Specialized Glass 197.9 188.4
Other 1.2 1.5
- ------------------------------------------------------------------------------
Consolidated total $3,535.0 $3,392.6
==============================================================================
<PAGE>22
- ------------------------------------------------------------------------------
Operating profit 1993 (b) 1992
- ------------------------------------------------------------------------------
Glass Containers $ 117.4 $ 299.0
Plastics and Closures 123.3 133.4
Specialized Glass 18.9 12.7
Eliminations and other retained costs (305.0) (12.3)
- ------------------------------------------------------------------------------
Consolidated total $ (45.4) $ 432.8
==============================================================================
(a) See Segment Information included on pages 60 - 63.
(b) Reflects the net reductions from unusual fourth quarter charges and gains
as follows: Glass Container, $214.0 million; Plastics and Closures,
$16.0 million; Specialized Glass, $3.2 million; and other retained costs,
$298.9 million.
Consolidated net sales for 1993 increased $142.4 million, or 4.2% over the
prior year. In the Glass Containers segment, reported dollar sales of the
Company's international affiliates were up 4.7%, reflecting improved economic
conditions in Brazil and higher unit shipments by most Latin American
affiliates. These improved results were largely offset by the unfavorable
impact of foreign currency exchange rate changes on the reported sales of the
Company's United Kingdom affiliate, despite an increase in its unit shipments.
Domestic glass container shipments were down in 1993 by 0.6%, with reported
sales down 1.5%. These reductions reflect the continuing conversion of soft
drinks from glass to plastic (polyethylene terephthalate or PET) containers.
The Company believes this trend will continue, but to a lesser extent. The
capacity resulting from such conversions is being used for the production of
containers for products experiencing increased demand, such as iced tea and
other beverages. In the Plastics and Closures segment, sales increased $127.6
million, with over 60% of the increase resulting from the acquisition of
Specialty Packaging Products in the fourth quarter of 1992. Shipments in the
base closure and plastic bottle businesses were higher in 1993, further
contributing to the higher sales. Partially offsetting these favorable
comparisons was reduced unit volume in the labels and carriers business,
attributable in large part to the continuing conversion of soft drinks from
glass to PET containers. Net sales of the Specialized Glass segment increased
$9.5 million or 5.0% principally due to improved sales mix and higher unit
volume. The Specialized Glass segment, as restated for the sale of Libbey,
consists only of the Kimble laboratory and pharmaceutical glassware business.
In addition, on December 31, 1993, the Company completed the sale of a 51%
interest in the Kimble business to Gerresheimer Glas, AG. As a result, Kimble
will be accounted for on the equity basis beginning in 1994.
Consolidated operating profit for 1993, excluding the unusual fourth quarter
items discussed separately below, increased $53.9 million or 12.5% to $486.7
million from $432.8 million reported in 1992. Consolidated operating profit,
excluding the unusual items, was 13.8% of net sales in 1993 compared to 12.8%
in 1992. Lower benefit costs, which generally affected all segments,
accounted for the majority of this percentage improvement. Consolidated
operating expenses (consisting of selling and administrative, engineering, and
<PAGE>23
research and development expenses) as a percentage of net sales decreased to
6.4% in 1993 from 6.6% in 1992. Operating profit of the Glass Containers
segment, exclusive of the unusual items, increased $32.4 million or 10.8%.
Approximately one-half of the increase was attributable to the international
glass business, principally in Brazil as a result of increased shipments and
improved economic conditions. Increased operating profit in the domestic
glass business resulted from lower manufacturing costs and increased labor
productivity, along with the benefit of a mid-year price increase amounting to
approximately 1.5% on an annualized basis. Operating profit of the Plastics
and Closures segment, exclusive of the unusual items, increased 4.4% from
$133.4 million in 1992 to $139.3 million in 1993. The favorable effects of
increased unit shipments in most product lines and the full-year results of
the Specialty Packaging Products acquisition were significantly offset by
lower profit in the labels and carriers business as unit shipments of soft
drink labels and Hi-Cone carriers declined. Other retained costs, exclusive
of the unusual items, were $6.1 million in 1993 compared to $12.3 million in
1992, principally as a result of lower benefit costs.
During the fourth quarter of 1993, the Company recorded several unusual
charges and gains as part of continuing operations. Consistent with its focus
on core packaging businesses, the Company sold its remaining 50% interest in
the television glass business in October, concluding a joint venture
established in mid-1988. In addition, on December 31, 1993, the Company sold
a 51% interest in its Kimble laboratory and pharmaceutical glassware business.
Gains from these sales amounted to $46.1 million pretax ($34.6 after tax).
The Company's fourth quarter 1993 results include charges totalling $250
million, principally for costs related to its restructuring program. The
program is the result of a comprehensive reengineering study initiated by the
Company in mid-1993 in response to management's commitment to enhance customer
service, improve manufacturing efficiency and productivity, and reduce costs.
The results of the study, completed in the fourth quarter, indicated that
opportunities for improvement are available through a combination of changes
in the manufacturing and quality control processes, simplification of plant
management organizations, and consolidation of administrative
responsibilities. During its implementation over the next several years, the
program is expected to result in a 10% reduction of the Company's domestic
work force and ultimately, over the next three to four years, increases in
operating profit of $75 million or more on an annual basis. The severance and
early retirement costs of the work force reduction are estimated to be $165
million, with about one-half expected to require cash expenditures and one-
half representing non-cash pension costs. Another significant component,
estimated at $30 million, represents the expected write-down to realizable
value of production and other factory equipment which will be eliminated as a
result of implementing the improvements in manufacturing, quality control, and
customer service processes. Additional cash expenditures of approximately $5
million consist of fourth quarter 1993 fees related to the reengineering study
and expected costs of exiting a number of sales offices and warehouses. Other
items included in the $250 million, not directly related to the restructuring
program, totaled approximately $50 million and included costs related to a
December 1993 plant shutdown and an increase in estimated future fees and
indemnification costs related to various environmental and legal matters. In
<PAGE>24
addition to the $250 million charge, the Company recorded a $3.2 million
charge for relocating several manufacturing departments in the Kimble
business. The net after tax amount for all these charges was $156.3 million.
Also included in the fourth quarter of 1993 is a charge of $325 million
($200.7 million after tax) for estimated uninsured future asbestos-related
costs. The Company recorded the charge based on recent trends and
developments and their effect on the Company's ability to estimate probable
costs of pending and likely future asbestos-related claims. Among other
things, the Company has disposed of 70,000 claims in 1992 and 1993,
representing almost one-half of all the cases disposed since the initial cases
were resolved in 1979; certain of these claims were disposed in 1993 at higher
than expected costs. These recent claim dispositions have expanded the
Company's data base. The Company has also had increasing success in
establishing administrative procedures to process claims in an administrative
framework outside the tort litigation system. In addition, the Company has
experienced a reduction in the number of new filings claiming significant
exposure to its asbestos-containing insulation products, apparently due at
least in part to the time which has elapsed since its 1958 exit from the
business. The Company's estimate was affected by a number of other
developments that have occurred recently with respect to asbestos-related
litigation, not only against Owens-Illinois but against other companies,
including the generally lower percentage of legitimate claims of serious
illness or impairment among newly filed cases. The estimate includes the
expectation of a substantial amount of insurance coverage, principally from
insurance policies from various companies for the years 1977 through 1983. In
the event any portion of this coverage is not available, an additional charge
may be required. For additional information see Capital Resources and
Liquidity on page 26 and Contingencies on page 55.
Comparison of 1992 with 1991
For the year ended December 31, 1992, the Company recorded earnings from
continuing operations of $78.3 million compared with a loss of $10.8 million
in 1991. The improvement in earnings was due primarily to reduced interest
expense resulting from the Company's December 1991 recapitalization and
generally improved operating results in most of the Company's businesses. The
adoption of Statement of Financial Accounting Standards (SFAS) Nos. 109 and
106 had adverse impacts of $1.0 million and $11.9 million, respectively, on
1992 earnings from continuing operations. The net loss for 1992 was $134.2
million and included charges of $31.5 million from the early extinguishment of
debt and $199.4 million for the cumulative effect of accounting changes as of
the beginning of the year. The net loss for 1991 was $273.6 million which
included a $123.1 million loss on disposal of the discontinued Health Care
segment and an extraordinary charge of $143.5 million related to early
extinguishment of debt in connection with the Recapitalization. For
additional information, see Recapitalization on page 39 and Discontinued
Operations on page 54.
<PAGE>25
Capsule segment results (in millions of dollars) for 1992 and 1991 are as
follows (a):
- ------------------------------------------------------------------------------
Net sales to unaffiliated customers 1992 1991
- ------------------------------------------------------------------------------
Glass Containers $2,421.7 $2,369.4
Plastics and Closures 781.0 729.6
Specialized Glass 188.4 183.7
Other 1.5 1.6
- ------------------------------------------------------------------------------
Consolidated total $3,392.6 $3,284.3
==============================================================================
- ------------------------------------------------------------------------------
Operating profit 1992 (b) 1991
- ------------------------------------------------------------------------------
Glass Containers $ 299.0 $ 315.4
Plastics and Closures 133.4 139.2
Specialized Glass 12.7 27.0
Eliminations and other retained costs (12.3) (1.6)
- ------------------------------------------------------------------------------
Consolidated total $ 432.8 $ 480.0
==============================================================================
(a) See Segment Information included on pages 60 - 63.
(b) Reflects additional non-cash expenses of $40.9 million from the adoption
of SFAS Nos. 109 and 106 as follows: Glass Containers, $17.9 million;
Plastics and Closures, $11.5 million; Specialized Glass, $6.7 million;
and other retained costs, $4.8 million.
Consolidated net sales for 1992 increased 3.3% over the net sales reported in
1991. In the Glass Containers segment, net sales increased $52.3 million.
Combined unit sales of glass containers by the Company's Venezuelan and
Colombian affiliates increased 14.3%, accounting for most of the increased
sales. Net sales for the domestic glass container business approximated 1991.
In the Plastics and Closures segment, net sales increased $51.4 million due to
increased unit sales volume, including the effect of the fourth quarter 1992
acquisition of Specialty Packaging Products, Inc. The increases were
partially offset by the unit sales price reductions in the plastic containers
business as a result of passing through lower resin costs. Net sales of the
Specialized Glass segment increased 2.6% primarily due to higher unit sales
volume.
Consolidated operating profit for 1992 of $432.8 million reflects a reduction
from the prior year of $6.3 million along with the additional non-cash
expenses of $40.9 million for the current year effects of adopting two new
accounting standards. Results for 1991 were not restated for the accounting
changes. Consolidated operating profit was 14.0% of net sales in 1992 (before
the additional expenses from the accounting changes) and 14.6% in 1991.
Consolidated operating expenses as a percentage of net sales increased to 6.6%
in 1992 from 5.9% in 1991 principally as a result of additional expenses from
the accounting changes. The 1991 results included a gain of $11.0 million
from the receipt of an insurance settlement related to the costs of a 1988
furnace spill at the Oakland, California glass container plant.
<PAGE>26
The $16.4 million lower operating profit of the Glass Containers segment was
primarily due to the additional 1992 expenses of $17.9 million resulting from
the accounting changes. Lower U. S. dollar earnings of consolidated foreign
affiliates were primarily due to the impact of unfavorable economic conditions
in Brazil on the reported earnings of the segment's Brazilian affiliate. The
operating profit of the domestic glass container business increased 9.3%,
excluding both the one-time impact of the 1991 insurance settlement and the
1992 charges for accounting changes. The increase was principally due to
improved capacity utilization, improved machine and labor productivity, and
generally lower manufacturing costs. The Plastics and Closures segment
operating profit for 1992 reflects a 4.1% increase from operations compared to
the prior year which was more than offset by additional expenses of $11.5
million related to the accounting changes. The operating improvements were
due primarily to higher unit sales volume and better manufacturing performance
in its plastic products and closures businesses. The 1992 operating profit of
the Specialized Glass segment declined mainly due to costs in the
pharmaceutical packaging and laboratory ware businesses associated with higher
furnace rebuild and repair activity in 1992 compared to 1991, combined with
increased manufacturing costs not offset by unit sales price increases. Other
retained costs for 1992 include additional expenses of $4.8 million from the
accounting changes.
The Company's effective tax rate for 1992 of 40.8% exceeds statutory rates
primarily as a result of non-cash charges for the amortization of the excess
purchase cost for which no tax benefit is available. The effective tax rate
in 1991, adjusted for the pro forma effects of the Recapitalization, was
53.5%. The decrease in the rate was due in large part to the change in method
of accounting for income taxes. Assets and liabilities, which had been
recorded net-of-tax as previously required in accounting for acquisitions,
were adjusted to their pretax amounts and corresponding deferred taxes were
recorded. The resulting increased depreciation and amortization, combined
with offsetting reductions of the provision for taxes, reduced the effective
rate. In addition, the foreign taxes on earnings of consolidated foreign
subsidiaries were generally lower in 1992 compared to 1991.
Pro Forma Results of Operations for 1991
Assuming the Recapitalization had occurred at the beginning of 1991, pro forma
earnings from continuing operations for 1991 would have been $78.7 million.
The Company's pro forma results of operations for 1991 reflect an increase in
earnings from continuing operations of $89.5 million when compared to its
historical results of operations. The increase results from lower interest
expense net of applicable income taxes as a result of debt repurchases
financed with the proceeds of the various components of the Recapitalization.
Capital Resources and Liquidity
The Company's total debt at December 31, 1993, was $2.49 billion compared to
$3.11 billion at December 31, 1992.
<PAGE>27
At December 31, 1993, the Company had available credit of $1 billion under its
recently completed Bank Credit Agreement. After giving effect to borrowings
on January 3, 1994 to redeem the remaining $268.9 million of Senior Variable
Rate Notes outstanding, the amount available under the Agreement was $558.6
million. At December 31, 1992, total commitments under the Company's previous
credit facility were $725.0 million of which $288.2 million was available.
Cash provided by operating activities was $231.7 million in 1993 compared to
$214.4 million in 1992. Capital expenditures for property, plant and
equipment were $266.2 million in 1993 and $250.8 million in 1992. Net cash
proceeds from divestitures and asset sales exceeded $725 million in 1993 and
were not significant in 1992.
In December 1993, the Company entered into a new Bank Credit Agreement which
provides commitments for borrowings up to $1 billion through December 1998.
This Agreement replaces the prior credit facility which had been scheduled to
expire in September 1994. The interest rates on borrowings under the new
Agreement are favorable to the previous agreement by approximately .375% and
would become slightly more or less favorable should the Company's publicly-
traded Senior Debentures be assigned higher or lower ratings by major rating
agencies. In addition, there are no required principal payments or reductions
of available capacity during the term of the new Agreement. Therefore, on a
consolidated basis at December 31, 1993, the Company had in excess of $550
millon of borrowing capacity and relatively modest scheduled principal
payments for a five-year period through December 1998.
In the twelve-month period commencing January 1, 1994, the Company anticipates
that cash flow from its operations and from utilization of available credit
under the Bank Credit Agreement will be sufficient to fund its operating and
seasonal working capital needs, debt service and other obligations, including
cash payments required in connection with the restructuring program undertaken
in 1993. The Company's insurance coverage under agreements with Aetna,
relating to amounts payable by the Company with respect to asbestos-related
lawsuits and claims, was exhausted during the second quarter of 1992. As a
result thereof, the Company faces additional demands upon its liquidity for
such payment until the United Insurance litigation is resolved; the date of
the resolution is uncertain. As of December 31, 1993, the Company had made
such payments of $283 million of which $136 million was paid in 1993. In
addition, the Company has entered into group settlement agreements which
include settlement amounts payable in 1994 and later years. As of December
31, 1993, such deferred payment amounts were approximately $168 million. The
cumulative total of the receivable and the deferred amounts as of December 31,
1993, was $451 million, which represents the Company's pretax spending and
commitments to spend on disposed lawsuits and claims as of that date for which
the Company expects to be reimbursed by insurance. None of the foregoing
amounts represented a spending commitment with respect to lawsuits and claims
pending against the Company as of December 31, 1993. Based on the Company's
expectations regarding favorable trends which should lower its aggregate
payments for lawsuits and claims and its expectation of substantial insurance
coverage and reimbursement for such lawsuits and claims as a result of the
United Insurance litigation and also based on the Company's expected operating
cash flow, the Company believes that the payment of any deferred amounts of
previously settled or otherwise determined lawsuits and claims, and the
<PAGE>28
resolution of presently pending and anticipated future lawsuits and claims
associated with asbestos, will not have a material adverse effect upon the
Company's liquidity on a short-term or long-term basis.
Over the five-year term of the Bank Credit Agreement ending in December 1998,
the Company expects that the utilization of available credit thereunder,
combined with cash flows from operations, will be sufficient to fund its
operating and seasonal working capital needs, debt service, and other
obligations. Beyond that, based upon current levels of operations and
anticipated growth, the Company anticipates that it will have to refinance
existing indebtedness, sell assets and/or otherwise raise funds in either the
private or public markets to make all of the principal payments when due under
its outstanding debt securities, beginning with principal payments due in 1999
under the 10-1/4% Senior Subordinated Notes. There can be no assurance that
the Company will be able to refinance existing indebtedness or otherwise raise
funds in a timely manner or that the proceeds therefrom will be sufficient to
make all such principal payments.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Page
-----
Report of Independent Auditors 29
Consolidated Balance Sheets at December 31, 1993 and 1992 32-33
For the years ended December 31, 1993, 1992, and 1991:
Consolidated Results of Operations 30-31
Consolidated Share Owners' Equity 34
Consolidated Cash Flows 35-36
Statement of Significant Accounting Policies 37-38
Financial Review 39-63
Selected Quarterly Financial Data 64-65
<PAGE>29
===============================================================================
REPORT OF INDEPENDENT AUDITORS
===============================================================================
The Board of Directors and Share Owners
Owens-Illinois, Inc.
We have audited the accompanying consolidated balance sheets of Owens-
Illinois, Inc. as of December 31, 1993 and 1992, and the related consolidated
statements of results of operations, share owners' equity, and cash flows for
each of the three years in the period ended December 31, 1993. Our audits
also included the financial statement schedules listed in the Index at Item
14.(a). These financial statements and schedules are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements and schedules based on our audits.
We conducted our audits in accordance with generally accepted auditing stan-
dards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Owens-Illinois,
Inc. at December 31, 1993 and 1992 and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1993, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedules,
when considered in relation to the basic financial statements taken as a
whole, present fairly in all material respects the information set forth
therein.
As discussed in the Statement of Significant Accounting Policies and Financial
Review, in 1992 the Company changed its methods of accounting for
postretirement benefits other than pensions and income taxes.
Ernst & Young
Toledo, Ohio
February 4, 1994
<PAGE>30
===========================================================================
CONSOLIDATED RESULTS OF OPERATIONS Owens-Illinois, Inc.
Millions of dollars, except per share amounts
Years ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------------
Revenues:
Net sales $3,535.0 $3,392.6 $3,284.3
Royalties and net technical assistance 29.2 29.5 32.2
Equity earnings 25.3 23.2 11.7
Interest 15.6 13.8 15.5
Other 57.0 15.1 23.9
- ---------------------------------------------------------------------------
3,662.1 3,474.2 3,367.6
Costs and expenses:
Manufacturing, shipping, and delivery 2,823.8 2,744.1 2,636.8
Research and development 23.1 22.9 20.4
Engineering 19.2 23.1 21.9
Selling and administrative 182.9 178.2 152.4
Interest 290.0 312.9 452.5
Other 617.6 36.1 28.9
- ---------------------------------------------------------------------------
3,956.6 3,317.3 3,312.9
- ---------------------------------------------------------------------------
Earnings (loss) from continuing operations
before items below (294.5) 156.9 54.7
Provision (credit) for income taxes (113.1) 64.0 53.7
- ---------------------------------------------------------------------------
(181.4) 92.9 1.0
- ---------------------------------------------------------------------------
Minority share owners' interests
in earnings of subsidiaries 19.4 14.6 11.8
- ---------------------------------------------------------------------------
Earnings (loss) from continuing operations
before extraordinary items and cumulative
effect of accounting changes (200.8) 78.3 (10.8)
Net earnings of discontinued
operations 1.4 18.4 3.8
Gain (loss) on sales of discontinued
operations, net of applicable income
taxes 217.0 (123.1)
- ---------------------------------------------------------------------------
Earnings (loss) before extraordinary items
and cumulative effect of accounting
changes 17.6 96.7 (130.1)
Extraordinary charges from early
extinguishment of debt, net of applicable
income taxes (12.7) (31.5) (143.5)
Cumulative effect on prior years of changes
in methods of accounting for income taxes
and postretirement benefits, net of
applicable income taxes (199.4)
- ---------------------------------------------------------------------------
Net earnings (loss) $ 4.9 $ (134.2) $ (273.6)
===========================================================================
<PAGE>31
===========================================================================
CONSOLIDATED RESULTS OF OPERATIONS Owens-Illinois, Inc. -- Continued
Millions of dollars, except per share amounts
Years ended December 31, 1993 1992 1991
- ---------------------------------------------------------------------------
Earnings (loss) per share of common stock:
Earnings (loss) from continuing
operations before extraordinary
items and cumulative effect of
accounting changes $ (1.70) $ 0.66 $ (0.27)
Net earnings of discontinued
operations 0.01 0.15 0.09
Gain (loss) on sales of
discontinued operations 1.82 (3.07)
- ---------------------------------------------------------------------------
Earnings (loss) before extraordinary
items and cumulative effect of
accounting changes 0.13 0.81 (3.25)
Extraordinary charges (0.10) (0.26) (3.58)
Cumulative effect of accounting changes (1.68)
- ---------------------------------------------------------------------------
Net earnings (loss) $ 0.03 $ (1.13) $ (6.83)
===========================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
<PAGE>32
=============================================================================
CONSOLIDATED BALANCE SHEETS Owens-Illinois, Inc.
Millions of dollars, except share amounts
December 31, 1993 1992
- -----------------------------------------------------------------------------
Assets
Current assets:
Cash, including time deposits of $33.4
($38.9 in 1992) $ 67.1 $ 81.1
Short-term investments, at cost which
approximates market 26.5 24.9
Receivables, less allowances of $31.3
($31.4 in 1992) for losses and discounts 340.0 365.1
Inventories 472.8 565.6
Prepaid expenses 53.6 22.4
- -----------------------------------------------------------------------------
Total current assets 960.0 1,059.1
Investments and other assets:
Domestic investments and advances 20.6 82.4
Foreign investments and advances 81.9 81.7
Repair parts inventories 137.5 142.0
Deferred taxes 40.7
Prepaid pension 616.5 658.5
Deposits, receivables, and other assets 463.4 375.1
Excess of purchase cost over net assets
acquired, net of accumulated amortization
of $198.7 ($180.6 in 1992) 1,083.0 1,171.0
- -----------------------------------------------------------------------------
Total investments and other assets 2,443.6 2,510.7
Property, plant, and equipment:
Land, at cost 102.6 115.4
Buildings and equipment, at cost:
Buildings and building equipment 443.2 480.2
Factory machinery and equipment 1,744.9 1,747.8
Transportation, office, and miscellaneous equipment 52.9 54.8
Construction in progress 142.3 140.5
- -----------------------------------------------------------------------------
2,485.9 2,538.7
Less accumulated depreciation 988.1 957.4
- -----------------------------------------------------------------------------
Net property, plant, and equipment 1,497.8 1,581.3
- -----------------------------------------------------------------------------
Total assets $4,901.4 $5,151.1
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
<PAGE>33
=============================================================================
CONSOLIDATED BALANCE SHEETS Owens-Illinois, Inc. (continued)
Millions of dollars, except share amounts
December 31, 1993 1992
- -----------------------------------------------------------------------------
Liabilities and Share Owners' Equity
Current liabilities:
Short-term loans $ 49.2 $ 56.7
Accounts payable 240.7 256.3
Salaries and wages 79.2 90.5
U. S. and foreign income taxes 18.9 25.1
Other accrued liabilities 319.7 317.3
Long-term debt due within one year 18.4 68.0
- -----------------------------------------------------------------------------
Total current liabilities 726.1 813.9
Long-term debt 2,419.3 2,982.6
Deferred taxes 32.7 99.3
Nonpension postretirement benefits 415.3 496.0
Other liabilities 922.0 403.6
Commitments and contingencies
Minority share owners' interests 91.2 57.1
Share owners' equity:
Preferred stock 26.3 26.3
Common stock, par value $.01 per share, 250,000,000
shares authorized, 118,978,327 shares outstanding 1.2 1.2
Capital in excess of par value 1,033.9 1,034.0
Deficit (696.7) (701.6)
Cumulative foreign currency translation adjustment (69.9) (61.3)
- -----------------------------------------------------------------------------
Total share owners' equity 294.8 298.6
- -----------------------------------------------------------------------------
Total liabilities and share owners' equity $4,901.4 $5,151.1
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
<PAGE>33
=============================================================================
CONSOLIDATED SHARE OWNERS' EQUITY Owens-Illinois, Inc.
Millions of dollars
Years ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------
Preferred stock
Balance at beginning of year $ 26.3
Issuance of preferred stock $ 26.3
- -----------------------------------------------------------------------------
Balance at end of year 26.3 26.3
=============================================================================
Common stock
Balance at beginning of year 1.2 1.2 $ .4
Issuance of common stock .8
- -----------------------------------------------------------------------------
Balance at end of year 1.2 1.2 1.2
=============================================================================
Capital in excess of par value
Balance at beginning of year 1.034.0 1,034.0 184.3
Issuance of common stock 849.7
Purchase of common stock (.1)
- -----------------------------------------------------------------------------
Balance at end of year 1,033.9 1,034.0 1,034.0
=============================================================================
Deficit
Balance at beginning of year (701.6) (567.4) (293.8)
Net earnings (loss) 4.9 (134.2) (273.6)
- -----------------------------------------------------------------------------
Balance at end of year (696.7) (701.6) (567.4)
=============================================================================
Cumulative foreign currency
translation adjustment
Balance at beginning of year (61.3) (52.9) (43.8)
Net change for the year (8.6) (8.4) (9.1)
- -----------------------------------------------------------------------------
Balance at end of year (69.9) (61.3) (52.9)
=============================================================================
Total share owners' equity $ 294.8 $ 298.6 $ 414.9
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
<PAGE>35
=============================================================================
CONSOLIDATED CASH FLOWS Owens-Illinois, Inc.
Millions of dollars
Years ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------
Operating activities:
Earnings (loss) from continuing
operations before extraordinary
items and cumulative
effect of accounting changes $ (200.8) $ 78.3 $ (10.8)
Non-cash charges (credits):
Depreciation 180.0 181.9 154.0
Amortization of deferred costs 52.3 50.6 49.9
Uninsured asbestos-related costs 325.0
Restructuring and other costs 253.2
Gains on sales of interests in Kimble
and television glass businesses (46.1)
Deferred tax provision (credit) (145.6) 44.2 21.7
Issuance of debentures and accretion
of debt in lieu of cash interest 3.9 115.4
Other (8.1) (19.9) (30.8)
Dividends from equity affiliates 5.6 5.4 4.6
Reduction of non-current liabilities (55.1) (69.5) (43.6)
Change in non-current operating assets (110.5) (68.8) (7.4)
Change in components of working capital (10.9) (21.1) (22.5)
- -----------------------------------------------------------------------------
Cash provided by continuing operating
activities 239.0 185.0 230.5
Cash provided by (utilized in)
discontinued operating activities (7.3) 29.4 53.8
- -----------------------------------------------------------------------------
Cash provided by operating activities 231.7 214.4 284.3
Investing activities:
Additions to property, plant and equipment (266.2) (250.8) (216.2)
Acquisitions (34.0) (53.8)
Net proceeds from divestitures 727.3 17.6 375.3
Other 2.1 (1.8)
- -----------------------------------------------------------------------------
Cash provided by (utilized in) investing
activities 429.2 (288.8) 159.1
<PAGE>36
=============================================================================
CONSOLIDATED CASH FLOWS Owens-Illinois, Inc. (continued)
Millions of dollars
Years ended December 31, 1993 1992 1991
- -----------------------------------------------------------------------------
Financing activities:
Additions to long-term debt $ 107.0 $1,102.5 $1,019.4
Issuance of Common Stock 850.5
Repayments of long-term debt (712.1) (931.3) (2,192.4)
Payment of debt issuance and repurchase
fees and premiums (14.9) (57.4) (135.6)
Increase (decrease) in short-term loans (13.7) (1.9) 1.2
- -----------------------------------------------------------------------------
Cash provided by (utilized in)
financing activities (633.7) 111.9 (456.9)
Effect of exchange rate fluctuations on cash (41.2) (23.8) (12.7)
- -----------------------------------------------------------------------------
Increase (decrease) in cash (14.0) 13.7 (26.2)
Cash at beginning of year 81.1 67.4 93.6
- -----------------------------------------------------------------------------
Cash at end of year $ 67.1 $ 81.1 $ 67.4
=============================================================================
See accompanying Statement of Significant Accounting Policies and Financial
Review.
<PAGE>37
=============================================================================
STATEMENT OF SIGNIFICANT ACCOUNTING POLICIES
=============================================================================
Basis of Consolidated Statements. The consolidated financial statements of
Owens-Illinois, Inc. ("Company") include the accounts of its wholly-owned
direct subsidiary, Owens-Illinois Group, Inc. ("Group"), and all other major
subsidiaries. Substantially all the assets of the Company are represented by
its investment in and receivables from Group.
The consolidated financial statements have been reclassified to reflect the
Libbey business and the Health Care segment as discontinued operations. See
Discontinued Operations.
Newly acquired subsidiaries have been included in the consolidated financial
statements from dates of acquisition.
Consolidated foreign subsidiaries are principally reported on the basis of
fiscal years ending November 30.
The Company uses the equity method of accounting for investments in which it
has a significant ownership interest, generally 20% to 50%. Other investments
are accounted for at cost.
Changes in Methods of Accounting. In the fourth quarter of 1992, the Company
adopted the provisions of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes," ("SFAS No. 109") effective January 1, 1992. As
permitted by the Statement, financial statements for years prior to 1992 have
not been restated. Previous accounting rules required that assets acquired in
a business combination be recorded at their net-of-tax value. SFAS No. 109
requires that such acquired assets be recorded at their full assigned value
with offsetting deferred taxes. It further requires that assets acquired in
previous business combinations be restated.
Under the liability method required by the Statement, deferred tax assets and
liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using the enacted tax
rates and laws that will be in effect when the differences are expected to
reverse. Prior to the adoption of SFAS No. 109, income tax expense was
determined using the deferred method. Deferred tax expense was based on items
of income and expense that were reported in different years in the financial
statements and tax returns and were measured at the tax rate in effect in the
year the difference originated.
Also in the fourth quarter of 1992, the Company adopted the provisions of
Statement of Financial Accounting Standards No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," ("SFAS No. 106") effective
January 1, 1992. The Statement requires that the expected cost of providing
postretirement health and life insurance benefits must be accrued, for each
employee, during the years the employee renders the necessary service.
<PAGE>38
Previously, the Company had accounted for these benefits on the pay-as-you-go
(cash) basis.
Cash. The Company defines "cash" as cash and time deposits with maturities of
three months or less when purchased.
Fair Values of Financial Instruments. The carrying amounts reported for cash,
short-term investments and short-term loans approximate fair value. In
addition, carrying amounts approximate fair value for certain long-term debt
obligations subject to frequently redetermined interest rates. Fair values
for the Company's significant fixed rate debt obligations are generally based
on published market quotations.
Inventory Valuation. The Company uses the last-in, first-out (LIFO) cost
method of inventory valuation for most domestic manufacturing inventories.
Other manufacturing inventories are valued at the lower of standard costs
(which approximate average costs), average costs, or market.
Excess of Purchase Cost over Net Assets Acquired. The excess of purchase cost
over net assets acquired is being amortized over 40 years.
Property, Plant, and Equipment. In general, depreciation is computed using
the straight-line method.
Income Taxes on Undistributed Earnings. In general, the Company plans to
continue to invest in the business the undistributed earnings of foreign
subsidiaries and corporate joint ventures accounted for by the equity method.
Accordingly, no provision is made currently for taxes which would be payable
if such earnings were distributed.
Foreign Currency Translation. The assets and liabilities of certain
affiliates and associates are translated at current exchange rates and any
related translation adjustments are recorded directly in share owners' equity.
The Company's major affiliates in Brazil and Venezuela, as well as certain
associates accounted for by the equity method, operate in "highly
inflationary" economies. In such cases, certain assets of these affiliates
and associates are translated at historical exchange rates and all translation
adjustments are reflected in the statement of Consolidated Results of
Operations.
Income (Loss) Per Share of Common Stock. Income (loss) per share of common
stock is computed using weighted average shares of common stock outstanding
(118,978,327 shares for 1993, 118,979,638 shares for 1992, and 40,089,317
shares for 1991) after deducting dividend requirements for preferred stock.
Incremental shares applicable to outstanding stock options and exchangeable
preferred stock are not included in the calculation as they would not
materially affect the reported amounts.
<PAGE>39
=============================================================================
FINANCIAL REVIEW
Tabular data in millions of dollars, except share and per share amounts
- -----------------------------------------------------------------------------
Recapitalization
Late in 1991, the Company completed a Recapitalization designed to increase
equity, reduce indebtedness and interest expense, and improve operating and
financial flexibility. The Recapitalization included the sale of more than 82
million shares of Common Stock for approximately $855 million, issuance of $1
billion of 11% Senior Debentures, sale of the Company's Health Care business
for $369 million, and repurchase or refinancing of approximately $2.1 billion
of indebtedness. Assuming the Recapitalization had occurred at the beginning
of 1991, pro forma earnings from continuing operations for the year ended
December 31, 1991 would have been $78.7 million or $0.65 per share of Common
Stock, reflecting an increase of $89.5 million when compared to historical
results of operations. This increase results from pro forma adjustments
reducing interest expense by a total of $139.9 million, partially offset by a
$50.4 million adjustment to increase the provision for income taxes.
Changes in Components of Working Capital Related to Operations. Changes in
the components of working capital related to operations (net of the effects
related to acquisitions and divestitures and changes in methods of accounting)
were as follows:
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
Decrease (increase) in current assets:
Short-term investments $ (3.4) $ (1.3) $ (1.0)
Receivables (10.9) (10.8) 31.5
Inventories (17.3) (39.9) 6.2
Prepaid expenses 3.9 1.0 .5
Increase (decrease) in current liabilities:
Accounts payable and accrued liabilities 5.0 57.0 (52.2)
U. S. and foreign income taxes (6.0) (23.8) 1.7
Salaries and wages 1.2 (8.1) 9.8
- ----------------------------------------------------------------------------
$(27.5) $(25.9) $ (3.5)
============================================================================
Discontinued operations $(16.6) $ (4.8) $ 19.0
Continuing operations (10.9) (21.1) (22.5)
- ----------------------------------------------------------------------------
$(27.5) $(25.9) $ (3.5)
============================================================================
<PAGE>40
Inventories. Major classes of inventory are as follows:
- ----------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------
Finished goods $370.4 $436.4
Work in process 7.6 24.5
Raw materials 67.2 72.7
Operating supplies 27.6 32.0
- ----------------------------------------------------------------------------
$472.8 $565.6
============================================================================
If inventories valued on the LIFO method had been valued at standard or
average costs, which approximate current costs, consolidated inventories would
be higher than reported by $10.4 million and $22.9 million at December 31,
1993 and 1992, respectively.
Manufacturing inventories valued at the lower of standard costs (which
approximate average costs), average costs, or market at December 31, 1993 and
1992 were approximately $116.2 million and $114.2 million, respectively.
Investments. Domestic and foreign investments and advances relate principally
to equity associates. Summarized information pertaining to the Company's
equity associates follows:
- ----------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------
At year-end:
Equity in undistributed earnings:
Foreign $40.9 $32.1
Domestic 2.8 1.9
- ----------------------------------------------------------------------------
Total $43.7 $34.0
============================================================================
Equity in cumulative translation adjustment $(8.6) $(4.9)
============================================================================
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
For the year:
Equity in earnings before cumulative
effect of changes in methods of accounting:
Foreign $15.8 $12.4 $ 9.4
Domestic 9.5 10.8 2.3
- ----------------------------------------------------------------------------
Total $25.3 $23.2 $11.7
============================================================================
Dividends received:
Foreign $ 4.8 $ 4.9 $ 4.0
Domestic .8 .5 .6
- ----------------------------------------------------------------------------
Total $ 5.6 $ 5.4 $ 4.6
============================================================================
<PAGE>41
Summarized combined financial information for equity associates is as follows:
- ----------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------
At end of year:
Current assets $ 388.0 $ 480.5
Non-current assets 351.4 537.2
- ----------------------------------------------------------------------------
Total assets 739.4 1,017.7
- ----------------------------------------------------------------------------
Current liabilities 167.8 232.1
Other liabilities and deferred items 329.5 427.2
- ----------------------------------------------------------------------------
Total liabilities and deferred items 497.3 659.3
- ----------------------------------------------------------------------------
Net assets $ 242.1 $ 358.4
============================================================================
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
For the year:
Net sales $1,003.5 $1,114.2 $1,126.9
============================================================================
Gross profit $ 201.3 $ 182.1 $ 170.5
============================================================================
Net earnings $ 67.8 $ 59.7 $ 55.6
============================================================================
During the fourth quarter of 1993, the Company sold the remaining 50% interest
in the television glass business, the results of which are included above
through the date of sale. On December 31, 1993, the Company sold 51% of its
Kimble business. Results of the Kimble business were consolidated to that
date; however, balance sheet data at December 31, 1993, is included above.
At December 31, 1993, the Company's equity in the undistributed earnings of
foreign subsidiaries, for which income taxes had not been provided,
approximated $115 million. It is not practicable to estimate the U.S. and
foreign tax which would be payable should these earnings be distributed. In
general, no provision for deferred tax has been recorded as the Company plans
to continue to invest these earnings in the business of the affiliates.
Foreign Currency Translation. Aggregate foreign currency exchange gains
(losses) included in other costs and expenses were $(16.1) million in 1993,
$18.4 million in 1992, and $9.2 million in 1991, and resulted principally from
translation of the balance sheets of the Company's major affiliates in Brazil
and Venezuela.
<PAGE>42
Changes in the cumulative foreign currency translation adjustment were as
follows:
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
Balance at beginning of year $ (61.3) $(52.9) $(43.8)
Net effect of exchange rate
fluctuations (10.8) (9.0) (7.9)
Previous adjustments eliminated
in divestitures (.3) (1.1)
Deferred income taxes 2.5 1.7 (1.2)
- ----------------------------------------------------------------------------
Balance at end of year $ (69.9) $(61.3) $(52.9)
============================================================================
The net effect of exchange rate fluctuations generally reflects changes in the
relative strength of the U.S. dollar against major foreign currencies between
the beginning and end of the year.
Operating Leases. Rent expense attributable to all operating leases was $54.2
million in 1993, $59.4 million in 1992, and $59.6 million in 1991. Contingent
rental expense was not significant in any period presented. Minimum future
rentals under operating leases are as follows: 1994, $32.2 million; 1995,
$27.3 million; 1996, $23.2 million; 1997, $22.1 million, 1998, $19.3 million;
and 1999 and thereafter, $121.0 million.
Other Accrued Liabilities. At December 31, 1993 and 1992, other accrued
liabilities include accruals for interest, consisting principally of interest
accrued on domestic obligations of $40.2 million and $49.4 million,
respectively, and for employee health care benefits of $36.0 million and $40.6
million, respectively.
<PAGE>43
Long-Term Debt
The following table summarizes the long-term debt of the Company at December
31, 1993 and 1992:
- -----------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------
Bank Credit Agreements:
Revolving Loans $ 57.6 $ 125.0
Working Capital and Swing Line Loans 141.0
Bid Rate Loans 35.0
Senior Notes and Debentures:
Senior Debentures, 11%, due 1999 to 2003 1,000.0 1,000.0
Series A Senior Reset Notes 41.2
Senior Variable Rate Notes 268.9 370.0
12-1/2% Senior Notes 130.0
Senior Subordinated Notes:
10-1/4%, due 1999 250.0 250.0
10-1/2%, due 2002 150.0 150.0
10%, due 2002 250.0 250.0
9-3/4%, due 2004 200.0 200.0
9.95%, due 2004 100.0 100.0
Other 161.2 258.4
- -----------------------------------------------------------------------------
2,437.7 3,050.6
Less amounts due within one year 18.4 68.0
- -----------------------------------------------------------------------------
Long-term debt $2,419.3 $2,982.6
=============================================================================
In December 1993, the Company entered into an agreement with a group of banks
("Bank Credit Agreement" or "Agreement") which provides Revolving Loan
Commitments under which the Company may borrow up to $1 billion through
December 1998. Amounts outstanding under the Company's previous credit
agreement were repaid. The Agreement includes Swing Line and Overdraft
Account facilities providing for aggregate borrowings up to $50 million which
reduce the amount available for borrowing under the Revolving Loan
Commitments. In addition, the terms of the Bank Credit Agreement permit the
Company to request Bid Rate Loans from banks participating in the Agreement
and to issue Commercial Paper notes to other purchasers. Borrowings
outstanding under Bid Rate Loans and Commercial paper notes are limited to
$450 million in the aggregate and reduce the amount available for borrowing
under the Revolving Loan Commitments. The Revolving Loan Commitments also
provide for the issuance of letters of credit totaling up to $300 million.
At December 31, 1993, the Company had unused credit available under the Bank
Credit Agreement of $827.5 million. However, on January 3, 1994, the Company
completed the redemption of its Senior Variable Rate Notes by borrowing $268.9
million under the Agreement, thereby reducing available credit to $558.6
million.
Revolving loans bear interest, at the Company's option, at the prime rate or a
Eurodollar deposit-based rate plus a margin linked to published ratings of the
Company's senior debt instruments. The margin is currently .875% and is
<PAGE>44
limited to a range of .625% to 1%. Swing Line and Overdraft Account loans
bear interest at the prime rate minus the commitment fee percentage, defined
below. The weighted average interest rate on borrowings outstanding under the
Bank Credit Agreement at December 31, 1993, was 4.17%. While no compensating
balances are required by the Agreement, the Company must pay a commitment fee
on the excess of the Revolving Loan Commitments over the aggregate amount of
Revolving Loans outstanding. The commitment fee, currently .375%, is subject
to reduction to .25%, also based on changes in published rates.
The capital stock and intercompany debt obligations of most of the Company's
domestic subsidiaries are pledged as collateral for borrowings under the
Agreement and certain other obligations. While these pledges do not directly
encumber the operating assets owned by these subsidiaries, the Agreement
restricts the creation of liens on them. The Agreement also requires the
maintenance of certain financial ratios, restricts the incurrence of
indebtedness and other contingent financial obligations, and restricts certain
types of business activities and investments.
The Senior Debentures rank pari passu with the obligations of the Company under
the Bank Credit Agreement and other senior indebtedness, and senior in right
of payment to all existing and future subordinated debt of the Company. The
Senior Debentures are guaranteed on a senior basis by Group and most of the
Company's domestic subsidiaries and secured by a pledge of the capital stock
of, and intercompany indebtedness of, Group and such subsidiaries.
Annual maturities for all of the Company's long-term debt through 1998 are as
follows: 1994, $18.4 million; 1995, $16.6 million; 1996, $17.3 million; 1997,
$3.5 million; and 1998, $335.3 million.
Interest paid in cash aggregated $284.2 million for 1993, $304.8 million for
1992, and $403.0 million for 1991.
Fair values at December 31, 1993, of the Company's significant fixed rate debt
obligations are as follows:
- -----------------------------------------------------------------------------
Indicated
Principal Market
Amount Price Fair Value
- -----------------------------------------------------------------------------
11% Senior Debentures $1,000.0 113 $ 1,130.0
Senior Subordinated Notes:
10-1/4% 250.0 106-1/2 266.3
10-1/2% 150.0 108-1/2 162.8
10% 250.0 106-1/2 266.3
9-3/4% 200.0 106-5/8 213.3
9.95% 100.0 107-7/8 107.9
- -----------------------------------------------------------------------------
<PAGE>45
Income Taxes. During the fourth quarter of 1992, the Company adopted SFAS No.
109, "Accounting for Income Taxes" effective January 1, 1992. The Statement
requires the use of the asset and liability approach for financial accounting
and reporting for income taxes. Financial statements for prior years have not
been restated.
The cumulative effect of adopting SFAS No. 109 as of January 1, 1992, was to
increase net earnings by $97.0 million. For the year ended December 31, 1992,
application of the new income tax rules decreased pretax earnings by $23.7
million principally because of increased depreciation and amortization as a
result of SFAS No. 109's requirement to report assets acquired in prior
business combinations at their pretax amounts. The provision for income taxes
decreased by $22.7 million as a result of the change. The net decrease in
1992 earnings from continuing operations was $1 million, or $.01 per share.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities at December 31, 1993 and
1992 are as follows:
- -----------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------
Deferred tax assets:
Other accrued liabilities $215.5 $143.2
Accrued postretirement benefits 145.9 168.8
Uninsured future asbestos-related costs 113.8
U. S. Federal tax loss carryovers 92.1 159.6
Other 57.1 88.1
- -----------------------------------------------------------------------------
Total deferred tax assets 624.4 559.7
Less valuation reserve (23.6)
- -----------------------------------------------------------------------------
Net deferred tax assets 624.4 536.1
Deferred tax liabilities:
Prepaid pension costs 204.0 219.4
Property, plant and equipment 177.4 215.8
Receivables and other assets 114.3 72.8
Inventory 45.5 53.3
Other 27.6 61.1
- -----------------------------------------------------------------------------
Total deferred tax liabilities 568.8 622.4
- -----------------------------------------------------------------------------
Net deferred tax assets (liabilities) $ 55.6 $(86.3)
=============================================================================
<PAGE>46
Deferred taxes are included in the Consolidated Balance Sheets at December 31,
1993 and 1992 as follows:
- -----------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------
Prepaid expenses $ 47.6 $ 13.0
Deferred tax assets 40.7
Deferred tax liabilities (32.7) (99.3)
- -----------------------------------------------------------------------------
Net deferred tax assets (liabilities) $ 55.6 $(86.3)
=============================================================================
The provision for income taxes consists of the following:
- -----------------------------------------------------------------------------
Deferred
Liability Method Method
1993 1992 1991
- -----------------------------------------------------------------------------
Current:
State and local $ 2.0 $ 3.7 $ 5.0
Foreign 31.6 28.7 32.9
- -----------------------------------------------------------------------------
33.6 32.4 37.9
- -----------------------------------------------------------------------------
Deferred:
U. S. federal (120.8) 42.1 24.3
State and local (17.0) 3.9 (.1)
Foreign (7.8) (1.8) (2.5)
- -----------------------------------------------------------------------------
(145.6) 44.2 21.7
- -----------------------------------------------------------------------------
Total:
U. S. federal (120.8) 42.1 24.3
State and local (15.0) 7.6 4.9
Foreign 23.8 26.9 30.4
- -----------------------------------------------------------------------------
$ (112.0) $ 76.6 $ 59.6
=============================================================================
The provision for income taxes has been
allocated as follows:
Continuing operations $ (113.1) $ 64.0 $ 53.7
Discontinued operations 1.1 12.6 5.9
- -----------------------------------------------------------------------------
$ (112.0) $ 76.6 $ 59.6
=============================================================================
<PAGE>47
The 1991 provision for deferred taxes as calculated under the deferred method
of accounting consists of the following:
- -----------------------------------------------------------------------------
1991
- -----------------------------------------------------------------------------
Charges (credits) related to:
Reduction of deferred tax credits from tax net operating loss
carryforwards, exclusive of acquisition effects $(1.8)
Receivables 18.0
Alternative minimum tax credit carryforwards 6.0
Foreign dividends 2.8
Compensation 2.0
Postretirement benefits 1.2
Property, plant, and equipment .4
Inventory (1.0)
Deferred costs (1.3)
Foreign currency (1.6)
Other items (3.0)
- ----------------------------------------------------------------------------
$21.7
============================================================================
The provision for income taxes was calculated based on the following
components of earnings (loss) before income taxes and extraordinary items:
- ------------------------------------------------------------------------------
1993 1992 1991
- ------------------------------------------------------------------------------
Continuing operations:
Domestic $(411.6) $64.5 $(31.6)
Foreign 117.1 92.4 86.3
Discontinued operations 2.5 31.0 9.7
- ------------------------------------------------------------------------------
$(292.0) $187.9 $ 64.4
==============================================================================
Income taxes paid in cash were as follows:
- -----------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------
Domestic $ 1.0 $14.1 $ 4.4
Foreign 18.5 13.2 15.0
- -----------------------------------------------------------------------------
$19.5 $27.3 $19.4
=============================================================================
<PAGE>48
A reconciliation of the provision for income taxes based on the statutory U.S.
federal tax rate of 35% (34% for 1992 and 1991) to the consolidated provision
for income taxes is as follows:
- -----------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------
Pretax earnings (loss) at statutory
U. S. Federal tax rate $(102.2) $63.9 $21.9
Increase (decrease) in provision for
income taxes due to:
Effects of purchase price allocation
including amortization of excess cost 11.0 10.8 26.7
Divestitures (8.3)
Adjustment for enacted change in tax
rate 2.4
Effect of tax provision on
consolidated foreign earnings (1.6) 2.2 8.1
Effect of tax provision on equity
earnings (2.6) (3.3) (.1)
State and local income taxes net
of related federal taxes (9.7) 5.0 2.9
Other items (1.0) (2.0) .1
- -----------------------------------------------------------------------------
Consolidated provision (credit) for
income taxes $(112.0) $76.6 $59.6
=============================================================================
For U. S. Federal income tax purposes, approximately $263 million of net
operating loss is available as a carryover at December 31, 1993. Carryovers
of the net operating loss expire beginning in 2004. Capital loss carryovers
were fully utilized in 1993 by capital gains. For financial reporting
purposes, a valuation reserve was established as of January 1, 1992 for $70
million of the capital loss carryover. The valuation reserve was eliminated
in 1993, thereby reducing the tax provision that otherwise would be required
on the gain on the sale of the Libbey business.
Additionally, credits for alternative minimum tax paid of approximately $16
million are available to offset future U. S. federal income tax. These
credits do not expire.
The issuance of shares of common stock in conjunction with the
recapitalization in 1991 resulted in a change of ownership for U. S. Federal
income tax purposes. The Company's use of net operating loss, capital loss
and tax credit carryovers is limited pursuant to Section 382 and 383 of the
Internal Revenue Code.
<PAGE>49
Preferred Stock. Preferred shares, $.01 par value, $7.00 cumulative dividend,
issuable in series, at December 31, 1993, were as follows:
Number of Shares
Series A Exchangeable ----------------
Authorized 75,000
Issued and outstanding 65,625
Series B Exchangeable
Authorized 75,000
Issued and outstanding 65,625
Series C Exchangeable
Authorized 150,000
Issued and outstanding 131,250
The preferred shares are exchangeable into a number of common shares
determined by multiplying the total number of exchangeable shares being
exchanged by the sum of $100 plus all dividends accumulated and unpaid on each
share being exchanged and dividing such amount by the last reported sales
price of common shares on the New York Stock Exchange at the close of business
on the business day next preceding the day of exchange. The shares are
exchangeable at the option of the owners as follows: Series A, from and after
the third anniversary of the date of issuance; Series B, from and after the
fifth anniversary of the date of issuance; and Series C, from and after the
sixth anniversary of the date of issuance.
Holders of the preferred shares have no voting rights, except on actions which
would affect their rights to exchange shares for common shares, or on actions
to increase the authorized number of exchangeable shares.
Stock Options. Nonqualified options to purchase shares of common stock of the
Company are outstanding under the Stock Option Plan for Key Employees as
amended and restated effective December 18, 1991.
Stock option activity is as follows:
- ---------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------
Shares under option:
Outstanding at beginning of year 4,522,594 3,608,644
Granted 442,255 933,250
Exercised (5,853)
Canceled (46,300) (19,300)
- ---------------------------------------------------------------------------
Outstanding at end of year 4,912,696 4,522,594
===========================================================================
Price range of options granted $11.50 $8.875-$12.50
===========================================================================
<PAGE>50
- ---------------------------------------------------------------------------
1993 1992
- ---------------------------------------------------------------------------
At end of year:
Shares reserved for option grants 2,540,613 2,966,168
===========================================================================
Share options exercisable 3,647,141 3,595,244
===========================================================================
Price range of options exercisable $5.00-$12.50 $5.00-$12.50
===========================================================================
Restriction on Retained Earnings. Under the terms of the Bank Credit
Agreement and the various Indentures related to the Company's senior and
subordinated notes and debentures (see Long-Term Debt), the Company may not
pay dividends with respect to its Preferred or Common Stock and is restricted
in the number of shares of its Common Stock which can be redeemed.
Restrictions on Transfer of Assets. The governments and national banking
systems of certain countries in which the Company has consolidated foreign
affiliates impose various restrictions on the payment of dividends and
transfer of funds out of those countries. Additionally, provisions of credit
agreements entered into by certain foreign affiliates presently restrict the
payment of dividends. The estimated U.S. dollar value of the foreign net
assets included in the Consolidated Balance Sheets that are restricted in some
manner as to transfer to the Company was approximately $153 million at
December 31, 1993.
Pension Benefit Plans. Net credits to continuing operations for all of the
Company's pension plans and certain deferred compensation arrangements
amounted to $26.7 million in 1993, $29.6 million in 1992, and $33.0 million in
1991.
The Company has pension plans covering substantially all domestic employees.
Benefits generally are based on compensation for salaried employees and on
length of service for hourly employees. The Company's policy is to fund
domestic pension plans such that sufficient assets will be available to meet
future benefit requirements.
The following tables relate to the Company's principal domestic pension plans.
<PAGE>51
The funded status at year-end was as follows:
- ----------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Vested $1,621.9 $1,556.7
Nonvested 109.9 99.0
- ----------------------------------------------------------------------------
Accumulated benefit obligation 1,731.8 1,655.7
Effect of assumed benefit increases 145.3 265.1
- ----------------------------------------------------------------------------
Projected benefit obligation 1,877.1 1,920.8
Plan assets at fair value 2,250.9 2,269.6
- ----------------------------------------------------------------------------
Plan assets in excess of projected benefit
obligation 373.8 348.8
Unrecognized prior service cost 44.0 67.2
Unrecognized net loss 198.7 242.5
- ----------------------------------------------------------------------------
Prepaid pension $ 616.5 $ 658.5
============================================================================
The components of the net pension credit for the year were as follows:
- -----------------------------------------------------------------------------
1993 1992 1991
- -----------------------------------------------------------------------------
Service cost - (benefits earned
during the period) $ 30.8 $ 29.0 $ 27.7
Interest cost on projected
benefit obligation 150.5 146.0 144.8
Actual return on plan assets (356.6) (27.9) (510.9)
Net amortization and deferral 139.4 (186.0) 298.5
- ----------------------------------------------------------------------------
$ (35.9) $ (38.9) $ (39.9)
============================================================================
The actuarial present value of benefit obligations is based on a discount rate
of 7.25% for 1993 and 8% for 1992. Future benefits are assumed to increase in
a manner consistent with past experience of the plans, which, to the extent
benefits are based on compensation, includes assumed salary increases on a
scale of 5% for 1993 and 6.5% for 1992. The expected long-term rate of return
on assets was 10% for 1993, 1992, and 1991. Amortization included in net
pension credits is based on the average remaining service of employees. Plan
assets include marketable equity securities which, at December 31, 1993,
included 19,099,637 shares of the Company's Common Stock, government and
corporate debt securities, real estate and commingled funds. During 1993,
1992, and 1991,the Company transferred $30.0 million, $31.7 million, and $42.9
million, respectively, of pension plans assets to a special trust for the
purpose of funding qualified current retiree health liabilities.
<PAGE>52
Postretirement Benefits Other Than Pensions. The Company provides certain
retiree health care and life insurance benefits covering substantially all
U.S. salaried and certain hourly employees. Employees are generally eligible
for benefits upon retirement and completion of a specified number of years of
creditable service.
In the fourth quarter of 1992, the Company adopted the provisions of SFAS No.
106, "Employers' Accounting for Postretirement Benefits Other Than Pensions,"
for its postretirement benefit plans, effective January 1, 1992 on the
immediate recognition basis. Previously, the Company has expensed the cost of
such benefits on the pay-as-you-go (cash) basis, amounting to $16.8 million in
1991. The cumulative effect as of January 1, 1992 of adopting SFAS No. 106
was to decrease net earnings by $470.5 million, less applicable income taxes
of $174.1 million. The change resulted in a decrease in 1992 earnings from
continuing operations of $11.9 million, or $0.09 per share.
The components of the net postretirement benefit cost for 1993 and 1992 were
as follows:
- -----------------------------------------------------------------------------
1993 1992
- -----------------------------------------------------------------------------
Service cost (benefits earned during the period) $ 5.1 $ 7.8
Interest cost on accumulated postretirement benefit
obligation 26.7 37.9
Amortization (15.8)
- -----------------------------------------------------------------------------
Net postretirement benefit cost $ 16.0 $ 45.7
=============================================================================
The components of the accumulated postretirement benefit obligation and
amounts accrued at year-end were as follows:
- ----------------------------------------------------------------------------
1993 1992
- ----------------------------------------------------------------------------
Actuarial present value of benefit obligations:
Retirees and dependents $ 259.8 $ 245.0
Eligible active employees 19.0 25.8
Other active employees 41.8 69.6
- ----------------------------------------------------------------------------
320.6 340.4
Unamortized prior service credit 146.0 173.8
Unrecognized net loss (51.3) (18.2)
- ----------------------------------------------------------------------------
Nonpension postretirement benefits $ 415.3 $ 496.0
============================================================================
Assumed health care cost inflation was based on a rate of 9.5%, declining
ratably to an ultimate rate of 6%. A one percentage point increase in these
rates would have increased the accumulated postretirement benefit obligation
at December 31, 1993 by $16.3 million and increased the net postretirement
benefit cost for 1993 by $2.5 million. The assumed discount rates used in
determining the accumulated postretirement benefit obligation were 7.25% and
8% at December 31, 1993 and 1992, respectively.
<PAGE>53
Benefits provided by the Company for certain of the hourly retirees are
determined by collective bargaining. Most other domestic hourly retirees
receive health and life insurance benefits from a multiemployer trust
established by collective bargaining. Payments to the trust as required by
the bargaining agreements are based upon specified amounts per hour worked and
were $7.3 million in 1993 and $7.9 million in 1992. Postretirement health and
life benefits for retirees of foreign affiliates are generally provided
through the national health care programs of the countries in which the
affiliates are located.
Other Revenues. Other revenues for the year ended December 31, 1993, includes
gains totaling $46.1 million (approximately $34.6 million after tax) from the
fourth quarter sales of the remaining 50% interest in the television glass
business and of 51% of the Kimble business.
Other Costs and Expenses. Other costs and expenses for the year ended
December 31, 1993, includes $325 million for estimated uninsured future
asbestos-related costs and charges totaling $253.2 million, principally for
costs related to a restructuring program and including approximately $50
million for costs related to a December 1993 plant shutdown and an increase in
estimated future fees and indemnification costs related to various
environmental and legal matters. Substantially all of the amounts accrued are
included in other liabilities at December 31, 1993.
Extraordinary Charges. During 1993, the Company redeemed the entire $130
million principal amount of its 12-1/2% Senior Notes, $41.2 million principal
amount of its Series A Senior Reset Notes, and $67.2 million of its 9.35% and
7-5/8% debentures outstanding. In addition, the Company repurchased $101.1
million of its Senior Variable Rate Notes and called the balance of $268.9
million for redemption on January 3, 1994. During the fourth quarter, the
Company entered into a new Bank Credit Agreement and repaid all amounts
outstanding under its previous agreement. As a result of the repayment of
these obligations prior to their scheduled maturities, the Company recorded
extraordinary charges of $20.3 million for the write-off of unamortized
finance fees and redemption premiums, less applicable income taxes of $7.6
million.
During 1992, the Company used the proceeds from the issuance of $250 million
of 10-1/4% Senior Subordinated Notes, $150 million of 10-1/2% Senior
Subordinated Notes, $250 million of 10% Senior Subordinated Notes, and $200
million of 9-3/4% Senior Subordinated Notes to redeem $425 million aggregate
principal amount of 12.25% Senior Subordinated Notes at 103.5% of the
principal amount, the remaining $42.7 million (accreted value) of Junior
Subordinated Discount Debentures at 102.458% of accreted value, and to redeem
all of the $325 million aggregate principal amount of 12.75% Subordinated
Debentures at 106.375% of the principal amount. As a result of the repayment
of these obligations prior to their scheduled maturities, the Company recorded
extraordinary charges of $49.5 million for the write-off of unamortized
finance fees and redemption premiums, less applicable income taxes of $18.0
million.
<PAGE>54
As part of the Company's Recapitalization in the fourth quarter of 1991,
approximately $2.1 billion of indebtedness was redeemed or repurchased. As a
result of the repayment of these obligations prior to their scheduled
maturities, the Company recorded an extraordinary charge of $144.7 million
less a $1.2 million state and local tax benefit. No federal income tax
benefit was allocated based on the Company's accounting for its net operating
loss position prior to the adoption of SFAS No. 109 in 1992. The charge
includes the consent fees and tender offer premiums, the write-off of related
unamortized finance fees, and certain other expenses associated with the debt
repayment.
Discontinued Operations. On June 24, 1993, the Company and Group completed
the sale of all the issued and outstanding shares of stock of Group's wholly
owned subsidiary, Libbey Inc. ("Libbey"), through an underwritten initial
public offering. Libbey operated the table glassware business of the Company,
which is presented as a discontinued operation in the accompanying financial
statements. Proceeds from the sale amounted to approximately $445 million.
The gain on the sale of the Libbey business amounted to $270.5 million, less
applicable income taxes of $53.5 million. Applicable income taxes have been
reduced by the previously unrecognized benefit of a capital loss carryover.
The Company's former Health Care business was sold on October 24, 1991
pursuant to an agreement entered into on August 30, 1991. The Company
recorded a loss on the sale of $123.1 million. No tax benefit was provided on
the loss due to the Company's accounting for its net operating loss and
capital loss carryover positions prior to the adoption of SFAS No. 109.
Summary results of operations information for the discontinued Libbey and
Health Care operations, through June 18, 1993, and August 30, 1991,
respectively, is as follows:
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
Total revenues $118.1 $301.0 $497.5
Costs and expenses 97.9 231.9 425.0
- ----------------------------------------------------------------------------
Earnings before interest and taxes 20.2 69.1 72.5
Interest expense 17.7 38.1 62.8
- ----------------------------------------------------------------------------
Earnings before income taxes 2.5 31.0 9.7
Provision for income taxes 1.1 12.6 5.9
- ----------------------------------------------------------------------------
Net earnings $ 1.4 $ 18.4 $ 3.8
============================================================================
Interest expense allocated to discontinued operations is based on the
indebtedness expected to be repaid with the sale proceeds including specific
obligations of the business, at applicable interest rates in effect during the
periods. Revenues for 1992 include a $17.8 million ($10.5 million after tax)
<PAGE>55
gain from the sale of Libbey's 50% interest in its Japanese glass tableware
associate.
Summary balance sheet information for the discontinued portions of Libbey
business at December 31, 1992 is as follows:
--------------------------------------------------
Current assets $ 72.2
Current liabilities (32.8)
--------------------------------------------------
Net current assets 39.4
Property, plant and equipment (net) 95.7
Other non-current assets 54.9
Non-current liabilities (52.1)
--------------------------------------------------
Net assets $137.9
==================================================
Contingencies. The Company was contingently liable at December 31, 1993,
under guarantees of loans and lease obligations related to certain divested
businesses in the principal amount of $65.2 million.
The Company is one of a number of defendants (typically 10 to 20) in a
substantial number of lawsuits filed in numerous state and federal courts by
persons alleging bodily injury (including death) as a result of exposure to
dust from asbestos fibers. From 1948 to 1958, one of the Company's former
business units commercially produced and sold a high-temperature, clay-based
insulating material containing asbestos. The insulation material was used in
limited industrial applications such as shipyards, power plants and chemical
plants. During its ten years in the high-temperature insulation business, the
Company's aggregate sales of insulation material containing asbestos were less
than $40 million. The Company exited the insulation business in April 1958.
The lawsuits relating to such production and sale of asbestos material
typically allege various theories of liability, including negligence, gross
negligence and strict liability and seek compensatory and punitive damages in
various amounts. As of December 31, 1993, the Company estimates that it is a
named defendant in asbestos bodily injury lawsuits and claims involving
approximately 43,000 plaintiffs and claimants.
The following table shows the approximate number of plaintiffs and claimants
involved in asbestos bodily injury lawsuits and claims pending at the
beginning of, disposed of and filed during, and pending at the end of, each of
the years listed (eliminating duplicate filings):
1993 1992 1991
------ ------ ------
Pending at beginning of year 54,000 76,000 82,000
Disposed 31,000 39,000 25,000
Filed 20,000 17,000 19,000
------ ------ ------
Pending at end of year 43,000 54,000 76,000
====== ====== ======
<PAGE>56
Since receiving its first asbestos bodily injury lawsuit, the Company, as of
December 31, 1993, has disposed of the lawsuits and claims of approximately
143,000 plaintiffs and claimants at an average indemnity payment per claim of
approximately $3,700. Certain of these dispositions have included deferred
payment amounts payable over periods ranging from one to seven years; such
amounts are included in the foregoing average indemnity payment per claim.
The Company's indemnity payments per claim have varied, and are expected to
continue to vary considerably over time. They are affected by a multitude of
factors, including the type and severity of the disease sustained by the
claimant; the occupation of the claimant; the extent of the claimant's
exposure to asbestos-containing insulation products manufactured or sold by
the Company; the extent of the claimant's exposure to asbestos-containing
products manufactured or sold by other producers; the number and financial
resources of other producer defendants; the jurisdiction of suit; the presence
or absence of other possible causes of the claimant's illness; the
availability of legal defenses such as the statute of limitations or state of
the art; and whether the claim was resolved on an individual basis or as part
of a group settlement. Approximately 30% of the claims filed in 1993 were
from claimants who claim so called "in place" exposure to asbestos containing
products. These cases appear to involve significantly less serious disease
and less exposure to the Company's product compared to traditional filings.
Indemnity payments in bodily injury lawsuits and the property damage lawsuits
referred to below may also be affected by settlement and judgment payments by
other defendants, which may take the form of a judgment credit for such
settlements. Because the scope and extent of such third party contribution
vary considerably according to applicable state law, the Company is unable to
estimate the extent to which such contribution may affect indemnity payments.
The Company is also one of a number of defendants (typically 15 to 30) in a
number of lawsuits and claims, some of which are class actions, brought by or
on behalf of public or private property owners, alleging damages as a result
of the presence of asbestos-containing insulation in various properties.
These lawsuits typically assert multiple theories of liability, including
negligence, breach of warranty and strict liability, and seek various forms of
monetary and equitable relief, including compensatory and punitive monetary
damages, restitution and removal of asbestos-containing material. As of
December 31, 1993, the Company was a named defendant in 22 such pending
property damage lawsuits and claims.
The damage claims, including both compensatory and punitive damage claims,
against the Company and the other defendants in the asbestos bodily injury and
property damage lawsuits and claims referred to above exceed several billion
dollars in the aggregate. Additionally, since 1982 a number of former
producers and/or miners of asbestos or asbestos-containing products which were
or would be co-defendants with the Company in the bodily injury lawsuits and
claims and/or in the property damage lawsuits and claims have filed for
reorganization under Chapter 11 of the United States Bankruptcy Code ("Co-
Defendant Bankruptcies") including, most recently, Keene Corporation, which
filed in 1993. Pending lawsuits have been stayed as to all but one of these
entities, but continue against the Company and the other defendants. Also,
the trust created by the Manville Chapter 11 Reorganization Plan and charged
<PAGE>57
with the responsibility for resolving asbestos bodily injury claims against
Manville was found to be a limited fund by the United States District Court
for the Eastern District of New York and virtually all proceedings against the
trust have been stayed. A mandatory settlement class was certified against
the trust resolving all claims by both plaintiffs and co-defendants; however,
the United States Court of Appeals for the Second Circuit reversed the
decision approving the settlement and remanded the case for further
proceedings. The outcome of this matter is uncertain at this time.
In July, 1991, the Judicial Panel on Multidistrict Litigation consolidated in
the Eastern District of Pennsylvania virtually all of the approximately 30,000
federal cases for possible coordinated and aggregate disposition and other
processing techniques (the "MDL Case"). Included in the MDL Case is a case in
the Eastern District of Texas where a petition had been filed to certify a
nationwide litigation class action with respect to all asbestos-related bodily
injury claims pending in the United States both in federal and state court.
The Company believes that such a nationwide litigation class action is not
supported by the existing case law. The number of plaintiffs in the cases
pending in the MDL case in which the Company is a defendant is included in the
reported pending plaintiffs and claimants. In 1992, the court entered an
order severing and retaining any claims for punitive damages in cases remanded
for trial of the compensatory damage claims. The court, through various
administrative orders, is giving priority to claims involving malignancies and
serious asbestosis both in terms of settlement activity and in terms of remand
for trial where a settlement with all defendants is not possible.
In addition, in January, 1993, in an action in which the Company was not a
party, a class action complaint, an answer and a stipulation of settlement of
such class action complaint were filed contemporaneously in the United States
District Court for the Eastern District of Pennsylvania. The lawsuit and
settlement are between a proposed class of persons occupationally or
secondarily exposed to asbestos but who did not have bodily injury suits
pending as of January 15, 1993, and a group of 20 companies who manufactured
or sold asbestos products and whose asbestos claims are managed by the Center
for Claims Resolution. The Company and a number of other former producers of
asbestos-containing products are not members of the Center for Claims
Resolution. The proposed settlement, negotiated between the member companies
and class counsel, seeks to create an administrative mechanism to process
future asbestos-related claims against such companies. Under the proposed
settlement, in order to receive compensation, claimants would be required to
satisfy objective medical and product exposure criteria. The class action and
proposed settlement raise a number of novel and complex issues, including the
potential impact of the proposed settlement on the Company's contribution and
settlement credit rights. In August, 1993, another of the Company's co-
defendants filed an action, which was thereafter provisionally certified as a
mandatory settlement class of all future asbestos-related claims. This action
was integrally related to separate settlements by this co-defendant of all of
its non-future asbestos claims and of its insurance coverage claims against
its insurers.
The precise impact on the Company of the Co-Defendant Bankruptcies and other
proceedings mentioned above is not determinable. These filings and
<PAGE>58
proceedings have created a substantial number of unprecedented and complex
issues. However, the Company believes the Co-Defendant Bankruptcies probably
have adversely affected the Company's share of the total liability to
plaintiffs in previously settled or otherwise determined lawsuits and claims
and also may adversely affect the Company's share of the total liability to
plaintiffs in the future. Additionally, the Company believes that the
dissemination of the required class notice in the Center for Claims Resolution
class action described above may increase the number of claims and lawsuits
against the Company.
In April, 1986, the Company and Aetna Life & Casualty Company ("Aetna") agreed
to a final settlement fully resolving litigation between them (which followed
the entry of partial summary judgment in favor of the Company in such
litigation). Under its agreement with Aetna, in 1990 the Company began paying
along with Aetna the costs incurred in connection with asbestos bodily injury
lawsuits and claims; these payments by the Company also reduced the policy
limits. The Company has processed claims, or identified claims to be
processed, which has effectively exhausted its coverage under the Aetna
agreement. The Company presently has similar litigation pending in New Jersey
against the Company's insurers, agents and related parties for the years 1977
through 1985 in which the Company seeks damages and a declaration of coverage
for both asbestos bodily injury and property damage claims under insurance
policies in effect during those years (Owens-Illinois, Inc. v. United
Insurance Co., et al, Superior Court of New Jersey, Middlesex County, November
30, 1984.) The total coverage sought in this litigation and, in the Company's
opinion, applicable to both bodily injury and property damage is in excess of
$600 million. The annual self-insurance applicable to such coverage is $1.0
million. The Company is also seeking additional coverage applicable solely to
property damage claims. In April 1990, the Company obtained summary judgment
for the coverage sought in this litigation and one of the defendant insurers,
in turn, obtained summary judgment under certain reinsurance contracts. The
defendants appealed the summary judgment granted to the Company and in April,
1993, the New Jersey Superior Court, Appellate Division affirmed the trial
court on all policy interpretation issues but remanded for trial certain other
issues. All parties petitioned the New Jersey Supreme Court for review. In
January, 1994, the New Jersey Supreme Court granted certification on two
policy interpretation issues, namely, the application of the continuous
trigger theory of coverage and the consequent apportionment of liability
(joint and several versus prorated liability). The Company believes that the
New Jersey Supreme Court will decide these issues sometime in 1994 and that
its decision will be favorable to the Company. Following such decision, the
trial of the issues remanded by the Appellate Division will take place and
will likely be concluded sometime in 1995.
The Company believes, based upon the rulings of the trial court and Appellate
Division as well as its understanding of the facts and legal precedents and
advice of counsel, McCarter & English, that it is probable this litigation
ultimately will be resolved in such a manner as to confirm a substantial
amount of coverage. The date, however, of a final resolution with respect to
both coverage and damage recovery is uncertain. The coverage and any damage
recovery obtained as a result of this litigation could be applied to reimburse
the Company with respect to its payments under the Aetna agreement, as well as
<PAGE>59
other payments made by the Company. The Company has made a claim against
certain United Insurance Co. insurers for all such payments to date. The
Company has also established a receivable for certain of such payments; at
December 31, 1993, the receivable amounted to $283 million. Accordingly, the
amounts of such payments covered by this receivable have not been and are not
expected to be reflected in the Company's Consolidated Results of Operations.
In addition, the Company has entered into group settlement agreements which
included settlement amounts payable in 1994 and later. As of December 31,
1993, such deferred payment amounts were approximately $168 million. Such
deferred payment amounts have not been accrued or otherwise reflected in the
Company's Consolidated Results of Operations; however, the Company intends to
add such deferred payment amounts to the receivable when they are paid by the
Company.
The cumulative total of the receivable and the deferred amounts as of December
31, 1993 was $451 million, which represents the Company's pretax spending and
commitments to spend on disposed lawsuits and claims as of that date. The
Company expects this total amount to be covered by the United Insurance Co.
policies involved in the litigation described above. None of the foregoing
total amount represented a spending commitment with respect to lawsuits and
claims pending against the Company as of December 31, 1993.
As a result of Chapter 11 filings, the recent class action filings, and the
continuing efforts in various federal and state courts to resolve asbestos
lawsuits and claims in nontraditional manners, as well as the continued
filings of new lawsuits and claims, the Company believes, as it always has,
that its ultimate asbestos-related contingent liability (i.e., its indemnity
or other claim disposition costs plus related litigation expenses) is
difficult to estimate with certainty. However, the Company has continually
monitored the trends of matters which may affect its ultimate liability.
Furthermore, as previously reported, in the fourth quarter of 1993 the Company
completed a detailed analysis of the trends, developments and variables
affecting or likely to affect the resolution of pending and future asbestos
claims against the Company.
Based on the trends and developments and their effect on the Company's ability
to estimate probable costs of pending and likely future asbestos-related
claims, the higher than expected costs of disposing of claims in certain
jurisdictions, and taking into account the reimbursement it expects to receive
in the future principally as a result of the United Insurance case, the
Company has determined that it will likely have probable asbestos-related
liabilities and costs which exceed its probable asbestos-related insurance
reimbursement in the approximate amount of $325 million. Accordingly, the
Company has recorded a charge of such amount against its Consolidated Results
of Operations for the fourth quarter of 1993. The Company believes that its
asbestos-related costs and liabilities will not exceed by a material amount
the sum of the available insurance reimbursement the Company believes it has
and will have as a result of the United Insurance case and the amount of such
charge.
Other litigation is pending against the Company, in many cases involving
ordinary and routine claims incidental to the business of the Company and in
<PAGE>60
others presenting allegations that are nonroutine and involve compensatory,
punitive or treble damage claims as well as other types of relief. The
ultimate legal and financial liability of the Company in respect to the
lawsuits, proceedings, and investigations referred to above, in addition to
other pending litigation, cannot be estimated with certainty. However, the
Company believes, based on its examination of such matters and experience to
date and discussions with counsel, that such ultimate liability will not be
material in relation to the Company's Consolidated Financial Statements.
Segment Information.
The Company had three industry segments: Glass Containers, Plastics and
Closures, and Specialized Glass. As reported herein, the Specialized Glass
segment consists only of the Kimble laboratory and pharmaceutical glassware
business. Amounts related to the Company's glass tableware business have been
reclassified from the Specialized Glass segment to discontinued operations as
a result of the June 1993 sale of Libbey. In addition, as a result of the
December 31, 1993 sale of 51% of the Kimble business, the Company will record
its share of Kimble's operations on an equity basis beginning in 1994.
Operating profit includes an allocation of corporate expenses based on both a
percentage of sales and direct billings based on the costs of specific
services provided.
Transfers between segments and geographic areas are not significant. In
arriving at the consolidated totals for segments and geographic areas,
eliminations are made as follows: as to sales and transfers, intersegment and
intergeographic sales and transfers are eliminated; as to operating profit and
identifiable assets, eliminations primarily relate to unrealized profit in
inventory.
<PAGE>61
Financial information regarding the Company's geographic segments is as
follows:
- ----------------------------------------------------------------------------
1993 (a) 1992 (b) 1991
- ----------------------------------------------------------------------------
Sales to unaffiliated customers:
United States $2,865.3 $2,752.3 $2,693.8
Other Western Hemisphere 413.6 355.5 310.0
Europe 256.1 284.8 280.5
- ----------------------------------------------------------------------------
Consolidated total $3,535.0 $3,392.6 $3,284.3
============================================================================
Operating profit:
United States $ 137.3 $ 337.8 $ 372.6
Other Western Hemisphere 98.4 80.0 82.0
Europe 23.9 27.3 27.0
- ----------------------------------------------------------------------------
Consolidated total $ 259.6 $ 445.1 $ 481.6
============================================================================
Identifiable assets:
United States $2,893.0 $3,164.7 $2,833.3
Other Western Hemisphere 428.1 350.9 272.9
Europe 256.0 263.1 294.5
Eliminations (.1) (.1)
- ----------------------------------------------------------------------------
Consolidated total $3,577.1 $3,778.6 $3,400.6
============================================================================
(a) Operating profit for the United States geographic segment in 1993
includes charges totaling $233.2 million principally related to a
restructuring program.
(b) The adoption of SFAS Nos. 109 and 106 resulted in decreased operating
profit for the United States geographic segment in 1992 compared to 1991
due to additional non-cash expenses of $36.1 million.
<PAGE>62
Financial information regarding the Company's worldwide business segments is
as follows:
- ----------------------------------------------------------------------------
1993 (b) 1992 (c) 1991
- ----------------------------------------------------------------------------
Sales to unaffiliated customers (a):
Glass Containers $2,427.3 $2,421.7 $2,369.4
Plastics and Closures 908.6 781.0 729.6
Specialized Glass 197.9 188.4 183.7
Eliminations and other 1.2 1.5 1.6
- ----------------------------------------------------------------------------
Consolidated total $3,535.0 $3,392.6 $3,284.3
============================================================================
Operating profit:
Glass Containers $ 117.4 $ 299.0 $ 315.4
Plastics and Closures 123.3 133.4 139.2
Specialized Glass 18.9 12.7 27.0
Eliminations and other retained costs (305.0) (12.3) (1.6)
- ----------------------------------------------------------------------------
Consolidated total (45.4) 432.8 480.0
Equity earnings 25.3 23.2 11.7
Interest expense (net) (274.4) (299.1) (437.0)
- ----------------------------------------------------------------------------
(294.5) 156.9 54.7
Reconciliation to earnings (loss) from
continuing operations before
extraordinary items and cumulative
effect of accounting changes:
Credit (provision) for income taxes 113.1 (64.0) (53.7)
Minority share owners' interests (19.4) (14.6) (11.8)
- ----------------------------------------------------------------------------
Earnings (loss) from continuing
operations before extraordinary
items and cumulative effect of
accounting changes $ (200.8) $ 78.3 $ (10.8)
============================================================================
(a) Sales of similar products which contributed 10% or more of consolidated
net sales for 1993, 1992, and 1991, and their percentage contribution in
each year, respectively, are glass containers with 64%, 67%, and 68%; and
plastic containers with 19%, 17%, and 18%.
(b) Operating profit for 1993 includes charges of $325 million for estimated
uninsured future asbestos-related costs, charges totaling $253.2 million
principally related to a restructuring program, and gains totaling $46.1
million from the sale of the remaining 50% interest in the television
glass business and 51% of the Kimble business. These items decreased
operating profit as follows: Glass Containers, $214.0 million, Plastics
and Closures, $16.0 million, Specialized Glass, $3.2 million, and other
retained costs, $298.9 million.
<PAGE>63
(c) The adoption of SFAS Nos. 109 and 106 resulted in decreased operating
profit in 1992 compared to 1991 due to additional non-cash expenses as
follows: Glass Containers, $17.9 million; Plastics and Closures, $11.5
million; Specialized Glass, $6.7 million; and other retained costs, $4.8
million.
- ----------------------------------------------------------------------------
1993 1992 1991
- ----------------------------------------------------------------------------
Identifiable Assets:
Glass Containers $2,372.9 $2,395.2 $2,247.2
Plastics and Closures 1,207.0 1,182.2 978.1
Specialized Glass 205.8 179.9
Eliminations (2.8) (4.6) (4.6)
- ----------------------------------------------------------------------------
Combined segment total 3,577.1 3,778.6 3,400.6
Investments in and advances
to associates 102.5 164.1 156.7
Corporate and other
retained assets 1,221.8 978.5 663.7
Discontinued operations 229.9 178.1
- ----------------------------------------------------------------------------
Total $4,901.4 $5,151.1 $4,399.1
============================================================================
Property, plant and equipment
- -- capital expenditures:
Glass Containers $ 153.1 $ 141.1 $ 142.6
Plastics and Closures 100.3 82.0 49.6
Specialized Glass 8.8 12.4 16.3
- ----------------------------------------------------------------------------
Combined segment total 262.2 235.5 208.5
Corporate and other
retained assets .7 1.9 .6
Discontinued operations 3.3 13.4 7.1
- ----------------------------------------------------------------------------
Total $ 266.2 $ 250.8 $ 216.2
============================================================================
Property, plant and equipment
- -- depreciation:
Glass Containers $ 110.9 $ 117.8 $ 101.0
Plastics and Closures 54.9 50.8 39.8
Specialized Glass 10.6 9.9 7.9
- ----------------------------------------------------------------------------
Combined segment total 176.4 178.5 148.7
Corporate and other
retained assets 3.6 3.4 5.3
Discontinued operations 7.3 13.5 24.3
- ----------------------------------------------------------------------------
Total $ 187.3 $ 195.4 $ 178.3
============================================================================
<PAGE>64
Selected Quarterly Financial Data (unaudited). The following tables present
selected financial data by quarter for the years ended December 31, 1993 and
1992:
- ----------------------------------------------------------------------------
1993 (a)
- ----------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------
Net sales $ 832.1 $ 915.0 $ 914.6 $ 873.3 $3,535.0
============================================================================
Gross profit $ 168.5 $ 200.3 $ 195.7 $ 146.7 $ 711.2
============================================================================
Earnings (loss):
Continuing operations $ 22.7 $ 47.1 $ 42.9 $(313.5) $ (200.8)
Discontinued
operations (.9) 2.3 1.4
Gain on sale of
discontinued
business, net of
applicable income
taxes 217.0 217.0
Extraordinary charges
from early extin-
guishment of debt,
net of applicable
income taxes (7.4) (1.0) (4.3) (12.7)
- ----------------------------------------------------------------------------
Net earnings (loss) $ 21.8 $ 259.0 $ 41.9 $(317.8) $ 4.9
============================================================================
Earnings (loss) per share
of common stock:
Continuing operations $ 0.19 $ 0.39 $ 0.36 $ (2.64) $ (1.70)
Discontinued
operations (0.01) 0.02 0.01
Gain on sale of
discontinued
business, net of
applicable income
taxes 1.82 1.82
Extraordinary charges (0.06) (0.01) (0.03) (0.10)
- ----------------------------------------------------------------------------
Net earnings (loss) $ 0.18 $ 2.17 $ 0.35 $ (2.67) $ 0.03
============================================================================
(a) In the fourth quarter of 1993, the Company recorded charges of $325
million for estimated uninsured future asbestos costs, charges totaling $253.2
million principally related to a restructuring program, and gains on asset
sales totaling $46.1 million. The net after tax amount of all these items was
approximately $322.4 million, or $2.71 per share.
<PAGE>65
- ----------------------------------------------------------------------------
1992
- ----------------------------------------------------------------------------
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
- ----------------------------------------------------------------------------
Net sales $ 792.5 $ 879.6 $ 877.4 $ 843.1 $3,392.6
============================================================================
Gross profit $ 153.8 $ 184.3 $ 177.3 $ 133.1 $ 648.5
============================================================================
Earnings (loss):
Continuing operations $ 12.4 $ 34.4 $ 31.4 $ 0.1 $ 78.3
Discontinued
operations 9.2 1.8 4.6 2.8 18.4
Extraordinary charges
from early extin-
guishment of debt,
net of applicable
income taxes (8.2) (23.3) (31.5)
Cumulative effect on
prior years of
changes in methods
of accounting (b) (199.4) (199.4)
- ----------------------------------------------------------------------------
Net earnings (loss) $(177.8) $ 28.0 $ 12.7 $ 2.9 $ (134.2)
============================================================================
Earnings (loss) per share
of common stock:
Continuing operations $ 0.11 $ 0.29 $ 0.26 $ 0.00 $ 0.66
Discontinued
operations 0.07 0.02 0.04 0.02 0.15
Extraordinary charges (0.07) (0.19) (0.26)
Cumulative effect of
accounting changes (1.68) (1.68)
- ----------------------------------------------------------------------------
Net earnings (loss) $ (1.50) $ 0.24 $ 0.11 $ 0.02 $ (1.13)
============================================================================
(b) In the fourth quarter of 1992, the Company adopted SFAS No. 109
"Accounting for Income Taxes" and SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions," effective January 1, 1992, as
described more fully in the Statement of Significant Accounting Policies.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
<PAGE>66
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANTS
Information with respect to non-officer directors is included in the Proxy
Statement in the section entitled "Election of Directors" and such information
is incorporated herein by reference.
Information with respect to executive officers is included herein on pages 14 -
16.
ITEMS 11. EXECUTIVE COMPENSATION AND CERTAIN RELATIONSHIPS AND RELATED
and 13. TRANSACTIONS
The section entitled "Director and Executive Compensation and Other
Information," exclusive of the subsections entitled "Board Compensation
Committee Report on Executive Compensation" and "Performance Graph," which is
included in the Proxy Statement is incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The section entitled "Security Ownership of Certain Beneficial Owners and
Management" which is included in the Proxy Statement is incorporated herein by
reference.
<PAGE>67
PART IV
ITEM 14.(a). EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM
8-K
Index of Financial Statements and Financial Statement Schedules Covered by
Report of Independent Auditors.
Page
----
Report of Independent Auditors 29
Consolidated Balance Sheets at December 31, 1993 and 1992 32-33
For the years ended December 31, 1993, 1992 and 1991
Consolidated Results of Operations 30-31
Consolidated Share Owners' Equity 34
Consolidated Cash Flows 35-36
Statement of Significant Accounting Policies 37-38
Financial Review 39-63
Financial Statement Schedules Schedule Page
----------------------------- -------------
For the years ended December 31, 1993, 1992, and 1991:
V - Property, Plant and Equipment (Consolidated) S-1
VI - Accumulated Depreciation and Amortization of
Property, Plant and Equipment (Consolidated) S-3
VIII - Valuation and Qualifying Accounts (Consolidated) S-5
IX - Short-Term Borrowings (Consolidated) S-6
X - Supplementary Income Statement Information
(Consolidated) S-7
All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule or because the information required is included in the consolidated
financial statements or the accompanying Financial Review.
<PAGE>68
EXHIBIT INDEX
S-K Item 601
No. Document
- ------------ --------
3.1 -- Restated Certificate of Incorporation of Owens-Illinois, Inc.
(filed as Exhibit 3.1 to the Registrants' Registration
Statement, File No. 33-43224, and incorporated herein by
reference).
3.2 -- By-laws of Owens-Illinois, Inc., as amended (filed as Exhibit
3.2 to the Registrants' Registration Statement, File No. 33-
43224, and incorporated herein by reference).
3.3 -- Certificate of Incorporation of Owens-Illinois Group, Inc., as
amended (filed as Exhibit 3.4 to the Registrants' Registration
Statement, File No. 33-13061, and incorporated herein by refer-
ence).
3.4 -- By-laws of Owens-Illinois Group, Inc. (filed as Exhibit 3.5 to
the Registrants' Registration Statement, File No. 33-13061, and
incorporated herein by reference).
3.5 -- Certificate of Designations, Preferences and Relative,
Participating, Optional and Other Special Rights of Preferred
Stock and Qualifications, Limitations and Restrictions Thereof
of Series A Exchangeable Preferred Stock, Series B Exchangeable
Preferred Stock and Series C Exchangeable Preferred Stock of
Owens-Illinois, Inc., dated October 30, 1992 (filed as Exhibit
3.5 to the Registrants' Annual Report on Form 10-K for the year
ended December 31, 1992, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
4.1 -- Note, dated March 17, 1987, to OII Holdings Corporation issued
by OII Group, Inc., as amended (filed as Exhibit 4.44 to the
Registration Statement, File No. 33-43224, of Owens-Illinois,
Inc., and incorporated herein by reference).
4.2 -- Indenture, dated as of December 15, 1991, among Owens-Illinois,
Inc., Owens-Illinois Group, Inc., and The Bank of New York
related to Senior Debentures of Owens-Illinois, Inc. (filed as
Exhibit 4.32 to the Registrants' Registration Statement, File
No. 33-34825, and incorporated herein by reference).
4.3 -- Group Exchange Guaranty, dated as of July 10, 1992, by Owens-
Illinois Group, Inc., in favor of the Trustee (filed as Exhibit
4.1 to the Registrants' Current Report on Form 8-K dated as of
July 15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.4 -- Subsidiary Guaranty, dated as of July 10, 1992, by the
Subsidiaries in favor of the Trustee (filed as Exhibit 4.2 to
the Registrants' Current Report on Form 8-K dated as of July
15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.5 -- Contribution Agreement, dated as of July 10, 1992, by and among
the Company, Owens-Illinois Group, Inc., and the Subsidiaries
(filed as Exhibit 4.3 to the Registrants' Current Report on
Form 8-K dated as of July 15, 1992, File nos. 1-9576 and 33-
13061, and incorporated herein by reference).
<PAGE>69
S-K Item 601
No. Document
- ------------ --------
4.6 -- Acknowledgment Regarding Additional Secured Debt, dated as of
July 10, 1992, by the Pledgors (filed as Exhibit 4.4 to the
Registrants' Current Report on Form 8-K dated as of July 15,
1992, File nos. 1-9576 and 33-13061, and incorporated herein by
reference).
4.7 -- Acknowledgment to Intercreditor Agreement, dated as of July 9,
1992, by the Trustee and the Pledgors (filed as Exhibit 4.5 to
the Registrants' Current Report on Form 8-K dated as of July
15, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.8 -- Indenture, dated as of April 1, 1992, between the Company and
Harris Trust and Savings Bank under which the Company has
issued its 10-1/4% Senior Subordinated Notes due April 1, 1999;
10% Senior Subordinated Notes due August 1, 2002; 10-1/2%
Senior Subordinated Notes due June 15, 2002; and 9-3/4% Senior
Subordinated Notes due August 15, 2004 (filed as Exhibit 4(a)
to the Registrants' Current Report on Form 8-K dated as of
March 27, 1992, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
4.9 -- Form of Indenture dated September 28, 1992, Shelf Registration
for up to $200 million of Senior Subordinated Debt Securities
between the Company and Harris Trust and Savings Bank, under
which the Company has issued its 9.95% Senior Subordinated
Notes due October 15, 2004 (filed as Exhibit 4.2 to the
Registrants' Registration Statement, File no. 33-51982, and
incorporated herein by reference).
4.10 -- First Supplemental Indenture, dated as of September 28, 1992,
between the Company and Harris Trust and Savings Bank (filed as
Exhibit 4(a) to the Registrants' Current Report on Form 8-K
dated as of October 1, 1992, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
4.11 -- Refinancing Credit Agreement, dated as of December 15, 1993,
among Owens-Illinois, Inc., the lenders listed therein,
including those named as lead managers and co-agents and
Bankers Trust Company including exhibits thereto (filed
herewith).
10.1 -- Lease Agreement, dated as of May 21, 1980, between Owens-
Illinois, Inc. and Leyden Associates Limited Partnership (filed
as Exhibit 5 to the Registrants' Registration Statement, File
No. 2-68022, and incorporated herein by reference).
10.2 -- Owens-Illinois Supplemental Benefit Plan, dated as of October
1, 1991 (filed as Exhibit 3.5 to the Registrants' Annual Report
on Form 10-K for the year ended December 31, 1992, File nos. 1-
9576 and 33-13061, and incorporated herein by reference).
10.3 -- Sixth Amended and Restated Owens-Illinois Salary Retirement
Plan (filed as Exhibit 3.5 to the Registrants' Annual Report on
Form 10-K for the year ended December 31, 1992, File nos. 1-
9576 and 33-13061, and incorporated herein by reference).
<PAGE>70
S-K Item 601
No. Document
- ------------ --------
10.4 * -- Written description of the Owens-Illinois Senior Executive Life
Insurance Plan (filed as Exhibit 3.5 to the Registrants' Annual
Report on Form 10-K for the year ended December 31, 1992, File
nos. 1-9576 and 33-13061, and incorporated herein by
reference).
10.5 * -- Form of Employment Agreement between Owens-Illinois, Inc. and
various Employees (filed as Exhibit 10(m) to the Registrants'
Annual Report on Form 10-K for the fiscal year ended December
31, 1987, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
10.6 * -- Form of Non-Qualified Stock Option Agreement between Owens-
Illinois, Inc. and various Employees for use under the Plan
(filed as Exhibit 10.25 to the Registration Statement, File no.
33-43224, of Owens-Illinois, Inc. and incorporated herein by
reference).
10.7 * -- The Amended and Restated Stock Option Plan for Key Employees of
Owens-Illinois, Inc. (filed as Exhibit 10.24 to the
Registration Statement, File no. 33-43224, of Owens-Illinois,
Inc., and incorporated herein by reference).
10.8 * -- Form of Non-Qualified Stock Option Agreement between Owens-
Illinois, Inc. and various Employees (filed as Exhibit 10(1) to
the Registrants' Annual Report on Form 10-K for the fiscal year
ended December 31, 1987, File nos. 1-9576 and 33-13061, and
incorporated herein by reference).
10.9 * -- Form of Subscription Agreement between Owens-Illinois, Inc. and
various Purchasers (filed as Exhibit 10(k) to the Registrants'
Annual Report on Form 10-K for the fiscal year ended December
31, 1987, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
10.10 * -- Form of Consulting Agreement between Owens-Illinois, Inc. and
Robert J. Lanigan (filed as Exhibit 10.17 to the Registrants'
Annual Report on Form 10-K for the fiscal year ended December
31, 1990, File nos. 1-9576 and 33-13061, and incorporated
herein by reference).
10.11 * -- Form of Non-Qualified Stock Option Agreement between Owens-
Illinois, Inc., and Robert J. Lanigan (filed as Exhibit 10.21
to the Registrants' Annual Report on Form 10-K for the fiscal
year ended December 31, 1990, File nos. 1-9576 and 33-13061,
and incorporated herein by reference).
10.12 * -- Form of First Amendment to Non-Qualified Stock Option Agreement
between Owens-Illinois, Inc. and Robert J. Lanigan (filed as
Exhibit 10.20 to the Registrants' Annual Report on Form 10-K
for the fiscal year ended December 31, 1990, File nos. 1-9576
and 33-13061, and incorporated herein by reference).
10.13 * -- Form of First Amendment to Subscription Agreement between
Owens-Illinois, Inc. and Robert J. Lanigan (filed as Exhibit
10.19 to the Registrants' Annual Report on Form 10-K for the
fiscal year ended December 31, 1990, File nos. 1-9576 and 33-
13061, and incorporated herein by reference).
<PAGE>71
S-K Item 601
No. Document
- ------------ --------
10.14 -- Fourth Amended and Restated Owens-Illinois, Inc. Stock Purchase
and Savings Program (filed as Exhibit 4.1 to Registrants' Form
S-8, File nos. 1-9576 and 33-43559, and incorporated herein by
reference).
10.15 * -- Amended and Restated Owens-Illinois, Inc. Senior Management
Incentive Plan effective on January 1, 1993 (filed herewith).
10.16 * -- Amended and Restated Owens-Illinois, Inc. Performance Award Plan
effective on January 1, 1993 (filed herewith).
10.17 * -- Owens-Illinois, Inc. Corporate Officers Deferred Compensation
Plan effective on December 31, 1993 (filed herewith).
10.18 * -- Owens-Illinois, Inc. Executive Savings Plan effective on
December 31, 1993 (filed herewith).
10.19 * -- First Amendment to Owens-Illinois, Inc. Supplemental Retirement
Plan effective on December 31, 1993 (filed herewith).
21 -- Subsidiaries of the Registrants (filed herewith).
23.1 -- Consent of Independent Auditors (filed herewith).
23.2 -- Consent of McCarter & English (filed herewith).
24 -- Owens-Illinois, Inc. and Owens-Illinois Group, Inc. Power of
Attorney (filed herewith).
* Indicates a management contract or compensatory plan or arrangement
required to be filed as an exhibit to this form pursuant to Item 14(c).
_______________
ITEM 14.(b). REPORTS ON FORM 8-K
No reports on Form 8-K were filed by the Registrants during the last quarter
of 1993.
<PAGE>72
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrants have duly caused this report to be signed on
their behalf by the undersigned thereunto duly authorized.
OWENS-ILLINOIS, INC.
OWENS-ILLINOIS GROUP, INC.
(Registrants)
By/s/ Thomas L. Young
-------------------------------
Thomas L. Young
Executive Vice President,
Administration, General Counsel
and Secretary
Date: March 29, 1994
<PAGE>73
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of Owens-
Illinois, Inc. and Owens-Illinois Group, Inc. and in the capacities and on the
dates indicated.
Signature Title
--------- -----
Edward A. Gilhuly Director
James H. Greene, Jr. Director
Joseph H. Lemieux Chairman of the Board of Directors; President and
Chief Executive Officer (Principal Executive Officer)
Michael W. Michelson Director
George R. Roberts Director
David G. Van Hooser Vice President, Treasurer and Comptroller
(Principal Accounting Officer)
Lee A. Wesselmann Senior Vice President and Chief Financial Officer
(Principal Financial Officer); Director
By/s/ Thomas L. Young
--------------------------
Thomas L. Young
Attorney-in-fact
Date: March 29, 1994
<PAGE>
INDEX TO FINANCIAL STATEMENT SCHEDULES
Financial Statement Schedules of Owens-Illinois, Inc. and Subsidiaries:
For the years ended December 31, 1993, 1992, and 1991:
Page
----
V -- Property, Plant and Equipment (Consolidated) . . . . . . . . S-1
VI -- Accumulated Depreciation and Amortization of Property, Plant
and Equipment (Consolidated). . . . . . . . . . . . . . . . S-3
VIII -- Valuation and Qualifying Accounts (Consolidated) . . . . . . S-5
IX -- Short-Term Borrowings (Consolidated) . . . . . . . . . . . . S-6
X -- Supplementary Income Statement Information (Consolidated). . S-7
<PAGE>S-1
OWENS-ILLINOIS, INC.
SCHEDULE V -- PROPERTY, PLANT, AND EQUIPMENT (CONSOLIDATED)
Years ended December 31, 1993, 1992, and 1991
(Millions of Dollars)
Acquisi-
tions (di-
vesti- Other
Balance tures) of changes- Balance
at begin- subsid- Retire- add at
ning of iaries Additions ments or (deduct) end of
1993: period (Note 1) at cost sales (Note 2) period
- ----- -------- -------- -------- -------- -------- --------
Land, at cost. . $ 115.4 $ (12.6) $ 0.0 $ 0.0 $ (0.2) $ 102.6
Buildings and
building
equipment. . . 480.2 (48.6) 13.9 1.6 (0.7) 443.2
Factory machinery
and equipment. 1,747.8 (206.8) 235.3 23.8 (7.6) 1,744.9
Transportation,
office and
miscellaneous
equipment. . . 54.8 (7.2) 7.9 2.3 (0.3) 52.9
Construction in
progress . . . 140.5 (7.1) 9.1 (0.2) 142.3
-------- -------- -------- -------- -------- --------
$2,538.7 $ (282.3) $ 266.2 $ 27.7 $ (9.0) $2,485.9
1992: ======== ======== ======== ======== ======== ========
- -----
Land, at cost. . $ 88.9 $ 1.1 $ 0.0 $ 0.9 $ 26.3 $ 115.4
Buildings and
building
equipment. . . 426.9 5.1 7.4 7.0 47.8 480.2
Factory machinery
and equipment. 1,418.9 32.3 198.3 63.7 162.0 1,747.8
Transportation,
office and
miscellaneous
equipment. . . 48.3 .9 3.5 1.3 3.4 54.8
Construction in
progress . . . 94.8 4.4 41.6 (0.3) 140.5
-------- -------- -------- -------- -------- --------
$2,077.8 $ 43.8 $ 250.8 $ 72.9 $ 239.2 $2,538.7
======== ======== ======== ======== ======== ========
<PAGE>S-2
Acquisi-
tions (di-
vesti- Other
Balance tures) of changes- Balance
at begin- subsid- Retire- add at
ning of iaries Additions ments or (deduct) end of
1991: period (Note 1) at cost sales (Note 2) period
- ----- -------- -------- -------- -------- -------- --------
Land, at cost. . $ 109.2 $ (16.4) $ 0.1 $ 2.9 $ (1.1) $ 88.9
Buildings and
building
equipment. . . 749.5 (338.0) 22.6 4.5 (2.7) 426.9
Factory machinery
and equipment. 1,351.1 (54.9) 183.2 45.9 (14.6) 1,418.9
Transportation,
office and
miscellaneous
equipment. . . 45.5 (.5) 4.4 1.0 (0.1) 48.3
Construction in
progress . . . 90.0 (0.9) 5.9 (0.2) 94.8
-------- -------- -------- -------- -------- --------
$2,345.3 $ (410.7) $ 216.2 $ 54.3 $ (18.7) $2,077.8
======== ======== ======== ======== ======== ========
(1) Includes amounts related to the divestiture of Libbey and Kimble opera-
tions in 1993 and the Health Care segment in 1991 and to businesses
acquired in 1993 and 1992.
(2) The amounts in "Other changes - add (deduct)" represent the current year
effects of foreign currency translation adjustments amounting to $(9.0),
($34.9), and $(18.7) in 1993, 1992, and 1991, respectively; a 1992
adjustment for adoption of SFAS No. 109 of $273.9.
<PAGE>S-3
OWENS-ILLINOIS, INC.
SCHEDULE VI -- ACCUMULATED DEPRECIATION AND AMORTIZATION OF PROPERTY,
PLANT, AND EQUIPMENT (CONSOLIDATED) (Note 1)
Years ended December 31, 1993, 1992, and 1991
(Millions of Dollars)
Acquisi-
tions (di- Additions
vesti- charged Other
Balance tures) of to costs changes- Balance
at begin- subsid- and Retire- add at
ning of iaries expenses ments or (deduct) end of
1993: period (Note 2) (Note 3) sales (Note 4) period
- ----- -------- -------- -------- -------- -------- --------
Buildings and
building
equipment. . . $ 126.5 $ (17.8) $ 20.2 $ 1.0 $ (0.3) $ 127.6
Factory
machinery and
equipment. . . 793.1 (106.0) 162.5 20.8 (3.3) 825.5
Transportation,
office, and
miscellaneous
equipment. . . 37.8 (6.3) 4.6 1.1 35.0
-------- -------- -------- -------- -------- --------
$ 957.4 $ (130.1) $ 187.3 $ 22.9 $ (3.6) $ 988.1
======== ======== ======== ======== ======== ========
1992:
- -----
Buildings and
building
equipment. . . $ 98.1 $ $ 20.8 $ 5.1 $ 12.7 $ 126.5
Factory
machinery and
equipment. . . 607.7 170.0 56.7 72.1 793.1
Transportation,
office, and
miscellaneous
equipment. . . 31.0 4.6 1.1 3.3 37.8
-------- -------- -------- -------- -------- --------
$ 736.8 $ $ 195.4 $ 62.9 $ 88.1 $ 957.4
======== ======== ======== ======== ======== ========
<PAGE>S-4
Acquisi-
tions (di- Additions
vesti- charged Other
Balance tures) of to costs changes-
at begin- subsid- and Retire- add Balance
ning of iaries expenses ments or (deduct) at end of
1991: period (Note 2) (Note 3) sales (Note 4) period
- ----- -------- -------- -------- -------- -------- --------
Buildings and
building
equipment. . . $ 111.7 $ (38.1) $ 25.3 $ 0.3 $ (0.5) $ 98.1
Factory
machinery and
equipment. . . 520.8 (27.4) 147.3 30.3 (2.7) 607.7
Transportation,
office, and
miscellaneous
equipment. . . 26.4 (0.5) 5.7 0.8 0.2 31.0
-------- -------- -------- -------- -------- --------
$ 658.9 $ (66.0) $ 178.3 $ 31.4 $ (3.0) $ 736.8
======== ======== ======== ======== ======== ========
(1) In general, depreciation is computed using the straight-line method.
(2) The amounts in "Acquisitions (divestitures) of subsidiaries" for 1993
includes the divestiture of the Company's Libbey and Kimble operations
and in 1991 includes the divestiture of the Company's Health Care
segment.
(3) The amounts in "Additions charged to costs and expenses" include amounts
of the Company's Libbey and Kimble operations of $7.3 and $10.6, respec-
tively, for the year ended December 31, 1993 and of the Company's
discontinued Health Care segment of $13.1 for the year ended December 31,
1991.
(4) The amounts in "Other changes - add (deduct)" represent the current year
effects of foreign currency translation adjustments amounting to $(3.6),
$(11.0), and $(3.0) in 1993, 1992, and 1991, respectively; and for 1992,
$99.1 to adjust for adoption of SFAS No. 109.
<PAGE>S-5
OWENS-ILLINOIS, INC.
SCHEDULE VIII -- VALUATION AND QUALIFYING ACCOUNTS (CONSOLIDATED)
Years ended December 31, 1993, 1992, and 1991
(Millions of Dollars)
Reserves deducted from assets in the balance sheets:
Allowances for losses and discounts on receivables
- --------------------------------------------------
Additions
------------------
Balance at Charged to Balance
beginning costs and Other Deductions at end of
of period expenses (Note 1) (Note 2) period
--------- --------- -------- --------- ---------
1993 . . . . . . . $ 31.4 $ 23.0 $ 0.0 $ 23.1 $ 31.3
======= ======= ======= ======= =======
1992 . . . . . . . $ 29.1 $ 13.5 $ 0.8 $ 12.0 $ 31.4
======= ======= ======= ======= =======
1991 . . . . . . . $ 35.3 $ 7.9 $ 0.0 $ 14.1 $ 29.1
======= ======= ======= ======= =======
(1) The amounts in "Other" represent recoveries of accounts previously
charged off as uncollectible.
(2) Deductions from allowances for losses and discounts on receivables
represent uncollectible notes and accounts written off.
<PAGE>S-6
OWENS-ILLINOIS, INC.
SCHEDULE IX -- SHORT-TERM BORROWINGS (CONSOLIDATED)
Years ended December 31, 1993, 1992, and 1991
(Millions of Dollars)
Weighted Weighted
average Maximum Average average
interest amount amount interest
Balance rate outstanding outstanding rate
at end of (Notes 1 during during (Notes 1,
period and 3) period period 2 and 3)
-------- ------- ----------- ----------- --------
1993 . . . . . . $ 49.2 35.7% $ 89.8 $ 64.2 35.7%
======== ======= =========== =========== ========
1992 . . . . . . $ 56.7 28.5% $ 77.6 $ 65.6 30.7%
======== ======= =========== =========== ========
1991 . . . . . . $ 58.8 29.7% $ 86.3 $ 72.4 30.3%
======== ======= =========== =========== ========
(1) Monetary correction of local currency debt at the Company's major
affiliate in Brazil has been excluded from interest expense in arriving
at the weighted average interest rates shown above.
(2) Actual interest expense divided by average short-term borrowings during
the period.
(3) The relatively high weighted average interest rates at end of period and
for the three years ended December 31, 1993 are reflective of the
generally higher short-term borrowing costs incurred by most of the
Company's South American affiliates.
<PAGE>S-7
OWENS-ILLINOIS, INC.
SCHEDULE X -- SUPPLEMENTARY INCOME STATEMENT INFORMATION (CONSOLIDATED)
Years ended December 31, 1993, 1992, and 1991
(Millions of Dollars)
1993 1992 1991
-------- -------- --------
Maintenance and Repairs. . . . . . $ 300.6 $ 307.5 $ 311.3
======== ======== ========
<PAGE>
EXHIBIT 4.11
REFINANCING
CREDIT AGREEMENT
dated as of
December 15, 1993
among
OWENS-ILLINOIS, INC.,
THE LENDERS LISTED HEREIN,
BANK OF MONTREAL, THE FUJI BANK, LTD.,
THE INDUSTRIAL BANK OF JAPAN, LTD.,
THE LONG-TERM CREDIT BANK OF JAPAN
and
THE SUMITOMO BANK, LTD.,
as Lead Managers,
BANK OF AMERICA NT&SA, THE BANK OF NEW YORK,
THE BANK OF NOVA SCOTIA, CIBC, INC.,
CONTINENTAL BANK N.A.,
THE FIRST NATIONAL BANK OF CHICAGO,
NATIONSBANK, SOCIETE GENERALE
and
THE TORONTO-DOMINION BANK,
as Co-Agents,
and
BANKERS TRUST COMPANY,
as Agent
<PAGE>i
OWENS-ILLINOIS, INC.
