<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 17, 1997
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
PLASTIC CONTAINERS, INC.
(EACH NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3085 13-3632393
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
CONTINENTAL PLASTIC CONTAINERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE 3085 06-1056158
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
CONTINENTAL CARIBBEAN CONTAINERS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 3085 66-0342024
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (IRS EMPLOYER
JURISDICTION OF CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
INCORPORATION OR
ORGANIZATION)
PLASTIC CONTAINERS, INC.
ONE AERIAL WAY
SYOSSET, NEW YORK 11791
(516) 822-4940
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
----------------
ABDO YAZGI, ESQ.
SECRETARY
PLASTIC CONTAINERS, INC.
ONE AERIAL WAY
SYOSSET, NEW YORK 11791
(516) 822-4940
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
----------------
COPIES TO:
VINCENT MONTE-SANO, ESQ.
CARTER, LEDYARD & MILBURN
2 WALL STREET
NEW YORK, NEW YORK 10005
(212) 732-3200
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: Upon consummation of the Exchange Offer described herein.
IF THE SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED IN
CONNECTION WITH THE FORMATION OF A HOLDING COMPANY AND THERE IS A COMPLIANCE
WITH GENERAL INSTRUCTION G, CHECK THE FOLLOWING BOX. [_]
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED
PROPOSED MAXIMUM
TITLE OF EACH CLASS MAXIMUM AGGREGATE
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF
REGISTERED REGISTERED PER UNIT PRICE REGISTRATION FEE
- -----------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
10% Senior Secured Notes
due 2006, Series B.... $125,000,000 100% $125,000,000 $37,878.79
- -----------------------------------------------------------------------------------
Guarantees of 10% Senior
Secured Notes due 2006,
Series B.............. (1) (1) (1) -0- (1)
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- -----------------------------------------------------------------------------------
</TABLE>
(1) Pursuant to Rule 457(n) under the Securities Act of 1933, no separate fee
for the Guarantees is payable.
----------------
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION, DATED JANUARY 17, 1997
PROSPECTUS
[LOGO] PLASTIC CONTAINERS, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SECURED NOTES DUE 2006, SERIES B, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10% SENIOR SECURED NOTES DUE 2006, SERIES A,
WHICH HAVE NOT BEEN SO REGISTERED
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS THEREUNDER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1997, UNLESS EXTENDED.
----------
Plastic Containers Inc., a Delaware corporation ("PCI" or the "Company"),
hereby offers, upon the terms and subject to the conditions set forth in this
Prospectus and the accompanying letter of transmittal (the "Letter of
Transmittal" and together with this Prospectus the "Exchange Offer"), to
exchange $1,000 principal amount of its 10% Senior Secured Notes due 2006,
Series B (the "New Notes"), which have been registered under the Securities Act
of 1933, as amended (the "Securities Act"), for each $1,000 principal amount of
its outstanding 10% Senior Secured Notes due 2006, Series A (the "Old Notes"),
of which $125,000,000 aggregate principal amount is outstanding as of the date
hereof. The New Notes and the Old Notes are collectively referred to herein as
the "Senior Secured Notes."
The Company will accept for exchange any and all Old Notes that are validly
tendered and not withdrawn on or prior to 5:00 p.m., New York City time, on the
date the Exchange Offer expires, which will be , 1997, unless
the Exchange Offer is extended (the latest date to which the Exchange Offer is
extended being herein referred to as the "Expiration Date"). Tenders of Old
Notes may be withdrawn at any time prior to 5:00 p.m., New York City time, on
the Expiration Date. The Exchange Offer is not conditioned upon any minimum
amount of Old Notes being tendered for exchange. Old Notes may be tendered only
in integral multiples of $1,000.
The New Notes upon issuance will be senior secured obligations of the Company
evidencing the same debt as the Old Notes tendered in exchange therefor, and
will be entitled to the benefits of the same Indenture (as defined herein),
which governs both the Old Notes and the New Notes. The New Notes are in all
material respects identical to the Old Notes except that the New Notes have
been registered under the Securities Act whereas the Old Notes were not.
Accordingly, the New Notes will not in general be subject to the restrictions
on resale applicable to the Old Notes. See "The Exchange Offer -- Purpose and
Effect of the Exchange Offer."
The Old Notes and the New Notes constitute new issues of securities with no
established trading market. No assurance can be given as to the liquidity of
the trading market for either the Old Notes or the New Notes. Any Old Notes not
tendered and accepted in the Exchange Offer will remain outstanding. To the
extent that Old Notes are tendered and accepted in the Exchange Offer, a
holder's ability to sell untendered Old Notes or tendered but unaccepted Old
Notes could be adversely affected. Following consummation of the Exchange
Offer, the holders of Old Notes will continue to be subject to the existing
restrictions on transfer thereof and PCI will have no further obligation to
such holders to provide for the registration under the Securities Act of the
Old Notes held by them, except if a holder of Old Notes shall notify the
Company, within 20 business days following the consummation of the Exchange
Offer, that (i) such holder was prohibited by law or the policy of the
Securities and Exchange Commission (the "Commission") from participating in the
Exchange Offer, or (ii) such holder may not resell the New Notes acquired by it
in the Exchange Offer to the public without delivering a prospectus, and this
Prospectus (including any amendment or supplement thereto) is not appropriate
or available for such resales by such holder. See "Registration Rights."
The New Notes will bear interest at a rate of 10% per annum from the
Expiration Date, the date of their original issuance. Interest on the New Notes
will be payable semi-annually on June 15 and December 15 of each year,
commencing June 15, 1997. Holders of Old Notes that are accepted for exchange
will receive accrued interest thereon to the date of issuance of the New Notes
at a rate of 10% per annum. Such interest will be paid with the first interest
payment on the New Notes. Interest on the Old Notes accepted for exchange will
cease to accrue upon issuance of the New Notes.
The Senior Secured Notes will mature on December 15, 2006. Except as set
forth below, the Senior Secured Notes will not be redeemable prior to December
15, 2001. Thereafter, the Senior Secured Notes will be redeemable, in whole or
in part, at the option of PCI at an initial price of 105% of the principal
amount thereof, declining ratably thereafter per annum to 100% on and after
December 15, 2004, plus in each case accrued and unpaid interest to the date of
redemption. In addition, on or prior to December 15, 1999, the Company may
apply the net cash proceeds of a Public Equity Offering (as defined) which
yields gross proceeds of $15.0 million or more to redeem up to $40.0 million of
the aggregate principal amount of the Senior Secured Notes at a redemption
price of 109% of the principal amount thereof to be redeemed plus accrued and
unpaid interest, if any, to the date of redemption, provided that at least
$85.0 million aggregate principal amount of Senior Secured Notes remains
outstanding immediately after such redemption and any such redemption occurs
not more than 120 days after the consummation of any such Public Equity
Offering. In the event of a Change of Control (as defined herein), PCI will be
obligated to make an offer to repurchase all outstanding Senior Secured Notes
at a price equal to 101% of the principal amount thereof plus accrued and
unpaid interest, if any, to the date of repurchase. Also, the Company will be
obligated in certain instances to make offers to purchase Senior Secured Notes
at a redemption price of 100% of the principal amount thereof, plus accrued and
unpaid interest, if any, to the date of repurchase, with the net cash proceeds
of certain sales or other dispositions of assets. See "Description of Senior
Secured Notes."
The New Notes, like the Old Notes, (i) will be unconditionally guaranteed
(the "Guarantees"), jointly and severally, by the Company's wholly-owned
subsidiaries, Continental Plastic Containers, Inc. ("CPC") and Continental
Caribbean Containers, Inc. ("Caribbean") (collectively, the "Guarantors" or the
"Continental Plastic Container Companies"), and (ii) will be secured by a lien
on and security interest in all of the issued and outstanding capital stock of
the Guarantors and substantially all of the assets and properties owned by the
Company and the Guarantors other than accounts receivable, inventory and
certain equipment securing capital lease obligations (the "Collateral"). The
New Notes will rank pari passu in right of payment with the Old Notes and all
other unsubordinated indebtedness of the Company, and the Guarantees will rank
pari passu in right of payment with all unsubordinated indebtedness of CPC and
Caribbean, respectively. As of September 30, 1996, after giving effect to the
Refinancing (as defined herein), the aggregate outstanding principal amount of
the Company's indebtedness would have been approximately $130.3 million. See
"Capitalization."
SEE "RISK FACTORS" BEGINNING ON PAGE 10 FOR A DISCUSSION OF CERTAIN RISKS
ASSOCIATED WITH AN INVESTMENT IN THE SENIOR SECURED NOTES.
Each broker-dealer that receives New Notes pursuant to the Exchange Offer in
exchange for Old Notes being held for its own account as a result of market-
making or other trading activities may be a statutory underwriter for purposes
of the Securities Act, and must acknowledge that it will deliver a prospectus
meeting the requirements of the Securities Act in connection with any resale of
such New Notes. The Letter of Transmittal states that by so acknowledging and
by delivering a prospectus, such broker-dealer will not be deemed to be
admitting that it is an "underwriter" within the meaning of the Securities Act.
This Prospectus, as amended or supplemented from time to time, may be used by
such a broker-dealer in connection with resales of New Notes received by it in
exchange for Old Notes so held. See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS , 1997.
<PAGE>
AVAILABLE INFORMATION
The Company has filed a registration statement on Form S-4 (herein referred
to, together with all exhibits and schedules thereto and any amendments
thereof, as the "Registration Statement") under the Securities Act with
respect to the New Notes offered hereby. This Prospectus, which forms a part
of the Registration Statement, does not contain all of the information set
forth in the Registration Statement, certain parts of which are omitted in
accordance with the rules and regulations of the Commission. For further
information with respect to the Company and the New Notes offered hereby,
reference is made to the Registration Statement. Statements made in this
Prospectus as to the contents of certain documents are not necessarily
complete and, in each instance, reference is made to the copy of the document
filed as an exhibit to the Registration Statement.
PCI is subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith
files reports and other information with the Securities and Exchange
Commission (the "Commission"). Such reports and other information, as well as
the Registration Statement, can be inspected and copied at the Public
Reference Section of the Commission's office at Room 1024, 450 Fifth Street,
N.W., Washington, D.C. 20549, and at the Commission's regional offices in New
York (7 World Trade Center, 13th Floor, New York, New York 10048) and Chicago
(Citicorp Center, 14th Floor, 500 West Madison Street, Chicago, Illinois
60661). Copies of such reports and information and the Registration Statement
may be obtained at prescribed rates from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549. In addition, the
Commission maintains a Web site that contains reports and other information
regarding registrants (such as PCI) that file electronically with the
Commission. The address of such site is http://www.sec.gov.
The Company intends to furnish the holders of Senior Secured Notes with its
Annual Reports on Form 10-K containing financial information which will be
examined and reported upon, with an opinion expressed by, an independent
certified public accountant.
For so long as any Old Notes remain outstanding, and during any period in
which the Company and the Guarantors are not subject to Section 13 or 15(d) of
the Exchange Act, the Company and the Guarantors will make available, upon
request, to any registered holder or beneficial owner of Old Notes in
connection with any prospective resale of Old Notes pursuant to Rule 144A
under the Securities Act, and to any prospective purchaser designated by such
holder or beneficial owner, the information required by Rule 144A(d)(4).
2
<PAGE>
SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements appearing elsewhere in this Prospectus.
Unless the context otherwise requires, references to "PCI" or the "Company"
refer to Plastic Containers, Inc. and its subsidiaries on a consolidated basis,
and references to the "Continental Plastic Container Companies" refer jointly
to the Company's subsidiaries, Continental Plastic Containers, Inc. ("CPC") and
Continental Caribbean Containers, Inc. ("Caribbean"). Certain capitalized terms
in this summary are defined elsewhere in this Prospectus. See, in particular,
"Description of Senior Secured Notes--Certain Definitions."
THE COMPANY
GENERAL
Plastic Containers, Inc. is a leader in developing, manufacturing and
marketing a wide range of custom extrusion blow-molded plastic containers for
food and juice, household chemicals, automotive products and motor oil,
industrial and agricultural chemicals, and hair care products. The Company
manufactures single and multi-layer containers, primarily from high density
polyethylene ("HDPE") and polypropylene ("PP") resins, ranging in size from two
ounces to two and one-half gallons. Management believes that, based on
revenues, the Company is among the largest U.S. manufacturers of extrusion
blow-molded plastic containers for (i) food and juice, (ii) automotive motor
oil and (iii) household chemical products. For the twelve months ended
September 30, 1996, the Company had net sales and pro forma EBITDA (as defined)
of $259.5 million and $29.6 million, respectively.
In 1995, PCI sold over 1.4 billion containers to national consumer product
companies, including Clorox, Coca-Cola Foods, Colgate-Palmolive, Lever
Brothers, Mobil Oil, Pace Foods, Pennzoil, Procter & Gamble, Quaker Oats and
Quaker State. The Company often is the sole supplier of a customer's container
requirements for specific product categories or for particular container sizes.
The Company has long-standing relationships with most of its customers and has
long-term contractual agreements with remaining terms of up to six years with
customers who represent approximately $237 million, or 86%, of the Company's
fiscal 1995 dollar sales volume. All of these contracts provide for changes in
raw material prices to be passed through to the customer.
The principal executive offices of the Company are located at One Aerial Way,
Syosset, New York 17791, telephone number (516) 822-4940. The principal
executive offices of the Continental Plastic Container Companies are located at
301 Merritt 7 Corporate Park, Norwalk, Connecticut 06856, telephone number
(203) 750-5800.
THE REFINANCING
The Company recently engaged in a series of related transactions
(collectively, the "Refinancing") comprised of (i) the offer and sale of the
Old Notes (the "Old Note Offering"), (ii) a cash tender offer (the "Tender
Offer") to purchase any and all of the Company's $104.7 million aggregate
principal amount of outstanding 10 3/4% Senior Secured Notes Due 2001 (the "10
3/4% Notes"), (iii) the discharge of all 10 3/4% Notes not purchased in the
Tender Offer (the "Redemption"), (iv) a sale/leaseback financing for
approximately $40.6 million (the "Sale/Leaseback") involving plastic container
manufacturing and ancillary equipment and a mortgage on one facility, and (v) a
$30.0 million loan (the "Continental Can Loan") by PCI to Continental Can
Company, Inc. ("Continental Can"), which prior to the Refinancing owned a 50%
equity interest in PCI and which used the proceeds of the Continental Can Loan
to acquire an additional 34% equity interest in PCI, thereby increasing its
ownership to 84%. See "The Refinancing" and "Ownership of PCI."
3
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer........ The Company is offering to exchange $1,000
principal amount of New Notes for each $1,000
principal amount of Old Notes that is properly
tendered and accepted. As of the date of this
Prospectus, $125,000,000 aggregate principal amount
of Old Notes was outstanding. See "The Exchange
Offer."
Based on interpretations given by the staff of the
Commission in no-action letters issued to persons
other than the Company, management of the Company
believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be
offered for resale, resold and otherwise
transferred by any holder thereof (other than any
such holder which is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities
Act, or certain broker-dealers and their
affiliates) without compliance with the
registration and prospectus delivery provisions of
the Securities Act, provided that such New Notes
are acquired in the ordinary course of such
holder's business and that such holder has no
arrangement or understanding with any person to
participate in the distribution of such New Notes.
See "The Exchange Offer--Purpose and Effect of the
Exchange Offer" and "Plan of Distribution."
Expiration Date........... The Exchange Offer will expire at 5:00 p.m., New
York City time, on , 1997, unless
extended. The term "Expiration Date" shall mean the
latest date to which the Exchange Offer is
extended. The Company will accept for exchange any
and all Old Notes which are properly tendered in
the Exchange Offer prior to 5:00 p.m., New York
City time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will be
deemed to be issued on the Expiration Date and will
be delivered promptly following the Expiration
Date.
Interest on the New Notes
and Old Notes............ Each New Note will bear interest from the
Expiration Date and interest on the Old Notes
accepted for exchange will cease to accrue on the
Expiration Date. Holders of Old Notes that are
accepted for exchange will receive accrued interest
on the Old Notes at the rate of 10% per annum from
the date of original issuance of the Old Notes
(December 17, 1996) through the Expiration Date,
payable on June 15, 1997 with the first interest
payment on the New Notes, and will receive accrued
interest on the New Notes at the rate of 10% per
annum from and after the Expiration Date.
Condition to the Exchange The Company may terminate the Exchange Offer if it
Offer.................... determines that its ability to proceed with the
Exchange Offer is prohibited or could be materially
impaired by any legal or governmental action, any
law, statute, rule or regulation or any
interpretation thereof by the staff of the
Commission. The Company does not expect any of the
foregoing to occur, although there can be no
assurances that any such condition will not occur.
See "The Exchange Offer--Condition to the Exchange
Offer."
4
<PAGE>
Procedures for For Old Notes to be validly tendered pursuant to
Tendering................ the Exchange Offer, either (i) book-entry
confirmation of a valid book-entry transfer must be
received by the Exchange Agent prior to the
expiration of the Exchange Offer, or (ii) a
properly completed Letter of Transmittal (or a
facsimile thereof) duly executed by the registered
holder of such Old Notes, together with the
certificates for the Old Notes tendered and any
other documents required by the Letter of
Transmittal, must be received by the Exchange Agent
prior to the expiration of the Exchange Offer at
one of its addresses set forth herein under the
caption "The Exchange Offer--Exchange Agent." No
provision has been made for the delayed guaranteed
delivery of Old Note certificates. See "The
Exchange Offer--Procedures for Tendering."
Special Procedures for
Beneficial Owners........ Any person who is a beneficial owner of Old Notes
which are registered in the name of a broker,
dealer, commercial bank, trust company or other
nominee, and who wishes to tender Old Notes in the
Exchange Offer, should contact such nominee
promptly with instructions to tender such Old Notes
on such beneficial owner's behalf. If a beneficial
owner wishes to tender directly, such beneficial
owner must, prior to completing and executing the
Letter of Transmittal and delivering his Old Notes,
either make appropriate arrangements to register
ownership of the Old Notes in such beneficial
owner's name or obtain and submit a properly
completed endorsement or bond power from the
registered holder. The transfer of registered
ownership may take considerable time and may be
difficult to complete prior to the expiration of
the Exchange Offer.
Withdrawal Rights.........
Tenders of Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the
Expiration Date by following the procedures set
forth in "The Exchange Offer--Withdrawal Rights."
Certain Federal Income
Tax Considerations....... For a general discussion of the Federal income tax
consequences of exchanging Old Notes for New Notes,
see "Certain Tax Consequences."
Exchange Agent............ United States Trust Company of New York is the
Exchange Agent. The addresses and telephone numbers
of the Exchange Agent are set forth under the
caption "The Exchange Offer--Exchange Agent."
5
<PAGE>
SUMMARY OF TERMS OF SENIOR NOTES
The Exchange Offer relates to $125,000,000 aggregate principal amount of New
Notes. The form and terms of the New Notes will be in all material respects
identical to the form and terms of the Old Notes. However, the New Notes will
be registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof. The New Notes will evidence the same debt as
the Old Notes tendered in exchange therefor, will be issued under, and entitled
to the benefits of, the same Indenture and will be treated as a single class
thereunder with the Old Notes. See "Description of Senior Notes."
Securities Offered........ $125,000,000 aggregate principal amount of 10%
Senior Secured Notes due 2006, Series B.
Maturity.................. December 15, 2006.
Interest Payment Dates.... Interest will accrue from the date of issuance and
will be payable semi-annually on each June 15 and
December 15, commencing June 15, 1997.
Optional Redemption....... Except as described below, the Senior Secured Notes
will not be redeemable by PCI prior to December 15,
2001. On or after that date, the Senior Secured
Notes may, subject to certain requirements, be
redeemed at the option of PCI, in whole or in part,
at an initial price of 105% of the principal amount
thereof, declining ratably thereafter per annum to
100% on and after December 15, 2004, plus in each
case accrued and unpaid interest, if any, to the
date of redemption. In addition, on or prior to
December 15, 1999, PCI may, subject to certain
requirements, redeem up to $40.0 million of the
aggregate principal amount of the Senior Secured
Notes with the net cash proceeds of a Public Equity
Offering (as defined herein) which yields gross
proceeds of $15.0 million or more, at a redemption
price equal to 109% of the principal amount thereof
to be redeemed plus accrued and unpaid interest, if
any, to the redemption date, provided that
immediately following such redemption, not less
than $85.0 million aggregate principal amount of
the Senior Secured Notes remain outstanding and any
such redemption occurs not more than 120 days after
the consummation of any such Public Equity
Offering. See "Description of Senior Secured
Notes--Redemption."
Change of Control......... In the event of a Change of Control, the Company
will be obligated to make an offer to repurchase
all outstanding Senior Secured Notes at a price
equal to 101% of the principal amount thereof plus
accrued and unpaid interest, if any, to the date of
repurchase. See "Description of Senior Secured
Notes--Change of Control."
Asset Sale Proceeds....... The Company will be obligated in certain
circumstances to make offers to purchase Senior
Secured Notes at a redemption price of 100% of the
principal amount thereof, plus accrued interest, if
any, to the date of purchase, with a portion of the
net cash proceeds of certain sales or other
dispositions of assets. See "Description of Senior
Secured Notes--Certain Covenants--Disposition of
Proceeds of Asset Sales."
Ranking and Guarantees.... The Senior Secured Notes are senior obligations of
the Company ranking senior in right of payment to
the Company's subordinated indebtedness, if any,
and pari passu in right of payment with all
6
<PAGE>
unsubordinated indebtedness of the Company,
including indebtedness under the Company's $50.0
million revolving credit facility (the "Revolving
Credit Facility"). The Senior Secured Notes are
unconditionally guaranteed, jointly and severally,
by CPC and Caribbean. The Guarantees rank pari
passu with the Guarantors' guarantees of the
Revolving Credit Facility and all other
unsubordinated indebtedness of the Guarantors. See
"Capitalization," "Description of Senior Secured
Notes--Ranking and Guarantees" and "Description of
the Revolving Credit Facility."
Security.................. The Senior Secured Notes are secured by a lien on
and security interest in (i) all of the issued and
outstanding capital stock of the Guarantors, (ii)
the promissory note evidencing the Continental Can
Loan and (iii) substantially all of the assets and
properties owned by the Company and the Guarantors
(after giving effect to the Refinancing) other than
accounts receivable, inventory and certain
equipment securing capital lease obligations (the
"Collateral"). See "Description of Senior Secured
Notes--Security" and "The Refinancing."
Certain Covenants......... The Indenture (as defined herein) contains certain
covenants that, among other things, limit the
ability of the Company and its subsidiaries to (i)
incur additional indebtedness, (ii) create or agree
to liens on their assets, (iii) make certain
investments or loans, (iv) pay dividends and
certain other distributions to shareholders, or
make certain Restricted Payments, (v) enter into
mergers, consolidations or sales of all or
substantially all of their assets, (vi) make Asset
Sales, (vii) enter into transactions with the
Company's affiliates, and (viii) engage in sale-
leaseback transactions. See "Description of Senior
Secured Notes--Certain Covenants."
Use of Proceeds........... There will be no cash proceeds to the Company from
the exchange of New Notes for Old Notes pursuant to
the Exchange Offer. The aggregate net proceeds from
the Sale/Leaseback and the Old Note Offering were
approximately $160.6 million, and were used (i) to
repurchase any and all of the 10 3/4% Notes
pursuant to the Tender Offer and effect the
Redemption, (ii) to make the Continental Can Loan,
and (iii) to repay amounts outstanding under the
Revolving Credit Facility. The balance of such net
proceeds is being used for general corporate
purposes, including working capital. See "Use of
Proceeds."
Comparison of New Notes
with Old Notes........... The New Notes will be identical to the Old Notes
except that the New Notes have been registered
under the Securities Act and in general may be
reoffered and resold by the holders (other than
"affiliates" of the Company and certain broker-
dealers and their affiliates) without restrictions
or limitations under such Act. The Letter of
Transmittal includes representations by the
tendering holder that, among other things, (i) the
New Notes to be received pursuant to the Exchange
Offer are being acquired in the ordinary course of
the business of the person receiving such New
Notes, (ii) neither such holder nor any such other
person has an arrangement or understanding to
participate in the
7
<PAGE>
distribution of such New Notes and (iii) neither
such holder nor any such other person is an
"affiliate" (as defined in Rule 405 under the
Securities Act) of the Company. In the case of a
broker-dealer that receives New Notes for its own
account in exchange for Old Notes which were
acquired by it as a result of market-making or
other trading activities, the Letter of Transmittal
also includes an acknowledgment that the broker-
dealer will deliver a copy of this Prospectus in
connection with the resale by it of New Notes
received pursuant to the Exchange Offer. See the
"Exchange Offer--Purpose and Effect of the Exchange
Offer" and "--Procedures for Tendering" and "Plan
of Distribution."
Registration Rights.......
The Company entered into a Registration Rights
Agreement for the benefit of all holders of Old
Notes, in which it agreed to make the Exchange
Offer. The Registration Rights Agreement provides
that if the Company fails to consummate the
Exchange Offer on or prior to June 16, 1997, the
Company will file a shelf registration statement
(the "Shelf Registration Statement") to cover
resales of Senior Secured Notes by holders who
provide certain information required for inclusion
in the Shelf Registration Statement, and who agree
to be bound by the terms of the Registration Rights
Agreement. Upon a Registration Default (as defined
herein), the Company will be required to pay
certain Liquidated Damages to the affected holders
of Senior Secured Notes. See "Registration Rights."
8
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The summary financial data under the captions "Statement of Operations Data"
and "Balance Sheet Data" set forth below are derived from, and should be read
in conjunction with, the Company's audited and unaudited consolidated financial
statements and the related notes thereto appearing elsewhere herein, and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations." The following historical financial data of PCI for the nine months
ended September 30, 1995 and 1996, and for the twelve months ended September
30, 1996, are unaudited; in the opinion of management, however, such data
reflect all adjustments which are necessary for a fair presentation. For a
discussion of the assumptions on which "Pro Forma Data" below is based, see
"Unaudited Pro Forma Data."
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED TWELVE
DECEMBER 31, SEPTEMBER 30, MONTHS ENDED
---------------------------- ------------------ SEPTEMBER 30,
1993 1994 1995 1995 1996 1996
(DOLLARS IN THOUSANDS; UNITS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.............. $207,035 $230,480 $277,061 $213,810 $196,232 $259,483
Gross profit........... 31,580 37,900 39,393 29,028 30,455 40,820
Selling, general and
administrative ex-
penses................ 27,820 28,480 30,059 22,457 21,670 29,272
Plant rationalization
and realignment....... (134) 855 (98) -- 1,500 1,402
Operating income....... 3,894 8,565 9,432 6,571 7,285 10,146
Interest expense,
net................... 11,929 11,629 11,586 8,604 9,544 12,526
Net earnings (loss) ... (6,709) (2,525) (225) (1,816) (493) 1,098
OTHER DATA:
EBITDA(1).............. $ 29,489 $ 34,477 $ 33,367 $ 24,736 $ 26,663 $ 35,294
Selling, general and
administrative
expenses as a
percentage of net
sales................. 13.4% 12.4% 10.8% 10.5% 11.0% 11.3%
Depreciation and amor-
tization.............. $ 25,729 $ 25,057 $ 24,033 $ 18,165 $ 17,878 $ 23,746
Units shipped.......... 1,227 1,316 1,452 1,106 1,130 1,476
Capital expenditures:
Maintenance........... $ 5,008 $ 3,639 $ 6,607 $ 5,750 $ 4,694 $ 5,551
Growth................ 11,067 11,300 24,086 18,252 13,748 19,582
-------- -------- -------- -------- -------- --------
Total................ $ 16,075 $ 14,989 $ 30,693 $ 24,002 $ 18,442 $ 25,133
======== ======== ======== ======== ======== ========
PRO FORMA DATA:(2)
EBITDA................. -- -- $ 27,640 $ 20,440 $ 22,367 $ 29,567
Cash interest expense,
net(3)................ -- -- 11,669 8,666 9,346 12,349
Ratio of EBITDA to
cash interest ex-
pense, net............ -- -- 2.4x 2.4x 2.4x 2.4x
Ratio of net debt to
EBITDA................ -- -- -- -- -- 4.2
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED(4)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital(5).................................... $ 13,038 $ 18,666
Property, plant and equipment, net.................... 142,480 101,914
Total assets.......................................... 220,533 205,369
Total debt (including current portion)................ 119,850 130,330
Stockholders' equity.................................. 36,977 16,961
</TABLE>
- --------------------
(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, plant rationalization and realignment costs,
the non-cash portion of rental expense, and other income/expense. EBITDA
does not represent, and should not be considered as an alternative to, net
income or cash from operations as determined by generally accepted
accounting principles. Management, however, believes that EBITDA provides
useful information regarding the Company's ability to service and/or incur
indebtedness.
(2) Gives pro forma effect to the Refinancing and the application of the net
proceeds therefrom, as if each transaction in the Refinancing had taken
place at the beginning of the period presented.
(3) Cash interest expense is shown net of cash interest income.
(4) As adjusted to reflect the Refinancing and the application of the net
proceeds therefrom, as if each transaction in the Refinancing had taken
place on September 30, 1996.
(5) Working capital represents current assets minus current liabilities,
excluding cash and cash equivalents, the current portion of long-term debt,
and short-term debt.
9
<PAGE>
RISK FACTORS
Prospective purchasers of the Senior Secured Notes offered hereby should
consider the specific factors set forth below as well as the other information
set forth in this Offering Memorandum.
OUTSTANDING INDEBTEDNESS OF THE COMPANY
The Company has significant amounts of outstanding indebtedness. As of
September 30, 1996, after giving effect to the Refinancing, the aggregate
outstanding principal amount of the Company's indebtedness would have been
approximately $130.3 million. For the year ended December 31, 1995, on a pro
forma basis, the Company's earnings would have been insufficient to cover
fixed charges by $3.4 million. The Company's obligations to make principal and
interest payments on outstanding indebtedness, and to comply with the
covenants in the indenture relating to the Senior Secured Notes (the
"Indenture"), will have several important effects on its future operations,
including the following: (i) the portion of the Company's cash flow from
operations which will be dedicated to the payment of interest on its
indebtedness will not be available for other purposes; (ii) the financial
covenants and other restrictions contained in the Revolving Credit Facility
documents and the Indenture will require the Company to meet certain financial
tests and will limit its ability to borrow additional funds or to dispose of
assets; and (iii) the Company's ability to obtain additional financing in the
future for working capital, capital expenditures, general corporate purposes
or other purposes may be impaired. Additionally, the Company's ability to meet
its debt service obligations and to reduce its total debt will be dependent
upon the Company's future performance, which will be subject to general
economic conditions and to financial, business and other factors affecting the
operations of the Company, many of which are beyond its control. An inability
of the Company to meet the financial covenants under the Revolving Credit
Facility could result in an acceleration of amounts due thereunder.
While no assurance can be given that the Company will maintain a level of
cash flow from operations sufficient to permit it to service its indebtedness
and pursue its operating strategies, management believes that, based on
current and anticipated levels of operations, the Company's cash flow from
operations, together with its other available sources of liquidity, will be
adequate to service its indebtedness (including the Senior Secured Notes), to
permit anticipated capital expenditures and to fund anticipated working
capital requirements for the foreseeable future.
DEPENDENCE ON SIGNIFICANT CUSTOMERS
The Company's three largest customers currently, Procter & Gamble, Coca-Cola
Foods and Mobil Oil, accounted respectively for approximately 27%, 11% and 5%
of net sales in 1995 and approximately 28%, 13% and 10% of net sales in the
first nine months of 1996. Although the Company has long-standing
relationships with these customers, the loss of one or more of them could have
a material adverse effect on the Company's operating results.
POSSIBLE CONSEQUENCES OF A CHANGE OF CONTROL OFFER
Although the Indenture requires PCI to make an offer (a "Change of Control
Offer") to repurchase the Senior Secured Notes upon the occurrence of a Change
of Control (as defined), there can be no assurance that, if a Change of
Control were to occur, PCI would have sufficient funds at that time to pay the
purchase price for all Senior Secured Notes, or would be able to obtain the
financing necessary to meet such repurchase obligation. In addition, the
existence of a Change of Control (or the financial effect of consummating a
Change of Control Offer) would constitute a default under the Revolving Credit
Facility. Furthermore, PCI's ability to purchase Senior Secured Notes could be
limited by future borrowing agreements. See "Description of Senior Secured
Notes--Change of Control."
SECURITY FOR THE SENIOR SECURED NOTES
Each of CPC and Caribbean has issued a Guarantee of the obligations of the
Company under the Senior Secured Notes, and has pledged, as security for its
Guarantee obligations, substantially all of its owned real and
10
<PAGE>
personal property, other than accounts receivable, inventory and certain
equipment securing capital lease obligations. The net book value of the
Collateral (excluding the promissory note evidencing the Continental Can Loan
(the "Continental Can Note") and the stock of the Guarantors) as of September
30, 1996, was approximately $91.1 million. There can be no assurance that the
proceeds from the sale or sales of the Collateral securing the Guarantees
would be sufficient to satisfy the amounts due on the Senior Secured Notes in
the event of a default. In addition, the ability of the holders of Senior
Secured Notes to realize upon the Collateral may be subject to certain
bankruptcy law limitations in the event of a bankruptcy. The Collateral
release provisions of the Indenture permit the release of Collateral for the
Senior Secured Notes without substitution of collateral of equal value under
certain limited circumstances. See "Description of Senior Secured Notes--
Security," "--Possession, Use and Release of Collateral," and "--Certain
Bankruptcy Limitations."
FRAUDULENT CONVEYANCE STATUTES
As a holding company with no operations of its own and only limited assets,
the Company is dependent upon distributions of the earnings of the Guarantors
to service its debt obligations. Although holders of Senior Secured Notes are
direct creditors of the Guarantors by virtue of the Guarantees, existing or
future creditors of the Guarantors could avoid or subordinate the Guarantees
(and the mortgages and liens securing the Guarantees) under fraudulent
conveyance laws if they were successful in establishing that (i) the
Guarantees were incurred with fraudulent intent or (ii) either of the
Guarantors did not receive fair consideration or reasonably equivalent value
for issuing its Guarantee and that it (w) was insolvent at the time of such
issuance, (x) was rendered insolvent by reason of such issuance, (y) was
engaged in a business or transaction for which its assets constituted
unreasonably small capital to carry on its business or (z) intended to incur,
or believed that it would incur, debts beyond its ability to pay such debts as
they matured. Management of the Company and the Guarantors believe that the
Guarantors (w) were solvent at the time of the issuance of the Guarantees, (x)
were not rendered insolvent by reason of such issuance, (y) were not at the
time of such issuance, and are not, engaged in a business or transaction for
which their assets constitute unreasonably small capital to carry on their
businesses and (z) did not then intend to incur, or will incur, debts beyond
their ability to pay such debts as they mature.
The measures of insolvency for purposes of determining whether a fraudulent
conveyance occurred would vary depending upon the laws of the relevant
jurisdiction and upon the valuation assumptions and methodology applied by the
court. Generally, however, a company would be considered insolvent for
purposes of the foregoing if the sum of the company's debts, including
contingent, unliquidated and unmatured liabilities, is greater than all of
such company's property at a fair valuation, or if the present fair saleable
value of the company's assets is less than the amount that will be required to
pay the probable liability on its existing debts as they become absolute and
matured.
ABSENCE OF PUBLIC MARKET FOR THE SENIOR SECURED NOTES; RESTRICTIONS ON
TRANSFER
The Senior Secured Notes constitute a new issue of securities for which
there is currently no established market, and there can be no assurance as to
the liquidity of markets that may develop for the Senior Secured Notes, the
ability of holders of the Senior Secured Notes to sell them or the price at
which such holders would be able to sell their Senior Secured Notes. If such
markets were to exist, the Senior Secured Notes could trade at prices that may
be higher or lower than the initial market values thereof depending on many
factors, including prevailing interest rates and the markets for similar
securities. The Old Notes are currently eligible for trading in the PORTAL
market.
The Old Notes were offered in reliance upon exemptions from registration
under the Securities Act and applicable state securities laws. Therefore, the
Old Notes may be transferred or resold only in transactions registered under
or exempt from the Securities Act and applicable state securities laws. If
issued in the Exchange Offer, the New Notes generally may be resold or
otherwise transferred by each holder without the requirement of further
registration or other restriction. The New Notes, however, also will
constitute a new issue of securities with no established trading market. The
Exchange Offer is not conditioned upon any minimum or maximum aggregate
principal amount of Old Notes being tendered for exchange. No assurance can be
given as to the
11
<PAGE>
liquidity of the trading market for the New Notes, or, in the case of non-
tendering holders of Old Notes, the trading market for the Old Notes following
the Exchange Offer.
THE REFINANCING
The Company recently engaged in a series of related transactions
(collectively, the "Refinancing") comprised of the Old Note Offering, the
Tender Offer, the Redemption, the Sale/Leaseback and the Continental Can Loan.
THE TENDER OFFER
On October 24, 1996 the Company commenced the Tender Offer to purchase for
cash any or all, but not less than two-thirds in aggregate principal amount,
of its $104.7 million aggregate principal amount of outstanding 10 3/4% Notes.
The Tender Offer, which expired on December 9, 1996, included the solicitation
of consents to a proposed amendment to the discharge provisions of the
indenture relating to the 10 3/4% Notes (the "10 3/4% Note Indenture"). The
Company received tenders and consents representing $101.7 million of the
aggregate principal amount of the outstanding 10 3/4% Notes.
THE REDEMPTION
Since the Company purchased less than 100% of the outstanding 10 3/4% Notes
pursuant to the Tender Offer, on December 17, 1996, the Company effected a
discharge of its obligations under the 10 3/4% Note Indenture (the
"Discharge"). As a result of the Discharge, the Company and the Guarantors
were released from their respective obligations under all restrictive
covenants and most other provisions of the 10 3/4% Note Indenture, and the
collateral securing the 10 3/4% Notes was released. Certain of such collateral
was thereupon pledged to secure on a first priority basis the Old Notes
immediately upon their issuance on December 17, 1996.
Concurrently with and as part of the Discharge, the Company deposited with
the trustee under the 10 3/4% Note Indenture cash sufficient to effect the
redemption, on April 1, 1997, of all the 10 3/4% Notes not purchased pursuant
to the Tender Offer, at a redemption price of 100% of the principal amount of
such 10 3/4% Notes, pursuant to the mandatory redemption provisions of the 10
3/4% Note Indenture, together with accrued and unpaid interest to such date.
THE SALE/LEASEBACK
On December 17, 1996, CPC consummated a sale to General Electric Capital
Corporation ("GECC") and certain other financial institutions, and the
leaseback to CPC (the "Leases"), of all plastic container manufacturing and
ancillary equipment (the "Equipment") located in CPC's facilities in
Baltimore, Maryland; Cincinnati, Ohio; Elk Grove, Illinois; DuPage, Illinois;
and Houston, Texas. CPC's obligations under the Leases are guaranteed by the
Company. The proceeds to the Company from the Sale/Leaseback were
approximately $40.6 million. CPC's obligations under the Sale/Leaseback are
secured by an assignment of all ground leases for such facilities leased by
CPC (Cincinnati, Elk Grove, DuPage and Houston), a first mortgage on the real
property at CPC's Baltimore facility, a subordinated security interest in the
Continental Plastic Container Companies' accounts receivable and inventories
and in the Continental Can Note, a security interest in certain machinery
currently leased by GECC to CPC and, when unencumbered, a security interest in
certain equipment currently securing capital lease obligations. In connection
with the Sale/Leaseback, CPC is obligated to deliver certain waivers from the
landlords and mortgagees of the facilities where the Equipment is located, and
in the event that CPC fails to deliver such waivers for two specified
facilities by June 1998, if the lessor so elects, CPC must repurchase the
Equipment located at such facilities.
The terms of the Leases range from 88 months to 109 months, subject to
options of CPC to repurchase the Equipment after 78 months and 83 months for
an aggregate of approximately $19.2 million. CPC's monthly cash rental
payments under the Sale/Leaseback are approximately $0.5 million.
12
<PAGE>
THE CONTINENTAL CAN LOAN
The Company has 100 shares of common stock outstanding (the "PCI Shares").
Prior to December 17, 1996, 50 PCI Shares were owned by Continental Can and 50
shares were owned by Merrywood, Inc. ("Merrywood"), a corporation which is
one-third owned by Jose Luis Zapata (a director of Continental Can, PCI and
each of the Guarantors) and one-third owned by Cayo Zapata (who was, until
October 22, 1996, a director of Continental Can, PCI and each of the
Guarantors). See "Management." Continental Can was contractually obligated to
purchase 34 PCI Shares from Merrywood on or prior to February 7, 1997, for
$30.0 million in cash, and to purchase Merrywood's remaining 16 PCI Shares on
or prior to December 31, 2000, for approximately $15.4 million plus certain
interest accruing from December 1, 1996.
Continental Can purchased the 34 PCI Shares in December 1996 and borrowed
from PCI the $30.0 million purchase price. Simultaneously with such purchase,
Continental Can granted Merrywood a security interest in the 84 PCI Shares
which Continental Can now owns, as security for the performance by Continental
Can of its obligations under its agreement with Merrywood. See "Ownership of
PCI."
The Continental Can Loan is for a term of 10 1/2 years from the closing date
of the Refinancing (December 17, 1996) and accrues interest, payable at
maturity, at an annual rate of 6.9%, compounded semi-annually. The note
evidencing the Continental Can Loan has been pledged by PCI as part of the
Collateral securing the Senior Secured Notes.
USE OF PROCEEDS
There will be no cash proceeds to the Company from the exchange of New Notes
for Old Notes pursuant to the Exchange Offer. The aggregate net proceeds
received by the Company from the Old Note Offering and the Sale/Leaseback were
approximately $160.6 million after the deduction of fees and expenses relating
to the Refinancing. The Company applied (a) $112.5 million of such net
proceeds to repurchase any or all of the 10 3/4% Notes pursuant to the Tender
Offer at a price of 105.2% of principal amount plus accrued and unpaid
interest, and pursuant to the subsequent Redemption of 10 3/4% Notes which
were not tendered or purchased in the Tender Offer, (b) $30.0 million of such
net proceeds to make the Continental Can Loan, and (c) approximately $7.3
million of such net proceeds to repay borrowings currently outstanding under
the Revolving Credit Facility (the current interest rate on such borrowings is
8.5%). The balance of such net proceeds is being used for general corporate
purposes, including working capital.
13
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT OF THE EXCHANGE OFFER
The Old Notes were sold by the Company on December 17, 1996, to Donaldson,
Lufkin & Jenrette Securities Corporation, Lehman Brothers Inc. and Societe
Generale Securities Corporation (collectively, the "Initial Purchasers") for
resale in transactions exempt from the registration requirements of the
Securities Act. In connection with the sale of the Old Notes, the Company, the
Guarantors and the Initial Purchasers entered into a Registration Rights
Agreement dated December 11, 1996 (the "Registration Rights Agreement"), which
requires the Company to use its best efforts to offer to the holders of the
Old Notes the opportunity to exchange their Old Notes for a like principal
amount of New Notes which may be reoffered and resold without restrictions or
limitations under the Securities Act by those holders who duly exchange Old
Notes under the Exchange Offer and make certain representations required in
the Letter of Transmittal. The Exchange Offer is being made to satisfy in part
the Company's obligations under the Registration Rights Agreement. See
"Registration Rights." A copy of the Registration Rights Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus is
a part.
Based on interpretations by the staff of the Commission set forth in no-
action letters addressed to Exxon Capital Holdings Corporation (April 13,
1988), Morgan Stanley & Co. Incorporated (June 5, 1991), Shearman & Sterling
(July 2, 1993) and Grupo Financiero InverMexico, S.A. (April 4, 1995),
management of the Company believes that the New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may in general be offered for resale,
resold and otherwise transferred by any holder of such New Notes without
compliance with the registration and prospectus delivery requirements of the
Securities Act, provided that such New Notes are acquired in the ordinary
course of such holder's business and such holder has no arrangement or
understanding with any person to participate in the distribution of such New
Notes. However, any holder who (i) is an "affiliate" of the Company within the
meaning of Rule 405 under the Securities Act, (ii) is participating in a
distribution of the New Notes to be received in the Exchange Offer, (iii) is a
broker-dealer that acquired the Old Notes in a transaction other than as part
of its market-making or other trading activities, or (iv) is not acquiring the
New Notes in the ordinary course of its business cannot rely on such
interpretations by the staff of the Commission. A secondary resale of New
Notes by such a holder (i) must be covered by an effective Registration
Statement under the Securities Act containing the selling securityholder
information required by Item 507 of Regulation S-K of the Commission, and (ii)
must comply with the prospectus delivery requirements of the Securities Act.
In addition, any tendering holder which is a broker-dealer and which, having
made certain representations in the Letter of Transmittal, receives New Notes
may be deemed to be an "underwriter" with respect to such New Notes and, in
connection with any resale of such New Notes, must comply with the prospectus
delivery requirements of the Securities Act (for which purpose this
Prospectus, as amended or supplemented from time to time, may be used as the
required prospectus).
The Company has not requested and does not expect to request a no-action
letter from the Commission staff with respect to the Exchange Offer.
TERMS OF THE EXCHANGE OFFER
Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old
Notes validly tendered and not withdrawn prior to 5:00 p.m., New York City
time, on the Expiration Date. On the Expiration Date, the Company will issue
$1,000 principal amount of New Notes in exchange for each $1,000 principal
amount of outstanding Old Notes tendered and accepted in the Exchange Offer.
As of the date of this Prospectus, $125,000,000 aggregate principal amount of
the Old Notes is outstanding. Holders may tender some or all of their Old
Notes pursuant to the Exchange Offer. However, Old Notes may be tendered only
in integral multiples of $1,000.
The form and terms of the New Notes will be the same as the form and terms
of the Old Notes, with both the Old Notes and the New Notes bearing interest
at the rate of 10% per annum from and after the Expiration
14
<PAGE>
Date. The New Notes have been registered under the Securities Act and hence
the certificates evidencing the New Notes will not bear legends restricting
the transfer thereof. The New Notes will evidence the same debt as the Old
Notes and will be entitled to the benefits of the Indenture.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering holders
for the purpose of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted Old Notes will be returned,
without expense, to the tendering holder thereof as promptly as practicable
after the Expiration Date.
Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the
Letter of Transmittal, transfer taxes with respect to the exchange of Old
Notes pursuant to the Exchange Offer. The Company will pay all charges and
expenses in connection with the Exchange Offer. See "--Payment of Expenses"
below.
In the event the Exchange Offer is consummated, subject to certain
exceptions contained in the Registration Rights Agreement, the Company will
not be required to register the Old Notes under the Securities Act. In such
event, investors seeking liquidity in their investment would have to rely on
exemptions to registration requirements under the United States securities
laws. See "Registration Rights."
EXPIRATION DATE; EXTENSIONS; TERMINATION; AMENDMENTS
The Exchange Offer will expire at 5:00 p.m., New York City time, on
, 1997 (the "Expiration Date"). The Company reserves the right,
at its discretion, to extend the Exchange Offer to a later date, in which
event the term "Expiration Date" will mean such later date and the Exchange
Offer will expire at 5:00 p.m., New York City time, on such later date. The
Company will notify the Exchange Agent of any extension by oral or written
notice and will make a public announcement thereof prior to 9:00 a.m., New
York City time, on the next business day after the previously scheduled
Expiration Date of the Exchange Offer.
The Company reserves the right to delay accepting any Old Notes under the
Exchange Offer, or to terminate the Exchange Offer and not accept under the
Exchange Offer any Old Notes not previously accepted, if any of the events set
forth below under "--Condition to the Exchange Offer" occurs and is not waived
by the Company, by giving oral or written notice of such delay or termination
to the Exchange Agent. The Company also reserves the right to amend the terms
of the Exchange Offer in any manner. Any such delay in acceptance, termination
or amendment will be followed as promptly as practicable by public
announcement thereof.
Without limiting the manner in which the Company may choose to make public
announcement of any extension, termination or amendment, the Company will have
no obligation to publish, advertise or otherwise communicate any such public
announcement, other than by making a release to the Dow Jones News Service,
the substance of which is carried over the Dow Jones Broad Tape.
PROCEDURES FOR TENDERING
Except as set forth below, for a holder validly to tender Old Notes pursuant
to the Exchange Offer, either (i) such Old Notes must be transferred pursuant
to the procedures for book-entry transfer described under the caption "--Book-
Entry Transfer" below, and a book-entry confirmation must be received by the
Exchange Agent prior to the expiration of the Exchange Offer, or (ii) a
properly completed and duly executed Letter of Transmittal (or a facsimile
thereof), together with any required signature guarantees, the certificates
for the Old Notes tendered and any other documents required by the
instructions to the Letter of Transmittal, must be received by the Exchange
Agent at one of the addresses set forth below under the caption "--Exchange
Agent" prior to the expiration of the Exchange Offer. No provision has been
made for the delayed guaranteed delivery of Old Note certificates. Letters of
Transmittal and Old Notes should be sent only to the Exchange Agent, not to
the Company.
15
<PAGE>
THE LETTER OF TRANSMITTAL INCLUDES REPRESENTATIONS BY THE TENDERING HOLDER
TO THE COMPANY THAT, AMONG OTHER THINGS, (I) THE NEW NOTES TO BE RECEIVED
PURSUANT TO THE EXCHANGE OFFER ARE BEING ACQUIRED IN THE ORDINARY COURSE OF
BUSINESS OF THE PERSON RECEIVING SUCH NEW NOTES (WHETHER OR NOT SUCH PERSON IS
THE HOLDER), (II) NEITHER SUCH HOLDER NOR ANY SUCH OTHER PERSON HAS AN
ARRANGEMENT OR UNDERSTANDING WITH ANY PERSON TO PARTICIPATE IN THE
DISTRIBUTION OF SUCH NEW NOTES, (III) NEITHER SUCH HOLDER NOR ANY SUCH OTHER
PERSON IS AN "AFFILIATE," AS DEFINED IN RULE 405 UNDER THE SECURITIES ACT, OF
THE COMPANY, AND (IV) IF THE TENDERING HOLDER IS A BROKER OR A DEALER (AS
DEFINED IN THE EXCHANGE ACT), IT ACQUIRED THE OLD NOTES FOR ITS OWN ACCOUNT AS
A RESULT OF MARKET-MAKING ACTIVITIES OR OTHER TRADING ACTIVITIES. In the case
of a broker-dealer that receives New Notes for its own account in exchange for
Old Notes which were acquired by it as a result of market-making or other
trading activities, the Letter of Transmittal will also include an
acknowledgment that the broker-dealer will deliver a copy of this Prospectus
in connection with the resale by it of New Notes received pursuant to the
Exchange Offer. See "Plan of Distribution."
Delivery of Letters of Transmittal in the Offer
If certificates for Old Notes are registered in the name of a person or
persons other than the signer of a Letter of Transmittal, then in order to
tender such Old Notes pursuant to the Exchange Offer, the certificates
evidencing such Old Notes must be endorsed, or accompanied by appropriate bond
powers signed, by the registered holder or holders exactly as the name or
names of such holder or holders appear on the certificates, with the
signature(s) on the certificates or bond powers guaranteed as provided below.
Any beneficial owner whose Old Notes are registered in the name of The
Depository Trust Company ("DTC") or its nominee for the account of a
participant in DTC's system, or in the name of a broker, dealer, commercial
bank, trust company or other nominee, and who wishes to tender Old Notes in
the Exchange Offer should contact such participant or nominee promptly with
instructions to tender Old Notes on such beneficial owner's behalf. If a
beneficial owner wishes to tender Old Notes personally, such beneficial owner
must, prior to completing and executing the Letter of Transmittal and
delivering such Old Notes, either make appropriate arrangements to register
ownership of the Old Notes in such beneficial owner's name or follow the
procedures described in the immediately preceding paragraph. The transfer of
record ownership may take considerable time and may be difficult to complete
prior to the expiration of the Exchange Offer.
The method of delivery of Old Notes and the Letter of Transmittal and all
other required documents to the Exchange Agent is at the election and risk of
the holder tendering Old Notes. If such delivery is by mail, it is suggested
that the holder use properly insured, registered mail with return receipt
requested, and that the mailing to the Exchange Agent be made sufficiently in
advance of the Expiration Date to permit delivery to the Exchange Agent on or
prior thereto. Except as otherwise provided herein, such delivery will be
deemed made when actually received or confirmed by the Exchange Agent.
Book-Entry Transfer
The Exchange Agent will make a request promptly after the date of this
Prospectus to establish an account with respect to the Old Notes at DTC for
the purpose of facilitating the Exchange Offer, and subject to the
establishment thereof, any financial institution that is a participant in
DTC's system (a "Participant") may make book-entry delivery of Old Notes by
causing DTC to transfer such Old Notes into the Exchange Agent's account with
respect to the Old Notes in accordance with DTC's Automated Tender Offer
Program ("ATOP") for such book-entry transfers. However, the exchange of New
Notes for Old Notes so tendered will only be made after timely book-entry
confirmation of such book-entry transfer of Old Notes into the Exchange
Agent's account, and timely receipt by the Exchange Agent of an Agent's
Message and any other documents required by the Letter of Transmittal. The
term "Agent's Message" means a message, transmitted by DTC and received by the
Exchange Agent and forming a part of a book-entry confirmation, which states
that DTC has received an express
16
<PAGE>
acknowledgment, from a Participant tendering Old Notes which are the subject
of such book-entry confirmation, that such Participant has received and agrees
to be bound by the terms of the Letter of Transmittal, and that the Company
may enforce such agreement against such Participant. An Agent's Message will
constitute a representation to the Company by the beneficial owners of the
appropriate Old Notes of the matters referred to in the second paragraph above
under the caption "--Procedures for Tendering."
Delivery of documents to DTC in accordance with DTC's procedures does not
constitute delivery to the Exchange Agent.
Signature Guarantees
Signatures on the Letter of Transmittal need not be guaranteed if the Old
Notes tendered thereby are tendered (i) by the registered holder thereof,
unless such holder has completed the box entitled "Special Delivery
Instructions" in the Letter of Transmittal, or (ii) for the account of a firm
(an "Eligible Institution") that is a participant in the Security Transfer
Agents Medallion Program or the Stock Exchange Medallion Program (generally a
member of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office in the United States). In all other cases, all signatures on
the Letter of Transmittal must be guaranteed by an Eligible Institution. See
the instructions to the Letter of Transmittal.
Lost or Missing Certificates
If a holder desires to tender Old Notes pursuant to the Exchange Offer but
the certificates evidencing such Old Notes have been mutilated, lost, stolen
or destroyed, such holder should write to or telephone the Exchange Agent
about procedures for promptly obtaining replacement certificates for such Old
Notes, arranging for indemnification or any other matter that requires
handling by the Trustee.
Other Matters
Notwithstanding any other provision of the Exchange Offer, the exchange of
New Notes for Old Notes pursuant to the Exchange Offer will occur only after
timely receipt by the Exchange Agent of a book-entry confirmation with respect
to such Old Notes, or receipt of the certificates for tendered Old Notes
together with a properly completed and duly executed Letter of Transmittal in
proper form (or a facsimile thereof) and any other required documents.
The tender of Old Notes pursuant to the procedures described above, and
acceptance thereof by the Company, will constitute a binding agreement between
the tendering beneficial owners and the Company upon the terms and subject to
the conditions of the Exchange Offer.
Subject to and effective upon the acceptance for exchange of Old Notes, by
executing and delivering a Letter of Transmittal, a tendering holder of Old
Notes (i) irrevocably sells, assigns and transfers to, or upon the order of,
the Company all right, title and interest in and to all the Old Notes tendered
thereby and (ii) irrevocably constitutes and appoints the Exchange Agent the
true and lawful agent and attorney-in-fact of such holder (with full knowledge
that the Exchange Agent also acts as agent of the Company) with respect to
such tendered Old Notes, with full power of substitution and resubstitution
(such power of attorney being deemed to be an irrevocable power coupled with
an interest) to (a) deliver certificates representing such Old Notes, or
transfer ownership of such Old Notes, on the account books maintained by DTC,
together, in any such case, with all accompanying evidences of transfer and
authenticity, to or upon the order of the Company, (b) present such Old Notes
for transfer on the Old Note register and (c) receive all benefits or
otherwise exercise all rights of beneficial ownership of such Old Notes, all
in accordance with the terms of the Exchange Offer.
All questions as to the form of all documents and the validity (including
time of receipt) and acceptance of all tenders and withdrawals of Old Notes
will be determined by the Company in its sole discretion, which determination
shall be final and binding. Alternative, conditional or contingent tenders
will not be considered valid. The Company reserves the absolute right to
reject any or all tenders of Old Notes that are not in proper form or the
acceptance of which would, in the opinion of the Company management, be
unlawful. The
17
<PAGE>
Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Old Notes without waiving the defects,
irregularities or conditions of tender as to other Old Notes. The Company's
interpretations of the terms and conditions of the Exchange Offer (including
the instructions in the Letter of Transmittal) will be final and binding. Any
defect or irregularity in connection with tenders of Old Notes must be cured
within such reasonable time as the Company determines, unless waived by the
Company. Tenders of Old Notes shall not be deemed to have been made until all
defects and irregularities have been waived by the Company or cured. None of
the Company, the Exchange Agent or any other person will be under any duty to
give notice of any defects or irregularities in tenders of Old Notes, or will
incur any liability to holders of Old Notes for failure to give any such
notice.
WITHDRAWAL OF TENDERS
Tenders of Old Notes pursuant to the Exchange Offer may be withdrawn at any
time prior to the expiration of the Exchange Offer but are thereafter
irrevocable. If the Company either (i) reduces the principal amount of Old
Notes subject to the Exchange Offer or (ii) increases or decreases the
consideration offered in exchange for the Old Notes, and if, at the time that
notice of such reduction, increase or decrease is first published, sent or
given to holders of Old Notes in the manner specified herein, the Exchange
Offer is scheduled to expire at any time earlier than the expiration of a
period ending on the tenth business day from, and including, the date that
such notice is first so published, sent or given, then the Exchange Offer will
be extended until the expiration of such period of ten business days.
Any holder who tenders Old Notes may withdraw them by delivery of a written
notice of withdrawal or revocation, as applicable, subject to the limitations
described herein. To be effective, a written or facsimile transmission of the
notice of withdrawal of a tender must either be made pursuant to DTC's ATOP
procedures or (i) be received by the Exchange Agent, at one of the addresses
specified below under the caption "--Exchange Agent," prior to the expiration
of the Exchange Offer, (ii) specify the name of the registered holder of the
Old Notes to be withdrawn, (iii) contain a description of the Old Notes to be
withdrawn, the certificate numbers shown on the particular certificates
representing such Old Notes, and the aggregate principal amount represented by
such Old Notes, and (iv) be signed by the holder of such Old Notes in the same
manner as the original signature on the Letter of Transmittal (including any
required signature guarantees) or be accompanied by documents of transfer
sufficient to have the Trustee register the transfer of the Old Notes into the
name of the person withdrawing such Old Notes. The signature(s) on the notice
of withdrawal of any tendered Old Notes must be guaranteed by an Eligible
Institution unless such Old Notes have been tendered for the account of an
Eligible Institution. If the Old Notes to be withdrawn have been delivered or
otherwise identified to the Exchange Agent, a signed notice of withdrawal is
effective immediately upon receipt by the Exchange Agent of written or
facsimile transmission of the notice of withdrawal even if physical release is
not yet effected.
A withdrawal of a tender of Old Notes may not be rescinded, and Old Notes
properly withdrawn will not be deemed to be validly tendered for purposes of
the Exchange Offer. However, withdrawn Old Notes may be retendered by
repeating the applicable procedures for tendering described above at any time
on or prior to the expiration of the Exchange Offer.
All questions as to the form and validity (including time of receipt) of any
delivery or withdrawal of a tender will be determined by the Company in its
sole discretion, which determination shall be final and binding. None of the
Company, the Exchange Agent or any other person will be under any duty to give
notification of any defect or irregularity in any delivery or withdrawal of a
tender or incur any liability for failure to give any such notification.
CONDITION TO THE EXCHANGE OFFER
Notwithstanding any other provision of the Exchange Offer, the Company will
not be required to accept any Old Notes tendered in connection with the
Exchange Offer, and may terminate or amend the Exchange Offer as provided
herein before the acceptance of such Old Notes, if any legal or governmental
action, any law, statute,
18
<PAGE>
rule or regulation or any interpretation thereof by the staff of the
Commission might, in the Company's sole judgment, prohibit the Exchange Offer
or otherwise materially impair the ability of the Company to proceed with the
Exchange Offer.
The foregoing condition is for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to such
conditions or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. Any determination by the Company
concerning the events described above will be final and binding upon all
parties. See "Registration Rights."
EXCHANGE AGENT
United States Trust Company of New York has been appointed as Exchange Agent
for the Exchange Offer. Completed Letters of Transmittal, together with
certificates evidencing Old Notes and any other documents required by the
Letter of Transmittal, as well as all correspondence in connection with the
Exchange Offer, should be addressed to the Exchange Agent, as follows:
UNITED STATES TRUST COMPANY OF NEW YORK
By Mail: By Facsimile By Hand:
Transmission:
United States Trust (212) 420-6152 United States Trust
Company Company
of New York of New York
P.O. Box 844 111 Broadway
Cooper Station Lower Level
New York, NY 10276-0844 Confirm by telephone: Corporate Trust Window
New York, NY
(800) 548-6565
By Overnight Courier:
United States Trust Company of New York
770 Broadway
New York, NY 10003
Attention: Corporate Trust
PAYMENT OF EXPENSES
The expenses of soliciting tenders pursuant to the Exchange Offer will be
borne by the Company. The principal solicitation for tenders pursuant to the
Exchange Offer is being made by mail; however, additional solicitations may be
made by telegraph, telephone or in person by officers and regular employees of
the Company and its affiliates.
The Company will not make any payments to brokers, dealers or other persons
soliciting acceptances of the Exchange Offer. The Company, however, will pay
the Exchange Agent reasonable and customary fees for its services and will
reimburse the Exchange Agent for reasonable out-of-pocket expenses in
connection therewith. The Company may also pay brokerage houses and other
custodians, nominees and fiduciaries the reasonable out-of-pocket expenses
incurred by them in forwarding copies of this Prospectus and related documents
to the beneficial owners of the Old Notes, and in handling or forwarding
tenders for exchange.
The expenses to be incurred in connection with the Exchange Offer will be
paid by the Company, and are estimated in the aggregate to be $ ,
including fees and expenses of the Exchange Agent and the Trustee and
printing, accounting and legal fees.
19
<PAGE>
CAPITALIZATION
The following table sets forth the consolidated capitalization of the
Company as of September 30, 1996, and as adjusted to give effect to the
Refinancing:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
ACTUAL AS ADJUSTED
(IN THOUSANDS)
<S> <C> <C>
SHORT-TERM AND LONG-TERM DEBT:
Revolving Credit Facility.......................... $ 9,820 $ 0(1)
10% Senior Secured Notes due 2006.................. -- 125,000
10 3/4% Senior Secured Notes Due 2001.............. 104,700(2) --
Capital lease obligations(3)....................... 5,330 5,330
-------- --------
Total debt..................................... 119,850 130,330
-------- --------
STOCKHOLDERS' EQUITY:
Common stock and additional paid-in capital........ 60,000 77,428(4)
Retained earnings (deficit)........................ (23,023) (30,467)(5)
-------- --------
36,977 46,961
Less note receivable from stockholder.............. -- (30,000)(6)
-------- --------
Total stockholders' equity....................... 36,977 16,961
-------- --------
Total capitalization........................... $156,827 $147,291
======== ========
</TABLE>
- ---------------------
(1) As of December 18, 1996, after giving effect to the Refinancing, the
Company had approximately $32,500 of undrawn availability under the
Revolving Credit Facility. See "Description of the Revolving Credit
Facility."
(2) Includes current portion of $16,700.
(3) Includes current portion of $967.
(4) The increase in common stock and additional paid-in capital reflects the
push-down of goodwill representing the excess of the purchase price of
$30,000 over the book value of net assets acquired of $12,572 (34% of
$36,977) arising from the purchase of 34 PCI common shares by Continental
Can from Merrywood. See "Ownership of PCI."
(5) The decrease in retained earnings is due to the write-offs of the
remaining balance of deferred financing fees associated with the 10 3/4%
Notes and the premium paid in the Tender Offer.
(6) Reflects classification of the Continental Can Loan as a deduction from
stockholders' equity.
20
<PAGE>
UNAUDITED PRO FORMA DATA
The following Pro Forma Balance Sheet gives effect to the Refinancing and the
application of the net proceeds therefrom, as if each transaction in the
Refinancing had taken place on September 30, 1996. The following Pro Forma
Statements of Operations give effect to the Refinancing and the application of
the net proceeds therefrom, as if each transaction in the Refinancing had taken
place at the beginning of the period presented.