REFINANCING CREDIT AGREEMENT
Dated as of December 15, 1993
TABLE OF CONTENTS
Section Heading Page
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1
DEFINITIONS
1.1 Certain Defined Terms. . . . . . . . . . . . . . . . . . . . . 2
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement; Change in Accounting
Principles . . . . . . . . . . . . . . . . . . . . . . . . . . 29
1.3 Other Definitional Provisions; Anniversaries . . . . . . . . . 29
SECTION 2
AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Revolving Loans; Swing Line Loans; Overdraft Account . . . . . 30
2.2 Interest on the Revolving Loans. . . . . . . . . . . . . . . . 38
2.3 Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
2.4 Prepayments and Payments; Reductions in Commitments. . . . . . 42
2.5 Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . 45
2.6 Special Provisions Governing Eurodollar Rate Loans . . . . . . 45
2.7 Capital Adequacy Adjustment; Increased Costs; Taxes. . . . . . 50
2.8 Letters of Credit. . . . . . . . . . . . . . . . . . . . . . . 54
2.9 Bid Rate Loans . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 3
CONDITIONS TO LOANS AND LETTERS OF CREDIT
3.1 Conditions to Initial Loans. . . . . . . . . . . . . . . . . . 67
3.2 Conditions to All Loans. . . . . . . . . . . . . . . . . . . . 70
3.3 Conditions to All Letters of Credit. . . . . . . . . . . . . . 72
SECTION 4
COMPANY'S REPRESENTATIONS AND WARRANTIES
<PAGE>ii
Section Heading Page
- ------- ------- ----
4.1 Organization, Powers, Good Standing, Business and
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . 72
4.2 Authorization of Borrowing, Etc. . . . . . . . . . . . . . . . 73
4.3 Financial Condition. . . . . . . . . . . . . . . . . . . . . . 74
4.4 No Adverse Material Change; No Stock Payments. . . . . . . . . 75
4.5 Title to Properties; Liens . . . . . . . . . . . . . . . . . . 75
4.6 Litigation; Adverse Facts. . . . . . . . . . . . . . . . . . . 75
4.7 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . . 76
4.8 Performance of Agreements. . . . . . . . . . . . . . . . . . . 76
4.9 Governmental Regulation. . . . . . . . . . . . . . . . . . . . 76
4.10 Securities Activities. . . . . . . . . . . . . . . . . . . . . 76
4.11 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . 77
4.12 Certain Fees . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.13 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . 77
4.14 Patents, Trademarks, Etc.. . . . . . . . . . . . . . . . . . . 78
4.15 Environmental Protection . . . . . . . . . . . . . . . . . . . 78
SECTION 5
COMPANY'S AFFIRMATIVE COVENANTS
5.1 Financial Statements and Other Reports . . . . . . . . . . . . 80
5.2 Corporate Existence, Etc.. . . . . . . . . . . . . . . . . . . 85
5.3 Payment of Taxes and Claims; Tax Consolidation . . . . . . . . 85
5.4 Maintenance of Properties; Insurance . . . . . . . . . . . . . 86
5.5 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.6 Equal Security for Loans and Notes; No Further Negative
Pledges. . . . . . . . . . . . . . . . . . . . . . . . . . . . 86
5.7 Compliance with Laws, Etc. . . . . . . . . . . . . . . . . . . 87
5.8 Lender Meeting . . . . . . . . . . . . . . . . . . . . . . . . 87
5.9 Environmental Disclosure and Inspection. . . . . . . . . . . . 87
5.10 Company's Remedial Action Regarding Hazardous Materials. . . . 88
5.11 Termination of Receivables Program; Redemption of Senior
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
5.12 Further Assurances as to Future Guarantor Subsidiaries . . . . 89
SECTION 6
COMPANY'S NEGATIVE COVENANTS
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . 89
6.2 Liens. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.3 Investments; Joint Ventures. . . . . . . . . . . . . . . . . . 92
6.4 Contingent Obligations . . . . . . . . . . . . . . . . . . . . 95
6.5 Restricted Payments. . . . . . . . . . . . . . . . . . . . . . 96
6.6 Financial Covenants. . . . . . . . . . . . . . . . . . . . . . 97
6.7 Restriction on Fundamental Changes . . . . . . . . . . . . . . 98
<PAGE>iii
Section Heading Page
- ------- ------- ----
6.8 Restriction on Leases. . . . . . . . . . . . . . . . . . . . .100
6.9 Sales and Lease-backs. . . . . . . . . . . . . . . . . . . . .101
6.10 Sale or Discount of Receivables. . . . . . . . . . . . . . . .101
6.11 Transactions with Shareholders and Affiliates. . . . . . . . .101
6.12 Disposal of Subsidiary Stock . . . . . . . . . . . . . . . . .101
6.13 Limitation on Consolidated Capital Expenditures. . . . . . . .102
6.14 Conduct of Business. . . . . . . . . . . . . . . . . . . . . .103
6.15 Amendments or Waivers of Certain Documents . . . . . . . . . .103
SECTION 7
EVENTS OF DEFAULT
7.1 Failure to Make Payments When Due. . . . . . . . . . . . . . .104
7.2 Default in Other Agreements. . . . . . . . . . . . . . . . . .104
7.3 Breach of Certain Covenants. . . . . . . . . . . . . . . . . .104
7.4 Breach of Warranty . . . . . . . . . . . . . . . . . . . . . .104
7.5 Other Defaults under Agreement or Loan Documents . . . . . . .105
7.6 Involuntary Bankruptcy; Appointment of Receiver, Etc.. . . . .105
7.7 Voluntary Bankruptcy; Appointment of Receiver, Etc.. . . . . .105
7.8 Judgments and Attachments. . . . . . . . . . . . . . . . . . .105
7.9 Dissolution. . . . . . . . . . . . . . . . . . . . . . . . . .106
7.10 Invalidity of O-I Subsidiary Guaranty. . . . . . . . . . . . .106
7.11 Failure of Security. . . . . . . . . . . . . . . . . . . . . .106
7.12 Change of Control. . . . . . . . . . . . . . . . . . . . . . .106
7.13 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . .106
SECTION 8
AGENT
8.1 Appointment. . . . . . . . . . . . . . . . . . . . . . . . . .109
8.2 Powers; General Immunity . . . . . . . . . . . . . . . . . . .109
8.3 Representations and Warranties; No Responsibility for
Appraisal of Creditworthiness. . . . . . . . . . . . . . . . .111
8.4 Right to Indemnity . . . . . . . . . . . . . . . . . . . . . .111
8.5 Registered Persons Treated as Owners . . . . . . . . . . . . .111
8.6 Successor Agent, Swing Line Lender and Overdraft Account
Provider . . . . . . . . . . . . . . . . . . . . . . . . . . .111
8.7 Intercreditor Agreement, O-I Subsidiary Guaranty and
Collateral Documents . . . . . . . . . . . . . . . . . . . . .112
SECTION 9
MISCELLANEOUS
<PAGE>iv
Section Heading Page
- ------- ------- ----
9.1 Representation of Lenders. . . . . . . . . . . . . . . . . . .113
9.2 Assignments and Participations in Loans, Notes and Letters
of Credit. . . . . . . . . . . . . . . . . . . . . . . . . . .113
9.3 Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . .116
9.4 Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . .116
9.5 Set Off. . . . . . . . . . . . . . . . . . . . . . . . . . . .117
9.6 Ratable Sharing. . . . . . . . . . . . . . . . . . . . . . . .117
9.7 Amendments and Waivers . . . . . . . . . . . . . . . . . . . .118
9.8 Independence of Covenants. . . . . . . . . . . . . . . . . . .119
9.9 Change in Accounting Principles, Fiscal Year or Tax Laws . . .119
9.10 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . .119
9.11 Survival of Warranties and Certain Agreements. . . . . . . . .120
9.12 Failure or Indulgence Not Waiver; Remedies Cumulative. . . . .120
9.13 Severability . . . . . . . . . . . . . . . . . . . . . . . . .120
9.14 Obligations Several; Independent Nature of Lenders' Rights . .120
9.15 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . .120
9.16 Applicable Law . . . . . . . . . . . . . . . . . . . . . . . .121
9.17 Successors and Assigns . . . . . . . . . . . . . . . . . . . .121
9.18 Consent to Jurisdiction and Service of Process . . . . . . . .121
9.19 Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . . .122
9.20 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . .122
9.21 Counterparts; Effectiveness. . . . . . . . . . . . . . . . . .123
<PAGE>v
EXHIBITS
- --------
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
III FORM OF NOTICE OF CONVERSION/CONTINUATION
IV FORM OF REVOLVING NOTE
V FORM OF SWING LINE NOTE
VI FORM OF BID RATE LOAN NOTE
VII FORM OF COMPLIANCE CERTIFICATE
VIII FORM OF O-I SUBSIDIARY GUARANTY
IX FORM OF OPINION OF LATHAM & WATKINS
X FORM OF OPINION OF GENERAL COUNSEL FOR
OWENS-ILLINOIS
XI FORM OF OPINION OF O'MELVENY & MYERS
XII FORM OF COLLATERAL ACCOUNT AGREEMENT
XIII FORM OF INTERCREDITOR AGREEMENT
XIV FORM OF COMPANY PLEDGE AGREEMENT
XV FORM OF O-I SUBSIDIARY PLEDGE AGREEMENT
XVI FORM OF BID RATE LOAN QUOTE REQUEST
XVII FORM OF INVITATION FOR BID RATE LOAN QUOTES
XVIII FORM OF BID RATE LOAN QUOTE
XIX FORM OF ASSIGNMENT AND ACCEPTANCE
XX FORM OF OVERDRAFT AGREEMENT
<PAGE>vi
Schedules
- ---------
A SUBSIDIARIES AND FOREIGN SUBSIDIARIES
B REVOLVING LOAN COMMITMENTS; PRO RATA
SHARES; FACILITY FEES
C EXISTING INDEBTEDNESS
D EXISTING LIENS
E EXISTING INVESTMENTS
F EXISTING CONTINGENT OBLIGATIONS
G REPORTING UNITS
H EMPLOYEE BENEFIT MATTERS
I ENVIRONMENTAL MATTERS
J EXISTING LETTERS OF CREDIT
<PAGE>1
OWENS-ILLINOIS, INC.
REFINANCING CREDIT AGREEMENT
DATED AS OF DECEMBER 15, 1993
This Refinancing Credit Agreement is dated as of December 15,
1993 (this "Agreement"), and entered into by and among OWENS-ILLINOIS, INC.,
a Delaware corporation ("Company"), THE LENDERS LISTED ON THE SIGNATURE PAGES
HEREOF (individually a "Lender" and collectively, "Lenders"), BANK OF
MONTREAL, THE FUJI BANK, LTD., THE INDUSTRIAL BANK OF JAPAN, LTD., THE LONG-
TERM CREDIT BANK OF JAPAN and THE SUMITOMO BANK, LTD., as Lead Managers for
Lenders (individually referred to herein as a "Lead Manager" and collectively
as "Lead Managers"), BANK OF AMERICA NT&SA, THE BANK OF NEW YORK, THE BANK OF
NOVA SCOTIA, CIBC, INC., CONTINENTAL BANK N.A., THE FIRST NATIONAL BANK OF
CHICAGO, NATIONSBANK, SOCIETE GENERALE and THE TORONTO-DOMINION BANK, as Co-
Agents for Lenders (individually referred to herein as a "Co-Agent" and
collectively as "Co-Agents"), and BANKERS TRUST COMPANY ("Bankers"), as Agent
for Lenders ("Agent").
RECITALS
WHEREAS, Company desires to refinance all of the Indebtedness
currently outstanding and all commitments under the Third Amended and
Restated Credit Agreement dated as of March 31, 1989, as amended to the date
hereof (as so amended, the "Existing Credit Agreement") among Company, the
lenders and managers listed therein and Bankers, as lead manager and agent;
WHEREAS, Company desires that Lenders extend credit facilities
to Company to fund the refinancing of all amounts owing under the Existing
Credit Agreement, to pay certain fees and expenses associated with the Loans
and the related transactions described herein, to provide working capital for
Company and its Subsidiaries, to provide for letter of credit requirements
and to provide funds for other general corporate purposes of Company and its
Subsidiaries;
WHEREAS, to induce Lenders to make available to Company the
credit facilities provided for in this Agreement, Company will cause certain
of its Subsidiaries to guaranty the obligations of Company with respect to
such credit facilities; and
WHEREAS, Company has agreed to secure its obligations under
this Agreement by pledging for the benefit of Lenders certain Intercompany
Indebtedness owing to it and the capital stock of Group, and certain of
Company's Subsidiaries have agreed to secure their obligations under the O-I
Subsidiary Guaranty by pledging certain Intercompany Indebtedness owing to
them and the capital stock of certain of their Subsidiaries;
<PAGE>2
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, Company, Lenders, Co-
Agents and Agent agree as follows:
SECTION 1
DEFINITIONS
1.1Certain Defined Terms
The following terms used in this Agreement shall have the
following meanings:
"Additional Subordinated Debt" means any senior subordinated
debt securities of Company issued after the Closing Date (i) that are issued
pursuant to the Senior Subordinated Debt Indenture and one or more
supplements thereto, (ii) that require no payments of principal (whether
repayments or prepayments, sinking fund payments, payments in respect of any
redemption, acquisition or defeasance thereof, or otherwise) to be made in
respect thereof prior to the date that is one year after the date of
expiration of the Revolving Loan Commitments as in effect on the date of
issuance thereof, (iii) that are secured, if at all, only on a senior
subordinated basis by the Collateral under the Company Pledge Agreement on
the same basis as the Senior Subordinated Debt, (iv) that are not guarantied
by any Subsidiary of Company, and (v) that bear interest at a fixed rate not
to exceed 12% per annum, as such Additional Subordinated Debt may be amended,
supplemented or otherwise modified from time to time to the extent permitted
under this Agreement; provided that the aggregate principal amount or
original issuance price, as the case may be, of all such Additional
Subordinated Debt may not exceed $100,000,000.
"Adjusted Eurodollar Rate" means, for any Interest Rate
Determination Date with respect to a Eurodollar Rate Loan, the rate obtained
by dividing (i) the arithmetic average (rounded upward to the nearest 1/100
of one percent) of the offered quotation, if any, to first class banks in the
interbank Eurodollar market by each of the Reference Lenders for U.S. dollar
deposits of amounts in same day funds comparable to the principal amount of
the Eurodollar Rate Loan of that Reference Lender for which the Adjusted
Eurodollar Rate is then being determined with maturities comparable to the
Interest Period for which such Adjusted Eurodollar Rate will apply as of
approximately 10:00 A.M. (New York time) on such Interest Rate Determination
Date by (ii) a percentage equal to 100% minus the stated maximum rate of all
reserve requirements (including, without limitation, any marginal, emergency,
supplemental, special or other reserves) applicable to any member bank of the
Federal Reserve System in respect of "Eurocurrency liabilities" as defined in
Regulation D (or any successor category of liabilities under Regulation D);
provided that if any Reference Lender fails to provide Agent with its
aforementioned quotation then the Adjusted Eurodollar Rate shall be
determined based on the quotation(s) provided to Agent by the other Reference
Lender(s).
<PAGE>3
"Affected Lender" means any Lender affected by any of the
events described in subsections 2.6B or 2.6C.
"Affected Subsidiary" has the meaning assigned to that term in
subsection 6.7.
"Affiliate", as applied to any Person, means any other Person
directly or indirectly controlling, controlled by, or under common control
with, that Person. For the purposes of this definition, "control" (including
with correlative meanings, the terms "controlling", "controlled by" and
"under common control with"), as applied to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of
voting securities or by contract or otherwise.
"Agent" has the meaning assigned to that term in the
introduction to this Agreement.
"Aggregate Amounts Due" has the meaning assigned to that term
in subsection 9.6.
"Agreement" means this Refinancing Credit Agreement dated as
of December 15, 1993, as it may be amended, supplemented or otherwise
modified from time to time.
"Applicable Margin" means, as at any date of determination, a
percentage based upon the highest of the then applicable credit ratings from
S&P or Moody's with respect to any of the Senior Debt Securities, as follows:
Senior Debt Securities
Credit Rating Applicable Margin
---------------------- -----------------
S&P Moody's
BBB- or higher Baa3 or higher .625%
BB+ Ba1 .750%
BB Ba2 .875%
BB- or lower Ba3 or lower 1.00%
; provided that if at any time either of the Senior Debt Securities is not
rated by either of S&P or Moody's, such Senior Debt Securities shall, for
purposes of this definition, be deemed to have been rated BB- by S&P or Ba3
by Moody's, as applicable; provided, further that if at any time neither of
S&P nor Moody's is in the business of rating debt securities such as the
Senior Debt Securities or if none of the Senior Debt Securities are at the
time outstanding, then Company and Lenders shall enter into good faith
negotiations to establish an alternate basis for determining the Applicable
Margin, either with reference to credit ratings from an alternate rating
agency with respect to any of the Senior Debt Securities or on some other
<PAGE>4
basis mutually acceptable to Company and Lenders; provided further, however,
that until such an alternate basis for determining the Applicable Margin is
established, the Applicable Margin shall be (a) for the first 30 days
following the occurrence of the event giving rise to the need to determine an
alternate basis for determining the Applicable Margin, the Applicable Margin
in effect immediately prior to such occurrence and (b) thereafter, determined
in accordance with the first proviso to this definition.
"Asset Sale" means the sale, transfer or other disposition by
Company or any of its Subsidiaries to any Person other than Company or any of
its Subsidiaries of (i) any of the stock of any of Company's Subsidiaries
(including any Foreign Subsidiary), (ii) substantially all of the assets of
any geographic or other division or line of business of Company or any of its
Subsidiaries (including any Foreign Subsidiary), or (iii) any other assets
(including, without limitation, any assets which do not constitute
substantially all of the assets of any geographic or other division or line
of business but excluding any assets manufactured, constructed or otherwise
produced or purchased for sale to others in the ordinary course of business
consistent with the past practices of Company and its Subsidiaries, and
excluding only for purposes of this clause (iii) the assets of the Foreign
Subsidiaries) of Company or any of its Subsidiaries having a value in excess
of $500,000 or more; provided that any asset sale described in clause (iii)
shall be deemed not to be an "Asset Sale" until the aggregate amount of all
such sales by Company and its Subsidiaries occurring in any fiscal year
equals or exceeds $5,000,000; provided, further, that any sale, transfer or
other disposition described in clause (i) or (ii) shall be deemed not to be
an "Asset Sale" with respect to any sale, transfer or other disposition by
any Foreign Subsidiary of all or any of the stock of, or all or any of the
assets of, any of its Subsidiaries so long as the proceeds of such sale,
transfer or other disposition remain in the applicable territory of the
United States of America or jurisdiction outside the United States of America
and are used for purposes consistent with the business or operations of such
Foreign Subsidiary as previously conducted.
"Assignment and Acceptance" means an Assignment and Acceptance, in
substantially the form of Exhibit XIX annexed hereto.
"Bankers" has the meaning assigned to that term in the introduction
to this Agreement.
"Bankruptcy Code" means Title 11 of the United States Code entitled
"Bankruptcy" as now and hereafter in effect, or any successor statute.
"Bid Rate Loans" means Loans made by Lenders to Company pursuant to
subsection 2.9.
"Bid Rate Loan Agent" means Agent acting in the capacity of agent
with respect to the Bid Rate Loans hereunder.
<PAGE>5
"Bid Rate Loan Interest Payment Date" means, with respect to any
Bid Rate Loan, the last day of the Bid Rate Loan Interest Period applicable
to such Bid Rate Loan; provided that in the case of a Bid Rate Loan with a
Bid Rate Loan Interest Period of 180 days "Bid Rate Loan Interest Payment
Date" shall also include the 90-day anniversary of the commencement of that
Bid Rate Loan Interest Period.
"Bid Rate Loan Interest Period" means, with respect to any Bid Rate
Loans, the period commencing on the date such Bid Rate Loans are made and
ending on a date 30, 60, 90 or 180 days thereafter, as Company may select as
provided in subsection 2.9B. Notwithstanding the foregoing, (i) if any Bid
Rate Loan Interest Period would otherwise end after the Revolving Loan
Commitment Termination Date, such Bid Rate Loan Interest Period shall end on
the Revolving Loan Commitment Termination Date, (ii) each Bid Rate Loan
Interest Period which would otherwise end on a day which is not a Business
Day shall end on the next succeeding Business Day, and (iii) notwithstanding
clause (i) above, no Bid Rate Loan Interest Period for any Bid Rate Loans
shall have a duration of less than 30 days and, if the Bid Rate Loan Interest
Period for any Bid Rate Loans would otherwise be a shorter period, such Bid
Rate Loans shall not be available hereunder.
"Bid Rate Loan Notes" means the promissory notes of Company,
substantially in the form of Exhibit VI annexed hereto, issued in favor of
one or more Lenders pursuant to subsection 2.9K to evidence the Bid Rate
Loans.
"Bid Rate Loan Quote" means an offer by a Lender to make Bid Rate
Loans, substantially in the form of Exhibit XVIII annexed hereto, delivered
to Agent by such Lender pursuant to subsection 2.9D.
"Bid Rate Loan Quote Request" means a request by Company to each
Lender to submit Bid Rate Loan Quotes, substantially in the form of
Exhibit XVI annexed hereto, delivered by Company to Agent pursuant to
subsection 2.9B.
"Bid Rate Loan Shortfall Amount" means the amount, if any, by which
the amount of Bid Rate Loans requested in a Bid Rate Loan Quote Request
exceeds the amount equal to (i) the aggregate amount of Bid Rate Loans
offered in any Bid Rate Loan Quotes delivered by Lenders relating to such Bid
Rate Loan Quote Request minus (ii) the amount of Bid Rate Loans so offered
which are rejected in good faith by Company.
"Bid Rate Loan Shortfall Date" means a proposed Funding Date of Bid
Rate Loans in respect of which a Bid Rate Loan Shortfall Amount exists.
"Business Day" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the States of New York or Ohio or is a day on
which banking institutions located in such states are authorized or required
by law or other governmental action to close and (ii) with respect to all
<PAGE>6
notices, determinations, fundings and payments in connection with the
Adjusted Eurodollar Rate, any day which is a Business Day described in clause
(i) and which is also a day for trading by and between banks in Dollar
deposits in the applicable interbank Eurodollar market.
"Capital Lease", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee which, in
conformity with GAAP (subject to subsection 1.2 hereof), is accounted for as
a capital lease on the balance sheet of that Person.
"Cash" means money, currency or a credit balance in a Deposit
Account.
"Cash Equivalents" means (i) marketable direct obligations issued
or unconditionally guarantied by the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of acquisition
thereof; (ii) marketable direct obligations issued by any state of the United
States of America or any political subdivision of any such state or any
public instrumentality thereof maturing within one year from the date of
acquisition thereof and, at the time of acquisition, having the highest
rating obtainable from either S&P or Moody's; (iii) commercial paper maturing
no more than one year from the date of creation thereof and, at the time of
acquisition, having a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year from the date of acquisition thereof issued by any Lender or any
commercial bank organized under the laws of the United States of America or
any state thereof or the District of Columbia having combined capital and
surplus of not less than $250,000,000; (v) Eurodollar time deposits having a
maturity of less than one year purchased directly from any Lender (whether
such deposit is with such Lender or any other Lender); and (vi) repurchase
agreements and reverse repurchase agreements with any Lender relating to
marketable direct obligations issued or unconditionally guarantied by the
United States Government or issued by any agency thereof and backed by the
full faith and credit of the United States, in each case maturing within one
year from the date of acquisition thereof.
"Change of Control" means such time as (i) a "person" or "group"
(within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
other than KKR and its Affiliates, becomes the "beneficial owner" (as defined
in Rule 13d-3 under the Exchange Act) of more than (a) 35% of the total
voting power of the then outstanding Voting Stock and (b) the total voting
power of the then outstanding Voting Stock beneficially owned by KKR and its
Affiliates; or (ii) during any period of two consecutive calendar years,
individuals who at the beginning of such period constituted Company's Board
of Directors (together with any new directors whose election by Company's
Board of Directors or whose nomination for election by Company's shareholders
was approved by a vote of at least two-thirds of the directors then still in
office who either were directors at the beginning of such period or whose
<PAGE>7
election or nomination for election was previously so approved) cease for any
reason to constitute a majority of the directors then in office; or
(iii) (a) Company consolidates with or merges into any other Person or
conveys, transfers or leases all or substantially all of its assets to any
Person or (b) any Person merges into Company, in either event pursuant to a
transaction in which any Voting Stock outstanding immediately prior to the
effectiveness thereof is reclassified or changed into or exchanged for cash,
securities or other property; provided that any consolidation, conveyance,
transfer or lease (x) between Company and any of its Subsidiaries or between
such Subsidiaries (including, without limitation, the reincorporation of
Company in another jurisdiction) or (y) for the purpose of creating a public
holding company for Company in which all holders of Capital Stock would be
entitled to receive (other than cash in lieu of fractional shares) solely
capital stock of the holding company in amounts proportionate to their
holdings of Capital Stock immediately prior to such transaction, shall be
excluded from the operation of this clause (iii). For purposes of this
definition of "Change of Control", (i) the term "Capital Stock" means any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock of Company and (ii) the term "Voting Stock"
means Capital Stock of any class or kind ordinarily (without regard to the
occurrence of any contingency) having the power to vote for the election of
directors of Company.
"Closing Date" means the date on or before December 17, 1993 on
which the initial Loans are made.
"Co-Agent" and "Co-Agents" have the meanings assigned to those
terms in the introduction to this Agreement.
"Collateral" means, collectively, the "Pledged Collateral" (as
defined in the Pledge Agreements) and the "Collateral" (as defined in the
Collateral Account Agreement).
"Collateral Account Agreement" means the Collateral Account
Agreement, in substantially the form of Exhibit XII annexed hereto, dated as
of the Closing Date, between Company, Agent and Collateral Agent, as such
Collateral Account Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"Collateral Agent" means Bankers acting in the capacity of
collateral agent on behalf of the holders from time to time of any
outstanding Commercial Paper, Lenders and the other Persons (other than
Company or its Subsidiaries) who have executed counterparts to the
Intercreditor Agreement, including Lenders party to Interest Rate Agreements
and Currency Agreements contemplated by subsection 6.4(vii), Foreign Lenders
party to Foreign Loan Agreements contemplated by subsection 6.4(xii), the
Senior Debenture Trustee, the Senior Note Trustee, and the Senior
Subordinated Debt Trustee, in each case under the applicable Collateral
Documents, the Intercreditor Agreement and, if applicable, the O-I Subsidiary
Guaranty.
"Collateral Documents" means the Pledge Agreements, the Collateral
Account Agreement and all other instruments or documents delivered by Company
or any of its Subsidiaries in order to grant to Collateral Agent Liens on any
Collateral.
<PAGE>8
"Commercial Letter of Credit" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism
in connection with the purchase of any materials, goods or services by
Company or any of its Subsidiaries in the ordinary course of business of
Company or such Subsidiary.
"Commercial Paper" means Indebtedness of Company permitted under
subsection 6.1(x).
"Commercial Paper Usage" means, as at any date of determination,
the aggregate face amount of outstanding Commercial Paper.
"Commitments" means the Revolving Loan Commitments of Lenders and
the Swing Line Loan Commitment of Agent.
"Commodities Agreement" means any forward contract, option, futures
contract, futures option, or similar agreement or arrangement designed to
protect Company or any of its Subsidiaries from fluctuations in the price of
commodities.
"Common Stock" means the common stock of Company, par value $.01
per share.
"Company" has the meaning assigned to that term in the introduction
to this Agreement.
"Company Pledge Agreement" means the Fourth Amended and Restated
Company Pledge Agreement executed by Company pursuant to subsection 3.1A5, in
substantially the form of Exhibit XIV annexed hereto, pursuant to which the
capital stock of Group and the O-I Subsidiary Debt Obligations owed by Group
to Company have been pledged to Collateral Agent, as such Company Pledge
Agreement may hereafter be amended, supplemented or otherwise modified from
time to time.
"Compliance Certificate" means a certificate substantially in the
form annexed hereto as Exhibit VII delivered to Lenders by Company pursuant
to subsection 5.1(iv).
"Consolidated Adjusted Interest Expense" means Consolidated Cash
Interest Expense minus the portion thereof allocable to Capital Leases.
"Consolidated Capital Expenditures" means, for any period, (x) the
sum of (i) the aggregate of all expenditures (whether paid in cash or accrued
as a liability but excluding capitalized interest and that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and
its Consolidated Subsidiaries and excluding expenditures made in connection
with the replacement, substitution or restoration of assets (A) to the extent
financed from insurance proceeds paid on account of the loss of or damage to
the assets being replaced or restored or (B) with awards of compensation
arising from the taking by eminent domain or condemnation of the assets being
<PAGE>9
replaced) by Company and its Consolidated Subsidiaries during that period
which, in conformity with GAAP (subject to subsection 1.2 hereof), are
included in "additions to property, plant or equipment" or similar items
reflected in the statement of changes in financial position of Company and
its Consolidated Subsidiaries and (ii) to the extent not covered by subclause
(i) hereof, the aggregate of all expenditures (including the amount of all
Indebtedness assumed in such acquisition or retained by the acquired Person)
by Company and its Consolidated Subsidiaries during that period to acquire by
purchase or otherwise the business, property or fixed assets of, or stock or
other evidence of beneficial ownership of, any Person (other than current
assets) minus (y) the proceeds of sales during that period of any assets
constituting plant, property or equipment on the balance sheet of Company and
its Consolidated Subsidiaries in the ordinary course of business and
consistent with past practice.
"Consolidated Cash Flow Available for Fixed Charges" means, for any
12-month period, the sum of the amounts for such period of (i) Consolidated
Net Income, (ii) Consolidated Adjusted Interest Expense, (iii) provisions for
taxes based on income, (iv) depreciation expense, (v) Consolidated Rental
Payments, (vi) amortization expense (excluding Capital Lease amortization)
and (vii) other non-cash items reducing Consolidated Net Income including,
without limitation, non-cash interest expense, other than items excluded from
the calculation thereof, minus non-cash items increasing Consolidated Net
Income, other than items excluded from the calculation thereof, all as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP (subject to subsection 1.2 hereof); provided that if,
during such period, Company or any of its Subsidiaries shall have made any
Asset Sales, Consolidated Cash Flow Available for Fixed Charges for such
period shall be reduced by an amount equal to the Consolidated Cash Flow
Available for Fixed Charges (if positive) directly attributable to the assets
which are the subject of such Asset Sales for the balance of such period
remaining after consummation of such Asset Sale or increased by an amount
equal to the Consolidated Cash Flow Available for Fixed Charges (if negative)
directly attributable thereto for the balance of such period remaining after
consummation of such Asset Sale, as such amounts are determined in the
reasonable judgment of Company, using such methods as are reasonably
acceptable to Agent. Consolidated Cash Flow Available for Fixed Charges
shall be determined for any period without regard to changes in working
capital of Company and its Subsidiaries during such period.
"Consolidated Cash Interest Expense" means, for any 12-month
period, total interest expense (including that attributable to Capital Leases
in accordance with GAAP (subject to subsection 1.2 hereof)) of Company and
its Subsidiaries on a consolidated basis with respect to all outstanding
Indebtedness of Company and its Subsidiaries, including, without limitation,
all capitalized interest, all commissions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing and net costs under Interest Rate Agreements, but excluding,
however, interest expense not payable in cash (including amortization of
discount) and the interest expense of any Subsidiary of Company if (a) the
<PAGE>10
income of such Subsidiary would be excluded in the calculation of
Consolidated Net Income pursuant to clause (iii) of the proviso to the
definition of Consolidated Net Income (but only in the same proportion as the
income of such Subsidiary is excluded from the calculation of Consolidated
Net Income), and (b) such excluded interest expense does not relate to
Indebtedness guarantied by Company or any of its Subsidiaries whose income
would be included in the calculation of Consolidated Net Income.
"Consolidated EBIT" means, for any 12-month period, the sum of the
amounts for such period of (i) Consolidated Net Income, (ii) provisions for
taxes based on income and (iii) total interest expense, all as determined on
a consolidated basis for Company and its Subsidiaries in conformity with GAAP
(subject to subsection 1.2 hereof).
"Consolidated Fixed Charges" means, for any 12-month period, the
sum of the amounts for such period of (i) Consolidated Adjusted Interest
Expense, (ii) taxes based on income payable during such period,
(iii) Consolidated Rental Payments, and (iv) payments of principal with
respect to Existing Indebtedness, all as determined on a consolidated basis
for Company and its Subsidiaries in conformity with GAAP (subject to
subsection 1.2 hereof); provided that if, during such period, Company or any
of its Subsidiaries shall have made any Asset Sales, Consolidated Fixed
Charges for such period shall be reduced by an amount equal to, without
duplication, the sum of (a) the Consolidated Fixed Charges directly
attributable to the assets which are the subject of such Asset Sales for the
balance of such period remaining after consummation of such Asset Sale and
(b) the total interest expense for the balance of such period remaining after
consummation of such Asset Sale directly attributable to any Indebtedness
repaid, prepaid or redeemed out of the Net Cash Proceeds of such Asset Sales
(determined by reference to the weighted average interest expense for such
Indebtedness during such remaining period), as such amounts are determined in
the reasonable judgment of Company, using such methods as are reasonably
acceptable to Agent.
"Consolidated Net Income" means, for any 12-month period, the net
income (or loss) of Company and its Subsidiaries on a consolidated basis for
such period taken as a single accounting period determined in conformity with
GAAP (subject to subsection 1.2 hereof); provided that there shall be
excluded (i) the income (or loss) of any Person in which any other Person
(other than Company or any of its Subsidiaries) has a joint interest, except
to the extent of the amount of dividends or other distributions actually paid
to Company or any of its Subsidiaries by such Person during such period,
(ii) the income (or loss) of any Person accrued prior to the date it becomes
a Subsidiary of Company or is merged into or consolidated with Company or any
of its Subsidiaries or that Person's assets are acquired by Company or any of
its Subsidiaries, (iii) the income of any Subsidiary of Company (other than
United Glass Limited) to the extent that the declaration or payment of
dividends or similar distributions by that Subsidiary of that income is not
at the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or governmental
regulation applicable to that Subsidiary, and (iv) any after-tax gains or
losses attributable to Asset Sales.
"Consolidated Net Worth" means, as at any date of determination,
the sum of the capital stock and additional paid-in capital plus retained
earnings (or minus accumulated deficit) of Company and its Subsidiaries on a
consolidated basis calculated in conformity with GAAP (subject to all
<PAGE>11
preferred stock being deemed to be capital stock for purposes of this
definition and subject to subsection 1.2 hereof but excluding the effects of
foreign currency exchange adjustments under Financial Accounting Standards
Board Statement No. 52) except that the determination of gains or losses on
Asset Sales shall be computed after application of Accounting Principles
Board Opinions Nos. 16 and 17.
"Consolidated Rental Payments" means, for any period, the aggregate
amount of all rents paid under all Capital Leases and Operating Leases of
Company and its Subsidiaries (other than, for purposes of subsections 6.8 and
6.9, any Foreign Subsidiaries) as lessee (net of sublease income), all as
determined on a consolidated basis in conformity with GAAP (subject to
subsection 1.2 hereof), but excluding, however, all rents paid under all
Capital Leases and Operating Leases of any Subsidiary of Company if (a) the
income of such Subsidiary would be excluded in the calculation of
Consolidated Net Income pursuant to clause (iii) of the proviso to the
definition of Consolidated Net Income (but only in the same proportion as the
income of such Subsidiary is excluded from the calculation of Consolidated
Net Income), and (b) such excluded rental payments are not guarantied by
Company or any of its Subsidiaries whose income would be included in the
calculation of Consolidated Net Income.
"Consolidated Subsidiaries" means all Subsidiaries of Company other
than the Foreign Subsidiaries.
"Consolidated Total Debt" means, as at any date of determination,
all Indebtedness of Company and its Subsidiaries on a consolidated basis
calculated in conformity with GAAP (subject to subsection 1.2 hereof), but
excluding, however, the Indebtedness of any Subsidiary of Company if (a) the
income of such Subsidiary would be excluded in the calculation of
Consolidated Net Income pursuant to clause (iii) of the proviso to the
definition of Consolidated Net Income (but only in the same proportion as the
income of such Subsidiary is excluded from the calculation of Consolidated
Net Income), and (b) such Indebtedness is not guarantied by Company or any of
its Subsidiaries whose income would be included in the calculation of
Consolidated Net Income.
"Contingent Obligation", as applied to any Person, means any direct
or indirect liability, contingent or otherwise, of that Person (i) with
respect to any indebtedness, lease, dividend, letter of credit or other
obligation of another if the primary purpose or intent thereof by the Person
incurring the Contingent Obligation is to provide assurance to the obligee of
such obligation of another that such obligation of another will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof, (ii) under any letter of credit issued for
the account of or for which that Person is otherwise liable for reimbursement
thereof, or (iii) under Currency Agreements or Interest Rate Agreements.
Contingent Obligations shall include, without limitation, (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in
<PAGE>12
the ordinary course of business), co-making, discounting with recourse or
sale with recourse by such Person of the obligation of another, and (b) any
liability of such Person for the obligations of another through any agreement
(contingent or otherwise) (i) to purchase, repurchase or otherwise acquire
such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances,
stock purchases, capital contributions or otherwise), (ii) to maintain the
solvency or any balance sheet item, level of income or financial condition of
another, or (iii) to make take-or-pay or similar payments if required
regardless of non-performance by any other party or parties to an agreement,
if in the case of any agreement described under subclauses (i) or (ii) of
this sentence the primary purpose or intent thereof is as described in the
preceding sentence. The amount of any Contingent Obligation shall be equal
to the amount of the obligation so guarantied or otherwise supported.
"Contractual Obligation", as applied to any Person, means any
provision of any Security issued by that Person or of any material indenture,
mortgage, deed of trust, contract, undertaking, agreement or other instrument
to which that Person is a party or by which it or any of its properties is
bound or to which it or any of its properties is subject.
"Covered Tax" means any Tax that is not an Excluded Tax.
"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
Company or any of its Subsidiaries against fluctuations in currency values.
"Deposit Account" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"Dollars" or the sign "$" means the lawful money of the United
States of America.
"Eligible Assignee" means (A)(i) a commercial bank organized under
the laws of the United States or any state thereof; (ii) a savings and loan
association or savings bank organized under the laws of the United States or
any state thereof; (iii) a commercial bank organized under the laws of any
other country or a political subdivision thereof; provided that (x) such bank
is acting through a branch or agency located in the United States or (y) such
bank is organized under the laws of a country that is a member of the
Organization for Economic Cooperation and Development or a political
subdivision of such country; and (iv) any other entity which is an
"accredited investor" (as defined in Regulation D under the Securities Act)
which extends credit as one of its businesses including, but not limited to,
insurance companies, mutual funds and lease financing companies, in each case
(under clauses (i) through (iv) above) that is reasonably acceptable to
Agent; and (B) any Lender and any Affiliate of any Lender; provided that no
Affiliate of Company shall be an Eligible Assignee; provided further that, in
order to be an Eligible Assignee, a Person must have at the time of
determination unimpaired capital and surplus of not less than $100,000,000.
"Employee Benefit Plan" means any "employee benefit plan" as
defined in Section 3(3) of ERISA (a) which is, or was within the past six
years, maintained or contributed to by Company or any ERISA Affiliate of
<PAGE>13
Company or (b) with respect to which Company or any ERISA Affiliate of
Company retains any liability.
"Environmental Claim" means any accusation, allegation, notice of
violation, claim, demand, abatement order or other order (conditional or
otherwise) by any governmental authority or any Person for any damage,
including, without limitation, personal injury (including sickness, disease
or death), tangible property damage, contribution, indemnity, indirect or
consequential damages, damage to the environment, nuisance, pollution,
contamination or other adverse effects on the environment, or for fines,
penalties or restrictions, in each case relating to, resulting from or in
connection with Hazardous Materials and relating to Company, any of its
Subsidiaries, any of their respective Affiliates or any Facility.
"Environmental Laws" means all statutes, ordinances, orders, rules,
regulations, plans or decrees relating to (i) environmental matters,
including, without limitation, those relating to fines, injunctions,
penalties, damages, contribution, cost recovery compensation, losses or
injuries resulting from the Release or threatened Release of Hazardous
Materials, (ii) the generation, use, storage, transportation or disposal of
Hazardous Materials, or (iii) occupational safety and health, industrial
hygiene, land use or the protection of human, plant or animal health or
welfare, in any manner applicable to Company or any of its Subsidiaries or
any or their respective properties, including, without limitation, the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. S 9601 et seq.), the Hazardous Materials Transportation Act (49 U.S.C.
S 1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. S 6901
et seq.), the Federal Water Pollution Control Act ( 33 U.S.C. S 1251 et
seq.), the Clean Air Act (42 U.S.C. S 7401 et seq.), the Toxic Substances
Control Act (15 U.S.C. S 2601 et seq.), the Federal Insecticide, Fungicide
and Rodenticide Act (7 U.S.C. S136 et seq.), the Occupational Safety and
Health Act (29 U.S.C. S 651 et seq.) and the Emergency Planning and Community
Right-to-Know Act (42 U.S.C. S 11001 et seq.), each as amended or
supplemented, and any analogous future or present local, state and federal
statutes and regulations promulgated pursuant thereto, each as in effect as
of the date of determination.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time and any successor statute.
"ERISA Affiliate", as applied to any Person, means (i) any
corporation which is, or was at any time, a member of a controlled group of
corporations within the meaning of Section 414(b) of the Internal Revenue
Code of which that Person is, or was at any time, a member; (ii) any trade or
business (whether or not incorporated) which is, or was at any time, a member
of a group of trades or businesses under common control within the meaning of
Section 414(c) of the Internal Revenue Code of which that Person is, or was
at any time, a member; and (iii) any member of an affiliated service group
within the meaning of Section 414(m) or (o) of the Internal Revenue Code of
which that Person, any corporation described in clause (i) above or any trade
or business described in clause (ii) above is, or was at any time, a member.
<PAGE>14
"ERISA Event" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to
any Pension Plan (excluding those for which the provision for 30-day notice
to the PBGC has been waived by regulation); (ii) the failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code with
respect to any Pension Plan (whether or not waived in accordance with Section
412(d) of the Internal Revenue Code) or the failure to make by its due date a
material required installment under Section 412(m) of the Internal Revenue
Code with respect to any Pension Plan or the failure to make any material
required contribution to a Multiemployer Plan; (iii) the provision by the
administrator of any Pension Plan pursuant to Section 4041(a)(2) of ERISA of
a notice of intent to terminate such plan in a distress termination described
in Section 4041(c) of ERISA; (iv) the withdrawal by Company or any of its
ERISA Affiliates from any Pension Plan with two or more contributing sponsors
or the termination of any such Pension Plan resulting in material liability
pursuant to Sections 4063 or 4064 of ERISA; (v) the institution by the PBGC
of proceedings to terminate any Pension Plan, or the occurrence of any event
or condition which would reasonably be expected to constitute grounds under
ERISA for the termination of, or the appointment of a trustee to administer,
any Pension Plan; (vi) the imposition of material liability on Company or any
of its ERISA Affiliates pursuant to Section 4062(e) or 4069 of ERISA or by
reason of the application of Section 4212(c) of ERISA; (vii) the withdrawal
by Company or any of its ERISA Affiliates in a complete or partial withdrawal
(within the meaning of Sections 4203 and 4205 of ERISA) from any
Multiemployer Plan, or the receipt by Company or any of its ERISA Affiliates
of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA, in any such
case if such event would reasonably be expected to result in material
liability to Company or its ERISA Affiliates; (viii) the occurrence of an act
or omission which could give rise to the imposition on Company or any of its
ERISA Affiliates of material fines, penalties, taxes or related charges under
Chapter 43 of the Internal Revenue Code or under Section 409 or 502(c), (i)
or (l) or 4071 of ERISA in respect of any Employee Benefit Plan; (ix) the
assertion of a material claim (other than routine claims for benefits)
against any Employee Benefit Plan other than a Multiemployer Plan or the
assets thereof, or against Company or any of its ERISA Affiliates in
connection with any such Employee Benefit Plan; (x) receipt from the Internal
Revenue Service of notice of the failure of any Pension Plan (or any other
Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal
Revenue Code, or the failure of any trust forming part of any Pension Plan to
qualify for exemption from taxation under Section 501(a) of the Internal
Revenue Code; or (xi) the imposition of a Lien pursuant to Section 401(a)(29)
or 412(n) of the Internal Revenue Code or pursuant to ERISA with respect to
any Pension Plan.
"Eurodollar Rate Loans" means Loans bearing interest at rates
determined by reference to the Adjusted Eurodollar Rate as provided in
subsection 2.2A.
"Event of Default" means each of the events set forth in Section 7.
<PAGE>15
"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, and any successor statute.
"Excluded Tax" means any of the following taxes, levies, imposts,
duties, deductions, withholdings or charges, and all liabilities with respect
thereto: (i) Taxes imposed on the net income of a Lender, Agent, Co-Agent or
Tax Transferee (including without limitation branch profits taxes, minimum
taxes and taxes computed under alternative methods, at least one of which is
based on net income (collectively referred to as "net income taxes")) by
(A) the jurisdiction under the laws of which such Lender, Agent, Co-Agent or
Tax Transferee is organized or any political subdivision thereof or (B) the
jurisdiction of such Lender's, Tax Transferee's, Co-Agent's or Agent's
applicable lending office or any political subdivision thereof or (C) any
jurisdiction in which the Lender, Agent, Co-Agent or Tax Transferee is doing
business (other than solely by virtue of being a Lender under this
Agreement), (ii) any Taxes to the extent that they are in effect and would
apply to a payment to such Lender, Agent or Co-Agent, as applicable, as of
the Closing Date, or as of the date such Person becomes a Lender, in the case
of any assignee pursuant to subsection 9.2, (iii) any Taxes that are in
effect and would apply to a payment to a Tax Transferee as of the date of
acquisition of any Loans by such Tax Transferee or the date of the change of
lending office of such Tax Transferee, as the case may be (provided, however,
that a Person shall not be considered a Tax Transferee for purposes of this
clause (iii) as a result of a change of its lending office or the taking of
any other steps pursuant to subsection 2.6J), (iv) with respect to any Taxes
for which any credit or other Tax benefit, in the reasonable good faith
judgment of such Lender, Tax Transferee, Co-Agent or Agent, as the case may
be, is available to such Lender, Tax Transferee, Co-Agent or Agent, as
applicable, as a result thereof and is allocable to the transactions
contemplated by this Agreement, the amount of such credit or other Tax
benefit or (v) any Taxes that would not have been imposed but for (A) the
failure by Agent, Co-Agent or such Lender or Tax Transferee, as applicable,
to provide and keep current any certification or other documentation required
to qualify for an exemption from or reduced rate of any Tax (unless such
failure results from a change in applicable law after the Closing Date or the
date of the applicable Assignment and Acceptance, as the case may be, which
precludes Agent, Co-Agent or such Lender or Tax Transferee, as applicable,
from qualifying for such exemption or reduced rate) or (B) the gross
negligence or willful misconduct of Agent, Co-Agent or a Lender.
"Existing Credit Agreement" has the meaning assigned to that term
in the Recitals to this Agreement.
"Existing Indebtedness" means Indebtedness of Company and its
Consolidated Subsidiaries listed in Schedule C annexed hereto.
"Facilities" means any and all real property (including, without
limitation, all buildings, fixtures or other improvements located thereon)
now, hereafter or heretofore owned, leased, operated or used by Company or
any of its Subsidiaries or any of their respective predecessors or
Affiliates.
<PAGE>16
"Foreign Entity" means any Subsidiary or Joint Venture of Company
more than 80% of the sales, earnings or assets (determined on a consolidated
basis) of which are located or derived from operations outside of the United
States of America.
"Foreign Lenders" means the Lenders to which the Foreign Lender
Debt is owed.
"Foreign Lender Debt" means the indebtedness owed by certain
Foreign Subsidiaries to certain Lenders which has been guarantied by Company
and is listed under the caption "Amount Related to Foreign Lender Debt" in
Schedule F annexed hereto and any other indebtedness owed by any Foreign
Subsidiary to any Lender which is guarantied by Company and which guarantee
is permitted under subsection 6.4(xii).
"Foreign Lender Guaranties" means any guaranties by Company of any
Foreign Lender Debt.
"Foreign Loan Agreements" means those certain loan and other credit
agreements pursuant to which Foreign Lender Debt is incurred.
"Foreign Subsidiary" means any Subsidiary or Joint Venture of
Company identified as such on Schedule A annexed hereto and, in addition, any
Subsidiary or Joint Venture acquired, incorporated or otherwise established
by Company after the Closing Date which is organized under the laws of a
jurisdiction other than the United States of America or any State thereof and
more than 80% of the sales, earnings or assets (determined on a consolidated
basis) of which are located or derived from operations in territories of the
United States of America and jurisdictions outside the United States of
America.
"Funding and Payment Office" means the office of Agent located at
One Bankers Trust Plaza, New York, New York.
"Funding Date" means the date of the funding of a Loan.
"GAAP" means, subject to the provisions of subsection 1.2,
generally accepted accounting principles set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute
of Certified Public Accountants and statements and pronouncements of the
Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, which are applicable to the circumstances as of the date of
determination.
"Governmental Authorization" means any permit, license,
authorization, plan, directive, consent order or consent decree of or from
any foreign, federal, state or local governmental authority, agency or court.
"Group" means Owens-Illinois Group, Inc., a Delaware corporation.
<PAGE>17
"Guarantor Subsidiaries" means, at any time of determination, each
O-I Subsidiary which is identified as a "Guarantor Subsidiary" in Schedule A
annexed hereto and each other Consolidated Subsidiary which becomes a first-
tier or second-tier Subsidiary of Group for a period of longer than 90 days,
but excluding, however, any Consolidated Subsidiary which was a party to the
O-I Subsidiary Guaranty but has been released therefrom in accordance with
its terms.
"Hazardous Materials" means (i) any chemical, material or substance
at any time defined as or included in the definition of "hazardous
substances", "hazardous wastes", "hazardous materials", "extremely hazardous
waste", "restricted hazardous waste", "infectious waste", "toxic substances"
or any other formulations intended to define, list or classify substances by
reason of deleterious properties such as ignitability, corrosivity,
reactivity, carcinogenicity, toxicity, reproductive toxicity, "TCLP toxicity"
or "EP toxicity" or words of similar import under any applicable
Environmental Laws; (ii) any oil, petroleum, petroleum fraction or petroleum
derived substance; (iii) any drilling fluids, produced waters and other
wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) asbestos in any form;
(vii) urea formaldehyde foam insulation; (viii) electrical equipment which
contains any oil or dielectric fluid containing levels of polychlorinated
biphenyls in excess of fifty parts per million; and (ix) pesticides.
"Indebtedness", as applied to any Person, means (i) all
indebtedness for borrowed money, (ii) that portion of obligations with
respect to Capital Leases which is properly classified as a liability on a
balance sheet in conformity with GAAP (subject to subsection 1.2 hereof),
(iii) notes payable and drafts accepted representing extensions of credit
whether or not representing obligations for borrowed money, (iv) any
obligation owed for all or any part of the deferred purchase price of
property or services, which purchase price is (a) due more than six months
from the date of incurrence of the obligation in respect thereof or
(b) evidenced by a note or similar written instrument, and (v) all
indebtedness secured by any Lien on any property or asset owned or held by
that Person regardless of whether the indebtedness secured thereby shall have
been assumed by that Person or is nonrecourse to the credit of that Person.
"Intercompany Indebtedness" means any Indebtedness of Company or
any Consolidated Subsidiary which, in the case of Company, is owing to any
Consolidated Subsidiary and which, in the case of any Consolidated
Subsidiary, is owing to Company or any other Consolidated Subsidiary.
"Intercreditor Agreement" means the Fifth Amended and Restated
Intercreditor Agreement among Collateral Agent, Bankers, as Agent hereunder
and as a Foreign Lender, the Senior Debenture Trustee, the Senior Note
Trustee and the Senior Subordinated Debt Trustee and, upon execution of
counterparts to the Intercreditor Agreement by any Lenders party to Interest
Rate Agreements or Currency Agreements contemplated by subsection 6.4(vii) or
by any other Foreign Lenders, such Lenders or Foreign Lenders, as the case
<PAGE>18
may be, and, upon execution of counterparts to the Intercreditor Agreement by
any other Persons who may become parties to the Intercreditor Agreement in
accordance with the terms thereof, such other Persons, in substantially the
form of Exhibit XIII annexed hereto, as such Intercreditor Agreement may
hereafter be amended, supplemented or modified from time to time.
"Interest Payment Date" means, with respect to any Eurodollar Rate
Loan, the last day of each Interest Period applicable to such Loan; provided
that in the case of each Interest Period of six months or longer, "Interest
Payment Date" shall also include each three-month anniversary of the
commencement of that Interest Period.
"Interest Period" means any interest period applicable to a
Eurodollar Rate Loan as determined pursuant to subsection 2.2B.
"Interest Rate Agreement" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement designed to protect Company or any of its
Subsidiaries against fluctuations in interest rates.
"Interest Rate Determination Date" means each date for calculating
the Adjusted Eurodollar Rate for purposes of determining the interest rate in
respect of an Interest Period. The Interest Rate Determination Date shall be
the second Business Day prior to the first day of the related Interest
Period.
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter.
"Investment", as applied to any Person, means any direct or
indirect purchase or other acquisition by that Person of, or of a beneficial
interest in, stock or other Securities of any other Person (other than a
Person that, prior to such purchase or acquisition, was a Consolidated
Subsidiary), or any direct or indirect loan, advance (other than advances to
employees for moving and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
that Person to any other Person other than a Consolidated Subsidiary,
including all indebtedness and accounts receivable from that other Person
which are not current assets or did not arise from sales to that other Person
in the ordinary course of business. The amount of any Investment shall be
the original cost or, in the case of an Investment consisting of non-cash
consideration received in connection with an Asset Sale or other sale of
assets, the original value of such Investment plus the cost of all additions
thereto, without any adjustments for increases or decreases in value, or
write-ups, write-downs or write-offs with respect to such Investment.
"Invitation for Bid Rate Loan Quotes" means an invitation to each
Lender to submit a Bid Rate Loan Quote, substantially in the form of
Exhibit XVII annexed hereto, delivered by Agent to such Lender pursuant to
subsection 2.9C with respect to a Bid Rate Loan Quote Request.
<PAGE>19
"Issuing Lender" means, with respect to any Letter of Credit, the
Lender which agrees or is otherwise obligated to issue such Letter of Credit,
determined as provided in subsection 2.8C.
"Joint Venture" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
that, as to any such arrangement in corporate form, such corporation shall
not, as to any Person of which such corporation is a Subsidiary, be con-
sidered to be a Joint Venture to which such Person is a party.
"KKR" means Kohlberg Kravis Roberts & Co., L.P., a Delaware limited
partnership.
"Kimble Joint Venture" means that certain Joint Venture to be
formed between Group and Gerresheimer Glas AG regarding OI Kimble FTS Inc.
and its Subsidiaries.
"Kimble Sale" means the sale by Group of 51% of the capital stock
of OI Kimble FTS Inc. to Gerresheimer Glas AG to form the Kimble Joint
Venture.
"Lead Manager" and "Lead Managers" have the meanings assigned to
those terms in the introduction to this Agreement.
"Lender" and "Lenders" have the meanings assigned to those terms in
the introduction to this Agreement and shall include Agent and each Co-Agent
and Lead Manager in their respective individual capacities; provided that
"Lender" and "Lenders" shall also include the successors and permitted
assigns of Lenders pursuant to subsection 9.2A.
"Letter of Credit" or "Letters of Credit" means Commercial Letters
of Credit and Standby Letters of Credit issued or to be issued by Issuing
Lenders for the account of Company pursuant to subsection 2.8.
"Letter of Credit Usage" means, as at any date of determination,
the sum of (i) the maximum aggregate amount which is or at any time
thereafter may become available for drawing under all Letters of Credit then
outstanding plus (ii) the aggregate amount of all drawings under Letters of
Credit honored by Issuing Lenders and not theretofore reimbursed by Company.
For purposes of this definition, any amount described in clause (i) or (ii)
of the preceding sentence which is denominated in a currency other than
Dollars shall be valued at its Dollar equivalent value as of such date of
determination.
"Lien" means any lien, mortgage, pledge, security interest, charge
or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to
give any security interest) and any other agreement intended to create any of
the foregoing.
<PAGE>20
"Loan" or "Loans" means one or more of the Revolving Loans, the Bid
Rate Loans or the Swing Line Loans or any combination thereof.
"Loan Documents" means this Agreement, the Notes, the Overdraft
Agreement, the Letters of Credit, the O-I Subsidiary Guaranty, the Collateral
Documents and the Intercreditor Agreement.
"Loan Parties" means Company and each Subsidiary of Company which
is or becomes a party to a Loan Document, collectively.
"Management Investor" means any senior management officer or
employee of Company or any of its Subsidiaries who owns or has the right to
acquire any Common Stock.
"Margin Stock" has the meaning assigned to that term in Regulation
U of the Board of Governors of the Federal Reserve System as in effect from
time to time.
"Material Adverse Effect" means (i) a material adverse effect upon
the business, operations, properties, assets or condition (financial or
otherwise) of Company and its Subsidiaries, taken as a whole, or (ii) a
material adverse effect on the ability of Company and its Subsidiaries, taken
as a whole, to perform, or of Agent, any Co-Agent or Lenders to enforce, the
Obligations.
"Material Subsidiary" means (i) each Subsidiary of Company now
existing or hereafter acquired or formed by Company which (x) for the most
recent fiscal year of Company, accounted for more than 5% of the consolidated
revenues of Company or (y) as at the end of such fiscal year, was the owner
of more than 5% of the consolidated assets of Company and (ii) each of United
Glass Limited, Owens-Illinois Labels Inc., Owens-Illinois Prescription
Products Inc., OI Peldar STS Inc., OI Venezuela STS Inc. and Companhia
Industrial Sao Paolo e Rio.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan" as defined in
Section 3(37) of ERISA (a) to which Company or any of its ERISA Affiliates is
contributing, or within the past six years has contributed, (b) to which
Company or any of its ERISA Affiliates has, or within the past six years has
had, an obligation to contribute or (c) with respect to which Company or any
of its ERISA Affiliates retains any liability.
"Net Cash Proceeds" means, with respect to any Asset Sale, cash
payments received (including any cash payments received by way of deferred
payment of principal pursuant to, or monetization of, a note or installment
receivable or otherwise, but only as and when received, and including any
payments of principal received in respect of any Intercompany Indebtedness in
connection with such Asset Sale, but excluding any other consideration
received in the form of assumption by the acquiring Person of Indebtedness or
<PAGE>21
other obligations relating to the assets such Person acquired or received in
any other noncash form), in each case net of all legal, title and recording
tax expenses, commissions and other fees and expenses incurred, and all
federal, state, provincial, foreign and local taxes payable as a consequence
of such Asset Sale, and in each case net of a reasonable reserve for the
after-tax cost of any indemnification payments (fixed and contingent)
attributable to seller's indemnities to the purchaser undertaken by Company
or any of its Subsidiaries in connection with such Asset Sale and net of all
payments made on any Indebtedness which is secured by the assets that are
being sold, in accordance with the terms of any Lien upon or with respect to
the assets that are being sold or which must by its terms or by the terms of
the contract pursuant to which such assets are being sold or by applicable
law be repaid out of the proceeds from such Asset Sale, and net of all
distributions and other payments made to minority interest holders in
Subsidiaries as a result of such Asset Sale.
"Notes" means one or more of the Revolving Notes, the Bid Rate Loan
Notes, the Swing Line Note or any combination thereof.
"Notice of Bid Rate Loan Borrowing" has the meaning assigned to
that term in subsection 2.9F.
"Notice of Borrowing" means a notice substantially in the form of
Exhibit I annexed hereto with respect to a proposed borrowing.
"Notice of Conversion/Continuation" means a notice substantially in
the form of Exhibit III annexed hereto with respect to a proposed conversion
or continuation.
"Notice of Issuance of Letter of Credit" means a notice
substantially in the form of Exhibit II annexed hereto with respect to the
proposed issuance of a Letter of Credit.
"Obligations" means all obligations of every nature of Company and
its Subsidiaries from time to time owed to Agent, Collateral Agent, Co-Agents
or Lenders or any of them under or in respect of this Agreement, the Notes,
the Letters of Credit or the other Loan Documents.
"Officers' Certificate" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its Chairman of the
Board (if an officer) or its President or one of its Vice Presidents, and by
its Chief Financial Officer, its Treasurer or its Assistant Treasurer;
provided, that any Officers' Certificate required to be delivered by Company
on the Closing Date may be executed on behalf of Company by any one of the
foregoing officers; provided, further, that every Officers' Certificate with
respect to the compliance with a condition precedent to the making of any
Loans hereunder shall include (i) a statement that the officer or officers
making or giving such Officers' Certificate have read such condition and any
definitions or other provisions contained in this Agreement relating thereto,
(ii) a statement that, in the opinion of the signers, they have made or have
caused to be made such examination or investigation as is necessary to enable
them to express an informed opinion as to whether or not such condition has
been complied with, and (iii) a statement as to whether, in the opinion of
the signers, such condition has been complied with.
<PAGE>22
"O-I Subsidiary" means each of the wholly-owned Subsidiaries of
Company identified as such on Schedule A annexed hereto.
"O-I Subsidiary Debt Obligations" means the obligations evidenced
by promissory notes issued by each Guarantor Subsidiary to the Persons owning
such Guarantor Subsidiary to evidence all Intercompany Indebtedness of such
Guarantor Subsidiary to such Persons.
"O-I Subsidiary Guaranty" means the O-I Subsidiary Guaranty
executed and delivered by each Guarantor Subsidiary pursuant to subsection
3.1B5, in substantially the form of Exhibit VIII annexed hereto, as such
guaranty agreement may hereafter be amended, supplemented or otherwise
modified from time to time.
"O-I Subsidiary Pledge Agreement" means the Third Amended and
Restated Intermediate Subsidiary Pledge Agreement executed pursuant to
subsection 3.1B5 by Group and the O-I Subsidiaries identified as "First Tier
Subsidiaries" on Schedule A annexed hereto, in substantially the form of
Exhibit XV annexed hereto, as such O-I Subsidiary Pledge Agreement may
hereafter be amended, supplemented or otherwise modified from time to time.
"Operating Lease" means, as applied to any Person, any lease
(including, without limitation, leases which may be terminated by the lessee
at any time) of any property (whether real, personal or mixed) which is not a
Capital Lease other than any such lease under which that Person is the
lessor.
"Overdraft Account" means the account established by Company with
Agent and referenced in the Overdraft Agreement.
"Overdraft Agreement" means the Overdraft Agreement executed and
delivered by Company and Agent, in substantially the form of Exhibit XX
annexed hereto, and any successor Overdraft Agreement executed and delivered
by Company and any successor Agent pursuant to subsection 8.6, as either such
Overdraft Agreement may hereafter be amended, amended and restated,
supplemented or otherwise modified from time to time.
"Overdraft Amount" means, as at any date of determination, the
aggregate amount of outstanding overdrafts charged to the Overdraft Account.
"PBGC" means the Pension Benefit Guaranty Corporation (or any
successor thereto).
"Pension Plan" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue
Code or Section 302 of ERISA.
<PAGE>23
"Permitted Encumbrances" means the following types of Liens:
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not at the time required by subsection 5.3;
(ii) Statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other liens imposed by law
incurred in the ordinary course of business for sums not yet delinquent
or being contested in good faith, if such reserve or other appropriate
provision, if any, as shall be required by GAAP (subject to subsection
1.2) shall have been made therefor;
(iii) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social
security, or to secure the performance of tenders, statutory obliga-
tions, surety and appeal bonds, bids, leases, government contracts,
performance and return-of-money bonds and other similar obligations
(exclusive of obligations for the payment of borrowed money);
(iv) Any attachment or judgment Lien not in excess of
$5,000,000 (exclusive of any amount adequately covered by insurance as
to which the insurance company has acknowledged coverage) and any other
attachment or judgment lien unless the judgment it secures shall, within
60 days after the entry thereof, not have been discharged or execution
thereof stayed pending appeal, or shall not have been discharged within
60 days after the expiration of any such stay;
(v) Leases or subleases granted to others not interfering in any
material respect with the business of Company or any of its
Subsidiaries;
(vi) Easements, rights-of-way, restrictions, minor defects or
irregularities in title and other similar charges or encumbrances not
interfering in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries;
(vii) Any interest or title of a lessor under any lease
permitted by subsection 6.8;
(viii) Liens arising from UCC financing statements regarding
leases permitted by this Agreement; and
(ix) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods.
"Person" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
<PAGE>24
"Pledge Agreements" means the Company Pledge Agreement and the O-I
Subsidiary Pledge Agreement.
"Potential Event of Default" means a condition or event which,
after notice or lapse of time or both, would constitute an Event of Default
if that condition or event were not cured or removed within any applicable
grace or cure period.
"Prime Rate" means the rate which Bankers announces from time to
time as its prime lending rate, as in effect from time to time. The Prime
Rate is a reference rate and does not necessarily represent the lowest or
best rate actually charged to any customer. Bankers may make commercial
loans or other loans at rates of interest at, above or below the Prime Rate.
"Prime Rate Loans" means Loans made by Lenders bearing interest at
rates determined by reference to the Prime Rate as provided in subsection
2.1B with respect to Swing Line Loans and subsection 2.2A with respect to
Revolving Loans.
"Pro Rata Share" means, with respect to each Lender, the percentage
designated as such Lender's Pro Rata Share set forth opposite the name of
such Lender on Part II of Schedule B annexed hereto, as such percentages
shall be adjusted from time to time to give effect to any assignments
permitted pursuant to subsection 9.2. The sum of the Pro Rata Shares of all
Lenders at any date of determination shall equal 100%.
"Reference Lenders" means Bankers, The Bank of Nova Scotia and
NationsBank, N.A.
"Refunded Swing Line Loans" has the meaning assigned to that term
in subsection 2.1B.
"Register" has the meaning assigned to that term in subsection
2.1F.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as in effect from time to time.
"Release" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal,
dumping, leaching or migration of Hazardous Materials into the indoor or
outdoor environment (including, without limitation, the abandonment or
disposal of any barrels, containers or other closed receptacles containing
any Hazardous Materials), or into or out of any Facility, including the
movement of any Hazardous Material through the air, soil, surface water,
groundwater or property.
"Reporting Unit" means each of the seven units of the operations of
Company, as set forth on Schedule G annexed hereto, as such Schedule G may
hereafter be amended, supplemented or modified from time to time by Company;
provided that following the consummation of the Kimble Sale, OI Kimble FTS
Inc. and its Subsidiaries shall no longer be a Reporting Unit.
<PAGE>25
"Requisite Lenders" means Lenders having 51% or more of the
aggregate Revolving Loan Commitments or, if the Revolving Loan Commitments
have been terminated, Lenders holding 51% or more of the sum of (i) the
aggregate outstanding principal amount of the Revolving Loans plus (ii) the
aggregate outstanding principal amount of the Bid Rate Loans plus (iii) the
aggregate Pro Rata Shares of the outstanding principal amount of the Swing
Line Loans plus (iv) the aggregate Pro Rata Shares of the Letter of Credit
Usage.
"Responsible Officer" means any of the chief executive officer, the
president, any vice president, the chief financial officer, the comptroller,
the treasurer or any assistant treasurer of Company.
"Restricted Payment" means (i) any dividend or other distribution,
direct or indirect, on account of any shares of any class of stock of Company
now or hereafter outstanding, except a dividend payable solely in shares of
that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition
for value, direct or indirect, of any shares of any class of stock of Company
now or hereafter outstanding, (iii) any payment or prepayment of principal
of, premium, if any, or interest on, or redemption, purchase, retirement,
defeasance, sinking fund or similar payment with respect to, the Senior Debt
Securities, the Senior Subordinated Debt or any Additional Subordinated Debt,
and (iv) any payment made to retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire shares of any class
of stock of Company now or hereafter outstanding.
"Revolving Loan Commitment" or "Revolving Loan Commitments" means
the commitment or commitments of a Lender or Lenders to make Revolving Loans
as set forth in subsection 2.1A.
"Revolving Loan Commitment Termination Date" means December 31,
1998.
"Revolving Loans" means the Loans made by Lenders to Company
pursuant to subsection 2.1A.
"Revolving Notes" means the promissory notes of Company
substantially in the form of Exhibit IV annexed hereto, issued in favor of
Lenders pursuant to subsection 2.1F(iv) to evidence the Revolving Loans, as
they may be amended, supplemented or otherwise modified from time to time.
"S&P" means Standard & Poor's Corporation.
"Secured Obligations" means the Obligations and, to the extent the
holders of such obligations are subject to the provisions of the
Intercreditor Agreement, the obligations owing under Interest Rate Agreements
and Currency Agreements contemplated by subsection 6.4(vii), the obligations
<PAGE>26
owing to the holders from time to time of any outstanding Commercial Paper
and the obligations owing to Foreign Lenders under the Foreign Lender
Guaranties issued to support the Foreign Lender Debt.
"Securities" means any stock, shares, voting trust certificates,
bonds, debentures, options, warrants, notes, or other evidences of
indebtedness, secured or unsecured, convertible, subordinated or otherwise,
or in general any instruments commonly known as "securities" or any
certificates of interest, shares or participations in temporary or interim
certificates for the purchase or acquisition of, or any right to subscribe
to, purchase or acquire, any of the foregoing.
"Securities Act" means the Securities Act of 1933, as amended from
time to time, and any successor statute.
"Senior Debentures" means the 11% Senior Debentures due 2003 of
Company in an aggregate original principal amount of $1,000,000,000 issued
pursuant to the Senior Debenture Indenture, as such Senior Debentures may be
amended, supplemented or otherwise modified from time to time after the
Closing Date to the extent permitted under this Agreement.
"Senior Debenture Indenture" means the Indenture dated as of
December 15, 1991 among Company, as issuer, Group, as guarantor, and the
Senior Debenture Trustee, as such Indenture may be amended, supplemented or
otherwise modified from time to time after the Closing Date to the extent
permitted under this Agreement.
"Senior Debenture Trustee" means The Bank of New York, as indenture
trustee for the Senior Debentures, and its successors.
"Senior Debt Securities" means one or more of the Senior
Debentures, the Senior Notes or any combination thereof.
"Senior Notes" means the senior variable notes due 1996 issued by
Company pursuant to the Senior Note Indenture, as such Senior Notes may be
amended, supplemented or otherwise modified from time to time after the
Closing Date to the extent permitted under this Agreement.
"Senior Note Indenture" means the Indenture dated as of April 1,
1989 among Company, as issuer, Group, as guarantor, and the Senior Note
Trustee, as such Indenture may be amended, supplemented or otherwise modified
from time to time after the Closing Date to the extent permitted under this
Agreement.
"Senior Note Trustee" means First Bank (N.A.) (as successor to
First Bank National Association), as indenture trustee for the Senior Notes,
and its successors.
<PAGE>27
"Senior Subordinated Debt" means each of Company's (i) 10-1/4%
Senior Subordinated Notes Due April 1, 1999 in the aggregate principal amount
of $250,000,000, (ii) 10-1/2% Senior Subordinated Notes Due June 15, 2002 in
the aggregate principal amount of $150,000,000, (iii) 10% Senior Subordinated
Notes Due August 1, 2002 in the aggregate principal amount of $250,000,000,
(iv) 9-3/4% Senior Subordinated Notes Due August 15, 2004 in the aggregate
principal amount of $200,000,000 and (v) 9.95% Senior Subordinated Notes Due
October 15, 2004 in the aggregate principal amount of $100,000,000, in each
case issued pursuant to the Senior Subordinated Debt Indenture, as such
Senior Subordinated Debt may be amended, supplemented or otherwise modified
from time to time after the Closing Date to the extent permitted under this
Agreement.
"Senior Subordinated Debt Indenture" means the Indenture dated as
of April 1, 1992 among Company, as issuer, and the Senior Subordinated Debt
Trustee, as supplemented to the date hereof and as such indenture may be
amended, supplemented or otherwise modified from time to time after the
Closing Date to the extent permitted under this Agreement.
"Senior Subordinated Debt Trustee" means Harris Trust and Savings
Bank, as indenture trustee for the Senior Subordinated Debt, and its
successors.
"Specialty Preferred Stock" means the preferred stock of Company
issued as part of the consideration payable by Company in connection with the
acquisition by Company of all of the outstanding stock of Specialty
Acquisition Corporation, a Delaware corporation, which preferred stock
cumulates dividends at a rate not to exceed 7% per annum whether or not
declared and is convertible at certain times and in certain amounts into
Common Stock.
"Standby Letter of Credit" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness
incurred by any Foreign Entity or Joint Venture (other than a Foreign
Subsidiary) to which Company or any of its Consolidated Subsidiaries is a
party for working capital and general business purposes, (ii) obligations of
Company or any of its Consolidated Subsidiaries with respect to capital calls
or similar requirements in respect of Joint Ventures to which Company or such
Consolidated Subsidiary is a party, (iii) workers compensation liabilities of
Company or any of its Consolidated Subsidiaries, (iv) the obligations of
third party insurers of Company or any of its Consolidated Subsidiaries
arising by virtue of the laws of any jurisdiction requiring third party
insurers, (v) Indebtedness of Company or any of its Consolidated Subsidiaries
in respect of industrial revenue or development bonds or financings,
(vi) obligations with respect to Capital or Operating Leases of Company or
any of its Consolidated Subsidiaries, (vii) obligations of Company or any of
its Consolidated Subsidiaries imposed by statute or by a court of competent
jurisdiction to post appeal bonds or other security in connection with
litigation appeals, and other performance, payment, deposit or surety
obligations of Company or any of its Consolidated Subsidiaries, in any such
<PAGE>28
other case if required by law or governmental rule or regulation or in
accordance with custom and practice in the industry, (viii) Indebtedness of
Company or any of its Consolidated Subsidiaries in respect of financings
listed under the caption "Letters of Credit" on Schedule F annexed hereto,
(ix) obligations of Owens Insurance Limited with respect to certain self
insurance and reinsurance programs, including obligations under insurance
treaties, or (x) other obligations of Company for which letter of credit
support would be used in the ordinary course of Company's business consistent
with its past practices or otherwise consistent with custom and practice in
the industry.
"Subscription Agreements" means, collectively, the common stock
subscription agreements between Management Investors and Company pursuant to
which shares of the Common Stock have been or may be purchased by Management
Investors.
"Subsidiary" means any corporation, association or other business
entity of which more than 50% of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by any Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Swing Line Loan Commitment" means the commitment of Agent to make
Swing Line Loans as set forth in subsection 2.1B.
"Swing Line Loans" means the Swing Line Loans made by Agent to
Company pursuant to subsection 2.1B.
"Swing Line Note" means the promissory note of Company,
substantially in the form of Exhibit V annexed hereto, issued in favor of
Agent pursuant to subsection 2.1F(iv) to evidence the Swing Line Loans.
"Tax" or "Taxes" means any present or future tax, levy, impost,
duty, charge, fee, deduction or withholding of any nature and whatever
called, by whomsoever, on whomsoever and wherever imposed, levied, collected,
withheld or assessed; provided that "Tax on the overall net income" of a
Person shall be construed as a reference to a tax imposed by the jurisdiction
in which that Person's principal office (and/or, in the case of a Lender, its
lending office) is located on all or part of the net income, profits or gains
of that Person (whether worldwide, or only insofar as such income, profits or
gains are considered to arise in or to relate to a particular jurisdiction,
or otherwise).
"Tax Transferee" means any Person who acquires any interest in the
Loans (whether or not by operation of law) or the office to which a Lender,
Agent or Co-Agent has transferred its Loans for purposes of determining where
the Loans are made, accounted for or booked.
"Total Utilization of Revolving Loan Commitments" means, as at any
date of determination, the sum of (i) the aggregate principal amount of all
outstanding Revolving Loans plus (ii) the aggregate principal amount of all
outstanding Swing Line Loans plus (iii) the aggregate principal amount of all
outstanding Bid Rate Loans plus (iv) the Commercial Paper Usage plus (v) the
Letter of Credit Usage plus (vi) the Overdraft Amount.
<PAGE>29
"Transaction Costs" means (i) "Transaction Costs" (as defined in
the Existing Credit Agreement) and (ii) the fees, costs and expenses payable
by Company pursuant to this Agreement and other fees, costs, premiums and
expenses payable or written off by Company or a Subsidiary thereof in
connection with the issuance of any Additional Subordinated Debt, the
termination of Company's accounts receivable securitization program, any
Restricted Payments permitted by clause (iii) of subsection 6.5, or the
origination or termination of any Commercial Paper program.
1.2 Accounting Terms; Utilization of GAAP for Purposes of
Calculations Under Agreement; Change in Accounting Principles
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings
assigned to them in conformity with GAAP as in effect from time to time, and
all calculations in connection with the financial covenants, standards or
terms found in Sections 1, 5 and 6 hereof (collectively, "Calculations")
shall utilize accounting principles and policies in conformity with GAAP as
in effect from time to time; provided that, in the event there is a change in
accounting principles and policies that would result in a change in the
method of performing any Calculations as described in subsection 9.9, such
change shall not be given effect for purposes of any Calculations until such
time as Company and Lenders complete the negotiations provided for in
subsection 9.9; provided, further that in performing the Calculations,
Company may exclude therefrom (i) Transaction Costs, (ii) a one-time
restructuring charge or series of related restructuring charges to be taken
no later than the period ending December 31, 1995 in an aggregate amount of
not more than $250,000,000 each such charge to be so identified by Company on
its consolidated financial statements, and (iii) any non-cash charges
relating to the same subject matter as, and in an aggregate amount not to
exceed, the receivable disclosed in the contingency footnote to Company's
consolidated financial statements for the period ending December 31, 1993.
Financial statements and other information required to be delivered by
Company to Lenders pursuant to clauses (i), (ii), (iii) and (xiii) of
subsection 5.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and, if necessary, delivered together with the
written statements provided for in subsection 5.1(v)).
1.3 Other Definitional Provisions; Anniversaries
References to "Sections" and "subsections" shall be to Sections and
subsections, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference. For purposes of this Agreement, a monthly anniversary of a
specified date shall occur on the same day of the applicable month as the day
of the month on which such date occurred; provided that if there is no
numerically corresponding day in the applicable month to the day of the month
on which such date occurred, the monthly anniversary of such date shall be
the last day of the applicable month.
<PAGE>30
SECTION 2
AMOUNT AND TERMS OF COMMITMENTS AND LOANS; NOTES
2.1 Revolving Loans; Swing Line Loans; Overdraft Account
A. Revolving Loan Commitments. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, each Lender hereby severally agrees,
subject to the limitation set forth below with respect to the maximum amount
of Revolving Loans permitted to be outstanding from time to time, to make
Revolving Loans to Company from time to time during the period from the
Closing Date to but excluding the Revolving Loan Commitment Termination Date,
in an amount not exceeding its Pro Rata Share of the aggregate Revolving Loan
Commitments (as defined below) to be used for the purposes identified in
subsection 2.5A. Each Lender's commitment to make Revolving Loans to Company
pursuant to this subsection 2.1A is herein called its "Revolving Loan
Commitment" and such commitments of all Lenders in the aggregate are herein
called the "Revolving Loan Commitments". The initial amount of each Lender's
Revolving Loan Commitment is set forth on Schedule B annexed hereto and the
aggregate initial amount of the Revolving Loan Commitments is $1,000,000,000.
Each Lender's Revolving Loan Commitment shall expire on the Revolving Loan
Commitment Termination Date and all Revolving Loans and all other amounts
owed hereunder with respect to the Revolving Loans shall be paid in full no
later than that date. The amount of the Revolving Loan Commitments shall be
reduced by the amount of all reductions thereof made pursuant to subsection
2.4F through the date of determination. In no event shall the aggregate
principal amount of the Revolving Loans from any Lender outstanding at any
time exceed its Revolving Loan Commitment then in effect.
Notwithstanding the foregoing provisions of this subsection 2.1A
and the provisions of subsection 2.1B, the amount otherwise available to be
borrowed or maintained as Revolving Loans under the Revolving Loan
Commitments as of any time of determination (other than (w) to repay Swing
Line Loans or Bid Rate Loans and accrued and unpaid interest thereon, (x) to
reimburse any Issuing Lender for the amount of any drawings under any Letters
of Credit honored by such Issuing Lender and not theretofore reimbursed by
Company, (y) to repay overdrafts charged to the Overdraft Account, and (z) to
repay at maturity any outstanding Commercial Paper) shall be reduced by an
amount equal to the sum of (a) the principal amount of all outstanding Swing
Line Loans plus (b) the principal amount of all outstanding Bid Rate Loans
plus (c) the Letter of Credit Usage plus (d) the Commercial Paper Usage plus
(e) the Overdraft Amount as of such time of determination.
Subject to subsection 2.6D, all Revolving Loans under this
Agreement shall be made by Lenders simultaneously and proportionately to
their Pro Rata Shares, it being understood that no Lender shall be
<PAGE>31
responsible for any default by any other Lender in that other Lender's obli-
gation to make Revolving Loans hereunder nor shall the Revolving Loan
Commitment of any Lender be increased or decreased as a result of the default
by any other Lender in that other Lender's obligation to make Revolving Loans
hereunder. Subject to the limitations set forth in this Agreement, amounts
borrowed by Company under this subsection 2.1A may be repaid and, to but
excluding the Revolving Loan Commitment Termination Date, reborrowed.
Revolving Loans (other than Revolving Loans in respect of a Bid Rate Loan
Shortfall Amount) made on any Funding Date shall be in an aggregate minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount.
B. Swing Line Loan Commitment. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company set forth herein, Agent hereby agrees, subject to the
limitations set forth below with respect to the maximum amount of Swing Line
Loans permitted to be outstanding from time to time, to make a portion of the
Revolving Loan Commitments available to Company from time to time during the
period from the Closing Date to but excluding the Revolving Loan Commitment
Termination Date in an aggregate principal amount of up to $50,000,000 by
making Swing Line Loans to Company, notwithstanding the fact that such Swing
Line Loans, when aggregated with Agent's outstanding Revolving Loans, may
exceed Agent's Revolving Loan Commitment. Agent's commitment to make Swing
Line Loans to Company pursuant to this subsection 2.1B is herein called its
"Swing Line Loan Commitment." In no event shall (a) the aggregate principal
amount of Swing Line Loans outstanding at any time exceed the aggregate Swing
Line Loan Commitment, (b) the aggregate principal amount of Revolving Loans,
Bid Rate Loans and Swing Line Loans outstanding at any time exceed the
aggregate Revolving Loan Commitments reduced by the aggregate Commercial
Paper Usage, Letter of Credit Usage and Overdraft Amount at such time,
(c) the aggregate principal amount of Swing Line Loans outstanding at any
time plus the Overdraft Amount at such time exceed $50,000,000 or (d) the ag-
gregate Swing Line Loan Commitment exceed the aggregate Revolving Loan
Commitments. Any reduction of the Revolving Loan Commitments made pursuant
to subsection 2.4F which reduces the Revolving Loan Commitments below the
then current amount of the Swing Line Loan Commitment shall result in an
automatic corresponding reduction of the Swing Line Loan Commitment to the
amount of the Revolving Loan Commitments, as so reduced, without any further
action on the part of Agent.
Agent's Swing Line Loan Commitment shall expire on the Revolving
Loan Commitment Termination Date and all Swing Line Loans shall be paid in
full no later than that date.
Subject to the limitations set forth in this Agreement, amounts
borrowed by Company under this subsection 2.1B may be repaid and, to but
excluding the Revolving Loan Commitment Termination Date, reborrowed. All
Swing Line Loans shall be made as Prime Rate Loans and shall not be entitled
to be converted into Eurodollar Rate Loans. All Swing Line Loans shall bear
interest on the unpaid principal amount thereof from the date made through
<PAGE>32
maturity (whether by acceleration or otherwise) at a rate per annum equal to
the Prime Rate minus the applicable percentage used in calculating the fee
charged on the unused portion of the Revolving Loan Commitments pursuant to
subsection 2.3A. Swing Line Loans made on any Funding Date shall be in an
aggregate minimum amount of $1,000,000 and integral multiples of $500,000 in
excess of that amount.
Agent, at any time in its sole and absolute discretion may, and on
the fifth Business Day after the making of a Swing Line Loan which has not
been voluntarily prepaid by Company pursuant to subsection 2.4A(i) shall, on
one Business Day's notice, so long as amounts are available to be borrowed
under the Revolving Loan Commitments, require each Lender, including Agent,
and each Lender hereby agrees, subject to this subsection 2.1B, to make a
Revolving Loan (which shall initially be funded as a Prime Rate Loan) or, in
the sole and absolute discretion of Agent, require each other Lender to
purchase a participation in amounts due with respect to the outstanding Swing
Line Loans, in each case, in an amount equal to such Lender's Pro Rata Share
of the amount of the Swing Line Loans ("Refunded Swing Line Loans")
outstanding on the date notice is given which Agent requests the Lenders to
prepay; provided, however, the obligation of each Lender to make any such
Revolving Loan or to purchase each such participation is subject to the
condition that (i) Agent believed in good faith that all conditions under
Section 3 to the making of such Swing Line Loan were satisfied at the time
such Swing Line Loan was made, or (ii) such Lender had actual knowledge, by
receipt of the statements required pursuant to subsection 5.1 or otherwise,
that any such condition had not been satisfied and failed to notify Agent in
writing that it had no obligation to make Revolving Loans until such
condition was satisfied (which notice shall be effective as of the date of
receipt by Agent), or (iii) the satisfaction of any such condition not
satisfied had been waived by Requisite Lenders (or, if applicable, all
Lenders) prior to or at the time such Swing Line Loan was made. In the case
of Revolving Loans made by Lenders other than Agent under the immediately
preceding sentence, each such Lender shall make the amount of its Revolving
Loan available to Agent, in same day funds, at the Funding and Payment Office
not later than 1:00 P.M. (New York time) on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Loans shall be
immediately delivered to Agent (and not to Company) and applied to repay the
Refunded Swing Line Loans. On the day such Revolving Loans are made, Agent's
Pro Rata Share of the Refunded Swing Line Loans shall be deemed to be paid
with the proceeds of a Revolving Loan made by Agent and such portion of the
Swing Line Loans deemed to be so paid shall no longer be outstanding as Swing
Line Loans and shall no longer be due under the Swing Line Note. In the
event that Agent requires the other Lenders to purchase participations in
amounts due with respect to the Swing Line Loans, payment for such
participations shall be made directly to Agent at the Funding and Payment
Office not later than 1:00 P.M. (New York time) on the Business Day next
succeeding the date notice to purchase such participations is given. Company
authorizes Agent to charge Company's accounts with Agent (up to the amount
available in each such account) in order to immediately pay Agent the amount
of such Refunded Swing Line Loans to the extent amounts received from
<PAGE>33
Lenders, including amounts deemed to be received from Agent, are not
sufficient to repay in full such Refunded Swing Line Loans. If any portion
of any such amount paid (or deemed to be paid) to Agent should be recovered
by or on behalf of Company from Agent in bankruptcy, by assignment for the
benefit of creditors or otherwise, the loss of the amount so recovered shall
be ratably shared among all Lenders in the manner contemplated by subsection
9.6. Subject to the proviso contained in the first sentence of this
paragraph, each Lender's obligation to make the Revolving Loans and to
purchase the participations in amounts due referred to in this paragraph
shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Lender may have against Agent,
Company or anyone else for any reason whatsoever; (ii) the occurrence or
continuance of an Event of Default or a Potential Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of Company; (iv) any
breach of this Agreement by Company or any other Lender; or (v) any other
circumstance, happening or event whatsoever, whether or not similar to any of
the foregoing; provided that in the event that the obligations of Lenders to
make Revolving Loans are terminated in accordance with Section 7, Lenders
shall thereafter only be obligated to purchase participations in amounts due
with respect to Swing Line Loans as provided in this subsection 2.1B. In the
event that any Lender fails to make available to Agent the amount of any of
such Lender's Revolving Loans required to be made pursuant to this subsection
2.1B or the amount of any participations in amounts due with respect to the
Swing Line Loans which are required to be purchased from Agent by such Lender
pursuant to this subsection 2.1B, Agent shall be entitled to recover such
amount on demand from such Lender together with interest at the customary
rate set by Agent for the correction of errors among banks for three Business
Days and thereafter at the Prime Rate. Nothing in this subsection 2.1B shall
be deemed to prejudice the right of any Lender to recover from Agent any
amounts made available by such Lender to Agent pursuant to this subsection
2.1B in respect of any extension of credit by Agent under the Swing Line Loan
Commitment in the event that it is determined by a court of competent juris-
diction that such extension of credit by Agent constituted gross negligence
or willful misconduct on the part of Agent.
A copy of each notice given by Agent to Lenders pursuant to the
preceding paragraph shall be promptly delivered by Agent to Company. Upon
the making of a Revolving Loan by a Lender pursuant to this subsection 2.1B,
the amount so funded shall become due under such Lender's Revolving Note (if
any) and shall no longer be owed under the Swing Line Note.
Notwithstanding anything herein to the contrary, Agent shall not be
obligated to make any Swing Line Loans if it has elected after the occurrence
and during the continuation of a Potential Event of Default or Event of
Default not to make Swing Line Loans and has notified Company in writing or
by telephone of such election.
C. Overdraft Account. Lenders agree that Company and Agent may
establish and maintain the Overdraft Account to be established pursuant to
the Overdraft Agreement; provided that (i) the aggregate amount of extensions
of credit available to Company with respect to the Overdraft Account shall
<PAGE>34
not exceed at any time $50,000,000, (ii) the aggregate amount of extensions
of credit outstanding with respect to the Overdraft Account at any time shall
not exceed the Revolving Loan Commitments reduced by the sum of the aggregate
principal amount of Revolving Loans, Bid Rate Loans and Swing Line Loans, the
Commercial Paper Usage and the Letter of Credit Usage at such time and
(iii) the aggregate amount of extensions of credit outstanding with respect
to the Overdraft Account at any time plus the aggregate principal amount of
Swing Line Loans outstanding at such time shall not exceed $50,000,000.
Notwithstanding anything contained in this Agreement to the contrary (but
subject, however, to the limitations set forth in subsection 2.1A with
respect to the making of Revolving Loans), Lenders and Company further agree
that Agent at any time in its sole and absolute discretion may, upon notice
to Company and Lenders, require each Lender (including Agent) on one Business
Day's notice to make a Revolving Loan in an amount equal to that Lender's Pro
Rata Share of the Overdraft Amount and all accrued and unpaid interest
thereon or, in the sole and absolute discretion of Agent, require each other
Lender to purchase a participation in amounts due with respect to the
Overdraft Account in an amount equal to that Lender's Pro Rata Share of the
Overdraft Amount and all accrued and unpaid interest thereon; provided,
however, that the obligation of each Lender to make each such Revolving Loan
or to purchase each such participation with respect to any extension of
credit included in the Overdraft Amount is subject to the condition that at
the time such extension of credit under the Overdraft Agreement was made
(A) the duly authorized officer of Agent responsible for the administration
of Agent's credit relationship with Company believed in good faith that
(i) no Event of Default had occurred and was continuing or (ii) any Event of
Default that had occurred and was continuing had been waived by Requisite
Lenders (or, if applicable, all Lenders) at the time such extension of credit
under the Overdraft Agreement was made or (B) such Lender had actual
knowledge, by receipt of the statements required pursuant to subsection 5.1
or otherwise, that an Event of Default had occurred and was continuing and
remained unwaived by Requisite Lenders (or, if applicable, all Lenders) at
the time such extension of credit under the Overdraft Agreement was made and
failed to notify Agent in writing on or prior to the date of such extension
of credit (which notice shall be effective as of the date of receipt by
Agent). In the case of Revolving Loans made by Lenders other than Agent
under the immediately preceding sentence, each such Lender shall make the
amount of its Revolving Loan available to Agent, in same day funds, at the
Funding and Payment Office not later than 1:00 P.M. (New York time) on the
Business Day next succeeding the date such notice is given. The proceeds of
such Revolving Loans shall be immediately delivered to Agent (and not to
Company) and applied to repay the Overdraft Amount. On the day such
Revolving Loans are made, Agent's Pro Rata Share of the Overdraft Amount
being refunded shall be deemed to be paid with the proceeds of a Revolving
Loan made by Agent and such portion of the Overdraft Amount deemed to be so
paid shall no longer be outstanding. Company authorizes Agent to charge
Company's accounts with Agent (up to the amount available in each such
account) in order to immediately pay Agent the amount of the Overdraft Amount
to be refunded to the extent amounts received from Lenders, including amounts
deemed to be received from Agent, are not sufficient to repay in full the
Overdraft Amount to be refunded. Each Revolving Loan made in accordance with
<PAGE>35
the foregoing shall be made as a Prime Rate Loan. If any portion of any such
amount paid to Agent should be recovered by or on behalf of Company from
Agent in bankruptcy, by assignment for the benefit of creditors or otherwise,
the loss of the amount so recovered shall be ratably shared among all Lenders
in the manner contemplated by subsection 9.6. In the event that Agent
requires the other Lenders to purchase participations in amounts due with
respect to the Overdraft Account, payment for such participations shall be
made directly to Agent at the Funding and Payment Office not later than 1:00
P.M. (New York time) on the Business Day next succeeding the date notice to
purchase such participations is given. Except as provided above in this
subsection 2.1C and except for the satisfaction of the conditions specified
in subsection 3.1, each Lender's obligation to make Revolving Loans pursuant
to this subsection 2.1C and to purchase participations in amounts due with
respect to the Overdraft Account pursuant to this subsection 2.1C shall be
absolute and unconditional and shall not be affected by any circumstance,
including, without limitation, (i) any set-off, counterclaim, recoupment,
defense or other right which such Lender may have against Agent, Company or
any other Person for any reason whatsoever; (ii) the occurrence or
continuance of an Event of Default or a Potential Event of Default; (iii) any
adverse change in the condition (financial or otherwise) of Company; (iv) any
breach of this Agreement by Company or any other Lender; or (v) any other
circumstance, happening, or event whatsoever, whether or not similar to any
of the foregoing; provided that in the event that the obligations of Lenders
to make Revolving Loans are terminated in accordance with Section 7, Lenders
shall thereafter only be obligated to purchase participations in amounts due
with respect to the Overdraft Account as provided in this subsection 2.1C.
In the event that any Lender fails to make available to Agent the amount of
any of such Lender's Revolving Loans required to be made pursuant to this
subsection 2.1C or the amount of any participations in amounts due with
respect to the Overdraft Account which are required to be purchased from
Agent by such Lender pursuant to this subsection 2.1C, Agent shall be
entitled to recover such amount on demand from such Lender together with
interest at the customary rate set by Agent for the correction of errors
among banks for three Business Days and thereafter at the Prime Rate.
Nothing in this subsection 2.1C shall be deemed to prejudice the right of any
Lender to recover from Agent any amounts made available by such Lender to
Agent pursuant to this subsection 2.1C in respect of any extension of credit
by Agent under the Overdraft Agreement in the event that it is determined by
a court of competent jurisdiction that such extension of credit by Agent
constituted gross negligence or willful misconduct on the part of Agent.
Any notice given by Agent to Lenders pursuant to the immediately
preceding paragraph shall be concurrently given by Agent to Company or its
designated representative.
D. Notice of Borrowing. Whenever Company desires that Agent make
a Swing Line Loan under subsection 2.1B, it shall deliver to Agent a Notice
of Borrowing no later than 1:00 P.M. (New York time) on the proposed Funding
Date. Whenever Company desires that Lenders make Revolving Loans under
subsection 2.1A, it shall deliver to Agent a Notice of Borrowing no later
than 11:00 A.M. (New York time) on the proposed Funding Date in the case of
<PAGE>36
Prime Rate Loans to be made on a Bid Rate Loan Shortfall Date in an aggregate
amount not to exceed the applicable Bid Rate Loan Shortfall Amount or at
least one Business Day in advance of the proposed Funding Date in the case of
any other Prime Rate Loan or three Business Days in advance of the proposed
Funding Date in the case of a Eurodollar Rate Loan. The Notice of Borrowing
shall specify (i) the proposed Funding Date (which shall be a Business Day),
(ii) the amount of the proposed Loans and whether such Loans are to be made
as Swing Line Loans or Revolving Loans; provided that in the case of a Notice
of Borrowing delivered on a Bid Rate Loan Shortfall Date requesting Prime
Rate Loans to be made as Revolving Loans on such Bid Rate Loan Shortfall
Date, the amount of such proposed Revolving Loans may not exceed the Bid Rate
Loan Shortfall Amount in respect of such Bid Rate Loan Shortfall Date,
(iii) whether such Revolving Loans are initially to consist of Prime Rate
Loans or Eurodollar Rate Loans or a combination thereof, (iv) if such
Revolving Loans, or any portion thereof, are initially to be Eurodollar Rate
Loans, the amounts thereof and the initial Interest Periods therefor;
provided that in the case of Revolving Loans requested to be made during the
first 30 days following the Closing Date as Eurodollar Rate Loans, the
initial Interest Period applicable to such Loans shall be one month unless
Agent permits otherwise, in its sole discretion, and (v) in the case of a
Notice of Borrowing delivered on a Bid Rate Loan Shortfall Date requesting
Prime Rate Loans to be made as Revolving Loans on such Bid Rate Loan
Shortfall Date, that the amount of such proposed Revolving Loans does not
exceed the Bid Rate Loan Shortfall Amount in respect of such Bid Rate Loan
Shortfall Date; and such Notice of Borrowing shall further certify that
subsection 3.2B is satisfied on and as of that Funding Date; provided that
the minimum amount of Eurodollar Rate Loans with a particular Interest Period
included as a portion of any such combination, if any, shall be $10,000,000
and integral multiples of $1,000,000 in excess of that amount. Revolving
Loans may be continued as or converted into Prime Rate Loans and Eurodollar
Rate Loans in the manner provided in subsection 2.2D. In lieu of delivering
the above-described Notice of Borrowing, Company may give Agent telephonic
notice by the required time of any proposed borrowing under this subsection
2.1; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Borrowing to Agent on or prior to the Funding Date of
the requested Revolving Loans or Swing Line Loan, as the case may be.
Neither Agent nor any Lender shall incur any liability to Company
in acting upon any telephonic notice referred to above which Agent believes
in good faith to have been given by a duly authorized officer or other person
authorized to borrow on behalf of Company or for otherwise acting in good
faith under this subsection 2.1D and upon funding of Revolving Loans by any
Lender or Swing Line Loans by Agent in accordance with this Agreement
pursuant to any such telephonic notice Company shall have effected Revolving
Loans or Swing Line Loans, as applicable, hereunder.
Except as provided in subsection 2.6D, a Notice of Borrowing for a
Eurodollar Rate Loan (or telephonic notice in lieu thereof) shall be
irrevocable on and after the related Interest Rate Determination Date, and
Company shall be bound to make a borrowing in accordance therewith, unless
Company pays to Lenders such amounts as may be due under subsection 2.6E for
failure of a borrowing of a Eurodollar Rate Loan to occur on the date
specified therefor in a Notice of Borrowing (or telephonic notice in lieu
thereof).
E. Disbursement of Funds. Promptly after receipt of a Notice of
Borrowing pursuant to subsection 2.1D (or telephonic notice in lieu thereof)
<PAGE>37
or the deemed receipt of a Notice of Borrowing pursuant to subsection 2.8D,
Agent shall notify each Lender of the proposed borrowing if the Loan to be
made pursuant to such proposed borrowing will be a Revolving Loan. Each
Lender shall make the amount of its Revolving Loan available to Agent, in
same day funds, at the Funding and Payment Office not later than 12:00 noon
(New York time) on the Funding Date. Except as provided in subsection 2.1B
with respect to the repayment of Swing Line Loans, in subsection 2.1C with
respect to the repayment of the Overdraft Amount and accrued and unpaid
interest thereon, and in subsection 2.8D with respect to the reimbursement of
amounts drawn under Letters of Credit, upon satisfaction or waiver of the
conditions precedent specified in subsections 3.1 and 3.2, Agent shall make
the proceeds of such Loans available to Company on such Funding Date by
causing an amount of same day funds equal to the proceeds of all such Loans
received by Agent to be credited to the account of Company at such office of
Agent.
Unless Agent shall have been notified by any Lender prior to any
Funding Date that such Lender does not intend to make available to Agent such
Lender's Loan on such Funding Date, Agent may assume that such Lender has
made such amount available to Agent on such Funding Date and Agent in its
sole discretion may, but shall not be obligated to, make available to Company
a corresponding amount on such Funding Date. If such corresponding amount is
not in fact made available to Agent by such Lender, Agent shall be entitled
to recover such corresponding amount on demand from such Lender together with
interest thereon, for each day from such Funding Date until the date such
amount is paid to Agent, at the customary rate set by Agent for the
correction of errors among banks for three Business Days and thereafter at
the Prime Rate. If such Lender does not pay such corresponding amount
forthwith upon Agent's demand therefor, Agent shall promptly notify Company,
and Company shall immediately pay such corresponding amount to Agent.
Nothing in this subsection 2.1E shall be deemed to relieve any Lender from
its obligation to fulfill its Commitments hereunder or to prejudice any
rights which Company may have against any Lender as a result of any default
by such Lender hereunder.
F. The Register; Notes.
(i) Agent shall maintain, at its address referred to in subsection
9.10, a register for the recordation of the names and addresses of
Lenders and the Commitments and Loans of each Lender from time to time
(the "Register"). Company, Agent, Co-Agents and Lenders may treat each
Person whose name is recorded in the Register as a Lender hereunder for
all purposes of this Agreement. The Register shall be available for
inspection by Company, Agent, Co-Agents or any Lender at any reasonable
time and from time to time upon reasonable prior notice.
(ii) Agent shall record in the Register the Commitments and
the Loans from time to time of each Lender and each repayment or
prepayment in respect of the principal amount of the Loans of each
Lender. Any such recordation shall be conclusive and binding on Company
and each Lender, absent manifest or demonstrable error; provided that
failure to make any such recordation, or any error in such recordation,
shall not affect Company's Obligations in respect of the applicable
Loans.
<PAGE>38
(iii) Each Lender shall record on its internal records
(including, without limitation, any promissory note described in
subsection 2.1F(iv)) the amount of each Loan made by it and each payment
in respect thereof; provided that in the event of any inconsistency
between the Register and any Lender's records, the recordations in the
Register shall govern, absent manifest or demonstrable error.
(iv) If so requested by any Lender by written notice to
Company (with a copy to Agent) at least two Business Days' prior to the
Closing Date or at any time thereafter, Company shall execute and
deliver to such Lender (and/or, if so specified in such notice, any
Person who is an assignee of such Lender pursuant to subsection 9.2
hereof) on the Closing Date (or, if such notice is delivered after the
Closing Date, promptly after Company's receipt of such notice) a
promissory note or promissory notes to evidence such Lender's Revolving
Loans, Swing Line Loans or Bid Rate Loans, substantially in the form of
Exhibit IV, Exhibit V or Exhibit VI hereto, respectively.
2.2 Interest on the Revolving Loans
A. Rate of Interest.
The Revolving Loans shall bear interest on the unpaid principal
amount thereof from the date made through maturity (whether by acceleration
or otherwise) at a rate determined by reference to the Prime Rate or the
Adjusted Eurodollar Rate. The Swing Line Loans shall bear interest by
reference to the Prime Rate as provided in subsection 2.1B and the Bid Rate
Loans shall bear interest as provided in subsection 2.9. Except to the
extent that this Agreement specifically provides that certain Revolving Loans
must be made at the Prime Rate, the applicable basis for determining the rate
of interest with respect to Revolving Loans shall be selected by Company at
the time a Notice of Borrowing is given pursuant to subsection 2.1D (or is
deemed to be given pursuant to subsection 2.8D) or at the time a Notice of
Conversion/Continuation is given pursuant to subsection 2.2D. If on any day
a Revolving Loan is outstanding with respect to which notice has not been
delivered to Agent in accordance with the terms of this Agreement specifying
the basis for determining the rate of interest, then for that day that
Revolving Loan shall bear interest determined by reference to the Prime Rate.
Revolving Loans shall bear interest through maturity as follows:
(i) if a Prime Rate Loan, then at the Prime Rate per annum; or
(ii) if a Eurodollar Rate Loan, then at the sum of the
Adjusted Eurodollar Rate plus the Applicable Margin per annum.
<PAGE>39
B. Interest Periods.
In connection with each Eurodollar Rate Loan, Company shall elect
an interest period (each an "Interest Period") to be applicable to such Loan,
which Interest Period shall be either a one, two, three, six, nine or twelve
month period; provided that:
(i) the Interest Period for any Loan shall commence on the date of
such Loan;
(ii) if an Interest Period would otherwise expire on a day
which is not a Business Day, such Interest Period shall expire on the
next succeeding Business Day; provided that if any Interest Period would
otherwise expire on a day which is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period which begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month;
(iv) no Interest Period shall extend beyond the Revolving Loan
Commitment Termination Date;
(v) there shall be no more than 20 Interest Periods outstanding at
any time;
(vi) in the event Company fails to specify an Interest Period
in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month; and
(vii) there shall be no Interest Period of nine or twelve
months unless Agent, after consultation with Lenders, has determined in
good faith based on prevailing conditions in the Eurodollar market on
any date of determination that U.S. dollar deposits are offered by each
Lender to first class banks in the Eurodollar market for a comparable
maturity.
C. Interest Payments. Subject to subsection 2.2E, interest shall
be payable on the Loans (other than Bid Rate Loans, interest on which shall
be payable as provided in subsection 2.9J) as follows:
(i) interest on each Prime Rate Loan shall be payable in arrears
on and to each March 15, June 15, September 15, and December 15 of each
year, commencing March 15, 1994, and at maturity; and
<PAGE>40
(ii) interest on each Eurodollar Rate Loan shall be payable in
arrears on and to each Interest Payment Date applicable to that Loan,
upon any prepayment of that Loan (to the extent accrued on the amount
being prepaid) and at maturity.
D. Conversion or Continuation. Subject to the provisions of
subsection 2.6, Company shall have the option (i) to convert at any time all
or any part of its outstanding Revolving Loans equal to $10,000,000 and in-
tegral multiples of $1,000,000 in excess of that amount from Loans bearing
interest at a rate determined by reference to one basis to Loans bearing
interest at a rate determined by reference to an alternative basis or
(ii) upon the expiration of any Interest Period applicable to a Eurodollar
Rate Loan, to continue all or any portion of its outstanding Revolving Loans
equal to $10,000,000 and integral multiples of $1,000,000 in excess of that
amount as a Eurodollar Rate Loan, and the succeeding Interest Period(s) of
such continued Loan shall commence on the last day of the Interest Period of
the Loan to be continued; provided, however, that a Eurodollar Rate Loan may
only be converted into a Prime Rate Loan on the expiration date of an
Interest Period applicable thereto; and provided, further, that, unless
Requisite Lenders otherwise agree, no outstanding Loan may be continued as,
or be converted into, a Eurodollar Rate Loan when any Event of Default or
Potential Event of Default has occurred and is continuing; and provided,
still further, that Swing Line Loans shall only bear interest as Prime Rate
Loans and Company shall not have any right to convert outstanding Swing Line
Loans into Loans bearing interest at a rate determined by reference to the
Adjusted Eurodollar Rate; and provided, still further, that no Loan may be
made as or converted into a Prime Rate Loan during the period from
December 24 of any year to and including January 7 of the immediately
succeeding year for the purpose of investing in securities bearing interest
at a rate determined by reference to any other basis for the purpose of
arbitrage or speculation.
Company shall deliver a Notice of Conversion/Continuation to Agent
no later than 12:00 Noon (New York time) at least one Business Day in advance
of the proposed conversion/continuation date (in the case of a conversion to
a Prime Rate Loan) or three Business Days in advance of the proposed
conversion/continuation date (in the case of a conversion to, or a
continuation of, a Eurodollar Rate Loan). A Notice of Conversion/Continua-
tion shall specify (i) the proposed conversion/continuation date (which shall
be a Business Day), (ii) the amount of the Loan to be converted/continued,
(iii) the nature of the proposed conversion/continuation and (iv) in the case
of a conversion to, or a continuation of, a Eurodollar Rate Loan, the
requested Interest Period. In lieu of delivering the above described Notice
of Conversion/Continuation, Company may give Agent telephonic notice by the
required time of any proposed conversion/continuation under this subsection
2.2D; provided that such notice shall be promptly confirmed in writing by
delivery of a Notice of Conversion/Continuation to Agent on or before the
proposed conversion/continuation date.
Agent shall incur no liability to Company in acting upon any
telephonic notice referred to above which Agent believes in good faith to
have been given by a duly authorized officer or other person authorized to
act on behalf of Company or for otherwise acting in good faith under this
subsection 2.2D and upon conversion/continuation by Agent in accordance with
this Agreement pursuant to any telephonic notice, Company shall have effected
Loans hereunder.
<PAGE>41
Except as provided in subsection 2.6D, a Notice of Conversion/Con-
tinuation for conversion to, or continuation of, a Eurodollar Rate Loan (or
telephonic notice in lieu thereof) shall be irrevocable on and after the
related Interest Rate Determination Date, and upon delivering a Notice of
Conversion/Continuation Company shall be bound to convert or continue in
accordance therewith, unless Company pays to Lenders such amounts as may be
due under subsection 2.6E for failure of a conversion to or continuation of
any Eurodollar Rate Loan to occur on the date specified therefor in a Notice
of Conversion/Continuation (or telephonic notice in lieu thereof).
E. Post-Maturity Interest. Any principal payments on the Loans
not paid when due and, to the extent permitted by applicable law, any
interest payments on the Loans not paid when due, in each case whether at
stated maturity, by notice of prepayment, by acceleration or otherwise, shall
thereafter bear interest payable upon demand at a rate equal to the sum of
the Prime Rate plus 2.00% per annum.
F. Computation of Interest. Interest on the Loans shall be
computed on the basis of a 360-day year and the actual number of days elapsed
in the period during which it accrues. In computing interest on any Loan,
the date of the making of the Loan or the first day of an Interest Period, as
the case may be, shall be included and the date of payment or the expiration
date of an Interest Period, as the case may be, shall be excluded; provided
that if a Loan is repaid on the same day on which it is made, one day's
interest shall be paid on that Loan.
2.3 Fees
A. Commitment Fees. Company agrees to pay to Agent, for
distribution to each Lender, such Lender's Pro Rata Share of the commitment
fees with respect to the unused portion of the Revolving Loan Commitments for
the period from and including the Closing Date to and excluding the Revolving
Loan Commitment Termination Date, equal to the average of the daily unused
portion of the Revolving Loan Commitments multiplied by (x) at any time that
any of the Senior Debt Securities is rated BB+ or higher by S&P or Ba1 or
higher by Moody's, 1/4 of 1% per annum or (y) at any other time, 3/8 of 1%
per annum, such commitment fees to be computed on the basis of a 360-day year
and to be payable in arrears on but excluding March 15, June 15, September 15
and December 15 of each year for the quarter ending on such date, commencing
on the first such date to occur after the Closing Date, and on the Revolving
Loan Commitment Termination Date. Anything contained in this Agreement to
the contrary notwithstanding, for purposes of calculating the commitment fees
relating to the Revolving Loan Commitments pursuant to this subsection 2.3A,
the "unused portion of the Revolving Loan Commitments," as of any date of
determination, shall be an amount equal to the aggregate Revolving Loan
Commitments as of such date minus the aggregate principal amount of all
outstanding Revolving Loans on such date. Reductions in the amounts
available for borrowing as Revolving Loans under the Revolving Loan
<PAGE>42
Commitments arising from the operation of the limitations set forth in the
second paragraph of subsection 2.1A, including reductions as a result of the
making of Swing Line Loans or Bid Rate Loans, the issuance of Letters of
Credit or Commercial Paper or the incurrence of overdrafts in respect of the
Overdraft Account, shall not constitute usages of Revolving Loan Commitments
for purposes of this subsection 2.3A and shall not reduce the amount of the
commitment fees that are payable under this subsection 2.3A.
B. Other Fees. Company agrees to pay to Agent an annual Agent's
administrative fee and such other fees in the amounts and at the times agreed
upon between Company and Bankers.
2.4 Prepayments and Payments; Reductions in Commitments
A. Prepayments.
(i) Voluntary Prepayments. Company may, upon written or
telephonic notice to Agent on or prior to 1:00 P.M. (New York time) on
the date of prepayment, which notice, if telephonic, shall be promptly
confirmed in writing, at any time and from time to time prepay any Swing
Line Loan in whole or in part in an aggregate minimum amount of
$1,000,000 and integral multiples of $500,000 in excess of that amount.
Company may not prepay any Bid Rate Loan without the consent of the
applicable Lender; provided that Company shall deliver to Agent a notice
of any prepayment of any Bid Rate Loan on or prior to the date of such
prepayment. Subject to the foregoing provisions of this subsection
2.4A(i), Company may, upon written or telephonic notice to Agent on or
prior to 11:00 A.M. (New York time) on the date of prepayment (in the
case of Prime Rate Loans) or three Business Days' prior written or
telephonic notice (in the case of Eurodollar Rate Loans), which notice,
if telephonic, shall be promptly confirmed in writing to Agent and which
notice Agent will promptly transmit by telegram, telex or telephone to
each Lender, at any time and from time to time prepay any Revolving Loan
in whole or in part in an aggregate minimum amount of $5,000,000 and
integral multiples of $1,000,000 in excess of that amount; provided,
however, that if a Eurodollar Rate Loan is prepaid on a date other than
the last day of the Interest Period applicable thereto, Company shall be
liable for any payments required by subsection 2.6E. In the event that
Company does not specify the Loan to which a prepayment is to be
applied, such prepayment shall be applied (a) first, to outstanding
Swing Line Loans to the full extent thereof and (b) second, to
outstanding Revolving Loans to the full extent thereof. Notice of
prepayment having been given as aforesaid, the principal amount of the
Loans specified in such notice shall become due and payable on the
prepayment date.
(ii) Mandatory Prepayments. Company shall make prepayments of
Revolving Loans to the extent necessary so that the aggregate
outstanding principal amount of Revolving Loans at any time does not
exceed the Revolving Loan Commitments then in effect. Company shall
also make prepayments of the Revolving Loans, Swing Line Loans and Bid
Rate Loans to the extent necessary so that the Total Utilization of
Revolving Loan Commitments at no time exceeds the Revolving Loan
Commitments.
<PAGE>43
(iii) Application of Prepayments. All prepayments of
Eurodollar Rate Loans shall include payment of accrued interest on the
principal amount so prepaid and shall be applied to payment of interest
before application to principal. Considering the Revolving Loans and
Swing Line Loans being prepaid separately, any mandatory prepayment
thereof shall be applied first to Prime Rate Loans to the full extent
thereof before application to Eurodollar Rate Loans as determined by
Agent.
B. Manner and Time of Payment. Except as provided in subsection
2.8E, all payments of principal, interest and fees hereunder and under the
Notes by Company shall be made without defense, setoff and counterclaim and
in same day funds and delivered to Agent not later than 12:00 Noon (New York
time) on the date due at the Funding and Payment Office for the account of
Lenders; funds received by Agent after that time shall be deemed to have been
paid by Company on the next succeeding Business Day. Company hereby
authorizes Agent to charge its account with Agent in order to cause timely
payment to be made to Agent of all principal, interest and fees due hereunder
(subject to sufficient funds being available in its account for that
purpose); provided that Agent shall give Company notice of such charges prior
thereto or as soon as reasonably practicable thereafter.
C. Apportionment of Payments. Aggregate principal and interest
payments in respect of Revolving Loans and, to the extent payments are made
by Company after payments have been made by Lenders pursuant to subsection
2.8E, payments in respect of Letters of Credit, shall be apportioned among
the Revolving Loans and Letters of Credit to which such payments relate, and
payments of the aggregate commitment fees and Letter of Credit commissions
shall be apportioned ratably among Lenders, in each case proportionally to
their respective Pro Rata Shares. All principal and interest payments in
respect of Swing Line Loans shall be transferred to and retained by Agent;
provided that Agent shall distribute to each Lender that has purchased a
participation in amounts due with respect to outstanding Swing Line Loans
pursuant to subsection 2.1B such Lender's Pro Rata Share of any payments
subsequently received by Agent in respect of such Swing Line Loans. All
principal and interest payments in respect of the Overdraft Account shall be
transferred to and retained by Agent; provided that Agent shall distribute to
each Lender that has purchased a participation in amounts due with respect to
the Overdraft Account pursuant to subsection 2.1C such Lender's Pro Rata
Share of any payments subsequently received by Agent in respect of such
amounts due with respect to the Overdraft Account. All principal and
interest payments in respect of any Bid Rate Loans shall be apportioned
ratably among Lenders making such Bid Rate Loans in accordance with the
respective outstanding amounts of such Bid Rate Loans. Subject to the last
sentence of subsection 2.8E, Agent (or, in the case of payments received by
any Issuing Lender from Company after payments have been made to such Issuing
Lender by Lenders pursuant to subsection 2.8E, such Issuing Lender) shall
promptly distribute to each Lender, at its primary address set forth below
<PAGE>44
its name on the appropriate signature page hereof or at such other address as
any Lender may request, its share of all such payments received by Agent (or
such Issuing Lender) and the commitment fees of such Lender when received by
Agent pursuant to subsection 2.3A. Notwithstanding the foregoing provisions
of this subsection 2.4C, (i) if, pursuant to the provisions of subsection
2.6D, any Notice of Borrowing or Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Prime
Rate Loans in lieu of its Pro Rata Share of Eurodollar Rate Loans, Agent
shall give effect thereto in apportioning payments received thereafter and
(ii) after the occurrence of an Event of Default and acceleration of the
maturity of the Loans and amounts available for drawing under Letters of
Credit as provided in Section 7, Agent shall apportion all payments received
by it in the manner specified in Section 7.