PRO FORMA BALANCE SHEET
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
------------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............... $ 1,178 $ 120,000 (a) $ 6,152
(115,772)(b)
40,566 (c)
(30,000)(d)
(9,820)(e)
Accounts receivable, net................ 31,034 31,034
Inventories............................. 22,395 22,395
Other current assets.................... 3,396 3,396
-------- --------- --------
Total current assets.................. 58,003 4,974 62,977
Property, plant and equipment, net........ 142,480 (40,566)(c) 101,914
Intangible assets, net.................... 6,652 5,000 (a) 27,080
(2,000)(f)
17,428 (g)
Other assets.............................. 13,398 13,398
-------- --------- --------
$220,533 $ (15,164) $205,369
======== ========= ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank................... $ 9,820 $ (9,820)(e) $ --
Accounts payable--trade................. 22,567 22,567
Current portion of long-term
obligations............................ 17,667 (16,700)(b) 967
Other current liabilities............... 21,220 (5,628)(b) 15,592
-------- --------- --------
Total current liabilities............. 71,274 (32,148) 39,126
Long-term obligations..................... 92,363 125,000 (a) 129,363
(88,000)(b)
Other liabilities......................... 19,919 19,919
-------- --------- --------
Total liabilities..................... 183,556 4,852 188,408
-------- --------- --------
Stockholders' equity:
Common stock, $1 par value. 1,000 shares
authorized; 100 shares issued and out-
standing............................... -- --
Additional paid-in capital.............. 60,000 17,428 (g) 77,428
Retained earnings (deficit)............. (23,023) (5,444)(b) (30,467)
(2,000)(f)
-------- --------- --------
36,977 9,984 46,961
Less note receivable from stockholder... -- (30,000)(d) (30,000)
-------- --------- --------
Total stockholders' equity............ 36,977 (20,016) 16,961
-------- --------- --------
$220,533 $ (15,164) $205,369
======== ========= ========
</TABLE>
- ---------------------
(a) Represents proceeds from issuance of the Senior Secured Notes, net of
estimated fees and expenses of $5,000.
(b) Reflects repurchase of all 10 3/4% Notes at a premium pursuant to the
Tender Offer and the payment of accrued interest through the date of
repurchase.
(c) Represents proceeds from the Sale/Leaseback and net book value of assets
sold, both equal to $40,566.
(d) Reflects classification of the Continental Can Loan as a deduction from
stockholders' equity.
(e) Reflects repayment of borrowings outstanding under the Revolving Credit
Facility.
(f) Represents the write-off of unamortized deferred financing fees related to
the 10 3/4% Notes.
(g) Reflects the push-down of goodwill of the purchase price adjustment
representing the excess of the purchase price of $30,000 over the book
value of net assets acquired of $12,572 (34% of $36,977) arising from the
purchase of 34 PCI shares by Continental Can from Merrywood. See
"Ownership of PCI."
21
<PAGE>
PRO FORMA STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1996
---------------------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales..................... $ 196,232 $ -- $ 196,232
Cost of goods sold............ 165,777 (4,363)(a) 166,009
4,595 (b)
------------ ---------- ------------
Gross profit................ 30,455 (232) 30,223
------------ ---------- ------------
Selling, general and adminis-
trative expenses............. 21,670 (336)(c) 21,661
327 (d)
Plant rationalization and re-
alignment.................... 1,500 1,500
------------ ---------- ------------
Operating income............ 7,285 (223) 7,062
Other income (expense):
Interest income............. 74 276 350
Interest expense............ (9,618) (453) (10,071)(f)
Loss on disposal of assets.. (125) (125)
------------ ---------- ------------
Total other income (ex-
pense)................... (9,669) (177) (9,846)
------------ ---------- ------------
Loss before income taxes and
extraordinary item......... (2,384) (400) (2,784)
Income tax benefit............ 1,891 1,891
------------ ---------- ------------
Loss before extraordinary
item(g).................... $ (493) $ (400) $ (893)
============ ========== ============
Other Data:
EBITDA(h)................... $ 26,663 $ 22,367
Cash interest expense, net.. 9,544 9,346
Ratio of EBITDA to cash in-
terest expense, net........ 2.8x 2.4x
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED SEPTEMBER 30, 1995
---------------------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales..................... $ 213,810 $ -- $ 213,810
Cost of goods sold............ 184,782 (4,363)(a) 185,014
4,595 (b)
------------ ---------- ------------
Gross profit................ 29,028 (232) 28,796
Selling, general and adminis-
trative expenses............. 22,457 (336)(c) 22,448
327 (d)
------------ ---------- ------------
Operating income............ 6,571 (223) 6,348
Other income (expense):
Interest income............. 165 648 (e) 813
Interest expense............ (8,769) (1,085) (9,854)(f)
Loss on disposal of assets.. (81) (81)
------------ ---------- ------------
Total other income (ex-
pense)................... (8,685) (437) (9,122)
------------ ---------- ------------
Loss before income taxes and
extraordinary item......... (2,114) (660) (2,774)
Income tax benefit............ 298 298
------------ ---------- ------------
Loss before extraordinary
item(g).................... $ (1,816) $ (660) $ (2,476)
============ ========== ============
Other Data:
EBITDA(h)................... $ 24,736 $ 20,440
Cash interest expense, net.. 8,604 8,666
Ratio of EBITDA to cash in-
terest expense, net........ 2.9x 2.4x
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1995
-----------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales................................. $277,061 $ -- $277,061
Cost of goods sold........................ 237,668 (5,817)(a) 237,977
6,126 (b)
-------- ------ --------
Gross profit............................ 39,393 (309) 39,084
Selling, general and administrative ex-
penses................................... 30,059 (448)(c) 30,047
436 (d)
Plant rationalization and realignment..... (98) (98)
-------- ------ --------
Operating income........................ 9,432 (297) 9,135
Other income (expense):
Interest income......................... 221 864 (e) 1,085
Interest expense........................ (11,807) (1,447) (13,254)(f)
Loss on disposal of assets.............. (346) (346)
-------- ------ --------
Total other income (expense).......... (11,932) (583) (12,515)
-------- ------ --------
Loss before income taxes and extraordi-
nary item.............................. (2,500) (880) (3,380)
Income tax benefit........................ 2,505 2,505
-------- ------ --------
Earnings (loss) before extraordinary
item(g)................................ $ 5 $ (880) $ (875)
======== ====== ========
Other Data:
EBITDA(h)............................... $ 33,367 $ 27,640
Cash interest expense, net.............. 11,586 11,669
Ratio of EBITDA to cash interest ex-
pense, net............................. 2.9x 2.4x
</TABLE>
<TABLE>
<CAPTION>
TWELVE MONTHS ENDED SEPTEMBER 30, 1996
------------------------------------------------
ACTUAL ADJUSTMENTS AS ADJUSTED
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net sales.................. $ 259,483 $ -- $ 259,483
Cost of goods sold......... 218,663 (5,817)(a) 218,972
6,126 (b)
------------- ----------- -------------
Gross profit............. 40,820 (309) 40,511
Selling, general and admin-
istrative expenses........ 29,272 (448)(c) 29,260
436 (d)
Plant rationalization and
realignment............... 1,402 1,402
------------- ----------- -------------
Operating income......... 10,146 (297) 9,849
Other income (expense):
Interest income.......... 130 492 (e) 622
Interest expense......... (12,656) (815) (13,471)(f)
Loss on disposal of as-
sets.................... (390) (390)
------------- ----------- -------------
Total other income (ex-
pense)................ (12,916) (323) (13,239)
------------- ----------- -------------
Loss before income taxes
and extraordinary item.. (2,770) (620) (3,390)
Income tax benefit......... 4,098 4,098
------------- ----------- -------------
Earnings before extraor-
dinary item(g).......... $ 1,328 $ (620) $ 708
============= =========== =============
Other Data:
EBITDA(h)................ $ 35,294 $ 29,567
Cash interest expense,
net..................... 12,526 12,349
Ratio of EBITDA to cash
interest expense, net... 2.8x 2.4x
Ratio of net debt to
EBITDA.................. 3.4 4.2
</TABLE>
23
<PAGE>
NOTES TO UNAUDITED PRO FORMA STATEMENTS OF OPERATIONS
(a) Reflects reduction in depreciation expense resulting from the
Sale/Leaseback.
(b) Represents lease expense resulting from the Sale/Leaseback. Included in
lease expense is non-cash expense of $299 for the nine months ended
September 30, 1996 and 1995 and $399 for the year ended December 31, 1995
and the twelve months ended September 30, 1996.
(c) Reflects the elimination of amortization expense due to the write-off of
deferred fees related to the 10 3/4% Notes.
(d) Represents amortization expense for goodwill arising from the purchase of
34 PCI common shares by Continental Can from Merrywood, assuming such
goodwill is amortized over a period of 40 years.
(e) Represents cash interest income from the investment of a portion of the
net proceeds from the Sale/Leaseback at an assumed rate of 5.00%. Non-cash
interest income from the Continental Can Loan is not included in the Pro
Forma Statements of Operations. Any cash interest payment received by the
Company will be recognized as income in the period received.
(f) Pro forma interest expense is computed as follows:
<TABLE>
<CAPTION>
TWELVE
NINE MONTHS ENDED YEAR MONTHS
SEPTEMBER 30, ENDED ENDED
------------------ DEC. 31, SEPT. 30,
1995 1996 1995 1996
<S> <C> <C> <C> <C>
Actual interest expense........... $ 8,769 $ 9,618 $ 11,807 $ 12,656
Less: Interest on 10 3/4% Notes... (8,441) (8,441) (11,255) (11,255)
Interest expense on Revolving
Credit Facility................. (224) (856) (298) (930)
Add: Interest on Senior Secured
Notes at 10%..................... 9,375 9,375 12,500 12,500
-------- -------- -------- --------
Cash interest expense........... 9,479 9,696 12,754 12,971
Add: Amortization of deferred fi-
nancing fees..................... 375 375 500 500
-------- -------- -------- --------
Pro forma interest expense...... $ 9,854 $ 10,071 $ 13,254 $ 13,471
======== ======== ======== ========
</TABLE>
(g) In the fourth quarter of 1996, the Company will incur an extraordinary
charge of approximately $7,400 in connection with the early retirement of
the 10 3/4% Notes and the write-off of the related unamortized deferred
financing fees.
(h) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, plant rationalization and realignment
costs, the non-cash portion of rental expense, and other income/expense.
EBITDA does not represent, and should not be considered as an alternative
to, net income or cash from operations as determined by generally accepted
accounting principles. Management, however, believes that EBITDA provides
useful information regarding the Company's ability to service and/or incur
indebtedness. Pro forma EBITDA does not give effect to any savings from
the Company's plant rationalization and realignment. See "Business--
Business Strategy--Continue Cost Reduction and Increase Productivity."
24
<PAGE>
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS TWELVE
YEAR ENDED DECEMBER 31, ENDED SEPTEMBER 30, MONTHS ENDED
------------------------------------------------------- ---------------------- SEPTEMBER 30,
1991 1992 1993 1994 1995 1995 1996 1996
(DOLLARS IN THOUSANDS; UNITS IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales.................. $207,192 $ 200,742 $207,035 $230,480 $277,061 $ 213,810 $ 196,232 $259,483
Cost of goods sold......... 172,595 169,755 175,455 192,580 237,668 184,782 165,777 218,663
-------- --------- -------- -------- -------- --------- --------- --------
Gross profit............... 34,597 30,987 31,580 37,900 39,393 29,028 30,455 40,820
Selling, general and
administrative expenses... 25,435 29,159 27,820 28,480 30,059 22,457 21,670 29,272
Plant rationalization and
realignment............... 4,117 159 (134) 855 (98) -- 1,500 1,402
-------- --------- -------- -------- -------- --------- --------- --------
Operating income........... 5,045 1,669 3,894 8,565 9,432 6,571 7,285 10,146
Interest expense, net...... (833) (10,979) (11,929) (11,629) (11,586) (8,604) (9,544) (12,526)
(Loss) gain on disposal of
assets.................... (496) 363 (147) (350) (346) (81) (125) (390)
-------- --------- -------- -------- -------- --------- --------- --------
Earnings (loss) before
income taxes and
extraordinary loss........ 3,716 (8,947) (8,182) (3,414) (2,500) (2,114) (2,384) (2,770)
Income tax (expense)
benefit................... (4,016) 971 1,473 1,631 2,505 298 1,891 4,098
-------- --------- -------- -------- -------- --------- --------- --------
Earnings (loss) before
extraordinary items and
accounting changes........ (300) (7,976) (6,709) (1,783) 5 (1,816) (493) 1,328
Extraordinary items and
accounting changes........ -- (3,005) -- (742) (230) -- -- (230)
-------- --------- -------- -------- -------- --------- --------- --------
Net earnings (loss)........ $ (300) $ (10,981) $ (6,709) $ (2,525) $ (225) $ (1,816) $ (493) $ 1,098
======== ========= ======== ======== ======== ========= ========= ========
OTHER DATA:
EBITDA(1).................. $ 27,307 $ 28,410 $ 29,489 $ 34,477 $ 33,367 $ 24,736 $ 26,663 $ 35,294
Depreciation and
amortization.............. 18,145 26,582 25,729 25,057 24,033 18,165 17,878 23,746
Units shipped.............. 1,205 1,206 1,227 1,316 1,452 1,106 1,130 1,476
Capital expenditures:
Maintenance............... $ 4,305 $ 6,615 $ 5,008 $ 3,689 $ 6,607 $ 5,750 $ 4,694 $ 5,551
Growth.................... 14,156 11,274 11,067 11,300 24,086 18,252 13,748 19,582
-------- --------- -------- -------- -------- --------- --------- --------
Total................... $ 18,461 $ 17,889 $ 16,075 $ 14,989 $ 30,693 $ 24,002 $ 18,442 $ 25,133
======== ========= ======== ======== ======== ========= ========= ========
Ratio of earnings to fixed
charges(2)................ 2.4x -- (3) -- (3) -- (3) -- (3) -- (3) -- (3) -- (3)
PRO FORMA DATA:(4)
EBITDA..................... -- -- -- -- $ 27,640 $ 20,440 $ 22,367 $ 29,567
Cash interest expense,
net(5).................... -- -- -- -- 11,669 8,666 9,346 12,349
Ratio of EBITDA to cash
interest expense, net..... -- -- -- -- 2.4x 2.4x 2.4x 2.4x
Ratio of net debt to
EBITDA.................... -- -- -- -- -- -- -- 4.2
Ratio of earnings to fixed
charges(2)................ -- -- -- -- -- (6) -- -- (6) --
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996
-----------------------
BALANCE SHEET DATA: ACTUAL AS ADJUSTED(8)
<S> <C> <C>
Working capital(7)...................................... $ 13,038 $ 18,666
Property, plant and equipment, net...................... 142,480 101,914
Total assets............................................ 220,533 205,369
Total debt (including current portion).................. 119,850 130,330
Stockholders' equity.................................... 36,977 16,961
</TABLE>
- ---------------------
(1) EBITDA represents earnings before interest expense, income taxes,
depreciation and amortization, plant rationalization and realignment
costs, the non-cash portion of rental expense, and other income/expense.
EBITDA does not represent, and should not be considered as an alternative
to, net income or cash from operations as determined by generally accepted
accounting principles. Management, however, believes that EBITDA provides
useful information regarding the Company's ability to service and/or incur
indebtedness.
(2) For purposes of determining the ratio of earnings to fixed charges,
earnings consist of earnings from continuing operations before income
taxes and extraordinary items plus fixed charges. Fixed charges consist of
interest expense, amortization of deferred financing fees, and that
portion of lease rental expense representative of the interest factor.
(3) Earnings were insufficient to cover fixed charges for the years ended
December 31, 1992, 1993, 1994 and 1995, the nine months ended September
30, 1995 and 1996, and the twelve months ended September 30, 1996, by
$8,947, $8,182, $3,414, $2,500, $2,114, $2,384, and $2,770, respectively.
(4) Gives pro forma effect to the Refinancing and the application of the net
proceeds therefrom, as if each transaction in the Refinancing had taken
place at the beginning of the period presented.
(5) Cash interest expense is shown net of cash interest income.
(6) On a pro forma basis, earnings were insufficient to cover fixed charges
by $3,380 for the year ended December 31, 1995, and by $2,784 for the
nine months ended September 30, 1996.
(7) Working capital represents current assets minus current liabilities,
excluding cash and cash equivalents, the current portion of long-term
debt, and short-term debt.
(8) As adjusted to reflect the Refinancing and the application of the net
proceeds therefrom, as if each transaction in the Refinancing had taken
place on September 30, 1996.
25
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (DOLLARS IN THOUSANDS)
GENERAL
The Company is a leader in developing, manufacturing and marketing a wide
range of custom extrusion blow-molded plastic containers for food and juice,
household chemicals, automotive products and motor oil, industrial and
agricultural chemicals, and hair care products. The Company manufactures
single and multi-layer containers, primarily from HDPE and PP resins, ranging
in size from two ounces to two and one-half gallons. Management believes that,
based on revenues, the Company is among the largest U.S. manufacturers of
extrusion blow-molded plastic containers for (i) food and juice, (ii)
automotive motor oil and (iii) household chemical products.
Approximately 86% of the Company's 1995 sales were made under contracts with
customers with remaining terms of up to six years. In most cases, contracts
are renewed or replaced by new contracts prior to expiration. The terms of the
contracts, including any minimum purchasing requirements and the customers'
ability to cancel, vary greatly with no accepted norm except for pass-throughs
of raw material price increases and decreases.
PCI's principal raw materials are HDPE and PP resins, which are delivered to
PCI in pellet form. During periods of tighter supply, PCI is typically able to
procure sufficient quantities of resins to supply all of its customers' needs.
PCI's dollar profit is substantially unaffected by fluctuations in resin
prices because changes in resin prices are passed through to customers by
means of corresponding changes in product pricing.
The Company was organized in October 1991 for the purpose of acquiring the
Continental Plastic Container Companies. In November 1991, PCI purchased all
the issued and outstanding capital stock of the Continental Plastic Container
Companies in a transaction involving total consideration of $150,450 (the
"Acquisition"). The Company is currently 84% owned by Continental Can, a
publicly-held company which is principally engaged, through its subsidiaries,
in manufacturing materials and containers used in the packaging industry. See
"Ownership of PCI."
RESULTS OF OPERATIONS
THREE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH THREE MONTHS ENDED
SEPTEMBER 30, 1995
Net Sales. Net sales for the third quarter of 1996 increased $367 (0.5%) to
$69,214, compared to $68,847 for the third quarter of 1995. The increase in
sales was the result of an increase in unit volume of 5.6%, which was offset
by a decline in raw material costs that were passed on to customers in the
form of lower prices. Lower resin prices accounted for lower sales of
approximately $2,100 in the third quarter of 1996 compared to the third
quarter of 1995.
Gross Profit. Gross profit for the third quarter of 1996 was $11,622, an
increase of $3,286 (39.4%) over gross profit of $8,336 for the third quarter
of 1995. This increase resulted from the increase in sales volume, an increase
in resin-adjusted margins, and a reduction in manufacturing costs. Higher than
normal manufacturing costs in the third quarter of 1995 were due to start-up
expenses and inefficiencies associated with a large number of capital projects
that took place during the first nine months of 1995. These projects impacted
performance at the majority of PCI's manufacturing locations. PCI had been
awarded contracts with a number of its major customers that required new
installations and changes to many of its existing lines. These contracts, all
of which were a result of PCI's successful sales and marketing efforts to
increase volume, were awarded during a relatively short period of time.
Technical and engineering resources were not available to simultaneously
handle all of the installations. Abnormally high installation-related expenses
for hiring and training hundreds of new employees, and the resulting learning
curve costs and general inefficiencies, continued through the last six months
of 1995. The assimilation of the new product lines was substantially completed
by the end of 1995. This, coupled with a number of other productivity
enhancements implemented during 1996, resulted in the significant year-to-year
improvement.
26
<PAGE>
Gross profit percentage for the third quarter of 1996 was 16.8%, compared to
12.1% for the third quarter of 1995. This increase in gross profit percentage
was the result of the increase in resin-adjusted margins and lower
manufacturing costs, as well as lower raw material costs. As discussed above,
the decrease in sales attributed to decreases in resin prices are a direct
pass through of raw material cost decreases and do not result in a
corresponding decrease in gross profit dollars. Excluding the impact on sale
of lower resin prices, the gross profit percentage for the third quarter of
1996 would have been 16.3%.
SG&A. Selling, general and administrative (SG&A) expenses for the third
quarter of 1996 decreased $768 (10.0%) to $6,929, compared to $7,697 for the
third quarter of 1995. Third quarter 1995 expense levels were higher in part
because of spending necessary to support the increased business activity
discussed above. In addition, the decrease in third quarter 1996 expense
reflected the Company's efforts to reduce SG&A spending in several areas. SG&A
expense as a percentage of net sales for the third quarter of 1996 was 10.0%
compared to 11.2% for the third quarter of 1995. The decrease in the
percentage was the result of the reduction in expense partially offset by the
impact on sales of the lower material costs. Excluding the impact on sales of
lower material costs, SG&A as a percentage of net sales for the third quarter
of 1996 would have been 9.7%.
Plant Rationalization and Realignment. In the third quarter of 1996, the
Company recorded a charge of $400 for plant rationalization and realignment in
connection with plans to consolidate certain manufacturing operations. This
charge primarily reflected severance costs from workforce reductions. The
consolidation is expected to result in higher equipment utilization, improved
productivity and lower operating costs. The Company incurred additional
charges in the fourth quarter resulting from the write-down of excess
equipment, employee relocation costs, and other incremental costs of
transferring production to continuing plants. Such additional accruals were
approximately $5,000. The consolidation is expected to be completed by the end
of the first quarter of 1997.
Other Expense. Other expense for the third quarter of 1996 was $3,261, an
increase of $378 (13.1%) compared to $2,883 for the third quarter of 1995.
This increase resulted primarily from an increase in interest expense due to
additional short-term borrowings outstanding during 1996.
Income Tax Benefit. An income tax benefit for the third quarter of 1996 of
$625 resulted primarily from a decrease in the valuation reserve for deferred
tax assets.
Net Earnings. Net earnings for the third quarter of 1996 were $1,657,
compared to a net loss of $2,038 for the third quarter of 1995. The increase
in third quarter earnings of $3,695 was the result of the increase in sales
and corresponding gross margin dollars, the decreases in manufacturing costs
and SG&A expenses, and the increase in income tax benefit. Excluding the
charge for plant rationalization and realignment, net earnings for the third
quarter of 1996 would have been $2,057.
NINE MONTHS ENDED SEPTEMBER 30, 1996 COMPARED WITH NINE MONTHS ENDED
SEPTEMBER 30, 1995
Net Sales. Net sales for the first nine months of 1996 decreased $17,578
(8.2%) to $196,232, compared to $213,810 for the first nine months of 1995.
The decrease in sales was due primarily to lower raw material costs that were
passed on to customers in the form of lower prices. Lower resin prices
accounted for approximately $13,500 of the decline in sales for the first nine
months of 1996. The additional decline in sales was the result of changes in
product mix. Total unit volume for the first nine months of 1996 increased
2.1% compared to the first nine months of 1995. However, the increase in unit
volume was comprised of an increase in unit volume of smaller, lower-priced
containers for the automotive and motor oil market, while a decline in unit
volume was experienced in larger, higher-priced bottles in the food and
beverage market.
Gross Profit. Gross profit for the first nine months of 1996 was $30,455, an
increase of $1,427 (4.9%) over gross profits of $29,028 for the first nine
months of 1995. This increase resulted from an increase in resin-adjusted
margins as well as the reduction in manufacturing costs discussed above. See
"--Three Months Ended September 30, 1996 Compared with Three Months Ended
September 30, 1995."
27
<PAGE>
Gross profit percentage for the first nine months of 1996 was 15.5% compared
to 13.6% for the first nine months of 1995. This increase in gross profit
percentage was the result of the decrease in sales associated with lower resin
prices as well as an increase in resin-adjusted margins and a reduction in
manufacturing costs. Excluding the impact of lower resin prices on sales,
gross profit percentage for the first nine months of 1996 would have been
14.5%.
SG&A. SG&A expenses for the first nine months of 1996 decreased $787 (3.5%)
to $21,670, compared to $22,457 for the first nine months of 1995. The
decrease reflected higher levels of spending in the third quarter of 1995 to
support an increase in new business as well as the Company's efforts in 1996
to reduce SG&A expense in several areas. SG&A expense as a percentage of net
sales for the first nine months of 1996 was 11.0% compared to 10.5% for the
first nine months of 1995. The increase in the percentage was due to the
decrease in sales resulting from lower material costs, offset by lower SG&A
expense in 1996. Excluding the impact on sales of lower material costs, SG&A
as a percentage of net sales for the first nine months of 1996 would have been
10.3%.
Plant Rationalization and Realignment. Through the first nine months of 1996
the Company recorded charges of $1,500 for plant rationalization and
realignment in connection with a plan to consolidate certain manufacturing
operations. The charges primarily reflected severance costs from workforce
reduction.
Other Expense. Other expense for the first nine months of 1996 was $9,669,
an increase of $984 (11.3%) compared to $8,685 for the first nine months of
1995. This increase resulted primarily from an increase in interest expense
due to additional short-term borrowings outstanding during 1996.
Income Tax Benefit. An income tax benefit for the first nine months of 1996
of $1,891 resulted primarily from a decrease in the valuation reserve for
deferred tax assets.
Net Loss. Net loss for the first nine months of 1996 was $493, compared to a
net loss of $1,816 for the first nine months of 1995. The decrease in loss for
the first nine months of 1996 of $1,323 was primarily the result of an
increase in gross profit and the increase in tax benefit, offset by higher
interest costs and the charges for plant rationalization and realignment.
Excluding the charges for plant rationalization and realignment, the Company
would have had net earnings of $1,007 for the first nine months of 1996.
1995 COMPARED WITH 1994
Net Sales. Net sales in 1995 increased $46,581, or 20.2%, to $277,061 when
compared to 1994 sales of $230,480. Sales growth was due in part to increases
in unit volume of 10.2% in 1995 compared to 1994. Additional sales growth is
due to increases in raw material costs that are passed on to customers in the
form of higher prices. Higher resin prices accounted for approximately
$23,000, or 10.0%, of sales growth in 1995.
Unit volume in the household chemical market increased 10.3% in 1995, with
the majority of the growth coming from light-duty liquids and bleach. Growth
in 1995 unit volume in the food and beverage market was 9.2%, related
primarily to juice and syrup containers. Unit volume for cosmetics and
toiletries, which comprises a small percentage of total sales volume,
experienced growth of 93.1% in 1995 which came primarily from shampoo
containers. The automotive and motor oil market had unit volume growth of 4.6%
in 1995.
Gross Profit. Gross profit increased $1,430, or 3.9%, to $38,392 in 1995,
compared to $36,962 in 1994. Gross profit as a percentage of sales was 13.9%
in 1995 compared to 16.0% in 1994. The decrease in the gross profit percentage
was due in part to increased revenues associated with higher resin prices. As
discussed above, additional revenues attributed to increases in resin prices
are a direct pass through of raw material cost increases to customers and do
not result in a corresponding increase in gross profit dollars. Excluding the
impact of higher resin prices, the gross profit percentage for 1995 would be
15.1%. Also contributing to the lower gross profit percentage in 1995 was an
increase in manufacturing costs. Manufacturing costs increased as a percentage
of sales in 1995 due to inefficiencies experienced in incorporating additional
sales volume in certain plants. The increased volume required installation of
additional lines at these plants, resulting in substantial amounts of
28
<PAGE>
installation-related expenses. These expenses were incurred primarily in the
third quarter of 1995 and by the fourth quarter manufacturing expense as a
percentage of sales had returned to a level comparable to 1994.
SG&A. SG&A expenses increased $563, or 2.0%, to $28,960 in 1995 compared to
$28,397 in 1994. Travel, hiring, and other related expenses increased in 1995
to support the additional sales volume and plant expansion activity. Expenses
for professional services also increased approximately $600 in 1995. These
increases are offset by the decrease in one-time expenses for plant
rationalization and realignment that were incurred in 1994. SG&A expense as a
percent of sales was 10.5% in 1995 compared to 12.3% in 1994. The decline in
the percentage was due to the increase in sales and the relatively fixed
nature of a majority of these expenses.
Operating Income. Operating income increased $867, or 10.1%, to $9,432 in
1995 compared to $8,565 in 1994. This increase resulted from the excess of
additional gross profit dollars generated from the increased sales over the
increase in SG&A costs. Operating income as a percentage of sales was 3.4% in
1995 compared to 3.7% in 1994. Excluding the effect of higher resin prices on
sales, operating income as a percentage of sales would be 3.7% in 1995.
Other Income/Expenses. Other income/expenses remained stable in 1995
compared to 1994. A decrease in interest expense related to the retirement of
$5,300 principal amount of the 10 3/4% Notes in 1994, was offset by an
increase in interest expense from a higher average outstanding balance on the
Revolving Credit Facility during 1995.
Income Taxes. Income tax benefit was $2,500 in 1995 compared to $1,631 in
1994. For a detailed explanation of the Company's accounting for income taxes,
see Note 10 of the Notes to Consolidated Financial Statements appearing
elsewhere in this Offering Memorandum.
Extraordinary Loss. PCI incurred an extraordinary loss in 1995 related to
the early extinguishment of a revolving credit facility. The loss resulted
from the write-off of remaining deferred financing fees associated with the
facility.
Net Loss. Net loss was $225 in 1995 compared to $2,525 in 1994. This
improvement resulted primarily from the increase in operating income and tax
benefit in 1995. Net loss in 1994 was also impacted by a charge of $525
related to an accounting change.
1994 COMPARED WITH 1993
Net Sales. Net sales in 1994 increased $23,445, or 11.3%, over 1993. Total
unit volume increased 7.4% in 1994. Unit volume in motor oil and additives
enjoyed nearly a 14% increase in 1994 with the addition of the Company's new
manufacturing location in West Memphis, Arkansas. This plant was opened in
1994 to service the Coastal Unilube Inc. ("Coastal") business. The Company
entered into a new multi-year contract with Coastal during 1994. Previously,
Coastal had self-manufactured most of their bottle requirements but had
decided to out-source their needs and chose PCI as their sole supplier.
Household chemical unit volume was up 2.2% with most of this growth coming
from light duty liquids. Sales of food and beverage containers increased 7.9%
with growth in juice and syrup containers. Sales dollars increased at a rate
faster than unit volume due to the increases in raw material costs, primarily
resins, that took place in the last half of 1994.
Gross Profit. Gross profit increased from $30,610 in 1993 to $36,962 in
1994. Gross profit as a percentage of sales improved from 14.8% in 1993 to
16.0% in 1994. The Company experienced increased operational efficiencies
during 1994 as a result of the additional volume. The increase in gross profit
percentage was also in spite of the fact a portion of the sales increases were
due to resin cost increases, which have no impact on gross profit dollars.
SG&A. SG&A expenses increased $1,681 in 1994 over 1993. Plant
rationalization and realignment expense increased $990. The Company increased
its accrual for future carrying costs associated with a facility
29
<PAGE>
that was closed prior to the Acquisition. The increase in costs was a result
of a sub-tenant in the facility defaulting on rent payments and the Company
reflecting the loss of the rental income stream. SG&A expenses increased in
other areas as a result of the sales growth and improved performance of the
Company. As a percent of sales, SG&A costs declined from 12.9% in 1993 to
12.3% in 1994.
The income contribution of the added volume more than offset the increases
in SG&A expense. Operating income increased $4,671, or 120%, to $8,565 in 1994
compared to $3,894 in 1993. As a percentage of sales, operating income
increased from 1.9% in 1993 to 3.7% in 1994.
Other Income/Expenses. The decline in other income/expenses was primarily
due to reductions in interest expense. The Company used excess cash to
purchase $5,300 aggregate principal amount of the 10 3/4% Notes during 1994,
thereby reducing interest expense.
Extraordinary Loss. The Company recorded an extraordinary loss of $217 in
1994 related to the purchase of $5,300 aggregate principal amount of the 10
3/4% Notes. Most of this loss related to the write-off of deferred financing
fees associated with the original issuance of such 10 3/4% Notes.
Accounting Change. Effective January 1, 1994, PCI adopted the provisions of
the Financial Accounting Standards Board Statement No. 112, "Employers'
Accounting for Post Employment Benefits." The cumulative effect of this change
in accounting was a charge to earnings of $525.
Net Loss. Net loss dropped from $6,709 in 1993 to $2,525 in 1994. The
improvement of $4,184 is directly due to improvements in operating income
resulting from the continued growth of the Company.
CAPITAL REQUIREMENTS
PCI acquired $18,442 in capital assets in the first nine months of 1996,
compared to $24,002 in the first nine months of 1995. Substantially all of the
assets acquired were packaging equipment for the manufacture of plastic
containers or related support equipment. Capital expenditure levels in both
1996 and 1995 were higher than normal levels due to the addition of the
Company's Atlanta facility in 1996 and plant expansions in several locations
in 1995.
The capital requirements in the first nine months of 1996 were met with cash
generated by operations, from existing funds and from borrowings under
existing credit facilities. Management estimates that the minimum capital
expenditure which would be required to maintain PCI's current facilities
averages approximately $5,000 per annum.
LIQUIDITY
The Company's primary sources of liquidity are provided through the
Revolving Credit Facility of $50,000 and cash flow from operations. As of
December 31, 1996, the Company had no borrowings outstanding under the
Revolving Credit Facility and cash proceeds from the Refinancing in the amount
of approximately $11,000.
The Revolving Credit Facility has a term of seven years expiring October 31,
2002. Interest is based on the bank's prime rate or LIBOR, at the Company's
option. At September 30, 1996, there were $9,820 in borrowings outstanding
under the Revolving Credit Facility, substantially all of which were at LIBOR-
based rates of 6.91%. Prime-based rates were 8.50%.
During the second quarter of 1996, tax-exempt industrial development revenue
bonds of $5,100 were issued on behalf of the Company to finance equipment
purchases in conjunction with the opening of a new manufacturing facility.
Under a capital lease arrangement, principal and interest at an annual rate of
5.80% is payable monthly through April 2002.
Working capital decreased $13,515 during the first nine months of 1996, from
$244 at December 31, 1995, to a deficit of $13,271 at September 30, 1996. The
decrease is due to the classification of the first sinking fund payment of
$16,700 on April 1, 1997, as a current liability. Excluding the effect of this
sinking fund payment
30
<PAGE>
classification, working capital increased $3,185 during the first nine months
of 1996. This increase is due primarily to a reduction in the level of short-
term borrowings by $7,198, offset by the accrual for the plant rationalization
and realignment charge and other accrued expenses. The most significant factor
contributing to the reduction in short-term borrowings was a reduction in the
level of capital expenditures during 1996, as compared with 1995. Management
expects that the Company's working capital position will improve during the
balance of 1996.
As a result of the Tender Offer and the Redemption, it is estimated that the
Company will incur an extraordinary charge from debt extinguishment of
approximately $7,400. This includes a premium and the write-off of unamortized
fees relating to the 10 3/4% Notes. The Company completed the Refinancing in
the fourth quarter of 1996 except for the Redemption. As of December 18, 1996,
after giving effect to the Refinancing, the Company had approximately $32,500
of undrawn availability under the Revolving Credit Facility.
Management believes the funding expected to be generated from operations and
provided by existing credit facilities and the Refinancing will be sufficient
to meet the Company's working capital and capital investment needs for the
foreseeable future.
UTILIZATION OF NET OPERATING LOSS CARRYFORWARDS
PCI accounts for income taxes in accordance with Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS 109"),
issued in February 1992. SFAS 109 requires, among other things, recognition of
future tax benefits, measured by enacted tax rates, attributable to deductible
temporary differences between financial statement and income tax bases of
assets and liabilities and to tax net operating loss carryforwards, to the
extent that realization of such benefits is more likely than not.
At December 31, 1995, PCI had tax net operating loss carryforwards ("NOLs")
totaling approximately $61,000 which expire between 2006 and 2010. After
giving effect to the Refinancing, NOLs were reduced by approximately $11,000.
SFAS 109 requires that the tax benefit of such NOLs be recorded as an asset to
the extent that management assesses the utilization of such NOLs to be "more
likely than not." Management has determined, based on the Continental Plastic
Container Companies' history of prior operating earnings and its expectations
for the future, that operating income of PCI will more likely than not be
sufficient to utilize at least $36,000 of these NOLs prior to their ultimate
expiration in the year 2010.
INFLATION AND CHANGING PRICES
PCI's sales and costs are subject to inflation and price fluctuations.
However, since changes in the cost of plastic resin, PCI's principal raw
material, are passed through to customers, such changes have equal and
offsetting effects on sales and cost of goods sold and therefore have no
material effect on PCI's earnings and cash flow; such changes can have a
substantial impact on PCI's sales.
RECENT ACCOUNTING PRONOUNCEMENTS
Statement of Financial Accounting Standards No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed"
("SFAS 121"), was adopted by PCI in 1996. SFAS 121 requires, among other
things, that long-lived assets held and used by an entity be reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. The implementation of SFAS
121 did not have a material impact on the Company's financial position or
results of operations.
31
<PAGE>
BUSINESS
GENERAL
The Company is a leader in developing, manufacturing and marketing a wide
range of custom extrusion blow-molded plastic containers for food and juice,
household chemicals, automotive products and motor oil, industrial and
agricultural chemicals, and hair care products. The Company manufactures
single and multi-layer containers, primarily from HDPE and PP resins, ranging
in size from two ounces to two and one-half gallons. Management believes that,
based on revenues, the Company is among the largest U.S. manufacturers of
extrusion blow-molded plastic containers for (i) food and juice, (ii)
automotive motor oil and (iii) household chemical products. For the twelve
months ended September 30, 1996, the Company had net sales and pro forma
EBITDA of $259.5 million and $29.6 million, respectively.
In 1995, PCI sold over 1.4 billion containers to national consumer product
companies, including Clorox, Coca-Cola Foods, Colgate-Palmolive, Lever
Brothers, Mobil Oil, Pace Foods, Pennzoil, Procter & Gamble, Quaker Oats and
Quaker State. The Company often is the sole supplier of a customer's container
requirements for specific product categories or for particular container
sizes. The Company has long-standing relationships with most of its customers
and has long-term contractual agreements with remaining terms of up to six
years with customers who represent approximately $237 million, or 86%, of the
Company's fiscal 1995 dollar sales volume. All of these contracts provide for
changes in raw material prices to be passed through to the customer.
COMPETITIVE STRENGTHS
Management believes that the Company possesses several attributes which
contribute to its position as a leading manufacturer of plastic containers for
food and juice, household chemicals, automotive products and other products,
including:
Strong Customer Relationships and Long-Term Production Contracts. Management
believes that the Company's strong and long-standing customer relationships
are due to its nationwide manufacturing facilities, proven ability to develop
and manufacture innovative products, and competitive pricing. The Company's
five largest customers (Procter & Gamble, Coca-Cola Foods, Mobil Oil, Pennzoil
and Quaker State) have been customers of the Company for an average of
approximately 15 years.
Customer-Focused Product Development. PCI works closely with its customers
in all phases of product design and production and, since 1992, has spent
approximately $44 million on research, development and engineering activities.
Examples of the Company's major product innovations include Conolene(TM)
fluorine treated barrier bottles (for use in certain applications where the
contents would otherwise damage an untreated plastic container) and
Lamicon(TM) multi-layer oxygen barrier bottles (for use in certain
applications where the contents would be harmed by prolonged exposure to
oxygen). Other PCI innovations include the first plastic containers for
numerous products, such as motor oil, anti-freeze, maple syrup, edible oil,
gasoline additives and herbicides. These innovations were commercially
developed at the Company's Elk Grove, Illinois technical center, where
approximately 80 employees are engaged in research, development and
engineering activities and which management believes provides the Company with
a competitive advantage.
State-of-the-Art Manufacturing Technologies. Management believes that PCI is
among the container industry's technology leaders and as such is able to
improve manufacturing efficiencies and lower unit costs. The Company was among
the first to develop and utilize a "wheel" manufacturing process employing
container molds mounted radially on a wheel. Many of PCI's current wheels
include proprietary improvements which permit them to operate at higher speeds
and to more efficiently manufacture containers with special features such as
multiple layers and in-mold labeling (which allows a customer's label to be
incorporated into the bottle at its formation rather than be attached with
adhesive at a later stage of the manufacturing process, thereby enhancing the
appearance of the label). As a result of these improvements, since 1991 the
Company has achieved
32
<PAGE>
approximately a 28% increase in productivity, as measured by pounds of resin
processed per employee. In addition, major production advances commercially
developed by PCI include the dual parison blow-molding process, which allows
up to four bottles to be made in a single mold, automatic on-line testing
equipment, robotic product handling equipment, sonic welding (a proprietary
technology to place insulated handles on microwavable bottles), custom color
matching and advanced bottle trimming techniques.
Strategically Located Facilities. The Company serves its customers through a
network of 15 plants located in the continental United States and one plant
located in Puerto Rico. In many cases, the Company's facilities are located
adjacent to or in close proximity to its largest customers' manufacturing
operations, thereby creating production and distribution efficiencies.
Management believes that the Company's national network of manufacturing
facilities is an important competitive advantage because of (i) customer
requirements for nationwide production capabilities, (ii) the significance of
transportation costs, and (iii) the importance of frequent, timely product
deliveries to its customers, many of whom have implemented "just-in-time"
inventory management techniques.
BUSINESS STRATEGY
The Company's business strategy is to leverage its core competencies in the
development, manufacture and marketing of extrusion blow-molded containers
through: (i) continued cost reduction and increased productivity; (ii) new
product development focused on the industry trend towards the conversion to
plastic packaging from glass, metal and other materials; and (iii) the
development of strategic partnerships with customers.
Continue Cost Reduction and Increase Productivity. Management continually
seeks opportunities to reduce costs and maintains several technology driven
programs which are dedicated to productivity improvements. For example, the
Company is expected to realize significant cost savings through the closing of
two production facilities. One such facility was closed in October 1996, and
the other facility is scheduled to close in the first quarter of 1997. The
Company expects to incur a one-time plant rationalization and realignment
charge of approximately $5.5 million in 1996 (of which $1.5 million was
recognized as of September 30, 1996), and although there can be no assurance,
management anticipates that the Company will realize annual savings of
approximately $5.0 million as a result of such plant rationalization and
realignment. Management further anticipates no material loss in unit volume or
net sales from these closings, as substantially all related production volume
is being transferred to other Company facilities. The Company has also focused
on rigorous control of selling, general and administrative expenses resulting
in a reduction of such expenses to 11.0% of net sales in the nine months ended
September 30, 1996, from 14.5% in the year ended December 31, 1992.
Capitalize on Conversion from Glass and Metal Containers. Management
believes that PCI can capitalize on the continuing trend towards the
substitution of plastic for glass and metal containers. This trend is
primarily a function of the greater satisfaction with plastic bottles due to
their (i) lighter weight, (ii) lower susceptibility to breakage, (iii) special
spouts and built-in handles, which increase "pourability" for larger bottles,
and (iv) superior on-shelf product presentation, which facilitates product
differentiation. The Company has developed a number of products aimed at
sectors traditionally served by glass or metal containers, including one
gallon Lamicon(TM) juice containers, plastic replacements for large cans used
in the food service industry, and juice concentrate bottles used in dispensing
machines.
Develop Customer Partnerships. In response to customers' increasing focus on
outsourcing non-core activities, management intends to expand customer
partnerships through vendor management programs. In 1995, the Company entered
into a five-year vendor management agreement with Mobil Oil under which the
Company supplies 100% of Mobil Oil's quart containers for motor oil and
manages related packaging materials. This program provides comprehensive
packaging services to Mobil Oil, including, in addition to bottle manufacture,
the purchase and inventory management of labels, closures and cartons. The
Company also provides technical support for all packaging components to insure
a high level of quality. The Company is in discussions with other customers
regarding similar alliances.
33
<PAGE>
CUSTOMERS
Substantially all of PCI's sales are made to major consumer products
companies. PCI in many cases is the sole supplier of substantially all of its
customers' container requirements for specific products or particular
container sizes.
In 1995, PCI's ten largest customers, which accounted for approximately 70%
of sales, were (in alphabetical order):
Clorox Pace Foods
Coca-Cola Foods Pennzoil
Colgate-Palmolive Procter & Gamble
Lever Brothers Quaker Oats
Mobil Oil Quaker State
PCI often has more than one contract with a particular customer. PCI may
have individual contracts for specific products or container sizes or, in
certain instances, separate contracts with one or more operating divisions of
a single customer. As a result, PCI currently has 15 contracts with the ten
customers listed above (excluding Lever Brothers, which has been a Company
customer for more than 15 years). PCI currently has eight contracts with its
two largest customers, Procter & Gamble and Coca-Cola Foods (which were the
only customers which accounted for more than 10% of PCI's revenues during
1995); the largest such contract accounted for $25.6 million in net sales in
1995 and expires in 1998. During the nine months ended September 30, 1996,
Mobil Oil, Procter & Gamble and Coca-Cola Foods each accounted for more than
10% of PCI's revenues.
PRODUCTS
PCI currently manufactures primarily HDPE containers and PP containers. In
1995, HDPE containers accounted for approximately 85% of the total number of
containers manufactured by PCI and PP containers accounted for approximately
13% of such total. PCI also manufactures at its plant in Puerto Rico a small
quantity of two-liter soda bottles made from polyethylene terephthalate
("PET").
HDPE containers are utilized for products such as laundry detergents,
dishwashing liquids, shampoo, automotive motor oil and some food products;
they may consist of a single layer of plastic or up to six layers for
specialized uses. Multi-layer containers may be required in order to include a
layer with barrier properties, to permit the inclusion of recycled materials
or to reduce cost by limiting the use of colorant to the single exterior
layer. PCI's Conolene(TM) brand of HDPE container is a two-layer container;
the inner layer has been exposed to fluorine/nitrogen gas which makes the
container suitable for storing insecticides and chemicals which would
otherwise cause a standard HDPE container to disintegrate. PP containers are
typically utilized for food products, such as maple syrup, ketchup, salad
dressing and salsa. PP containers are usually either single layer non-barrier
containers or multi-layer containers which include a barrier layer.
PCI's Lamicon(TM) brand of HDPE or PP container consists of six layers,
including a barrier layer of ethyl vinyl alcohol which renders the container
oxygen-tight and makes it suitable for use for food products which are subject
to spoiling or deterioration if exposed to oxygen.
34
<PAGE>
PRODUCT MARKETS
Plastic containers manufactured by PCI are utilized for four main product
categories. PCI's sales volume for 1995 in each of these product categories is
as follows:
<TABLE>
<CAPTION>
1995
------------------------
SALES SALES
VOLUME VOLUME
(IN MILLIONS) PERCENTAGE
<S> <C> <C>
Food and juice................................ $114.3 41.3%
Household chemicals........................... 83.6 30.2
Automotive and motor oil...................... 52.1 18.8
Other......................................... 27.1 9.7
------ -----
Total....................................... $277.1 100.0%
====== =====
</TABLE>
FOOD AND JUICE
The food and juice products for which PCI manufactures containers include
ketchup, maple syrup, edible oil, salsa and fruit juices. Certain of these
products (such as ketchup and salsa) require containers which include an
oxygen resistant barrier layer to prevent spoiling or deterioration. PCI's
food and juice products containers are approximately 64% single layer non-
barrier containers and 36% multi-layer containers with a barrier layer.
Because of the technical requirements involved in barrier packaging for food
and juice, this market is generally characterized by fewer competitors and
higher margins than PCI's other principal product markets.
The packaged food industry has been slow to convert to plastic containers
due to technical requirements relating to product quality, shelf-life and
product handling, and plastic containers currently comprise only a small
percentage of the food container market. However, multi-layer plastic
containers are increasingly accepted for many food products, and management
believes that the food product market presents a substantial opportunity for
future sales of plastic containers.
The Company's unit sales of containers for food and juice products have
grown at an annual compounded rate of 10.4% since 1992. PCI's strategy for the
food and juice market is to work with customers to convert them to plastic
containers for products which are now packaged in glass, metal, paper or
multi-material containers. PCI's marketing emphasizes its proprietary
technology such as Lamicon(TM) barrier containers and its position as the
industry's leading supplier of extrusion blow-molded food containers.
HOUSEHOLD CHEMICALS
The Company's containers for household chemicals consist almost entirely of
HDPE containers for laundry detergent, dishwashing liquid, bleach and fabric
softeners. The Company's unit sales of containers for household chemical
products have grown at an annual compounded rate of 3.3% since 1992. PCI's
strategy for the household chemicals market is to increase market share by
stressing technological advantages permitting the production of more
containers with custom features, and to lower production costs, thereby
allowing the Company to be price competitive. PCI markets specialized product
features such as in-mold labeling and "window stripe" bottles (with a see-
through stripe permitting visual measurement of the contents). In order to
reduce unit manufacturing costs, PCI employs dual parison production, a
process which allows up to four bottles to be made in a single mold, and
automated packing technology.
AUTOMOTIVE AND MOTOR OIL
Motor oil containers produced by PCI consist primarily of one-quart HDPE
bottles. Virtually all containers for automotive motor oil currently sold at
retail are plastic. The Company's unit sales of containers for automotive and
motor oil products have grown at an annual compounded rate of 2.9% since 1992.
As with the household chemicals market, PCI's strategy for the automotive and
motor oil market is to continue to increase its market share through unit-cost
advantages and by emphasizing product features such as "window stripes" and
in-mold labeling.
35
<PAGE>
OTHER PRODUCTS
Hair Care. The Company manufactures containers for shampoos and conditioners
for Procter & Gamble. Management believes that such containers represent an
attractive opportunity for the Company to utilize its advanced production
techniques, as hair care product manufacturers typically have demanding
container specifications. The Company's unit sales of containers for hair care
products have grown at an annual compounded rate of 30.8% since 1992.
Industrial and Agricultural. Containers manufactured for use by industrial
and agricultural manufacturers consist of containers for insect repellents and
high-strength cleaners packaged for commercial and industrial use. PCI's
corrosion-resistant Conolene(TM) containers are a leading product for this
market and PCI's marketing efforts stress the quality of containers produced
with PCI's proprietary Conolene(TM) technology. The Company's unit sales of
containers for industrial and agricultural products have grown at an annual
compounded rate of 2.8% since 1992.
MANUFACTURING AND PRODUCTION PROCESS
PCI serves its customers through a network of 15 plants located in the
continental United States and one plant located in Puerto Rico. See "--
Properties" below. In many cases, the Company's facilities are located
adjacent to or in close proximity to its largest customers' manufacturing
operations, thereby creating production and distribution efficiencies. Most of
PCI's products are shipped by common carrier to customers within a 250-300
mile radius of a given production site.
Five of the Company's plants are dedicated to single customers with which
PCI has long-standing relationships. The plants have between 2 and 13
production lines, and individual production lines within a plant are
frequently dedicated to a single customer. Of the 124 production lines
operated by PCI, 78 are currently dedicated to a particular customer's
products. The dedication of production lines is an important factor in
obtaining long-term contracts. PCI's plants (but not every production line
within a plant) generally operate 24 hours a day five days a week.
In the extrusion blow-molding production process, resin pellets are blended
with colorants or other necessary additives and fed into an extrusion machine,
which uses heat and pressure to form the resin into a round hollow tube of
molten plastic called a parison. Bottle molds mounted radially on a wheel
capture the parisons as they leave the extruder. Once inside the mold, air
pressure is used to blow the parison into the bottle shape of the mold. Over
60% of PCI's production lines are set up so that multiple extruders each
deposit a separate parison into a single mold, thus producing a multi-layered
bottle. In addition, over 60% of the production lines include in-mold labeling
equipment. The Company was among the first to develop and utilize a "wheel"
manufacturing technology. While certain of PCI's competitors also use wheel
technology in their production lines, PCI has developed a number of
proprietary improvements which management believes permit the Company's wheels
to operate at higher speeds and to manufacture more efficiently containers
with one or more special features, such as multiple layers and in-mold
labeling.
Management believes that capital investment to maintain and upgrade
property, plant and equipment is important to remain competitive. Total
capital expenditures for 1993, 1994 and 1995 and the first nine months of 1996
were approximately $16.1 million, $15.0 million, $30.7 million and $18.4
million, respectively. Capital expenditure levels in both 1996 and 1995 were
higher than normal due to the addition of the Company's Atlanta facility in
1996 and plant expansions in several locations in 1995. Management estimates
that the minimum annual capital expenditure which would be required to
maintain PCI's current facilities averages approximately $5.0 million.
SOURCES AND AVAILABILITY OF RAW MATERIALS
All of the raw materials PCI uses have historically been available in
adequate supply from multiple sources. PCI's principal raw materials are HDPE
and PP resins, which are delivered to PCI in pellet form. During periods
36
<PAGE>
of tighter supply, PCI has been able to procure sufficient quantities of
resins to supply all of its customers' needs. PCI's dollar gross profit is
substantially unaffected by fluctuations in resin prices because industry
practice and PCI's contractual arrangements with its customers permit changes
in resin prices to be passed through to customers by means of corresponding
changes in product pricing.
PROPERTIES
PCI employs various owned and leased properties located throughout the
United States for its production facilities, corporate headquarters, technical
center and sales offices. Of the 22 domestic properties currently owned or
leased, 5 are owned and 17 are leased.
The following table sets forth the location and approximate current square
footage of PCI's production facilities:
<TABLE>
<CAPTION>
SIZE IN
LOCATION SQUARE FEET
<S> <C>
Lakeland, Florida........................................ 218,000
Elk Grove, Illinois...................................... 183,000(1)
Kansas City, Kansas...................................... 173,000
Baltimore, Maryland...................................... 151,000(1)(2)
Cincinnati, Ohio......................................... 130,000(1)
Lima, Ohio............................................... 123,000
New Market, New Jersey................................... 116,000(3)
DuPage, Illinois......................................... 104,000(1)
Santa Ana, California.................................... 103,000
Oil City, Pennsylvania................................... 96,000
Atlanta, Georgia......................................... 85,000(4)
Houston, Texas........................................... 80,000(1)
Fairfield, California.................................... 66,000
West Memphis, Arkansas................................... 60,000
Newell, West Virginia.................................... 50,000
Caguas, Puerto Rico...................................... 47,000
</TABLE>
- ---------------------
(1) The equipment located at this facility is included in the Sale/Leaseback.
See "The Refinancing--The Sale/Leaseback."
(2) CPC's obligations as lessee are secured by a first mortgage on the real
property at this facility. See "The Refinancing--The Sale/Leaseback."
(3) PCI's Cleveland, Ohio facility ceased production in October 1996. The
lease on this facility expires on August 31, 1997. PCI's New Market, New
Jersey facility is expected to cease production during the first quarter
of 1997. The New Market lease expires on June 30, 1999.
(4) The equipment at this facility is leased, pursuant to a capital lease,
under an industrial revenue bond financing. Upon the termination of such
financing, the equipment at this facility will secure CPC's obligations
under the Sale/Leaseback. See "The Refinancing--The Sale/Leaseback."
----------------
PCI owns the facilities in Santa Ana, Fairfield, Oil City, Baltimore and
Puerto Rico; all others are leased.
PCI also leases its technical center in Elk Grove, Illinois (79,000 sq.
ft.), its corporate headquarters space in Norwalk, Connecticut (20,000 sq.
ft.), its accounting office space in Omaha, Nebraska (6,000 sq. ft.) and sales
offices in Cincinnati, Ohio (1,000 sq. ft.) and Houston, Texas (1,000 sq.
ft.).
37
<PAGE>
RESEARCH, DEVELOPMENT AND ENGINEERING
Research, development and engineering constitute an important part of PCI's
activities, both for development of new products and product enhancements and
for development of manufacturing technology. These efforts are undertaken by
approximately 80 Company employees principally at PCI's technical center
located in Elk Grove, Illinois. While PCI to a limited extent engages the
services of outside research and development consulting firms to assist on
specific projects, it develops the vast majority of its technical expertise
internally. Research, development and engineering expenditures were
approximately $9.6 million, $9.0 million and $8.8 million for 1993, 1994 and
1995, respectively, and approximately $6.0 million for the nine months ended
September 30, 1996. Management believes that continuing product and
manufacturing innovations are of major importance to meeting customer's needs
and lowering unit costs, thereby permitting the Company to remain competitive
in the plastic container market.
PCI has a large number of patents which relate to a variety of products and
processes, has pending a number of patent applications, and is licensed under
several patents owned by others. Management does not consider any patent or
group of patents relating to any particular product or process to be of
material importance to its business as a whole.
COMPETITION
PCI faces substantial competition throughout its product lines from a number
of well-established businesses operating nationally, and in certain limited
circumstances, from firms operating regionally. In most instances regional
competitors lack the technological capabilities to service national consumer
product companies. PCI's primary national competitors are Owens-Brockway (a
subsidiary of Owens-Illinois, Inc.), Graham Container Corporation, Plastipak,
Inc. and American National Can, Inc. Management believes that PCI's long-term
success is largely dependent on its ability to continue to develop product
innovations and improve its production technology and expertise through its
applied research and development capability. Other important competitive
factors are rapid delivery of products, production quality, and price.
MARKETING AND DISTRIBUTION
Substantially all of PCI's sales are made through the direct efforts of its
approximately 16 sales personnel. Sales activities are conducted from PCI's
corporate headquarters in Norwalk, Connecticut and from field sales offices
located in Houston, Texas; Cincinnati, Ohio; Elk Grove, Illinois; Santa Ana,
California; Fort Smith, Arkansas; Fairfield, California; and Lakeland,
Florida.
PCI's products are typically delivered to its customers by truck, at the
expense of the customer. Deliveries are generally made on a daily basis to
comply with its customers' "just-in-time" delivery requirements.
EMPLOYEES
The Company employed approximately 1,850 persons at September 30, 1996. A
majority of these employees are hourly workers covered by collective
bargaining agreements. PCI has not had any material labor disputes in the past
five years and considers its employee relations to be good.
The Company is presently in negotiation with the union representing certain
of the employees at its Lakeland, Florida production facility with respect to
wages and benefits. In November 1996, the Company experienced a three-day
strike at this facility, which did not disrupt or delay the shipment of
containers to customers. The union has agreed that there will be no further
strikes or work stoppages prior to January 17, 1997, and management expects
that this negotiation will be satisfactorily concluded prior to that date.
ENVIRONMENTAL MATTERS
PCI's operations, in common with those of the industry generally, are
subject to numerous existing and proposed laws and governmental regulations
designed to protect the environment, particularly regarding plant wastes and
emissions and solid waste disposal. Although compliance with environmental
laws and regulations
38
<PAGE>
requires ongoing expenditures and remediation activities, capital expenditures
for property, plant and equipment for environmental control activities and
other expenditures for compliance with environmental laws and regulations were
not material in 1995 and are not expected to be material in 1996. Management
believes that PCI is in material compliance with all federal, state and local
environmental laws and regulations and is currently not engaged in any
remediation activities required by governmental regulatory authorities.
A number of states and the federal government have considered or are
expected to consider legislation mandating certain rates of recycling and/or
the use of recycled materials. Some consumer products companies (including
certain customers of PCI), have responded to these governmental initiatives
and to perceived environmental concerns of consumers by using bottles made in
whole or in part of recycled plastic. Approximately 17% of the Company's resin
needs for HDPE containers are currently supplied from recycled containers.
LITIGATION
PCI is a party to various litigation matters arising in the ordinary course
of its business. The ultimate legal and financial liability of PCI with
respect to such litigation cannot be estimated with certainty but management
of PCI believes, based on its examination of such matters, experience to date
and discussions with counsel, that such ultimate liability will not be
material to the financial statements of PCI.
39
<PAGE>
MANAGEMENT
Set forth below are the names, ages and positions of the current directors
and executive officers of PCI, CPC and Caribbean who will continue to serve
after the Refinancing:
<TABLE>
<CAPTION>
NAME AGE OFFICE
<C> <C> <S>
Donald J. Bainton...... 65 Chairman of the Board and Director of PCI, CPC and
Caribbean; President and Chief Executive Officer
of PCI.
Charles F. DiGiovanna.. 55 President and Chief Executive Officer of CPC and
Caribbean; Director of PCI, CPC and Caribbean.
Abdo Yazgi............. 44 Secretary, Director and Vice President of PCI, CPC
and Caribbean; Treasurer of PCI.
Jay W. Hereford........ 46 Vice President, Treasurer and Chief Financial
Officer of CPC and Caribbean; Assistant Treasurer
of PCI.
Samuel A. Nutile....... 63 Vice President--Manufacturing and Engineering of
CPC and Caribbean.
David M. Stulman....... 50 Vice President--Human Resources of CPC and
Caribbean.
John S. Roesch......... 55 Vice President--Sales and Marketing of CPC and
Caribbean.
J.A. Zubillaga......... 63 Vice President and General Manager of Caribbean.
Jose Luis Zapata....... 36 Director of PCI, CPC and Caribbean.
</TABLE>
Donald J. Bainton has served since November 1991 as Chairman of the Board
and a director of PCI, CPC and Caribbean, and as Chief Executive Officer of
PCI. Since July 1983, he has been principally employed as Chairman of the
Board and Chief Executive Officer of Continental Can. Prior thereto, Mr.
Bainton was Executive Vice President and a director of The Continental Group,
Inc. and President of Continental Packaging Co. Mr. Bainton devotes less than
a majority of his time to PCI's affairs.
Charles F. DiGiovanna was appointed President and Chief Executive Officer of
CPC and Caribbean in March 1992 and was elected a director of PCI, CPC and
Caribbean in May 1994. Mr. DiGiovanna served as Chairman of the Board and
Chief Executive Officer of Darome Inc., an international telecommunications
company, from 1985 through 1990, when he became an independent consultant.
Commencing in June 1991, he rendered consulting services to Continental Can in
connection with the Acquisition. Mr. DiGiovanna is also a director of
Continental Can and Home Port Bancorp, Inc.
Abdo Yazgi has served as Secretary and a director of PCI, CPC and Caribbean,
and as Treasurer of PCI, since November 1991, and as Vice President of PCI,
CPC and Caribbean since February 1992. He has been principally employed as
Executive Vice President of Continental Can since May 1991, as a director of
Continental Can since August 1991, and as its Secretary and General Counsel
since 1979. Mr. Yazgi devotes less than a majority of his time to PCI's
affairs.
Jay W. Hereford has served as Treasurer of CPC and Caribbean since November
1991, and, since May 1992, also as Vice President and Chief Financial Officer
of CPC and Caribbean and Assistant Treasurer of PCI. Mr. Hereford has been
employed by the Company and its predecessors since 1974.
Samuel A. Nutile served as General Manager--Manufacturing of CPC and
Caribbean from September 1993 until his appointment as Vice President--
Manufacturing in January 1994. He was appointed Vice President--Manufacturing
and Engineering in November 1994. He originally worked for CPC in various
manufacturing positions during the period from April 1956 through March 1984.
From March 1984 to September 1993, he served as President and Chief Operating
Officer of Four M Manufacturing Corporation (a manufacturer of corrugate
products) and as an independent consultant.
David M. Stulman has served as Vice President-Human Resources of CPC since
February 1996. He originally worked for Continental Can in various human
resources positions from 1973-1987. Prior to joining CPC, he served as
Corporate Director of Human Resources of Amphenol Corporation from 1988 to
June 1993, and as Vice President-Human Resources of Pirelli Armstrong Tire
Corporation from June 1993 to February 1996.
40
<PAGE>
John S. Roesch has served as General Manager--Sales of CPC and Caribbean
from May 1992 until June 1993, as Vice President--Sales from June 1993 until
July 1996, and thereafter as Vice President--Sales and Marketing. Prior to May
1992, he served in numerous sales positions since joining CPC in 1975.
J.A. Zubillaga has served as Vice President and General Manager of Caribbean
since October 1981.
Jose Luis Zapata has served as a director of PCI since October 1991 and as a
director of CPC and Caribbean since November 1991. He served as President of
PCI from October 1991 through October 22, 1996. He has also served as director
of Corporate Finance of Taenza, S.A. de C.V. since 1989. Mr. Zapata is also a
Director of Continental Can. See "Ownership of PCI."
All directors of PCI hold office until the next annual meeting of
stockholders of PCI and until their successors are duly elected and qualified,
and all executive officers of PCI, CPC and Caribbean hold office at the
pleasure of the respective boards of directors.
MANAGEMENT COMPENSATION
The table below shows the compensation paid or credited by the Company and
its subsidiaries during the last three fiscal years to each executive officer
of the Company whose cash compensation (paid or deferred) in 1996 exceeded
$100,000 (the "named executive officers"):
SUMMARY COMPENSATION TABLE(1)
<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
---------------
ALL OTHER
SALARY BONUS COMPENSATION
NAME AND PRINCIPAL POSITION YEAR ($) ($) ($)(2)
--------------------------- ---- ------- ------- ------------
<S> <C> <C> <C> <C>
Charles F. DiGiovanna........................ 1996 245,028 4,500
President and Chief Executive 1995 245,028 -- 4,500
Officer of CPC and Caribbean 1994 245,028 120,000 4,440
Jay W. Hereford.............................. 1996 152,000 4,500
Vice President, Treasurer and 1995 152,000 -- 4,500
Chief Financial Officer of CPC and Caribbean 1994 145,000 106,314 4,500
Samuel A. Nutile............................. 1996 132,000 3,960
Vice President--Manufacturing 1995 132,000 -- 4,500
and Engineering of CPC and Caribbean 1994 125,004 80,196 3,900
David M. Stulman............................. 1996 130,000 -- 3,450
Vice President--Human
Resources of CPC and Caribbean since
February 1996
John S. Roesch............................... 1996 123,500 3,375
Vice President-Sales and 1995 115,000 -- 4,500
Marketing of CPC and Caribbean 1994 110,004 70,573 3,140
</TABLE>
- ----------
(1) All of the compensation paid to or earned by the named executive officers
relates to performance for a single fiscal year. No long term compensation
was paid to any of the named executive officers for any of the past three
fiscal years.