D. Payments on Non-Business Days. Whenever any payment to be
made hereunder or under the Notes shall be stated to be due on a day which is
not a Business Day, the payment shall be made on the next succeeding Business
Day and such extension of time shall be included in the computation of the
payment of interest hereunder or under the Notes or of the commitment and
other fees hereunder, as the case may be.
E. Notation of Payment. Each Lender agrees that before disposing
of any Note held by it, or any part thereof (other than by granting
participations therein), that Lender will make a notation thereon of all
Loans and principal payments previously made thereon and of the date to which
interest thereon has been paid and will notify Company and Agent of the name
and address of the transferee of that Note; provided that the failure to make
(or any error in the making of) a notation of any Loan made under such Notes
or to notify Company or Agent of the name and address of such transferee
shall not limit or otherwise affect the obligation of Company hereunder or
under such Notes with respect to any Loan and payments of principal or
interest on any such Note.
F. Voluntary Reductions of Revolving Loan Commitments. Company
shall have the right, at any time and from time to time, to terminate in
whole or permanently reduce in part, without premium or penalty, the
Revolving Loan Commitments in an amount up to the amount by which the
Revolving Loan Commitments exceed the Total Utilization of Revolving Loan
Commitments at the time of such proposed termination or reduction; provided
that if at any time of determination there are no Obligations or Letters of
Credit outstanding, then the Revolving Loan Commitments may be terminated in
whole notwithstanding the fact that the Commercial Paper Usage is greater
than zero.
Company shall give not less than three Business Days' prior written
notice to Agent designating the date (which shall be a Business Day) of such
termination or reduction and the amount of any partial reduction. Promptly
after receipt of a notice of such termination or partial reduction, Agent
shall notify each Lender of the proposed termination or partial reduction.
Such termination or partial reduction of the Revolving Loan Commitments shall
be effective on the date specified in the notice delivered by Company and
shall reduce the Revolving Loan Commitment of each Lender proportionately to
its Pro Rata Share. Any such partial reduction of the Revolving Loan
Commitments shall be in an aggregate minimum amount of $5,000,000, and
integral multiples of $1,000,000 in excess of that amount.
<PAGE>45
2.5 Use of Proceeds
A. Loans. The proceeds of the Loans shall be used, and Company
shall cause such proceeds to be used, only for general corporate purposes,
which may include the payment of the Swing Line Loans pursuant to subsection
2.1B, the payment of the Overdraft Amount pursuant to subsection 2.1C, the
payment of the Bid Rate Loans, the reimbursement to any Issuing Lender of any
amounts drawn under any Letters of Credit issued by such Issuing Lender as
provided in subsection 2.8D, the payment of Transaction Costs and the making
of intercompany loans to Company's Subsidiaries for their own general
corporate purposes, including, without limitation, repurchases or redemptions
of the Senior Debt Securities to the extent permitted under subsection 6.5;
provided that the proceeds of the Loans shall not be used for the payment of
dividends by Company or any of Company's Subsidiaries which is not a wholly-
owned Subsidiary of Company and/or one or more of Company's wholly-owned
Subsidiaries; provided, further, that the proceeds of Swing Line Loans shall
not be used to repay outstanding Swing Line Loans except if Swing Line Loans
in an aggregate principal amount of $5,000,000 or less are outstanding.
B. Letters of Credit. Letters of Credit shall be issued solely
for the purposes specified in the definitions of Commercial Letter of Credit
and Standby Letter of Credit; provided that no Standby Letters of Credit
shall be issued under this Agreement by an Issuing Lender for the purposes
specified in clauses (i) or (ii) of the definition of Standby Letter of
Credit.
C. Benefits to Subsidiaries. In consideration for the O-I
Subsidiary Guaranty executed and delivered by the Guarantor Subsidiaries,
Company agrees to make the benefit of the extensions of credit hereunder
available to the Guarantor Subsidiaries and their Subsidiaries in the amount
and to the extent agreed between Company and each Subsidiary.
D. Margin Regulations. No portion of the proceeds of any
borrowing under this Agreement shall be used by Company in any manner which
might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T, or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board
or to violate the Exchange Act, in each case as in effect on the date or
dates of such borrowing and such use of proceeds.
2.6 Special Provisions Governing Eurodollar Rate Loans
Notwithstanding other provisions of this Agreement, the following
provisions shall govern with respect to Eurodollar Rate Loans as to the
matters covered:
<PAGE>46
A. Determination of Interest Rate. As soon as practicable after
10:00 A.M. (New York time) on each Interest Rate Determination Date, Agent
shall determine (which determination shall, absent manifest or demonstrable
error, be final, conclusive and binding upon all parties) the interest rate
which shall apply to the Eurodollar Rate Loans for which an interest rate is
then being determined for the applicable Interest Period (subject to any
changes in the Applicable Margin pursuant to the terms of the definition
thereof) and shall promptly give notice thereof (in writing or by telephone
confirmed in writing) to Company and to each Lender.
B. Substituted Rate of Borrowing. In the event that on any
Interest Rate Determination Date any Lender (including Agent) shall have
determined (which determination shall be final and conclusive and binding
upon all parties but, with respect to the following clauses (i) and (ii)(b),
shall be made only after consultation with Company and Agent) that:
(i) by reason of any changes arising after the date of this
Agreement affecting the Eurodollar market or affecting the position of
that Lender in such market, adequate and fair means do not exist for
ascertaining the applicable interest rate on the basis provided for in
the definition of Adjusted Eurodollar Rate with respect to the
Eurodollar Rate Loans as to which an interest rate determination is then
being made; or
(ii) by reason of (a) any change after the date hereof in any
applicable law or governmental rule, regulation or order (or any
interpretation thereof and including the introduction of any new law or
governmental rule, regulation or order) or (b) other circumstances
affecting that Lender or the Eurodollar market or the position of that
Lender in such market (such as for example, but not limited to, official
reserve requirements required by Regulation D to the extent not given
effect in the Adjusted Eurodollar Rate), the Adjusted Eurodollar Rate
shall not represent the effective pricing to that Lender for Dollar
deposits of comparable amounts for the relevant period;
then, and in any such event, that Lender shall be an Affected Lender and it
shall promptly (and in any event as soon as possible after being notified of
a borrowing, conversion or continuation) give notice (by telephone confirmed
in writing) to Company and Agent (which notice Agent shall promptly transmit
to each other Lender) of such determination. Thereafter, Company shall pay
to the Affected Lender with respect to Company's Eurodollar Rate Loans, upon
written demand therefor, such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as the
Affected Lender in its sole discretion shall reasonably determine) as shall
be required to cause the Affected Lender to receive interest with respect to
such Affected Lender's Eurodollar Rate Loans for the Interest Period(s)
following that Interest Rate Determination Date at a rate per annum equal to
the Applicable Margin per annum in excess of the effective pricing to the
<PAGE>47
Affected Lender for Dollar deposits to make or maintain its Eurodollar Rate
Loans. A certificate as to additional amounts owed the Affected Lender,
showing in reasonable detail the basis for the calculation thereof, submitted
in good faith to Company and Agent by the Affected Lender shall, absent
manifest or demonstrable error, be final and conclusive and binding upon all
of the parties hereto.
C. Required Termination and Prepayment. In the event that on any
date any Lender shall have reasonably determined (which determination shall
be final and conclusive and binding upon all parties) that the making or
continuation of its Eurodollar Rate Loans has become unlawful by compliance
by that Lender in good faith with any law, governmental rule, regulation or
order (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful), then, and in any such event, that Lender
shall be an Affected Lender and it shall promptly give notice (by telephone
confirmed in writing) to Company and Agent (which notice Agent shall promptly
transmit to each Lender) of that determination. Subject to the following
subsection 2.6D, the obligation of the Affected Lender to make or maintain
its Eurodollar Rate Loans during any such period shall be terminated at the
earlier of the termination of the Interest Period then in effect or when
required by law and Company shall no later than the termination of the
Interest Period in effect at the time any such determination pursuant to this
subsection 2.6C is made or, earlier, when required by law, repay the
Eurodollar Rate Loans of the Affected Lender, together with all interest
accrued thereon.
D. Options of Company. In lieu of paying an Affected Lender such
additional moneys as are required by subsection 2.6B or the prepayment of an
Affected Lender required by subsection 2.6C, Company may exercise any one of
the following options:
(i) If the determination by an Affected Lender relates only to
Eurodollar Rate Loans then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, Company may
by giving notice (by telephone confirmed in writing) to Agent (who shall
promptly give similar notice to each Lender) no later than the date
immediately prior to the date on which such Eurodollar Rate Loans are to
be made, converted or continued, withdraw as to the Affected Lender that
Notice of Borrowing or such Notice of Conversion/Continuation and such
Affected Lender shall thereupon make or maintain its Pro Rata Share of
the Eurodollar Rate Loan then being requested, converted or continued as
a Prime Rate Loan; or
(ii) Upon written notice to Agent and each Lender, Company may
terminate the obligations of Lenders to make or maintain Loans as, and
to convert Loans into, Eurodollar Rate Loans and in such event, Company
shall, prior to the time any payment pursuant to subsection 2.6C is
required to be made or, if the provisions of subsection 2.6B are
applicable, at the end of the then current Interest Period, convert all
of the Eurodollar Rate Loans into Prime Rate Loans in the manner
contemplated by subsection 2.2D but without satisfying the advance
notice requirements therein; or
(iii) Company may give notice (by telephone confirmed in writing)
to the Affected Lender and Agent (who shall promptly give similar notice
<PAGE>48
to each Lender) and require the Affected Lender to make the Eurodollar
Rate Loan then being requested as a Prime Rate Loan or to continue to
maintain its outstanding Prime Rate Loan then the subject of a Notice of
Conversion/ Continuation as a Prime Rate Loan or to convert its
Eurodollar Rate Loans then outstanding that are so affected into Prime
Rate Loans at the end of the then current Interest Period (or at such
earlier time as prepayment is otherwise required to be made pursuant to
subsection 2.6C) in the manner contemplated by subsection 2.2D but
without satisfying the advance notice requirements therein, that notice
to pertain only to the Loans of the Affected Lender and to have no
effect on the obligations of the other Lenders to make or maintain
Eurodollar Rate Loans or to convert Prime Rate Loans into Eurodollar
Rate Loans.
E. Compensation. Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth in reasonable
detail the basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any interest paid by
that Lender to lenders of funds borrowed by it to make or carry its
Eurodollar Rate Loans and any loss sustained by that Lender in connection
with the re-employment of such funds), which that Lender may sustain with
respect to Company's Eurodollar Rate Loans: (i) if for any reason (other
than a default by that Lender) a borrowing of any Eurodollar Rate Loan does
not occur on a date specified therefor in a Notice of Borrowing, a Notice of
Conversion/Continuation or a telephonic request for borrowing or conversion/
continuation or a successive Interest Period does not commence after notice
therefor is given pursuant to subsection 2.2D, (ii) if any prepayment or
other principal payment of any of its Eurodollar Rate Loans occurs on a date
prior to the last day of the Interest Period applicable to that Loan,
(iii) if any prepayment of any of such Lender's Eurodollar Rate Loans is not
made on any date specified in a notice of prepayment given by Company, or
(iv) as a consequence of any other default by Company to repay such Lender's
Eurodollar Rate Loans when required by the terms of this Agreement.
F. Quotation of Adjusted Eurodollar Rate. Anything herein to the
contrary notwithstanding, if on any Interest Rate Determination Date no
Adjusted Eurodollar Rate is available by reason of the failure of all
Reference Lenders to provide offered quotations to Agent in accordance with
the definition of "Adjusted Eurodollar Rate," Agent shall give Company and
each Lender prompt notice thereof and the Loans requested shall be made as
Prime Rate Loans.
G. Booking of Eurodollar Rate Loans. Any Lender may make, carry
or transfer Eurodollar Rate Loans at, to, or for the account of, any of its
branch offices or the office of an Affiliate of that Lender.
H. Assumptions Concerning Funding of Eurodollar Rate Loans.
Calculation of all amounts payable to a Lender under this subsection 2.6
shall be made as though that Lender had actually funded its relevant
Eurodollar Rate Loan through the purchase of a Eurodollar deposit bearing
interest at the rate obtained pursuant to clause (i) of the definition of
Adjusted Eurodollar Rate in an amount equal to the amount of that Eurodollar
Rate Loan and having a maturity comparable to the relevant Interest Period
and through the transfer of such Eurodollar deposit from an offshore office
of that Lender to a domestic office of that Lender in the United States of
<PAGE>49
America; provided, however, that each Lender may fund each of its Eurodollar
Rate Loans in any manner it sees fit and the foregoing assumption shall be
utilized only for the calculation of amounts payable under this subsection
2.6.
I. Eurodollar Rate Loans After Default. Unless Requisite Lenders
shall otherwise agree, after the occurrence of and during the continuance of
a Potential Event of Default or Event of Default, Company may not elect to
have a Loan be made or maintained as, or converted to, a Eurodollar Rate Loan
after the expiration of any Interest Period then in effect for that Loan.
J. Affected Lenders' Obligation to Mitigate. Each Lender agrees
that, as promptly as practicable after it becomes aware of the occurrence of
an event or the existence of a condition that would cause it to be an
Affected Lender under subsection 2.6B or 2.6C, it will, to the extent not
inconsistent with such Lender's internal policies, use its best efforts to
make, fund or maintain the affected Eurodollar Rate Loans of such Lender
through another lending office of such Lender if as a result thereof the
additional moneys which would otherwise be required to be paid in respect of
such Loans pursuant to subsection 2.6B would be materially reduced or the
illegality or other adverse circumstances which would otherwise require
prepayment of such Loans pursuant to subsection 2.6C would cease to exist and
if, as determined by such Lender, in its sole discretion, the making, funding
or maintaining of such Loans through such other lending office would not
otherwise materially adversely affect such Loans or such Lender. Company
hereby agrees to pay all reasonable expenses incurred by any Lender in
utilizing another lending office of such Lender pursuant to this subsection
2.6J.
K. Replacement of Lender. If Company receives a notice pursuant
to subsection 2.6B or 2.6C, so long as no Event of Default shall have
occurred and be continuing and Company has obtained a commitment from another
Lender or an Eligible Assignee to become a Lender for all purposes under this
Agreement and to assume all obligations of the Lender to be replaced, Company
may require the Lender giving such notice to assign all of its Loans,
Commitments and other Obligations to such other Lender or Eligible Assignee
pursuant to the provisions of subsection 9.2B; provided that, prior to or
concurrently with such replacement (i) Company has paid to the Lender giving
such notice all principal, interest, fees and other amounts due and owing to
such Lender through such date of replacement, (ii) Company has paid to Agent
the processing and recordation fee required to be paid by subsection 9.2B(i),
and (iii) all of the requirements for such assignment contained in subsection
9.2B, including, without limitation, the receipt by Agent of an executed
Assignment and Acceptance and other supporting documents, have been
fulfilled.
<PAGE>50
2.7 Capital Adequacy Adjustment; Increased Costs; Taxes
A. Capital Adequacy. If any Lender shall have determined in good
faith that the adoption, effectiveness, phase-in or applicability (excluding
any adoption, effectiveness, phase-in or applicability published as of the
Closing Date and currently scheduled to take effect) after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof after the date hereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof,
or compliance by any Lender (or its applicable lending office) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any such governmental authority, central bank or
comparable agency, has or would have the effect of reducing the rate of
return on the capital of such Lender or any corporation controlling such
Lender as a consequence of, or with reference to, such Lender's Loans or
Commitments or Letters of Credit or participations therein or other
obligations hereunder to a level below that which such Lender or such
controlling corporation could have achieved but for such adoption,
effectiveness, phase-in, applicability, change or compliance (taking into
consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within ten Business
Days after written demand by such Lender (with a copy of such demand to
Agent), Company shall pay to such Lender such additional amount or amounts as
will compensate such Lender or such controlling corporation on an after-tax
basis for such reduction; provided that a Lender shall not be entitled to
avail itself of the benefit of this subsection 2.7A to the extent that any
such reduction in return was incurred more than six months prior to the time
it first makes a demand therefor, unless the circumstance giving rise to such
reduced return arose or became applicable retrospectively, in which case no
time limit shall apply (provided that such Lender has notified Company within
six months from the date such circumstances arose or became applicable).
Each Lender, upon determining in good faith that any additional amounts will
be payable pursuant to this subsection 2.7A, will give prompt written notice
thereof to Company, which notice shall set forth the basis of the calculation
of such additional amounts, although the failure to give any such notice
shall not release or diminish any of Company's obligations to pay additional
amounts under this subsection 2.7A.
B. Compensation for Increased Costs and Taxes. In the event that
any Lender shall determine (which determination shall, absent manifest or
demonstrable error, be final and conclusive and binding upon all parties
hereto) that any law, treaty or governmental rule, regulation or order, or
any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental
rule, regulation or order), or any determination of a court or governmental
authority, in each case that is adopted after the date hereof, or compliance
by such Lender with any guideline, request or directive issued or made after
the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
<PAGE>51
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such
Lender) with respect to this Agreement or any of the Loans or any of its
obligations hereunder, or changes the basis of taxation of payments to
such Lender (or its applicable lending office) of principal, interest,
fees or any other amount payable hereunder (except for changes in the
rate of Tax on the overall net income of such Lender or its applicable
lending office);
(ii) imposes, modifies or holds applicable any reserve
(including without limitation any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC
insurance or similar requirement against assets held by, or deposits or
other liabilities in or for the account of, or advances or loans by, or
other credit extended by, or any other acquisition of funds by, any
office of such Lender (other than any such reserve or other requirements
with respect to Eurodollar Rate Loans that are reflected in the
definition of Adjusted Eurodollar Rate); or
(iii) imposes any other condition on or affecting such Lender
(or its applicable lending office) or its obligations hereunder or the
interbank Eurodollar market, other than with respect to Taxes;
and the result of any of the foregoing is to increase the cost to such Lender
of agreeing to make, making or maintaining Loans hereunder or to reduce any
amount received or receivable by such Lender (or its applicable lending
office) with respect thereto; then, in any such case, Company shall promptly
pay to such Lender, upon written demand and receipt of the written notice
referred to below, such additional amount or amounts (in the form of an
increased rate of, or a different method of calculating, interest or
otherwise as such Lender in its sole discretion shall determine) as may be
necessary to compensate such Lender on an after-tax basis for any such
increased cost or reduction in amounts received or receivable hereunder;
provided that any increased cost arising as a result of any of the foregoing
other than in respect of Taxes shall apply only to Eurodollar Rate Loans;
provided further that a Lender shall not be entitled to avail itself of the
benefit of this subsection 2.7B to the extent that any such increased cost or
reduction was incurred more than six months prior to the time it gives notice
to Company (as provided in the next sentence) of the relevant circumstance,
unless such circumstance arose or became applicable retrospectively, in which
case no time limit shall apply. Such Lender shall deliver to Company a
written notice, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Lender under this subsection 2.7B, which
statement shall be conclusive and binding upon all parties hereto absent
manifest or demonstrable error.
C. Withholding of Taxes.
(i) Payments to Be Free and Clear. All sums payable by Company
under this Agreement and the other Loan Documents shall be paid free and
clear of and (except to the extent required by law) without any
deduction or withholding on account of any Covered Tax imposed, levied,
<PAGE>52
collected, withheld or assessed by or within the United States of
America or any political subdivision in or of the United States of
America or any other jurisdiction from or to which a payment is made by
or on behalf of Company or by any federation or organization of which
the United States of America or any such jurisdiction is a member at the
time of payment.
(ii) Withholding in respect of Payments. If Company or any
other Person is required by law to make any deduction or withholding on
account of any such Tax from any sum paid or payable by Company to Agent
or any Lender under any of the Loan Documents:
(a) Company shall notify Agent of any such requirement or any
change in any such requirement as soon as Company becomes aware of
it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability
to pay is imposed on Company) for its own account or (if that
liability is imposed on Agent or such Lender, as the case may be)
on behalf of and in the name of Agent or such Lender;
(c) in the event such Tax is a Covered Tax, the sum payable
by Company in respect of which the relevant deduction, withholding
or payment is required shall be increased to the extent necessary
to ensure that, after the making of that deduction, withholding or
payment, Agent or such Lender, as the case may be, receives on the
due date and retains (free from any liability in respect of any
such deduction, withholding or payment) a net sum equal to what it
would have received and so retained had no such deduction,
withholding or payment in respect of Covered Taxes been required or
made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required
by clause (b) above to pay, Company shall deliver to Agent evidence
reasonably satisfactory to the other affected parties of such
deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority;
provided that no such additional amount shall be required to be paid to
any Lender under clause (c) above except to the extent that any change
after the date hereof in any such requirement for a deduction,
withholding or payment as is mentioned therein shall result in an
increase in the rate of such deduction, withholding or payment from that
in effect at the date of this Agreement in respect of payments to such
Lender.
(iii) Tax Refund. If Company determines in good faith that a
reasonable basis exists for contesting a Covered Tax, the relevant
Lender or Tax Transferee or Agent, as applicable, shall cooperate with
<PAGE>53
Company (but shall have no obligation to disclose any confidential
information, unless arrangements satisfactory to the relevant Lender
have been made to preserve the confidential nature of such information)
in challenging such Tax at Company's expense if requested by Company (it
being understood and agreed that none of Agent or any Lender shall have
any obligation to contest, or any responsibility for contesting, any
Tax). If any Lender, Tax Transferee or Agent, as applicable, receives a
refund (whether by way of a direct payment or by offset) of any Covered
Tax for which a payment has been made pursuant to this subsection 2.7C
which, in the reasonable good faith judgment of such Lender, Tax
Transferee or Agent, as the case may be, is allocable to such payment
made under this subsection 2.7C, the amount of such refund (together
with any interest received thereon) shall be paid to Company to the
extent payment has been made in full as and when required pursuant to
this subsection 2.7C.
(iv) U.S. Tax Certificates. Each Lender that is organized
under the laws of any jurisdiction other than the United States or any
state or other political subdivision thereof shall deliver to Agent for
transmission to Company, on or prior to the Closing Date (in the case of
each Lender listed on the signature pages hereof) or on the date of the
Assignment and Acceptance pursuant to which it becomes a Lender (in the
case of each other Lender), and at such other times as may be necessary
in the determination of Company or Agent (each in the reasonable
exercise of its discretion), such certificates, documents or other
evidence, properly and accurately completed and duly executed by such
Lender (including, without limitation, Internal Revenue Service Form
1001 or Form 4224 or any other certificate or statement of exemption
required by Treasury Regulations Section 1.1441-4(a) or Section 1.1441-
6(c) or any successor thereto) to establish that such Lender is not
subject to deduction or withholding of United States federal income tax
under Section 1441 or 1442 of the Internal Revenue Code or otherwise (or
under any comparable provisions of any successor statute) with respect
to any payments to such Lender of principal, interest, fees or other
amounts payable under any of the Loan Documents. Company shall not be
required to pay any additional amount to any such Lender under
subsection 2.7C(ii) if such Lender shall have failed to satisfy the
requirements of the immediately preceding sentence; provided that if
such Lender shall have satisfied such requirements on the Closing Date
(in the case of each Lender listed on the signature pages hereof) or on
the date of the Assignment and Acceptance pursuant to which it became a
Lender (in the case of each other Lender), nothing in this subsection
2.7C(iv) shall relieve Company of its obligation to pay any additional
amounts pursuant to clause (c) of subsection 2.7C(ii) in the event that,
as a result of any change in applicable law after the Closing Date or
the date of the applicable Assignment and Acceptance, as the case may
be, such Lender is no longer properly entitled to deliver certificates,
documents or other evidence at a subsequent date establishing the fact
that such Lender is not subject to withholding as described in the
immediately preceding sentence.
D. Replacement of Lender. If Company receives a notice pursuant
to subsections 2.7A, 2.7B or 2.7C, so long as no Event of Default shall have
occurred and be continuing and Company has obtained a commitment from another
Lender or an Eligible Assignee to become a Lender for all purposes under this
<PAGE>54
Agreement and to assume all obligations of the Lender to be replaced, Company
may require the Lender giving such notice to assign all of its Loans,
Commitments and other Obligations to such other Lender or Eligible Assignee
pursuant to the provisions of subsection 9.2B; provided that, prior to or
concurrently with such replacement (i) Company has paid to the Lender giving
such notice all principal, interest, fees and other amounts due and owing to
such Lender through such date of replacement, (ii) Company has paid to Agent
the processing and recordation fee required to be paid by subsection 9.2B(i),
and (iii) all of the requirements for such assignment contained in subsection
9.2B, including, without limitation, the receipt by Agent of an executed
Assignment and Acceptance and other supporting documents, have been
fulfilled.
2.8 Letters of Credit
A. Letters of Credit. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Company set forth herein, Company may request, in accordance with the
provisions of this subsection 2.8A, in addition to requesting that Lenders
make Loans pursuant to subsections 2.1 and 2.9, that on and after the Closing
Date one or more Issuing Lenders issue, and one or more Issuing Lenders will
issue, subject to the terms and conditions hereof, Standby Letters of Credit
and Commercial Letters of Credit for the account of Company denominated in
Dollars. Issuances of Letters of Credit shall be subject to the following
limitations:
(i) Company shall not request that any Lender issue any Standby
Letter of Credit or Commercial Letter of Credit if, after giving effect
to such issuance, the Total Utilization of Revolving Loan Commitments
would exceed the Revolving Loan Commitments;
(ii) In no event shall any Issuing Lender issue under this
Agreement (v) any Standby Letter of Credit described in clauses (i) or
(ii) of the definition of Standby Letter of Credit, including any
Standby Letter of Credit described in clause (x) of the definition of
Standby Letter of Credit which is also described in clauses (i) or (ii)
of said definition; (w) any Letter of Credit having an expiration date
later than the Revolving Loan Commitment Termination Date; (x) subject
to the foregoing clause (w), any Standby Letter of Credit having an
expiration date more than one year after its date of issuance; provided
that, subject to the foregoing clause (w) and to subsection 2.8A(v),
this clause (x) shall not prevent any Issuing Lender from issuing a
Standby Letter of Credit having an expiration date up to two years after
its date of issuance if such Standby Letter of Credit will be used by
Company in connection with, or in lieu of, posting an appeal bond;
provided further that, subject to the foregoing clause (w), this clause
(x) shall not prevent any Issuing Lender from agreeing that a Standby
Letter of Credit will automatically be extended annually for a period
not to exceed one year unless such Issuing Lender gives notice that it
will not extend; provided further that such Issuing Lender shall deliver
<PAGE>55
a written notice to Agent setting forth the last day on which such
Issuing Lender may give notice that it will not extend (the
"Notification Date" with respect to such Letter of Credit) at least ten
Business Days prior to such Notification Date; provided further, that,
unless Requisite Lenders otherwise consent, such Issuing Lender shall
give notice that it will not extend if it has knowledge that an Event of
Default has occurred and is continuing on such Notification Date; or
(y) any Commercial Letter of Credit having an expiration date which is
not acceptable to such Issuing Lender in its reasonable discretion or
which is more than 180 days after its date of issuance;
(iii) Company shall not request that any Issuing Lender issue
any Commercial Letter of Credit if, after giving effect to such
issuance, the Letter of Credit Usage in respect of Commercial Letters of
Credit would exceed $25,000,000;
(iv) Company shall not request that any Issuing Lender issue
any Letter of Credit if, after giving effect to such issuance, the
Letter of Credit Usage would exceed $300,000,000; and
(v) Company shall not request that any Issuing Lender issue any
Standby Letter of Credit having an expiration date more than one year
after its date of issuance which will be used by Company in connection
with, or in lieu of, posting an appeal bond if, after giving effect to
such issuance, the Letter of Credit Usage in respect of all such Standby
Letters of Credit would exceed $20,000,000.
The issuance of any Standby Letter of Credit or Commercial Letter
of Credit in accordance with the provisions of this subsection 2.8 shall be
given effect in the calculation of the Total Utilization of Revolving Loan
Commitments and shall require the satisfaction of each condition set forth in
subsections 3.1 and 3.3.
Company and Lenders agree that any Standby Letters of Credit and
Commercial Letters of Credit issued as "Letters of Credit" (as defined in the
Existing Credit Agreement) pursuant to the Existing Credit Agreement and
outstanding as of the Closing Date shall for all purposes of this Agreement
be deemed to have been issued as of the Closing Date under and pursuant to
the terms of this Agreement and all fees payable under subsection 2.8F with
respect to such Letters of Credit shall accrue from and after the Closing
Date. All Letters of Credit originally issued pursuant to the Existing
Credit Agreement are described in Schedule J annexed hereto.
Immediately upon the issuance of each Standby Letter of Credit or
Commercial Letter of Credit, each Lender shall be deemed to, and hereby
agrees to, have irrevocably purchased from the Issuing Lender a participation
in such Letter of Credit and drawings thereunder in an amount equal to such
Lender's Pro Rata Share of the maximum amount which is or at any time may
become available to be drawn thereunder.
Each Letter of Credit may provide that the Issuing Lender may (but
shall not be required to) pay the beneficiary thereof upon the occurrence of
an Event of Default and the acceleration of the maturity of the Loans or, if
<PAGE>56
payment is not then due to the beneficiary, provide for the deposit of funds
in an account to secure payment to the beneficiary and that any funds so de-
posited shall be paid to the beneficiary of the Letter of Credit if
conditions to such payment are satisfied or returned to the Issuing Lender
for distribution to Lenders (or, if all Obligations shall have been
indefeasibly paid in full, to Company) if no payment to the beneficiary has
been made and the final date available for drawings under the Letter of
Credit has passed. Each payment or deposit of funds by an Issuing Lender as
provided in this paragraph shall be treated for all purposes of this
Agreement as a drawing duly honored by such Issuing Lender under the related
Letter of Credit.
B. Notice of Issuance. Whenever Company desires the issuance of
a Letter of Credit, it shall deliver to Agent and, in the case of a
Commercial Letter of Credit, the Lender which Company has requested to issue
such Commercial Letter of Credit, a Notice of Issuance of Letter of Credit no
later than 1:00 P.M. (New York time) at least five Business Days, or such
shorter period as may be agreed to by an Issuing Lender in any particular
instance, in advance of the proposed date of issuance. The Notice of
Issuance of Letter of Credit shall specify (i) the proposed date of issuance
(which shall be a business day under the laws of the jurisdiction of the
Issuing Lender), (ii) the face amount of the Letter of Credit, (iii) the
expiration date of the Letter of Credit, (iv) the name and address of the
beneficiary and (v) in the case of a Commercial Letter of Credit, the Lender
which Company has requested to issue such Commercial Letter of Credit; and
such Notice of Issuance of Letter of Credit shall further certify that
subsection 3.2B is satisfied on and as of the date of issuance of such Letter
of Credit. As soon as practicable after delivery of such notice, the Issuing
Lender for such Letter of Credit shall be determined as provided in
subsection 2.8C. Prior to the date of issuance, Company shall specify a
precise description of the documents and the verbatim text of any certificate
to be presented by the beneficiary which, if presented by the beneficiary
prior to the expiration date of the Letter of Credit, would require the
Issuing Lender to make payment under the Letter of Credit; provided that the
Issuing Lender, in its sole reasonable judgment, may require changes in any
such documents and certificates; and provided further that no Letter of
Credit shall require payment against a conforming draft to be made thereunder
on the same business day (under the laws of the jurisdiction of the Issuing
Lender) that such draft is presented if such presentation is made after 11:00
a.m. in the time zone of the Issuing Lender on such business day. In
determining whether to pay under any Letter of Credit, the Issuing Lender
shall be responsible only to determine that the documents and certificates
required to be delivered under that Letter of Credit have been delivered and
that they comply on their face with the requirements of that Letter of
Credit.
C. Determination of Issuing Lender.
(1) The Company may request any Lender to issue a Commercial
Letter of Credit and, upon receipt by a Lender of a notice from Company
pursuant to subsection 2.8B requesting the issuance of a Commercial
Letter of Credit, such Lender shall promptly notify Company and Agent
<PAGE>57
whether or not, in its sole discretion, it has elected to issue such
Commercial Letter of Credit. If such Lender elects to issue such
Commercial Letter of Credit, such Lender shall be the Issuing Lender
with respect thereto. If such Lender declines to issue such Commercial
Letter of Credit, the Company may request any other Lender to issue such
Commercial Letter of Credit, by delivering the notice described in
subsection 2.8B to such Lender. In the event that all Lenders shall
have declined to issue such Commercial Letter of Credit, notwithstanding
the prior election of Agent not to issue such Commercial Letter of
Credit, Agent shall be obligated to issue the Commercial Letter of
Credit requested by Company and shall be the Issuing Lender with respect
to such Commercial Letter of Credit.
(2) Upon receipt by Agent of a notice from Company pursuant to
subsection 2.8B requesting the issuance of a Standby Letter of Credit,
in the event Agent elects to issue such Letter of Credit, Agent shall so
notify Company and Agent shall be the Issuing Lender with respect
thereto. In the event that Agent, in its sole discretion, elects not to
issue such Standby Letter of Credit, Agent shall promptly so notify
Company and Agent, on behalf of Company, shall request each other Lender
to issue such Standby Letter of Credit. Each such Lender so requested
to issue such Standby Letter of Credit shall promptly notify Company and
Agent whether or not, in its sole discretion, it has elected to issue
such Standby Letter of Credit. If more than one other Lender elects to
issue such Standby Letter of Credit, Company shall select the Issuing
Lender with respect thereto. In the event that Agent and all other
Lenders shall have declined to issue such Standby Letter of Credit,
notwithstanding the prior election of each Reference Lender not to issue
such Standby Letter of Credit, each Reference Lender shall be obligated
to issue a Standby Letter of Credit in a maximum aggregate amount
available for drawing equal to such Reference Lender's proportionate
share (based upon the relative Pro Rata Shares of Reference Lenders) of
the Standby Letter of Credit requested by Company, and each Reference
Lender shall be an Issuing Lender with respect to the Standby Letter of
Credit issued by it.
(3) Each Issuing Lender which elects to issue a Letter of Credit
shall promptly give written notice to Agent and each other Lender of the
information required under subsection 2.8B(i)-(v) relating to such
Letter of Credit and shall provide a copy of such Letter of Credit to
Agent and each other Lender. Promptly after receipt of such notice,
Agent shall notify each Lender (other than the Issuing Lender) of the
amount of its respective participation therein, determined in accordance
with subsection 2.8A.
D. Payment of Amounts Drawn Under Letters of Credit. In the
event of any request for drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall notify Company and Agent on or
before the date which is two Business Days prior to the date on which such
<PAGE>58
Issuing Lender intends to honor such drawing unless such Letter of Credit by
its terms requires the Issuing Lender to honor a drawing on or prior to the
second Business Day following such drawing in which case the Issuing Lender
shall notify Company and Agent on or before the date on which such Issuing
Lender intends to honor such drawing, and Company shall reimburse such
Issuing Lender on the date on which such drawing is honored in an amount in
same day funds equal to the amount of such drawing; provided that, anything
contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified Agent and such Issuing Lender prior to 11:00 a.m.
(New York time) on the Business Day immediately prior to the date of such
drawing that Company intends to reimburse such Issuing Lender for the amount
of such drawing with funds other than the proceeds of Revolving Loans,
Company shall be deemed to have given a Notice of Borrowing to Agent
requesting Lenders to make Revolving Loans which are Prime Rate Loans on the
date on which such drawing is honored in an amount equal to the amount of
such drawing, and (ii) subject to satisfaction or waiver of the conditions
specified in subsection 3.2B, Lenders shall, on the date of such drawing,
make Revolving Loans which are Prime Rate Loans in the amount of such
drawing, the proceeds of which shall be applied directly by Agent to
reimburse such Issuing Lender for the amount of such drawing; and further
provided that, if for any reason proceeds of Revolving Loans are not received
by such Issuing Lender on such date in an amount equal to the amount of such
drawing, Company shall reimburse such Issuing Lender, on the business day
(under the laws of the jurisdiction of such Issuing Lender) immediately
following the date of such drawing, in an amount in same day funds equal to
the excess of the amount of such drawing over the amount of such Revolving
Loans, if any, which are so received, plus accrued interest on such amount at
the rate set forth in subsection 2.8F(4).
E. Payment by Lenders with Respect to Standby Letters of Credit
and Commercial Letters of Credit. In the event that Company shall fail to
reimburse an Issuing Lender as provided in subsection 2.8D in an amount equal
to the amount of any drawing honored by such Issuing Lender under a Standby
Letter of Credit or Commercial Letter of Credit issued by it, such Issuing
Lender shall promptly notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein. Each Lender
shall make available to such Issuing Lender an amount equal to its respective
participation in same day funds, at the office of such Issuing Lender
specified in such notice, not later than 1:00 P.M. (New York time) on the
business day (under the laws of the jurisdiction of such Issuing Lender)
after the date notified by such Issuing Lender. In the event that any Lender
fails to make available to such Issuing Lender the amount of such Lender's
participation in such Standby Letter of Credit or Commercial Letter of Credit
as provided in this subsection 2.8E, such Issuing Lender shall be entitled to
recover such amount on demand from such Lender together with interest at the
customary rate set by such Issuing Lender for the correction of errors among
banks for three Business Days and thereafter at the Prime Rate. Nothing in
this subsection 2.8 shall be deemed to prejudice the right of any Lender to
<PAGE>59
recover from such Issuing Lender any amounts made available by such Lender to
such Issuing Lender pursuant to this subsection 2.8E in the event that it is
determined by a court of competent jurisdiction that the payment with respect
to a Standby Letter of Credit or Commercial Letter of Credit by such Issuing
Lender in respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender. Each
Issuing Lender shall distribute to each other Lender which has paid all
amounts payable by it under this subsection 2.8E with respect to any Letter
of Credit issued by such Issuing Lender such other Lender's Pro Rata Share of
all payments received by such Issuing Lender from Company in reimbursement of
drawings honored by such Issuing Lender under such Letter of Credit when such
payments are received.
F. Compensation. Company agrees to pay the following amounts to
each Issuing Lender for its own account with respect to Letters of Credit
issued by it (with respect to paragraphs (1), (3) and (5) below) and to Agent
for the account of each Lender (with respect to paragraphs (2) and (4) below)
with respect to all Letters of Credit:
(1) with respect to each Standby Letter of Credit, an
administrative fee equal to 0.125% per annum of the maximum amount
available from time to time to be drawn under such Standby Letter of
Credit, payable in arrears on and through the last day of each fiscal
quarter of Company and calculated on the basis of a 360-day year and the
actual number of days elapsed;
(2) with respect to each Standby Letter of Credit, a commission
equal to, on a per annum basis, (a) the Applicable Margin minus the
applicable percentage used in calculating the fee charged on the unused
portion of the Revolving Loan Commitments pursuant to subsection 2.3A
multiplied by (b) the maximum amount available from time to time to be
drawn under such Standby Letter of Credit, payable in arrears on and
through the last day of each fiscal quarter of Company and calculated on
the basis of a 360-day year and the actual number of days elapsed;
(3) with respect to each Commercial Letter of Credit, the
administrative fee and commission mutually agreed to by the Issuing
Lender issuing such Commercial Letter of Credit and Company, payable at
the times and calculated in the manner required by such Issuing Lender;
provided that the aggregate amount of such administrative fee and
commission with respect to any Commercial Letter of Credit shall not be
greater than, on a per annum basis, (a) the Applicable Margin plus
0.125% minus the applicable percentage used in calculating the fee
charged on the unused portion of the Revolving Loan Commitments pursuant
to subsection 2.3A multiplied by (b) the maximum amount available from
time to time to be drawn under such Commercial Letter of Credit;
(4) with respect to drawings made under any Letter of Credit,
interest, payable on demand, on the amount paid by such Issuing Lender
in respect of each such drawing from the date of payment of the drawing
through the date such amount is reimbursed by Company (including any
such reimbursement out of the proceeds of Loans pursuant to subsection
2.8D) at a rate equal to the sum of the Prime Rate plus 2.00% per annum;
and
<PAGE>60
(5) with respect to the issuance, amendment, transfer or payment
of each Letter of Credit, documentary and processing charges in
accordance with such Issuing Lender's standard schedule for such charges
in effect at the time of such issuance, amendment, transfer or payment,
as the case may be.
Promptly upon receipt by Agent of any amount described in clause
(2) or (4) of this subsection 2.8F, Agent shall distribute to each Lender its
Pro Rata Share of such amount.
G. Obligations Absolute. The obligation of Company to reimburse
each Issuing Lender for drawings made under the Letters of Credit issued by
it and the obligations of Lenders under subsection 2.8E shall be
unconditional and irrevocable and shall be paid strictly in accordance with
the terms of this Agreement under all circumstances including, without
limitation, the following circumstances:
(1) any lack of validity or enforceability of any Letter of
Credit;
(2) the existence of any claim, set-off, defense or other right
which Company may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any persons or entities for whom
any such transferee may be acting), such Issuing Lender, any Lender or
any other Person, whether in connection with this Agreement, the
transactions contemplated herein or any unrelated transaction (including
any underlying transaction between Company or one of its Subsidiaries
and the beneficiary for which the Letter of Credit was procured);
(3) any draft, demand, certificate or any other document presented
under any Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(4) payment by such Issuing Lender under any Letter of Credit
against presentation of a demand, draft or certificate or other document
which does not comply with the terms of such Letter of Credit, provided
that such payment does not constitute gross negligence or willful
misconduct of such Issuing Lender;
(5) any other circumstance or happening whatsoever, which is
similar to any of the foregoing; or
(6) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing.
H. Additional Payments. If by reason of (a) any change after the
date hereof in applicable law, regulation, rule, decree or regulatory
requirement or any change after the date hereof in the interpretation or ap-
plication by any judicial or regulatory authority of any law, regulation,
rule, decree or regulatory requirement (in each case other than any law,
<PAGE>61
regulation, rule, decree or regulatory requirement regarding capital
adequacy) or (b) compliance by any Issuing Lender or any Lender with any
direction, request or requirement (whether or not having the force of law) of
any governmental or monetary authority imposed after the date hereof
including, without limitation, Regulation D (but excluding, however, any
direction, request or requirement regarding capital adequacy):
(i) such Issuing Lender or any Lender shall be subject to any tax,
levy, charge or withholding of any nature or to any variation thereof or
to any penalty with respect to the maintenance or fulfillment of its
obligations under this subsection 2.8, whether directly or by such being
imposed on or suffered by such Issuing Lender or any Lender;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, imposed or modified in respect of any Letters of Credit
issued by such Issuing Lender or participations therein purchased by any
Lender; or
(iii) there shall be imposed on such Issuing Lender or any Lender
any other condition regarding this subsection 2.8, any Letter of Credit
or any participation therein;
and the result of the foregoing is to directly or indirectly increase the
cost to such Issuing Lender or any Lender of issuing, making or maintaining
any Letter of Credit or of purchasing or maintaining any participation
therein, or to reduce the amount receivable in respect thereof by such Issu-
ing Lender or any Lender, then and in any such case such Issuing Lender or
such Lender may, at any time within six months after the additional cost is
incurred or the amount received is reduced, notify Company, and Company shall
pay within ten days of receipt of such notice such amounts as such Issuing
Lender or such Lender may specify to be necessary to compensate such Issuing
Lender or such Lender for such additional cost or reduced receipt, together
with interest on such amount from 10 days after the date of such demand until
payment in full thereof at a rate equal at all times to the Prime Rate per
annum. The determination by such Issuing Lender or any Lender, as the case
may be, of any amount due pursuant to this subsection 2.8H as set forth in a
certificate setting forth the calculation thereof in reasonable detail,
shall, in the absence of manifest or demonstrable error, be final and
conclusive and binding on all of the parties hereto.
I. Indemnification; Nature of Issuing Lender's Duties. In
addition to amounts payable as elsewhere provided in this subsection 2.8,
Company hereby agrees to protect, indemnify, pay and save each Issuing Lender
harmless from and against any and all claims, demands, liabilities, damages,
losses, costs, charges and expenses (including reasonable attorneys' fees and
allocated costs of internal counsel) which such Issuing Lender may incur or
be subject to as a consequence, direct or indirect, of (i) the issuance of
the Letters of Credit, other than as a result of the gross negligence or
willful misconduct of such Issuing Lender as determined by a court of
competent jurisdiction or (ii) the failure of such Issuing Lender to honor a
drawing under any Letter of Credit as a result of any act or omission,
whether rightful or wrongful, of any present or future de jure or de facto
government or governmental authority (all such acts or omissions herein
called "Government Acts").
<PAGE>62
As between Company and each Issuing Lender, Company assumes all
risks of the acts and omissions of, or misuse of the Letters of Credit issued
by such Issuing Lender by, the respective beneficiaries of such Letters of
Credit. In furtherance and not in limitation of the foregoing, such Issuing
Lender shall not be responsible: (i) for the form, validity, sufficiency,
accuracy, genuineness or legal effect of any document submitted by any party
in connection with the application for and issuance of such Letters of
Credit, even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent or forged; (ii) for the validity or
sufficiency of any instrument transferring or assigning or purporting to
transfer or assign any such Letter of Credit or the rights or benefits
thereunder or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (iii) for failure of the beneficiary
of any such Letter of Credit to comply fully with conditions required in
order to draw upon such Letter of Credit; (iv) for errors, omissions,
interruptions or delays in transmission or delivery of any messages, by mail,
cable, telegraph, telex or otherwise; (v) for errors in interpretation of
technical terms; (vi) for any loss or delay in the transmission or otherwise
of any document required in order to make a drawing under any such Letter of
Credit or of the proceeds thereof; (vii) for the misapplication by the
beneficiary of any such Letter of Credit of the proceeds of any drawing under
such Letter of Credit; and (viii) for any consequences arising from causes
beyond the control of such Issuing Lender, including, without limitation, any
Government Acts. None of the above shall affect, impair, or prevent the
vesting of any of such Issuing Lender's rights or powers hereunder; provided,
however, that such Issuing Lender shall be responsible for any payment it
makes under any Letter of Credit against presentation of a demand, draft or
certificate or other document which does not comply with the terms of such
Letter of Credit in the event such payment constitutes gross negligence or
willful misconduct of such Issuing Lender as determined by a court of
competent jurisdiction.
In furtherance and extension and not in limitation of the specific
provisions hereinabove set forth, any action taken or omitted by any Issuing
Lender under or in connection with the Letters of Credit issued by it or the
related certificates, if taken or omitted in good faith and in the absence of
gross negligence or willful misconduct, shall not put such Issuing Lender
under any resulting liability to Company.
Notwithstanding anything to the contrary contained in this
subsection 2.8I, Company shall have no obligation to indemnify any Issuing
Lender in respect of any liability incurred by such Issuing Lender arising
solely out of the gross negligence or willful misconduct of such Issuing
Lender, as determined by a court of competent jurisdiction, or out of the
wrongful dishonor by such Issuing Lender of proper demand for payment made
under the Letters of Credit issued by it.
J. Computation of Interest. Interest payable pursuant to this
subsection 2.8 shall be computed on the basis of a 360-day year and the
actual number of days elapsed in the period during which it accrues.
2.9 Bid Rate Loans
A. The Bid Rate Option. Subject to the terms and conditions of
this Agreement and in reliance upon the representations and warranties of
Company set forth herein, in addition to Company requesting that Lenders make
<PAGE>63
Revolving Loans pursuant to subsection 2.1, Company may, as set forth in this
subsection 2.9, request Lenders during the period from and including the
Closing Date to but excluding the Revolving Loan Commitment Termination Date
to make offers to make Bid Rate Loans to Company; provided that (i) the
aggregate principal amount of Bid Rate Loans outstanding at any time shall
not, when added to the Commercial Paper Usage at such time, exceed
$450,000,000, (ii) the aggregate principal amount of Bid Rate Loans
outstanding at any time shall not, when added to the aggregate principal
amount of all outstanding Revolving Loans and Swing Line Loans plus the
Letter of Credit Usage plus the Commercial Paper Usage plus the Overdraft
Amount, exceed the Revolving Loan Commitments then in effect and (iii) the
aggregate principal amount of Bid Rate Loans of any Lender outstanding at any
time shall not exceed $100,000,000. Lenders may, but shall have no
obligation to, make such offers and Company may, but shall have no obligation
to, accept any such offers in the manner set forth in this subsection 2.9.
B. Bid Rate Loan Quote Request. Whenever Company desires to
request offers to make Bid Rate Loans, it shall transmit to Bid Rate Loan
Agent by telecopy a Bid Rate Loan Quote Request substantially in the form of
Exhibit XVI annexed hereto no later than 12:00 Noon (New York time) two
Business Days in advance of the proposed Funding Date set forth therein. The
Bid Rate Loan Quote Request shall specify (i) the proposed Funding Date
(which shall be a Business Day), (ii) the amount of Bid Rate Loans for which
offers are requested, which shall be in a minimum principal amount of
$5,000,000 and in integral multiples of $1,000,000 in excess of that amount
and (iii) the duration of the Bid Rate Loan Interest Period applicable
thereto, subject to the provisions set forth in the definition of Bid Rate
Loan Interest Period; and such Bid Rate Loan Quote Request shall further
certify that subsection 3.2B is satisfied on and as of the date of such Bid
Rate Loan Quote Request and on and as of the date of the making of such Bid
Rate Loans. No Bid Rate Loan Quote Request shall be given within five
Business Days of any other Bid Rate Loan Quote Request.
C. Invitation for Bid Rate Loan Quotes. Promptly upon any
request by Company for Bid Rate Loan Quotes pursuant to the delivery of a Bid
Rate Loan Quote Request in accordance with the provisions of subsection 2.9B,
but in no event later than the close of business on the date of receipt
thereof, Bid Rate Loan Agent shall send to Lenders by telecopy an Invitation
for Bid Rate Loan Quotes substantially in the form of Exhibit XVII annexed
hereto, which shall constitute an invitation by Company to each Lender to
submit Bid Rate Loan Quotes offering to make Bid Rate Loans to which such Bid
Rate Loan Quote Request relates in accordance with this subsection 2.9.
D. Submission and Contents of Bid Rate Loan Quotes.
(i) Each Lender may, in its sole discretion, submit a Bid Rate
Loan Quote containing an offer or offers to make Bid Rate Loans in
response to any Invitation for Bid Rate Loan Quotes. Each Bid Rate Loan
Quote must comply with the requirements of this subsection 2.9D and must
be received by Bid Rate Loan Agent by telecopy no later than 10:00 A.M.
<PAGE>64
(New York time) on the proposed Funding Date of such Bid Rate Loans;
provided that Bid Rate Loan Quotes submitted by Agent (or any Affiliate
of Agent) in the capacity of a Lender may be submitted, and may only be
submitted, if Agent or such Affiliate notifies Company of the terms of
the offer or offers contained therein no later than 9:45 A.M. (New York
time) on the proposed Funding Date of such Bid Rate Loans. Any Bid Rate
Loan Quote so made shall be, subject to subsection 2.9G, irrevocable
except with the written consent of Bid Rate Loan Agent given on the
instructions of Company.
(ii) Each Bid Rate Loan Quote shall be in substantially the
form of Exhibit XVIII annexed hereto and shall refer to this Agreement
and specify (a) the proposed Funding Date, (b) the principal amount of
the Bid Rate Loan offered for each Bid Rate Loan Interest Period in
respect of which an offer is being made, which principal amount (x) may
be greater than or less than the Revolving Loan Commitment of the
quoting Lender, (y) must be in a minimum amount of $5,000,000 and inte-
gral multiples of $1,000,000 in excess of that amount and (z) may not
exceed the principal amount of Bid Rate Loans for such Bid Rate Loan
Interest Period for which offers were requested, (c) in the event the
sum of the Bid Rate Loans being offered for all Bid Rate Loan Interest
Periods exceeds the maximum aggregate amount of Bid Rate Loans that the
quoting Lender is willing to make pursuant to such Bid Rate Loan Quote,
such maximum aggregate amount, (d) the rate of interest per annum
(expressed as an absolute number and not in terms of a specified margin
over the quoting Lender's cost of funds and rounded to the nearest 1/100
of 1%) at which such Lender is willing to make each such Bid Rate Loan
and (e) the identity of the quoting Lender.
(iii) Any Bid Rate Loan Quote shall be disregarded that (a) is
not substantially in the form of Exhibit XVIII annexed hereto or does
not specify all of the information required in subsection 2.9D(ii),
(b) contains qualifying, conditional or similar language, (c) proposes
terms other than or in addition to those set forth in the applicable
Invitation for Bid Rate Loan Quotes or (d) arrives after the time set
forth in subsection 2.9D(i).
(iv) If any Lender shall elect not to make such an offer, such
Lender shall so notify Bid Rate Loan Agent via telecopy no later than
10:00 a.m. (New York time) on the proposed Funding Date; provided,
however, that failure by any Lender to give such notice shall not
constitute a breach or default by such Lender nor cause such Lender to
be liable to Company or any other party or be obligated to make any Bid
Rate Loan as part of such requested Bid Rate Loans.
E. Notice to Agent and Company. Bid Rate Loan Agent shall (by
telephone confirmed by telecopy) promptly notify Company of the terms (x) of
any Bid Rate Loan Quote submitted by a Lender that is in accordance with
subsection 2.9D and (y) of any Bid Rate Loan Quote that amends, modifies or
is otherwise inconsistent with a previous Bid Rate Loan Quote submitted by
<PAGE>65
such Lender with respect to the same Bid Rate Loan Quote Request; provided
that any such subsequent Bid Rate Loan Quote shall be disregarded by Bid Rate
Loan Agent unless such subsequent Bid Rate Loan Quote is submitted solely to
correct a manifest error in such former Bid Rate Loan Quote. Bid Rate Loan
Agent's notice to Company shall specify (i) the aggregate principal amount of
Bid Rate Loans for which offers have been received for each Bid Rate Loan
Interest Period specified in the related Bid Rate Loan Quote Request,
(ii) the respective principal amounts and interest rates so offered and
(iii) the identity of each quoting Lender.
F. Acceptance and Notice by Company. Not later than 11:00 a.m.
(New York time) on the proposed Funding Date, Company shall (by telephone
confirmed by telecopy) notify Bid Rate Loan Agent (who shall promptly so
notify Agent and Lenders as set forth in subsection 2.9H) of its acceptance
or non-acceptance of the offers so notified to it pursuant to subsection
2.9E. For the purposes of this subsection 2.9F, silence on the part of
Company shall be deemed to be a non-acceptance of all offers so notified to
it pursuant to subsection 2.9E. In the case of acceptance, such notice (a
"Notice of Bid Rate Loan Borrowing") shall specify the aggregate principal
amount of offers for each Bid Rate Loan Interest Period that are accepted.
Company may accept any Bid Rate Loan Quote in whole or in part; provided that
(i) acceptance of offers may only be made on the basis of ascending interest
rates, (ii) the aggregate principal amount of each borrowing of Bid Rate
Loans may not exceed the applicable amount set forth in the related Bid Rate
Loan Quote Request, (iii) the principal amount of each Bid Rate Loan must be
$5,000,000 or integral multiples of $1,000,000 in excess of that amount and
(iv) Company may not accept any offer that is described in subsection
2.9D(iii) or that otherwise fails to comply with the requirements of this
Agreement.
A Notice of Bid Rate Loan Borrowing given by Company pursuant to
this subsection 2.9F shall be irrevocable without the prior consent of all
Lenders whose Bid Rate Loan offers have been accepted.
G. Allocation by Company. If offers are made by two or more
Lenders at the same rate of interest for a greater aggregate principal amount
than the amount in respect of which offers are accepted for the related Bid
Rate Loan Interest Period, the principal amount of Bid Rate Loans in respect
of which such offers are accepted shall be allocated pro rata by Company
among such Lenders; provided that no Lender whose Bid Rate Loan Quote is
accepted shall be allocated a Bid Rate Loan in a principal amount less than
$5,000,000 without its consent, and if such Lender does not so consent it
shall be deemed to have withdrawn its Bid Rate Loan Quote. Determinations by
Company of the amounts of Bid Rate Loans shall be conclusive in the absence
of manifest error.
H. Notice to Agent and Lenders. Bid Rate Loan Agent shall (by
telephone confirmed by telecopy) promptly notify Agent and each Lender that
has submitted a Bid Rate Loan Quote as described in subsection 2.9D(i)
whether or not any offer made by such Lender pursuant to such Bid Rate Loan
Quote has been accepted by Company pursuant to the delivery of a Notice of
Bid Rate Loan Borrowing (whereupon such Lender will become bound, subject to
the other applicable conditions hereof, to make the Bid Rate Loan in respect
of which its offer has been accepted) and (ii) of the aggregate principal
amount of Bid Rate Loan Quotes accepted by Company and the range of interest
rates applicable to such Bid Rate Loan Quotes.
<PAGE>66
I. Funding of Bid Rate Loans. Not later than 12:00 Noon (New
York time) on the proposed Funding Date specified for each Bid Rate Loan
hereunder, each Lender participating therein shall make the amount of its Bid
Rate Loan available to Agent, in same day funds, at the Funding and Payment
Office. Upon satisfaction or waiver of the conditions precedent specified in
subsection 3.2, Agent shall make the proceeds of all such Bid Rate Loans
available to Company on such Funding Date by causing an amount of same day
funds equal to the proceeds of all such Bid Rate Loans received by Agent to
be credited to the account of Company at such office of Agent.
Unless Agent shall have received notice from a Lender participating
in a Bid Rate Loan prior to the Funding Date of such Bid Rate Loan that such
Lender will not make available to Agent such Lender's Bid Rate Loan, Agent
may (but shall not be obligated to) assume that such Lender has made such Bid
Rate Loan available to Agent on the Funding Date of such Bid Rate Loan in
accordance with this subsection 2.9I and Agent may, in reliance upon such
assumption, make available to Company a corresponding amount on such Funding
Date. If and to the extent such Lender shall not have so made such Bid Rate
Loan available to Agent, then Agent shall be entitled to recover such
corresponding amount on demand from such Lender together with interest
thereon, for each day from such Funding Date until the date such amount is
paid to Agent, at the customary rate set by Agent for the correction of
errors among banks for three Business Days and thereafter at the Prime Rate.
If such Lender does not pay such corresponding amount forthwith upon Agent's
demand therefor, Agent shall promptly notify Company of the amount of such
Bid Rate Loan not funded by such Lender and Company shall immediately pay
such corresponding amount to Agent. Nothing in this subsection 2.9I shall be
deemed to relieve any Lender from its obligation to fulfill its commitment
hereunder or to prejudice any rights which Company may have against any
Lender as a result of any default by such Lender hereunder.
J. Payment of Interest. Interest with respect to each
outstanding Bid Rate Loan shall be payable in arrears on and to each Bid Rate
Loan Interest Payment Date applicable to that Bid Rate Loan, upon any
prepayment of such Bid Rate Loan (to the extent accrued on the amount being
prepaid) and at maturity.
K. Bid Rate Loan Notes. Upon the request of any Lender in
accordance with subsection 2.1F(iv), Company shall execute and deliver to
each Lender (or to Agent for that Lender) a Bid Rate Loan Note, substantially
in the form of Exhibit VI annexed hereto with appropriate insertions, to
evidence that Lender's Bid Rate Loans.
L. Compensation. Company shall compensate each Lender, upon
written request by that Lender (which request shall set forth in reasonable
detail the basis for requesting such amounts), for all reasonable losses,
expenses and liabilities (including, without limitation, any interest paid by
that Lender to lenders of funds borrowed by it to make or carry its Bid Rate
Loans and any loss sustained by that Lender in connection with re-employment
of such funds), which that Lender may sustain with respect to Bid Rate Loans:
<PAGE>67
(i) if for any reason (other than a default or error by that Lender) a
borrowing of any Bid Rate Loan does not occur on the date specified therefor
in a Notice of Bid Rate Loan Borrowing, (ii) if any prepayment or other
principal payment of any of such Lender's Bid Rate Loans occurs on a date
prior to the last day of the Bid Rate Loan Interest Period applicable to that
Bid Rate Loan, (iii) if any prepayment of any of such Lender's Bid Rate Loans
is not made on any date specified in a notice of prepayment given by Company
and consented to by such Lender, or (iv) as a consequence of any other
default by Company to repay such Lender's Bid Rate Loans when required by the
terms of this Agreement.
SECTION 3
CONDITIONS TO LOANS AND LETTERS OF CREDIT
3.1 Conditions to Initial Loans
The obligations of Lenders to make any Loans to be made on the
Closing Date are, in addition to the conditions precedent specified in
subsection 3.2, subject to prior or concurrent satisfaction of all of the
following conditions:
A. On or before the Closing Date, Company shall deliver to
Lenders (or to Agent for Lenders with sufficient originally executed copies,
where appropriate, for each Lender and its counsel) each, unless otherwise
noted, dated the Closing Date:
1. Certified copies of its Certificate of Incorporation, together
with evidence of good standing from the Secretary of State of the State
of Delaware, each to be dated a recent date prior to the Closing Date;
2. Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
3. Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of this Agreement,
the Company Pledge Agreement and the Collateral Account Agreement,
approving and authorizing the execution and delivery of the
Intercreditor Agreement and approving and authorizing the execution,
delivery and payment of the Revolving Notes, Bid Rate Loan Notes and
Swing Line Note, each certified as of the Closing Date by its corporate
secretary or an assistant secretary as being in full force and effect
without modification or amendment;
4. Signature and incumbency certificates of its officers
executing this Agreement and the other Loan Documents to which it is a
party;
<PAGE>68
5. Executed copies of this Agreement and the other Loan Documents
to which it is a party; and
6. Such other documents as Agent may reasonably request.
B. On or before the Closing Date, Company shall deliver, or cause
to be delivered, to Lenders (or to Agent for Lenders with sufficient
originally executed copies, where appropriate, for each Lender and its
counsel) with respect to each Guarantor Subsidiary, each, unless otherwise
noted, dated the Closing Date:
1. Certified copies of its Certificate of Incorporation together
with evidence of good standing from the Secretary of State of the State
of Delaware, each to be dated a recent date prior to the Closing Date;
2. Copies of its Bylaws certified as of the Closing Date by its
corporate secretary or an assistant secretary;
3. Resolutions of its Board of Directors approving and
authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, certified as of the Closing Date by
its corporate secretary or an assistant secretary as being in full force
and effect without modification or amendment;
4. Signature and incumbency certificates of its officers
executing the Loan Documents to which it is a party;
5. Executed copies of the Loan Documents to which it is a party;
and
6. Such other documents as Agent may reasonably request.
C. On or before the Closing Date, (i) Agent shall have received
(A) an Officers' Certificate from Company to the effect that all such
consents, waivers, amendments and approvals as may be required to be obtained
by Company or any of its Subsidiaries as of the Closing Date under its
existing Contractual Obligations, including, without limitation, the Senior
Debenture Indenture, the Senior Note Indenture and the Senior Subordinated
Debt Indenture, to permit the borrowings under this Agreement and the Liens
created pursuant to the Collateral Documents have been obtained by such
Person and all such consents, waivers, amendments and approvals are in full
force and effect and (B) executed copies of all such consents, waivers,
amendments and approvals and (ii) each of Company and each of its
Subsidiaries shall otherwise be in compliance with all such contracts and
agreements to which it is a party.
D. The corporate, capital and ownership structure of Company and
its Subsidiaries as a result of the transactions contemplated hereby shall be
satisfactory to Agent in all respects.
<PAGE>69
E. Concurrently with the initial borrowing hereunder, Company
shall have repaid in full all of the outstanding loans and all other amounts
owing under the Existing Credit Agreement, including without limitation all
accrued but unpaid fees in respect of all Letters of Credit originally issued
under the Existing Credit Agreement and continuing to remain outstanding
hereunder, and the commitments thereunder shall have been terminated. Prior
to or concurrently with the initial borrowing hereunder, Company shall have
caused each of the sellers of accounts receivable under Company's accounts
receivable securitization program to have caused the commencement of the
termination and self-liquidation of such program by issuing a notice of
termination to O-I Funding Corp. from each such seller of accounts
receivable, copies of which notices shall have been delivered to Agent on or
prior to the Closing Date.
F. Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of
Latham & Watkins, counsel for Company and the O-I Subsidiaries, in
substantially the form of Exhibit IX annexed hereto and covering such other
matters and including such changes as shall be reasonably requested or
approved by Agent on behalf of Lenders and their counsel, dated as of the
Closing Date.
G. Lenders and their respective counsel shall have received
originally executed copies of one or more favorable written opinions of
Thomas L. Young, Executive Vice President -- Administration and General
Counsel for Company, in substantially the form of Exhibit X annexed hereto
and covering such other matters and including such changes as shall be
reasonably requested or approved by Agent on behalf of Lenders and their
counsel, dated as of the Closing Date.
H. Lenders shall have received an originally executed copy of one
or more favorable written opinions of O'Melveny & Myers, counsel to Agent,
dated as of the Closing Date, substantially in the form of Exhibit XI annexed
hereto and as to such other matters as Agent on behalf of Lenders may
reasonably request.
I. Each of the Senior Debenture Trustee, the Senior Note Trustee
and the Senior Subordinated Debt Trustee, and Bankers, in its capacity as a
Foreign Lender, shall have executed and delivered to Agent and Collateral
Agent (i) any consents required in connection with the Pledge Agreements and
(ii) a counterpart of the Intercreditor Agreement, and the Pledge Agreements
and the Intercreditor Agreement shall be in full force and effect.
J. As of the Closing Date, Agent and its counsel shall be
satisfied that the relative priority of the Liens and other rights with
respect to the Collateral securing the Obligations is the same in all
substantive respects as the relative priority of the corresponding Liens and
other rights granted to the lenders under the Existing Credit Agreement, in
each case as compared to the relative priority of the corresponding Liens and
other rights granted with respect to the Senior Debt Securities and the
Senior Subordinated Debt and any other obligations secured by such
Collateral.
<PAGE>70
K. Since December 31, 1992, there shall not have occurred any
material adverse change in the business, operations, properties, assets, or
condition (financial or otherwise) of Company and its Subsidiaries.
L. As of the Closing Date, there shall have been no material
adverse change since October 22, 1993 to the syndication markets for credit
facilities similar in nature to the credit facilities provided herein, and
there shall not have occurred and be continuing a material disruption of or
material adverse change in financial, banking or capital markets that would
have an adverse effect on such syndication market, in each case as determined
by Agent in its sole discretion.
M. On or before the Closing Date, Company shall have paid to
Agent and Co-Agents, for distribution (as appropriate) to Lenders, the fees
payable on the Closing Date referred to in subsection 2.3.
N. Agent shall have received an Officers' Certificate from
Company, dated the Closing Date, to the effect that, as of the Closing Date,
there exists no "Event of Default" or "Potential Event of Default" under and
as defined in the Existing Credit Agreement.
O. On or before the Closing Date, Company shall have delivered to
the Senior Note Trustee a notice of redemption with respect to all of the
outstanding Senior Notes, which notice shall provide for the redemption of
such Senior Notes on the next available redemption date under the Senior Note
Indenture following the Closing Date.
P. On or before the Closing Date, all corporate and other
proceedings taken or to be taken in connection with the transactions
contemplated hereby and all documents incidental thereto not previously found
acceptable by Agent, acting on behalf of Lenders, and its counsel shall be
reasonably satisfactory in form and substance to Agent and such counsel, and
Agent and such counsel shall have received all such counterpart originals or
certified copies of such documents as Agent may reasonably request.
Q. On or before the Closing Date, each of the Loan Parties shall
have performed in all material respects all agreements which this Agreement
provides shall be performed on or before the Closing Date except as otherwise
disclosed to and agreed to in writing by Lenders.
3.2 Conditions to All Loans
Subject to the provisions of subsections 2.1B, 2.1C and 2.8D, the
obligations of Lenders to make all Loans and the obligation of Agent to make
Swing Line Loans are subject to the following further conditions precedent:
A. Agent shall have received, in accordance with the provisions
of subsection 2.1D or 2.9B, as the case may be, on or before any Funding
Date, an originally executed Notice of Borrowing or Bid Rate Loan Quote
Request, as the case may be, signed by the chief executive officer, the chief
financial officer, the treasurer or an assistant treasurer of Company or by
any executive officer of Company designated by any of the above-described
officers on behalf of Company in writing delivered to Agent.
<PAGE>71
B. As of that Funding Date:
1. The representations and warranties contained herein shall be
true, correct and complete in all material respects on and as of that
Funding Date to the same extent as though made on and as of that date,
except that the representations and warranties need not be true and
correct (a) to the extent such representations and warranties
specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and
complete in all material respects on and as of such earlier date and (b)
to the extent that changes in the facts and conditions on which such
representations and warranties are based are required or permitted under
this Agreement;
2. No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing or Bid Rate Loan Quote Request which would constitute (a) an
Event of Default or (b) a Potential Event of Default;
3. Each Loan Party shall have performed in all material respects
all agreements and satisfied all conditions which this Agreement
provides shall be performed by it on or before such Funding Date;
4. No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender
from making that Loan;
5. At the time of the making of the Loans requested on such
Funding Date, not more than 25% of the value of the assets of Company,
or of Company and its Subsidiaries on a consolidated basis, shall
constitute Margin Stock;
6. The making of the Loans requested on such Funding Date shall
not violate Regulation U of the Board of Governors of the Federal
Reserve System; and
7. There shall not be pending or, to the knowledge of Company
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting any Loan Party or any of its Sub-
sidiaries or any property of any Loan Party or any of its Subsidiaries,
which has not been disclosed by Company in writing pursuant to
subsection 4.6 or 5.1(x) prior to the making of the last preceding Loans
(or, in the case of the initial Loans made hereunder, prior to the
execution of this Agreement) and there shall have occurred no de-
velopment not so disclosed in any such action, suit, proceeding,
governmental investigation or arbitration so disclosed, which, in either
event, in the opinion of Requisite Lenders (as communicated by Requisite
Lenders to Agent and evidenced by a written notice from Agent to
Company), would reasonably be expected to have a Material Adverse
Effect.
<PAGE>72
C. Each borrowing by Company hereunder shall constitute a
representation and warranty by Company hereunder as of the applicable Funding
Date that subsection 3.2B is satisfied on and as of such Funding Date.
3.3 Conditions to All Letters of Credit
The issuance of any Letter of Credit by any Lender hereunder is
subject to prior or concurrent satisfaction of all of the following
conditions:
A. On or before the date of issuance of the initial Letter of
Credit pursuant to this Agreement, each of the conditions set forth in
subsection 3.1 shall have been satisfied.
B. On or before the date of issuance of such Letter of Credit,
Agent shall have received, in accordance with the provisions of subsection
2.8B, a notice requesting the issuance of such Letter of Credit, all other
information specified in subsection 2.8B, and such other documents as the
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all
conditions precedent described in subsection 3.2B shall be satisfied to the
same extent as though the issuance of such Letter of Credit were the making
of a Loan and the date of issuance of such Letter of Credit were a Funding
Date.
SECTION 4
COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make
the Loans, to induce Agent to make the Swing Line Loans and to make
overdrafts in respect of the Overdraft Account, to induce Issuing Lenders to
issue Letters of Credit and to induce Lenders to purchase participations in
Letters of Credit, Company represents and warrants to each Lender that the
following statements are true, correct and complete:
4.1 Organization, Powers, Good Standing, Business and Subsidiaries
A. Organization and Powers. Each of the Loan Parties is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation (which jurisdiction is set forth on
Schedule A annexed hereto). Each of the Loan Parties has all requisite
corporate power and authority to own and operate its properties, to carry on
its business as now conducted and proposed to be conducted, to enter into
each Loan Document to which it is a party and to carry out the transactions
contemplated hereby and thereby, and, in the case of Company, to issue the
Notes.
<PAGE>73
B. Good Standing. Each of the Loan Parties is in good standing
wherever necessary to carry on its present business and operations, except in
jurisdictions in which the failure to be in good standing has not had and
will not have a material adverse effect on the conduct of the business of
Company and its Subsidiaries taken as a whole.
C. Conduct of Business. Company and its Subsidiaries are engaged
only in the businesses permitted to be engaged in under subsection 6.14.
D. Subsidiaries. All of the Subsidiaries of each of the Loan
Parties as of the Closing Date are identified in Schedule A annexed hereto.
As of the Closing Date, the capital stock of each of the Subsidiaries
identified in Schedule A annexed hereto is duly authorized, validly issued,
fully paid and nonassessable. The capital stock of each Person identified on
Schedule A annexed hereto as a direct or indirect Subsidiary of Company which
continues to be, as of the time of determination, a Subsidiary of Company is
not Margin Stock. Each of the Subsidiaries identified on Schedule A annexed
hereto which continues to be, as of the time of determination, a Subsidiary
of Company is validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has full corporate power and
authority to own its assets and properties and to operate its business as
presently owned and conducted except where failure to be in good standing or
a lack of corporate power and authority has not had and will not have a
material adverse effect on Company and its Subsidiaries taken as a whole. As
of the Closing Date, Schedule A annexed hereto correctly sets forth the
ownership interest of each of the Loan Parties in each of its Subsidiaries
identified therein.
4.2 Authorization of Borrowing, Etc.
A. Authorization of Borrowing. The execution, delivery and
performance of the Loan Documents and the issuance, delivery and payment of
the Notes and any Additional Subordinated Debt have been duly authorized by
all necessary corporate action by each Loan Party.
B. No Conflict. The execution, delivery and performance by each
Loan Party of each Loan Document to which it is respectively a party and the
issuance, delivery and performance of the Notes, the Senior Debt Securities,
the Senior Subordinated Debt and any Additional Subordinated Debt did not, do
not and will not (i) violate any provision of law applicable to any Loan
Party, the Certificates of Incorporation or Bylaws of any Loan Party, or any
order, judgment or decree of any court or other agency of government binding
on any Loan Party, (ii) conflict with, result in a material breach of or
constitute (with due notice or lapse of time or both) a material default
under the indentures pursuant to which the Senior Debt Securities, the Senior
Subordinated Debt or any Additional Subordinated Debt has been issued or any
Contractual Obligation of any Loan Party, (iii) result in or require the
creation or imposition of any Lien upon any of their properties or assets
(other than Liens in favor of the Collateral Agent), or (iv) require any ap-
proval of stockholders or any approval or consent of any Person under any
Contractual Obligation of any Loan Party.
<PAGE>74
C. Governmental Consents. The execution, delivery and
performance by each Loan Party of the Loan Documents to which it is a party
and application of the proceeds of the Loans and the issuance, delivery and
performance of the Notes and any Additional Subordinated Debt did not, do not
and will not require any registration with, consent or approval of, or notice
to, or other action to, with or by, any federal, state or other governmental
authority or regulatory body except for filings, consents or notices required
by federal or state securities laws, which filings, consents or notices have
been or will be made during the period in which they are required to be made.
D. Binding Obligations. This Agreement and the other Loan
Documents executed prior to the date of this Agreement are, and the other
Loan Documents and the Notes to be executed subsequent to the date of this
Agreement, when executed and delivered will be, the legally valid and binding
obligations of the applicable Loan Parties, enforceable against the
applicable Loan Parties in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditors' rights
generally or by equitable principles relating to enforceability.
E. Obligations Constitute "Senior Indebtedness". All monetary
Obligations, including without limitation Company's obligations to repay the
Loans and the Overdraft Amount and to reimburse any drawings under Letters of
Credit, each Guarantor Subsidiary's guaranty of the Obligations and the
pledge of the Collateral as security for the repayment of the Obligations, do
not and will not violate, or constitute (with due notice or lapse of time or
both) a default under, the Senior Debenture Indenture, the Senior Note
Indenture or the Senior Subordinated Debt Indenture or any indenture pursuant
to which Additional Subordinated Debt has been issued, and all Obligations of
Company do and will constitute "Senior Indebtedness" under the Senior
Subordinated Debt Indenture or any indenture pursuant to which Additional
Subordinated Debt has been issued. All outstanding monetary Obligations,
including without limitation all of Company's monetary Obligations with
respect to the repayment of the Loans and the Overdraft Amount and the
reimbursement of any drawings under Letters of Credit, each Guarantor
Subsidiary's monetary Obligations under the O-I Subsidiary Guaranty and the
pledge of the Collateral as security for the repayment of all monetary
Obligations hereunder are within the definition of "Senior Secured
Obligations" contained in the Company Pledge Agreement, the definition of
"Secured Obligations" contained in the O-I Subsidiary Pledge Agreement and
the definition of "Guarantied Obligations" contained in the O-I Subsidiary
Guaranty.
4.3 Financial Condition
Company has heretofore delivered to Lenders, at Lenders' request,
the following financial statements and information: (i) the audited
consolidated balance sheet of Company and its Subsidiaries as at December 31,
1992 and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for the Fiscal Year then ended
<PAGE>75
and (ii) the unaudited consolidated balance sheet of Company and its
Subsidiaries as at September 30, 1993 and the related unaudited consolidated
statements of income, stockholders' equity and cash flows of Company and its
Subsidiaries for the three months then ended. All such statements were
prepared in conformity with GAAP. All such consolidated financial statements
fairly present the consolidated financial position of Company and its
Subsidiaries as at the respective dates thereof and the consolidated results
of operations and changes in financial position of Company and its
Subsidiaries for each of the periods covered thereby, subject, in the case of
any unaudited interim financial statements, to changes resulting from normal
year-end adjustments. Neither Company nor any of its Subsidiaries has any
material Contingent Obligation, contingent liability or liability for taxes,
long-term lease or unusual forward or long-term commitment, which is not
reflected in the foregoing financial statements or in the most recent
consolidated financial statements delivered pursuant to subsection 5.1 of
this Agreement, except for those incurred since the date of such financial
statements that are not prohibited hereunder.
4.4 No Adverse Material Change; No Stock Payments
Since December 31, 1992 there has been no change in the business,
operations, properties, assets or condition (financial or otherwise) of
Company and its Subsidiaries, which has been, either in any case or in the
aggregate, materially adverse to Company and its Subsidiaries, taken as a
whole. Since the Closing Date, neither Company nor any of its Subsidiaries
have directly or indirectly declared, ordered, paid or made or set apart any
sum or property for any Restricted Payment or agreed so to do except as
permitted by subsection 6.5.
4.5 Title to Properties; Liens
Each Loan Party and each Subsidiary thereof has good, sufficient
and legal title to all its respective properties and assets reflected in the
most recent consolidated balance sheet referred to in subsection 4.3 or in
the most recent financial statements delivered pursuant to subsection 5.1 of
this Agreement, except for assets acquired or disposed of in the ordinary
course of business or as otherwise not prohibited hereunder since the date of
such consolidated balance sheet and except for such defects that in the
aggregate do not materially adversely affect the business, operations,
properties, assets or condition (financial or otherwise) of Company and its
Subsidiaries, taken as a whole, and would not materially adversely affect
Company's ability or obligation to perform, or Lenders' ability to enforce,
the Obligations. Except as permitted by this Agreement, all such properties
and assets are free and clear of Liens.
4.6 Litigation; Adverse Facts
Except as disclosed in Company's quarterly report on Form 10-Q for
the fiscal quarter ended September 30, 1993, there is no action, suit,
proceeding, governmental investigation of which Company has knowledge or
<PAGE>76
arbitration (whether or not purportedly on behalf of any Loan Party or any
respective Subsidiary thereof) at law or in equity or before or by any
federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign, pending or, to
the knowledge of Company, threatened against or affecting Company or any Loan
Party or any of their respective Subsidiaries or any property of Company, any
Loan Party or any Subsidiary thereof which would reasonably be expected to
result in a Material Adverse Effect.
4.7 Payment of Taxes
Except to the extent permitted by subsection 5.3, all material tax
returns and reports of each Loan Party and each Subsidiary of each Loan Party
required to be filed by any of them have been timely filed, and all taxes,
assessments, fees and other governmental charges upon such Persons and upon
their respective properties, assets, income and franchises which are due and
payable have been paid when due and payable. Company knows of no proposed
tax assessment against any such Person that would be material to the
condition (financial or otherwise) of Company and its Subsidiaries, taken as
a whole, which is not being actively contested in good faith by such Person
to the extent affected thereby in good faith and by appropriate proceedings
provided that such reserves or other appropriate provisions, if any, as shall
be required in conformity with GAAP shall have been made or provided
therefor.
4.8 Performance of Agreements
None of the Loan Parties and none of the respective Subsidiaries of
the Loan Parties is in default in the performance, observance or fulfillment
of any of the obligations, covenants or conditions contained in any
Contractual Obligation of any such Person, and no condition exists which,
with the giving of notice or the lapse of time or both, would constitute such
a default, except where the consequences, direct or indirect, of such default
or defaults, if any, would not have a Material Adverse Effect.
4.9 Governmental Regulation
Neither Company nor any of its Subsidiaries is subject to
regulation under the Public Utility Holding Company Act of 1935 or the
Investment Company Act of 1940 or to any federal or state statute or
regulation limiting its ability to incur Indebtedness for money borrowed.
4.10 Securities Activities
None of the Loan Parties and none of the Subsidiaries of the Loan
Parties is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of purchasing or carrying any
Margin Stock.
<PAGE>77
4.11 Employee Benefit Plans
A. Company, each of its Subsidiaries and each of their respective
ERISA Affiliates are in compliance in all material respects with any
applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans and
have performed all of their respective material obligations under such
Employee Benefit Plans.
B. Except as set forth on Schedule H annexed hereto, no ERISA
Event has occurred or is reasonably expected to occur.
C. Except to the extent required under Section 4980B of the
Internal Revenue Code or except as described on Schedule H annexed hereto, as
of the Closing Date, no Employee Benefit Plan provides health or welfare
benefits (through the purchase of insurance or otherwise) for any retired or
former employees of Company or any of its ERISA Affiliates.
D. As of the most recent valuation date for any Pension Plan, the
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities) as set forth in the most recent actuarial report
prepared for such Pension Plan, does not exceed $150,000,000.
4.12 Certain Fees
No broker's or finder's fee or commission was paid or is or will be
payable with respect to the offer, issue and sale of the Notes or any
Additional Subordinated Debt or any of the other transactions contemplated by
such offer, issue or sale, and Company hereby indemnifies Lenders against and
agrees that it will hold Lenders harmless from any claim, demand or liability
for broker's or finder's fees alleged to have been incurred in connection
with any such offer, issue and sale, or any of the other transactions
contemplated by such offer, issue or sale and any expenses, including rea-
sonable legal fees, arising in connection with any such claim, demand or
liability.
4.13 Disclosure
No representation or warranty of Company or any other Loan Party
contained in this Agreement or any other document, certificate or written
statement furnished to Lenders by or on behalf of any such Person for use in
connection with the transactions contemplated by this Agreement contains any
untrue statement of a material fact or omits to state a material fact (known
to any such Person in the case of any document not furnished by it) necessary
in order to make the statements contained herein or therein not misleading.
The projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions believed by
such Persons to be reasonable at the time made, it being recognized by
<PAGE>78
Lenders that such projections as to future events are not to be viewed as
facts and that actual results during the period or periods covered by any
such projections may differ from the projected results. There is no fact
known to any such Person (other than matters of a general economic nature)
which materially and adversely affects the business, operations, property,
assets or condition (financial or otherwise) of any such Person and its re-
spective Subsidiaries, taken as a whole, which has not been disclosed herein
or in such other documents, certificates and statements furnished to Lenders
for use in connection with the transactions contemplated hereby.
4.14 Patents, Trademarks, Etc.
Company and each of its Subsidiaries owns, or is licensed to use,
all patents, trademarks, trade names, copyrights, technology, know-how and
processes used in or necessary for the conduct of their respective businesses
as currently conducted which are material to the condition (financial or
otherwise), business, or operations of Company and its Subsidiaries taken as
a whole. The use of such patents, trademarks, trade names, copyrights,
technology, know-how and processes by Company and its Subsidiaries does not
infringe on the rights of any Person, subject to such claims and in-
fringements as do not, in the aggregate, give rise to any liability on the
part of Company and its Subsidiaries which is material to Company and its
Subsidiaries taken as a whole. The consummation of the transactions
contemplated by this Agreement do not and will not in any material manner or
to any material extent impair the ownership of (or the license to use, as the
case may be) any of such patents, trademarks, trade names, copyrights,
technology, know-how or processes by Company and its Subsidiaries. To the
best knowledge of Company, the rights of Company and its Subsidiaries to so
sell, franchise or license under such brand names then being used may be
transferred in connection with any sale of assets or stock of the related
business by Company or any of its Subsidiaries with only such exceptions as
are not material to Company, taken as a whole, or to any Material Subsidiary
of Company.
4.15 Environmental Protection
Except as set forth in Schedule I annexed hereto:
(i) the operations of Company and each of its Subsidiaries
(including, without limitation, all operations and conditions at or in
the Facilities) comply in all material respects with all Environmental
Laws;
(ii) Company and each of its Material Subsidiaries have
obtained all Governmental Authorizations under Environmental Laws
necessary to their respective operations, and all such Governmental
Authorizations are in good standing, and Company and each of its
Material Subsidiaries are in compliance with all material terms and
conditions of such Governmental Authorizations;
(iii) neither Company nor any of its Subsidiaries has received
(a) any written notice or claim to the effect that it is or may be
liable to any Person as a result of or in connection with any Hazardous
<PAGE>79
Materials or (b) any letter or written request for information under
Section 104 of the Comprehensive Environmental Response, Compensation,
and Liability Act (42 U.S.C. S 9604) or comparable state laws, and, to
the best of Company's knowledge, none of the operations of Company or
any of its Subsidiaries is the subject of any federal or state
investigation relating to or in connection with any Hazardous Materials
at any Facility or at any other location which, in each case, would
reasonably be expected to result in a Material Adverse Effect;
(iv) none of the operations of Company or any of its
Subsidiaries is subject to any judicial or administrative proceeding
alleging the violation of or liability under any Environmental Laws
which if adversely determined is reasonably likely to have a Material
Adverse Effect;
(v) neither Company nor any of its Subsidiaries nor any of their
respective Facilities or operations are subject to any outstanding
written order or agreement with any governmental authority or private
party relating to (a) any Environmental Laws or (b) any Environmental
Claims which, in each case would reasonably be expected to result in a
Material Adverse Effect;
(vi) neither Company nor any of its Subsidiaries has any
contractual undertaking which would create a liability in connection
with any Release of any Hazardous Materials by Company or any of its
Subsidiaries which would reasonably be expected to have a Material
Adverse Effect;
(vii) neither Company nor any of its Subsidiaries nor, to the
best knowledge of Company, any predecessor of Company or any of its
Subsidiaries has filed any notice under any Environmental Law indicating
past or present treatment or Release of Hazardous Materials at any
Facility which would reasonably be expected to result in a Material
Adverse Effect;
(viii) no Hazardous Materials exist on, under or about any
Facility in a manner that would reasonably be expected to result in an
Environmental Claim having a Material Adverse Effect, and neither
Company nor any of its Subsidiaries has filed any notice or report of a
Release of any Hazardous Materials that would reasonably be expected to
result in an Environmental Claim having a Material Adverse Effect;
(ix) neither Company nor any of its Subsidiaries nor, to the
best knowledge of Company, any of their respective predecessors has
disposed of any Hazardous Materials in a manner that would reasonably be
expected to result in an Environmental Claim having a Material Adverse
Effect;
(x) no underground storage tanks or surface impoundments are on or
at any Facility currently owned and/or operated by Company or any of its
Material Subsidiaries or, to the best of the knowledge of Company or any
of its Material Subsidiaries, were on or at any facility previously
owned and/or operated by any of them during or prior to the period of
such ownership or operation, except, in each case, which would not
reasonably be expected to result in a material liability to Company or
such Material Subsidiary; and
<PAGE>80
(xi) to the best knowledge of Company or any of its Material
Subsidiaries, no Lien in favor of any Person relating to or in
connection with any Environmental Claim has been filed or has been
attached to any Facility which would reasonably be expected to result in
a Material Adverse Effect.
Notwithstanding anything in this subsection 4.15 to the contrary, no event or
condition has occurred with respect to Company or any of its Subsidiaries
relating to any Environmental Laws or Release of Hazardous Materials at any
Facility or any other location which, individually, or in the aggregate, has
had or would reasonably be expected to have a Material Adverse Effect.
SECTION 5
COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments hereunder shall be in effect and until payment in full of all of
the Loans, the Notes and the Overdraft Amount, the cancellation or expiration
of all Letters of Credit and the reimbursement of all amounts drawn
thereunder, unless Requisite Lenders shall otherwise give prior written
consent, Company shall perform all covenants in this Section 5.
5.1 Financial Statements and Other Reports
Company will maintain, and cause each of its Subsidiaries to
maintain, a system of accounting established and administered in accordance
with sound business practices to permit preparation of consolidated financial
statements in conformity with GAAP. Company will deliver to Lenders:
(i) as soon as practicable and in any event within 30 days after
the end of each month (60 days with respect to the month of January)
ending after the Closing Date in each of Company's fiscal years, other
than months which are the last month in a fiscal quarter, (a) a
statement setting forth sales and operating income data by Reporting
Unit and for Company and its Subsidiaries on a consolidated basis, in
each case for such month and for the period from the beginning of the
then current fiscal year to the end of such month, (b) a consolidated
statement of cash flows for Company and its Subsidiaries for the period
from the beginning of the then current fiscal year to the end of such
month and (c) a narrative report describing the operations of each
Reporting Unit for such month and for the period from the beginning of
the then current fiscal year to the end of such month, setting forth in
the case of the statements described in clause (a) above in comparative
form the corresponding figures for the corresponding periods of the
previous fiscal year, all in reasonable detail and certified by the
chief accounting officer, the chief financial officer or treasurer of
Company that they fairly present the results of operations of Company
<PAGE>81
and its Subsidiaries on a consolidated basis for the periods indicated,
subject to changes resulting from audit and normal year-end adjustment
and based on Company's normal accounting procedures, applied on a
consistent basis;
(ii) as soon as practicable and in any event within 45 days
after the end of each fiscal quarter, other than quarters which are the
last quarter in a fiscal year, (a) the consolidated balance sheet of
Company as at the end of such period and the related consolidated
statements of income and cash flows of Company for the period from the
beginning of the then current fiscal year to the end of such fiscal
quarter and (b) a statement setting forth sales and operating income
data by Reporting Unit for the last month of such fiscal quarter and for
the period from the beginning of the then current fiscal year to the end
of such fiscal quarter, setting forth in the case of the statements
described in clauses (a) and (b) above in comparative form the
corresponding figures for the corresponding periods of the previous
fiscal year and, with respect to the consolidated statements of income
and cash flows and the statement of sales and operating income data by
Reporting Unit, the corresponding figures from the consolidated plan and
financial forecast for the current fiscal year delivered pursuant to
subsection 5.1(xiii), all in reasonable detail and certified by the
chief accounting officer, the chief financial officer or treasurer of
Company that they fairly present the consolidated financial condition of
Company and its Subsidiaries as at the dates indicated and the
consolidated results of operations and cash flows for the periods
indicated, subject to changes resulting from audit and normal year-end
adjustment and insofar as relates to Reporting Units based on Company's
normal accounting procedures applied on a consistent basis;
(iii) as soon as practicable and in any event within 90 days
after the end of each fiscal year of Company (a) the consolidated
balance sheet of Company as at the end of such year and the related
consolidated statements of income, stockholders' equity and cash flows
of Company for such fiscal year and (b) a statement setting forth sales
and operating income data by Reporting Unit for such fiscal year,
setting forth in the case of the statements described in clauses (a) and
(b) above, in comparative form the corresponding figures for the pre-
vious year and, with respect to the consolidated statements of income
and the statement of sales and operating income data by Reporting Unit,
the corresponding figures from the consolidated plan and financial
forecast for the current fiscal year delivered pursuant to subsection
5.1(xiii), all in reasonable detail, (c) in the case of such
consolidated financial statements, accompanied by a report thereon of
independent certified public accountants of recognized national standing
selected by Company which report shall be unqualified as to going
concern and scope of audit and shall state that such consolidated
financial statements present fairly the financial position of Company
and its Subsidiaries as at the dates indicated and the results of their
operations and cash flows for the periods indicated in conformity with
<PAGE>82
GAAP consistently applied and that the examination by such accountants
in connection with such consolidated financial statements has been made
in accordance with generally accepted auditing standards and (d) in the
case of such financial statements with respect to Reporting Units,
certified by the chief accounting officer, the chief financial officer
or treasurer of Company based on Company's normal accounting procedures
applied on a consistent basis;
(iv) together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivisions (i) (with respect
to the following clause (a) only), (ii), and (iii) above, (a) an
Officers' Certificate of Company stating that the signers have reviewed
the terms of this Agreement and the Notes and have made, or caused to be
made under their supervision, a review in reasonable detail of the
transactions and condition of Company and its Subsidiaries during the
accounting period covered by such financial statements and that such
review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of the Officers' Certificate, of any condition
or event which constitutes an Event of Default or Potential Event of
Default, or, if any such condition or event existed or exists,
specifying the nature and period of existence thereof and what action
Company has taken, is taking and proposes to take with respect thereto;
and (b) a Compliance Certificate demonstrating compliance (as determined
in accordance with GAAP) during and at the end of such accounting
periods with the restrictions contained in subsections 6.1, 6.2, 6.3,
6.4, 6.6, 6.7, 6.8 and 6.13 and, in addition, a written statement of the
chief accounting officer or chief financial officer of Company
describing in reasonable detail the differences between the financial
information contained in such financial statements and the information
contained in the Compliance Certificate relating to Company's compliance
with subsections 6.6, 6.8 and 6.13;
(v) to the extent required pursuant to clause (a) or (b) below,
together with each delivery of financial statements pursuant to sub-
divisions (i), (ii) or (iii) of this subsection 5.1, a written statement
from the chief accounting officer or chief financial officer or
treasurer of Company setting forth (a) if necessary to explain any
material changes in the consolidated financial statements caused by the
adoption of new accounting principles, a comparison and reconciliation
of the consolidated financial statements with pro forma consolidated
financial statements prepared as if the new accounting principles had
not been adopted (it being understood that, subject to the following
clause (b), only one such statement shall be required with respect to
any particular adoption of any new accounting principles) and (b) during
the pendency of any negotiations provided for in subsection 9.9
resulting from any change in accounting principles and policies, the
differences which would have resulted if such financial statements had
been prepared without giving effect to such change;
(vi) together with each delivery of consolidated financial
statements of Company and its Subsidiaries pursuant to subdivision (iii)
above, a written statement by the independent public accountants giving
the report thereon (a) stating whether, in connection with their audit
<PAGE>83
examination, any condition or event which constitutes an Event of
Default or Potential Event of Default has come to their attention, and
if such a condition or event has come to their attention, specifying the
nature and period of existence thereof; provided that such accountants
shall not be liable by reason of any failure to obtain knowledge of any
such Event of Default or Potential Event of Default that would not be
disclosed in the course of their audit examination and (b) stating that
based on their audit examination nothing has come to their attention
which causes them to believe either or both that the financial
information contained in either or both the certificates delivered
therewith pursuant to subdivision (iv) above is not correct or that the
matters set forth in the Compliance Certificate delivered therewith
pursuant to clause (b) of such subdivision (iv) above for the applicable
fiscal year are not stated in accordance with the terms of this
Agreement;
(vii) promptly upon receipt thereof (unless restricted by
applicable professional standards), copies of all significant reports
submitted to Company by independent public accountants in connection
with each annual, interim or special audit of the financial statements
of Company made by such accountants, including, without limitation, the
comment letter submitted by such accountants to management in connection
with their annual audit;
(viii) promptly upon their becoming available, copies of all
financial statements, reports, notices and proxy statements sent or made
available generally by Company to its security holders or by any
Subsidiary of Company to its security holders other than Company or
another Subsidiary, of all regular and periodic reports and all
registration statements and prospectuses, if any, filed by Company or
any of its Subsidiaries with any securities exchange or with the
Securities and Exchange Commission and of all press releases and other
statements made available generally by Company or any of its
Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(ix) promptly upon any Responsible Officer of Company
obtaining knowledge (a) of any condition or event which constitutes an
Event of Default or Potential Event of Default, or becoming aware that
any Lender or Agent has given any notice or taken any other action with
respect to a claimed Event of Default or Potential Event of Default
under this Agreement, (b) that any Person has given any notice to
Company or any Subsidiary of Company or taken any other action with
respect to a claimed default or event or condition of the type referred
to in subsection 7.2, (c) of any condition or event which would be re-
quired to be disclosed in a current report filed by Company with the
Securities and Exchange Commission on Form 8-K (Items 1, 2, 4 and 5 of
such Form as in effect on the date hereof) if Company were required to
file such reports under the Exchange Act, or (d) of the occurrence of
any event or change that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence of any such condition or
event, or specifying the notice given or action taken by such holder or
Person and the nature of such claimed default, Event of Default, Poten-
tial Event of Default, event or condition, and what action Company has
taken, is taking and proposes to take with respect thereto;
<PAGE>84
(x) promptly upon any Responsible Officer of Company obtaining
knowledge of (a) the institution of, or non-frivolous threat of, any
action, suit, proceeding, governmental investigation or arbitration
against or affecting Company or any of its Subsidiaries or any property
of Company or any of its Subsidiaries not previously disclosed by Com-
pany to Lenders, or (b) any material development in any such action,
suit, proceeding, governmental investigation or arbitration, which, in
either case, if adversely determined, would reasonably be expected to
cause a Material Adverse Effect, Company shall promptly give notice
thereof to Lenders and provide such other information as may be
reasonably available to it to enable Lenders and their counsel to
evaluate such matters;
(xi) promptly upon becoming aware of the occurrence of or
forthcoming occurrence of any ERISA Event (for purposes of this
subdivision (xi), the term "material" in the definition of ERISA Event
shall mean an amount which would reasonably be expected to exceed
$5,000,000), a written notice specifying the nature thereof, what action
Company or any of its ERISA Affiliates has taken, is taking or proposes
to take with respect thereto, and, when known, any action taken or
threatened by the Internal Revenue Service, the Department of Labor or
the Pension Benefit Guaranty Corporation with respect thereto;
(xii) with reasonable promptness copies of (a) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by
Company or any of its ERISA Affiliates with the Internal Revenue Service
with respect to each Pension Plan; (b) all notices received by Company
or any of its ERISA Affiliates from a Multiemployer Plan sponsor
concerning an ERISA Event (for purposes of this clause (xii), the term
"material" in the definition of ERISA Event shall mean an amount which
would reasonably be expected to exceed $5,000,000); and (c) such other
documents or governmental reports or filings relating to any Employee
Benefit Plan as Agent shall reasonably request;
(xiii) as soon as practicable and in any event by the last day
of the first month of each fiscal year of Company, a consolidated plan
and financial forecast, prepared in accordance with Company's normal
accounting procedures applied on a consistent basis, for such fiscal
year of Company and its Subsidiaries, including, without limitation,
(a) a forecasted consolidated balance sheet, consolidated statement of
income and consolidated statement of cash flow of Company for such
fiscal year, (b) forecasted consolidated balance sheets, statements of
income and cash flows of Company and a statement setting forth
forecasted sales and operating income data for each Reporting Unit for
each fiscal quarter of such fiscal year, and (c) the amount of
forecasted capital expenditures and unallocated overhead for such fiscal
year;
<PAGE>85
(xiv) as soon as practicable and in any event by the last day
of each fiscal year of Company, a report in form and substance
reasonably satisfactory to Agent and Requisite Lenders outlining all
material insurance coverage maintained as of the date of such report by
Company and its Subsidiaries and all material insurance coverage planned
to be maintained by such Persons in the subsequent fiscal year;
(xv) together with each delivery of financial statements of
Company and its Subsidiaries pursuant to subdivision (iii) above, an
Officers' Certificate of Company stating that the signers made, or
caused to be made under their supervision, a review of the terms of, and
the records relating to, all of the Intercompany Indebtedness of Company
and its Subsidiaries and stating the amount of all outstanding
Intercompany Indebtedness pledged as Collateral under any Pledge
Agreement, as of the date of such financial statements;
(xvi) (a) promptly and in any event within one Business Day after
any change in the Commercial Paper Usage has occurred, a written
statement of the chief accounting officer, chief financial officer or
treasurer of Company setting forth the Commercial Paper Usage as of such
date of change after giving effect to such change and (b) on the last
day in each of Company's fiscal quarters, a written statement of the
chief accounting officer, chief financial officer or treasurer of
Company setting forth the Commercial Paper Usage as of each day of such
fiscal quarter; provided, however, that the written statement referred
to in clause (a) above need only be delivered to Agent; and
(xvii) with reasonable promptness, such other information and
data with respect to Company or any of its Subsidiaries as from time to
time may be reasonably requested by any Lender.
5.2 Corporate Existence, Etc.
Company will at all times preserve and keep in full force and
effect its corporate existence and rights and franchises material to its
business and those of each of its Subsidiaries; provided, however, that the
corporate existence of any such Subsidiary may be terminated if such
termination is in the best interest of its parent, does not result in trans-
fers of assets to Company or to Group (other than temporary transfers of
assets to Company or Group in connection with transfers to other Subsidiaries
of Company) which, when combined with all previous such transfers, have an
aggregate value of more than $200,000,000 and is not otherwise materially
disadvantageous to any Lender.
5.3 Payment of Taxes and Claims; Tax Consolidation
A. Company will, and will cause each of its Subsidiaries to, pay
all taxes, assessments and other governmental charges imposed upon it or any
of its properties or assets or in respect of any of its franchises, business,
income or property before any material penalty accrues thereon, and all
claims (including, without limitation, claims for labor, services, materials
<PAGE>86
and supplies) for sums which have become due and payable and which by law
have or may become a material Lien upon any of its properties or assets,
prior to the time when any material penalty or fine shall be incurred with
respect thereto; provided that no such charge or claim need be paid if being
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted and if such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made
therefor.
B. Company will not, nor will it permit any of its Subsidiaries
to, file or consent to the filing of any consolidated income tax return with
any Person (other than Company or any of their respective Subsidiaries or
such other Person as may be reasonably acceptable to Requisite Lenders).
5.4 Maintenance of Properties; Insurance
Company will maintain or cause to be maintained in good repair,
working order and condition all material properties used or useful in the
business of Company and its Subsidiaries and from time to time will make or
cause to be made all appropriate repairs, renewals and replacements thereof.
Company will maintain or cause to be maintained, with financially sound and
reputable insurers, insurance with respect to its properties and business and
the properties and business of its Subsidiaries against loss or damage of the
kinds customarily insured against by corporations of established reputation
engaged in the same or similar businesses and similarly situated, of such
types and in such amounts as are customarily carried under similar
circumstances by such other corporations ("Industry Standards") and may self
insure to the extent, and only to the extent, consistent with Industry
Standards.
5.5 Inspection
Company shall permit any authorized representatives designated by
any Lender, at the expense of that Lender, to visit and inspect any of the
properties of Company or any of its Subsidiaries, including its and their
financial and accounting records, and to make copies and take extracts there-
from, and to discuss its and their affairs, finances and accounts with its
and their officers and independent public accountants, all upon reasonable
notice and at such reasonable times during normal business hours and as often
as may be reasonably requested.
5.6 Equal Security for Loans and Notes; No Further Negative
Pledges
A. If Company or any of its Subsidiaries shall create or assume
any Lien upon any of its property or assets, whether now owned or hereafter
acquired, other than Liens not prohibited by the provisions of subsection 6.2
(unless prior written consent to the creation or assumption thereof shall
have been obtained from Requisite Lenders), it shall, at the request of
Requisite Lenders, make or cause to be made effective provision whereby the
<PAGE>87
Obligations will be secured by such Lien equally and ratably with any and all
other Indebtedness thereby secured as long as any such Indebtedness shall be
secured; provided that this covenant shall not be construed as consent by
Requisite Lenders to any violation by Company of the provisions of subsection
6.2; provided further that Company shall under no circumstances be required
to make or cause to be made effective provision whereby the Obligations will
be secured, directly or indirectly, by Margin Stock.
B. Except with respect to specific property encumbered to secure
payment of particular Indebtedness and Margin Stock and except for the
prohibitions on Liens contained in the Senior Debenture Indenture, the Senior
Note Indenture or the Senior Subordinated Debt Indenture, neither Company nor
any of its Subsidiaries shall enter into any agreement prohibiting the
creation or assumption of any Lien upon its properties or assets, whether now
owned or hereafter acquired; provided that, restrictions on the creation or
assumption of any Lien upon assets being sold pursuant to any definitive
agreement for the sale of such assets to which Company or any of its
Subsidiaries is a party are permitted if such sale of assets is not
prohibited hereunder.
5.7 Compliance with Laws, Etc.
Company and its Subsidiaries shall exercise all due diligence in
order to comply with the requirements of all applicable laws, rules,
regulations and orders of any governmental authority, noncompliance with
which in any case or in the aggregate would reasonably be expected to cause a
Material Adverse Effect.
5.8 Lender Meeting
Company will participate in a meeting of Agent, Co-Agents and
Lenders once during each fiscal year, commencing in fiscal year 1994, to be
held at a location and a time selected by Company.
5.9 Environmental Disclosure and Inspection.
A. Company shall, and shall cause each of its Subsidiaries to,
exercise all due diligence in order to comply and cause (i) all tenants under
any leases or occupancy agreements affecting any portion of the Facilities
and (ii) all other Persons on or occupying such property, to comply with all
Environmental Laws, except in each case where the failure to do so would not
reasonably be expected to have a Material Adverse Effect.
B. Except for the disclosure of matters as to which a legal
privilege is asserted in good faith by Company or any of its Subsidiaries,
Company shall promptly advise Lenders in writing and in reasonable detail of
(i) any material Release of any Hazardous Materials required to be reported
to any federal, state or local governmental or regulatory agency under any
applicable Environmental Laws, (ii) any and all written communications with
respect to any Environmental Claims that would reasonably be expected to
<PAGE>88
result in a Material Adverse Effect or with respect to any Release of
Hazardous Materials which is material in nature and is required to be
reported to any federal, state or local governmental or regulatory agency,
(iii) any remedial action taken by Company or any other Person in response to
(x) any Hazardous Materials on, under or about any Facility, the existence of
which would reasonably be expected to result in an Environmental Claim having
a Material Adverse Effect, or (y) any Environmental Claim that would
reasonably be expected to result in a Material Adverse Effect, (iv) Company's
discovery of any occurrence or condition on any real property adjoining or in
the vicinity of any Facility that is reasonably likely to cause such Facility
or any part thereof to be subject to any restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws and
which would reasonably be expected to have a Material Adverse Effect, and
(v) any request for information from any governmental agency that indicates
such agency is investigating whether Company or any of its Subsidiaries may
be potentially responsible for a Release of Hazardous Materials that would
reasonably be expected to have a Material Adverse Effect.
C. Company shall promptly notify Lenders of any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that would reasonably be expected to expose Company or any of
its Subsidiaries to, or result in, Environmental Claims that would reasonably
be expected to result in a Material Adverse Effect or that would reasonably
be expected to have a material adverse effect on any material Governmental
Authorization then held by Company or any of its Subsidiaries.
D. Company shall, at its own expense, provide copies of such
documents or information as Agent may reasonably request in relation to any
matters disclosed pursuant to this subsection 5.9.
5.10 Company's Remedial Action Regarding Hazardous Materials
Company shall promptly take, and shall cause each of its
Subsidiaries promptly to take, any and all necessary remedial action in
connection with the presence, storage, use, disposal, transportation or
Release of any Hazardous Materials on, under or about any Facility in order
to comply with all applicable material Environmental Laws and material
Governmental Authorizations. In the event Company or any of its Subsidiaries
undertakes any remedial action with respect to any Hazardous Materials on,
under or about any Facility, Company or such Subsidiary shall conduct and
complete such remedial action in material compliance with all applicable
material Environmental Laws, and in accordance with the orders and directives
of all federal, state and local governmental authorities except when, and
only to the extent that, Company's or such Subsidiary's liability, including
with respect to such presence, storage, use, disposal, transportation or
discharge of any Hazardous Materials, is being contested in good faith by
Company or such Subsidiary.
5.11 Termination of Receivables Program; Redemption of Senior
Notes
A. Company shall, and shall cause each of its Subsidiaries to,
promptly take all necessary and appropriate actions to carry out the
termination and self-liquidation of Company's accounts receivable
securitization program as described in subsection 3.1E.
<PAGE>89
B. On the next available redemption date under the Senior Note
Indenture following the Closing Date, Company shall irrevocably deposit funds
with the Senior Note Trustee sufficient to repurchase or redeem all of the
outstanding Senior Notes, in accordance with the notice of redemption
delivered to the Senior Note Trustee pursuant to subsection 3.1O.
5.12 Further Assurances as to Future Guarantor Subsidiaries
Company will notify Agent promptly in the event that any Subsidiary
of Company becomes a first-tier or second-tier Subsidiary of Group (either as
a result of such Subsidiary's acquisition or otherwise) for a period of time
longer than 90 days, and from and after the Closing Date Company will cause
each such Subsidiary, except for one or more such Subsidiaries owning assets
with an aggregate fair market value (as determined in good faith by Company)
for all such Subsidiaries of less than $50,000,000, to execute counterparts
of the O-I Subsidiary Guaranty and, if such Subsidiary is a first-tier
Subsidiary of Group, the O-I Subsidiary Pledge Agreement, in each case to the
same extent and subject to the same limitations as though such Subsidiary
were a Guarantor Subsidiary and, if applicable, such a first-tier Subsidiary
of Group, as of the Closing Date, and to take all such further action as may
be required to perfect any security interests granted by such Subsidiary
under the O-I Subsidiary Pledge Agreement as may be required by Agent.
SECTION 6
COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as any of the
Commitments shall be in effect and until payment in full of all of the Loans,
the Notes and the Overdraft Amount, the cancellation or expiration of all
Letters of Credit and the reimbursement of all amounts drawn thereunder,
unless Requisite Lenders shall otherwise give prior written consent, Company
will perform all covenants in this Section 6.
6.1 Indebtedness
Company and its Consolidated Subsidiaries shall not directly or
indirectly create, incur, assume, guaranty, or otherwise become or remain
directly or indirectly liable with respect to, any Indebtedness, except:
(i) Company and its Consolidated Subsidiaries may become and
remain liable with respect to the Obligations;
(ii) Company may remain liable with respect to the
Indebtedness evidenced by the Senior Debentures, the Senior Notes and
the Senior Subordinated Debt and may become and remain liable with
respect to the Indebtedness evidenced by the Additional Subordinated
Debt;
<PAGE>90
(iii) Company and its Consolidated Subsidiaries may remain and
may become and remain liable with respect to Intercompany Indebtedness;
provided that (a) all such Intercompany Indebtedness shall be evidenced
by promissory notes, (b) any Intercompany Indebtedness owed by Company
or any Guarantor Subsidiary to any of their Consolidated Subsidiaries
shall, to the extent permitted by applicable law, be subordinated
pursuant to the terms of the promissory notes evidencing such
Intercompany Indebtedness in right of payment, from and after such time
as the Loans shall become due and payable (whether at stated maturity,
by acceleration or otherwise), to the payment in full of the Obligations
of Company or the payment in full of the obligations of such Guarantor
Subsidiary under the O-I Subsidiary Guaranty and the O-I Subsidiary
Pledge Agreement, and (c) any payment by any of Company's Consolidated
Subsidiaries under any guaranty of the Obligations shall result in a pro
tanto reduction of the amount of any Intercompany Indebtedness owed by
such Consolidated Subsidiary to Company or any of its Consolidated
Subsidiaries for whose benefit the payment is made;
(iv) Company and its Consolidated Subsidiaries may become and
remain and remain liable with respect to, and may refinance, Existing
Indebtedness which is described in Schedule C annexed hereto;
(v) Company and its Consolidated Subsidiaries may become and
remain liable with respect to Indebtedness in respect of Capital Leases
if such Capital Leases would not be prohibited by subsection 6.8;
(vi) Company and its Consolidated Subsidiaries may become and
remain and may remain liable with respect to Contingent Obligations not
prohibited by subsection 6.4 and, upon any obligations actually arising
pursuant thereto, the Indebtedness corresponding to the Contingent
Obligations so extinguished;
(vii) During each fiscal year the Company and its Consolidated
Subsidiaries may become liable with respect to additional Indebtedness
directly incurred to (a) finance any Consolidated Capital Expenditures
not prohibited under subsection 6.13, which Indebtedness is in an amount
not exceeding the amount of such Consolidated Capital Expenditures and
is secured, if at all, only by Liens on the real or personal property
that is the subject of such Consolidated Capital Expenditures, and (b)
refinance any Indebtedness previously incurred to finance (or refinance)
Consolidated Capital Expenditures not prohibited under subsection 6.13
so long as (1) the principal amount of such Indebtedness so refinanced
is not increased, and (2) such Indebtedness so refinanced is not secured
by any collateral which did not secure such Indebtedness prior to such
refinancing, and Company and its Consolidated Subsidiaries may
thereafter remain liable as to any such Indebtedness permitted to be
incurred under this clause (vii);
(viii) Company may become and remain liable with respect to
Indebtedness represented by the obligations of Company to make payments
with respect to the cancellation or repurchase of certain stock or stock
options granted to Management Investors pursuant to Subscription Agree-
ments;
<PAGE>91
(ix) Company and its Consolidated Subsidiaries may become and
remain liable with respect to additional Indebtedness incurred to
refinance debt of its Foreign Subsidiaries in an aggregate amount not to
exceed $100,000,000 at any time outstanding;
(x) Company may become and remain liable with respect to short-
term Indebtedness commonly known as commercial paper in an aggregate
face amount not to exceed at any time the lesser of (a) $450,000,000
minus the aggregate principal amount of outstanding Bid Rate Loans, and
(b) the Revolving Loan Commitments then in effect minus the sum of
(1) the principal amount of all outstanding Revolving Loans, (2) the
principal amount of all outstanding Swing Line Loans, (3) the principal
amount of all outstanding Bid Rate Loans, (4) the Overdraft Amount, and
(5) the Letter of Credit Usage as of such time of determination; and
(xi) In addition to the Indebtedness permitted by clauses (i)-
(x), Company and its Consolidated Subsidiaries may become and remain
liable with respect to Indebtedness not exceeding $100,000,000 in the
aggregate at any time outstanding; provided that no such Indebtedness
may be used to repurchase, redeem or defease any of the Senior
Debentures.