(2) Comprised of contributions by the Company to the accounts of the named
executive officers under the Continental Can Savings Plan, a defined
contribution plan.
41
<PAGE>
COMPENSATION OF DIRECTORS
Each director of PCI receives an annual fee of $15,000 for his services as a
director for the Company and is reimbursed for any out-of-pocket expenses
incurred in attending meetings.
SALARIED PENSION PLAN
The Continental Plastic Containers, Inc. Salaried Pension Plan (the "Pension
Plan") is a defined-benefit pension plan available to all non-union salaried
employees of the Company. All contributions to the Pension Plan are made by,
and all costs of the Pension Plan are borne by, the Company.
Plan benefits are based on all years of continuous service and the
employee's average earnings during the highest five continuous years of the
last ten years of employment, minus a profit-sharing annuity. Beginning
January 1, 1994, the compensation amount used in the calculation is limited to
$150,000 per year. The profit-sharing annuity is based on the amount of
profit-sharing contributions received for 1988 through 1992.
Payments of benefits under the Pension Plan commence on such date after a
terminating employee's 55th birthday as the employee shall elect, and are made
in the form of straight life or joint and survivor annuities.
The following table sets forth estimated annual formula benefits payable
upon retirement at age 65 to persons in specified earnings and years of
service classifications, who have elected to receive payments in the form of
straight life annuities. The amounts shown do not reflect reductions which
would be made to offset the profit-sharing annuity.
<TABLE>
<CAPTION>
HIGHEST YEARS OF CONTINUOUS SERVICE AT AGE 65(2)
AVERAGE -------------------------------------------------------------
EARNINGS(1) 10 15 20 25 30 35 40
- ----------- ------- -------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
$100,000 $15,470 $ 23,205 $ 30,940 $ 38,675 $ 46,410 $ 54,145 $ 61,880
150,000 23,820 35,730 47,640 59,550 71,460 83,370 95,280
200,000 32,170 48,255 64,340 80,425 96,510 112,595 128,680
250,000 40,520 60,780 81,040 101,300 121,560 141,820 162,080
300,000 48,870 73,305 97,740 122,175 146,610 171,045 195,480
350,000 57,220 85,830 114,440 143,050 171,660 200,270 228,880
400,000 65,570 98,355 131,140 163,925 196,710 229,495 262,280
450,000 73,920 110,880 147,840 184,800 221,760 258,720 295,680
500,000 82,270 123,405 164,540 205,675 246,810 287,945 329,080
</TABLE>
- ----------
(1) Annual earnings are equal to the sum of salary and bonus shown in the
Summary Compensation Table above.
(2) Messrs. DiGiovanna, Hereford, Nutile, Stulman and Roesch were credited
with 4, 22, 31, 0 and 21 years of continuous service as of December 31,
1996.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no transactions with management and others, business
relationships, indebtedness of management or transactions with promoters that
occurred during 1996, nor are any currently proposed for PCI and its
subsidiaries, that are required to be reported under applicable regulations of
the Commission.
42
<PAGE>
OWNERSHIP OF PCI
PCI has outstanding an aggregate of 100 shares of Common Stock (the "PCI
Shares"); prior to December 1996, 50 PCI Shares were owned by Continental Can
and 50 PCI Shares were owned by Merrywood. As part of the Refinancing,
Continental Can purchased an additional 34 PCI Shares from Merrywood and
agreed to purchase Merrywood's remaining 16 PCI Shares not later than December
31, 2000. Jose Luis Zapata (a director of PCI), Cayo Zapata (until October 22,
1996, a director of PCI), and Paulo Zapata are brothers and each beneficially
owns one-third of Merrywood.
The Company, Continental Can, Merrywood and Plaza Limited (the record holder
of all of the outstanding Merrywood Stock) entered into an agreement dated
September 10, 1992, which, among other matters, gave Merrywood the right to
require Continental Can to purchase Merrywood's 50 PCI Shares for $30.0
million, plus interest from November 1991. On July 31, 1996, Merrywood
exercised this right to require such purchase on December 2, 1996, for $30.0
million plus approximately $15.4 million of interest. Merrywood and
Continental Can meanwhile entered into a new agreement dated as of October 22,
1996 (the "Stock Purchase Agreement"), pursuant to which, in lieu of the
foregoing purchase, Continental Can (i) purchased 34 PCI Shares from Merrywood
for $30.0 million and (ii) agreed to purchase Merrywood's remaining 16 PCI
Shares on or before December 31, 2000, for $15.4 million plus interest at a
rate of 0.75% above the nominal rate of the Senior Secured Notes (the
"Remaining PCI Shares Purchase Price"). Pursuant to the Stock Purchase
Agreement, Continental Can also issued to Plaza Limited a warrant to purchase,
at any time prior to January 1, 2001, up to 150,000 shares of the common stock
of Continental Can at a price per share equal to the lower of $20 and the per
share book value of Continental Can common stock as of December 31, 1996.
As security for the performance by Continental Can of its obligations under
the Stock Purchase Agreement, Continental Can granted Merrywood a security
interest in the 84 PCI Shares owned by Continental Can after the Refinancing.
Also, if Continental Can fails to purchase Merrywood's remaining 16 PCI Shares
on or before December 31, 2000, as an alternative to any other remedy
available to it, Merrywood would have the right to exchange those PCI Shares
for the number of shares of Continental Can common stock obtained by dividing
(x) the Remaining PCI Shares Purchase Price by (y) the lower of (i) $11.93
(the average closing price of Continental Can common stock for the 20 business
days preceding October 22, 1996) and (ii) the average closing price of the
Continental Can common stock for the 20 business days preceding December 31,
2000. If Continental Can fails to make such cash purchase, then, depending on
the market price of the Continental Can common stock at that time, and on the
number of shares of such stock then outstanding, the acquisition by Merrywood
of these shares of Continental Can common stock could result in Merrywood's
becoming the largest stockholder of Continental Can.
PCI loaned to Continental Can, out of the proceeds of the Refinancing, the
$30.0 million cash necessary to purchase the additional 34 PCI Shares from
Merrywood. The note evidencing the Continental Can Loan has been pledged as
part of the Collateral to secure the Senior Secured Notes.
43
<PAGE>
DESCRIPTION OF THE REVOLVING CREDIT FACILITY
On October 30, 1995, the Company entered into the Revolving Credit Facility
with The CIT Group/Business Credit, Inc. ("CIT"), pursuant to which CIT agreed
to make revolving loans to the Company and arrange for the issuance of up to
$10.0 million of letters of credit for the benefit of the Company, up to an
aggregate maximum at any time of the lesser of (i) $50.0 million and (ii) the
sum of (x) 85% of the amount of Eligible Accounts (as defined) of CPC and
(subject to the satisfaction of certain conditions precedent) Caribbean, plus
(y) 60% of the value of the Eligible Inventory (as defined) of CPC and
(subject to the satisfaction of certain conditions precedent) Caribbean. As of
December 18, 1996, after giving effect to the Refinancing, the total amount
available to the Company under the Revolving Credit Facility was $36.0
million; as of that date the Company had no revolving loans outstanding and
$3.5 million of letters of credit issued for its benefit.
Interest on the revolving loans is payable at the Company's option, (i) at a
specified percentage above the prime rate or (ii) a specified percentage above
LIBOR. The specified percentages used in computing the interest payable on the
Company's loan balance vary depending on the ratio of certain outstanding
indebtedness of the Company to its earnings. The Company is also required to
pay an annual line of credit fee in the amount of 0.25% of the unused portion
of the Revolving Credit Facility up to $25.0 million and 0.50% of such unused
portion in excess of $25.0 million and a collateral management fee in the
amount of $75,000 per annum.
The Company's obligations under the Revolving Credit Facility are
unconditionally guaranteed by CPC and Caribbean. As security for their
guarantees, each of CPC and Caribbean has granted to CIT a first security
interest in its accounts receivable and inventory (including raw material,
work-in-process, semi-finished goods and supplies), contract rights, documents
and instruments arising from the sale or other disposition of inventory or
rendition of services and related rights, and the bank accounts into which the
proceeds on such accounts receivable are deposited.
The Revolving Credit Facility requires that the Company comply with certain
covenants, including, but not limited to, a restriction on the incurrence of
additional indebtedness, a restriction on the creation of additional liens,
compliance with certain financial covenants, certain restrictions on
dividends, loans and investments, restrictions on mergers and sales of assets
and certain restrictions on the amount of capital expenditures.
The Revolving Credit Facility contains certain events of default, including,
without limitation: (i) the failure of the Company to pay any of its
obligations under the Revolving Credit Facility when due or within five
business days thereafter; (ii) any breach by the Company of any warranty,
representation or covenant of the Revolving Credit Facility or related
agreements beyond any applicable cure period; (iii) the occurrence of an event
of default under any other debt instrument of the Company, CPC or Caribbean
relating to borrowings in excess of $0.25 million in principal amount; (iv)
any prepayment of the Senior Secured Notes unless, at the time in question,
the Company could borrow at least an additional $10.0 million under the
Revolving Credit Facility and the Company, CPC and Caribbean are current in
the payment of their debts and obligations, in accordance with their usual
business practices; (v) certain events of bankruptcy or insolvency of the
Company, CPC or Caribbean; or (vi) Continental Can's ceasing to have the
ability to elect at least one-half of the members of the Company's board of
directors.
The term of the Revolving Credit Facility continues until October 30, 2002
and from year to year thereafter, provided that the Company or CIT may
terminate the Revolving Credit Facility as of October 30, 2002 or any
subsequent anniversary date on 60 days advance written notice.
The Senior Secured Notes rank pari passu in right of payment with
indebtedness under the Revolving Credit Facility.
On December 17, 1996, the Company and CIT entered into an amendment to the
Revolving Credit Facility permitting the consummation of the Refinancing and
amending the Revolving Credit Facility in certain other respects.
44
<PAGE>
DESCRIPTION OF SENIOR SECURED NOTES
The Old Notes were issued, and the New Notes will be issued, under an
indenture dated as of December 17, 1996 (the "Indenture") among the Company,
each of CPC and Caribbean, as guarantors, and United States Trust Company of
New York, as trustee (the "Trustee"). References below to the Senior Secured
Notes include the New Notes and the Old Notes unless the context otherwise
requires. Upon the issuance of the New Notes, if any, or the effectiveness of
a Shelf Registration Statement, the Indenture will be subject to the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"). The following
summary of certain provisions of the Indenture (a copy of which may be
obtained upon request to the Company) does not purport to be complete and is
subject to, and is qualified in its entirety by reference to, the Trust
Indenture Act and to all of the provisions of the Indenture, including the
definitions of certain terms therein and those terms made a part of the
Indenture by reference to the Trust Indenture Act, as in effect on the date of
the Indenture. The definition of certain capitalized terms used in the
following summary are set forth below under "--Certain Definitions."
GENERAL
The Senior Secured Notes will be issued only in registered form, without
coupons, in denominations of $1,000 and integral multiples of $1,000.
Principal of, premium and Liquidated Damages, if any, and interest on the
Senior Secured Notes will be payable, and the Senior Secured Notes will be
transferable, at the corporate trust office or agency of the Trustee in the
City of New York maintained for such purposes at 114 West 47th Street, New
York, New York. In addition, interest may be paid by wire transfer or check
mailed to the Person entitled thereto as shown on the register for the Senior
Secured Notes, provided that all payments with respect to Global Notes (as
defined) and Certificated Securities (as defined), the holders of which have
given wire transfer instructions to the Company, will be required to be made
by wire transfer of immediately available funds to the accounts specified by
the holders thereof. The Senior Secured Notes are initially represented by one
or more Global Notes (the "Global Notes") and are deposited with, or on behalf
of, DTC and registered in the name of a nominee of DTC. Except as set forth in
"--Book-Entry, Delivery and Form," owners of beneficial interests in such
Global Notes are not entitled to have Senior Secured Notes registered in their
names, will not receive or be entitled to receive physical delivery of Senior
Secured Notes in definitive form and are not considered the owners or holders
thereof under the Indenture. See "--Book-Entry, Delivery and Form." No service
charge will be made for any registration of transfer or exchange of the Senior
Secured Notes, except for any tax or other governmental charge that may be
imposed in connection therewith.
Any Old Notes that remain outstanding after the completion of the Exchange
Offer, together with the New Notes issued in connection with the Exchange
Offer, will be treated as a single class of securities under the Indenture.
MATURITY, INTEREST AND PRINCIPAL
The Senior Secured Notes are secured obligations of the Company, limited to
$125,000,000 aggregate principal amount and will mature on December 15, 2006.
Interest on the Senior Secured Notes accrues at the rate of 10% per annum and
will be payable semi-annually on each June 15 and December 15, commencing June
15, 1997, to the holders of record of Senior Secured Notes at the close of
business on June 1 and December 1 immediately preceding such interest payment
date. Interest on the Senior Secured Notes accrues from the most recent date
to which interest has been paid or, if no interest has been paid, from
December 17, 1996, the original date of issuance (the "Issue Date"). Interest
is computed on the basis of a 360-day year comprised of twelve 30-day months
and the actual number of days elapsed. Interest on overdue principal and (to
the extent permitted by law) on overdue installments of interest will accrue
at a rate equal to 11% per annum.
45
<PAGE>
REDEMPTION
Optional Redemption. The Senior Secured Notes will be redeemable, in whole
or in part, at the option of the Company, at any time on or after December 15,
2001, at the redemption prices (expressed as percentages of principal amount)
set forth below plus accrued and unpaid interest to the redemption date, if
redeemed during the 12-month period beginning on December 15 of the years
indicated below:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
<S> <C>
2001.............................. 105.000%
2002.............................. 103.333%
2003.............................. 101.667%
2004 and thereafter............... 100.000%
</TABLE>
In addition, on or prior to December 15, 1999, the Company may, at its
option, following a Public Equity Offering (as defined below) which yields
gross proceeds (before discounts, commissions and expenses) of $15.0 million
or more in the aggregate, redeem up to $40.0 million of Senior Secured Notes
on a pro rata basis (or as nearly pro rata as practicable), at a redemption
price equal to 109% of the principal amount thereof, plus accrued and unpaid
interest, if any, to the date of redemption; provided that at least $85.0
million aggregate principal amount of Senior Secured Notes would remain
outstanding immediately after giving effect to any such redemption. In order
to effect the foregoing redemption with the net proceeds of a Public Equity
Offering, the Company shall send the redemption notice not later than 60 days
after the consummation of such Public Equity Offering.
As used in the preceding paragraph, a "Public Equity Offering" means an
underwritten public offering of Capital Stock (other than Disqualified Stock)
of the Company made on a primary basis by the Company pursuant to a
registration statement filed with and declared effective by the Commission in
accordance with the Securities Act or an underwritten offering of Capital
Stock (other than Disqualified Capital Stock) of the Company made on a primary
basis by the Company pursuant to Rule 144A under the Securities Act.
Mandatory Redemption. As described below, in the event of a Change of
Control, the Company is obligated to make an offer to purchase all outstanding
Senior Secured Notes at a redemption price of 101% of the principal amount
thereof, plus accrued interest. In addition, the Company is obligated to make
offers to purchase Senior Secured Notes at a redemption price of 100% of the
principal amount plus accrued interest with and in an amount equal to the net
cash proceeds of certain sales or other dispositions of assets. See "--Change
of Control" and "--Certain Covenants --Disposition of Proceeds of Asset Sales"
below. The Company will comply with Rule 14e-1 promulgated under the Exchange
Act in making any such offer to purchase Senior Secured Notes.
Selection and Notice. In the event that less than all of the Senior Secured
Notes are to be redeemed at any time, selection of Senior Secured Notes for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Senior
Secured Notes are listed or, if the Senior Secured Notes are not listed on a
national securities exchange, on a pro rata basis, by lot or by such method as
the Trustee shall deem fair and appropriate, provided, however, that no Senior
Secured Notes of $1,000 or less shall be redeemed in part. Notice of
redemption shall be mailed by first class mail at least 30 but not more than
60 days before the redemption date to each holder of Senior Secured Notes to
be redeemed at its registered address. If any Senior Secured Note is to be
redeemed in part only, the notice of redemption that relates to such Senior
Secured Note shall state the portion of the principal amount thereof to be
redeemed. A new Senior Secured Note in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the holder thereof
upon cancellation of the original Senior Secured Note. On and after the
redemption date, interest will cease to accrue on Senior Secured Notes or
portions thereof called for redemption.
46
<PAGE>
CHANGE OF CONTROL
In the event of a Change of Control (the date of such occurrence being the
"Change of Control Date"), the Company shall notify the holders in writing of
such occurrence and shall make an offer to purchase (the "Change of Control
Offer"), on a business day (the "Change of Control Payment Date") not later
than 60 days following the Change of Control Date, all Senior Secured Notes
then outstanding at a purchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the Change of Control
Payment Date. Notice of a Change of Control Offer shall be mailed by the
Company to the holders not less than 30 days nor more than 45 days before the
Change of Control Payment Date. The Change of Control Offer is required to
remain open for at least 20 business days and until the close of business on
the Change of Control Payment Date. For the definition of Change of Control,
see "--Certain Definitions--Change of Control" below. The occurrence of the
Company having to make a Change of Control Offer may cause a default under
certain financial covenants of the Revolving Credit Facility.
RANKING AND GUARANTEES
The indebtedness of the Company evidenced by the Senior Secured Notes ranks
senior in right of payment to all subordinated indebtedness of the Company and
ranks pari passu in right of payment with indebtedness under the Revolving
Credit Facility and all other existing or future unsubordinated indebtedness
of the Company.
The Company's obligations under the Senior Secured Notes are jointly and
severally guaranteed by CPC and Caribbean (the "Guarantees"). The Guarantees
rank pari passu in right of payment with all existing or future unsubordinated
indebtedness of each of CPC and Caribbean, respectively. CPC's Guarantee is
secured, in the manner and to the extent summarized below under "--Security,"
by substantially all of CPC's assets and properties other than inventory and
accounts receivable. Caribbean's Guarantee is secured, in the manner and to
the extent summarized below under "--Security," by substantially all of
Caribbean's assets and properties other than inventory, accounts receivable
and certain equipment securing capital lease obligations. With respect to
certain risks associated with the Guarantees, see "Risk Factors--Fraudulent
Conveyance Statutes."
SECURITY
Pursuant to the Security Documents, each of CPC and Caribbean has assigned
and pledged as collateral to the Collateral Trustee for the benefit of the
Collateral Trustee and the holders of the Senior Secured Notes a security
interest in certain of its real and personal property summarized below,
whether now owned or hereafter acquired, together with the proceeds therefrom
and permanent additions and accessions thereto, but such security interest
does not extend to (i) the inventory or accounts receivable of each of CPC and
Caribbean, which are pledged to secure the obligations under the Revolving
Credit Facility, (ii) the real or personal property sold in connection with,
or pledged to secure, the obligations under the 1996 Sale/Leaseback (as
defined under "--Certain Definitions") or to any permanent additions or
accessions thereto or (iii) the Previously Leased/Financed Equipment. The
Collateral for the Senior Secured Notes represents substantially all of the
real and personal property (other than inventory, accounts receivable and
certain equipment securing capital lease obligations) of each of CPC and
Caribbean. The security interest in the Collateral is a first priority
interest (to the extent attainable by filing or possession), subject to
certain exceptions, which exceptions, in the judgment of the Company, CPC and
Caribbean, do not adversely affect the value of the Collateral.
The net book value of the Collateral (excluding the Continental Can Note and
the stock of the Guarantors) as of September 30, 1996, after giving effect to
the 1996 Sale/Leaseback, was approximately $91.1 million (the net book value,
as of September 30, 1996, of the assets subject to the 1996 Sale/Leaseback,
was approximately $40.6 million). There can be no assurance that the proceeds
of any sale of the Collateral in whole pursuant to the Indenture and the
related Security Documents following an Event of Default would be sufficient
to satisfy payments due on the Senior Secured Notes. In addition, the ability
of the Senior Secured Noteholders to realize upon the Collateral may be
subject to certain bankruptcy law limitations in the event of a bankruptcy.
See "--Certain Bankruptcy Limitations" below.
The collateral release provisions of the Indenture permit the release of
Collateral without substitution of collateral of equal value under certain
circumstances. See "--Possession, Use and Release of Collateral." For
47
<PAGE>
example, Collateral may be released in connection with Asset Sales and new
collateral need not be substituted therefor. As described under "--Certain
Covenants--Disposition of Proceeds of Asset Sales," the Net Cash Proceeds of
such Asset Sales are required to be utilized to make an offer to purchase
Senior Secured Notes, as hereafter described. To the extent an offer to
purchase Senior Secured Notes is not subscribed to by holders thereof on the
basis described under "--Certain Covenants--Disposition of Proceeds of Assets
Sales," the unutilized Net Cash Proceeds may be retained by the Company, free
of the Lien of the Indenture and the Security Documents.
The Indenture permits the substitution of Collateral for collateral of equal
value under certain circumstances. See "--Possession, Use and Release of
Collateral."
Pursuant to the Security Documents, (i) the Company has assigned and pledged
to the Trustee, for its benefit and the benefit of the holders of the Senior
Secured Notes, the Continental Can Note, the Capital Stock of each of CPC and
Caribbean and (ii) each of CPC and Caribbean has assigned and pledged to the
Trustee, for its benefit and the benefit of the holders of the Senior Secured
Notes, each of the following assets of such entity owned by such entity on the
date the Senior Secured Notes were originally issued or acquired by such
entity thereafter (other than assets with respect to which a Lien has been
granted to a third party pursuant to clause (c) of the covenant described
under "--Limitation of Liens" below): (a) all contracts, together with all
contract rights arising thereunder; (b) all machinery and equipment; (c) all
trademarks and service marks, together with the registrations and rights to
all renewals thereof; (d) all patents and copyrights; (e) all computer
programs of such entity and all intellectual property rights therein and all
other proprietary information of such entity, including, but not limited to,
trade secrets; (f) the instruments deposited or required to be deposited in
the Cash Collateral Account upon the sale or other disposition of Collateral;
(g) interests in real properties, which as of the date of this Prospectus
consist of the owned facilities described under "Business--Properties" above,
excluding the Company's Baltimore facility, which is pledged to secure the
1996 Sale/Leaseback (the "Real Property Collateral"); (h) the Continental Can
Note; and (i) all proceeds and products of any and all of the foregoing.
Notwithstanding the foregoing, the Senior Secured Notes are not secured by
inventory and accounts receivable (which are pledged to secure the Revolving
Credit Facility), certain contract rights, leasehold interests in real
property, motor vehicles, cash (except in certain instances), the equipment,
machinery and other property to be sold in connection with the 1996
Sale/Leaseback or any permanent additions or accessories to such equipment,
machinery and other property and the Previously Leased/Financed Equipment;
provided that the Previously Leased/Financed Equipment shall constitute
Collateral at such time as the 1996 Sale/Leaseback terminates. In addition to
securing the obligations of the Company under the Senior Secured Notes, the
pledge of Collateral by CPC and Caribbean also secures the obligations of such
guarantor under its Guarantee.
The personal and intellectual property Collateral is pledged pursuant to
pledge and security agreements among CPC, Caribbean and the Trustee and, with
respect to Caribbean, pursuant to a personal property note pledge agreement, a
personal property mortgage and affidavit and a personal property mortgage note
between Caribbean and the Trustee (collectively, the "Security Agreements")
and, in the case of the intellectual property Collateral, the pledge has been
confirmed pursuant to a separate notice of security interest among the same
parties (the "Notice of Security Interest"). The Real Property Collateral of
CPC is pledged pursuant to mortgages or deeds of trust (the "U.S. Mortgages")
and the Real Property Collateral of Caribbean is pledged pursuant to a real
property mortgage note pledge agreement, a real property mortgage and
affidavit and a real property mortgage note (collectively, the "Puerto Rico
Mortgage"; together with the U.S. Mortgages, the "Mortgages"). The Capital
Stock of CPC and Caribbean and the Continental Can Note are pledged pursuant
to a stock pledge agreement among the Company and the Trustee (the "Stock
Pledge Agreement"). The lessors under the 1996 Sale/Leaseback have a
subordinated security interest in the Continental Can Note.
If an Event of Default occurs under the Indenture, the Trustee, on behalf of
the holders of the Senior Secured Notes, in addition to any rights or remedies
available to it under the Indenture, may take such action as it deems
advisable to protect and enforce its rights in the Collateral, including the
institution of foreclosure proceedings. The proceeds received by the Trustee
from any foreclosure will be applied by the Trustee first to pay the
48
<PAGE>
expenses of such foreclosure and fees and other amounts then payable to the
Trustee under the Indenture, and thereafter to pay the principal of, premium,
if any, and interest on the Senior Secured Notes.
CERTAIN BANKRUPTCY LIMITATIONS
The right of the Trustee to repossess and dispose of the Collateral upon the
occurrence of an Event of Default is likely to be significantly impaired by
applicable bankruptcy law if a bankruptcy proceeding were to be commenced by
or against the Company, CPC or Caribbean prior to the Trustee having
repossessed and disposed
of the Collateral. Under the Bankruptcy Code, a secured creditor such as the
Trustee is prohibited from repossessing its security from a debtor in a
bankruptcy case, or from disposing of security repossessed from such debtor,
without bankruptcy court approval. Moreover, the Bankruptcy Code permits the
debtor to continue to retain and to use collateral even though the debtor is
in default under the applicable debt instruments, provided that the secured
creditor is given "adequate protection." The meaning of the term "adequate
protection" may vary according to circumstances, but it is intended in general
to protect the value of the secured creditor's interest in the collateral and
may include cash payments or the granting of additional security, if and at
such times as the court in its discretion determines, for any diminution in
the value of the collateral as a result of the stay of repossession or
disposition or any use of the collateral by the debtor during the pendency of
the bankruptcy case. In view of the lack of a precise definition of the term
"adequate protection" and the broad discretionary powers of a bankruptcy
court, it is impossible to predict how long payments under the Senior Secured
Notes could be delayed following commencement of a bankruptcy case, whether or
when the Trustee could repossess or dispose of the Collateral or whether or to
what extent holders of the Senior Secured Notes would be compensated for any
delay in payment or loss of value of the Collateral through the requirement of
"adequate protection."
CERTAIN COVENANTS
Set forth below are certain covenants which are contained in the Indenture.
Limitation on Additional Company Indebtedness. The Company shall not create,
incur, assume, guarantee or in any manner become liable for the payment of
("incur"), any Indebtedness (including any Acquired Indebtedness) except for
(each of which shall be given independent effect):
(a) Indebtedness under the Senior Secured Notes and the Indenture;
(b) Indebtedness which, when aggregated with any Indebtedness of CPC or
Caribbean incurred pursuant to clause (g) of the covenant described under
"--Limitation on Additional Subsidiary Indebtedness," does not exceed the
greater of (i) Indebtedness outstanding from time to time pursuant to the
commitments, advance rates and the definitions of "Eligible Receivables"
and "Eligible Inventory" in effect from time to time under the Revolving
Credit Facility and (ii) $25.0 million;
(c) Indebtedness of the Company outstanding on the date on which the
Senior Secured Notes were originally issued and included in the Company's
consolidated financial statements contained elsewhere in this Prospectus;
(d) Indebtedness if, immediately after giving pro forma effect to the
incurrence thereof, the Consolidated Interest Coverage Ratio of the Company
would be greater than or equal to 2.25:1.00 on or prior to December 31,
1999 and 2.50:1.00 thereafter;
(e) Indebtedness incurred in connection with or arising out of
Capitalized Lease Obligations or secured by Liens of the type permitted
under clause (c) of the covenant described under "--Limitation of Liens"
below in an aggregate amount at any time outstanding which, when aggregated
with any Indebtedness incurred pursuant to clause (d) of the covenant
described under "--Limitation on Additional Subsidiary Indebtedness" below,
does not exceed $10.0 million, provided such Indebtedness arising out of
Capitalized Lease Obligations is incurred in accordance with the covenant
described under "--Limitation on Liens" below;
49
<PAGE>
(f) Interest Rate Protection Obligations of the Company covering
Indebtedness of the Company (which Indebtedness (i) bears interest at
fluctuating interest rates and (ii) is otherwise permitted to be incurred
under this covenant) to the extent the notional principal amount of such
Interest Rate Protection Obligations does not exceed the principal amount
of the Indebtedness to which such Interest Rate Protection Obligations
relate;
(g) Indebtedness arising under any appeal and reimbursement obligation
entered into with respect to any judgment;
(h) Indebtedness in the nature of or in connection with (i) any Sale-
Leaseback Transaction permitted under the covenant described under "--
Limitation on Sale-Leaseback Transactions" below, (ii) a guarantee of the
1996 Sale/Leaseback, or (iii) a refinancing or replacement of the 1996
Sale/Leaseback, so long as any such Indebtedness incurred pursuant to
clause (i) or (iii) is incurred pursuant to the Consolidated Interest
Coverage Ratio test set forth in paragraph (d) of this covenant;
(i) any replacements, renewals, refinancings and extensions of
Indebtedness incurred under clauses (a), (b), (c) and (d) above, provided
that any such replacement, renewal, refinancing and extension (x) shall not
provide for any mandatory redemption, amortization or sinking fund
requirement in an amount greater than or at a time prior to the amounts and
times specified in the Indebtedness being replaced, renewed, refinanced or
extended and (y) shall not exceed the principal amount (plus accrued
interest) of the Indebtedness being replaced, renewed, refinanced or
extended; and
(j) Indebtedness under any guarantees by the Company of any obligations
of CPC or Caribbean outstanding from time to time under the Revolving
Credit Facility.
Limitation on Additional Subsidiary Indebtedness. The Company shall not
cause or permit any Subsidiary to incur any Indebtedness (including any
Acquired Indebtedness) except for (each of which shall be given independent
effect):
(a) Indebtedness under the Guarantees;
(b) Indebtedness issued to and held by the Company or a Wholly-Owned
Subsidiary of the Company;
(c) Indebtedness of Subsidiaries outstanding on the date on which the
Senior Secured Notes were originally issued and included in the Company's
consolidated financial statements included elsewhere in this Prospectus;
(d) Indebtedness incurred in connection with or arising out of
Capitalized Lease Obligations or secured by Liens of the type permitted
under clause (c) of the covenant described under "--Limitation on Liens"
below in an aggregate amount which, when aggregated with any Indebtedness
incurred pursuant to clause (e) of the covenant described under "--
Limitation on Additional Company Indebtedness" above, does not exceed $10.0
million at any time outstanding, provided such Indebtedness arising out of
Capitalized Lease Obligations is incurred in accordance with the covenant
described under "--Limitation on Liens" below;
(e) Indebtedness in the nature of or in connection with any Sale-
Leaseback Transaction permitted under the covenant described under "--
Limitation on Sale-Leaseback Transactions" below or in connection with a
refinancing or replacement of the 1996 Sale/Leaseback, so long as any such
Indebtedness is incurred pursuant to the Consolidated Interest Coverage
Ratio test set forth in paragraph (d) of the covenant entitled "--
Limitation on Additional Company Indebtedness";
(f) Indebtedness under any guarantees by CPC and Caribbean of the
obligations of the Company outstanding from time to time under the
Revolving Credit Facility; and
(g) Indebtedness which, when aggregated with any Indebtedness of the
Company incurred pursuant to clause (b) of the covenant described under "--
Limitation on Additional Company Indebtedness," does not exceed the greater
of (i) Indebtedness outstanding from time to time pursuant to the
commitments, advance rates and the definitions of "Eligible Receivables"
and "Eligible Inventory" in effect from time to time under the Revolving
Credit Facility, and (ii) $25.0 million.
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Limitation on Investments, Loans and Advances. The Company shall not make
and shall not permit any of its Subsidiaries to make any capital
contributions, advances or loans to, or investments or purchases of Capital
Stock in, any Person (collectively, "Investments"), except: (i) Investments by
the Company in or to any Wholly-Owned Subsidiary and Investments or loans in
or to the Company or a Wholly-Owned Subsidiary by any Subsidiary; (ii)
Investments represented by accounts receivable created or acquired in the
ordinary course of business; (iii) advances to employees in the ordinary
course of business; (iv) Investments under or pursuant to interest rate
protection agreements; (v) Investments, not exceeding $5.0 million in the
aggregate, in joint ventures, partnerships or Persons that are not Wholly-
Owned Subsidiaries, provided that such Investments are made solely for the
purpose of acquiring businesses related to the Company's business; (vi)
Restricted Payments permitted by the covenant "--Limitation on Restricted
Payments"; and (vii) Permitted Investments. Investments other than those
permitted by the foregoing provisions are referred to herein as "Prohibited
Investments."
Limitation on Restricted Payments. The Company shall not make, and shall not
permit any of its Subsidiaries to, directly or indirectly, make any Restricted
Payment, unless:
(a) no Default or Event of Default shall have occurred and be continuing
at the time of or after giving effect to such Restricted Payment;
(b) the Company is able to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set
forth in paragraph (d) of the covenant entitled "--Limitation on Additional
Company Indebtedness"; and
(c) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the date on
which the Senior Secured Notes are originally issued does not exceed the
sum of (1) 75% of the Company's Consolidated Net Income (or in the event
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) from January 1, 1997, (2) 100% of the aggregate net cash proceeds
and the Fair Market Value of marketable securities received by the Company
from the issue or sale, after the date on which the Senior Secured Notes
are originally issued, of Capital Stock (other than Disqualified Stock) of
the Company or any Indebtedness or other securities of the Company
convertible into or exercisable for Capital Stock (other than Disqualified
Stock) of the Company which has been so converted or exercised, as the case
may be, plus (3) solely to the extent such Restricted Payment is made to
provide Continental Can with the funds necessary to purchase PCI Shares
pursuant to the Merrywood Agreement, $7.5 million, provided that at the
time of such Restricted Payment made pursuant to this clause (3), the
Consolidated Interest Coverage Ratio computed on a pro forma basis is
greater than 2.75:1.00. For purposes of determining under clause (2) above
the amount expended for Restricted Payments, cash distributed shall be
valued at the face amount thereof and property other than cash shall be
valued at its Fair Market Value.
The provisions of this covenant do not prohibit (i) the payment of any
dividend within 60 days after the date of declaration thereof, if at such date
of declaration such payment would comply with the provisions of the Indenture,
(ii) the retirement of any shares of Capital Stock of the Company in exchange
for, or out of, the Net Proceeds of the substantially concurrent sale (other
than to a Subsidiary of the Company) of other shares of Capital Stock of the
Company (other than Disqualified Stock) and, (iii) the redemption or
retirement of subordinated Indebtedness of the Company in exchange for, by
conversion into, or out of the Net Proceeds of, a substantially concurrent (x)
sale or issuance of Capital Stock of the Company or (y) incurrence of
subordinated Indebtedness of the Company that is contractually subordinated in
right of payment to the Senior Secured Notes and that is permitted to be
incurred in accordance with the covenant described under "--Limitation on
Additional Company Indebtedness" above.
In determining the amount of Restricted Payments permissible under clause
(c) above, amounts expended pursuant to clauses (i)-(iii) above shall be
included as Restricted Payments.
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Limitation on Liens. The Company shall not, and shall not permit, cause or
suffer any of its Subsidiaries to, create, incur, assume or suffer to exist
any Lien of any kind upon any of its property or assets now owned or hereafter
acquired by it, except for:
(a) Liens existing as of the Issue Date and disclosed in the Security
Documents on the Issue Date and Liens created by the Senior Secured Notes,
the Indenture and the Security Documents;
(b) Permitted Liens on property and assets not constituting Collateral
and certain Liens on the Collateral to the extent permitted by the Security
Documents;
(c) Liens to secure the payment of all or a part of the purchase price of
assets or property acquired or constructed in the ordinary course of
business after the date on which the Senior Secured Notes are originally
issued, provided that (i) the aggregate principal amount of Indebtedness
secured by such Liens shall not exceed the lesser of cost or Fair Market
Value of the assets or property so acquired or constructed and shall not,
in any event, exceed $15.0 million, provided, however, that for the purpose
of calculating the amount of Indebtedness permitted under clause (i) of
this paragraph (c), Indebtedness incurred to refinance or replace the 1996
Sale/Leaseback and secured by such Liens shall not be included, (ii) the
Indebtedness secured by such Liens shall have otherwise been permitted to
be incurred under the Indenture and (iii) such Liens shall not encumber any
other assets or property of the Company or any of its Subsidiaries and
shall attach to such assets or property within 60 days of the construction
or acquisition of such assets or property;
(d) Liens on the assets or property of a Subsidiary of the Company
existing at the time such Subsidiary became a Subsidiary of the Company and
not incurred as a result of (or in connection with or in anticipation of)
such Subsidiary becoming a Subsidiary of the Company, provided such Liens
do not extend to or cover any property or assets of the Company or any of
its Subsidiaries (other than the property or assets so acquired);
(e) Liens on the inventory and accounts receivable of the Company, CPC
and Caribbean securing the obligations under the Revolving Credit Facility;
(f) any Lien pursuant to Capitalized Lease Obligations not to exceed
$10.0 million in the aggregate, provided such Liens do not extend to or
cover any property or assets of the Company or any of its Subsidiaries
(other than the property or assets subject to such Capitalized Lease
Obligations);
(g) leases and subleases of real property which do not interfere with the
ordinary conduct of the business of the Company or any of its Subsidiaries,
and which are made on customary and usual terms applicable to similar
properties;
(h) Liens securing (i) Indebtedness which is incurred to replace or
refinance the 1996 Sale/Leaseback or (ii) Indebtedness which has been
secured by a Lien permitted under the Indenture and is permitted to be
refinanced under the Indenture, provided that none of such Liens extend to
or cover any property or assets of the Company or any of its Subsidiaries
not securing the 1996 Sale/Leaseback or Indebtedness so replaced or
refinanced, as the case may be;
(i) Liens securing the 1996 Sale/Leaseback and Previously Leased/Financed
Equipment, including Liens on such assets which may in the future secure
the 1996 Sale/Leaseback; and
(j) in addition to Liens permitted under clauses (a)-(i) above, Liens
securing an aggregate of $5.0 million of Indebtedness or other obligations.
Limitation on Dividends and Other Payment Restrictions Affecting
Subsidiaries. The Company shall not, and shall not permit any Subsidiary of
the Company to, directly or indirectly, create or otherwise cause or suffer to
exist or enter into any agreement with any Person that would cause, any
consensual encumbrance or restriction of any kind on the ability of any
Subsidiary of the Company to (a) pay dividends, in cash or otherwise, or make
any other distributions on its Capital Stock or any other interest or
participation in, or measured by, its profits owned by, or pay any
Indebtedness owed to, the Company or a Subsidiary of the Company, (b) make any
loans
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or advances to the Company or any Subsidiary of the Company or (c) transfer
any of its properties or assets to the Company or to any Subsidiary of the
Company, except, in each case, for such encumbrances or restrictions existing
under or contemplated by or by reason of (i) restrictions imposed by
applicable law, (ii) customary non-assignment provisions of any contract or
any lease governing a leasehold interest of the Company or any Subsidiary of
the Company, (iii) the Senior Secured Notes, the Indenture and the Security
Documents, (iv) any restrictions existing under or contemplated by agreements
in effect on the Issue Date, including, without limitation, restrictions under
the Revolving Credit Facility and the 1996 Sale/Leaseback, as both are in
effect on the Issue Date, (v) any restrictions, with respect to a Subsidiary
of the Company that is not a Subsidiary of the Company on the Issue Date, in
existence at the time such Person becomes a Subsidiary of the Company (but not
created in contemplation of such Person becoming a Subsidiary) and (vi) any
restrictions existing under any agreement that refinances or replaces an
agreement containing a restriction permitted by clause (i) through (v), above;
provided that the terms and conditions of any such restrictions are not
materially less favorable to the holders of the Senior Secured Notes than
those under or pursuant to the agreement being replaced or the agreement
evidencing the Indebtedness refinanced. Nothing contained in this covenant
shall prevent the Company or any of its Subsidiaries from entering into any
agreement (a) permitted under the covenant described under "--Limitation on
Liens" above or (b) restricting the sale or other disposition of assets or
property securing Indebtedness evidenced by such agreement so long as the
Company complies with the covenant described under "--Disposition of Proceeds
of Asset Sales" below.
Limitation on Sale-Leaseback Transactions. The Company shall not, and shall
not permit any of its Subsidiaries to, enter into any Sale-Leaseback
Transaction other than the 1996 Sale/Leaseback. Notwithstanding the foregoing,
the Company and its Subsidiaries may (a) enter into Sale-Leaseback
Transactions if (i) after giving effect to any such Sale-Leaseback
Transaction, the Company shall be in compliance with clause (d) of the
covenant described under "--Limitation on Additional Company Indebtedness"
above or in compliance with clause (e) of the covenant described under "--
Limitation on Additional Subsidiary Indebtedness," and (ii) the net proceeds
of such Sale-Leaseback Transaction are at least equal to the Fair Market Value
of such property (determined by the Company's Board of Directors), and the
Company or such Subsidiary shall apply the Net Cash Proceeds of the sale as
provided under "--Disposition of Proceeds of Asset Sales" below.
Disposition of Proceeds of Asset Sales. The Company shall not, and shall not
permit any of its Subsidiaries to, make any Asset Sale unless (i) such Asset
Sale is for Fair Market Value, (ii) the proceeds therefrom consist of at least
85% cash and/or Cash Equivalents, (iii) if such Asset Sale involves Collateral
it shall be in compliance with the provisions described under "--Possession,
Use and Release of Collateral" below and (iv) the Company shall commit to
apply the Net Cash Proceeds of such Asset Sale within 270 days of receipt
thereof, and shall apply such Net Cash Proceeds within 360 days of receipt
thereof, as follows:
(i) first, to the extent such Net Cash Proceeds are received from an
Asset Sale involving the sale, transfer or disposition of inventory or
accounts receivable ("Working Capital Proceeds"), to satisfy all mandatory
repayment obligations arising by reason of such Asset Sale, and
(ii) second, any Working Capital Proceeds remaining after application
pursuant to the preceding paragraph (i), together with any Net Cash
Proceeds not involving the sale, transfer or disposition of inventory or
accounts receivable (the "Available Amount"), the Company shall make an
offer to purchase (the "Asset Sale Offer") from all holders of Senior
Secured Notes, up to a maximum principal amount (expressed as a multiple of
$1,000) of Senior Secured Notes equal to the Available Amount at a purchase
price equal to 100% of the principal amount thereof plus accrued and unpaid
interest thereon, if any, to the date of purchase, provided, however, that
the Company will not be required to apply pursuant to this paragraph (ii)
Net Cash Proceeds received from any Asset Sale if, and only to the extent
that, such Net Cash Proceeds are committed in writing to be applied to
acquire property or assets in lines of business related to the Company's
and its Subsidiaries' business at such time (a "Permitted Related
Acquisition") within 270 days of such Asset Sale, and are so applied within
360 days of such Asset Sale, and the property and assets so acquired are
made subject to the Lien of the Indenture and the applicable Security
Documents pursuant to the provisions described under "--Possession, Use and
Release of Collateral" below; and
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provided, further, that the Company may defer the Asset Sale Offer until
there is an aggregate unutilized Available Amount equal to or in excess of
$5.0 million resulting from one or more Asset Sales (at which time, the
entire unutilized Available Amount, and not just the amount in excess of
$5.0 million, shall be applied as required pursuant to this paragraph). The
Asset Sale Offer shall remain open for a period of at least 20 business
days. To the extent the Asset Sale Offer is not fully subscribed to by the
Senior Secured Noteholders, the Company may retain such unutilized portion
of the Available Amount free and clear of the Lien of the Security
Documents.
Notwithstanding the foregoing, the sale or other disposition of assets
subject to the 1996 Sale/Leaseback (including any Previously Leased/Financed
Equipment which becomes subject to the 1996 Sale/Leaseback) in connection with
a refinancing or replacement thereof shall not be deemed to be an Asset Sale
so long as such sale or disposition is committed to in writing within 270 days
of the termination of the 1996 Sale/Leaseback as originally executed and such
proceeds are so applied within 360 days of the date of such termination.
Whenever Net Cash Proceeds in excess of $1.0 million from any Asset Sale are
received by the Company and such Net Cash Proceeds may, through the passage of
time or otherwise, be required to be applied to the purchase of Senior Secured
Notes pursuant to this covenant, the Company shall deposit such Net Cash
Proceeds with the Trustee as Trust Moneys subject to disposition as provided
in this covenant or as provided under the "--Possession, Use and Release of
Collateral--Release of Collateral" and "--Use of Trust Moneys" provisions
described below and such Net Cash Proceeds shall be set aside by the Trustee
pending application to either the purchase of Senior Secured Notes or its
other permitted applications. At the direction of the Company, such Net Cash
Proceeds shall be required to be invested by the Trustee in Permitted
Investments. The Company or its relevant Subsidiary, as applicable, shall be
entitled to any interest or dividends accrued, earned or paid on such
investments.
Ownership of Stock of Wholly-Owned Subsidiaries. The Company shall at all
times maintain, or cause each Subsidiary to maintain, ownership of 100% of
each class of voting securities of, and all other equity securities in, each
Subsidiary of the Company, except any Subsidiary that shall be disposed of in
its entirety or consolidated or merged with or into the Company or another
Subsidiary, in each case in accordance with the provisions described under "--
Consolidation, Merger, Conveyance, Transfer or Lease" below and "--Disposition
of Proceeds of Asset Sales" above.
Limitation on Transactions with Affiliates. The Company shall not, and the
Company shall not permit, cause, or suffer any Subsidiary of the Company to,
conduct any business or enter into any transaction or series of transactions
with or for the benefit of any of their respective Affiliates (each an
"Affiliate Transaction"), except in good faith and on terms that are no less
favorable to the Company or such Subsidiary, as the case may be, than those
that could have been obtained in a comparable transaction on an arms' length
basis from a Person not an Affiliate of the Company or such Subsidiary. All
Affiliate Transactions (and each series of related Affiliate Transactions
which are similar or part of a common plan) involving aggregate payments or
other market value in excess of $500,000 shall be approved by the Board of
Directors of the Company, such approval to be evidenced by a Board Resolution
stating that such Board of Directors has determined that such transaction
complies with the foregoing provisions. If the Company or any Subsidiary of
the Company enters into an Affiliate Transaction (or a series of related
Affiliate Transactions which are similar or part of a common plan) involving
aggregate payments or other market value in excess of $5.0 million, the
Company or such Subsidiary, as the case may be, shall, prior to the
consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
Notwithstanding the foregoing, the restrictions set forth in this covenant
shall not apply to (i) transactions between the Company and any of its wholly-
owned Subsidiaries or among wholly-owned Subsidiaries of the Company, (ii)
Restricted Payments permitted by the Indenture and (iii) customary directors'
fees, indemnification and similar arrangements, consulting fees, employee
salaries (including the reimbursement of Continental Can for a pro rata
portion of the salaries and fringe benefit expenses of Messrs. Bainton and
Yazgi and other officers of Continental Can based on the actual time devoted
by them to Company matters) and bonuses or legal fees.
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Impairment of Security Interest. The Company shall not, and shall not permit
any of its Subsidiaries to, take or knowingly or negligently omit to take any
action which action or omission might or would have the result of materially
impairing the security interest in favor of the Trustee and the holders of the
Senior Secured Notes, with respect to the Collateral, and the Company shall
not grant to any Person (other than the Trustee and the holders of the Senior
Secured Notes) any interest whatsoever in the Collateral other than Liens
permitted by the Indenture and the Security Documents.
Conflicting Agreements. The Company shall not, and shall not permit any of
its Subsidiaries to, enter into any agreement or instrument that by its terms
expressly (i) prohibits the Company from making any payments on or in respect
of the Senior Secured Notes in accordance with the terms thereof and of the
Indenture, as in effect from time to time or (ii) requires that the proceeds
received from the sale of any Collateral be applied to repay, redeem or
otherwise retire any Indebtedness of any Person other than the Indebtedness
represented by the Senior Secured Notes, except as expressly permitted by the
Indenture or the Security Documents (other than the Revolving Credit Facility,
which may provide for repayment of obligations owing thereunder to the extent
of any unutilized portion of any Available Amount in the event of an Asset
Sale Offer that is not fully subscribed to by the Senior Secured Noteholders
as provided in the covenant described under "--Disposition of Proceeds of
Asset Sales" above).
Special Covenants of the Guarantors. Each Guarantor has covenanted to comply
with each of the covenants contained in the Indenture that impose restrictions
or obligations on such Guarantor (by virtue of being a Guarantor or otherwise)
notwithstanding that the text of such covenant is worded as a restriction on
or obligation of the Company with respect to such Guarantor.
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Neither the Company nor any Guarantor shall consolidate with or merge with
or into or sell, assign, convey, lease or transfer all or substantially all of
its properties and assets as an entirety to any Person or group of affiliated
Persons in a single transaction or through a series of transactions, unless:
(a) the Company or the Guarantor, as the case may be, shall be the continuing
Person or the resulting, surviving or transferee Person (the "surviving
entity") shall be a corporation organized and existing under the laws of the
United States or any State thereof or the District of Columbia; (b) the
surviving entity shall expressly assume, by a supplemental indenture executed
and delivered to the Trustee, in form and substance reasonably satisfactory to
the Trustee, in the case of a transaction involving the Company, all of the
obligations of the Company under the Senior Secured Notes, the Indenture and
the Security Documents, or in the case of a transaction involving a Guarantor,
all of the obligations of such Guarantor under the Senior Secured Notes, the
Indenture, such Guarantor's Guarantee and the Security Documents; (c)
immediately before and immediately after giving effect to such transaction, or
series of transactions (including, without limitation, any Indebtedness
incurred or anticipated to be incurred in connection with or in respect of
such transaction or series of transactions), no Default or Event of Default
shall have occurred and be continuing; (d) the Company or the surviving entity
(if the transaction or series of transactions involves the Company) shall
immediately before and after giving effect to such transaction or series of
transactions (including, without limitation, any Indebtedness incurred or
anticipated to be incurred in connection with or in respect of the transaction
or series of transactions) have a Consolidated Net Worth equal to or greater
than the Consolidated Net Worth of the Company immediately prior to such
transaction or series of transactions; (e) immediately after giving effect to
such transaction or series of transactions on a pro forma basis, the Company
or the surviving entity (if the transaction or series of transactions involves
the Company) would be permitted to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set
forth in paragraph (d) of the covenant entitled "--Limitation on Additional
Company Indebtedness"; (f) the Company or the surviving entity shall have
delivered to the Trustee an Officers' Certificate stating that such
consolidation, merger, conveyance, transfer or lease and, if a supplemental
indenture is required in connection with such transaction or series of
transactions, such supplemental indenture complies with this covenant and that
all conditions precedent in the respective Indenture relating to the
transaction or series of transactions have been satisfied; (g) the Guarantors
shall, by supplemental indenture, confirm that their Guarantee shall apply to
the surviving entity's obligations under the Senior Secured Notes and the
Indenture, as modified by such
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supplemental indenture, and confirm the due and punctual performance of the
Guarantee and every covenant in the Indenture on the part of the Guarantors to
be performed or observed; and (h) neither the Company nor any Subsidiary would
thereupon become obligated with respect to any Indebtedness, nor any of its
property subject to any Lien, unless the Company or such Subsidiary could
incur such Indebtedness or create such Lien under the Indenture.
EVENTS OF DEFAULT
The following are Events of Default under the Indenture:
(i) the default in the payment of any interest on (or Liquidated Damages,
if any, with respect to) the Senior Secured Notes when it becomes due and
payable and continuance of any such default for a period of 30 days; or
(ii) the default in the payment of the principal of (or premium, if any,
on) the Senior Secured Notes when due and payable, at maturity, upon
acceleration, redemption or otherwise (including the failure to make a
payment to purchase Senior Secured Notes tendered pursuant to a Change of
Control Offer or a Net Proceeds Offer); or
(iii) default in the performance of or compliance with, or breach of, any
term, covenant, condition, or provision of the Security Documents, which
default or breach shall continue unremedied for 30 days after written
notice to the Company by the Trustee or to the Company and the Trustee by
holders of at least 25% in aggregate principal amount of the outstanding
Senior Secured Notes; or
(iv) default in the performance, or breach, of any covenant in the
Indenture (other than defaults specified in clause (i) or (ii) above), and
continuance of such default or breach for a period of 30 days after written
notice to the Company by the Trustee or to the Company and the Trustee by
the holders of at least 25% in aggregate principal amount of the
outstanding Senior Secured Notes; or
(v) failure by the Company or any Subsidiary (a) to make any payment when
due with respect to any other Indebtedness in an aggregate principal amount
of $2.5 million or more; or (b) to perform any term, covenant, condition,
or provision of one or more classes or issues of other Indebtedness in an
aggregate principal amount of $2.5 million or more, which failure, in the
case of clause (b), results in an acceleration of the maturity thereof; or
(vi) one or more judgments, orders or decrees for the payment of money in
excess of $2.5 million, either individually or in an aggregate amount,
shall be entered against the Company or any of its Subsidiaries or any of
their respective properties and shall not be discharged and there shall
have been a period of 60 days during which a stay of enforcement of such
judgment or order, by reason of pending appeal or otherwise, shall not be
in effect; or
(vii) certain events of bankruptcy or insolvency with respect to the
Company, CPC or Caribbean shall have occurred; or
(viii) either of the Guarantees or any of the Security Documents ceases
to be in full force and effect or any of the Security Documents ceases to
give the Trustee, in any material respect, the Liens purported to be
created thereby (including, without limitation, a perfected security
interest in, and Lien on, all of the Collateral to the extent provided for
in the Indenture or in such Security Documents) in favor of the Trustee for
the benefit of the Holders subject to no other Liens (in each case, except
as permitted by the Indenture and by the Security Documents).
If an Event of Default (other than an Event of Default specified in clause
(vii) above) occurs and is continuing, then the holders of at least 25% in
principal amount of the outstanding Senior Secured Notes may, by written
notice, and the Trustee upon the request of the holders of not less than 25%
in principal amount of the outstanding Senior Secured Notes shall, declare the
principal of and accrued interest on, all the Senior Secured Notes to be due
and payable immediately. Upon any such declaration such amounts shall become
due and payable immediately. If an Event of Default specified in clause (vii)
occurs and is continuing, then the
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principal of and accrued interest on, all the Senior Secured Notes shall ipso
facto become and be immediately due and payable without any declaration or
other act on the part of the Trustee or any holder.
After a declaration of acceleration, the holders of a majority in aggregate
principal amount of outstanding Senior Secured Notes may, by notice to the
Trustee, rescind such declaration of acceleration if all existing Events of
Default have been cured or waived, other than nonpayment of principal of and
accrued interest on the Senior Secured Notes that has become due solely as a
result of such acceleration and if the rescission of acceleration would not
conflict with any judgment or decree. The holders of a majority in principal
amount of the outstanding Senior Secured Notes also have the right to waive
past defaults under the Indenture except a default in the payment of the
principal of or interest on any Senior Secured Note, or in respect of a
covenant or a provision which cannot be modified or amended without the
consent of all holders.
No holder of any of the Senior Secured Notes has any right to institute any
proceeding with respect to the Indenture or any remedy thereunder, unless the
holders of at least 25% in principal amount of the outstanding Senior Secured
Notes have made written request, and offered reasonable indemnity, to the
Trustee to institute such proceeding as Trustee, the Trustee has failed to
institute such proceeding within 15 days after receipt of such notice and the
Trustee has not within such 15-day period received directions inconsistent
with such written request by holders of a majority in principal amount of the
outstanding Senior Secured Notes. Such limitations do not apply, however, to a
suit instituted by a holder of a Senior Secured Note for the enforcement of
the payment of the principal of, premium, if any, or accrued interest on, such
Senior Secured Note on or after the respective due dates expressed in such
Senior Secured Note.
During the existence of an Event of Default, the Trustee is required to
exercise such rights and powers vested in it under the Indenture and use the
same degree of care and skill in its exercise thereof as a prudent Person
would exercise under the circumstances in the conduct of such Person's own
affairs. Subject to the provisions of the Indenture relating to the duties of
the Trustee, in case an Event of Default shall occur and be continuing, the
Trustee is not under any obligation to exercise any of its rights or powers
under the Indenture at the request or direction of any of the holders unless
such holders shall have offered to such Trustee reasonable security or
indemnity. Subject to certain provisions concerning the rights of the Trustee,
the holders of a majority in principal amount of the outstanding Senior
Secured Notes have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee, or
exercising any trust, or power conferred on the Trustee.
DEFEASANCE
The Company may at any time terminate all of its obligations with respect to
the Senior Secured Notes ("defeasance"), except for certain obligations,
including those regarding any trust established for a defeasance and
obligations to register the transfer or exchange of the Senior Secured Notes,
to replace mutilated, destroyed, lost or stolen Senior Secured Notes and to
maintain agencies in respect of Senior Secured Notes. The Company may at any
time terminate its obligations under certain covenants set forth in the
Indenture, some of which are described under "--Certain Covenants" above, and
any omission to comply with such obligations shall not constitute a Default or
an Event of Default with respect to the Senior Secured Notes issued under the
Indenture ("covenant defeasance"). In order to exercise either defeasance or
covenant defeasance, the Company must irrevocably deposit in trust, for the
benefit of the holders of the Senior Secured Notes, with the Trustee money or
U.S. government obligations, or a combination thereof, in such amounts as will
be sufficient to pay the principal of and interest on the Senior Secured Notes
to redemption or maturity and comply with certain other conditions, including
the delivery of an opinion as to certain tax matters.
SATISFACTION AND DISCHARGE
The Indenture will be discharged and will cease to be of further effect
(except as to surviving rights or registration of transfer or exchange of
Senior Secured Notes) as to all outstanding Senior Secured Notes when either
(a) all such Senior Secured Notes theretofore authenticated and delivered
(except lost, stolen or destroyed
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Senior Secured Notes which have been replaced or paid and Senior Secured Notes
for whose payment money has theretofore been deposited in trust or segregated
and held in trust by the Company and thereafter repaid to the Company or
discharged from such trust) have been delivered to the Trustee for
cancellation; or (b)(i) all such Senior Secured Notes not theretofore
delivered to the Trustee for cancellation have or will (upon the mailing of a
notice or notices deposited with the Trustee together with irrevocable
instructions to mail such notice or notices to holders of the Senior Secured
Notes) become due and payable and the Company has irrevocably deposited or
caused to be deposited with the Trustee as trust funds in the trust for the
purpose an amount of money sufficient to pay and discharge the entire
indebtedness on the Senior Secured Notes not theretofore delivered to the
Trustee for cancellation, for principal, premium, if any, and accrued interest
to the date of such deposit; (ii) the Company has paid all sums payable by it
under the Indenture; and (iii) the Company has delivered irrevocable
instructions to the Trustee to apply the deposited money toward the payment of
the Senior Secured Notes at maturity or the redemption date, as the case may
be. In addition, the Company must deliver an Officers' Certificate and an
Opinion of Counsel stating that all conditions precedent to satisfaction and
discharge have been complied with.
AMENDMENTS AND WAIVERS
From time to time the Company and the Guarantors, when authorized by
resolutions of their Boards of Directors, and the Trustee may, without the
consent of the holders of the Senior Secured Notes, amend, waive or supplement
the Indenture, the Security Documents or the Senior Secured Notes for certain
specified purposes, including, among other things, curing ambiguities, defects
or inconsistencies, maintaining the qualification of the Indenture under the
Trust Indenture Act, making any change that does not adversely affect the
rights of any holder or mortgaging, pledging or granting a security interest
in favor of the Trustee as additional security for the payment and performance
of the obligations under the Indenture, in any property or assets, including
any which is required to be mortgaged, pledged or hypothecated, or in which a
security interest is required to be granted, to the Trustee pursuant to any
Security Document or otherwise. Other amendments and modifications of the
Indenture, the Senior Secured Notes or the Security Documents may be made by
the Company, the Guarantors and the Trustee with the consent of the holders of
not less than a majority of the aggregate principal amount of the outstanding
Senior Secured Notes; provided, however, that no such modification or
amendment may, without the consent of the holder of each outstanding Senior
Secured Note affected thereby, (i) reduce the principal amount outstanding of,
extend the maturity of, or alter the redemption provisions of, the Senior
Secured Notes, (ii) change the currency in which any Senior Secured Notes or
any premium or the accrued interest thereon is payable, (iii) reduce the
percentage in principal amount outstanding of Senior Secured Notes, who must
consent to an amendment, supplement or waiver or consent to take any action
under the Indenture, the Senior Secured Notes or the Security Documents, (iv)
impair the right to institute suit for the enforcement of any payment on or
with respect to the Senior Secured Notes, (v) waive a default in payment with
respect to the Senior Secured Notes, (vi) reduce the rate or extend the time
for payment of interest on the Senior Secured Notes, (vii) affect the ranking
or security of the Senior Secured Notes or (viii) release any Guarantor from
any of its obligations under its Guarantee or the Indenture (other than, in
the case of this clause (viii), a merger of one of the Guarantors with or into
the other Guarantor or the Company or with another wholly-owned Subsidiary of
the Company that assumes all of such Guarantor's obligations under the
Guarantee and the Indenture and the Security Documents) unless in each case
the holders of the particular Senior Secured Notes to be affected consent with
respect thereto.
POSSESSION, USE AND RELEASE OF COLLATERAL
Unless an Event of Default shall have occurred and be continuing, the
Company and the Guarantors will have the right to remain in possession and
retain exclusive control of the Collateral securing the Senior Secured Notes
(other than any cash, securities, obligations and Cash Equivalents
constituting part of the Collateral and deposited with the Trustee and other
than as set forth in the Security Documents), to freely operate the Collateral
and to collect, invest and dispose of any income thereon.
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Release of Collateral. The Company or the relevant Guarantor, as the case
may be, will have the right to sell, exchange or otherwise dispose of any of
the Collateral (other than Trust Moneys constituting Net Cash Proceeds from an
Asset Sale, which are subject to release from the Lien of the Security
Documents as provided under "--Use of Trust Moneys" below) (a "Release
Transaction"), upon compliance with the requirements and conditions of the
provisions described below, and the Trustee shall release the same from the
Lien of the Security Documents upon receipt by the Trustee (other than in the
case of paragraph (d) below) of a notice requesting such release and
describing the property to be so released, together with delivery of the
following, among other matters:
(a) If the property to be released has a book value of at least
$5,000,000, a Board Resolution of the Company or the relevant Guarantor, as
the case may be, requesting such release and authorizing an application to
the Trustee therefor.
(b) An officers' certificate of the Company or the relevant Guarantor, as
the case may be, dated not more than 30 days prior to the date of the
application for such release, and signed also, in the case of the following
clauses (ii) and (iv), by an Independent Appraiser or, if such property
consists of securities, by a Financial Advisor, in each case stating in
substance as to certain matters, including the following:
(i) that, in the opinion of the signers, the security afforded by the
Security Documents will not be impaired by such release in
contravention of the provisions of the Indenture, and that either (1)
the Collateral to be released is not being replaced by comparable
property, has a book value of less than $250,000 and is not necessary
for the efficient operation of the Company's and its Subsidiaries'
remaining property or in the conduct of the business of the Company and
its Subsidiaries as conducted immediately prior thereto or (2) the
Collateral to be released is being released in connection with an Asset
Sale of such Collateral and the net proceeds (as defined in paragraph
(d) below) from such Asset Sale are being delivered to the Trustee (if
required by the covenant "--Disposition of Proceeds of Asset Sales") in
accordance with, and to the extent required by, the provisions of
paragraph (d) below;
(ii) that the Company or the relevant Guarantor has either disposed
of or will dispose of the Collateral so to be released in compliance
with all applicable terms of the Indenture and for a consideration
representing, in the opinion of the signers, its fair value, which
consideration may, subject to any other provisions of the Indenture,
consist of any one or more of the following: (A) cash or Cash
Equivalents, (B) obligations secured by a purchase money Lien upon the
property so to be released and (C) any other property or assets that,
upon acquisition thereof by the Company or the relevant Guarantor would
be subject to the Lien of the Security Documents (except as provided in
paragraph (d) below), and subject to no Lien other than certain Liens
which, under the applicable provisions of the Security Documents
relating thereto, are permitted to be superior to the Lien of the
Trustee therein, all of such consideration to be briefly described in
the certificate;
(iii) that no Event of Default has occurred and is continuing;
(iv) the fair value, in the opinion of the signers, of the property
to be released at the date of such application for release; provided
that it shall not be necessary under this clause (iv) to state the fair
value of any property whose fair value is certified in a certificate of
an Independent Appraiser or Independent Financial Advisor under
paragraph (c) below; and
(v) that all conditions precedent in the Indenture and the Security
Documents relating to the release of the Collateral in question have
been complied with.
(c) If (i) the fair value of the property to be released and of all other
property released from the Lien of the Security Documents since the
commencement of the then current calendar year is 10 percent or more of the
aggregate principal amount of the Senior Secured Notes outstanding on the
date of the application and (ii) the fair value of the Collateral to be so
released is at least $25,000 and at least 1 percent of the aggregate
principal amount of the Senior Secured Notes outstanding on the date of the
application, a
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certificate of an Independent Appraiser, or if such property consists of
securities, a certificate of an Independent Financial Advisor stating (1)
the then fair value, in the opinion of the signer, of the property to be
released; and (2) that such release, in the opinion of the signer, will not
impair the security interests under any of the Security Documents in
contravention of their terms.