6.2 Liens
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset (including any
document or instrument in respect of goods or accounts receivable) of Company
or any of its Consolidated Subsidiaries, whether now owned or hereafter
acquired, or any income or profits therefrom, except:
(i) Permitted Encumbrances;
(ii) Liens granted pursuant to the Collateral Documents;
(iii) Liens described in Schedule D annexed hereto;
(iv) Liens securing the Indebtedness described in subsection
6.1(vii) and Liens securing the Indebtedness described in subsection
6.1(xi);
(v) Liens securing reimbursement obligations of Company and its
Consolidated Subsidiaries with respect to Commercial Letters of Credit
and Standby Letters of Credit permitted by subsection 6.4(vi), in each
case which Liens encumber documents or other property relating to such
Standby Letters of Credit or Commercial Letters of Credit and the
products and proceeds thereof;
<PAGE>92
(vi) Liens encumbering customary initial deposits and margin
deposits, and other Liens incurred in the ordinary course of business
and which are either within the general parameters customary in the
industry (as concurred in by Agent) or are otherwise approved by Req-
uisite Lenders, in each case securing obligations under Commodities
Agreements entered into by Company and its Consolidated Subsidiaries;
(vii) Liens encumbering deposits made to secure obligations
arising from statutory, regulatory, contractual or warranty requirements
of Company or its Consolidated Subsidiaries incurred in the ordinary
course of business or as a result of this Agreement or the incurrence,
guarantying or granting of security interests in respect of Indebtedness
pursuant to this Agreement or the other Loan Documents;
(viii) Liens securing Existing Indebtedness described in
subsection 6.1(iv) which has been refinanced so long as (a) the
principal amount of such Indebtedness which has been refinanced is not
increased and (b) such Indebtedness which has been refinanced is not
secured by any collateral which did not secure such Indebtedness prior
to such refinancing; and
(ix) In addition to Liens permitted by clauses (i)-(viii),
Company and its Consolidated Subsidiaries may have Liens securing the
payment of Indebtedness with respect to property or assets with an
aggregate fair market value of not more than $80,000,000.
6.3 Investments; Joint Ventures
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly make or own any Investment in any
Person or enter into any Joint Venture, except:
(i) Company and its Consolidated Subsidiaries may make and own
Investments in Cash Equivalents;
(ii) Company may make and own Investments in an aggregate
amount set forth in the Subscription Agreements evidenced by promissory
notes of the Management Investors issued pursuant to the Subscription
Agreements;
(iii) Company and its Consolidated Subsidiaries may continue to
own and may make and own Investments described in Schedule E annexed
hereto;
(iv) Company and its Consolidated Subsidiaries may continue to
own and may make intercompany loans to the extent permitted under
subsection 6.1;
(v) Company and its Consolidated Subsidiaries may continue to own
Investments in, and may make and own Investments resulting from capital
calls, buyout obligations or similar requirements in respect of, Joint
Ventures operating outside of the United States which are in existence
on the date hereof;
<PAGE>93
(vi) Company and its Consolidated Subsidiaries may make and
own Investments in Joint Ventures operating outside of the United States
if such arrangement is required pursuant to the law of the jurisdiction
in which such Joint Venture is operating;
(vii) Company and its Consolidated Subsidiaries may continue to
own and may make and own Investments in Joint Ventures operating in the
United States; provided that the aggregate amount of such Investments
(including any Investments in existence on the date hereof but excluding
the Investment in the Kimble Joint Venture, as described in the next
proviso) shall not at any time exceed $100,000,000; and provided,
further, that neither Company nor any of its Consolidated Subsidiaries
may own Investments in connection with the Kimble Joint Venture in an
aggregate amount which exceeds the sum of the value of the common stock
of OI Kimble FTS Inc. held by Group (after giving effect to the sale by
Group of 51% of the common stock of OI Kimble FTS Inc. to Gerresheimer
Glas AG) plus $25,000,000;
(viii) Company and its Consolidated Subsidiaries may acquire and
retain ownership of Investments in connection with Asset Sales or other
sales of assets not prohibited by subsection 6.7; provided that the
aggregate amount of all such Investments, as determined in good faith by
Company, shall not at any time exceed $70,000,000; provided further,
however, that for purposes of compliance with this subsection 6.3(viii)
Asset Sales or other sales of assets involving the simultaneous receipt
of notes and sale of such notes to a third party shall be excluded if
such sale is permitted by subsection 6.10;
(ix) Company and its Consolidated Subsidiaries may make and
own Investments received in connection with the bankruptcy or
reorganization of suppliers and customers and in settlement of
delinquent obligations of, and other disputes with, customers and
suppliers arising in the ordinary course of business;
(x) Company and its Consolidated Subsidiaries may make and own
Investments arising in connection with Commodities Agreements entered
into in accordance with current industry practice or the past practices
of Company and its Subsidiaries;
(xi) Company and its Consolidated Subsidiaries may continue to
own Investments in, and may make and own Investments in Foreign
Subsidiaries; provided that the aggregate fair market value of all
assets (including, but not limited to, cash, cash equivalents, capital
and other assets) transferred by Company and its Consolidated Sub-
sidiaries to all Foreign Subsidiaries, by way of capital contribution,
loan or otherwise, shall not exceed (a) during any fiscal year,
$100,000,000, and (b) during the term of this Agreement, the sum of (1)
$250,000,000 (less the aggregate amount of outstanding Contingent
<PAGE>94
Obligations permitted under subsection 6.4(xii)) and (2) the aggregate
amount of all dividends, distributions and other cash payments actually
received by Company and its Consolidated Subsidiaries after the date
hereof in connection with the sale, transfer or other disposition (to
any Person other than Company or any of its Subsidiaries) of any
Investment of Company or any of its Consolidated Subsidiaries in any
Foreign Subsidiary;
(xii) Company and its Consolidated Subsidiaries may make and
own Investments in equity securities listed on the New York Stock
Exchange ("NYSE") received in transactions; provided that such equity
securities are held for a period not in excess of two weeks; and
provided further that, the aggregate fair value, as determined by the
closing price on the NYSE for such equity securities on the Business Day
prior to making the Investment, of such equity securities shall not at
any time exceed $20,000,000;
(xiii) Company and its Consolidated Subsidiaries may continue to
own Investments in, and may make and own Investments in Consolidated
Capital Expenditures permitted under subsection 6.13;
(xiv) Company and its Consolidated Subsidiaries may make and
own Investments in Margin Stock; provided that the aggregate fair value
of investments in Margin Stock permitted under this subsection 6.3(xiv)
shall not at any time exceed $100,000;
(xv) Company and its Consolidated Subsidiaries may make and
own Investments with respect to Contingent Obligations which are not
prohibited by subsection 6.4 and, upon any Investment actually arising
pursuant thereto, the Investment corresponding to the Contingent
Obligation so extinguished;
(xvi) Company may make and own Investments in Common Stock in
connection with the administration of Company's 401(k) program; provided
that the aggregate fair market value, as determined by the closing price
on the New York Stock Exchange for such equity securities on the
Business Day prior to making the Investment, of such equity securities
at any one time held by Company shall not exceed $10,000,000;
(xvii) Company's Consolidated Subsidiaries may establish
(including making initial capital contributions thereto), and own the
capital stock of, newly-formed Subsidiaries; and
(xviii) In addition to Investments permitted by clauses (i)-(xv),
Company and its Consolidated Subsidiaries may make and own Investments
with an aggregate fair market value of not more than $50,000,000;
provided that except as set forth in clauses (iii), (v), (ix), (xii) and
(xiv), neither Company nor any of its Consolidated Subsidiaries may make
or own Investments in any Margin Stock; provided, further that, except
as set forth in clause (vii), neither Company nor any of its
Consolidated Subsidiaries may own Investments in connection with the
Kimble Joint Venture.
<PAGE>95
6.4 Contingent Obligations
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, create or become or be liable with
respect to any Contingent Obligation except:
(i) Guaranties resulting from endorsement of negotiable
instruments for collection in the ordinary course of business;
(ii) Obligations under the O-I Subsidiary Guaranty;
(iii) Guaranties by O-I Subsidiaries of Interest Rate
Agreements and Currency Agreements entered into by Company which are
permitted by subsection 6.4(vii);
(iv) Guaranties by the Guarantor Subsidiaries of the Senior
Debentures and a guaranty by Group of the Senior Notes;
(v) Currency Agreements entered into by Company or any
Consolidated Subsidiary and any financial institution in the ordinary
course of business or in connection with Asset Sales;
(vi) Contingent reimbursement obligations not exceeding
$350,000,000 in the aggregate outstanding at any one time under
Commercial Letters of Credit and Standby Letters of Credit (including
any such letters of credit in existence as of the date hereof);
(vii) Interest Rate Agreements and Currency Agreements entered
into by Company and any Lender;
(viii) Contingent Obligations described in Schedule F annexed
hereto;
(ix) Contingent Obligations in respect of any obligation of
Company or one of its Consolidated Subsidiaries permitted under this
Agreement (other than any obligation with respect to Indebtedness);
(x) Contingent Obligations relating to guaranties of the
obligations of suppliers, customers, franchisees and licensees of
Company and its Consolidated Subsidiaries; provided that the maximum
aggregate liability of Company and its Consolidated Subsidiaries under
all such Contingent Obligations shall at no time exceed $25,000,000
(including any Contingent Obligations in existence as of the date
hereof);
<PAGE>96
(xi) Contingent Obligations relating to obligations of Company
to make payments with respect to the cancellation or repurchase of
certain stock or stock options granted to Management Investors pursuant
to Subscription Agreements;
(xii) Contingent Obligations relating to guaranties by Company
of indebtedness owed by any Foreign Subsidiary to any lender (excluding
the guaranties described in Schedule F annexed hereto); provided that
the maximum aggregate liability of Company under all such guaranties
shall at no time exceed $100,000,000; provided further that the sum of
(a) the aggregate amount outstanding of such Contingent Obligations and
(b) Investments after the date hereof permitted under subsection 6.3(xi)
shall not exceed the sum of (1) $250,000,000 and (2) the aggregate
amount of all dividends, distributions and other cash payments actually
received by Company and its Consolidated Subsidiaries after the date
hereof in connection with the sale, transfer or other disposition (to
any Person other than Company or any of its Subsidiaries) of any
Investment of Company or any of its Consolidated Subsidiaries in any
Foreign Subsidiary;
(xiii) Contingent Obligations incurred pursuant to agreements
entered into by Company and its Consolidated Subsidiaries in connection
with Asset Sales which are of a type, scope and amount customarily
incurred by Company or its Subsidiaries or similar businesses in
connection with the sale of similar assets, including, without lim-
itation, undertakings to indemnify a buyer of assets with respect to the
status of title or existing litigation relating to such assets; provided
that the amount of a Contingent Obligation with respect to a particular
Asset Sale shall not exceed the consideration received in such Asset
Sale; and
(xiv) In addition to the Contingent Obligations permitted by
clauses (i)-(xiii), Company and its Consolidated Subsidiaries may become
and remain liable with respect to other Contingent Obligations; provided
that the maximum aggregate liability of Company and its Consolidated
Subsidiaries in respect of all such Contingent Obligations shall at no
time exceed $50,000,000;
6.5 Restricted Payments
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, declare, order, pay, make or set
apart any sum for any Restricted Payment except that (i) Company may make
Restricted Payments to cancel or repurchase stock or stock options granted to
Management Investors pursuant to Subscription Agreements, (ii) Company may
make regularly scheduled payments of principal and interest in respect of the
Senior Debt Securities, the Senior Subordinated Debt and the Additional
Subordinated Debt, if any, in accordance with the terms of, and only to the
extent required by, the Senior Debenture Indenture, the Senior Note Indenture
<PAGE>97
and the Senior Subordinated Debt Indenture (and, in the case of any
Additional Subordinated Debt, any supplements thereto), and, with respect to
the Senior Subordinated Debt and any Additional Subordinated Debt, subject to
the subordination provisions contained in the Senior Subordinated Debt
Indenture (and, in the case of any Additional Subordinated Debt, any
supplements thereto), (iii) so long as no Event of Default, and no Potential
Event of Default under subsection 7.1, 7.6, 7.8 or 7.9, shall have occurred
and be continuing or shall be caused thereby, Company may purchase or redeem
for cash, or defease in a manner satisfactory to Agent, including pursuant to
open market or privately negotiated purchases, tender offers and/or exchange
offers, (a) any of the Senior Debentures or the Senior Notes in an aggregate
principal amount up to $250,000,000; provided that, to the extent there are
any Senior Notes outstanding at the time Company desires to purchase, redeem
or defease any of the Senior Debentures, the aggregate amount of Senior
Debentures which may be purchased, redeemed or defeased pursuant to this
subsection 6.5 shall be reduced by the aggregate principal amount of
outstanding Senior Notes and (b) the Senior Notes and the Senior Debentures
in an aggregate principal amount equal to $126,200,000 plus the Net Cash
Proceeds of the Kimble Sale; provided that no Senior Debentures may be
purchased, redeemed or defeased pursuant to this clause (b) as long as any
Senior Notes remain outstanding, and (iv) Company may issue Common Stock in
exchange for Specialty Preferred Stock upon the conversion thereof in
accordance with the terms of the Specialty Preferred Stock.
6.6 Financial Covenants
A. Fixed Charge Coverage Ratio.
Company will not permit the ratio of (i) Consolidated Cash Flow
Available for Fixed Charges to (ii) Consolidated Fixed Charges on the last
day of each fiscal quarter (the "Reference Date") during each period
indicated below to be less than the correlative ratio indicated for the 12-
month period ending on the Reference Date:
MINIMUM
FIXED CHARGE
PERIOD COVERAGE RATIO
----------------- --------------
10/1/93 - 9/30/96 1.50
10/1/96 - 9/30/97 1.70
10/1/97 - 9/30/98 1.75
10/1/98 - 12/31/98 1.80
B. Interest Coverage Ratio.
Company will not permit the ratio of (i) Consolidated EBIT to
(ii) Consolidated Cash Interest Expense on the last day of each fiscal
quarter (the "Reference Date") during each period indicated below to be less
than the correlative ratio indicated for the 12-month period ending on the
Reference Date:
<PAGE>98
MINIMUM INTEREST
PERIOD COVERAGE RATIO
----------------- ----------------
10/1/93 - 9/30/94 1.40
10/1/94 - 9/30/95 1.55
10/1/95 - 9/30/96 1.65
10/1/96 - 9/30/97 1.85
10/1/97 - 9/30/98 2.05
10/1/98 - 12/31/98 2.35
C. Maximum Leverage Ratio.
Company will not permit the ratio of (i) Consolidated Total Debt to
(ii) Consolidated Net Worth at any time during each period indicated below to
be more than the correlative ratio indicated for such period:
MAXIMUM
PERIOD LEVERAGE RATIO
----------------- --------------
10/1/93 - 9/30/95 4.00
10/1/95 - 9/30/96 2.90
10/1/96 - 9/30/97 2.65
10/1/97 - 9/30/98 2.30
10/1/98 - 12/31/98 1.90
6.7 Restriction on Fundamental Changes
Subject to subsection 5.2, each of Company and its Subsidiaries
will not enter into any transaction of merger or consolidation, or liquidate,
wind-up or dissolve itself (or suffer any liquidation or dissolution), or
convey, sell, lease, transfer or otherwise dispose of, in one transaction or
a series of transactions, all or any part of its business, property or fixed
assets, whether now owned or hereafter acquired, or acquire by purchase or
otherwise all or substantially all the business, property or fixed assets of,
or stock or other evidence of beneficial ownership of, any Person, except:
(i) the Loan Parties may enter into transactions contemplated by
the Subscription Agreements;
(ii) any Subsidiary of Company may be merged or consolidated
with or into Company or any wholly-owned Subsidiary of Company, or be
liquidated, wound up or dissolved, or all or any part of its business,
property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions,
to Company or any wholly-owned Subsidiary of Company; provided that, in
the case of such a merger or consolidation, Company or such wholly-
owned Subsidiary shall be the continuing or surviving corporation;
further provided that, in the case of such a merger or consolidation or
<PAGE>99
disposition of a majority of the stock of a Subsidiary of, or
substantially all of the business, property or assets of such a
Subsidiary (the "Affected Subsidiary") of, Company which is a guarantor
of any of the Obligations, (a) the continuing, surviving or transferee
corporation shall expressly assume the obligations of the Affected
Subsidiary under such guaranty and (b) in the case of a merger or
consolidation, the net worth of the continuing or surviving corporation
(calculated without giving effect to any increase in the amount of
Intercompany Indebtedness for which the continuing or surviving
corporation is liable as compared to the amount of Intercompany
Indebtedness for which the Affected Subsidiary was liable immediately
prior to such merger or consolidation) shall not be less than the net
worth of the Affected Subsidiary immediately prior to such merger or
consolidation; and still further provided that, if required by the
terms of any applicable Collateral Document, in the case of such a
merger or consolidation or disposition of a majority of the stock of a
Subsidiary of, or substantially all of the business, property or assets
of such a Subsidiary of, Company the stock of which is pledged to
secure the Obligations, the stock of the continuing, surviving or
transferee corporation shall, at the time of consummation of such
merger, consolidation or transfer, be pledged to secure the Obliga-
tions;
(iii) Company and its Subsidiaries may convey, sell, lease or
otherwise dispose of in the ordinary course of business any property or
asset which is obsolete or no longer useful in any of its businesses or
is of de minimis value, as determined in good faith by the Board of
Directors of Company or such Subsidiary, as the case may be;
(iv) so long as no Event of Default has occurred and is
continuing or shall be caused thereby, Company and its Subsidiaries may
convey, sell, lease or otherwise dispose of any of their assets outside
the ordinary course of business; provided that (a) any such sale or
other disposition is made for at least the fair market value of such
assets; (b) Company and its Subsidiaries may not sell or otherwise
dispose of, in any one or more Asset Sales consummated after the date
hereof, an amount equal to or greater than an aggregate of
(i) $100,000,000 in fair market value of stock or other assets pursuant
to this subsection 6.7(iv) during any consecutive 12-month period or
(ii) $300,000,000 in fair market value of stock or other assets
pursuant to this subsection 6.7(iv) during the term of this Agreement;
and (c) Company and its Subsidiaries may not sell all or substantially
all of the assets of any Reporting Unit; further provided that the
Kimble Sale (x) shall be excluded from the calculations required
pursuant to subclauses (i) and (ii) of clause (b) of the immediately
preceding proviso and (y) shall not be prohibited by clause (c) of the
immediately preceding proviso; and still further provided that
simultaneously with the consummation of the Kimble Sale the capital
stock of OI Kimble FTS Inc., OI Kontes STS Inc., OI Enbosa STS Inc. and
Kimble Glass Inc. (collectively, the "Kimble Entities") and any
Intercompany Indebtedness owed by or to any Kimble Entity shall be
released from the Lien of the OI Subsidiary Pledge Agreement without
any further action on the part of Company, any of its Subsidiaries,
Agent or Lenders;
<PAGE>100
(v) Company and its Subsidiaries may sell, resell or otherwise
dispose of real or personal property held for sale or resale in the
ordinary course of business;
(vi) Company and its Subsidiaries may enter into sale and
lease-back arrangements permitted by subsection 6.9;
(vii) Company and its Consolidated Subsidiaries may make and
own Investments permitted under subsection 6.3 and may incur
Consolidated Capital Expenditures permitted under subsection 6.13;
(viii) Company or any of its Subsidiaries may convey, sell,
transfer or otherwise dispose of any Margin Stock (other than any
capital stock of any Subsidiaries of Company), whether now owned or
hereafter acquired; provided that such disposition is for fair value;
and
(ix) Company and its Consolidated Subsidiaries may sell and
discount notes and accounts receivable as permitted under subsection
6.10.
6.8 Restriction on Leases
Company will not, and will not permit any of its Consolidated
Subsidiaries to, become liable in any way, whether directly or by assignment
or as a guarantor or other surety, for the obligations of the lessee under
any lease (other than intercompany leases between Company and its Con-
solidated Subsidiaries), whether an Operating Lease or a Capital Lease,
unless, immediately after giving effect to the incurrence of liability with
respect to such lease the Consolidated Rental Payments at the time in effect
during the then current fiscal year of Company shall not exceed the ap-
plicable amount set forth below:
FISCAL YEAR AMOUNT
----------- ------------
1993 $ 95,000,000
1994 95,000,000
1995 100,000,000
1996 105,000,000
1997 110,000,000
1998 115,000,000
Notwithstanding the foregoing, if Company or any of its
Consolidated Subsidiaries shall have made any Asset Sales after December 31,
1993, each of the above amounts with respect to any period from or after the
date of such Asset Sale shall be reduced by an amount equal to the reasonable
good faith estimates by Company (using such methods as Agent may reasonably
approve) of Consolidated Rental Payments for such periods directly
attributable to the assets which are the subject to such Asset Sales.
<PAGE>101
6.9 Sales and Lease-backs
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, become or remain liable as lessee or
as guarantor or other surety with respect to any lease, whether an Operating
Lease or a Capital Lease, of any property (whether real or personal or mixed)
whether now owned or hereafter acquired, (i) which Company or any of its
Consolidated Subsidiaries has sold or transferred or is to sell or transfer
to any other Persons, or (ii) which Company or any such Consolidated
Subsidiary intends to use for substantially the same purpose as any other
property which has been or is to be sold or transferred by Company or any
such Consolidated Subsidiary to any Person in connection with such lease;
provided that Company or any of its Consolidated Subsidiaries may enter into
transactions otherwise prohibited under this subsection 6.9 if the provisions
of subsection 6.8 would not be breached thereby.
6.10 Sale or Discount of Receivables
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, sell with recourse, or discount or
otherwise sell for less than the face value thereof, notes or accounts
receivable unless Company or such Consolidated Subsidiary, as the case may
be, receives fair value for such notes or accounts receivable, as determined
in good faith by the Board of Directors of Company, and such notes or
accounts receivable are sold without recourse in the ordinary course of
business of Company or such Consolidated Subsidiary.
6.11 Transactions with Shareholders and Affiliates
Company will not, and will not permit any of its Consolidated
Subsidiaries to, directly or indirectly, enter into or permit to exist any
transaction (including, without limitation, the purchase, sale, lease or
exchange of any property or the rendering of any service) with any holder of
5% or more of any class of equity securities of Company or with any Affiliate
of Company or of any such holder, on terms that are less favorable to Company
or that Subsidiary, as the case may be, than those which might be obtained at
the time from Persons who are not such a holder or Affiliate; provided that
the foregoing restriction shall not apply to (i) any transaction between
Company and any of its wholly-owned Subsidiaries or between any of its
wholly-owned Subsidiaries or (ii) customary fees paid to members of the Board
of Directors of Company and its Subsidiaries.
6.12 Disposal of Subsidiary Stock
Except as permitted by subsection 6.7 and except for Liens created
pursuant to the Collateral Documents, Company will not:
(i) directly or indirectly sell, assign, pledge or otherwise
encumber or dispose of any shares of capital stock or other equity
securities of (or warrants, rights or options to acquire shares or other
equity securities of) any of its Subsidiaries, except to qualify
directors if required by applicable law; or
<PAGE>102
(ii) permit any of its Consolidated Subsidiaries directly or
indirectly to sell, assign, pledge or otherwise encumber or dispose of
any shares of capital stock or other securities of (or warrants, rights
or options to acquire shares or other securities of) itself or any of
its Subsidiaries, except to Company, another wholly-owned Subsidiary of
Company or to qualify directors if required by applicable law.
6.13 Limitation on Consolidated Capital Expenditures
Company will not, and will not permit its Consolidated Subsidiaries
to, incur Consolidated Capital Expenditures in any fiscal year of Company and
its Consolidated Subsidiaries indicated below in excess of the corresponding
amount (the "Maximum Amount") set forth below opposite such fiscal year;
provided, that the Maximum Amount for each fiscal year shall be increased by
an amount equal to the excess, if any (but in no event more than 25% of the
Maximum Amount for the previous fiscal year), of the Maximum Amount for the
previous fiscal year (as adjusted in accordance with this proviso) over the
actual amount of Consolidated Capital Expenditures for such previous fiscal
year; provided further that the Maximum Amount for fiscal year 1994 shall be
increased by an amount equal to the lesser of (a) 25% of the Maximum Amount
for fiscal year 1993 (as determined in accordance with subsection 6.13 of the
Existing Credit Agreement) and (b) the excess of the Maximum Amount for
fiscal year 1993 (as determined in accordance with subsection 6.13 of the
Existing Credit Agreement) over the actual amount of Consolidated Capital
Expenditures incurred in fiscal year 1993:
MAXIMUM CONSOLIDATED
FISCAL YEAR CAPITAL EXPENDITURES
----------- --------------------
1993 $195,000,000
1994 $210,000,000
1995 $225,000,000
1996 $240,000,000
1997 $255,000,000
1998 $265,000,000
Notwithstanding the foregoing or any other provision of this
Agreement to the contrary, Company and its Consolidated Subsidiaries may
incur Consolidated Capital Expenditures in fiscal year 1994 in an amount not
to exceed $80,000,000 in excess of the Maximum Amount for fiscal year 1994
(as adjusted pursuant to the foregoing provisos) in connection with the
consummation of an acquisition of certain assets disclosed to Lenders by
Company in a letter dated December 3, 1993; provided that nothing in this
sentence shall be deemed to increase the Maximum Amount for fiscal year 1994
for purposes of the adjustments to the Maximum Amount for fiscal year 1995 as
set forth in the foregoing provisos.
<PAGE>103
6.14 Conduct of Business
From and after the Closing Date, Company will not permit any of its
Subsidiaries (other than Group) to engage in any business other than (1) the
business engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses, (2) the activities permitted under this
subsection 6.14 and (3) such other lines of business as may be consented to
by Requisite Lenders. Company will not engage in any type of business
activity other than the ownership of the shares of its Subsidiaries, the
issuance of the Notes, the Senior Debt Securities, the Senior Subordinated
Debt, the Additional Subordinated Debt, if any, and the Commercial Paper, if
any, and the execution, delivery and performance of this Agreement and the
other Loan Documents executed by Company. Company will not permit Group to
engage in any type of business activity other than (i) the ownership and sale
of the shares of the O-I Subsidiaries and the O-I Subsidiary Debt
Obligations, (ii) the execution, delivery and performance of the O-I
Subsidiary Guaranty, the guaranties permitted by subsection 6.4(iv), and the
O-I Subsidiary Pledge Agreement, (iii) the making and owning of Investments
permitted under subsection 6.3, and (iv) the temporary acquisition of assets
from Group's Subsidiaries in connection with transfers to other Subsidiaries
of Group.
6.15 Amendments or Waivers of Certain Documents
Neither Company nor any of its Consolidated Subsidiaries will amend
or otherwise change the terms of any Senior Debt Securities or Senior
Subordinated Debt or of any Additional Subordinated Debt or any indenture or
agreement in respect thereof, or make any payment consistent with an
amendment or change thereto, if the effect of such amendment or change is to
increase the interest rate on such Indebtedness, change the dates upon which
payments of principal or interest are due thereon, change any event of
default or condition to an event of default with respect to such
Indebtedness, change the redemption provisions thereof, add any collateral
security with respect thereto or, with respect to the Senior Subordinated
Debt or any Additional Subordinated Debt, change the subordination provisions
thereof (or of any guaranty thereof) or which, together with all other
amendments or changes made, increase materially the obligations of the
obligor or confer additional rights on the holder of such Indebtedness which
would be adverse to Company or Lenders.
SECTION 7
EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur and be continuing:
<PAGE>104
7.1 Failure to Make Payments When Due
Failure to pay any installment of principal of any Loan when due,
whether at stated maturity, by acceleration, by notice of prepayment or
otherwise; or failure to pay any interest on any Loan or any other amount due
under this Agreement within five days after the date due; or
7.2 Default in Other Agreements
A. Failure of Company or any of its Subsidiaries to pay when due
(x) any principal or interest on any Indebtedness (other than Indebtedness
referred to in subsection 7.1) in an individual principal amount of
$20,000,000 or more or items of Indebtedness with an aggregate principal
amount of $40,000,000 or more or (y) any Contingent Obligation in an
individual principal amount of $20,000,000 or more or Contingent Obligations
with an aggregate principal amount of $40,000,000 or more, in each case
beyond the end of any period prior to which the obligee thereunder is
prohibited from accelerating payment thereunder; or
B. Breach or default of Company or any of its Subsidiaries with
respect to any other material term of (x) any evidence of any Indebtedness in
an individual principal amount of $20,000,000 or more or items of
Indebtedness with an aggregate principal amount of $40,000,000 or more or any
Contingent Obligation in an individual principal amount of $20,000,000 or
more or Contingent Obligations with an aggregate principal amount of
$40,000,000 or more; or (y) any loan agreement, mortgage, indenture or other
agreement relating thereto, if the effect of such failure, default or breach
is to cause, or to permit the holder or holders of that Indebtedness or
Contingent Obligation (or a trustee on behalf of such holder or holders) then
to cause, that Indebtedness or Contingent Obligation to become or be declared
due prior to its stated maturity (or the stated maturity of any underlying
obligation, as the case may be); provided that such failure, default or
breach has not been waived by such holder or holders or trustee on behalf of
such holder or holders; or
7.3 Breach of Certain Covenants
Failure of Company to perform or comply with any term or condition
contained in subsections 2.5, 5.2 or 5.6 or Section 6 of this Agreement; or
7.4 Breach of Warranty
Any representation or warranty made by any Loan Party in any Loan
Document or in any statement or certificate at any time given by such Person
in writing pursuant hereto or thereto or in connection herewith or therewith
shall be false in any material respect on the date as of which made; or
<PAGE>105
7.5 Other Defaults under Agreement or Loan Documents
Company or any other Loan Party shall default in the performance of
or compliance with any term contained in this Agreement or the other Loan
Documents other than those referred to above in subsections 7.1, 7.3 or 7.4
and such default shall not have been remedied or waived within 30 days after
receipt of notice from Agent or any Lender of such default; or
7.6 Involuntary Bankruptcy; Appointment of Receiver, Etc.
(A) A court having jurisdiction in the premises shall enter a
decree or order for relief in respect of Company or any of its Material
Subsidiaries in an involuntary case under the Bankruptcy Code or any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, which decree or order is not stayed; or any other similar relief
shall be granted under any applicable federal or state law; or (B) an
involuntary case is commenced against Company or any of its Material
Subsidiaries under any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect; or a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver, liquidator,
sequestrator, trustee, custodian or other officer having similar powers over
Company or any of its Material Subsidiaries, or over all or a substantial
part of its property, shall have been entered; or the involuntary appointment
of an interim receiver, trustee or other custodian of Company or any of its
Material Subsidiaries for all or a substantial part of its property; or the
issuance of a warrant of attachment, execution or similar process against any
substantial part of the property of Company or any of its Material
Subsidiaries, and the continuance of any such events in subpart (B) for 60
days unless dismissed, bonded or discharged; or
7.7 Voluntary Bankruptcy; Appointment of Receiver, Etc.
Company or any of its Material Subsidiaries shall have an order for
relief entered with respect to it or commence a voluntary case under the
Bankruptcy Code or any applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to
a voluntary case, under any such law, or shall consent to the appointment of
or taking possession by a receiver, trustee or other custodian for all or a
substantial part of its property; the making by Company or any of its
Material Subsidiaries of any general assignment for the benefit of creditors;
or the inability or failure of Company or any of its Material Subsidiaries,
or the admission by Company or any of its Material Subsidiaries in writing of
its inability to pay its debts as such debts become due; or the Board of Di-
rectors of Company or any of its Material Subsidiaries (or any committee
thereof) adopts any resolution or otherwise authorizes action to approve any
of the foregoing; or
7.8 Judgments and Attachments
Any money judgment, writ or warrant of attachment, or similar
process involving (i) in any individual case an amount in excess of
$10,000,000 or (ii) in the aggregate at any time an amount in excess of
<PAGE>106
$20,000,000 (in either case not adequately covered by insurance as to which
the insurance company has acknowledged coverage) shall be entered or filed
against Company or any of its Material Subsidiaries or any of their
respective assets and shall remain undischarged, unvacated, unbonded or
unstayed for a period of 60 days or in any event later than five days prior
to the date of any proposed sale thereunder; or
7.9 Dissolution
Any order, judgment or decree shall be entered against Company or
any of its Material Subsidiaries decreeing the dissolution or split up of
Company or that Subsidiary and such order shall remain undischarged or
unstayed for a period in excess of 30 days; or
7.10 Invalidity of O-I Subsidiary Guaranty
The O-I Subsidiary Guaranty for any reason, other than the
satisfaction in full of all Obligations and termination of this Agreement,
ceases to be in full force and effect or is declared to be null and void, or
any Guarantor Subsidiary denies that it has any further liability under the
O-I Subsidiary Guaranty or gives notice to such effect (prior to the time
such Guarantor Subsidiary has been released from its obligations under the O-
I Subsidiary Guaranty in accordance with the terms thereof); or
7.11 Failure of Security
Any Pledge Agreement or any other Collateral Document shall, at any
time after the execution and delivery thereof, cease to be in full force and
effect or shall be declared null and void, or the validity, enforceability or
priority thereof shall be contested by any Loan Party or the Collateral Agent
or, in the case of the Collateral Account Agreement, the Agent shall not have
or shall cease to have a valid and perfected first priority security interest
in the Collateral (other than Collateral released in accordance with the
terms of any applicable Collateral Document) pledged to Collateral Agent or
to Agent, as the case may be, in each case for any reason other than the
failure of Collateral Agent or, in the case of the Collateral Account Agree-
ment, Agent to take any action within its control; or
7.12 Change of Control
A Change of Control shall have occurred;
7.13 Employee Benefit Plans
There shall occur one or more ERISA Events which results in or
would reasonably be expected to result in liability of Company or any of its
ERISA Affiliates in an individual or an aggregate amount in excess of
$25,000,000 during the term of this Agreement; or there shall exist an amount
of unfunded benefit liabilities (as defined in Section 4001(a)(18) of ERISA),
individually or in the aggregate for all Pension Plans (excluding for
<PAGE>107
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities) as set forth in the most recent actuarial report
prepared for such Pension Plans, which exceeds $150,000,000.
THEN (i) upon the occurrence of any Event of Default described in
the foregoing subsection 7.6 or 7.7, each of (x) the unpaid principal amount
of and accrued interest on the Loans, (y) the Overdraft Amount and all
accrued and unpaid interest thereon, and (z) an amount equal to the maximum
amount which may at any time be drawn under all Letters of Credit then
outstanding (whether or not any beneficiary under any Letter of Credit shall
have presented, or shall be entitled at such time to present, the drafts or
other documents required to draw under such Letter of Credit) shall
automatically become immediately due and payable, without presentment,
demand, protest or other requirements of any kind, all of which are hereby
expressly waived by Company, and the obligation of Agent to make any Swing
Line Loan or to honor any overdraft in respect of the Overdraft Account, the
obligation of each Lender to make any Loan, the obligation of any Reference
Lender to issue any Standby Letter of Credit, the obligation of Agent to
issue any Commercial Letter of Credit and the right of any other Lender to
issue any other Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence of any other Event of Default, Requisite Lenders
may, by written notice to Company, declare an amount equal to the amounts
described in clauses (x), (y) and (z) above to be, and the same shall
forthwith become, due and payable, together with accrued interest thereon,
and the obligation of Agent to make any Swing Line Loan or to honor any
overdraft in respect of the Overdraft Account, the obligation of each Lender
to make any Loan, the obligation of any Reference Lender to issue any Standby
Letter of Credit, the obligation of Agent to issue any Commercial Letter of
Credit and the right of any other Lender to issue any other Letter of Credit
hereunder shall thereupon terminate; provided that the foregoing shall not
affect in any way (A) the right of Agent to cause Lenders to make Revolving
Loans in order to repay Swing Line Loans as provided in (and subject to the
conditions set forth in) subsection 2.1B or to repay the then outstanding
Overdraft Amount as provided in (and subject to the conditions set forth in)
subsection 2.1C, (B) the obligations of Lenders to purchase from Agent
participations in Swing Line Loans as provided in subsection 2.1B or to
purchase from Agent participations in the Overdraft Amount as provided in
subsection 2.1C, and (C) the obligations of Lenders to purchase from Issuing
Lenders participations in the unreimbursed amount of any drawings under any
Letters of Credit as provided in subsection 2.8E. So long as any Letter of
Credit shall remain outstanding, any amounts described in clause (z) above
with respect to such Letter of Credit, when received by Agent, shall be
delivered to Collateral Agent under the Intercreditor Agreement or be held by
Agent pursuant to the terms of the Collateral Account Agreement as cash
collateral for the obligation of Company to reimburse the respective Issuing
Lender in the event of any drawing under such Letter of Credit, as required
under the Collateral Account Agreement, and upon any drawing under any
outstanding Letter of Credit in respect of which Agent has deposited in the
Collateral Account (as defined in the Collateral Account Agreement) any
amounts described in clause (z) above, Agent shall apply such amounts held by
<PAGE>108
Agent to reimburse the Issuing Lender for the amount of such drawing. In the
event any Letter of Credit in respect of which Agent has deposited in the
Collateral Account any amounts described in clause (z) above is cancelled or
expires or in the event of any reduction in the maximum amount available at
any time for drawing under such Letter of Credit (the "Maximum Available
Amount"), Agent shall apply the amount then in the Collateral Account desig-
nated to reimburse the Issuing Lender for any drawings under such Letter of
Credit less the Maximum Available Amount immediately after such cancellation,
expiration or reduction, if any, first to the cash collateralization pursuant
to the terms of the Collateral Account Agreement of any outstanding Letters
of Credit in respect of which Company has failed to pay all or a portion of
the amounts described in clause (z) above, second, to the payment in full of
the outstanding Obligations, and third, to the extent of any excess, to the
Collateral Agent under the Intercreditor Agreement for application as
provided in Section 3 of the Intercreditor Agreement. Nevertheless, if at
any time within 60 days after acceleration of the maturity of any Loan,
Company shall pay all arrears of interest and all payments on account of
principal which shall have become due otherwise than by acceleration (with
interest on principal and, to the extent permitted by law, on overdue
interest, at the rates specified in this Agreement or the Notes) and all
Events of Default and Potential Events of Default (other than non-payment of
principal of and accrued interest on the Loans and the Notes, and payments of
amounts referred to in clause (z) above, in each case which is due and
payable solely by virtue of acceleration) shall be remedied or waived pur-
suant to subsection 9.7, then Requisite Lenders by written notice to Company
may rescind and annul the acceleration and its consequences (and upon such
written notice all obligations of each Lender hereunder shall be reinstated,
in each case as in effect immediately prior to such acceleration) and Agent
shall return to Company any amounts held by Agent pursuant to the Collateral
Account Agreement as cash collateral in respect of amounts described in
clause (z) above; but such action shall not affect any subsequent Event of
Default or Potential Event of Default or impair any right consequent thereon.
Anything contained in this Agreement to the contrary
notwithstanding, after the occurrence of an Event of Default and the
acceleration of the maturity of the Loans and the amounts referred to in
clauses (y) and (z) above, all payments relating to the Loans and such
amounts shall be made to Agent for the account of Lenders and all amounts
received by Agent (whether received from Company or any Guarantor Subsidiary
or from Collateral Agent pursuant to the exercise of any remedies pursuant to
any of the Collateral Documents) which are to be applied to the payment of
the Obligations shall be distributed to Lenders in such a manner that each
Lender receives the same proportionate share of such amounts based on the
ratio of the Aggregate Amounts Due to such Lender to the Aggregate Amounts
Due to all Lenders.
<PAGE>109
SECTION 8
AGENT
8.1 Appointment
Bankers is hereby appointed Agent hereunder by each Lender and in
such capacity as Agent to serve as Bid Rate Loan Agent, and each Lender
hereby authorizes Agent to act hereunder and under the other instruments and
agreements referred to herein (including, without limitation, the Collateral
Documents, the O-I Subsidiary Guaranty and the Intercreditor Agreement) as
its agent hereunder and thereunder. Bankers agrees to act as such upon the
express conditions contained in this Section 8 and in the Collateral
Documents, the O-I Subsidiary Guaranty and the Intercreditor Agreement. The
provisions of this Section 8 are solely for the benefit of Agent and Lenders,
and Company shall not have any rights as a third party beneficiary of any of
the provisions hereof. In performing its functions and duties under this
Agreement, Agent shall act solely as agent of Lenders and does not assume and
shall not be deemed to have assumed any obligation towards or relationship of
agency or trust with or for Company. Each Lender named as a Lead Manager or
Co-Agent hereunder shall have no liability under this Agreement to any
Person, other than as a Lender hereunder.
8.2 Powers; General Immunity
A. Duties Specified. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers
hereunder and under the other instruments and agreements referred to herein
(including, without limitation, the Collateral Documents, the O-I Subsidiary
Guaranty and the Intercreditor Agreement) as are specifically delegated to
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. Agent shall have only those duties and
responsibilities which are expressly specified in this Agreement, the Collat-
eral Documents, the O-I Subsidiary Guaranty and the Intercreditor Agreement
and it may perform such duties by or through its agents or employees. The
duties of Agent shall be mechanical and administrative in nature; Agent shall
not have by reason of this Agreement a fiduciary relationship in respect of
any Lender; and nothing in this Agreement, expressed or implied, is intended
to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or the other instruments and agreements referred to
herein except as expressly set forth herein or therein.
B. No Responsibility for Certain Matters. Agent shall not be
responsible to any Lender for the execution, effectiveness, genuineness,
validity, enforceability, collectability or sufficiency of this Agreement,
the Collateral Documents, the O-I Subsidiary Guaranty and the Intercreditor
Agreement or the Notes issued hereunder, or for any representations,
warranties, recitals or statements made herein or therein or made in any
written or oral statement or in any financial or other statements,
instruments, reports, certificates or any other documents in connection
<PAGE>110
herewith or therewith furnished or made by Agent to Lenders or by or on
behalf of Company to Agent or any Lender or be required to ascertain or
inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained herein or therein or as to the
use of the proceeds of the Loans or the use of Letters of Credit or of the
existence or possible existence of any Event of Default or Potential Event of
Default. Anything contained in this Agreement to the contrary notwith-
standing, Agent shall have no liability arising from confirmations of the
amount of outstanding Loans or the Letter of Credit Usage or the component
amounts thereof.
C. Exculpatory Provisions. Neither Agent nor any of its
officers, directors, employees or agents shall be liable to Lenders for any
action taken or omitted hereunder or in connection herewith (including,
without limitation, any act or omission under the Intercreditor Agreement,
the O-I Subsidiary Guaranty or the Collateral Documents) unless caused by its
or their gross negligence or willful misconduct. If Agent shall request
instructions from Lenders with respect to any act or action (including the
failure to take an action) in connection with this Agreement, or the other
instruments and agreements referred to herein, Agent shall be entitled to
refrain from such act or taking such action unless and until Agent shall have
received instructions from Requisite Lenders. Without prejudice to the gen-
erality of the foregoing, (i) Agent shall be entitled to rely, and shall be
fully protected in relying, upon any communication, instrument or document
believed by it to be genuine and correct and to have been signed or sent by
the proper person or persons, and shall be entitled to rely and shall be
protected in relying on opinions and judgments of attorneys (who may be
attorneys for Company), accountants, experts and other professional advisors
selected by it; and (ii) no Lender shall have any right of action whatsoever
against Agent as a result of Agent acting or (where so instructed) refraining
from acting under this Agreement or the other instruments and agreements
referred to herein in accordance with the instructions of Requisite Lenders.
Agent shall be entitled to refrain from exercising any power, discretion or
authority vested in it under this Agreement or the other instruments and
agreements referred to herein unless and until it has obtained the
instructions of Requisite Lenders.
D. Agent Entitled to Act as Lender. The agency hereby created
shall in no way impair or affect any of the rights and powers of, or impose
any duties or obligations upon, Agent in its individual capacity as a Lender
hereunder. With respect to its participation in the Loans and Letters of
Credit, Agent shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not performing the duties
and functions delegated to it hereunder and the term "Lender" or "Lenders" or
any similar term shall, unless the context clearly otherwise indicates,
include Agent in its individual capacity. Agent and each of its Affiliates
may accept deposits from, lend money to and generally engage in any kind of
banking, trust, financial advisory or other business with Company or any
Affiliate of Company as if it were not performing the duties specified
herein, and may accept fees and other consideration from Company for services
in connection with this Agreement and otherwise without having to account for
the same to Lenders.
<PAGE>111
8.3 Representations and Warranties; No Responsibility for
Appraisal of Creditworthiness
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company
in connection with the making of the Loans and the issuance of Letters of
Credit hereunder and such Lender's purchasing of participations in such
Letters of Credit and has made and shall continue to make its own appraisal
of the creditworthiness of Company. Agent shall not have any duty or
responsibility either initially or on a continuing basis to make any such
investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto whether
coming into its possession before the making of the Loans or the or the
issuance of the Letters of Credit or any time or times thereafter and Agent
shall further have no responsibility with respect to the accuracy of or the
completeness of the information provided to Lenders.
8.4 Right to Indemnity
Each Lender severally agrees to indemnify Agent, proportionately to
its Pro Rata Share, to the extent Agent shall not have been reimbursed by
Company, for and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses (including,
without limitation, counsel fees and disbursements) or disbursements of any
kind or nature whatsoever which may be imposed on, incurred by or asserted
against Agent in performing its duties hereunder or in any way relating to or
arising out of this Agreement or the other instruments and agreements re-
ferred to herein; provided that no Lender shall be liable for any portion of
such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's
gross negligence or willful misconduct. If any indemnity furnished to Agent
for any purpose shall, in the opinion of Agent, be insufficient or become
impaired, Agent may call for additional indemnity and cease, or not commence,
to do the acts indemnified against until such additional indemnity is
furnished.
8.5 Registered Persons Treated as Owners
Agent may deem and treat the Persons listed as Lenders in the
Register as the owners of the corresponding Loans listed therein for all
purposes hereof unless and until an Assignment and Acceptance effecting the
assignment or transfer thereof shall have been accepted by Agent and recorded
in the Register as provided in subsection 9.2B(ii). Any request, authority
or consent of any Person who, at the time of making such request or giving
such authority or consent, is listed in the Register as a Lender shall be
conclusive and binding on any subsequent holder, transferee or assignee of
the corresponding Loan.
8.6 Successor Agent, Swing Line Lender and Overdraft Account
Provider
Agent may resign at any time by giving 30 days prior written notice
thereof to Lenders and Company, and Agent may be removed at any time with or
without cause by an instrument or concurrent instruments in writing delivered
to Company and Agent and signed by Requisite Lenders. Upon any such notice
of resignation or any such removal, Requisite Lenders shall have the right,
<PAGE>112
upon five days notice to Company, to appoint a successor Agent; provided that
such appointment shall be subject to the consent of Company, which consent
shall not be unreasonably withheld. Upon the acceptance of any appointment
as an Agent hereunder by a successor Agent, that successor Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Agent, and the retiring or
removed Agent shall be discharged from its duties and obligations as Agent
under this Agreement. After any retiring or removed Agent's resignation or
removal hereunder as Agent, the provisions of this Section 8 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.
Any resignation or removal of Agent pursuant to this subsection 8.6
shall also constitute the resignation or removal of Agent as the lender of
the Swing Line Loans and the provider of the Overdraft Account, and any
successor Agent appointed pursuant to this subsection 8.6 shall, upon its
acceptance of such appointment, become the successor lender of the Swing Line
Loans and the successor provider of the Overdraft Account for all purposes
hereunder. In such event (i) Company shall prepay any outstanding Swing Line
Loans made by the retiring or removed Agent in its capacity as the lender of
the Swing Line Loans, (ii) upon such prepayment, the retiring or removed
Agent shall surrender the Swing Line Note held by it to Company for
cancellation, (iii) Company shall (if requested to do so) issue a new Swing
Line Note to the successor Agent substantially in the form of Exhibit V
annexed hereto, in the principal amount of the Swing Line Loan Commitment
then in effect and with other appropriate insertions, (iv) Company shall
repay in full the Overdraft Amount and all other amounts owing to the
retiring or removed Agent under the Overdraft Agreement, and (v) Company and
the retiring or removed Agent shall terminate the Overdraft Agreement to
which they are a party and Company and the successor Agent shall enter into a
successor Overdraft Agreement.
8.7 Intercreditor Agreement, O-I Subsidiary Guaranty and
Collateral Documents
Each Lender hereby authorizes Agent to enter into the Intercreditor
Agreement and the Collateral Account Agreement on behalf of and for the
benefit of that Lender, and agrees to be bound by the terms of the
Intercreditor Agreement and the Collateral Account Agreement. Each Lender
hereby authorizes the Collateral Agent to enter into the Collateral
Documents, the O-I Subsidiary Guaranty and the Intercreditor Agreement and to
take all action contemplated by the Intercreditor Agreement, the Collateral
Documents and the O-I Subsidiary Guaranty; provided that Agent shall not
enter into or consent to any amendment, modification, termination or waiver
of any provision contained in the Intercreditor Agreement without the prior
consent of the Requisite Lenders. Each Lender agrees that no Lender shall
have any right individually to seek to enforce the O-I Subsidiary Guaranty or
to realize upon the security granted by any Collateral Document, it being
understood and agreed that such rights and remedies may be exercised by
Collateral Agent for the benefit of Lenders and the parties to the
Intercreditor Agreement upon the terms of the O-I Subsidiary Guaranty, the
Collateral Documents, and the Intercreditor Agreement.
<PAGE>113
SECTION 9
MISCELLANEOUS
9.1 Representation of Lenders
Each Lender hereby represents that it is a commercial lender or
financial institution which makes loans in the ordinary course of its
business and that it will make each Loan hereunder for its own account in the
ordinary course of such business; provided, however, that, subject to
subsection 9.2, the disposition of the Notes or other evidences of In-
debtedness held by that Lender shall at all times be within its exclusive
control.
9.2 Assignments and Participations in Loans, Notes and Letters of
Credit
A. General. Each Lender shall, subject to the provisions of this
subsection 9.2, have the right at any time to (i) sell, assign, transfer or
negotiate to any Eligible Assignee, or (ii) sell participations to any Person
in, all or any part of any Loan or Loans made by it or its Commitments or its
Letters of Credit or participations therein or any other interest herein or
in any other Obligations owed to it; provided that no such assignment or
participation shall, without the consent of Company, require Company to file
a registration statement with the Securities and Exchange Commission or apply
to qualify such assignment or participation of the Loans, Letters of Credit
or participations therein or the other Obligations under the securities laws
of any state. Except as otherwise provided in this subsection 9.2, no Lender
shall, as between Company and such Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or any granting of participations in, all or any part of the
Loans, the Commitments, Letters of Credit or participations therein or the
other Obligations owed to such Lender.
B. Assignments.
(i) Amounts and Terms of Assignments. Each Loan, Commitment or
other Obligation may (a) be assigned in any amount (of a constant and
not a varying percentage) to another Lender, or to an Affiliate of the
assigning Lender or another Lender, with the giving of notice to Company
and Agent or (b) be assigned in an amount (of a constant and not a
varying percentage) of not less than $10,000,000 (or such lesser amount
(X) as shall constitute the aggregate amount of all Loans, Commitments,
Letters of Credit or participations therein and other Obligations of the
assigning Lender or (Y) so long as, after giving effect to such
assignment and any other assignments concurrently being made to the
assignee, such assignee receives not less than $10,000,000 of the Loans,
Commitments or other Obligations assigned to it) to any other Eligible
Assignee with the giving of notice to Company and Agent and with the
consent of Company and Agent, in the case of an assignment made by a
<PAGE>114
Lender other than Agent, or with the consent of Company, in the case of
an assignment made by Agent (which consent of Company and Agent shall
not be unreasonably withheld; provided that the inability of an Eligible
Assignee to satisfy the requirements set forth in subsection 2.7C(iv) of
this Agreement, if applicable, shall constitute reasonable grounds for
withholding such consent). To the extent of any such assignment in
accordance with either clause (a) or (b) above, the assigning Lender
shall be relieved of its obligations with respect to its Loans,
Commitments, Letters of Credit or participations therein or other
Obligations or the portion thereof so assigned. The parties to each
such assignment shall execute and deliver to Agent, for its acceptance
and recording in the Register, an Assignment and Acceptance, together
with, with respect to assignments which occur following the Closing
Date, a processing and recordation fee of $3,500, and such certificates,
documents or other evidence, if any, with respect to United States
federal income tax withholding matters as the assignee under such
Assignment and Acceptance may be required to deliver to Agent pursuant
to subsection 2.7C(iv). Upon such execution, delivery and acceptance,
from and after the effective date specified in such Assignment and
Acceptance, (y) the assignee thereunder shall be a party hereto and a
"Lender" hereunder and, to the extent that rights and obligations
hereunder have been assigned to it pursuant to such Assignment and
Acceptance, shall have the rights and obligations of a Lender hereunder,
including, without limitation, the obligation in subsection 9.20 to
maintain the confidentiality of all non-public information received by
it pursuant to this Agreement and (z) the assigning Lender thereunder
shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish
its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender's rights and obligations under
this Agreement, such assigning Lender shall cease to be a party hereto);
provided that, if the assignee of the assigning Lender is an Affiliate
of such Lender, such assignee shall not be entitled to receive any
greater amount pursuant to subsections 2.6E or 2.7 than the assigning
Lender would have been entitled to receive in respect of the amount of
the assignment effected by such assigning Lender to such Affiliate had
no such assignment occurred. The Commitments hereunder shall be
modified to reflect the Commitment of such assignee and any remaining
Commitment of such assigning Lender and, if any such assignment occurs
after the issuance of a Note to the assigning Lender hereunder, if
requested pursuant to subsection 2.1F(iv), new Notes shall, upon
surrender of the assigning Lender's Note, be issued upon request to the
assignee and to the assigning Lender, substantially in the form of
Exhibit IV, Exhibit V or Exhibit VI annexed hereto, as the case may be,
with appropriate insertions, to reflect the new Commitments and/or
outstanding Loans, as the case may be, of the assignee and the assigning
Lender. In the event that a Lender assigns the full amount of its
Revolving Loans, Revolving Loan Commitments and other Obligations and
such Lender has any outstanding Bid Rate Loans at the time of such
assignment, such Lender must also assign the full amount of such Bid
<PAGE>115
Rate Loans to an Eligible Assignee. Notwithstanding the foregoing
provisions of this subsection 9.2B(i), any Lender may pledge or assign
all or any portion of its rights under this Agreement to a Federal
Reserve Bank as security for borrowings therefrom; provided that no such
pledge or assignment shall release any such Lender from its obligations
hereunder.
(ii) Acceptance by Agent; Recordation in Register. Upon its
receipt of an Assignment and Acceptance executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee, together
with the processing and recordation fee referred to in subsection
9.2B(i) and any certificates, documents or other evidence with respect
to United States federal income tax withholding matters that such
assignee may be required to deliver to Agent pursuant to subsection
2.7C(iv), Agent shall, if such Assignment and Acceptance has been
completed and is in substantially the form of Exhibit XIX hereto and if
Agent and Company have consented to the assignment evidenced thereby (in
each case to the extent such consent is required pursuant to subsection
9.2B(i)), (a) accept such Assignment and Acceptance by executing a
counterpart thereof as provided therein (which acceptance shall evidence
any required consent of Agent to such assignment), (b) record the
information contained therein in the Register, and (c) give prompt
notice thereof to Company. Agent shall maintain a copy of each
Assignment and Acceptance delivered to and accepted by it as provided in
this subsection 9.2B(ii).
C. Participations. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except
action directly affecting (i) the extension of the regularly scheduled
maturity of any portion of the principal amount of or interest on any Loan
allocated to such participation or (ii) a reduction of the principal amount
of or the rate of interest payable on any Loan or payments due in repayment
of draws under Letters of Credit allocated to such participation, and all
amounts payable by Company hereunder shall be determined as if such Lender
had not sold such participation. A Lender which has sold a participation in
its Loans or Commitments shall require the holder of such participation to
agree in writing to comply with the provisions of subsection 9.20 and if a
Lender desires to give any prospective participant a copy of any non-public
information obtained by Lenders pursuant to the requirements of this
Agreement which has been identified as such by Company, such Lender shall
require such prospective participant to agree in writing to hold such
information in accordance with such prospective participant's customary
procedures for handling confidential information of this nature and in
accordance with safe and sound banking practices prior to its delivery of
such material to such prospective participant. Company hereby acknowledges
and agrees that, only for purposes of subsections 2.6E, 2.7, 9.5 and 9.6, any
participation will give rise to a direct obligation of Company to the
participant and the participant shall be considered to be a "Lender";
provided that no participant shall be entitled to receive any greater amount
pursuant to subsections 2.6E or 2.7 than the transferor Lender would have
been entitled to receive in respect of the amount of the participation
effected by such transferor Lender to such participant had no such
participation occurred.
<PAGE>116
D. Information. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to
time to assignees and participants (including prospective assignees and
participants), subject to subsection 9.20.
9.3 Expenses
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to promptly pay (i) all the actual and reasonable
costs and expenses of preparation of this Agreement and the other Loan
Documents and all the costs of furnishing all opinions by counsel for Company
and the other Loan Parties (including without limitation any opinions
requested by Lenders as to any legal matters arising hereunder), and of
Company's performance of and compliance with all agreements and conditions
contained herein on their part to be performed or complied with; (ii) the
reasonable fees, expenses and disbursements of counsel to Agent (including
allocated costs of internal counsel) in connection with the negotiation,
preparation, execution and administration of this Agreement, the other Loan
Documents, the Letters of Credit and the Loans hereunder, and any amendments
and waivers hereto or thereto; (iii) all the actual costs and expenses of
creating and perfecting Liens in favor of Lenders pursuant to any Loan
Document, including filing and recording fees and expenses, fees and expenses
of counsel for providing such opinions as Lenders may reasonably request and
reasonable fees and expenses of legal counsel to Agent; and (iv) after the
occurrence of an Event of Default, all costs and expenses (including
reasonable attorneys' fees, including allocated costs of internal counsel,
and costs of settlement) incurred by Lenders in enforcing any Obligations of
or in collecting any payments due from Company hereunder or under the Notes
or any of the other Loan Documents by reason of such Event of Default or in
connection with any refinancing or restructuring of the credit arrangements
provided under this Agreement in the nature of a "work-out" or of any
insolvency or bankruptcy proceedings.
9.4 Indemnity
In addition to the payment of expenses pursuant to subsection 9.3,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to indemnify, pay and hold Agent and Lenders and the officers,
directors, employees, agents, and affiliates of Agent and Lenders
(collectively called the "Indemnitees") harmless from and against, any and
all other liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel for such Indemnitees in connection with any
investigative, administrative or judicial proceeding commenced or threatened,
whether or not such Indemnitee shall be designated a party thereto), which
may be imposed on, incurred by, or asserted against that Indemnitee, in any
manner relating to or arising out of this Agreement or the other Loan
Documents, Lenders' agreement to make the Loans or the use or intended use of
the proceeds of the Loans or the issuance of Letters of Credit hereunder and
Lenders' agreement to purchase participations therein as provided for herein
<PAGE>117
or the use or intended use of the Letters of Credit or the honoring of
overdrafts under the Overdraft Agreement or the purchase of participations by
Lenders in the Overdraft Amount (the "indemnified liabilities"); provided
that Company shall have no obligation to an Indemnitee hereunder with respect
to indemnified liabilities arising from the gross negligence or willful
misconduct of that Indemnitee. Company also agrees to indemnify and hold
harmless the Indemnitees from any claim, demand or liability for broker's or
finder's fees alleged to have been incurred in connection with the offer,
issuance and sale of any Commercial Paper, or any other transactions
contemplated by this Agreement and any expenses, including reasonable legal
fees, arising in connection with any such claim, demand or liability. To the
extent that the undertaking to indemnify, pay and hold harmless set forth in
the preceding sentence may be unenforceable because it is violative of any
law or public policy, Company shall contribute the maximum portion which it
is permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all indemnified liabilities incurred by the Indemnitees or
any of them.
9.5 Set Off
In addition to any rights now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence of
any Event of Default, each Lender is hereby authorized by Company at any time
or from time to time, without notice to Company, or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
to apply any and all deposits (general or special, including, but not limited
to, Indebtedness evidenced by certificates of deposit, whether matured or
unmatured but not including trust accounts) and any other Indebtedness at any
time held or owing by that Lender to or for the credit or the account of
Company against and on account of the obligations and liabilities of Company
to that Lender under this Agreement, the Notes, the Overdraft Agreement and
the Letters of Credit, including, but not limited to, all claims of any
nature or description arising out of or connected with this Agreement, the
Letters of Credit or the Notes or the other Loan Documents, irrespective of
whether or not (a) that Lender shall have made any demand hereunder or
(b) that Lender shall have declared the principal of the interest on the
Loans and Notes, any obligations of Company in respect of the Letters of
Credit and other amounts due hereunder to be due and payable as permitted by
Section 7 and although said obligations and liabilities, or any of them, may
be contingent or unmatured.
9.6 Ratable Sharing
Lenders hereby agree among themselves that if any of them shall,
through the exercise of any right of counterclaim, setoff, banker's lien or
otherwise or as adequate protection of a deposit treated as cash collateral
under the Bankruptcy Code, receive payment or reduction of a proportion of
the aggregate amount of principal and interest then due with respect to the
Loans owed to that Lender, the amount then due to that Lender with respect to
the Overdraft Amount or any Letter of Credit or any participation therein, or
<PAGE>118
any fees or commissions payable hereunder or under the other Loan Documents
(collectively, the "Aggregate Amounts Due" to such Lender) which is greater
than the proportion received by any other Lender in respect to the Aggregate
Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (y) notify each other Lender and Agent
of such receipt and (z) purchase participations (which it shall be deemed to
have done simultaneously upon the receipt of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate
Amounts Due shall be shared by the Lenders in proportion to the Aggregate
Amounts Due them; provided that if all or part of such proportionately
greater payment received by such purchasing Lender is thereafter recovered
from such Lender, those purchases shall be rescinded and the purchase prices
paid for such participations shall be returned to that Lender to the extent
of such recovery, but without interest. Company expressly consents to the
foregoing arrangement and agrees that any holder of a participation so
purchased and any other subsequent holder of a participation in any Loan or
Letter of Credit or the Overdraft Amount otherwise acquired may exercise any
and all rights of banker's lien, setoff or counterclaim with respect to any
and all monies owing by Company to that holder as fully as if that holder
were a holder of such a Loan or Letter of Credit or the Overdraft Amount in
the amount of the participation held by that holder.
9.7 Amendments and Waivers
No amendment, modification, termination or waiver of any provision
of this Agreement or of the Notes, or consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; except that (i) any amendment, modification, termination,
or waiver of any provision of Section 2 relating to the principal amount of
any of the Commitments or the Loans or payments by Company in respect
thereof, or the maximum amount of Letters of Credit, each Lender's Pro Rata
Share or the definition of "Requisite Lenders", any provision expressly
requiring the approval or concurrence of all Lenders, the scheduled final
maturity date of the Loans, the dates on which interest is payable, the
interest rates borne by the Loans, the amounts or due date of any amount
payable in respect of, or the required maturity or expiration date of, the
Letters of Credit or the rate of interest payable thereon, the amount of fees
payable hereunder, the maximum duration of Interest Periods, the repayment of
Swing Line Loans or the Overdraft Amount with the proceeds of Revolving
Loans, the obligation of Lenders to fund Revolving Loans to reimburse Agent
for Swing Line Loans or the Overdraft Amount or to purchase participations
with respect to the Letters of Credit and the provisions contained in
subsections 2.6B, 2.6C, 2.7, 2.8A(ii)(w), 7.1 and this subsection 9.7 shall
be effective only if evidenced by a writing signed by or on behalf of all
Lenders and (ii) any amendment, modification, termination or waiver of any of
the provisions contained in Section 3 shall be effective only if evidenced by
a writing signed by or on behalf of Agent and Requisite Lenders. No
amendment, modification, termination or waiver of any provision of any Note
shall be effective without the written concurrence of the holder of that
Note. No amendment, modification, termination or waiver of any provision of
<PAGE>119
subsection 2.1B or 2.1C or any other provision relating to the Swing Line
Loan Commitment or the Swing Line Loans or the Overdraft Account or any
provision of Section 8 hereof shall be effective without the written
concurrence of Agent. Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company
to any other or further notice or demand in similar or other circumstances.
Any amendment, modification, termination, waiver or consent effected in
accordance with this subsection 9.7 shall be binding upon each Lender at the
time, each future Lender, and, if signed by Company, on Company.
9.8 Independence of Covenants
All covenants hereunder shall be given independent effect so that
if a particular action or condition is not permitted by any of such
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of an Event of Default or Potential Event of Default if such
action is taken or condition exists.
9.9 Change in Accounting Principles, Fiscal Year or Tax Laws
If (i) any changes in accounting principles and policies from those
used in the preparation of the financial statements referred to in subsection
4.3 hereafter occasioned by the promulgation of rules, regulations,
pronouncements and opinions by or required by the Financial Accounting
Standards Board or the American Institute of Certified Public Accountants (or
successors thereto or agencies with similar functions) would result in a
change in the method of calculation of financial covenants, standards or
terms found in Sections 1, 5 and 6 hereof, (ii) there is any change in
Company's fiscal quarter or fiscal year, or (iii) there is a material change
in federal tax laws which materially affects Company's ability to comply with
the financial covenants, standards or terms found in Sections 1, 5 or 6
hereof, the parties hereto agree to enter into negotiations in order to amend
such provisions (in accordance with subsection 9.7) so as to equitably
reflect such changes with the desired result that the criteria for evaluating
Company's financial condition shall be the same after such changes as if such
changes had not been made.
9.10 Notices
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing
and may be personally served, telecopied, telexed or sent by United States
mail or by courier service and shall be deemed to have been given when
delivered in person or by courier service, by receipt of telecopy or telex or
four Business Days after depositing it in the United States mail, registered
or certified, with postage prepaid and properly addressed; provided that
notices to Agent or Company shall not be effective until received. For the
purposes hereof, the addresses of the parties hereto (until notice of a
change thereof is delivered as provided in this subsection 9.10) shall be as
set forth under each party's name on the signature pages hereof or in the
applicable Assignment and Acceptance.
<PAGE>120
9.11 Survival of Warranties and Certain Agreements
A. All agreements, representations and warranties made herein
shall survive the execution and delivery of this Agreement, the making of the
Loans hereunder, the execution and delivery of the Notes and the issuance of
the Letters of Credit.
B. Notwithstanding anything in this Agreement or implied by law
to the contrary, the agreements of Company set forth in subsections 2.6E,
2.7, 9.3 and 9.4 and the agreements of Lenders set forth in subsections 8.2C,
8.4, 9.5 and 9.6 shall survive the payment of the Loans, the Notes and the
Overdraft Amount, the cancellation or expiration of the Letters of Credit and
the termination of this Agreement.
9.12 Failure or Indulgence Not Waiver; Remedies Cumulative
No failure or delay on the part of Agent or any Lender in the
exercise of any power, right or privilege hereunder or under the other Loan
Documents shall impair such power, right or privilege or be construed to be a
waiver of any default or acquiescence therein, nor shall any single or par-
tial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege. All rights and
remedies existing under this Agreement or the other Loan Documents are
cumulative to and not exclusive of, any rights or remedies otherwise
available.
9.13 Severability
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.
9.14 Obligations Several; Independent Nature of Lenders'
Rights
The obligation of each Lender hereunder is several, and no Lender
shall be responsible for the obligation or commitment of any other Lender
hereunder. Nothing contained in this Agreement and no action taken by
Lenders pursuant hereto shall be deemed to constitute Lenders to be a
partnership, an association, a joint venture or any other kind of entity.
The amounts payable at any time hereunder to each Lender shall be a separate
and independent debt, and each Lender shall, subject to Section 7, be
entitled to protect and enforce its rights arising out of this Agreement and
it shall not be necessary for any other Lender to be joined as an additional
party in any proceeding for such purpose.
9.15 Headings
Section and subsection headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of
this Agreement for any other purpose or be given any substantive effect.
<PAGE>121
9.16 Applicable Law
THIS AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. EACH LETTER OF
CREDIT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF CREDIT, OR IF
NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND PRACTICES FOR
DOCUMENTARY CREDITS (1983 REVISION), INTERNATIONAL CHAMBER OF COMMERCE,
PUBLICATION NO. 400 OR ANY SUCCESSOR PUBLICATIONS (THE "UNIFORM
CUSTOMS") AND, AS TO MATTERS NOT GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF
THE STATE OF NEW YORK.
9.17 Successors and Assigns
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the
parties hereto and the successors and assigns of Lenders. Neither Company's
rights or obligations under the Loan Documents or any interest therein may be
assigned without the written consent of all Lenders. Lenders' rights of
assignment are subject to subsection 9.2.
9.18 Consent to Jurisdiction and Service of Process
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OBLIGATION MAY
BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF NEW YORK AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT COMPANY
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT, SUCH
OTHER LOAN DOCUMENT OR SUCH OBLIGATION. Company designates and appoints CT
Corporation System, 1633 Broadway, New York, New York 10019, and such other
Persons as may hereafter be selected by Company irrevocably agreeing in
writing to so serve, as its agent to receive on its behalf service of all
process in any such proceedings in any such court, such service being hereby
acknowledged by Company to be effective and binding service in every respect.
A copy of any such process so served shall be mailed by registered mail to
Company at its address provided in subsection 9.10; provided that, unless
otherwise provided by applicable law, any failure to mail such copy shall not
affect the validity of service of process. If any agent appointed by Company
refuses to accept service, Company hereby agrees that service of process
sufficient for personal jurisdiction in any action against Company may be
made by registered or certified mail, return receipt requested, to Company at
its address provided in subsection 9.10, and Company hereby acknowledges that
such service shall be effective and binding in every respect. Nothing herein
shall affect the right to serve process in any other manner permitted by law
or shall limit the right of any Lender to bring proceedings against Company
in the courts of any other jurisdiction.
<PAGE>122
9.19 Waiver of Jury Trial
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY
DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION
OR THE LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of
this waiver is intended to be all-encompassing of any and all disputes that
may be filed in any court and that relate to the subject matter of this
transaction, including without limitation contract claims, tort claims,
breach of duty claims and all other common law and statutory claims. Each
party hereto acknowledges that this waiver is a material inducement to enter
into a business relationship, that each has already relied on this waiver in
entering into this Agreement, and that each will continue to rely on this
waiver in their related future dealings. Each party hereto further warrants
and represents that it has reviewed this waiver with its legal counsel and
that it knowingly and voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT
MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY
TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the event of litigation,
this Agreement may be filed as a written consent to a trial by the court.
9.20 Confidentiality
Lenders shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as such by
Company in accordance with their customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices and in any event, subject to subsection 9.2, may make
disclosure reasonably required by any bona fide transferee or participant in
connection with the contemplated transfer of any Loan or participation
therein or as required or requested by any governmental agency or
representative thereof or pursuant to legal process; provided that, unless
specifically prohibited by applicable law or court order, each Lender shall
notify Company of any request by any governmental agency or representative
thereof (other than any such request in connection with an examination of the
financial condition of such Lender by such governmental agency) for
disclosure of any such non-public information prior to disclosure of such
information; and further provided that in no event shall any Lender be obli-
gated or required to return any materials furnished by Company.
9.21 Counterparts; Effectiveness
This Agreement and any amendments, waivers, consents, or
supplements may be executed in any number of counterparts and by different
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts, together
shall constitute but one and the same instrument. This Agreement shall
become effective upon the execution of a counterpart hereof by each of the
parties hereto and receipt by Company and Agent of written or telephonic
notification of such execution and authorization of delivery thereof.
<PAGE>S-1
WITNESS the due execution hereof by the respective du
officers of the undersigned as of the date first written above.
COMPANY:
OWENS-ILLINOIS, INC.
By: /s/ DAVID G. VAN HOOSER
Title: Vice President
Notice Address:
Owens-Illinois, Inc.
One Seagate
Toledo, Ohio 43666
Attention: Treasurer
with a copy to:
c/o Kohlberg Kravis
Roberts & Co.
101 California Street
San Francisco, California 94111
Attention: Edward A. Gilhuly
<PAGE>S-2
LENDERS:
BANKERS TRUST COMPANY,
individually and as Agent
By: /s/ MARY ZADROGA
Title: Vice President
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza, 14th Floor
New York, New York 10017
Attention: Tom Alpoyanis
Telex: 126642
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Josie Pabellano-Hoey
Telex: 4720048
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
Telex: 4720048
<PAGE>S-3
BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION
individually and as Co-Agent
By: /s/ DANIEL D. MCCREADY
Name: Daniel D. McCready
Title: Vice President
Notice Address:
Bank of America NT&SA
1850 Gateway Boulevard
Concord, California 94520
Attention: Pat Simmons
Fax: (510) 675-7532
with a copy to:
Bank of America NT&SA
335 Madison Avenue
New York, New York 10017
Attention: Daniel D. McCready
Fax: (212) 503-7066
<PAGE>S-4
THE BANK OF NEW YORK,
individually and as Co-Agent
By: /s/ DOUGLAS A. OBER
Name: Douglas A. Ober
Title: Vice President
Notice Address:
The Bank of New York
One Wall Street 22nd Floor
New York, New York 10286
Attention: Douglas A. Ober
with a copy to:
The Bank of New York
One Wall Street 22nd Floor
New York, New York 10286
Attention: Susan Baratta
Letter of Credit Contact:
The Bank of New York
One Wall Street 22nd Floor
New York, New York 10286
Attention: Susan Baratta
<PAGE>S-5
THE BANK OF NOVA SCOTIA,
individually and as Co-Agent
By: /s/ CLAUDE ASHBY
Name: Claude Ashby
Title: Senior Manager
Notice Address:
The Bank of Nova Scotia
Cleveland Representative Office
One Cleveland Center, Suite 1950
Cleveland, Ohio 44114
Attention: James S. Coleman
Telex: 00980364
with a copy to:
The Bank of Nova Scotia
Atlanta Agency
600 Peachtree Street, N.E.
Suite 2700
Atlanta, Georgia 30308
Attention: Claude Ashby
<PAGE>S-6
CIBC, INC.,
individually and as Co-Agent
By: /s/ ELIZABETH O. FISCHER
Name: Elizabeth O. Fischer
Title: Authorized Signatory
Notice Address:
Prime Rate and Eurodollar Rate Loans
Canadian Imperial Bank of Commerce
Atlanta Agency
2727 Paces Ferry Road, Suite 1200
Atlanta, Georgia 30339
Attention: Mirian McCart
Fax: (404) 319-4950
Telex: 54-2413
Answerback: CANBANK ATL
Bid Rate Loans
Canadian Imperial Bank of Commerce
425 Lexington Avenue
New York, New York 10017
Attention: Carol Kizzia
Tel: (212) 856-3693
Fax: (212) 856-6699
Telex: 426-504
Answerback: CIMM
<PAGE>S-7
CONTINENTAL BANK N.A.,
individually and as Co-Agent
By: /s/ CARL W. JORDAN
Name: Carl W. Jordan
Title: Vice President
Notice Address:
Continental Bank N.A.
105 West Adams
Chicago, Illinois 60693
Attention: Letter of Credit Department
Telex: 253412
with a copy to:
Continental Bank N.A.
231 La Salle Street
Chicago, Illinois 60697
Attention: Carl W. Jordan
<PAGE>S-8
THE FIRST NATIONAL BANK OF CHICAGO,
individually and as Co-Agent
By: /s/ ROBERT L. JACKSON
Name: Robert L. Jackson
Title: Vice President
Notice Address:
The First National Bank of Chicago
One First National Plaza, Suite 0088 1-10
Chicago, Illinois 60670
Attention: John Orofino, Jr.
Telex: 071000013
with a copy to:
The First National Bank of Chicago
One North Dearborn, Suite 0236, 9th Floor
Chicago, Illinois 60670
Attention: Gwendolyn Watson
Telex: (312) 407-1065
with a copy to:
The First National Bank of Chicago
1301 East Ninth Street, Suite 2150
Cleveland, Ohio 44114
Attention: Kenneth G. Wilkes
<PAGE>S-9
NATIONSBANK OF NORTH CAROLINA, N.A.,
individually and as Co-Agent
By: /s/ NANCY J. PEARSON
Name: Nancy J. Pearson
Title: Senior Vice President
Notice Address:
NationsBank
One NationsBank Plaza
NC1-002-06-19
Charlotte, North Carolina 28255
Attention: Kathy Mumpower
Fax: (704) 386-8694
With a copy to:
NationsBank
70 West Madison St., Suite 5300
Chicago, Illinois 60602
Attention: Nancy J. Pearson
Fax: (312) 372-9194
<PAGE>S-10
SOCIETE GENERALE,
individually and as Co-Agent
By: /s/ EDITHA PARAS
Name: Editha Paras
Title: Assistant Vice President
By: /s/ CLAUDE GARSIN
Name: Claude Garsin
Title: Corporate Banking Manager
Notice Address:
Societe Generale
181 W. Madison St., Suite 3400
Chicago, Illinois 60602
Attention: Editha Paras
Telex: 190130
Answerback: SGCHI UT
<PAGE>S-11
THE TORONTO-DOMINION BANK,
individually and as Co-Agent
By: /s/ E.E. WALKER
Name: E.E. Walker
Title: Manager Credit Administration
Notice Address:
The Toronto-Dominion Bank,
Cayman Islands Branch
Three First National Plaza, Suite 5430
Chicago, Illinois 60602
Attention: Mario da Ponte,
Senior Manager,
Corporate Accounts
Fax: (312) 782-6337
with a copy to:
The Toronto-Dominion Bank,
Houston Branch
909 Fannin
Houston, TX 77010
Attention: David Parker
Tel: (713) 653-8200
Fax: (713) 951-9921
<PAGE>S-12
BANK OF MONTREAL,
individually and as Lead Manager
By: /s/ H.K. BROWER
Title: Director
Notice Address:
Harris Trust & Savings Bank
(Bank of Montreal)
115 South La Salle Street, 12th Floor
Chicago, Illinois 60603
Attention: Hugh K. Brower
Telex: 190289
Answerback: 190289
BKMTL CGO
<PAGE>S-13
THE FUJI BANK, LIMITED,
individually and as Lead Manager
By: /s/ HIDEKAZA SEO
Name: Hidekazu Seo
Title: Joint General Manager
Notice Address:
The Fuji Bank, Limited
225 West Wacker Drive, Suite 2000
Chicago, Illinois 60606
Attention: Cely Navarro
Telex: 253114
Answerback: FUJI CGO
Letter of Credit Contact:
The Fuji Bank, Limited
225 West Wacker Drive, Suite 2000
Chicago, Illinois 60606
Attention: Cely Navarro
Telex: 253114
Answerback: FUJI CGO
<PAGE>S-14
THE INDUSTRIAL BANK OF JAPAN, LTD.,
individually and as Lead Manager
By: /s/ JUNRI ODA
Name: Junri Oda
Title: Senior Vice President and
Senior Manager
Notice Address:
The Industrial Bank of Japan, Ltd.
245 Park Avenue
New York, New York 10167
Attention: Mikihide Katsumata,
Peter Kelly
Fax: (212) 682-2870
Letter of Credit Contact:
The Industrial Bank of Japan, Ltd.
Ms. M. Fujihira
Credit Administration
Tel: (212) 309-6449
Fax: (212) 949-01343
<PAGE>S-15
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
individually and as Lead Manager
By: /s/ BRADY S. SADEK
Name: Brady S. Sadek
Title: Vice President and Deputy
General Manager
Notice Address:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
190 South LaSalle Street, Suite 800
Chicago, Illinois 60603
Attention: Brady S. Sadek
Tel: (312) 704-1700
Fax: (312) 704-8505
with a copy to:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
190 South LaSalle Street, Suite 800
Chicago, Illinois 60603
Attention: William F. Schauble
Tel: (312) 704-5494
Fax: (312) 704-8717
Letter of Credit Contact:
The Long-Term Credit Bank of Japan, Ltd.
Chicago Branch
190 South LaSalle Street, Suite 800
Chicago, Illinois 60603
Attention: William F. Schauble
Tel: (312) 704-5494
Fax: (312) 704-8717
<PAGE>S-16
THE SUMITOMO BANK, LTD.,
individually and as Lead Manager
By: /s/ K. IWASAWA
Name: Mr. Iwasawa
Title: Joint General Manager
Notice Address:
The Sumitomo Bank, Ltd.
Chicago Branch
Sears Tower, Suite 4800
233 South Wacker Drive
Chicago, Illinois 60606-6448
Attention: James Semonchik
Telex: 25-3734
Answerback: SUMIT CGO
With a copy to:
The Sumitomo Bank, Ltd.
Chicago Branch
Sears Tower, Suite 4800
233 South Wacker Drive
Chicago, Illinois 60606-6448
Attention: John Dilegge
Telex: 25-3734
Answerback: SUMIT CGO
Letter of Credit contact:
The Sumitomo Bank, Ltd.
Chicago Branch
Sears Tower, Suite 4800
233 South Wacker Drive
Chicago, Illinois 60606-6448
Attention: Kwang Park
Fax: (312) 876-6436
Tel: (312) 876-6429
<PAGE>S-17
ABN AMRO BANK N.V.
By: /s/ JAMES N. JANOVSKY
Title: Group Vice President
By: /s/ CRAIG GUINANE
Title: Assistant Vice President
Notice Address:
ABN Amro Bank N.V.
One PPG Place
Suite 2950
Pittsburgh, PA 15222
Attention: Mr. James Janovsky
Fax: (412) 566-2266
Telex: 6734601
Answerback: BANCOLANDO
with a copy to:
ABN Amro Bank N.V.
One PPG Place
Suite 2950
Pittsburgh, PA 15222
Attention: Monica Meis
Fax: (412) 566-2266
Letter of Credit Contact:
ABN Amro Bank N.V.
One PPG Place
Suite 2950
Pittsburgh, PA 15222
Attention: Monica Meis
Fax: (412) 566-2266
<PAGE>S-18
ARAB BANKING CORPORATION
By: /s/ GRANT E. MCDONALD
Name: Grant McDonald
Title: Vice President
Notice Address:
Arab Banking Corporation
245 Park Avenue
New York, New York 10167
Attention: Grant McDonald
Telex: 661978
Answerback: ABC NY
Letter of Credit Contact:
Arab Banking Corporation
245 Park Avenue
New York, New York 10167
Attention: Olga Alexandrou
Loan Administration
Telex: 661978
Answerback: ABC NY
<PAGE>S-19
THE FIRST NATIONAL BANK OF BOSTON
By: /s/ ELLEN H. ALLEN
Title: Director
Notice Address:
The First National Bank of Boston
100 Federal Street, 1-21-3
Boston, MA 02110
Attention: Ellen H. Allen
Fax: (617) 434-0601
with a copy to:
The First National Bank of Boston
100 Federal Street, 1-21-3
Boston, MA 02110
Attention: Patricia A. Walsh
Fax: (617) 434-0601
Letter of Credit Contact:
The First National Bank of Boston
150 Federal Street, 50-4-1
Boston, MA 02110
Attention: Kenya Jacobs
Letter of Credit Department
Fax: (617) 434-5414
<PAGE>S-20
BANK OF HAWAII
By: /s/ ELIZABETH O. MACLEAN
Name: Elizabeth O. MacLean
Title: Assistant Vice President
Notice Address:
Bank of Hawaii
130 Merchant Street
20th Floor
Honolulu, HI 96825
Attention: Elizabeth O. MacLean
Fax: (808) 537-8249
Letter of Credit Contact:
Bank of Hawaii
130 Merchant Street
20th Floor
Honolulu, HI 96825
Attention: Elizabeth O. MacLean
Fax: (808) 537-8249
<PAGE>S-21
CAISSE NATIONALE DE CREDIT AGRICOLE
By: /s/ DEAN BALICE
Name: Dean Balice
Title: Senior Vice President
Notice Address:
Caisse Nationale de Credit Agricole
55 East Monroe Street, Suite 4700
Chicago, Illinois 60603-5702
Attention: Karen Coons,
Assistant Vice President
Telex: 283594
Fax: (312) 372-3724
<PAGE>S-22
MELLON BANK, N.A.
By: /s/ FREDERICK W. OKIE, JR.
Name: Frederick W. Okie, Jr.
Title: Vice President
Notice Address:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 2305
Pittsburgh, PA 15259
Attention: Rose Covel
Letter of Credit Contact:
Mellon Bank, N.A.
Three Mellon Bank Center
Room 2329
Pittsburgh, PA 15259
Attention: Sue Stahl
<PAGE>S-23
THE MITSUBISHI TRUST AND BANKING
CORP.
By: /s/ PATRICIA LORET DE MOLA
Name: Patricia Loret de Mola
Title: Senior Vice President
Notice Address:
The Mitsubishi Trust and Banking Corp.
520 Madison Ave., 25th Floor
New York, NY 10022
Attention: Manager of Loan
Administration
Tel: (212) 891-8256
Fax: (212) 755-2349 or 846-0970
Letter of Credit Contact:
The Mitsubishi Trust and Banking Corp.
520 Madison Ave., 25th Floor
New York, NY 10022
Attention: Manager of Loan
Administration
Tel: (212) 891-8256
Fax: (212) 755-2349 or (212) 846-0970
<PAGE>S-24
NATIONAL CITY BANK
By: /s/ MARYBETH S. HOWE
Name: Marybeth S. Howe
Title: Vice President
Notice Address:
National City Bank
Locator #2102
1900 East Ninth Street
Cleveland, OH 44114-3484
Attention: Marybeth S. Howe
Telex: 212637 NCBUR
Answerback: NCBUR
<PAGE>S-25
THE NIPPON CREDIT BANK, LTD.
By: /s/ CLIFFORD ABRAMSKY
Title: Vice President & Manager
Notice Address:
The Nippon Credit Bank, Ltd.
245 Park Avenue, 30th Floor
New York, NY 10167
Attention: Clifford Abramsky
Fax: (212) 490-3895
with a copy only for administrative matters:
The Nippon Credit Bank, Ltd.
245 Park Avenue, 30th Floor
New York, NY 10167
Attention: Peter Fiurillo
Fax: (212) 697-8034
Letter of Credit Contact:
The Nippon Credit Bank, Ltd.
245 Park Avenue, 30th Floor
New York, NY 10167
Attention: Peter Fiurillo
Fax: (212) 697-8034
<PAGE>S-26
THE NORTHERN TRUST COMPANY
By: /s/ DAVID M. FINDLAY
Name: David M. Findlay
Title: Vice President
Notice Address:
The Northern Trust Company
50 S. LaSalle St., #B-11
Chicago, Illinois 60675
Attention: David M. Findlay,
Vice President
Telex: 433-0397
Answerback: NT CI CGO
Fax: (312) 444-3508
<PAGE>S-27
THE SANWA BANK LTD.
By: /s/ A. OGAWA
Title: Assistant General Manager
Notice Address:
The Sanwa Bank Ltd.
10 South Wacher
31st Floor
Chicago, IL 60606
Attention: Bev Wyckoff
Fax: (312) 346-6677
Tel: (312) 368-3016
with a copy to:
The Sanwa Bank Ltd.
200 Public Square
BP America Building, 29th Floor
Suite 3400
Cleveland, OH 44114
Attention: Eileen Stenerson
Fax: (216) 736-3381
Tel: (216) 736-3379
Letter of Credit Contact:
The Sanwa Bank Ltd.
10 South Wacher
31st Floor
Chicago, IL 60606
Attention: Bev Wyckoff
Fax: (312) 346-6677
Tel: (312) 368-3016
<PAGE>S-28
SOCIETY NATIONAL BANK
By: /s/ MARK A. STEGEMAN
Name: Mark A. Stegeman
Title: Vice President
Notice Address:
Society National Bank
Three Seagate
Second Floor
Toledo, OH 43603
Attention: Mark A. Stegeman
Fax: (419) 259-8146
Tel: (419) 259-8528
Letter of Credit Contact:
Society National Bank
Three Seagate
Second Floor
Toledo, OH 43603
Attention: Linda Custodio,
Assistant Vice
President
Fax: (419) 259-8146
<PAGE>S-29
UNITED STATES NATIONAL BANK OF OREGON
By: /s/ CHRIS J. KARLIN
Name: Chris J. Karlin
Title: Vice President
Notice Address:
United States National Bank of Oregon
Corporate Banking Division
309-SW 6th Avenue, BB-12
Portland, Oregon 97208
Attention: Chris J. Karlin,
Vice President
Telex: 360549
Answerback: USNATLBANK
PTL
Fax: (312) 782-6337
with a copy to:
United States National Bank of Oregon
Corporate Banking Division
309-SW 6th Avenue, BB-12
Portland, Oregon 97208
Attention: Jeffrey W. Jones,
Vice President
<PAGE>S-30
YASUDA TRUST & BANKING CO. LTD.
By: /s/ HIDEO NAKAZAWA
Name: Hideo Nakazawa
Title: Joint General Manager
Notice Address:
Yasuda Trust and Banking Co., Ltd.
181 W. Madison Street, Ste. 4500
Chicago, IL 60602
Attention: Mary Blochberger
Tel: (312) 683-3852
Fax: (312) 683-3899
<PAGE>I-1
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
Pursuant to that certain Refinancing Credit Agreement dated as of
December 15, 1993 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement) among Owens-Illinois, Inc., a Delaware corporation
("Company"), the Lenders named therein, the Lenders named as Lead Managers
and Co-Agents for Lenders, and Bankers Trust Company, as Agent, this
represents Company's request to borrow on __________, 19___ from [Lenders on
a pro rata basis $________ as [Prime Rate/Eurodollar Rate] Revolving Loans]
[Agent $__________ as Swing Line Loans]. [The Interest Period for such Loans
is requested to be a ________-month period.] The proceeds of such Loans are
to be deposited in Company's account at Agent.
The undersigned officer, to the best of his/her knowledge as an
officer of Company, and Company do hereby certify that (i) the undersigned is
the [insert title of undersigned officer] of Company; (ii) the undersigned
has read the conditions precedent to the making of any Loans set forth in
subsection 3.2B of the Credit Agreement, and any definitions or other
provisions in the Credit Agreement relating thereto with respect to the
statements contained herein, and the undersigned has made or caused to be
made such examination or investigation as is necessary to enable him/her to
express an informed opinion as to whether or not such conditions have been
complied with; and (iii) each of the conditions set forth in subsection 3.2B
of the Credit Agreement has been satisfied on and as of the date hereof and
will be satisfied on and as of the date of the proposed borrowing.
DATED: ___________________
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
<PAGE>II-1
EXHIBIT II
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
Pursuant to that certain Refinancing Credit Agreement dated as of
December 15, 1993 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement) among Owens-Illinois, Inc., a Delaware corporation
("Company"), the Lenders named therein, the Lenders named as Lead Managers
and Co-Agents for Lenders, and Bankers Trust Company, as Agent, this
represents Company's request to have [Agent/__________] issue a
[Standby][Commercial] Letter of Credit on _______________ __, 19__ in the
face amount of $_______________ with an expiration date of
_______________ __, 19__ for the benefit of .
The undersigned officer, to the best of his/her knowledge as an
officer of Company, and Company certify that (i) the undersigned has read the
conditions precedent to the issuance of any Letter of Credit set forth in
subsections 3.2B and 3.3C of the Credit Agreement and any definitions or
other provisions in the Credit Agreement relating thereto with respect to the
statements contained herein, and the undersigned has made or caused to be
made such examination or investigation as is necessary to enable him/her to
express an informed opinion as to whether or not such conditions have been
complied with and (ii) each of the conditions set forth in subsection 3.2B of
the Credit Agreement has been satisfied on and as of the date hereof and will
be satisfied on and as of the date of the proposed issuance of such Letter of
Credit, in each case to the same extent as though the issuance of such Letter
of Credit were the making of a Loan and the date of issuance of such Letter
of Credit were a Funding Date.
DATED: ___________________
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
<PAGE>III-1
EXHIBIT III
[NOTICE OF CONVERSION/CONTINUATION]
Pursuant to that certain Refinancing Credit Agreement dated as of
December 15, 1993 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"; capitalized
terms used herein without definition shall have the meanings set forth in the
Credit Agreement) among Owens-Illinois, Inc., a Delaware corporation
("Company"), the Lenders named therein, the Lenders named as Lead Managers
and Co-Agents for Lenders, and Bankers Trust Company, as Agent, this
represents Company's request [A: to convert $_______ in principal amount of
presently outstanding [Prime Rate/Eurodollar Rate] Revolving Loans [with a
final Interest Payment Date of _________, 19___] to [Prime Rate/Eurodollar
Rate] Loans on _________, 19___. [The Interest Period for such Eurodollar
Rate Loans is requested to be a _______-month period.]] [B: to continue as
Eurodollar Rate Loans $_______ in principal amount of presently outstanding
Eurodollar Rate Loans with a final Interest Payment Date of _________, 19___.
The Interest Period for such Eurodollar Rate Loans commencing on such
Interest Payment Date is requested to be a _______-month period.]
The undersigned officer, to the best of his/her knowledge as an
officer of Company, and Company certify that no Event of Default or Potential
Event of Default has occurred and is continuing under the Credit Agreement.
DATED:_____________________
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
<PAGE>IV-1
EXHIBIT IV
[FORM OF REVOLVING NOTE]
OWENS-ILLINOIS, INC.
PROMISSORY NOTE DUE DECEMBER 31, 1998
December __, 1993
$
FOR VALUE RECEIVED, OWENS-ILLINOIS, INC., a Delaware corporation
("Company"), promises to pay to the order of ("Payee"), on or before the
Revolving Loan Commitment Termination Date, the lesser of (x) ($1) and
(y) the unpaid principal amount of all advances made by Payee to Company as
Revolving Loans under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of the
Refinancing Credit Agreement dated as of December 15, 1993 among Company, the
Lenders named therein, the Lenders named as Lead Managers and Co-Agents for
Lenders, and Bankers Trust Company, as Agent, as amended, amended and
restated, supplemented or otherwise modified from time to time (said
Refinancing Credit Agreement, as so amended, amended and restated,
supplemented or otherwise modified from time to time, being the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
This Note is one of Company's "Revolving Notes" in the aggregate
principal amount of $1,000,000,000 and is issued pursuant to and entitled to
the benefits of the Credit Agreement to which reference is hereby made for a
more complete statement of the terms and conditions under which the Revolving
Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day
funds at the Funding and Payment Office, or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Until notified in writing of the transfer of this Note,
<PAGE>IV-2
Company and Agent shall be entitled to deem Payee or such person who has been
so identified by the transferor in writing to Company and Agent as the holder
of this Note, as the owner and holder of this Note. Each of Payee and any
subsequent holder of this Note agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of
all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligation of Company hereunder with respect to payments of principal or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4A(ii) and prepayment at the option of Company as provided in
subsection 2.4A(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligation of
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.3 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and endorsers of this Note hereby waive diligence, presentment, protest,
demand and notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand
hereunder.
<PAGE>IV-3
IN WITNESS WHEREOF, Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
<PAGE>IV-4
TRANSACTIONS ON REVOLVING NOTE
Amount of
Principal Outstanding
Type of Amount of or Interest Principal
Loan Made Loan Made Paid Balance Notation
Date This Date This Date This Date This Date Made By
- ---- --------- --------- ---------- ---------- --------
<PAGE>V-1
EXHIBIT V
[FORM OF SWING LINE NOTE]
OWENS-ILLINOIS, INC.
PROMISSORY NOTE DUE DECEMBER 31, 1998
December __, 1993
$50,000,000
FOR VALUE RECEIVED, OWENS-ILLINOIS, INC., a Delaware corporation
("Company"), promises to pay to the order of BANKERS TRUST COMPANY ("Payee"),
on or before the Revolving Loan Commitment Termination Date, the lesser of
(x) FIFTY MILLION AND NO/100 DOLLARS ($50,000,000.00) and (y) the unpaid
principal amount of all advances made by Payee to Company as Swing Line Loans
under the Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal
amount hereof from the date hereof until paid in full, at the rates and at
the times which shall be determined in accordance with the provisions of the
Refinancing Credit Agreement dated as of December 15, 1993 among Company, the
Lenders named therein, the Lenders named as Lead Managers and Co-Agents for
Lenders, and Bankers Trust Company, as Agent, as amended, amended and
restated, supplemented or otherwise modified from time to time (said
Refinancing Credit Agreement, as so amended, amended and restated,
supplemented or otherwise modified from time to time, being the "Credit
Agreement"). Capitalized terms used herein without definition shall have the
meanings set forth in the Credit Agreement.
This Note is Company's "Swing Line Note" and is issued pursuant to
and entitled to the benefits of the Credit Agreement to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Swing Line Loans evidenced hereby were made and are to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day
funds at the Funding and Payment Office, or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Until notified in writing of the transfer of this Note,
Company and Agent shall be entitled to deem Payee or such person who has been
so identified by the transferor in writing to Company and Agent as the holder
<PAGE>V-2
of this Note, as the owner and holder of this Note. Each of Payee and any
subsequent holder of this Note agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of
all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligation of Company hereunder with respect to payments of principal or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4A(ii) of the Credit Agreement and to prepayment at the option
of Company as provided in subsection 2.4A(i) of the Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligation of
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.3 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and endorsers of this Note hereby consent to renewals and extensions of time
at or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense
to any demand hereunder.
<PAGE>V-3
IN WITNESS WHEREOF, Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
<PAGE>V-4
TRANSACTIONS ON SWING LINE NOTE
Amount of
Principal Outstanding
Amount of or Interest Principal
Loan Made Paid Balance Notation
Date This Date This Date This Date Made By
- ---- --------- ---------- --------- --------
<PAGE>VI-1
EXHIBIT VI
[FORM OF BID RATE LOAN NOTE]
OWENS-ILLINOIS, INC.
PROMISSORY NOTE
December __, 1993
FOR VALUE RECEIVED, OWENS-ILLINOIS, INC., a Delaware corporation
("Company"), hereby promises to pay to the order of ("Payee") the unpaid
principal amount of each advance made by Payee to Company as a Bid Rate Loan
under the Credit Agreement referred to below on the last day of the Bid Rate
Loan Interest Period relating to such Bid Rate Loan.
Company also promises to pay interest on the unpaid principal
amount of each Bid Rate Loan from the date such Bid Rate Loan is made until
paid in full, at the rates and at the times which shall be determined in
accordance with the provisions of the Refinancing Credit Agreement dated as
of December 15, 1993 among Company, the Lenders named therein, the Lenders
named as Lead Managers and Co-Agents for Lenders, and Bankers Trust Company,
as Agent, as amended, amended and restated, supplemented or otherwise
modified from time to time (said Refinancing Credit Agreement, as so amended,
amended and restated, supplemented or otherwise modified from time to time,
being the "Credit Agreement"). Capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement.
This Note is one of Company's Bid Rate Loan Notes and is issued
pursuant to and entitled to the benefits of the Credit Agreement to which
reference is hereby made for a more complete statement of the terms and
conditions under which the Bid Rate Loans evidenced hereby were made and are
to be repaid.
All payments of principal and interest in respect of this Note
shall be made in lawful money of the United States of America in same day
funds at the Funding and Payment Office, or at such other place as shall be
designated in writing for such purpose in accordance with the terms of the
Credit Agreement. Until notified in writing of the transfer of this Note,
Company and Agent shall be entitled to deem Payee or such person who has been
so identified by the transferor in writing to Company and Agent as the holder
of this Note, as the owner and holder of this Note. Each of Payee and any
<PAGE>VI-2
subsequent holder of this Note agrees, by its acceptance hereof, that before
disposing of this Note or any part hereof it will make a notation hereon of
all principal payments previously made hereunder and of the date to which
interest hereon has been paid; provided, however, that the failure to make a
notation of any payment made on this Note shall not limit or otherwise affect
the obligation of Company hereunder with respect to payments of principal or
interest on this Note.
Whenever any payment on this Note shall be stated to be due on a
day which is not a Business Day, such payment shall be made on the next
succeeding Business Day and such extension of time shall be included in the
computation of the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in
subsection 2.4A(ii) of the Credit Agreement and to prepayment at the option
of Company with the consent of Payee as provided in subsection 2.4A(i) of the
Credit Agreement.
THE CREDIT AGREEMENT AND THIS NOTE SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of
the principal amount of this Note, together with all accrued but unpaid
interest thereon, may become, or may be declared to be, due and payable in
the manner, upon the conditions and with the effect provided in the Credit
Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
No reference herein to the Credit Agreement and no provision of
this Note or the Credit Agreement shall alter or impair the obligation of
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the
currency herein prescribed.
Company promises to pay all costs and expenses, including
reasonable attorneys' fees, all as provided in subsection 9.3 of the Credit
Agreement, incurred in the collection and enforcement of this Note. Company
and endorsers of this Note hereby consent to renewals and extensions of time
at or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense
to any demand hereunder.
<PAGE>VI-3
IN WITNESS WHEREOF, Company has caused this Note to be executed and
delivered by its duly authorized officer, as of the day and year first above
written.
OWENS-ILLINOIS, INC.
By___________________________
Title________________________
<PAGE>VI-4
TRANSACTIONS ON BID RATE LOAN NOTE
Amount of
Principal Outstanding
Amount of or Interest Principal
Loan Made Paid Balance Notation
Date This Date This Date This Date Made By
- ---- --------- --------- ---------- --------
<PAGE>VII-1
EXHIBIT VII
[FORM OF COMPLIANCE CERTIFICATE]
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) We are the duly elected [Title] and [Title] of Owens-Illinois,
Inc., a Delaware corporation ("Company");
(2) We have reviewed the terms of the Refinancing Credit Agreement
dated as of December __, 1993 among Company, the Lenders named therein,
the Lenders named as Lead Managers and Co-Agents for Lenders, and
Bankers Trust Company, as Agent (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein and in Attachment No. 1
annexed hereto and not otherwise defined herein or in such
Attachment No. 1 shall have the meanings assigned to such terms in the
Credit Agreement), and we have made, or have caused to be made under our
supervision, a review in reasonable detail of the transactions and
condition of Company and its Subsidiaries during the accounting period
covered by the attached financial statements; and
(3) The examination described in paragraph (2) did not disclose
and we have no knowledge of the existence of any condition or event
which constitutes an Event of Default or Potential Event of Default
during or at the end of the accounting period covered by the attached
financial statements or as of the date of this Certificate, except as
set forth below.
Describe below (or in a separate attachment to this Certificate)
the exceptions, if any, to paragraph (3) by listing, in detail, the nature of
the condition or event, the period during which it has existed and the action
which Company has taken, is taking, or proposes to take with respect to each
such condition or event:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
<PAGE>VII-2
The foregoing certifications, together with the computations set
forth in Attachment No. 1 annexed hereto and the financial statements
delivered with this Certificate in support hereof, are made and delivered
this _____ day of __________, 19__ pursuant to subsection 5.1(iv) of the
Credit Agreement.
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
By____________________________
Title_________________________
<PAGE>VII-3
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
(The certificate attached hereto is dated as of ______________ and
pertains to the period from __________ to __________.) Subsection references
herein relate to the subsections of the Credit Agreement.
A. Indebtedness
1. Indebtedness incurred to finance any Consolidated Capital
Expenditures permitted under subsection 6.1(vii) for fiscal
year-to-date $__________
2. Maximum Amount of Consolidated Capital Expenditures permitted under
subsection 6.13 for fiscal year $__________
3. Indebtedness incurred to refinance debt of Foreign Subsidiaries
permitted under subsection 6.1(ix) $__________
4. Maximum permitted under subsection 6.1(ix) at any time$100,000,000
5. Indebtedness with respect to Commercial Paper permitted under
subsection 6.1(x) $__________
6. Maximum permitted under subsection 6.1(x) $450,000,000
7. Indebtedness permitted under subsection 6.1(xi) $__________
8. Maximum permitted under subsection 6.1(xi) $100,000,000
B. Liens
1. Aggregate fair market value of property or assets subject to Liens
permitted under subsection 6.2(ix) $__________
2. Maximum permitted under subsection 6.2(ix) $ 80,000,000
C. Investments
1. Aggregate amount of Investments in Joint Ventures operating in the
United States permitted under subsection 6.3(vii)$__________
<PAGE>VII-4
2. Maximum permitted under subsection 6.3(vii) $100,000,000
3. Aggregate amount of Investments in connection with Asset Sales or
other sales of assets permitted under subsection 6.3(viii)
$__________
4. Maximum permitted under subsection 6.3(viii) $ 70,000,000
5. Aggregate fair market value of all assets transferred by Company
and its Consolidated Subsidiaries to all Foreign Subsidiaires
during fiscal year-to-date in one or more transactions permitted
under subsection 6.3(xi) $__________
6. Maximum permitted during fiscal year under subsection
6.3(xi)(a) $100,000,000
7. Aggregate fair market value of all assets transferred by Company
and its Consolidated Subsidiaries to all Foreign Subsidiaries after
Closing Date in one or more transactions permitted under subsection
6.3(xi) $__________
8. Aggregate amount of all dividends, distributions and other cash
payments received by the Company and its Consolidated Subsidiaries
after Closing Date in connection with the sale, transfer or other
disposition (to any Person other than Company or any of its
Subsidiaries) of any Investment of Company or any of its
Consolidated Subsidiaries in any Foreign Subsidiary$__________
9. Maximum permitted under subsection 6.3(xi)(b) (($250,000,000 -
D.5) + C.8) $__________
10. Aggregate amount of Investments in equity securities listed on the
NYSE permitted under subsection 6.3(xii) $__________
11. Maximum permitted under subsection 6.3(xii) $ 20,000,000
12. Aggregate amount of Investments in Margin Stock permitted under
subsection 6.3(xiv) $__________
<PAGE>VII-5
13. Maximum permitted under subsection 6.3(xiv) $ 100,000
14. Aggregate fair market value of Investments in Common Stock in
connection with the administration of the Company's 401(k) program
permitted under subsection 6.3(xvi) $__________
15. Maximum permitted under subsection 6.3(xvi) $ 10,000,000
16. Aggregate fair market value of other Investments permitted under
subsection 6.3(xviii) $__________
17. Maximum permitted under subsection 6.3(xviii) $ 50,000,000
D. Contingent Obligations
1. Contingent reimbursement obligations under Commercial Letters of
Credit and Standby Letters of Credit permitted under subsection
6.4(vi) $__________
2. Maximum permitted under subsection 6.4(vi) $350,000,000
3. Guaranties of obligations of suppliers, customers, franchisees and
licensees permitted under subsection 6.4(x) $__________
4. Maximum permitted under subsection 6.4(x) $25,000,000
5. Guaranties of indebtedness owed by any Foreign Subsidiary to any
lender permitted under subsection 6.4(xii) $__________
6. Maximum permitted under subsection 6.4(xii) (first
proviso) $100,000,000
7. Aggregate amount of Contingent Obligations incurred under
subsection 6.4(xii) plus Aggregate fair market value of Investments
made and owned under subsection 6.3(xi) (D.5 + C.7)$__________
<PAGE>VII-6
8. Aggregate amount of all dividends, distributions and other cash
payments received by the Company and its Consolidated Subsidiaries
after Closing Date in connection with the sale, transfer or other
disposition (to any Person other than Company or any of its
Subsidiaries) of any Investment of Company or any of its
Consolidated Subsidiaries in any Foreign Subsidiary$__________
9. Maximum permitted under subsection 6.4(xii) (second proviso
(compare D.7 to D.9))($250,000,000 + D.8) $__________
10. Other Contingent Obligations permitted under subsection
6.4(xiv) $__________
11. Maximum permitted under subsection 6.4(xiv) $ 50,000,000
E. Fixed Charge Coverage Ratio for the Period Ended __________, 19__
1. Consolidated Net Income $__________
2. Consolidated Adjusted Interest Expense $__________
3. Taxes based on income payable during such period$__________
4. Provisions for taxes based on income $__________
5. Depreciation expense $__________
6. Consolidated Rental Payments $__________
7. Amortization expense (excluding Capital Lease amortization)
$_________
8. Other non-cash items reducing Consolidated Net Income$__________
9. Non-cash items increasing Consolidated Net Income$__________
10. Adjustments due to Asset Sales $__________
<PAGE>VII-7
11. Consolidated Cash Flow Available for Fixed Charges ((1+2+4+5+6+7+8-
9) + or - (10)) $__________
12. Adjustments due to Asset Sales plus total interest expense directly
attributable to Indebtedness repaid, prepaid or redeemed from Net
Cash Proceeds of such Asset Sales $__________
13. Payments of principal with respect to Existing
Indebtedness $__________
14. Consolidated Fixed Charges (2+3+6+13-12) $__________
15. Fixed Charge Coverage Ratio (11):(14) _______:1.00
16. Minimum ratio permitted under subsection 6.6A _______:1.00
F. Interest Coverage Ratio for the Period Ended __________, 19__
1. Consolidated Net Income $__________
2. Provisions for taxes based on income $__________
3. Total interest expense $__________
4. Consolidated EBIT (1+2+3) $__________
5. Consolidated Cash Interest Expense $__________
6. Interest Coverage Ratio (4):(5) _______:1.00
7. Minimum ratio permitted under subsection 6.6B _______:1.00
G. Maximum Leverage Ratio as of __________, 19__
1. Consolidated Total Debt $__________
2. Consolidated Net Worth $__________
3. Maximum Leverage Ratio (1):(2) _______:1.00
4. Maximum Leverage Ratio permitted under subsection 6.6C_______:1.00
<PAGE>VII-8
H. Fundamental Changes
1. Aggregate fair market value of stock or other assets sold in any
one or more Asset Sales during consecutive 12-month period in one
or more transactions permitted under subsection 6.7(iv)(b)(i)
$__________
2. Maximum permitted during consecutive 12-month period under
subsection 6.7(iv)(b)(i) before consent of Requisite Lenders
required $100,000,000
3. Aggregate fair market value of stock or other assets sold in any
one or more Asset Sales after Closing Date in one or more
transactions permitted under subsection 6.7(iv)(b)(ii)$__________
4. Maximum permitted under subsection 6.7(iv)(b)(ii) before consent of
Requisite Lenders required $300,000,000
I. Leases
1. Consolidated Rental Payments permitted under subsection 6.8 for
fiscal year-to-date $__________
2. Maximum amount permitted under subsection 6.8 for fiscal
year $__________
J. Capital Expenditures
1. Consolidated Capital Expenditures permitted under subsection 6.13
for fiscal year-to-date $__________
2. Maximum Amount of Consolidated Capital Expenditures permitted under
subsection 6.13 for fiscal year $__________
<PAGE>VIII-1
EXHIBIT VIII
[FORM OF O-I SUBSIDIARY GUARANTY]
O-I SUBSIDIARY GUARANTY
This O-I SUBSIDIARY GUARANTY (as amended, amended and restated or
otherwise modified from time to time, this "Guaranty") is entered into as of
December 15, 1993, by the undersigned ("Guarantors") in favor of and for the
benefit of BANKERS TRUST COMPANY, as Collateral Agent for and representative
of (in such capacity herein called the "Collateral Agent") the lenders
("Current Lenders") party to the Current Credit Agreement (as hereinafter
defined), any Successor Lenders (as hereinafter defined), any Lender (as
hereinafter defined) party to the Interest Rate Agreements and Currency
Agreements referred to below, and any Commercial Paper Representatives and
Commercial Paper Holders (as such terms are hereinafter defined)
(collectively, the "Guarantied Parties").