(d) The net proceeds (excluding any Net Cash Proceeds from any Asset Sale
which are not required, or cannot be required through the passage of time
or otherwise, to be used to purchase or redeem Senior Secured Notes under
the covenant described under "--Disposition of Proceeds of Asset Sales"
above) or if the Collateral so to be released is subject to a prior Lien
permitted under the Security Documents, a certificate of the trustee,
mortgagee or other holder of such prior Lien that it has received such net
proceeds and has been irrevocably authorized by the Company or the relevant
Guarantor to pay over to the Trustee any balance of such net proceeds
remaining after the discharge of such Indebtedness secured by such prior
Lien; and, if any property other than cash, Cash Equivalents or obligations
is included in such net proceeds, such instruments of conveyance,
assignment and transfer, if any, as may be necessary, in the Opinion of
Counsel, to subject to the Lien of the Security Documents all the right,
title and interest of the Company or the relevant Guarantor in and to such
property. For purposes of this paragraph (d), "net proceeds" shall mean any
cash, Cash Equivalents, obligations or other property received on the sale,
transfer, exchange or other disposition of Collateral to be released, less
a proportionate share of (i) brokerage commissions and other reasonable
fees and expenses related to such transaction and (ii) any provision for
Federal, state or local taxes payable as a result of such sale, transfer,
exchange or other disposition.
(e) One or more Opinions of Counsel which, when considered collectively,
shall be substantially to the effect (i) that any obligation included in
the consideration for any property so to be released and to be received by
the Trustee pursuant to paragraph (d) above is a valid and binding
obligation enforceable in accordance with its terms, subject to such
customary exceptions regarding equitable principles, creditors' rights
generally and bankruptcy as shall be reasonably acceptable to the Trustee
in its sole judgment, and is effectively pledged under the Security
Documents, (ii) that any Lien granted by a purchaser to secure a purchase
money obligation is a fully perfected first priority Lien to the extent
obtainable by filing or possession and such instrument granting such Lien
is enforceable in accordance with its terms, (iii) either (x) that such
instruments of conveyance, assignment and transfer as have been or are then
delivered to the Trustee are sufficient to subject to the Lien of the
Security Documents all the right, title and interest of the Company or the
relevant Guarantor in and to any property, other than cash, Cash
Equivalents and obligations, that is included in the consideration for the
Collateral so to be released and to be received by the Trustee pursuant to
paragraph (d) above, subject to no Lien other than Liens permitted on
Collateral by the covenant described under "--Limitation on Liens" above,
or (y) that no instruments of conveyance, assignment or transfer are
necessary for such purpose, (iv) that the Company or the relevant Guarantor
has corporate power to own all property included in the consideration for
such release, (v) in case any part of the money or obligations referred to
in paragraph (d) above has been deposited with a trustee or other holder of
any prior Lien permitted by the Security Documents, that the Collateral to
be released, or a specified portion thereof, is or immediately before such
release was subject to such prior Lien and that such deposit is required by
such prior Lien and (vi) that all conditions precedent provided in the
Indenture and the Security Documents relating to the release of the
Collateral have been complied with.
Notwithstanding the foregoing, the Company or the Guarantors may obtain a
release of Available Amounts required to purchase Senior Secured Notes
pursuant to an Asset Sale Offer on an Asset Sale Payment Date by directing
the Trustee in writing to cause to be applied such Available Amounts to
such purchase in accordance with the covenant described under "--
Disposition of Proceeds of Asset Sales" above.
In case an Event of Default shall have occurred and be continuing, the
Company or the relevant Guarantor, while in possession of the Collateral
(other than cash, Cash Equivalents and other personal property held by, or
required to be deposited or pledged with, the Trustee under the Indenture or
under any Security Document or with the trustee, mortgagee or other holder of
a prior Lien permitted under the Security Documents), may do any
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of the things enumerated in these "--Release of Collateral" provisions only if
the Trustee, in its discretion, or the holders of a majority in aggregate
principal amount of the outstanding Senior Secured Notes shall consent to such
action, in which event any certificate filed under these "--Release of
Collateral" provisions, shall omit the statement to the effect that no Event
of Default has occurred and is continuing.
All cash or Cash Equivalents received by the Trustee pursuant to the
provisions described under "Release of Collateral" will be held by the Trustee
as Trust Moneys under the Indenture subject to application as provided in "--
Release of Collateral" (in the case of any Net Cash Proceeds from Asset Sales)
or in "--Use of Trust Moneys" below. All purchase money and other obligations
received by the Trustee pursuant to these "--Release of Collateral" provisions
shall be held by the Trustee.
Any releases of Collateral made in strict compliance with these "--Release
of Collateral" provisions shall be deemed not to impair the security interests
created by the Security Documents in favor of the Trustee for the benefit of
the Senior Secured Noteholders, in contravention of the provisions of the
Indenture.
Disposition of Collateral Without Release. Notwithstanding the provisions of
"--Release of Collateral" above, so long as no Event of Default shall have
occurred and be continuing, the Company and the Guarantors may, without any
release or consent by the Trustee, do any number of ordinary course
activities, in limited dollar amounts specified by the Trust Indenture Act of
1939, upon satisfaction of certain conditions. For example, among other
things, subject to such dollar limitations and conditions, the Company and the
Guarantors would be permitted to sell or otherwise dispose of any machinery,
equipment, furniture, tools, materials or supplies or other similar property
subject to the Lien of any of the Security Documents, which may have become
worn out or obsolete; grant rights-of-way and easements over or in respect of
any Real Property; abandon, terminate, cancel, release or make alterations in
or substitutions of any leases, contracts or rights-of-way subject to the Lien
of any of the Security Documents; surrender or modify any franchise, license
or permit subject to the Lien of any of the Security Documents which it may
own or under which it may be operating; alter, repair, replace, change the
location or position of and add to its plants, structures, machinery, systems,
equipment, fixtures and appurtenances; and demolish, dismantle, tear down or
scrap any Collateral or abandon any thereof other than land or interests in
land (other than leases); grant a non-exclusive license of any Intellectual
Property (as defined in the Intellectual Property Security Document); and
abandon Intellectual Property under certain circumstances and grant leases in
respect of any Real Property under certain circumstances.
SUBSTITUTE COLLATERAL
The Company or any Guarantor may, at its option, obtain a release of any of
the Collateral constituting Equipment by subjecting to the Lien of any
Security Document or a similar instrument, in exchange for the Collateral to
be released, other Equipment used or to be used in the business of the Company
or the relevant Guarantor and having a fair value equal to or greater than the
Collateral to be released ("Substitute Collateral"), upon presentation to the
Trustee of the following documents:
(a) an application of the Company or the relevant Guarantor requesting
such substitution of Substitute Collateral and describing the property to
be so released and the property to be substituted therefor;
(b) certain resolutions, certificates, opinions and other statements
required by the Indenture in respect of any of the Collateral to be
released;
(c) a certificate, signed by an Independent Appraiser, stating in
substance the Fair Market Value, in the opinion of the signers, of the
Substitute Collateral and the Collateral to be released;
(d) an officers' certificate of the Company or the relevant Guarantor
stating that (i) any specific exceptions to such Lien are Liens of the
character which were permitted to be Prior Liens under the Security
Documents with respect to the Collateral being replaced by such Substitute
Collateral and (ii) the Fair Market Value of all Collateral released
pursuant to the provisions of this section during the then current calendar
year does not exceed in the aggregate $10,000,000; and
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(e) evidence of payment or a closing statement indicating payments to be
made by the Company or the relevant Guarantor of all filing fees, recording
charges, transfer taxes and other costs and expenses, including reasonable
legal fees and disbursements of counsel for the Trustee (and any local
counsel) that may be incurred to validly and effectively subject such
Substitute Collateral to the Lien of any applicable Security Document and
to perfect such Liens.
USE OF TRUST MONEYS
All Trust Moneys (including, without limitation, all Net Cash Proceeds
required to be deposited with the Trustee) shall be held by the Trustee as a
part of the Collateral securing the Senior Secured Notes and, so long as no
Event of Default shall have occurred and be continuing, may either (i) be
released in accordance with "--Possession, Use and Release of Collateral--
Release of Collateral" above if such Trust Moneys represent Net Cash Proceeds
from an Asset Sale or (ii) at the direction of the Company be applied by the
Trustee from time to time to the payment of the principal of, premium, if any,
and interest on any Senior Secured Notes at maturity or upon redemption or to
the purchase of Senior Secured Notes upon tender or in the open market or at
private sale or upon any exchange or in any one or more of such ways, in each
case in accordance with the terms of the Indenture. The Company may also
withdraw Trust Moneys constituting the proceeds of insurance upon any part of
the Collateral or an award for any Collateral taken by eminent domain to
reimburse the Company for repair or replacement of such Collateral, subject to
certain conditions.
REGARDING THE TRUSTEE
United States Trust Company of New York serves as Trustee under the
Indenture and acts as collateral agent or the mortgagee, as applicable, under
the Security Documents.
CERTAIN DEFINITIONS
Set forth below is a summary of certain defined terms used in the Indenture.
Reference is made to the Indenture for the full definition of all such terms,
as well as any other capitalized terms used herein for which no definition is
provided.
"1996 Sale/Leaseback" means the Sale/Leaseback having substantially the
terms described herein under "The Refinancing--The Sale/Leaseback," between
General Electric Capital Corporation and certain other financial institutions,
as lessors, CPC as lessee and the Company as guarantor, as the same may be
amended or restated, and any Sale-Leaseback Transaction used to refinance or
replace the 1996 Sale/Leaseback in an amount not to exceed the purchase price
at the time of the termination thereof.
"Acquired Indebtedness" means Indebtedness of a Person existing at the time
such Person becomes a Subsidiary of the Company or assumed in connection with
an Asset Acquisition by such Person, including, without limitation,
Indebtedness incurred in connection with, or in anticipation of, such Person
becoming a Subsidiary of the Company or such acquisition.
"Affiliate" of any specified Person means any other Person which, directly
or indirectly, controls, is controlled by or is under direct or indirect
common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by the contract or
otherwise, and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Appraiser" means a Person who is in the course of its business appraises
property and, where Real Property is involved, who is a member in good
standing of the American Institute of Real Estate Appraisers, recognized and
licensed to do business in the jurisdiction where the applicable Real Property
is situated, and who may be employed by the Company or a Guarantor.
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"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, by the Company or any of its Subsidiaries in any
other Person, in either case pursuant to which such Person shall become a
Subsidiary of the Company or any of its Subsidiaries or shall be merged with
or into the Company or any of its Subsidiaries or (ii) any acquisition by the
Company or any of its Subsidiaries of the assets of any Person which
constitute substantially all of an operating unit or business of such Person.
"Asset Sale" means any direct or indirect sale, conveyance, transfer, lease
or other disposition to any Person other than the Company or a Subsidiary of
the Company, in one transaction or a series of related transactions, of (i)
any Capital Stock of any Subsidiary of the Company or (ii) any other property
or asset of the Company or any Subsidiary of the Company, in each case, other
than inventory in the ordinary course of business and other than such isolated
transactions which do not exceed $250,000 individually. For the purposes of
this definition, the term "Asset Sale" shall not include sales of (i)
receivables not a part of a sale of the business from which they arose or any
disposition of properties and assets of the Company or any Subsidiary that is
governed under and complies with the requirements set forth in "Consolidation,
Merger, Conveyance, Transfer or Lease" above or (ii) the assets securing the
Previously Leased/Financed Equipment so long as such assets do not constitute
Collateral.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Company or a Guarantor, as appropriate, to
have been duly adopted by the Board of Directors of the Company or a
Guarantor, as appropriate, and to be in full force and effect on the date of
such certification, and delivered to the Trustee.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock, whether
outstanding on the date on which the Senior Secured Notes are originally
issued or issued after such date, and any and all rights, warrants or options
exchangeable for or convertible into such capital stock.
"Capitalized Lease Obligation" means any obligation to pay rent or other
amounts under a lease of (or other agreement conveying the right to use) any
property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purpose of the Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with
GAAP.
"Cash Equivalents" means, at any time (i) any evidence of Indebtedness with
a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality
thereof (provided that the full faith and credit of the United States of
America is pledged in support thereof); (ii) certificates of deposit or
acceptances with a maturity of 180 days or less of any financial institution
that is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than $500,000,000; (iii) commercial
paper with a maturity of 180 days or less issued by a corporation (except an
Affiliate of the Company) organized under the laws of any state of the United
States or the District of Columbia and having the highest rating obtainable
from Standard & Poor's Ratings Service, a division of The McGraw-Hill
Companies, Inc. or Moody's Investors Service, Inc.; and (iv) repurchase
obligations for a term of not more than seven days for underlying securities
of the types described in clause (i) above entered into with any bank meeting
the qualifications specified in clause (ii) above.
"Change of Control" means (i) the direct or indirect, sale, lease, exchange
or other transfer of all or substantially all of the assets of the Company to
any Person or entity or group of Persons or entities acting in concert as a
partnership or other group (a "Group of Persons") other than an Affiliate of
the Company, (ii) the merger or consolidation of the Company with or into
another corporation with the effect that the then existing shareholders of the
Company hold less than 50% of the combined voting power of the then
outstanding securities of the surviving corporation of such merger or the
corporation resulting from such consolidation ordinarily (and
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apart from rights arising under special circumstances) having the right to
vote in the election of directors, (iii) the replacement of a majority of the
Board of Directors of the Company, over a two-year period, from the directors
who constituted the Board of Directors at the beginning of such period, and
such replacement shall not have been approved by the Board of Directors as
constituted at the beginning of such period or (iv) a Person or Group of
Persons (other than Continental Can or any of its Affiliates) shall, as a
result of a tender or exchange offer, open market purchases, privately
negotiated purchases or otherwise, have become the beneficial owner (within
the meaning of Rule 13d-3 under the Exchange Act) of securities of the Company
or Continental Can representing 50% or more of the combined voting power of
the then outstanding securities of the Company or Continental Can ordinarily
(and apart from rights accruing under special circumstances) having the right
to vote in the election of directors.
"Collateral" means, collectively, all of the property and assets (including,
without limitation, Trust Moneys) that are from time to time subject to the
Pledge and Security Agreements, the Patent and Trademark Security Assignment,
the Stock Pledge Agreement and the Mortgages.
"Consolidated Cash Flow" means, with respect to any Person for any period,
the Consolidated Net Income of such Person for such period increased (to the
extent deducted in determining Consolidated Net Income) by the sum of: (i) all
income taxes of such Person paid or accrued according to GAAP for such period
(other than income taxes attributable to extraordinary, unusual or non-
recurring gains or losses); (ii) all interest expense of such Person paid or
accrued in accordance with GAAP (net of any interest income) for such period
(including amortization of original issue discount and the interest portion of
deferred payment obligations); (iii) depreciation; (iv) amortization
including, without limitation, amortization of capitalized debt issuance
costs; and (v) any other non-cash charges to the extent deducted from
Consolidated Net Income (including the non-cash portion of any rental expense
and non-cash expenses recognized in accordance with Financial Accounting
Standards Bulletin Number 106) except for non-cash charges which require an
accrual of or a reserve for any future period, and decreased by the amount of
any non-cash items increasing Consolidated Net Income for such period.
"Consolidated Interest Coverage Ratio" means, with respect to any Person,
the ratio of (i) Consolidated Cash Flow of such Person for the four full
fiscal quarters for which financial statements are available that immediately
precede the date of the transaction or other circumstances giving rise to the
need to calculate the Consolidated Interest Coverage Ratio (the "Transaction
Date") to (ii) all cash and non-cash interest expense (including capitalized
interest) of such Person and its Subsidiaries determined in accordance with
GAAP (net of any interest income to the extent received in cash by such Person
and its Subsidiaries and exclusive of deferred financing fees of such Person
and its Subsidiaries) and the product of (x) the amount of all dividends
declared, paid or accrued on Capital Stock (other than Common Stock) of such
Person during such period times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective
consolidated Federal, state, local and foreign tax rate (expressed as a
decimal number between 1 and 0) of such Person during such period (as
reflected in the audited consolidated financial statements of such Person for
the most recently completed fiscal year). For purposes of this definition, if
the Transaction Date occurs prior to the date on which the Company's
consolidated financial statements for the four full fiscal quarters subsequent
to the date on which the Senior Secured Notes are originally issued are first
available, "Consolidated Cash Flow" and the items referred to in the preceding
clause (ii) shall be calculated, in the case of the Company, after giving
effect on a pro forma basis as if the Senior Secured Notes outstanding on the
Transaction Date were issued on the first day of such four full fiscal quarter
period. In addition to and without limitation of the foregoing, for purposes
of this definition, "Consolidated Cash Flow" and the items referred to in the
preceding clause (ii) shall be calculated after giving effect on a pro forma
basis for the period of such calculation to (i) the incurrence of any
Indebtedness of such Person or any of its Subsidiaries at any time during the
period (the "Reference Period") (A) commencing on the first day of the four
full fiscal quarter period for which financial statements are available that
precedes the Transaction Date and (B) ending on and including the Transaction
Date, including, without limitation, the incurrence of the Indebtedness giving
rise to the need to make such calculation, as if such incurrence occurred on
the first day of the Reference Period; provided, that if such Person or any of
its
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Subsidiaries directly or indirectly guarantees Indebtedness of a third Person,
the above clause shall give effect to the incurrence of such guaranteed
Indebtedness as if such Person or Subsidiary had directly incurred such
guaranteed Indebtedness and (ii) any Asset Sales or Asset Acquisitions
(including, without limitation, any Asset Acquisition giving rise to the need
to make such calculation as a result of the Company or any of its Subsidiaries
(including any Person who becomes a Subsidiary as a result of the Asset
Acquisition) incurring Acquired Indebtedness) occurring during the Reference
Period and any retirement of Indebtedness in connection with such Asset
Acquisitions, as if such Asset Sale or Asset Acquisition and/or retirement
occurred on the first day of the Reference Period. Furthermore, in calculating
the denominator (but not the numerator) of this "Consolidated Interest
Coverage Ratio," (1) subject to clause (3) below, interest on Indebtedness
determined on a fluctuating basis as of the Transaction Date and which will
continue to be so determined thereafter shall be deemed to accrue at a fixed
rate per annum equal to the rate of interest on such Indebtedness in effect on
the Transaction Date; (2) if interest on any Indebtedness actually incurred on
the Transaction Date may optionally be determined at an interest rate based
upon a factor of a prime or similar rate, a eurocurrency interbank offered
rate, or other rates, then the interest rate based upon a factor of a prime or
similar rate shall be deemed to have been in effect; and (3) notwithstanding
clause (1) above, interest on Indebtedness determined on a fluctuating basis,
to the extent such interest is covered by agreements relating to Interest Rate
Protection Obligations, shall be deemed to accrue at the rate per annum
resulting after giving effect to the operation of such agreements.
"Consolidated Net Income" means, with respect to any Person, for any period,
the aggregate of the Net Income of such Person and its Subsidiaries for such
period, on a consolidated basis, determined in accordance with GAAP (which, in
the case of the Company, shall include any cash interest payment received by
the Company in respect of the Continental Can Note); provided, however, that
(i) the Net Income of any Person (the "other Person") in which the Person in
question or any of its Subsidiaries has a joint interest with a third party
(which interest does not cause the net income of such other Person to be
consolidated into the net income of the Person in question in accordance with
GAAP) shall be included only to the extent of the amount of dividends or
distributions paid, in cash, to the Person in question or the Subsidiary, (b)
the net income of any Subsidiary of the Person in question that is subject to
any restriction or limitation on the payment of dividends or the making of
other distributions shall be excluded to the extent of such restriction or
limitation, (c)(i) the net income (or loss) of any Person acquired in a
pooling of interests transaction for any period prior to the date of such
acquisition shall be excluded and (ii) any net gain or loss resulting from an
Asset Sale by the Person in question or any of its Subsidiaries other than in
the ordinary course of business shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at any date of
determination, the consolidated equity of the common stockholders of such
Person and its subsidiaries at such date, as determined on a consolidated
basis in accordance with GAAP.
"Continental Can Note" means the note having substantially the terms
described herein under "The Refinancing--The Continental Can Loan," evidencing
Indebtedness of Continental Can to the Company.
"Default" means any event that is, or after notice or passage of time or
both would be, an Event of Default.
"Disqualified Stock" means, with respect to any Person, any Capital Stock
which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
maturity date of the Senior Secured Notes.
"Equipment" shall have the meaning assigned to such term in the Pledge and
Security Agreement.
"Fair Market Value" or "fair value" means, with respect to any asset or
property, the price which could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither
of whom is under undue pressure or compulsion to complete the transaction.
Fair Market Value shall be determined by the Board of Directors acting in good
faith and shall be evidenced by a Board Resolution delivered
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to the Trustee except (x) any determination of Fair Market Value made with
respect to any parcel of Real Property shall be made by an Appraiser and (y)
any determination of Fair Market Value of any asset or assets which would
reasonably be expected to have a Fair Market Value of $5 million or more made
with respect to the covenant "--Limitation on Transactions with Affiliates"
shall be made by an Independent Financial Advisor or Independent Appraiser.
"Financial Advisor" means an investment banking firm of national reputation
which (except as otherwise expressly provided in the Indenture) may be
employed by the Company.
"GAAP" means 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 of the United States, which are applicable as of the date of the
Indenture.
"Guarantee" means the guarantee of the Company's obligations under the
Senior Secured Notes on a joint and several basis by the Guarantors.
"Guarantor" means each of CPC and Caribbean and their respective successors.
"Indebtedness" means, with respect to any Person, without duplication, (i)
any liability, contingent or otherwise, of such Person (A) for borrowed money
(whether or not the recourse of the lender is to the whole of the assets of
such Person or only to a portion thereof), (B) evidenced by a note, debenture
or similar instrument or letters of credit (including a purchase money
obligation) or (C) for the payment of money relating to a Capitalized Lease
Obligation or other obligation relating to the deferred purchase price of
property; (ii) any liability of others of the kind described in the preceding
clause (i) which the Person has guaranteed or which is otherwise its legal
liability; (iii) any obligation secured by a Lien to which the property or
assets of such Person are subject, whether or not the obligations secured
thereby shall have been assumed by or shall otherwise be such Person's legal
liability; and (iv) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (i), (ii) or (iii).
"Independent" when used with respect to any specified Person means such a
Person who (a) is in fact independent, (b) does not have any direct financial
interest or any material indirect financial interest in the Company, or in any
Guarantor or in any Affiliate of the Company or any Guarantor and (c) is not
an officer, employee, promoter, underwriter, trustee, partner, director or
Person performing similar functions for the Company or any Guarantor. Whenever
it is provided in the Indenture that any Independent Person's opinion or
certificate shall be furnished to the Trustee, such Person shall be appointed
by the Company and approved by the Trustee in the exercise of reasonable care,
and such opinion or certificate shall state that the signer has read this
definition and that the signer is Independent within the meaning thereof.
"Interest Rate Protection Obligations" means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time
periodic payments calculated by applying either a floating or a fixed rate of
interest on a stated notional amount in exchange for periodic payments made by
such Person calculated by applying a fixed or a floating rate of interest on
the same notional amount and shall include without limitation, interest rate
swaps, caps, floors, collars and similar agreements.
"Issue Date" means the date on which the Senior Secured Notes were initially
issued (December 17, 1996).
"Lien" means any mortgage, Lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any kind or nature
whatsoever. For purposes of the Indenture, a Person shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Person.
"Liquidated Damages" means all liquidated damages owing pursuant to the
Registration Rights Agreement. See "Registration Rights."
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"Maturity Date," when used with respect to any Senior Secured Note, means
December 15, 2006, the date on which the principal of such Senior Secured Note
is due and payable.
"Merrywood Agreement" means the Stock Purchase Agreement dated as of October
22, 1996 by and among the Company, Continental Can, Merrywood, Inc. and Plaza
Limited.
"Mortgage" means (i) in the case of CPC, a mortgage instrument (or deed of
trust) and assignment of leases and rents, substantially in the form attached
to the Indenture (including such changes to such form as may be necessary or
desirable to conform such form to local laws or customs applicable to property
in the jurisdiction where such instrument is to be recorded), as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the terms of the Indenture and the terms of any other
Security Document and (ii) in the case of Caribbean, (x) a Pledge Agreement
substantially in the form attached to the Indenture, (y) a Deed of Mortgage
substantially in the form attached to the Indenture and (z) a Mortgage Note
substantially in the form attached to the Indenture, in each case including
such changes to such forms as may be necessary or desirable to conform such
form to local laws or customs applicable to property in the jurisdiction where
such instrument is to be recorded, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof.
"Net Cash Proceeds" means, with respect to any Asset Sale the proceeds
thereof in the form of cash or cash equivalents, including payments in respect
of deferred payment obligations when received in the form of cash or cash
equivalents (except to the extent that such obligations with respect to
Indebtedness are financed or sold with recourse to the Company or any of its
Subsidiaries) net of (i) brokerage commissions and other reasonable fees and
expenses (including fees and expenses of counsel and investment bankers)
related to such Asset Sale; (ii) provisions for all taxes payable as a result
of such Asset Sale; (iii) payments made to retire Indebtedness secured by the
current assets subject to such Asset Sale (including retirements of
Indebtedness under the Revolving Credit Facility) to the extent required
pursuant to the terms of such Indebtedness; and (iv) appropriate amounts to be
provided by the Company or any of its Subsidiaries, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any of its Subsidiaries, as the case
may be, after such Asset Sale, including, without limitation, pension and
other post-employment benefit liabilities, liabilities related to
environmental matters and liabilities under any indemnification obligations
associated with such Asset Sale.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by the
Company, the aggregate net proceeds received by the Company, after payment of
expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the Fair Market Value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or
surrender of outstanding securities of any kind for or into shares of Capital
Stock of the Company which is not Disqualified Stock, the net book value of
such outstanding securities on the date of such exchange, exercise, conversion
or surrender (plus any additional amount required to be paid by the holder to
the Company upon such exchange, exercise, conversion or surrender, less any
and all payments made to the holders, e.g., on account of fractional shares
and less all expenses incurred by the Company in connection therewith).
"Notice of Security Interest" means a Notice of Security Interest relating
to intellectual property, substantially in the form attached to the Indenture,
as such may be amended, supplemented or otherwise modified from time to time
in accordance with the terms thereof.
"Permitted Investments" means (i) obligations of the U.S. government due
within one year; (ii) certificates of deposits or Eurodollar deposits due
within one year with a commercial bank having capital funds of at least
$500,000,000 or more; and (iii) A-1, P-1 commercial paper.
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"Permitted Liens" means, with respect to any Person, any Lien arising by
reason of (a) any judgment, decree or order of any court, so long as such Lien
is being contested in good faith and is adequately bonded, any appropriate
legal proceedings which may have been duly initiated for the review of such
judgment, decree or
order shall not have been finally terminated or the period within which such
proceedings may be initiated shall not have expired; (b) taxes not yet
delinquent or which are being contested in good faith; (c) security for
payment of workers' compensation or other insurance; (d) security for the
performance of tenders, contracts (other than contracts for the payment of
money) or leases; (e) deposits to secure public or statutory obligations, or
to secure permitted contracts for the purchase or sale of any currency entered
into in the ordinary course of business; (f) Liens imposed by operation of law
in favor of carriers, warehousemen, landlords, mechanics, materialmen,
laborers, employees or suppliers, incurred in the ordinary course of business
for sums which are not yet delinquent or are being contested in good faith by
negotiations or by appropriate proceedings which suspend the collection
thereof; (g) security for surety or appeal bonds; and (h) easements, rights-
of-way, zoning and similar covenants and restrictions and other similar
encumbrances or title defects which, in the aggregate, are not substantial in
amount, and which do not in any case materially detract from the value of the
property subject thereto or materially interfere with the ordinary conduct of
the business of the Company or any of its Subsidiaries.
"Previously Leased/Financed Equipment" means the equipment and machinery
listed on a schedule attached to the Indenture representing certain equipment
and machinery currently the subject of certain operating and capital leases
and any additions or accessories thereto.
"Prior Liens" has the meaning set forth in the Security Documents.
"Restricted Payment" means any of the following: (i) the declaration or
payment of any dividend or any other distribution on Capital Stock of the
Company or any Subsidiary of the Company or any payment made to the direct or
indirect holders (in their capacities as such) of Capital Stock of the Company
or any Subsidiary of the Company (other than (x) dividends or distributions
payable solely in Capital Stock (other than Disqualified Stock) or in options,
warrants or other rights to purchase Capital Stock (other than Disqualified
Stock), and (y) in the case of Subsidiaries of the Company, dividends or
distributions payable to the Company or to a Subsidiary of the Company), (ii)
the purchase, redemption or other acquisition or retirement for value of any
Capital Stock of the Company or any of its Subsidiaries, (iii) the making of
any principal payment on, or the purchase, defeasance, repurchase, redemption
or other acquisition or retirement for value, prior to any scheduled maturity,
scheduled repayment or scheduled sinking fund payment, of any Indebtedness
which is subordinated in right of payment to the Senior Secured Notes (other
than Indebtedness acquired in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within
one year of the date of acquisition) and (iv) the making of any Prohibited
Investment or guarantee of any Prohibited Investment in any Person.
"Revolving Credit Facility" means the credit agreement between the Company
and The CIT Group/Business Credit, Inc. as lender, providing for working
capital and other financing, as the same may at any time be amended, amended
and restated, supplemented or otherwise modified, including any refinancing,
refunding, replacement or extension thereof by the Company or the Guarantors
with the same or any other lender or group of lenders.
"Sale-Leaseback Transaction" means any arrangement with any Person providing
for the leasing by the Company or any Subsidiary of the Company of any real or
tangible personal property, which property has been or is to be sold or
transferred by the Company or such Subsidiary to such Person in contemplation
of such leasing.
"Security Documents" means, collectively, (i) the Stock Pledge Agreement,
(ii) the Pledge and Security Agreements, (iii) the Mortgages and (iv) the
Notice of Security Interest.
"Subsidiary" means, with respect to any Person, (i) any corporation of which
the outstanding Capital Stock having at least a majority of the votes entitled
to be cast in the election of directors shall at the time be owned, directly
or indirectly, by such Person, or (ii) any other Person of which at least a
majority of voting interest is at the time, directly or indirectly, owned by
such Person.
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"Trust Moneys" means all cash or Cash Equivalents received by the Trustee:
(a) upon the release of property from the Lien of any of the Security
Documents, including all moneys received in respect of the principal of all
purchase money, governmental and other obligations; or (b) as compensation
for, or proceeds of the sale of all or any part of the Collateral taken by
eminent domain or purchased by, or sold pursuant to an order of, a
governmental authority or otherwise disposed of; or (c) as proceeds of
insurance upon any, all or part of the Collateral (other than any liability
insurance proceeds payable to the Trustee for any loss, liability or expense
incurred by it); or (d) pursuant to certain provisions of the Mortgages; or
(e) as proceeds of any other sale or other disposition of all or any part of
the Collateral by or on behalf of the Trustee or any collection, recovery,
receipt, appropriation or other realization of or from all or any part of the
Collateral pursuant to the Security Documents or otherwise; or (f) for
application under the Indenture as provided in the Indenture or any Security
Document, or whose disposition is not otherwise specifically provided for in
the Indenture or in any Security Document; provided, however, that Trust
Moneys shall in no event include any property deposited with the Trustee for
any Change of Control Offer or redemption or defeasance of any Senior Secured
Notes.
BOOK-ENTRY, DELIVERY AND FORM
The Old Notes were offered and sold to QIBs in reliance on Rule 144A ("Rule
144A Notes"), and to Institutional Accredited Investors (as defined) in
transactions exempt from registration under the Securities Act not made in
reliance on Rule 144A or Regulation S ("Other Notes").
Rule 144A Notes and Other Notes initially are represented by one or more
temporary global certificates in registered form without interest coupons
(collectively, the "Global Notes"). The Global Notes were deposited upon
issuance with the Trustee, as custodian for DTC, in New York, New York, and
registered in the name of DTC or its nominee, in each case for credit to an
account of a direct or indirect participant as described below.
Except as set forth below, the Global Notes may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Notes may not be exchanged for Old
Notes in certificated form ("Certificated Notes"), except in the limited
circumstances described below.
Global Notes (including beneficial interests therein) are subject to certain
restrictions on transfer and bear a restrictive legend. In addition, transfer
of beneficial interests in the Global Notes are subject to the applicable
rules and procedures of DTC and its direct or indirect participants, which may
change from time to time.
A Global Note is exchangeable for definitive Senior Secured Notes in
registered certificated form if (i) DTC (x) notifies the Company that it is
unwilling or unable to continue as depositary for the Global Notes and the
Company thereupon fails to appoint a successor depositary or (y) has ceased to
be a clearing agency registered under the Exchange Act, (ii) the Company, at
its option, notifies the Trustee in writing that it elects to cause the
issuance of the Old Notes in certificated form or (iii) there shall have
occurred and be continuing a Default or an Event of Default with respect to
the Senior Secured Notes. In addition, beneficial interests in a Global Note
may be exchanged for Certificated Notes upon request but only upon at least 20
days prior written notice given to the Trustee by or on behalf of DTC in
accordance with its customary procedures. In all cases, Certificated Notes
delivered in exchange for any Global Note or beneficial interests therein will
be registered in the names, and issued in any approved denominations,
requested by or on behalf of the depositary (in accordance with its customary
procedures) and will bear a restrictive legend unless the Company determines
otherwise in compliance with applicable law.
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REGISTRATION RIGHTS
The Company, the Guarantors and the Initial Purchasers, for the benefit of
the Noteholders, have entered into the Registration Rights Agreement, pursuant
to which the Company filed with the Commission the Registration Statement with
respect to the Exchange Offer. If any holder of Transfer Restricted Securities
(as defined below) notifies the Company, within 20 business days following the
consummation of the Exchange Offer, that (A) such holder was prohibited by law
or Commission policy from participating in the Exchange Offer, or (B) such
holder may not resell the New Notes acquired by it in the Exchange Offer to
the public without delivering a prospectus, and this Prospectus is not
appropriate or available for such resales by such holder, the Company will
file with the Commission a shelf registration statement (the "Shelf
Registration Statement") to cover resales of the Senior Secured Notes by the
Noteholders thereof who satisfy certain conditions relating to the provision
of information in connection with the Shelf Registration Statement. The
Company will use its best efforts to cause the Shelf Registration Statement to
be declared effective as promptly as possible by the Commission. For purposes
of the foregoing, "Transfer Restricted Securities" means each Senior Secured
Note until the earliest to occur of (i) the date on which it is exchanged in
the Exchange Offer for a New Note which may be resold to the public by the
holder thereof without complying with the prospectus delivery requirements of
the Securities Act, (ii) the date on which such Senior Secured Note has been
sold or otherwise disposed of in accordance with the Shelf Registration
Statement, (iii) the date on which such Senior Secured Note is disposed of by
a broker-dealer as contemplated by the Registration Statement (including
delivery of this Prospectus) and (iv) the date on which such Senior Secured
Note is distributed to the public pursuant to Rule 144 under the Securities
Act.
The Registration Rights Agreement provides that the Company will use its
best efforts to issue New Notes in exchange for all Transfer Restricted
Securities tendered prior thereto in the Exchange Offer, and that, if
obligated to file the Shelf Registration Statement, the Company and the
Guarantors will file the Shelf Registration Statement with the Commission on
or prior to 35 days after such filing obligation arises and use their
respective best efforts to cause the Shelf Registration Statement to be
declared effective by the Commission on or prior to 130 days after such
obligation arises; provided that if the Company has not consummated the
Exchange Offer on or prior to June 16, 1997, then the Company and the
Guarantors will file the Shelf Registration Statement with the Commission on
or prior to that date. The Company shall use its best efforts to keep such
Shelf Registration Statement continuously effective, supplemented and amended
until December 17, 1999, or such shorter period that will terminate when all
the Senior Secured Notes covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or are eligible for sale
under pursuant to Rule 144(k) under the Securities Act. If (a) the Company
fails to file the Shelf Registration Statement on or before the date specified
for such filing, (b) the Shelf Registration Statement is not declared
effective by the Commission on or prior to the date specified above for such
effectiveness (the "Effectiveness Target Date"), (c) the Company fails to
consummate the Exchange Offer on or prior to June 9, 1997, or (d) the Shelf
Registration Statement or the Registration Statement is declared effective but
thereafter, subject to certain exceptions, ceases to be effective for a period
of one Business Day or (e) at any time when a prospectus is required by the
Act to be delivered in connection with sales of Transfer Restricted
Securities, the Company shall conclude, or the holders of a majority in
principal amount of the affected Transfer Restricted Securities shall
reasonably conclude, based on advice of their counsel, and shall give notice
to the Company, that either (A) any event shall occur or fact exist as a
result of which it is necessary to amend or supplement this Prospectus, or a
prospectus included in the Shelf Registration Statement, in order that it will
not include an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, or (B) it shall be
necessary to amend or supplement the Registration Statement, the Shelf
Registration Statement, this Prospectus, or a prospectus included in the Shelf
Registration Statement, in order to comply with the requirements of the Act or
the rules of the Commission thereunder, and in the case of clause (A) or (B),
such Registration Statement is not appropriately amended by an effective post-
effective amendment, or the prospectus is not amended or supplemented, in a
manner reasonably satisfactory to the holders of Transfer Restricted
Securities within one Business Day after the Company shall so conclude or
shall receive the above-mentioned notice from Holders of Transfer Restricted
Securities (each such event referred to in clauses (a) through (e) above a
"Registration Default"), then the Company will pay liquidated damages
("Liquidated
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Damages") to each holder of Transfer Restricted Securities affected by the
Registration Default, with respect to the first 90-day period immediately
following the occurrence of such Registration Default, in an amount equal to
$.05 per week per $1,000 principal amount of Transfer Restricted Securities
held by such holder. The amount of the Liquidated Damages will increase by an
additional $.05 per week per $1,000 principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all
Registration Defaults have been cured, up to a maximum amount of Liquidated
Damages of $.50 per week per $1,000 principal amount of Notes. All accrued
Liquidated Damages will be paid by the Company to the registered holders of
the Global Notes by wire transfer of immediately available funds or by federal
funds check and to holders of Certificated Notes by mailing checks to their
registered addresses. Following the cure of all Registration Defaults, the
accrual of Liquidated Damages will cease.
Noteholders will be required to make certain representations to the Company
(as described herein under the caption "The Exchange Offer--Procedures for
Tendering") in order to participate in the Exchange Offer and will be required
to deliver information to be used in connection with the Shelf Registration
Statement and to provide comments on the Shelf Registration Statement within
the time periods set forth in the Registration Rights Agreement, in order to
have their Senior Secured Notes included in the Shelf Registration Statement
and benefit from the provisions regarding Liquidated Damages set forth above.
The foregoing description of the Registration Rights Agreement is a summary
only and does not purport to be complete. This summary is qualified in its
entirety by reference to all provisions of the Registration Rights Agreement.
A Noteholder who sells Senior Secured Notes pursuant to the Shelf
Registration Statement will generally be required to be named as a selling
securityholder in the related prospectuses and to deliver a prospectus to
purchasers, will be subject to certain of the civil liability provisions under
the Securities Act in connection with such sales and will be bound by the
provisions of the Registration Rights Agreement which are applicable to such a
Noteholder (including certain indemnification obligations).
CERTAIN TAX CONSEQUENCES
In the opinion of Carter, Ledyard & Milburn, counsel to the Company and the
Guarantors, the exchange of an Old Note for a New Note pursuant to the
Exchange Offer should not be treated as an exchange for United States federal
income tax purposes. Therefore, a New Note should be treated as a continuation
of the corresponding Old Note and, as a result, an exchanging beneficial owner
should not recognize any gain or loss on the exchange, his holding period for
the New Note would include his holding period for the Old Note and his basis
in the New Note would be the same as his basis in the Old Note.
PLAN OF DISTRIBUTION
Any broker-dealer that resells New Notes received by it in the Exchange
Offer may be deemed to be an "underwriter" as defined in section 2(11) of the
Securities Act and subject to restrictions thereunder as such. However, a
broker-dealer which acquired Old Notes for its own account and as a result of
market-making activities or other trading activities may, if it is able to
make the representations set forth in the second paragraph under the caption
"The Exchange Offer--Procedures for Tendering," obtain New Notes in the
Exchange Offer and may resell such New Notes without registration under the
Securities Act, provided that such broker-dealer delivers to the purchaser of
such New Notes a copy of a prospectus relating to such resale, which may be
this Prospectus as supplemented or amended from time to time, in reliance upon
the policy of the staff of the Commission set forth in a "no-action" letter
addressed to Shearman & Sterling (July 2, 1993). Such broker-dealer may offer
the New Notes for sale from time to time in negotiated transactions or
otherwise, at market prices prevailing at the time of sale, at prices related
to such market prices or at negotiated prices. The Letter of Transmittal
requires such broker-dealer to acknowledge that the broker-dealer will deliver
such a prospectus, but states that by so acknowledging and by delivering a
prospectus, such broker-dealer will not be deemed to be admitting that it is
an "underwriter" within the meaning of the Securities Act.
The Company will not receive any proceeds from any sale of New Notes by
broker-dealers or any other persons.
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LEGAL MATTERS
Certain legal matters regarding the Senior Secured Notes offered hereby will
be passed upon for PCI and the Guarantors by Carter, Ledyard & Milburn, New
York, New York.
EXPERTS
The consolidated financial statements of the Company included in this
Prospectus as of December 31, 1995 and 1994, and for each of the years in the
three year period ended December 31, 1995, and the related financial statement
schedule included in the Registration Statement, have been so included in
reliance on the report of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein and upon the authority of said firm as
experts in auditing and accounting. The report of KPMG Peat Marwick LLP refers
to a change in accounting for postemployment benefits in 1994.
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Independent Auditors' Report of KPMG Peat Marwick LLP..................... F-2
Consolidated Balance Sheets as of December 31, 1995 and 1994.............. F-3
Consolidated Statements of Operations for the years ended December 31,
1995, 1994 and 1993...................................................... F-4
Consolidated Statements of Stockholders' Equity for the years ended Decem-
ber 31, 1995,
1994 and 1993............................................................ F-5
Consolidated Statements of Cash Flows for the years ended December 31,
1995, 1994 and 1993...................................................... F-6
Notes to Consolidated Financial Statements................................ F-7
Condensed and Consolidated Balance Sheets as of September 30, 1996 (unau-
dited) and
December 31, 1995........................................................ F-18
Condensed and Consolidated Statements of Operations for the three month
periods and
the nine month periods ended September 30, 1996 and 1995 (unaudited)..... F-19
Condensed and Consolidated Statements of Cash Flows for the nine month
periods ended September 30, 1996 and 1995 (unaudited).................... F-20
Notes to Condensed and Consolidated Financial Statements.................. F-21
</TABLE>
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Plastic Containers, Inc.:
We have audited the accompanying consolidated balance sheets of Plastic
Containers, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended December 31, 1995.
These consolidated financial statements are the responsibility of the
company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. 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 consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Plastic
Containers, Inc. and subsidiaries as of December 31, 1995 and 1994, and the
results of their operations and their cash flows for each of the years in the
three-year period ended December 31, 1995, in conformity with generally
accepted accounting principles.
As discussed in Note 11 to the consolidated financial statements, the
company adopted the provisions of the Financial Accounting Standards Board's
Statement of Financial Accounting Standards No.112, "Employers' Accounting for
Postemployment Benefits," in 1994.
KPMG Peat Marwick LLP
Omaha, Nebraska
February 2, 1996
F-2
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
ASSETS
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Current assets:
Cash and cash equivalents................................ $ 1,428 $ 2,745
Investments.............................................. 285 292
Accounts receivable (note 5):
Trade................................................... 30,463 31,642
Other................................................... 4,107 4,828
-------- --------
34,570 36,470
Less allowance for doubtful accounts and accrued re-
bates................................................... 1,502 2,288
-------- --------
Net accounts receivable................................ 33,068 34,182
-------- --------
Inventories (notes 2 and 5).............................. 19,987 23,461
Deferred income taxes (note 10).......................... 2,152 2,141
Prepaid expenses......................................... 804 1,471
-------- --------
Total current assets................................... 57,724 64,292
-------- --------
Property, plant and equipment (note 7):
Land, building and building improvements................. 20,430 19,917
Manufacturing machinery and equipment.................... 186,398 166,551
Construction in progress................................. 18,322 6,520
-------- --------
225,150 192,988
Less accumulated depreciation and amortization........... 83,936 64,828
-------- --------
Net property, plant and equipment...................... 141,214 128,160
-------- --------
Intangible assets (note 3)................................. 9,976 14,486
Other assets (note 4)...................................... 10,698 2,361
-------- --------
$219,612 $209,299
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank (note 5)........................... $ 17,018 $ --
Accounts payable--trade.................................. 24,898 22,878
Current portion of long-term obligations (note 7)........ 141 129
Other current liabilities (note 6)....................... 15,423 17,101
-------- --------
Total current liabilities.............................. 57,480 40,108
Long-term obligations, excluding current portion (note 7).. 105,212 105,354
Other liabilities (note 9)................................. 19,450 26,142
-------- --------
Total liabilities...................................... 182,142 171,604
-------- --------
Stockholders' equity:
Common stock, $l par value. Authorized 1,000 shares; 100
shares issued and outstanding........................... -- --
Additional paid-in capital............................... 60,000 60,000
Deficit.................................................. (22,530) (22,305)
-------- --------
Total stockholders' equity............................. 37,470 37,695
-------- --------
Commitments and contingencies (notes 5, 8, 11 and 15)......
-------- --------
$219,612 $209,299
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Net sales (note 12).............................. $277,061 $230,480 $207,035
Cost of goods sold............................... 238,669 193,518 176,425
-------- -------- --------
Gross profit................................. 38,392 36,962 30,610
Selling, general and administrative expenses..... 28,960 28,397 26,716
-------- -------- --------
Operating income............................. 9,432 8,565 3,894
-------- -------- --------
Other income (expenses):
Interest income................................ 221 202 321
Interest expense............................... (11,807) (11,831) (12,250)
Loss on disposal of assets..................... (346) (350) (147)
-------- -------- --------
(11,932) (11,979) (12,076)
-------- -------- --------
Loss before income taxes, extraordinary item
and
cumulative effect of accounting change...... (2,500) (3,414) (8,182)
Income tax benefit (note 10)..................... 2,505 1,631 1,473
-------- -------- --------
Income (loss) before extraordinary item and
cumulative
effect of accounting change................. 5 (1,783) (6,709)
Extraordinary loss (note 14)..................... (230) (217) --
-------- -------- --------
Loss before cumulative effect of accounting
change...................................... (225) (2,000) (6,709)
Cumulative effect of accounting change (note
11)............................................. -- (525) --
-------- -------- --------
Net loss..................................... $ (225) $ (2,525) $ (6,709)
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
PLASTIC
CONTAINERS,
INC. ADDITIONAL TOTAL
COMMON PAID-IN STOCKHOLDERS'
STOCK CAPITAL DEFICIT EQUITY
<S> <C> <C> <C> <C>
Balances at December 31, 1992... $ -- $60,000 $(13,071) $46,929
Net loss........................ -- -- (6,709) (6,709)
----- ------- -------- -------
Balances at December 31, 1993... -- 60,000 (19,780) 40,220
Net loss........................ -- -- (2,525) (2,525)
----- ------- -------- -------
Balances at December 31, 1994... -- 60,000 (22,305) 37,695
Net loss........................ -- -- (225) (225)
----- ------- -------- -------
Balances at December 31, 1995... $ -- $60,000 $(22,530) $37,470
===== ======= ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
(IN THOUSANDS)
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Cash flows from operating activities:
Net loss....................................... $ (225) $ (2,525) $ (6,709)
Adjustments to reconcile net loss to net cash
provided by operating activities:
Depreciation and amortization................. 24,033 25,057 25,729
Loss on disposal of assets.................... 346 350 147
Deferred income taxes......................... (2,732) (1,764) (1,494)
Extraordinary loss on write-off of capitalized
financing costs.............................. 230 217 --
Changes in assets and liabilities:
Accounts receivable, net..................... 1,114 (8,153) (6,482)
Inventories.................................. 3,474 (6,228) (26)
Prepaid expenses............................. 667 (761) 277
Intangible assets............................ (355) -- (16)
Other assets................................. (463) (207) (15)
Pension asset/liability...................... (11,377) (2,740) (1,778)
Accounts payable............................. (426) 10,313 2,385
Other current liabilities.................... (1,678) 2,419 (3,358)
Other liabilities............................ (468) 1,614 479
-------- -------- --------
Net cash provided by operating activities.. 12,140 17,592 9,139
-------- -------- --------
Cash flows from investing activities:
Proceeds from investment maturities............ 7 25 34
Proceeds from disposal of assets............... 341 66 138
Purchase of property, plant and equipment...... (30,693) (14,989) (16,075)
-------- -------- --------
Net cash used in investing activities...... (30,345) (14,898) (15,903)
-------- -------- --------
Cash flows from financing activities:
Net borrowings on notes payable to bank........ 17,018 -- --
Repayment of long-term obligations............. (130) (5,480) (107)
-------- -------- --------
Net cash provided by (used in) financing
activities................................ 16,888 (5,480) (107)
-------- -------- --------
Net decrease in cash and cash equivalents........ (1,317) (2,786) (6,871)
Cash and cash equivalents--beginning............. 2,745 5,531 12,402
-------- -------- --------
Cash and cash equivalents--ending................ $ 1,428 $ 2,745 $ 5,531
======== ======== ========
Supplemental disclosures of cash flow informa-
tion:
Interest paid.................................. $ 11,683 $ 11,977 $ 12,289
Income taxes paid.............................. 210 36 42
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
THREE-YEAR PERIOD ENDED DECEMBER 31, 1995
(IN THOUSANDS)
(1) ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION AND BASIS OF PRESENTATION
The accompanying financial statements include Plastic Containers, Inc. and
its wholly-owned subsidiaries, Continental Plastic Containers, Inc. and
Continental Caribbean Containers, Inc., on a consolidated basis. All
significant intercompany transactions have been eliminated in the consolidated
financial statements. The consolidated entities are referred to as Plastic
Containers, Inc. ("PCI" or "the Company") in the notes to consolidated
financial statements.
PCI manufactures a wide range of blow-molded plastic containers for the
food, automotive, personal care and household, industrial and agricultural
chemical markets.
INVESTMENTS
Investments are accounted for under Statement of Financial Accounting
Standards No. 115, "Accounting for Certain Investments in Debt and Equity
Securities." Investments consist of held-to-maturity government agency
securities stated at amortized cost, which approximates market value.
INVENTORIES
Continental Plastic Containers, Inc.'s manufacturing inventories are stated
at cost using the last-in, first-out (LIFO) method, which is not in excess of
market. All repair parts, supplies inventories and Continental Caribbean
Containers, Inc.'s inventories are stated at the lower of cost, applied on the
first-in, first-out (FIFO) method, or market.
PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are recorded at cost. Depreciation is computed
principally on a straight-line basis over estimated useful lives of the assets
which range from three to thirty-five years. PCI has classified a leased
building as a capital lease which is being amortized over the term of the
lease agreement.
INSURANCE
PCI purchases commercial insurance policies, but remains self-insured in
certain states for the purposes of providing workers' compensation, general
liability and property and casualty insurance coverages up to varying
deductible amounts. PCI's self-insurance reserves are included in other
liabilities on the consolidated balance sheets. Costs charged to operations
for self-insurance for the years ended December 31, 1995, 1994 and 1993 were
$2,200, $2,066 and $2,268, respectively.
RESEARCH, DEVELOPMENT AND ENGINEERING
Expenditures for research, development and engineering are expensed as
incurred. Costs charged to operations for research, development and
engineering for the years ended December 31, 1995, 1994 and 1993 were $8,777,
$9,013 and $9,613, respectively.
INTANGIBLE ASSETS
Provision for amortization of intangible assets is based upon the estimated
useful lives of the related assets and is computed using the straight-line
method. Noncompete agreement and acquisition costs are being amortized
F-7
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
over five years. Customer contracts are being amortized over ten years.
Additionally, finance costs are being amortized over periods ranging from five
to nine years.
PCI assesses the recoverability of all intangible assets by determining
whether the amortization of the balance over its remaining life can be
recovered through undiscounted future operating cash flows of the Company's
operations.
INCOME TAXES
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carry forwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences are expected
to be recovered or settled. The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period that includes
the enactment date.
USE OF ESTIMATES
Management of PCI has made a number of estimates and assumptions relating to
the reporting of assets and liabilities and the disclosure of contingent
assets and liabilities to prepare these consolidated financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.
CASH EQUIVALENTS
For purposes of the consolidated statements of cash flows, PCI considers
investments with a maturity of three months or less at date of purchase as
cash equivalents.
(2) INVENTORIES
Major classes of inventories at December 31 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Raw materials........................................... $ 8,992 $15,296
Finished goods.......................................... 10,866 10,042
------- -------
19,858 25,338
LIFO reserve............................................ (2,025) (3,924)
------- -------
17,833 21,414
Continental Caribbean Containers, Inc................... 670 580
Repair parts and supplies............................... 1,484 1,467
------- -------
$19,987 $23,461
======= =======
</TABLE>
During 1995, LIFO inventory layers were reduced. This reduction resulted in
charging lower inventory costs prevailing in previous years to cost of goods
sold in 1995, thus reducing cost of goods sold by approximately $700 below the
amount that would have resulted from liquidating inventory recorded at
December 31, 1994 prices.
F-8
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(3) INTANGIBLE ASSETS
Intangible assets at December 31 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Noncompete agreements.................................... $15,000 $15,000
Customer contracts....................................... 7,630 7,630
Financing and acquisition costs.......................... 6,058 6,316
------- -------
28,688 28,946
Less accumulated amortization............................ 18,713 14,460
------- -------
$ 9,976 $14,486
======= =======
(4) OTHER ASSETS
Other assets at December 31 consist of the following:
<CAPTION>
1995 1994
<S> <C> <C>
Deferred income taxes.................................... $ 4,826 $ 2,105
Prefunded pension asset.................................. 5,153 --
Other.................................................... 719 256
------- -------
$10,698 $ 2,361
======= =======
</TABLE>
(5) NOTES PAYABLE TO BANK
On October 30, 1995, PCI entered into a $50,000 revolving credit facility
with a commercial bank, which replaced an existing $15,000 revolving credit
facility. The new revolving credit facility is for a term of seven years with
interest on individual borrowings based on the bank's prime rate or LIBOR, at
the Company's option. Borrowings are secured by accounts receivable and
inventories. At December 31, 1995, borrowings of $17,018 were outstanding at
interest rates of 7.37 percent and 8.75 percent.
The Company is required to pay an annual commitment fee of 1/4 percent on
the unused facility up to $25,000 and 1/2 percent on the unused amount in
excess of $25,000. Commitment fees for the year ended December 31, 1995 were
$23.
The facility contains certain restrictive covenants, including the
maintenance of minimum levels of net worth, fixed charge coverage and interest
coverage, limitations on capital expenditures and additional indebtedness, and
restrictions on the payment of dividends. At December 31, 1995, the Company
was in compliance with these covenants or had obtained waivers.
The facility also provides for the issuance of letters of credit by the bank
on the Company's behalf. At December 31, 1995, letters of credit amounting to
$3,131 had been issued to guarantee obligations carried on the consolidated
balance sheet.
F-9
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(6) OTHER CURRENT LIABILITIES
Other current liabilities at December 31 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accrual for open credits................................. $ 1,311 $ 1,439
Employee compensation and benefits....................... 5,928 7,350
Accrued interest......................................... 2,947 2,824
Accrued real estate and personal property taxes.......... 1,313 1,297
Other.................................................... 3,924 4,191
------- -------
$15,423 $17,101
======= =======
</TABLE>
(7) LONG-TERM OBLIGATIONS
Long-term obligations at December 31 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Senior secured notes, due 2001, interest at 10.75%,
payable semiannually on April 1 and October 1,
secured by all the issued and outstanding stock of
Continental Plastic Container Companies and
substantially all of the assets and properties owned
by PCI and subsidiaries other than inventories and
accounts receivable.................................. $104,700 $104,700
Capital lease obligation.............................. 653 783
-------- --------
Total long-term obligations......................... 105,353 105,483
Less current portion.................................. 141 129
-------- --------
Long-term obligations, excluding current portion.... $105,212 $105,354
======== ========
</TABLE>
PCI is required to make four annual sinking fund payments of $22,000 each,
commencing April 1, 1997 and continuing through April 1, 2000, and a final
principal payment of $22,000 is due April 1, 2001. The first sinking fund
payment may be reduced by an amount equal to any early repurchases made before
the payment date ($5,300 at December 31, 1995). The notes are redeemable, in
whole or in part, at the option of PCI at prices decreasing from 105 percent
of par at April 1, 1997, to par on April 1, 2000.
In the event of a change of control as defined in the indenture, PCI is
obligated to offer to purchase all outstanding Senior Secured Notes at a
redemption price of 101 percent of the principal amount thereof plus accrued
interest. In addition, PCI is obligated in certain instances to offer to
purchase Senior Secured Notes at a redemption price of 100 percent of the
principal amount thereof plus accrued interest with the net cash proceeds of
certain sales or dispositions of assets.
The indenture places certain restrictions on payment of dividends,
additional liens, disposition of the proceeds from asset sales, sale-leaseback
transactions and additional borrowings. At December 31, 1995, PCI is in
compliance with these restrictions.
PCI leases a manufacturing facility with a cost of $1,152 and accumulated
amortization of $535 and $411 at December 31, 1995 and 1994, respectively,
under a capital lease arrangement at 9.364 percent interest which expires on
December 31, 1999. Future minimum lease payments under the capital lease are
as follows:
F-10
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
<S> <C>
1996.............................................................. $205
1997.............................................................. 205
1998.............................................................. 205
1999.............................................................. 205
----
Total future minimum lease payments............................. 820
Less portion representing interest................................ 167
----
Net minimum lease payments...................................... $653
====
</TABLE>
(8) LEASES
PCI rents certain property and equipment used in connection with its
operations. Rental expense under these operating leases was approximately
$6,152, $4,802 and $4,472 for the years ended December 31, 1995, 1994 and
1993, respectively. Substantially all operating leases require PCI to pay
taxes, maintenance, insurance and certain operating expenses applicable to the
lease. The Company plans to renew or replace many of these leases as they
expire. PCI subleases a warehouse facility for $144 annually through June
1999.
Future minimum lease payments under noncancellable operating leases are as
follows:
<TABLE>
<CAPTION>
YEARS ENDING
DECEMBER 31,
<S> <C>
1996........................................................ $ 7,543
1997........................................................ 6,572
1998........................................................ 4,342
1999........................................................ 3,480
2000........................................................ 2,963
Thereafter.................................................. 3,243
-------
Total future minimum lease payments....................... $28,143
=======
</TABLE>
(9) OTHER LIABILITIES
Other liabilities at December 31 consist of the following:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Pension liability........................................ $ -- $ 6,224
Insurance reserves....................................... 8,956 8,805
Postretirement benefits accrued.......................... 5,972 5,904
Other.................................................... 4,522 5,209
------- -------
$19,450 $26,142
======= =======
</TABLE>
F-11
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(10) INCOME TAXES
Total income tax benefit (expense) for the years ended December 31, 1995,
1994 and 1993 consists of the following:
<TABLE>
<CAPTION>
1995 1994 1993
---------------------- --------------------- ---------------------
FEDERAL STATE TOTAL FEDERAL STATE TOTAL FEDERAL STATE TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Current...... $ (145) $(82) $ (227) $ (145) $ 12 $ (133) $ -- $(21) $ (21)
Deferred..... 2,569 163 2,732 1,559 205 1,764 1,004 490 1,494
------ ---- ------ ------ ---- ------ ------ ---- ------
$2,424 $ 81 $2,505 $1,414 $217 $1,631 $1,004 $469 $1,473
====== ==== ====== ====== ==== ====== ====== ==== ======
</TABLE>
The income tax benefit for the years ended December 31, 1995, 1994 and 1993
differed from the "expected" income tax benefit computed by applying the
Federal income tax rate to loss before income taxes, extraordinary item and
cumulative effect of accounting changes as a result of the following:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Computed "expected" income tax benefit.............. $ 850 $1,161 $ 2,782
Increase (reduction) in benefit resulting from:
Change in valuation allowance..................... 1,303 (80) (1,671)
State and local income taxes, net of Federal in-
come tax benefit................................. 53 143 310
Other............................................. 299 407 52
------ ------ -------
Income tax benefit.............................. $2,505 $1,631 $ 1,473
====== ====== =======
</TABLE>
The significant components of deferred income tax benefit attributable to
loss from continuing operations for the years ended December 31, 1995, 1994
and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Deferred tax expense (exclusive of the effects of
other components listed below).................. $(4,168) $ 840 $(4,330)
Benefit of operating loss carry forward.......... 5,087 859 7,495
Benefit of research and experimentation credits.. 365 -- --
Benefit of alternative minimum tax credit carry
forward......................................... 145 145 --
Decrease (increase) in valuation allowance for
deferred tax assets............................. 1,303 (80) (1,671)
------- ------ -------
$ 2,732 $1,764 $ 1,494
======= ====== =======
</TABLE>
F-12
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at December
31, 1995 and 1994 are presented below:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Deferred tax assets:
Net operating loss carry forwards......................... $23,073 $17,986
Vacation and incentive pay reserves....................... 1,004 1,548
Self-insurance reserves................................... 3,753 3,696
Pension reserve........................................... -- 2,306
Postretirement benefit reserves........................... 2,472 2,404
Other..................................................... 3,401 3,158
------- -------
Total gross deferred tax assets......................... 33,703 31,098
Less valuation allowance.................................. 5,068 6,371
------- -------
Net deferred tax assets................................. 28,635 24,727
------- -------
Deferred tax liabilities:
Book over tax basis of principally fixed assets........... 19,598 20,028
Prefunded pension......................................... 1,958 --
Other..................................................... 101 453
------- -------
Total gross deferred tax liabilities.................... 21,657 20,481
------- -------
Net deferred tax assets................................. $ 6,978 $ 4,246
======= =======
Net deferred tax assets are classified in the accompanying consolidated
balance sheets as follows:
<CAPTION>
1995 1994
<S> <C> <C>
Current--deferred income taxes.............................. $ 2,152 $ 2,141
Long-term--other assets..................................... 4,826 2,105
------- -------
$ 6,978 $ 4,246
======= =======
</TABLE>
The valuation allowance for deferred tax assets as of January 1, 1994 was
$6,291. The net change in the total valuation allowance for the years ended
December 31, 1995 and 1994 was a decrease of $1,303 and an increase of $80,
respectively. At December 31, 1995, PCI has operating loss carry forwards for
Federal income tax purposes of approximately $61,000 which are available to
offset future Federal taxable income through 2010. In addition, the Company
has alternative minimum tax credit carry forwards of approximately $139 which
are available to reduce future Federal regular income taxes over an indefinite
period and research and experimentation credits of approximately $365
available to reduce future Federal income taxes through 2010.
Based upon the scheduled reversal of deferred tax liabilities, projected
future taxable income and tax planning strategies, management believes it is
more likely than not the Company will realize the benefits of these deductible
differences, net of the existing valuation allowances at December 31, 1995.
(11) EMPLOYEE BENEFITS
PENSION PLANS
PCI maintains a defined benefit pension plan for substantially all salaried
employees. In 1993, the plan was amended for eligible employees at work on or
after August 31, 1993. Plan benefits are based on all years of continuous
service and the employee's compensation during the highest five continuous
years of the last ten years of employment, minus a profit-sharing annuity. The
profit-sharing annuity is based on the amount of profit-sharing contributions
received for 1988 through 1992. Any employee who terminated employment prior
to August 31, 1993 is governed by the terms of the plan in effect at the time
the termination occurred.
F-13
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
PCI maintains a noncontributory defined benefit pension plan for
substantially all hourly workers who have attained 21 years of age. Plan
benefits are variable by location/contract but are based primarily on years of
service and the employee's highest wage classification for twelve consecutive
months in the five years prior to retirement. "Normal" retirement is at age
65, with at least five years of continuous service. However, employees may
retire as early as age 55 and receive reduced benefits.
Subject to the limitation on deductibility imposed by Federal income tax
laws, PCI's policy has been to contribute funds to the plans annually in
amounts required to maintain sufficient plan assets to provide for accrued
benefits. Plan assets are held in a master trust and are comprised primarily
of common stock, corporate bonds and U.S. Government and government agency
obligations.
The following table sets forth the plans' funded status at December 31, 1995
and 1994 based primarily on January 1, 1995 participant data and plan assets:
<TABLE>
<CAPTION>
1995 1994
---------------------------- ----------------------------
SALARIED HOURLY TOTAL SALARIED HOURLY TOTAL
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value
of benefit obligation,
including vested
benefits of $29,078 and
$18,644 in 1995 and
$25,464 and $14,700 in
1994 for the salaried
and hourly plans,
respectively............ $(30,921) $(21,877) $(52,798) $(26,794) $(16,718) $(43,512)
======== ======== ======== ======== ======== ========
Projected benefit
obligation (PBO)........ (33,110) (21,877) (54,987) (27,799) (16,758) (44,557)
Plan assets, at fair
value................... 31,082 22,068 53,150 23,806 14,277 38,083
Unrecognized net (gain)
loss.................... 5,206 1,926 7,132 1,800 (1,301) 499
Adjustment to recognize
minimum liability....... -- -- -- (171) -- (171)
Prior service cost not
yet recognized in net
periodic pension cost... (556) 414 (142) (624) 546 (78)
-------- -------- -------- -------- -------- --------
Prefunded pension asset
(accrued pension
liability)............ $ 2,622 $ 2,531 $ 5,153 $ (2,988) $ (3,236) $ (6,224)
======== ======== ======== ======== ======== ========
</TABLE>
Net periodic pension costs included the following components for the years
ended December 31, 1995, 1994 and 1993:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost........................................... $ 992 $1,161 $ 818
Interest cost.......................................... 4,002 3,715 3,713
Return on plan assets.................................. (6,292) 1,916 (4,198)
Net amortization and deferral.......................... 2,922 (5,613) 781
Effect of window plan.................................. -- -- 2,725
------- ------ ------
Net periodic pension costs......................... $ 1,624 $1,179 $3,839
======= ====== ======
</TABLE>
PCI contributions to the plans for the years ended December 31, 1995, 1994
and 1993 were $12,800, $2,585 and $2,075, respectively.
During 1992, negotiated benefit increases were made for certain hourly plan
participants and early retirement (window plan) was accepted by certain
salaried plan participants. The effects of these changes were to increase
total periodic pension costs by $2,725 in 1993.
F-14
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
Assumptions used in the accounting were:
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
------------------------
1995 1994 1993
<S> <C> <C> <C>
Discount rates.................................... 7.5% 9.0% 7.5%
Rates of increase in compensation levels.......... 5.0% 5.0% 5.0%
Expected long-term rate of return on assets....... 9.5% 9.5% 9.5%
</TABLE>
RETIREMENT THRIFT PLAN
PCI maintains a defined contribution plan which covers substantially all
hourly employees who meet eligibility requirements. Provisions regarding
employee and employer contributions and the benefits provided under the plan
vary between PCI's manufacturing facilities. PCI's defined contribution plan's
expense was $292, $272 and $232 for the years ended December 31, 1995, 1994
and 1993, respectively.
SAVINGS PLAN
PCI maintains a contributory defined contribution 401(k) savings plan which
covers substantially all nonorganized salaried employees. Employees may
contribute up to 12 and 8 percent of pay on a pretax and after-tax basis,
respectively. However, the total employee contribution rate may not exceed 15
percent of pay. PCI matches up to 3 percent of employees' pretax
contributions. Employees vest in PCI's contributions at 25 percent per year,
becoming fully vested after four years of employment. Employees may make
withdrawals from the plan prior to attaining age 59 1/2, subject to certain
penalties. PCI's savings plan expense was $518, $450 and $445 for the years
ended December 31, 1995, 1994 and 1993, respectively.
UNION BENEFIT PLANS
PCI contributes to various union pension plans pursuant to its labor
agreements. Union benefit plan expense was $1,080, $896 and $783 for the years
ended December 31, 1995, 1994 and 1993, respectively.
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
PCI provides certain health care and life insurance benefits for retired
PCI employees. Certain of PCI's hourly and salaried employees became eligible
for these benefits when they became eligible for an immediate pension under a
formal company pension plan. In 1993, the plan was amended to eliminate health
care benefits for employees hired after January 1, 1993.
PCI's policy is to fund the cost of medical benefits in amounts determined
at the discretion of management. Summary information on PCI's plan at December
31, 1995 and 1994 is as follows:
<TABLE>
<CAPTION>
1995 1994
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees................................................. $3,449 $3,146
Fully eligible, active plan participants................. 1,219 1,097
Other active plan participants........................... 1,486 1,197
------ ------
6,154 5,440
Unrecognized net loss from experience and changes in as-
sumptions................................................. (614) (99)
Prior service cost in net periodic postretirement benefit
cost...................................................... 432 563
------ ------
Accrued postretirement benefit obligation.............. $5,972 $5,904
====== ======
</TABLE>
F-15
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
The components of net periodic postretirement benefit cost at December 31,
1995, 1994 and 1993 are as follows:
<TABLE>
<CAPTION>
1995 1994 1993
<S> <C> <C> <C>
Service cost............................................... $ 52 $ 73 $ 55
Interest cost.............................................. 480 431 588
Net amortization and deferral.............................. (34) (57) 67
---- ---- ----
Net periodic postretirement benefit cost................... $498 $447 $710
==== ==== ====
</TABLE>
As of December 31, 1995, the discount rate used in determining the APBO was
7.5 percent. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 9.7 percent for 1995,
declining gradually with each succeeding year to an ultimate rate of 5.0
percent beginning in calendar year 2001.
As of December 31, 1994, the discount rate used in determining the APBO was
9.0 percent. The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 10.4 percent for 1994,
declining gradually with each succeeding year to an ultimate rate of 6.0
percent beginning in calendar year 2001.
The health care cost trend rate assumption has a significant effect on the
amounts reported. To illustrate, increasing the assumed health care cost trend
rates by 1 percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 1995 by $720 and the
aggregate of the service and interest cost components of net periodic
postretirement benefit cost for the year then ended by $61.
POSTEMPLOYMENT BENEFITS
PCI provides certain postemployment benefits to former and inactive
employees, their beneficiaries and covered dependents. These benefits include
disability related benefits, continuation of health care benefits and life
insurance coverage.
In 1994, PCI adopted the provisions of the Financial Accounting Standards
Board's Statement No. 112, "Employers' Accounting for Postemployment
Benefits," which requires employers to recognize the obligation to provide
postemployment benefits and an allocation of the cost of those benefits to the
periods the employees render service. The cumulative effect of this change in
accounting principle of $525 was determined as of January 1, 1994 and is
reported separately in the consolidated statement of operations for the year
ended December 31, 1994. Additional costs charged to operations for
postemployment benefits in 1995 and 1994 were $24 and $29, respectively.
(12) MAJOR CUSTOMERS
Sales to one customer represented approximately 27 percent, 23 percent and
23 percent of net sales for the years ended December 31, 1995, 1994 and 1993,
respectively. Included in accounts receivable are receivables from this
customer of $6,947 and $6,521 at December 31, 1995 and 1994, respectively.
Another customer represented approximately 11 percent, 12 percent and 12
percent of net sales for each of the years ended December 31, 1995, 1994 and
1993, respectively, and $4,293 and $3,977 of receivables from this customer
are included in accounts receivable at December 31, 1995 and 1994,
respectively.
F-16
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)
(13) RELATED PARTY TRANSACTIONS
PCI is charged for services provided to it by Continental Can Company, Inc.,
the parent corporation of PCI. These costs amounted to $600, $490 and $400 for
the years ended December 31, 1995, 1994 and 1993, respectively. At December
31, 1995 and 1994, the amount payable to Continental Can Company, Inc. for
these costs was $352 and $350, respectively, and is included in other current
liabilities in the accompanying consolidated balance sheets.
(14) EXTRAORDINARY ITEM
In 1995, PCI incurred an extraordinary loss of $230 related to the early
extinguishment of a revolving credit facility.
In 1994, PCI incurred an extraordinary loss of $217 related to the early
extinguishment of a portion of the senior secured notes.
(15) CONTINGENCIES
The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management and legal counsel,
the ultimate disposition of these matters will not have a material adverse
effect on the Company's consolidated financial statements.
(16) FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board's Statement No. 107, "Disclosures about
Fair Value of Financial Instruments," defines fair value of a financial
instrument as the amount at which the instrument could be exchanged in a
current transaction between willing parties. At December 31, 1995 and 1994,
the carrying amount approximates fair value for cash and cash equivalents,
investment securities, accounts receivable, accounts payable--trade, notes
payable to bank, long-term debt and other current liabilities.
The carrying amounts of cash, accounts receivable, accounts payable and
other current liabilities approximate fair value because of the short maturity
of those instruments. The fair value of held-to-maturity investments are based
on the quoted market prices at the reporting date for those or similar
investments. The fair value of long-term debt is estimated based on rates
currently offered to PCI for debt of the same remaining maturities, as advised
by PCI's bankers.
F-17
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS, EXCEPT FOR SHARE AMOUNTS)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1996 1995
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents......................... $ 1,178 $ 1,428
Accounts receivable, net.......................... 31,034 33,068
Inventories (note 3).............................. 22,395 19,987
Other current assets.............................. 3,396 3,241
-------- --------
Total current assets............................ 58,003 57,724
Property, plant and equipment, net.................. 142,480 141,214
Intangible assets, net.............................. 6,652 9,976
Other assets........................................ 13,398 10,698
-------- --------
$220,533 $219,612
======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to bank............................. $ 9,820 $ 17,018
Accounts payable--trade........................... 22,567 24,898
Current portion of long-term obligations.......... 17,667 141
Other current liabilities......................... 21,220 15,423
-------- --------
Total current liabilities....................... 71,274 57,480
Long-term obligations............................... 92,363 105,212
Other liabilities................................... 19,919 19,450
-------- --------
Total liabilities............................... 183,556 182,142
Stockholders' equity:
Common stock, $1 par value. Authorized 1,000
shares; 100 shares issued and outstanding........ -- --
Additional paid-in capital........................ 60,000 60,000
Retained earnings................................. (23,023) (22,530)
-------- --------
Total stockholders' equity...................... 36,977 37,470
-------- --------
$220,533 $219,612
======== ========
</TABLE>
F-18
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
<S> <C> <C>
Net sales.......................................... $69,214 $68,847
Cost of goods sold................................. 57,592 60,511
------- -------
Gross profit................................... 11,622 8,336
Selling, general and administrative expense........ 6,929 7,697
Plant rationalization and realignment (note 4)..... 400 --
------- -------
Operating income............................... 4,293 639
Other income (expense):
Interest income.................................. 20 51
Interest expense................................. (3,155) (2,893)
Loss on disposal of assets....................... (126) (41)
------- -------
Total other income (expense)................... (3,261) (2,883)
------- -------
Earnings (loss) before income taxes.......... 1,032 (2,244)
Income tax benefit................................. 625 206
------- -------
Net earnings (loss).......................... $ 1,657 $(2,038)
======= =======
</TABLE>
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
<S> <C> <C>
Net sales.......................................... $196,232 $213,810
Cost of goods sold................................. 165,777 184,782
-------- --------
Gross profit................................... 30,455 29,028
Selling, general and administrative expense........ 21,670 22,457
Plant rationalization and realignment (note 4)..... 1,500 --
-------- --------
Operating income............................... 7,285 6,571
Other income (expense):
Interest income.................................. 74 165
Interest expense................................. (9,618) (8,769)
Loss on disposal of assets....................... (125) (81)
-------- --------
Total other income (expense).................... (9,669) (8,685)
-------- --------
Loss before income taxes....................... (2,384) (2,114)
Income tax benefit................................. 1,891 298
-------- --------
Net loss......................................... $ (493) $ (1,816)
======== ========
</TABLE>
F-19
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
CONDENSED AND CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(IN THOUSANDS)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
---------------------------
SEPTEMBER 30, SEPTEMBER 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss........................................ $ (493) $ (1,816)
Adjustments:
Depreciation and amortization.................. 17,878 18,165
Loss on disposal of assets..................... 125 81
Changes in assets and liabilities.............. 2,986 11,570
-------- --------
Net cash provided by operating activities..... 20,496 28,000
-------- --------
Cash flows from investing activities:
Change in investments, net...................... 71 5
Proceeds from disposal of assets................ 146 341
Purchases of property, plant and equipment...... (18,442) (24,002)
-------- --------
Net cash used in investing activities......... (18,225) (23,656)
-------- --------
Cash flows from financing activities:
Repayments of notes payable..................... (7,198) --
Additions to long-term obligations.............. 5,100 --
Repayments of long-term obligations............. (423) --
-------- --------
Net cash used in financing activities......... (2,521) --
-------- --------
Net increase (decrease) in cash and cash equiva-
lents............................................ (250) 4,344
Cash and cash equivalents--beginning.............. 1,428 2,745
-------- --------
Cash and cash equivalents--ending................. $ 1,178 $ 7,089
======== ========
Supplemental disclosure of cash flow information:
Interest paid................................... $ 6,620 $ 5,868
Income taxes paid............................... 8 285
======== ========
</TABLE>
F-20
<PAGE>
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED AND CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS)
(1) BASIS OF PRESENTATION
The accompanying condensed and consolidated financial statements include
Plastic Containers, Inc. (the "Company" or "PCI") and its wholly-owned
subsidiaries, Continental Plastic Containers, Inc. ("CPC") and Continental
Caribbean Containers, Inc. ("Caribbean") (collectively, the "Continental
Plastic Container Companies"). All significant intercompany transactions have
been eliminated in the consolidated financial statements.
The condensed and consolidated financial statements are unaudited and
reflect all adjustments which are, in the opinion of management, necessary for
a fair presentation of the financial position and operating results for the
interim periods. The condensed and consolidated financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto contained in the Company's Form 10-K for the year ended December 31,
1995.
Separate financial statements of CPC and Caribbean are not included because
both such companies are fully and unconditionally liable as well as jointly
and severally liable with respect to the senior secured notes issued by PCI,
and because aggregate assets, liabilities, earnings and equity of CPC and
Caribbean are substantially equivalent to the assets, liabilities, earnings
and equity of PCI on a consolidated basis.
(2) RECLASSIFICATIONS
Certain 1995 balances have been reclassified to conform to the 1996
presentation.
(3) INVENTORIES
Major classes of inventories at September 30, 1996 and December 31, 1995
consist of the following:
<TABLE>
<CAPTION>
SEPT. 30, 1996 DEC. 31, 1995
<S> <C> <C>
Raw materials................................ $10,583 $ 9,339
Finished goods............................... 12,307 10,882
------- -------
22,890 20,221
LIFO reserve................................. (2,025) (2,025)
------- -------
20,865 18,196
Repair parts and supplies.................... 1,530 1,791
------- -------
$22,395 $19,987
======= =======
</TABLE>
(4) PLANT RATIONALIZATION AND REALIGNMENT
The Company recorded charges of $1,100 and $400 in the second and third
quarters of 1996, respectively, in connection with plans to consolidate
certain manufacturing operations, reduce operating costs and better position
itself to achieve its corporate objectives. The charges reflect primarily
severance costs from workforce reductions. The Company expects to incur
additional charges in the fourth quarter resulting from the write-down of
excess equipment, employee relocation costs, and other incremental cost of
transferring production from closing to continuing plants. Such additional
accruals are expected to be approximately $5,000.
As of September 30, 1996, approximately $700 has been paid in connection
with these actions. The actions are expected to be completed by the end of the
first quarter of 1997.
F-21
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY IN-
FORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY PLASTIC CONTAINERS, INC. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL, OR SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Available Information.................................................... 2
Summary.................................................................. 3
Risk Factors............................................................. 10
The Refinancing.......................................................... 12
Use of Proceeds.......................................................... 13
The Exchange Offer....................................................... 14
Capitalization........................................................... 20
Unaudited Pro Forma Data................................................. 21
Selected Historical and Pro Forma Financial Data......................... 25
Management's Discussion and Analysis of Financial Condition and Results
of Operations........................................................... 26
Business................................................................. 32
Management............................................................... 40
Management Compensation.................................................. 41
Ownership of PCI......................................................... 43
Description of the Revolving Credit Facility............................. 44
Description of Senior Secured Notes...................................... 45
Registration Rights...................................................... 70
Certain Tax Consequences................................................. 71
Plan of Distribution..................................................... 71
Legal Matters............................................................ 72
Experts.................................................................. 72
Index to Consolidated Financial Statements............................... F-1
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
$125,000,000
[LOGO]
PLASTIC CONTAINERS, INC.
10% SENIOR SECURED NOTES DUE 2006, SERIES B
-----------------------------
EXCHANGE OFFER
-----------------------------
, 1997
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection 145(a) of the General Corporation Law of the State of Delaware
(the "Law") provides, in general, that a Delaware corporation may indemnify
any person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation), by reason of the fact that he is or was a director
or officer of the corporation. Such indemnity may be against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with such
action, suit or proceeding, if such person acted in good faith and in a manner
he reasonably believed to be in or not opposed to the best interests of the
corporation; and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful.
Subsection 145(b) of the Law provides, in general, that a Delaware
corporation may indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or
in the right of the corporation to procure a judgment in its favor by reason
of the fact that he is or was a director or officer of the corporation. Such
indemnity may be against expenses (including attorneys' fees) actually and
reasonably incurred by him in connection with the defense or settlement of
such action or suit if he acted in good faith and in a manner he reasonably
believed to be in or not opposed to the best interests of the corporation.
However, no indemnification may be made in respect of any claim, issue or
matter as to which such person shall have been adjudged to be liable to the
corporation unless and only to the extent that the Delaware Court of Chancery
or the court in which such action or suit was brought shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
Any indemnification under subsections 145(a) and (b) (unless ordered by a
court) shall be made by the corporation only as authorized in the specific
case upon a determination that indemnification of the director, officer,
employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsections 145(a) and (b). Such
determination shall be made (1) by a majority vote of the directors who are
not parties to such action, suit or proceeding, even though less than a
quorum, or (2) if there are no such directors, or if such directors so direct,
by independent legal counsel in a written opinion, or (3) by the stockholders.
The indemnification provided by, or granted pursuant to, Section 145 of the
Law is not exclusive of any other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
Subsection 145(g) of the Law provides, in general, that a corporation shall
have power to purchase and maintain insurance on behalf of any person who is
or was a director or officer of the corporation against any liability asserted
against him and incurred by him in any such capacity, or arising out of his
status as such, whether or not the corporation would have the power to
indemnify him against such liability under the provisions of the Law.
Section 7 of the Amended and Restated Certificate of Incorporation of
Plastic Containers, Inc. ("PCI") and Article VIII of the Amended and Restated
By-Laws of each of PCI, Continental Plastic Containers, Inc. ("CPC") and
Continental Caribbean Containers, Inc. ("Caribbean") provide that each of them
will indemnify its directors and officers to the fullest extent permitted by
law, except in the case of willful misconduct.
Under insurance policies the premiums of which are paid by PCI, directors
and officers of PCI, CPC and Caribbean are insured against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act").
II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(A) EXHIBITS
The index to exhibits appears immediately following the signature pages of
this Registration Statement.
(B) FINANCIAL STATEMENT SCHEDULES
The report of KPMG Peat Marwick LLP on the following financial statement
schedule is included in its consent being filed as Exhibit 23.1 to this
Registration Statement.
SCHEDULE II
PLASTIC CONTAINERS, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(000'S OMITTED)
<TABLE>
<CAPTION>
BALANCE AT BALANCE
BEGINNING AT END
DESCRIPTION OF PERIOD ADDITIONS DEDUCTIONS OF PERIOD
----------- ---------- --------- ---------- ---------
<S> <C> <C> <C> <C>
December 31, 1993:
LIFO reserve..................... $ (112) (63)(2) -- (175)
====== ===== ===== =====
381(3)
Allowance for doubtful accounts
and accrued rebates............. $ 451 486 (5) 34(4) 522
====== ===== ===== =====
December 31, 1994:
LIFO reserve..................... $ (175) 4,099 (2) -- 3,924
====== ===== ===== =====
492(3)
Allowance for doubtful accounts
and accrued rebates............. $ 522 2,288 (5) 30(4) 2,288
====== ===== ===== =====
December 31, 1995: 704(1)
LIFO reserve..................... $3,924 -- 1,195(2) 2,025
====== ===== ===== =====
771(3)
Allowance for doubtful accounts
and accrued rebates............. $2,288 213 (5) 228(4) 1,502
====== ===== ===== =====
</TABLE>
- ---------------------
(1) Credited to cost of sales--reduction in inventory quantities.
(2) Charged/credited to costs--inventory repricing.
(3) Payments to customers.
(4) Specific write-off of receivable or recovery of previously doubtful
receivable.
(5) Charged to expense--accruals for customer rebates and doubtful
receivables.
(C) REPORT, OPINION OR APPRAISAL
None.
ITEM 22. UNDERTAKINGS.
(1) The undersigned Registrants hereby undertake:
(a) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) to include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement. (Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if
II-2
<PAGE>
the total dollar value of securities offered would not exceed that
which was registered) may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
change in volume represents no more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.); and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in this Registration Statement or
any material change to such information in this Registration Statement.
(b) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered herein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(2) Prior to any public reoffering of the securities registered hereunder
through use of a prospectus which is a part of this Registration Statement, by
any person or party who is deemed to be an underwriter within the meaning of
Rule 145(c), the Registrants undertake that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition
to the information called for by the other Items of the applicable form.
(3) The Registrants undertake that every prospectus (i) that is filed
pursuant to paragraph (2) immediately preceding, or (ii) that purports to meet
the requirements of section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to this Registration Statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered herein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(4) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrants pursuant to the provisions described in Item 20 above, or
otherwise, the Registrants have been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other
than the payment by the Registrants of expenses incurred or paid by a
director, officer or controlling person of the Registrants in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the
final adjudication of such issue.
(5) The undersigned Registrants hereby undertake to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Item 4, 10(b), 11 or 13 of Form S-4, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of this Registration Statement through
the date of responding to the request.
(6) The undersigned Registrants hereby undertake to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in this Registration Statement when it became effective.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Syosset, State of New
York, on the 17th day of January, 1997.
Plastic Containers, Inc.
/s/ Abdo Yazgi
By:__________________________________
ABDO YAZGI
VICE PRESIDENT, SECRETARY AND
TREASURER
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Abdo Yazgi, Jay
W. Hereford and Vincent Monte-Sano, and each of them singly, his true and
lawful attorneys-in-fact with full power to execute in the name of such
person, in the capacities stated below, and to file, such one or more
amendments to this Registration Statement as the Registrant deems appropriate,
and generally to do all such things in the name and on behalf of such person,
in the capacities stated below, to enable the Registrant to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission thereunder, and hereby ratifies and
confirms the signature of such person as it may be signed by said attorneys-
in-fact, or any one of them, to any and all amendments to this Registration
Statement.
----------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and the above power of attorney have been signed on
January 17, 1997, by the following persons in the capacities indicated.
SIGNATURES TITLE
/s/ Donald J. Bainton Chairman of the Board,
------------------------------------- President and Chief
DONALD J. BAINTON Executive Officer
(Principal Executive
Officer) and Director
/s/ Abdo Yazgi Vice President,
------------------------------------- Secretary and
ABDO YAZGI Treasurer (Principal
Financial and
Accounting Officer)
and Director
Director
-------------------------------------
JOSE LUIS ZAPATA
/s/ Charles F. DiGiovanna Director
-------------------------------------
CHARLES F. DIGIOVANNA
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Norwalk, State of
Connecticut, on the 17th day of January, 1997.
CONTINENTAL PLASTIC CONTAINERS, INC.
/s/ Abdo Yazgi
By: _________________________________
ABDO YAZGI VICE PRESIDENT AND
SECRETARY
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Abdo Yazgi, Jay
W. Hereford and Vincent Monte-Sano, and each of them singly, his true and
lawful attorneys-in-fact with full power to execute in the name of such
person, in the capacities stated below, and to file, such one or more
amendments to this Registration Statement as the Registrant deems appropriate,
and generally to do all such things in the name and on behalf of such person,
in the capacities stated below, to enable the Registrant to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission thereunder, and hereby ratifies and
confirms the signature of such person as it may be signed by said attorneys-
in-fact, or any one of them, to any and all amendments to this Registration
Statement.
----------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and the above power of attorney have been signed on
January 17, 1997, by the following persons in the capacities indicated.
SIGNATURES TITLE
/s/ Charles F. DiGiovanna President and Chief
------------------------------------- Executive Officer
CHARLES F. DIGIOVANNA (Principal Executive
Officer) and Director
/s/ Jay W. Hereford Vice President, Treasurer
------------------------------------- and Chief Financial Officer
JAY W. HEREFORD (Principal Financial and
Accounting Officer)
/s/ Donald J. Bainton Chairman of the Board and
------------------------------------- Director
DONALD J. BAINTON
/s/ Abdo Yazgi Director
-------------------------------------
ABDO YAZGI
Director
-------------------------------------
JOSE LUIS ZAPATA
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the Town of Norwalk, State of
Connecticut, on the 17th day of January, 1997.
CONTINENTAL CARIBBEAN CONTAINERS, INC.
/s/ Abdo Yazgi
By___________________________________
ABDO YAZGI VICE PRESIDENT AND
SECRETARY
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes Abdo Yazgi, Jay
W. Hereford and Vincent Monte-Sano, and each of them singly, his true and
lawful attorneys-in-fact with full power to execute in the name of such
person, in the capacities stated below, and to file, such one or more
amendments to this Registration Statement as the Registrant deems appropriate,
and generally to do all such things in the name and on behalf of such person,
in the capacities stated below, to enable the Registrant to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission thereunder, and hereby ratifies and
confirms the signature of such person as it may be signed by said attorneys-
in-fact, or any one of them, to any and all amendments to this Registration
Statement.
----------------
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement and the above power of attorney have been signed on
January 17, 1997, by the following persons in the capacities indicated.
SIGNATURES TITLE
/s/ Charles F. DiGiovanna President and Chief
- ------------------------------------- Executive Officer
CHARLES F. DIGIOVANNA (Principal Executive
Officer) and Director
/s/ Jay W. Hereford Vice President,
- ------------------------------------- Treasurer and Chief
JAY W. HEREFORD Financial Officer
(Principal Financial
and Accounting Officer)
/s/ Donald J. Bainton Chairman of the Board
- ------------------------------------- and Director
DONALD J. BAINTON
/s/ Abdo Yazgi Director
- -------------------------------------
ABDO YAZGI
Director
- -------------------------------------
JOSE LUIS ZAPATA
II-6
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
3.1(a) --Amended and Restated Certificate of Incorporation of PCI, filed
as Exhibit 3.1 to the Registrant's Registration Statement on Form
S-1, Registration No. 33-45879 (the "S-1 Registration Statement"),
and incorporated herein by reference.
3.1(b) --Certificate of Incorporation of CPC, filed as Exhibit 3.3 to the
S-1 Registration Statement and incorporated herein by reference.
3.1(c) --Certificate of Incorporation of Caribbean, filed as Exhibit 3.5
to the S-1 Registration Statement and incorporated herein by
reference.
3.2(a) --Amended and Restated By-Laws of PCI, filed as Exhibit 3.2 to the
S-1 Registration Statement and incorporated herein by reference.
3.2(b) --Amended and Restated By-Laws of CPC, filed as Exhibit 3.4 to the
S-1 Registration Statement and incorporated herein by reference.
3.2(c) --Amended and Restated By-Laws of Caribbean, filed as Exhibit 3.6
to the S-1 Registration Statement and incorporated herein by
reference.
4.1 --Indenture dated as of December 17, 1996, among PCI, as Issuer,
CPC and Caribbean, as Guarantors, and United States Trust Company
of New York, as Trustee, providing for 10%
Senior Secured Notes due 2006, Series A and Series B (including
the definitive forms of the Notes).
4.2 --Registration Rights Agreement dated as of December 17, 1996, by
and among PCI, CPC and Caribbean, and Donaldson, Lufkin & Jenrette
Securities Corporation, Lehman Brothers Inc. and Societe Generale
Securities Corporation.
--Note: The Registrants hereby agree to provide the Commission,
upon request, copies of such instruments defining the rights of
holders of long-term debt of the Registrants and their
subsidiaries as are specified in Item 601(b)(4)(iii)(A) of
Regulation S-K.
5 --Opinion of Carter, Ledyard & Milburn with respect to the
securities being registered hereunder.
8 --Opinion of Carter, Ledyard & Milburn with respect to the
description of certain Federal income tax matters in the
Prospectus included herein.
10.1 --Amended and Restated Financing Agreement dated December 17, 1996,
between The CIT Group/Business Credit, Inc. (as Lender) and PCI
(as Borrower).
10.2 --Master Lease Agreement, dated as of May 20, 1994, between General
Electric Capital Corporation and CPC.
10.3 --Schedules A-1 through A-6, each dated December 17, 1986, to the
Master Lease Agreement (Exhibit 10.2).
10.4 --Corporate Guaranty dated May 20, 1994, from PCI to General
Electric Capital Corporation, and Amendments Nos. 1 and 2 thereto,
both made as of December 17, 1996.
10.5 --Stock Purchase Agreement dated September 10, 1992, among
Continental Can Company, Inc., PCI, Merrywood, Inc. and Plaza
Limited.
12 --Statement regarding computation of ratios of earnings to fixed
charges.
21 --Subsidiaries of the Registrants.
23.1 --Consent of KPMG Peat Marwick LLP.
23.2 --Consent of Carter, Ledyard & Milburn (included in Exhibits 5 and
8).
24 --Powers of Attorney (included in the signature pages of this
Registration Statement).
25 --Form T-1 Statement of Eligibility of United States Trust Company
of New York under the Trust Indenture Act of 1939.
</TABLE>
1
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
99.1 --Form of Letter of Transmittal.
99.2 --Form of Letter to Securities Brokers and Dealers, Commercial
Banks, Trust Companies and Other Nominees.
99.3 --Form of Letter to Clients.
</TABLE>
2
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
PLASTIC CONTAINERS, INC.,
as Issuer,
CONTINENTAL PLASTIC CONTAINERS, INC.
and
CONTINENTAL CARIBBEAN CONTAINERS, INC.,
as Guarantors,
and
UNITED STATES TRUST COMPANY OF NEW YORK,
as Trustee
_______________________
INDENTURE
Dated as of December 17, 1996
_______________________
$125,000,000
10% Senior Secured Notes due 2006, Series A
and
10% Senior Secured Notes due 2006, Series B
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE
TIA Section Indenture Section
- ----------- -----------------
310(a)(1).............................................7.10
(a)(2).............................................7.10
(a)(3).............................................7.12
(a)(4).............................................N.A.
(b)................................................7.8; 7.10; 13.2
(c)................................................N.A.
311(a)................................................7.11
(b)................................................7.11
(c)................................................N.A.
312(a)................................................2.5
(b)................................................13.3
(c)................................................13.3
313(a)................................................7.6
(b)(1).............................................7.6
(b)(2).............................................7.6
(c)................................................7.6; 13.2
(d)................................................7.6
314(a)................................................4.8; 13.2
(b)................................................11.2
(c)(1).............................................13.4
(c)(2).............................................13.4
(c)(3).............................................N.A.
(d)................................................11.4(c); 11.6
(e)................................................13.5
(f)................................................N.A.
315(a)................................................7.1(b)
(b)................................................7.5; 13.2
(c)................................................7.1(a)
(d)................................................7.1(c)
(e)................................................6.11
316(a) (last sentence)................................2.9
(a)(1)(A)..........................................6.5
(a)(1)(B)..........................................6.4
(a)(2).............................................N.A.
(b)................................................6.7
317(a)(1).............................................6.8
(a)(2).............................................6.9
(b)................................................2.3; 2.4
318(a)................................................13.1
____________________
N.A. means Not Applicable.
NOTE: This Cross-Reference Table shall not, for any purpose, be deemed to be
a part of this Indenture.
<PAGE>
TABLE OF CONTENTS
-----------------
Section Page
- ------- ----
ARTICLE I
DEFINITIONS AND
INCORPORATION BY REFERENCE
1.1 Definitions...................................................1
1.2 Incorporation by Reference of Trust
Indenture Act...............................................20
1.3 Rules of Construction.........................................20
ARTICLE II
THE SECURITIES
2.1 Form and Dating...............................................21
2.2 Execution and Authentication..................................25
2.3 Registrar and Paying Agent....................................26
2.4 Paying Agent To Hold Assets in Trust..........................26
2.5 Securityholder Lists..........................................27
2.6 Transfer and Exchange.........................................27
2.7 Replacement Securities........................................28
2.8 Outstanding Securities........................................28
2.9 Treasury Securities...........................................29
2.10 Temporary Securities..........................................29
2.11 Cancellation..................................................29
2.12 Defaulted Interest............................................30
2.13 CUSIP Number..................................................30
2.14 Deposit of Moneys.............................................30
2.15 Book-Entry Provisions for Global Security.....................30
2.16 Special Transfer Provisions...................................33
ARTICLE III
REDEMPTION
3.1 Notices to Trustee............................................39
3.2 Selection of Securities To Be
Redeemed....................................................39
3.3 Notice of Redemption..........................................40
3.4 Effect of Notice of Redemption................................41
3.5 Deposit of Redemption Price...................................41
3.6 Securities Redeemed in Part...................................41
ARTICLE IV
COVENANTS
-i-
<PAGE>
Section Page
- ------- ----
4.1 Payment of Securities.........................................42
4.2 Maintenance of Office or Agency...............................42
4.3 Corporate Existence...........................................43
4.4 Payment of Taxes and Other Claims.............................43
4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law......................43
4.6 Guarantees....................................................44
4.7 Compliance Certificates.......................................44
4.8 Reports.......................................................45
4.9 Further Assurance to the Trustee..............................46
4.10 Limitation on Additional Company
Indebtedness................................................46
4.11 Limitation on Additional Subsidiary
Indebtedness................................................47
4.12 Limitation on Sale-Leaseback Transactions.....................48
4.13 Limitation on Liens...........................................49
4.14 Limitation on Restricted Payments.............................50
4.15 Disposition of Proceeds of Asset
Sales.......................................................52
4.16 Limitation on Transactions with Affiliates....................56
4.17 Change of Control.............................................57
4.18 Limitation on Dividends and Other Payment
Restrictions Affecting Subsidiaries.........................60
4.19 Limitation on Issuance of Preferred Stock by
Subsidiaries................................................60
4.20 Impairment of Security Interest...............................61
4.21 Conflicting Agreements........................................61
4.22 Amendment to Security Documents...............................61
4.23 Special Covenants of Each Guarantor...........................61
4.24 Real Property.................................................62
4.25 Waiver of Stay, Extension or Usury Laws.......................62
4.26 Limitation on Investments, Loans and
Advances....................................................62
4.27 Ownership of Stock of Wholly-Owned
Subsidiaries................................................63
ARTICLE V
SUCCESSOR CORPORATION
5.1 When Company May Merge, Etc...................................63
5.2 Successor Entity Substituted..................................66
ARTICLE VI
DEFAULT AND REMEDIES
6.1 Events of Default.............................................66
6.2 Acceleration..................................................68
-ii-
<PAGE>
Section Page
- ------- ----
6.3 Other Remedies................................................69
6.4 Waiver of Past Default........................................69
6.5 Control by Majority...........................................70
6.6 Limitation on Suits...........................................70
6.7 Rights of Holders To Receive Payment..........................71
6.8 Collection Suit by Trustee....................................71
6.9 Trustee May File Proofs of Claim..............................71
6.10 Priorities....................................................72
6.11 Undertaking for Costs.........................................72
ARTICLE VII
TRUSTEE
7.1 Duties of Trustee.............................................73
7.2 Rights of Trustee.............................................76
7.3 Individual Rights of Trustee..................................77
7.4 Trustee's Disclaimer..........................................77
7.5 Notice of Defaults............................................78
7.6 Reports by Trustee to Holders.................................78
7.7 Compensation and Indemnity....................................78
7.8 Replacement of Trustee........................................79
7.9 Successor Trustee by Merger, Etc..............................81
7.10 Eligibility; Disqualification.................................81
7.11 Preferential Collection of Claims Against
Company.....................................................81
7.12 Co-Trustee....................................................81
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
8.1 Termination of Company's Obligations..........................83
8.2 Legal Defeasance and Covenant Defeasance......................84
8.3 Application of Trust Money....................................89
8.4 Repayment to Company or Guarantors............................89
8.5 Reinstatement.................................................89
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
9.1 Without Consent of Holders....................................90
9.2 With Consent of Holders.......................................91
9.3 Compliance with Trust Indenture Act...........................92
9.4 Revocation and Effect of Consents.............................92
9.5 Notation on or Exchange of Securities.........................94
9.6 Trustee To Sign Amendments, Etc...............................94
-iii-
<PAGE>
Section Page
- ------- ----
ARTICLE X
GUARANTEE ARRANGEMENTS
10.1 Guarantee.....................................................94
10.2 Execution and Delivery of Guarantee...........................96
10.3 Additional Guarantors.........................................96
ARTICLE XI
SECURITY DOCUMENTS
11.1 Collateral and Security Documents.............................97
11.2 Recording, Etc................................................97
11.3 Disposition of Collateral Without Release.....................99
11.4 Release of Collateral.........................................102
11.5 Substitute Collateral.........................................108
11.6 Eminent Domain and Other Governmental
Takings.....................................................109
11.7 Trust Indenture Act Requirements..............................111
11.8 Suits To Protect the Collateral...............................112
11.9 Purchaser Protected...........................................113
11.10 Powers Exercisable by Receiver or Trustee.....................113
11.11 Disposition of Obligations Received...........................113
11.12 Determinations Relating to Collateral.........................114
11.13 Renewal and Refunding.........................................114
11.14 Release upon Termination of the Company's
and the Guarantor's Obligations.............................114
11.15 Trustee's Duties in Respect of Collateral.....................115
ARTICLE XII
APPLICATION OF TRUST MONEYS
12.1 "Trust Moneys" Defined........................................115
12.2 Retirement of Securities......................................116
12.3 Withdrawals of Insurance Proceeds and
Condemnation Awards.........................................119
12.4 Withdrawal of Trust Moneys for Reinvestment...................123
12.5 Powers Exercisable Notwithstanding Event
of Default..................................................127
12.6 Powers Exercisable by Trustee or Receiver.....................127
12.7 Disposition of Securities Retired.............................127
12.8 Investment of Trust Moneys....................................128
ARTICLE XIII
MISCELLANEOUS
-iv-
<PAGE>
Section Page
- ------- ----
13.1 Trust Indenture Act Controls..................................128
13.2 Notices.......................................................128
13.3 Communications by Holders with Other
Holders.....................................................129
13.4 Certificate and Opinion of Counsel as to
Conditions Precedent........................................130
13.5 Statements Required in Certificate and
Opinion of Counsel..........................................130
13.6 Rules by Trustee, Paying Agent, Registrar.....................130
13.7 Legal Holidays................................................131
13.8 Governing Law.................................................131
13.9 No Recourse Against Others....................................131
13.10 Successors....................................................131
13.11 Duplicate Originals...........................................131
13.12 Separability..................................................131
13.13 Table of Contents, Headings, Etc..............................132
SIGNATURES............................................................132
EXHIBIT A - Form of Initial Security
EXHIBIT B - Form of Exchange Security
EXHIBIT C - Form of certification to be given by the holders of beneficial
interest in a temporary Regulation S global security to Euroclear
or Cedel
EXHIBIT D - Form of certification to be given by Euroclear operator or Cedel
EXHIBIT E - Form of certification to be given by transferee of beneficial
interest in a temporary Regulation S global security
EXHIBIT F - Form of certification for transfer or exchange of restricted
global security to temporary Regulation S global security
EXHIBIT G - Form of certification for transfer or exchange of restricted
global security to permanent Regulation S global security
EXHIBIT H - Form of certification for transfer or exchange of temporary
Regulation S global security or permanent Regulation S global
security to restricted global security
EXHIBIT I - Form of certification for transfer or exchange of non-global
restricted security to restricted global security
EXHIBIT J - Form of certification for transfer or exchange of non-global
restricted security to permanent Regulation S global security or
temporary Regulation S global security
EXHIBIT K-1 - Form of certification for transfer or exchange of non-global
permanent Regulation S security to restricted global security
-v-
<PAGE>
EXHIBIT K-2 - Form of certification for transfer or exchange of non-global
permanent Regulation S security to permanent Regulation S global
security
EXHIBIT L - Form of Transferee Letter of Representation
EXHIBIT M - Form of Legend for Book-Entry Securities
EXHIBIT N - Form of Mortgage
EXHIBIT O - Form of Pledge and Security Agreement
EXHIBIT P - Form of Stock Pledge Agreement
EXHIBIT Q - Form of Notice of Security Interest
EXHIBIT R - Mortgage Note Pledge Agreement
EXHIBIT S - Deed of Constitution of Mortgage
EXHIBIT T - Mortgage Note
EXHIBIT U - Personal Property Mortgage Note Pledge Agreement
EXHIBIT V - Personal Property Mortgage and Affidavit
EXHIBIT W - Personal Property Mortgage Note (included in Exhibit V)
EXHIBIT X - Previously Leased/Financed Equipment
Schedule A - List of Mortgaged Real Properties
-vi-
<PAGE>
INDENTURE dated as of December 17, 1996, among PLASTIC CONTAINERS,
INC., a Delaware corporation, as Issuer (the "Company"), CONTINENTAL PLASTIC
CONTAINERS, INC. a Delaware corporation, as Guarantor ("CPC" or a "Guarantor"),
CONTINENTAL CARIBBEAN CONTAINERS, INC., a Delaware corporation, as Guarantor
("Caribbean" or a "Guarantor"), and UNITED STATES TRUST COMPANY OF NEW YORK, a
New York corporation, as Trustee (the "Trustee").
The Company and the Guarantors have duly authorized the execution and
delivery of this Indenture to provide for the issuance of the 10% Senior Secured
Notes due 2006, Series A, of the Company (the "Initial Securities") and the 10%
Senior Secured Notes due 2006, Series B, of the Company (the "Exchange
Securities" and, together with the Initial Securities, the "Securities") to be
issued as provided for in this Indenture and the related Guarantees (as
hereinafter defined) of CPC and Caribbean.
The parties hereto agree as follows for the benefit of each other and
for the equal and ratable benefit of the Holders of the Securities, without
distinction as to Series:
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
------------------------------------------
SECTION 1.1 Definitions.
-----------
"1996 Sale/Leaseback" means the Sale/Leaseback having substantially
the same terms described in the Offering Memorandum under "The Refinancing--The
Sale/Leaseback" between General Electric Capital Corporation and certain other
financial institutions as lessors, CPC as lessee and the Company as guarantor,
as the same may be amended or restated and any Sale/Leaseback Transaction used
to refinance or replace the 1996 Sale/Leaseback in an amount not to exceed the
purchase price at the time of the termination thereof.
"Account" has the meaning assigned to that term in the Revolving
Credit Facility as in effect on the Issue Date.
"Acquired Indebtedness" means Indebtedness of a Person existing at the
time such Person becomes a Subsidiary of the Company or assumed in connection
with an Asset Acquisition by such Person, including, without limitation,
Indebtedness incurred in connection with, or in anticipation of, such Person
becoming a Subsidiary of the Company or such acquisition.
<PAGE>
-2-
"Affiliate" of any specified Person means any other Person which,
directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such specified Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Affiliate Transaction" has the meaning provided in Section 4.16.
"Agent" means any Registrar, Paying Agent or co-registrar.
"Agent Members" has the meaning provided in Section 2.15.
"Appraiser" means a Person who, in the course of its business,
appraises property and, where Real Property is involved, who is a member in good
standing of the American Institute of Real Estate Appraisers, recognized and
licensed to do business in the jurisdiction where the applicable Real Property
is situated, and who may be employed by the Company or a Guarantor.
"Asset Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise), or purchase or
acquisition of Capital Stock, by the Company or any of its Subsidiaries in any
other Person, in either case, pursuant to which such Person shall become a
Subsidiary of the Company or any of its Subsidiaries or shall be merged with or
into the Company or any of its Subsidiaries or (ii) any acquisition by the
Company or any of its Subsidiaries of the assets of any Person which constitute
substantially all of an operating unit or business of such Person.
"Asset Sale" means any direct or indirect sale, conveyance, transfer,
lease or other disposition to any Person other than the Company or a Subsidiary
of the Company, in one transaction or a series of related transactions, of (i)
any Capital Stock of any Subsidiary of the Company or (ii) any other property or
asset of the Company or any Subsidiary of the Company, in each case, other than
Inventory in the ordinary course of business and other than such isolated
transactions which do not exceed $250,000 individually. For the purposes of
this definition, the term "Asset Sale" shall not include sales of (i)
receivables not a part of a
<PAGE>
-3-
sale of the business from which they arose or any disposition of properties and
assets of the Company or any Subsidiary that is governed under and complies with
Section 5.1 hereof or (ii) the assets securing the Previously Leased/Financed
Equipment so long as such assets do not constitute Collateral.
"Asset Sale Offer" has the meaning provided in Section
4.15(a)(ii).
"Asset Sale Payment Date" means, with respect to any Available Amount
from an Asset Sale, the earliest of (x) the 270th day following receipt of such
Available Amount if no written commitments to apply such Available Amount to a
use other than an Asset Sale Offer have been made or (y) the 360th day following
receipt of such Available Amount or (z) such earlier date on which an Asset Sale
Offer shall expire.
"Available Amount" has the meaning provided in Section 4.15(a)(ii).
"Bankruptcy Law" means Title 11 of the U.S. Code or any similar
federal or state law for the relief of debtors.
"Board of Directors" means the Board of Directors of the Company or a
Guarantor, as appropriate, or any committee of such Board of Directors
authorized to act for it hereunder.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company or a Guarantor, as
appropriate, to have been duly adopted by the Board of Directors of the Company,
or a Guarantor, as appropriate, and to be in full force and effect on the date
of such certification, and delivered to the Trustee.
"Business Day" means any day except a Saturday, a Sunday or any day on
which banking institutions in New York, New York are required or authorized by
law or other governmental action to be closed.
"Capital Stock" means, with respect to any Person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting or non-voting) of, such Person's capital stock, whether
outstanding on the date on which the Securities are originally issued or issued
after such date, and any and all rights, warrants or options exchangeable for or
convertible into such capital stock.
<PAGE>
-4-
"Capitalized Lease Obligation" means any obligation to pay rent or
other amounts under a lease of (or other agreement conveying the right to use)
any property (whether real, personal or mixed) that is required to be classified
and accounted for as a capital lease obligation under GAAP, and, for the
purposes of this Indenture, the amount of such obligation at any date shall be
the capitalized amount thereof at such date, determined in accordance with GAAP.
"Cash Equivalents" means, at any time (i) any evidence of Indebtedness
with a maturity of 180 days or less issued or directly and fully guaranteed or
insured by the United States of America or any agency or instrumentality thereof
(provided that the full faith and credit of the United States of America is
pledged in support thereof); (ii) certificates of deposit or acceptances with a
maturity of 180 days or less of any financial institution that is a member of
the Federal Reserve System having combined capital and surplus and undivided
profits of not less than $500,000,000; (iii) commercial paper with a maturity of
180 days or less issued by a corporation (except an Affiliate of the Company)
organized under the laws of any state of the United States or the District of
Columbia and having the highest rating obtainable from Standard & Poor's Ratings
Service, a division of The McGraw-Hill Companies, Inc., or Moody's Investors
Service, Inc.; and (iv) repurchase obligations for a term of not more than seven
days for underlying securities of the types described in clause (i) above
entered into with any bank meeting the qualifications specified in clause (ii)
above.
"CEDEL" means Cedel Bank, Societe Anonyme (or any successor securities
clearing agency).
"Change of Control" means (i) the direct or indirect sale, lease,
exchange or other transfer of all or substantially all of the assets of the
Company to any Person or entity or group of Persons or entities acting in
concert as a partnership or other group (a "Group of Persons") other than an
Affiliate of the Company, (ii) the merger or consolidation of the Company with
or into another corporation with the effect that the then existing shareholders
of the Company hold less than 50% of the combined voting power of the then
outstanding securities of the surviving corporation of such merger or the
corporation resulting from such consolidation ordinarily (and apart from rights
arising under special circumstances) having the right to vote in the election of
directors, (iii) the replacement of a majority of the Board of Directors of the
Company, over a two-year period, from the directors who constituted the Board of
Directors at the beginning
<PAGE>
-5-
of such period, and such replacement shall not have been approved by the Board
of Directors of the Company as constituted at the beginning of such period or
(iv) a Person or Group of Persons (other than Continental Can or any of its
Affiliates) shall, as a result of a tender or exchange offer, open market
purchases, privately negotiated purchases or otherwise, have become the
beneficial owner (within the meaning of Rule 13d-3 under the Exchange Act) of
securities of the Company or Continental Can representing 50% or more of the
combined voting power of the then outstanding securities of the Company or
Continental Can ordinarily (and apart from rights arising under special
circumstances) having the right to vote in the election of directors.
"Change of Control Date" has the meaning provided in Section 4.17.
"Change of Control Offer" has the meaning provided in Section 4.17.
"Change of Control Payment Date" has the meaning provided in Section
4.17.
"Collateral" means, collectively, all of the property and assets
(including, without limitation, Trust Moneys) that are from time to time subject
to the Security Documents.
"Common Stock" means, with respect to any Person, any and all shares,
interests or other participations in, and other equivalents (however designated
and whether voting or nonvoting) of, such Person's common stock, whether
outstanding on the date on which the Securities are originally issued or issued
after such date, and includes, without limitation, all series and classes of
such common stock.
"Company" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and,
thereafter, means the successor.
"Consolidated Cash Flow" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period increased (to
the extent deducted in determining Consolidated Net Income) by the sum of: (i)
all income taxes of such Person paid or accrued in accordance with GAAP for such
period (other than income taxes attributable to extraordinary, unusual or non-
recurring gains or losses); (ii) all interest expense of such Person paid or
accrued in accordance with GAAP (net of any interest income) for such period
(including amortization of original issue
<PAGE>
-6-
discount and the interest portion of deferred payment obligations); (iii)
depreciation; (iv) amortization, including, without limitation, amortization of
capitalized debt issuance costs; and (v) any other non-cash charges to the
extent deducted from Consolidated Net Income (including the non-cash portion of
any rental expense and non-cash expenses recognized in accordance with Financial
Accounting Standards Bulletin Number 106) except for non-cash charges which
require an accrual of or a reserve for any future period, and decreased by the
amount of any non-cash items increasing Consolidated Net Income for such period.
"Consolidated Financial Statements" means the consolidated financial
statements of the Company as contained in the Offering Memorandum.
"Consolidated Interest Coverage Ratio" means, with respect to any
Person, the ratio of (i) Consolidated Cash Flow of such Person for the four full
fiscal quarters for which financial statements are available that immediately
precede the date of the transaction or other circumstances giving rise to the
need to calculate the Consolidated Interest Coverage Ratio (the "Transaction
Date") to (ii) all cash and non-cash interest expense (including capitalized
interest) of such Person and its Subsidiaries determined in accordance with GAAP
(net of any interest income to the extent received in cash by such Person and
its Subsidiaries and exclusive of deferred financing fees of such Person and its
Subsidiaries) and the product of (x) the amount of all dividends declared, paid,
or accrued on Capital Stock (other than Common Stock) of such Person during such
period times (y) a fraction, the numerator of which is one and the denominator
of which is one minus the then current effective consolidated Federal, state,
local and foreign tax rate (expressed as a decimal number between 1 and 0) of
such Person during such period (as reflected in the audited consolidated
financial statements of such person for the most recently completed fiscal
year). For purposes of this definition, if the Transaction Date occurs prior to
the date on which the Company's consolidated financial statements for the four
full fiscal quarters subsequent to the date on which the Securities are
originally issued are first available, "Consolidated Cash Flow" and the items
referred to in the preceding clause (ii) shall be calculated, in the case of the
Company, after giving effect on a pro forma basis as if the Securities
outstanding on the Transaction Date were issued on the first day of such four
full fiscal quarter period. In addition to and without limitation of the
foregoing, for purposes of this definition, "Consolidated Cash Flow" and the
items referred to in the preceding clause (ii) shall be calculated after giving
effect on a pro forma basis for the period of such
<PAGE>
-7-
calculation to (i) the incurrence of any Indebtedness of such Person or any of
its Subsidiaries at any time during the period (the "Reference Period") (A)
commencing on the first day of the four full fiscal quarter period for which
financial statements are available that precedes the Transaction Date and (B)
ending on and including the Transaction Date, including, without limitation, the
incurrence of the Indebtedness giving rise to the need to make such calculation,
as if such incurrence occurred on the first day of the Reference Period;
provided that if such Person or any of its Subsidiaries directly or indirectly
- --------
guarantees Indebtedness of a third Person, the above clause shall give effect to
the incurrence of such guaranteed Indebtedness as if such Person or Subsidiary
had directly incurred such guaranteed Indebtedness and (ii) any Asset Sales or
Asset Acquisitions (including, without limitation, any Asset Acquisition giving
rise to the need to make such calculation as a result of the Company or any of
its Subsidiaries (including any Person who becomes a Subsidiary as a result of
the Asset Acquisition) incurring Acquired Indebtedness) occurring during the
Reference Period and any retirement of Indebtedness in connection with such
Asset Acquisitions, as if such Asset Sale or Asset Acquisition and/or retirement
occurred on the first day of the Reference Period. Furthermore, in calculating
the denominator (but not the numerator) of this "Consolidated Interest Coverage
Ratio," (1) subject to clause (3) below, interest on Indebtedness determined on
a fluctuating basis as of the Transaction Date and which will continue to be so
determined thereafter shall be deemed to accrue at a fixed rate per annum equal
--- -----
to the rate of interest on such Indebtedness in effect on the Transaction Date;
(2) if interest on any Indebtedness actually incurred on the Transaction Date
may optionally be determined at an interest rate based upon a factor of a prime
or similar rate, a eurocurrency interbank offered rate, or other rates, then the
interest rate based upon a factor of a prime or similar rate shall be deemed to
have been in effect; and (3) notwithstanding clause (1) above, interest on
Indebtedness determined on a fluctuating basis, to the extent such interest is
covered by agreements relating to Interest Rate Protection Obligations, shall be
deemed to accrue at the rate per annum resulting after giving effect to the
--- -----
operation of such agreements.
"Consolidated Net Income" means, with respect to any Person, for any
period, the aggregate of the Net Income of such Person and its Subsidiaries for
such period, on a consolidated basis, determined in accordance with GAAP (which,
in the case of the Company, shall include any cash interest payment received by
the Company in respect of the Continental Can Note); provided, however, that (i)
-------- -------
the Net Income of any Person (the "Other Person") in which the Person in
question or any of its Subsidiaries has a
<PAGE>
-8-
joint interest with a third party (which interest does not cause the income of
such other Person to be consolidated into the net income of the Person in
question in accordance with GAAP) shall be included only to the extent of the
amount of dividends or distributions paid, in cash, to the Person in question or
the Subsidiary, (ii) the Net Income of any Subsidiary of the Person in question
that is subject to any restriction or limitation on the payment of dividends or
the making of other distributions shall be excluded to the extent of such
restriction or limitation, (iii) the Net Income (or loss) of any Person acquired
in a pooling of interests transaction for any period prior to the date of the
acquisition of such Person shall be excluded, and (iv) any net gain or loss
resulting from an Asset Sale by the Person in question or any of its
Subsidiaries other than in the ordinary course of business shall be excluded.
"Consolidated Net Worth" means, with respect to any Person at any date
of determination, the consolidated equity of the common stockholders of such
Person and its Subsidiaries at such date, as determined on a consolidated basis
in accordance with GAAP.
"Continental Can" means Continental Can Company, Inc., a Delaware
corporation.
"Continental Can Note" means the note having substantially the terms
set forth in the Offering Memorandum under the section "The Refinancing--The
Continental Can Loan", evidencing Indebtedness of Continental Can to the
Company.
"Custodian" has the meaning provided in Section 6.1(b).
"Default" means any event that is, or after notice or passage of
time or both would be, an Event of Default.
"Depository" means The Depository Trust Company, its nominees and
successors.
"Disqualified Stock" means, with respect to any Person, any Capital
Stock which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is exchangeable for Indebtedness, or is redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
Maturity Date of the Securities.
<PAGE>
-9-
"Equipment" shall have the meaning assigned to such term in the Pledge
and Security Agreement.
"Euroclear" means the Euroclear Clearance System (or any successor
securities clearing agency).
"Event of Default" has the meaning provided in Section 6.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchange Offer" means the registration by the Company under the
Securities Act pursuant to a registration statement of the offer by the Company
to each Holder of the Initial Securities to exchange all the Initial Securities
held by such Holder for the Exchange Securities in an aggregate principal amount
equal to the aggregate principal amount of the Initial Securities held by such
Holder, all in accordance with the terms and conditions of the Registration
Rights Agreement.
"Exchange Securities" has the meaning provided in the preamble to this
Indenture.
"Fair Market Value" or "fair value" means, with respect to any asset
or property, the price which could be negotiated in an arms' length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under undue pressure or compulsion to complete the transaction. Fair
Market Value shall be determined by the Board of Directors acting in good faith
and shall be evidenced by a Board Resolution delivered to the Trustee except (i)
any determination of Fair Market Value made with respect to any parcel of Real
Property shall be made by an Appraiser and (ii) any determination of Fair Market
Value of any asset or assets which would reasonably be expected to have a Fair
Market Value of $5 million or more made with respect to Section 4.16, shall be
made by an Independent Financial Advisor or Independent Appraiser.
"Financial Advisor" means an investment banking firm of national
reputation which (except as otherwise expressly provided in this Indenture) may
be employed by the Company.
"GAAP" means 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
<PAGE>
-10-
other entity as may be approved by a significant segment of the accounting
profession of the United States, which are applicable as of the date of this
Indenture.
"Global Security" means, as the context may require, any or all of the
Temporary Regulation S Global Security, the Permanent Regulation S Global
Security and the Restricted Global Security.
"Guarantee" means the guarantee of each Guarantor set forth in
Article X.
"Guarantor" means each of CPC and Caribbean and their respective
successors.
"Holder" or "Securityholder" means each Person in whose name a
Security is registered on the Registrar's books.
"incur" means, with respect to any Indebtedness, to directly or
indirectly, create, incur, assume, issue, guarantee or otherwise become liable
for or with respect to such Indebtedness, and the terms "incurred," "incurrence"
and "incurring" have meanings correlative to the foregoing.
"Indebtedness" means, with respect to any Person, without duplication,
(i) any liability, contingent or otherwise, of such Person (A) for borrowed
money (whether or not the recourse of the lender is to the whole of the assets
of such Person or only to a portion thereof), (B) evidenced by a note, debenture
or similar instrument or letters of credit (including a purchase money
obligation) or (C) for the payment of money relating to a Capitalized Lease
Obligation or other obligation relating to the deferred purchase price of
property; (ii) any liability of others of the kind described in the preceding
clause (i) which the Person has guaranteed or which is otherwise its legal
liability; (iii) any obligation secured by a Lien to which the property or
assets of such Person are subject, whether or not the obligations secured
thereby shall have been assumed by or shall otherwise be such Person's legal
liability; and (iv) any and all deferrals, renewals, extensions and refundings
of, or amendments, modifications or supplements to, any liability of the kind
described in any of the preceding clauses (i), (ii) or (iii).
"Indenture" means this Indenture as amended or supplemented from time
to time pursuant to the terms hereof.
"Independent" when used with respect to any specified Person means
such a Person who (a) is in fact independent, (b) does
<PAGE>
-11-
not have any direct financial interest or any material indirect financial
interest in the Company, or in any Guarantor or in any Affiliate of the Company
or any Guarantor, and (c) is not an officer, employee, promoter, underwriter,
trustee, partner or director or Person performing similar functions to any of
the foregoing for the Company or any Guarantor. Whenever it is provided in this
Indenture that any Independent Person's opinion or certificate shall be
furnished to the Trustee, such Person shall be appointed by the Company and
approved by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read this definition and that the
signer is Independent within the meaning thereof.
"Initial Purchasers" means Donaldson, Lufkin & Jenrette Securities
Corporation, Lehman Brothers, Inc. and Societe Generale Securities Corporation.
"Initial Securities" has the meaning provided in the preamble to this
Indenture.
"Institutional Accredited Investor" means an institution that is an
"accredited investor" as the term is defined in Rule 501(a)(1), (2), (3) or (7)
under the Securities Act.
"interest," when used with respect to any Security, means the amount
of all interest accruing on such Security, including all interest accruing
subsequent to the occurrence of any events specified in Sections 6.1(a)(viii)
and (ix) or which would have accrued but for any such event.
"Interest Payment Date," when used with respect to any Security, means
the stated maturity of an installment of interest specified in such Security.
"Interest Rate," when used with respect to any Security, means the
rate per annum specified in such Security as the rate of interest accruing on
--- -----
the principal amount of such Security.
"Interest Rate Protection Obligations" means the obligations of any
Person pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such Person
calculated by applying a fixed or a floating rate of interest on the same
notional amount and shall include, without
<PAGE>
-12-
limitation, interest rate swaps, caps, floors, collars and similar agreements.
"Inventory" has the meaning assigned to that term in the Revolving
Credit Facility as in effect on the date of issuance of the Securities.
"Investments" has the meaning provided in Section 4.26.
"Issue Date" means the date the Securities are initially issued.
"Legal Holiday" means any day other than a Business Day.
"Lien" means any mortgage, lien (statutory or other), pledge, security
interest, encumbrance, claim, hypothecation, assignment for security, deposit
arrangement or preference or other security agreement of any kind or nature
whatsoever. For purposes of this Indenture, a Person shall be deemed to own
subject to a Lien any property which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such Person.
"Liquidated Damages" means all liquidated damages owing pursuant to
the Registration Rights Agreement.
"Maturity Date," when used with respect to any Security, means the
date specified in such Security as the fixed date on which the principal of such
Security is due and payable.
"Merrywood Agreement" means the Stock Purchase Agreement dated as of
October 22, 1996 by and among the Company, Continental Can, Merrywood, Inc. and
Plaza Limited.
"Mortgage" means (i) in the case of CPC, a mortgage instrument (or
deed of trust) and assignment of leases and rents, substantially in the form of
Exhibit N hereto (including such changes to such form as may be necessary or
desirable to conform such form to local laws or customs applicable to property
in the jurisdiction where such instrument is to be recorded), as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
the terms thereof, hereof and of any other Security Document and (ii) in the
case of Caribbean, (x) a Mortgage Note Pledge Agreement substantially in the
form of Exhibit U hereto, (y) a Deed of Constitution of Mortgage substantially
in the form of Exhibit S hereto and (z) a Mortgage Note substantially in
<PAGE>
-13-
the form of Exhibit T hereto, in each case including such changes to such forms
as may be necessary or desirable to conform such form to local laws or customs
applicable to property in the jurisdiction where such instrument is to be
recorded, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof and hereof.
"Mortgaged Property" means any Real Property that is subject to a
Mortgage.
"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds thereof in the form of cash or Cash Equivalents, including payments in
respect of deferred payment obligations when received in the form of cash or
Cash Equivalents (except to the extent that such obligations with respect to
Indebtedness are financed or sold with recourse to the Company or any of its
Subsidiaries) net of (i) brokerage commissions and other reasonable fees and
expenses (including reasonable fees and expenses of counsel and investment
bankers) related to such Asset Sale; (ii) provisions for all taxes payable as a
result of such Asset Sale; (iii) payments made to retire Indebtedness secured by
the current assets subject to such Asset Sale (including retirements of
Indebtedness under the Revolving Credit Facility) to the extent required
pursuant to the terms of such Indebtedness; and (iv) appropriate amounts to be
provided by the Company or any of its Subsidiaries, as the case may be, as a
reserve, in accordance with GAAP, against any liabilities associated with such
Asset Sale and retained by the Company or any of its Subsidiaries, as the case
may be, after such Asset Sale, including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale.
"Net Income" means, with respect to any Person for any period, the net
income (loss) of such Person determined in accordance with GAAP.
"Net Proceeds" means (a) in the case of any sale of Capital Stock by
the Company, the aggregate net proceeds received by the Company, after payment
of expenses, commissions and the like incurred in connection therewith, whether
such proceeds are in cash or in property (valued at the Fair Market Value
thereof, as determined in good faith by the Board of Directors, at the time of
receipt) and (b) in the case of any exchange, exercise, conversion or surrender
of outstanding securities of any kind for or into shares of Capital Stock of the
Company which is not Disqualified Stock, the net book value of such outstanding
securities on the
<PAGE>
-14-
date of such exchange, exercise, conversion or surrender (plus any additional
amount required to be paid by the holder to the Company upon such exchange,
exercise, conversion or surrender, less any and all payments made to the
holders, e.g., on account of fractional shares, and less all expenses incurred
---
by the Company in connection therewith).
"Non-U.S. Person" means a person who is not a U.S. person, as defined
in Regulation S.
"Notice of Security Interest" means a Notice of Security Interest
relating to intellectual property, substantially in the form of Exhibit Q
hereto, as such may be amended, supplemented or otherwise modified from time to
time in accordance with the terms hereof and thereof.
"Offering Memorandum" means the offering memorandum of the Company,
dated December 11, 1996 pursuant to which the Company offered the Securities.
"Officer" means the Chairman, the President, any Vice President, the
Chief Financial Officer, the Treasurer, the Secretary or the Controller of the
Company or a Guarantor, as the case may be.
"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of the Company
or a Guarantor, as the case may be.
"Opinion of Counsel" means a written opinion from legal counsel who is
acceptable to the Trustee, which may include counsel to the Company or a
Guarantor.
"Paying Agent" has the meaning provided in Section 2.3.
"Permanent Regulation S Global Security" has the meaning set forth in
Section 2.1.
"Permitted Investments" means (i) obligations of the U.S. government
due within one year; (ii) certificates of deposit or Eurodollar deposits due
within one year with a commercial bank having capital funds of at least
$500,000,000 or more; and (iii) A-1, P-1 commercial paper.