R E C I T A L S
WHEREAS, Owens-Illinois, Inc., a Delaware corporation ("Company"),
Current Lenders, the Current Lenders named as Lead Managers or Co-Agents for
Current Lenders, and Bankers Trust Company, as Agent for Current Lenders
("Current Credit Agent"), have entered into that certain Refinancing Credit
Agreement dated as of December 15, 1993 (said Refinancing Credit Agreement,
as it may hereafter be amended, amended and restated or otherwise modified
from time to time, being the "Current Credit Agreement"; capitalized terms
defined therein and not otherwise defined herein being used herein as therein
defined or as defined in the Successor Credit Agreement (as hereinafter
defined) then in effect) pursuant to which Current Lenders have agreed to
provide certain credit facilities to Company for the purpose of, among other
things, (i) refinancing all outstanding Indebtedness under the Existing
Credit Agreement, (ii) refinancing indebtedness outstanding under the Senior
Indentures (as hereinafter defined), and (iii) restructuring a portion of the
credit facilities provided under the Existing Credit Agreement by permitting
Company to issue Commercial Paper as more fully described below;
WHEREAS, the refinancings of Indebtedness referred to in the
immediately preceding recital will inure, in whole or in part, to the benefit
of Guarantors, and, in addition, it is contemplated that certain proceeds of
the Loans made to Company by Current Lenders will be advanced to Guarantors
and that certain Letters of Credit will be issued directly or indirectly for
the benefit of Guarantors, and to such extent the Obligations of Company are
being incurred for and will inure to the benefit of Guarantors (which
benefits are hereby acknowledged);
<PAGE>VIII-2
WHEREAS, it is contemplated that, from time to time, Current
Lenders or other financial institutions (collectively, "Successor Lenders")
may enter into one or more agreements with Company and other Persons,
including Subsidiaries of Company, either extending the maturity of,
refinancing or otherwise restructuring (including, but not limited to, the
inclusion of additional borrowers thereunder which are Subsidiaries of
Company) all or any portion of the Indebtedness under the Current Credit
Agreement or any Successor Credit Agreement (as hereinafter defined) or the
Senior Note Indenture or the Senior Debenture Indenture (collectively, the
"Senior Indentures") (said agreements, as they may exist from time to time
(but, in the case of such a refinancing or restructuring, only to the extent
thereof), being the "Successor Credit Agreements", which together with the
Current Credit Agreement are referred to herein as the "Credit Agreements";
provided that, notwithstanding the fact (as more fully described in the
Intercreditor Agreement) that any agreement or instrument pursuant to which
any Commercial Paper is issued or evidencing any Commercial Paper Obligations
(as hereinafter defined) (collectively, the "Commercial Paper Documents")
could have constituted a Successor Credit Agreement, in no event shall any
Commercial Paper Document be deemed to be a Successor Credit Agreement or a
Credit Agreement; provided, further that, notwithstanding the fact (as more
fully described in the Intercreditor Agreement) that any Additional
Subordinated Debt Indenture (as defined in the Intercreditor Agreement) could
have constituted a Successor Credit Agreement, in no event shall any such
Additional Subordinated Debt Indenture be deemed to be a Successor Credit
Agreement or a Credit Agreement; and provided, further, that in no event
shall any amendment, amendment and restatement or other modification of the
Current Credit Agreement after the date hereof cause the Current Credit
Agreement to be deemed to be a Successor Credit Agreement or require Current
Credit Agent to execute an acknowledgment to the Intercreditor Agreement in
connection with such amendment, amendment and restatement or other
modification) (Current Lenders and any Successor Lenders being collectively
referred to herein as "Lenders", and Current Credit Agent and any agents
(collectively, "Successor Credit Agents") under any Successor Credit
Agreements being collectively referred to herein as "Credit Agents"), and it
is desired that the obligations of Company and any additional borrowers which
are Subsidiaries of Company under any Successor Credit Agreements
(collectively, the "Successor Credit Agreement Obligations") be guarantied
hereunder to the same extent as the Obligations under the Current Credit
Agreement;
WHEREAS, it is contemplated that the Successor Credit Agreement
Obligations will be incurred for and will inure to, in whole or in part, the
benefit of Guarantors (which benefits are hereby acknowledged);
WHEREAS, it is contemplated that Company may from time to time
enter into Interest Rate Agreements and Currency Agreements with one or more
Lenders as contemplated by subsection 6.4(vii) of the Current Credit
Agreement, and Guarantors desire to guaranty all the obligations of Company
under such Interest Rate Agreements and Currency Agreements (all such
obligations being the "Interest Rate Obligations" or the "Currency
Obligations", as the case may be);
<PAGE>VIII-3
WHEREAS, it is contemplated that the Interest Rate Obligations and
Currency Obligations will be incurred for and will inure to, in whole or in
part, the benefit of Guarantors;
WHEREAS, Current Lenders have agreed, subject to the terms and
conditions set forth in the Current Credit Agreement, to permit Company to
issue Commercial Paper in an aggregate face amount at any time outstanding
not to exceed the amount specified in the Current Credit Agreement to the
extent that Company has reserved unused a portion of the Commitments under
the Current Credit Agreement;
WHEREAS, it is contemplated that the Commercial Paper Obligations
(as hereinafter defined) will be incurred for and will inure to, in whole or
in part, the benefit of Guarantors;
WHEREAS, Guarantors desire to guaranty all obligations of Company
under any such Commercial Paper outstanding from time to time (the
"Commercial Paper Obligations") for the benefit of any financial institutions
initially purchasing such Commercial Paper (each an "Initial Commercial Paper
Holder" and collectively the "Initial Commercial Paper Holders") or appointed
to act as agent or representative for the holders from time to time of such
Commercial Paper (each a "Commercial Paper Representative" and collectively
the "Commercial Paper Representatives"; provided that in the event no such
financial institution is appointed to act as agent or representative for the
holders of any Commercial Paper, the Commercial Paper Holder in respect of
such Commercial Paper shall be deemed to be the Commercial Paper
Representative in respect of such Commercial Paper) and for the benefit of
the holders from time to time of such Commercial Paper (together with the
Initial Commercial Paper Holders, the "Commercial Paper Holders");
WHEREAS, Current Lenders have required that this Guaranty be
executed and delivered by Guarantors at or prior to the making of the initial
Loans under the Current Credit Agreement; and
WHEREAS, Company, Group, as guarantor, and The Bank of New York, as
trustee, have entered into an Indenture dated as of December 15, 1991 (the
"Senior Debenture Indenture") pursuant to which Company has issued
$1,000,000,000 in aggregate principal amount of senior debentures due 2003
(the "Senior Debentures");
WHEREAS, each Guarantor other than Group (collectively, the "Common
Guarantors") has guarantied the obligations of Company under the Senior
Debenture Indenture and the Senior Debentures issued thereunder pursuant to a
Subsidiary Guaranty substantially in the form of Exhibit E to the Senior
Debenture Indenture (each such Subsidiary Guaranty being a "Senior Debenture
Guaranty"; collectively, the "Senior Debenture Guaranties"); and
<PAGE>VIII-4
WHEREAS, in accordance with certain provisions of the Senior
Debenture Indenture, Current Lenders have agreed to modify the maximum
liability of each Common Guarantor hereunder during any period in which such
Common Guarantor is the obligor under a Senior Debenture Guaranty or any
other guaranty of any Participating Indebtedness (as hereinafter defined);
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, Guarantors hereby agree as follows:
Guarantors jointly and severally hereby unconditionally guaranty
the due and punctual payment of all Obligations, all Successor Credit
Agreement Obligations, all Interest Rate Obligations, all Currency
Obligations and all Commercial Paper Obligations when the same shall become
due, whether at stated maturity, by required payment, declaration, demand or
otherwise (including amounts which would become due but for the operation of
the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
S 362(a)), and agree to pay any and all costs and expenses (including fees
and disbursements of counsel and allocated costs of internal counsel)
incurred by Collateral Agent, Credit Agents, Lenders, any Commercial Paper
Representative or any Commercial Paper Holder in enforcing any rights under
this Guaranty (collectively, the "Guarantied Obligations"); provided that the
guaranty hereunder and any other provisions of this Guaranty shall be
effective as to any obligations in respect of any Successor Credit Agreements
or any Interest Rate Obligations and Currency Obligations only if the holders
of said obligations or their representatives and Guarantors shall have
acknowledged and delivered to Collateral Agent a counterpart of the
Intercreditor Agreement; and provided, further, that the guaranty hereunder
and any other provisions of this Guaranty shall be effective as to Commercial
Paper Obligations in respect of any Commercial Paper only if the Commercial
Paper Representative in respect of such Commercial Paper and Guarantors shall
have acknowledged and delivered to Collateral Agent a counterpart of the
Intercreditor Agreement.
Anything contained in this Guaranty to the contrary notwithstanding
(but subject, however, to the provisions of the next succeeding paragraph),
the obligations of each Guarantor hereunder shall be limited to a maximum
aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "Fraudulent
Transfer Laws"), in each case after giving effect to all other liabilities of
such Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Guarantor in respect of intercompany indebtedness to Company or other
affiliates of Company to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by such Guarantor hereunder
pursuant to which the liability of such Guarantor hereunder is included in
the liabilities taken into account in determining such maximum amount) and
<PAGE>VIII-5
after giving effect as assets to the value (as determined under the
applicable provisions of the Fraudulent Transfer Laws) of any rights to
subrogation, reimbursement or contribution of such Guarantor pursuant to (i)
applicable law or (ii) any agreement providing for an equitable allocation
among such Guarantor and other affiliates of Company of obligations arising
under guaranties by such parties.
Anything contained in this Guaranty to the contrary
notwithstanding, at all times, if any, during which any Common Guarantor is
the obligor under a Senior Debenture Guaranty or any other guaranty of any
Participating Indebtedness (any such Common Guarantor being, at all such
times (and only at such times), a "Participating Guarantor") the provisions
of the immediately preceding paragraph shall be inapplicable as to such
Participating Guarantor, and each Common Guarantor hereby, and each
beneficiary under this Guaranty by accepting the benefits hereof, confirms
that it is its intention that the guaranty by each Participating Guarantor
pursuant to this Guaranty together with each other guaranty by such Partici-
pating Guarantor of Participating Indebtedness shall not constitute a
fraudulent transfer or conveyance for purposes of any applicable provisions
of Title 11 of the United States Code, the Uniform Fraudulent Conveyance Act,
the Uniform Fraudulent Transfer Act, or any similar federal or state law. To
effectuate the foregoing intent, the obligations of each Participating
Guarantor under this Guaranty and each other guaranty of Participating
Indebtedness shall be limited, collectively, to such maximum amount as will,
after giving effect to such maximum amount and all other liabilities of such
Participating Guarantor, contingent or otherwise, that are relevant under
such laws, and after giving effect to any rights to contribution of such
Participating Guarantor pursuant to any agreement providing for an equitable
distribution among such Participating Guarantor and other affiliates of
Company of payments made under guaranties by such parties, result in the
obligations of such Participating Guarantor in respect of such maximum amount
not constituting a fraudulent transfer or conveyance. Each beneficiary under
this Guaranty by accepting the benefits hereof confirms its intention that,
in the event of a bankruptcy, reorganization or other similar proceeding of
Company or any Participating Guarantor in which concurrent claims are made
upon such Participating Guarantor hereunder and under any other guaranty of
Participating Indebtedness, to the extent such claims will not be fully
satisfied, each claimant with a valid claim against Company shall be entitled
to a ratable share of all payments by such Participating Guarantor in respect
of such concurrent claims. For the purposes of this paragraph and this
Guaranty, "Participating Indebtedness" means, as to any Common Guarantor, any
Indebtedness of Company that is guarantied by such Common Guarantor pursuant
to a guaranty (i) the incurrence of which is not prohibited by the terms of
any Credit Agreement or any agreement governing any other Participating
Indebtedness then outstanding (or, if so prohibited by the terms of any
Credit Agreement or any such agreement, is permitted as a result of a consent
or waiver thereunder) and (ii) that contains a limitation of liability and
confirmation of intention regarding ratability of payments on substantially
the terms set forth in this paragraph.
<PAGE>VIII-6
Guarantors under this Guaranty together desire to allocate among
themselves, in a fair and equitable manner, their obligations arising under
this Guaranty. Accordingly, in the event any payment or distribution is made
on any date by any Guarantor under this Guaranty (a "Funding Guarantor") that
exceeds its Fair Share (as defined below) as of such date, that Funding
Guarantor shall be entitled to a contribution from each of the other
Guarantors in the amount of such other Guarantor's Fair Share Shortfall (as
defined below) as of such date, with the result that all such contributions
will cause each Guarantor's Aggregate Payments (as defined below) to equal
its Fair Share as of such date. "Fair Share" means, with respect to a
Guarantor as of any date of determination, an amount equal to (i) the ratio
of (x) the Adjusted Maximum Amount (as defined below) with respect to such
Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with respect
to all Guarantors, multiplied by (ii) the aggregate amount paid or
distributed on or before such date by all Funding Guarantors under this
Guaranty in respect of the obligations guarantied. "Fair Share Shortfall"
means, with respect to a Guarantor as of any date of determination, the
excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "Adjusted Maximum Amount" means, with respect to
a Guarantor as of any date of determination, the maximum aggregate amount of
the obligations of such Guarantor under this Guaranty, determined as of such
date in accordance with the second preceding paragraph or the immediately
preceding paragraph, whichever is applicable; provided that solely for
purposes of calculating the "Adjusted Maximum Amount" with respect to any
Guarantor for purposes of this paragraph, any assets or liabilities of such
Guarantor arising by virtue of any rights to subrogation or reimbursement or
any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "Aggregate Payments"
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on
or before such date by such Guarantor in respect of this Guaranty (including,
without limitation, in respect of this paragraph) minus (ii) the aggregate
amount of all payments received on or before such date by such Guarantor from
the other Guarantors as contributions under this paragraph. The amounts
payable as contributions hereunder shall be determined as of the date on
which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Guarantors of their obligations as set forth
in this paragraph shall not be construed in any way to limit the liability of
any Guarantor hereunder.
Guarantors agree that the Guarantied Obligations may be extended or
renewed, in whole or in part, without notice or further assent from them, and
that each Guarantor will remain bound upon this Guaranty notwithstanding any
extension, renewal or other alteration of any Guarantied Obligation.
Guarantors waive presentation of, demand of, and protest of any
Guarantied Obligation and also waive notice of protest for nonpayment. The
obligations of Guarantors under this Guaranty shall not be affected by:
<PAGE>VIII-7
(a) the failure of any Guarantied Party, Collateral Agent, any
Credit Agent or any other Person to assert any claim or demand or to
enforce any right or remedy against Company under the provisions of any
Credit Agreement, any other Loan Document, any Interest Rate Agreement,
any Currency Agreement or any Commercial Paper Document or any other
agreement or otherwise,
(b) any extension or renewal of any provision of any thereof,
(c) any rescission, waiver, amendment or modification of any of
the terms or provisions of any Credit Agreement, any other Loan
Document, any Interest Rate Agreement, any Currency Agreement, any
Commercial Paper Document or any instrument or agreement executed
pursuant thereto,
(d) the failure to perfect any security interest in, or the
release of, any of the security held by any Guarantied Party, Collateral
Agent, any Credit Agent or any other Person for any of the Guarantied
Obligations, or
(e) the failure of any Guarantied Party, Collateral Agent, any
Credit Agent or any other Person to exercise any right or remedy against
any other guarantor of any of the Guarantied Obligations.
Guarantors further agree that this Guaranty constitutes a guaranty
of payment when due and not of collection and waive any right to require that
any resort be had by any Guarantied Party, Collateral Agent, any Credit Agent
or any other Person to any of the security held for payment of any of the
Guarantied Obligations or to any balance of any deposit account or credit on
the books of any Guarantied Party, Collateral Agent, any Credit Agent or any
other Person in favor of Company or any other Person.
The obligations of Guarantors under this Guaranty shall not be
subject to any reduction, limitation, impairment or termination for any
reason, including, without limitation, any claim of waiver, release,
surrender, alteration or compromise of any of the Guarantied Obligations, and
shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever by reason of the invalidity, illegality or
unenforceability of any of the Guarantied Obligations, the discharge of
Company from any of the Guarantied Obligations in a bankruptcy or similar
proceeding, or otherwise. Without limiting the generality of the foregoing,
the obligations of Guarantors under this Guaranty shall not be discharged or
impaired or otherwise affected by the failure of any Guarantied Party,
Collateral Agent, any Credit Agent or any other Person to assert any claim or
demand or to enforce any remedy under any Credit Agreement, any other Loan
Document, any Interest Rate Agreement, any Currency Agreement, any Commercial
Paper Document or any other agreement, by any waiver or modification of any
thereof, by any default, or any other act or thing or omission or delay to do
<PAGE>VIII-8
any other act or thing which may or might in any manner or to any extent vary
the risk of Guarantors or which would otherwise operate as a discharge of
Guarantors as a matter of law or equity.
Guarantors further agree that this Guaranty shall continue to be
effective or be reinstated, as the case may be, if at any time payment, or
any part thereof, of principal of, interest on or any other amount with
respect to any Guarantied Obligation is rescinded or must otherwise be
restored by any Guarantied Party, Collateral Agent, any Credit Agent or any
other Person upon the bankruptcy or reorganization of Company, any Guarantor,
any other Person or otherwise.
Guarantors further agree, in furtherance of the foregoing and not
in limitation of any other right which any Guarantied Party, Collateral
Agent, any Credit Agent or any other Person may have at law or in equity
against Guarantors by virtue hereof, upon the failure of Company to pay any
of the Guarantied Obligations when and as the same shall become due, whether
by required prepayment, declaration or otherwise (including amounts which
would become due but for the operation of the automatic stay under Section
362(a) of the Bankruptcy Code, 11 U.S.C. S 362(a)), Guarantors will forthwith
pay, or cause to be paid, in cash, to Collateral Agent for the ratable
benefit of Guarantied Parties, an amount equal to the sum of the unpaid
principal amount of such Guarantied Obligations then due as aforesaid,
accrued and unpaid interest on such Guarantied Obligations (including,
without limitation, interest which, but for the filing of a petition in a
bankruptcy, reorganization or other similar proceeding with respect to
Company, would have accrued on such Guarantied Obligations) and all other
Guarantied Obligations then owed to Guarantied Parties as aforesaid. All
such payments shall be applied promptly from time to time by the Collateral
Agent:
First, to the payment of the costs and expenses of any collection
or other realization under this Guaranty, including reasonable
compensation to the Collateral Agent and its agents and counsel, and all
expenses, liabilities and advances made or incurred by the Collateral
Agent in connection therewith;
Second, to the payment of the Guarantied Obligations as provided in
Section 3 of the Intercreditor Agreement; provided that in making such
application to any Commercial Paper Holder (or the Commercial Paper
Representative in respect of such Commercial Paper Holder) in respect of
any Commercial Paper Obligations, the Collateral Agent shall be entitled
to deduct from such Commercial Paper Holder's share of such payments
such Commercial Paper Holder's pro rata share of all amounts that the
Collateral Agent has been paid by the Paying Indemnifying Parties (as
defined in Section 7(c) of the Intercreditor Agreement) pursuant to
Section 7(c) of the Intercreditor Agreement; and
<PAGE>VIII-9
Third, after payment in full of all Guarantied Obligations, to the
payment to Guarantors, or their successors or assigns, or to whomsoever
may be lawfully entitled to receive the same or as a court of competent
jurisdiction may direct, of any surplus then remaining from such
payments.
Each Guarantor hereby waives any claim, right or remedy, direct or
indirect, that such Guarantor now has or may hereafter have against Company
or any of its assets in connection with this Guaranty or the performance by
such Guarantor of its obligations hereunder, in each case whether such claim,
right or remedy arises in equity, under contract, by statute, under common
law or otherwise and including without limitation (a) any right of
subrogation, reimbursement or indemnification that such Guarantor now has or
may hereafter have against Company, (b) any right to enforce, or to
participate in, any claim, right or remedy that Collateral Agent or any
Guarantied Party now has or may hereafter have against Company, and (c) any
benefit of, and any right to participate in, any collateral or security now
or hereafter held by Collateral Agent or any Guarantied Party. In addition,
until the Guarantied Obligations shall have been indefeasibly paid in full
and the Commitments shall have terminated and all Letters of Credit shall
have expired or been cancelled, each Guarantor shall withhold exercise of any
right of contribution such Guarantor may have against any other guarantor
(including any other Guarantor) of the Guarantied Obligations (including
without limitation any such right of contribution hereunder) as a result of
any payment hereunder. Each Guarantor further agrees that, to the extent the
waiver of its rights of subrogation, reimbursement, indemnification and
contribution as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any such rights of
subrogation, reimbursement or indemnification such Guarantor may have against
Company or against any collateral or security, and any such rights of
contribution such Guarantor may have against any such other guarantor, shall
be junior and subordinate to any rights Collateral Agent or any Guarantied
Party may have against Company, to all right, title and interest Collateral
Agent or any Guarantied Party may have in any such collateral or security,
and to any right Collateral Agent or any Guarantied Party may have against
such other guarantor. If any amount shall be paid to any Guarantor on
account of any such subrogation, reimbursement, indemnification or
contribution rights at any time when all Guarantied Obligations shall not
have been paid in full, such amount shall be held in trust for Collateral
Agent on behalf of Guarantied Parties and shall forthwith be paid over to
Collateral Agent for the benefit of Guarantied Parties to be credited and
applied against the Guarantied Obligations, whether matured or unmatured, in
accordance with the terms hereof.
<PAGE>VIII-10
No delay or omission by any Guarantied Party, Collateral Agent or
any Credit Agent to exercise any right under this Guaranty shall impair any
such right, nor shall it be construed to be a waiver thereof. No amendment,
modification, termination or waiver of any provision of this Guaranty, or
consent to any departure by Guarantors therefrom, shall in any event be
effective without the written concurrence of Requisite Lenders under the
Credit Agreement then in effect; provided that no such amendment,
modification, termination, waiver or consent which would reduce or adversely
affect the right of the Commercial Paper Representatives to request or direct
the Collateral Agent to take action as provided in Section 2(a) of the Inter-
creditor Agreement shall in any event be effective as to the Commercial Paper
Holders or Commercial Paper Representatives in respect of any Commercial
Paper outstanding at the time of such amendment, modification, termination,
waiver or consent without the written concurrence of the Commercial Paper
Representatives in respect of a majority in aggregate face amount of such
outstanding Commercial Paper. No waiver of any single breach or default
under this Guaranty shall be deemed a waiver of any other breach or default.
Anything contained in this Guaranty to the contrary
notwithstanding, no Guarantied Party shall be entitled to take any action
whatsoever to enforce any term or provision of this Guaranty except through
the Collateral Agent in accordance with the terms of the Intercreditor
Agreement.
This Guaranty shall be binding upon each Guarantor and its
respective successors and assigns and shall inure to the benefit of the
successors and assigns of Collateral Agent and Guarantied Parties and, in the
event of any transfer or assignment of rights by Collateral Agent or any
Guarantied Party, the rights and privileges herein conferred upon Collateral
Agent and Guarantied Parties shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms and conditions hereof.
Upon the liquidation of any Guarantor, the obligations of that
Guarantor hereunder shall be assumed by its successors (including, without
limitation, its stockholders on the date of such liquidation) except to the
extent that any such assumption (i) shall be prohibited by applicable law or
(ii) would be considered an investment of earnings in United States property
under Section 956 (or a successor provision) of the Internal Revenue Code
which investment would trigger an increase in the gross income of a United
States stockholder of such successor pursuant to Section 951 (or a successor
provision) of the Internal Revenue Code.
If all of the stock of any Guarantor or any of its successors in
interest under this Guaranty shall be sold or otherwise disposed of
(including by merger or consolidation) in an Asset Sale not prohibited by the
Credit Agreement then in effect or otherwise consented to by Requisite
Lenders under the Credit Agreement then in effect or, in the case of OI
Kimble FTS Inc. and its Subsidiaries, upon the consummation of the Kimble
Sale, the Guaranty of such Guarantor or such successor in interest, as the
<PAGE>VIII-11
case may be, hereunder shall automatically be discharged and released without
any further action by any Credit Agent, Collateral Agent or any other Person
or any Guarantied Party, effective as of the time of such Asset Sale or
consent.
If any Guarantor or any of its successors in interest under this
Guaranty shall be merged with and into any O-I Subsidiary in a transaction
not prohibited by the Credit Agreement then in effect or otherwise consented
to by Requisite Lenders under the Credit Agreement then in effect, and if
such Guarantor or such successor in interest, as the case may be, is not the
surviving corporation in such merger, the Guaranty of such Guarantor or such
successor in interest, as the case may be, hereunder shall be automatically
discharged and released without any further action by any Credit Agent,
Collateral Agent or any other Person or any Guarantied Party, effective as of
the time of consummation of such merger.
THIS GUARANTY, AND ANY INSTRUMENT OR AGREEMENT REQUIRED HEREUNDER,
SHALL BE DEEMED TO BE MADE UNDER, SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
All judicial proceedings brought against any Guarantor with respect
to this Guaranty may be brought in any state or federal court of competent
jurisdiction in the State of New York and by execution and delivery of this
Guaranty, each Guarantor accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Guaranty. Each Guarantor designates
and appoints C T Corporation System, The Corporation Trust Company,
1633 Broadway, New York, New York 10019 and such other Persons as may
hereafter be selected by Guarantors irrevocably agreeing in writing to so
serve, as their agent to receive on their behalf service of all process in
any such proceedings in any such court, such service being hereby
acknowledged by each Guarantor to be effective and binding service in every
respect. A copy of any such process so served shall be mailed by registered
mail to each Guarantor at the address of the Company provided in the Credit
Agreement except that, unless otherwise provided by applicable law, any
failure to mail such copy shall not affect the validity of service of
process. If any agent appointed by any Guarantor refuses to accept service,
each Guarantor hereby agrees that service upon it by mail shall constitute
sufficient notice. Nothing herein shall affect the right of the Agent to
bring proceedings against any Guarantor in the courts of any other
jurisdiction.
The initial Guarantors hereunder shall be such of the Subsidiaries
of Company as are signatories hereto on the date hereof. From time to time
subsequent to the date hereof, additional Subsidiaries of Company may become
parties hereto, as additional Guarantors (each an "Additional Guarantor"), by
executing a counterpart of this Guaranty. Upon delivery of any such
<PAGE>VIII-12
counterpart to Collateral Agent, notice of which is hereby waived by
Guarantors, each such Additional Guarantor shall be a Guarantor and shall be
as fully a party hereto as if such Additional Guarantor were an original
signatory hereof. Each Guarantor expressly agrees that its obligations
arising hereunder shall not be affected or diminished by the addition or
release of any other Guarantor hereunder, nor by any election of Lenders not
to cause any Subsidiary of Company to become an Additional Guarantor
hereunder. This Guaranty shall be fully effective as to any Guarantor that
is or becomes a party hereto regardless of whether any other Person becomes
or fails to become or ceases to be a Guarantor hereunder.
This Guaranty may be executed in any number of counterparts and by
the different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed to be an original for all purposes;
but all such counterparts together shall constitute but one and the same
instrument. This Guaranty shall become effective as to each Guarantor upon
the execution of a counterpart hereof by such Guarantor (whether or not a
counterpart hereof shall have been executed by any other Guarantor) and
receipt by Collateral Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
[Remainder of page intentionally left blank]
<PAGE>VIII-13
IN WITNESS WHEREOF, each of the undersigned Guarantors has caused
this Guaranty to be duly executed as of the day and year first written above.
Owens-Illinois Group, Inc., Owens-Brockway Packaging, Inc.
(formerly named "OI Glass Container FTS Inc."), OI Closure FTS Inc., OI
Plastic Products FTS Inc., OI Kimble FTS Inc., O-I Health Care Holding Corp.
(formerly named "Health Care and Retirement Corporation"), OI General FTS
Inc., OI General Finance Inc., Owens-Brockway Glass Container Inc. (formerly
named "Owens-Illinois Glass Container Inc." and "OI Glass Container STS
Inc."), OI IONE STS Inc., OI US Capital STS Inc., Owens-Illinois Closure Inc.
(formerly named "OI Closure STS Inc."), Owens-Illinois Plastic Products Inc.
(formerly named "OI Blown Container STS Inc."), Owens-Illinois Prescription
Products Inc. (formerly named "OI Prescription Products STS Inc."), OI
Treitler STS Inc., OI Dougherty STS Inc., OI Kontes STS Inc., OI Schott STS
Inc., OI Enbosa STS Inc., Kimble Glass Inc. (formerly named "OI Kimble STS
Inc."), Owens-Illinois General Inc. (formerly named "OI General STS Inc."),
OI Castalia STS Inc., OI Levis Park STS Inc., OI MVCURC STS Inc., OI UMI STS
Inc., OI AID STS Inc. and Specialty Packaging Licensing Company.
By: ________________________________
David G. Van Hooser
Vice President and Treasurer
of each of the foregoing
Guarantors
ACCEPTED AND AGREED TO:
BANKERS TRUST COMPANY,
as Collateral Agent
By: __________________________
Title:
IN WITNESS WHEREOF, the undersigned Additional Guarantor has caused
this Guaranty to be duly executed as of __________, 199__.
ACCEPTED AND AGREED TO: _______________________________
(Name of Additional Guarantor)
BANKERS TRUST COMPANY,
as Collateral Agent
By: ________________________
By:
__________________________ Name: ________________________
Title:
Title: ________________________
<PAGE>IX-1
EXHIBIT IX
[FORM OF OPINION OF LATHAM & WATKINS]
December 17, 1993
Bankers Trust Company, as
Agent and as Collateral Agent
One Bankers Trust Plaza
New York, New York 10006
and
The Lead Managers, Co-Agents and Lenders
identified on Exhibit A hereto
Re: Refinancing Credit Agreement dated as of December 15, 1993
among Owens-Illinois, Inc., the Lenders, Lead Managers and Co-
Agents listed therein and Bankers Trust Company, as Agent
Ladies and Gentlemen:
We have acted as special counsel to Owens-Illinois, Inc., a
Delaware corporation (the "Company"), in connection with that certain
Refinancing Credit Agreement dated as of December 15, 1993 (the "Credit
Agreement") among the Company, the Lenders, Lead Managers and Co-Agents
listed therein (collectively, the "Lenders") and Bankers Trust Company, as
Agent (in such capacity, "Agent"); capitalized terms defined in the Credit
Agreement which are used and not otherwise defined herein, shall have the
meanings given them in the Credit Agreement. We have also acted as special
counsel to each direct and indirect subsidiary of the Company identified on
Exhibit B hereto (each a "Guarantor Subsidiary" and, collectively, the
"Guarantor Subsidiaries") in connection with the Intercreditor Agreement, the
OI Subsidiary Pledge Agreement and the OI Subsidiary Guaranty.
This opinion is rendered to you, at the request of the Company,
pursuant to subsection 3.1F of the Credit Agreement.
As such counsel, we have examined such matters of fact and
questions of law as we have considered appropriate for purposes of rendering
the opinions expressed below. We have examined, among other things, the
following:
(a) the Credit Agreement;
<PAGE>IX-2
(b) the Revolving Notes, Bid Rate Loan Notes and the Swing
Line Note, in each case issued by the Company on the Closing Date
(collectively, the "Notes");
(c) the Company Pledge Agreement;
(d) the OI Subsidiary Guaranty;
(e) the OI Subsidiary Pledge Agreement;
(f) the Collateral Account Agreement;
(g) the Overdraft Agreement; and
(h) the indentures pursuant to which the Senior Debentures,
the Senior Notes and the Senior Subordinated Debt have been issued
(collectively, the "Indentures").
The documents described in subsections (a) through (g) above are
referred to herein collectively as the "Loan Documents." As used in this
opinion, the "UCC" shall mean the Uniform Commercial Code as now in effect in
the specified jurisdiction.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of all natural persons executing documents,
the authenticity of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us
as copies.
We have been furnished with, and with your consent have relied
upon, certificates of officer(s) of the Company and the Guarantor
Subsidiaries with respect to certain factual matters. In addition, we have
obtained and relied upon such certificates and assurances from public
officials as we have deemed necessary.
We are opining herein as to the effect on the subject transactions
only of the federal laws of the United States, the internal laws of the State
of New York and the General Corporation Law of the State of Delaware (the
"DGCL"), and we express no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction or, in the case
of Delaware, any other laws or as to any matters of municipal law or the laws
of any other local agencies within any state. Various issues are addressed
in the opinion of Thomas L. Young, General Counsel of the Company, separately
provided to you, and we express no opinion with respect to those matters.
Our opinions set forth in paragraph 2 below are based upon our
consideration of only those statutes, rules and regulations which, in our
experience, are normally applicable to borrowers and guarantors in secured
loan transactions.
<PAGE>IX-3
For purposes of this opinion, we have assumed, with your
permission, that (i) each of the Company and each Guarantor Subsidiary (each
a "Loan Party" and, collectively, the "Loan Parties") is duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, with corporate power and authority to conduct its business as
now conducted and to own, or hold under lease, its assets and to enter into
the Intercreditor Agreement and the Loan Documents to which it is a party and
perform its obligations thereunder, (ii) each Loan Party has duly authorized,
executed and delivered the Intercreditor Agreement and each Loan Document to
which it is a party, and (iii) none of the execution, delivery and
performance by any Loan Party of the Intercreditor Agreement and each Loan
Document to which it is a party will result in the violation of the
Certificate of Incorporation or Bylaws of such Loan Party.
Subject to the foregoing and the other matters set forth herein,
and in reliance thereon, it is our opinion that, as of the date hereof:
1. Each of the Loan Documents constitutes a legally valid and
binding obligation of each Loan Party party thereto, enforceable against such
Loan Party in accordance with its terms.
2. None of (a) the execution and delivery by each Loan Party of
the Intercreditor Agreement and the Loan Documents to which it is a party,
(b) the borrowing and repayment of the Loans by the Company pursuant to the
Credit Agreement, (c) the guarantee of the Company's obligations under the
Credit Agreement by each Guarantor Subsidiary pursuant to the OI Subsidiary
Guaranty, (d) the pledge, pursuant to the Company Pledge Agreement, by the
Company of the Pledged Collateral (as defined in the Company Pledge
Agreement) to secure the Obligations, or (e) the pledge, pursuant to the OI
Subsidiary Pledge Agreement, by each Guarantor Subsidiary party to the OI
Subsidiary Pledge Agreement (the "OI Subsidiary Pledgors") of the Pledged
Collateral (as defined in the OI Subsidiary Pledge Agreement) of such OI
Subsidiary Pledgor to secure the Obligations and to secure such OI
Subsidiary Pledgor's obligations under the OI Subsidiary Guaranty:
(i) violates any federal or New York statute, rule or regulation applicable
to such Loan Party (including, without limitation, Regulations G, T, U or X
of the Board of Governors of the Federal Reserve System) or any provision of
the DGCL applicable to such Loan Party , (ii) results in the breach of or a
default under any of the Indentures, or (iii) requires any consents,
approvals, authorizations, registrations, declarations or filings by such
Loan Party under any federal or New York statute, rule or regulation
applicable to such Loan Party or under any provision of the DGCL applicable
to such Loan Party. No opinion is expressed in this paragraph 2 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state law or of any antifraud laws, antitrust or trade
regulation laws.
3. Assuming the Collateral Agent is holding the certificates
evidencing the shares of capital stock listed on Part I of Schedule I to the
Company Pledge Agreement (the "Company Pledged Shares") and the certificates
<PAGE>IX-4
evidencing the shares of capital stock listed on Part I of Schedule I to the
OI Subsidiary Pledge Agreement (the "OI Subsidiary Pledged Shares" and,
together with the Company Pledged Shares, the "Pledged Shares"), with undated
stock powers duly indorsed in blank, in the State of New York, the Pledge
Agreements create valid and perfected security interests, in favor of the
Collateral Agent for the benefit of the Lenders and the other Secured Parties
(as defined in the applicable Pledge Agreement) in the rights in such Pledged
Shares which each Pledgor (as defined in the applicable Pledge Agreement) has
or has actual authority to convey, subject to no equal or prior consensual
security interest granted by the applicable Loan Party, as security for the
payment, to the extent set forth in the applicable Pledge Agreement, of all
obligations of the Company and the Intermediate Pledgors under the Loan
Documents.
4. Assuming the Collateral Agent is holding the promissory notes
evidencing the indebtedness described on Part II of Schedule I to the Company
Pledge Agreement (the "Company Pledged Notes") and the promissory notes
evidencing the indebtedness described on Part II of Schedule I to the OI
Subsidiary Pledge Agreement (the "OI Subsidiary Pledged Notes" and, together
with the Company Pledged Notes, the "Pledged Notes"), duly indorsed in blank,
in the State of New York, the Pledge Agreements create valid and perfected
security interests in favor of the Collateral Agent for the benefit of the
Lenders and the other Secured Parties (as defined in the applicable Pledge
Agreement) in such Pledged Notes, subject to no equal or prior consensual
security interest granted by the applicable Loan Party, as security for the
payment, to the extent set forth in the applicable Pledge Agreement, of all
obligations of the Company and the OI Subsidiary Pledgors under the Loan
Documents.
5. None of the Loan Parties is an "investment company" as such
term is defined in the Investment Company Act of 1940, as amended.
6. It is not necessary in connection with the execution and
delivery by the Company of the Notes to the recipients thereof (the "Note
Recipients") on the Closing Date to register the Notes under the Securities
Act of 1933, as amended, or to qualify any indenture in respect thereof under
the Trust Indenture Act of 1939, as amended.
7. All monetary obligations of the Company under the Credit
Agreement are within the definition of "Senior Indebtedness" as defined in
the Senior Subordinated Debt Indenture.
The opinions expressed in paragraph 1 do not include any opinions
with respect to the perfection or priority of any security interest or lien.
The opinions expressed in paragraph 1 and the opinions expressed in
paragraphs 3 and 4 as to the creation, validity, perfection and priority of
the security interests and liens referred to therein are further subject to
the following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
or affecting the rights or remedies of creditors generally;
<PAGE>IX-5
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be
brought;
(c) the unenforceability under certain circumstances under
law or court decisions of provisions providing for the indemnification
of or contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the
payment of attorney's fees, except to the extent that a court determines
such fees to be reasonable.
We express no opinion as to the terms of the OI Subsidiary Guaranty
providing for the equitable allocation and contribution among the Guarantor
Subsidiaries with respect to their obligations under or payments made in
respect of the OI Subsidiary Guaranty.
We have not been requested to express and, with your permission, do
not render any opinion as to the applicability to the obligations of the
Guarantor Subsidiaries under the Loan Documents of Section 548 of the
Bankruptcy Code or applicable state law (including, without limitation,
Article 10 of the New York Debtor & Creditor Law) relating to fraudulent
transfers and obligations.
We call to your attention that the provisions of the Loan Documents
which permit Agent, Collateral Agent, any Lead Manager, any Co-Agent or any
Lender to take action or make determinations may be subject to a requirement
that such action be taken or such determinations be made in a commercially
reasonable manner and in good faith.
In rendering the opinions expressed in paragraph 2 insofar as they
require interpretation of the Indentures (i) we have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written and would apply the internal laws of the State of New
York without giving effect to any choice of law provisions contained therein,
or any choice of law principles, which would result in application of the
internal laws of any other state, (ii) to the extent that any questions of
legality or legal construction have arisen in connection with our review, we
have applied the internal laws of the State of New York in resolving such
questions and (iii) except as expressly set forth in paragraph 2, we express
no opinion with respect to the effect of any action or inaction by any Loan
Party under the Loan Documents or the Indentures which may result in a breach
or default under any Indenture. We advise you that the Indentures may be
governed by other laws, that such laws may vary substantially from the law
assumed to govern for purposes of this opinion, and that this opinion may not
be relied upon as to whether or not a breach or default would occur under the
law actually governing such Indentures.
<PAGE>IX-6
Our opinions in paragraphs 3 and 4 are also subject to the
following assumptions, exceptions, limitations and qualifications:
(i) we express no opinion as to the creation, validity, perfection
or priority of any security interest or lien, except as expressly set forth
in paragraphs 3 and 4;
(ii) we have assumed that each Loan Party has "rights" in the
Pledged Notes pledged by such Loan Party, as contemplated by Section 9-203 of
the New York UCC;
(iii) we call to your attention the fact that the perfection of a
security interest in "proceeds" (as defined in the New York UCC) of
collateral is governed and restricted by Section 9-306 of the New York UCC;
(iv) we have assumed that the Collateral Agent and each Lender has
taken the Pledged Shares in good faith and without prior notice of any
adverse claim and that neither the Collateral Agent nor any Lender has been a
party to any fraud or illegality affecting the Pledged Shares;
(v) we have assumed that neither the Collateral Agent nor any of
the Lenders has expressly or by implication waived, subordinated or agreed to
any modification of the perfection or priority of any security interest under
the Loan Documents or agreed to any adverse claim; and
(vi) we have assumed that none of the Pledged Notes is subject to
a security interest perfected in the manner described in New York UCC SS 9-
304(4), (5) or (7) or 9-306(2) or (3).
For purposes of our opinions expressed in paragraph 6, we have
assumed with your permission that each Note Recipient is a commercial lender
or a financial institution which makes loans in the ordinary course of its
business and that it is receiving the Notes to be received by it and will
make each Loan under the Credit Agreement to be made by it for its own
account in the ordinary course of its commercial banking or lending business
and not with a view to or for sale in connection with any distribution of
such Notes.
To the extent that the obligations of the Company may be dependent
upon such matters, we assume for purposes of this opinion that: all parties
to the Loan Documents are duly incorporated, validly existing and in good
standing under the laws of their respective jurisdictions of incorporation;
all parties to the Loan Documents have the requisite corporate power and
authority to execute and deliver the Loan Documents and to perform their
respective obligations under the Loan Documents to which they are a party;
and the Loan Documents to which such parties are a party have been duly
authorized, executed and delivered by such parties and (with respect to such
parties other than the Loan Parties) constitute their legally valid and
binding obligations, enforceable against them in accordance with their terms.
Except as expressly set forth herein, we express no opinion as to compliance
<PAGE>IX-7
by any parties to the Loan Documents with any state or federal laws or
regulations applicable to the subject transactions because of the nature of
their business.
This opinion is rendered only to you and is solely for your benefit
in connection with the transactions covered hereby. This opinion may not be
relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without
our prior written consent. At your request, we hereby consent to reliance
hereon by any future assigns of your interest under the Credit Agreement
which are Eligible Assignees as expressly permitted by subsection 9.2 of the
Credit Agreement; provided that you have notified any such assignee that this
opinion speaks only as of the date hereof and to its addressees and that we
have no responsibility or obligation to update this opinion, to consider its
applicability or correctness to other than its addressees, or to take into
account changes in law, facts or any other development of which we may later
become aware.
Very truly yours,
<PAGE>IX-8
EXHIBIT A
to
Opinion of Latham & Watkins
Dated December 17, 1993
Rendered in Connection With
Owens-Illinois, Inc. Refinancing Credit Agreement
Lead Managers:
The Industrial Bank of Japan, Ltd.
Bank of Montreal, Chicago Branch
The Fuji Bank, Limited
The Sumitomo Bank, Ltd.
The Long-Term Credit Bank of Japan, Ltd.
Co-Agents:
Bank of America National Trust and Savings Association
The Bank of New York
The Bank of Nova Scotia
CIBC, Inc.
Continental Bank N.A.
The First National Bank of Chicago
NationsBank of North Carolina, N.A.
Societe Generale
The Toronto-Dominion Bank
Lenders:
The Mitsubishi Trust and Banking Corp.
Caisse Nationale De Credit Agricole
The Nippon Credit Bank, Ltd.
United States National Bank of Oregon
The First National Bank of Boston
Society National Bank
National City Bank
The Northern Trust Company
Mellon Bank, N.A.
The Sanwa Bank LTD.
Arab Banking Corporation
Bank of Hawaii
ABN Amro Bank N.V.
Yasuda Trust & Banking Co. Ltd.
<PAGE>IX-9
EXHIBIT B
to
Opinion of Latham & Watkins
Dated December 17, 1993
Rendered in Connection With
Owens-Illinois, Inc. Refinancing Credit Agreement
Guarantor Subsidiaries:
- ----------------------
Owens-Illinois Group, Inc.
Owens-Brockway Packaging, Inc.
OI Plastic Products FTS Inc.
OI Closure FTS Inc.
OI Kimble FTS Inc.
OI General FTS Inc.
OI General Finance Inc.
O-I Health Care Holding Corp.
Owens-Brockway Glass Container Inc.
OI IONE STS Inc.
Owens-Illinois Plastic Products Inc.
Owens-Illinois Prescription Products Inc.
OI Treitler STS Inc.
OI Dougherty STS Inc.
Owens-Illinois Closure Inc.
OI US Capital STS Inc.
Kimble Glass Inc.
OI Schott STS Inc.
OI Kontes STS Inc.
OI Enbosa STS Inc.
Owens-Illinois General Inc.
OI Levis Park STS Inc.
OI Castalia STS Inc.
OI MVCURC STS Inc.
OI UMI STS Inc.
OI AID STS Inc.
Specialty Packaging Licensing Company
<PAGE>X-1
EXHIBIT X
[FORM OF OPINION OF GENERAL COUNSEL FOR OWENS-ILLINOIS]
December 17, 1993
Bankers Trust Company, as
Agent and as Collateral Agent
One Bankers Trust Plaza
New York, New York 10006
and
The Lead Managers, Co-Agents and Lenders
identified on Exhibit A hereto
Re: Refinancing Credit Agreement dated as of December 15, 1993
among Owens-Illinois, Inc., the Lenders, Lead Managers and
Co-Agents listed therein and Bankers Trust Company, as Agent
Ladies and Gentlemen:
I am general counsel to Owens-Illinois, Inc., a Delaware
corporation (the "Company") and render this opinion to you in such capacity
pursuant to subsection 3.1G of that certain Refinancing Credit Agreement
dated as of December 15, 1993 (the "Credit Agreement") among the Company, the
Lenders, Lead Managers and Co-Agents listed therein (collectively, the
"Lenders") and Bankers Trust Company, as Agent (in such capacity, "Agent");
capitalized terms defined in the Credit Agreement which are used and not
otherwise defined herein, shall have the meanings given them in the Credit
Agreement.
As such counsel, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering
the opinions expressed below. I have examined, among other things, the
following:
(a) the Credit Agreement;
(b) the Revolving Notes, Bid Rate Loan Notes and the Swing
Line Note, in each case issued by the Company on the Closing Date
(collectively, the "Notes");
(c) the Company Pledge Agreement;
(d) the OI Subsidiary Guaranty;
(e) the OI Subsidiary Pledge Agreement;
<PAGE>X-2
(f) the Collateral Account Agreement;
(g) the Intercreditor Agreement;
(h) the Overdraft Agreement;
(i) the Certificate of Incorporation and Bylaws (the
"Governing Documents") of the Company and each direct and indirect
subsidiary of the Company identified on Exhibit B hereto (each a "Guarantor
Subsidiary" and, collectively, the "Guarantor Subsidiaries");
(j) the indenture(s) (but not including the indentures
pursuant to which the Senior Debentures, the Senior Notes and the Senior
Subordinated Debt have been issued), note(s), loan agreement(s),
mortgage(s), deed(s) of trust, security agreement(s) and other written
agreement(s) and instrument(s) creating, evidencing or securing indebtedness
of the Company or its Subsidiaries and which are material to the Company and
its Subsidiaries taken as a whole (the "Material Agreements"); and
(k) court and administrative orders, writs, judgments and
decrees specifically directed to the Company or its Subsidiaries which are
material to the Company and its Subsidiaries taken as a whole (the "Court
Orders").
The documents described in subsections (a) through (h) above are
referred to herein collectively as the "Loan Documents."
In my examination, I have assumed the genuineness of all
signatures, the legal capacity of all natural persons executing documents,
the authenticity of all documents submitted to me as originals, and the
conformity to authentic original documents of all documents submitted to me
as copies.
I have been furnished with, and with your consent have relied
upon, certificates of officer(s) of the Company and the Guarantor
Subsidiaries with respect to certain factual matters. In addition, I have
obtained and relied upon such certificates and assurances from public
officials as I have deemed necessary.
I am opining herein as to the effect on the subject transactions
only of the federal laws of the United States, the internal laws of the State
of Ohio and the General Corporation Law of the State of Delaware (the
"DGCL"), and I express no opinion with respect to the applicability thereto,
or the effect thereon, of the laws of any other jurisdiction or, in the case
of Delaware, any other laws or as to any matters of municipal law or the laws
of any other local agencies within any state. I express no opinion herein
with respect to the applicability to the subject transactions, or the effect
thereon, of any federal or state securities laws. Various issues are
addressed in the opinion of Latham & Watkins, separately provided to you in
connection with the Credit Agreement, and I express no opinion with respect
to those matters.
<PAGE>X-3
Whenever a statement herein is qualified by "to the best of my
knowledge" or a similar phrase, it is intended to indicate that I do not have
current actual knowledge of the inaccuracy of such statement.
For purposes of this opinion, I have assumed, with your
permission, that none of the execution, delivery and performance by the
Company and each Guarantor Subsidiary (each a "Loan Party" and, collectively,
the "Loan Parties") of each Loan Document to which it is a party will result
in the violation of any federal statute, rule or regulation applicable to
such Loan Party (including, without limitation, Regulations G, T, U or X of
the Board of Governors of the Federal Reserve System) or the DGCL.
Subject to the foregoing and the other matters set forth herein,
and in reliance thereon, it is my opinion that, as of the date hereof:
1. Each Loan Party has been duly incorporated and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation with corporate power and authority to conduct its business as
now conducted and to own, or hold under lease, its assets and to enter into
the Loan Documents to which it is a party and perform its obligations
thereunder.
2. The execution, delivery and performance by each Loan Party of
the Loan Documents to which such Loan Party is a party have been duly
authorized by all necessary corporate action of such Loan Party. Each Loan
Document has been duly executed and delivered by each Loan Party party
thereto.
3. None of (a) the execution and delivery by each Loan Party of
the Loan Documents to which it is a party, (b) the borrowing and repayment of
the Loans by the Company pursuant to the Credit Agreement, (c) the guarantee
of the Company's obligations under the Credit Agreement by each Guarantor
Subsidiary pursuant to the OI Subsidiary Guaranty, (d) the pledge, pursuant
to the Company Pledge Agreement, by the Company of the Pledged Collateral (as
defined in the Company Pledge Agreement) to secure the Obligations, or (e)
the pledge, pursuant to the OI Subsidiary Pledge Agreement, by each Guarantor
Subsidiary party to the OI Subsidiary Pledge Agreement (the "OI Subsidiary
Pledgors") of the Pledged Collateral (as defined in the OI Subsidiary Pledge
Agreement) of such OI Subsidiary Pledgor to secure the Obligations and to
secure such OI Subsidiary Pledgor's obligations under the OI Subsidiary
Guaranty: (i) violate the provisions of the Governing Documents of such Loan
Party, (ii) result in the breach of or a default under any of the Material
Agreements or Court Orders, (iii) violates any Ohio statute, rule or
regulation applicable to such Loan Party, or (iv) requires any consents,
approvals, authorizations, registrations, declarations or filings by such
Loan Party under any Ohio statute, rule or regulation applicable to such Loan
Party. No opinion is expressed in this paragraph 3 as to the application of
Section 548 of the federal Bankruptcy Code and comparable provisions of state
law or of any antifraud laws, antitrust or trade regulation laws.
4. The common stock of each Guarantor Subsidiary listed on
Schedule 1 hereto has been duly authorized and validly issued, is fully paid
<PAGE>X-4
and nonassessable, constitutes all of the issued and outstanding capital
stock of such Guarantor Subsidiary and is owned of record by the Persons
indicated on Schedule 1.
5. To the best of my knowledge after due inquiry, there are no
legal or governmental proceedings pending or threatened to which any Loan
Party is a party or to which any of the properties of any Loan Party is
subject (except for those legal or governmental proceedings previously
disclosed in writing to Lenders including, without limitation, those
disclosed in the Company's quarterly report on Form 10-Q for the fiscal
quarter ended September 30, 1993) that has a significant likelihood of
resulting in a Material Adverse Effect.
In rendering the opinions expressed in paragraph 3 insofar as they
require interpretation of the Material Agreements (i) I have assumed with
your permission that all courts of competent jurisdiction would enforce such
agreements as written and would apply the internal laws of the State of Ohio
without giving effect to any choice of law provisions contained therein, or
any choice of law principles, which would result in application of the
internal laws of any other state, (ii) to the extent that any questions of
legality or legal construction have arisen in connection with my review, I
have applied the internal laws of the State of Ohio in resolving such
questions and (iii) except as expressly set forth in paragraph 3, I express
no opinion with respect to the effect of any action or inaction by any Loan
Party under the Loan Documents or the Material Agreements which may result in
a breach or default under any Material Agreement. I advise you that the
Material Agreements may be governed by other laws, that such laws may vary
substantially from the law assumed to govern for purposes of this opinion,
and that this opinion may not be relied upon as to whether or not a breach or
default would occur under the law actually governing such Material
Agreements.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may
not be relied upon by you for any other purpose, or furnished to, quoted to
or relied upon by any other person, firm or corporation for any purpose,
without my prior written consent. At your request, I hereby consent to
reliance hereon by any future assigns of your interest under the Credit
Agreement which are Eligible Assignees as expressly permitted by subsection
9.2 of the Credit Agreement; provided that you have notified any such
assignee that this <PAGE>
opinion speaks only as of the date hereof and to its
addressees and that I have no responsibility or obligation to update
this opinion, to consider its applicability or correctness to other than its
addressees, or to take into account changes in law, facts or any other
development of which I may later become aware.
Very truly yours,
Thomas L. Young
General Counsel
<PAGE>X-5
EXHIBIT A
to
Opinion of Thomas L. Young
Dated December 17, 1993
Rendered in Connection With
Owens-Illinois, Inc. Refinancing Credit Agreement
Lead Managers:
The Industrial Bank of Japan, Ltd.
Bank of Montreal, Chicago Branch
The Fuji Bank, Limited
The Sumitomo Bank, Ltd.
The Long-Term Credit Bank of Japan, Ltd.
Co-Agents:
Bank of America National Trust and Savings Association
The Bank of New York
The Bank of Nova Scotia
CIBC, Inc.
Continental Bank N.A.
The First National Bank of Chicago
NationsBank of North Carolina, N.A.
Societe Generale
The Toronto-Dominion Bank
Lenders:
The Mitsubishi Trust and Banking Corp.
Caisse Nationale De Credit Agricole
The Nippon Credit Bank, Ltd.
United States National Bank of Oregon
The First National Bank of Boston
Society National Bank
National City Bank
The Northern Trust Company
Mellon Bank, N.A.
The Sanwa Bank LTD.
Arab Banking Corporation
Bank of Hawaii
ABN Amro Bank N.V.
Yasuda Trust & Banking Co. Ltd.
<PAGE>X-6
EXHIBIT B
to
Opinion of Thomas L. Young
Dated December 17, 1993
Rendered in Connection With
Owens-Illinois, Inc. Refinancing Credit Agreement
Guarantor Subsidiaries:
- ----------------------
Owens-Illinois Group, Inc.
Owens-Brockway Packaging, Inc.
OI Plastic Products FTS Inc.
OI Closure FTS Inc.
OI Kimble FTS Inc.
OI General FTS Inc.
OI General Finance Inc.
O-I Health Care Holding Corp.
Owens-Brockway Glass Container Inc.
OI IONE STS Inc.
Owens-Illinois Plastic Products Inc.
Owens-Illinois Prescription Products Inc.
OI Treitler STS Inc.
OI Dougherty STS Inc.
Owens-Illinois Closure Inc.
OI US Capital STS Inc.
Kimble Glass Inc.
OI Schott STS Inc.
OI Kontes STS Inc.
OI Enbosa STS Inc.
Owens-Illinois General Inc.
OI Levis Park STS Inc.
OI Castalia STS Inc.
OI MVCURC STS Inc.
OI UMI STS Inc.
OI AID STS Inc.
Specialty Packaging Licensing Company
<PAGE>X-7
SCHEDULE 1
to
Opinion of Thomas L. Young
Dated December 17, 1993
Rendered in Connection With Owens-Illinois, Inc. Refinancing Credit Agreement
<TABLE>
<CAPTION>
Class Stock Par Number
Stockholder Issuer of Stock of Stock Cert.No Value of Shares
- ----------- --------------- -------- ------- ----- ---------
<S> <C> <C> <C> <C> <C>
Owens-Illinois, Inc. Owens-Illinois Group,Inc. Common 1 $.01 100
Owens-Illinois Group, Inc. Owens-BrockwayPackaging, Inc. Common 1 .01 100
Owens-Illinois Group, Inc. OI Closure FTS Inc. Common 1 .01 100
Owens-Illinois Group, Inc. OI Plastic Products FTS Inc. Common 1 .01 100
Owens-Illinois Group, Inc. OI Kimble FTS Inc. Common 1 .01 100
Owens-Illinois Group, Inc. O-I Health Care Holding Corp. Common 1 .01 100
Owens-Illinois Group, Inc. OI General FTS Inc. Common 1 .01 100
Owens-Illinois Group, Inc. OI General Finance Inc. Common 1 .01 100
Owens-Brockway Packaging, Inc. Owens-Brockway Glass Container Inc.Common 1 .01 100
Owens-Brockway Packaging, Inc. OI IONE STS Inc. Common 1 .01 100
OI Closure FTS Inc. OI US Capital STS Inc. Common 1 .01 100
OI Closure FTS Inc. Owens-Illinois Closure Inc. Common 1 .01 100
OI Closure FTS Inc. Specialty Packaging Licensing Common 3 1.00 1000
Company
OI Plastic Products FTS Inc. Owens-Illinois Plastic Products IncCommon 1 .01 100
OI Plastic Products FTS Inc. Owens-Illinois Presecription Common 1 .01 100
Products Inc.
OI Plastic Products FTS Inc. OI Treitler STS Inc. Common 1 .01 100
OI Plastic Products FTS Inc. OI Dougherty STS Inc. Common 1 .01 100
OI Kimble FTS Inc. OI Kontes STS Inc. Common 1 .01 100
OI Kimble FTS Inc. OI Schott STS Inc. Common 1 .01 100
OI Kimble FTS Inc. OI Enbosa STS Inc. Common 1 .01 100
OI Kimble FTS Inc. Kimble Glass Inc. Common 1 .01 100
OI General FTS Inc. Owens-Illinois General Inc. Common 1 .01 100
OI General FTS Inc. OI Castalia STS Inc. Common 1 .01 100
OI General FTS Inc. OI Levis Park STS Inc. Common 1 .01 100
OI General FTS Inc. OI MVCURC STS Inc. Common 1 .01 100
OI General FTS Inc. OI UMI STS Inc. Common 1 .01 100
OI General FTS Inc. OI AID STS Inc. Common 1 .01 100
</TABLE>
<PAGE>XI-1
EXHIBIT XI
[FORM OF OPINION OF O'MELVENY & MYERS]
December__, 1993
Bankers Trust Company, as Agent
One Bankers Trust Plaza
New York, New York 10006
and
The Lead Managers, Co-Agents and Lenders
Party to the Refinancing Credit
Agreement Referenced Below
Re: Loans to Owens-Illinois, Inc.
Ladies and Gentlemen:
We have acted as counsel to Bankers Trust Company, as Agent (in
such capacity, "Agent"), in connection with the preparation and delivery of a
Refinancing Credit Agreement dated as of December 15, 1993 (the "Credit
Agreement") among Owens-Illinois, Inc., a Delaware corporation ("Company"),
the Lenders named therein, the Lenders named as Lead Managers and Co-Agents
for Lenders, and Agent and in connection with the preparation and delivery of
certain related documents.
We have participated in various conferences with representatives
of Company and Agent and conferences and telephone calls with Latham &
Watkins, counsel to Company, Thomas L. Young, Executive Vice President--
Administration and General Counsel for Company, and with your
representatives, during which the Credit Agreement and related matters have
been discussed, and we have also participated in the meeting held on the date
hereof (the "Closing") incident to the funding of the initial loans made
under the Credit Agreement. We have reviewed the forms of the Credit
Agreement and the exhibits thereto, including the forms of the promissory
notes annexed thereto (the "Notes"), and the opinions of Latham & Watkins and
Thomas L. Young (collectively, the "Opinions") and the officers' certificates
and other documents delivered at the Closing. We have assumed the
genuineness of all signatures, the authenticity of all documents submitted to
us as originals or copies and the due authority of all persons executing the
same, and we have relied as to factual matters on the documents that we have
reviewed.
Although we have not independently considered all of the matters
covered by the Opinions to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the
Opinions and the officers' certificates and other documents delivered in
connection with execution and delivery of, and as condition to the making of
the initial loans under, the Credit Agreement and the Notes are substantially
responsive to the requirements of the Credit Agreement.
Respectfully submitted,
<PAGE>XII-1
EXHIBIT XII
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
This COLLATERAL ACCOUNT AGREEMENT (this "Agreement") is dated as
of December 15, 1993 and entered into by and between OWENS-ILLINOIS, INC., a
Delaware corporation ("Pledgor"), and BANKERS TRUST COMPANY, as agent for and
representative of (in such capacity, "Agent") the financial institutions
("Lenders") party to the Credit Agreement (as hereinafter defined) and as
collateral agent (in such capacity, "Collateral Agent") under the
Intercreditor Agreement (as defined in the Credit Agreement).
PRELIMINARY STATEMENTS
A. Lenders, the Lenders named as Lead Managers and Co-Agents
therein and Agent have entered into the Refinancing Credit Agreement dated as
of December 15, 1993 (said Refinancing Credit Agreement, as it may hereafter
be amended, amended and restated, supplemented or otherwise modified from
time to time, being the "Credit Agreement", the terms defined therein and not
otherwise defined herein being used herein as therein defined) with Pledgor
pursuant to which Agent and Lenders have made certain commitments, subject to
the terms and conditions set forth in the Credit Agreement, to extend certain
credit facilities to Pledgor.
B. It is a condition precedent to the initial extensions of
credit by Agent and Lenders under the Credit Agreement that Pledgor shall
have executed and delivered to Agent a copy of this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to
induce Agent and Lenders to make Loans and other extensions of credit under
the Credit Agreement and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, Pledgor hereby agrees
with Agent and Collateral Agent as follows:
SECTION 1. Definitions. The following terms used in this
Agreement shall have the following meanings:
"Cash Equivalents" means, as at any date of determination, (i)
marketable securities issued or directly and unconditionally guaranteed by
the United States Government or issued by any agency thereof and backed by
the full faith and credit of the United States, in each case maturing within
thirty (30) days from such date; (ii) marketable direct obligations issued by
<PAGE>XII-1
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof maturing within thirty (30)
days from such date and, at the time of acquisition thereof, having the
highest rating obtainable from either S&P or Moody's; (iii) commercial paper
maturing no more than thirty (30) days from such date and, at the time of
acquisition thereof, having the highest rating obtainable from either S&P or
Moody's; and (iv) certificates of deposit or bankers' acceptances maturing
within thirty (30) days from such date issued by any Lender.
"Collateral" means (i) the Collateral Account and all amounts from
time to time on deposit therein, (ii) all Investments, including all
certificates and instruments from time to time representing or evidencing
such Investments and any account or accounts in which such Investments may be
held by, or in the name of, Agent or Collateral Agent for or on behalf of
Pledgor, (iii) all notes, certificates of deposit, checks and other
instruments and all deposits and uncertificated securities from time to time
hereafter transferred to or otherwise possessed by, or held in the name of,
Agent or Collateral Agent for or on behalf of Pledgor in substitution for or
in addition to any or all of the Collateral, (iv) all interest, dividends,
cash, instruments and other property from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or all of the
Collateral, and (v) to the extent not covered by clauses (i) through (iv)
above, all proceeds of any or all of the foregoing Collateral. Without
limiting the foregoing, the term "Collateral" shall include all Transferred
Collateral.
"Collateral Account" means the deposit account established and
maintained by Pledgor with Agent pursuant to Section 2.
"Investments" means those investments, if any, made by Agent
pursuant to Section 5.
"Secured Obligations" means the Obligations, all obligations of
every nature of Company now or hereafter existing under this Agreement, and
the Senior Secured Obligations (as defined in the Intercreditor Agreement)
but excluding obligations under or in respect of the Senior Note Indenture or
any Senior Notes or the Senior Debenture Indenture or any Senior Debentures
or any Senior Debenture Guaranty (as defined in the Intercreditor Agreement).
"Secured Parties" means the Secured Parties (as defined in the
Intercreditor Agreement) but excluding the Senior Note Trustee, the holders
of the Senior Notes, the Senior Debenture Trustee, the holders of the Senior
Debentures, the Senior Subordinated Debt Trustee, the holders of any Senior
Subordinated Debt, the Additional Subordinated Debt Trustees (as defined in
the Intercreditor Agreement) and the holders of any Additional Subordinated
Debt.
<PAGE>XII-2
"Transferred Collateral" means Collateral delivered to the
Collateral Agent pursuant to Section 2 hereof.
SECTION 2. Collateral Account.
(a) Pledgor hereby authorizes and directs Agent to establish and
maintain at its office at One Bankers Trust Plaza, New York, New York, as a
blocked account in the name of Pledgor but under the sole dominion and
control of Agent, a deposit account (account number 99091) designated as "BT
Co., as Agent for Owens-Illinois, Inc. Cash Collateral Account".
(b) In accordance with Section 7 of the Credit Agreement, if an
Event of Default has occurred and is continuing and Pledgor is required to
pay to Agent an amount (the "Aggregate Available Amount") equal to the
maximum amount that may at any time be drawn under all Letters of Credit then
outstanding, Agent shall, upon receipt (whether from Pledgor or from
Collateral Agent pursuant to Section 3 of the Intercreditor Agreement) of any
amounts which are allocable to the amounts then due under the Credit
Agreement which are described above, deposit such amounts in the Collateral
Account; provided that, if the aggregate amount delivered by Pledgor and/or
Collateral Agent to Agent for deposit in the Collateral Account as aforesaid
is less than the Aggregate Available Amount, the aggregate amount so
delivered by Pledgor and/or Collateral Agent to Agent shall be apportioned
among all outstanding Letters of Credit for purposes of this Section 2(b) in
accordance with the ratio of the maximum amount available for drawing under
each such Letter of Credit (as to such Letter of Credit, the "Maximum
Available Amount") to the Aggregate Available Amount. Upon any drawing under
any outstanding Letter of Credit in respect of which Agent has deposited in
the Collateral Account any amounts described above, Agent shall apply such
amounts to reimburse the respective Issuing Lender for the amount of such
drawing. In the event of cancellation or expiration of any Letter of Credit
in respect of which Agent has deposited in the Collateral Account any amounts
described above, or in the event of any reduction in the Maximum Available
Amount under such Letter of Credit, Agent shall apply the amount then on
deposit in the Collateral Account in respect of such Letter of Credit less
such Maximum Available Amount immediately after such cancellation, expiration
or reduction first, to the cash collateralization pursuant to the terms of
this Agreement of any outstanding Letters of Credit in respect of which all
or a portion of the amounts described above have not been deposited in the
Collateral Account, second, to the extent of any excess, to the payment of
any outstanding Obligations, and third, to the extent of any further excess,
to Collateral Agent who shall apply the proceeds as provided in Section 3 of
the Intercreditor Agreement.
(c) Anything contained in this Agreement to the contrary
notwithstanding, any interest received in respect of Investments of any
amounts deposited in the Collateral Account pursuant to Section 2(b) shall be
delivered by Agent to Pledgor on the last Business Day of each calendar month
<PAGE>XII-4
or, if earlier, upon cancellation or expiration of or drawing under all
Letters of Credit in respect of which such amounts were deposited in the
Collateral Account hereunder; provided that Agent shall not deliver to
Pledgor any such interest received in respect of Investments of any amounts
deposited in the Collateral Account pursuant to Section 2(b) unless all
outstanding Secured Obligations and all other obligations referenced in
Section 12 of the O-I Subsidiary Pledge Agreement have been indefeasibly paid
in full or cash collateralized pursuant to the terms of this Agreement.
SECTION 3. Pledge of Security for Secured Obligations. Pledgor
hereby pledges and assigns to Agent and Collateral Agent for the benefit of
Lenders and the other Secured Parties, and hereby grants to Agent and
Collateral Agent for the benefit of Lenders and the other Secured Parties a
security interest in, all of Pledgor's right, title and interest in and to
the Collateral as collateral security for the prompt payment or performance
in full when due, whether at stated maturity, by acceleration or otherwise,
of all Secured Obligations.
SECTION 4. Delivery of Pledged Collateral. All certificates or
instruments, if any, representing or evidencing the Collateral shall be
delivered to and held by or on behalf of Agent or Collateral Agent pursuant
hereto and shall be in suitable form for transfer by delivery or, as
applicable, shall be accompanied by Pledgor's endorsement, where necessary,
or duly executed instruments of transfer or assignment in blank, all in form
and substance reasonably satisfactory to Agent or Collateral Agent, as the
case may be. In the event any Collateral is not evidenced by a certificate,
a notation reflecting title in the name of Agent or Collateral Agent, as
appropriate, or the security interest of Agent or Collateral Agent, as
appropriate, shall be made in the records of the issuer of such Collateral or
in such other appropriate records as Agent or Collateral Agent, as the case
may be, may require, all in form and substance reasonably satisfactory to
Agent or Collateral Agent, as the case may be. Agent or Collateral Agent
shall have the right, at any time without notice to Pledgor, to transfer to
or to register in the name of Agent or Collateral Agent, as the case may be,
or any of their respective nominees any or all of the Collateral. In
addition, Agent or Collateral Agent shall have the right at any time to
exchange certificates or instruments representing or evidencing Collateral
for certificates or instruments of smaller or larger denominations.
SECTION 5. Investment of Amounts in the Collateral Account. Cash
held by Agent in the Collateral Account shall not be invested or reinvested
except as provided in this Section 5. Transferred Collateral shall be held
and applied by Collateral Agent in accordance with Section 3 of the
Intercreditor Agreement.
(a) Except as otherwise provided in Section 13, any funds on
deposit in the Collateral Account shall be invested by Agent in its own name
(i) in call deposits of Lenders that shall be available in the London
interbank market or (ii) in Cash Equivalents.
<PAGE>XII-5
(b) Agent is hereby authorized to sell, and shall sell, all or
any designated part of the securities constituting part of the Collateral if
such sale is necessary to permit Agent to perform its duties hereunder.
Agent shall have no responsibility for any loss resulting from a fluctuation
in interest rates or otherwise. Subject to the provisions of Section 2(c),
any interest received in respect of securities constituting part of the
Collateral and the net proceeds of the sale or payment of any such securities
shall be held in the Collateral Account by Agent pending investment thereof
pursuant to Section 5(a).
(c) The Collateral Account shall be subject to such applicable
laws, and such applicable regulations of the Board of Governors of the
Federal Reserve System and of any other appropriate banking or governmental
authority, as may now or hereafter be in effect.
SECTION 6. Representations and Warranties. Pledgor represents
and warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of
transfer to Agent or Collateral Agent thereof will be) the legal and
beneficial owner of the Collateral from time to time transferred by Pledgor
to Agent or Collateral Agent, free and clear of any Lien except for the
security interest created by this Agreement.
(b) Perfection. The pledge and assignment of the Collateral
pursuant to this Agreement creates a valid and perfected first priority
security interest in the Collateral, securing the payment of the Secured
Obligations.
(c) Other Information. All information heretofore, herein or
hereafter supplied to Agent or Collateral Agent by or on behalf of Pledgor
with respect to the Collateral is accurate and complete in all respects.
SECTION 7. Further Assurances. Pledgor agrees that from time to
time, at the expense of Pledgor, Pledgor will promptly execute and deliver
all further instruments and documents, and take all further action, that may
be necessary, or that Agent or Collateral Agent may reasonably request, in
order to perfect and protect any security interest granted or purported to be
granted hereby or to enable Agent or Collateral Agent to exercise and enforce
its rights and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Pledgor will: (i) execute and file
such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary, or as Agent or Collateral
Agent may reasonably request, in order to perfect and preserve the security
interests granted or purported to be granted hereby and (ii) at Agent's or
Collateral Agent's request, appear in and defend any action or proceeding
that may affect Pledgor's title to or Agent's or Collateral Agent's security
interest in all or any part of the Collateral.
<PAGE>XII-6
SECTION 8. Transfers and other Liens. Pledgor agrees that it
will not (a) sell, assign (by operation of law or otherwise) or otherwise
dispose of any of the Collateral or (b) create or suffer to exist any Lien
upon or with respect to any of the Collateral, except for the security
interest under this Agreement.
SECTION 9. Agent and Collateral Agent Appointed Attorney-in-Fact.
Pledgor hereby irrevocably appoints Agent and Collateral Agent as Pledgor's
attorneys-in-fact, with full authority in the place and stead of Pledgor and
in the name of Pledgor or otherwise, from time to time in Agent's or
Collateral Agent's reasonable discretion to take any action and to execute
any instrument that Agent or Collateral Agent may deem necessary or advisable
to accomplish the purposes of this Agreement, including without limitation
(a) if Pledgor fails to do so following Collateral Agent's request pursuant
to Section 7 hereof, to file one or more financing or continuation
statements, or amendments thereto, relative to all or any part of the
Collateral without the signature of Pledgor and (b) to receive, endorse and
collect any instruments made payable to Pledgor representing any dividend,
principal or interest payment or other distribution in respect of the
Collateral or any part thereof and to give full discharge for the same.
SECTION 10. Agent and Collateral Agent May Perform. If Pledgor
fails to perform any agreement contained herein, after notice to Pledgor,
Agent or Collateral Agent may itself perform, or cause performance of, such
agreement, and the expenses of Agent or Collateral Agent, as the case may be,
incurred in connection therewith shall be payable by Pledgor under Section
14. Agent and Collateral Agent shall cooperate with each other in order to
perform and comply with the provisions of this Agreement and the
Intercreditor Agreement.
SECTION 11. Standard of Care. The powers conferred on Agent and
Collateral Agent hereunder are solely to protect their interests in the
Collateral and shall not impose any duty upon either of them to exercise any
such powers. Except for the exercise of reasonable care in the custody of
any Collateral in its possession and the accounting for moneys actually
received by it hereunder, Agent or Collateral Agent, as the case may be,
shall have no duty as to any Collateral, it being understood that Agent and
Collateral Agent shall have no responsibility for (a) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relating to any Collateral, whether or not Agent or Collateral
Agent, as the case may be, has or is deemed to have knowledge of such
matters, (b) taking any necessary steps (other than steps taken in accordance
with the standard of care set forth above to maintain possession of the
Collateral) to preserve rights against any parties with respect to any
Collateral, (c) taking any necessary steps to collect or realize upon the
Secured Obligations or any guarantee therefor, or any part thereof, or any of
the Collateral, (d) initiating any action to protect the Collateral against
the possibility of a decline in market value, (e) any loss resulting from
<PAGE>XII-7
Investments made pursuant to Section 5, except for a loss resulting from
Agent's or Collateral Agent's, as the case may be, gross negligence or
willful misconduct in complying with Section 5, or (f) determining whether
any deposit in the Collateral Account is proper. Each of Agent and
Collateral Agent shall be deemed to have exercised reasonable care in the
custody and preservation of Collateral in its possession if such Collateral
is accorded treatment substantially equal to that which Agent or Collateral
Agent, as the case may be, accords its own property consisting of negotiable
securities. Agent shall have no responsibility for Collateral in the
possession of Collateral Agent and Collateral Agent shall have no
responsibility for Collateral in the possession of Agent.
SECTION 12. Remedies. If any Event of Default shall have occurred
and be continuing, Agent and Collateral Agent may exercise in respect of the
Collateral, in addition to all other rights and remedies provided for herein
or otherwise available to them, all the rights and remedies of a secured
party on default under the Uniform Commercial Code as in effect in any
relevant jurisdiction (the "Code") (whether or not the Code applies to the
affected Collateral), and Agent and Collateral Agent may also, without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any exchange or broker's board or
at any of Agent's or Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, at such time or times and at such price or
prices and upon such other terms as Agent or Collateral Agent, as the case
may be, may deem commercially reasonable, irrespective of the impact of any
such sales on the market price of the Collateral. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim or right on
the part of Pledgor, and Pledgor hereby waives (to the extent permitted by
applicable law) all rights of redemption, stay and/or appraisal which it now
has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted. Pledgor agrees that, to the extent notice
of sale shall be required by law, at least ten days' notice to Pledgor of the
time and place of any public sale or the time after which any private sale is
to be made shall constitute reasonable notification. Neither Agent nor
Collateral Agent shall be obligated to make any sale of Collateral regardless
of notice of sale having been given. Agent or Collateral Agent may adjourn
any public or private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further notice, be made at
the time and place to which it was so adjourned.
SECTION 13. Application of Proceeds.
(a) Subject to the provisions of Section 2(b), any cash held by
Agent and all cash proceeds received by Agent in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be applied (after payment of any amounts payable to Collateral Agent or
Agent pursuant to Section 14) by Agent to pay the Obligations or shall be
paid to Collateral Agent, in each case as provided in Section 2(b) of this
<PAGE>XII-8
Agreement. Any surplus of such cash or cash proceeds held by Agent and
remaining after payment in full of all Obligations shall be paid to
Collateral Agent as provided in said Section 2(b) or, after payment in full
of all Secured Obligations, shall be paid over to Pledgor or to whomever may
be lawfully entitled to receive such surplus.
(b) Subject to the provisions of Section 2(b), any cash held by
Collateral Agent as Collateral and all cash proceeds received by Collateral
Agent in respect of any sale of, collection from, or other realization upon
all or any part of the Collateral shall be applied (after payment of any
amounts payable to Collateral Agent or Agent pursuant to Section 14) by
Collateral Agent to pay the Secured Obligations as provided in Section 3 of
the Intercreditor Agreement. Any surplus of such cash or cash proceeds held
by Collateral Agent and remaining after payment in full of all Secured
Obligations shall be paid over to whomsoever may be lawfully entitled to
receive such surplus.
SECTION 14. Expenses. Pledgor will pay to Agent and Collateral
Agent upon demand the amount of any and all costs and expenses, including the
reasonable fees and expenses of its counsel and of any experts and agents,
that Agent or Collateral Agent, as the case may be, may incur in connection
with (i) the custody or preservation of, or the sale of, collection from, or
other realization upon, any of the Collateral, (ii) the exercise or
enforcement of any of the rights of Agent and Collateral Agent hereunder, or
(iii) the failure by Pledgor to perform or observe any of the provisions
hereof.
SECTION 15. Continuing Security Interest; Transfer of Notes.
This Agreement shall create a continuing security interest in the Collateral
and shall (a) remain in full force and effect until the indefeasible payment
in full of the Secured Obligations, the cancellation or termination of the
Commitments and the cancellation or expiration of all outstanding Letters of
Credit, (b) be binding upon Pledgor, its successors and assigns, and
(c) inure, together with the rights and remedies of Agent and Collateral
Agent hereunder, to the benefit of each of Agent, Collateral Agent, Lenders
and the other Secured Parties and its successors, transferees and assigns.
Without limiting the generality of the foregoing clause (c), but subject to
the provisions of subsections 9.2 and 9.17 of the Credit Agreement, any
Lender may assign or otherwise transfer any Notes held by it to any other
Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to Lenders herein or otherwise. Upon the
indefeasible payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Pledgor. Upon any
such termination Agent and Collateral Agent will, at Pledgor's expense,
execute and deliver to Pledgor such documents as Pledgor shall reasonably
request to evidence such termination and Pledgor shall be entitled to the
return, upon its request and at its expense, against receipt and without
recourse to Agent or Collateral Agent, of such of the Collateral as shall not
have been sold or otherwise applied pursuant to the terms hereof.
<PAGE>XII-9
SECTION 16. Resignation or Removal. Agent shall, at all times,
be the same Person which is Agent under the Credit Agreement and Collateral
Agent shall, at all times, be the same Person which is Collateral Agent under
the Intercreditor Agreement. Written notice of resignation by Agent pursuant
to subsection 8.6 of the Credit Agreement shall also constitute notice of
resignation under this Agreement; removal of Agent pursuant to subsection 8.6
of the Credit Agreement shall also constitute removal under this Agreement;
and appointment of a successor Agent pursuant to subsection 8.6 of the Credit
Agreement shall also constitute appointment of a successor Agent under this
Agreement. Written notice of resignation by Collateral Agent pursuant to the
terms of the Intercreditor Agreement shall also constitute notice of
resignation under this Agreement; removal of Collateral Agent pursuant to the
terms of the Intercreditor Agreement shall also constitute removal under this
Agreement; and appointment of a successor Collateral Agent pursuant to the
Intercreditor Agreement shall also constitute appointment of a successor
Collateral Agent under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 8.6 of the Credit Agreement by a suc-
cessor Agent, or as Collateral Agent under the Intercreditor Agreement by a
successor Collateral Agent, that successor Agent or Collateral Agent, as the
case may be, shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent or
Collateral Agent under this Agreement, and the retiring or removed Agent or
Collateral Agent under this Agreement shall promptly deliver to such
successor Agent or Collateral Agent, as the case may be, all sums and
securities held hereunder, together with all records and other documents
necessary or appropriate in connection with the performance of the duties of
the successor Agent or Collateral Agent as depository under this Agreement,
whereupon such retiring or removed Agent or Collateral Agent, as the case may
be, shall be discharged from its duties and obligations under this Agreement.
After any retiring or removed Agent's or Collateral Agent's resignation or
removal hereunder as Agent or Collateral Agent, as the case may be, the
provisions of Sections 11 and 14 hereof shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent or Collateral
Agent under this Agreement.
SECTION 17. Amendments; Etc. No amendment or waiver of any
provision of this Agreement, or consent to any departure by Pledgor herefrom,
shall in any event be effective unless the same shall be in writing and
signed by Agent and Collateral Agent, and then such waiver or consent shall
be effective only in the specific instance and for the specific purpose for
which it was given.
SECTION 18. Notices. Any notice or other communication herein
required or permitted to be given shall be in writing and may be personally
served, telecopied, telexed or sent by United States mail or courier service
and shall be deemed to have been given when delivered in person or by courier
service, upon receipt of telecopy or telex, or four Business Days after
depositing it in the United States mail, registered or certified, with
postage prepaid and properly addressed. For the purposes hereof, the address
<PAGE>XII-10
of each party hereto shall be as set forth under such party's name on the
signature pages hereof or, as to either party, such other address as shall be
designated by such party in a written notice delivered to the other party
hereto.
SECTION 19. Failure or Indulgence Not Waiver; Remedies
Cumulative. No failure or delay on the part of Agent or Collateral Agent in
the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or
acquiescence therein, nor shall any single or partial exercise of any such
power, right or privilege preclude any other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing
under this Agreement are cumulative to, and not exclusive of, any rights or
remedies otherwise available.
SECTION 20. Severability. In case any provision in or obligation
under this Agreement shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.
SECTION 21. Headings. Section and subsection headings in this
Agreement are included herein for convenience of reference only and shall not
constitute a part of this Agreement for any other purpose or be given any
substantive effect.
SECTION 22. Governing Law; Terms. THIS AGREEMENT SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES, EXCEPT TO THE EXTENT THAT THE CODE PROVIDES THAT THE VALIDITY OR
PERFECTION OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN
RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise defined
herein or in the Credit Agreement, terms used in Article 9 of the Uniform
Commercial Code in the State of New York are used herein as therein defined.
SECTION 23. Consent to Jurisdiction and Service of Process. ALL
JUDICIAL PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO
THIS AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF NEW YORK, AND BY EXECUTION AND DELIVERY OF THIS
AGREEMENT PLEDGOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES,
GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES
TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT. Pledgor designates and appoints CT Corporation System,
1633 Broadway, New York, New York 10019, and such other Persons as may
hereafter be selected by Pledgor irrevocably agreeing in writing to so serve,
as its agent to receive on its behalf service of all process in any such
<PAGE>XII-11
proceedings in any such court, such service being hereby acknowledged by
Pledgor to be effective and binding service in every respect. A copy of any
such process so served shall be mailed by registered mail to Pledgor at its
address provided in Section 18; provided that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity
of service of such process. If any agent appointed by Pledgor refuses to
accept service, Pledgor hereby agrees that service of process sufficient for
personal jurisdiction in any action against Pledgor in the State of New York
may be made by registered or certified mail, return receipt requested, to
Pledgor at its address provided in Section 18, and Pledgor hereby
acknowledges that such service shall be effective and binding in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Agent or Collateral Agent
to bring proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 24. Waiver of Jury Trial. PLEDGOR, AGENT AND COLLATERAL
AGENT HEREBY AGREE TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT. The
scope of this waiver is intended to be all-encompassing of any and all
disputes that may be filed in any court and that relate to the subject matter
of this transaction, including without limitation contract claims, tort
claims, breach of duty claims, and all other common law and statutory claims.
Pledgor, Agent and Collateral Agent each acknowledge that this waiver is a
material inducement for Pledgor, Agent and Collateral Agent to enter into a
business relationship, that Pledgor, Agent and Collateral Agent have already
relied on this waiver in entering into this Agreement and that each will
continue to rely on this waiver in their related future dealings. Pledgor,
Agent and Collateral Agent further warrant and represent that each has
reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED
EITHER ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT
AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the
event of litigation, this Agreement may be filed as a written consent to a
trial by the court.
SECTION 25. Counterparts. This Agreement may be executed in one
or more counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument; signature pages may be detached from multiple separate
counterparts and attached to a single counterpart so that all signature pages
are physically attached to the same document.
[Remainder of page intentionally left blank]
<PAGE>XII-12
IN WITNESS WHEREOF, Pledgor, Agent and Collateral Agent have
caused this Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized as of the date first above written.
OWENS-ILLINOIS, INC.
By:_________________________
Title:_______________________
Notice Address:
___________________________
___________________________
BANKERS TRUST COMPANY, as
Agent and Collateral Agent
By:__________________________
Title:________________________
Notice Address:
____________________________
____________________________
<PAGE>XIII-1
EXHIBIT XIII
[FORM OF INTERCREDITOR AGREEMENT]
This FIFTH AMENDED AND RESTATED INTERCREDITOR AGREEMENT (as
amended, amended and restated or otherwise modified from time to time in
accordance with the terms hereof, herein called "this Agreement") is dated as
of December 15, 1993 among BANKERS TRUST COMPANY ("Bankers"), as agent (the
"Current Credit Agent") for the lenders (the "Current Lenders") party to the
Current Credit Agreement (as hereinafter defined), FIRST BANK (N.A.), as
trustee (together with its successors in such capacity, the "Senior Note
Trustee") under the Senior Note Indenture (as hereinafter defined), THE BANK
OF NEW YORK, as trustee (together with its successors in such capacity, the
"Senior Debenture Trustee") under the Senior Debenture Indenture (as
hereinafter defined), HARRIS TRUST AND SAVINGS BANK, as trustee (together
with its successors in such capacity, the "Subordinated Debt Trustee") under
the Subordinated Debt Indenture (as hereinafter defined), BANKERS TRUST
COMPANY, as a Foreign Lender (as hereinafter defined), BANKERS TRUST COMPANY,
as Collateral Agent (as hereinafter defined), and the other persons who may
become parties to this Agreement from time to time pursuant to and in
accordance with Section 6 of this Agreement, and amends and restates the
Fourth Amended and Restated Intercreditor Agreement dated as of December 10,
1991, as amended by the First Amendment to Fourth Amended and Restated
Intercreditor Agreement dated as of March 31, 1992 and the Second Amendment
to Fourth Amended and Restated Intercreditor Agreement dated as of
September 28, 1992 (as so amended, the "Existing Intercreditor Agreement"),
among the Current Credit Agent, the Refinancing Subordinated Debt Trustees
and the Senior Note Trustees (as such terms are defined in the Existing
Intercreditor Agreement), the Senior Debenture Trustee, the Subordinated Debt
Trustee, Bankers, as a Foreign Lender, and Bankers, as Collateral Agent.
Certain defined terms used in this Agreement are indexed in Annex 1 to this
Agreement.
R E C I T A L S
1. Owens-Illinois, Inc., a Delaware corporation (the "Company"),
has executed and delivered to the Collateral Agent a Fourth Amended and
Restated Company Pledge Agreement dated as of December 15, 1993 (as amended,
amended and restated or otherwise modified from time to time in accordance
with the terms thereof and hereof, herein called the "Company Pledge
Agreement"; a copy of the Company Pledge Agreement as in effect on the date
this Agreement becomes effective is attached to this Agreement as Annex 2),
which amends and restates the Existing Company Pledge Agreement (such term
being used in this Agreement as defined in the Company Pledge Agreement);
<PAGE>XIII-2
2. Owens-Illinois Group, Inc., a Delaware corporation ("Group"),
and the O-I Subsidiaries (such term being used in this Agreement as defined
in the Current Credit Agreement) identified as "First Tier Subsidiaries" on
Schedule A annexed to the Current Credit Agreement (each, including Group, an
"Intermediate Subsidiary Pledgor" and collectively the "Intermediate
Subsidiary Pledgors") have executed and delivered to the Collateral Agent a
Third Amended and Restated Intermediate Subsidiary Pledge Agreement dated as
of December 15, 1993 (as amended, amended and restated or otherwise modified
from time to time in accordance with the terms thereof and hereof, herein
called the "Intermediate Subsidiary Pledge Agreement"; a copy of the
Intermediate Subsidiary Pledge Agreement as in effect on the date this
Agreement becomes effective is attached to this Agreement as Annex 3), which
amends and restates the Existing Intermediate Subsidiary Pledge Agreement
(such term being used in this Agreement as defined in the Intermediate
Subsidiary Pledge Agreement; the Existing Company Pledge Agreement and the
Existing Intermediate Subsidiary Pledge Agreement being collectively referred
to herein as the "Existing Pledge Agreements");
3. The Company and the Intermediate Subsidiary Pledgors have
delivered to the Collateral Agent the Pledged Shares (as defined in each of
the Company Pledge Agreement and the Intermediate Subsidiary Pledge Agreement
(collectively referred to herein as the "Pledge Agreements")) and the Pledged
Debt (as defined in each Pledge Agreement; the Pledged Shares and the Pledged
Debt under the Pledge Agreements being collectively referred to herein as the
"Pledged Collateral");
4. The Current Lenders, the Managers and the Current Credit
Agent (as such terms are defined in the Existing Intercreditor Agreement)
have entered into a Third Amended and Restated Credit Agreement dated as of
March 31, 1989 with the Company and Health Care and Retirement Corporation of
America (said Third Amended and Restated Credit Agreement, as amended to the
date hereof, being the "Existing Credit Agreement");
5. Group and the other Guarantor Subsidiaries (such term being
used in this Agreement as defined in the Current Credit Agreement) have
guarantied the obligations of the Company under the Existing Credit Agreement
pursuant to the Group Guaranty and the Other Subsidiary Guaranty (as such
terms are defined in the Existing Intercreditor Agreement; collectively, the
"Existing Loan Guaranties");
6. (a) The obligations of the Company under the Existing Credit
Agreement have been secured on a senior basis pursuant to the Existing
Company Pledge Agreement and (b) the obligations of the Company under the
Existing Credit Agreement and the obligations of the Intermediate Subsidiary
Pledgors under the Existing Loan Guaranties have been secured on a senior
basis pursuant to the Existing Intermediate Subsidiary Pledge Agreement;
7. The Company, Group, as guarantor, and the Senior Note Trustee
have entered into an Indenture dated as of April 1, 1989 (the "Senior Note
Indenture"), pursuant to which the Company has issued approximately
<PAGE>XIII-3
$394,400,000 in aggregate principal amount of Senior Variable Rate Notes Due
1996, of which approximately $270,000,000 in aggregate principal amount are
outstanding as of the effective date of this Agreement (the "Senior Notes");
8. As more fully described in the recitals to the Existing
Intercreditor Agreement, the Indebtedness evidenced by the Senior Notes has
been secured on a senior basis pursuant to the Existing Company Pledge
Agreement, subject to certain limitations on the rights of the Senior Note
Trustee under the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement with respect to decisions relating to the exercise of
remedies in respect of the Pledged Collateral (as defined in the Existing
Company Pledge Agreement) and other matters, and the Company desires that
such Indebtedness continue to be secured on a senior basis by the Pledged
Collateral under the Company Pledge Agreement to the same extent, and subject
to the same limitations relative to the other obligations secured by such
Pledged Collateral (treating the Current Credit Agreement for such purposes
as being in all respects the same as the Existing Credit Agreement), as under
the Existing Company Pledge Agreement and the Existing Intercreditor
Agreement;
9. The Company, Group, as guarantor, and the Senior Debenture
Trustee have entered into an Indenture dated as of December 15, 1991 (the
"Senior Debenture Indenture"; the Senior Note Indenture and the Senior
Debenture Indenture being collectively referred to herein as the "Senior
Indentures") pursuant to which the Company has issued $1,000,000,000 in
aggregate principal amount of 11% Senior Debentures Due 2003 (the "Senior
Debentures"; the obligations of the Company under the Senior Note Indenture
and the obligations of the Company under the Senior Debenture Indenture being
collectively referred to herein as the "Senior Indenture Obligations");
10. Each Guarantor Subsidiary (other than Group) has guarantied
the obligations of the Company under the Senior Debenture Indenture and the
Senior Debentures issued thereunder pursuant to a Subsidiary Guaranty
substantially in the form of Exhibit E to the Senior Debenture Indenture, and
Group has guarantied the obligations of the Company under the Senior
Debenture Indenture and the Senior Debentures issued thereunder pursuant to
the Group Exchange Guaranty, substantially in the form of Exhibit D to the
Senior Debenture Indenture (each such Subsidiary Guaranty and such Group
Exchange Guaranty being a "Senior Debenture Guaranty"; collectively, the
"Senior Debenture Guaranties");
11. As more fully described in the recitals to the Existing
Intercreditor Agreement, (a) the Indebtedness evidenced by the Senior
Debentures has been secured on a senior basis pursuant to the Existing
Company Pledge Agreement, subject to certain limitations on the rights of the
Senior Debenture Trustee under the Existing Company Pledge Agreement and the
Existing Intercreditor Agreement with respect to decisions relating to the
exercise of remedies in respect of the Pledged Collateral (as defined in the
Existing Company Pledge Agreement) and other matters, and (b) such
Indebtedness and the obligations of the Intermediate Subsidiary Pledgors
<PAGE>XIII-4
under the Senior Debenture Guaranties have been secured on a senior basis
pursuant to the Existing Intermediate Subsidiary Pledge Agreement, subject to
certain limitations on the rights of the Senior Debenture Trustee under the
Existing Intermediate Subsidiary Pledge Agreement and the Existing
Intercreditor Agreement with respect to decisions relating to the exercise of
remedies in respect of the Pledged Collateral (as defined in the Existing
Intermediate Subsidiary Pledge Agreement) and other matters, and the Company
desires that such Indebtedness and obligations continue to be secured on a
senior basis by the Pledged Collateral under the Company Pledge Agreement and
the Intermediate Subsidiary Pledge Agreement to the same extent, and subject
to the same limitations relative to the other obligations secured by such
Pledged Collateral (treating the Current Credit Agreement for such purposes
as being in all respects the same as the Existing Credit Agreement), as under
the Existing Company Pledge Agreement, the Existing Intermediate Subsidiary
Pledge Agreement and the Existing Intercreditor Agreement;
12. The Company and the Subordinated Debt Trustee have entered
into an Indenture dated as of April 1, 1992, together with supplements
thereto dated as of April 8, 1992, June 22, 1992, August 4, 1992, August 24,
1992 and October 8, 1992 (collectively, the "Subordinated Debt Indenture"),
pursuant to which the Company has issued the following (collectively, the
"Subordinated Debt Securities"): (a) $250,000,000 in aggregate principal
amount of 10-1/4% Senior Subordinated Notes Due April 1, 1999;
(b) $150,000,000 in aggregate principal amount of 10-1/2% Senior Subordinated
Notes Due June 15, 2002; (c) $250,000,000 in aggregate principal amount of
10% Senior Subordinated Notes Due August 1, 2002; (d) $200,000,000 in
aggregate principal amount of 9-3/4% Senior Subordinated Notes Due August 15,
2004; and (e) $100,000,000 in aggregate principal amount of 9.95% Senior
Subordinated Notes Due October 15, 2004 (the Subordinated Debt Securities
described in the foregoing clauses (a)-(d) having been referred to in the
Existing Company Pledge Agreement and the Existing Intercreditor Agreement as
"1992 Refinancing Subordinated Debt", and the Subordinated Debt Securities
referred to in the foregoing clause (e) having been referred to in the
Existing Company Pledge Agreement and the Existing Intercreditor Agreement as
"Additional 1992 Subordinated Debt");
13. As more fully described in the recitals to the Existing
Intercreditor Agreement, the Indebtedness evidenced by the Subordinated Debt
Securities has been secured on a senior subordinated basis pursuant to the
Existing Company Pledge Agreement, subject to certain limitations on the
rights of the Subordinated Debt Trustee under the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement with respect to decisions
relating to the exercise of remedies in respect of the Pledged Collateral (as
defined in the Existing Company Pledge Agreement) and other matters, and the
Company desires that such Indebtedness continue to be secured on a senior
subordinated basis by the Pledged Collateral under the Company Pledge
Agreement to the same extent, and subject to the same limitations relative to
the other obligations secured by such Pledged Collateral (treating the
Current Credit Agreement for such purposes as being in all respects the same
as the Existing Credit Agreement), as under the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement;
<PAGE>XIII-5
14. The Current Lenders, the Current Lenders appointed as Lead
Managers and Co-Agents for the Current Lenders, and the Current Credit Agent
have entered into a Refinancing Credit Agreement dated as of December 15,
1993 with the Company (said Refinancing Credit Agreement, as it may hereafter
be amended, amended and restated or otherwise modified from time to time,
being the "Current Credit Agreement"; capitalized terms defined therein and
not otherwise defined herein being used herein as therein defined or as
defined in the Successor Credit Agreement (as hereinafter defined) then in
effect), pursuant to which the Current Lenders have agreed, subject to the
terms and conditions set forth in the Current Credit Agreement, to extend
certain credit facilities to the Company for the purpose of, among other
things, (a) refinancing all outstanding Indebtedness under the Existing
Credit Agreement, (b) refinancing certain Indebtedness outstanding under the
Senior Indentures, and (c) permitting the Company to issue Commercial Paper
as more fully described below;
15. As required in the Current Credit Agreement, Group and the
other Guarantor Subsidiaries (collectively, the "Loan Guarantors") have
guarantied the obligations of the Company under the Current Credit Agreement
and any Successor Credit Agreements pursuant to an O-I Subsidiary Guaranty
dated as of December 15, 1993 (as amended, amended and restated or otherwise
modified from time to time in accordance with the terms thereof and hereof,
herein called the "Loan Guaranty"; a copy of the Loan Guaranty as in effect
on the date this Agreement becomes effective is attached to this Agreement as
Annex 4);
16. It is desired that (a) all obligations of the Company under
the Current Credit Agreement and any Successor Credit Agreements be secured
on a senior basis by the Pledged Collateral under the Pledge Agreements to
the same extent as the obligations under the Existing Credit Agreement have
been secured by the Pledged Collateral (as defined in the Existing Pledge
Agreements) and (b) all obligations of the Loan Guarantors under the Loan
Guaranty be secured on a senior basis by the Pledged Collateral under the
Intermediate Subsidiary Pledge Agreement to the same extent as the
obligations under the Existing Loan Guaranties have been secured by the
Pledged Collateral (as defined in the Existing Intermediate Subsidiary Pledge
Agreement), and that the relative priority of the Liens and other rights in
favor of the Credit Agents and the Lenders (as such terms are hereinafter
defined) with respect to the Pledged Collateral be the same in all
substantive respects as the relative priority of the corresponding Liens and
other rights granted to the Current Credit Agent and the Current Lenders (as
such terms are defined in the Existing Pledge Agreements and the Existing
Intercreditor Agreement), in each case as compared to the relative priority
of any corresponding Liens and other rights granted to the Senior Note
Trustee, the Senior Debenture Trustee, the Subordinated Debt Trustee and the
holders of any other obligations secured by any or all of the Pledged
Collateral;
<PAGE>XIII-6
17. (a) As more fully described in the recitals to the Existing
Intercreditor Agreement, to the extent that the Current Credit Agreement
refinances all or any portion of the Indebtedness under the Existing Credit
Agreement or any Senior Indenture, the Current Credit Agreement and any
Successor Credit Agreements will each constitute a "Successor Credit
Agreement" as defined in the Existing Pledge Agreements and the Existing
Intercreditor Agreement and, as such, the Current Credit Agreement and any
Successor Credit Agreements will automatically be entitled to be secured by
the Pledged Collateral on the basis described in Recital 16, and (b) whether
or not the Current Credit Agreement constitutes a "Successor Credit
Agreement" as defined in the Existing Pledge Agreements and the Existing
Intercreditor Agreement, the terms of the Senior Indentures, the Subordinated
Debt Indenture, the Existing Pledge Agreements and the Existing Intercreditor
Agreement permit the amendments to the Existing Pledge Agreements and the
Existing Intercreditor Agreement effected pursuant to the Pledge Agreements
and this Agreement without the consent of the holders of the Senior Notes,
the Senior Debentures or the Subordinated Debt Securities for the purpose of
(i) securing the Current Credit Agreement and any Successor Credit Agreements
by the Pledged Collateral on the basis described in Recital 16 and
(ii) securing the Loan Guaranty by the Pledged Collateral under the
Intermediate Subsidiary Pledge Agreement on the basis described in Recital
16; and accordingly (X) the entire amount of the obligations under the
Current Credit Agreement and any Successor Credit Agreements is entitled (as
described in the foregoing clauses (a) and (b)) to be secured by the Pledged
Collateral on the basis described in Recital 16 and (Y) the entire amount of
the obligations under the Loan Guaranty is entitled (as described in the
foregoing clause (b)) to be secured by the Pledged Collateral under the
Intermediate Subsidiary Pledge Agreement on the basis described in Recital
16;
18. It is contemplated that, from time to time, the Current
Lenders or other financial institutions (collectively, the "Successor
Lenders") may enter into one or more agreements with the Company and other
Persons, including Subsidiaries of the Company, either extending the maturity
of, refinancing or otherwise restructuring (including, but not limited to,
the inclusion of additional borrowers thereunder which are Subsidiaries of
the Company) all or any portion of the Indebtedness under the Current Credit
Agreement or any Successor Credit Agreement or any Senior Indenture (said
agreements, as they may exist from time to time (but, in the case of such a
refinancing or restructuring, only to the extent thereof), being the
"Successor Credit Agreements", which together with the Current Credit
Agreement are referred to herein as the "Credit Agreements"; provided that,
notwithstanding the fact (as described in certain of the following recitals)
that any agreement or instrument pursuant to which any Commercial Paper is
issued or evidencing any Commercial Paper Obligations (as hereinafter
defined) (collectively, the "Commercial Paper Documents") could have
constituted a Successor Credit Agreement, in no event shall any Commercial
Paper Document be deemed to be a Successor Credit Agreement or a Credit
Agreement; provided, further that, notwithstanding the fact (as described in
<PAGE>XIII-7
certain of the following recitals) that any Additional Subordinated Debt
Indenture (as hereinafter defined) could have constituted a Successor Credit
Agreement, in no event shall any Additional Subordinated Debt Indenture be
deemed to be a Successor Credit Agreement or a Credit Agreement; and
provided, further, that in no event shall any amendment, amendment and
restatement or other modification of the Current Credit Agreement after the
date hereof cause the Current Credit Agreement to be deemed to be a Successor
Credit Agreement or require the Current Credit Agent to execute an
acknowledgment to this Agreement in connection with such amendment, amendment
and restatement or other modification) (the Current Lenders and any Successor
Lenders being collectively referred to herein as the "Lenders", and the
Current Credit Agent and any agents (collectively, the "Successor Credit
Agents") under any Successor Credit Agreements being collectively referred to
herein as the "Credit Agents"), and it is desired that, as described in
Recitals 16 and 17, the obligations of the Company and any additional
borrowers which are Subsidiaries of the Company under any Successor Credit
Agreements be secured by the Pledged Collateral to the same extent as the
obligations under the Current Credit Agreement;
19. The Current Lenders have agreed, subject to the terms and
conditions set forth in the Current Credit Agreement, to permit the Company
to issue Commercial Paper in an aggregate face amount at any time outstanding
not to exceed the amount specified in the Current Credit Agreement to the
extent that the Company has reserved unused a portion of the Commitments
under the Current Credit Agreement, and it is desired that all obligations of
the Company under any such Commercial Paper outstanding from time to time
(collectively, the "Commercial Paper Obligations") be guarantied under the
Loan Guaranty and secured on a senior basis by the Pledged Collateral;
20. The parties hereto desire to acknowledge and confirm, for the
benefit of any financial institutions initially purchasing any such
Commercial Paper (each an "Initial Commercial Paper Holder" and collectively
the "Initial Commercial Paper Holders") or appointed to act as agent or
representative for the holders from time to time of such Commercial Paper
(each a "Commercial Paper Representative" and collectively the "Commercial
Paper Representatives"; provided that in the event no such financial
institution is appointed to act as agent or representative for the holders of
any Commercial Paper, the Initial Commercial Paper Holder in respect of such
Commercial Paper shall be deemed to be the Commercial Paper Representative in
respect of such Commercial Paper) and for the benefit of the holders from
time to time of such Commercial Paper (together with the Initial Commercial
Paper Holders, the "Commercial Paper Holders"), that during any period in
which any Commercial Paper is outstanding such Commercial Paper constitutes a
restructuring of a portion of the credit facilities provided under the
Current Credit Agreement and accordingly that all Commercial Paper Obliga-
tions would also constitute Indebtedness outstanding under a "Successor
Credit Agreement" as defined in the Pledge Agreements and this Agreement, and
as such all Commercial Paper Obligations are entitled to constitute (a)
Senior Secured Obligations (as defined in the Company Pledge Agreement) and
(b) Secured Obligations (as defined in the Intermediate Subsidiary Pledge
<PAGE>XIII-8
Agreement); provided that, as a condition to permitting the Company to issue
Commercial Paper, the Current Lenders have required, as was required in the
Existing Pledge Agreements and the Existing Intercreditor Agreement, that no
Commercial Paper Document shall be deemed to be a "Successor Credit
Agreement" for purposes of the Pledge Agreements or this Agreement and that
certain limitations be placed on the rights of the Commercial Paper Holders
and the Commercial Paper Representatives with respect to decisions relating
to the exercise of remedies in respect of the Pledged Collateral and other
matters; and provided, further, that the Commercial Paper Holder and
Commercial Paper Representative in respect of any Commercial Paper shall only
be entitled to the benefits of the Pledge Agreements, the Loan Guaranty and
this Agreement if such Commercial Paper Representative shall have executed
and delivered to the Collateral Agent an acknowledgment to this Agreement (in
the form attached hereto) agreeing to be bound by the terms hereof (which
acknowledgment shall have been acknowledged by the Company, each Intermediate
Subsidiary Pledgor and each Loan Guarantor);
21. The Company has executed certain guaranties (the "Existing
Foreign Lender Guaranties") dated March 23, 1988 pursuant to which the
Company has guarantied certain indebtedness (the "Existing Foreign Lender
Debt") of Owens-Illinois de Venezuela, C.A. and Fabrica de Vidrio Los Andes,
C.A. to Bankers Trust Company (the "Existing Foreign Lender") under certain
loan agreements dated as of January 25, 1988 (the "Existing Foreign Loan
Agreements"), and the Company contemplates that it may, from time to time,
enter into other guaranties permitted under the Credit Agreements (together
with the Existing Foreign Lender Guaranties, the "Foreign Lender Guaranties")
in support of certain indebtedness of certain Foreign Subsidiaries (together
with the Existing Foreign Lender Debt, the "Foreign Lender Debt") to certain
Lenders (together with the Existing Foreign Lenders, the "Foreign Lenders")
under certain loan and other credit agreements (together with the Existing
Foreign Loan Agreements, the "Foreign Loan Agreements"), and the Company
desires that its obligations under the Foreign Lender Guaranties (such
obligations being collectively referred to herein as the "Foreign Lender
Obligations") continue to be secured by the Pledged Collateral, to the extent
permitted by the Credit Agreements, to the same extent as under the Existing
Pledge Agreements and the Existing Intercreditor Agreement; provided that any
Foreign Lender desiring such security shall execute and deliver to the
Collateral Agent a counterpart of this Agreement or an acknowledgment to this
Agreement (in the form attached hereto) agreeing to be bound by the terms
hereof (which acknowledgment shall be acknowledged by the Company and the
Intermediate Subsidiary Pledgors); provided, further, that in no event shall
any Foreign Lender benefit from or have any rights with respect to the Loan
Guaranty;
22. It is contemplated that the Company may from time to time
enter into one or more Interest Rate Agreements with one or more Lenders
(collectively, the "Interest Rate Exchangers") and it is desired that the
obligations of the Company under such Interest Rate Agreements, including the
obligation to make payments in the event of early termination thereunder (all
<PAGE>XIII-9
such obligations being the "Interest Rate Obligations"), be guarantied under
the Loan Guaranty to the same extent as under the Existing Loan Guaranties
and the Existing Intercreditor Agreement and continue to be secured by the
Pledged Collateral to the same extent as under the Existing Pledge Agreements
and the Existing Intercreditor Agreement; provided that any Interest Rate
Exchanger desiring the benefit of the Loan Guaranty and such security shall
execute and deliver to the Collateral Agent an acknowledgment to this
Agreement (in the form attached hereto) agreeing to be bound by the terms
hereof (which acknowledgment shall be acknowledged by the Company, the
Intermediate Subsidiary Pledgors and the Loan Guarantors);
23. It is contemplated that the Company may from time to time
enter into one or more Currency Agreements with one or more Lenders
(collectively, the "Currency Exchangers") and it is desired that the
obligations of the Company under such Currency Agreements, including the
obligation to make payments in the event of early termination thereunder (all
such obligations being the "Currency Obligations"), be guarantied under the
Loan Guaranty to the same extent as under the Existing Loan Guaranties and
the Existing Intercreditor Agreement and continue to be secured by the
Pledged Collateral to the same extent as under the Existing Pledge Agreements
and the Existing Intercreditor Agreement; provided that any Currency
Exchanger desiring the benefit of the Loan Guaranty and such security shall
execute and deliver to the Collateral Agent an acknowledgment to this
Agreement (in the form attached hereto) agreeing to be bound by the terms
hereof (which acknowledgment shall be acknowledged by the Company, the
Intermediate Subsidiary Pledgors and the Loan Guarantors);
24. As described in Recital 17, all or a portion of the Current
Credit Agreement constitutes a "Successor Credit Agreement" as defined in the
Existing Pledge Agreements and the Existing Intercreditor Agreement, and
accordingly the Current Lenders constitute "Lenders" as defined in the
Existing Pledge Agreements and the Existing Intercreditor Agreement and are
entitled to be secured by the Pledged Collateral in their capacities as
Foreign Lenders, Interest Rate Exchangers and Currency Exchangers as
described in Recitals 21, 22 and 23;
25. The Current Credit Agreement contemplates that the Company
and one or more trustees (each such trustee that acts in the capacity as
trustee for a particular series of Additional Subordinated Debt (as
hereinafter defined), together with its successors in such capacity, being an
"Additional Subordinated Debt Trustee"; collectively, the "Additional
Subordinated Debt Trustees") may from time to time after the date hereof
enter into one or more supplements to the Subordinated Debt Indenture
(whether in the form of a supplemental indenture or a certificate from the
Company or otherwise) (each an "Additional Indenture Supplement") each of
which relates to a separate series of securities, in each case containing
terms and conditions (including, without limitation, terms and conditions
relating to covenants, defaults, remedies, subordination, collateral
security, maturities, amortization or sinking fund schedules, redemptions,
guaranties and interest rates) meeting the requirements set forth in the
<PAGE>XIII-10
definition of "Additional Subordinated Debt" contained in the Current Credit
Agreement (each such combination of the Subordinated Debt Indenture and an
Additional Indenture Supplement relating to a separate series of securities
being an "Additional Subordinated Debt Indenture"; collectively, the
"Additional Subordinated Debt Indentures") pursuant to which the Company may
issue up to $100,000,000 in aggregate principal amount or original issuance
price, as the case may be, of Indebtedness (any such Indebtedness being
referred to herein as "Pro Forma Additional Subordinated Debt"; any such
Indebtedness issued pursuant to an Additional Subordinated Debt Indenture
that requires the Indebtedness issued thereunder to be secured by the Pledged
Collateral under the Company Pledge Agreement being referred to herein as
"Additional Subordinated Debt"; the obligations of the Company thereunder,
together with the obligations of the Company under the Subordinated Debt
Indenture, being collectively referred to herein as the "Junior Secured
Obligations") and the Company desires that the Indebtedness evidenced thereby
may be secured on a senior subordinated basis by the Pledged Collateral under
the Company Pledge Agreement to the same extent as the Subordinated Debt
Securities;
26. (a) Any Additional Subordinated Debt would have constituted
"Additional 1992 Subordinated Debt" under the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement and, accordingly, subject
to the same terms and conditions as are set forth in clause (b) below, the
terms of the Existing Company Pledge Agreement and the Existing Intercreditor
Agreement would have permitted any Additional Subordinated Debt to be secured
by the Pledged Collateral under the Company Pledge Agreement on the basis
described in Recital 25, and (b) the Current Lenders have agreed to permit
the Company to issue any Pro Forma Additional Subordinated Debt on the
condition that the Pledge Agreements and this Agreement provide (as was
provided in the Existing Pledge Agreements and the Existing Intercreditor
Agreement), and it is hereby so provided, that (i) notwithstanding the fact
that the proceeds of any Additional Subordinated Debt may be used to
refinance all or any part of any Indebtedness under the Credit Agreement or
any Senior Indenture (and, accordingly, the applicable Additional
Subordinated Debt Indenture could have constituted a Successor Credit
Agreement), (A) in no event shall any Additional Subordinated Debt Indenture
be deemed to be a "Successor Credit Agreement" or a "Credit Agreement" for
purposes of the Pledge Agreements or this Agreement, (B) in no event shall
the holder of any Pro Forma Additional Subordinated Debt or the trustee under
any Additional Subordinated Debt Indenture in respect thereof have any
rights, or be entitled to any benefits, under the Intermediate Subsidiary
Pledge Agreement or this Agreement (insofar as such benefits under this
Agreement relate to the Intermediate Subsidiary Pledge Agreement and the
Pledged Collateral thereunder), and (C) in all respects the rights of the
holders of any Additional Subordinated Debt and the Additional Subordinated
Debt Trustee in respect thereof under the Company Pledge Agreement and this
Agreement shall be limited in the same manner and to the same extent as the
rights of the holders of the Subordinated Debt Securities and the
Subordinated Debt Trustee; and (ii) the holders of any Additional
Subordinated Debt of any series and the Additional Subordinated Debt Trustee
<PAGE>XIII-11
in respect thereof shall only be entitled to the benefits of the Company
Pledge Agreement and this Agreement if (A) such Additional Subordinated Debt
Trustee shall have executed and delivered to the Collateral Agent an
acknowledgment to this Agreement (in the form attached hereto) specifying
such series of Additional Subordinated Debt and the applicable Additional
Subordinated Debt Indenture and agreeing to be bound by the terms hereof
(which acknowledgment shall have been acknowledged by the Company) and
(B) the Collateral Agent shall have received an opinion of Latham & Watkins,
counsel for the Company, to the effect that the issuance of such series of
Additional Subordinated Debt and the securing of the obligations thereunder
by Liens on the Pledged Collateral under the Company Pledge Agreement do not
conflict with, result in a breach of, or constitute a default under, any
Senior Indenture or the Subordinated Debt Indenture or any Additional
Subordinated Debt Indenture;
27. The Current Credit Agent, the Senior Note Trustee, the Senior
Debenture Trustee, the Subordinated Debt Trustee and the Foreign Lender named
on the signature pages hereof, and, in the event any Successor Credit
Agreement is to be guarantied under the Loan Guaranty and secured by the
Pledge Agreements, the Successor Credit Agent thereunder, and, in the event
any other Foreign Lender Obligations are to be secured by the Pledge
Agreements, the Foreign Lender which is the beneficiary of the applicable
Foreign Lender Guaranty, and, in the event any Interest Rate Obligations are
to be guarantied under the Loan Guaranty and secured by the Pledge Agree-
ments, the Interest Rate Exchanger party to the relevant Interest Rate
Agreement, and, in the event any Currency Obligations are to be guarantied
under the Loan Guaranty and secured by the Pledge Agreements, the Currency
Exchanger party to the relevant Currency Agreement, and, in the event any
Additional Subordinated Debt is to be secured by the Company Pledge
Agreement, the Additional Subordinated Debt Trustee under the applicable
Additional Subordinated Debt Indenture, and, in the event any Commercial
Paper Obligations in respect of any Commercial Paper are to be guarantied
under the Loan Guaranty and secured by the Pledge Agreements, the Commercial
Paper Representative in respect of such Commercial Paper, and the Collateral
Agent (collectively, the "Parties") desire to set forth certain additional
provisions regarding the appointment, duties and responsibilities of the
Collateral Agent and to set forth certain other provisions concerning the
obligations of the Company, the Intermediate Subsidiary Pledgors and the Loan
Guarantors (collectively, the "Loan Parties") to the Parties and to the
Lenders, the holders of the Senior Notes, the holders of the Senior
Debentures, the holders of the Subordinated Debt Securities, the holders of
any Additional Subordinated Debt secured by the Company Pledge Agreement, and
the Commercial Paper Holders in respect of any Commercial Paper guarantied
under the Loan Guaranty and secured by the Pledge Agreements (collectively,
together with the Parties, the "Secured Parties") under the agreements
referred to in the foregoing recitals;
28. The Parties wish to set forth their agreement as to the
allocation of certain payments to be made from the proceeds of Asset Sales of
Pledged Collateral;
29. The Parties wish to set forth their agreement as to decisions
relating to the exercise of remedies under the Loan Guaranty and the Pledge
Agreements and certain limitations on the exercise of such remedies;
<PAGE>XIII-12
30. Certain of the Parties wish to set forth their mutual
intentions as to certain matters relating to payments by the applicable Loan
Parties under the Loan Guaranty and the Senior Debenture Guaranties;
31. The Parties wish to confirm their agreement that (a) in no
event shall either the Junior Secured Obligations or the Subordinated Debt
Trustee or any trustee under any Additional Subordinated Debt Indenture be
secured by or have any rights with respect to the Pledged Collateral under
the Intermediate Subsidiary Pledge Agreement or benefit from or have any
rights with respect to the Loan Guaranty or the Senior Debenture Guaranties
and (b) certain remedies under the Company Pledge Agreement not be taken for
the benefit of certain junior indebtedness unless such remedies are being
concurrently exercised for the benefit of certain senior indebtedness or
unless all such senior indebtedness has been paid in full; and
32. The Parties wish to confirm that certain subordination
provisions granting benefits to the holders of certain senior indebtedness
shall not be impaired by the granting of security interests in collateral, or
the exercise of rights with respect to such collateral, in favor of the
holders of certain junior indebtedness;
NOW, THEREFORE, the Parties agree that the Existing Intercreditor
Agreement is hereby amended and restated as follows:
SECTION 1. Appointment As Collateral Agent. The Current Credit
Agent, the Senior Note Trustee, the Senior Debenture Trustee, the
Subordinated Debt Trustee and the Foreign Lender listed on the signature
pages hereof each hereby appoints, and each Credit Agent, Lender, Foreign
Lender, Interest Rate Exchanger, Currency Exchanger, Additional Subordinated
Debt Trustee and Commercial Paper Representative signing an acknowledgment
hereto, by such signing appoints Bankers Trust Company to serve as collateral
agent and representative of each such Party and the Commercial Paper Holders
(to the extent applicable) under each of the Pledge Agreements and the Loan
Guaranty (in such capacity, together with its successors in such capacity,
the "Collateral Agent") and authorizes the Collateral Agent to act as agent
for the Secured Parties (a) for the purpose of executing and delivering, on
behalf of all such Parties and the Secured Parties, the Company Pledge
Agreement and, on behalf of all such Parties and the Secured Parties except
the Senior Note Trustee and the holders of the Senior Notes, the Subordinated
Debt Trustee and the holders of the Subordinated Debt Securities, the
Additional Subordinated Debt Trustees and the holders of the Additional
Subordinated Debt, and (with respect to the Collateral Account Agreement
only) the Senior Debenture Trustee and the holders of the Senior Debentures,
the Intermediate Subsidiary Pledge Agreement and the Collateral Account
Agreement and, subject to the provisions of this Agreement, for the purpose
of enforcing the Secured Parties' rights in respect of the Pledged Collateral
and the obligations of the Company and each Intermediate Subsidiary Pledgor
(collectively, the "Pledgors") under the Pledge Agreements and the
obligations of the Company under the Collateral Account Agreement and (b) in
<PAGE>XIII-13
addition, with respect to the foregoing appointment and authorization by the
Current Credit Agent and by each Credit Agent, Lender, Interest Rate
Exchanger, Currency Exchanger and Commercial Paper Representative signing an
acknowledgment hereto (collectively, together with the Commercial Paper
Holders, the "Guarantied Parties"), for the purpose of enforcing the
Guarantied Parties' rights under the Loan Guaranty and the obligations of the
Loan Guarantors under the Loan Guaranty.
SECTION 2. Decisions Relating to Exercise of Remedies Vested in
Requisite Obligees Under the Credit Agreements, Interest Rate Agreements,
Currency Agreements, Foreign Loan Agreements, Senior Indentures, Commercial
Paper Documents, Subordinated Debt Indenture, and Additional Subordinated
Debt Indentures in Respect of Additional Subordinated Debt.
(a) The Collateral Agent agrees to make such demands and give
such notices under the Loan Guaranty and the Pledge Agreements as Requisite
Obligees may request, and to take such action to enforce the Loan Guaranty
and the Pledge Agreements and to foreclose upon, collect and dispose of the
Pledged Collateral or any portion thereof as may be directed by Requisite
Obligees. For purposes of this Agreement, "Requisite Obligees" means (i) for
purposes of directing the Collateral Agent with respect to any of the
foregoing actions to be taken under or in respect of the Pledge Agreements,
Secured Parties holding 51% or more of the aggregate principal amount of the
sum of all Loans outstanding, all other credit facilities utilized (including
the stated amount of all letters of credit and the face amount of all
unmatured discounted bankers' acceptances, if any) and all unused Commitments
under the Credit Agreements; provided that, if the Obligations (such term
being used herein as defined in the Credit Agreements) have been indefeasibly
paid in full, "Requisite Obligees" shall mean (x) solely for purposes of
directing the Collateral Agent with respect to actions to be taken under or
in respect of the Company Pledge Agreement, Secured Parties holding 51% or
more of the aggregate amount of the sum of (A) the principal amount of the
Foreign Lender Debt then guarantied by the Foreign Lender Guaranties, (B) 20%
of the notional amount under all Interest Rate Agreements and Currency
Agreements or, if an Interest Rate Agreement or Currency Agreement has been
terminated in accordance with its terms, the amount then due and payable
(exclusive of expenses and similar payments but including any early
termination payments then due) under such Interest Rate Agreement or Currency
Agreement, as the case may be, (C) the aggregate outstanding principal amount
of the Senior Notes, (D) the aggregate outstanding principal amount of the
Senior Debentures (to the extent the Senior Debentures are then secured by
the Pledged Collateral under the Company Pledge Agreement), and (E) the
aggregate original issuance price of any outstanding Commercial Paper secured
by the Pledged Collateral under the Company Pledge Agreement until
indefeasible payment in full of the Foreign Lender Obligations, the Interest
Rate Obligations, the Currency Obligations, the Senior Notes, and all Senior
Debentures and Commercial Paper secured by the Pledged Collateral under the
Company Pledge Agreement, and, thereafter, Secured Parties holding 51% or
more of the aggregate amount of the sum of (F) the aggregate outstanding
<PAGE>XIII-14
principal amount of the Subordinated Debt Securities and (G) the aggregate
outstanding principal amount or accreted value, as the case may be, of any
Additional Subordinated Debt secured by the Pledged Collateral under the
Company Pledge Agreement until indefeasible payment in full of the
Subordinated Debt Securities and all such Additional Subordinated Debt, and
(y) solely for purposes of directing the Collateral Agent with respect to
actions to be taken under or in respect of the Intermediate Subsidiary Pledge
Agreement, Secured Parties holding 51% or more of the sum of the amounts
described in clauses (A), (B), (D) (to the extent the Senior Debentures are
then secured by the Pledged Collateral under the Intermediate Subsidiary
Pledge Agreement), and (E) above; and (ii) for purposes of directing the
Collateral Agent with respect to any of the foregoing actions to be taken
under or in respect of the Loan Guaranty, Requisite Lenders under the Credit
Agreement, or, if the Obligations have been indefeasibly paid in full,
Guarantied Parties holding 51% or more of the sum of (H) 20% of the notional
amount under all Interest Rate Agreements and Currency Agreements or, if an
Interest Rate Agreement or Currency Agreement has been terminated in
accordance with its terms, the amount then due and payable (exclusive of
expenses and similar payments but including any early termination payments
then due) under such Interest Rate Agreement or Currency Agreement, as the
case may be, and (I) the aggregate original issuance price of any outstanding
Commercial Paper guarantied by the Loan Guaranty; provided, further that, in
the case of each of clauses (i) and (ii) above, if the Collateral Agent
requests instruction as to any action to be taken at the direction of
Requisite Obligees from any Commercial Paper Representative (on behalf of
such Commercial Paper Representative and the Commercial Paper Holders in
respect of which such Commercial Paper Representative is the Commercial Paper
Representative) and such Commercial Paper Representative declines or
otherwise fails to promptly give directions to the Collateral Agent, the
aggregate original issuance price of any outstanding Commercial Paper held by
such Commercial Paper Holders shall not be counted or otherwise deemed to be
outstanding by Collateral Agent for purposes of determining the action to be
directed by Requisite Obligees or whether a consensus of Requisite Obligees
has been obtained. The Collateral Agent shall not be required to take any
action that is in its opinion contrary to law or to the terms of this
Agreement or any or all of the Loan Guaranty or the Pledge Agreements, or
which would in its opinion subject it or any of its officers, employees or
directors to liability, and the Collateral Agent shall not be required to
take any action under this Agreement or any or all of the Loan Guaranty or
the Pledge Agreements unless and until the Collateral Agent shall be
indemnified to its satisfaction by the Parties against any and all losses,
costs, expenses or liabilities in connection therewith; provided that any
such indemnification required by the Collateral Agent with respect to any
such action under the Loan Guaranty shall be provided by the Guarantied
Parties.
(b) Each Party executing this Agreement or an acknowledgment
hereto which is entitled to give directions to the Collateral Agent pursuant
to Section 2(a) with respect to the Pledge Agreements or the Loan Guaranty
(collectively, the "Directing Parties") and each Party executing this
Agreement or an acknowledgment hereto which is not entitled to give
<PAGE>XIII-15
directions to the Collateral Agent pursuant to Section 2(a) with respect to
the Pledge Agreements or the Loan Guaranty (collectively, the "Non-Directing
Parties") agrees that the Collateral Agent may act as Requisite Obligees may
request (regardless of whether any individual Directing Party, Non-Directing
Party or any other Secured Party (including the Commercial Paper Holders or
the holders of the Senior Notes, the Senior Debentures, the Subordinated Debt
Securities or the Additional Subordinated Debt) agrees, disagrees or abstains
with respect to such request), that the Collateral Agent shall have no
liability for acting in accordance with such request (provided such action
does not conflict with the express terms of this Agreement) and that no
Directing Party, Secured Party or Guarantied Party shall have any liability
to any other Directing Party, Non-Directing Party, Secured Party or
Guarantied Party for any such request. The Collateral Agent shall give
prompt notice to all Parties of actions taken pursuant to the instructions of
Requisite Obligees; provided, however, that the failure to give any such
notice shall not impair the right of the Collateral Agent to take any such
action or the validity or enforceability under this Agreement and the
applicable Pledge Agreement or Loan Guaranty of the action so taken.
(c) The Non-Directing Parties with respect to the Pledge
Agreements and this Agreement agree that the only right of such Non-Directing
Parties under the Pledge Agreements is for (i) the Foreign Lender
Obligations, the Interest Rate Obligations, the Currency Obligations, the
Senior Indenture Obligations in respect of the Senior Debenture Indenture,
and the Commercial Paper Obligations to be secured by the Pledged Collateral
and (ii) the Junior Secured Obligations and the Senior Indenture Obligations
in respect of the Senior Note Indenture to be secured by the Pledged
Collateral pledged under the Company Pledge Agreement, in each case for the
period and to the extent (but only to the extent) provided for in the Pledge
Agreements and to receive a share of the proceeds of the Pledged Collateral,
if any, to the extent and at the times provided in Section 12 of the Pledge
Agreements and Section 4(b) hereof. The Non-Directing Parties with respect
to the Loan Guaranty agree that the only right of such Non-Directing Parties
under the Loan Guaranty is for the Interest Rate Obligations, the Currency
Obligations and the Commercial Paper Obligations to be guarantied by the Loan
Guaranty for the period and to the extent provided in the Loan Guaranty and
to receive a share of any payments received on account of the Loan Guaranty
as provided in the Loan Guaranty.
(d) The Senior Note Trustee agrees, which agreement shall be
binding upon each and every holder of the Senior Notes, that the Senior
Indenture Obligations in respect of the Senior Note Indenture shall be
secured only by the Pledged Collateral under the Company Pledge Agreement and
that such Senior Indenture Obligations shall not be secured by any Pledged
Collateral under the Intermediate Subsidiary Pledge Agreement or the
collateral pledged under the Collateral Account Agreement.
(e) The Senior Debenture Trustee agrees, which agreement shall be
binding upon each and every holder of the Senior Debentures, that the Senior
Indenture Obligations in respect of the Senior Debenture Indenture (i) shall
be secured by the Pledged Collateral pledged by any Pledgor only until such
<PAGE>XIII-16
time, if any, as the pledge made and security interest granted by such
Pledgor with respect to such Senior Indenture Obligations may be released in
accordance with the terms of the last proviso to Section 2A of the Company
Pledge Agreement or the penultimate proviso to Section 2 of the Intermediate
Subsidiary Pledge Agreement, as the case may be, and (ii) shall not be
secured by the collateral pledged under the Collateral Account Agreement.
(f) The Subordinated Debt Trustee and each Additional
Subordinated Debt Trustee executing an acknowledgment to this Agreement
agrees, which agreement shall be binding upon each and every holder of the
Subordinated Debt Securities and each and every holder of any Additional
Subordinated Debt for which such Additional Subordinated Debt Trustee serves
as trustee, that (i) the Junior Secured Obligations shall be secured only by
the Pledged Collateral under the Company Pledge Agreement and the Junior
Secured Obligations shall not be secured by any Pledged Collateral under the
Intermediate Subsidiary Pledge Agreement or the collateral pledged under the
Collateral Account Agreement and (ii) the Collateral Agent shall take no
action to exercise any remedy provided in Section 11 of the Company Pledge
Agreement for the purpose of realizing value on the Pledged Collateral under
the Company Pledge Agreement to be applied to the payment of any Junior
Secured Obligation unless (y) such remedy is concurrently being exercised for
the purpose of realizing value on such Pledged Collateral to be applied to
the payment of the Obligations, the Foreign Lender Obligations, the Interest
Rate Obligations, the Currency Obligations, the Senior Indenture Obligations
(in the case of any Senior Indenture Obligations in respect of the Senior
Debenture Indenture, to the extent such Senior Indenture Obligations are then
secured by the Pledged Collateral under the Company Pledge Agreement) or the
Commercial Paper Obligations (collectively, the "Senior Secured
Obligations"); provided, however, that the holders of the Junior Secured
Obligations shall have no right to direct the exercise of such remedy; or (z)
all Senior Secured Obligations shall have been indefeasibly paid in full.
(g) The Collateral Agent may at any time request directions from
the Requisite Obligees with respect to the Pledge Agreements or the Loan
Guaranty as to any course of action or other matter relating hereto or to
such Pledge Agreements or Loan Guaranty, as the case may be. Except as
otherwise provided in the Pledge Agreements and the Loan Guaranty, directions
given by Requisite Obligees to the Collateral Agent hereunder shall be
binding on all Directing Parties, Non-Directing Parties, Secured Parties and
Guarantied Parties for all purposes.
(h) Each Directing Party and Non-Directing Party agrees, on
behalf of the Secured Parties and the Guarantied Parties, respectively, not
to take any action whatsoever to enforce any term or provision of the Pledge
Agreements or the Loan Guaranty or to enforce any of its rights in respect of
the Pledged Collateral, in each case except through the Collateral Agent in
accordance with this Agreement.
<PAGE>XIII-17
SECTION 3. Application of Proceeds of Security, Loan Guaranty
Payments, Etc.
(a) Subject to the provisions of Section 4 which shall govern
with respect to the allocation of Net Cash Proceeds of Asset Sales of Pledged
Collateral, any and all amounts actually received by the Collateral Agent in
connection with the enforcement of the Pledge Agreements, including the
proceeds of any collection, sale or other disposition of the Pledged
Collateral or any portion thereof (collectively, "Proceeds") shall be applied
promptly by the Collateral Agent as provided for in Section 12 of the Pledge
Agreements. Any and all amounts actually received by the Collateral Agent in
connection with the enforcement of the Loan Guaranty (collectively, "Loan
Guaranty Payments") shall be applied promptly by the Collateral Agent as
provided in the Loan Guaranty. Until Proceeds and Loan Guaranty Payments are
so applied, the Collateral Agent shall hold such Proceeds and Loan Guaranty
Payments in its custody in accordance with its regular procedures for
handling deposited funds.
(b) Subject to the provisions of Section 4 which shall govern
with respect to the allocation of Net Cash Proceeds of Asset Sales of Pledged
Collateral, (i) any Proceeds received by the Collateral Agent relating to the
Senior Secured Obligations shall be applied so that each Secured Party with
respect thereto that is then secured by the Pledged Collateral giving rise to
such Proceeds shall receive payment of the same proportionate amount of all
such Senior Secured Obligations and (ii) any Proceeds received by the
Collateral Agent relating to the Junior Secured Obligations shall be applied
so that each Secured Party with respect thereto that is then secured by the
Pledged Collateral giving rise to such Proceeds shall receive payment of the
same proportionate amount of all such Junior Secured Obligations. Any Loan
Guaranty Payments received by the Collateral Agent relating to the Obliga-
tions, the Interest Rate Obligations, the Currency Obligations or the
Commercial Paper Obligations (collectively, the "Guarantied Obligations")
shall be applied so that each Guarantied Party with respect thereto shall
receive payment of the same proportionate amount of all such Guarantied
Obligations. For purposes of determining the proportionate amounts of all
Senior Secured Obligations or Guarantied Obligations at the time any Proceeds
or Loan Guaranty Payments are to be distributed under this Section 3, the
amount of the outstanding Obligations, Foreign Lender Obligations, Senior
Indenture Obligations and Commercial Paper Obligations, respectively, shall
be deemed to be the principal and interest or face amount, as applicable,
then due and payable under the Credit Agreements, the Foreign Lender
Guaranties, the Senior Indentures (in the case of the Senior Debenture
Indenture, to the extent that the Senior Indenture Obligations with respect
thereto are then secured by the Pledged Collateral under the Company Pledge
Agreement or the Intermediate Subsidiary Pledge Agreement, as applicable) and
the Commercial Paper Documents, as the case may be, and the amount of the
outstanding Interest Rate Obligations and Currency Obligations of any
Interest Rate Exchanger or Currency Exchanger shall be deemed to be the
amount of the Company's obligations then due and payable (exclusive of
expenses or similar liabilities but including any early termination payments
<PAGE>XIII-18
then due) under the applicable Interest Rate Agreements or Currency
Agreements. For purposes of determining the proportionate amounts of all
Junior Secured Obligations at the time any Proceeds are to be distributed
under this Section 3, the amount of the outstanding Junior Secured
Obligations in respect of the Subordinated Debt Securities shall be deemed to
be the principal and interest then due and payable under the Subordinated
Debt Indenture, and the amount of the outstanding Junior Secured Obligations
in respect of any Additional Subordinated Debt that is then secured by the
Pledged Collateral giving rise to such Proceeds shall be deemed to be the
principal and interest or accreted value, as applicable, then due and payable
under the applicable Additional Subordinated Debt Indenture. Anything
contained in this Agreement or the Pledge Agreements to the contrary
notwithstanding, by signing an acknowledgment to this Agreement, the Current
Credit Agent agrees that, in the event the Current Credit Agent receives any
Proceeds which are held pursuant to the terms of Section 2(b) of the
Collateral Account Agreement as cash collateral for any outstanding Letter of
Credit, the Current Credit Agent shall, in the event of cancellation or
expiration of such Letter of Credit or any reduction in the maximum amount
available at any time for drawing thereunder, return to the Collateral Agent
any portion of such Proceeds which, at the time of such cancellation,
expiration or reduction, is neither required to be retained as cash
collateral for such Letter of Credit or any other Letter of Credit nor
required to be applied to the payment of any outstanding Obligations secured
pursuant to the terms of the Collateral Account Agreement. The Collateral
Agent shall apply the amount of any Proceeds so returned by the Current
Credit Agent to the payment of the other Senior Secured Obligations owed to
the Secured Parties (as defined in the Collateral Account Agreement) in
accordance with Section 12 of the Intermediate Subsidiary Pledge Agreement.
(c) Payments by the Collateral Agent to the Lenders in respect of
the Obligations shall be made to the Credit Agents for distribution to the
Lenders in accordance with the Credit Agreements; any payments in respect of
Interest Rate Obligations and Currency Obligations shall be made as directed
by the Lender to which such Interest Rate Obligations or Currency Obligations
are owed; any payments in respect of Foreign Lender Obligations shall be made
as directed by the Foreign Lender to which such Foreign Lender Obligations
are owed; any payments in respect of any Senior Indenture Obligations shall
be paid to the Senior Note Trustee or the Senior Debenture Trustee, as the
case may be, for the benefit of the holders of such Senior Indenture Obliga-
tions; any payments in respect of Commercial Paper Obligations shall be paid
to the respective Commercial Paper Holders or to the applicable Commercial
Paper Representatives for their benefit; and any payments in respect of any
Junior Secured Obligations shall be paid to the Subordinated Debt Trustee or
the appropriate Additional Subordinated Debt Trustee, as the case may be, for
the benefit of the holders of such Junior Secured Obligations.
SECTION 4. Allocation of Proceeds from Asset Sales of Pledged
Collateral. The Current Credit Agent, acting on behalf of the Current
Lenders, each Successor Credit Agent signing an acknowledgment hereto, acting
on behalf of the Lenders for which it is agent, each Interest Rate Exchanger,
<PAGE>XIII-19
Currency Exchanger and Foreign Lender executing this Agreement or an
acknowledgment hereto, the Senior Note Trustee, acting on behalf of the
holders of the Senior Notes, the Senior Debenture Trustee, acting on behalf
of the holders of the Senior Debentures, each Commercial Paper Representative
executing an acknowledgment to this Agreement, acting on behalf of such
Commercial Paper Representative and the Commercial Paper Holders in respect
of which such Commercial Paper Representative is the Commercial Paper Repre-
sentative, the Subordinated Debt Trustee, acting on behalf of the holders of
the Subordinated Debt Securities, and each Additional Subordinated Debt
Trustee executing an acknowledgment to this Agreement, acting on behalf of
the holders of the Additional Subordinated Debt for which it serves as
trustee, agree, inter se, that Net Cash Proceeds of Assets Sales of Pledged
Collateral shall be allocated as provided in this Section 4. The Company,
the Intermediate Subsidiary Pledgors and the Parties agree that any Net Cash
Proceeds relating to Asset Sales of Pledged Collateral shall be applied at
the times, if any, required under the Credit Agreements by the Company as
provided in Section 4(c).
(a) Upon the occurrence of an Asset Sale of Pledged Collateral,
the applicable Net Cash Proceeds shall be applied to repay outstanding
Obligations; provided that, anything contained in this Agreement or the
Pledge Agreements to the contrary notwithstanding (but subject, however, to
the provisions of Section 4(b) hereof), repayment of the outstanding
Obligations out of such Net Cash Proceeds shall only be made to the extent
required by the terms of the Credit Agreement then in effect.
(b) Notwithstanding paragraph (a) of this Section 4, (i) after
the occurrence and during the continuation of a Level 2 Sharing Event (as
hereinafter defined) with respect to any Pledged Collateral, 100% of any Net
Cash Proceeds with respect to such Pledged Collateral which become available
shall be applied to the payment of the Obligations, the Foreign Lender
Obligations, the Interest Rate Obligations, the Currency Obligations, the
Senior Indenture Obligations in respect of the Senior Debenture Indenture,
and the Commercial Paper Obligations in proportion to their respective
outstanding principal and interest or face amounts or early termination
amounts, as the case may be, (ii) if a Level 1 Sharing Event (as hereinafter
defined) is continuing at the time Net Cash Proceeds become available for
repayment of the Obligations pursuant to Section 4(a), the Collateral Agent
shall apply such Net Cash Proceeds received by it to repay principal and
interest or the face amount, as applicable, then due and payable under the
Credit Agreement, the Foreign Lender Guaranties, the Senior Indentures and
the Commercial Paper Documents and to repay any amount upon early termination
then due and payable in respect of Interest Rate Obligations and Currency
Obligations in proportion to their respective outstanding principal and
interest or face amounts or early termination amounts, as the case may be,
and (iii) if Net Cash Proceeds are applied in accordance with Section 4(a) to
repay outstanding Obligations, or if Net Cash Proceeds are applied in
accordance with Section 4(b)(i) to pay outstanding Obligations, Foreign
Lender Obligations, Interest Rate Obligations, Currency Obligations, Senior
Indenture Obligations in respect of the Senior Debenture Indenture and/or
<PAGE>XIII-20
Commercial Paper Obligations, and in either such case a Level 1 Sharing Event
occurs within the period commencing on the date the Collateral Agent delivers
such amounts to the Credit Agent, the applicable Lender, the Senior Debenture
Trustee and/or the applicable Commercial Paper Representative for payment of
the Obligations, any Foreign Lender Obligations, Interest Rate Obligations or
Currency Obligations, the Senior Indenture Obligations in respect of the
Senior Debenture Indenture, or any Commercial Paper Obligations, as the case
may be (the "Prepayment Date"), and ending ninety days thereafter, then 100%
of Net Cash Proceeds which thereafter become available shall be applied to
the repayment of the Obligations, Foreign Lender Obligations, Interest Rate
Obligations, Currency Obligations, Senior Indenture Obligations and
Commercial Paper Obligations until such time as (A) the proportion of the
principal and interest due and payable under the Credit Agreements to the
principal and interest or the face amount, as applicable, due and payable
under the Foreign Loan Guaranties, the Senior Indentures (in each case to the
extent the Senior Indenture Obligations in respect thereof are then secured
by the Pledged Collateral that is the subject of the relevant Asset Sale) and
the Commercial Paper Documents and the amount upon early termination then due
and payable in respect of Interest Rate Obligations and Currency Obligations
is the same as it was immediately prior to the Prepayment Date and (B) the
proportion of the principal and interest or face amount, as applicable, due
and payable under the Credit Agreements, the Foreign Lender Guaranties, the
Senior Debenture Indenture (to the extent the Senior Indenture Obligations in
respect thereof are then secured by the Pledged Collateral that is the
subject of the relevant Asset Sale) and the Commercial Paper Documents and
the amount upon early termination then due and payable in respect of Interest
Rate Obligations and Currency Obligations to the principal and interest then
due and payable under the Senior Note Indenture (to the extent the Senior
Indenture Obligations in respect of the Senior Notes are then secured by the
Pledged Collateral that is the subject of the relevant Asset Sale) is the
same as it was immediately prior to the Prepayment Date (in the case of each
of the foregoing clauses (A) and (B), without giving effect to the impact on
the applicable proportions referred to therein of any reductions in the
amounts of the various Senior Secured Obligations referred to therein
resulting from events other than the application of Net Cash Proceeds in
accordance with Section 4(a) or Section 4(b)(i)), and thereafter such Net
Cash Proceeds shall be applied to repayment of principal and interest or the
face amount, as applicable, then due and payable under the Credit Agreements,
the Foreign Lender Guaranties, the Senior Indentures and the Commercial Paper
Documents and to repay any amount upon early termination then due and payable
in respect of Interest Rate Obligations and Currency Obligations in
proportion to their respective outstanding principal and interest or face
amounts or early termination amounts, as the case may be; provided that, in
making any determination pursuant to this Section 4(b) of either the amount
of principal and interest then outstanding under or in respect of the Senior
Debentures or the amount of principal and interest then due and payable under
or in respect of the Senior Debentures, the amount so determined shall in
each case be reduced, for purposes of this Section 4(b), by an amount equal
to any amounts held by the Senior Debenture Trustee pursuant to the proviso
to clause "Third" of Section 6.10 of the Senior Debenture Indenture as in
<PAGE>XIII-21
effect on the date of issuance of the Senior Debentures (the "Senior
Debenture Closing Date"); and provided, further that, anything contained in
this Section 4 to the contrary notwithstanding, (X) in no event shall any Net
Cash Proceeds in respect of any Asset Sale of Pledged Collateral under the
Company Pledge Agreement be applied to the repayment of any Foreign Lender
Obligations, Interest Rate Obligations, Currency Obligations, Senior
Indenture Obligations in respect of the Senior Debenture Indenture, or
Commercial Paper Obligations which do not constitute "Senior Secured
Obligations" under the Company Pledge Agreement and (Y) in no event shall any
Net Cash Proceeds of any Asset Sale of Pledged Collateral under the
Intermediate Subsidiary Pledge Agreement be applied to the repayment of (1)
any Foreign Lender Obligations, Interest Rate Obligations, Currency
Obligations, Senior Indenture Obligations in respect of the Senior Debenture
Indenture, or Commercial Paper Obligations which do not constitute "Secured
Obligations" under the Intermediate Subsidiary Pledge Agreement or (2) any
Senior Indenture Obligations in respect of the Senior Note Indenture. The
priorities of allocation set forth in this paragraph (b) shall apply in all
circumstances including, without limitation, with respect to any case or
proceeding under any bankruptcy law or insolvency law involving creditors'
rights generally.
For purposes of this Section 4(b), (i) "Level 2 Sharing Event"
means, with respect to any Pledged Collateral, the occurrence and
continuation, during any period when such Pledged Collateral secures the
Senior Indenture Obligations in respect of the Senior Debenture Indenture, of
a Default or Event of Default (as such terms are defined in the Senior
Debenture Indenture as in effect on the Senior Debenture Closing Date) under
the Senior Debenture Indenture as in effect on the Senior Debenture Closing
Date; provided that such a Default or Event of Default under Section 6.01(3)
of the Senior Debenture Indenture (as in effect on the Senior Debenture
Closing Date) shall only constitute a Level 2 Sharing Event to the extent
such Default or Event of Default results from a failure of the Company to
comply with the provisions of any of Sections 4.01, 4.03, 4.04, 4.05, 4.06,
4.07, 4.08, 4.09, 4.13, 4.14, 4.17, 4.18, 4.19 and 5.01 of the Senior
Debenture Indenture (in each case as in effect on the Senior Debenture
Closing Date); and provided further, however, that in no event shall a
Level 2 Sharing Event be deemed to be continuing after the occurrence and
during the continuation of a Level 1 Sharing Event; and (ii) "Level 1 Sharing
Event" means each of the following: (i) the insolvency or bankruptcy of
Company, (ii) a default which is continuing in the payment (whether such
payment is due upon maturity, acceleration or otherwise) of principal,
interest or any other obligations with respect to Indebtedness under (A) the
Credit Agreements or (B) any Senior Indenture or any Commercial Paper
Documents in respect of any Commercial Paper (in the case of any Indebtedness
described in this clause (B), only to the extent such Indebtedness is then
secured by the Pledged Collateral that is the subject of the relevant Asset
Sale), or (iii) the commencement of foreclosure proceedings or any other
action taken in exercising any right of Requisite Obligees with respect to
the security interests granted or property pledged to Secured Parties
pursuant to the Pledge Agreements.
(c) To the extent received by the Company, the Company shall pay
to the Collateral Agent the Net Cash Proceeds which are allocable to, and
<PAGE>XIII-22
required to be applied in respect of, the Obligations under Section 4(a) and
all of the Net Cash Proceeds which are payable under Section 4(b). Any such
payments received by the Collateral Agent directly or from the Company shall
be distributed as provided in Section 3(c).
SECTION 5. Information. In the event the Collateral Agent
proceeds to foreclose upon, collect, sell or otherwise dispose of or take any
other action with respect to the Pledged Collateral, or any portion thereof,
or to enforce any Pledge Agreement or the Loan Guaranty, or proposes to take
any other action pursuant to this Agreement or requests instructions from the
Secured Parties or Guarantied Parties as provided herein, upon the request of
the Collateral Agent, each of the following Parties agrees to promptly
provide to the Collateral Agent the information described below:
(a) The Current Credit Agent on behalf of the Current Lenders
agrees to promptly from time to time notify the Collateral Agent of (i) the
aggregate amount of principal of and interest on the Obligations as at such
date as the Collateral Agent may specify, (ii) the current Commitment of each
Current Lender under the Current Credit Agreement, and (iii) any payment
received by the Current Credit Agent to be applied to the principal of or
interest on the Obligations. The Current Credit Agent shall certify as to
such amounts and the Collateral Agent shall be entitled to rely conclusively
upon such certification.
(b) Each Lender party to an Interest Rate Agreement benefited by
this Agreement, by signing an acknowledgment to this Agreement, agrees to
promptly from time to time notify the Collateral Agent of (i) the notional
amount under such Interest Rate Agreement and the amount payable by the
Company upon early termination of such Interest Rate Agreement at the date of
termination as fixed by such Interest Rate Agreement and (ii) any payment
received by such Lender to be applied to amounts due upon early termination
of such Interest Rate Agreement. Such Lender shall certify as to such
amounts and the Collateral Agent shall be entitled to rely conclusively upon
such certification.
(c) Each Lender party to a Currency Agreement benefited by this
Agreement, by signing an acknowledgment to this Agreement, agrees to promptly
from time to time notify the Collateral Agent of (i) the notional amount
under such Currency Agreement and the amount payable by the Company upon
early termination of such Currency Agreement at the date of termination as
fixed by such Currency Agreement and (ii) any payment received by such Lender
to be applied to amounts due upon early termination of such Currency Agree-
ment. Such Lender shall certify as to such amounts and the Collateral Agent
shall be entitled to rely conclusively upon such certification.
(d) Each Foreign Lender beneficiary to a Foreign Lender Guaranty
benefited by this Agreement, by executing this Agreement or signing an
acknowledgment to this Agreement, as the case may be, agrees to promptly from
time to time notify the Collateral Agent of (i) the aggregate amount of
principal and interest outstanding under the Foreign Loan Agreement to which
<PAGE>XIII-23
such Foreign Lender Guaranty relates, whether such amounts are fully
guarantied by such Foreign Lender Guaranty and the amount, if any, then due
and payable under such Foreign Lender Guaranty, as at such date as the
Collateral Agent may specify and (ii) any payment received by such Foreign
Lender to be applied to the principal of or interest on the amounts due under
such Foreign Loan Agreements and such Foreign Lender Guaranty. The Foreign
Lender shall certify as to such amounts and the Collateral Agent shall be
entitled to rely conclusively upon such certification.
(e) The Senior Note Trustee agrees to promptly from time to time
notify the Collateral Agent of the outstanding principal amount of the Senior
Notes and the amount of accrued but unpaid interest thereon, at such date as
the Collateral Agent may specify. The Senior Note Trustee shall, or shall
cause the registrar for the Senior Notes to, certify as to such amount as
reflected in the register maintained for such purpose by the Senior Note
Trustee or such registrar, as the case may be, and the Collateral Agent shall
be entitled to rely conclusively upon such certification.
(f) The Senior Debenture Trustee agrees to promptly from time to
time notify the Collateral Agent of the outstanding principal amount of the
Senior Debentures and the amount of accrued but unpaid interest thereon, at
such date as the Collateral Agent may specify. The Senior Debenture Trustee
shall, or shall cause the registrar for the Senior Debentures to, certify as
to such amount as reflected in the register maintained for such purpose by
the Senior Debenture Trustee or such registrar, as the case may be, and the
Collateral Agent shall be entitled to rely conclusively upon such
notification.
(g) Each Commercial Paper Representative, by signing an
acknowledgment to this Agreement, severally agrees, promptly from time to
time upon written inquiry, to notify the Collateral Agent of (i) the
aggregate amount of Commercial Paper Obligations outstanding in respect of
Commercial Paper in respect of which such Commercial Paper Representative is
the Commercial Paper Representative and (ii) any payment received by such
Commercial Paper Representative to be applied to any such Commercial Paper
Obligations, as at such date as the Collateral Agent may specify, and the
Collateral Agent shall be entitled to rely conclusively upon such
notification.
(h) Each Successor Lender entering into a Successor Credit
Agreement, or the Successor Credit Agent thereunder, by signing an
acknowledgment to this Agreement, agrees that such Successor Lender or
Successor Credit Agent, as the case may be, will promptly from time to time
notify the Collateral Agent of (i) the aggregate amount of principal of and
interest on the Obligations outstanding to such Successor Lender in the case
of such Successor Lender, or the aggregate amount of principal of and
interest on all of the Obligations in the case of such Successor Credit
Agent, as at such date as the Collateral Agent may specify, (ii) the current
Commitment of such Successor Lender under such Successor Credit Agreement in
the case of such Successor Lender, or all of the current Commitments of all
<PAGE>XIII-24
Successor Lenders under such Successor Credit Agreement in the case of such
Successor Credit Agent, and (iii) any payment received by the Successor
Lender or Successor Credit Agent, as the case may be, to be applied to the
principal of or interest on the Obligations. Such Successor Lender and
Successor Credit Agent shall certify as to such amounts and the Collateral
Agent shall be entitled to rely conclusively upon such certification.
(i) The Subordinated Debt Trustee agrees to promptly from time to
time notify the Collateral Agent of the outstanding principal amount of the
Subordinated Debt Securities and the amount of accrued but unpaid interest
thereon, at such date as the Collateral Agent may specify. The Subordinated
Debt Trustee shall, or shall cause the registrar for the Subordinated Debt
Securities to, certify as to such amount as reflected in the register
maintained for such purpose by the Subordinated Debt Trustee or such
registrar, as the case may be, and the Collateral Agent shall be entitled to
rely conclusively upon such certification.
(j) Each Additional Subordinated Debt Trustee, by signing an
acknowledgment to this Agreement, severally agrees to promptly from time to
time notify the Collateral Agent of the outstanding principal amount or
accreted value, as the case may be, of the Additional Subordinated Debt for
which such Additional Subordinated Debt Trustee serves as trustee and the
amount of accrued but unpaid interest thereon, at such date as the Collateral
Agent may specify. The applicable Additional Subordinated Debt Trustee
shall, or shall cause the registrar for the applicable Additional
Subordinated Debt to, certify as to such amount as reflected in the register
maintained for such purpose by such Additional Subordinated Debt Trustee or
registrar, as the case may be, and the Collateral Agent shall be entitled to
rely conclusively upon such certification.
SECTION 6. Successor Credit Agreements; Interest Rate Agreements;
Currency Agreements; Foreign Lender Guaranties; Additional Subordinated Debt
Indentures in Respect of Additional Subordinated Debt; Commercial Paper
Documents.
(a) Each lender becoming party to a Successor Credit Agreement,
or the agent for such lender, may cause the Obligations thereunder to be
secured by the Pledge Agreements and guarantied by the Loan Guaranty by
executing an acknowledgment in the form contained on the signature pages
hereof, and by delivering such executed acknowledgment (which must be
acknowledged by the Pledgors and the Loan Guarantors) to the Collateral
Agent, by which each such lender or such agent for such lender, as the case
may be, agrees to be bound by the terms of this Agreement.
(b) Each Lender may cause Interest Rate Obligations and Currency
Obligations to be secured by the Pledge Agreements and guarantied under the
Loan Guaranty by executing an acknowledgment in the form contained on the
signature pages hereof, and by delivering such executed acknowledgment (which
must be acknowledged by the Pledgors and the Loan Guarantors) to the
Collateral Agent, by which such Lender agrees to be bound by the terms of
this Agreement.
<PAGE>XIII-25
(c) Each Foreign Lender may cause Foreign Lender Obligations to
be secured by the Pledge Agreements by executing an acknowledgment in the
form contained on the signature pages hereof, and by delivering such executed
acknowledgment (which must be acknowledged by the Pledgors) to the Collateral
Agent, by which such Foreign Lender agrees to be bound by the terms of this
Agreement.
(d) Each Commercial Paper Representative may cause the Commercial
Paper in respect of which such Commercial Paper Representative is the
Commercial Paper Representative to be guarantied by the Loan Guaranty and
secured by the Pledge Agreements by executing an acknowledgment in the form
contained on the signature pages hereof, and by delivering such executed
acknowledgment (which must be acknowledged by the Pledgors and the Loan
Guarantors) to the Collateral Agent, by which such Commercial Paper
Representative agrees, for itself and on behalf of the Commercial Paper
Holders in respect of which such Commercial Paper Representative is the
Commercial Paper Representative, to be bound by the terms of this Agreement.
(e) Each Additional Subordinated Debt Trustee may cause the
Additional Subordinated Debt for which such Additional Subordinated Debt
Trustee serves as trustee to be secured, on a senior subordinated basis, by
the Company Pledge Agreement by executing an acknowledgment specifying the
applicable series of Additional Subordinated Debt and the applicable
Additional Subordinated Debt Indenture in the form contained on the signature
pages hereof, and by delivering such executed acknowledgment (which must be
acknowledged by the Company) to the Collateral Agent, by which such
Additional Subordinated Debt Trustee agrees, for itself and on behalf of the
holders of the Additional Subordinated Debt for which such Additional
Subordinated Debt Trustee serves as trustee, to be bound by the terms of this
Agreement; provided that any such series of Additional Subordinated Debt
shall only be entitled to be secured as aforesaid if the Collateral Agent
shall have received an opinion of Latham & Watkins, counsel for the Company,
to the effect that the issuance of such series of Additional Subordinated
Debt and the securing of the obligations thereunder by Liens on the Pledged
Collateral under the Company Pledge Agreement do not conflict with, result in
a breach of, or constitute a default under, any Senior Indenture or the
Subordinated Debt Indenture or any Additional Subordinated Debt Indenture.
SECTION 7. Disclaimers, Indemnity, Etc.
(a) The Collateral Agent shall have no duties or responsibilities
except those expressly set forth in this Agreement, the Pledge Agreements or
the Loan Guaranty, and the Collateral Agent shall not by reason of this
Agreement, the Pledge Agreements or the Loan Guaranty be a trustee for any
Secured Party or Guarantied Party or have any other fiduciary obligation to
any Secured Party or Guarantied Party (including any obligation under the
Trust Indenture Act of 1939, as amended). The Collateral Agent shall not be
responsible to any Secured Party or Guarantied Party for any recitals,
statements, representations or warranties contained in this Agreement, the
Credit Agreements, the notes evidencing Indebtedness under the Credit
<PAGE>XIII-26
Agreements, the Interest Rate Agreements, the Currency Agreements, the
Foreign Lender Guaranties, the Foreign Loan Agreements, the Senior Note
Indenture, the Senior Notes, the Senior Debenture Indenture, the Senior
Debentures, the Commercial Paper Documents, the Subordinated Debt Indenture,
the Subordinated Debt Securities, the Additional Subordinated Debt
Indentures, the Additional Subordinated Debt, the Pledge Agreements or the
Loan Guaranty (collectively, the "Financing Agreements") or in any
certificate or other document referred to or provided for in, or received by
any of them under, any of the Financing Agreements, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of any of
the Financing Agreements or any other document referred to or provided for
therein or any Lien under the Pledge Agreements or the perfection or priority
of any such Lien or for any failure by any Loan Party to perform any of its
respective obligations under any of the Financing Agreements. The Collateral
Agent may employ agents and attorneys-in-fact and shall not be responsible,
except as to money or securities received by it or its authorized agents, for
the negligence or misconduct of any such agents or attorneys-in-fact selected
by it with reasonable care. Neither the Collateral Agent nor any of its
directors, officers, employees or agents shall be liable or responsible for
any action taken or omitted to be taken by it or them hereunder or in
connection herewith, except for its or their own gross negligence or willful
misconduct.
(b) The Collateral Agent shall be entitled to rely upon any
certification, notice or other communication (including any thereof by telex,
telecopy, telegram or cable) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to the Company
or any Subsidiary of the Company), independent accountants and other experts
selected by the Collateral Agent. As to any matters not expressly provided
for by this Agreement, the Collateral Agent shall in all cases be fully
protected in acting, or in refraining from acting, hereunder in accordance
with instructions signed by Requisite Obligees, and such instructions of
Requisite Obligees, and any action taken or failure to act pursuant thereto,
shall be binding on all of the Secured Parties and Guarantied Parties.
(c) Subject to the proviso contained in the last sentence of
Section 2(a), each Credit Agent on behalf of the Lenders for which it serves
as agent, each Interest Rate Exchanger, each Currency Exchanger and each
Foreign Lender (collectively, the "Paying Indemnifying Parties") agrees that
the Secured Parties represented by it shall indemnify the Collateral Agent,
ratably in accordance with the amount of the obligations held by such Secured
Parties secured by the Pledge Agreements, to the extent neither reimbursed by
the Company or any Pledgor under any Pledge Agreement nor reimbursed out of
any Proceeds pursuant to clause First of Section 12 of any Pledge Agreement,
for any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind and
nature whatsoever which may be imposed on, incurred by or asserted against
the Collateral Agent in any way relating to or arising out of any of the
<PAGE>XIII-27
Financing Agreements or any other documents contemplated by or referred to
therein or the transactions contemplated thereby or the enforcement of any of
the terms of any thereof; provided, however, that no such Party or Secured
Party shall be liable for any of the foregoing to the extent they arise from
the gross negligence or willful misconduct of the Collateral Agent. Each
Commercial Paper Representative, on behalf of such Commercial Paper
Representative and the Commercial Paper Holders in respect of which such
Commercial Paper Representative is the Commercial Paper Representative,
agrees that, as provided in Section 12 of each Pledge Agreement and in the
Loan Guaranty, deductions from distributions otherwise due the Commercial
Paper Holders will be made so that such Commercial Paper Holders shall share
with the Paying Indemnifying Parties, ratably in accordance with the amount
of the Commercial Paper Obligations secured by the Pledge Agreements and
guarantied by the Loan Guaranty, the payment of the amounts due under the
preceding sentence. Each Senior Indenture Trustee, the Subordinated Debt
Trustee and each Additional Subordinated Debt Trustee executing an
acknowledgment to this Agreement (on behalf of the holders of the Senior
Indenture Obligations or Subordinated Debt Securities or Additional
Subordinated Debt on behalf of which it is entering into this Agreement)
agrees that, as provided in Section 12 of the Company Pledge Agreement or (in
the case of the holders of Senior Indenture Obligations in respect of the
Senior Debenture Indenture to the extent such Senior Indenture Obligations
are then secured by the Pledged Collateral under the Intermediate Subsidiary
Pledge Agreement) Section 12 of the Intermediate Subsidiary Pledge Agreement,
deductions from distributions otherwise due such holders of Senior Indenture
Obligations or Subordinated Debt Securities or Additional Subordinated Debt,
as the case may be, will be made so that such holders of Senior Indenture
Obligations or Subordinated Debt Securities or Additional Subordinated Debt,
as the case may be, shall share with the Paying Indemnifying Parties, ratably
in accordance with the amount (without duplication) of such Senior Indenture
Obligations or Subordinated Debt Securities or Additional Subordinated Debt,
as the case may be, secured by the Company Pledge Agreement or the
Intermediate Subsidiary Pledge Agreement, as the case may be, the payment of
the amounts due under the second preceding sentence.
(d) Except for action expressly required of the Collateral Agent
hereunder, the Collateral Agent shall, notwithstanding anything to the
contrary in Section 7(c) hereof, in all cases be fully justified in failing
or refusing to act hereunder unless it shall be further indemnified to its
satisfaction by the Parties against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such
action.
(e) The Collateral Agent may deem and treat the payee of any
promissory note or other evidence of indebtedness relating to the Secured
Obligations or Guarantied Obligations as the owner thereof for all purposes
hereof unless and until a written notice of the assignment or transfer
thereof, signed by such payee and in form satisfactory to the Collateral
Agent, shall have been filed with the Collateral Agent. Any request,
authority or consent of any Person who at the time of making such request or
<PAGE>XIII-28
giving such authority or consent is the holder of any such note or other
evidence of indebtedness shall be conclusive and binding on any subsequent
holder, transferee or assignee of such note or other evidence of indebtedness
and of any note or notes or other evidences of indebtedness issued in
exchange therefor.
(f) Except as expressly provided herein and in the Pledge
Agreements, the Collateral Agent shall have no duty to take any affirmative
steps with respect to the collection of amounts payable in respect of the
Pledged Collateral. The Collateral Agent shall incur no liability to any
Secured Party as a result of any sale of any Pledged Collateral at any
private sale.
(g) (i) Until such time as the Obligations, the Foreign Lender
Obligations, the Interest Rate Obligations and the Currency Obligations
secured by the Pledged Collateral shall have been indefeasibly paid in full,
the Collateral Agent may resign at any time by giving at least 30 days'
notice thereof to the Parties (such resignation to take effect as hereinafter
provided) and the Collateral Agent may be removed as Collateral Agent at any
time by Requisite Obligees. In the event of such resignation or removal of
the Collateral Agent, Requisite Obligees shall thereupon have the right to
appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed by Requisite Obligees and shall have accepted such
appointment within 30 days after the notice of the intent of the Collateral
Agent to resign, then the retiring Collateral Agent may, on behalf of the
other Parties, appoint a successor Collateral Agent. Any successor
Collateral Agent appointed pursuant to this clause (i) (A) shall be a com-
mercial bank organized under the laws of the United States of America or any
state thereof and having a combined capital and surplus of at least
$500,000,000 and (B) shall be approved by the Company.
(ii) After the payment in full of the Obligations, the Foreign
Lender Obligations, the Interest Rate Obligations and the Currency
Obligations secured by the Pledged Collateral and until such time as the
Senior Indenture Obligations, the Commercial Paper Obligations and the Junior
Secured Obligations are paid in full, the Collateral Agent may resign at any
time by giving at least 30 days' notice thereof to each Senior Indenture
Trustee (to the extent the Senior Indenture Obligations in respect of which
such Senior Indenture Trustee is the trustee are then secured by any of the
Pledged Collateral), each Commercial Paper Representative, the Subordinated
Debt Trustee, and each Additional Subordinated Debt Trustee (to the extent
the Junior Secured Obligations in respect of which such Additional
Subordinated Debt Trustee is the trustee are then secured by the Pledged
Collateral under the Company Pledge Agreement) (such resignation to take
effect as hereinafter provided) and the Collateral Agent may be removed as
Collateral Agent at any time by the appropriate Requisite Obligees. In the
event of any such resignation or removal of the Collateral Agent, such
Requisite Obligees shall thereupon have the right to appoint a successor
Collateral Agent. If no successor Collateral Agent shall have been so
appointed within 30 days after the notice of the intent of the Collateral
<PAGE>XIII-29
Agent to resign, then the retiring Collateral Agent may, on behalf of the
Requisite Obligees, appoint a successor Collateral Agent. Any successor
Collateral Agent appointed pursuant to this clause (ii) (A) shall be a
commercial bank organized under the laws of the United States of America or
any state thereof and having a combined capital and surplus of at least
$500,000,000 and (B) shall, unless such successor Collateral Agent is
appointed by the retiring Collateral Agent, be approved by Company.
(iii) Upon the acceptance of any appointment as Collateral Agent
hereunder by a successor Collateral Agent, such successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring or removed Collateral Agent, and the
retiring or removed Collateral Agent shall thereupon be discharged from its
duties and obligations hereunder. After any retiring or removed Collateral
Agent's resignation or removal hereunder as Collateral Agent, the provisions
of this Section 7 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Collateral Agent.
(h) In no event shall Collateral Agent or any Party, Secured
Party or Guarantied Party be liable or responsible for any funds or
investments of funds held by Company.
SECTION 8. No Impairment of Subordination in Rights of Payment.
The Subordinated Debt Trustee and each Additional Subordinated Debt Trustee
executing an acknowledgment to this Agreement agrees, which agreement shall
be binding upon each and every holder of the Junior Secured Obligations, that
the agreements and obligations of the Loan Parties and the holders of the
Junior Secured Obligations relating to the subordination of the right of
payment of the holders of the Subordinated Debt Securities and any Additional
Subordinated Debt to the prior payment of "Senior Indebtedness" (as defined
in the Subordinated Debt Indenture and the applicable Additional Subordinated
Debt Indenture, respectively) shall not be impaired in any manner by the
pledge of the Pledged Collateral and the security interest granted under the
Company Pledge Agreement or the exercise of any rights provided thereunder
and that the rights of the holders of such "Senior Indebtedness" shall not be
impaired in any manner by any such action.
SECTION 9. Miscellaneous.
(a) All notices and other communications provided for herein
shall be in writing and may be personally served, telecopied, telexed or sent
by United States mail and shall be deemed to have been given when delivered
in person, upon receipt of telecopy or telex or four Business Days after
deposit in the United States mail, registered or certified, with postage
prepaid and properly addressed. For the purposes hereof, the addresses of
the parties hereto (until notice of a change thereof is delivered as provided
in this Section 9(a)) shall be as set forth under each party's name on the
signature pages (including acknowledgments) hereof.
(b) This Agreement may be modified or waived only by an
instrument or instruments in writing signed by each Party; provided that, in
<PAGE>XIII-30
the event and only in the event of a modification or amendment which would
(i) reduce or adversely affect the right of the Commercial Paper Represen-
tatives to request or direct the Collateral Agent to take action as provided
in Section 2(a) or (ii) subordinate or cause the Commercial Paper Holders to
hold a security interest in the Pledged Collateral junior to the security
interest therein of any other Secured Party, no such modification or
amendment shall be effective as to the Commercial Paper Holders or Commercial
Paper Representatives in respect of any Commercial Paper outstanding at the
time of such modification or amendment except with the prior written consent
of the Commercial Paper Representatives in respect of a majority in aggregate
face amount of such outstanding Commercial Paper; provided, however that,
notwithstanding the foregoing, neither the written consent of the Senior
Debenture Trustee nor the written consent of the Subordinated Debt Trustee
nor the written consent of any Additional Subordinated Debt Trustee shall be
required with respect to amendments, modifications or waivers necessary to
permit the incurrence of additional Indebtedness secured by the Pledged
Collateral and entitled to the benefits of the Company Pledge Agreement or
the Intermediate Subsidiary Pledge Agreement insofar as the foregoing is
permitted by the Senior Debenture Indenture or the Subordinated Debt
Indenture or the applicable Additional Subordinated Debt Indenture, as the
case may be, including without limitation any amendments, modifications or
waivers for the purpose of adding appropriate references to additional
parties in, and according such parties the benefits of, any of the provisions
hereof (including without limitation the provisions of Section 4 and the
definitions of Level 2 Sharing Event and Level 1 Sharing Event set forth
therein and, if applicable, the provisions of Section 10) in connection with
the incurrence of such Indebtedness; provided further, however that,
notwithstanding the foregoing, this Agreement may be amended from time to
time by an instrument or instruments in writing signed by the Current Credit
Agent and the Collateral Agent with the written acknowledgment of the Company
but without the signature or written consent of any other Party for the
purpose of providing, with respect to any Indebtedness proposed to be issued
by the Company the proceeds of which may be used to repay Loans, that,
notwithstanding the fact that any agreement or instrument related to such
Indebtedness might otherwise be deemed to be a Successor Credit Agreement, in
no event shall any such agreement or instrument be deemed to be a Successor
Credit Agreement.
(c) This Agreement shall be binding upon and inure to the benefit
of the Collateral Agent, each other Party, each Secured Party and each
Guarantied Party and their respective successors and assigns.
(d) This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
(e) This Agreement shall become effective as to the Current
Lenders, the Current Credit Agent, the Senior Note Trustee and the holders of
the Senior Notes, the Senior Debenture Trustee and the holders of the Senior
Debentures, the Subordinated Debt Trustee and the holders of the Subordinated
<PAGE>XIII-31
Debt Securities, the Foreign Lender listed on the signature pages hereof, and
the Collateral Agent upon the execution of this Agreement by the Current
Credit Agent, the Senior Note Trustee, the Senior Debenture Trustee, the
Subordinated Debt Trustee, the Foreign Lender listed on the signature pages
hereof, and the Collateral Agent and the delivery of each such Person's
counterparts to the Collateral Agent and shall become effective as to each
Interest Rate Exchanger, each Currency Exchanger, each other Foreign Lender,
each Successor Credit Agent, each Successor Lender, each Additional
Subordinated Debt Trustee and each holder of any Additional Subordinated
Debt, and each Commercial Paper Representative and each Commercial Paper
Holder, respectively, upon the execution of an acknowledgment by any such
Person or its representative as contemplated by Section 6 and delivery of
such executed acknowledgment (which shall also be acknowledged by the
applicable Pledgors and Loan Guarantors) to the Collateral Agent.
(f) The Foreign Lender listed on the signature pages hereof, the
Senior Note Trustee, the Senior Debenture Trustee and the Subordinated Debt
Trustee, by their execution of this Agreement, consent to and approve the
execution and delivery of the Company Pledge Agreement and, in the case of
such Foreign Lender and the Senior Debenture Trustee, the Intermediate
Subsidiary Pledge Agreement.
(g) THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
(h) Anything contained in this Agreement to the contrary
notwithstanding, the Senior Note Trustee, the Senior Debenture Trustee, the
Subordinated Debt Trustee or any Additional Subordinated Debt Trustee, as the
case may be, shall no longer be a Party from and after such time as all of
the applicable Senior Notes, Senior Debentures, Subordinated Debt Securities
or Additional Subordinated Debt, respectively, or the instruments
representing the same, shall have ceased to be outstanding by virtue of the
payment thereof or the cancellation thereof or delivery for cancellation
thereof in accordance with the terms of the applicable Senior Note Indenture,
Senior Debenture Indenture, Subordinated Debt Indenture or Additional
Subordinated Debt Indenture, respectively.
SECTION 10. Confirmation of Mutual Intentions as to Certain
Matters Regarding Payments Under the Loan Guaranty and Certain Guaranties of
the Senior Debentures. The Collateral Agent and the Senior Debenture Trustee
each hereby confirms, which confirmation shall be binding on each and every
Guarantied Party and each and every holder of the Senior Debentures, that, in
the event of a bankruptcy, reorganization or other similar proceeding of the
Company or any Intermediate Subsidiary Guarantor (as hereinafter defined) in
which concurrent claims are made upon such Intermediate Subsidiary Guarantor
under the Loan Guaranty and the Applicable Senior Debenture Guaranty (as
hereinafter defined), to the extent such concurrent claims will not be fully
satisfied, each holder of such a concurrent claim with a valid claim against
the Company shall be entitled to a ratable share of all payments by such
<PAGE>XIII-32
Intermediate Subsidiary Guarantor in respect of such concurrent claims. For
purposes of this Section 10, (i) the term "Intermediate Subsidiary Guarantor"
means any O-I Subsidiary (other than Group) that (a) has executed a
counterpart of, or has otherwise become a party to, the Loan Guaranty and
(b) is a party to a Senior Debenture Guaranty or has otherwise guarantied the
obligations of the Company under the Senior Debenture Indenture and the
Senior Debentures issued thereunder pursuant to a Subsidiary Guaranty
substantially in the form of Exhibit E to the Senior Debenture Indenture and
(ii) the term "Applicable Senior Debenture Guaranty" means, with respect to
any Intermediate Subsidiary Guarantor, the applicable Senior Debenture
Guaranty or other guaranty described in clause (i)(b) above to which such
Intermediate Subsidiary Guarantor is a party.
[Remainder of page intentionally left blank]
<PAGE>XIII-33
IN WITNESS WHEREOF, the parties hereto have caused this Agre
to be duly executed as of the day and year first above written.
BANKERS TRUST COMPANY,
as Agent for the Current Lenders
By: __________________________
Title:________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Terence J. Mogan
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, CA 90071
Attention: Frank H. Gerencser
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, CA 90071
Attention: Edward H. Schweitzer
<PAGE>XIII-34
FIRST BANK (N.A.),
as trustee under the Senior Note
Indenture
By:____________________________
Title:_________________________
Notice Address:
First Bank (N.A.)
First Trust Center
180 East Fifth Street
St. Paul, MN 55164
Attention: Corporate Trust Department
<PAGE>XIII-35
THE BANK OF NEW YORK,
as trustee under the Senior Debenture
Indenture
By:_____________________________
Title:__________________________
Notice Address:
The Bank of New York
One Wall Street, 22nd Floor
New York, NY 10286
Attention: Corporate Trust
Trustee Administration
<PAGE>XIII-36
HARRIS TRUST AND SAVINGS BANK, as
trustee under the Subordinated Debt
Indenture
By:_____________________________
Title:__________________________
Notice Address:
Harris Trust and Savings Bank
115 S. LaSalle Street, 12th Floor
Chicago, IL 60603
Attention: U.S. Corporate Banking
<PAGE>XIII-37
BANKERS TRUST COMPANY, as Foreign
Lender
By:_____________________________
Title:__________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza,
14th Floor
New York, New York 10006
Attention:
Telex: 126642
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Frank H. Gerencser
Telex: 4720048
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
Telex: 4720048
<PAGE>XIII-38
BANKERS TRUST COMPANY,
as Collateral Agent
By:___________________________
Title:________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Terence J. Mogan
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Frank H. Gerencser
With a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
<PAGE>XIII-39
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993, as amended to the date
hereof (as so amended, this "Agreement") among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party and Guarantied Party has entered
into the Interest Rate Agreement described below with the Company pursuant to
which Interest Rate Obligations thereunder are to be secured by the Pledge
Agreements and guarantied under the Loan Guaranty. The undersigned Secured
Party and Guarantied Party acknowledges the terms of this Agreement and
agrees to be bound hereby.
The Interest Rate Agreement described above is [Insert
description of Interest Rate Agreement.]
SECURED PARTY AND GUARANTIED PARTY:
[Insert Name of Lender]
By_______________________________
Date___________________________
Notice Address:
______________________________
______________________________
______________________________
Acknowledged and Agreed:
______________________________
[Pledgors]
By_______________________________
Date___________________________
______________________________
[Loan Guarantors]
By_______________________________
Date___________________________
<PAGE>XIII-40
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993 as amended to the date
hereof (as so amended, this "Agreement") among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party and Guarantied Party has entered
into the Currency Agreement described below with the Company pursuant to
which Currency Obligations thereunder are to be secured by the Pledge
Agreements and guarantied under the Loan Guaranty. The undersigned Secured
Party and Guarantied Party acknowledges the terms of this Agreement and
agrees to be bound hereby.
The Currency Agreement referred to above is [Insert
description of Currency Agreement.]
SECURED PARTY AND GUARANTIED PARTY:
[Insert Name of Lender]
By_______________________________
Date___________________________
Notice Address:
______________________________
______________________________
______________________________
Acknowledged and Agreed:
______________________________
[Pledgors]
By_______________________________
Date___________________________
______________________________
[Loan Guarantors]
By_______________________________
Date___________________________
<PAGE>XIII-41
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993 as amended to the date
hereof (as so amended, this "Agreement") among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party and Guarantied Party has entered
into a Successor Credit Agreement with the Company pursuant to which
Indebtedness thereunder is to be secured by the Pledge Agreements and
guarantied under the Loan Guaranty. The undersigned Secured Party and
Guarantied Party acknowledges the terms of this Agreement and agrees to be
bound hereby.
SECURED PARTY AND GUARANTIED PARTY:
[Insert Name of Lender or
Credit Agent]
By_______________________________
Date___________________________
Notice Address:
______________________________
______________________________
______________________________
Acknowledged and Agreed:
______________________________
[Pledgors]
By_______________________________
Date___________________________
______________________________
[Loan Guarantors]
By_______________________________
Date___________________________
<PAGE>XIII-42
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993 as amended to the date
hereof (as so amended, this "Agreement") among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party has entered into Foreign Debt
Agreements described below with the Foreign Subsidiaries identified below and
the obligations of such Foreign Subsidiaries under such Foreign Debt
Agreements have been guarantied by Company, pursuant to a Foreign Lender
Guaranty as permitted under the Credit Agreement. The Pledgors desire that
the obligations to Secured Party under such Foreign Lender Guaranty be
secured by the Pledge Agreements. The undersigned Secured Party acknowledges
the terms of this Agreement and agrees to be bound hereby.
The Foreign Loan Agreements and Foreign Lender Guaranties
referred to above are: [Insert description of relevant Foreign Loan
Agreements and Foreign Lender Guaranties].
SECURED PARTY:
[Insert Name of Foreign Lender]
By_______________________________
Date___________________________
Notice Address:
______________________________
______________________________
______________________________
Acknowledged and Agreed:
______________________________
[Pledgors]
By_______________________________
Date___________________________
<PAGE>XIII-43
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993 as amended to the date
hereof (as so amended, this "Agreement") among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party and Guarantied Party has
purchased and/or may from time to time hereafter purchase Commercial Paper
from the Company under, or has been appointed to act as agent or
representative of the holders of Commercial Paper purchased or to be
purchased from the Company under, the Commercial Paper Documents described
below pursuant to which Commercial Paper Obligations thereunder are to be
secured by the Pledge Agreements and guarantied under the Loan Guaranty. The
undersigned Secured Party and Guarantied Party, for itself and on behalf of
the Commercial Paper Holders in respect of which it is Commercial Paper
Representative, acknowledges the terms of this Agreement and agrees to be
bound hereby.
The Commercial Paper Documents described above are [Insert
description of Commercial Paper Documents.]
SECURED PARTY AND GUARANTIED PARTY:
[Insert Name of Commercial Paper
Representative]
By_______________________________
Date___________________________
Notice Address:
______________________________
______________________________
______________________________
Acknowledged and Agreed:
______________________________
[Pledgors]
By_______________________________
Date___________________________
______________________________
[Loan Guarantors]
By_______________________________
Date___________________________
<PAGE>XIII-44
ACKNOWLEDGMENT
Reference is hereby made to the Fifth Amended and Restated
Intercreditor Agreement dated as of December 15, 1993, as amended to the date
hereof (as so amended, this "Agreement"), among Bankers Trust Company, as
Agent for the lenders party to the Current Credit Agreement, the Senior Note
Trustee, as trustee for the holders of the Senior Notes, the Senior Debenture
Trustee, as trustee for the holders of the Senior Debentures, the
Subordinated Debt Trustee, as trustee for the holders of the Subordinated
Debt Securities, the Foreign Lender listed on the signature pages thereof and
Bankers Trust Company, as Collateral Agent, in which this Acknowledgment is
incorporated. The undersigned Secured Party has entered into an Additional
Subordinated Debt Indenture with the Company pursuant to which a particular
series of Additional Subordinated Debt to be issued thereunder is to be
secured, on a senior subordinated basis, by the Company Pledge Agreement.
The undersigned Secured Party, for itself and on behalf of the holders of the
Additional Subordinated Debt issued pursuant to the Additional Subordinated
Debt Indenture referred to above, acknowledges the terms of this Agreement
and agrees to be bound hereby.
The Additional Subordinated Debt Indenture referred to
above is [Insert description of relevant Additional Subordinated Debt
Indenture]. The particular series of Additional Subordinated Debt referred
to above is [Insert description of relevant series of Additional Subordinated
Debt].
SECURED PARTY:
[Insert Name of Additional
Subordinated Debt Trustee]
By _______________________
Date ___________________
Notice Address:
____________________
____________________
____________________
Acknowledged and Agreed:
____________________________
[Company]
By _______________________
Date __________________
<PAGE>XIII-45
EACH LOAN PARTY, by its execution of this Agreement in the
space provided below, HEREBY ACKNOWLEDGES AND AGREES to the foregoing
provisions of this Agreement including, without limitation, Sections 3 and 4
hereof.
Owens-Illinois, Inc. (formerly named "OII Holdings
Corporation" and "Owens-Illinois Holdings Corporation"), Owens-Illinois
Group, Inc. (formerly named "OII Group, Inc."), Owens-Brockway Packaging,
Inc. (formerly named "OI Glass Container FTS Inc."), OI Closure FTS Inc., OI
Plastic Products FTS Inc., OI Kimble FTS Inc., O-I Health Care Holding Corp.
(formerly named "Health Care and Retirement Corporation"), OI General FTS
Inc., OI General Finance Inc., Owens-Brockway Glass Container Inc. (formerly
named "Owens-Illinois Glass Container Inc." and "OI Glass Container STS
Inc."), OI IONE STS Inc., OI US Capital STS Inc., Owens-Illinois Closure Inc.
(formerly named "OI Closure STS Inc."), Specialty Packaging Licensing
Company, Owens-Illinois Plastic Products Inc. (formerly named "OI Blown
Container STS Inc."), Owens-Illinois Prescription Products Inc. (formerly
named "OI Prescription Products STS Inc."), OI Treitler STS Inc., OI
Dougherty STS Inc., OI Kontes STS Inc., OI Schott STS Inc., OI Enbosa STS
Inc., Kimble Glass Inc. (formerly named "OI Kimble STS Inc."), Owens-Illinois
General Inc. (formerly named "OI General STS Inc."), OI Castalia STS Inc., OI
Levis Park STS Inc., OI MVCURC STS Inc., OI UMI STS Inc., and OI AID STS Inc.
By:________________________________
Title:_____________________________
<PAGE>annex 1-1
ANNEX 1
to
FIFTH AMENDED AND RESTATED
INTERCREDITOR AGREEMENT
INDEX OF TERMS
Additional Indenture Supplement . . . . . . . . . . . . . . . . . Recital 25
Additional Subordinated Debt . . . . . . . . . . . . . . . . . . . Recital 25
Additional Subordinated Debt Indenture . . . . . . . . . . . . . . Recital 25
Additional Subordinated Debt Indentures. . . . . . . . . . . . . . Recital 25
Additional Subordinated Debt Trustee . . . . . . . . . . . . . . . Recital 25
Additional 1992 Subordinated Debt Trustees . . . . . . . . . . . . Recital 25
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Applicable Senior Debenture Guaranty . . . . . . . . . . . . . . . Section 10
Bankers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . .Section 1
Commercial Paper Documents . . . . . . . . . . . . . . . . . . . . Recital 18
Commercial Paper Holders . . . . . . . . . . . . . . . . . . . . . Recital 20
Commercial Paper Obligations . . . . . . . . . . . . . . . . . . . Recital 19
Commercial Paper Representative. . . . . . . . . . . . . . . . . . Recital 20
Commercial Paper Representatives . . . . . . . . . . . . . . . . . Recital 20
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Recital 1
Company Pledge Agreement . . . . . . . . . . . . . . . . . . . . . .Recital 1
Credit Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 18
Credit Agreements. . . . . . . . . . . . . . . . . . . . . . . . . Recital 18
Currency Exchangers. . . . . . . . . . . . . . . . . . . . . . . . Recital 23
Currency Obligations . . . . . . . . . . . . . . . . . . . . . . . Recital 23
Current Credit Agent . . . . . . . . . . . . . . . . . . . . . . Introduction
Current Credit Agreement . . . . . . . . . . . . . . . . . . . . . Recital 14
Current Lenders. . . . . . . . . . . . . . . . . . . . . . . . . Introduction
Directing Parties. . . . . . . . . . . . . . . . . . . . . . . . Section 2(b)
Existing Company Pledge Agreement. . . . . . . . . . Company Pledge Agreement
Existing Credit Agreement. . . . . . . . . . . . . . . . . . . . . Recital 21
Existing Foreign Lender Debt . . . . . . . . . . . . . . . . . . . Recital 21
Existing Foreign Lender Guaranties . . . . . . . . . . . . . . . . Recital 21
Existing Foreign Lender. . . . . . . . . . . . . . . . . . . . . . Recital 21
Existing Foreign Loan Agreements . . . . . . . . . . . . . . . . . Recital 21
Existing Intercreditor Agreement . . . . . . . . . . . . . . . . Introduction
Existing Intermediate Intermediate Subsidiary
Subsidiary Pledge Agreement . . . . . . . . . . Pledge Agreement
Existing Loan Guaranties . . . . . . . . . . . . . . . . . . . . . .Recital 5
Existing Pledge Agreements . . . . . . . . . . . . . . . . . . . . .Recital 2
Financing Agreements . . . . . . . . . . . . . . . . . . . . . . Section 7(a)
Foreign Lender Debt. . . . . . . . . . . . . . . . . . . . . . . . Recital 21
Foreign Lender Guaranties. . . . . . . . . . . . . . . . . . . . . Recital 21
Foreign Lender Obligations . . . . . . . . . . . . . . . . . . . . Recital 21
Foreign Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . Recital 21
Foreign Loan Agreements. . . . . . . . . . . . . . . . . . . . . . Recital 21
<PAGE>annex 1-2
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Recital 2
Guarantied Obligations . . . . . . . . . . . . . . . . . . . . . Section 3(b)
Guarantied Parties . . . . . . . . . . . . . . . . . . . . . . . . .Section 1
Initial Commercial Paper Holder. . . . . . . . . . . . . . . . . . Recital 20
Initial Commercial Paper Holders . . . . . . . . . . . . . . . . . Recital 20
Interest Rate Exchangers . . . . . . . . . . . . . . . . . . . . . Recital 22
Interest Rate Obligations. . . . . . . . . . . . . . . . . . . . . Recital 22
Intermediate Subsidiary Guarantor. . . . . . . . . . . . . . . . . Section 10
Intermediate Subsidiary Pledge Agreement . . . . . . . . . . . . . .Recital 2
Intermediate Subsidiary Pledgor. . . . . . . . . . . . . . . . . . .Recital 2
Intermediate Subsidiary Pledgors . . . . . . . . . . . . . . . . . .Recital 2
Junior Secured Obligations . . . . . . . . . . . . . . . . . . . . Recital 25
Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 18
Level 1 Sharing Event. . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Level 2 Sharing Event. . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Loan Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 15
Loan Guarantors. . . . . . . . . . . . . . . . . . . . . . . . . . Recital 15
Loan Guaranty Payments . . . . . . . . . . . . . . . . . . . . . Section 3(a)
Loan Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 27
Non-Directing Parties. . . . . . . . . . . . . . . . . . . . . . Section 2(b)
Parties. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 27
Paying Indemnifying Parties. . . . . . . . . . . . . . . . . . . Section 7(c)
Pledge Agreements. . . . . . . . . . . . . . . . . . . . . . . . . .Recital 3
Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . . . .Recital 3
Pledgors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 1
Prepayment Date. . . . . . . . . . . . . . . . . . . . . . . . . Section 4(b)
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 3(a)
Pro Forma Additional Subordinated Debt . . . . . . . . . . . . . . Recital 25
Requisite Obligees . . . . . . . . . . . . . . . . . . . . . . . Section 2(a)
Secured Parties. . . . . . . . . . . . . . . . . . . . . . . . . . Recital 27
Senior Debenture Closing Date. . . . . . . . . . . . . . . . . . Section 4(b)
Senior Debenture Guaranties. . . . . . . . . . . . . . . . . . . . Recital 10
Senior Debenture Guaranty. . . . . . . . . . . . . . . . . . . . . Recital 10
Senior Debenture Indenture . . . . . . . . . . . . . . . . . . . . .Recital 9
Senior Debenture Trustee . . . . . . . . . . . . . . . . . . . . Introduction
Senior Debentures. . . . . . . . . . . . . . . . . . . . . . . . . .Recital 9
Senior Indenture Obligations . . . . . . . . . . . . . . . . . . . .Recital 9
Senior Indentures. . . . . . . . . . . . . . . . . . . . . . . . . .Recital 9
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . .Recital 7
Senior Note Trustee. . . . . . . . . . . . . . . . . . . . . . . Introduction
Senior Secured Obligations . . . . . . . . . . . . . . . . . . . Section 2(f)
Senior Note Indenture. . . . . . . . . . . . . . . . . . . . . . . .Recital 7
Subordinated Debt Indenture. . . . . . . . . . . . . . . . . . . . Recital 12
Subordinated Debt Securities . . . . . . . . . . . . . . . . . . . Recital 12
Subordinated Debt Trustee. . . . . . . . . . . . . . . . . . . . Introduction
Successor Credit Agents. . . . . . . . . . . . . . . . . . . . . . Recital 18
Successor Credit Agreements. . . . . . . . . . . . . . . . . . . . Recital 18
Successor Lenders. . . . . . . . . . . . . . . . . . . . . . . . . Recital 18
<PAGE>XIV-1
EXHIBIT XIV
[FORM OF COMPANY PLEDGE AGREEMENT]
This FOURTH AMENDED AND RESTATED COMPANY PLEDGE AGREEMENT
(as amended, amended and restated or otherwise modified from time to time,
herein called "this Agreement") is dated as of December 15, 1993, between
OWENS-ILLINOIS, INC., a Delaware corporation (the "Pledgor"), and BANKERS
TRUST COMPANY ("Bankers"), as Collateral Agent for and representative of (in
such capacity herein called the "Collateral Agent") the Lenders (as
hereinafter defined), the Interest Rate Exchangers (as hereinafter defined),
the Currency Exchangers (as hereinafter defined), the Foreign Lenders (as
hereinafter defined), the trustee (including any successor, the "Senior Note
Trustee") under the Senior Note Indenture (as hereinafter defined), the
trustee (including any successor, the "Senior Debenture Trustee") under the
Senior Debenture Indenture (as hereinafter defined) (the Senior Note Trustee
and the Senior Debenture Trustee being collectively referred to herein as the
"Senior Indenture Trustees"), the Commercial Paper Holders and the Commercial
Paper Representatives (as such terms are hereinafter defined), the trustee
(including any successor, the "Subordinated Debt Trustee") under the
Subordinated Debt Indenture (as hereinafter defined), and the Additional
Subordinated Debt Trustees (as hereinafter defined), and amends and restates
the Third Amended and Restated Company Pledge Agreement dated as of
December 10, 1991, as amended by the First Amendment to Third Amended and
Restated Company Pledge Agreement dated as of March 31, 1992 and the Second
Amendment to Third Amended and Restated Company Pledge Agreement dated as of
September 28, 1992 (as so amended, the "Existing Company Pledge Agreement"),
among the Pledgor and Bankers, as collateral agent for and representative of
the Lenders, the Public Debenture Trustees, the Senior Note Trustees, the
Refinancing Senior Debt Trustees, the Refinancing Subordinated Debt Trustees,
the 1992 Refinancing Subordinated Debt Trustees and the Additional 1992
Subordinated Debt Trustees (as such terms are defined in the Existing Company
Pledge Agreement), the Interest Rate Exchangers, the Currency Exchangers, the
Foreign Lenders, the Senior Debenture Trustee, the Commercial Paper Holders
and the Commercial Paper Representatives. Certain defined terms used in this
Agreement are indexed in Annex 1 to this Agreement.
R E C I T A L S
1. The Pledgor is the legal and beneficial owner of (i)
the shares of stock described in Part I of Schedule I hereto (the "Pledged
Shares") issued by the corporations named therein, which shares constitute
the percentage of all of the issued and outstanding shares of all classes of
capital stock of such companies identified in Part I of said Schedule I, and
(ii) the indebtedness described in Part II of said Schedule I (the "Pledged
Debt") issued by the obligors named therein;
<PAGE>XIV-2
2. The Current Lenders (including certain of such
Current Lenders appointed as Managers for such Current Lenders) and the
Current Credit Agent (as such terms are defined in the Existing Company
Pledge Agreement) have entered into a Third Amended and Restated Credit
Agreement dated as of March 31, 1989 with the Pledgor and Health Care and
Retirement Corporation of America (said Third Amended and Restated Credit
Agreement, as amended to the date hereof, being the "Existing Credit
Agreement"), and the obligations of the Pledgor under the Existing Credit
Agreement have been secured on a senior basis pursuant to the Existing
Company Pledge Agreement and the Existing Intercreditor Agreement (such term
being used herein as defined in the Intercreditor Agreement (as hereinafter
defined));
3. The Pledgor, Owens-Illinois Group, Inc., a Delaware
corporation ("Group"), as guarantor, and the Senior Note Trustee have entered
into an Indenture dated as of April 1, 1989 (the "Senior Note Indenture"),
pursuant to which the Pledgor has issued approximately $394,400,000 in
aggregate principal amount of Senior Variable Rate Notes Due 1996, of which
approximately $270,000,000 in aggregate principal amount are outstanding as
of the effective date of this Agreement (the "Senior Notes");
4. As more fully described in the recitals to the
Existing Company Pledge Agreement, the Indebtedness evidenced by the Senior
Notes has been secured on a senior basis pursuant to the Existing Company
Pledge Agreement, subject to certain limitations on the rights of the Senior
Note Trustee under the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement with respect to decisions relating to the exercise of
remedies in respect of the Pledged Collateral (as defined in the Existing
Company Pledge Agreement) and other matters, and the Pledgor desires that
such Indebtedness continue to be secured on a senior basis by the Pledged
Collateral (as hereinafter defined) to the same extent, and subject to the
same limitations relative to the other obligations secured by the Pledged
Collateral (treating the Current Credit Agreement (as hereinafter defined)
for such purposes as being in all respects the same as the Existing Credit
Agreement), as under the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement; provided that, notwithstanding the foregoing, the
holders of any Senior Notes and the Senior Note Trustee shall only be
entitled to the benefits of this Agreement if the Senior Note Trustee shall
have executed and delivered to the Collateral Agent a counterpart of the
Intercreditor Agreement;
5. The Pledgor, Group, as guarantor, and the Senior
Debenture Trustee have entered into an Indenture dated as of December 15,
1991 (the "Senior Debenture Indenture"; the Senior Note Indenture and the
Senior Debenture Indenture being collectively referred to herein as the
"Senior Indentures") pursuant to which the Pledgor has issued $1,000,000,000
in aggregate principal amount of 11% Senior Debentures Due 2003 (the "Senior
Debentures");
6. As more fully described in the recitals to the
Existing Company Pledge Agreement, the Indebtedness evidenced by the Senior
Debentures has been secured on a senior basis pursuant to the Existing
<PAGE>XIV-3
Company Pledge Agreement, subject to certain limitations on the rights of the
Senior Debenture Trustee under the Existing Company Pledge Agreement and the
Existing Intercreditor Agreement with respect to decisions relating to the
exercise of remedies in respect of the Pledged Collateral (as defined in the
Existing Company Pledge Agreement) and other matters, and the Pledgor desires
that such Indebtedness continue to be secured on a senior basis by the
Pledged Collateral to the same extent, and subject to the same limitations
relative to the other obligations secured by the Pledged Collateral (treating
the Current Credit Agreement for such purposes as being in all respects the
same as the Existing Credit Agreement), as under the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement; provided that,
notwithstanding the foregoing, the holders of any Senior Debentures and the
Senior Debenture Trustee shall only be entitled to the benefits of this
Agreement if the Senior Debenture Trustee shall have executed and delivered
to the Collateral Agent a counterpart of the Intercreditor Agreement;
7. The Pledgor and the Subordinated Debt Trustee have
entered into an Indenture dated as of April 1, 1992, together with
supplements thereto dated as of April 8, 1992, June 22, 1992, August 4, 1992,
August 24, 1992 and October 8, 1992 (collectively, the "Subordinated Debt
Indenture"), pursuant to which the Pledgor has issued the following
(collectively, the "Subordinated Debt Securities"): (a) $250,000,000 in
aggregate principal amount of 10-1/4% Senior Subordinated Notes Due April 1,
1999; (b) $150,000,000 in aggregate principal amount of 10-1/2% Senior
Subordinated Notes Due June 15, 2002; (c) $250,000,000 in aggregate principal
amount of 10% Senior Subordinated Notes Due August 1, 2002; (d) $200,000,000
in aggregate principal amount of 9-3/4% Senior Subordinated Notes Due
August 15, 2004; and (e) $100,000,000 in aggregate principal amount of 9.95%
Senior Subordinated Notes Due October 15, 2004 (the Subordinated Debt
Securities described in the foregoing clauses (a)-(d) having been referred to
in the Existing Company Pledge Agreement and the Existing Intercreditor
Agreement as "1992 Refinancing Subordinated Debt", and the Subordinated Debt
Securities referred to in the foregoing clause (e) having been referred to in
the Existing Company Pledge Agreement and the Existing Intercreditor
Agreement as "Additional 1992 Subordinated Debt");
8. As more fully described in the recitals to the
Existing Company Pledge Agreement, the Indebtedness evidenced by the
Subordinated Debt Securities has been secured on a senior subordinated basis
pursuant to the Existing Company Pledge Agreement, subject to certain
limitations on the rights of the Subordinated Debt Trustee under the Existing
Company Pledge Agreement and the Existing Intercreditor Agreement with
respect to decisions relating to the exercise of remedies in respect of the
Pledged Collateral (as defined in the Existing Company Pledge Agreement) and
other matters, and the Pledgor desires that such Indebtedness continue to be
secured on a senior subordinated basis by the Pledged Collateral to the same
extent, and subject to the same limitations relative to the other obligations
secured by the Pledged Collateral (treating the Current Credit Agreement for
such purposes as being in all respects the same as the Existing Credit
<PAGE>XIV-4
Agreement), as under the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement; provided that the holders of any Subordinated Debt
Securities and the Subordinated Debt Trustee shall only be entitled to the
benefits of this Agreement if the Subordinated Debt Trustee shall have
executed and delivered to the Collateral Agent a counterpart of the
Intercreditor Agreement;
9. Certain lenders (the "Current Lenders"), the Current
Lenders appointed as Lead Managers and Co-Agents for the Current Lenders, and
Bankers, as Agent for the Current Lenders (in such capacity herein called the
"Current Credit Agent"), have entered into a Refinancing Credit Agreement
dated as of December 15, 1993 with the Pledgor (said Refinancing Credit
Agreement, as it may hereafter be amended, amended and restated or otherwise
modified from time to time, being the "Current Credit Agreement"; capitalized
terms defined therein and not otherwise defined herein being used herein as
therein defined or as defined in the Successor Credit Agreement (as
hereinafter defined) then in effect), pursuant to which the Current Lenders
have agreed, subject to the terms and conditions set forth in the Current
Credit Agreement, to extend certain credit facilities to the Pledgor for the
purpose of, among other things, (a) refinancing all outstanding Indebtedness
under the Existing Credit Agreement, (b) refinancing certain Indebtedness
outstanding under the Senior Indentures, and (c) permitting the Pledgor to
issue Commercial Paper as more fully described below;
10. The Pledgor desires that all obligations of the
Pledgor under the Current Credit Agreement and any Successor Credit
Agreements be secured on a senior basis by the Pledged Collateral to the same
extent as the obligations under the Existing Credit Agreement have been
secured by the Pledged Collateral (as defined in the Existing Company Pledge
Agreement), and that the relative priority of the Liens and other rights in
favor of the Credit Agents and the Lenders (as such terms are hereinafter
defined) with respect to the Pledged Collateral be the same in all
substantive respects as the relative priority of the corresponding Liens and
other rights granted to the Current Credit Agent and the Current Lenders (as
such terms are defined in the Existing Company Pledge Agreement and the
Existing Intercreditor Agreement), in each case as compared to the relative
priority of any corresponding Liens and other rights granted to the Senior
Note Trustee, the Senior Debenture Trustee, the Subordinated Debt Trustee and
the holders of any other obligations secured by the Pledged Collateral;
11. (a) As more fully described in the recitals to the
Existing Company Pledge Agreement, to the extent that the Current Credit
Agreement refinances all or any portion of the Indebtedness under the
Existing Credit Agreement or any Senior Indenture, the Current Credit
Agreement and any Successor Credit Agreements will each constitute a
"Successor Credit Agreement" as defined in the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement and, as such, the Current
Credit Agreement and any Successor Credit Agreements will automatically be
entitled to be secured by the Pledged Collateral on the basis described in
Recital 10, and (b) whether or not the Current Credit Agreement constitutes a
<PAGE>XIV-5
"Successor Credit Agreement" as defined in the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement, the terms of the Senior
Indentures, the Subordinated Debt Indenture, the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement permit the amendments to
the Existing Company Pledge Agreement and the Existing Intercreditor
Agreement effected pursuant to this Agreement and the Intercreditor Agreement
without the consent of the holders of the Senior Notes, the Senior Debentures
or the Subordinated Debt Securities for the purpose of securing the Current
Credit Agreement and any Successor Credit Agreements by the Pledged
Collateral on the basis described in Recital 10; and accordingly the entire
amount of the obligations under the Current Credit Agreement and any
Successor Credit Agreements is entitled (as described in the foregoing
clauses (a) and (b)) to be secured by the Pledged Collateral on the basis
described in Recital 10;
12. It is contemplated that, from time to time, the
Current Lenders or other financial institutions (collectively, the "Successor
Lenders") may enter into one or more agreements with the Pledgor and other
Persons, including Subsidiaries of the Pledgor, either extending the maturity
of, refinancing or otherwise restructuring (including, but not limited to,
the inclusion of additional borrowers thereunder which are Subsidiaries of
the Pledgor) all or any portion of the Indebtedness under the Current Credit
Agreement or any Successor Credit Agreement or any Senior Indenture (said
agreements, as they may exist from time to time (but, in the case of such a
refinancing or restructuring, only to the extent thereof), being the
"Successor Credit Agreements", which together with the Current Credit
Agreement are referred to herein as the "Credit Agreements"; provided that,
notwithstanding the fact (as described in certain of the following recitals)
that any agreement or instrument pursuant to which any Commercial Paper is
issued or evidencing any Commercial Paper Obligations (as hereinafter
defined) (collectively, the "Commercial Paper Documents") could have
constituted a Successor Credit Agreement, in no event shall any Commercial
Paper Document be deemed to be a Successor Credit Agreement or a Credit
Agreement; provided, further that, notwithstanding the fact (as described in
certain of the following recitals) that any Additional Subordinated Debt
Indenture (as hereinafter defined) could have constituted a Successor Credit
Agreement, in no event shall any Additional Subordinated Debt Indenture be
deemed to be a Successor Credit Agreement or a Credit Agreement; and
provided, further, that in no event shall any amendment, amendment and
restatement or other modification of the Current Credit Agreement after the
date hereof cause the Current Credit Agreement to be deemed to be a Successor
Credit Agreement or require the Current Credit Agent to execute an
acknowledgment to the Intercreditor Agreement in connection with such
amendment, amendment and restatement or other modification) (the Current
Lenders and any Successor Lenders being collectively referred to herein as
the "Lenders", and the Current Credit Agent and any agents (collectively, the
"Successor Credit Agents") under any Successor Credit Agreements being
collectively referred to herein as the "Credit Agents"), and the Pledgor
desires that, as described in Recitals 10 and 11, the obligations of the
Pledgor and any additional borrowers which are Subsidiaries of the Pledgor
under any Successor Credit Agreements be secured by the Pledged Collateral to
the same extent as the obligations under the Current Credit Agreement;
13. The Current Lenders have agreed, subject to the terms
and conditions set forth in the Current Credit Agreement, to permit the
Pledgor to issue Commercial Paper in an aggregate face amount at any time
<PAGE>XIV-6
outstanding not to exceed the amount specified in the Current Credit
Agreement to the extent that the Pledgor has reserved unused a portion of the
Commitments under the Current Credit Agreement, and the Pledgor desires that
all obligations of the Pledgor under any such Commercial Paper outstanding
from time to time (collectively, the "Commercial Paper Obligations") be
secured on a senior basis by the Pledged Collateral;
14. The parties hereto desire to acknowledge and confirm,
for the benefit of any financial institutions initially purchasing any such
Commercial Paper (each an "Initial Commercial Paper Holder" and collectively
the "Initial Commercial Paper Holders") or appointed to act as agent or
representative for the holders from time to time of such Commercial Paper
(each a "Commercial Paper Representative" and collectively the "Commercial
Paper Representatives"; provided that in the event no such financial
institution is appointed to act as agent or representative for the holders of
any Commercial Paper, the Initial Commercial Paper Holder in respect of such
Commercial Paper shall be deemed to be the Commercial Paper Representative in
respect of such Commercial Paper) and for the benefit of the holders from
time to time of such Commercial Paper (together with the Initial Commercial
Paper Holders, the "Commercial Paper Holders"), that during any period in
which any Commercial Paper is outstanding such Commercial Paper constitutes a
restructuring of a portion of the credit facilities provided under the
Current Credit Agreement and accordingly that all Commercial Paper Obliga-
tions would also constitute Indebtedness outstanding under a "Successor
Credit Agreement" as defined in this Agreement and the Intercreditor
Agreement, and as such all Commercial Paper Obligations are entitled to
constitute Senior Secured Obligations (as hereinafter defined); provided
that, as a condition to permitting the Pledgor to issue Commercial Paper, the
Current Lenders have required, as was required in the Existing Company Pledge
Agreement and the Existing Intercreditor Agreement, that no Commercial Paper
Document shall be deemed to be a "Successor Credit Agreement" for purposes of
this Agreement or the Intercreditor Agreement and that certain limitations be
placed on the rights of the Commercial Paper Holders and the Commercial Paper
Representatives with respect to decisions relating to the exercise of
remedies in respect of the Pledged Collateral and other matters; and
provided, further, that the Commercial Paper Holder and Commercial Paper
Representative in respect of any Commercial Paper shall only be entitled to
the benefits of this Agreement if such Commercial Paper Representative shall
have executed and delivered to the Collateral Agent an acknowledgment to the
Intercreditor Agreement (in the form attached thereto) acknowledged by the
Pledgor;
15. The Pledgor has executed certain guaranties (the
"Existing Foreign Lender Guaranties") dated March 23, 1988 pursuant to which
the Pledgor has guarantied certain indebtedness (the "Existing Foreign Lender
Debt") of Owens-Illinois de Venezuela, C.A. and Fabrica de Vidrio Los Andes,
C.A. to Bankers Trust Company (the "Existing Foreign Lender") under certain
loan agreements dated as of January 25, 1988 (the "Existing Foreign Loan
Agreements"), and the Pledgor contemplates that it may, from time to time,
enter into other guaranties permitted under the Credit Agreements (together
<PAGE>XIV-7
with the Existing Foreign Lender Guaranties, the "Foreign Lender Guaranties")
in support of certain indebtedness of certain Foreign Subsidiaries (together
with the Existing Foreign Lender Debt, the "Foreign Lender Debt") to certain
Lenders (together with the Existing Foreign Lenders, the "Foreign Lenders")
under certain loan and other credit agreements (together with the Existing
Foreign Loan Agreements, the "Foreign Loan Agreements"), and the Pledgor
desires that its obligations under the Foreign Lender Guaranties (such
obligations being collectively referred to herein as the "Foreign Lender
Obligations") continue to be secured by the Pledged Collateral, to the extent
permitted by the Credit Agreements, to the same extent as under the Existing
Company Pledge Agreement and the Existing Intercreditor Agreement; provided
that any Foreign Lender desiring such security shall execute and deliver to
the Collateral Agent a counterpart of the Intercreditor Agreement or an
acknowledgment to the Intercreditor Agreement (in the form attached thereto)
acknowledged by the Pledgor;
16. It is contemplated that the Pledgor may from time to
time enter into Interest Rate Agreements and Currency Agreements with one or
more Lenders (collectively, the "Interest Rate Exchangers" or the "Currency
Exchangers," as the case may be) and the Pledgor desires that its obligations
under such agreements, including the obligation to make payments in the event
of early termination thereunder (all such obligations being the "Interest
Rate Obligations" or the "Currency Obligations," as the case may be),
continue to be secured hereunder to the same extent as under the Existing
Company Pledge Agreement and the Existing Intercreditor Agreement; provided
that any Interest Rate Exchanger or any Currency Exchanger requiring such
security shall execute and deliver to the Collateral Agent an acknowledgment
to the Intercreditor Agreement (in the form attached thereto) acknowledged by
the Pledgor;
17. As described in Recital 11, all or a portion of the
Current Credit Agreement constitutes a "Successor Credit Agreement" as
defined in the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement, and accordingly the Current Lenders constitute
"Lenders" as defined in the Existing Company Pledge Agreement and the
Existing Intercreditor Agreement and are entitled to be secured by the
Pledged Collateral in their capacities as Foreign Lenders, Interest Rate
Exchangers and Currency Exchangers as described in Recitals 15 and 16;
18. The Current Credit Agreement contemplates that the
Pledgor and one or more trustees (each such trustee that acts in the capacity
as trustee for a particular series of Additional Subordinated Debt (as
hereinafter defined), together with its successors in such capacity, being an
"Additional Subordinated Debt Trustee"; collectively, the "Additional
Subordinated Debt Trustees") may from time to time after the date hereof
enter into one or more supplements to the Subordinated Debt Indenture
(whether in the form of a supplemental indenture or a certificate from the
Pledgor or otherwise) (each an "Additional Indenture Supplement") each of
which relates to a separate series of securities, in each case containing
terms and conditions (including, without limitation, terms and conditions
<PAGE>XIV-8
relating to covenants, defaults, remedies, subordination, collateral
security, maturities, amortization or sinking fund schedules, redemptions,
guaranties and interest rates) meeting the requirements set forth in the
definition of "Additional Subordinated Debt" contained in the Current Credit
Agreement (each such combination of the Subordinated Debt Indenture and an
Additional Indenture Supplement relating to a separate series of securities
being an "Additional Subordinated Debt Indenture"; collectively, the
"Additional Subordinated Debt Indentures") pursuant to which the Pledgor may
issue up to $100,000,000 in aggregate principal amount or original issuance
price, as the case may be, of Indebtedness (any such Indebtedness being
referred to herein as "Pro Forma Additional Subordinated Debt"; any such
Indebtedness issued pursuant to an Additional Subordinated Debt Indenture
that requires the Indebtedness issued thereunder to be secured by the Pledged
Collateral being referred to herein as "Additional Subordinated Debt") and
the Pledgor desires that the Indebtedness evidenced thereby may be secured on
a senior subordinated basis by the Pledged Collateral to the same extent as
the Subordinated Debt Securities;
19. (a) Any Additional Subordinated Debt would have
constituted "Additional 1992 Subordinated Debt" under the Existing Company
Pledge Agreement and the Existing Intercreditor Agreement and, accordingly,
subject to the same terms and conditions as are set forth in clause (b)
below, the terms of the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement would have permitted any Additional Subordinated Debt
to be secured by the Pledged Collateral under the Company Pledge Agreement on
the basis described in Recital 18, and (b) the Current Lenders have agreed to
permit the Pledgor to issue any Pro Forma Additional Subordinated Debt on the
condition that this Agreement and the Intercreditor Agreement provide (as was
provided in the Existing Company Pledge Agreement and the Existing
Intercreditor Agreement), and it is hereby so provided, that (i)
notwithstanding the fact that the proceeds of any Additional Subordinated
Debt may be used to refinance all or any part of any Indebtedness under the
Credit Agreement or any Senior Indenture (and, accordingly, the applicable
Additional Subordinated Debt Indenture could have constituted a Successor
Credit Agreement), (A) in no event shall any Additional Subordinated Debt
Indenture be deemed to be a "Successor Credit Agreement" or a "Credit
Agreement" for purposes of this Agreement or the Intercreditor Agreement and
(B) in all respects the rights of the holders of any Additional Subordinated
Debt and the Additional Subordinated Debt Trustee in respect thereof under
this Agreement and the Intercreditor Agreement shall be limited in the same
manner and to the same extent as the rights of the holders of the
Subordinated Debt Securities and the Subordinated Debt Trustee; and (ii) the
holders of any Additional Subordinated Debt of any series and the Additional
Subordinated Debt Trustee in respect thereof shall only be entitled to the
benefits of this Agreement if (A) such Additional Subordinated Debt Trustee
shall have executed and delivered to the Collateral Agent an acknowledgment
to the Intercreditor Agreement (in the form attached thereto) specifying such
series of Additional Subordinated Debt and the applicable Additional
Subordinated Debt Indenture and agreeing to be bound by the terms hereof
(which acknowledgment shall have been acknowledged by the Pledgor) and
(B) the Collateral Agent shall have received an opinion of Latham & Watkins,
counsel for the Pledgor, to the effect that the issuance of such series of
Additional Subordinated Debt and the securing of the obligations thereunder
by Liens on the Pledged Collateral do not conflict with, result in a breach
of, or constitute a default under, any Senior Indenture or the Subordinated
Debt Indenture or any Additional Subordinated Debt Indenture;
<PAGE>XIV-9
20. The Pledgor has executed and delivered the Existing
Company Pledge Agreement to Bankers, as collateral agent for and
representative of the Lenders, the Public Debenture Trustees, the Senior Note
Trustees, the Refinancing Senior Debt Trustees, the Refinancing Subordinated
Debt Trustees and the Additional 1992 Subordinated Debt Trustees (as such
terms are defined in the Existing Company Pledge Agreement), the Interest
Rate Exchangers, the Currency Exchangers, the Foreign Lenders, the Senior
Debenture Trustee, the Commercial Paper Holders and the Commercial Paper
Representatives;
21. The Current Credit Agent, the Senior Note Trustee,
the Senior Debenture Trustee, the Subordinated Debt Trustee, the Foreign
Lender listed on the signature pages thereof and the Collateral Agent have
entered into a Fifth Amended and Restated Intercreditor Agreement dated the
date hereof (said Fifth Amended and Restated Intercreditor Agreement, as it
may hereafter be amended, amended and restated or otherwise modified from
time to time, being the "Intercreditor Agreement"), which amends and restates
the Existing Intercreditor Agreement and provides for, inter alia, the
appointment of the Collateral Agent to administer the Pledged Collateral; and
22. The Pledgor wishes to confirm the continuation of the
pledge and grant of security interests in favor of the Collateral Agent for
the benefit of the Lenders, the Credit Agents, the Interest Rate Exchangers,
the Currency Exchangers, the Foreign Lenders, the holders of the Senior Notes
and the Senior Note Trustee, the holders of the Senior Debentures and the
Senior Debenture Trustee, and the Commercial Paper Holders and the Commercial
Paper Representatives (collectively, the "Senior Secured Parties") and for
the benefit of the holders of the Subordinated Debt Securities and the
Subordinated Debt Trustee, and the holders of any Additional Subordinated
Debt and any Additional Subordinated Debt Trustees (collectively, the "Junior
Secured Parties"; the Senior Secured Parties and the Junior Secured Parties
being collectively referred to herein as the "Secured Parties");
NOW, THEREFORE, in consideration of the premises the
parties hereto agree that the Existing Company Pledge Agreement is hereby
amended and restated as follows:
SECTION 1. Pledges.
A. Senior Pledge. The Pledgor hereby pledges to the
Collateral Agent and grants to the Collateral Agent for the benefit of the
Senior Secured Parties a first priority security interest in the following
(the "Pledged Collateral") to secure the Senior Secured Obligations (as
defined in Section 2A):
(i) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of the Pledgor in the
entries on the books of any financial intermediary pertaining
to the Pledged Shares, and, subject to Section 6, all
dividends, cash or proceeds, options, warrants, rights,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of the Pledged Shares;
<PAGE>XIV-10
(ii) all additional shares of stock of any issuer of
the Pledged Shares from time to time acquired by the Pledgor in
any manner (which shares shall be deemed to be part of the
Pledged Shares), and the certificates representing such
additional shares and any interest of the Pledgor in the
entries on the books of any financial intermediary pertaining
to such additional shares, and, subject to Section 6, all
dividends, cash, options, warrants, rights, instruments and
other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in
exchange for any or all of such shares;
(iii) all shares of any Person directly owned or held
by the Pledgor which, after the date of this Agreement, is or
becomes, as a result of any occurrence, a Subsidiary (subject
to the obtaining or making of any foreign governmental actions,
notices or filings as referred to in Section 4(iii)) of the
Pledgor (which shares shall be deemed to be part of the Pledged
Shares) and the certificates representing such shares and any
interest of the Pledgor in the entries on the books of any
financial intermediary pertaining to such shares, and, subject
to Section 6, all dividends, cash, options, warrants, rights,
instruments and other property or proceeds from time to time
received, receivable or otherwise distributed in respect of or
in exchange for any or all of such shares; provided that the
Pledgor shall not be required to pledge more than 65% of the
shares of capital stock of any Subsidiary which is a Foreign
Entity and, in any event, shall not be required to pledge the
shares of stock of any Subsidiary otherwise required to be
pledged pursuant to this Section 1A(iii) to the extent that
such pledge would constitute an investment of earnings in
United States property under Section 956 (or a successor
provision) of the Internal Revenue Code which investment would
trigger an increase in the gross income of a United States
shareholder of the Pledgor pursuant to Section 951 (or a
successor provision) of the Internal Revenue Code; and
(iv) the Pledged Debt and the instruments evidencing
the Pledged Debt, and all interest, cash instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Pledged Debt;
The foregoing pledge and grant of a security interest
confirms the pledge and grant of a first priority security interest in the
Pledged Collateral to secure the Senior Secured Obligations made in the
Original Company Pledge Agreement (such term being used herein as used in the
Existing Company Pledge Agreement) and confirmed in the First Amended and
Restated Company Pledge Agreement (such term being used herein as defined in
the Existing Company Pledge Agreement) and the Existing Company Pledge
Agreement and continues in all respects the pledge and grant therein without
in any way causing any interruption in continuity from such original pledge
and grant.
<PAGE>XIV-11
B. Junior Pledge. The Pledgor hereby pledges to the
Collateral Agent and grants to the Collateral Agent for the benefit of the
Junior Secured Parties a second priority security interest in the Pledged
Collateral to secure the Junior Secured Obligations (as defined in Section
2B).
The foregoing pledge and grant of a security interest
confirms the pledge and grant of a second priority security interest in the
Pledged Collateral to secure the Junior Secured Obligations made in the First
Amended and Restated Company Pledge Agreement and confirmed in the Existing
Company Pledge Agreement, and continues in all respects the pledge and grant
therein without in any way causing any interruption in continuity from such
original pledge and grant.
SECTION 2. Secured Obligations.
A. Senior Secured Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment or
performance in full when due, whether at stated maturity, by acceleration or
otherwise (including the payment of amounts which would become due but for
the operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. S 362(a)), of all Obligations now or hereafter existing under
or in respect of the Credit Agreements (the "Obligations"), the notes which
evidence Indebtedness under the Credit Agreements (the "Notes"), all Interest
Rate Obligations and Currency Obligations now or hereinafter existing under
or in respect of the Interest Rate Agreements and the Currency Agreements,
all Foreign Lender Obligations, all obligations of the Pledgor now or
hereafter existing under the Senior Note Indenture and the Senior Notes
issued thereunder, all obligations of the Pledgor now or hereafter existing
under the Senior Debenture Indenture and the Senior Debentures issued
thereunder, and all Commercial Paper Obligations, in each case whether for
principal, premium or interest (including, without limitation, interest
which, but for the filing of a petition in a bankruptcy, reorganization or
other similar proceeding with respect to the Pledgor, would accrue on such
obligations), payments for early termination, fees, expenses or otherwise and
all obligations of the Pledgor now or hereafter existing under this Agreement
(all such obligations being the "Senior Secured Obligations"); provided that
the pledge made and security interest granted in Section 1A and any other
provisions of this Agreement shall be effective as to any obligations in
respect of any Successor Credit Agreements, Interest Rate Agreements,
Currency Agreements and Foreign Lender Guaranties only if the holders of such
obligations or their representatives shall have executed and delivered to the
Collateral Agent a counterpart of the Intercreditor Agreement or an
acknowledgment to the Intercreditor Agreement (in the form attached thereto)
acknowledged by the Pledgor; provided, further that the pledge made and
security interest granted in Section 1A and any other provisions of this
Agreement shall be effective as to any obligations in respect of any Senior
Indenture and the Senior Notes or Senior Debentures issued thereunder only if
the applicable Senior Indenture Trustee shall have executed and delivered to
the Collateral Agent a counterpart of the Intercreditor Agreement; provided,
<PAGE>XIV-12
further that the pledge made and security interest granted in Section 1A and
any other provisions of this Agreement shall be effective as to any
Commercial Paper Obligations in respect of any Commercial Paper only if the
Commercial Paper Representative in respect of such Commercial Paper shall
have executed and delivered to the Collateral Agent an acknowledgment to the
Intercreditor Agreement (in the form attached thereto) acknowledged by the
Pledgor; provided, further that the pledge made and security interest granted
by the Pledgor in Section 1A shall be released, and any other provisions of
this Agreement with respect to such pledge made and security interest granted
by the Pledgor shall cease to be effective, in each case with respect to the
obligations of the Pledgor under the Senior Debenture Indenture and the
Senior Debentures issued thereunder, if upon the date of such release (i) all
outstanding Indebtedness (as defined in the Senior Debenture Indenture) of
the Pledgor incurred, or taken into account in determining the amount of
Indebtedness (as defined in the Senior Debenture Indenture) outstanding,
under clause (i) of part (a) of Section 4.03 of the Senior Debenture
Indenture, if incurred by the Pledgor on that date, would be permitted to be
incurred by the Pledgor under Section 4.03 of the Senior Debenture Indenture
and secured (if applicable) under Section 4.08 of the Senior Debenture
Indenture, in each case under the permitted exceptions to the restrictions
set forth therein (other than clause (i) of Section 4.08 of the Senior
Debenture Indenture) and (ii) no Default (as defined in the Senior Debenture
Indenture) would occur as a result thereof or otherwise shall have occurred
and be continuing.
B. Junior Secured Obligations. This Agreement secures,
and the Pledged Collateral is collateral security for, the prompt payment in
full when due, whether at stated maturity, by acceleration or otherwise
(including amounts which would become due but for the operation of the
automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C.
S 362(a)), of all obligations of the Pledgor now or hereafter existing under
the Subordinated Debt Indenture and the Subordinated Debt Securities issued
thereunder, and all obligations of the Pledgor hereafter existing under any
Additional Subordinated Debt and the applicable Additional Subordinated Debt
Indenture, in each case whether for principal, premium, interest (including,
without limitation, interest which, but for the filing of a petition in a
bankruptcy, reorganization or other similar proceeding with respect to the
Pledgor, would accrue on such obligations), fees, expenses or otherwise, and
all obligations of the Pledgor now or hereafter existing under this Agreement
(all such obligations of the Pledgor being the "Junior Secured Obligations");
provided that the pledge made and the security interest granted in Section 1B
and any other provisions of this Agreement shall be effective as to any
obligations in respect of the Subordinated Debt Indenture and the
Subordinated Debt Securities issued thereunder only if the Subordinated Debt
Trustee shall have executed and delivered to the Collateral Agent a counter-
part of the Intercreditor Agreement; provided, further that the pledge made
and the security interest granted in Section 1B and any other provisions of
this Agreement shall be effective as to any obligations in respect of any
Additional Subordinated Debt of any series and the applicable Additional
Subordinated Debt Indenture only if (i) the applicable Additional
Subordinated Debt Trustee shall have executed and delivered to the Collateral
<PAGE>XIV-13
Agent an acknowledgement to the Intercreditor Agreement (in the form attached
thereto) specifying such series of Additional Subordinated Debt and such
Additional Subordinated Debt Indenture and agreeing to be bound by the terms
thereof (which acknowledgement shall have been acknowledged by the Pledgor)
and (ii) the Collateral Agent shall have received an opinion of Latham &
Watkins, counsel for the Pledgor, to the effect that the issuance of such
series of Additional Subordinated Debt and the securing of the obligations
thereunder by Liens on the Pledged Collateral do not conflict with, result in
a breach of, or constitute a default under, any Senior Indenture, the
Subordinated Debt Indenture or any Additional Subordinated Debt Indenture.
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the Pledged Collateral
shall be delivered to and held by or on behalf of the Collateral Agent
pursuant hereto and shall be in suitable form for transfer by delivery, or
shall be accompanied by duly executed instruments of transfer or assignment
in blank, all in form and substance satisfactory to the Collateral Agent.
All such certificates and instruments delivered pursuant to the Original
Company Pledge Agreement, the First Amended and Restated Company Pledge
Agreement or the Existing Company Pledge Agreement shall be retained by the
Collateral Agent without re-delivery hereunder. The Collateral Agent shall
have the right, at any time upon or after the occurrence of an Event of
Default (as defined in Section 11A) and without notice to the Pledgor, to
transfer to or to register in the name of the Collateral Agent or any of its
nominees any or all of the Pledged Collateral. In addition, the Collateral
Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for certificates or
instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. The Pledgor
represents and warrants as follows:
(i) The Pledgor is, and at the time of delivery of any
Pledged Collateral to the Collateral Agent pursuant to Section
3 of this Agreement will be, the legal and beneficial owner of
the Pledged Collateral free and clear of any Lien except for
the lien and security interest created by this Agreement.
(ii) The Pledgor has full power, authority and legal
right to pledge all the Pledged Collateral pursuant to this
Agreement.
(iii) No consent of any other party (including, without
limitation, stockholders or creditors of the Pledgor) and no
consent, authorization, approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required either (x) for the pledge by the
Pledgor of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by
the Pledgor or (y) for the exercise by the Collateral Agent of
the voting or other rights provided for in this Agreement or
<PAGE>XIV-14
the remedies in respect of the Pledged Collateral pursuant to
this Agreement; except (a) for foreign governmental actions,
notices or filings required for actions referred to in clauses
(x) and (y) as to Pledged Shares issued by corporations which
own, directly or indirectly, the stock of Foreign Entities and
(b) as may be required in connection with such disposition by
laws affecting the offering and sale of securities generally.
(iv) All of the Pledged Shares have been duly
authorized and validly issued and are fully paid and non-
assessable. The Pledged Debt has been duly authorized,
authenticated or issued and delivered, and is the legal, valid
and binding obligation of the issuers thereof, and is not in
default.
(v) The pledge of the Pledged Shares and the Pledged Debt
pursuant to this Agreement creates a valid and perfected first
priority security interest in the Pledged Shares and the
Pledged Debt securing the payment of the Senior Secured
Obligations and a valid and perfected second priority security
interest in the Pledged Shares and the Pledged Debt securing
the payment of the Junior Secured Obligations.
(vi) As of the date hereof, the Pledged Shares
consisting of capital stock of the Persons identified in Part I
of Schedule I annexed hereto constitute the percentage of the
issued and outstanding shares of stock of such Persons as
identified in Part I of Schedule I annexed hereto. The Pledged
Debt constitutes all of the issued and outstanding O-I
Subsidiary Debt Obligations owing to the Pledgor as of the date
hereof.
(vii) Except as otherwise permitted by the Credit
Agreements, the Pledgor at all times will be sole beneficial
owner of the Pledged Collateral.
(viii) All information set forth herein relating to the
Pledged Collateral is accurate and complete in all material
respects.
(ix) The pledge of the Pledged Collateral pursuant to
this Agreement does not violate Regulations G, U or X of the
Federal Reserve Board.
(x) The Pledgor does not directly own any other shares of
capital stock of any Subsidiary of the Pledgor other than the
shares of capital stock described in Part I of Schedule I
annexed hereto and shares of capital stock not required to be
pledged hereunder pursuant to the proviso to Section 1A(iii).