"Permitted Liens" means, with respect to any Person, any Lien arising
by reason of (a) any judgment, decree or order of any court, so long as such
Lien is being contested in good faith and is
<PAGE>
-15-
adequately bonded, any appropriate legal proceedings which may have been duly
initiated for the review of such judgment, decree or order shall not have been
finally terminated or the period within which such proceedings may be initiated
shall not have expired; (b) taxes not yet delinquent or which are being
contested in good faith; (c) security for payment of workers' compensation or
other insurance; (d) security for the performance of tenders, contracts (other
than contracts for the payment of money) or leases; (e) deposits to secure
public or statutory obligations, or to secure permitted contracts for the
purchase or sale of any currency entered into in the ordinary course of
business; (f) Liens imposed by operation of law in favor of carriers,
warehousemen, landlords, mechanics, materialmen, laborers, employees or
suppliers, incurred in the ordinary course of business for sums which are not
yet delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof; (g) security for
surety or appeal bonds; and (h) easements, rights-of-way, zoning and similar
covenants and restrictions and other similar encumbrances or title defects
which, in the aggregate, are not substantial in amount, and which do not in any
case materially detract from the value of the property subject thereto or
materially interfere with the ordinary conduct of the business of the Company or
any of its Subsidiaries.
"Permitted Related Acquisition" has the meaning provided in Section
4.15(a)(ii).
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Physical Security" has the meaning provided in Section 2.1.
"Pledge and Security Agreement" means (i) in the case of the Company,
CPC and Caribbean, a Pledge and Security Agreement, substantially in the form
attached hereto as Exhibit O, as such may be amended, supplemented or otherwise
modified from time to time in accordance with the terms hereof and thereof and
(ii) in the case of Caribbean, a Personal Property Mortgage Note Pledge
Agreement, substantially in the form attached hereto as Exhibit U, a Personal
Property Mortgage and Affidavit, substantially in the form attached hereto as
Exhibit V, and a Personal Property Mortgage Note, substantially in the form
attached hereto as Exhibit W, in each case as such may be amended, supplemented
or otherwise modified from time to time in accordance with the terms hereof and
thereof.
<PAGE>
-16-
"Previously Leased/Financed Equipment" means the equipment and
machinery listed on Exhibit X hereto representing certain equipment and
machinery currently the subject of certain operating and capital leases and any
additions or accessories thereto.
"principal" of a debt security means the principal amount of the
security plus, when appropriate, the premium, if any, on the security.
"Prior Liens" has the meaning set forth in the Security Documents.
"Prohibited Investments" has the meaning provided in Section 4.26.
"Qualified Institutional Buyer" or "QIB" has the meaning specified in
Rule 144A under the Securities Act.
"Real Property" means any interest in any real property or any portion
thereof whether owned in fee or leased or otherwise owned.
"Redemption Date" means, with respect to any Security, the Maturity
Date of such Security or the date on which such Security is to be redeemed by
the Company pursuant to the terms of the Securities.
"Registrar" has the meaning provided in Section 2.3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the Issue Date between the Company, the Guarantors and the
Initial Purchasers.
"Regulation S" means Regulation S under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Release Notice" has the meaning provided in Section 11.4.
"Restricted Global Security" has the meaning set forth in Section 2.1.
"Restricted Payment" means any of the following: (i) the declaration
or payment of any dividend or any other distribution on Capital Stock of the
Company or any Subsidiary of the Company or
<PAGE>
-17-
any payment made to the direct or indirect holders (in their capacities as such)
of Capital Stock of the Company or any Subsidiary of the Company (other than (x)
dividends or distributions payable solely in Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to purchase Capital
Stock (other than Disqualified Stock) and (y) in the case of Subsidiaries of the
Company, dividends or distributions payable to the Company or to a Subsidiary of
the Company), (ii) the purchase, redemption or other acquisition or retirement
for value of any Capital Stock of the Company or any of its Subsidiaries, (iii)
the making of any principal payment on, or the purchase, defeasance, repurchase,
redemption or other acquisition or retirement for value, prior to any scheduled
maturity, scheduled repayment or scheduled sinking fund payment, of any
Indebtedness which is subordinated in right of payment to the Securities (other
than Indebtedness acquired in anticipation of satisfying a sinking fund
obligation, principal installment or final maturity, in each case due within one
year of the date of acquisition) and (iv) the making of any Prohibited
Investment or guarantee of any Prohibited Investment in any Person.
"Restricted Period" has the meaning set forth in Section 2.1.
"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided that the Trustee shall be entitled to request
--------
and conclusively rely upon an Opinion of Counsel with respect to whether any
Security is a Restricted Security.
"Revolving Credit Facility" means the credit agreement entered into
between the Company and The CIT Group/Business Credit, Inc. as lender, providing
for working capital and other financing, as the same may at any time be amended,
amended and restated, supplemented or otherwise modified, including any
refinancing, refunding, replacement or extension thereof by the Company or CPC
by the same or any other lender or group of lenders.
"Rule 144" means Rule 144 under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Rule 144A" means Rule 144A under the Securities Act (or any successor
provision), as it may be amended from time to time.
"Sale-Leaseback Transaction" means any arrangement with any Person
providing for the leasing by the Company or any Subsidiary of the Company of any
real or tangible personal
<PAGE>
-18-
property, which property has been or is to be sold or transferred by the Company
or such Subsidiary to such Person in contemplation of such leasing.
"SEC" means the Securities and Exchange Commission.
"Security Documents" means, collectively, (i) the Stock Pledge
Agreement, (ii) the Pledge and Security Agreements, (iii) the Mortgages and (iv)
the Notice of Security Interest.
"Security Interests" means the Lien on the Collateral created by the
Security Documents in favor of the Trustee for the benefit of the Holders of
Securities.
"Securities" means the Initial Securities and the Exchange Securities
treated as a single class of securities, as amended or supplemented from time to
time in accordance with the terms hereof, that are issued pursuant to this
Indenture.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Stock Pledge Agreement" means the Stock Pledge Agreement
substantially in the form attached hereto as Exhibit P, as such may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof and thereof.
"Subsidiary" means, with respect to any Person, (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors shall at the time be owned,
directly or indirectly, by such Person, or (ii) any other Person of which at
least a majority of voting interest is at the time, directly or indirectly,
owned by such Person.
"Successor Security" of any particular Security means every Security
issued after, and evidencing all or a portion of the same debt as that evidenced
by, such particular Security; and, for the purposes of this definition, any
Security authenticated and delivered under Section 2.07 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Security shall be deemed to
evidence the same debt as the mutilated, destroyed, lost or stolen Security.
"Survey" means a survey of any parcel of real property (and all
improvements thereon): (i) prepared by a surveyor or
<PAGE>
-19-
engineer licensed to perform surveys in the state where such property of
located, (ii) dated (or redated) not earlier than six months prior to the date
of delivery thereof (unless there shall have occurred within six months prior to
such date of delivery any exterior construction on the site of such property, in
which event such survey shall be dated (or redated) after the completion of such
construction or if such construction shall not have been completed as of such
date of delivery, not earlier than 20 days prior to such date of delivery),
(iii) certified by the surveyor (in a manner reasonably acceptable to the title
company providing title insurance) and (iv) complying in all respects with the
minimum detail requirements of the American Land Title Association, or local
equivalent, as such requirements are in effect on the date of preparation of
such survey, or that is otherwise reasonably acceptable to the Trustee (giving
consideration to the applicable transaction).
"Temporary Regulation S Global Security" has the meaning set
forth in Section 2.1.
"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb) as in effect on the date of this Indenture.
"Transaction Documents" means, collectively, (i) the Securities, (ii)
this Indenture, (iii) the Guarantees and (iv) the Security Documents.
"Trustee" means the party named as such in this Indenture until a
successor replaces it in accordance with the provisions of this Indenture and
thereafter means such successor, and shall in addition include any Person
designated or constituted as a co-trustee or separate trustee pursuant to
Section 7.12 for the limited purposes of such designation or constitution.
"Trust Moneys" has the meaning provided in Section 12.1.
"Trust Officer" means an officer or assistant officer of the Trustee
assigned to the Corporate Trustee Administration Division, or any successor to
such department or, in the case of a successor trustee, an officer assigned to
the department, division or group performing the corporate trust work of such
successor.
"U.S. Government Obligations" has the meaning provided in Section
8.1(b).
<PAGE>
-20-
"Wholly-Owned Subsidiary" means any Subsidiary of the Company of which
100% of the outstanding Capital Stock is owned by the Company or another Wholly-
Owned Subsidiary of the Company.
"Working Capital Proceeds" has the meaning provided in Section
4.15(a)(i).
SECTION 1.2 Incorporation by Reference
of Trust Indenture Act.
--------------------------
Whenever this Indenture refers to a provision of the TIA, the
provision shall be deemed incorporated by reference in and made a part of this
Indenture. The following TIA terms used in this Indenture have the following
meanings:
(a) "Commission" means the SEC;
(b) "indenture securities" means the Securities;
(c) "indenture security holder" means a Securityholder;
(d) "indenture to be qualified" means this Indenture;
(e) "indenture trustee" or "institutional trustee" means the
Trustee; and
(f) "obligor" on the indenture securities means the Company or
any other obligor on the Securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings so assigned to them therein.
SECTION 1.3 Rules of Construction.
---------------------
Unless the context otherwise requires:
(a) a term has the meaning assigned to it;
(b) "or" is exclusive;
(c) words in the singular include the plural, and words in the
plural include the singular;
<PAGE>
-21-
(d) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
Subdivision; and
(e) unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations hereunder shall
be made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect from time to time,
applied on a basis consistent with the most recent audited consolidated
financial statements of the Company .
ARTICLE
THE SECURITIES
--------------
SECTION 2.1 Form and Dating.
---------------
The Securities and the Trustee's certificates of authentication with
respect thereto shall be substantially in the form set forth in Exhibit A or
---------
Exhibit B annexed hereto, as the case may be, which are hereby incorporated in
- ---------
and expressly made a part of this Indenture. The Securities may have notations,
legends or endorsements required by law, rule, usage or agreement to which the
Company is subject. The Company and the Trustee shall approve the form of the
Securities and any notating legend or endorsement on them. Each Security shall
be dated the date of its issuance and shall show the date of its authentication.
The terms and provisions contained in the Securities shall constitute, and are
expressly made, a part of this Indenture.
Securities offered and sold in reliance on Rule 144A or to
Institutional Accredited Investors shall be issued initially in the form of one
or more permanent Global Securities in registered form, substantially in the
form set forth in Exhibit A (collectively, and together with their Successor
Securities, the "Restricted Global Security"), with such applicable legends as
are provided for in Exhibit A or Exhibit M, registered in the name of the
--------- ---------
Depository or its nominee and deposited with the Trustee, as custodian for the
Depository, duly executed by the Company and the Guarantors and authenticated by
the Trustee as hereinafter provided, for credit by the Depository to the
respective accounts of beneficial owners of the Securities represented thereby
(or such other accounts as they may direct). The aggregate principal amount of
the Restricted Global Security may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for the
Depository, as hereinafter provided.
<PAGE>
-22-
Securities offered and sold in their initial distribution in reliance
on Regulation S may be initially issued in the form of temporary Global
Securities in fully registered form without interest coupons, substantially in
the form set forth in Exhibit A, with such applicable legends as are provided
for in Exhibit A or Exhibit M. Such temporary Global Securities shall be
registered in the name of the Depository or its nominee and deposited with the
Trustee, as custodian for the Depository, duly executed by the Company and the
Subsidiary Guarantors and authenticated by the Trustee as hereinafter provided,
for credit by the Depository to the respective accounts of the beneficial owners
of the Securities represented thereby (or such other accounts as they may
direct), provided that upon such deposit all such Securities shall be credited
--------
to or through accounts maintained at the Depository by or on behalf of Euroclear
or CEDEL. Until such time as the Restricted Period (as defined below) shall
have expired, such temporary Global Securities, together with their Successor
Securities which are Global Securities other than the Restricted Global
Security, shall be referred to herein as a "Temporary Regulation S Global
Security." After such time as the Restricted Period shall have expired and the
certifications referred to below in the next succeeding paragraph shall have
been provided, interests in such Temporary Regulation S Global Securities shall
be exchanged for interests in like Global Securities, referred to herein
collectively as the "Permanent Regulation S Global Security," substantially in
the form of Security set forth in Exhibit A, with such applicable legends as are
provided for in Exhibit A or Exhibit M. Such Permanent Regulation S Global
Securities shall be registered in the name of the Depository or its nominee and
deposited with the Trustee, as custodian for the Depository, duly executed by
the Company and the Subsidiary Guarantors and authenticated by the Trustee as
hereinafter provided, for credit to the respective accounts of the beneficial
owners of the Securities represented thereby (or such other accounts as they may
direct). The aggregate principal amount of the Temporary Regulation S Global
Security or the Permanent Regulation S Global Security may be increased or
decreased from time to time by adjustments made on the records of the Trustee,
as custodian for the Depository, as hereinafter provided. As used herein, the
term "Restricted Period" means the period of 40 days commencing on the day after
the later of (a) the day on which the Securities are first offered to persons
other than distributors (as defined in Regulation S) in reliance on Regulation S
and (b) the Issue Date.
Interests in a Temporary Regulation S Global Security may be exchanged
for interests in a Permanent Regulation S Global Security only after (a) the
expiration of the Restricted Period,
<PAGE>
-23-
(b) delivery by a beneficial owner of an interest therein to Euroclear or CEDEL
of a written certification (an "Owner Securities Certification") substantially
in the form of Exhibit C hereto, and (c) upon delivery by Euroclear or CEDEL to
the Trustee of a written certification (a "Depository Securities Certification")
substantially in the form attached hereto as Exhibit D. Upon satisfaction of
such conditions, the Trustee will exchange the portion of the Temporary
Regulation S Global Security covered by such certification for interests in a
Permanent Regulation S Global Security. The delivery by such Holder of a
beneficial interest in such Temporary Regulation S Global Security of such
certification shall constitute an irrevocable instruction by such holder to
Euroclear or CEDEL, as the case may be, to exchange such Holder's beneficial
interest in the Temporary Regulation S Global Security for a beneficial interest
in the Permanent Regulation S Global Security upon the expiration of the
Restricted Period in accordance with the next succeeding paragraph.
Upon:
(i) the expiration of the Restricted Period;
(ii) receipt by Euroclear or CEDEL, as the case may be, of Owner
Securities Certifications described in the preceding paragraph;
(iii) receipt by the Depository of:
(1) written instructions given in accordance with the rules and
procedures of the Depository, Euroclear and CEDEL, in each case to the extent
applicable and as in effect from time to time (the "Applicable Procedures"),
from an Agent Member directing the Depository to credit or cause to be credited
to a specified Agent Member's account a beneficial interest in a Permanent
Regulation S Global Security in a principal amount equal to that of the
beneficial interest in a corresponding Temporary Regulation S Global Security
for which the necessary certifications have been delivered; and
(2) a written order given in accordance with the Applicable Procedures
containing information regarding the account of the Agent Member, and the
Euroclear or CEDEL account for which such Agent Member's account is held, to be
credited with, and the account of the Agent Member to be debited for, such
beneficial interest; and
<PAGE>
-24-
(iv) receipt by the Trustee of notification from the Depository of
the transactions described in (iii) above and from Euroclear or CEDEL, as
the case may be, of Depository Securities Certifications,
the Trustee, as Registrar, shall instruct the Depository to reduce the principal
amount of such Temporary Regulation S Global Security and to increase the
principal amount of such Permanent Regulation S Global Security, by the
principal amount of the beneficial interest in such Temporary Regulation S
Global Security to be so transferred, and to credit or cause to be credited to
the account of the Person specified in such instructions a beneficial interest
in such Permanent Regulation S Global Security having a principal amount equal
to the amount by which the principal amount of such Temporary Regulation S
Global Security was reduced upon such transfer.
Securities offered and sold in reliance on Regulation S, and
Securities offered and sold in reliance on Rule 144A or to Institutional
Accredited Investors may be originally issued at the request of the Holders
thereof in the form of permanent certificated Securities in registered form, in
substantially the form set forth in Exhibit A (the "Physical Securities") with
appropriate legends. Beneficial owners of Physical Securities may request
registration of such Physical Securities in their names or the names of their
nominees.
The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.
If the Securities are to be issued in the form of one or more Global
Securities, then the Company shall execute and the Trustee shall authenticate
and deliver one or more Global Securities that shall represent and shall be in
minimum denominations of $1,000.
Exchange Notes may be issued only in exchange for a like principal
amount of Initial Notes pursuant to an Exchange Offer.
The principal of and interest on Book-Entry Securities shall be
payable to the Depository or its nominee, as the case may be, as the sole
registered owner and the sole holder of the Book-Entry Securities represented
thereby. The principal of and interest on Securities in certificated form shall
be payable at the office of the Paying Agent.
<PAGE>
-25-
SECTION 2.2 Execution and Authentication.
----------------------------
Two Officers shall execute the Securities on behalf of the Company by
either manual or facsimile signature. The Company's seal shall be impressed,
affixed, imprinted or reproduced on the Securities.
If an Officer whose signature is on a Security no longer holds that
office at the time the Trustee authenticates the Security or at any time
thereafter, the Security shall be valid nevertheless.
A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. Such
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.
The Trustee shall authenticate (i) Securities for original issue in an
aggregate principal amount not to exceed $125,000,000, and (ii) Exchange
Securities from time to time for issue only in exchange for a like principal
amount of Original Securities, in each case upon receipt of an Officers'
Certificate signed by two Officers directing the Trustee to authenticate the
Securities and certifying that all conditions precedent to the issuance of the
Securities contained herein and in the Security Documents have been complied
with.
The Officers' Certificate shall specify the amount of Securities to be
authenticated, the date on which the Securities are to be authenticated and the
aggregate principal amount of Securities outstanding on the date of
authentication, whether the Securities are to be Original Securities or Exchange
Securities. The aggregate principal amount of Securities outstanding at any
time may not exceed $125,000,000, except as provided in Section 2.7.
The Trustee shall not be required to authenticate Securities if the
issuance of such Securities pursuant to this Indenture will affect the Trustee's
own rights, duties or immunities under the Securities and this Indenture in a
manner which is not reasonably acceptable to the Trustee.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Securities. Unless limited by the terms of such
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each
<PAGE>
-26-
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. Such authenticating agent shall have the same
rights as the Trustee in any dealings hereunder with the Company or with any of
the Company's Affiliates.
SECTION 2.3 Registrar and Paying Agent.
--------------------------
The Company shall maintain an office or agency (which shall be located
in the Borough of Manhattan in the City of New York, State of New York) where
Securities may be presented for registration of transfer or for exchange (the
"Registrar"), an office or agency (which shall be located in the Borough of
Manhattan, City of New York, State of New York) where Securities may be
presented or surrendered for payment (the "Paying Agent") and an office or
agency where notices and demands to or upon the Company in respect of the
Securities and this Indenture may be served. The Registrar shall keep a
register of the Securities and of their transfer and exchange. The Company may
have one or more co-registrars and one or more additional paying agents. The
term "Paying Agent" includes any additional paying agent. Neither the Company
nor any Affiliate thereof may act as Paying Agent.
The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 7.7.
The Company initially appoints the Trustee as Registrar, Paying Agent
and agent for service of notices and demands in connection with the Securities,
until such time as the Trustee has resigned or a successor has been appointed.
The Paying Agent or Registrar may resign upon 30 days' notice to the Company.
SECTION 2.4 Paying Agent To Hold Assets in Trust.
------------------------------------
Each Paying Agent shall hold in trust for the benefit of the
Securityholders or the Trustee all assets held by the Paying Agent for the
payment of principal of or interest on the Securities (whether such assets have
been distributed to it by the Company or any other obligor on the Securities),
and the Company and the Paying Agent shall notify the Trustee of any default by
the Company (or any other obligor on the Securities) in making any such
<PAGE>
-27-
payment. Money held in trust by the Paying Agent need not be segregated except
as required by law and in no event shall the Paying Agent be liable for any
interest on any money received by it hereunder. The Company at any time may
require the Paying Agent to distribute all assets held by it to the Trustee and
account for any assets distributed and the Trustee may at any time during the
continuance of any Event of Default specified in Section 6.1(a)(i), (ii) or
(iii), upon written request to the Paying Agent, require such Paying Agent to
distribute forthwith all assets so held by it to the Trustee and to account for
any assets distributed. Upon making such distribution, the Paying Agent shall
have no further liability for such assets delivered to the Trustee.
SECTION 2.5 Securityholder Lists.
--------------------
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
the Securityholders. If the Trustee is not the Registrar, the Company shall
furnish to the Trustee at least five Business Days before each Interest Payment
Date, and at such other times as the Trustee may request in writing, a list in
such form and as of such date as the Trustee may reasonably require of the names
and addresses of the Securityholders.
SECTION 2.6 Transfer and Exchange.
---------------------
Subject to the provisions of Sections 2.15 and 2.16, when Physical
Securities are presented to the Registrar or a co-registrar with a request from
the Holder of such Securities to register the transfer or to exchange them for
an equal principal amount of Securities of other authorized denominations, the
Registrar shall register the transfer or make the exchange as requested;
provided that every Security presented or surrendered for registration of
- --------
transfer or exchange shall be duly endorsed or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the Registrar,
duly executed by the Holder thereof or his attorneys duly authorized in writing.
To permit registrations of transfers and exchanges, the Company shall issue and
execute and the Trustee shall authenticate new Securities evidencing such
transfer or exchange at the Registrar's request. No service charge shall be
made to the Securityholder for any registration of transfer or exchange. The
Company may require from the Securityholder payment of a sum sufficient to cover
any transfer taxes or other governmental charge that may be imposed in relation
to a transfer or exchange, but this provision shall not apply to any exchange
pursuant to Section 2.10, 3.6, 4.15, 4.17 or 9.5 (in which events the Company
will be responsible for the
<PAGE>
-28-
payment of such taxes). The Trustee shall not be required to exchange or
register a transfer of any Security for a period of 15 days immediately
preceding the first mailing of notice of redemption of Securities to be redeemed
or of any Security selected, called or being called for redemption except, in
the case of any Security where public notice has been given that such Security
is to be redeemed in part, the portion thereof not to be redeemed.
SECTION 2.7 Replacement Securities.
----------------------
If a mutilated Security is surrendered to the Registrar or the Trustee
or if the Holder of a Security claims that the Security has been lost, destroyed
or wrongfully taken, the Company shall issue and the Trustee shall authenticate
a replacement Security if the Holder of such Security furnishes to the Company
and to the Trustee evidence reasonably acceptable to them of the ownership and
the destruction, loss or theft of such Security. If required by the Trustee or
the Company, an indemnity bond shall be posted, sufficient in the judgment of
both to protect the Company, the Trustee or any Paying Agent from any loss that
any of them may suffer if such Security is replaced. The Company may charge
such Holder for the Company's expenses in replacing such Security and the
Trustee may charge the Company for the Trustee's expenses in replacing such
Security. Every replacement Security shall constitute an additional obligation
of the Company.
SECTION 2.8 Outstanding Securities.
----------------------
The Securities outstanding at any time are all Securities that have
been authenticated by the Trustee except for (a) those cancelled by it, (b)
those delivered to it for cancellation, (c) to the extent set forth in Sections
8.1 and 8.2, on or after the date on which the conditions set forth in Section
8.1 or 8.2 have been satisfied, those Securities theretofore authenticated and
delivered by the Trustee hereunder and (d) those described in this Section 2.8
as not outstanding. A Security does not cease to be outstanding because the
Company or one of its Affiliates holds the Security.
If a Security is replaced pursuant to Section 2.7 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser in whose hands such Security is a legal, valid
and binding obligation of the Company.
<PAGE>
-29-
If the Paying Agent holds, in its capacity as such, on any Maturity
Date or on any optional redemption date, money sufficient to pay all accrued
interest and principal with respect to such Securities payable on that date and
is not prohibited from paying such money to the Holders thereof pursuant to the
terms of this Indenture, then on and after that date such Securities cease to be
outstanding and interest on them ceases to accrue.
SECTION 2.9 Treasury Securities.
-------------------
In determining whether the Holders of the required principal amount of
Securities have concurred in any declaration of acceleration or notice of
default or direction, waiver or consent or any amendment, modification or other
change to this Indenture, Securities owned by the Company or an Affiliate of the
Company shall be disregarded as though they were not outstanding, except that
for the purposes of determining whether the Trustee shall be protected in
relying on any such direction, waiver or consent or any amendment, modification
or other change to this Indenture, only Securities that the Trustee actually
knows are so owned shall be so disregarded.
SECTION 2.10 Temporary Securities.
--------------------
Until definitive Securities are prepared and ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of definitive Securities
but may have variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall prepare and the
Trustee shall authenticate definitive Securities in exchange for temporary
Securities. Until such exchange, temporary Securities shall be entitled to the
same rights, benefits and privileges as definitive Securities.
SECTION 2.11 Cancellation.
------------
The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for registration of transfer, exchange or
payment. The Trustee shall cancel all Securities surrendered for registration
of transfer, exchange, payment, replacement or cancellation and shall (subject
to the record-retention requirements of the Exchange Act) dispose of cancelled
Securities unless the Company directs the Trustee to return such Securities to
the Company, and, if so disposed, shall deliver a certificate of disposition
thereof to the Company. The
<PAGE>
-30-
Company may not reissue or resell, or issue new Securities to replace,
Securities that the Company has redeemed or paid, or that have been delivered to
the Trustee for cancellation.
SECTION 2.12 Defaulted Interest.
------------------
If the Company defaults on a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent permitted by law) any
interest payable on the defaulted interest, in accordance with the terms hereof,
to the Persons who are Securityholders on a subsequent special record date,
which date shall be at least five Business Days prior to the payment date. The
Company shall fix such special record date and payment date in a manner
satisfactory to the Trustee. At least 15 days before such special record date,
the Company shall mail to each Securityholder of such series a notice that
states the special record date, the payment date and the amount of defaulted
interest, and interest payable on such defaulted interest, if any, to be paid.
SECTION 2.13 CUSIP Number.
------------
The Company in issuing the Securities may use a "CUSIP" number or
numbers, and if so, such CUSIP number or numbers shall be included in notices of
redemption or exchange as a convenience to Holders; provided, however, that any
-------- -------
such notice may state that no representation is made as to the correctness or
accuracy of the CUSIP number or numbers printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company will promptly notify the Trustee
of any change in the CUSIP number or numbers.
SECTION 2.14 Deposit of Moneys.
-----------------
On each Interest Payment Date and Maturity Date, the Company shall
have deposited with the Paying Agent in immediately available funds money
sufficient to make cash payments, if any, due on such Interest Payment Date or
Maturity Date, as the case may be, in a timely manner which permits the Trustee
to remit payment to the Holders on such Interest Payment Date or Maturity Date,
as the case may be.
SECTION 2.15 Book-Entry Provisions
for Global Security.
---------------------
(a) Members of, or participants in, the Depository ("Agent Members")
shall have no rights under this Indenture with respect to any Global Security
held on their behalf by the
<PAGE>
-31-
Depository, or the Trustee as its custodian, or under the Global Security, and
the Depository may be treated by the Company, the Trustee and any agent of the
Company or the Trustee as the absolute owner of the Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall
prevent the Company, the Trustee or any agent of the Company or the Trustee from
giving effect to any written certification, proxy or other authorization
furnished by the Depository or impair, as between the Depository and its Agent
Members, the operation of customary practices governing the exercise of the
rights of a holder of any Security. With respect to any Global Security
deposited with the Trustee as custodian for the Depository for credit to their
respective accounts (or to such other accounts as they may direct) at Euroclear
or CEDEL, the provisions of the "Operating Procedures of the Euroclear System"
and the "Terms and Conditions Governing Use of Euroclear", and the "Management
Regulations" and "Instructions to Participants" of CEDEL, respectively, shall be
applicable to such Global Security.
(b) Transfers of a Global Security shall be limited to transfers in
whole or in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in a Global Security may be transferred
or exchanged for Physical Securities in accordance with the rules and procedures
of the Depository and the provisions of Section 2.16. In addition, Physical
Securities shall be transferred to all beneficial owners in exchange for their
beneficial interests in a Global Security if (i) the Depository notifies the
Company that it is unwilling or unable to continue as Depository for such Global
Security and a successor depositary is not appointed by the Company within 90
days of such notice or (ii) an Event of Default has occurred and is continuing
and the Registrar has received a written request from the Depository to issue
Physical Securities.
(c) If any Global Security is to be exchanged for other Securities or
cancelled in whole, it shall be surrendered by or on behalf of the Depository or
its nominee to the Trustee, as Registrar, for exchange or cancellation as
provided in this Article II. If any Global Security is to be exchanged for
other Securities or cancelled in part, or if a Physical Security is to be
exchanged in whole or in part for a beneficial interest in any Global Security,
such Global Security shall be so surrendered for exchange or cancellation as
provided in this Article II or, if the Trustee is acting as custodian for the
Depository or its nominee (or is party to a similar arrangement) with respect to
such Global Security, the principal amount thereof shall be reduced or increased
by an amount equal to the portion thereof to be so
<PAGE>
-32-
exchanged or cancelled, or the principal amount of such other Security to be so
exchanged for a beneficial interest therein, as the case may be, in each case by
means of an appropriate adjustment made on the records of the Trustee, whereupon
the Trustee, in accordance with the Applicable Procedures, shall instruct the
Depository or its authorized representatives to make a corresponding adjustment
to its records (including by crediting or debiting any Agent Member's account as
necessary to reflect any transfer or exchange of a beneficial interest). Upon
any such surrender or adjustment of a Global Security, the Trustee shall,
subject to this Article II, authenticate and deliver any Securities issuable in
exchange for such Global Security (or any portion thereof) to or upon the order
of, and registered in such names as may be directed by, the Depository or its
authorized representative. Upon the request of the Trustee in connection with
the occurrence of any of the events specified in the preceding paragraph or in
paragraph (b) above, the Company shall promptly make available to the Trustee a
reasonable supply of Securities that are not in the form of Global Securities.
The Trustee shall be entitled to rely upon any order, direction or request of
the Depository or its authorized representative which is given or made pursuant
to this Article II if such order, direction or request is given or made in
accordance with the Applicable Procedures.
(d) In connection with the transfer of the entire Global Security to
beneficial owners pursuant to paragraph (b), the Global Security shall be deemed
to be surrendered to the Trustee for cancellation, and the Company shall
execute, and the Trustee shall authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Security, an equal aggregate principal amount of Physical Securities
of authorized denominations.
(e) Any Physical Security constituting a Restricted Security delivered
in exchange for an interest in a Global Security pursuant to paragraph (d)
shall, except as otherwise provided by paragraphs (a)(i)(x) and (d) of Section
2.16, bear the legend regarding transfer restrictions applicable to the Physical
Securities set forth in Exhibit A.
(f) If an Initial Security is a Restricted Security and a Physical
Security, then as provided in this Indenture and subject to the limitations
herein set forth, the Holder, provided it is a Qualified Institutional Buyer,
may exchange such Security for a Book-Entry Security by instructing the Trustee
(by completing the Transferee Certificate in the form of Exhibit I or J hereto)
to arrange for such an Initial Security to be represented by a
<PAGE>
-33-
beneficial interest in a Global Security in accordance with the customary
procedures of the Depository.
(g) The Holder of a Global Security may grant proxies and otherwise
authorize any Person, including Agent Members and Persons that may hold
interests through Agent Members, to take any action which such Holder is
entitled to take under this Indenture or the Securities.
SECTION 2.16 Special Transfer Provisions.
---------------------------
(a) Transfers of Physical Securities to Non-QIB Institutional
---------------------------------------------------------
Accredited Investors and Non-U.S. Persons. The following
-----------------------------------------
provisions shall apply with respect to the registration of any proposed transfer
of a Security constituting a Restricted Security to any Institutional Accredited
Investor which is not a QIB or to any Non-U.S. Person:
(i) the Registrar shall register the transfer of any Security
constituting a Restricted Security, whether or not such Security bears the
private placement legend substantially in the form of Exhibit A hereto
("Private Placement Legend"), if (x) the requested transfer is after
December 17, 1999 or (y) (1) in the case of a transfer to an Institutional
Accredited Investor which is not a QIB (excluding Non-U.S. Persons), the
proposed transferee has delivered to the Registrar a certificate
substantially in the form of Exhibit L hereto or (2) in the case of a
transfer to a Non-U.S. Person, the proposed transferor has delivered to the
Registrar a certificate substantially in the form of Exhibit E hereto; and
(ii) if the proposed transferor is an Agent Member holding a beneficial
interest in the Global Security, upon receipt by the Registrar of (x) the
certificate, if any, required by paragraph (i) above and (y) instructions
given in accordance with the Depository's and the Registrar's procedures,
whereupon (a) the Registrar shall reflect on its books and records the date and
(if the transfer does not involve a transfer of outstanding Physical Securities)
a decrease in the principal amount of the Global Security in an amount equal to
the principal amount of the beneficial interest in the Global Security to be
transferred, and (b) the Company shall execute and the Trustee shall
authenticate and deliver one or more Physical Securities of like tenor and
amount.
<PAGE>
-34-
(b) Transfers of Physical Securities to QIBs. The following
----------------------------------------
provisions shall apply with respect to the registration of any proposed transfer
of a Security constituting a Restricted Security to a QIB:
(i) the Registrar shall register the transfer if such transfer is being
made by a proposed transferor who has advised the Company and the Registrar
in writing, that the sale has been made in compliance with the provisions of
Rule 144A to a transferee who has signed the certification provided for on
the form of Security stating, or has otherwise advised the Company and the
Registrar in writing, that it is purchasing the Security for its own account
or an account with respect to which it exercises sole investment discretion
and that it and any such account is a QIB within the meaning of Rule 144A,
and is aware that the sale to it is being made in reliance on Rule 144A and
acknowledges that it has received such information regarding the Company as
it has requested pursuant to Rule 144A or has determined not to request such
information and that it is aware that the transferor is relying upon its
foregoing representations in order to claim the exemption from registration
provided by Rule 144A; and
(ii) if the proposed transferee is an Agent Member, and the Securities
to be transferred consist of Physical Securities which after transfer are to
be evidenced by an interest in the Global Security, upon receipt by the
Registrar of instructions given in accordance with the Depository's and the
Registrar's procedures, the Registrar shall reflect on its books and records
the date and an increase in the principal amount of the Global Security in
an amount equal to the principal amount of the Physical Securities to be
transferred, and the Trustee shall cancel the Physical Securities so
transferred.
(c) Certain Transfers and Exchanges.
-------------------------------
(i) Temporary Regulation S Global Security. If the holder of a
--------------------------------------
beneficial interest in a Temporary Regulation S Global Security wishes at
any time to transfer such interest to a Person who wishes to take delivery
thereof in the form of a beneficial interest in such Temporary Regulation S
Global Security, such transfer may be effected, subject to the Applicable
Procedures, only in accordance with this clause (i). Upon delivery (a) by a
beneficial owner of an interest in a Temporary Regulation S Global Security
to Euroclear or CEDEL, as the case may be, of an Owner Securities
<PAGE>
-35-
Certification, (b) by the transferee of such beneficial interest in the
Temporary Regulation S Global Security to Euroclear or CEDEL, as the case
may be, of a written certification (a "Transferee Securities Certification")
substantially in the form of Exhibit E hereto and (c) by Euroclear or CEDEL,
as the case may be, to the Trustee, as Security Registrar, of a Depository
Securities Certification, the Trustee may direct either Euroclear or CEDEL,
as the case may be, to reflect on its records the transfer of a beneficial
interest in the Temporary Regulation S Global Security from the beneficial
owner providing the Owner Securities Certification to the Person providing
the Transferee Securities Certification.
(ii) Restricted Global Security to Temporary Regulation S Global
-----------------------------------------------------------
Security or Permanent Regulation S Global Security. If the holder of a
--------------------------------------------------
beneficial interest in the Restricted Global Security wishes at any time to
transfer such interest to a Person who wishes to take delivery thereof in
the form of a beneficial interest in the Temporary Regulation S Global
Security or the Permanent Regulation S Global Security, such transfer may be
effected, subject to the Applicable Procedures, only in accordance with the
provisions of this clause (ii) and clause (vii) below. Upon receipt by the
Trustee, as Registrar, of (A) written instructions given by or on behalf of
the Depository in accordance with the Applicable Procedures directing the
Trustee to credit or cause to be credited to a specified Agent Member's
account a beneficial interest in the Temporary Regulation S Global Security
or the Permanent Regulation S Global Security, as the case may be, in a
specified principal amount and to cause to be debited from another specified
Agent Member's account a beneficial interest in the Restricted Global
Security in an equal principal amount and (B) a certificate in substantially
the form set forth (i) in Exhibit F for holders taking delivery in the form
of a beneficial interest in the Temporary Regulation S Global Security or
(ii) in Exhibit G for holders taking delivery in the form of a beneficial
interest in the Permanent Regulation S Global Security signed by or on
behalf of the holder of such beneficial interest in the Restricted Global
Security, the Trustee, as Registrar, shall, subject to clause (vii) below,
reduce the principal amount of the Restricted Global Security, and increase
the principal amount of the Temporary Regulation S Global Security or the
Permanent Regulation S Global Security, as the case may be, by such
specified principal amount.
<PAGE>
-36-
(iii) Temporary Regulation S Global Security or Permanent Regulation S
----------------------------------------------------------------
Global Security to Restricted Global Security. If the holder of a beneficial
---------------------------------------------
interest in the Temporary Regulation S Global Security or Permanent
Regulation S Global Security at any time, wishes to transfer such interest
to a Person who wishes to take delivery thereof in the form of a beneficial
interest in the Restricted Global Security, such transfer may be effected,
subject to the Applicable Procedures, only in accordance with this clause
(iii) and clause (vii) below; provided that with respect to any transfer of
--------
a beneficial interest in a Temporary Regulation S Global Security, the
transferor and Euroclear or CEDEL, as the case may be, must have previously
delivered an Owner Securities Certification and a Depository Securities
Certification respectively, with respect to such beneficial interest. Upon
receipt by the Trustee, as Registrar, of (A) written instructions given by
or on behalf of the Depository in accordance with the Applicable Procedures
directing the Trustee to credit or cause to be credited to a specified Agent
Member's account a beneficial interest in the Restricted Global Security in
a specified principal amount and to cause to be debited from another
specified Agent Member's account a beneficial interest in the Temporary
Regulation S Global Security or the Permanent Regulation S Global Security,
as the case may be, in an equal principal amount and (B) a certificate in
substantially the form set forth in Exhibit H signed by or on behalf of the
holder of such beneficial interest in the Temporary Regulation S Global
Security or the Permanent Regulation S Global Security, as the case may be,
the Trustee, as Registrar, shall, subject to clause (vii) below, reduce the
principal amount of such Temporary Regulation S Global Security or Permanent
Regulation S Global Security, as the case may be, and increase the principal
amount of the Restricted Global Security by such specified principal amount.
(iv) Non-Global Restricted Security to Global Security. If the holder
-------------------------------------------------
of a Restricted Security (other than a Global Security) wishes at any time
to transfer all or any portion of such Security to a Person who wishes to
take delivery thereof in the form of a beneficial interest in the Restricted
Global Security, the Temporary Regulation S Global Security or the Permanent
Regulation S Global Security, such transfer may be effected, subject to the
Applicable Procedures, only in accordance with this clause (iv) and clause
(vii) below. Upon receipt by the Trustee, as Registrar, of (A) such Security
and written instructions given by or on behalf of such Holder as
<PAGE>
-37-
provided in Section 2.15 directing the Trustee to credit or cause to be
credited to a specified Agent Member's account a beneficial interest in the
Restricted Global Security, the Temporary Regulation S Global Security or
the Permanent Regulation S Global Security, as the case may be, in a
specified principal amount equal to the principal amount of the Restricted
Security (or portion thereof) to be so transferred, and (B) an appropriately
completed certificate substantially in the form set forth in Exhibit I
hereto, if the specified account is to be credited with a beneficial
interest in the Restricted Global Security, or Exhibit J hereto, if the
specified account is to be credited with a beneficial interest in the
Temporary Regulation S Global Security or the Permanent Regulation S Global
Security, signed by or on behalf of such Holder, then the Trustee, as
Registrar, shall, subject to clause (vii) below, cancel such Restricted
Security (and issue a new Security in respect of any untransferred portion
thereof as provided in Section 2.15 and increase the principal amount of the
Restricted Global Security, Temporary Regulation S Global Security or
Permanent Regulation S Global Security, as the case may be, by the specified
principal amount.
(v) Non-Global Permanent Regulation S Security to Restricted Global
---------------------------------------------------------------
Security or Permanent Regulation S Global. If the Holder of a Permanent
-----------------------------------------
Regulation S Security (other than a Global Security) wishes at any time to
transfer all or any portion of such Security to a Person who wishes to take
delivery thereof in the form of a beneficial interest in the Restricted
Global Security or the Permanent Regulation S Global Security, as the case
may be, such transfer may be effected only in accordance with this clause
(v) and subject to the Applicable Procedures. Upon receipt by the Trustee,
as Registrar, of (A) such Security and instructions given by or on behalf of
such Holder as provided in Section 2.15 directing the Trustee to credit or
cause to be credited to a specified Agent Member's account a beneficial
interest in the Restricted Global Security or the Permanent Regulation S
Global Security, as the case may be, in a principal amount equal to the
principal amount of the Security (or portion thereof) to be so transferred,
(B) (i) with respect to a transfer which is to be delivered in the form of a
beneficial interest in the Restricted Global Security, a certificate in
substantially the form set forth in Exhibit K-1, signed by or on behalf of
such Holder, and (ii) with respect to a transfer which is to be delivered in
the form of a beneficial interest in the Permanent Regulation S Global
Security, a certificate in
<PAGE>
-38-
substantially the form set forth in Exhibit K-2, signed by or on behalf of
such Holder, then the Trustee, as Registrar, shall, subject to clause (vii)
below, cancel such Security (and issue a new Security in respect of any
untransferred portion thereof) as provided in Section 2.15 and increase the
principal amount of the Restricted Global Security, or the Permanent
Regulation S Global Security, as the case may be, by the specified principal
amount.
(vi) Other Exchange. Securities that are not Global Securities may be
--------------
exchanged (on transfer or otherwise) for Securities that are not Global
Securities or for beneficial interests in a Global Security (if any is then
outstanding) only in accordance with such procedures, which shall be
substantially consistent with the provisions of clauses (i) through (v)
above (including the certification requirements intended to insure that
transfers of beneficial interests in a Global Security comply with Rule
144A, Regulation S, or another exemption from the Securities Act) and any
Applicable Procedures, as may be from time to time adopted by the Company
and the Trustee.
(vii) Interests in Temporary Regulation S Global Security to Be Held
--------------------------------------------------------------
Through Euroclear or CEDEL. Until the later of the expiration of the
--------------------------
Restricted Period and the provision of the Owner Securities Certification
and the Depository Securities Certification, beneficial interests in any
Temporary Regulation S Global Security may be held only in or through
accounts maintained at the Depository by Euroclear or CEDEL (or by Agent
Members acting for the account thereof).
(d) Private Placement Legend. Upon the transfer, exchange or
------------------------
replacement of Securities not bearing the Private Placement Legend, the
Registrar shall deliver Securities that do not bear the Private Placement
Legend. Upon the transfer, exchange or replacement of Securities bearing the
Private Placement Legend, the Registrar shall deliver only Securities that bear
the Private Placement Legend unless (i) the circumstance contemplated by
paragraph (a)(i)(x) of this Section 2.16 exist or (ii) there is delivered to the
Registrar an Opinion of Counsel reasonably satisfactory to the Company and the
Trustee to the effect that neither such legend nor the related restrictions on
transfer are required in order to maintain compliance with the provisions of the
Securities Act.
(e) General. By its acceptance of any Security bearing the Private
-------
Placement Legend, each Holder of such a Security
<PAGE>
-39-
acknowledges the restrictions on transfer of such Security set forth in this
Indenture and in the Private Placement Legend and agrees that it will transfer
such Security only as provided in this Indenture.
The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such letters,
notices or other written communications at any reasonable time upon the giving
of reasonable written notice to the Registrar.
ARTICLE III
REDEMPTION
----------
SECTION 3.1 Notices to Trustee.
------------------
If the Company elects to redeem Securities pursuant to Paragraph 5 of
the Securities, it shall notify each Guarantor, the Trustee and the Paying Agent
in writing of the Redemption Date and the principal amount of Securities to be
redeemed.
The Company shall give each notice provided for in this Section 3.1 at
least 45 days before the Redemption Date (unless a shorter notice shall be
agreed to by the Trustee in writing), together with an Officers' Certificate
stating that such redemption will comply with the conditions contained herein
and in the Securities.
SECTION 3.2 Selection of Securities
To Be Redeemed.
-----------------------
If less than all of the Securities are to be redeemed, the Trustee shall
select the Securities to be redeemed in compliance with the requirements of the
principal national securities exchange, if any, on which the Securities being
redeemed are listed or, if the Securities are not listed on a national
securities exchange, on a pro rata basis, by lot or by such method as the
Trustee shall deem fair and appropriate. The Trustee shall make the selection
from the Securities outstanding and not previously called for redemption. The
Trustee shall promptly notify the Company in writing of such Securities selected
for redemption and, in the case of Securities selected for partial redemption,
the principal amount to be redeemed. The Trustee may select for redemption
portions of the principal amount of
<PAGE>
-40-
Securities that have denominations larger than $1,000. Securities and portions
of them the Trustee selects shall be in amounts of $1,000 or integral multiples
of $1,000. Provisions of this Indenture that apply to Securities called for
redemption also apply to portions of Securities called for redemption.
SECTION 3.3 Notice of Redemption.
--------------------
At least 30 days but not more than 60 days before a Redemption Date, the
Company shall mail or cause the mailing of a notice of redemption by first-class
mail to each Holder of Securities to be redeemed and the Trustee and any Paying
Agent.
The notice shall identify the Securities to be redeemed and shall state:
(a) the Redemption Date;
(b) the redemption price and the amount of accrued interest, if any, to
be paid;
(c) the name and address of the Paying Agent;
(d) that Securities called for redemption must be surrendered to the
Paying Agent to collect the redemption price and accrued interest, if any;
(e) that, unless the Company defaults in making the redemption payment,
interest on Securities called for redemption ceases to accrue on and after
the Redemption Date and the only remaining right of the Holders of such
Securities of such series is to receive payment of the redemption price upon
surrender to the Paying Agent of the Securities redeemed;
(f) if any Security is to be redeemed in part, the portion of the
principal amount (equal to $1,000 or any integral multiple thereof) of such
Security to be redeemed and that, on or after the Redemption Date, upon
surrender of such Security, a new Security or Securities in aggregate
principal amount equal to the unredeemed portion thereof will be issued
without charge to the Securityholder;
(g) if less than all of the Securities are to be redeemed, the
identification of the particular Securities (or portion thereof) to be
redeemed, as well as the aggregate principal amount of Securities to be
redeemed and the
<PAGE>
-41-
aggregate principal amount of Securities estimated to be outstanding after
such partial redemption; and
(h) the CUSIP number or numbers, if any, pursuant to Section 2.13.
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense.
SECTION 3.4 Effect of Notice of Redemption.
------------------------------
Once notice of redemption is mailed, Securities called for redemption
become due and payable on the Redemption Date and at the redemption price. Upon
surrender to the Paying Agent, such Securities shall be paid at the redemption
price plus accrued interest to the Redemption Date, but interest installments
whose maturity is on or prior to such Redemption Date will be payable on the
relevant Interest Payment Dates to the Holders of record at the close of
business on the relevant record dates referred to in the Securities.
SECTION 3.5 Deposit of Redemption Price.
---------------------------
At least one Business Day prior to the Redemption Date, the Company
shall deposit with the Paying Agent in immediately available funds money
sufficient to pay the redemption price of and accrued interest on all Securities
or portions thereof to be redeemed on that date.
If any Security surrendered for redemption in the manner provided in the
Securities shall not be so paid on the Redemption Date due to the failure of the
Company or any Guarantor to deposit sufficient funds with the Paying Agent,
interest will continue to accrue from the Redemption Date until such payment is
made on the unpaid principal and, to the extent lawful, on any interest not paid
on such unpaid principal, in each case at the date and in the manner provided in
the Securities.
SECTION 3.6 Securities Redeemed in Part.
---------------------------
Upon surrender to the Paying Agent of a Security that is redeemed in
part, the Company shall execute and the Trustee shall authenticate for the
Holder a new Security (accompanied by a notation of Guarantee duly endorsed by
the Guarantors) equal in principal amount to the unredeemed portion of the
Security surrendered.
<PAGE>
-42-
ARTICLE IV
COVENANTS
---------
SECTION 4.1 Payment of Securities.
---------------------
The Company shall pay the principal of and interest on the Securities on
the dates and in the manner provided in the Securities and this Indenture.
An installment of principal or interest shall be considered paid on the
date due if the Trustee or the Paying Agent holds on such date immediately
available funds designated for and sufficient to pay such installment.
The Company shall pay interest on overdue principal and (to the extent
permitted by law) on overdue installments of interest at a rate equal to 11% per
---
annum.
- -----
SECTION 4.2 Maintenance of Office or Agency.
-------------------------------
The Company shall maintain in the Borough of Manhattan, the City of New
York, an office or agency, where Securities may be surrendered for registration
of transfer or exchange or for presentation for payment and where notices and
demands to or upon the Company in respect of the Securities and this Indenture
may be served. The Company will give prompt written notice to the Trustee of
the location, and any change in the location, of such office or agency. If at
any time the Company shall fail to maintain any such required office or agency
or shall fail to furnish the Trustee with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
address of the Trustee set forth in Section 13.2.
The Company may also from time to time designate one or more other
offices or agencies where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
- -------- -------
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, the City of New York, for such purposes. The Company will
give prompt written notice to the Trustee of any such designation or rescission
and of any change in the location of any such other office or agency.
<PAGE>
-43-
The Company hereby initially designates the corporate trust office of
the Trustee set forth in Section 13.2 as an agency of the Company in accordance
with Section 2.3.
SECTION 4.3 Corporate Existence.
-------------------
Subject to Article V, the Company shall do or cause to be done, at its
own cost and expense, all things necessary to and will cause each of its
Subsidiaries to, preserve and keep in full force and effect the corporate or
partnership existence and rights (charter and statutory), licenses and/or
franchises of the Company and each of its Subsidiaries; provided, however, that
-------- -------
subject to Article XI and the terms of any Security Document, the Company or any
of its Subsidiaries shall not be required to preserve any such rights, licenses
or franchises if the Board of Directors of the Company shall reasonably
determine that the preservation thereof is no longer desirable in the conduct of
the business of the Company or such Subsidiary and the loss thereof is not
adverse in any material respect to the Holders.
SECTION 4.4 Payment of Taxes and Other Claims.
---------------------------------
The Company shall pay or discharge or cause to be paid or discharged,
before the same shall become delinquent, (a) all taxes, assessments and
governmental charges levied or imposed upon its or its Subsidiaries' income,
profits or property and (b) all lawful claims for labor, materials and supplies
which, if unpaid, might by law become a Lien upon its property; provided,
--------
however, that, subject to the terms of the applicable Security Documents, the
- -------
Company shall not be required to pay or discharge or cause to be paid or
discharged any such tax, assessment, charge or claim whose amount, applicability
or validity is being contested in good faith by appropriate negotiations or
proceedings and for which disputed amounts adequate reserves (in the good faith
judgment of the Board of Directors of the Company) have been made.
SECTION 4.5 Maintenance of Properties; Insurance;
Books and Records; Compliance with Law.
--------------------------------------
(a) Subject to, and in compliance with, the provisions of Sections 11.3
and 11.4 and to the provisions of the applicable Security Documents, the Company
shall, and shall cause each of its Subsidiaries to, at all times cause all
properties used or useful in the conduct of its business to be maintained and
kept in good condition, repair and working order (reasonable wear and tear
excepted) and supplied with all necessary equipment, and shall
<PAGE>
-44-
cause to be made all necessary repairs, renewals, replacements, betterments and
improvements thereto.
The Company and each of its Subsidiaries shall maintain insurance
subject to the provisions of the applicable Security Documents in such amounts
and covering such risks as are usually and customarily carried with respect to
similar facilities according to their respective locations.
The Company shall and shall cause each of its Subsidiaries to keep
proper books of record and account, in which full and correct entries shall be
made of all financial transactions and the assets and business of the Company
and each Subsidiary of the Company, in accordance with GAAP consistently applied
to the Company and its Subsidiaries taken as a whole.
The Company shall and shall cause each of its Subsidiaries to comply
with all statutes, laws, ordinances, or government rules and regulations to
which it is subject, non-compliance with which would materially adversely affect
the business, prospects, earnings, properties, assets or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole.
SECTION 4.6 Guarantees.
----------
The Company shall at all times ensure that each Guarantee shall remain
in full force and effect and shall not be subordinated in right of payment to
any Indebtedness of the Guarantors.
SECTION 4.7 Compliance Certificates.
-----------------------
(a) The Company and each Guarantor shall deliver to the Trustee, within
45 days after the end of each of the first three quarters of the Company's
fiscal year, and within 90 days after the end of such fiscal year, Officers'
Certificates of the Company and each Guarantor stating (i) that a review of the
activities of the Company or such Guarantor, as the case may be, during the
preceding fiscal quarter or year, as the case may be, has been made under the
supervision of the signing Officers with a view to determining whether the
Company or such Guarantor, as the case may be, has kept, observed, performed and
fulfilled its obligations under this Indenture, and (ii) that, to the best
knowledge of each Officer signing such certificate, the Company or such
Guarantor, as the case may be, has kept, observed, performed and fulfilled each
and every covenant contained in this Indenture and is not in default in the
performance or observance of any of the terms, provisions and
<PAGE>
-45-
conditions hereof (or, if a Default or Event of Default shall have occurred,
describing all such Defaults or Events of Default of which such Officers may
have knowledge, their status and what action the Company or such Guarantor, as
the case may be, is taking or proposes to take with respect thereto).
(b) So long as (and to the extent) not contrary to the then current
recommendations of the American Institute of Certified Public Accountants, the
annual financial statements delivered pursuant to Section 4.8 shall be
accompanied by a written statement of the Company's independent public
accountants that in making the examination necessary for certification of such
annual financial statements nothing has come to their attention that would lead
them to believe that the Company has violated any provisions of this Indenture
or, if any such violation has occurred, specifying the nature and period of
existence thereof, it being understood that such accountants shall not be liable
directly or indirectly to any Person for any failure to obtain knowledge of any
such violation.
(c) The Company and each Guarantor shall, so long as any of the
Securities are outstanding, deliver to the Trustee, forthwith upon any Officer
becoming aware of any Default or Event of Default, an Officers' Certificate
specifying such Default or Event of Default and what action the Company is
taking or proposes to take with respect thereto.
SECTION 4.8 Reports.
-------
(a) Whether or not required by the rules and regulations of the
Commission, so long as any Securities are outstanding, the Company shall furnish
to the Holders of securities (i) all quarterly and annual financial information
that would be required to be contained in a filing with the SEC on Forms 10-Q
and 10-K if the Company were required to file such Forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its Subsidiaries, and, with respect to the annual information
only, a report thereon by the Company's certified independent accountants and
(ii) all reports that would be filed with the SEC on Form 8-K if the Company
were required to file such reports. In addition, whether or not required by the
rules and regulations of the SEC, the Company will file a copy of all such
information and reports with the SEC for public availability (unless the SEC
will not accept such a filing) and make such information available to investors
who request it in writing. Upon qualification of this Indenture under the TIA,
the Company shall also comply with the provisions of TIA Section 314(a).
<PAGE>
-46-
(b) For so long as any of the Securities remain outstanding, the
Company shall furnish to the Holders and beneficial Holders of Securities and to
prospective purchasers of Securities designated by the Holders of Transfer
Restricted Securities (as defined in the Registration Rights Agreement) and to
broker dealers, upon their request, the information required to be delivered
pursuant to Rule 144(d)(4) under the Securities Act.
SECTION 4.9 Further Assurance to the Trustee.
--------------------------------
The Company shall, upon request of the Trustee, execute and deliver such
further instruments and do such further acts as may reasonably be necessary or
proper to carry out more effectively the provisions of this Indenture and the
Security Documents.
SECTION 4.10 Limitation on Additional Company
Indebtedness.
--------------------------------
The Company shall not incur any Indebtedness (including any Acquired
Indebtedness), except for the following (each of which shall be given
independent effect):
(i) Indebtedness under the Securities and this Indenture;
(ii) Indebtedness which, when aggregated with any Indebtedness of CPC
or Caribbean incurred pursuant to paragraph (vii) of Section 4.11, does not
exceed the greater of (a) Indebtedness outstanding from time to time
pursuant to the commitments, advance rates and definitions of "Eligible
Receivables" and "Eligible Inventory" in effect from time to time under the
Revolving Credit Facility and (b) $25,000,000;
(iii) Indebtedness of the Company outstanding on the date on which the
Securities are originally issued and included in the Consolidated Financial
Statements;
(iv) Indebtedness if, immediately after giving pro forma effect to the
incurrence thereof, the Consolidated Interest Coverage Ratio of the Company
would be greater than or equal to 2.25:1.00 on or prior to December 31, 1999
and 2.50:1.00 thereafter;
(v) Indebtedness incurred in connection with or arising out of
Capitalized Lease Obligations or secured by Liens permitted under paragraph
(iii) of Section 4.13 in an aggregate amount at any time outstanding which,
when
<PAGE>
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aggregated with any Indebtedness incurred pursuant to paragraph (iv) of
Section 4.11 does not exceed $10,000,000; provided that such Indebtedness
--------
arising out of Capitalized Lease Obligations is incurred in accordance with
paragraph (vi) of Section 4.13;
(vi) Interest Rate Protection Obligations of the Company covering
Indebtedness of the Company (which Indebtedness (A) bears interest at
fluctuating interest rates and (B) is otherwise permitted to be incurred
under this Section 4.10) to the extent the notional principal amount of such
Interest Rate Protection Obligations does not exceed the principal amount of
the Indebtedness to which such Interest Rate Protection Obligations relate;
(vii) Indebtedness arising under any appeal and reimbursement
obligation entered into with respect to any judgment;
(viii) Indebtedness in the nature of or in connection with (i) any Sale-
Leaseback Transaction permitted under Section 4.12 below, (ii) a guarantee
of the 1996 Sale/Leaseback, or (iii) a refinancing or replacement of the
1996 Sale/Leaseback, so long as any such Indebtedness incurred pursuant to
clause (i) or (iii) is incurred pursuant to the Consolidated Interest
Coverage Ratio test set forth in paragraph (iv) of this Section 4.10;
(ix) any replacements, renewals, refinancings and extensions of the
Indebtedness incurred under clauses (i) through (iv) above; provided
--------
that any such replacement, renewal, refinancing and extension (A) shall not
provide for any mandatory redemption, amortization or sinking fund
requirement in an amount greater than or at a time prior to the amounts and
times specified in the Indebtedness being replaced, renewed, refinanced or
extended, and (B) shall not exceed the principal amount (plus accrued
interest) of the Indebtedness being replaced, renewed, refinanced or
extended; and
(x) Indebtedness under any guarantees by the Company of any
obligations of CPC or Caribbean outstanding from time to time under the
Revolving Credit Facility.
SECTION 4.11 Limitation on Additional Subsidiary
Indebtedness.
-----------------------------------
<PAGE>
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The Company shall not cause or permit any Subsidiary to incur any
Indebtedness (including any Acquired Indebtedness), except for the following
(each of which shall be given independent effect):
(i) Indebtedness under the Guarantees;
(ii) Indebtedness issued to and held by the Company or a Wholly-Owned
Subsidiary of the Company;
(iii) Indebtedness of Subsidiaries outstanding on the date on which the
Securities are originally issued and included in the Consolidated Financial
Statements;
(iv) Indebtedness incurred in connection with or arising out of
Capitalized Lease Obligations or secured by Liens permitted under paragraph
(iii) of Section 4.13 in an aggregate amount at any time outstanding which,
when aggregated with any Indebtedness incurred pursuant to Section 4.10(v),
does not exceed $10,000,000; provided that such Indebtedness arising out of
--------
Capitalized Lease Obligations is incurred in accordance with paragraph (vi)
of Section 4.13;
(v) Indebtedness in the nature of or in connection with any Sale-
Leaseback Transaction permitted under Section 4.12 or in connection with a
refinancing or replacement of the 1996 Sale/Leaseback, so long as any such
Indebtedness is incurred pursuant to the Consolidated Interest Coverage
Ratio test set forth in paragraph (iv) of Section 4.10 above;
(vi) Indebtedness under any guarantees by CPC and Caribbean of the
obligations outstanding from time to time under the Revolving Credit
Facility; and
(vii) Indebtedness which, when aggregated with any Indebtedness of the
Company incurred pursuant to paragraph (ii) of Section 4.10, does not exceed
the greater of (a) Indebtedness outstanding from time to time pursuant to
the commitments, advance rates and definitions of "Eligible Receivables" and
"Eligible Inventory" in effect from time to time under the Revolving Credit
Facility and (b) $25,000,000.
SECTION 4.12 Limitation on Sale-Leaseback
Transactions.
----------------------------
<PAGE>
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(a) The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any Sale-Leaseback Transaction other than the 1996
Sale/Leaseback.
(b) Notwithstanding paragraph (a), the Company and its Subsidiaries may
enter into Sale-Leaseback Transactions if (i) after giving effect to any such
Sale-Leaseback Transaction, the Company is in compliance with paragraph (iv) of
Section 4.10 or the applicable Company Subsidiary is in compliance with
paragraph (v) of Section 4.11 and, (ii) the net proceeds of such Sale-Leaseback
Transaction are at least equal to the Fair Market Value of such property
(determined by the Company's Board of Directors), and the Company or such
Subsidiary applies the Net Cash Proceeds of the sale as provided in Section
4.15.
SECTION 4.13 Limitation on Liens.
-------------------
The Company shall not, and shall not permit, cause or suffer any
Subsidiary of the Company to, create, incur, assume or suffer to exist any Lien
of any kind upon any property or assets now owned or hereafter acquired by the
Company, except for the following:
(i) Liens existing as of the Issue Date and disclosed in the Security
Documents on such date and Liens created by the Securities, this Indenture
and the Security Documents;
(ii) Permitted Liens on property and assets not constituting Collateral
and certain Liens on the Collateral to the extent permitted by the Security
Documents;
(iii) Liens to secure the payment of all or a part of the purchase price
of assets or property acquired or constructed in the ordinary course of
business after the date on which the Securities are originally issued;
provided that (a) the aggregate principal amount of Indebtedness secured by
--------
such Liens shall not exceed the lesser of cost or Fair Market Value of the
assets or property so acquired or constructed and shall not, in any event,
exceed $15,000,000, provided, however, that for the purpose of calculating
-------- -------
the amount of permitted under this clause (a), Indebtedness incurred to
refinance or replace the 1996 Sale/Leaseback and secured by such Liens shall
not be included, (b) the Indebtedness secured by such Liens shall have
otherwise been permitted to be incurred under this Indenture and (c) such
Liens shall not encumber any other assets or property of the Company or any
of its Subsidiaries and shall attach to such assets or property
<PAGE>
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within 60 days of the construction or acquisition of such assets or
property;
(iv) Liens on the assets or property of a Subsidiary of the Company
existing at the time such Subsidiary became a Subsidiary of the Company and
not incurred as a result of (or in connection with or in anticipation of)
such Subsidiary becoming a Subsidiary of the Company; provided that such
--------
Liens do not extend to or cover any property or assets of the Company
or any of its Subsidiaries (other than the property or assets so acquired);
(v) Liens on the Inventory and Accounts of the Company, CPC and
Caribbean securing the obligations under the Revolving Credit Facility;
(vi) any Lien pursuant to Capitalized Lease Obligations not to exceed
$10,000,000 in the aggregate, provided such Liens do not extend to or cover
--------
any property or assets of the Company or any of its Subsidiaries (other than
the property or assets subject to such Capitalized Lease Obligations);
(vii) leases and subleases of real property which do not interfere with
the ordinary conduct of the business of the Company or any of its
Subsidiaries, and which are made on customary and usual terms applicable to
similar properties;
(viii) Liens securing (a) Indebtedness which is incurred to replace or
refinance the 1996 Sale/Leaseback or (b) Indebtedness which has been secured
by a Lien permitted under this Indenture and is permitted to be refinanced
under this Indenture; provided that none of such Liens extend to or cover
--------
any property or assets of the Company or any of its Subsidiaries not
securing the 1996 Sale/Leaseback or Indebtedness so replaced or refinanced,
as the case may be;
(ix) Liens securing the 1996 Sale/Leaseback and Previously
Leased/Financed Equipment, including Liens on the Previously Leased/Financed
Equipment which may in the future secure the 1996 Sale/Leaseback; and
(x) in addition to Liens permitted under clauses (i)-(viii) above,
Liens securing an aggregate of $5,000,000 of Indebtedness or other
obligations.
SECTION 4.14 Limitation on Restricted Payments.
---------------------------------
<PAGE>
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(a) Subject to Section 4.14(b), the Company shall not, and shall not
cause, suffer or permit any of its Subsidiaries to, directly or indirectly, make
any Restricted Payment, unless:
(i) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted Payment;
(ii) the Company is able to incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Interest Coverage Ratio test set
forth in paragraph (iv) of Section 4.10; and
(iii) immediately after giving effect to such Restricted Payment, the
aggregate of all Restricted Payments declared or made after the date on
which the Securities are originally issued does not exceed the sum of (a)
75% of the Consolidated Net Income of the Company (or in the event such
Consolidated Net Income shall be a deficit, minus 100% of such deficit) from
January 1, 1997, (b) 100% of the aggregate net cash proceeds and the Fair
Market Value of marketable securities received by the Company from the issue
or sale, after the Issue Date, of Capital Stock (other than Disqualified
Stock) of the Company, or any Indebtedness or other securities of the
Company convertible into or exercisable for Capital Stock (other than
Disqualified Stock) of the Company which has been so converted or exercised,
as the case may be, plus (c) solely to the extent such Restricted Payment is
made to provide Continental Can with the funds necessary to purchase shares
of the Company pursuant to the Merrywood Agreement, $7,500,000, provided
--------
that at the time of such Restricted Payment made pursuant to this
clause (c), the Consolidated Interest Coverage Ratio computed on a pro forma
basis is greater than 2.75:1.00. For purposes of determining under clause
(b) above the amount expended for Restricted Payments, cash distributed
shall be valued at the face amount thereof and property other than cash
shall be valued at its Fair Market Value.
(b) The provisions of Section 4.14(a) shall not prohibit:
(i) the payment of any dividend within 60 days after the date of
declaration thereof, if at such date of declaration such payment would
comply with the provisions of this Indenture;
<PAGE>
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(ii) the retirement of any shares of Capital Stock of the Company in
exchange for, or out of, the Net Proceeds of the substantially concurrent
sale (other than to a Subsidiary of the Company) of other shares of Capital
Stock of the Company (other than Disqualified Stock); and
(iii) the redemption or retirement of subordinated Indebtedness of the
Company in exchange for, by conversion into or out of the Net Proceeds of, a
substantially concurrent (x) sale or issuance of Capital Stock of the
Company or (y) incurrence of subordinated Indebtedness of the Company that
is contractually subordinated in right of payment to the Securities and that
is permitted to be incurred under Section 4.10;
In determining the amount of Restricted Payments permissible under
clause (ii) of paragraph (a) above, the amounts expended pursuant to clauses
(i) through (iii) of paragraph (b) above shall be included as Restricted
Payments.
SECTION 4.15 Disposition of Proceeds of Asset Sales.
--------------------------------------
(a) The Company shall not, and shall not permit any of its Subsidiaries to,
make any Asset Sale unless (i) such Asset Sale is for Fair Market Value, (ii)
the proceeds therefrom consist of at least 85% in cash and/or Cash Equivalents,
(iii) if such Asset Sale involves Collateral it shall be made in compliance with
the provisions of Article XI, and (iv) the Company shall commit to apply the Net
Cash Proceeds of such Asset Sale within 270 days of receipt thereof, and shall
apply such Net Cash Proceeds within 360 days of receipt thereof, as follows:
(i) first, to the extent such Net Cash Proceeds are received from an
Asset Sale involving the sale, transfer or disposition of Inventory or
Accounts ("Working Capital Proceeds"), to satisfy all mandatory repayment
obligations arising by reason of such Asset Sale;
(ii) second, any Working Capital Proceeds remaining after application
pursuant to the preceding paragraph (i), together with any Net Cash Proceeds
received from an Asset Sale not involving the sale, transfer or disposition
of Inventory or Accounts (the "Available Amount"), the Company shall make an
offer to purchase (the "Asset Sale Offer") from all Holders of Securities,
up to a maximum principal amount (expressed as a multiple of $1,000) of
Securities equal to the Available Amount at a purchase price equal to 100%
of the principal
<PAGE>
-53-
amount thereof plus accrued and unpaid interest thereon, if any, to the date
of purchase, provided, however, that the Company will not be required to
-------- -------
apply pursuant to this paragraph (ii) Net Cash Proceeds
received from any Asset Sale if, and only to the extent that, such Net Cash
Proceeds are committed in writing to be applied to acquire property or
assets in lines of business related to the Company's and its Subsidiaries'
business at such time (a "Permitted Related Acquisition") within 270 days of
such Asset Sale, and are so applied within 360 days of such Asset Sale, and
the property and assets so acquired are made subject to the Lien of the
Indenture and the applicable Security Documents pursuant to Article XI; and,
provided, further, that the Company may defer the Asset Sale Offer until
-------- -------
there is an aggregate unutilized Available Amount equal to or in excess of
$5,000,000 resulting from one or more Asset Sales (at which time, the entire
unutilized Available Amount, and not just the amount in excess of
$5,000,000, shall be applied as required pursuant to this paragraph).
Notwithstanding the foregoing, the sale or other disposition of assets
subject to the 1996 Sale/Leaseback (including any Previously Leased/Financed
Equipment which becomes subject to the 1996 Sale/Leaseback) in connection with a
refinancing or replacement thereof shall not be deemed to be an Asset Sale so
long as such sale or disposition is committed to in writing within 270 days of
the termination of the 1996 Sale/Leaseback as originally executed and such
proceeds are so applied within 360 days of the date of such termination.
(b) Whenever Net Cash Proceeds in excess of $1,000,000 from any Asset
Sale are received by the Company and such Net Cash Proceeds may, through the
passage of time or otherwise, be required to be applied to the purchase of
Securities pursuant to this Section 4.15, the Company shall deposit such Net
Cash Proceeds with the Trustee as Trust Moneys subject to disposition as
provided in this Section 4.15 or as provided in Section 11.4 or Article XII, and
such Net Cash Proceeds shall be set aside by the Trustee pending application to
either the purchase of Securities or its other permitted applications. Such Net
Cash Proceeds shall be invested by the Trustee in Permitted Investments pursuant
to the direction of the Company which shall specify the Permitted Investment in
which such Net Cash Proceeds shall be invested and the maturity date of such
investment; provided, however, that in no event shall the Company specify a
-------- --------
maturity date later than the Asset Sale Payment Date. The Company or its
relevant Subsidiary,
<PAGE>
-54-
as applicable, shall be entitled to any interest or dividends accrued, earned or
paid on such Permitted Investments.
(c) The Company shall provide the Trustee with notice of the Asset Sale
Offer at least 30 days before any notice of any Asset Sale Offer is mailed to
Holders of the Securities (unless shorter notice is acceptable to the Trustee).
Notice of an Asset Sale Offer shall be mailed by the Company to all Holders of
Securities not less than 30 days nor more than 60 days before the Asset Sale
Payment Date at their last registered address with a copy to the Trustee and the
Paying Agent. The Asset Sale Offer shall remain open from the time of mailing
for at least 20 Business Days and until at least 5:00 p.m., New York City time,
on the Asset Sale Payment Date. The notice, which shall govern the terms of the
Asset Sale Offer, shall include such disclosures as are required by law and
shall state:
(i) that the Asset Sale Offer is being made pursuant to this Section
4.15;
(ii) the purchase price (including the amount of accrued interest, if
any) for each Security and the Asset Sale Payment Date;
(iii) that any Security not tendered or accepted for payment will
continue to accrue interest in accordance with the terms thereof;
(iv) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the Asset Sale Offer shall cease
to accrue interest after the Asset Sale Payment Date;
(v) that Holders electing to have Securities purchased pursuant to an
Asset Sale Offer will be required to surrender their Securities to the
Paying Agent at the address specified in the notice prior to 5:00 p.m., New
York City time, on the Asset Sale Payment Date and must complete any form
letter of transmittal proposed by the Company and acceptable to the Trustee
and the Paying Agent;
(vi) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than 5:00 p.m., New York City time, on the
Asset Sale Payment Date, a tested telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of Securities the
Holder delivered for purchase, the Security certificate number
<PAGE>
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(if any) and a statement that such Holder is withdrawing his election to
have such Securities purchased;
(vii) that if Securities in a principal amount in excess of the
Available Amount are tendered pursuant to the Asset Sale Offer, the Company
shall purchase Securities on a pro rata basis among the Securities tendered
--- ----
(with such adjustments as may be deemed appropriate by the Company so that
only Securities in denominations of $1,000 or integral multiples of $1,000
shall be acquired);
(viii) that Holders whose Securities are purchased only in part will be
issued new Securities equal in principal amount to the unpurchased portion
of the Securities surrendered; and
(ix) the instructions that Holders must follow in order to tender
their Securities.
On or before the Asset Sale Payment Date, the Company shall (i) accept
for payment, on a pro rata basis among the Securities (subject to adjustment as
--- ----
contemplated by clause (vii) above), Securities or portions thereof tendered
pursuant to the Asset Sale Offer, (ii) cause the Trustee to liquidate the
necessary amount of Permitted Investments and to deposit with the Paying Agent
on the Asset Sale Payment Date money, in immediately available funds, in an
amount sufficient to pay the purchase price of all Securities or portions
thereof so tendered and accepted and (iii) deliver to the Paying Agent the
Securities so accepted together with an Officers' Certificate setting forth the
Securities or portions thereof tendered to and accepted for payment by the
Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security equal in principal amount to any unpurchased portion of the Security
surrendered. Any Securities not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. To the extent an Asset Sale
Offer is not fully subscribed to by the Holders, the Company may retain (free
and clear of the Lien of this Indenture and the Security Documents) any
unutilized portion of the Available Amount. The Paying Agent shall promptly
deliver to the Company the balance of any such Trust Moneys held by the Paying
Agent after payment to the holders of Securities as aforesaid. Notwithstanding
anything herein to the contrary, in no event shall the Trustee be liable for any
loss incurred as a result of the liquidation of any Permitted Investments absent
its gross negligence or willful misconduct.
<PAGE>
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The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to the
Asset Sale Offer. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Section 4.15, the Company shall
comply with the applicable securities laws and regulations and shall not be
deemed to have breached its obligations under this Section 4.15 by virtue
thereof.
(d) No transaction or action otherwise permitted under this Section
4.15 shall occur until the Trustee shall have received an Officers' Certificate
and an Opinion of Counsel as to (i) the Company's compliance with this Section
4.15 and with the Security Documents and (ii) the fulfillment of all conditions
precedent to such transaction or action.
SECTION 4.16 Limitation on Transactions with
Affiliates.
-------------------------------
The Company shall not, and shall not permit, cause or suffer any of
its Subsidiaries to, conduct any business or enter into any transaction or
series of transactions with or for the benefit of any of their respective
Affiliates (each an "Affiliate Transaction"), except in good faith and on terms
that are no less favorable to the Company or such Subsidiary, as the case may
be, than those that could have been obtained in a comparable transaction on an
arm's-length basis from a Person not an Affiliate of the Company or such
Subsidiary. All Affiliate Transactions (and each series of related Affiliated
Transactions which are similar or part of a common plan) involving aggregate
payments or other market value in excess of $500,000 shall be approved by the
Board of Directors of the Company, such approval to be evidenced by a Board
Resolution stating that the Board of Directors of the Company has determined
that such transaction complies with the provisions of this Section 4.16. If the
Company or any Subsidiary of the Company enters into an Affiliate Transaction
(or a series of related Affiliate Transactions which are similar or part of a
common plan) involving aggregate payments or other market value in excess of
$5,000,000, the Company or such Subsidiary, as the case may be, shall, prior to
the consummation thereof, obtain a favorable opinion as to the fairness of such
transaction or series of related transactions to the Company or the relevant
Subsidiary, as the case may be, from a financial point of view, from an
Independent Financial Advisor and file the same with the Trustee.
Notwithstanding the foregoing, the restrictions set forth in this Section 4.16
shall not apply to (i) transactions between the
<PAGE>
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Company and any of its Wholly-Owned Subsidiaries or among Wholly-Owned
Subsidiaries of the Company, (ii) Restricted Payments permitted under this
Indenture and (iii) customary directors' fees, indemnification and similar
arrangements, consulting fees, employee salaries (including the reimbursement of
Continental Can for a pro rata portion of the salaries and fringe benefit
--- ----
expenses of Messrs. Bainton and Yazgi and other officers of Continental Can
based on the actual time devoted by them to Company matters) and bonuses and
legal fees.
SECTION 4.17 Change of Control.
-----------------
In the event of a Change of Control (the date of such occurrence, the
"Change of Control Date"), the Company shall notify the holders of Securities in
writing of such occurrence and shall make an offer to purchase (the "Change of
Control Offer") on a Business Day (the "Change of Control Payment Date") not
later than 60 days following the Change of Control Date, all Securities then
outstanding at a purchase price equal to 101% of the principal amount thereof
plus accrued and unpaid interest, if any, to the Change of Control Payment Date.
Notice of a Change of Control Offer shall be mailed by the Company not
less than 30 days nor more than 45 days before the Change of Control Payment
Date to the holders of Securities at their last registered addresses with a copy
to the Trustee and the Paying Agent. The Change of Control Offer shall remain
open from the time of mailing for at least 20 Business Days and until 5:00 p.m.,
New York City time, on the Change of Control Payment Date. The notice, which
shall govern the terms of the Change of Control Offer, shall include such
disclosures as are required by law and shall state:
(a) that a Change of Control Offer is being made pursuant to this
Section 4.17 and that all Securities will be accepted for payment;
(b) the purchase price (including the amount of accrued interest, if
any) for each Security and the Change of Control Payment Date;
(c) that any Security not tendered for payment will continue to accrue
interest in accordance with the terms thereof;
(d) that, unless the Company defaults on making the payment, any
Security accepted for payment pursuant to the
<PAGE>
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Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;
(e) that Holders electing to have Securities purchased pursuant to a
Change of Control Offer will be required to surrender their Securities to
the Paying Agent at the address specified in the notice prior to 5:00 p.m.,
New York City time, on the Change of Control Payment Date and must complete
any form letter of transmittal proposed by the Company and acceptable to the
Trustee and the Paying Agent;
(f) that Holders of Securities will be entitled to withdraw their
election if the Paying Agent receives, not later than 5:00 p.m., New York
City time, on the Change of Control Payment Date, a tested telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of Securities the Holder delivered for purchase, the Security
certificate number (if any) and a statement that such Holder is withdrawing
his election to have such Securities purchased;
(g) that Holders whose Securities are purchased only in part will be
issued Securities equal in principal amount to the unpurchased portion of
the Securities surrendered;
(h) the instructions that Holders must follow in order to tender their
Securities; and
(i) the circumstances and relevant facts regarding such Change of
Control (including, but not limited to, information with respect to pro
forma historical financial information after giving effect to such Change of
Control, information regarding the Persons acquiring control and such
Persons' business plans going forward).
On the Change of Control Payment Date, the Company shall (i) accept
for payment Securities or portions thereof tendered pursuant to the Change of
Control Offer, (ii) deposit with the Paying Agent money sufficient to pay the
purchase price of all Securities or portions thereof so tendered and accepted
and (iii) deliver to the Trustee the Securities so accepted together with an
Officers' Certificate setting forth the Securities or portions thereof tendered
to and accepted for payment by the Company. The Paying Agent shall promptly
mail or deliver to the Holders of Securities so accepted payment in an amount
equal to the purchase price, and the Trustee shall promptly authenticate and
mail or deliver to such Holders a new Security equal in principal
<PAGE>
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amount to any unpurchased portion of the Security surrendered. Any Securities
not so accepted shall be promptly mailed or delivered by the Company to the
Holder thereof.
The Company shall comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act, and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to a
Change of Control Offer. To the extent that the provisions of any securities
laws or regulations conflict with provisions of this Section 4.17, the Company
shall comply with the applicable securities laws and regulations and shall not
be deemed to have breached its obligations under this Section 4.17 by virtue
thereof.
<PAGE>
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SECTION 4.18 Limitation on Dividends and Other
Payment Restrictions Affecting
Subsidiaries.
---------------------------------
The Company shall not, and shall not permit any Subsidiary to,
directly or indirectly, create or otherwise cause or suffer to exist, or enter
into any agreement with any Person that would cause, any consensual encumbrance
or restriction of any kind on the ability of any Subsidiary of the Company to
(a) pay dividends, in cash or otherwise, or make any other distributions on its
Capital Stock or any other interest or participation in, or measured by, its
profits owned by, or pay any Indebtedness owed to, the Company or a Subsidiary
of the Company, (b) make any loans or advances to the Company or any Subsidiary
of the Company or (c) transfer any of its properties or assets to the Company or
to any Subsidiary of the Company, except, in each case, for such encumbrances or
restrictions existing under or contemplated by or by reason of (i) restrictions
imposed by applicable law, (ii) customary non-assignment provisions of any
contract or any lease governing a leasehold interest of the Company or any
Subsidiary of the Company, (iii) the Securities, this Indenture and the Security
Documents, (iv) any restrictions existing under or contemplated by agreements in
effect on the Issue Date, including, without limitation, restrictions under the
Revolving Credit Facility and the 1996 Sale/Leaseback as both are in effect on
such date, (v) any restrictions, with respect to a Subsidiary of the Company
that is not a Subsidiary of the Company on the date on which the Securities are
originally issued, in existence at the time such Person becomes a Subsidiary of
the Company (but not created in contemplation of such Person becoming a
Subsidiary) and (vi) any restrictions existing under any agreement that
refinances or replaces an agreement containing a restriction permitted by clause
(i) through (v) above, provided that the terms and conditions of any such
--------
restrictions under this clause (vi) are not materially less favorable to the
Holders than those under or pursuant to the agreement being replaced or the
agreement evidencing the Indebtedness being refinanced. Nothing contained in
this Section 4.18 shall prevent the Company or any of its Subsidiaries from
entering into any agreement (x) permitted under Section 4.13 or (y) restricting
the sale or other disposition of assets or property securing Indebtedness
evidenced by such agreement provided that the Company complies with Section
4.15.
SECTION 4.19 Limitation on Issuance of Preferred
Stock by Subsidiaries.
-----------------------------------
<PAGE>
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The Company shall not cause or permit any Subsidiary of the Company to
issue any Capital Stock other than Common Stock or to have outstanding at any
time any shares of Capital Stock other than Common Stock, except issuances of
Capital Stock to the Company, provided, however, that the Company is at all
-------- -------
times the sole beneficial and record owner of such Capital Stock.
SECTION 4.20 Impairment of Security Interest.
-------------------------------
The Company shall not, and shall not permit any of its Subsidiaries
to, take or knowingly or negligently omit to take any action, which action or
omission might or would have the result of materially impairing the security
interest in favor of the Trustee on behalf of the Holders of the Securities,
with respect to the Collateral, and the Company shall not grant to any Person
(other than the Trustee on behalf of the Holders of the Securities) any interest
whatsoever in the Collateral, except, in either case, as expressly permitted by
this Indenture and the Security Documents.
SECTION 4.21 Conflicting Agreements.
----------------------
The Company shall not, and shall not permit any of its Subsidiaries
to, enter into any agreement or instrument that by its terms expressly (i)
prohibits the Company from making any payments on or in respect of the
Securities in accordance with the terms thereof and of this Indenture, as in
effect from time to time, or (ii) requires that the proceeds received from the
sale of any Collateral be applied to repay, redeem or otherwise retire any
Indebtedness of any Person other than the Indebtedness represented by the
Securities, except as expressly permitted by this Indenture or the Security
Documents (other than the Revolving Credit Facility or 1996 Sale/Leaseback which
may provide for repayment of obligations owing thereunder to the extent of any
unutilized portion of any Available Amount in the event of an Asset Sale Offer
that is not fully subscribed to by the Securityholders as provided in Section
4.15).
SECTION 4.22 Amendment to Security Documents.
-------------------------------
The Company shall not, and shall not permit any Subsidiary of the
Company to, amend, modify or supplement, or permit or consent to any amendment,
modification or supplement of, any of the Security Documents in any way which
would be adverse to the Holders of the Securities or which would constitute a
Default under this Indenture or a default under any Security Document.
SECTION 4.23 Special Covenants of Each Guarantor.
-----------------------------------
<PAGE>
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Each Guarantor shall comply with each of the covenants contained in
this Indenture that impose restrictions or obligations on such Guarantor (by
virtue of being a Guarantor or otherwise) notwithstanding that the text of such
covenant is worded as a restriction on or obligation of the Company with respect
to such Guarantor.
SECTION 4.24 Real Property.
-------------
Prior to the authentication and delivery of any Securities pursuant to
Section 2.2, the Company, CPC or Caribbean, as applicable, will execute and
deliver to the Trustee a Mortgage, as required or allowed by the law of the
applicable jurisdiction, with respect to each Real Property listed on Schedule A
attached hereto and incorporated herein by reference. The Trustee shall not
have any responsibility to determine the sufficiency for the purposes of this
Indenture of any Mortgage so executed and delivered.
SECTION 4.25 Waiver of Stay, Extension
or Usury Laws.
-------------------------
Each of the Company and each Guarantor covenants (to the extent
permitted by law) that it will not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law that would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of or
interest on the Securities as contemplated herein, wherever enacted, now or at
any time hereafter in force, or that may affect the covenants or the performance
of this Indenture; and (to the extent permitted by law) each of the Company and
each Guarantor hereby expressly waives all benefit or advantage of any such law,
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
SECTION 4.26 Limitation on Investments,
Loans and Advances.
--------------------------
The Company shall not make and shall not permit any of its
Subsidiaries to make any capital contributions, advances or loans to, or
investments or purchases of Capital Stock in, any Person (collectively,
"Investments"), except: (i) Investments by the Company in or to any Wholly-
Owned Subsidiary and Investments in or to the Company or a Wholly-Owned
Subsidiary by any Subsidiary; (ii) Investments represented by accounts
receivable created or
<PAGE>
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acquired in the ordinary course of business; (iii) advances to employees in the
ordinary course of business; (iv) Investments under or pursuant to Interest Rate
Protection Agreements; (v) Investments, not exceeding $5,000,000 in the
aggregate, in joint ventures, partnerships or Persons that are not Wholly-Owned
Subsidiaries, provided that such Investments are made solely for the purpose of
--------
acquiring businesses related to the Company's business; (vi) Restricted Payments
permitted by Section 4.14 above; and (vii) Permitted Investments. Investments
other than those permitted by the foregoing provisions are referred to herein as
"Prohibited Investments."
SECTION 4.27 Ownership of Stock of
Wholly-Owned Subsidiaries.
-------------------------
The Company shall at all times maintain, or cause each Subsidiary to
maintain, ownership of 100% of each class of voting securities of, and all other
equity securities in, each Subsidiary of the Company existing on the date on
which the Securities are originally issued, except any Subsidiary that shall be
disposed of in its entirety or consolidated or merged with or into the Company
or another Subsidiary, in each case in accordance with Section 4.15 and Section
5.1.
ARTICLE V
SUCCESSOR CORPORATION
---------------------
SECTION 5.1 When Company May Merge, Etc.
---------------------------
Neither the Company nor any Guarantor shall consolidate with or merge
with or into or sell, assign, convey, lease or transfer all or substantially all
of its properties and assets, in a single transaction or through a series of
transactions, as an entirety, to any Person or group of affiliated Persons,
unless:
(a) the Company or such Guarantor, as the case may be, shall be the
continuing Person, or the resulting, surviving or transferee Person (the
"surviving entity") shall be a corporation organized and existing under the laws
of the United States, any State thereof or the District of Columbia;
(b) the surviving entity shall expressly assume, by a supplemental
indenture executed and delivered to the Trustee, in form and substance
reasonably satisfactory to the Trustee, in the case of a transaction involving
the Company, all of the obligations of the Company under the Securities, this
Indenture and the
<PAGE>
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Security Documents, or, in the case of a transaction involving a Guarantor, all
of the obligations of such Guarantor under the Securities, such Guarantor's
Guarantee, this Indenture and the Security Documents;
(c) immediately before and immediately after giving effect to such
transaction or series of transactions (including, without limitation, any
Indebtedness incurred or anticipated to be incurred in connection with or in
respect of such transaction or series of transactions), no Default or Event of
Default shall have occurred and be continuing;
(d) the Company or the surviving entity (if the transaction or series of
transactions involves the Company) shall, immediately before and immediately
after giving effect to such transaction or series of transactions (including,
without limitation, any Indebtedness incurred or anticipated to be incurred in
connection with or in respect of such transaction or series of transactions),
have a Consolidated Net Worth equal to or greater than the Consolidated Net
Worth of the Company immediately prior to such transaction or series of
transactions;
(e) immediately after giving effect to such transaction or series of
transactions on a pro forma basis, the Company or the surviving entity (if the
transaction or series of transactions involves the Company) would be permitted
to incur at least $1.00 of additional Indebtedness pursuant to the Consolidated
Interest Coverage Ratio test set forth in paragraph (iv) of Section 4.10;
(f) the Company or the surviving entity shall have delivered to the
Trustee an Officers' Certificate stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction or series of transactions, such supplemental
indenture, complies with this Section 5.1, and that all conditions precedent
provided for in this Indenture relating to such transaction or series of
transactions have been satisfied; and
(g) the Guarantors shall, by supplemental indenture, confirm that their
Guarantee shall apply to the surviving entity's obligations under the Securities
and this Indenture, as modified by such supplemental indenture, and confirm the
due and punctual performance of the Guarantee and every covenant in this
Indenture on the part of the Guarantors to be performed or observed; and
(h) neither the Company nor any Subsidiary would thereupon become
obligated with respect to any Indebtedness, nor any of its
<PAGE>
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property subject to any Lien, unless the Company or such Subsidiary could incur
such Indebtedness or create such Lien under this Indenture.
<PAGE>
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SECTION 5.2 Successor Entity Substituted.
----------------------------
Upon any consolidation, merger or any transfer of all or substantially
all of the assets of the Company in accordance with Section 5.1, the surviving
entity formed by such consolidation or into which the Company is merged or to
which such transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of, the Company under this Indenture with the
same effect as if such surviving entity had been named as the Company herein.
ARTICLE VI
DEFAULT AND REMEDIES
--------------------
SECTION 6.1 Events of Default.
-----------------
(a) An "Event of Default" occurs if:
(i) the Company defaults in the payment of interest on, or Liquidated
Damages (if any) with respect to, the Securities when the same becomes due
and payable and any such Default continues for a period of 30 days; or
(ii) the Company defaults in the payment of the principal of (or
premium, if any, on) the Securities when the same becomes due and payable at
maturity, upon acceleration, redemption or otherwise (including the failure
to make a payment to purchase Securities tendered pursuant to a Change of
Control Offer or an Asset Sale Offer); or
(iii) the Company or any Guarantor defaults in the performance of or
compliance with, or breaches, any term, covenant, condition, or provision of
the Security Documents, which default or breach shall continue unremedied
for 30 days after written notice to the Company by the Trustee or to the
Company and the Trustee by Holders of at least 25% in aggregate principal
amount of the outstanding Securities; or
(iv) the Company or any Guarantor defaults in the performance of, or
breaches, any covenant of this Indenture (other than defaults specified in
clause (i) or (ii) above), and such default or breach continues for a period
of 30 days after written notice to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the outstanding Securities; or
<PAGE>
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(v) the Company or any Subsidiary fails (a) to make any payment when
due with respect to any other Indebtedness in an aggregate principal amount
of $2,500,000 or more; or (b) to perform any term, covenant, condition or
provision of one or more classes of Indebtedness in an aggregate principal
amount of $2,500,000 or more, which failure, in the case of this clause (b),
results in an acceleration of the maturity thereof; or
(vi) one or more judgments, orders or decrees for the payment of money
in excess of $2,500,000, either individually or in an aggregate amount,
shall be entered against the Company or any of its Subsidiaries or any of
their respective properties and shall not be discharged and there shall have
been a period of 60 days during which a stay of enforcement of such judgment
or order, by reason of pending appeal or otherwise, shall not be in effect;
or
(vii) (A) either of the Guarantees shall cease to be in full force and
effect or any of the Security Documents shall cease to be in full force and
effect, or shall cease to give the Trustee in any material respect the
Liens, rights, powers and privileges purported to be created thereby
(including, without limitation, a perfected security interest in, and Lien
on, all of the Collateral to the extent provided for herein or in such
Security Documents) in favor of the Trustee for the benefit of the Holders
subject to no other Liens (in each case, except as permitted hereby and by
the Security Documents); or
(B) any provision of Article X shall cease to be in full force and
effect, or any Guarantor or any Person acting by or on behalf of any
Guarantor shall deny or disaffirm such Guarantor's obligations thereunder;
or
(viii) the Company, CPC or Caribbean pursuant to or within the meaning
of any Bankruptcy Law:
(A) commences a voluntary case or proceeding,
(B) consents to the entry of an order for relief against it in
an involuntary case or proceeding,
(C) consents to the appointment of a Custodian of it or for all
or substantially all of its property,
<PAGE>
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(D) makes a general assignment for the benefit of its creditors
or
(E) shall generally not pay its debts when such debts become due
or shall admit in writing its inability to pay its debts
generally; or
(ix) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(A) is for relief against the Company, CPC or Caribbean in an
involuntary case or proceeding,
(B) appoints a Custodian of the Company, CPC or Caribbean for
all or substantially all of its properties, or
(C) orders the liquidation of the Company, CPC or Caribbean,
and in each case the order or decree remains unstayed and in effect for 60 days;
provided, however, that if the entry of such order or decree is appealed and
- -------- -------
dismissed on appeal then the Event of Default hereunder by reason of the entry
of such order or decree shall be deemed to have been cured.
(b) For purposes of this Section 6.1, the term "Custodian" means any
receiver, trustee, assignee, liquidator, sequestrator or similar official
charged with maintaining possession or control over property for one or more
creditors.
(c) Subject to the provisions of Sections 7.1 and 7.2, the Trustee shall
not be charged with knowledge of any Event of Default unless written notice
thereof shall have been given to a trust officer at the corporate trust office
of the Trustee by the Company or any other Person.
SECTION 6.2 Acceleration.
------------
If an Event of Default (other than an Event of Default specified in
Section 6.1(a)(viii) or (ix) with respect to the Company, CPC or Caribbean)
occurs and is continuing, the Holders of at least 25% in principal amount of the
outstanding Securities may, by written notice to the Company and the Trustee,
and the Trustee upon the request of the Holders of not less than 25% in
principal amount of the outstanding Securities shall declare the principal of
and accrued interest on all the Securities to be due and payable
<PAGE>
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immediately. Upon any such declaration such amounts shall become due and
payable immediately. If an Event of Default specified in Section 6.1(a)(viii)
or (ix) with respect to the Company, CPC or Caribbean occurs and is continuing,
then the principal of and accrued interest on all the Securities shall ipso
----
facto become and be immediately due and payable without any declaration or other
- -----
act on the part of the Trustee or any Holder. The Holders of a majority in
aggregate principal amount of outstanding Securities may, by notice to the
Trustee, rescind such declaration of acceleration if all existing Events of
Default have been cured or waived, other than the non-payment of principal of
and accrued interest on the Securities that has become due solely as a result of
such acceleration and if the rescission of acceleration would not conflict with
any judgment or decree. No such rescission shall affect any subsequent default
or impair any right consequent thereto.
SECTION 6.3 Other Remedies.
--------------
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities, this Indenture or the Security
Documents.
All rights of action and claims under this Indenture or the Securities
may be enforced by the Trustee even if the Trustee does not possess any of the
Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
Each Holder, by accepting a Security, acknowledges that the exercise
of remedies by the Trustee with respect to the Collateral is subject to the
terms and conditions of the Security Documents and the proceeds received upon
realization of the Collateral shall be applied by the Trustee in accordance with
Section 6.10.
SECTION 6.4 Waiver of Past Default.
----------------------
Subject to Sections 6.7 and 9.2, the Holders of, in the aggregate, at
least a majority in principal amount of the outstanding Securities by notice to
the Trustee may waive an
<PAGE>
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existing Default or Event of Default and its consequences, except a Default
specified in Section 6.1(a)(i) or (ii) or in respect of any provision hereof
which cannot be modified or amended without the consent of the Holder so
affected pursuant to Section 9.2. When a Default or Event of Default is so
waived, it shall be deemed cured and ceases.
SECTION 6.5 Control by Majority.
-------------------
The Holders of at least a majority in principal amount of the
outstanding Securities may direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee or exercising any trust or
power conferred on it; provided, however, that the Trustee may refuse to follow
-------- -------
any direction that (i) conflicts with law or this Indenture, (ii) the Trustee
determines may be unduly prejudicial to the rights of another Securityholder, or
(iii) may involve the Trustee in personal liability unless the Trustee has
indemnification satisfactory to it in its sole discretion against any loss or
expense caused by its following such direction; and provided, further, that the
-------- -------
Trustee may take any other action deemed proper by the Trustee that is not
inconsistent with such direction.
SECTION 6.6 Limitation on Suits.
-------------------
A Securityholder may not pursue any remedy with respect to this
Indenture or the Securities unless:
(a) the Holder gives to the Trustee written notice of a continuing
Event of Default;
(b) the Holders of at least 25% in principal amount of the
outstanding Securities make a written request to the Trustee to pursue a
remedy;
(c) such Holder or Holders offer and, if requested, provide to the
Trustee indemnity reasonably satisfactory to the Trustee against any loss,
liability or expense;
(d) the Trustee does not comply with the request within 15 days after
receipt of the request and the offer and, if requested, provision of
indemnity; and
(e) during such 15-day period the Holders of a majority in principal
amount of the outstanding Securities do not give the Trustee a direction
inconsistent with the request.
<PAGE>
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The foregoing limitations shall not apply to a suit instituted by a
Holder for the enforcement of the payment of principal of or accrued interest on
such Security on or after the respective due dates set forth in such Security.
A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over such other
Securityholder.
SECTION 6.7 Rights of Holders To Receive Payment.
------------------------------------
Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of and interest on a Security, on or
after the respective due dates expressed in the Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, is
absolute and unconditional and shall not be impaired or affected without the
consent of such Holder except to the extent that the institution or prosecution
of such suit or the entry of judgment therein would, under applicable law,
result in the surrender, impairment or waiver of the Lien of this Indenture and
the Security Documents upon the Collateral.
SECTION 6.8 Collection Suit by Trustee.
--------------------------
If an Event of Default specified in Section 6.1(a)(i) or (ii) occurs
and is continuing, the Trustee may recover judgment in its own name and as
trustee of an express trust against the Company, the Guarantors or any other
obligor on the Securities for the whole amount of principal and accrued interest
remaining unpaid, together with interest overdue on principal and, to the extent
that payment of such interest is lawful, interest on overdue installments of
interest, in each case at the Interest Rate and such further amount as shall be
sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.9 Trustee May File Proofs of Claim.
--------------------------------
The Trustee shall be entitled and empowered to file such proofs of
claim and other papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Securityholders allowed in any judicial proceedings
relative to the Company, the Subsidiaries of the Company or any Guarantor (or
any
<PAGE>
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other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each
Securityholder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the
Securityholders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agent and
counsel, and any other amounts due the Trustee under Section 7.7. Nothing
herein contained shall be deemed to authorize the Trustee to authorize or
consent to or accept or adopt on behalf of any Securityholder any plan of
reorganization, arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee to vote in
respect of the claim of any Securityholder in any such proceeding.
SECTION 6.10 Priorities.
----------
If the Trustee collects any money pursuant to this Article VI or
pursuant to any of the Security Documents, it shall pay out such money in the
following order:
First: to the Trustee for amounts due under Section 7.7 and for amounts
due under any of the Security Documents;
Second: to Holders for interest accrued on the Securities, ratably,
without preference or priority of any kind, according to the amounts due
and payable on the Securities for interest;
Third: to Holders for principal amounts owing under the Securities,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Securities for principal; and
Fourth: to the Company or, to the extent the Trustee collects any amount
pursuant to Article X from any Guarantor, to such Guarantor.
The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to Securityholders pursuant to this
Section 6.10.
SECTION 6.11 Undertaking for Costs.
---------------------
<PAGE>
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In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.7, or a suit by Holders of more than 10% in aggregate
principal amount of the outstanding Securities.
ARTICLE VII
TRUSTEE
-------
SECTION 7.1 Duties of Trustee.
-----------------
(a) If an Event of Default known to the Trustee has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture and use the same degree of care and skill in its exercise
as a prudent Person would exercise or use under the circumstances in the conduct
of his own affairs.
(b) Except during the continuance of an Event of Default actually
known to the Trustee:
(i) The Trustee need perform only those duties as are specifically set
forth in this Indenture and no others and no implied covenants or
obligations shall be read into this Indenture against the Trustee.
(ii) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to
the Trustee and conforming to the requirements of this Indenture. However,
in the case of any such certificates or opinions which by any provision
hereof are specifically required to be furnished to the Trustee, the Trustee
shall examine such certificates and opinions to determine whether or not
they conform to the requirements of this Indenture.
<PAGE>
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(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) This paragraph does not limit the effect of paragraph (b) of this
Section 7.1.
(ii) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts.
(iii) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction received
by it pursuant to Section 6.2, 6.4 or 6.5.
(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or in the exercise of any of its
rights or powers if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 7.1.
(f) The Trustee shall not be liable for interest on any money received
by it except as the Trustee may agree in writing with the Company or any
Guarantor. Except as otherwise provided for in Section 7.1(g) below, money held
in trust by the Trustee need not be segregated from other funds except to the
extent required by law.
(g) Notwithstanding anything herein to the contrary, all Net Cash
Proceeds delivered to the Trustee shall be invested on behalf of the Company in
one or more Permitted Investments pursuant to the written directions of the
Company delivered to the Trustee. Such written directions shall specify the
Permitted Investment into which the Net Cash Proceeds shall be invested and the
maturity of such Permitted Investments, all subject to the requirements of this
Indenture.
(h) The Trustee may refuse to perform any duty or exercise any right
or power unless it is provided adequate funds to
<PAGE>
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enable it to do so and it receives indemnity satisfactory to it in its sole
discretion against any loss, liability, fee or expense.
<PAGE>
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SECTION 7.2 Rights of Trustee.
-----------------
Subject to Section 7.1:
(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any document believed by it to be genuine and to
have been signed or presented by the proper Person. The Trustee shall not be
bound to make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as
it may see fit, and, if the Trustee shall determine to make such further
inquiry or investigation, it shall be entitled to examine the books, records
and premises of the Company or any Guarantor, personally or by agent or
attorney.
(b) Before the Trustee acts or refrains from acting with respect to
any matter contemplated by this Indenture, it may require an Officers'
Certificate or an Opinion of Counsel, which shall conform to the provisions
of Section 13.5. The Trustee shall not be liable for any action it takes or
omits to take in good faith in reliance on such certificate or opinion.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent (other than the
negligence or willful misconduct of an agent who is an employee of the
Trustee) appointed with due care.
(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith which it reasonably believes to be authorized or
within its rights or powers.
(e) The Trustee may consult with counsel and the advice or opinion of
such counsel as to matters of law shall be full and complete authorization
and protection from liability in respect of any action taken, omitted or
suffered by it hereunder in good faith and in accordance with the advice or
opinion of such counsel.
(f) Subject to Section 9.2 hereof, the Trustee may (but shall not be
obligated to), without the consent of the Holders, give any consent, waiver
or approval required under
<PAGE>
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any of the Security Documents or by the terms hereof with respect to the
Collateral, but shall not without the consent of the Holders of a majority
in aggregate principal amount of the Securities at the time outstanding (i)
give any consent, waiver or approval or (ii) agree to any amendment or
modification of any of the Security Documents, in each case which will have
an adverse effect on the interests of any Holder. The Trustee shall be
entitled to request and conclusively rely on an Opinion of Counsel with
respect to whether any consent, waiver, approval, amendment or modification
will have an adverse effect on the interests of any Holder.
(g) Subject to clause (a) of Section 7.1 hereof, the Trustee shall be
under no obligation to exercise any of the rights or powers vested in it by
this Indenture at the request or direction of any Holder pursuant to this
Indenture, unless such Holder shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or direction.
SECTION 7.3 Individual Rights of Trustee.
----------------------------
The Trustee in its individual capacity or any other capacity may
become the owner or pledgee of Securities and may otherwise deal with the
Company, any Guarantor or their respective Subsidiaries and Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same
with like rights. However, the Trustee is subject to Sections 7.10 and 7.11.
SECTION 7.4 Trustee's Disclaimer.
--------------------
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the Securities, the Guarantees
or the Security Documents or the Collateral covered thereby, or of any insurance
thereon, and it shall not be accountable for the Company's use of the proceeds
from the issuance of the Securities, and it shall not be responsible for any
statement of the Company or any Guarantor in this Indenture, the Guarantee, the
Security Documents or any document issued in connection with the sale of
Securities or any statement in the Securities other than the Trustee's
certificate of authentication.
<PAGE>
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SECTION 7.5 Notice of Defaults.
------------------
If a Default or an Event of Default with respect to the Securities
occurs and is continuing and is known to the Trustee, the Trustee shall mail to
each Securityholder notice of the Default or Event of Default within 45 days
after the occurrence thereof. Except in the case of a Default or an Event of
Default in payment of principal of or interest on any Security, the Trustee may
withhold the notice to the Securityholders if a committee of its Trust Officers
in good faith determines that withholding the notice is in the interest of
Securityholders.
SECTION 7.6 Reports by Trustee to Holders.
-----------------------------
To the extent required by TIA Section 313(a), within 10 days after May
15 of each year commencing with 1997 and for as long as there are Securities
outstanding hereunder, the Trustee shall mail to each Securityholder the
Company's brief report dated as of such date that complies with TIA Section
313(a). The Trustee also shall comply with TIA Section 313(b) and TIA Section
313(c) and (d). A copy of such report at the time of its mailing to
Securityholders shall be filed with the SEC, if required, and each stock
exchange, if any, on which the Securities are listed.
The Company shall promptly notify the Trustee if the Securities become
listed on any stock exchange, and the Trustee shall comply with TIA Section
313(d).
SECTION 7.7 Compensation and Indemnity.
--------------------------
The Company and the Guarantors shall pay to the Trustee, the Paying
Agent and the Registrar from time to time reasonable compensation for their
respective services rendered hereunder or under the Security Documents. The
Trustee's, the Paying Agent's and the Registrar's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The
Company and the Guarantors shall reimburse the Trustee, the Paying Agent and the
Registrar upon request for all reasonable out-of-pocket disbursements, expenses
and advances (including fees and expenses of counsel) incurred or made by each
of them in addition to the compensation for their respective services. Such
expenses shall include the reasonable compensation, out-of-pocket disbursements
and expenses of the Trustee's, the Paying Agent's and the Registrar's agents and
counsel.
The Company and the Guarantors shall indemnify the Trustee, the Paying
Agent and the Registrar for, and hold each of
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them harmless against, any claim, demand, expense (including but not limited to
attorneys' fees and expenses), loss or liability incurred by each of them
arising out of or in connection with the administration of this Indenture or the
Security Documents and their respective duties hereunder or thereunder. Each of
the Trustee, the Paying Agent and the Registrar shall notify the Company and the
Guarantors promptly of any claim asserted against it for which it may seek
indemnity. However, failure by the Trustee, the Paying Agent or the Registrar
to so notify the Company and the Guarantors shall not relieve the Company or any
Guarantor of its obligations hereunder. The Company and the Guarantors need not
reimburse any expense or indemnify against any loss or liability incurred by the
Trustee, the Paying Agent or the Registrar through the Trustee's, the Paying
Agent's or the Registrar's, as the case may be, own willful misconduct,
negligence or bad faith.
To secure the Company's and the Guarantors' payment obligations in
this Section 7.7, each of the Trustee, the Paying Agent and the Registrar shall
have a lien prior to the Securities on all money or property held or collected
by it, in its capacity as Trustee, Paying Agent or Registrar, as the case may
be, except money or property held in trust to pay principal of or interest on
particular Securities.
When any of the Trustee, the Paying Agent and the Registrar incurs
expenses or renders services after an Event of Default specified in Section
6.1(a)(viii) or (ix) occurs, the expenses and the compensation for the services
are intended to constitute expenses of administration under any Bankruptcy Law.
SECTION 7.8 Replacement of Trustee.
----------------------
The Trustee may resign at any time by so notifying the Company and the
Guarantors in writing, such resignation to be effective upon the appointment of
a successor Trustee. The Holders of a majority in principal amount of the
outstanding Securities may remove the Trustee by so notifying the Trustee in
writing and may appoint a successor Trustee with the Company's consent, which
consent shall not be unreasonably withheld. The Company may remove the Trustee
if:
(a) the Trustee fails to comply with Section 7.10;
(b) the Trustee is adjudged a bankrupt or an insolvent;
<PAGE>
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(c) a receiver or other public officer takes charge of the Trustee or
its property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Company and the Guarantors shall
promptly appoint a successor Trustee. Within one year after the successor
Trustee takes office, the Holders of a majority in principal amount of the
Securities may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Immediately after that,
the retiring Trustee shall transfer all property held by it as Trustee to the
successor Trustee (subject to the lien provided in Section 7.7), the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. A successor Trustee shall mail notice of its succession to each
Securityholder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holders of at least 25% in principal amount of the outstanding Securities may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
Any resignation or removal of the Trustee pursuant to this Indenture
shall be deemed to be a resignation or removal of the Trustee in its capacity as
collateral agent or mortgagee under each of the Security Documents and any
appointment of a successor Trustee pursuant to this Indenture shall be deemed to
be an appointment of a successor collateral agent or mortgagee under each of the
Security Documents and such successor shall assume all of the obligations of the
Trustee pursuant to the Security Documents.
Notwithstanding replacement of the Trustee pursuant to this Section
7.8, the Company's and the Guarantors' obligations
<PAGE>
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under Section 7.7 shall continue for the benefit of the retiring Trustee.
SECTION 7.9 Successor Trustee by Merger, Etc.
--------------------------------
If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or national banking association, the resulting, surviving or
transferee corporation or national banking association without any further act
shall be the successor Trustee (and successor collateral agent or mortgagee, as
applicable, under each of the Security Documents) provided such corporation
shall be otherwise qualified and eligible under this Article VII.
SECTION 7.10 Eligibility; Disqualification.
-----------------------------
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1) and (2). The Trustee shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition. The Trustee shall comply with TIA Section
310(b); provided, however, that there shall be excluded from the operation of
-------- -------
TIA Section 310(b)(1) any indenture or indentures under which other securities,
or certificates of interest or participation in other securities, of the Company
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. The provisions of TIA Section 310 shall apply to the Company,
as obligor of the Securities.
SECTION 7.11 Preferential Collection of
Claims Against Company.
--------------------------
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein. The provisions of TIA Section 311 shall apply to the Company and each
Guarantor, as obligors on the Securities.
SECTION 7.12 Co-Trustee.
----------
(a) If at any time or times it shall be necessary or prudent in order
to conform to any law of any jurisdiction in which any of the Collateral shall
be located, or the Trustee shall be advised by counsel satisfactory to it, that
it is necessary or prudent in the interest of the Holders, or 25% of the Holders
of the outstanding Securities shall in writing so request the Trustee and the
Company, or the Trustee shall deem it desirable for its own
<PAGE>
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protection in the performance of its duties hereunder, the Trustee and the
Company shall execute and deliver all instruments and agreements necessary or
proper to constitute another bank or trust company, or one or more Persons
approved by the Trustee and the Company, either to act as co-trustee or co-
trustees (each, a "co-trustee") of all or any of the Collateral, jointly with
the Trustee, or to act as separate trustee or trustees of any such property. If
the Company shall not have joined in the execution of such instruments and
agreements within 10 days after it receives a written request from the Trustee
to do so, or if a notice of acceleration is in effect, the Trustee may act under
the foregoing provisions of this Section without the concurrence of the Company.
The Company hereby appoints the Trustee as its agent and attorney to act for it
under the foregoing provisions of this Section in either of such contingencies.
(b) Every separate trustee and every co-trustee, other than any
successor Trustee appointed pursuant to Section 7.8, shall, to the extent
permitted by law, be appointed and act and be such, subject to the following
provisions and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee hereunder shall be conferred or imposed and exercised or
performed by the Trustee and such separate trustee or separate trustees or
co-trustee or co-trustees, jointly, as shall be provided in the instrument
appointing such separate trustee or separate trustees or co-trustee or co-
trustees, except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations shall be exercised and performed by
such separate trustee or separate trustees or co-trustee or co-trustees;
(ii) no trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder; and
(iii) the Company and the Trustee, at any time by an instrument in
writing executed by them jointly, may accept the resignation of or remove
any such separate trustee or co-trustee and, in that case by an instrument
in writing executed by them jointly, may appoint a successor to such
separate trustee or co-trustee, as the case may be, anything contained
herein to the contrary notwithstanding. If the Company shall not have
joined in the execution of any such instrument within
<PAGE>
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10 days after it receives a written request from the Trustee to do so, or
if a notice of acceleration is in effect, the Trustee shall have the power
to accept the resignation of or remove any such separate trustee or co-
trustee and to appoint a successor without the concurrence of the Company,
the Company hereby appointing the Trustee its agent and attorney to act for
it in such connection in such contingency. If the Trustee shall have
appointed a separate trustee or separate trustees or co-trustee or co-
trustees as above provided, the Trustee may at any time, by an instrument
in writing, accept the resignation of or remove any such separate trustee
or co-trustee and the successor to any such separate trustee or co-trustee
shall be appointed by the Company and the Trustee, or by the trustee alone
pursuant to this Section.
ARTICLE VIII
DISCHARGE OF INDENTURE; DEFEASANCE
----------------------------------
SECTION 8.1 Termination of Company's Obligations.
------------------------------------
The Company may terminate its obligations under the Securities and
this Indenture, and the obligations of the Guarantors shall terminate, except
those obligations referred to in the penultimate paragraph of this Section 8.1,
if all Securities previously authenticated and delivered (other than destroyed,
lost or stolen Securities which have been replaced or paid) have been delivered
to the Trustee for cancellation and the Company has paid all sums payable by it
hereunder, or if:
(a) pursuant to Article III, the Company shall have (i) given notice
to the Trustee of the redemption of all of the Securities and (ii) either
(x) mailed to Holders notice(s) of the redemption of all of the Securities
under arrangements satisfactory to the Trustee for the giving of such
notice(s) or (y) deposited with the Trustee such notice(s) of redemption,
together with irrevocable instructions to the Trustee to mail such notice(s)
to Holders in accordance with Section 3.3;
(b) the Company shall have irrevocably deposited or caused to be
deposited with the Trustee or a trustee satisfactory to the Trustee, under
the terms of an irrevocable trust agreement in form and substance
satisfactory to the Trustee, as trust funds in trust solely for the benefit
of the Holders for that purpose, money or direct non-callable obligations
of, or non-callable obligations guaranteed by, the
<PAGE>
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United States of America for the payment of which guarantee or obligation
the full faith and credit of the United States is pledged ("U.S. Government
Obligations") maturing as to principal and interest in such amounts and at
such times as are sufficient without consideration of any reinvestment of
such interest, to pay principal of and interest on the outstanding
Securities to maturity or redemption, as the case may be, provided that the
Trustee shall have been irrevocably instructed to apply such money or the
proceeds of such U.S. Government Obligations to the payment of said
principal and interest with respect to the Securities; and
(c) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent providing for the termination of the Company's and the Guarantors'
obligation under the Securities and this Indenture have been complied with.
Notwithstanding the foregoing paragraph, the Company's obligations in
Sections 2.5, 2.6, 2.7, 2.8, 4.1, 4.2, 7.7, 7.8, 8.4 and 8.5 and the Guarantors'
obligations under Section 10.1 in respect thereof shall survive until the
Securities are no longer outstanding. After the Securities are no longer
outstanding, the Company's obligations in Sections 7.7, 8.4 and 8.5 and the
Guarantors' obligations under Section 10.1 in respect thereof shall survive.
After such delivery or irrevocable deposit the Trustee upon request
shall acknowledge in writing the discharge of the Company's and the Guarantors'
obligations under the Securities and this Indenture except for those surviving
obligations specified above.
SECTION 8.2 Legal Defeasance and Covenant
Defeasance.
----------------------------
(a) The Company may, at its option by Board Resolution, at any time,
with respect to the Securities, elect to have either paragraph (b) or paragraph
(c) below be applied to the outstanding Securities upon compliance with the
conditions set forth in paragraph (d).
(b) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (b), the Company shall be deemed to have been
released and discharged from its obligations with respect to the outstanding
Securities on the date the conditions set forth below are satisfied
(hereinafter, "legal
<PAGE>
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defeasance"). For this purpose, such legal defeasance means that the Company
shall be deemed to have paid and discharged the entire indebtedness represented
by the outstanding Securities, which shall thereafter be deemed to be
"outstanding" only for the purposes of paragraph (e) below and the other
Sections of and matters under this Indenture referred to in (i) and (ii) below,
and to have satisfied all its other obligations under such Securities and this
Indenture insofar as such Securities are concerned (and the Trustee, at the
expense of the Company, shall execute proper instruments acknowledging the
same), except for the following which shall survive until otherwise terminated
or discharged hereunder: (i) the rights of Holders of outstanding Securities to
receive solely from the trust fund described in paragraph (d) below and as more
fully set forth in such paragraph, payments in respect of the principal of and
interest on such Securities when such payments are due, (ii) the Company's
obligations with respect to such Securities under Sections 2.6, 2.7 and 4.2,
and, with respect to the Trustee, under Section 7.7 and the Guarantor's
obligations under Section 10.1 in respect thereof, (iii) the rights, powers,
trusts, duties and immunities of the Trustee hereunder and (iv) this Section
8.2. Subject to compliance with this Section 8.2, the Company may exercise its
option under this paragraph (b) notwithstanding the prior exercise of its option
under paragraph (c) below with respect to the Securities.
(c) Upon the Company's exercise under paragraph (a) of the option
applicable to this paragraph (c), the Company shall be released and discharged
from its obligations under any covenant contained in Article V and in Sections
4.5 and 4.7 through 4.27 with respect to the outstanding Securities on and after
the date the conditions set forth below are satisfied (hereinafter, "covenant
defeasance"), and the Securities shall thereafter be deemed to be not
"outstanding" for the purpose of any direction, waiver, consent or declaration
or act of Holders (and the consequences of any thereof) in connection with such
covenants, but shall continue to be deemed "outstanding" for all other purposes
hereunder. For this purpose, such covenant defeasance means that, with respect
to the outstanding Securities, the Company and any Guarantor may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.1, but, except as specified above, the remainder of this
Indenture and such Securities shall be unaffected thereby.
<PAGE>
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(d) The following shall be the conditions to application of either
paragraph (b) or paragraph (c) above to the outstanding Securities:
(i) the Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements
of Section 7.10 who shall agree to comply with the provisions of this
Section 8.2 applicable to it) as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal of and interest in respect thereof in
accordance with their terms will provide, not later than one day before the
due date of any payment, money in an amount, or (C) a combination thereof,
sufficient, in the opinion of a nationally recognized firm of independent
public accountants expressed in a written certification thereof delivered to
the Trustee, to pay and discharge and which shall be applied by the Trustee
(or other qualifying trustee) to pay and discharge principal of and interest
on the outstanding Securities on the Maturity Date of such principal or
installment of principal or interest in accordance with the terms of this
Indenture and of such Securities; provided, however, that the Trustee
-------- -------
(or other qualifying trustee) shall have received an irrevocable
written order from the Company instructing the Trustee (or other qualifying
trustee) to apply such money or the proceeds of such U.S. Government
Obligations to said payments with respect to the Securities;
(ii) no Default or Event of Default or event which with notice or lapse
of time or both would become a Default or an Event of Default with respect
to the Securities shall have occurred and be continuing on the date of such
deposit or, insofar as Sections 6.1(a)(viii) and (ix) are concerned, at any
time during the period ending on the 91st day after the date of such deposit
(it being understood that this condition shall not be deemed satisfied until
the expiration of such period);
(iii) such legal defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a Default or Event of Default under,
this Indenture or any other agreement or instrument to which the Company is
a party or by which it is bound;
<PAGE>
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(iv) in the case of an election under paragraph (b) above, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that (x)
the Company has received from, or there has been published by, the Internal
Revenue Service a ruling or (y) since the date of this Indenture, there has
been a change in the applicable Federal income tax law, in either case to
the effect that, and based thereon such opinion shall confirm that, the
Holders of the outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such legal defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such legal
defeasance had not occurred;
(v) in the case of an election under paragraph (c) above, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect that
the Holders of the outstanding Securities will not recognize income, gain or
loss for Federal income tax purposes as a result of such covenant defeasance
and will be subject to Federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such covenant
defeasance had not occurred;
(vi) in the case of an election under either paragraph (b) or (c)
above, an Opinion of Counsel to the effect that, (x) the trust funds will
not be subject to any rights of any other holders of Indebtedness of the
Company, and (y) after the 91st day following the deposit, the trust funds
will not be subject to the effect of any applicable Bankruptcy Law;
provided, however, that if a court were to rule under any such law in any
-------- -------
case or proceeding that the trust funds remained property of the Company, no
opinion needs to be given as to the effect of such laws on the trust funds
except the following: (A) assuming such trust funds remained in the
Trustee's possession prior to such court ruling to the extent not paid to
Holders of Securities, the Trustee will hold, for the benefit of the Holders
of Securities, a valid and enforceable security interest in such trust funds
that is not avoidable in bankruptcy or otherwise, subject only to principles
of equitable subordination, (B) the Holders of Securities will be entitled
to receive adequate protection of their interests in such trust funds if
such trust funds are used, and (C) no property, rights in property or other
interests granted to the Trustee or the Holders of Securities in exchange
for or with respect to any of such funds will be subject to any prior rights
of any other Person, subject only
<PAGE>
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to prior Liens granted under Section 364 of Title 11 of the U.S. Bankruptcy
Code (or any section of any other Bankruptcy Law having the same effect),
but still subject to the foregoing clause (B); and
(vii) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that (A) all conditions
precedent provided for relating to either the legal defeasance under
paragraph (b) above or the covenant defeasance under paragraph (c) above, as
the case may be, have been complied with and (B) if any other Indebtedness
of the Company shall then be outstanding or committed, such legal defeasance
or covenant defeasance will not violate the provisions of the agreements or
instruments evidencing such Indebtedness.
(e) All money and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this paragraph (e), the "Trustee") pursuant to paragraph (d)
above in respect of the outstanding Securities shall be held in trust and
applied by the Trustee, in accordance with the provisions of such Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(other than the Company) as the Trustee may determine, to the Holders of such
Securities of all sums due and to become due thereon in respect of principal and
interest, but such money need not be segregated from other funds except to the
extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to paragraph (d) above or the principal and interest received
in respect thereof other than any such tax, fee or other charge which by law is
for the account of the Holders of the outstanding Securities.
Anything in this Section 8.2 to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request,
in writing, by the Company any money or U.S. Government Obligations held by it
as provided in paragraph (d) above which, in the opinion of a nationally
recognized firm of independent public accountants expressed in a written
certification thereof delivered to the Trustee, are in excess of the amount
thereof which would then be required to be deposited to effect an equivalent
legal defeasance or covenant defeasance.
<PAGE>
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SECTION 8.3 Application of Trust Money.
--------------------------
The Trustee shall hold in trust money or U.S. Government Obligations
deposited with it pursuant to Sections 8.1 and 8.2, and shall apply the
deposited money and the money from U.S. Government Obligations in accordance
with this Indenture to the payment of principal of and interest on the
Securities.
SECTION 8.4 Repayment to Company or Guarantors.
----------------------------------
Subject to Sections 7.7, 8.1 and 8.2, the Trustee shall promptly pay
to the Company, or if deposited with the Trustee by the Guarantors, to the
Guarantors, upon receipt by the Trustee of an Officers' Certificate, any excess
money, determined in accordance with Sections 8.2(d)(i) and (e), held by it at
any time. The Trustee and the Paying Agent shall pay to the Company or the
Guarantors, as the case may be, upon receipt by the Trustee or the Paying Agent,
as the case may be, of an Officers' Certificate, any money held by it for the
payment of principal or interest that remains unclaimed for two years; provided,
--------
however, that the Trustee and the Paying Agent before being required to make any
- -------
payment may, but need not, at the expense of the Company cause to be published
once in a newspaper of general circulation in The City of New York or mail to
each Holder entitled to such money notice that such money remains unclaimed and
that after a date specified therein, which shall be at least 30 days from the
date of such publication or mailing, any unclaimed balance of such money then
remaining will be repaid to the Company. After payment to the Company or the
Guarantors, as the case may be, Securityholders entitled to money must look
solely to the Company for payment as general creditors unless an applicable
abandoned property law designates another Person, and all liability of the
Trustee or Paying Agent with respect to such money shall thereupon cease.
SECTION 8.5 Reinstatement.
-------------
If the Trustee or Paying Agent is unable to apply any money or U.S.
Government Obligations in accordance with this Indenture by reason of any legal
proceeding or by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application, then
and only then the Company's and each Guarantor's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had been made pursuant to this Indenture until such time as the Trustee
is permitted to apply all such money or U.S. Government Obligations in
accordance with this Indenture; provided, however, that if the Company or the
-------- -------
Guarantors have made
<PAGE>
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any payment of interest on or principal of any Securities because of the
reinstatement of their obligations, the Company or the Guarantors, as the case
may be, shall be subrogated to the rights of the holders of such Securities to
receive such payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
-----------------------------------
SECTION 9.1 Without Consent of Holders.
--------------------------
The Company and the Guarantors, when authorized by a Board Resolution
of each of them, and the Trustee may amend, waive or supplement this Indenture,
the Securities or any Security Document without notice to or consent of any
Securityholder:
(a) to cure any ambiguity, defect or inconsistency, provided that such
amendment or supplement does not adversely affect the rights of any Holder;
(b) to provide for uncertificated Securities in addition to or in
place of certificated Securities;
(c) to comply with any requirements of the SEC under the TIA;
to evidence the succession in accordance with Article V hereof of
another Person to the Company or a Guarantor and the assumption by any such
successor of the covenants of the Company herein and in the Securities;
(d) to mortgage, pledge or grant a security interest in favor of the
Trustee as additional security for the payment and performance of their
obligations under this Indenture, in any property or assets, including any
which are required to be mortgaged, pledged or hypothecated, or in which a
security interest is required to be granted, to the Trustee pursuant to any
Security Document or otherwise;
(e) to evidence and provide for the acceptance of appointment
hereunder by a separate or successor Trustee with respect to the Securities
and to add to or change any of the provisions of this Indenture as shall be
necessary to provide for or facilitate the administration of the trusts
hereunder
<PAGE>
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by more than one Trustee, pursuant to the requirements of Section 7.12; or
(g) to make any change that does not adversely affect the rights of
any Holder.
SECTION 9.2 With Consent of Holders.
-----------------------
Subject to Section 6.7 and the provisions of this Section 9.2, the
Company, the Guarantors and the Trustee may amend or supplement this Indenture,
the Securities or any of the Security Documents with the written consent of the
Holders of at least a majority in aggregate principal amount of the Securities
then outstanding. Subject to Section 6.7 and the provisions of this Section
9.2, the Holders of, in the aggregate, at least a majority in aggregate
principal amount of the outstanding Securities affected may waive compliance by
the Company or any Guarantor with any provision of this Indenture or the
Securities without notice to any other Securityholder. However, without the
consent of each Securityholder affected, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.4, may not:
(a) reduce the amount of Securities the Holders of which must consent
to an amendment, supplement or waiver of any provision of this Indenture,
the Securities or the Security Documents;
(b) reduce the rate of, change the method of calculation of, or extend
the time for, payment of interest on any Security;
(c) reduce the principal amount outstanding of or extend the fixed
maturity of any Security or alter the redemption provisions with respect
thereto;
(d) waive a default in the payment of the principal of, interest on,
Liquidated Damages with respect to, or redemption payment or an offer to
purchase required hereunder with respect to, any Security;
(e) make any Security payable in money other than that stated in the
Security;
(f) affect the ranking or security of the Securities;
(g) release any Guarantor from any of its obligations under its
Guarantee or this Indenture (other than as a result
<PAGE>
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of a merger of one of the Guarantors with or into the other Guarantor or the
Company or with another Wholly-Owned Subsidiary of the Company that assumes
all of such Guarantor's obligations under the Guarantee, this Indenture and
the Security Documents);
(h) impair the right to institute suit for the enforcement of any
payment on or with respect to the Securities; or
(i) modify this Section 9.2 or Section 6.4.
It shall not be necessary for the consent of the Holders under this
Section 9.2 to approve the particular form of any proposed amendment, supplement
or waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section 9.2
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.
SECTION 9.3 Compliance with Trust Indenture Act.
-----------------------------------
Every amendment to or supplement of this Indenture, the Security
Documents or the Securities shall comply with the TIA as then in effect.
SECTION 9.4 Revocation and Effect of Consents.
---------------------------------
Until an amendment or waiver becomes effective, a consent to it by a
Holder is a continuing consent by the Holder and every subsequent Holder of that
Security or portion of that Security that evidences the same debt as the
consenting Holder's Security, even if notation of the consent is not made on any
Security. However, any such Holder or subsequent Holder may revoke the consent
as to his Security or portion of a Security. Such revocation shall be effective
only if the Trustee receives the notice of revocation before the date the
amendment, supplement or waiver becomes effective. Notwithstanding the above,
nothing in this paragraph shall impair the right of any Securityholder under
Section 316(b) of the TIA.
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The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver. If a record date is fixed, then notwithstanding the
second and third sentences of the immediately preceding paragraph, those Persons
who were Holders at such record date (or their duly designated proxies), and
only those Persons, shall be entitled to consent to such amendment, supplement
or waiver or to revoke any consent previously given, whether or not such Persons
continue to be Holders after such record date. Such consent shall be effective
only for actions taken within 90 days after such record date.