SECTION 5. Supplements, Further Assurances. The Pledgor
agrees that at any time and from time to time, at the expense of the Pledgor,
the Pledgor will promptly execute and deliver all further instruments and
documents, and take all further action, that may be necessary or that the
Collateral Agent may reasonably request, in order to perfect and protect any
security interest granted or purported to be granted hereby or to enable the
Collateral Agent to exercise and enforce its rights and remedies hereunder
with respect to any Pledged Collateral.
<PAGE>XIV-15
The Pledgor further agrees that it will, upon obtaining
any shares of any Person required to be pledged pursuant to Sections 1(ii) or
1(iii), promptly (and in any event within five (5) Business Days) deliver to
the Collateral Agent a pledge amendment, duly executed by the Pledgor, in
substantially the form of Schedule II hereto (a "Pledge Amendment"), in
respect of the additional Pledged Shares which are to be pledged pursuant to
this Agreement. The Pledgor hereby authorizes the Collateral Agent to attach
each Pledge Amendment to this Agreement and agrees that all Pledged Shares
listed on any Pledge Amendment delivered to the Collateral Agent shall for
all purposes hereunder be considered Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) As long as
no Event of Default shall have occurred and be continuing:
(i) The Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral or any part thereof for any purpose not inconsistent
with the terms of this Agreement, the Credit Agreements, the
Senior Indentures, the Subordinated Debt Indenture or the
Additional Subordinated Debt Indentures in respect of any
Additional Subordinated Debt; provided, however, that the
Pledgor shall give the Collateral Agent at least 5 days' prior
written notice of the manner in which it intends to exercise
any such right. It is understood, however, that neither (A)
the voting by the Pledgor of any Pledged Shares for, or the
Pledgor's consent to, the election of directors at a regularly
scheduled annual or other meeting of stockholders or with
respect to incidental matters at any such meeting nor (B) the
Pledgor's consent to or approval of any action otherwise
permitted under this Agreement, the Credit Agreements, the
Senior Indentures, the Subordinated Debt Indenture and such
Additional Subordinated Debt Indentures shall be deemed
inconsistent with the terms of this Agreement, the Credit
Agreements, the Senior Indentures, the Subordinated Debt
Indenture or such Additional Subordinated Debt Indentures
within the meaning of this Section 6(a)(i), and no notice of
any such voting or consent need be given to the Collateral
Agent.
(ii) The Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this
Agreement, any and all dividends, distributions, principal and
interest paid in respect of the Pledged Collateral; provided,
however, that any and all dividends and other distributions in
equity securities shall be, and shall be forthwith delivered to
the Collateral Agent to hold as, Pledged Collateral and shall,
if received by the Pledgor, be received in trust for the
benefit of the Collateral Agent, be segregated from the other
property or funds of the Pledgor, and be forthwith delivered to
the Collateral Agent as Pledged Collateral in the same form as
so received (with any necessary endorsement).
(iii) In order to permit the Pledgor to exercise the
voting and other rights which it is entitled to exercise
<PAGE>XIV-16
pursuant to Section 6(a)(i) above and to receive the dividends,
distributions, principal or interest payments which it is
authorized to receive and retain pursuant to Section 6(a)(ii)
above, the Collateral Agent shall, if necessary, upon written
request of the Pledgor, from time to time execute and deliver
(or cause to be executed and delivered) to the Pledgor all such
proxies, dividend payment orders and other instruments as the
Pledgor may reasonably request.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) Upon written notice from the Collateral Agent to the
Pledgor, all rights of the Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 6(a)(i) above shall cease, and all
such rights shall thereupon become vested in the Collateral
Agent which shall thereupon have the sole right to exercise
such voting and other consensual rights during the continuance
of such Event of Default.
(ii) All rights of the Pledgor to receive the
dividends, distributions, principal and interest payments which
it would otherwise be authorized to receive and retain pursuant
to Section 6(a)(ii) above shall cease and all such rights shall
thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends, distributions, principal and
interest payments during the continuance of such Event of
Default.
(c) In order to permit the Collateral Agent to receive
all dividends and other distributions to which it may be entitled under
Section 6(a)(ii) above, to exercise the voting and other consensual rights
which it may be entitled to exercise pursuant to Section 6(b)(i) above, and
to receive all dividends, distributions, principal and interest payments and
other distributions which it may be entitled to receive under Section
6(b)(ii) above, the Pledgor shall, if necessary, upon written notice from the
Collateral Agent, from time to time execute and deliver to the Collateral
Agent appropriate proxies, dividend payment orders and other instruments as
the Collateral Agent may reasonably request.
(d) All dividends, distributions, principal and interest
payments which are received by the Pledgor contrary to the provisions of
Section 6(b)(ii) above shall be received in trust for the benefit of the
Collateral Agent, shall be segregated from other funds of the Pledgor and
shall be forthwith paid over to the Collateral Agent as Pledged Collateral in
the same form as so received (with any necessary endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares.
A. Transfers and Other Liens. The Pledgor agrees that
it will not, except as permitted by the Credit Agreements, the Senior
Indentures and the Senior Debenture Guaranties (as defined in the
Intercreditor Agreement) (in the case of the Senior Debenture Indenture and
<PAGE>XIV-17
such Senior Debenture Guaranties, only to the extent the obligations of the
Pledgor under the Senior Debenture Indenture are then secured by the Pledged
Collateral), the Subordinated Debt Indenture and the Additional Subordinated
Debt Indentures (in the case of any Additional Subordinated Debt Indenture,
only to the extent the obligations of the Pledgor under such Additional
Subordinated Debt Indenture are then secured by the Pledged Collateral), (i)
sell or otherwise dispose of, or grant any option or warrant with respect to,
any of the Pledged Collateral, (ii) create or permit to exist any Lien upon
or with respect to any of the Pledged Collateral, except for the lien and
security interest under this Agreement, or (iii) permit any issuer of Pledged
Shares to merge or consolidate unless all the outstanding capital stock of
the surviving or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no cash, securities or other property is distributed in
respect of the outstanding shares of any other constituent corporation;
provided, however, that in the event of an Asset Sale permitted by the Credit
Agreements wherein the assets subject to such Asset Sale are Pledged Shares,
the Collateral Agent shall release the Pledged Shares that are the subject of
such Asset Sale to the Pledgor free and clear of the lien and security
interest under this Agreement (a) so long as any Obligations remain
outstanding under the Credit Agreements, concurrently with the receipt of
advice from the Credit Agent that arrangements satisfactory to it have been
made for delivery to it of the Net Cash Proceeds of such Asset Sale to which
the Lenders are entitled under such Credit Agreements and the Intercreditor
Agreement, (b) after such time as all Obligations under the Credit Agreements
have been indefeasibly paid in full, in the event that any other Secured
Parties are entitled to receive any portion of the Cash Proceeds of such
Asset Sale, concurrently with the receipt of advice from the agent or trustee
for such Secured Parties that arrangements satisfactory to it have been made
for delivery to it of the amounts required to be paid to such Secured Parties
out of the Cash Proceeds of such Asset Sale, and (c) in the event no Secured
Party is entitled to receive any portion of the Cash Proceeds of such Asset
Sale, concurrently with the consummation of such Asset Sale; provided, in the
case of clause (c), that the issuer of the Pledged Shares that are the
subject of such Asset Sale will be concurrently released from its
obligations, if any, as a guarantor under the Senior Indentures (or would
have been so released if such issuer of the Pledged Shares were such a
guarantor); provided, further, that notwithstanding anything herein to the
contrary, (x) the Collateral Agent shall release Pledged Shares or other
Pledged Collateral from the lien and security interest of this Agreement as
may be specified by the Credit Agent upon the approval of the release of such
Pledged Shares or other Pledged Collateral by Requisite Lenders under the
Credit Agreement and (y) the Collateral Agent shall release Pledged Shares
from the lien and security interest of this Agreement if and to the extent
such Pledged Shares are not required to be pledged due to the limitations set
forth in the proviso to Section 1A(iii).
B. Additional Shares. The Pledgor agrees that it will
(i) cause each issuer of Pledged Shares not to issue any stock or other
securities in addition to or in substitution for the Pledged Shares issued by
such issuer, except to the Pledgor, (ii) pledge hereunder, immediately upon
its acquisition (directly or indirectly) thereof, any and all additional
shares of stock or other equity securities of each issuer of Pledged Shares;
<PAGE>XIV-18
provided, however, that the Pledgor shall not be required under this clause
(ii) to pledge shares of the capital stock of such issuer acquired by any of
its Subsidiaries, and (iii) subject to the proviso to Section 1A(iii), pledge
hereunder, immediately upon its direct acquisition thereof, any and all
shares of stock of any Person which, after the date of this Agreement,
becomes, as a result of any occurrence, a Subsidiary (subject to the
obtaining or making of any foreign governmental actions, notices or filings
referred to in Section 4(iii)) of the Pledgor.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact.
The Pledgor hereby appoints the Collateral Agent the Pledgor's attorney-in-
fact, with full authority in the place and stead of the Pledgor and in the
name of the Pledgor or otherwise, from time to time in the Collateral Agent's
discretion to take any action and to execute any instrument which the
Collateral Agent may reasonably deem necessary or advisable to accomplish the
purposes of this Agreement, including, without limitation, to receive,
endorse and collect all instruments made payable to the Pledgor representing
any dividend, interest payment or other distribution in respect of the
Pledged Collateral or any part thereof and to give full discharge for the
same.
SECTION 9. Collateral Agent May Perform. If the Pledgor
fails to perform any agreement contained herein after receipt of a written
request to do so from the Collateral Agent, the Collateral Agent may itself
perform, or cause performance of, such agreement, and the reasonable expenses
of the Collateral Agent, including the reasonable fees and expenses of its
counsel, incurred in connection therewith shall be payable by the Pledgor
under Section 13 hereof.
SECTION 10. Reasonable Care. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody and preservation
of the Pledged Collateral in its possession if the Pledged Collateral is
accorded treatment substantially equivalent to that which the Collateral
Agent, in its individual capacity, accords its own property consisting of
negotiable securities, it being understood that neither the Collateral Agent
nor any other Secured Party shall have responsibility for (i) ascertaining or
taking action with respect to calls, conversions, exchanges, maturities,
tenders or other matters relative to any Pledged Collateral, whether or not
the Collateral Agent or any other Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps (other than
steps taken in accordance with the standard of care set forth above to
maintain possession of the Pledged Shares and Pledged Debt) to preserve
rights against any Person with respect to any Pledged Collateral.
SECTION 11. Remedies Upon Default; Decisions Relating to
Exercise of Remedies.
A. Remedies Upon Default. Subject to Sections 11B and
11C, (i) if any event of default under any Credit Agreement, or (ii) after
such time as all Obligations shall have been indefeasibly paid in full, and
provided that the Pledged Collateral then secures the payment and performance
of Interest Rate Obligations, Currency Obligations, Foreign Lender
Obligations, obligations of the Pledgor under any Senior Indenture or
<PAGE>XIV-19
Commercial Paper Obligations under any Commercial Paper Document, if any
event of default under (A) any Interest Rate Agreement or Currency Agreement
which is secured by the Pledged Collateral, (B) any Foreign Lender Guaranty
which is secured by the Pledged Collateral, (C) any such Senior Indenture, or
(D) any such Commercial Paper Document, as the case may be, or (iii) after
such time as all Senior Secured Obligations shall have been indefeasibly paid
in full, and provided that the Pledged Collateral then secures the payment
and performance of the Junior Secured Obligations, if any event of default
under the Subordinated Debt Indenture or any Additional Subordinated Debt
Indenture (to the extent the obligations of the Pledgor under such Additional
Subordinated Debt Indenture are then secured by the Pledged Collateral) (each
of the events of default described in the foregoing clauses (i) through (iii)
(subject to any provisos set forth therein) being referred to herein as an
"Event of Default") shall have occurred and be continuing:
(a)(i) The Collateral Agent may exercise in respect of
the Pledged Collateral, in addition to other rights and
remedies provided for herein or otherwise available to it, all
the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") in effect in the State of
New York at that time, and the Collateral Agent may also in its
sole discretion, without notice except as specified below, sell
the Pledged Collateral or any part thereof in one or more
parcels at public or private sale, at any exchange, broker's
board or at any of the Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and at such price
or prices and upon such other terms as the Collateral Agent may
deem commercially reasonable, irrespective of the impact of any
such sales on the market price of the Pledged Collateral. The
Collateral Agent or any other Secured Party may be the
purchaser of any or all of the Pledged Collateral at any such
sale but shall not be entitled, for the purpose of bidding and
making settlement or payment of the purchase price for all or
any portion of the Pledged Collateral sold at such sale, to use
and apply any of the Secured Obligations owed to such Person as
a credit on account of the purchase price of any Pledged
Collateral payable by such Person at such sale. Each purchaser
at any such sale shall hold the property sold absolutely free
from any claim or right on the part of the Pledgor, and the
Pledgor hereby waives (to the extent permitted by law) all
rights of redemption, stay and/or appraisal which it now has or
may at any time in the future have under any rule of law or
statute now existing or hereafter enacted. The Pledgor agrees
that, to the extent notice of sale shall be required by law, at
least ten days' notice to the Pledgor of the time and place of
any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The
Collateral Agent shall not be obligated to make any sale of
Pledged Collateral regardless of notice of sale having been
given. The Collateral Agent may adjourn any public or private
sale from time to time by announcement at the time and place
fixed therefor, and such sale may, without further notice, be
made at the time and place to which it was so adjourned. The
Pledgor hereby waives any claims against the Collateral Agent
arising by reason of the fact that the price at which any
Pledged Collateral may have been sold at such a private sale
<PAGE>XIV-20
was less than the price which might have been obtained at a
public sale, even if the Collateral Agent accepts the first
offer received and does not offer such Pledged Collateral to
more than one offeree.
(ii) The Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as
amended (the "Securities Act"), and applicable state securities
laws, the Collateral Agent may be compelled, with respect to
any sale of all or any part of the Pledged Collateral, to limit
purchasers to those who will agree, among other things, to
acquire the Pledged Collateral for their own account, for
investment and not with a view to the distribution or resale
thereof. The Pledgor acknowledges that any such private sales
may be at prices and on terms less favorable to the Collateral
Agent than those obtainable through a public sale without such
restrictions (including, without limitation, a public offering
made pursuant to a registration statement under the Securities
Act), and, notwithstanding such circumstances, agrees that any
private sale shall be deemed to have been made in a
commercially reasonable manner and that the Collateral Agent
shall have no obligation to engage in public sales and no
obligation to delay the sale of any Pledged Collateral for the
period of time necessary to permit the issuer thereof to regis-
ter it for a form of public sale requiring registration under
the Securities Act or under applicable state securities laws,
even if the Pledgor would agree to do so.
(b) If the Collateral Agent determines to exercise its
right to sell any or all of the Pledged Collateral, upon
written request, the Pledgor shall and shall cause each issuer
of any Pledged Shares to be sold hereunder from time to time to
furnish to the Collateral Agent all such information as the
Collateral Agent may request in order to determine the number
of shares and other instruments included in the Pledged
Collateral which may be sold by the Collateral Agent as exempt
transactions under the Securities Act and the rules of the
Securities and Exchange Commission thereunder, as the same are
from time to time in effect.
B. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Agreement to the contrary, as provided in
the Intercreditor Agreement, the Collateral Agent shall exercise, or shall
refrain from exercising, any remedy provided for in Section 11A in accordance
with the instructions of Requisite Obligees (as defined in the Intercreditor
Agreement) and the Credit Agents, the Interest Rate Exchangers, the Currency
Exchangers, the Foreign Lenders, the holders of the Senior Notes and the
Senior Note Trustee, the holders of the Senior Debentures and the Senior
Debenture Trustee, the Commercial Paper Holders and the Commercial Paper
Representatives, the holders of the Subordinated Debt Securities and the
Subordinated Debt Trustee, and the holders of any Additional Subordinated
Debt and the Additional Subordinated Debt Trustees in respect thereof shall
be bound by such instructions; and the sole rights of the Credit Agents, the
<PAGE>XIV-21
Interest Rate Exchangers, the Currency Exchangers, the Foreign Lenders, the
holders of the Senior Notes and the Senior Note Trustee, the holders of the
Senior Debentures and the Senior Debenture Trustee, the Commercial Paper
Holders and the Commercial Paper Representatives, the holders of the Subor-
dinated Debt Securities and the Subordinated Debt Trustee, and the holders of
any Additional Subordinated Debt and the Additional Subordinated Debt
Trustees in respect thereof under this Agreement shall be to be secured by
the Pledged Collateral and to receive the payments provided for in Section 12
hereof; provided, however, that if the Collateral Agent has requested
instructions from any Commercial Paper Representative as to the exercise of
any such remedies and such Commercial Paper Representative has not promptly
responded to such request, in determining the instructions given by Requisite
Obligees (as defined in the Intercreditor Agreement), the Collateral Agent
shall disregard such Commercial Paper Representative and the outstanding
amount of Commercial Paper in respect of which such Commercial Paper
Representative is the Commercial Paper Representative.
C. Limitations on Exercise of Remedies. Notwithstanding
anything in this Agreement to the contrary, as provided in the Intercreditor
Agreement, the Collateral Agent shall not exercise any remedy provided for in
Section 11A for the purpose of realizing value on the Pledged Collateral to
be applied to the payment of the Junior Secured Obligations unless (y) such
remedy is concurrently being exercised for the purpose of realizing value on
the Pledged Collateral to be applied to the payment of the Senior Secured
Obligations or (z) all Senior Secured Obligations shall have been
indefeasibly paid in full.
D. No Impairment of Subordination in Right of Payments.
The Intercreditor Agreement, the Subordinated Debt Indenture, and each
Additional Subordinated Debt Indenture in respect of Additional Subordinated
Debt set forth certain agreements of the Pledgor, and the holders of the
Subordinated Debt Securities and any Additional Subordinated Debt are subject
to certain obligations, which subordinate the right of payment of such
Subordinated Debt Securities and Additional Subordinated Debt to the prior
payment of "Senior Indebtedness" (as defined in the Subordinated Debt
Indenture or the applicable Additional Subordinated Debt Indenture, as the
case may be). Notwithstanding anything in this Agreement to the contrary,
such agreements and obligations of the Pledgor and the holders of the
Subordinated Debt Securities and any Additional Subordinated Debt shall not
be impaired in any manner by the pledge of the Pledged Collateral, the
security interest granted by this Agreement or the exercise of rights
provided hereunder, and the rights of the holders of such "Senior
Indebtedness" shall not be impaired in any manner by any such action.
SECTION 12. Application of Proceeds. After and during
the continuance of an Event of Default, any cash held by the Collateral Agent
as Pledged Collateral and all cash proceeds received by the Collateral Agent
(all such cash being "Proceeds") in respect of any sale of, collection from,
or other realization upon all or any part of the Pledged Collateral pursuant
to the exercise by the Collateral Agent of its remedies as a secured creditor
as provided in Section 11 of this Agreement shall be applied promptly from
time to time by the Collateral Agent as follows:
First, to the payment of the costs and expenses of such
sale, collection or other realization, including reasonable
compensation to the Collateral Agent and its agents and
counsel, and all expenses, liabilities and advances made or
<PAGE>XIV-22
incurred by the Collateral Agent in connection therewith;
Second, to the payment of the Senior Secured Obligations
as provided in Section 3 of the Intercreditor Agreement;
provided that in making such application to any Senior
Indenture Trustee in respect of outstanding obligations under
the applicable Senior Indenture, the Collateral Agent shall be
entitled to deduct from the share of such Proceeds otherwise
payable to the holders of the Senior Notes or Senior Debentures
issued thereunder such holders' pro rata share of all amounts
that the Collateral Agent has been paid by the Paying
Indemnifying Parties (such term being used in this Section 12
as defined in Section 7(c) of the Intercreditor Agreement)
pursuant to Section 7(c) of the Intercreditor Agreement; and
provided, further, that in making such application to any
Commercial Paper Holder (or the Commercial Paper Representative
in respect of such Commercial Paper Holder) in respect of any
Commercial Paper Obligations, the Collateral Agent shall be
entitled to deduct from such Commercial Paper Holder's share of
such Proceeds such Commercial Paper Holder's pro rata share of
all amounts that the Collateral Agent has been paid by the
Paying Indemnifying Parties pursuant to Section 7(c) of the
Intercreditor Agreement;
Third, only after payment in full of all Senior Secured
Obligations, to the payment of the Junior Secured Obligations
as provided in Section 3 of the Intercreditor Agreement;
provided that, to the extent applicable, the Subordinated Debt
Trustee and each applicable Additional Subordinated Debt
Trustee shall hold any amount so payable subject to the
subordination provisions contained in the Subordinated Debt
Indenture or the applicable Additional Subordinated Debt
Indenture, as the case may be; provided, further, that in
making such application to the Subordinated Debt Trustee, the
Collateral Agent shall be entitled to deduct from the share of
such Proceeds otherwise payable to the holders of the Subordi-
nated Debt Securities such holders' pro rata share of all
amounts that the Collateral Agent has been paid by the Paying
Indemnifying Parties pursuant to Section 7(c) of the
Intercreditor Agreement; and provided, further, that in making
such application to any Additional Subordinated Debt Trustee in
respect of outstanding obligations under the applicable
Additional Subordinated Debt Indenture, the Collateral Agent
shall be entitled to deduct from the share of such Proceeds
otherwise payable to the holders of the Additional Subordinated
Debt issued thereunder such holders' pro rata share of all
amounts that the Collateral Agent has been paid by the Paying
Indemnifying Parties pursuant to Section 7(c) of the
Intercreditor Agreement; and
Fourth, after payment in full of all Secured Obligations,
to the Pledgor, or its successors or assigns, or to whomsoever
may be lawfully entitled to receive the same or as a court of
competent jurisdiction may direct, of any surplus then
remaining from such Proceeds.
At the time of any application of Proceeds by the
Collateral Agent pursuant to this Section 12, the Collateral Agent shall
<PAGE>XIV-23
provide the Senior Indenture Trustees, the Commercial Paper Representative in
respect of any Commercial Paper, the Subordinated Debt Trustee and any
applicable Additional Subordinated Debt Trustees with a certificate setting
forth the total amount paid to the Collateral Agent pursuant to Section 7(c)
of the Intercreditor Agreement and a calculation of the amounts, if any,
deducted from Proceeds paid to the Senior Indenture Trustees, the Commercial
Paper Holders in respect of such Commercial Paper, the Subordinated Debt
Trustee or such Additional Subordinated Debt Trustees, as the case may be.
SECTION 13. Expenses. The Pledgor will upon demand pay
to the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any experts
and agents, which the Collateral Agent may incur in connection with (i) the
administration of this Agreement, (ii) the custody or preservation of, or the
sale of, collection from, or other realization upon, any of the Pledged
Collateral, (iii) the exercise or enforcement of any of the rights of the
Collateral Agent or any other Secured Party hereunder or (iv) the failure by
the Pledgor to perform or observe any of the provisions hereof.
SECTION 14. No Waiver. No failure on the part of the
Collateral Agent to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as
a waiver thereof; nor shall any single or partial exercise by the Collateral
Agent of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein provided are to the fullest extent permitted by law
cumulative and are not exclusive of any remedies provided by law.
SECTION 15. Collateral Agent. The Collateral Agent has
been appointed as Collateral Agent hereunder pursuant to the Intercreditor
Agreement by the Current Credit Agent, the Senior Note Trustee, the Senior
Debenture Trustee, the Subordinated Debt Trustee and the Foreign Lender
listed on the signature pages thereof and, in the event that any Interest
Rate Obligations or Currency Obligations, any other Foreign Lender
Obligations, any obligations in respect of any Additional Subordinated Debt
or any Commercial Paper Obligations are secured hereby, by each Interest Rate
Exchanger and Currency Exchanger, each other Foreign Lender, each Additional
Subordinated Debt Trustee and each Commercial Paper Representative executing
a counterpart to the Intercreditor Agreement, and the Collateral Agent shall
be entitled to the benefits of the Intercreditor Agreement. The Collateral
Agent shall be obligated, and shall have the right, hereunder to make
demands, to give notices, to exercise or refrain from exercising any rights,
and to take or refrain from taking action (including, without limitation, the
release or substitution of Pledged Collateral) solely in accordance with this
Agreement and the Intercreditor Agreement. The Collateral Agent may resign
and a successor Collateral Agent may be appointed in the manner provided in
the Intercreditor Agreement. Upon the acceptance of any appointment as a
Collateral Agent by a successor Collateral Agent, that successor Collateral
Agent shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent under this
Agreement, and the retiring Collateral Agent shall thereupon be discharged
from its duties and obligations under this Agreement and shall deliver any
Pledged Collateral in its possession to the successor Collateral Agent.
After any retiring Collateral Agent's resignation, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
<PAGE>XIV-24
taken by it under this Agreement while it was Collateral Agent. Anything
contained in this Agreement to the contrary notwithstanding, in the event of
any conflict between the express terms and provisions of this Agreement and
the express terms and provisions of the Intercreditor Agreement, such terms
and provisions of the Intercreditor Agreement shall control.
SECTION 16. Indemnification. The Pledgor hereby agrees
to indemnify the Collateral Agent for any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever which may be imposed on,
incurred by or asserted against the Collateral Agent in any way relating to
or arising out of this Agreement, the Intercreditor Agreement, the Credit
Agreements, the Interest Rate Agreements, the Currency Agreements, the
Foreign Lender Guaranties, the Senior Notes, the Senior Debentures, the
Senior Indentures, the Commercial Paper Documents, the Subordinated Debt
Securities, the Subordinated Debt Indenture, any Additional Subordinated Debt
or any Additional Subordinated Debt Indenture or any other documents
contemplated by or referred to therein or the transactions contemplated
thereby or the enforcement of any of the terms hereof or of any such other
documents or otherwise arising or relating in any manner to the pledges,
dispositions of Pledged Collateral or proceeds of Pledged Collateral, or
other actions of any nature with respect to the Pledged Collateral
contemplated hereunder and under the Intercreditor Agreement to secure the
payment of the Secured Obligations (including without limitation the
Commercial Paper Obligations); provided, however, that the Pledgor shall not
be liable for any of the foregoing to the extent they arise from the gross
negligence or willful misconduct of the Collateral Agent or failure by the
Collateral Agent to exercise reasonable care in the custody and preservation
of the Pledged Collateral as provided in Section 10.
SECTION 17. Amendments, Etc. Prior to such time as all
Senior Secured Obligations shall have been indefeasibly paid in full, this
Agreement may not be amended, modified or waived except with the written
consent of the Pledgor, the Collateral Agent and the Credit Agents and,
solely with respect to an amendment of Section 12, the relative ranking or
the priority of the security interests granted in Section 1, the definitions
herein of "Pledged Collateral", "Secured Obligations", "Senior Secured
Obligations" or "Junior Secured Obligations", this Section 17, or the release
of Pledged Collateral except as herein provided, with the written consent of
each Interest Rate Exchanger (if the Pledged Collateral then secures such
Interest Rate Exchanger), each Currency Exchanger (if the Pledged Collateral
then secures such Currency Exchanger), each Foreign Lender (if the Pledged
Collateral then secures such Foreign Lender), the Senior Note Trustee (if the
Pledged Collateral then secures the Senior Notes), the Senior Debenture
Trustee (if the Pledged Collateral then secures the Senior Debentures), the
Subordinated Debt Trustee (if the Pledged Collateral then secures the
Subordinated Debt Securities), and each Additional Subordinated Debt Trustee
(if the Pledged Collateral then secures the applicable Additional
Subordinated Debt); provided that the written consent of the Credit Agents
shall not be required if the Obligations have been indefeasibly paid in full;
provided, further, that if the Obligations have been indefeasibly paid in
full, the written consent of the holders of a majority of the outstanding
Interest Rate Obligations, Currency Obligations and Foreign Lender
Obligations which are secured by the Pledged Collateral shall be required to
<PAGE>XIV-25
any amendment, modification or waiver of this Agreement; and provided,
further, that (x) during such times as the Pledged Collateral secures payment
of any Commercial Paper Obligations, solely with respect to an amendment,
modification or waiver which would (i) reduce or adversely affect the right
of the Commercial Paper Representatives to request or direct the Collateral
Agent to take action as provided in Section 2(a) of the Intercreditor
Agreement or (ii) subordinate or cause the Commercial Paper Holders to hold a
security interest in the Pledged Collateral junior to the security interest
therein of any other holder of Senior Secured Obligations, no such amendment,
modification or waiver shall in any event be effective as to the Commercial
Paper Holders or Commercial Paper Representatives in respect of any
Commercial Paper outstanding at the time of such amendment, modification or
waiver except with the prior written consent of the Commercial Paper
Representatives in respect of a majority in aggregate face amount of such
outstanding Commercial Paper, (y) during such time as the Pledged Collateral
secures only the payment of the Junior Secured Obligations and the
obligations under or in respect of any Senior Indenture(s), this Agreement
may not be amended, modified or waived except with the written consent of the
Pledgor, the Collateral Agent and the applicable Senior Indenture Trustee(s),
and (z) during such time as the Pledged Collateral secures only the payment
of the Junior Secured Obligations, this Agreement may not be amended,
modified or waived except with the written consent of the Pledgor, the
Collateral Agent, the Subordinated Debt Trustee and the applicable Additional
Subordinated Debt Trustee(s); provided, however, that, notwithstanding the
foregoing, such written consent of any Senior Indenture Trustee(s) or the
Subordinated Debt Trustee or any Additional Subordinated Debt Trustee(s) and,
insofar as required by clause (y) or (z) above, as the case may be, the
Collateral Agent, shall not be required with respect to amendments, modifica-
tions or waivers necessary to permit the incurrence of additional
Indebtedness secured by the Pledged Collateral and entitled to the benefits
hereof insofar as the foregoing is permitted by the applicable Senior
Indenture(s) or the Subordinated Debt Indenture or the applicable Additional
Subordinated Debt Indenture(s), as the case may be.
SECTION 18. Termination. When all Secured Obligations
have been indefeasibly paid in full, this Pledge Agreement shall terminate,
and the Collateral Agent shall, upon the request and at the expense of the
Pledgor, forthwith assign, transfer and deliver, against receipt and without
recourse to the Collateral Agent, such of the Pledged Collateral as shall not
have been sold or otherwise applied pursuant to the terms hereof to or on the
order of the Pledgor. Notwithstanding anything herein (including Section 20)
to the contrary, if all the Senior Secured Obligations except the obligations
in respect of the Senior Notes and the Senior Debentures have either been
indefeasibly paid in full or are no longer secured by any of the Pledged
Collateral, this Pledge Agreement shall be terminable at the election of the
Pledgor and upon the delivery of written notice of such election to the
Collateral Agent, this Pledge Agreement shall terminate and the Collateral
Agent shall, at the expense of the Pledgor, forthwith assign, transfer and
deliver, against receipt and without recourse to the Collateral Agent, such
Pledged Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof to or on the order of the Pledgor.
<PAGE>XIV-26
SECTION 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic or telecopy communication) and mailed, telegraphed, telecopied or
delivered, if to the Pledgor, addressed to it at the address set forth on the
signature page of this Agreement, if to the Collateral Agent, addressed to it
at the address set forth on the signature page of this Agreement, if to the
Current Credit Agent, addressed to it at the address set forth on the
signature page of the Current Credit Agreement, if to the Senior Note
Trustee, addressed to such trustee at the address provided by such trustee
pursuant to the Intercreditor Agreement, if to the Senior Debenture Trustee,
addressed to such trustee at the address provided by such trustee pursuant to
the Intercreditor Agreement, if to the Subordinated Debt Trustee, addressed
to such trustee at the address provided by such trustee pursuant to the
Intercreditor Agreement, and if to an Additional Subordinated Debt Trustee,
addressed to such trustee at the address provided by such trustee pursuant to
the Intercreditor Agreement, or as to any party at such other address as
shall be designated by such party in a written notice to each other party
complying as to delivery with the terms of this Section 19. All such notices
and other communications shall, when mailed or telegraphed, respectively, be
effective when deposited in the mails or delivered to the telegraph company,
respectively, addressed as aforesaid and shall, when delivered or telecopied,
be effective when received.
SECTION 20. Continuing Security Interest; Transfer Of
Notes. Subject to Section 18, this Agreement shall create a continuing
security interest in the Pledged Collateral and shall (i) remain in full
force and effect until indefeasible payment in full of all Secured
Obligations, (ii) be binding upon the Pledgor, its successors and assigns,
and (iii) inure, together with the rights and remedies of the Collateral
Agent hereunder, to the benefit of the Collateral Agent and each other
Secured Party and each of their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (iii) and
subject to the provisions of subsections 9.2 and 9.17 of the Current Credit
Agreement, any Secured Party may assign or otherwise transfer any indebted-
ness held by it secured by this Agreement to any other person or entity, and
such other person or entity shall thereupon become vested with all the
benefits in respect thereof granted to such Secured Party herein or
otherwise, subject, however, to the provisions of the Intercreditor
Agreement.
SECTION 21. Governing Law; Terms. THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE
EXTENT THAT THE CODE REQUIRES THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF NEW YORK. Unless otherwise defined herein or in the Current Credit
Agreement, terms defined in Articles 8 and 9 of the Uniform Commercial Code
as in effect in the State of New York are used herein as therein defined.
<PAGE>XIV-27
SECTION 22. Consent to Jurisdiction and Service of
Process. All judicial proceedings brought against the Pledgor with respect
to this Agreement may be brought in any state or federal court of competent
jurisdiction in the State of New York and by execution and delivery of this
Agreement, the Pledgor accepts for itself and in connection with its
properties, generally and unconditionally, the nonexclusive jurisdiction of
the aforesaid courts, and irrevocably agrees to be bound by any judgment
rendered thereby in connection with this Agreement. The Pledgor designates
and appoints C T Corporation System, The Corporation Trust Company, 1633
Broadway, New York, New York 10019 and such other Persons as may hereafter be
selected by the Pledgor irrevocably agreeing in writing to so serve, as its
agent to receive on its behalf service of all process in any such proceedings
in any such court, such service being hereby acknowledged by the Pledgor to
be effective and binding service in every respect. A copy of any such
process so served shall be mailed by registered mail to the Pledgor at its
address referred to in Section 19, except that unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity
of service of process. If any agent appointed by the Pledgor refuses to
accept service, the Pledgor hereby agrees that service upon it by mail shall
constitute sufficient notice. Nothing herein shall affect the right to serve
process in any other manner permitted by law or shall limit the right of the
Collateral Agent to bring proceedings against the Pledgor in the courts of
any other jurisdiction.
SECTION 23. Security Interest Absolute. All rights of
the Collateral Agent and security interests hereunder, and all obligations of
the Pledgor hereunder, shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of any of the
Credit Agreements, the Notes, any Interest Rate Agreement, any
Currency Agreement, any Foreign Lender Guaranty, the Senior
Notes, the Senior Debentures, any Senior Indenture, any
Commercial Paper Document, the Subordinated Debt Securities,
the Subordinated Debt Indenture, any Additional Subordinated
Debt or any Additional Subordinated Debt Indenture in respect
thereof or any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of
payment of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent
to any departure from any of the Credit Agreements, the Notes,
any Interest Rate Agreement, any Currency Agreement, any
Foreign Lender Guaranty, the Senior Notes, the Senior
Debentures, any Senior Indenture, any Commercial Paper
Document, the Subordinated Debt Securities, the Subordinated
Debt Indenture, any Additional Subordinated Debt or any
Additional Subordinated Debt Indenture in respect thereof;
(iii) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or
consent to any departure from any guaranty, for all or any of
the Secured Obligations; or
<PAGE>XIV-28
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, the
Pledgor.
[Remainder of page intentionally left blank]
<PAGE>XIV-29
IN WITNESS WHEREOF, the Pledgor has caused this Agree
to be duly executed and delivered by its officer thereunto duly authorized as
of the date first above written.
Pledgor
OWENS-ILLINOIS, INC.
By____________________________
Title_________________________
Notice Address:
Owens-Illinois, Inc.
One Seagate
Toledo, Ohio 43666
Attention: Treasurer
Collateral Agent
BANKERS TRUST COMPANY
By_____________________________
Title__________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Terence J. Mogan
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Frank H. Gerencser
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
<PAGE>XIV-30
SCHEDULE I
Attached to and forming a part of that certain Fourth
Amended and Restated Company Pledge Agreement dated as of December 15, 1993,
by Owens-Illinois, Inc., as Pledgor, to Bankers Trust Company, as Collateral
Agent.
PART I
Class Stock Number Percentage of
of Certificate Par of All Capital
Stock Issuer Stock No(s). Value Shares Stock Owned
- ------------ ----- --------- ----- ------ -------------
Owens-Illinois common 1 $.01 100 100%
Group, Inc.
PART II
Principal Date of
Amount of Promissory Note
Indebtedness as of Evidencing the
Debt Issuer December 31, 1988 Pledged Debt
- ----------- ----------------- ---------------
Owens-Illinois
Group, Inc. $3,552,810,591 March 17, 1987
The Pledged Debt of each of the Debt Issuers
referenced in this Part II of Schedule I shall include all
outstanding Indebtedness of such Debt Issuer from time to time
owing to Pledgor which indebtedness shall be evidenced by the
promissory note or notes referenced above, as amended or
supplemented from time to time, and by the records of Pledgor
relating to the amounts outstanding from time to time under
such promissory note or notes or by any replacement or
successor promissory notes issued by such Debt Issuer in favor
of Pledgor.
<PAGE>XIV-31
SCHEDULE II
To the Fourth Amended and Restated Company Pledge Agreement
PLEDGE AMENDMENT
This Pledge Amendment, dated as of _________, 19__,
is delivered pursuant to Section 5 of the Pledge Agreement
referred to below. The undersigned hereby agrees that this
Pledge Amendment may be attached to the Fourth Amended and
Restated Company Pledge Agreement dated as of December 15,
1993, between the undersigned and Bankers Trust Company, as
Collateral Agent (the "Pledge Agreement"; capitalized terms
defined therein being used as therein defined), and that the
Pledged Shares listed on this Pledge Amendment shall be deemed
to be part of the Pledged Shares and shall become part of the
Pledged Collateral and shall secure all Senior Secured
Obligations and Junior Secured Obligations as provided in the
Pledge Agreement.
OWENS-ILLINOIS, INC.
By __________________________
Title ________________________
Class Stock Number Percentage of
of Certificate Par of All Capital
Stock Issuer Stock No(s). Value Shares Stock Owned
- ------------ ----- -------- ------ ------ ------------
<PAGE>annex 1-1
ANNEX 1
to
FOURTH AMENDED AND RESTATED
COMPANY PLEDGE AGREEMENT
INDEX OF TERMS
Additional Indenture Supplement . . . . . . . . . . . . . .Recital 18
Additional Subordinated Debt . . . . . . . . . . . . . . . .Recital 18
Additional Subordinated Debt Indenture . . . . . . . . . . .Recital 18
Additional Subordinated Debt Indentures. . . . . . . . . . .Recital 18
Additional Subordinated Debt Trustee . . . . . . . . . . . .Recital 18
Additional Subordinated Debt Trustees. . . . . . . . . . . .Recital 18
Agreement. . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Bankers. . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 11A
Collateral Agent . . . . . . . . . . . . . . . . . . . . .Introduction
Commercial Paper Documents . . . . . . . . . . . . . . . . .Recital 12
Commercial Paper Holders . . . . . . . . . . . . . . . . . .Recital 14
Commercial Paper Obligations . . . . . . . . . . . . . . . .Recital 13
Commercial Paper Representative. . . . . . . . . . . . . . .Recital 14
Commercial Paper Representatives . . . . . . . . . . . . . .Recital 14
Credit Agents. . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Credit Agreements. . . . . . . . . . . . . . . . . . . . . .Recital 12
Currency Exchangers. . . . . . . . . . . . . . . . . . . . .Recital 16
Currency Obligations . . . . . . . . . . . . . . . . . . . .Recital 16
Current Credit Agent . . . . . . . . . . . . . . . . . . . . Recital 9
Current Credit Agreement . . . . . . . . . . . . . . . . . . Recital 9
Current Lenders. . . . . . . . . . . . . . . . . . . . . . . Recital 9
Event of Default . . . . . . . . . . . . . . . . . . . . . Section 11A
Existing Company Pledge Agreement. . . . . . . . . . . . .Introduction
Existing Credit Agreement. . . . . . . . . . . . . . . . . . Recital 2
Existing Foreign Lender. . . . . . . . . . . . . . . . . . .Recital 15
Existing Foreign Lender Debt . . . . . . . . . . . . . . . .Recital 15
Existing Foreign Lender Guaranties . . . . . . . . . . . . .Recital 15
Existing Foreign Loan Agreements . . . . . . . . . . . . . .Recital 15
Existing Intercreditor Agreement . . . . . . . Intercreditor Agreement
First Amended and Restated Company Existing Company
Pledge Agreement . . . . . . . . . . . . . . . . .Pledge Agreement
Foreign Lender Debt. . . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Lender Guaranties. . . . . . . . . . . . . . . . . .Recital 15
Foreign Lender Obligations . . . . . . . . . . . . . . . . .Recital 15
Foreign Lenders. . . . . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Loan Agreements. . . . . . . . . . . . . . . . . . .Recital 15
<PAGE>annex 1-2
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 3
Initial Commercial Paper Holder. . . . . . . . . . . . . . .Recital 14
Initial Commercial Paper Holders . . . . . . . . . . . . . .Recital 14
Intercreditor Agreement. . . . . . . . . . . . . . . . . . .Section 21
Interest Rate Exchangers . . . . . . . . . . . . . . . . . .Recital 16
Interest Rate Obligations. . . . . . . . . . . . . . . . . .Recital 16
Junior Secured Obligations . . . . . . . . . . . . . . . . .Section 2B
Junior Secured Parties . . . . . . . . . . . . . . . . . . .Recital 22
Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 2A
Obligations. . . . . . . . . . . . . . . . . . . . . . . . .Section 2A
Original Company Pledge Agreement. . Existing Company Pledge Agreement
Paying Indemnifying Parties. . . . . . . . . . Intercreditor Agreement
Pledge Amendment . . . . . . . . . . . . . . . . . . . . . . Section 5
Pledged Collateral . . . . . . . . . . . . . . . . . . . . .Section 1A
Pledged Debt . . . . . . . . . . . . . . . . . . . . . . . . Recital 1
Pledged Shares . . . . . . . . . . . . . . . . . . . . . . . Recital 1
Pledgor. . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Pro Forma Additional Subordinated Debt . . . . . . . . . . .Recital 18
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . .Section 12
Secured Parties. . . . . . . . . . . . . . . . . . . . . . .Recital 22
Securities Act . . . . . . . . . . . . . . . . . . . . . . Section 11A
Senior Debenture Indenture . . . . . . . . . . . . . . . . . Recital 5
Senior Debenture Trustee . . . . . . . . . . . . . . . . .Introduction
Senior Debentures. . . . . . . . . . . . . . . . . . . . . . Recital 5
Senior Indenture Obligations . . . . . . . . . . . . . . . . Recital 9
Senior Indenture Trustees. . . . . . . . . . . . . . . . .Introduction
Senior Indentures. . . . . . . . . . . . . . . . . . . . . . Recital 5
Senior Note Indenture. . . . . . . . . . . . . . . . . . . . Recital 3
Senior Note Trustee. . . . . . . . . . . . . . . . . . . .Introduction
Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . Recital 3
Senior Secured Obligations . . . . . . . . . . . . . . . . .Section 2A
Senior Secured Parties . . . . . . . . . . . . . . . . . . .Recital 22
Subordinated Debt Indenture. . . . . . . . . . . . . . . . . Recital 7
Subordinated Debt Securities . . . . . . . . . . . . . . . . Recital 7
Subordinated Debt Trustee. . . . . . . . . . . . . . . . .Introduction
Successor Credit Agents. . . . . . . . . . . . . . . . . . .Recital 12
Successor Credit Agreements. . . . . . . . . . . . . . . . .Recital 12
Successor Lenders. . . . . . . . . . . . . . . . . . . . . .Recital 12
<PAGE>XV-1
EXHIBIT XV
[FORM OF O-I SUBSIDIARY PLEDGE AGREEMENT]
This THIRD AMENDED AND RESTATED INTERMEDIATE SUBSIDIARY
PLEDGE AGREEMENT (as amended, amended and restated or otherwise
modified from time to time, herein called "this Agreement") is dated
as of December 15, 1993, among THE O-I SUBSIDIARIES LISTED ON THE
SIGNATURE PAGES HEREOF, each of which is a Delaware corporation
(individually a "Pledgor" and collectively the "Pledgors"), and
BANKERS TRUST COMPANY ("Bankers"), as Collateral Agent for and
representative of (in such capacity herein called the "Collateral
Agent") the Lenders (as hereinafter defined), the Interest Rate
Exchangers (as hereinafter defined), the Currency Exchangers (as
hereinafter defined), the Foreign Lenders (as hereinafter defined),
the trustee (including any successor, the "Senior Debenture Trustee")
under the Senior Debenture Indenture (as hereinafter defined) and the
Commercial Paper Holders and Commercial Paper Representatives (as such
terms are hereinafter defined), and amends and restates the Second
Amended and Restated Intermediate Subsidiary Pledge Agreement dated as
of December 10, 1991, as amended by the First Amendment to Second
Amended and Restated Intermediate Subsidiary Pledge Agreement dated as
of March 31, 1992 and the Second Amendment to Second Amended and
Restated Intermediate Subsidiary Pledge Agreement dated as of
September 28, 1992 (as so amended, the "Existing Intermediate
Subsidiary Pledge Agreement"), among the Pledgors and Bankers, as
collateral agent for and representative of the Public Debenture
Trustees and the Lenders (as such terms are defined in the Existing
Intermediate Subsidiary Pledge Agreement), the Foreign Lenders, the
Interest Rate Exchangers, the Currency Exchangers, the Senior
Debenture Trustee, and the Commercial Paper Holders and the Commercial
Paper Representatives. Certain defined terms used in this Agreement
are indexed in Annex 1 to this Agreement.
R E C I T A L S
1. Each Pledgor is the legal and beneficial owner of
(a) the shares of stock described opposite its name in Part I of
Schedule I hereto (the "Pledged Shares") issued by the corporations
named therein, which shares constitute the percentage of all of the
issued and outstanding shares of all classes of capital stock of such
companies identified in Part I of said Schedule I, and (b) the
indebtedness described opposite its name in Part II of said Schedule I
(the "Pledged Debt") issued by the obligors named therein;
2. The Current Lenders (including certain of such Current
Lenders appointed as Managers for such Current Lenders) and the
Current Credit Agent (as such terms are defined in the Existing
<PAGE>XV-2
Intermediate Subsidiary Pledge Agreement) have entered into a Third
Amended and Restated Credit Agreement dated as of March 31, 1989 with
Owens-Illinois, Inc., a Delaware corporation (the "Company"), and
Health Care and Retirement Corporation of America (said Third Amended
and Restated Credit Agreement, as amended to the date hereof, being
the "Existing Credit Agreement");
3. Owens-Illinois Group, Inc., a Delaware corporation
("Group"), and the other Guarantor Subsidiaries (such term being used
in this Agreement as defined in the Current Credit Agreement (as
hereinafter defined)) have guarantied the obligations of the Company
under the Existing Credit Agreement pursuant to the Group Guaranty and
the Other Subsidiary Guaranty (as such terms are defined in the
Existing Intercreditor Agreement (such term being used herein as
defined in the Intercreditor Agreement (as hereinafter defined));
collectively, the "Existing Loan Guaranties");
4. The obligations of the Company under the Existing
Credit Agreement and the obligations of the Pledgors under the
Existing Loan Guaranties have been secured on a senior basis pursuant
to the Existing Intermediate Subsidiary Pledge Agreement and the
Existing Intercreditor Agreement;
5. The Company, Group, as guarantor, and the Senior
Debenture Trustee have entered into an Indenture dated as of
December 15, 1991 (the "Senior Debenture Indenture") pursuant to which
the Company has issued $1,000,000,000 in aggregate principal amount of
11% Senior Debentures Due 2003 (the "Senior Debentures");
6. Each Pledgor (other than Group) has guarantied the
obligations of the Company under the Senior Debenture Indenture and
the Senior Debentures issued thereunder pursuant to a Subsidiary
Guaranty substantially in the form of Exhibit E to the Senior
Debenture Indenture, and Group has guarantied the obligations of the
Company under the Senior Debenture Indenture and the Senior Debentures
issued thereunder pursuant to the Group Exchange Guaranty,
substantially in the form of Exhibit D to the Senior Debenture
Indenture (each such Subsidiary Guaranty and such Group Exchange
Guaranty being a "Senior Debenture Guaranty"; collectively, the
"Senior Debenture Guaranties");
7. As more fully described in the recitals to the Existing
Intermediate Subsidiary Pledge Agreement, the Indebtedness evidenced
by the Senior Debentures and the obligations of the Pledgors under the
Senior Debenture Guaranties have been secured on a senior basis
pursuant to the Existing Intermediate Subsidiary Pledge Agreement,
subject to certain limitations on the rights of the Senior Debenture
Trustee under the Existing Intermediate Subsidiary Pledge Agreement
and the Existing Intercreditor Agreement with respect to decisions
relating to the exercise of remedies in respect of the Pledged
Collateral (as defined in the Existing Intermediate Subsidiary Pledge
<PAGE>XV-3
Agreement) and other matters, and each Pledgor desires that such
Indebtedness and obligations continue to be secured on a senior basis
by the Pledged Collateral to the same extent, and subject to the same
limitations relative to the other obligations secured by the Pledged
Collateral (treating the Current Credit Agreement for such purposes as
being in all respects the same as the Existing Credit Agreement), as
under the Existing Intermediate Subsidiary Pledge Agreement and the
Existing Intercreditor Agreement; provided that, notwithstanding the
foregoing, the holders of any Senior Debentures and the Senior
Debenture Trustee shall only be entitled to the benefits of this
Agreement if the Senior Debenture Trustee shall have executed and
delivered to the Collateral Agent a counterpart of the Intercreditor
Agreement;
8. Certain lenders (the "Current Lenders"), the Current
Lenders appointed as Lead Managers and Co-Agents for the Current
Lenders, and Bankers, as Agent for the Current Lenders (in such
capacity herein called the "Current Credit Agent"), have entered into
a Refinancing Credit Agreement dated as of December 15, 1993 with the
Company (said Refinancing Credit Agreement, as it may hereafter be
amended, amended and restated or otherwise modified from time to time,
being the "Current Credit Agreement"; capitalized terms defined
therein and not otherwise defined herein being used herein as therein
defined or as defined in the Successor Credit Agreement (as
hereinafter defined) then in effect), pursuant to which the Current
Lenders have agreed, subject to the terms and conditions set forth in
the Current Credit Agreement, to extend certain credit facilities to
the Company for the purpose of, among other things, (a) refinancing
all outstanding Indebtedness under the Existing Credit Agreement,
(b) refinancing certain Indebtedness outstanding under the Senior
Indentures (as hereinafter defined), and (c) permitting the Company to
issue Commercial Paper as more fully described below;
9. As required in the Current Credit Agreement, Group and
the other Guarantor Subsidiaries have guarantied the obligations of
the Company under the Current Credit Agreement and any Successor
Credit Agreements pursuant to an O-I Subsidiary Guaranty dated as of
December 15, 1993 (as amended, amended and restated or otherwise
modified from time to time, herein called the "Loan Guaranty");
10. Each Pledgor desires that all obligations of the
Company under the Current Credit Agreement and any Successor Credit
Agreements and all obligations of the Pledgors under the Loan Guaranty
be secured on a senior basis by the Pledged Collateral to the same
extent as the obligations under the Existing Credit Agreement and the
Existing Loan Guaranties have been secured by the Pledged Collateral
(as defined in the Existing Intermediate Subsidiary Pledge Agreement),
and that the relative priority of the Liens and other rights in favor
of the Credit Agents and the Lenders (as such terms are hereinafter
defined) with respect to the Pledged Collateral be the same in all
substantive respects as the relative priority of the corresponding
Liens and other rights granted to the Current Credit Agent and the
Current Lenders (as such terms are defined in the Existing
Intermediate Subsidiary Pledge Agreement and the Existing
Intercreditor Agreement), in each case as compared to the relative
priority of any corresponding Liens and other rights granted to the
Senior Debenture Trustee and the holders of any other obligations
secured by the Pledged Collateral;
11. (a) As more fully described in the recitals to the
Existing Intermediate Subsidiary Pledge Agreement, to the extent that
the Current Credit Agreement refinances all or any portion of the
<PAGE>XV-4
Indebtedness under the Existing Credit Agreement or any Senior
Indenture, the Current Credit Agreement and any Successor Credit
Agreements will each constitute a "Successor Credit Agreement" as
defined in the Existing Intermediate Subsidiary Pledge Agreement and
the Existing Intercreditor Agreement and, as such, the Current Credit
Agreement and any Successor Credit Agreements will automatically be
entitled to be secured by the Pledged Collateral on the basis
described in Recital 10, and (b) whether or not the Current Credit
Agreement constitutes a "Successor Credit Agreement" as defined in the
Existing Intermediate Subsidiary Pledge Agreement and the Existing
Intercreditor Agreement, the terms of the Senior Indentures, the
Senior Subordinated Debt Indenture, the Existing Intermediate
Subsidiary Pledge Agreement and the Existing Intercreditor Agreement
permit the amendments to the Existing Intermediate Subsidiary Pledge
Agreement and the Existing Intercreditor Agreement effected pursuant
to this Agreement and the Intercreditor Agreement without the consent
of the holders of the Senior Notes, the Senior Debentures or the
Senior Subordinated Debt for the purpose of securing the Current
Credit Agreement and any Successor Credit Agreements and the Loan
Guaranty by the Pledged Collateral on the basis described in Recital
10; and accordingly the entire amount of the obligations under the
Current Credit Agreement and any Successor Credit Agreements and the
Loan Guaranty is entitled (as described in the foregoing clauses (a)
and (b)) to be secured by the Pledged Collateral on the basis
described in Recital 10;
12. It is contemplated that, from time to time, the Current
Lenders or other financial institutions (collectively, the "Successor
Lenders") may enter into one or more agreements with the Company and
other Persons, including Subsidiaries of the Company, either extending
the maturity of, refinancing or otherwise restructuring (including,
but not limited to, the inclusion of additional borrowers thereunder
which are Subsidiaries of the Company) all or any portion of the
Indebtedness under the Current Credit Agreement or any Successor
Credit Agreement or the Senior Note Indenture or the Senior Debenture
Indenture (the Senior Note Indenture and the Senior Debenture
Indenture being collectively referred to herein as the "Senior
Indentures") (said agreements, as they may exist from time to time
(but, in the case of such a refinancing or restructuring, only to the
extent thereof), being the "Successor Credit Agreements", which to-
gether with the Current Credit Agreement are referred to herein as the
"Credit Agreements"; provided that, notwithstanding the fact (as
described in certain of the following recitals) that any agreement or
instrument pursuant to which any Commercial Paper is issued or
evidencing any Commercial Paper Obligations (as hereinafter defined)
(collectively, the "Commercial Paper Documents") could have
constituted a Successor Credit Agreement, in no event shall any
Commercial Paper Document be deemed to be a Successor Credit Agreement
or a Credit Agreement; provided, further that, notwithstanding the
fact (as described in the recitals to the Intercreditor Agreement)
that any Additional Subordinated Debt Indenture (such term being used
herein as defined in the Intercreditor Agreement) could have
constituted a Successor Credit Agreement, in no event shall any
Additional Subordinated Debt Indenture be deemed to be a Successor
Credit Agreement or a Credit Agreement; and provided, further, that in
no event shall any amendment, amendment and restatement or other
modification of the Current Credit Agreement after the date hereof
<PAGE>XV-5
cause the Current Credit Agreement to be deemed to be a Successor
Credit Agreement or require the Current Credit Agent to execute an
acknowledgment to the Intercreditor Agreement in connection with such
amendment, amendment and restatement or other modification) (the
Current Lenders and any Successor Lenders being collectively referred
to herein as the "Lenders", and the Current Credit Agent and any
agents (collectively, the "Successor Credit Agents") under any
Successor Credit Agreements being collectively referred to herein as
the "Credit Agents"), and each Pledgor desires that, as described in
Recitals 10 and 11, the obligations of the Company and any additional
borrowers which are Subsidiaries of the Company under any Successor
Credit Agreements be secured by the Pledged Collateral to the same
extent as the obligations under the Current Credit Agreement;
13. The Current Lenders have agreed, subject to the terms
and conditions set forth in the Current Credit Agreement, to permit
the Company to issue Commercial Paper in an aggregate face amount at
any time outstanding not to exceed the amount specified in the Current
Credit Agreement to the extent that the Company has reserved unused a
portion of the Commitments under the Current Credit Agreement, and
each Pledgor desires that all obligations of the Company under any
such Commercial Paper outstanding from time to time (collectively, the
"Commercial Paper Obligations") be secured on a senior basis by the
Pledged Collateral;
14. The parties hereto desire to acknowledge and confirm,
for the benefit of any financial institutions initially purchasing any
such Commercial Paper (each an "Initial Commercial Paper Holder" and
collectively the "Initial Commercial Paper Holders") or appointed to
act as agent or representative for the holders from time to time of
such Commercial Paper (each a "Commercial Paper Representative" and
collectively the "Commercial Paper Representatives"; provided that in
the event no such financial institution is appointed to act as agent
or representative for the holders of any Commercial Paper, the Initial
Commercial Paper Holder in respect of such Commercial Paper shall be
deemed to be the Commercial Paper Representative in respect of such
Commercial Paper) and for the benefit of the holders from time to time
of such Commercial Paper (together with the Initial Commercial Paper
Holders, the "Commercial Paper Holders"), that during any period in
which any Commercial Paper is outstanding such Commercial Paper
constitutes a restructuring of a portion of the credit facilities
provided under the Current Credit Agreement and accordingly that all
Commercial Paper Obligations would also constitute Indebtedness
outstanding under a "Successor Credit Agreement" as defined in this
Agreement and the Intercreditor Agreement, and as such all Commercial
Paper Obligations are entitled to constitute Secured Obligations (as
hereinafter defined); provided that, as a condition to permitting the
Company to issue Commercial Paper, the Current Lenders have required,
as was required in the Existing Intermediate Subsidiary Pledge
Agreement and the Existing Intercreditor Agreement, that no Commercial
Paper Document shall be deemed to be a "Successor Credit Agreement"
for purposes of this Agreement or the Intercreditor Agreement and that
certain limitations be placed on the rights of the Commercial Paper
Holders and the Commercial Paper Representatives with respect to
decisions relating to the exercise of remedies in respect of the
Pledged Collateral and other matters; and provided, further, that the
<PAGE>XV-6
Commercial Paper Holder and Commercial Paper Representative in respect
of any Commercial Paper shall only be entitled to the benefits of this
Agreement if such Commercial Paper Representative shall have executed
and delivered to the Collateral Agent an acknowledgment to the
Intercreditor Agreement (in the form attached thereto) acknowledged by
each Pledgor;
15. The Company has executed certain guaranties (the
"Existing Foreign Lender Guaranties") dated March 23, 1988 pursuant to
which the Company has guarantied certain indebtedness (the "Existing
Foreign Lender Debt") of Owens-Illinois de Venezuela, C.A. and Fabrica
de Vidrio Los Andes, C.A. to Bankers Trust Company (the "Existing
Foreign Lender") under certain loan agreements dated as of January 25,
1988 (the "Existing Foreign Loan Agreements"), and the Company
contemplates that it may, from time to time, enter into other
guaranties permitted under the Credit Agreements (together with the
Existing Foreign Lender Guaranties, the "Foreign Lender Guaranties")
in support of certain indebtedness of certain Foreign Subsidiaries
(together with the Existing Foreign Lender Debt, the "Foreign Lender
Debt") to certain Lenders (together with the Existing Foreign Lenders,
the "Foreign Lenders") under certain loan and other credit agreements
(together with the Existing Foreign Loan Agreements, the "Foreign Loan
Agreements"), and each Pledgor desires that the obligations of the
Company under the Foreign Lender Guaranties (such obligations being
collectively referred to herein as the "Foreign Lender Obligations")
continue to be secured by the Pledged Collateral, to the extent
permitted by the Credit Agreements, to the same extent as under the
Existing Intermediate Subsidiary Pledge Agreement and the Existing
Intercreditor Agreement; provided that any Foreign Lender desiring
such security shall execute and deliver to the Collateral Agent a
counterpart of the Intercreditor Agreement or an acknowledgment to the
Intercreditor Agreement (in the form attached thereto) acknowledged by
each Pledgor;
16. Pursuant to the Loan Guaranty, each Pledgor has agreed
to guaranty the obligations of the Company under any Interest Rate
Agreements and Currency Agreements that may from time to time be
entered into between the Company and one or more Lenders
(collectively, the "Interest Rate Exchangers" or the "Currency
Exchangers," as the case may be), and each Pledgor desires that its
obligations under the Loan Guaranty with respect to such Interest Rate
Agreements and Currency Agreements, including the obligation to make
payments in the event of early termination under such Interest Rate
Agreements and Currency Agreements (all such obligations being the
"Interest Rate Obligations" or the "Currency Obligations," as the case
may be), continue to be secured hereunder to the same extent as under
the Existing Intermediate Subsidiary Pledge Agreement and the Existing
Intercreditor Agreement; provided that any Interest Rate Exchanger or
any Currency Exchanger requiring such security shall execute and
deliver to the Collateral Agent a counterpart of the Intercreditor
Agreement or an acknowledgment to the Intercreditor Agreement (in the
form attached thereto) acknowledged by each Pledgor;
17. As described in Recital 11, all or a portion of the
Current Credit Agreement constitutes a "Successor Credit Agreement" as
defined in the Existing Intermediate Subsidiary Pledge Agreement and
<PAGE>XV-7
the Existing Intercreditor Agreement, and accordingly the Current
Lenders constitute "Lenders" as defined in the Existing Intermediate
Subsidiary Pledge Agreement and the Existing Intercreditor Agreement
and are entitled to be secured by the Pledged Collateral in their
capacities as Foreign Lenders, Interest Rate Exchangers and Currency
Exchangers as described in Recitals 15 and 16;
18. The Pledgors (other than OI General Finance Inc.) have
executed and delivered the Existing Intermediate Subsidiary Pledge
Agreement to Bankers, as collateral agent for and representative of
the Lenders and the Public Debenture Trustees (as such terms are
defined in the Existing Intermediate Subsidiary Pledge Agreement), the
Foreign Lenders, the Interest Rate Exchangers, the Currency
Exchangers, the Senior Debenture Trustee, and the Commercial Paper
Holders and the Commercial Paper Representatives;
19. The Current Credit Agent, the Senior Note Trustee, the
Senior Debenture Trustee, the Senior Subordinated Debt Trustee, the
Foreign Lender listed on the signature pages thereof and the
Collateral Agent have entered into a Fifth Amended and Restated
Intercreditor Agreement dated as of the date hereof (said Fifth
Amended and Restated Intercreditor Agreement, as it may hereafter be
amended, amended and restated or otherwise modified from time to time,
being the "Intercreditor Agreement"), which amends and restates the
Existing Intercreditor Agreement and provides for, inter alia, the
appointment of the Collateral Agent to administer the Pledged
Collateral;
20. Pursuant to the Intercreditor Agreement, the Senior
Note Trustee, the Senior Subordinated Debt Trustee and each trustee
under any Additional Subordinated Debt Indenture executing an
acknowledgement to the Intercreditor Agreement have agreed, which
agreement shall be binding on the holders of the Senior Notes and the
Senior Subordinated Debt and the holders of the applicable Additional
Subordinated Debt (such term being used herein as defined in the
Intercreditor Agreement), that notwithstanding anything to the
contrary contained in the Original Intermediate Subsidiary Pledge
Agreement (such term being used herein as defined in the Existing
Intermediate Subsidiary Pledge Agreement) or the Existing Intermediate
Subsidiary Pledge Agreement or this Agreement or the Second Amended
and Restated Intercreditor Agreement (as defined in the Existing
Intermediate Subsidiary Pledge Agreement) or the Existing
Intercreditor Agreement or the Intercreditor Agreement, the Secured
Obligations shall not include any obligations in respect of the Senior
Notes or any Senior Subordinated Debt or any such Additional
Subordinated Debt; and
21. OI General Finance Inc. wishes to pledge and grant a
security interest, and each other Pledgor wishes to confirm the
continuation of the pledge and grant of security interests, in favor
of the Collateral Agent for the benefit of the Lenders, the Credit
Agents, the Interest Rate Exchangers, the Currency Exchangers, the
Foreign Lenders, the holders of the Senior Debentures and the Senior
Debenture Trustee, and the Commercial Paper Holders and the Commercial
Paper Representatives (all such beneficially interested parties being
referred to collectively herein as the "Secured Parties");
<PAGE>XV-8
NOW, THEREFORE, in consideration of the premises the parties
hereto agree that the Existing Intermediate Subsidiary Pledge
Agreement is hereby amended and restated as follows:
SECTION 1. Pledge. Each Pledgor hereby pledges to the
Collateral Agent and grants to the Collateral Agent for the benefit of
the Secured Parties a first priority security interest in the
following (the "Pledged Collateral") to secure the Secured Obligations
(as defined in Section 2):
(i) the Pledged Shares and the certificates representing
the Pledged Shares and any interest of each Pledgor in the
entries on the books of any financial intermediary pertaining to
the Pledged Shares, and, subject to Section 6, all dividends,
cash or proceeds, options, warrants, rights, instruments and
other property or proceeds from time to time received, receivable
or otherwise distributed in respect of or in exchange for any or
all of the Pledged Shares;
(ii) all additional shares of stock of any issuer of
the Pledged Shares from time to time acquired by each Pledgor in
any manner (which shares shall be deemed to be part of the
Pledged Shares), and the certificates representing such
additional shares and any interest of each Pledgor in the entries
on the books of any financial intermediary pertaining to such
additional shares, and, subject to Section 6, all dividends,
cash, options, warrants, rights, instruments and other property
or proceeds from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of such
shares;
(iii) all shares of any Person owned or held by each
Pledgor which, after the date of this Agreement, is or becomes,
as a result of any occurrence, a Subsidiary (subject to the
obtaining or making of any foreign governmental actions, notices
or filings as referred to in Section 4(iii)) of the Company
(which shares shall be deemed to be part of the Pledged Shares)
and the certificates representing such shares and any interest of
each Pledgor in the entries on the books of any financial
intermediary pertaining to such shares, and, subject to Section
6, all dividends, cash, options, warrants, rights, instruments
and other property or proceeds from time to time received,
receivable or otherwise distributed in respect of or in exchange
for any or all of such shares; provided that no Pledgor shall be
required to pledge more than 65% of the shares of capital stock
of any Subsidiary which is a Foreign Entity and, in any event,
shall not be required to pledge the shares of stock of any
Subsidiary otherwise required to be pledged pursuant to this
Section 1(iii) to the extent that such pledge would constitute an
investment of earnings in United States property under Section
956 (or a successor provision) of the Internal Revenue Code which
investment would trigger an increase in the gross income of a
United States shareholder of any Pledgor pursuant to Section 951
(or a successor provision) of the Internal Revenue Code; and
<PAGE>XV-9
(iv) the Pledged Debt and the instruments evidencing
the Pledged Debt, and all interest, cash, instruments and other
property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the
Pledged Debt;
With respect to each Pledgor other than OI General Finance
Inc., the foregoing pledge and grant of a security interest confirms
the pledge and grant of a first priority security interest in the
Pledged Collateral to secure the Secured Obligations made in the
Original Intermediate Subsidiary Pledge Agreement and confirmed in the
Existing Intermediate Subsidiary Pledge Agreement and continues in all
respects the pledge and grant therein without in any way causing any
interruption in continuity from such original pledge and grant.
SECTION 2. Secured Obligations. With respect to each
Pledgor, this Agreement secures, and the Pledged Collateral is
collateral security for, the prompt payment or performance in full
when due, whether at stated maturity, by acceleration or otherwise
(including the payment of amounts which would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy
Code, 11 U.S.C. S 362(a)), of all Obligations now or hereafter existing
under or in respect of the Credit Agreements (the "Obligations"), the
notes which evidence Indebtedness under the Credit Agreements (the
"Notes"), all Interest Rate Obligations and Currency Obligations now
or hereinafter existing under or in respect of the Interest Rate
Agreements and the Currency Agreements, all Foreign Lender
Obligations, all obligations of the Company now or hereafter existing
under the Senior Debenture Indenture and the Senior Debentures issued
thereunder, and all Commercial Paper Obligations, in each case whether
for principal, premium or interest (including, without limitation,
interest which, but for the filing of a petition in a bankruptcy,
reorganization or other similar proceeding with respect to the
Company, would accrue on such obligations), payments for early
termination, fees, expenses or otherwise and all obligations of each
Pledgor now or hereafter existing under this Agreement and the Loan
Guaranty and under the Senior Debenture Guaranty executed by such
Pledgor (all such obligations being the "Secured Obligations");
provided that the pledge made and security interest granted in Section
1 and any other provisions of this Agreement shall be effective as to
any obligations in respect of any Successor Credit Agreements,
Interest Rate Agreements, Currency Agreements and Foreign Lender
Guaranties only if the holders of such obligations or their
representatives shall have executed and delivered to the Collateral
Agent a counterpart of the Intercreditor Agreement or an acknowledge-
ment to the Intercreditor Agreement (in the form attached thereto)
acknowledged by each Pledgor; provided, further that the pledge made
and security interest granted by any Pledgor in Section 1 and any
other provisions of this Agreement with respect to such pledge made
and security interest granted by such Pledgor shall be effective as to
any obligations in respect of the Senior Debenture Indenture, the
Senior Debentures issued thereunder and any Senior Debenture
Guaranties only if the Senior Debenture Trustee shall have executed
and delivered to the Collateral Agent a counterpart of the
Intercreditor Agreement; provided, further that the pledge made and
security interest granted in Section 1 and any other provisions of
this Agreement shall be effective as to any Commercial Paper
<PAGE>XV-10
Obligations in respect of any Commercial Paper only if the Commercial
Paper Representative in respect of such Commercial Paper shall have
executed and delivered to the Collateral Agent an acknowledgment to
the Intercreditor Agreement (in the form attached thereto)
acknowledged by each Pledgor; provided, further that the pledge made
and security interest granted by any Pledgor in Section 1 shall be
released, and any other provisions of this Agreement with respect to
such pledge made and security interest granted by such Pledgor shall
cease to be effective, in each case with respect to the obligations of
the Company under the Senior Debenture Indenture and the Senior
Debentures issued thereunder and the obligations of the Pledgors
(including such Pledgor) under their respective Senior Debenture
Guaranties, from and after such time, if any, as such Pledgor is
released from its obligations under its Senior Debenture Guaranty in
accordance with the terms of Section 9 thereof.
SECTION 3. Delivery of Pledged Collateral. All
certificates or instruments representing or evidencing the Pledged
Collateral shall be delivered to and held by or on behalf of the
Collateral Agent pursuant hereto and shall be in suitable form for
transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Collateral Agent. All such certificates
and instruments delivered pursuant to the Original Intermediate
Subsidiary Pledge Agreement or the Existing Intermediate Subsidiary
Pledge Agreement shall be retained by the Collateral Agent without re-
delivery hereunder. The Collateral Agent shall have the right, at any
time upon or after the occurrence of an Event of Default (as defined
in Section 11A) and without notice to any Pledgor, to transfer to or
to register in the name of the Collateral Agent or any of its nominees
any or all of the Pledged Collateral. In addition, the Collateral
Agent shall have the right at any time to exchange certificates or
instruments representing or evidencing Pledged Collateral for
certificates or instruments of smaller or larger denominations.
SECTION 4. Representations and Warranties. Each Pledgor
represents and warrants as follows:
(i) Each Pledgor is, and at the time of delivery of any
Pledged Collateral to the Collateral Agent pursuant to Section 3
of this Agreement will be, the legal and beneficial owner of the
Pledged Collateral pledged by such Pledgor hereunder free and
clear of any Lien except for the lien and security interest
created by this Agreement.
(ii) Each Pledgor has full power, authority and legal
right to pledge all the Pledged Collateral pledged by such
Pledgor pursuant to this Agreement.
(iii) No consent of any other party (including, without
limitation, stockholders or creditors of any Pledgor) and no
consent, authorization, approval or other action by, and no
notice to or filing with, any governmental authority or
regulatory body is required either (x) for the pledge by any
Pledgor of the Pledged Collateral pursuant to this Agreement or
for the execution, delivery or performance of this Agreement by
any Pledgor or (y) for the exercise by the Collateral Agent of
<PAGE>XV-11
the voting or other rights provided for in this Agreement or the
remedies in respect of the Pledged Collateral pursuant to this
Agreement; except (a) for foreign governmental actions, notices
or filings required for actions referred to in clauses (x) and
(y) as to Pledged Shares issued by corporations which own,
directly or indirectly, the stock of Foreign Entities and (b) as
may be required in connection with such disposition by laws
affecting the offering and sale of securities generally.
(iv) All of the Pledged Shares have been duly
authorized and validly issued and are fully paid and non-
assessable. The Pledged Debt has been duly authorized,
authenticated or issued and delivered, and is the legal, valid
and binding obligation of the issuers thereof, and is not in
default.
(v) The pledge of the Pledged Shares pursuant to this
Agreement creates a valid and perfected first priority security
interest in the Pledged Shares securing the payment of the
Secured Obligations. The pledge of the Pledged Debt pursuant to
this Agreement creates a valid and perfected first priority
security interest in the Pledged Debt securing the payment of the
Secured Obligations.
(vi) As of the date hereof, the Pledged Shares
consisting of capital stock of the Persons identified in Part I
of Schedule I annexed hereto constitute the percentage of the
issued and outstanding shares of stock of such Persons as
identified in Part I of Schedule I annexed hereto. The Pledged
Debt constitutes all of the issued and outstanding O-I Subsidiary
Debt Obligations owing to each Pledgor as of the date hereof.
(vii) Except as otherwise permitted by the Credit
Agreements, each Pledgor at all times will be the sole beneficial
owner of the Pledged Collateral pledged by such Pledgor
hereunder.
(viii) All information set forth herein relating to the
Pledged Collateral is accurate and complete in all material
respects.
(ix) The pledge of the Pledged Collateral pursuant to
this Agreement does not violate Regulations G, U or X of the
Federal Reserve Board.
(x) No Pledgor directly owns any other shares of capital
stock of any Subsidiary of the Company other than the shares of
capital stock described in Part I of Schedule I annexed hereto
and shares of capital stock not required to be pledged hereunder
pursuant to the proviso to Section 1(iii).
SECTION 5. Supplements, Further Assurances. Each Pledgor
agrees that at any time and from time to time, at the expense of the
Pledgor, each Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be
necessary or that the Collateral Agent may reasonably request, in
<PAGE>XV-12
order to perfect and protect any security interest granted or pur-
ported to be granted hereby or to enable the Collateral Agent to
exercise and enforce its rights and remedies hereunder with respect to
any Pledged Collateral.
Each Pledgor further agrees that it will, upon obtaining any
shares of any Person required to be pledged pursuant to Sections 1(ii)
or 1(iii), promptly (and in any event within five (5) Business Days)
deliver to the Collateral Agent a pledge amendment, duly executed by
such Pledgor, in substantially the form of Schedule II hereto (a
"Pledge Amendment"), in respect of the additional Pledged Shares which
are to be pledged pursuant to this Agreement. Each Pledgor hereby
authorizes the Collateral Agent to attach each Pledge Amendment to
this Agreement and agrees that all Pledged Shares listed on any Pledge
Amendment delivered to the Collateral Agent shall for all purposes
hereunder be considered Pledged Collateral.
SECTION 6. Voting Rights; Dividends; Etc. (a) As long as
no Event of Default shall have occurred and be continuing:
(i) Each Pledgor shall be entitled to exercise any and all
voting and other consensual rights pertaining to the Pledged
Collateral pledged by such Pledgor hereunder or any part thereof
for any purpose not inconsistent with the terms of this
Agreement, the Credit Agreements or the Senior Debenture
Indenture; provided, however, that such Pledgor shall give the
Collateral Agent at least 5 days' prior written notice of the
manner in which it intends to exercise any such right. It is
understood, however, that neither (A) the voting by any Pledgor
of any Pledged Shares for, or any Pledgor's consent to, the
election of directors at a regularly scheduled annual or other
meeting of stockholders or with respect to incidental matters at
any such meeting nor (B) any Pledgor's consent to or approval of
any action otherwise permitted under this Agreement, the Credit
Agreements and the Senior Debenture Indenture shall be deemed
inconsistent with the terms of this Agreement, the Credit
Agreements or the Senior Debenture Indenture within the meaning
of this Section 6(a)(i), and no notice of any such voting or
consent need be given to the Collateral Agent.
(ii) Each Pledgor shall be entitled to receive and
retain, and to utilize free and clear of the Lien of this
Agreement, any and all dividends, distributions, principal and
interest paid in respect of the Pledged Collateral; provided,
however, that any and all dividends and other distributions in
equity securities shall be, and shall be forthwith delivered to
the Collateral Agent to hold as, Pledged Collateral and shall, if
received by such Pledgor, be received in trust for the benefit of
the Collateral Agent, be segregated from the other property or
funds of such Pledgor, and be forthwith delivered to the
Collateral Agent as Pledged Collateral in the same form as so
received (with any necessary endorsement).
(iii) In order to permit each Pledgor to exercise the
voting and other rights which it is entitled to exercise pursuant
to Section 6(a)(i) above and to receive the dividends,
distributions, principal or interest payments which it is
<PAGE>XV-13
authorized to receive and retain pursuant to Section 6(a)(ii)
above, the Collateral Agent shall, if necessary, upon written
request of any Pledgor, from time to time execute and deliver (or
cause to be executed and delivered) to such Pledgor all such
proxies, dividend payment orders and other instruments as such
Pledgor may reasonably request.
(b) Upon the occurrence and during the continuance of an
Event of Default:
(i) Upon written notice from the Collateral Agent to any
Pledgor, all rights of such Pledgor to exercise the voting and
other consensual rights which it would otherwise be entitled to
exercise pursuant to Section 6(a)(i) above shall cease, and all
such rights shall thereupon become vested in the Collateral Agent
which shall thereupon have the sole right to exercise such voting
and other consensual rights during the continuance of such Event
of Default.
(ii) All rights of each Pledgor to receive the divi-
dends, distributions, principal and interest payments which it
would otherwise be authorized to receive and retain pursuant to
Section 6(a)(ii) above shall cease and all such rights shall
thereupon become vested in the Collateral Agent who shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends, distributions, principal and interest
payments during the continuance of such Event of Default.
(c) In order to permit the Collateral Agent to receive all
dividends and other distributions to which it may be entitled under
Section 6(a)(ii) above, to exercise the voting and other consensual
rights which it may be entitled to exercise pursuant to
Section 6(b)(i) above, and to receive all dividends, distributions,
principal and interest payments and other distributions which it may
be entitled to receive under Section 6(b)(ii) above, each Pledgor
shall, if necessary, upon written notice from the Collateral Agent,
from time to time execute and deliver to the Collateral Agent
appropriate proxies, dividend payment orders and other instruments as
the Collateral Agent may reasonably request.
(d) All dividends, distributions, principal and interest
payments which are received by any Pledgor contrary to the provisions
of Section 6(b)(ii) above shall be received in trust for the benefit
of the Collateral Agent, shall be segregated from other funds of such
Pledgor and shall be forthwith paid over to the Collateral Agent as
Pledged Collateral in the same form as so received (with any necessary
endorsement).
SECTION 7. Transfers and Other Liens; Additional Shares.
A. Transfers and Other Liens. Each Pledgor agrees that it
will not, except as permitted by the Credit Agreements, the Senior
Debenture Indenture and the Senior Debenture Guaranties (in the case
of the Senior Debenture Indenture and the Senior Debenture Guaranties,
only to the extent the obligations of the Company under the Senior
Debenture Indenture are then secured by the Pledged Collateral in
<PAGE>XV-14
question), (i) sell or otherwise dispose of, or grant any option or
warrant with respect to, any of the Pledged Collateral, (ii) create or
permit to exist any Lien upon or with respect to any of the Pledged
Collateral, except for the lien and security interest under this
Agreement, or (iii) permit any issuer of Pledged Shares to merge or
consolidate unless all the outstanding capital stock of the surviving
or resulting corporation is, upon such merger or consolidation,
pledged hereunder and no cash, securities or other property is
distributed in respect of the outstanding shares of any other
constituent corporation; provided, however, that in the event of an
Asset Sale permitted by the Credit Agreements wherein the assets
subject to such Asset Sale are Pledged Shares, the Collateral Agent
shall release the Pledged Shares that are the subject of such Asset
Sale to the Pledgor owning such Pledged Shares free and clear of the
lien and security interest under this Agreement (a) so long as any
Obligations remain outstanding under the Credit Agreements and any
Lenders thereunder are entitled to all or any portion of the Net Cash
Proceeds of such Asset Sale, concurrently with the receipt of advice
from the Credit Agent that arrangements satisfactory to it have been
made for delivery to it of the Net Cash Proceeds of such Asset Sale to
which the Lenders are entitled under such Credit Agreements and the
Intercreditor Agreement, (b) after such time as all Obligations under
the Credit Agreements have been indefeasibly paid in full, in the
event that any other Secured Parties are entitled to receive any
portion of the Cash Proceeds of such Asset Sale, concurrently with the
receipt of advice from the agent or trustee for such Secured Parties
that arrangements satisfactory to it have been made for delivery to it
of the amounts required to be paid to such Secured Parties out of the
Cash Proceeds of such Asset Sale, and (c) in the event no Secured
Party is entitled to receive any portion of the Cash Proceeds of such
Asset Sale, concurrently with the consummation of such Asset Sale;
provided, in the case of clause (c), that the issuer of the Pledged
Shares that are the subject of such Asset Sale will be concurrently
released from its obligations under any Senior Debenture Guaranty to
which it is a party; provided, further that, notwithstanding anything
herein to the contrary, (x) the Collateral Agent shall release Pledged
Shares or other Pledged Collateral from the lien and security interest
of this Agreement as may be specified by the Credit Agent upon the
approval of the release of such Pledged Shares or other Pledged
Collateral by Requisite Lenders under the Credit Agreements and
(y) the Collateral Agent shall release Pledged Shares from the lien
and security interest of this Agreement if and to the extent such
Pledged Shares are not required to be pledged due to the limitations
set forth in the first proviso to Section 1(iii).
B. Additional Shares. Each Pledgor agrees that it will
(i) cause each issuer of Pledged Shares not to issue any stock or
other securities in addition to or in substitution for the Pledged
Shares issued by such issuer, except to a Pledgor, (ii) pledge
hereunder, immediately upon its acquisition (directly or indirectly)
thereof, any and all additional shares of stock or other equity
securities of each issuer of Pledged Shares; provided however, that no
Pledgor shall be required under this clause (ii) to pledge shares of
the capital stock of such issuer acquired by any of its Subsidiaries,
and (iii) subject to the provisos of Section 1(iii), pledge hereunder,
immediately upon its acquisition (directly or indirectly) thereof, any
<PAGE>XV-15
and all shares of stock of any Person which, after the date of this
Agreement, becomes, as a result of any occurrence, a Subsidiary
(subject to the obtaining or making of any foreign governmental
actions, notices or filings referred to in Section 4(iii)) of the
Company.
SECTION 8. Collateral Agent Appointed Attorney-in-Fact.
Each Pledgor hereby appoints the Collateral Agent such Pledgor's
attorney-in-fact, with full authority in the place and stead of such
Pledgor and in the name of such Pledgor or otherwise, from time to
time in the Collateral Agent's discretion to take any action and to
execute any instrument which the Collateral Agent may reasonably deem
necessary or advisable to accomplish the purposes of this Agreement,
including, without limitation, to receive, endorse and collect all
instruments made payable to such Pledgor representing any dividend,
interest payment or other distribution in respect of the Pledged
Collateral or any part thereof and to give full discharge for the
same.
SECTION 9. Collateral Agent May Perform. If any Pledgor
fails to perform any agreement contained herein after receipt of a
written request to do so from the Collateral Agent, the Collateral
Agent may itself perform, or cause performance of, such agreement, and
the reasonable expenses of the Collateral Agent, including the
reasonable fees and expenses of its counsel, incurred in connection
therewith shall be payable by the Pledgors under Section 13 hereof.
SECTION 10. Reasonable Care. The Collateral Agent shall be
deemed to have exercised reasonable care in the custody and
preservation of the Pledged Collateral in its possession if the
Pledged Collateral is accorded treatment substantially equivalent to
that which the Collateral Agent, in its individual capacity, accords
its own property consisting of negotiable securities, it being
understood that neither the Collateral Agent nor any other Secured
Party shall have responsibility for (i) ascertaining or taking action
with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Pledged Collateral, whether or not the
Collateral Agent or any other Secured Party has or is deemed to have
knowledge of such matters, or (ii) taking any necessary steps (other
than steps taken in accordance with the standard of care set forth
above to maintain possession of the Pledged Shares and Pledged Debt)
to preserve rights against any Person with respect to any Pledged
Collateral.
SECTION 11. Remedies Upon Default; Decisions Relating to
Exercise of Remedies.
A. Remedies Upon Default. Subject to Section 11B, (i) if
any event of default under any Credit Agreement, or (ii) after such
time as all Obligations shall have been indefeasibly paid in full, and
provided that the Pledged Collateral then secures the payment and
performance of Interest Rate Obligations, Currency Obligations,
Foreign Lender Obligations, obligations of the Company under the
Senior Debenture Indenture or the Senior Debentures, or Commercial
Paper Obligations under any Commercial Paper Document, if any event of
default under (A) any Interest Rate Agreement or Currency Agreement
which is secured by the Pledged Collateral, (B) any Foreign Lender
<PAGE>XV-16
Guaranty which is secured by the Pledged Collateral, (C) the Senior
Debenture Indenture, or (D) any such Commercial Paper Document, as the
case may be (each of the events of default described in the foregoing
clauses (i) and (ii) (subject to any provisos set forth therein) being
referred to herein as an "Event of Default"), shall have occurred and
be continuing:
(a)(i) The Collateral Agent may exercise in respect of the
Pledged Collateral, in addition to other rights and remedies
provided for herein or otherwise available to it, all the rights
and remedies of a secured party on default under the Uniform
Commercial Code (the "Code") in effect in the State of New York
at that time, and the Collateral Agent may also in its sole
discretion, without notice except as specified below, sell the
Pledged Collateral or any part thereof in one or more parcels at
public or private sale, at any exchange, broker's board or at any
of the Collateral Agent's offices or elsewhere, for cash, on
credit or for future delivery, and at such price or prices and
upon such other terms as the Collateral Agent may deem
commercially reasonable, irrespective of the impact of any such
sales on the market price of the Pledged Collateral. The
Collateral Agent or any other Secured Party may be the purchaser
of any or all of the Pledged Collateral at any such sale but
shall not be entitled, for the purpose of bidding and making
settlement or payment of the purchase price for all or any
portion of the Pledged Collateral sold at such sale, to use and
apply any of the Secured Obligations owed to such Person as a
credit on account of the purchase price of any Pledged Collateral
payable by such Person at such sale. Each purchaser at any such
sale shall hold the property sold absolutely free from any claim
or right on the part of any Pledgor, and each Pledgor hereby
waives (to the extent permitted by law) all rights of redemption,
stay and/or appraisal which it now has or may at any time in the
future have under any rule of law or statute now existing or
hereafter enacted. Each Pledgor agrees that, to the extent
notice of sale with respect to the Pledged Collateral pledged by
such Pledgor hereunder shall be required by law, at least ten
days' notice to such Pledgor of the time and place of any public
sale or the time after which any private sale is to be made shall
constitute reasonable notification. The Collateral Agent shall
not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given. The Collateral
Agent may adjourn any public or private sale from time to time by
announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to
which it was so adjourned. Each Pledgor hereby waives any claims
against the Collateral Agent arising by reason of the fact that
the price at which any Pledged Collateral may have been sold at
such a private sale was less than the price which might have been
obtained at a public sale, even if the Collateral Agent accepts
the first offer received and does not offer such Pledged
Collateral to more than one offeree.
(ii) Each Pledgor recognizes that, by reason of certain
prohibitions contained in the Securities Act of 1933, as amended
(the "Securities Act"), and applicable state securities laws, the
<PAGE>XV-17
Collateral Agent may be compelled, with respect to any sale of
all or any part of the Pledged Collateral, to limit purchasers to
those who will agree, among other things, to acquire the Pledged
Collateral for their own account, for investment and not with a
view to the distribution or resale thereof. Each Pledgor
acknowledges that any such private sales may be at prices and on
terms less favorable to the Collateral Agent than those
obtainable through a public sale without such restrictions (in-
cluding, without limitation, a public offering made pursuant to a
registration statement under the Securities Act), and,
notwithstanding such circumstances, agrees that any such private
sale shall be deemed to have been made in a commercially
reasonable manner and that the Collateral Agent shall have no
obligation to engage in public sales and no obligation to delay
the sale of any Pledged Collateral for the period of time
necessary to permit the issuer thereof to register it for a form
of public sale requiring registration under the Securities Act or
under applicable state securities laws, even if any Pledgor would
agree to do so.
(b) If the Collateral Agent determines to exercise its
right to sell any or all of the Pledged Collateral, upon written
request, each Pledgor shall and shall cause each issuer of any
Pledged Shares to be sold hereunder from time to time to furnish
to the Collateral Agent all such information as the Collateral
Agent may request in order to determine the number of shares and
other instruments included in the Pledged Collateral which may be
sold by the Collateral Agent as exempt transactions under the
Securities Act and the rules of the Securities and Exchange
Commission thereunder, as the same are from time to time in
effect.
B. Decisions Relating to Exercise of Remedies.
Notwithstanding anything in this Agreement to the contrary, as
provided in the Intercreditor Agreement, the Collateral Agent shall
exercise, or shall refrain from exercising, any remedy provided for in
Section 11A in accordance with the instructions of Requisite Obligees
(as defined in the Intercreditor Agreement) and the Credit Agents, the
Interest Rate Exchangers, the Currency Exchangers, the Foreign
Lenders, the holders of the Senior Debentures and the Senior Debenture
Trustee, and the Commercial Paper Holders and the Commercial Paper
Representatives shall be bound by such instructions; and the sole
rights of the Credit Agents, the Interest Rate Exchangers, the
Currency Exchangers, the Foreign Lenders, the holders of the Senior
Debentures and the Senior Debenture Trustee, and the Commercial Paper
Holders and the Commercial Paper Representatives under this Agreement
shall be to be secured by the Pledged Collateral and to receive the
payments provided for in Section 12 hereof; provided, however, that if
the Collateral Agent has requested instructions from any Commercial
Paper Representative as to the exercise of any such remedies and such
Commercial Paper Representative has not promptly responded to such
request, in determining the instructions given by Requisite Obligees
(as defined in the Intercreditor Agreement), the Collateral Agent
shall disregard such Commercial Paper Representative and the
outstanding amount of Commercial Paper in respect of which such
Commercial Paper Representative is the Commercial Paper
Representative.
<PAGE>XV-18
SECTION 12. Application of Proceeds. After and during the
continuance of an Event of Default, any cash held by the Collateral
Agent as Pledged Collateral and all cash proceeds received by the
Collateral Agent (all such cash being "Proceeds") in respect of any
sale of, collection from, or other realization upon all or any part of
the Pledged Collateral pursuant to the exercise by the Collateral
Agent of its remedies as a secured creditor as provided in Section 11
of this Agreement shall be applied promptly from time to time by the
Collateral Agent as follows:
First, to the payment of the costs and expenses of such
sale, collection or other realization, including reasonable
compensation to the Collateral Agent and its agents and counsel,
and all expenses, liabilities and advances made or incurred by
the Collateral Agent in connection therewith;
Second, to the payment of the Secured Obligations as
provided in Section 3 of the Intercreditor Agreement; provided
that in making such application to the Senior Debenture Trustee
in respect of outstanding obligations under the Senior Debenture
Indenture or any Senior Debenture Guaranty, the Collateral Agent
shall be entitled to deduct from the share of such Proceeds
otherwise payable to the holders of the Senior Debentures issued
thereunder such holders' pro rata share of all amounts that the
Collateral Agent has been paid by the Paying Indemnified Parties
(as defined in Section 7(c) of the Intercreditor Agreement)
pursuant to Section 7(c) of the Intercreditor Agreement; and
provided, further, that in making such application to any
Commercial Paper Holder (or the Commercial Paper Representative
in respect of such Commercial Paper Holder) in respect of any
Commercial Paper Obligations, the Collateral Agent shall be
entitled to deduct from such Commercial Paper Holder's share of
such Proceeds such Commercial Paper Holder's pro rata share of
all amounts that the Collateral Agent has been paid by the Paying
Indemnifying Parties pursuant to Section 7(c) of the
Intercreditor Agreement; and
Third, after payment in full of all Secured Obligations, to
the Pledgor which pledged such Pledged Collateral or the Pledged
Collateral from which such Proceeds were received, or its
successors or assigns, or to whomsoever may be lawfully entitled
to receive the same or as a court of competent jurisdiction may
direct, of any surplus then remaining from such Proceeds.
At the time of any application of Proceeds by the Collateral
Agent pursuant to this Section 12, the Collateral Agent shall provide
the Senior Debenture Trustee and the Commercial Paper Representative
in respect of any Commercial Paper with a certificate setting forth
the total amount paid to the Collateral Agent pursuant to Section 7(c)
of the Intercreditor Agreement and a calculation of the amounts, if
any, deducted from Proceeds paid to the Senior Debenture Trustee or
the Commercial Paper Holders in respect of such Commercial Paper, as
the case may be.
SECTION 13. Expenses. Each Pledgor will upon demand pay to
the Collateral Agent the amount of any and all reasonable expenses,
including the reasonable fees and expenses of its counsel and of any
<PAGE>XV-19
experts and agents, which the Collateral Agent may incur in connection
with (i) the administration of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization
upon, any of the Pledged Collateral, (iii) the exercise or enforcement
of any of the rights of the Collateral Agent or any other Secured
Party hereunder or (iv) the failure by any Pledgor to perform or
observe any of the provisions hereof.
SECTION 14. No Waiver. No failure on the part of the
Collateral Agent to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent of any right, power or remedy
hereunder preclude any other or further exercise thereof or the
exercise of any other right, power or remedy. The remedies herein
provided are to the fullest extent permitted by law cumulative and are
not exclusive of any remedies provided by law.
SECTION 15. Collateral Agent. The Collateral Agent has
been appointed as Collateral Agent hereunder pursuant to the
Intercreditor Agreement by the Current Credit Agent, the Senior
Debenture Trustee and the Foreign Lender listed on the signature pages
thereof and, in the event that any Interest Rate Obligations or
Currency Obligations, any other Foreign Lender Obligations, or any
Commercial Paper Obligations are secured hereby, by each Interest Rate
Exchanger and Currency Exchanger, each other Foreign Lender, and each
Commercial Paper Representative executing a counterpart to the
Intercreditor Agreement, and the Collateral Agent shall be entitled to
the benefits of the Intercreditor Agreement. The Collateral Agent
shall be obligated, and shall have the right, hereunder to make
demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking action (including, without
limitation, the release or substitution of Pledged Collateral) solely
in accordance with this Agreement and the Intercreditor Agreement.
The Collateral Agent may resign and a successor Collateral Agent may
be appointed in the manner provided in the Intercreditor Agreement.
Upon the acceptance of any appointment as a Collateral Agent by a
successor Collateral Agent, that successor Collateral Agent shall
thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent under this
Agreement, and the retiring Collateral Agent shall thereupon be
discharged from its duties and obligations under this Agreement and
shall deliver any Pledged Collateral in its possession to the
successor Collateral Agent. After any retiring Collateral Agent's
resignation, the provisions of this Agreement shall inure to its
benefit as to any actions taken or omitted to be taken by it under
this Agreement while it was Collateral Agent. Anything contained in
this Agreement to the contrary notwithstanding, in the event of any
conflict between the express terms and provisions of this Agreement
and the express terms and provisions of the Intercreditor Agreement,
such terms and provisions of the Intercreditor Agreement shall
control.
SECTION 16. Indemnification. Each Pledgor hereby agrees to
indemnify the Collateral Agent for any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever
<PAGE>XV-20
which may be imposed on, incurred by or asserted against the
Collateral Agent in any way relating to or arising out of this
Agreement, the Intercreditor Agreement, the Credit Agreements, the
Interest Rate Agreements, the Currency Agreements, the Foreign Lender
Guaranties, the Senior Debentures or the Senior Debenture Indenture,
or the Commercial Paper Documents or any other documents contemplated
by or referred to therein or the transactions contemplated thereby or
the enforcement of any of the terms hereof or of any such other
documents or otherwise arising or relating in any manner to the
pledges, dispositions of Pledged Collateral or proceeds of Pledged
Collateral, or other actions of any nature with respect to the Pledged
Collateral contemplated hereunder and under the Intercreditor
Agreement to secure the payment of the Secured Obligations (including,
without limitation, the Commercial Paper Obligations); provided,
however, that no Pledgor shall be liable for any of the foregoing to
the extent they arise from the gross negligence or willful misconduct
of the Collateral Agent or failure by the Collateral Agent to exercise
reasonable care in the custody and preservation of the Pledged
Collateral as provided in Section 10.
SECTION 17. Amendments, Etc. This Agreement may not be
amended, modified or waived except with the written consent of each
Pledgor, the Collateral Agent and the Credit Agents and, solely with
respect to an amendment of Section 12, the definitions of "Pledged
Collateral" or "Secured Obligations" herein or this Section 17, or the
release of Pledged Collateral except as herein provided, with the
written consent of each Interest Rate Exchanger (if the Pledged
Collateral then secures such Interest Rate Exchanger), each Currency
Exchanger (if the Pledged Collateral then secures such Currency
Exchanger), each Foreign Lender (if the Pledged Collateral then
secures such Foreign Lender), and the Senior Debenture Trustee (if the
Pledged Collateral then secures the Senior Debentures); provided that
the written consent of the Credit Agents shall not be required if the
Obligations have been indefeasibly paid in full; provided, further,
that if the Obligations have been indefeasibly paid in full, this
Agreement may not be amended, modified or waived except with the
written consent of the holders of a majority of the outstanding
Interest Rate Obligations, Currency Obligations and Foreign Lender
Obligations which are secured by the Pledged Collateral; and provided,
further, that (y) during such times as the Pledged Collateral secures
payment of any Commercial Paper Obligations, solely with respect to an
amendment which would (i) reduce or adversely affect the right of the
Commercial Paper Representatives to request or direct the Collateral
Agent to take action as provided in Section 2(a) of the Intercreditor
Agreement or (ii) subordinate or cause the Commercial Paper Holders to
hold a security interest in the Pledged Collateral junior to the
security interest therein of any other holder of Secured Obligations,
no such amendment, modification or waiver shall in any event be
effective as to the Commercial Paper Holders or Commercial Paper
Representatives in respect of any Commercial Paper outstanding at the
time of such amendment, modification or waiver except with the prior
written consent of the Commercial Paper Representatives in respect of
a majority in aggregate face amount of such outstanding Commercial
Paper, and (z) during such time as the Pledged Collateral secures only
the payment of the obligations under or in respect of the Senior
Debenture Indenture and any Senior Debenture Guaranties, this
Agreement may not be amended, modified or waived except with the
<PAGE>XV-21
written consent of each Pledgor, the Collateral Agent and the Senior
Debenture Trustee; provided, however, that, notwithstanding the
foregoing, no such written consent of the Senior Debenture Trustee
shall be required with respect to amendments, modifications or waivers
necessary to permit the incurrence of additional Indebtedness secured
by the Pledged Collateral and entitled to the benefits hereof insofar
as the foregoing is permitted by the Senior Debenture Indenture.
SECTION 18. Termination. When all Secured Obligations have
been indefeasibly paid in full, this Pledge Agreement shall terminate,
and the Collateral Agent shall, upon the request and at the expense of
each Pledgor, forthwith assign, transfer and deliver, against receipt
and without recourse to the Collateral Agent, such of the Pledged
Collateral as shall not have been sold or otherwise applied pursuant
to the terms hereof to or on the order of the Pledgor owning such
Pledged Collateral. Notwithstanding anything herein (including
Section 20) to the contrary, if all the Secured Obligations except the
obligations in respect of the Senior Debentures and any Senior
Debenture Guaranties have either been indefeasibly paid in full or are
no longer secured by any of the Pledged Collateral, this Pledge
Agreement shall be terminable at the election of the Company, and upon
the delivery of written notice of such election to the Collateral
Agent, this Pledge Agreement shall terminate and the Collateral Agent
shall, at the expense of each Pledgor, forthwith assign, transfer and
deliver, against receipt and without recourse to the Collateral Agent,
such Pledged Collateral as shall not have been sold or otherwise
applied pursuant to the terms hereof to or on the order of the Pledgor
owning such Pledged Collateral.
SECTION 19. Addresses for Notices. All notices and other
communications provided for hereunder shall be in writing (including
telegraphic or telecopy communication) and mailed, telegraphed,
telecopied or delivered, if to a Pledgor, addressed to it at the
address of the Company set forth on the applicable signature page of
the Current Credit Agreement, if to the Collateral Agent, addressed to
it at the address set forth on the applicable signature page of this
Agreement, if to the Current Credit Agent, addressed to it at the
address set forth on the applicable signature page of the Current
Credit Agreement, if to the Senior Debenture Trustee, addressed to
such trustee at the address provided by such trustee pursuant to the
Intercreditor Agreement, or as to any party at such other address as
shall be designated by such party in a written notice to each other
party complying as to delivery with the terms of this Section 19. All
such notices and other communications shall, when mailed or
telegraphed, respectively, be effective when deposited in the mails or
delivered to the telegraph company, respectively, addressed as
aforesaid and shall, when delivered or telecopied, be effective when
received.
SECTION 20. Continuing Security Interest; Transfer Of
Notes. This Agreement shall create a continuing security interest in
the Pledged Collateral and shall (i) remain in full force and effect
until indefeasible payment in full of all Secured Obligations, (ii) be
binding upon each Pledgor, its successors and assigns, and (iii)
inure, together with the rights and remedies of the Collateral Agent
hereunder, to the benefit of the Collateral Agent and each other
<PAGE>XV-22
Secured Party and each of their respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause
(iii) and subject to the provisions of subsections 9.2 and 9.17 of the
Current Credit Agreement, any Secured Party may assign or otherwise
transfer any indebtedness held by it secured by this Agreement to any
other person or entity, and such other person or entity shall
thereupon become vested with all the benefits in respect thereof
granted to such Secured Party herein or otherwise, subject, however,
to the provisions of the Intercreditor Agreement.
SECTION 21. Governing Law; Terms; Joint and Several
Obligations of Pledgors. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT
TO THE EXTENT THAT THE CODE REQUIRES THAT THE VALIDITY OR PERFECTION
OF THE SECURITY INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT
OF ANY PARTICULAR PLEDGED COLLATERAL ARE GOVERNED BY THE LAWS OF A
JURISDICTION OTHER THAN THE STATE OF NEW YORK. Unless otherwise
defined herein or in the Current Credit Agreement, terms defined in
Articles 8 and 9 of the Uniform Commercial Code as in effect in the
State of New York are used herein as therein defined. All obligations
of the Pledgors hereunder shall be joint and several.
SECTION 22. Consent to Jurisdiction and Service of Process.
All judicial proceedings brought against any Pledgor with respect to
this Agreement may be brought in any state or federal court of
competent jurisdiction in the State of New York and by execution and
delivery of this Agreement, each Pledgor accepts for itself and in
connection with its properties, generally and unconditionally, the
nonexclusive jurisdiction of the aforesaid courts, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with
this Agreement. Each Pledgor designates and appoints CT Corporation
System, The Corporation Trust Company, 1633 Broadway, New York, New
York 10019 and such other Persons as may hereafter be selected by such
Pledgor irrevocably agreeing in writing to so serve, as its agent to
receive on its behalf service of all process in any such proceedings
in any such court, such service being hereby acknowledged by such
Pledgor to be effective and binding service in every respect. A copy
of any such process so served shall be mailed by registered mail to
such Pledgor at the address of the Company provided in the applicable
signature page to the Credit Agreement, except that unless otherwise
provided by applicable law, any failure to mail such copy shall not
affect the validity of service of process. If any agent appointed by
any Pledgor refuses to accept service, such Pledgor hereby agrees that
service upon it by mail shall constitute sufficient notice. Nothing
herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of the Collateral Agent to
bring proceedings against any Pledgor in the courts of any other
jurisdiction.
SECTION 23. Security Interest Absolute. All rights of the
Collateral Agent and security interests hereunder, and all obligations
of each Pledgor hereunder, shall be absolute and unconditional
irrespective of:
(i) any lack of validity or enforceability of any of the
Credit Agreements, the Notes, the Loan Guaranty, any Interest
<PAGE>XV-23
Rate Agreement, any Currency Agreement, any Foreign Lender
Guaranty, the Senior Debentures, the Senior Debenture Indenture,
any Senior Debenture Guaranty or any Commercial Paper Document or
any other agreement or instrument relating thereto;
(ii) any change in the time, manner or place of payment
of, or in any other term of, all or any of the Secured
Obligations, or any other amendment or waiver of or any consent
to any departure from any of the Credit Agreements, the Notes,
the Loan Guaranty, any Interest Rate Agreement, any Currency
Agreement, any Foreign Lender Guaranty, the Senior Debentures,
the Senior Debenture Indenture, any Senior Debenture Guaranty or
any Commercial Paper Document;
(iii) any exchange, release or non-perfection of any
other collateral, or any release or amendment or waiver of or
consent to any departure from any guaranty, for all or any of the
Secured Obligations; or
(iv) any other circumstance which might otherwise
constitute a defense available to, or a discharge of, any
Pledgor.
SECTION 24. Secured Obligations Limitation.
Notwithstanding anything to the contrary set forth herein, the amount
of the Secured Obligations with respect to the Pledged Collateral
pledged by any Pledgor other than Group shall in no event exceed
(i) with respect to Secured Obligations in respect of Guarantied
Obligations (as defined in the Loan Guaranty), the maximum liability
of such Pledgor under the Loan Guaranty, as calculated in accordance
with the provisions of the Loan Guaranty without regard to any lack of
validity or enforceability (whether actual or alleged) of any
provision thereof or (ii) with respect to Secured Obligations in
respect of the Senior Debentures and the Senior Debenture Guaranty
executed and delivered by such Pledgor, the maximum liability of such
Pledgor under such Senior Debenture Guaranty, as calculated in
accordance with the provisions of such Senior Debenture Guaranty
without regard to any lack of validity or enforceability (whether
actual or alleged) of any provision thereof.
SECTION 25. Additional Pledgors; Counterparts. (a) The
initial Pledgors hereunder shall be such of the Subsidiaries of
Company as are signatories hereto on the date hereof. From time to
time subsequent to the date hereof, additional Subsidiaries of Company
may become parties hereto, as additional Pledgors (each an "Additional
Pledgor"), by executing a counterpart of this Agreement. Upon
delivery of any such counterpart to Collateral Agent, notice of which
is hereby waived by Pledgors, each such Additional Pledgor shall be a
Pledgor and shall be as fully a party hereto as if such Additional
Pledgor were an original signatory hereof. Each Pledgor expressly
agrees that its obligations arising hereunder shall not be affected or
diminished by the addition or release of any other Pledgor hereunder,
nor by any election of Lenders not to cause any Subsidiary of Company
to become an Additional Pledgor hereunder. This Agreement shall be
fully effective as to any Pledgor that is or becomes a party hereto
regardless of whether any other Person becomes or fails to become or
ceases to be a Pledgor hereunder.
<PAGE>XV-24
(b) This Agreement may be executed in any number of
counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be
deemed to be an original for all purposes; but all such counterparts
together shall constitute but one and the same instrument. This
Agreement shall become effective as to each Pledgor upon the execution
of a counterpart hereof by such Pledgor (whether or not a counterpart
hereof shall have been executed by any other Pledgor) and receipt by
Collateral Agent of written or telephonic notification of such
execution and authorization of delivery thereof.
SECTION 26. Release of Pledgor. Notwithstanding anything
to the contrary set forth herein, immediately upon the consummation of
the Kimble Sale, OI Kimble FTS Inc. shall cease to be a Pledgor and a
party hereto without any further action on the part of Collateral
Agent, any Secured Party or any other Person.
[Remainder of page intentionally left blank]
<PAGE>XV-25
IN WITNESS WHEREOF, each Pledgor has caused this Agreement
to be duly executed and delivered by its officer thereunto duly
authorized as of the date first above written.
Pledgors:
Owens-Illinois Group, Inc. (formerly named "OII Group,
Inc."), Owens-Brockway Packaging, Inc. (formerly named "OI Glass
Container FTS Inc."), OI Closure FTS Inc., OI Plastic Products FTS
Inc., OI Kimble FTS Inc., O-I Health Care Holding Corp. (formerly
named "Health Care and Retirement Corporation"), OI General FTS Inc.,
and OI General Finance Inc.
By: _________________________________
David G. Van Hooser
Vice President and Treasurer
of each of the foregoing
Pledgors
IN WITNESS WHEREOF, the undersigned Additional Pledgor has
caused this Agreement to be duly executed and delivered by its officer
thereunto duly authorized as of __________, 199__.
Additional Pledgor: ____________________
By: ______________________________
Name: _____________________________
Title: ______________________________
<PAGE>XV-26
Collateral Agent:
BANKERS TRUST COMPANY
By: ________________________________
Title: _____________________________
Notice Address:
Bankers Trust Company
One Bankers Trust Plaza
New York, New York 10006
Attention: Terence J. Mogan
with a copy to:
Bankers Trust Company
300 South Grand Avenue, 41st Floor
Los Angeles, California 90071
Attention: Frank H. Gerencser
with a copy to:
Bankers Trust Company
300 South Grand Avenue
41st Floor
Los Angeles, California 90071
Attention: Edward H. Schweitzer
<PAGE>XV-27
SCHEDULE I
Attached to and forming a part of that certain Third Amended
and Restated Intermediate Subsidiary Pledge Agreement dated as of
December 15, 1993 by the O-I Subsidiaries named on the signature pages
thereof, as Pledgors, to Bankers Trust Company, as Collateral Agent.
PART I
<TABLE>
<CAPTION>
Class Stock Number Percentage
Name of Issuer of Stock of Certif. Par of of All Capital
Pledgor Owned by Pledgor Stock No(s). Value Shares Stock Owned
- ------- ---------------- ----- ------ ----- ------ --------------
<S> <C> <C> <C> <C> <C> <C>
Owens-Illinois Group, Inc. Owens-Brockway Packaging, Common 1 $.01 100 100%
Inc. (formerly named
"OI Glass Container FTS Inc.")
Owens-Illinois Group, Inc. .....OI Closure FTS Inc. Common 1 .01 100 100%
Owens-Illinois Group, Inc. .....OI Plastic Products FTS IncCommon 1 .01 100 100%
Owens-Illinois Group, Inc. .....OI Kimble FTS Inc. Common 1 .01 100 100%
Owens-Illinois Group, Inc. .....O-I Health Care Holding Common 1 .01 100 100%
Corp. (formerly named
"Health Care and Retirement
Corporation")
Owens-Illinois Group, Inc. .....OI General FTS Inc. Common 1 .01 100 100%
Owens-Illinois Group, Inc. .....OI General Finance Inc. Common 1 .01 100 100%
Owens-Brockway Packaging, Inc..Owens-Brockway Glass Common 1 .01 100 100%
Container Inc. (formerly
named "Owens-Illinois Glass
Container Inc." and "OI Glass
Container STS Inc.")
</TABLE>
<PAGE>XV-28
<TABLE>
<CAPTION>
Class Stock Number Percentage
Name of Issuer of Stock of Certif. Par of of All Capital
Pledgor Owned by Pledgor Stock No(s). Value Shares Stock Owned
- ------- ---------------- ------ ------ ----- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Owens-Brockway Packaging, Inc...OI IONE STS Inc. Common 1 $.01 100 100%
OI Closure FTS Inc. ............OI US Capital STS Inc. Common 1 .01 100 100%
OI Closure FTS Inc. ............Owens-Illinois Closure Inc.Common 1 .01 100 100%
(formerly named "OI
Closure STS Inc.")
OI Closure FTS Inc. ...........Specialty Packaging Common 3 1.00 1000 100%
Licensing Company
OI Plastic Products FTS Inc. ...Owens-Illinois Plastic Common 1 .01 100 100%
Products Inc. (formerly
named "OI Blown Container
STS Inc.")
OI Plastic Products FTS Inc...Owens-Illinois Prescription Common 1 .01 100 100%
Products Inc. (formerly
named "OI Prescription
Products STS Inc.")
OI Plastic Products FTS Inc. ...OI Treitler STS Inc. Common 1 .01 100 100%
OI Plastic Products FTS Inc. ...OI Dougherty STS Inc. Common 1 .01 100 100%
OI Kimble FTS Inc. .............OI Kontes STS Inc. Common 1 .01 100 100%
OI Kimble FTS Inc. .............OI Schott STS Inc. Common 1 .01 100 100%
OI Kimble FTS Inc. .............OI Enbosa STS Inc. Common 1 .01 100 100%
OI Kimble FTS Inc. .............Kimble Glass Inc. Common 1 .01 100 100%
(formerly named "OI
Kimble STS Inc.")
OI General FTS Inc. ............Owens-Illinois General Inc.Common 1 .01 100 100%
(formerly named "OI
General STS Inc.")
OI General FTS Inc. ............OI Castalia STS Inc. Common 1 .01 100 100%
OI General FTS Inc. ............OI Levis Park STS Inc. Common 1 .01 100 100%
OI General FTS Inc. ............OI MVCURC STS Inc. Common 1 .01 100 100%
OI General FTS Inc. ............OI UMI STS Inc. Common 1 .01 100 100%
OI General FTS Inc. ............OI AID STS Inc. Common 1 .01 100 100%
</TABLE>
<PAGE>XV-29
PART II
The Pledged Debt of each of the Debt Issuers identified in
this Part II of Schedule I shall include all outstanding Indebtedness of such
Debt Issuer from time to time owing to the applicable Pledgor identified
opposite such Debt Issuer which indebtedness shall be evidenced by the
promissory note or notes referenced below, as amended or supplemented from
time to time, and by the records of such Pledgor relating to the amounts
outstanding from time to time under such promissory note or notes or by any
replacement or successor promissory notes issued by such Debt Issuer in
favor of such Pledgor.
<TABLE>
<CAPTION>
Amount of Date of
Indebtedness Promissory
Issuer of Promissory Note as of Note Evidencing
Names of Pledgor Held by Pledgor Dec. 31,1988 the Pledged Debt
- ---------------- ------------------------- --------------- ----------------
<S> <C> <C> <C>
Owens-Illinois Group, Inc. ........Owens-Brockway Packaging, $1,072,961,703 March 17, 1987
(formerly named "OI Group, Inc.") Inc. (formerly named "OI
Glass Container FTS Inc.")
Owens-Illinois Group, Inc. ........OI Closure FTS Inc. 205,401,223 March 17, 1987
(formerly named "OI Group, Inc.")
Owens-Illinois Group, Inc. ........OI Plastic Products FTS Inc. 608,479,545 March 17, 1987
(formerly named "OI Group, Inc.")
Owens-Illinois Group, Inc. ........OI Kimble FTS Inc. 173,405,398 March 17, 1987
(formerly named "OI Group, Inc.")
Owens-Illinois Group, Inc. ........O-I Health Care Holding 474,893,863 March 17, 1987
(formerly named "OI Group, Inc.") Corp. (formerly named
"Health Care and
Retirement Corporation")
Owens-Illinois Group, Inc. ........OI General FTS Inc. 192,131,215 March 17, 1987
(formerly named "OI Group, Inc.")
</TABLE>
<PAGE>XV-30
<TABLE>
<CAPTION>
Principal
Amount of Date of
Indebtedness Promissory
Issuer of Promissory Note as of Note Evidencing
Names of Pledgor Held by Pledgor Dec. 31, 1988 the Pledged Debt
---------------- ------------------------- ------------- ----------------
<S> <C> <C> <C>
Owens-Brockway Packaging, Inc. ....Owens-Brockway Glass Container 936,294,711 March 17, 1987
(formerly named "OI Glass Inc. (formerly named "Owens-
Container FTS Inc.") Illinois Glass Container Inc." and
"OI Glass Container STS Inc.")
Owens-Brockway Packaging, Inc. ....OI IONE STS Inc. 36,603,643 March 17, 1987
(formerly named "OI Glass
Container FTS Inc.")
OI Closure FTS Inc. ...............OI US Capital STS Inc. 26,762,350 March 17, 1987
OI Closure FTS Inc. ...............Owens-Illinois Closure Inc. 178,638,873 March 17, 1987
(formerly named "OI Closure
STS Inc.")
OI Plastic Products FTS Inc. ......Owens-Illinois Plastic 442,330,130 March 17, 1987
Products Inc. (formerly
named "OI Blown Container
STS Inc.")
OI Plastic Products FTS Inc. ....Owens-Illinois Prescription 106,742,864 March 17, 1987
Products Inc. (formerly
named "OI Prescription
Products STS Inc.")
OI Plastic Products FTS Inc. ....OI Treitler STS Inc. 13,856,318 March 17, 1987
OI Plastic Products FTS Inc. ....OI Dougherty STS Inc. 54,261,757 March 17, 1987
OI Kimble FTS Inc. ..............OI Kontes STS Inc. 11,173,996 March 17, 1987
OI Kimble FTS Inc. ..............OI Schott STS Inc. 5,461,658 March 17, 1987
OI Kimble FTS Inc. ..............OI Enbosa STS Inc. 7,413,845 March 17, 1987
OI Kimble FTS Inc. ..............Kimble Glass Inc. (formerly 149,355,899 March 17, 1987
named "OI Kimble STS Inc.")
OI General FTS Inc. .............Owens-Illinois General Inc. 149,900,436 March 17, 1987
(formerly named "OI General
STS Inc.")
OI General FTS Inc. .............OI Castalia STS Inc. 10,140,374 March 17, 1987
OI General FTS Inc. .............OI Levis Park STS Inc. 25,529,670 March 17, 1987
OI General FTS Inc. .............OI MVCURC STS Inc. 1,590,983 March 17, 1987
OI General FTS Inc. .............OI UMI STS Inc. 3,790,162 March 17, 1987
OI General FTS Inc. .............OI AID STS Inc. 2,121,291 March 17, 1987
</TABLE>
<PAGE>XV-31
SCHEDULE II
To the Third Amended and Restated
Intermediate Subsidiary Pledge Agreement
PLEDGE AMENDMENT
This Pledge Amendment, dated as of ___________, 19__, is delivered
pursuant to Section 5 of the Pledge Agreement referred to below. The
undersigned hereby agrees that this Pledge Amendment may be attached to the
Third Amended and Restated Intermediate Subsidiary Pledge Agreement dated as of
December 15, 1993, among the undersigned, the other Pledgors listed on the
signature pages thereof and Bankers Trust Company, as Collateral Agent
(the "Pledge Agreement"; capitalized terms defined therein being used herein as
therein defined) and that the Pledged Shares listed on this Pledge Amendment
shall be deemed to be part of the Pledged Shares and shall become part of the
Pledged Collateral and shall secure all Secured Obligations as provided in the
Pledge Agreement.
Pledgor:
By __________________________
Title _______________________
Class Stock Number
of Certificate Par of
Stock Issuer Stock No(s). Value Shares
------------ ----- ------ ----- ------
<PAGE>annex 1-1
ANNEX 1
to
THIRD AMENDED AND RESTATED
INTERMEDIATE SUBSIDIARY PLEDGE AGREEMENT
INDEX OF TERMS
Additional Pledgor . . . . . . . . . . . . . . . . . . . . . Section 25(a)
Additional Subordinated Debt . . . . . . . . . . . Intercreditor Agreement
Additional Subordinated Debt Indenture . . . . . . Intercreditor Agreement
Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Bankers. . . . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Code . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 11A
Collateral Agent . . . . . . . . . . . . . . . . . . . . . . .Introduction
Commercial Paper Documents . . . . . . . . . . . . . . . . . . .Recital 12
Commercial Paper Holders . . . . . . . . . . . . . . . . . . . .Recital 14
Commercial Paper Obligations . . . . . . . . . . . . . . . . . .Recital 13
Commercial Paper Representative. . . . . . . . . . . . . . . . .Recital 14
Commercial Paper Representatives . . . . . . . . . . . . . . . .Recital 14
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 2
Credit Agents. . . . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Credit Agreements. . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Currency Exchangers. . . . . . . . . . . . . . . . . . . . . . .Recital 16
Currency Obligations . . . . . . . . . . . . . . . . . . . . . .Recital 16
Current Credit Agent . . . . . . . . . . . . . . . . . . . . . . Recital 8
Current Credit Agreement . . . . . . . . . . . . . . . . . . . . Recital 8
Current Lenders. . . . . . . . . . . . . . . . . . . . . . . . . Recital 8
Event of Default . . . . . . . . . . . . . . . . . . . . . . . Section 11A
Existing Intermediate Subsidiary Pledge Agreement. . . . . . .Introduction
Existing Credit Agreement. . . . . . . . . . . . . . . . . . . . Recital 2
Existing Foreign Lender. . . . . . . . . . . . . . . . . . . . .Recital 15
Existing Foreign Lender Debt . . . . . . . . . . . . . . . . . .Recital 15
Existing Foreign Lender Guaranties . . . . . . . . . . . . . . .Recital 15
Existing Foreign Loan Agreements . . . . . . . . . . . . . . . .Recital 15
Existing Loan Guaranties . . . . . . . . . . . . . . . . . . . . Recital 3
Existing Intercreditor Agreement . . . . . . . . . Intercreditor Agreement
First Amended and Restated Company Existing Company
Pledge Agreement . . . . . . . . . . . . . . . . . . .Pledge Agreement
Foreign Lender Debt. . . . . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Lender Guaranties. . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Lender Obligations . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Lenders. . . . . . . . . . . . . . . . . . . . . . . . .Recital 15
Foreign Loan Agreements. . . . . . . . . . . . . . . . . . . . .Recital 15
Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 3
Initial Commercial Paper Holder. . . . . . . . . . . . . . . . .Recital 14
Initial Commercial Paper Holders . . . . . . . . . . . . . . . .Recital 14
Intercreditor Agreement. . . . . . . . . . . . . . . . . . . . .Recital 19
Interest Rate Exchangers . . . . . . . . . . . . . . . . . . . .Recital 16
<PAGE>annex 1-2
Interest Rate Obligations. . . . . . . . . . . . . . . . . . . .Recital 16
Junior Secured Obligations . . . . . . . . . . . . . . . . . . .Section 2B
Junior Secured Parties . . . . . . . . . . . . . . . . . . . . .Recital 22
Lenders. . . . . . . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Loan Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . . Recital 9
Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2
Obligations. . . . . . . . . . . . . . . . . . . . . . . . . . . Section 2
Original Intermediate Subsidiary Existing Intermediate
Pledge Agreement. . . . . . . . . . . . . Subsidiary Pledge Agreement
Paying Indemnifying Parties. . . . . . . . . . . . Intercreditor Agreement
Pledge Amendment . . . . . . . . . . . . . . . . . . . . . . . . Section 5
Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . . Section 1
Pledged Debt . . . . . . . . . . . . . . . . . . . . . . . . . . Recital 1
Pledged Shares . . . . . . . . . . . . . . . . . . . . . . . . . Recital 1
Pledgor. . . . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Pledgors . . . . . . . . . . . . . . . . . . . . . . . . . . .Introduction
Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . .Section 12
Second Amended and Restated Existing Intermediate
Intercreditor Agreement . . . . . . . . . Subsidiary Pledge Agreement
Secured Obligations. . . . . . . . . . . . . . . . . . . . . . . Section 2
Secured Parties. . . . . . . . . . . . . . . . . . . . . . . . .Recital 21
Securities Act . . . . . . . . . . . . . . . . . . . . . . . . Section 11A
Senior Debenture Guaranties. . . . . . . . . . . . . . . . . . . Recital 6
Senior Debenture Guaranty. . . . . . . . . . . . . . . . . . . . Recital 6
Senior Debenture Indenture . . . . . . . . . . . . . . . . . . . Recital 5
Senior Debenture Trustee . . . . . . . . . . . . . . . . . . .Introduction
Senior Debentures. . . . . . . . . . . . . . . . . . . . . . . . Recital 5
Senior Indentures. . . . . . . . . . . . . . . . . . . . . . . .Recital 12
Successor Credit Agents. . . . . . . . . . . . . . . . . . . . .Recital 12
Successor Credit Agreements. . . . . . . . . . . . . . . . . . .Recital 12
Successor Lenders. . . . . . . . . . . . . . . . . . . . . . . .Recital 12
<PAGE>XVI-1
EXHIBIT XVI
[FORM OF BID RATE LOAN QUOTE REQUEST]
To: Bankers Trust Company ("Agent")
From: Owens-Illinois, Inc. ("Company")
Re: Refinancing Credit Agreement dated as
of December 15, 1993 (as amended,
amended and restated, supplemented or
otherwise modified from time to time,
the "Credit Agreement") among Company,
the Lenders listed therein, the
Lenders named as Lead Managers and Co-
Agents for Lenders, and Agent
Company hereby gives notice pursuant to subsection
2.9B of the Credit Agreement that it requests Bid Rate Loan
Quotes for the following proposed Bid Rate Loan(s):
Proposed Funding Date of Bid Rate Loan: ________________
Duration of Bid Rate
Principal Amount Loan Interest Period
$ _______________
The undersigned officer, to the best of his/her
knowledge as an officer of Company, and Company hereby certify
that (i) the undersigned is the [insert title of undersigned
officer] of Company; (ii) the undersigned has read the
conditions precedent to the making of any Loans set forth in
subsection 3.2B of the Credit Agreement, and any definitions
or other provisions in the Credit Agreement relating thereto
with respect to the statements contained herein, and the
undersigned has made or caused to be made such examination or
investigation as is necessary to enable him/her to express an
informed opinion as to whether or not such conditions have
been complied with; and (iii) each of the conditions set forth
in subsection 3.2B of the Credit Agreement has been satisfied
on and as of the date hereof and will be satisfied on and as
of the date of the proposed borrowing.
<PAGE>XVI-2
Capitalized terms used herein without definition have
the meanings assigned to such terms in the Credit Agreement.
OWENS-ILLINOIS, INC.
By __________________________
Title _______________________
<PAGE>XVII-1
EXHIBIT XVII
[FORM OF INVITATION FOR BID RATE LOAN QUOTES]
To: [Name of Lender]
From: Bankers Trust Company ("Agent")
Re: Invitation for Bid Rate Loan Quotes to
Owens-Illinois, Inc. ("Company")
Pursuant to subsection 2.9C of that certain Refinancing Credit
Agreement dated as of December 15, 1993 (as amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement) among Company, the Lenders
listed therein, the Lenders named as Lead Managers and Co-Agents for Lenders,
and Agent, we are pleased on behalf of Company to invite you to submit Bid
Rate Loan Quotes to Company for the following proposed Bid Rate Loan(s):
Proposed Funding Date of Bid Rate Loan: _________________
Duration of Bid Rate
Principal Amount Loan Interest Period
$ ______________
Please respond to this invitation by no later than 10:00 a.m. (New
York time) on the proposed Funding Date.
BANKERS TRUST COMPANY,
as Agent
By: _________________________
Title: ______________________
<PAGE>XVIII-1
EXHIBIT XVIII
[FORM OF BID RATE LOAN QUOTE]
Bankers Trust Company
[P.O. Box 318
Church Street Station
New York, New York 10015]
Telecopy No.: _______________
Attention: _____________
Re: Bid Rate Loan Quote to Owens-Illinois, Inc. ("Company")
In response to your invitation on behalf of Company dated
_______________, 19___, we hereby make the following Bid Rate Loan Quote on
the following terms:
1. Quoting Lender:
______________________________________________________
2. Person to contact at Quoting Lender:
______________________________________________________
3. Funding Date of proposed Bid Rate Loan(s):
_____________________________________________________
4. We hereby offer to make Bid Rate Loan(s) in the following principal
amounts, for the following Bid Rate Loan Interest Periods and at the
following rates:
<PAGE>XVIII-2
Duration
of Bid
Rate Loan
Principal Interest
Amount Period Interest Rate
- --------- --------- -------------
$_____________
$_____________
Provided that the aggregate principal amount of Bid Rate Loans for which
this offer may be accepted shall not exceed $_______________.2
We understand and agree that the offer(s) set forth above, subject
to the satisfaction of the applicable conditions set forth in the Refinancing
Credit Agreement dated as of December 15, 1993 (as amended, amended and
restated, supplemented or otherwise modified from time to time, the "Credit
Agreement"; capitalized terms used herein without definition shall have the
meanings assigned to such terms in the Credit Agreement) among Company, the
Lenders listed therein, the Lenders named as Lead Managers and Co-Agents for
Lenders, and Bankers Trust Company, as Agent, irrevocably obligate us to make
the Bid Rate Loan(s) for which any offer(s) are accepted, in whole or in
part.
Very truly yours,
[NAME OF LENDER]
Date: ____________________ By: _________________________
Title: ______________________
<PAGE>XIX-1
EXHIBIT XIX
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
This ASSIGNMENT AND ACCEPTANCE (this "Agreement") is dated as of
____________, 199_ and entered into by and between ____________________
("Assignor") and _____________________ ("Assignee").
PRELIMINARY STATEMENTS
A. Assignor has entered into that certain Refinancing Credit
Agreement dated as of December 15, 1993 (said Credit Agreement, as amended,
amended and restated, supplemented or otherwise modified to the date hereof
and as it may hereafter be amended, amended and restated, supplemented or
otherwise modified from time to time, being the "Credit Agreement;" the terms
defined therein and not otherwise defined herein being used herein as therein
defined) among Owens-Illinois, Inc., a Delaware corporation ("Company"), the
lenders listed on the signature pages thereof (individually a "Lender" and
collectively, "Lenders"), the Lenders named therein as Lead Managers and Co-
Agents for Lenders, and Bankers Trust Company, as Agent for Lenders
("Agent").
B. Assignor has a Revolving Loan Commitment under the Credit
Agreement pursuant to which Assignor (i) [has made and] may be required to
make Revolving Loans to Company pursuant to subsection 2.1A of the Credit
Agreement[, (ii) has issued certain outstanding Letters of Credit (the
"Assignor Letters of Credit") pursuant to subsection 2.8A of the Credit
Agreement,] and [(ii)/(iii)] [has purchased and] may be required to purchase
participations in Letters of Credit issued by other Lenders pursuant to
subsection 2.8A of the Credit Agreement [(such participations in any such
Letters of Credit outstanding as of the date hereof being the "Assignor
Participations")]. [Assignor also has outstanding Bid Rate Loans to Company
under subsection 2.9 of the Credit Agreement.]
C. Assignor desires to assign to Assignee its rights and
obligations as a Lender under the Credit Agreement and the other Loan
Documents with respect to [a portion of] Assignor's Revolving Loan Commitment
[and outstanding Revolving Loans] [and the Assignor Participations] [and with
respect to [a portion of] Assignor's outstanding Bid Rate Loans] [and to sell
to Assignee a participation in the Assignor Letters of Credit (the "Assignee
Participation") equal to the participation required to be purchased therein
pursuant to subsection 2.8 of the Credit Agreement by a Lender having a
Revolving Loan Commitment equal to that being assigned to Assignee
hereunder], and Assignee has agreed to assume the obligations of Assignor
under the Loan Documents to the extent of the rights and obligations so
assigned [and to purchase the Assignee Participation].
<PAGE>XIX-2
NOW, THEREFORE, in consideration of the premises and the
agreements, provisions and covenants herein contained, the parties hereto
hereby agree as follows:
SECTION 1. Assignment and Assumption.
(a) Assignor hereby [(i)] assigns to Assignee, effective upon the
receipt of the consideration set forth in Section 1(c), without recourse,
representation or warranty (except as expressly set forth herein), [(A)] an
undivided _____% interest (the "Percentage") in all of Assignor's rights and
obligations as a Lender arising under the Credit Agreement and the other Loan
Documents relating to Assignor's Revolving Loan Commitment [and outstanding
Revolving Loans] [and the Assignor Participations] [and (B) all of Assignor's
rights and obligations as a Lender arising under the Credit Agreement and the
other Loan Documents relating to the interest (the "Bid Rate Loan Interest")
in Assignor's outstanding Bid Rate Loans described in Annex I annexed hereto]
[and (ii) concurrently therewith sells to Assignee, without recourse,
representation or warranty (except as expressly set forth herein), the
Assignee Participation].
(b) Assignee hereby [(i)] assumes from Assignor, and Assignor is
hereby expressly and absolutely released from, [(A)] the Percentage of all of
Assignor's obligations arising under the Loan Documents relating to
Assignor's Revolving Loan Commitment [and outstanding Revolving Loans] [and
the Assignor Participations], including without limitation all such
obligations with respect to any Revolving Loans to be made, and any
participations in Letters of Credit to be purchased, pursuant to the Credit
Agreement [and (B) all of Assignor's obligations arising under the Loan Docu-
ments relating to the Bid Rate Loan Interest] [and (ii) purchases from
Assignor the Assignee Participation].
(c) In consideration of Assignor's assignment [and sale], Assignee
hereby agrees to pay to Assignor, on the effective date of this Agreement, in
immediately available funds by wire transfer to Assignor's office at
____________ ____________________________, an amount equal to the unpaid
principal amount, accrued but unpaid interest and accrued but unpaid fees
with respect to [(i)] the Percentage of Assignor's rights under the Credit
Agreement relating to Assignor's Revolving Loan Commitment [and outstanding
Revolving Loans] [and the Assignor Participations] [and with respect to the
Assignee Participation], in each case as of the effective date of this
Agreement [and (ii) the Bid Rate Loan Interest].
(d) Assignor and Assignee hereby agree that Annex [II] attached
hereto sets forth the amount of the Revolving Loan Commitment[, the aggregate
participation by Assignee in any outstanding Letters of Credit][, the amount
of outstanding Bid Rate Loans] and the Pro Rata Share of Assignee after
giving effect to the assignment and assumption [and the sale and purchase]
described above.
<PAGE>XIX-3
(e) Assignor and Assignee hereby agree that, upon giving effect to
the assignment and assumption [and the sale and purchase] described above,
Assignee shall be a party to and a "Lender" under the Credit Agreement and
shall have all of the rights and obligations under the Loan Documents of, and
shall be deemed to have made all of the covenants and agreements contained in
the Loan Documents made by, a Lender having (i) the Revolving Loan
Commitment[, aggregate participation in outstanding Letters of Credit][,
outstanding Bid Rate Loans] and Pro Rata Share of Assignee as reflected on
Annex [II] attached hereto, and (ii) outstanding Revolving Loans in an amount
equal to the Percentage of the amount of Assignor's outstanding Revolving
Loans immediately prior to giving effect to the assignment and assumption
described above. Assignee hereby acknowledges and agrees that the agreement
set forth in this subsection 1(e) is expressly made for the benefit of
Company, Agent, Assignor and the other Lenders and their respective
successors and permitted assigns.
(f) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect [(A)] the
assignment by Assignor and the assumption by Assignee of [(1)] the Percentage
of Assignor's rights and obligations with respect to Assignor's Revolving
Loan Commitment [and outstanding Revolving Loans] [and the Assignor
Participations] [and (2) Assignor's rights and obligations with respect to
the Bid Rate Loan Interest], and all rights and obligations under the Loan
Documents with respect thereto [and (B) the sale by Assignor and the purchase
by Assignee of the Assignee Participation], (ii) any other assignments by
Assignor of a portion of its rights and obligations with respect to
Assignor's Revolving Loan Commitment [and outstanding Revolving Loans] [and
the Assignor Participations][or with respect to Assignor's outstanding Bid
Rate Loans][, and any other sales by Assignor of participations in the
Assignor Letters of Credit,] shall have no effect on (A) the Revolving Loan
Commitment[, aggregate participation in outstanding Letters of Credit][,
outstanding Bid Rate Loans] and Pro Rata Share of Assignee set forth on
Annex [II] attached hereto, or (B) the Percentage of Assignor's outstanding
Revolving Loans being assigned and assumed hereby, and (iii) from and after
the effective date of this Agreement, Agent shall make all payments under the
Credit Agreement in respect of the Percentage interest assigned hereby [and
the Assignee Participation][and the Bid Rate Loan Interest] (including
without limitation all payments of principal and accrued but unpaid interest
and commitment and letter of credit fees with respect thereto) to Assignee,
whether such amounts (in the case of such interest and fees) have accrued
prior to the effective date of this Agreement or subsequent thereto.
<PAGE>XIX-4
SECTION 2. Certain Representations, Warranties and Agreements.
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Percentage interest [and the Bid Rate Loan Interest]
being assigned by it hereunder [and of the Assignee Participation] and that
such interest[s] [is][are] [and the Assignee Participation are] free and
clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the
execution, effectiveness, genuineness, validity, enforceability, collect-
ibility or sufficiency of any of the Loan Documents or for any
representations, warranties, recitals or statements made therein or made in
any written or oral statement or in any financial or other statements,
instruments, reports or certificates or any other documents furnished or made
by Assignor to Assignee or by or on behalf of Company or any of its
Subsidiaries to Assignor or Assignee in connection with the Loan Documents
and the transactions contemplated thereby or for the financial condition or
business affairs of Company or any of its Subsidiaries or any other Person
liable for the payment of any Obligations, nor shall Assignor be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained in any of the Loan
Documents or as to the use of the proceeds of the Loans or the use of the
Letters of Credit or as to the existence or possible existence of any Event
of Default or Potential Event of Default.
(c) Assignee represents and warrants that it is an Eligible
Assignee; that it has experience and expertise in the making of loans such as
the Loans; that it has acquired its Percentage interest [and the Bid Rate
Loan Interest] for its own account and not with any present intention of
selling all or any portion of such interest; and that it has received,
reviewed and approved copies of all Loan Documents.
(d) Assignee represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company
and its Subsidiaries in connection with the assignment evidenced by this
Agreement and that it has made and shall continue to make its own appraisal
of the creditworthiness of Company and its Subsidiaries. Assignor shall not
have any duty or responsibility, either initially or on a continuing basis,
to make any such investigation or any such appraisal on behalf of Assignee or
to provide Assignee with any credit or other information with respect
thereto, whether coming into its possession before the making of the initial
Loans or at any time or times thereafter, and Assignor shall not have any
responsibility with respect to the accuracy of or the completeness of any
information provided to Assignee.
(e) Each party to this Agreement represents and warrants to the
other party hereto that it has full power and authority to enter into this
Agreement and to perform its obligations hereunder in accordance with the
provisions hereof, that this Agreement has been duly authorized, executed and
delivered by such party and that this Agreement constitutes a legal, valid
<PAGE>XIX-5
and binding obligation of such party, enforceable against such party in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general principles
of equity.
[(f) [Include one of the following only in the case of an
Assignment to an Eligible Assignee other than another Lender or an Affiliate
of Assignor:] [Assignor represents and warrants that, if the aggregate
amount of Loans, Commitments or other Obligations assigned hereby is less
than $10,000,000, the amount assigned hereby constitutes the aggregate amount
of all Loans, Commitments, Letters of Credit or participations therein and
other Obligations held by Assignor] or [Assignee represents and warrants that
after giving effect to the assignment contemplated hereby, Assignee shall
have received an aggregate amount of not less than $10,000,000 of Loans,
Commitments or other Obligations assigned hereunder].]
SECTION 3. Miscellaneous.
(a) Each party to this Agreement hereby agrees from time to time,
upon request of the other party hereto, to take such additional actions and
to execute and deliver such additional documents and instruments as such
other party may reasonably request to effect the transactions contemplated
by, and to carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated, except by an instrument in writing signed
by the party against whom enforcement of such change, waiver, discharge or
termination is sought.
(c) Unless otherwise specifically provided herein, any notice or
other communication herein required or permitted to be given shall be in
writing and may be personally served, telecopied, telexed or sent by United
States mail or courier service and shall be deemed to have been given when
delivered in person or by courier service, upon receipt of telecopy or telex,
or four Business Days after depositing it in the United States mail,
registered or certified, with postage prepaid and properly addressed. For
the purposes hereof, the address of each party hereto shall be as set forth
under such party's name on the signature page hereof or, as to either party,
such other address as shall be designated by such party in a written notice
delivered to the other party hereto. In addition, the address of Assignee
set forth below its name on the signature page hereof shall serve as the
initial notice address of Assignee for purposes of subsection 9.10 of the
Credit Agreement.
(d) In case any provision in or obligation under this Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provisions or obligations, or of
such provision or obligation in any other jurisdiction, shall not in any way
be affected or impaired thereby.
<PAGE>XIX-6
(e) THIS AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and
by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages
may be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) This Agreement shall become effective upon (i) the execution
of a counterpart hereof by each of Assignor and Assignee, (ii) the execution
of a counterpart hereof by Agent as evidence of its [consent and] acceptance
hereof in accordance with subsection [9.2B(i) and] 9.2B(ii) of the Credit
Agreement, [(iii) the execution of a counterpart hereof by Company as
evidence of its consent hereto in accordance with subsection 9.2B(i) of the
Credit Agreement,] and [(iv)] the receipt by Assignor, Assignee and Agent of
originals or telecopies of such counterparts and authorization of delivery
thereof.
[Remainder of page intentionally left blank]<PAGE>
<PAGE>S-1
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
[NAME OF ASSIGNOR] [NAME OF ASSIGNEE]
By: ________________________ By: ________________________
Title: ________________________ Title: ________________________
Notice Address: Notice Address:
________________________ ________________________
________________________ ________________________
________________________ ________________________
________________________ ________________________
[Consented to in accordance with [Consented to and] Accepted
subsection 9.2B(i) of the in accordance with subsection[s]
Credit Agreement [9.2B(i) and]9.2B(ii) of the
Credit Agreement
OWENS-ILLINOIS, INC. BANKERS TRUST COMPANY,
as Agent
By: ________________________ By: ________________________
Title:________________________] Title: ________________________
<PAGE>annex 1-1
[ANNEX I
BID RATE LOAN INTEREST
Outstanding principal amount of Bid Rate Loans being assigned: $___________
Accrued but unpaid interest on such Bid Rate Loans: $___________
Total principal and interest with respect to such Bid Rate Loans:$___________]
[Insert any other information necessary or desirable
to describe the Bid Rate Loans being assigned]
<PAGE>annex 1-2
ANNEX [II]
ASSIGNEE'S REVOLVING LOAN COMMITMENT[,
AGGREGATE PARTICIPATION IN
OUTSTANDING LETTERS OF CREDIT][,
OUTSTANDING BID RATE LOANS] AND
PRO RATA SHARE
AFTER ASSIGNMENT
Revolving Loan Commitment: $___________
[Aggregate participation in
outstanding Letters of Credit: $___________]
[Outstanding Bid Rate Loans: $___________]
Pro Rata Share ____%
<PAGE>XX-1
EXHIBIT XX
[FORM OF OVERDRAFT AGREEMENT]
This OVERDRAFT AGREEMENT is dated as of
December 15, 1993 and entered into by and between OWENS-ILLINOIS, INC., a
Delaware corporation ("Company"), and BANKERS TRUST COMPANY ("Bank").
RECITALS
WHEREAS, Company and Bank are parties to
that certain Refinancing Credit Agreement dated as of December 15, 1993 among
Company, the Lenders listed therein, the Lead Managers and Co-Agents listed
therein and Bank, as Agent (as it may be amended, amended and restated,
supplemented or otherwise modified from time to time, the "Credit Agreement";
capitalized terms used herein without definition shall have the meanings
assigned to such terms in the Credit Agreement); and
WHEREAS, pursuant to and subject to the
limitations set forth in subsection 2.1C of the Credit Agreement, Company and
Bank are permitted to establish and maintain an overdraft facility to
facilitate Company's cash management practices.
NOW, THEREFORE, in consideration of the
premises and the terms and conditions stated herein, the parties hereby agree
as follows:
1. Upon presentment to Bank for payment
of an item drawn by Company on Company's account ________ (the "Account")
with Bank in an amount that, when charged against the Account, creates an
overdraft in the Account, Bank shall pay such item; provided that Bank elects
to do so as provided herein; and provided, further that after giving effect
to such overdraft (i) the Overdraft Amount shall not exceed $50,000,000,
(ii) the Overdraft Amount shall not at any time exceed the amount of the
Revolving Loan Commitments minus the sum of (x) the aggregate principal
amount of all outstanding Revolving Loans, Bid Rate Loans and Swing Line
Loans plus (y) the Commercial Paper Usage plus (z) the Letter of Credit Usage
at such time, and (iii) the Overdraft Amount at any time plus the aggregate
principal amount of Swing Line Loans outstanding at such time shall not
exceed $50,000,000.
2. Bank may elect not to pay any item
that would create an overdraft, with or without notice to Company, if Bank,
in its sole discretion, believes that it will not be able, pursuant to
subsection 2.1C of the Credit Agreement, to require each other Lender to make
a Revolving Loan or to purchase a participation, in each case for the purpose
of refunding Bank in the amount of such overdraft.
<PAGE>XX-2
3. Company shall pay to Bank on demand,
and in any event not more than three Business Days from the date of creation
of any overdraft in the Account, an amount equal to the Overdraft Amount then
outstanding. In addition, Company shall pay, on demand or, if no demand is
made, on the last Business Day of each month, interest on the Overdraft
Amount from time to time outstanding at a fluctuating rate per annum
(calculated on the basis of a 360-day year and the actual number of days
elapsed) equal to the Prime Rate minus the applicable percentage used in
calculating the fee charged on the unused portion of the Revolving Loan
Commitments pursuant to subsection 2.3A of the Credit Agreement; provided
that if the Overdraft Amount or interest thereon is not paid when due, the
Overdraft Amount and, to the extent permitted by applicable law, any interest
thereon not paid when due shall thereafter bear interest payable on demand at
a rate per annum equal to the Prime Rate plus 2.00% per annum; and provided,
further that, unless demand is otherwise made, the interest payable on the
last Business Day of any month shall be that which is accrued and unpaid
through such Business Day. Bank may, at its option, request Lenders to make
Revolving Loans as provided in subsection 2.1C of the Credit Agreement and
apply the proceeds of such Revolving Loans to effect payment of the Overdraft
Amount as set forth above.
4. Company shall make each payment
hereunder to Bank in lawful money of the United States of America and in same
day funds at the office of Bank located at One Bankers Trust Plaza, New York,
New York 10006.
5. Promptly after the last day of each
month, Bank will prepare and send to Company copies of statements of the
Account showing the charges made thereto and the Overdraft Amount and
interest accrued thereon as of the last day of such month. Such statements,
and any photocopies of items and other records held by Bank relating to the
Account, shall absent manifest or demonstrable error constitute evidence of
the Indebtedness owed by Company hereunder.
6. Without prejudice to Bank's other
rights, Company hereby authorizes Bank to charge against any balance in the
Account and/or in any of Company's other accounts with Bank and/or against
any other debt owing by Bank to Company any amount owing by Company to Bank
hereunder; provided that Bank shall confirm to Company any such charge
promptly thereafter.
7. Notwithstanding anything to the
contrary contained herein, Bank shall not be obligated to pay any item which
would create an overdraft in the Account if such payment would be an
extension of credit to Company in violation of any limitation or prohibition
provided by any applicable statute or regulation.
8. This Agreement shall terminate upon
the termination of the Commitments and, at any time prior to the termination
of the Commitments, Bank or Company may, upon at least five Business Day's
<PAGE>XX-3
written notice to the other party, terminate this Agreement; provided that no
such termination shall affect Company's obligations with respect to
overdrafts created on or prior to such termination or Bank's rights with
respect to such overdrafts. This Agreement is not for the benefit of any
party other than Company and Bank.
9. This Agreement shall be governed by,
and construed in accordance with, the internal laws of the State of New York,
without regard to conflicts of laws principles.
10. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed an
original, but all such counterparts together shall constitute but one and the
same instrument.
11. Company hereby submits to the
jurisdiction of any state or federal court in the State of New York with
respect to any action or proceeding in connection with this Agreement to the
full extent provided in subsection 9.18 of the Credit Agreement and such
subsection 9.18 of the Credit Agreement is hereby incorporated herein by this
reference.
12. The parties hereto agree to waive
their respective rights to a jury trial with respect to any action or
proceeding in connection with this Agreement to the full extent provided in
subsection 9.19 of the Credit Agreement and such subsection 9.19 of the
Credit Agreement is hereby incorporated herein by this reference.
[Remainder of page intentionally left blank]
<PAGE>XX-4
WITNESS the due execution hereof by th
respective duly authorized officers of the undersigned as of the date first
written above.
BANKERS TRUST COMPANY
By: ___________________________
Title: _________________________
OWENS-ILLINOIS, INC.
By: ___________________________
Title: _________________________
<PAGE>S-1
SCHEDULE A-1
COMPANY, GROUP, FIRST AND SECOND TIER SUBSIDIARIES
<TABLE>
<CAPTION>
Jurisdiction
and Date of Percentage of
Entity Incorporation Stockholder(s) Ownership
------ ------------- ------------- -------------
<S> <C> <C> <C>
Company
- -------
Owens-Illinois, Inc. Delaware
11/27/85
Group
- -----
Owens-Illinois Group,Inc. Delaware Owens-Illinois,Inc. 100
3/10/87
First Tier Subsidiaries
- -----------------------
Owens-Brockway Packaging, Inc. Delaware Owens-Illinois Group, Inc. 100
3/6/87
OI Closure FTS Inc. Delaware Owens-Illinois Group, Inc. 100
3/6/87
OI Plastic Products FTS Inc. Delaware Owens-Illinois Group, Inc. 100
3/6/87
OI Kimble FTS Inc. Delaware Owens-Illinois Group, Inc. 100
3/6/87
O-I Health Care Holding Corp. Delaware Owens-Illinois Group, Inc. 100
3/6/87
OI General FTS Inc. Delaware Owens-Illinois Group, Inc. 100
3/6/87
OI General Finance Inc. Delaware Owens-Illinois Group, Inc. 100
4/19/93
Second Tier Subsidiaries
- ------------------------
Owens-Brockway Glass Container Delaware Owens-Brockway 100
Inc. 3/9/87 Packaging, Inc.
OI IONE STS Inc. Delaware Owens-Brockway 100
3/9/87 Packaging, Inc.
OI US Capital STS Inc. Delaware OI Closure FTS Inc. 100
3/9/87
Owens-Illinois Closure Inc. Delaware OI Closure FTS Inc. 100
3/9/87
Specialty Packaging Licensing Delaware OI Closure FTS Inc. 100
Company 11/15/85
</TABLE>
<PAGE>S-2
<TABLE>
<CAPTION>
Jurisdiction
and Date of Percentage of
Entity Incorporation Stockholder(s) Ownership
------ ------------- -------------- -------------
<S> <C> <C> <C>
Owens-Illinois Plastic Products Delaware OI Plastic Products FTS 100
Inc. 3/9/87 Inc.
Owens-Illinois Prescription Delaware OI Plastic Products FTS 100
Products Inc. 3/9/87 Inc.
OI Treitler STS Inc. Delaware OI Plastic Products FTS 100
3/9/87 Inc.
OI Dougherty STS Inc. Delaware OI Plastic Products FTS 100
3/9/87 Inc.
OI Schott STS Inc. Delaware OI Kimble FTS Inc. 100
3/9/87
OI Kontes STS Inc. Delaware OI Kimble FTS Inc. 100
3/9/87
OI Enbosa STS Inc. Delaware OI Kimble FTS Inc. 100
3/9/87
Kimble Glass Inc. Delaware OI Kimble FTS Inc. 100
3/9/87
Owens-Illinois General Inc. Delaware OI General FTS Inc. 100
3/9/87
OI Castalia STS Inc. Delaware OI General FTS Inc. 100
3/9/87
OI Levis Park STS Inc. Delaware OI General FTS Inc. 100
3/9/87
OI MVCURC STS Inc. Delaware OI General FTS Inc. 100
3/9/87
OI UMI STS Inc. Delaware OI General FTS Inc. 100
3/9/87
OI AID STS Inc. Delaware OI General FTS Inc. 100
</TABLE>
The Guarantor Subsidiaries, as of the Closing Date, consist of Owens-Illinois
Group, Inc. and each of the "First Tier Subsidiaries" and "Second Tier
Subsidiaries" set forth above.
<PAGE>
SCHEDULE A-2
DIRECT & INDIRECT SUBSIDIARIES
OF THE GUARANTOR SUBSIDIARIES
FOREIGN SUBSIDIARIES (INCLUDING FOREIGN JOINT VENTURES)
DENOTED WITH ASTERISK
(For purposes of this Schedule A-2, "First Tier Subsidiary" means a direct
Subsidiary of the Person indicated and "Second Tier Subsidiary" means a direct
Subsidiary of one or more of such First Tier Subsidiaries of the Person
indicated)
<TABLE>
<CAPTION>
Jurisdiction of Percentage of
Name Incorp or Organization Stockholder(s) Ownership
- ---- ---------------------- -------------- -------------
<S> <C> <C> <C>
OI Puerto Rico STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
1.Owens-Illinois de Puerto Rico*
(Partnership) Ohio OI Puerto Rico STS Inc. 80
OI Venezuela STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
OI Peldar STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
OI Ecuador STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
OI Consol STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
Bolivian Investments, Inc. Delaware Owens-Brockway Glass Container Inc. 100
Brockway Realty Inc. Pennsylvania Owens-Brockway Glass Container Inc. 100
Brockway Research Delaware Owens-Brockway Glass Container Inc. 100
Overseas Finance Company Delaware Owens-Brockway Glass Container Inc. 100
Seagate, Inc. Ohio Owens-Brockway Glass Container Inc. 100
CGR, Inc. Delaware Owens-Brockway Glass Container Inc. 100
OIB Produvisa Inc. Delaware Owens-Brockway Glass Container Inc. 100
Pacific Coast Glass Co.,Ltd. California Owens-Brockway Glass Container Inc. 100
OI Peru STS Inc. Delaware Owens-Brockway Glass Container Inc. 100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdisction of Percentage of
Name Incorp. or Organization Stockholder(s) Ownership
- ---- ----------------------- ------------------- -------------
<S> <C> <C> <C>
1.Vinsa* Peru OI Peru STS Inc. 50.3
OI Poland Inc. Delaware Owens-Brockway Glass Container Inc. 100
O-I Funding Corporation Delaware Owens-Illinois Closure Inc. (16.67)
Owens-Illinois Plastic Products Inc. (16.67)
Owens-Illinois Glass Container Inc. (16.67)
Owens-Illinois Prescription Products Inc. (16.67)
Owens-Illinois Labels Inc. (16.67)
Owens-Illinois General Inc. (16.67)
O-I Brockway Plastics,Inc. Delaware Owens-Illinois Plastic Products Inc. 100
Owens-Illinois Labels Inc. Delaware Owens-Illinois Plastic Products Inc. 100
DBC, Inc. New Jersey OI Dougherty STS Inc. 100
1.Owens-Illinois Specialty Products
Puerto Rico, Inc.* New Jersey DBC, Inc. 100
Northeastern Container Corp. Pennsylvania Owens-Illinois General Inc. 100
O-I Holding Company, Inc. Ohio Owens-Illinois General Inc. 100
O-I Services, Inc. Ohio Owens-Illinois General Inc. 100
Owens Hotel Industry, Inc. Ohio Owens-Illinois General Inc. 100
Owens Industries, Inc. Ohio Owens-Illinois General Inc. 100
Toledo Air Associates Ohio Owens-Illinois General Inc. 50
Harbor Capital Advisors,Inc. Delaware Owens-Illinois General Inc. 100
1.HCA Securities, Inc. Delaware Harbor Capital Advisors, Inc. 100
1.1Harbor Transfer,Inc. Delaware HCA Securities, Inc. 100
KGV, Inc. Delaware Kimble Glass Inc. 100
Kontes Glass Company New Jersey OI Kontes STS Inc. 100
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Percentage of
Name Incorp. or Organization Stockholders(s) Ownership
- ---- ----------------------- --------------- -------------
<S> <C> <C> <C>
Maumee Valley Community Urban
Redevelopment Corporation Ohio OI MVCURC 100
O-I Medical Inc. Delaware Owens-Illinois Prescription
Products Inc. 100
1.Owens Brigham Medical Company
(Partnership) Delaware OI Medical Inc. 55
Product Design & Engineering,Inc. Minnesota Owens-Illinois Closure Inc. 100
Treitler-Owens, Inc. New Jersey OI Treitler STS Inc. 100
U.S. Cap & Closure, Inc. Illinois OI US Capital STS Inc. 100
Universal Materials, Inc. Ohio OI UMI STS Inc. 100
Kimble-Enbosa (Partnership) Delaware KGV Inc. 51
OI Regioplast STS Inc. Delaware OI Trietler STS Inc. 100
1.Regioplast, S.A. de C.V.* Mexico OI Regioplast STS Inc. 50
Owens-Illinois (Australia)Pty.Ltd.*Australia Owens-Brockway Glass Container Inc. 100
Bahamian Grove Limited* Bahamas Owens-Brockway Glass Container Inc. 100
Owens Insurance Limited*
(W/4 First Tier Subsidiaries) Bermuda Owens-Illinois General Inc. 100
Fabrica Boliviana de
Vidrios, S.A.* Bolivia Owens-Brockway Glass Container Inc.(46%)
Bolivian Investments Inc.(4%) 50
Sao Raimundo Administracao,
Participacoes e Representacoes,
Limitada* Brazil Owens-Brockway Glass Container Inc. 100
1.Companhia Industrial Sao Paulo
e Rio* (W/8 First Tier
Subsidiaries and 1 Second Tier
Subsidiary) Brazil Sao Raimundo 79.41
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Percentage of
Name Incorp. or Organization Stockholder(s) Ownership
- ---- ----------------------- -------------- -------------
<S> <C> <C> <C>
2.Cisper Industria e Comercia,
S.A.* Brazil Sao Raimundo 79.41
Owens-Illinois Canada,Inc.* Canada Kimble Glass Inc. 100
Cristaleria Peldar, S.A.*
(W/1 First Tier Subsidiary) Colombia OI Peldar STS Inc. 57.36
Cristaleria del Ecuador,S.A.*
(W/2 First Tier Subsidiaries) Ecuador OI Ecuador STS Inc. 48.91
O-I Overseas Management
Company Limited* Delaware Owens-Brockway GlassContainer Inc. 100
1.United Glass Group, Ltd.*
(W/13 First Tier Subsidiaries
and 4 Second Tier Subsidiaries) England O-I Overseas Management Company Limited 100
Specialty Packaging Products
De Mexico, S.A. de C.V.* Mexico Owens-Illinois Closure Inc. 100
Owens-Brockway Venezuelan
Holding Co.* Venezuela OI Venezuela STS Inc. 100
1.Manufactura de Vidrios Planos
C.A.* (W/1 First Tier
Subsidiary and 1 Second Tier
Subsidiary) Venezuela Owens-Brockway Venezuela Holding Co. 100
2.Contro Vidvioro de Venezuela
("Cevive") C.A.* Venezuela Owens-Brockway Venezuela Holding Co. 100
3.Owens-Illinois de Venezuela,
C.A.* (W/3 First Tier
Subsidiaries and 5 Second Tier
Subsidiaries) Venezuela Owens-Brockway Venezuela Holding Co. 92.2
Owens-Illinois Foreign Sales
Corporation* Virgin Islands Owens-Illinois General Inc. 100
Consol Ltd.* South Africa OI Consol STS Inc. 19.32
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Jurisdiction of Percentage of
Name Incorp. or Organization Stockholder(s) Ownership
- ---- ----------------------- -------------- ------------
<S> <C> <C> <C>
Productos de Vidrio S.A.* Venezuela OIB Produvisa Inc. .90
Middle Ease Glass Mfg. Co. Egypt Owens-Brockway Glass Container Inc. 9.1
Nippon Glass Company* Japan Owens-Brockway Glass Container Inc. 10
Envases de Borosilicato S.A.* Mexico OI Enbosa STS 49
United Glass Container Corp.* Phillipines Owens-Brockway Glass Container Inc. 16
</TABLE>
<PAGE>
SCHEDULE B
LENDERS' COMMITMENTS AND PRO RATA SHARES
Revolving Loan Pro Rata
Lender Commitment Share
- ------ -------------- --------
Agent:
Bankers Trust $49,000,000 4.900000%
Co-Agents:
Bank of America $44,000,000 4.400000%
Bank of New York $44,000,000 4.400000%
Bank of Nova Scotia $44,000,000 4.400000%
CIBC $44,000,000 4.400000%
Continental Bank $44,000,000 4.400000%
First Chicago $44,000,000 4.400000%
NationsBank $44,000,000 4.400000%
Societe Generale $44,000,000 4.400000%
Toronto Dominion $44,000,000 4.400000%
Lead Managers:
IBJ $38,000,000 3.800000%
Bank of Montreal $38,000,000 3.800000%
Fuji Bank $38,000,000 3.800000%
Sumitomo Bank $38,000,000 3.800000%
LTCB $38,000,000 3.800000%
Lenders:
Mitsubishi Trust $31,000,000 3.100000%
Credit Agricole $31,000,000 3.100000%
Nippon $31,000,000 3.100000%
U. S. Bank of Oregon $31,000,000 3.100000%
Bank of Boston $31,000,000 3.100000%
Society Bank $25,000,000 2.500000%
National City $25,000,000 2.500000%
Northern Trust $25,000,000 2.500000%
Mellon Bank $25,000,000 2.500000%
Sanwa $25,000,000 2.500000%
Arab Bank $25,000,000 2.500000%
Bank of Hawaii $20,000,000 2.000000%
ABN/Amro $25,000,000 2.500000%
Yasuda $15,000,000 1.500000%
TOTALS $1,000,000,000 100.000000%
============== ==========
<PAGE>
SCHEDULE C
EXISTING INDEBTEDNESS
OF
OWENS-ILLINOIS AND
CONSOLIDATED SUBSIDIARIES
Amount
($M)
Industrial Development Revenue Bonds -------
Cincinnati, Ohio 4,000
Findlay, Ohio 1,000
Holmes County, Ohio (Berlin, OH) 1,000
Industrial Development Board of the City of Montgomery, AL 1,000
Industrial Development Board of the City of Montgomery, AL 14,025 (1)
Industrial Development Board of the County of Los Angeles 1,500
Muskogee (Oklahoma) Industrial Trust 893
New Jersey Economic Development Authority (Vineland, NJ) 1,000
------
Total Industrial Development Revenue Bonds 24,418
Miscellaneous senior debt
Alcon capital lease 2,122
Obligation to repurchase shares of Brockway, Inc. (NY) 653
Obligation to repurchase shares of Owens-Illinois, Inc., an
Ohio Corporation 2,117
Other senior debt 28,028
Superior Beverage 41,000 (2)
Various capitalized leases 503
------
Total Miscellaneous Senior Debt 74,423
Total Existing Indebtedness 98,841
======
(1) Included for disclosure only; not indebtedness under GAAP as the
Company owns all outstanding bonds.
(2) Not indebtedness under GAAP.
<PAGE>
SCHEDULE D
EXISTING LEINS
OF
OWENS-ILLINOIS AND
CONSOLIDATED SUBSIDIARIES
Amount of
Encumbrance
Location Property encumbered ($M)
- ----------------------- ------------------------------ -----------
Toano, Virginia Real estate, plant & equipment 3,028
Danville, VA and
Tracy, CA Real estate, plant & equipment 41,000
Various Equipment under capital leases 2,625
Vineland, New Jersey Real estate 1,000
Acquisition Facility Real estate, plant & equipment 25,000
Total Existing Liens 72,653
======
<PAGE>
SCHEDULE E
INVESTMENTS
OF
OWENS-ILLINOIS AND
CONSOLIDATED SUBSIDIARIES
Amount
Investment ($M)
---------- -------
Investments in Stock
Foreign Subsidiaries 147,725
Non-consolidated Companies
Domestic 2,829
Foreign 29,829
-------
Total Investments in Stock 180,383
Other Investments
Allwaste, Inc. 1,000
BriGam Ventures Inc. 1,260
Castalia Properties 350
Cross City 2,000
Fremont Plastics 50
Industrial Development Board of the City of Montgomery 14,025 (1)
Norman Hartzel/Don McCone 150
Schutz Containers 42
-------
Total Other Investments 19,877
Total Investments 200,260
=======
(1) Included for disclosure only; this amount is not included as an
investment on the balance sheet of the Company. The Company owns
all outstanding bonds originally issued by Brockway, Inc. (NY), a
corporation whose operations are now included with those of the
Company and its Consolidated Subsidiaries.
<PAGE>
SCHEDULE F
EXISTING CONTINGENT LIABILITIES
OF
OWENS-ILLINOIS AND CONSOLIDATED SUBSIDIARIES
Amount
Debtor Creditor ($M)
- -------------------------------------- --------------- -------
Indebtedness assumed by purchasers of
assets sold (1)
Bedford County, Virginia IRB Bondholders 6,300
CAN Enterprises (Note) Lender 1,723
Franklin County, Ohio IRB Bondholders 1,000
Harlan, Kentucky IRB Bondholders 1,335
Kansas City, Missouri IRB Bondholders 9,000
Luzerne County, Pennsylvania IRB Bondholders 1,000
Macon County, Georgia IRB Bondholders 4,590
Memphis, Tennessee IRB Bondholders 2,225
Mentor, Ohio IRB Bondholders 2,000
New Fern Restorium Lessor 204
Ohio Air Quality Revenue Bond Bondholders 1,300
Panama City, Florida IRB Bondholders 2,735
Total indebtedness assumed by purchasers of assets sold 33,412
<TABLE>
<CAPTION>
Amount
Guaranties of consolidated subsidiary Creditor ($M)
- ----------------------------------------- ----------------- -------
<S> <C> <C>
Kimble Glass Inc. (Cajah's Mt., NC) Caldwell County Econ. Dev'l.Comm'n 788
Guaranties of Indebtedness of Foreign
Subsidiaries
Owens-Illinois de Puerto Rico Scotia Bank de Puerto Rico 15,000
OI Specialty Products Puerto Rico Scotia Bank 11,000
Owens-Illinois de Venezuela Bankers Trust Company 1,302
Fabrica Boliviana de Vidros Bank of New York 3,500
------
Total indebtedness of Foreign Subsidiaries Guarantied by the Company 30,802
Brockway Airlines
Indemnity to airplane lessors Not
Indemnity to sellers of airline deicing services quantifiable
Indemnity to truck, trailer and auto lessors but not
Indemnity to seller of ground services at municipal airports expected
Liability with other airlines to be
Cross border lease material
Unexpired airplane leases 24,985
------
Total Quantifiable contingent liabilities related to Brockway Airlines 24,985
Total Quantifiable Existing Contingent Liabilities 90,287
======
(1) Indebtedness assumed by third parties in connection with the purchase
of the underlying assets. The Company is indemnified by the party
assuming the debt.
</TABLE>
<PAGE>
SCHEDULE G
REPORTING UNITS
OF
OWENS-ILLINOIS
Glass Container
International Glass
Plastic Products
Closure & Specialty
Prescription Products
Kimble (1)
Corporate & Other
(1) Will cease to be a Reporting Unit upon consummation of Kimble Sale.
<PAGE>
SCHEDULE H
1. Owens-Illinois Salary Employees Welfare Benefit Plan (Plan No. 501)
2. Owens-Illinois Hourly Employees Welfare Benefit Plan (Plan No. 502)
<PAGE>
SCHEDULE I
ENVIRONMENTAL MATTERS
None.
<PAGE>
SCHEDULE J
LETTERS OF CREDIT UNDER EXISTING CREDIT AGREEMENT
LOG OF LETTERS OF CREDIT OUTSTANDING AS OF 12/17/93
EXPIRATION
CURRENT AMOUNT DATE
-------------- ----------
State of Calif. - Self Insurance 13,299,321.00 16-Jun-94
NJ Dept of Environmental Protection
-- Glassboro 3,124,250.00 12-Mar-94
NJ Dept of Environmental Protection
-- OI/Schott 213,285.00 24-May-94
NationsBank of North Carolina, N.A. 300,000.00 23-Oct-94
Society Bank & Trust Company 4,193,333.33 15-Dec-94
NHW Partnership I & Hibernia National Bank 6,000,000.00 09-Nov-94
Commonwealth of Pennsylvania 584,819.00 06-Apr-94
NJ Dept of Environmental Protection
-- Bridgeton 3,149,459.00 12-Mar-94
Continental Casualty Company 9,712,000.00 18-Jun-94
Aetna Life Insurance Company 1,327,075.00 30-Jun-94
Westpac Banking Corporation 5,091,631.94 30-Sep-94
NJ Dept of Environmental Protection
-- Kimble 50,000.00 26-Nov-94
Oklahoma Workers' Compensation Court 2,500,000.00 31-Jan-94
Barnett Banks Trust Company, N.A. 1,532,055.00 02-Jan-95
Commonwealth of Pennsylvania 137,152.00 06-Apr-94
Society Bank & Trust Company 1,048,333.33 15-Dec-94
Connell Finance Company, Inc. 553,023.00 30-Sep-94
Bancireland/First Financial, Inc. 250,000.00 31-Jul-94
Copelco Capital Corporation 1,000,000.00 01-Jul-94
Liberty Mutual Insurance Company - SAC 514,018.00 06-Oct-94
The Cit Group/Equipment Financing, Inc. 2,979,131.40 31-Jul-94
Sylvia Yeager 757,755.00 18-Nov-94
State of California & County of Amador 297,030.00 31-Dec-93
Mellon Bank N.A. (Muskogee IRB) 1,383,805.00 15-Aug-94
NJ Dept of Environmental Protection
-- Kimble 5,250.00 19-Feb-94
National Union Fire Insurance Company 8,508,397.00 01-Sep-94
NJ Dept of Environmental Protection
-- Kimble Spill 2,000,000.00 29-Oct-94
Industrial Commission of Ohio 2,975,000.00 30-Jun-94
Commonwealth of Pennsylvania 810,873.60 06-Sep-94
Pitney Bowes Credit Corporation 500,000.00 30-Apr-94
NJ Dept of Environmental Protection
-- Vineland 426,000.00 12-Mar-94
Old Republic Insurance Co. 500,000.00 31-Jan-94
Chair, Workers' Compensation Board 1,874,443.00 06-Oct-94
Liberty Mutual Insurance Company (Re: SPPI) 390,643.00 31-Mar-94
The Aetna Casualty and Surety Company 36,374,000.00 31-Dec-93
Peoples Gas System Inc. 200,000.00 18-Nov-94
Brigam Properties 305,000.00 19-Nov-94
Farmers Alliance Mutual Insurance Co. 1,300.00 31-Dec-93
Liberty National Fire Insurance Company 310.00 31-Dec-93
<PAGE>
LETTERS OF CREDIT UNDER EXISTING CREDIT A
LOG OF LETTERS OF CREDIT OUTSTANDING AS OF 12/17/93
(continued)
EXPIRATION
CURRENT AMOUNT DATE
-------------- ----------
Texas Employer's Insurance Assoc. 50,000.00 31-Dec-93
Sup Insur State of NY, Liq of NEM
Reinsurance Corp. 26,136.00 31-Dec-93
Lancer Insurance Company 10,000.00 31-Dec-93
American Eagle Insurance Co. 40,390.00 31-Dec-93
AllState Insurance Company 534.00 31-Dec-93
Fremont Reinsurance Company 2,585.26 31-Dec-93
Paladin, Heartland, Candon & Syncorp 9,705.71 31-Dec-93
Mutual Marine Office, Inc. 70,712.19 31-Dec-93
Republic Insurance Company 78,655.00 31-Dec-93
SubTotal 101,858,090.76
Georgia Self Insurers Guaranty Trust Fund 1,500,000.00 07-Apr-94
Grand Total 116,657,411.76
==============
<PAGE>
EXHIBIT 10.15
AMENDED AND RESTATED OWENS-ILLINOIS, INC.
SENIOR MANAGEMENT INCENTIVE PLAN
Effective January 1, 1993
1. History and purpose.
1.1 The Owens-Illinois, Inc. Senior Management Incentive Plan as most
recently adopted by the Board of Directors of Owens-Illinois, Inc. (the
"Original Plan") was effective on January 1, 1991. Pursuant to paragraph
8 of the Original Plan, said Board has duly authorized the amendment and
restatement of the Original Plan, effective on or as of January 1, 1993,
in the form of this Amended and Restated Owens-Illinois, Inc. Senior
Management Incentive Plan. The provisions of the Original Plan shall
continue to govern with respect to Award Periods (as defined in the
Original Plan) commencing before January 1, 1993 and with respect to all
matters related thereto.
1.2 The purposes of this Amended and Restated Owens-Illinois, Inc. Senior
Management Incentive Plan are to reward officers and other management
employees who contribute to the success of the Company, by making the
amount of their compensation significantly contingent upon the Company's
financial performance, and to attract and retain officers and other
management employees of exceptional ability.
2. Definitions. As used herein:
"Annual Bonus" means the compensation payable to an Executive under this
Plan and will consist of one or more Performance Components and a
Discretionary Component, as described in paragraph 5.1 hereof;
"Board" means the Board of Directors of OI;
"Bonus Pool" means, for each year, the sum of all Target Bonuses for such
year and will consist of two Performance Components and a Discretionary
Component, as described in paragraph 5.1 hereof;
"CEO" means the Chief Executive Officer of OI;
"Committee" means the Compensation Committee of the Board or any other
committee of the Board to which administrative authority with respect to
the Plan may be delegated by the Board;
"Company" means OI together with any corporation (or unincorporated
business entity) 50 percent or more of the voting shares (or other
ownership interests) of which are owned, directly or indirectly, by OI;
"Deferred Compensation Plan" means any plan or arrangement adopted by the
Company whereby an Executive may be permitted, at his option, to defer the
actual receipt of an Annual Bonus otherwise payable to him under this
Plan;
<PAGE>
"Discretionary Component" means the component of a Target Bonus, Annual
Bonus, or Bonus Pool payable in the discretion of the Board or the CEO in
accordance with paragraph 8 hereof;
"Executive" means an officer or other management employee of the Company
who is eligible to participate in this Plan in accordance with paragraph
4 hereof;
"OI" means Owens-Illinois, Inc., a Delaware corporation;
"Operating Results" means the Company's or a Unit's annual results from
operations for any year, determined in accordance with paragraph 7 hereof
and expressed as a percentage of the year's Performance Objective;
"Performance Component" means either of the two components of a Target
Bonus, Annual Bonus, or Bonus Pool payable only to the extent of the
Company's or, if applicable, a Unit's attainment of its Performance
Objective for a year in accordance with paragraph 7 hereof.
"Performance Objective" means the annual objective established in
accordance with paragraph 6 hereof for the operating performance of the
Company or a Unit;
"Plan" means this Amended and Restated Owens-Illinois, Inc. Senior
Management Incentive Plan as set forth herein or as from time to time
amended;
"Return on Net Assets" or "RONA" means a fraction, the numerator of which
is the Company's or a Unit's operating cash flow for the year and the
denominator of which is the Company's or Unit's average net assets, both
determined by reference to the Company's financial statements for the year
with such adjustments as the Board, on recommendation of the CEO, may
approve from time to time to prevent distortions not fairly attributable
to the performance of Executives or for other reasons in the discretion of
the Board;
"Target Bonus" means an amount established each year in accordance with
paragraph 5 hereof equal to a stated percentage of an Executive's annual
base salary and will consist of one or more Performance Components and a
Discretionary Component, as described in paragraph 5.1 hereof;
"Unit" means an operating unit or subsidiary of the Company; and
Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include
the plural and vice versa.
<PAGE>
3. Administration.
3.1 The Plan will be administered by the CEO, whose administrative powers
hereunder shall include the powers to interpret the Plan and to exercise
full and complete discretion to adopt, modify, and/or rescind (or to
authorize one or more other appropriate officers of OI to adopt, modify,
and/or rescind) any rulings, determinations, policies, and/or procedures
deemed necessary or appropriate for the maintenance and administration of
the Plan. All such interpretations, rulings, determinations, policies,
and procedures shall be final, conclusive, and binding upon all interested
persons.
3.2 The Board, in its discretion on recommendation of the CEO, shall be
authorized at any time and from time to time to modify any Performance
Objective, and the Committee, in its discretion on recommendation of the
CEO, shall be authorized at any time and from time to time to adjust the
amount of any Target Bonus, the size of the Bonus Pool, and/or the
relative proportions of the Performance and Discretionary Components; and
to accelerate or defer the payment of Annual Bonuses.
4. Eligibility and participation.
4.1 Each person who, at the beginning of 1993 or any subsequent calendar
year, is an elected corporate officer of OI shall be an Executive eligible
to participate in the Plan for such year. Each person who first becomes
an elected corporate officer of OI during 1993 or any subsequent calendar
year shall be an Executive eligible to participate in the Plan for at
least the balance of such year or, if approved by the Committee on
recommendation of the CEO, for the entire year.
4.2 Any other officer or management employee of the Company shall be an
Executive eligible to participate in the Plan for all or any part of any
year during or before which such participation has been approved by the
CEO. The CEO may prospectively or retroactively suspend or withdraw such
approval with respect to any such Executive for all or any part of any
year.
5. Target Bonuses.
5.1 A Target Bonus shall be established each year for each Executive,
equal in amount to a stated percentage, not to exceed 100 percent, of his
base salary for such year. Each Target Bonus shall consist of one or more
Performance Components and a Discretionary Component. The Target Bonus of
an Executive employed in a Unit shall consist of a Unit Performance Compo-
nent equal to 40 percent of his Target Bonus, a Company Performance
Component equal to 30 percent of his Target Bonus, and a Discretionary
Component equal to 30 percent of his Target Bonus. The Target Bonus of an
Executive employed on the Company's corporate staff shall consist of a
Company Performance Component equal to 70 percent of his Target Bonus and
a Discretionary Component equal to 30 percent of his Target Bonus.
<PAGE>
5.2 The Committee shall establish the CEO's Target Bonus, and the CEO
shall establish the Target Bonuses of all other Executives. Target
Bonuses shall be established based on an evaluation of the
responsibilities of each Executive and of each Executive's potential to
contribute to the Company's or a Unit's attainment of its Performance
Objective for such year. Target Bonuses shall be established before or as
soon as practicable after the beginning of each year, and each Executive
shall thereupon be notified of his Target Bonus.
5.3 If the rate of an Executive's base salary is changed during a year
after his Target Bonus has been established, the amount of his Target
Bonus shall be adjusted to equal the stated percentage of his actual base
salary before and after the change.
6. Performance Objectives. The Board, on recommendation of the CEO, shall
establish a Performance Objective for the Company for each year, expressed
as the attainment by the Company, at the end of such year, of a specified
rate of Return on Net Assets. The Board may, in its discretion on
recommendation of the CEO, establish a separate Performance Objective for
one or more Units for any year, expressed as the attainment by such Unit,
at the end of such year, of a specified rate of Return on Net Assets.
Each year's Performance Objective(s) shall be established before or as
soon as practicable after the beginning of such year, and each Executive
shall thereupon be notified thereof.
7. Operating Results. As soon as practicable after the end of each year, the
Return on Net Assets for such year for the Company and for each Unit shall
be determined and reported to the Board and the CEO. The Company's
Operating Results for each year, for purposes of the Plan, shall be the
percentage which the Company's RONA for such year, as so reported, is of
the Company's Performance Objective for such year. Each Unit's Operating
Results for each year, for purposes of the Plan, shall be the percentage
which the Unit's RONA for such year, as so reported, is of the Company's
or, if established, the Unit's Performance Objective for such year.
8. Determination of Annual Bonuses.
8.1 The Operating Results shall determine the extent to which the
Discretionary and Performance Components of the Bonus Pool are payable as
Annual Bonuses. The Discretionary Component and the Company Performance
Component shall be determined by reference to the Company's Operating
Results, and the Unit Performance Components shall be determined by
reference to the applicable Unit's Operating Results. However, and
notwithstanding paragraphs 8.2 and 8.3 hereof, the CEO, in his discretion,
may reduce or eliminate the Annual Bonus of any Executive for any year to
the extent the CEO determines that such Executive's performance for such
year did not materially contribute to the Operating Results for such year
or that any act or omission by such Executive has adversely affected (or
can be reasonably expected to adversely affect) the Company.
<PAGE>
8.2 If the Company's Operating Results are less than 90 percent, none of
the Discretionary or Company Performance Component will be paid as Annual
Bonuses. If the Company's Operating Results are exactly 90 percent, 50
percent of the Performance Component will be paid, and up to 50 percent of
the Discretionary Component may be paid, as Annual Bonuses. For each
percentage point by which the Company's Operating Results exceed 90
percent but not 95 percent, an additional 3-1/3 percent of the Performance
Component will be paid, and up to an additional 3-1/3 percent of the
Discretionary Component may be paid, as Annual Bonuses, up to 66-2/3
percent. For each percentage point by which the Company's Operating
Results exceed 95 percent but not 105 percent, an additional 6-2/3 percent
of the Performance Component will be paid, and up to an additional 6-2/3
percent of the Discretionary Component may be paid, as Annual Bonuses, up
to 133-1/3 percent. For each percentage point by which the Company's
Operating Results exceed 105 percent but not 110 percent, an additional 3-
1/3 percent of the Performance Component will be paid, and up to an
additional 3-1/3 percent of the Discretionary Component may be paid, as
Annual Bonuses, up to 150 percent. No more than 150 percent of the
Discretionary Component or Company Performance Component shall be paid as
Annual Bonuses, regardless of the level of the Company's Operating
Results.
8.3 If a Unit's Operating Results are less than 85 percent, none of the
Unit Performance Component will be paid as Annual Bonuses. If a Unit's
Operating Results are exactly 85 percent, 25 percent of the Unit Component
will be paid as Annual Bonuses. For each percentage point by which such
Unit's Operating Results exceed 85 percent but not 90 percent, an
additional 5 percent of the Unit Component will be paid as Annual Bonuses,
up to 50 percent. For each percentage point by which such Unit's
Operating Results exceed 90 percent but not 95 percent, an additional 3-
1/3 percent of the Unit Component will be paid as Annual Bonuses, up to
66-2/3 percent. For each percentage point by which such Unit's Operating
Results exceed 95 percent but not 105 percent, an additional 6-2/3 percent
of the Unit Component will be paid as Annual Bonuses, up to 133-1/3
percent. For each percentage point by which such Unit's Operating Results
exceed 105 percent but not 110 percent, an additional 3-1/3 percent of the
Unit Component will be paid as Annual Bonuses, up to 150 percent. No more
than 150 percent of any Unit Performance Component shall be paid as Annual
Bonuses, regardless of the level of the Unit's Operating Results.
8.4 To the extent payable in accordance with paragraph 8.2 hereof, and
subject to the last sentence of this paragraph 8.4, the Discretionary
Component of the Bonus Pool shall be paid to Executives as Annual Bonuses
in the discretion of the CEO or, in the case of the CEO's Annual Bonus, in
the discretion of the Board. In exercising such discretion, the CEO or
the Board may take into consideration, in addition to the Company's or a
Unit's Operating Results as defined for purposes of this Plan, the extent
of an Executive's contributions to the Company's other financial and non-
financial objectives, such as quality of service and products, customer
satisfaction, adherence to or furtherance of the Company's legal and
<PAGE>
ethical policies, product development, market share, improvement in
financial indicators of the Company's success other than RONA, and
effective response to adverse economic conditions or to unforeseen adverse
events beyond the control of the Company or a Unit. The aggregate amount
of the Discretionary Components of the Annual Bonuses payable to all
Executives for any year shall not exceed the maximum percentage of the
Discretionary Component of the Bonus Pool which, under paragraph 8.2
hereof, may be payable for such year, and the total amount of the Annual
Bonus payable to an Executive for any year shall not exceed by more than
10 percent the maximum percentage of such Executive's Target Bonus which,
under paragraphs 8.2 and 8.3 hereof, may be payable for such year.
9. Payment of Annual Bonuses.
9.1 Except to the extent deferred at the option of an Executive in
accordance with a Deferred Compensation Plan, each Executive's Annual
Bonus for each year, determined in accordance with paragraph 8 hereof,
shall be paid to him in cash no later than March 15 of the following year.
9.2 In the event of an Executive's death after the end of a year but
before his Annual Bonus, if any, for such year has been paid to him, it
shall be paid to the beneficiary or beneficiaries designated by him in
writing filed with the Company or, in the absense of any such designation
or if no such designated beneficiary survives the Executive, to the
beneficiary or beneficiaries of his life insurance under the Company's
Life Insurance Plan. If there is no such designated beneficiary or life
insurance beneficiary, such Executive's Annual Bonus shall be paid to his
estate.
9.3 If an Executive's employment with the Company is terminated for any
reason during the course of a year, or if he is transferred to a position
with the Company which the CEO determines no longer qualifies him to be an
Executive eligible to participate in this Plan, the extent, if any, to
which his Annual Bonus for such year will be paid to him will be
determined by the CEO, in his discretion.
10. Amendment or termination of the Plan. The Board, in its sole discretion,
may amend, suspend, or terminate the Plan at any time, except that no such
action shall adversely affect the rights of any person with respect to an
Annual Bonus that has become payable in accordance with paragraph 8 hereof
without such person's consent.
11. Miscellaneous.
11.1 Nothing in the Plan shall confer on any Executive or other employee
of the Company any right to continue in the employ of the Company or limit
in any way the right of the Company to terminate any such person's employ-
ment at any time.
<PAGE>
11.2 No rights under this Plan shall be assignable or transferable, or
subject to encumbrance of any nature, except to the extent that an
Executive may designate a beneficiary to receive any payment to be made
following his death. If any Executive or beneficiary shall attempt to
assign, transfer, encumber or charge any such right, or should such right
be subjected to attachment, execution, garnishment, sequestration or other
legal, equitable or other process, it shall thereupon pass to such one or
more persons as may be designated by the Committee from among the
Executive, any beneficiary theretofore designated by the Executive, and
any spouse, parent, or child of such Executive or beneficiary.
11.3 With respect to the rights of Executives under the Plan, the
obligations of the Company under the Plan shall be wholly unsecured. The
Company shall be under no obligation to reserve, segregate or earmark any
cash or other property for the payment of any amounts under the Plan.
12. Effective Date. This Plan, when duly executed, shall become effective on
or as of January 1, 1993.
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of Owens-Illinois, Inc., has
caused this Amended and Restated Owens-Illinois, Inc. Senior Management
Incentive Plan to be executed by a duly authorized officer of the corporation,
as of the 1st day of January, 1993.
OWENS-ILLINOIS, INC.
By \s\ Thomas L. Young
Attest: Executive Vice President
By \s\ James W. Baehren
Assistant Secretary
<PAGE>
EXHIBIT 10.16
AMENDED AND RESTATED
OWENS-ILLINOIS, INC. PERFORMANCE AWARD PLAN
Effective January 1, 1993
1. History and purpose.
1.1 The Owens-Illinois, Inc. Performance Award Plan as most recently
adopted by the Board of Directors of Owens-Illinois, Inc. (the "Original
Plan") was effective on January 1, 1987. Said Board has duly authorized
the amendment and restatement of the Original Plan, effective on or as of
January 1, 1993, in the form of this Amended and Restated Owens-Illinois,
Inc. Performance Award Plan (the "Restated Plan"). The provisions of the
Original Plan shall continue to govern with respect to any Performance
Allotments (as defined in the Original Plan) granted under the Original
Plan. The provisions of this Restated Plan shall govern with respect to
Performance Allotments (as defined herein) granted under this Restated
Plan.
1.2 The purposes of this Amended and Restated Owens-Illinois, Inc.
Performance Award Plan are to reward officers and other key management
employees who contribute to the long-term success of the Company, by
making the amount of their compensation significantly contingent upon the
Company's long-term profitable performance and growth, and to attract and
retain officers and other key management employees of exceptional ability.
2. Definitions. As used herein:
"Award Period" means each period of at least three consecutive calendar
years, as established by the Board in accordance with paragraph 5 hereof,
over which it is possible for Performance Awards to be fully earned;
"Award Pool" means, for each Award Period, the amount established by the
Board as the maximum aggregate amount potentially payable as Performance
Awards for such Award Period or, if less, the sum of all Performance
Allotments for such Award Period;
"Board" means the Board of Directors of OI or any committee of said Board
to which any or all of its powers or duties under the Plan may be
delegated;
"CEO" means the Chief Executive Officer of OI;
"Company" means OI together with any corporation (or unincorporated
business entity) 50 percent or more of the voting shares (or other
ownership interests) of which are owned, directly or indirectly, by OI;
<PAGE>
"Deferred Compensation Plan" means any plan or arrangement adopted by the
Company whereby a Participant may be permitted, at his option, to defer
the actual receipt of a Performance Award otherwise payable to him under
this Plan;
"Participant" means an officer or other key management employee of the
Company who is eligible to participate in this Plan in accordance with
paragraph 4 hereof;
"OI" means Owens-Illinois, Inc., a Delaware corporation;
"Performance Allotment" means an amount established for an Award Period in
accordance with paragraph 6 hereof equal to a stated percentage of a
Participant's annual base salary and consisting of one or more Performance
Components, as described in paragraph 6.1 hereof;
"Performance Award" means the compensation payable to a Participant under
this Plan;
"Performance Component" means a component of a Performance Allotment
payable as a Performance Award only to the extent of the Company's
attainment of its related Performance Objective for an Award Period in
accordance with paragraph 8 hereof.
"Performance Objective" means an objective established in accordance with
paragraph 7 hereof for the performance of the Company during an Award
Period;
"Plan" means this Amended and Restated Owens-Illinois, Inc. Performance
Award Plan as set forth herein or as from time to time amended; and
Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include
the plural and vice versa.
3. Administration.
3.1 The Plan will be administered by the Board and the CEO. The
administrative powers of the Board shall include the powers to interpret
the Plan and to exercise full and complete discretion to adopt, modify,
and/or rescind (or to authorize the CEO or one or more other appropriate
officers of OI to adopt, modify, and/or rescind) any rulings, determi-
nations, policies, and/or procedures deemed necessary or appropriate for
the maintenance and administration of the Plan. All such interpretations,
rulings, determinations, policies, and procedures shall be final,
conclusive, and binding upon all interested persons.
3.2 The Board, in its discretion on recommendation of the CEO, shall be
authorized at any time and from time to time to modify any Performance
Objective; to adjust the amount of any Performance Allotment, the size of
the Award Pool, and/or the relative proportions of any Performance
Components; and to accelerate or defer the payment of Performance Awards.
<PAGE>
4. Eligibility and participation. An officer or other key management
employee of the Company shall be a Participant eligible to participate in
the Plan for all or any part of any Award Period during or before which
such participation has been approved by the Board on recommendation of the
CEO. The Board may, on recommendation of the CEO, suspend or withdraw its
approval with respect to any such Participant for all or any part of any
Award Period.
5. Award Periods. Award Periods, which shall be established by the Board,
will begin on any January 1 and end on any subsequent December 31, so long
as each Award Period consists of at least three consecutive calendar
years. The Board may, in its discretion, establish wholly or partially
concurrent Award Periods.
6. Performance Allotments.
6.1 A Performance Allotment shall be granted to each Participant for each
Award Period, equal in amount to a stated percentage, not to exceed 100
percent, of the Participant's annual base salary at the rate in effect
when his Performance Allotment is granted and consisting of one or more
Performance Components. The number of Performance Components included in
each Performance Allotment for an Award Period shall be equal to the
number of Performance Objectives established for such Award Period in
accordance with paragraph 7 hereof, and each such Performance Component
shall be related to one of such Performance Objectives. The Board, on
recommendation of the CEO, shall determine the relative weight of each
Performance Component comprising the Performance Allotments for each Award
Period on a uniform basis as to all Particiants.
6.2 The Board shall establish the amount of the Award Pool for each Award
Period and the amount of the Performance Allotment to be granted to the
CEO. The CEO shall establish the Performance Allotments to be granted to
all other Participants. Performance Allotments shall be established based
on an evaluation of the responsibilities of each Participant and of each
Participant's potential to contribute to the Company's attainment of its
Performance Objective(s) for such Award Period. The Award Pool and
Performance Allotments for each Award Period shall be established before
or as soon as practicable after the beginning of each Award Period (but in
no event later than the end of the first year of such Award Period), and
each Participant shall thereupon be notified of the Performance Allotment
granted to him.
7. Performance Objectives. The Board, on recommendation of the CEO, shall
establish one or more Performance Objectives for the Company for each
Award Period, or for any one or more years within an Award Period, each of
which shall be expressed as the attainment by the Company of a specified,
measurable operating, financial, or other objective, such as (but not
limited to) a specified rate of return on net assets or shareholders'
<PAGE>
equity or a specified rate of earnings per share. Performance
Objective(s) shall be established before or as soon as practicable after
the beginning of each Award Period (but in no event later than the end of
the first year of such Award Period), and each Participant shall thereupon
be notified thereof.
8. Determination of Performance Awards.
8.1 As soon as practicable after the end of each Award Period, the Board
shall determine in good faith the extent to which the Company has attained
its Performance Objectives for such Award Period by reference to the
Company's financial statements for each year of such Award Period, with
such adjustments as the Board, on recommendation of the CEO, may approve
from time to time to prevent distortions not fairly attributable to the
performance of Participants or for other reasons in the discretion of the
Board.
8.2 Upon making its determinations under paragraph 8.1 hereof, and on the
basis thereof, the Board shall, subject to paragraph 8.3 hereof, determine
the extent to which the Award Pool for each Award Period shall be deemed
to have been earned and become payable as Performance Awards, and shall
notify each Participant thereof.
8.3 If, as determined by the Board in good faith under paragraph 8.1
hereof, the Company's attainment of its Performance Objectives for an
Award Period is less than 80 percent, none of the Award Pool for such
Award Period shall be deemed to have been earned and no Performance Awards
shall be paid for such Award Period. If, as so determined, such
attainment is exactly 80 percent, the Award Pool for such Award Period
shall be deemed 20 percent earned and shall be paid as Performance Awards
equal to 20 percent of the Performance Allotments. For each percentage
point by which such attainment exceeds 80 percent, an additional four
percent of such Award Pool shall be deemed to have been earned and an
additional four percent of the Performance Allotments shall become payable
as Performance Awards. To the extent such attainment exceeds 100 percent,
the Award Pool shall be deemed more than fully earned and shall be paid as
Performance Awards in excess of 100 percent of the Performance Allotments,
in accordance with the foregoing, without limitation. In all other
respects, the Board's determinations in good faith under paragraphs 8.1
and 8.2 hereof shall be within the Board's sole and unlimited discretion.
9. Payment of Performance Awards.
9.1 Except to the extent deferred at the option of a Participant in
accordance with a Deferred Compensation Plan, each Participant's
Performance Award for each Award Period, to the extent earned and payable
as determined in accordance with paragraph 8 hereof, shall be paid to him
in cash no later than March 15 of the year following the end of such Award
Period.
<PAGE>
9.2 In the event of a Participant's death after the end of an Award
Period but before his Performance Award, if any, for such Award Period has
been paid to him, it shall be paid to the beneficiary or beneficiaries
designated by him in writing filed with the Company or, in the absense of
any such designation or if no such designated beneficiary survives the
Participant, to the beneficiary or beneficiaries of his life insurance
under the Company's Life Insurance Plan. If there is no such designated
beneficiary or life insurance beneficiary, such Participant's Award shall
be paid to his estate.
9.3 If a Participant's employment with the Company is terminated for any
reason during the course of an Award Period, or if he is transferred to a
position with the Company which the Board, on recommendation of the CEO,
determines no longer qualifies him to be a Participant eligible to
participate in this Plan, a part of his Performance Award, if any, for
such Award Period, proportionate to the part of such Award Period during
which he remained a Participant, will be paid to him unless the Board, on
recommendation of the CEO, determines that the termination or transfer of
his employment was on account of his willful act or omission adversely
affecting (or reasonably expected to adversely affect) the Company.
10. Amendment or termination of the Plan. The Board, in its sole discretion,
may amend, suspend, or terminate the Plan at any time, except that no such
action shall adversely affect the rights of any person with respect to a
Performance Award that has become payable in accordance with paragraph 9
hereof without such person's consent.
11. Miscellaneous.
11.1 Nothing in the Plan shall confer on any Participant or other
employee of the Company any right to continue in the employ of the Company
or limit in any way the right of the Company to terminate any such
person's employment at any time.
11.2 No rights under this Plan shall be assignable or transferable, or
subject to encumbrance of any nature, except to the extent that a
Participant may designate a beneficiary to receive any payment to be made
following his death. If any Participant or beneficiary shall attempt to
assign, transfer, encumber or charge any such right, or should such right
be subjected to attachment, execution, garnishment, sequestration or other
legal, equitable or other process, it shall thereupon pass to such one or
more persons as may be designated by the Board from among the Participant,
any beneficiary theretofore designated by the Participant, and any spouse,
parent, or child of such Participant or beneficiary.
11.3 With respect to the rights of Participants under the Plan, the
obligations of the Company under the Plan shall be wholly unsecured. The
Company shall be under no obligation to reserve, segregate or earmark any
cash or other property for the payment of any amounts under the Plan.
12. Effective date. This Plan, when duly executed, shall become effective on
or as of January 1, 1993.
<PAGE>
IN WITNESS WHEREOF, the Board of Directors of Owens-Illinois, Inc., has
caused this Amended and Restated Owens-Illinois, Inc. Performance Award Plan to
be executed by a duly authorized officer of the corporation, as of the 1st day
of January, 1993.
OWENS-ILLINOIS, INC.
By \s\ Thomas L. Young
Executive Vice President
Attest:
By \s\ James W. Baehren
Assistant Secretary
<PAGE>
EXHIBIT 10.17
OWENS-ILLINOIS, INC.
CORPORATE OFFICERS DEFERRED COMPENSATION PLAN
1. PURPOSE.
The purpose of this Owens-Illinois, Inc. Corporate Officers Deferred
Compensation Plan is to permit elected corporate officers of Owens-
Illinois, Inc. and certain companies affiliated with it to elect to defer
receipt of all or part of their regular, incentive, and/or performance-
based compensation.
2. DEFINITIONS. As used herein:
"Account" means a deferred compensation memorandum account established and
maintained on the books of the Company to reflect an Officer's interest in
the Plan;
"Annual Bonus" means an "Annual Bonus" as defined in and payable to an
Officer under the Incentive Plan;
"Award Period" means, with respect to an Annual Bonus, the calendar year
to which it relates and, with respect to a Performance Award, means the
"Award Period" (as defined in the Performance Award Plan) to which it
relates;
"Board" means the Board of Directors of O-I;
"CEO" means the Chief Executive Officer of O-I;
"Committee" means the Compensation Committee of the Board or any other
committee of the Board to which administrative authority with respect to
the Plan may be delegated by the Board;
"Company" means the corporate group of companies consisting of O-I and
each corporation (or unincorporated business entity) 50 percent or more of
the voting shares (or other ownership interests) of which are owned,
directly or indirectly, by O-I;
"Current Compensation" means any salary, bonus, and/or other form of
current cash remuneration for services rendered to or on behalf of the
Company by an Officer other than an Annual Bonus or Performance Award;
"Deferral Election" means an election made by an Officer pursuant to and
in accordance with Section 5 of the Plan;
"Incentive Plan" means the Amended and Restated Owens-Illinois, Inc.
Senior Management Incentive Plan, as from time to time in effect;
<PAGE>
"Officer" means an elected corporate officer of the Company eligible to
participate in the Plan pursuant to and in accordance with Section 4 of
the Plan;
"O-I" means Owens-Illinois, Inc., a Delaware corporation;
"Performance Award" means a "Performance Award" as defined in and payable
to an Officer under the Performance Award Plan;
"Performance Award Plan" means the Amended and Restated Owens-Illinois,
Inc. Performance Award Plan, as from time to time in effect;
"Plan" means this Owens-Illinois, Inc. Corporate Officers Deferred
Compensation Plan, as from time to time in effect; and
Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include
the plural and vice versa.
3. ADMINISTRATION.
The Plan shall be administered by the Committee. The administrative
powers of the Committee shall include the powers to interpret the Plan and
to exercise full and complete discretion to adopt, modify, and/or rescind
(or to authorize the CEO to adopt, modify, and/or rescind) any rules,
determinations, policies, or procedures deemed necessary or appropriate
for the maintenance and administration of the Plan. Any provision hereof
to the contrary notwithstanding, only the Committee or the Board may
exercise any discretionary and/or administrative authority under the Plan
with respect to the CEO's participation in the Plan, and neither the Board
nor the Committee may delegate any such authority to the CEO or to any
other officer, employee, or committee of O-I (other than another committee
of the Board of which the CEO is not a voting member).
4. ELIGIBILITY AND PARTICIPATION.
Any elected corporate officer of the Company shall be eligible to
participate in this Plan. No member of the Board who is not an employee
of the Company shall be eligible to participate in the Plan, but a member
of the Board who is otherwise eligible to participate in the Plan shall
not be disqualified from such participation solely by reason of such Board
membership.
5. DEFERRAL ELECTIONS.
5.1 Each Officer may elect from time to time, by written notice to the
CEO or, in the case of an election by the CEO, to the Board or the
Committee, to defer his receipt, subject to the provisions of the Plan, of
<PAGE>
(a) all or any specified part of his Annual Bonus and/or Performance
Award, if any, to be earned for an applicable Award Period
ending thereafter; and/or
(b) all or any specified part, up to and including 100 percent, of
his Current Compensation to be earned for the next pay period
and thereafter.
5.2 Each Deferral Election with respect to an Annual Bonus or Performance
Award shall be made at such time and in such manner as may be permitted
pursuant to rules and procedures of uniform application adopted by the
Committee; shall be irrevocable; and shall apply only to the Annual Bonus
or Performance Award with respect to which it is made. The rules and
procedures to be adopted by the Committee under this Section 5.2 shall
specify the time within which any such Deferral Election shall be made
(which shall in all events be before the date on which such Annual Bonus
or Performance Award becomes payable to the electing Officer under the
applicable provisions of the Incentive Plan or Performance Award Plan) in
accordance with Section 9.5 of the Plan.
5.3 Each Deferral Election with respect to an Officer's Current
Compensation shall be made before the first pay period to which it
applies. An Officer may elect prospectively to change the rate of or
revoke his Deferral Election with respect to his future Current Compensa-
tion at such times and with such frequency as may be permitted pursuant to
rules and procedures of uniform application adopted by the Committee.
Until so changed or revoked, such a Deferral Election shall remain in
effect with respect to all Current Compensation earned by the Officer
after the date thereof.
5.4 Notwithstanding the foregoing provisions of this Section 5, an
Officer may make a Deferral Election with respect to all or any specified
part of any unpaid Annual Bonus, Performance Award, and/or Current
Compensation by written notice to the CEO or, in the case of a Deferral
Election by the CEO, to the Board or the Committee, given within one month
after the date on which this Plan is initially adopted or, if later,
within one month after the date on which such Officer first becomes
eligible to participate in this Plan.
6. ACCOUNTS.
6.1 All amounts deferred under the Plan shall be credited by the Company,
as of the date such amounts would otherwise be payable to the Officer in
the absence of a Deferral Election, to the Officer's Account and shall,
until paid or distributed in full, accrue interest, compounded monthly, at
an annual rate equal from time to time to the average annual yield on
domestic corporate bonds of Moody's A-rated companies (as most recently
reported in the Survey of Current Business published by the United States
Department of Commerce or a successor publication) or at such other rate
as the Board may at any time and from time to time designate prospec-
tively.
<PAGE>
6.2 The Company shall be under no duty to segregate or set aside any
amount credited to any Account from the general assets of the Company, but
the Board may, in its discretion, direct the establishment of any
trusteed, insured, or other payment arrangement from which the Company's
obligations as to an Officer under the Plan may be paid. No Officer,
beneficiary, estate, or other person claiming through or under an Officer
shall have any legal or beneficial property interest whatsoever in any
assets of the Company or in any such payment arrangement which may be
established at the direction of the Board except as may be expressly
provided by such payment arrangement. Neither the establishment of an
Account nor the crediting of any amounts thereto nor the establishment of
any payment arrangement (except as may be expressly provided by such
payment arrangement) shall be deemed to create a trust of any kind, any
fiduciary relationship between the Company and any person, or any
collateral security for the Company's obligations under the Plan. To the
extent that an Officer or any other person acquires a right to receive any
payment from the Company under this Plan, such right shall be no greater
than that of any other unsecured general creditor of the Company. The
Company shall provide to each Officer who has made any Deferral Election,
at least annually, a statement of his Account balance.
7. PAYMENT OF ACCOUNT BALANCES.
The entire amount credited to an Officer's Account, including accrued
interest to the date of payment, shall become payable upon termination of
the Officer's employment with the Company for any reason. Amounts so
payable shall be paid to the Officer in cash in a lump sum or, if and to
the extent the Officer has so elected in writing at the time of his
Deferral Elections, in such number, not to exceed 15, of equal annual
installments as the Officer has so elected plus interest on the unpaid
balance at the rate from time to time called for under Section 6.1 of the
Plan. In the event of an Officer's death before his Account plus interest
has been paid to him in full, the entire amount then credited to his
Account, including accrued interest to the date of payment, shall be paid
in cash in a lump sum to the beneficiary or beneficiaries named by him in
a written designation filed with the Company (or, in the absence of such
a designation, to his estate). All payments hereunder shall be made or
commenced as soon as practicable after an Officer's termination of
employment but in no event later than March 31 of the following year.
8. AMENDMENT AND TERMINATION OF THE PLAN.
The Board may at any time and from time to time amend, suspend, or
terminate the Plan in whole or in part; provided, however, that no such
amendment, suspension, or termination may, without the consent of any
Officer affected thereby, have any adverse retroactive effect on the
rights of any such Officer (or any person claiming through or under him)
under the Plan unless required by applicable law.
<PAGE>
9. MISCELLANEOUS.
9.1 At the request of an Officer for whom an Account has been established
hereunder or on its own initiative, the Committee may, at any time and in
its sole and unlimited discretion, accelerate the payment of all or any
part of an Officer's Account balance.
9.2 Nothing in the Plan shall confer on any Officer or any other employee
of the Company any right to continue in the employ of the Company or
affect in any way the right of the Company to terminate any such person's
employment at any time.
9.3 Rights under the Plan shall not be assignable or transferable or
subject to encumbrance or charge of any nature, other than by designation
of beneficiary to take effect at death or, in the absence of such designa-
tion, by will or the laws of descent and distribution.
9.4 The Plan shall be binding on and inure to the benefit of the Company,
each Officer, and every person claiming through or under an Officer, and
their respective heirs, successors, and assigns.
9.5 This Plan is intended as a "Deferred Compensation Plan" within the
meaning of the Incentive Plan and Performance Award Plan, and Deferral
Elections under the Plan are intended to defer Officers' recognition of
income, for income tax purposes under the Internal Revenue Code of 1986,
as amended, until their actual receipt of payments from their Accounts.
The Plan shall be interpreted and administered in a manner consistent with
such intent.
9.6 This Plan shall be effective on and after its date of execution.
<PAGE>
IN WITNESS WHEREOF, the Board has caused this Plan to be executed by
a duly authorized officer of the Company this 31st day of December, 1993.
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
Vice President
Attest:
/s/ James W. Baehren
Assistant Secretary
<PAGE>
EXHIBIT 10.18
OWENS-ILLINOIS, INC. EXECUTIVE SAVINGS PLAN
1. PURPOSE. The purpose of this Owens-Illinois, Inc. Executive Savings Plan
is to provide selected corporate officers and other senior management
employees of Owens-Illinois, Inc. and certain companies affiliated with
it, to the extent any of such officers or employees are restricted as to
their participation in the Owens-Illinois Stock Purchase and Savings
Program, as nearly as practicable with an equivalent benefit.
2. DEFINITIONS. As used herein:
"Account" means a Deferral Account or Matching Account;
"Board" means the Board of Directors of O-I;
"CEO" means the Chief Executive Officer of O-I or any other officer,
employee, or committee of O-I designated by said Chief Executive Officer
to whom any or all of his powers or duties under the Plan may be
delegated;
"Code" means the Internal Revenue Code of 1986, as amended;
"Committee" means the Compensation Committee of the Board or any other
committee of the Board to which administrative authority with respect to
the Plan may be delegated by the Board;
"Company" means the corporate group of companies consisting of O-I and
each corporation (or unincorporated business entity) 50 percent or more of
the voting shares (or other ownership interests) of which are owned,
directly or indirectly, by O-I;
"Current Compensation" means the "Compensation", as defined in SPASP, paid
to an Executive during a year, without regard to any limitations on the
amount thereof imposed under Section 401(a)(17) of the Code;
"Deferral Account" means a deferred compensation memorandum account
established and maintained on the books of the Company to reflect the
value of an Executive's interest in the Plan attributable to his Deferral
Elections;
"Deferral Election" means an election made by an Executive under Section
5.1 of the Plan;
"Executive" means a corporate officer or other senior management employee
of the Company eligible to participate in the Plan under Section 4 of the
Plan;
<PAGE>
"Matching Account" means a deferred compensation memorandum account
established and maintained on the books of the Company to reflect the
value of an Executive's interest in the Plan attributable to the Company's
Matching Credits for his benefit;
"Matching Credit" means a credit by the Company to an Executive's Matching
Account under Section 5.3 of the Plan;
"O-I" means Owens-Illinois, Inc., a Delaware corporation;
"Plan" means this Owens-Illinois, Inc. Executive Savings Plan, as from
time to time in effect;
"SPASP" means the Owens-Illinois Stock Purchase and Savings Program, as
from time to time in effect; and
Words of the masculine gender include correlative words of the feminine
and neuter genders and vice versa, and words denoting the singular include
the plural and vice versa.
3. ADMINISTRATION. The Plan shall be administered by the Committee. The
administrative powers of the Committee shall include the powers to
interpret the Plan and to exercise full and complete discretion to adopt,
modify, and/or rescind (or to authorize the CEO or one or more other
appropriate officers of O-I to adopt, modify, and/or rescind) any rules,
determinations, policies, or procedures deemed necessary or appropriate
for the maintenance and administration of the Plan. Without limiting the
generality of the foregoing, the Committee's rules, determinations,
policies, and procedures under this Plan (including without limitation any
rules and procedures adopted under Section 5.2 hereof) may be consistent
with the provisions of, and any comparable rules, determinations,
policies, and procedures adopted by the Company under, SPASP. Any
provision hereof to the contrary notwithstanding, only the Committee or
the Board may exercise any discretionary and/or administrative authority
under the Plan with respect to the CEO's participation in the Plan, and
neither the Board nor the Committee may delegate any such authority to the
CEO or to any other officer, employee, or committee of O-I (other than
another committee of the Board of which the CEO is not a voting member).
4. ELIGIBILITY AND PARTICIPATION.
Each corporate officer or other senior management employee of the Company
who is eligible to participate in SPASP but whose participation therein is
restricted by reason of the limitations and/or prohibitions imposed by:
(a) Section 401(a)(17) of the Code, as to the maximum amount of
his annual compensation that may be taken into account under
SPASP;
<PAGE>
(b) Section 401(k) of the Code, as to "excess contributions"
that may not be contributed or retained under SPASP for the
benefit of "highly compensated employees";
(c) Section 402(g) of the Code, as to the maximum annual
"elective deferrals" that may be excluded from his gross income
with respect to contributions made on his behalf under SPASP; or
(d) Section 415 of the Code, as to the maximum "annual
addition" that may be made to an account for his benefit under
SPASP,
or who is entirely excluded from current participation in SPASP solely
because, as determined by the Committee or the CEO, his participation
therein would jeopardize the qualification of SPASP under Section 401(a)
of the Code, shall be eligible to participate in this Plan if, and for so
long as, he is selected to do so by the Committee or the CEO. No member
of the Board who is not an employee of the Company shall be eligible to
participate in the Plan, but a member of the Board who is otherwise
eligible to participate in the Plan shall not be disqualified from such
participation solely by reason of such Board membership.
5. DEFERRAL ELECTIONS AND MATCHING CREDITS.
5.1 Each Executive eligible to participate in the Plan under Section 4 of
the Plan may elect from time to time, by written notice to the Company,
given before the first day of any regular Company pay period for salaried
employees, to defer his receipt, subject to the provisions of the Plan, of
a specified part of his Current Compensation earned in the next pay period
and thereafter. The amount of an Executive's Current Compensation to be
deferred pursuant to his Deferral Elections under this Plan shall not
exceed, on an annual basis, the excess of 19% of his Current Compensation
over the sum of his annual "MTSO Contributions" and "SCO Contributions"
under (and as defined in) SPASP.
5.2 An Executive may elect prospectively to change the rate of or revoke
his Deferral Election with respect to his future Current Compensation at
such times and with such frequency as may be permitted pursuant to rules
and procedures of uniform application adopted by the Committee. Until so
changed or revoked, an Executive's Deferral Election shall remain in
effect with respect to all Current Compensation earned by the Executive
after the date thereof.
5.3 The Company shall post a Matching Credit to the Matching Account of
each Executive who has made a Deferral Election under Section 5.1 in an
amount equal to 50 percent of the amount of such Deferral Election, up to
a maximum annual Matching Credit equal to the excess of (a) three percent
of the Executive's Current Compensation or, if less, $10,000, over (b) the
amount of the annual "Company Matching Contribution" made on his behalf
under (and as defined in) SPASP.
<PAGE>
5.4 For purposes of Sections 5.1 and 5.3 of the Plan, an Executive who is
eligible to participate in SPASP for all or any part of a year shall be
deemed conclusively to have made "MTSO Contributions" under (and as
defined in) SPASP in the maximum amount which he is permitted to make
thereunder for the period of such eligibility.
5.5 Any provision hereof to the contrary notwithstanding, the annual sum
of an Executive's Deferral Elections and Matching Credits hereunder plus
his "MTSO Contributions", "SCO Contributions", and "Company Matching
Contributions" under (and as defined in) SPASP shall not exceed $30,000.
6. ACCOUNTS.
6.1 All amounts deferred under the Plan shall be credited by the Company,
as of the date such amounts would otherwise be payable to the Executive in
the absence of a Deferral Election, to the Executive's Deferral Account.
All Matching Credits shall be posted concurrently with the deferred
amounts to which they relate. All such amounts so credited to an
Executive's Deferral and Matching Accounts shall, until paid or distribut-
ed in full, accrue interest, compounded monthly, at an annual rate equal
from time to time to the average annual yield on domestic corporate bonds
of Moody's A-rated companies (as most recently reported in the Survey of
Current Business published by the United States Department of Commerce or
a successor publication) or at such other rate as the Board may at any
time and from time to time designate prospectively.
6.2 The Company shall be under no duty to segregate or set aside any
amount credited to any Account from the general assets of the Company, but
the Board may, in its discretion, direct the establishment of any
trusteed, insured, or other payment arrangement from which the Company's
obligations as to an Executive under the Plan may be paid. No Executive,
beneficiary, estate, or other person claiming through or under an
Executive shall have any legal or beneficial property interest whatsoever
in any assets of the Company or in any such payment arrangement which may
be established at the direction of the Board except as may be expressly
provided by such payment arrangement. Neither the establishment of an
Account nor the crediting of any amounts thereto nor the establishment of
any payment arrangement (except as may be expressly provided by such
payment arrangement) shall be deemed to create a trust of any kind, any
fiduciary relationship between the Company and any person, or any
collateral security for the Company's obligations under the Plan. To the
extent that an Executive or any other person acquires a right to receive
any payment from the Company under this Plan, such right shall be no
greater than that of any other unsecured general creditor of the Company.
The Company shall provide to each Executive who has made any Deferral
Election, at least annually, a statement of his Account balances.
<PAGE>
7. PAYMENT OF ACCOUNT BALANCES.
7.1 Each Executive shall at all times have a nonforfeitable, fully vested
interest in the amounts credited to his Deferral Account and Matching
Account.
7.2 The entire amount credited to an Executive's Accounts, including
accrued interest to the date of payment, shall become payable upon
termination of the Executive's employment with the Company by reason of
his death, total and permanent disability, normal or early retirement
pursuant to any retirement plan sponsored by the Company, or any other
reason. Amounts so payable shall be paid to the Executive in cash in a
lump sum as soon as practicable after such termination of employment but
in no event later than March 31 of the following year.
7.3 In the event of an Executive's death before his Accounts plus
interest have been paid to him in full, the entire amount then credited to
his Accounts, including accrued interest to the date of payment, shall be
paid in cash in a lump sum to the beneficiary or beneficiaries named by
him in a written designation filed with the Company (or, in the absence of
such a designation, to his estate). Such payment shall be made as soon as
practicable after such Executive's death but in no event later than March
31 of the following year.
7.4 Before termination of employment, an Executive may request a
withdrawal from his Deferral Account of an amount sufficient to meet a
financial hardship that would justify a withdrawal of the same amount from
a "MTSO Contributions Account" under (and as defined in) SPASP. The
Committee shall determine the existence of a bona fide financial hardship
based on non-discriminatory procedures, taking into account any then
applicable rulings or regulations of the Internal Revenue Service. The
standards established by the Committee for determining the existence of a
financial hardship shall be uniformly applied to all Executives who
request such a withdrawal, and the Committee's decision with respect to
each such request shall be final. An approved hardship withdrawal shall
be paid to the Executive in cash as soon as practicable after approval.
8. AMENDMENT AND TERMINATION OF THE PLAN. The Board may at any time and from
time to time amend, suspend, or terminate the Plan in whole or in part;
provided, however, that no such amendment, suspension, or termination may,
without the consent of each Executive affected thereby, have any adverse
retroactive effect on the rights of any Executive (or any person claiming
through or under him) under the Plan unless required by applicable law.
9. MISCELLANEOUS.
9.1 At the request of an Executive or on its own initiative, the
Committee may, at any time and in its sole and unlimited discretion,
accelerate the payment of any part of an Executive's Accounts.
<PAGE>
9.2 Nothing in the Plan shall confer on any Executive or any other
employee of the Company any right to continue in the employ of the Company
or affect in any way the right of the Company to terminate any such
person's employment at any time.
9.3 Rights under the Plan shall not be assignable or transferable or
subject to encumbrance or charge of any nature, other than by designation
of beneficiary to take effect at death or, in the absence of such designa-
tion, by will or the laws of descent and distribution.
9.4 The Plan shall be binding on and inure to the benefit of the Company,
each Executive, and every person claiming through or under an Executive,
and their respective heirs, successors, and assigns.
9.5 Deferral Elections under the Plan are intended to defer Executives'
recognition of income, for income tax purposes under the Code, until their
actual receipt of payments from their Accounts. The Plan shall be
interpreted and administered in a manner consistent with such intent.
9.6 This Plan shall be effective on and after its date of execution.
<PAGE>
IN WITNESS WHEREOF, the Board has caused this Plan to be executed by
a duly authorized officer of the Company this 31st day of December, 1993 .
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
Vice President
Attest:
/s/ James W. Baehren
Assistant Secretary
<PAGE>
EXHIBIT 10.19
FIRST AMENDMENT TO
OWENS-ILLINOIS SUPPLEMENTAL
RETIREMENT BENEFIT PLAN
Pursuant to the authority reserved to the Board of Directors (the
"Board") of Owens-Illinois, Inc. (the "Company") under Section 5.1 of the Owens-
Illinois Supplemental Retirement Benefit Plan (the "Plan"), the Board hereby
amends the Plan as follows:
1. The first sentence of Section 4.03 of the Plan is replaced by the
following:
The time at which any retirement, survivor, or death benefit is
payable under this Plan shall be substantially the same, allowing for
differences in administrative procedures, as the time at which such
benefit would have been payable under the Salary Plan. The person or
persons to whom any such benefit is payable under this Plan shall be
identical to the person or persons to whom such benefit would have
been payable under the Salary Plan. All elections, designations, and
determinations with respect to the time at which and person or
persons to whom benefits are payable under this Plan shall be made as
and when made under the Salary Plan.
2. This First Amendment shall be effective as of December 1, 1993.
In all other respects the Plan shall remain in full force and effect as
originally adopted effective October 1, 1991.
IN WITNESS WHEREOF, the Board has caused this First Amendment to be
executed by a duly authorized officer of the Company this 31st day of
December, 1993 .
OWENS-ILLINOIS, INC.
By /s/ Thomas L. Young
Vice President
Attest:
/s/ James W. Baehren
Assistant Secretary
<PAGE>
EXHIBIT 21
OWENS-ILLINOIS, INC.
SUBSIDIARIES OF THE REGISTRANTS
The Registrants had the following subsidiaries at December 31, 1993:
Domestic Subsidiaries
State of Incorporation
Name or Organization
- ---- ----------------------
Owens-Brockway Packaging, Inc. Delaware
OI Puerto Rico STS Inc. Delaware
Owens-Illinois de Puerto Rico Ohio
OI Venezuela STS Inc Delaware
OI Peldar STS Inc. Delaware
OI Ecuador STS Inc. Delaware
OIB Produvisa Inc. Delaware
OI Consol STS Inc. Delaware
OI Peru STS, Inc. Delaware
OI Poland, Inc. Delaware
OI Brazil, Inc. Delaware
Bolivian Investments, Inc. Delaware
Overseas Finance Company Delaware
SeaGate, Inc. Ohio
OI Ione STS Inc. Delaware
OI Closure FTS Inc. Delaware
Owens-Illinois Closure Inc. Delaware
Product Design & Engineering, Inc. Minnesota
Specialty Packaging Licensing Company Delaware
OI Plastic Products FTS Inc. Delaware
Owens-Illinois Plastic Products Inc. Delaware
Owens-Illinois Prescription Products Inc. Delaware
OI Medical, Inc. Delaware
Owens-BriGam Medical Company Delaware
OI Treitler STS Inc. Delaware
Owens-Illinois Labels Inc. Delaware
Treitler-Owens, Inc. New Jersey
OI Dougherty STS Inc. Delaware
DBC, Inc. New Jersey
Owens-Illinois Specialty Products Puerto Rico, Inc. Delaware
OI Regioplast STS, Inc. Delaware
OI Schott STS Inc. Delaware
<PAGE>
State of Incorporation
Name or Organization
- ---- ----------------------
OI General Finance Inc. Delaware
OI General FTS Inc. Delaware
Owens-Illinois General Inc. Delaware
Harbor Capital Advisors, Inc. Delaware
HCA Securities, Inc. Delaware
Harbor Transfer, Inc. Delaware
Owens Industries, Inc. Ohio
Owens Hotel Industry, Inc. Ohio
OI Holding Company, Inc. Ohio
OI Services, Inc. Ohio
Pacific Coast Glass Co., Ltd. California
OI Castalia STS Inc. Delaware
OI Levis Park STS Inc. Delaware
OI MVCURC STS Inc. Delaware
Maumee Valley Community Urban Redevelopment Corporation Ohio
OI UMI STS Inc. Delaware
Universal Materials, Inc. Ohio
OI AID STS Inc. Delaware
OI Overseas Management Company Limited Delaware
Owens-Brockway Glass Container Inc. Delaware
OI Brockway Plastics, Inc. Delaware
Brockway Research Inc. Delaware
Brockway Realty Inc. Pennsylvania
OI Health Care Holding Corp. Delaware
OI Funding Corporation Delaware
<PAGE>
Foreign Subsidiaries
Country of Incorporation
Name or Organization
- ---- ------------------------
Owens Insurance, Ltd. Bermuda
Cisper Industria e Comercio, S. A. Brazil
Companhia Industrial Sao Paulo e Rio Brazil
Sao Raimundo Administracao,
Participacoes e Representacoes, Limitada Brazil
Cristaleria Peldar, S. A. Colombia
Cristaleria del Ecuador, S. A. Ecuador
Regioplast S.A. de C.V. Mexico
Specialty Packaging Products de Mexico, S. A., CVA Mexico
Vidrios Industries S.A. Peru
United Glass Group Ltd. United Kingdom
United Glass, Limited United Kingdom
Centro Vidriero de Venezuela, C. A. Venezuela
Fabrica de Vidrio Los Andes, C. A. Venezuela
Manufacturera de Vidrios Planos, C. A. Venezuela
Owens-Illinois de Venezuela, C. A. Venezuela
Owens-Illinois Ventas, S. A. Venezuela
Owens-Illinois Foreign Sales Corp. Virgin Islands
<PAGE>
EXHIBIT 23.1
OWENS-ILLINOIS, INC.
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Selected Financial
Data."
We also consent to the incorporation by reference in the Registration State-
ment (Form S-3 No. 33-51982) of Owens-Illinois, Inc. and in the related
Prospectus, in the Registration Statement (Form S-8 No. 33-43559) pertaining
to the Fourth Amended and Restated Owens-Illinois, Inc. Stock Purchase and
Savings Program; the Second Amended and Restated Owens-Illinois, Inc., Non-
Union Retirement and Savings Plan; the Second Amended and Restated Owens-
Illinois, Inc. Supplemental Retirement Plan; and the First Amended and
Restated Owens-Illinois, Inc. Long-Term Savings Plan, and in the Registration
Statement (Form S-8 No. 33-44252) pertaining to the Amended and Restated Stock
Option Plan for Key Employees of Owens-Illinois, Inc. of our report dated
February 4, 1994 with respect to the consolidated financial statements and
schedules of Owens-Illinois, Inc., included in this Annual Report (Form 10-K)
for the year ended December 31, 1993.
(/s/ Ernst & Young)
Ernst & Young
Toledo, Ohio
March 29, 1994
<PAGE>
EXHIBIT 23.2
OWENS-ILLINOIS, INC.
CONSENT OF MCCARTER & ENGLISH
March 29, 1994
Ladies and Gentlemen:
We consent to the incorporation by reference in this Annual Report on
Form 10-K of Owens-Illinois, Inc. and Owens-Illinois Group, Inc. for the year
ended December 31, 1993, of the reference to our firm under the caption "Legal
Proceedings."
Very truly yours,
(/s/ McCarter & English)
McCarter & English
<PAGE>
EXHIBIT 24
OWENS-ILLINOIS, INC.
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS: That each individual whose
signature appears below hereby consents to and appoints Thomas L. Young, Lee
A. Wesselmann, or either of them, individually, as his true and lawful
attorney-in-fact and agent with all power of substitution, for him and in his
name, place and stead, in any and all capacities, to sign the 1993 Annual
Report on Form 10-K of Owens-Illinois, Inc. and Owens-Illinois Group, Inc.,
both corporations organized and existing under the laws of the State of
Delaware, and any and all amendments thereto, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the
Securities and Exchange Commission pursuant to the requirements of the
Securities and Exchange Act of 1934, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the same as fully to all
intents and purposes as he might or could do in person, hereby notifying and
confirming all that said attorney-in-fact and agent or his substitute or
substitutes, may lawfully do or cause to be done by virtue thereof.
IN WITNESS WHEREOF, each of the undersigned has hereunto set his
hand on the date set opposite his name.
Signature Title Date
- --------- ----- -------
/s/ Joseph H. Lemieux Chairman of the Board of 3/29/94
- ------------------------- Directors, and Chief -------
Joseph H. Lemieux Executive Officer (Principal
Executive Officer); Director
/s/ Lee A. Wesselmann Senior Vice President and 3/29/94
- ------------------------- Chief Financial Officer -------
Lee A. Wesselmann (Principal Financial Officer);
Director
Chairman Emeritus of the
- ------------------------- Board of Directors; Director -------
Robert J. Lanigan
/s/ David G. Van Hooser Vice President, Treasurer and 3/29/94
- ------------------------- Comptroller (Principal -------
David G. Van Hooser Accounting Officer)
/s/ Edward A. Gilhuly Director 3/29/94
- ------------------------- -------
Edward A. Gilhuly
/s/ James H. Greene, Jr. Director 3/29/94
- ------------------------- -------
James H. Greene, Jr.
<PAGE>
Signature Title Date
- --------- ----- -------
Director
- ------------------------- -------
Henry R. Kravis
Director
- ------------------------- -------
Robert I. MacDonnell
/s/ Michael W. Michelson Director 3/29/94
- ------------------------- -------
Michael W. Michelson
/s/ George R. Roberts Director 3/29/94
- ------------------------- -------
George R. Roberts