After an amendment, supplement or waiver becomes effective, it shall
bind every Securityholder, unless it makes a change described in any of clauses
(a) through (i) of Section 9.2; if it makes such a change, the amendment,
supplement or waiver shall bind every subsequent Holder of a Security or portion
of a Security that evidences the same debt as the consenting Holder's Security.
<PAGE>
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SECTION 9.5 Notation on or Exchange of Securities.
-------------------------------------
If an amendment, supplement or waiver changes the terms of a Security,
the Trustee shall (in accordance with the specific direction of the Company)
request the Holder of the Security to deliver it to the Trustee. The Trustee
shall (in accordance with the specific direction of the Company) place an
appropriate notation on the Security about the changed terms and return it to
the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Security shall issue and the Trustee shall
authenticate a new Security that reflects the changed terms. Failure to make
the appropriate notation or issue a new Security shall not affect the validity
and effect of such amendment, supplement or waiver.
SECTION 9.6 Trustee To Sign Amendments, Etc.
-------------------------------
The Trustee shall sign any amendment, supplement or waiver authorized
pursuant to this Article IX if the amendment, supplement or waiver does not
adversely affect the rights, duties or immunities of the Trustee. If it does,
the Trustee may, but need not, sign it. In signing any amendment, supplement or
waiver, the Trustee shall be entitled to receive, if requested, an indemnity
satisfactory to it in its sole discretion and to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
any amendment, supplement or waiver authorized pursuant to this Article IX is
authorized or permitted by this Indenture. The Company may not sign an
amendment until its Board of Directors approves it.
ARTICLE X
GUARANTEE ARRANGEMENTS
----------------------
SECTION 10.1 Guarantee.
---------
Each Guarantor hereby jointly and severally unconditionally guarantees
(such guarantees collectively referred to as the "Guarantee") to each Holder of
a Security authenticated and delivered by the Trustee and to the Trustee and its
successors and assigns, irrespective of the validity and enforceability of this
Indenture, the Securities, the Security Documents or the obligations of the
Company or any other Guarantors to the Holders or the Trustee hereunder or
thereunder, that: (a) the principal of and any interest on the Securities will
be duly and punctually paid in full when due, whether at stated maturity, by
acceleration or otherwise, and interest on the overdue principal and (to the
extent
<PAGE>
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permitted by law) interest, if any, on the Securities and all other obligations
of the Company or the Guarantors to the Holders or the Trustee hereunder or
thereunder (including fees, expenses or other) will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof; and (b) in case
of any extension of time of payment or renewal of any Securities or any of such
other obligations, the same will be promptly paid in full when due or performed
in accordance with the terms of the extension or renewal, whether at stated
maturity, by acceleration or otherwise. Failing payment when due of any amount
so guaranteed, or failing performance of any other obligation of the Company to
the Holders, for whatever reason, each Guarantor will be obligated to pay, or to
perform or cause the performance of, the same immediately. An Event of Default
under this Indenture, the Security Documents or the Securities shall constitute
an event of default under this Guarantee, and shall entitle the Holders of
Securities to accelerate the obligations of the Guarantors hereunder in the same
manner and to the same extent as the obligations of the Company. This Guarantee
is intended to be superior to or pari passu in right of payment with all
---- -----
Indebtedness of the Guarantors. Each of the Guarantors hereby agrees that its
obligations hereunder shall be unconditional, irrespective of the validity,
regularity or enforceability of the Securities, the Security Documents or this
Indenture, the absence of any action to enforce the same, any waiver or consent
by any Holder of the Securities with respect to any provisions hereof or
thereof, any releases of Collateral, any release of any other Guarantor, any
delays in obtaining or realizing upon or failure to obtain or realize upon
Collateral, the recovery of any judgment against the Company, any action to
enforce the same or any other circumstance which might otherwise constitute a
legal or equitable discharge or defense of a Guarantor. Each of the Guarantors
hereby waives diligence, presentment, demand of payment, filing of claims with a
court in the event of insolvency or bankruptcy of the Company, any right to
require a proceeding first against the Company, protest, notice and all demands
whatsoever and covenants that its Guarantee will not be discharged except by
complete performance of the obligations contained in the Securities, this
Indenture, the Security Documents and this Guarantee. If any Securityholder or
the Trustee is required by any court or otherwise to return to the Company or to
any Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or such Guarantor, any amount paid by the
Company or such Guarantor to the Trustee or such Securityholder, this Guarantee,
to the extent theretofore discharged, shall be reinstated in full force and
effect. Each of the Guarantors agrees that it shall not be entitled to, and
hereby waives, any right of subrogation in relation to the Securityholders
<PAGE>
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or the Trustee, as the case may be, in respect of any obligations guaranteed
hereby. Each Guarantor further agrees that, as between it, on the one hand, and
the Holders of Securities and the Trustee, on the other hand, (x) subject to
this Article X, the maturity of the obligations guaranteed hereby may be
accelerated as provided in Article VI hereof for the purposes of this Guarantee,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration in respect of the obligations guaranteed hereby, and (y) in the
event of any acceleration of such obligations as provided in Article VI hereof,
such obligations (whether or not due and payable) shall forthwith become due and
payable by the Guarantors for the purpose of this Guarantee.
SECTION 10.2 Execution and Delivery of Guarantee.
-----------------------------------
To further evidence the Guarantee set forth in Section 10.1, each
Guarantor hereby agrees that a notation of such Guarantee shall be endorsed on
each Security authenticated and delivered by the Trustee and executed by either
manual or facsimile signature of two Officers of each Guarantor.
Each of the Guarantors hereby agrees that its Guarantee set forth in
Section 10.1 shall remain in full force and effect notwithstanding any failure
to endorse on each Security a notation of such Guarantee.
If an Officer of a Guarantor whose signature is on this Indenture or a
Security no longer holds that office at the time the Trustee authenticates such
Security or at any time thereafter, such Guarantor's Guarantee of such Security
shall be valid nevertheless.
The delivery of any Security by the Trustee, after the authentication
thereof hereunder, shall constitute due delivery of any Guarantee set forth in
this Indenture on behalf of the Guarantor.
SECTION 10.3 Additional Guarantors.
---------------------
Any Person that was not a Guarantor on the date of this Indenture may
become a Guarantor by executing and delivering to the Trustee (a) a supplemental
indenture in form and substance satisfactory to the Trustee, which subjects such
Person to the provisions (including the representations and warranties) of this
Indenture as a Guarantor and (b) an Opinion of Counsel to the effect that such
supplemental indenture has been duly authorized and executed by such Person and
constitutes the legal, valid, binding and enforceable obligation of such Person
(subject to such
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customary exceptions concerning creditors' rights and equitable principles as
may be acceptable to the Trustee in its discretion).
ARTICLE XI
SECURITY DOCUMENTS
------------------
SECTION 11.1 Collateral and Security Documents.
---------------------------------
(a) In order to secure the due and punctual payment of the Securities,
the Company, the Guarantors and the Trustee have entered into the Security
Documents to create the Security Interests and for related matters. The Trustee,
the Company and the Guarantors hereby agree that the Trustee holds the
Collateral in trust for the benefit of the Holders pursuant to the terms of the
Security Documents.
(b) Each Holder, by accepting a Security, agrees to all of the terms
and provisions of the Security Documents, as the same may be amended from time
to time pursuant to the provisions of the Security Documents and this Indenture.
SECTION 11.2 Recording, Etc.
--------------
(a) The Company will, and will cause CPC and Caribbean to, take or
cause to be taken all action required or desirable to maintain, preserve and
protect the Security Interests in the Collateral granted by the Security
Documents, including, but not limited to, causing all financing statements,
Mortgages, other instruments of further assurance, including, without
limitation, continuation statements covering security interests in personal
property, and all mortgages securing purchase money obligations delivered to the
Trustee or to the trustee, mortgagee or other holder of a Permitted Lien under
Section 11.4 to be promptly recorded, registered and filed, and at all times to
be kept recorded, registered and filed, and will execute and file such financing
statements and cause to be issued and filed such continuation statements, all in
such manner and in such places as may be required by law fully to preserve and
protect the rights of the Holders and the Trustee under this Indenture and the
Security Documents to all property comprising the Collateral.
The Company or the relevant Guarantor will from time to time promptly
pay and discharge all mortgage and financing and continuation statement
recording and/or filing fees, charges and taxes relating to this Indenture and
the Security Documents, any amendments thereto and any other instruments of
further assurance.
<PAGE>
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Without limiting the generality of the foregoing covenant, in the event at any
time the Trustee shall determine that additional mortgage recording, transfer or
similar taxes are required to be paid to perfect or continue any Lien on any
Real Property in an amount at least equal to the Fair Market Value from time to
time of such Real Property, the Company or the relevant Guarantor shall pay such
taxes promptly upon demand by the Trustee. Notwithstanding the foregoing, the
Trustee shall not have any duty or obligation to ascertain whether any such
taxes are required to be paid at any time, and the determination referred to in
the preceding sentence shall only be made by the Trustee upon receipt of written
notice that such taxes are due and owing.
(b) The Company, CPC and Caribbean shall furnish to the Trustee:
(i) at the time of execution and delivery of this Indenture,
Opinion(s) of Counsel either (a) substantially to the effect that, in the
opinion of such Counsel, this Indenture and the grant of a Security Interest
in the Collateral intended to be made by each Security Document and all
other instruments of further assurance or assignment have been properly
recorded, registered and filed to the extent necessary to perfect the
Security Interests created by each such Security Document and reciting the
details of such action, and stating that as to the Security Interests
created pursuant to each such Security Document, such recordings,
registerings and filings are the only recordings, registerings and filings
necessary to give notice thereof and that no re-recordings, re-registerings
or refilings are necessary to maintain such notice (other than as stated in
such opinion), or (b) to the effect that, in the opinion of such counsel, no
such action is necessary to perfect such Security Interests;
(ii) at the time of execution and delivery of this Indenture, with
respect to each Mortgage, a policy of title insurance (or a commitment to
issue such a policy) which may be issued pursuant to an endorsement to any
existing policy or commitment insuring (or committing to insure) the Lien of
such Mortgage as a valid first mortgage Lien on the real property and
fixtures described therein, subordinate only to those Liens specified in the
Mortgage as "Permitted Liens," in an amount not less than the Fair Market
Value of such real property and fixtures, which policy (or commitment) shall
(a) be issued by Chicago Title Insurance Company (b) have been supplemented
by the following endorsements, to the extent available at commercially
reasonable rates: contiguity, first
<PAGE>
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loss, last dollar, usury, doing business and so-called comprehensive
coverage over covenants and restrictions and (c) contain only such
exceptions to title as shall be Prior Liens (as defined in the Mortgages);
(iii) within 30 days after January 1 in each year beginning with January
1, 1998, an Opinion of Counsel, dated as of such date, either (a) to the
effect that, in the opinion of such counsel, such action has been taken with
respect to the recordings, registerings, filings, re-recordings, re-
registerings and refilings of all financing statements, continuation
statements or other instruments of further assurance as is necessary to
maintain the Security Interests of each of the Security Documents and
reciting with respect to such Security Interests the details of such action
or referencing to prior Opinions of Counsel in which such details are given,
and stating that all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and protect the
rights of the Holders and the Trustee hereunder and under each of the
Security Documents with respect to the Security Interests, or (b) to the
effect that, in the opinion of such Counsel, no such action is necessary to
maintain such Security Interests;
(iv) within 90 days after the Issue Date, with respect to each Mortgaged
Property located in California and Pennsylvania, a survey certified to the
Trustee and the title insurance company issuing the title commitments
referred to in clause (iv) above in such form as shall be required by the
title insurance company to issue a comprehensive endorsement in customary
form.
SECTION 11.3 Disposition of Collateral Without
Release.
---------------------------------
(a) Notwithstanding the provisions of Section 11.4, so long as no
Event of Default shall have occurred and be continuing, the Company and the
Guarantors may, without any release or consent by the Trustee:
(i) sell or otherwise dispose of any machinery, equipment, furniture,
apparatus, tools or implements, materials or supplies or other similar
property subject to the Lien of the Security Documents, which may have
become worn out or obsolete, not exceeding in value in any one calendar year
the lesser of $25,000 or one percent of the principal amount of the
Securities at the time outstanding;
<PAGE>
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(ii) grant rights-of-way and easements over or in respect of any Real
Property; provided, however, that such grant will not, in the reasonable
-------- -------
opinion of the Board of Directors of the Company or the relevant Guarantor,
impair the usefulness of such property in the conduct of the Company's or
the relevant Guarantor's business, as applicable, and will not be
prejudicial to the interests of the Holders;
(iii) alter, repair, replace, change the location or position of and
add to its plants, structures, machinery, systems, equipment, fixtures and
appurtenances; provided, however, that no change in the location of any such
-------- -------
Collateral subject to the Lien of any of the Security Documents shall be
made which (1) removes such property into a jurisdiction in which any
instrument required by law to preserve the Lien of any of the Security
Documents on such property, including all necessary financing statements and
continuation statements, has not been recorded, registered or filed in the
manner required by law to preserve the Lien of any of the Security Documents
on such property, (2) does not comply with the terms of this Indenture and
the Security Documents or (3) otherwise impairs the Lien of the Security
Documents;
(iv) demolish, dismantle, tear down or scrap any Collateral, or
abandon any thereof other than land or interests in land (other than
leases), if in the good faith opinion of the Board of Directors of the
Company or the relevant Guarantor (as evidenced by a Board Resolution if it
involves Collateral having a Fair Market Value in excess of the lesser of
$100,000 or 1% of the aggregate principal amount of the outstanding
Securities), such demolition, dismantling, tearing down, scrapping or
abandonment is in the best interests of the Company or the relevant
Guarantor, and the Fair Market Value and utility of the Collateral as an
entirety, and the security for the Securities, will not thereby be impaired;
(v) grant a non-exclusive license of any Patent, Trademark or
Copyright (each as defined in the relevant Security Document);
(vi) abandon any Patent, Trademark or Copyright where subsequent
applications relating to such Patent, Trademark or Copyright have been filed
with respect to similar subject matter or where the Company or the relevant
Guarantor, in its reasonable business judgment, concludes that such
abandonment
<PAGE>
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is in the best interest of the Company or the relevant Guarantor;
(vii) grant leases in respect of any Real Property in the event that the
Company or the relevant Guarantor determines that such Real Property is no
longer useful in the conduct of the Company's or the relevant Guarantor's
business; provided, however, that any such lease shall by its terms be
-------- -------
subject and subordinate to the Lien of the Mortgage affecting such Real
Property;
(viii) abandon, terminate, cancel, release or make alterations in or
substitutions of any leases, contracts or rights-of-way subject to the Lien
of the Security Documents; provided, however, that any altered or
-------- -------
substituted leases, contracts or rights-of-way shall forthwith be made
subject to the Lien of the Security Documents to the same extent as those
previously existing; and provided, further, that if the Company or the
-------- --------
relevant Guarantor shall receive-any money or property in excess of its
expenses in connection with such termination, cancellation, release,
alteration or substitution, to the extent it exceeds $250,000 (in which case
all of the money so received and not just the portion in excess of $250,000
shall be subject to this clause), forthwith upon its receipt by the Company
or the relevant Guarantor, shall be deposited with the Trustee (unless
otherwise required by a Prior Lien permitted under the applicable Security
Documents) as Trust Moneys subject to disposition as provided in Article
Twelve hereof or otherwise subjected to the Lien of the Security Documents;
or
(ix) surrender or modify any franchise, license or permit subject to
the Lien of any of the Security Documents which it may own or under which it
may be operating; provided, however, that after the surrender or
-------- -------
modification of any such franchise, license or permit, the Company or the
applicable Guarantor shall still, in the reasonable opinion of the Board of
Directors of the Company or the relevant Guarantor, be entitled, under some
other or without any franchise, license or permit, to conduct its business
in the territory in which it is then operating; and provided, further, that
-------- --------
if the Company or the relevant Guarantor shall be entitled to receive any
money or property in excess of its expenses in connection with such
surrender or modification, to the extent it exceeds $250,000 (in which case
all of the money so received and not just the portion in excess of $250,000
shall be subject to this clause), forthwith upon its receipt by the Company
or the
<PAGE>
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relevant Guarantor, shall be deposited with the Trustee (unless otherwise
required by a Prior Lien permitted under the applicable Security Documents)
as Trust Moneys subject to disposition as provided in Article Twelve hereof
or otherwise subjected to the Lien of the Security Documents.
(b) In the event that the Company or the relevant Guarantor has sold,
exchanged, or otherwise disposed of or proposes to sell, exchange or otherwise
dispose of any portion of the Collateral which under the provisions of this
Section 11.3 may be sold, exchanged or otherwise disposed of by the Company or
the relevant Guarantor without any release or consent of the Trustee, and the
Company or the relevant Guarantor requests the Trustee to furnish a written
disclaimer, release or quitclaim of any interest in such property under any of
the Security Documents, the Trustee shall promptly execute such an instrument
upon delivery to the Trustee of (i) an Officers' Certificate by the Company or
the relevant Guarantor reciting the sale, exchange or other disposition made or
proposed to be made and describing in reasonable detail the property affected
thereby, and stating that such property is property which by the provisions of
this Section 11.3 may be sold, exchanged or otherwise disposed of or dealt with
by the Company or the relevant Guarantor without any release or consent of the
Trustee and (ii) an Opinion of Counsel stating that the sale, exchange or other
disposition made or proposed to be made was duly taken by the Company or the
relevant Guarantor in conformity with a designated subsection of Section 11.3(a)
and that the execution of such written disclaimer, release or quitclaim is
appropriate under this Section 11.3.
Any disposition of Collateral made in strict compliance with the
provisions of this Section 11.3 shall be deemed not to impair the Security
Interests in contravention of the provisions of this Indenture.
SECTION 11.4 Release of Collateral.
---------------------
In addition to its rights under Sections 11.3 and 11.5, the Company or
the relevant Guarantor shall have the right, at any time and from time to time,
to sell, exchange or otherwise dispose of any of the Collateral (other than
Trust Moneys, which are subject to release from the Lien of the Security
Documents as provided under Article XII), upon compliance with the requirements
and conditions of this Section 11.4, and the Trustee shall promptly release the
same from the Lien of any of the Security Documents upon receipt by the Trustee
(other than in the case of Section 11.4(d) below) of a Release Notice requesting
such release and
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describing the property to be so released, together with delivery of the
following, among other matters:
(a) If the property to be released has a book value of at least
$5,000,000, a Board Resolution of the Company or the relevant Guarantor, as
the case may be, requesting such release and authorizing an application to
the Trustee therefor.
(b) An Officers' Certificate of the Company or the relevant Guarantor,
as the case may be, dated not more than 30 days prior to the date of the
application for such release, and signed also, in the case of the following
clauses (ii) and (iv) by an Independent Appraiser or, if such property
consists of securities, by a Financial Advisor, in each case stating in
substance as follows:
(i) that, in the opinion of the signers, the security afforded by
the Security Documents will not be impaired by such release in
contravention of the provisions of this Indenture, and that either (A)
the Collateral to be released is not being replaced by comparable
property, has a book value of less than $250,000, and is not necessary
for the efficient operation of the Company's and its remaining
Subsidiaries' remaining property or in the conduct of the business of
the Company and its Subsidiaries as conducted immediately prior thereto,
or (B) the Collateral to be released is being released in connection
with an Asset Sale of such Collateral and the net proceeds (as defined
in Section 11.4(d)) from such Asset Sale are being delivered to the
Trustee (if required by Section 4.15) in accordance with, and to the
extent required by, the provisions of Section 11.4(d);
(ii) that the Company or the relevant Guarantor has either disposed
of or will dispose of the Collateral so to be released in compliance
with all applicable terms of this Indenture and for a consideration
representing, in the opinion of the signers, its fair value, which
consideration may, subject to any other provision of this Indenture,
consist of any one or more of the following: (A) cash or Cash
Equivalents, (B) obligations secured by a purchase money Lien upon the
property so to be released and (C) any other property or assets that, in
each case, upon acquisition thereof by the Company or the relevant
Guarantor, would be subject to the Lien of the Security
<PAGE>
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Documents (except as provided in Section 11.4(d)) and subject to no Lien
other than certain Liens which, under the applicable provisions of the
Security Documents relating thereto, are permitted to be superior to the
Lien of the Trustee for the benefit of the Holders herein and therein,
all of such consideration to be briefly described in the certificate;
(iii) that no Event of Default has occurred and is continuing;
(iv) the fair value, in the opinion of the signers, of the
property to be released at the date of such application for release;
provided, however, that it shall not be necessary under this clause
-------- -------
(iv) to state the fair value of any property whose fair value is
certified in a certificate of an Independent Appraiser or Independent
Financial Advisor under Section 11.4(c); and
(v) that all conditions precedent herein provided for relating to the
release of the Collateral in question have been complied with.
(c) If (i) the fair value of the property to be released and of all other
property released from the Lien of the Security Documents since the commencement
of the then current calendar year, as shown by certificates required by Section
11.4(b), is 10% or more of the aggregate principal amount of the Securities
outstanding on the date of the application, and (ii) the fair value of the
Collateral to be so released, as shown by the certificate filed pursuant to
paragraph (b) of this Section 11.4, is at least $25,000 and at least 1% of the
aggregate principal amount of the Securities outstanding on the date of the
application, a certificate of an Independent Appraiser, or if such property
consists of securities, a certificate of an Independent Financial Advisor,
stating:
(1) the then fair value, in the opinion of the signer, of the property
to be released; and
(2) that such release, in the opinion of the signer, will not impair
the Security Interests under any of the Security Documents in contravention
of its terms.
(d) The net proceeds (excluding any Net Cash Proceeds from any Asset Sale
which are not required, or cannot possibly be required, through the passage of
time or otherwise, to be
<PAGE>
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used to purchase or redeem Securities under Section 4.15) or, if the
Collateral so to be released is subject to a Lien permitted by the Security
Documents to be prior to the Security Interests, a certificate of the
trustee, mortgagee or other holder of such prior Lien permitted by the
Security Documents that it has received such net proceeds (except to the
extent that the assignment thereof would violate the terms thereof or any
agreement relating thereto) and has been irrevocably authorized by the
Company or the relevant Guarantor to pay over to the Trustee any balance of
such net proceeds remaining after the discharge of such Indebtedness secured
by such prior Lien permitted by the Security Documents; and, if any property
other than cash, Cash Equivalents or obligations is included in such net
proceeds, such instruments of conveyance, assignment and transfer, if any,
as may be necessary, in the Opinion of Counsel to be given pursuant to
Section 11.4(e), to subject to the Lien of the Security Documents all the
right, title and interest of the Company or the relevant Guarantor in and to
such property.
For the purposes of this Section 11.4(d), "net proceeds" means any cash,
Cash Equivalents, obligations or other property received on the sale,
transfer, exchange or other disposition of Collateral to be released, less a
proportionate share of (i) brokerage commissions and other reasonable fees
and expenses related to such transaction and (ii) any provision for any
Federal, state or local taxes payable as a result of such sale, transfer,
exchange or other disposition.
(e) One or more Opinions of Counsel which, when considered
collectively, shall be substantially to the effect (i) that any obligation
included in the consideration for any property so to be released and to be
received by the Trustee pursuant to Section 11.4(d) is a valid and binding
obligation enforceable in accordance with its terms, subject to such
customary exceptions regarding equitable principles, creditors' rights
generally and bankruptcy as shall be reasonably acceptable to the Trustee in
its sole judgment, and is effectively pledged under the Security Documents,
(ii) that any Lien granted by a purchaser to secure a purchase money
obligation is a fully perfected first priority Lien to the extent obtainable
by filing and such instrument granting such Lien is enforceable in
accordance with its terms, (iii) either (x) that such instruments of
conveyance, assignment and transfer as have been or are then delivered to
the Trustee are sufficient to subject to the Lien of the applicable Security
Documents all the right, title and interest of the Company or
<PAGE>
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the relevant Guarantor in and to any property, other than cash, Cash
Equivalents and obligations, that is included in the consideration for the
Collateral so to be released and is to be received by the Trustee pursuant
to Section 11.4(d), subject to no Lien other than Liens of the type
permitted by the applicable Security Documents, or (y) that no instruments
of conveyance, assignment or transfer are necessary for such purpose, (iv)
that the Company or the relevant Guarantor has corporate power to own all
property included in the consideration for such release, (v) in case any
part of the money or obligations referred to in Section 11.4(d) has been
deposited with a trustee or other holder of a Lien permitted by the Security
Documents to be prior to the Security Interests, that the Collateral to be
released, or a specified portion thereof, is or immediately before such
release was subject to such prior Lien permitted by the Security Documents
and that such deposit is required by such prior Lien permitted by the
Security Documents and (vi) that all conditions precedent herein and under
any of the Security Documents relating to the release of such Collateral
have been complied with.
(f) If the Collateral to be released is only a portion of a discrete
parcel of Real Property, evidence that a title insurance company shall have
committed to issue an endorsement to the title insurance policy relating to
the affected Mortgaged Property confirming that after such release, the Lien
of the applicable Mortgage continues unimpaired as a first priority
perfected Lien upon the remaining Mortgaged Property subject only to those
Liens permitted by the applicable Mortgage.
(g) If the Collateral to be released is Mortgaged Property having a
fair value in excess of $250,000, the Company or the relevant Guarantor
shall have delivered to the Trustee a Survey depicting the Real Property to
be released.
In connection with any release, the Company or the relevant Guarantor
shall (i) execute, deliver and record or file and obtain such instruments as the
Trustee may reasonably require, including, without limitation, amendments to the
Security Documents and (ii) deliver to the Trustee such evidence of the
satisfaction of the applicable provisions of this Indenture and the Security
Documents as the Trustee may reasonably require.
The Company or the relevant Guarantor shall exercise their rights
under this Section 11.4 by delivery to the Trustee of
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a notice (each, a "Release Notice"), which shall (i) refer to this Section 11.4,
(ii) contain all the resolutions, certificates, opinions, title insurance
endorsements, Surveys and such other documents and statements as are required
pursuant to this Section 11.4 (including, without limitation, the Officers'
Certificate required pursuant to Section 11.4(b)), (iii) describe with
particularity the items of property proposed to be covered by the release and
(iv) be accompanied by a counterpart of the instruments proposed to give effect
to the release fully executed and acknowledged (if applicable) by all parties
thereto other than the Trustee and in form for execution by the Trustee. Upon
such compliance, the Company or the relevant Guarantor shall direct the Trustee
to execute, acknowledge (if applicable) and deliver to the Company or the
relevant Guarantor such counterpart within 10 Business Days after receipt by the
Trustee of a Release Notice and the satisfaction of the requirements of this
Section 11.4.
Notwithstanding the foregoing provisions of this Section 11.4, the
Company or the Guarantors may obtain a release of Available Amounts required to
purchase Securities pursuant to an Asset Sale Offer on an Asset Sale Payment
Date by directing the Trustee in writing to cause to be applied such Available
Amounts to such purchase in accordance with Section 4.15 and Article XII.
In case an Event of Default shall have occurred and be continuing, the
Company or the Guarantors, while in possession of the Collateral (other than
cash, Cash Equivalents, securities and other personal property held by, or
required to be deposited or pledged with, the Trustee hereunder or under any
Security Document or with the trustee, mortgagee or other holder of a prior Lien
permitted by the Security Documents), may do any of the things enumerated in
this Section 11.4 only if the Trustee, in its discretion, or the Holders of a
majority in aggregate principal amount of the Securities outstanding, by
appropriate action of such Holders, shall consent to such action, in which event
any certificate filed under this Section 11.4 shall omit the statement to the
effect that no Event of Default has occurred and is continuing. This paragraph
shall not apply, however, during the continuance of an Event of Default of the
type specified in Section 6.1(a)(i) or (ii).
All cash or Cash Equivalents received by the Trustee pursuant to this
Section 11.4 shall be held by the Trustee for the benefit of the Holders, as
Trust Moneys subject to application as provided in this Section 11.4 (in the
case of any Net Cash Proceeds from Asset Sales) or in Article XII. All purchase
money and other obligations received by the Trustee pursuant to this Section
11.4
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shall be held by the Trustee for the benefit of the Holders, as Collateral.
Any releases of Collateral made in strict compliance with the
provisions of this Section 11.4 shall be deemed not to impair the Security
Interests, in contravention of the provisions of this Indenture.
SECTION 11.5 Substitute Collateral.
---------------------
The Company or any Guarantor may, at its option, obtain a release of
any of the Collateral constituting Equipment by subjecting other Equipment used
or to be used in the business of the Company or the relevant Guarantor to the
Lien of any Security Document or a similar instrument in place of and in
exchange for any of the Collateral to be released, if such substitute Equipment
has a fair value equal to or greater than the Collateral to be released
("Substitute Collateral"), upon presentation to the Trustee of the following
documents:
(a) an application of the Company or the relevant Guarantor requesting
such substitution of Substitute Collateral and describing the property to
be so released and the property to be substituted therefor;
(b) the resolutions, certificates, opinions and other statements
required by the provisions of Section 11.4 (other than Section 11.4(b)(1)),
as applicable, in respect of any of the Collateral to be released;
(c) an Officers' Certificate, also signed by an Independent Appraiser,
stating in substance the Fair Market Value, in the opinion of the signers,
of the Substitute Collateral and the Collateral to be released;
(d) an instrument or instruments in recordable form sufficient for the
Lien of the Security Documents to cover the Substitute Collateral;
(e) an Opinion of Counsel stating that the Lien of the Security
Documents constitutes a valid and perfected Lien on such Substitute
Collateral and an Opinion of Counsel in the jurisdiction in which the
Substitute Collateral is located substantially in the form of the local
counsel opinions delivered on the Closing Date and otherwise in form and
substance satisfactory to the Trustee with respect to the documents
executed and delivered by the Company or the
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relevant Guarantor and the Substitute Collateral encumbered thereby;
(f) an Officers' Certificate of the Company or the relevant Guarantor
stating that (i) any specific exceptions to such Lien are Liens of the
character which were permitted to be Prior Liens under the Security
Documents with respect to the Collateral being replaced by such Substitute
Collateral and (ii) the Fair Market Value of all Collateral released
pursuant to this Section 11.5 during the then current calendar year does
not exceed in the aggregate $10,000,000; and
(g) evidence of payment or a closing statement indicating payments to
be made by the Company or the relevant Guarantor of all filing fees,
recording charges, transfer taxes and other costs and expenses, including
reasonable legal fees and disbursements of counsel for the Trustee (and any
local counsel) that may be incurred to validly and effectively subject such
Substitute Collateral to the Lien of any applicable Security Document and
to perfect such Liens.
SECTION 11.6 Eminent Domain and Other Governmental
Takings.
-------------------------------------
Should any of the Collateral be taken by eminent domain or be sold
pursuant to the exercise by the United States of America or any state,
municipality or other governmental authority of any right which it may then have
to purchase, or to designate a purchaser or to order a sale of, all or any part
of the Collateral, the Trustee shall release the property so taken or purchased,
but only upon receipt by the Trustee of the following:
(a) an Officers' Certificate stating that such property has been taken
by eminent domain and the amount of the award therefor, or that such
property has been sold pursuant to a right vested in the United States of
America, or a state, municipality or other governmental authority to
purchase, or to designate a purchaser, or order a sale of such property and
the amount of the proceeds of such sale, and that all conditions precedent
herein provided for relating to such release have been complied with;
(b) the award for such property or the proceeds of such sale, to be
held as Trust Moneys subject to the disposition thereof pursuant to Article
XII; provided, however, that, in lieu of all or any part of such award or
-------- -------
proceeds,the Company shall have the right to deliver to the
Trustee a certificate
<PAGE>
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of the trustee, mortgagee or other holder of a Lien on all or any part of
the property to be released which is permitted by the Security Documents to
be prior to the Security Interests, stating that such award or proceeds, or
a specified portion thereof, has been deposited with such trustee,
mortgagee or other holder pursuant to the requirements of such prior Lien
permitted by the Security Documents, in which case the balance of the
award, if any, shall be delivered to the Collateral Agent; and
(c) an Opinion of Counsel substantially to the effect:
(1) that such property has been taken by eminent domain, or has
been sold pursuant to the exercise of a right vested in the United
States of America or a state, municipality or other governmental
authority to purchase, or to designate a purchaser or order a sale of,
such property;
(2) in the case of any taking by eminent domain, that the award
for the property so taken has become final or that the Board of
Directors of the Company has determined that an appeal from such award
is not advisable in the interests of the Company or the relevant
Guarantor or the Holders of the Securities;
(3) in the case of any such sale, that the amount of the proceeds
of the property so sold is not less than the amount to which the
Company or the relevant Guarantor is legally entitled under the terms
of such right to purchase or designate a purchaser, or under the order
or orders directing such sale, as the case may be;
(4) in case, pursuant to Section 11.7(b), the award for such
property or the proceeds of such sale, or a specified portion thereof,
shall be certified to have been deposited with the trustee, mortgagee
or other holder of a Lien which is permitted by the Security Documents
to be prior to the Security Interests, that the property to be
released, or a specified portion thereof, is or immediately before
such taking or purchase was subject to such prior Lien permitted by
the Security Documents, and that such deposit is required by such
prior Lien permitted by the Security Documents; and
(5) that the instrument or the instruments and the award or
proceeds of such sale which have been or are
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therewith delivered to and deposited with the Trustee conform to the
requirements of this Indenture and any of the applicable Security
Documents and that, upon the basis of such application, the Trustee is
permitted by the terms hereof and of the Security Documents to execute
and deliver the release requested, and that all conditions precedent
herein provided for relating to such release have been complied with.
In any proceedings for the taking or purchase or sale of any part of
the Collateral, by eminent domain or by virtue of any such right to purchase or
designate a purchaser or to order a sale, the Trustee may be represented by
counsel who may be counsel for the Company.
All cash or Cash Equivalents received by the Trustee pursuant to this
Section 11.6 shall be held by the Trustee as Trust Moneys under Article XII
subject to application as therein provided. All purchase money and other
obligations received by the Trustee pursuant to this Section 11.6 shall be held
by the Trustee as Collateral subject to application as provided in Section
11.11.
SECTION 11.7 Trust Indenture Act Requirements.
--------------------------------
The release of any Collateral, whether pursuant to Article XI or XII,
from the Lien of any of the Security Documents or the release of, in whole or in
part, the Liens created by any of the Security Documents, will not be deemed to
impair the Security Interests in contravention of the provisions hereof if and
to the extent the Collateral or Liens are released pursuant to the applicable
Security Documents and pursuant to the terms hereof. The Trustee and each of
the Holders acknowledge that a release of Collateral or Liens strictly in
accordance with the terms of the Security Documents and the terms hereof will
not be deemed for any purpose to be an impairment of the Security Interests in
contravention of the terms of this Indenture. To the extent applicable, without
limitation, the Company, the Guarantors and each obligor on the Securities shall
cause Trust Indenture Act (S) 314(d) relating to the release of property or
securities from the Liens hereof and of the Security Documents to be complied
with. Any certificate or opinion required by Trust Indenture Act (S) 314(d) may
be made by an officer of the Company, except in cases in which Trust Indenture
Act (S) 314(d) requires that such certificate of opinion be made by an
independent person.
<PAGE>
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SECTION 11.8 Suits To Protect the Collateral.
-------------------------------
Subject to the provisions of the Security Documents, the Trustee shall
have power to institute and to maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any acts which may
be unlawful or in violation of any of the Security Documents or this Indenture,
and such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders in the Collateral
(including power to institute and maintain suits or proceedings to restrain the
enforcement of or compliance with any legislative or other governmental
enactment, rule or order that may be unconstitutional or otherwise invalid if
the enforcement of, or compliance with, such enactment, rule or order would
impair the Security Interests or be prejudicial to the interests of the Holders
or the Trustee).
<PAGE>
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SECTION 11.9 Purchaser Protected.
-------------------
In no event shall any purchaser in good faith of any property
purported to be released hereunder be bound to ascertain the authority of the
Trustee to execute the release or to inquire as to the satisfaction of any
conditions required by the provisions hereof for the exercise of such authority
or to see to the application of any consideration given by such purchaser or
other transferee; nor shall any purchaser or other transferee of any property or
rights permitted by this Article XI to be sold be under obligation to ascertain
or inquire into the authority of the Company or the relevant Guarantor to make
any such sale or other transfer.
SECTION 11.10 Powers Exercisable by Receiver or
Trustee.
---------------------------------
In case the Collateral shall be in the possession of a receiver or
trustee, lawfully appointed, the powers conferred in this Article XI upon the
Company or the relevant Guarantor with respect to the release, sale or other
disposition of such property may be exercised by such receiver or trustee, and
an instrument signed by such receiver or trustee shall be deemed the equivalent
of any similar instrument of the Company or the relevant Guarantor or of any
officer or officers thereof required by the provisions of this Article XI.
SECTION 11.11 Disposition of Obligations Received.
-----------------------------------
All purchase money or other obligations received by the Trustee under
this Article XI shall be held by the Trustee, as a part of the Collateral. Upon
payment in cash or Cash Equivalents by or on behalf of the Company or the
obligor thereof to the Trustee of the entire unpaid principal amount of any such
obligation, to the extent not constituting Net Cash Proceeds from an Asset Sale
which may possibly be required, through the passage of time or otherwise, to be
used to purchase Securities pursuant to Section 4.15, the Trustee shall promptly
release and transfer such obligation and any mortgage securing the same upon
receipt of any documentation that the Trustee may reasonably require. Any cash
or Cash Equivalents received by the Trustee in respect of the principal of any
such obligations shall be held by the Trustee as Trust Moneys under Article XII
subject to application as therein provided. Unless and until the Securities are
accelerated, pursuant to Section 6.2, all interest and other income on any such
obligations, when received by the Trustee, shall be paid to the Company from
time to time in accordance with Section 12.7. If the
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Securities have been accelerated pursuant to Section 6.2, any such interest or
other income not theretofore paid, when collected by the Trustee, shall be
applied by the Trustee, as the case may be, in accordance with Section 6.10.
SECTION 11.12 Determinations Relating to Collateral.
-------------------------------------
In the event (i) the Trustee shall receive any written request from
the Company or a Guarantor under any Security Document for consent or approval
with respect to any matter or thing relating to any Collateral or the Company's
or the Guarantor's obligations with respect thereto or (ii) there shall be due
to or from the Trustee under the provisions of any Security Document any
performance or the delivery of any instrument or (iii) the Trustee shall become
aware of any nonperformance by the Company or any Guarantor of any covenant or
any breach of any representation or warranty of the Company or any Guarantor set
forth in any Security Document, then, in each such event, the Trustee shall be
entitled to hire experts, consultants, agents and attorneys to advise the
Trustee on the manner in which the Trustee should respond to such request or
render any requested performance or response to such nonperformance or breach
(the expenses of which shall be reimbursed to the Trustee pursuant to Section
7.7 hereof). The Trustee shall be fully protected in the taking of any action
recommended or approved by any such expert, consultant, agent or attorney or
agreed to by a majority of Holders pursuant to Section 6.5.
SECTION 11.13 Renewal and Refunding.
---------------------
Nothing in this Article XI shall prevent (a) the renewal or extension,
without impairment of the Security Interests, at the same or at a lower or
higher rate of interest, of any of the obligations or Indebtedness of any
corporation included in the Collateral or (b) the issue in substitution for any
such obligations or Indebtedness of other obligations or Indebtedness of such
corporation for equivalent amounts and of substantially equal or superior rank
as to security, if any; provided, however, that every such obligation or
-------- -------
Indebtedness as so renewed or extended shall continue to be subject to the Lien
of the Security Documents and every substituted obligation of Indebtedness and
the evidence thereof shall be deposited and pledged with the Trustee.
SECTION 11.14 Release upon Termination of the
Company's and the Guarantor's
Obligations.
-------------------------------
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In the event that each of the Company and the Guarantors deliver an
Officers' Certificate certifying that all of their respective obligations under
the Indenture have been satisfied and discharged by complying with the
provisions of Article VIII, the Trustee shall not be deemed to hold the Security
Interests for the benefit of the Holders.
SECTION 11.15 Trustee's Duties in
Respect of Collateral.
---------------------
The Trustee, acting in its capacity as collateral agent or mortgagee
under each of the Security Documents, shall have only such duties with respect
to the Collateral as are set forth in the Security Documents.
ARTICLE XII
APPLICATION OF TRUST MONEYS
---------------------------
SECTION 12.1 "Trust Moneys" Defined.
---------------------
All cash or Cash Equivalents received by the Trustee:
(a) upon the release of property from the Lien of any of the Security
Documents, including, without limitation, all moneys received in respect of
the principal of all purchase money, governmental and other obligations; or
(b) as compensation for, or proceeds of the sale of, all or any part
of the Collateral taken by eminent domain or purchased by, or sold pursuant
to an order of, a governmental authority or otherwise disposed of; or
(c) as proceeds of insurance upon any, all or part of the Collateral
(other than any liability insurance proceeds payable to the Trustee for any
loss, liability or expense incurred by it); or
(d) pursuant to the Mortgages; or
(e) as proceeds of any other sale or other disposition of all or any
part of the Collateral by or on behalf of the Trustee or any collection,
recovery, receipt, appropriation or other realization of or from all or any
part of the Collateral pursuant to the Security Documents or otherwise; or
<PAGE>
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(f) for application under this Article XII as elsewhere provided in
this Indenture or any Security Document, or whose disposition is not
elsewhere otherwise specifically provided for herein or in any Security
Document;
(all such moneys being herein sometimes called "Trust Moneys"; provided,
--------
however, that Trust Moneys shall not include any property deposited with the
- -------
Trustee pursuant to Section 4.17 or Articles III or VIII or delivered to or
received by the Trustee pursuant to Section 6.10 hereof), shall be held by the
Trustee for the benefit of the Holders as a part of the Collateral and, upon any
entry upon or sale or other disposition of the Collateral or any part thereof
pursuant to any of the Security Documents, said Trust Moneys shall be applied in
accordance with Section 6.10; but, prior to any such entry, sale or other
disposition, all or any part of the Trust Moneys may be withdrawn, and shall be
released, paid or applied by the Trustee, from time to time as provided in
Sections 12.2 through 12.5, inclusive.
SECTION 12.2 Retirement of Securities.
------------------------
The Trustee shall apply Trust Moneys from time to time to the payment
of the principal of and interest on any Securities, on any Maturity Date or to
the redemption thereof or the purchase thereof upon tender or in the open market
or at private sale or upon any exchange or in any one or more of such ways,
including, without limitation, pursuant to an offer to purchase under Section
4.15, or a Change of Control Offer under Section 4.17, as the Company or the
relevant Guarantor shall request in writing, upon receipt by the Trustee of the
following:
(a) Board Resolutions of the Company or the relevant Guarantor
directing the application pursuant to this Section 12.2 of a specified
amount of Trust Moneys and, in case any such moneys are to be applied to
payment, designating the Securities so to be paid and, in case any such
moneys are to be applied to the purchase of Securities, prescribing the
method of purchase, the price or prices to be paid and the maximum
principal amount of Securities to be purchased and any other provisions of
this Indenture governing such purchase;
(b) cash in the maximum amount of the accrued interest, if any,
required to be paid in connection with any such purchase, which cash shall
be held by the Trustee in trust for such purpose;
<PAGE>
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(c) an Officers' Certificate, dated not more than five Business Days
prior to the date of the relevant application stating
(i) that no Default or Event of Default exists unless such Default
or Event of Default would be cured thereby; and
(ii) that all conditions precedent and covenants herein provided
for relating to such application of Trust Moneys have been complied
with; and
(d) an Opinion of Counsel stating that the documents and the cash or
Cash Equivalents, if any, which have been or are therewith delivered to and
deposited with the Trustee conform to the requirements of this Indenture and
that all conditions precedent herein provided for relating to such
application of Trust Moneys have been complied with.
Upon compliance with the foregoing provisions of this Section, the
Trustee shall apply Trust Moneys as directed and specified by such Board
Resolution, up to, but not exceeding, the principal amount of the Securities so
paid or purchased, using the cash deposited pursuant to paragraph (b) of this
Section 12.2, to the extent necessary, to pay any accrued interest required in
connection with such purchase.
A Board Resolution expressed to be irrevocable directing the
application of Trust Moneys under this Section 12.2 to the payment of the
principal of particular Securities shall for all purposes of this Indenture be
deemed the equivalent of the deposit of money with the Trustee in trust for such
purpose. Such Trust Moneys and any cash deposited with the Trustee pursuant to
paragraph (b) of this Section 12.2 for the payment of accrued interest shall
not, after compliance with the foregoing provisions of this Section, be deemed
to be part of the Collateral or Trust Moneys.
The Company or the relevant Guarantor shall have the right, at any
time and from time to time to obtain a release of Trust Moneys constituting Net
Cash Proceeds from an Asset Sale that were subject to an Asset Sale Offer and
not used to purchase Securities thereunder because it was not fully subscribed
by the Holders upon receipt by the Trustee of an Officers' Certificate stating
(i) that an Asset Sale Offer was made in accordance with Section 12.2 hereof,
(ii) the amount of Net Cash Proceeds of such Asset Sale remaining after the
completion of such Asset Sale Offer
<PAGE>
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(iii) that no Default or Event of Default exists and (iv) that all conditions
precedent and covenants herein provided for relating to such application of
Trust Moneys have been complied with. Upon compliance with the foregoing, the
Trustee shall release such Trust Moneys to the Company or the relevant
Guarantor.
<PAGE>
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SECTION 12.3 Withdrawals of Insurance Proceeds
and Condemnation Awards.
---------------------------------
To the extent that any Trust Moneys consist of either (a) the proceeds
of insurance upon any part of the Collateral or (b) any award for or the
proceeds of any of the Collateral being taken by eminent domain or sold pursuant
to the exercise by the United States of America or any state, municipality or
other governmental authority of any right which it may then have to purchase, or
to designate a purchaser or to order a sale of any part of the Collateral, such
Trust Moneys may be withdrawn by the Company or the relevant Guarantor and shall
be paid by the Trustee upon a request by the Company or the relevant Guarantor
by the proper officer or officers of the Company to reimburse the Company or the
relevant Guarantor for expenditures made, or to pay costs incurred, by the
Company or the relevant Guarantor to repair, rebuild or replace the property
destroyed, damaged or taken, upon receipt by the Trustee of the following:
(a) an Officers' Certificate of the Company or the relevant Guarantor,
dated not more than 30 days prior to the date of the application for the
withdrawal and payment of such Trust Moneys and signed also in the case of
the following clauses (i), (iv) and (vi), by an Appraiser or Financial
Advisor, setting forth:
(i) that expenditures have been made, or costs incurred, by the
Company or the relevant Guarantor in a specified amount for the purpose
of making certain repairs, rebuildings and replacements of the
Collateral, which shall be briefly described, and stating the fair value
thereof to the Company or the relevant Guarantor at the date of the
acquisition thereof by the Company or the relevant Guarantor, except
that it shall not be necessary under this clause (i) to state the fair
value of any such repairs, rebuildings or replacements that are
separately described pursuant to clause (vi) of this paragraph (a) and
whose fair value is stated in the Independent Appraiser's or Independent
Financial Advisor's certificate under paragraph (b) of this Section
12.3;
(ii) that no part of such expenditures in any previous or then
pending application, has been or is being made the basis for the
withdrawal of any Trust Moneys pursuant to this Section 12.3;
<PAGE>
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(iii) that no part of such expenditures or costs has been paid out
of either the proceeds of insurance upon any part of the Collateral not
required to be paid to the Trustee under the relevant Mortgage or any
award for or the proceeds from any of the Collateral being taken not
required to be paid to the Trustee under Section 11.6, as the case may
be;
(iv) that there is no outstanding Indebtedness, other than costs
for which payment is being requested, known to the Company or the
relevant Guarantor, after due inquiry, for the purchase price or
construction of such repairs, rebuildings or replacements, or for labor,
wages, materials or supplies in connection with the making thereof,
which, if unpaid, might become the basis of a vendor's, mechanics',
laborers' materialmen's, statutory or other similar Lien upon any of
such repairs, rebuildings or replacement, which Lien might, in the
opinion of the signers of such certificate, materially impair the
security afforded by such repairs, rebuildings or replacement;
(v) that the property to be repaired, rebuilt or replaced is
necessary or desirable in the conduct of the Company's or the relevant
Guarantor's business;
(vi) whether any part of such repairs, rebuildings or replacements
within six months before the date of acquisition thereof by the Company
or the relevant Guarantor, has been used or operated by others than the
Company or the relevant Guarantor in a business similar to that in which
such property has been or is to be used or operated by the Company or
the relevant Guarantor, and whether the fair value to the Company or the
relevant Guarantor, at the date of such acquisition, of such part of
such repairs, rebuildings or replacement is at least $25,000, and 1% of
the aggregate principal amount of the outstanding Securities; and, if
all of such facts are present, such part of said repairs, rebuildings or
replacements shall be separately described, and it shall be stated that
an Independent Appraiser's or Independent Financial Advisor's
certificate as to the fair value to the Company or the relevant
Guarantor of such separately described repairs, rebuildings or
replacements will be furnished under paragraph (b) of this Section 12.3;
<PAGE>
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(vii) that no Default or Event of Default shall have occurred and
be continuing; and
(viii) that all conditions precedent herein provided for relating to
such withdrawal and payment have been complied with.
(b) In case any part of such repairs, rebuildings or replacements is
separately described pursuant to the foregoing clause (vi) of paragraph (a)
of this Section 12.3, a certificate of an Independent Appraiser or
Independent Financial Advisor stating the fair value to the Company or the
relevant Guarantor, in such Independent Appraiser's or Independent
Financial Advisor's opinion, of such separately described repairs,
rebuildings or replacements at the date of the acquisition thereof by the
Company or the relevant Guarantor.
(c) (i) In case any part of such repairs, rebuildings or replacements
constitutes Real Property:
(1) with respect to any such repairs, rebuildings or replacements
that are not encompassed within or are not erected upon Mortgaged
Property, an instrument or instruments in recordable form sufficient for
the Lien of this Indenture and any Mortgage to cover such repairs,
rebuildings or replacements which, if such repairs, rebuildings or
replacements include leasehold or easement interests, shall include
normal and customary provisions with respect thereto and evidence of the
filing of all such documents as may be necessary to perfect such Liens;
(2) a policy of title insurance (or a commitment to issue title
insurance) insuring that the Lien of this Indenture and any Mortgage
constitutes a direct and valid and perfected first priority mortgage
Lien on such repairs, rebuildings or replacements in an aggregate amount
equal to the fair value of such repairs, rebuildings or replacements,
together with such endorsements and other opinions as are contemplated
by Section 11.2(b)(ii), or with respect to any such repairs, rebuildings
or replacements that are encompassed within or are erected upon
Mortgaged Property an endorsement to the title insurance policy issued
pursuant to Section 11.2(b)(ii) regarding the affected Mortgaged
Property confirming that such repairs, rebuildings or replacements
<PAGE>
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are encumbered by the first priority Lien of the applicable Mortgage;
(3) in the event such repairs, rebuildings or replacements have a
fair value in excess of $250,000, a Survey with respect thereto; and
(4) evidence of payment or a closing statement indicating payments
to be made by the Company or the relevant Guarantor of all title
premiums, recording charges, transfer taxes and other costs and
expenses, including reasonable legal fees and disbursements of counsel
for the Trustee (and any local counsel), that may be incurred to validly
and effectively subject such repairs, rebuildings or replacements to the
Lien of any applicable Security Document to perfect such Lien; and
(ii) in case any part of such repairs, rebuildings or replacements
constitutes personal property interests:
(1) an instrument in recordable form sufficient for the Lien of
any applicable Security Document to cover such repairs, rebuildings or
replacements; and
(2) evidence of payment or a closing statement indicating payments
to be made by the Company or the relevant Guarantor of all filing fees,
recording charges, transfer taxes and other costs and expenses,
including reasonable legal fees and disbursements of counsel for the
Trustee (and any local counsel), that may be incurred to validly and
effectively subject such repairs, rebuildings or replacements to the
Lien of any Security Document.
(d) An Opinion of Counsel substantially stating:
(i) that the instruments that have been or are therewith delivered
to the Trustee conform to the requirements of this Indenture or any
other Security Document, and that, upon the basis of such request of the
Company and the accompanying documents specified in this Section 12.3,
all conditions precedent herein provided for relating to such withdrawal
and payment have been complied with, and the Trust Moneys whose
withdrawal is then requested may be lawfully paid over under this
Section 12.3;
<PAGE>
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(ii) that the Company or the relevant Guarantor has acquired title
to said repairs, rebuildings and replacements at least the equivalent to
its title to the property destroyed, damaged or taken, and that the same
and every part thereof are free and clear of all Liens prior to the Lien
of any of the Security Documents, except Liens of the type permitted
under the applicable Security Document to which the property so
destroyed, damaged or taken shall have been subject at the time of such
destruction, damage or taking; and
(iii) that all of the Company's or the relevant Guarantor's right,
title and interest in and to said repairs, rebuildings or replacements,
or combination thereof, are then subject to the Lien of any of the
Security Documents.
Upon compliance with the foregoing provisions of this Section 12.3,
the Trustee shall pay on the written request of the Company an amount of Trust
Moneys of the character aforesaid equal to the amount of the expenditures or
costs stated in the Officers' Certificate required by clause (i) of paragraph
(a) of this Section 12.3, or the fair value to the Company or the relevant
Guarantor of such repairs, rebuildings and replacements stated in such Officers'
Certificate (and in such Independent Appraiser's or Independent Financial
Advisor's certificate, if required by paragraph (b) of this Section 12.3),
whichever is less; provided, however, that notwithstanding the above, so long as
-------- -------
no Default or Event of Default shall have occurred and be continuing, in the
event that any insurance proceeds or award for such property or proceeds of such
sale does not exceed the lesser of $25,000 or 1% of the principal amount of the
outstanding Securities, and, in the good faith estimate of the Company or the
relevant Guarantor, such destruction or damage resulting in such insurance
proceeds or such taking or sale resulting in such award does not detrimentally
affect the value or use of the applicable Collateral in any material respect,
upon delivery to the Trustee of an Officers' Certificate of the Company or the
relevant Guarantor to such effect, the Trustee shall release to the Company or
the relevant Guarantor such insurance proceeds or award for such property or
proceeds of such sale, free of the Lien hereof and of the applicable Security
Documents; the Company or the relevant Guarantor shall take all steps necessary
to notify the condemning authority of such assignment.
SECTION 12.4 Withdrawal of Trust Moneys
for Reinvestment.
--------------------------
<PAGE>
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To the extent that any Trust Moneys consist of Net Cash Proceeds
received by the Trustee pursuant to Section 4.15 and the Company or any
Guarantor, as applicable, intends to reinvest such Net Cash Proceeds in a manner
that would constitute a Permitted Related Acquisition, such Trust Moneys may be
withdrawn by the Company or any Guarantor, as applicable, and shall be paid by
the Trustee upon a written request by the Company by the proper officer or
officers of the Company or any Guarantor, as applicable, to reimburse the
Company or any Guarantor, as applicable, for expenditures made or to pay costs
incurred by the Company or any Guarantor, as applicable, in connection with such
Permitted Related Acquisition, upon receipt by the Trustee of the following:
(a) An Officers' Certificate of the Company, dated not more than 30
days prior to the date of the application for the withdrawal and payment of
such Trust Moneys, stating in substance as follows:
(i) that the Trust Moneys to be released constitute Net Cash
Proceeds from an Asset Sale;
(ii) setting forth with particularity the investment to be made
with such Trust Moneys;
(iii) that the release of the Trust Moneys complies with all
applicable terms of this Indenture;
(iv) that there is no Default or Event of Default (both before and
after giving effect to the Permitted Related Acquisition) continuing;
and
(v) that all conditions precedent herein provided for relating to
the release of the Trust Moneys in question have been provided.
(b) If the Permitted Related Acquisition to be made is an investment
in Real Property, the Company shall also deliver to the Trustee:
(i) an instrument or instruments in recordable form sufficient
for the Lien of any Mortgage to cover such Real Property which, if the
Real Property is a leasehold or easement interest, shall include
normal and customary provisions with respect thereto and evidence of
the filing of all such financing statements and other instruments as
may be necessary to perfect such Liens;
<PAGE>
-125-
(ii) a policy of title insurance (or a commitment to issue
title insurance) insuring that the Lien of this Indenture and any
Mortgage constitutes a valid and perfected mortgage Lien on such
Real Property (subject to no Prior Liens other than Prior Liens of
the type which were permitted with respect to the Collateral which
was the subject of the Asset Sale) in an aggregate amount equal to
the Fair Market Value of the Real Property, together with an
Officers' Certificate stating that any specific exceptions to such
title insurance are Liens of the type which were permitted with
respect to the Collateral which was the subject of the Asset Sale,
together with such endorsements and other opinions as are
contemplated by Section 11.2(b)(ii); and
(iii) evidence of payment or a closing statement indicating
payments to be made by the Company or the appropriate Guarantor of
all title premiums, recording charges, transfer taxes and other
costs and expenses, including reasonable legal fees and
disbursements of counsel for the Trustee (and any local counsel),
that may be incurred to validly and effectively subject the Real
Property to the Lien of any applicable Security Document and to
perfect such Lien.
(c) If the Permitted Related Acquisition is a personal property
interest, the Company or the appropriate Guarantor shall deliver to
the Trustee and the Collateral Agent:
(i) an instrument in recordable form sufficient for the Lien of
any applicable Security Document to cover such personal property
interest; and
(ii) evidence of payment or a closing statement indicating
payments to be made by the Company or the appropriate Guarantor of
all filing fees, recording charges, transfer taxes and other costs
and expenses, including reasonable legal fees and disbursements of
counsel for the Trustee (and any local counsel), that may be
incurred to validly and effectively subject the Permitted Related
Acquisition to the Lien of any Security Document and to perfect such
Lien.
(d) An Opinion of Counsel stating that the documents that have been
or are therewith delivered to the Trustee conform to the requirements of
this Indenture and that allQS
<PAGE>
-126-
conditions precedent herein relating to such application of Trust Moneys have
been complied with.
<PAGE>
-127-
SECTION 12.5 Powers Exercisable Notwithstanding
Event of Default.
----------------------------------
In case an Event of Default shall have occurred and shall be
continuing, the Company or the relevant Guarantor, while in possession of the
Collateral (other than cash, Cash Equivalents, securities and other personal
property held by, or required to be deposited or pledged with, the Trustee
hereunder or under the Security Documents or with the trustee, mortgagee or
other holder of a Lien permitted by the Security Documents to be prior to the
Security Interests), may do any of the things enumerated in Sections 12.2 and
12.3 if the Holders of a majority in aggregate principal amount of the
Securities outstanding, by appropriate action of such Holders, shall consent to
such action, in which event any certificate filed under any of such Sections
shall omit the statement to the effect that no Event of Default has occurred and
is continuing. This Section 12.5 shall not apply, however, during the
continuance of an Event of Default of the type specified in Section 6.1(a)(i) or
(ii).
SECTION 12.6 Powers Exercisable by Trustee or
Receiver.
--------------------------------
In case the Collateral (other than any cash, Cash Equivalents,
securities and other personal property held by, or required to be deposited or
pledged with, the Trustee hereunder or under the Security Documents or with the
trustee, mortgagee or other holder of a Lien permitted by the Security Documents
to be prior to the Security Interests) shall be in the possession of a receiver
or trustee lawfully appointed, the powers hereinbefore in this Article XII
conferred upon the Company or the relevant Guarantor with respect to the
withdrawal or application of Trust Moneys may be exercised by such receiver or
trustee, in which case a certificate signed by such receiver or trustee shall be
deemed the equivalent of any Officers' Certificate required by this Article XII.
If the Trustee shall be in possession of any of the Collateral hereunder or
under any of the Security Documents, such powers may be exercised by the
Trustee, in its discretion.
SECTION 12.7 Disposition of Securities
Retired.
-------------------------
All Securities received by the Trustee and for whose purchase Trust
Moneys are applied under this Article XII, if not otherwise cancelled, shall be
promptly delivered to the Trustee for cancellation and destruction unless the
Trustee shall be otherwise directed by the Company or the relevant Guarantor.
Upon
<PAGE>
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destruction of any Securities, the Trustee shall issue a certificate of
destruction to the Company.
SECTION 12.8 Investment of Trust Moneys.
--------------------------
All or any part of any Trust Moneys held by the Trustee hereunder
(except such as may be held for the account of any particular Securities) shall
from time to time be invested or reinvested by the Trustee in any Cash
Equivalents or, with respect to Net Cash Proceeds from Asset Sales, in any
Permitted Investments pursuant to the direction of the Company which shall
specify the Permitted Investment in which such Net Cash Proceeds shall be
invested and the maturity date of such investment, as provided in Section 4.15.
Unless an Event of Default occurs and is continuing, any interest on such Cash
Equivalents or Permitted Investments (in excess of any accrued interest paid at
the time of purchase) which may be received by the Trustee shall be forthwith
paid to the Company. Such Cash Equivalents and Permitted Investments shall be
held by the Trustee as a part of the Collateral, subject to the same provisions
hereof as the cash used by it to purchase such Cash Equivalents or Permitted
Investments.
The Trustee shall not be liable or responsible for any loss resulting
from such investments or sales except only for its own grossly negligent action,
its own grossly negligent failure to act or its own willful misconduct in
complying with this Section 12.8.
ARTICLE XIII
MISCELLANEOUS
-------------
SECTION 13.1 Trust Indenture Act Controls.
----------------------------
If any provision of this Indenture limits, qualifies, or conflicts
with another provision which is required to be included in this Indenture by the
TIA, the required provision shall control.
SECTION 13.2 Notices.
-------
Any notice or communication shall be sufficiently given if in writing
and delivered in Person or mailed by first-class mail addressed as follows:
<PAGE>
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(a) if to the Company or the Guarantors:
PLASTIC CONTAINERS, INC.
301 Merritt 7 Corporate Park
P.O. Box 5410
Norwalk, Connecticut 06856
Attention: Secretary
Continental Can Company, Inc.
One Aerial Way
Syosset, New York 11791
Attention: General Counsel
(b) if to the Trustee:
UNITED STATES TRUST COMPANY
OF NEW YORK
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Re: Plastic Containers, Inc.
Attention: Corporate Trust Department
The Company, the Guarantors or the Trustee by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
Any notice or communication mailed to a Securityholder, including any
notice delivered in connection with TIA Section 310(b), TIA Section 313(c), TIA
Section 314(a) and TIA Section 315(b), shall be mailed to him, first-class
postage prepaid, at his address as it appears on the registration books of the
Registrar and shall be sufficiently given to him if so mailed within the time
prescribed.
Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. Except for a notice to the Trustee, which is deemed given only
when received, if a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.
SECTION 13.3 Communications by Holders with Other
Holders.
------------------------------------
Securityholders may communicate pursuant to TIA Section 312(b) with
other Securityholders with respect to their rights under this Indenture or the
Securities. The Company, the Trustee, the
<PAGE>
-130-
Registrar and any other Person shall have the protection of TIA Section 312(c).
SECTION 13.4 Certificate and Opinion of Counsel
as to Conditions Precedent.
----------------------------------
Upon any request or application by the Company or any Guarantor to the
Trustee to take any action under this Indenture, the Company or such Guarantor,
as the case may be, shall furnish to the Trustee at the request of the Trustee
(a) an Officers' Certificate in form and substance satisfactory to the Trustee
stating that, in the opinion of the signers, all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (b) an Opinion of Counsel in form and substance satisfactory to
the Trustee stating that, in the opinion of counsel, all such conditions have
been complied with and (c) where applicable, a certificate or opinion by an
independent certified public accountant satisfactory to the Trustee that
complies with TIA Section 314(c).
SECTION 13.5 Statements Required in Certificate
and Opinion of Counsel.
----------------------------------
Each certificate and Opinion of Counsel with respect to compliance
with a condition or covenant provided for in this Indenture shall include:
(a) a statement that the Person making such certificate has read such
covenant or condition;
(b) a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate are
based;
(c) a statement that, in the opinion of such Person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been complied with.
SECTION 13.6 Rules by Trustee, Paying Agent,
Registrar.
-------------------------------
<PAGE>
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The Trustee may make reasonable rules in accordance with the Trustee's
customary practices for action by or at a meeting of Securityholders. The
Paying Agent or Registrar may make reasonable rules for its functions.
SECTION 13.7 Legal Holidays.
--------------
If a payment date is a Legal Holiday at a place of payment, payment
may be made at that place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 13.8 Governing Law.
-------------
The internal laws of the State of New York shall govern this Indenture
and the Securities without regard to principles of conflict of laws.
SECTION 13.9 No Recourse Against Others.
--------------------------
A trustee, director, officer, employee, stockholder or beneficiary, as
such, of the Company shall not have any liability for any obligations of the
Company under the Securities or the Indenture or for any claim based on, in
respect of or by reason of such obligations or their creation. Each
Securityholder by accepting a Security waives and releases all such liability.
SECTION 13.10 Successors.
----------
All agreements of the Company and each Guarantor in this Indenture and
the Securities shall bind their respective successors. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.11 Duplicate Originals.
-------------------
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 13.12 Separability.
------------
In case any provision in this Indenture or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby,
and a Holder shall have no claim therefor against any party hereto.
<PAGE>
-132-
SECTION 13.13 Table of Contents, Headings, Etc.
--------------------------------
The table of contents, cross-reference sheet and headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, and are not to be considered a part hereof, and shall in no way
modify or restrict any of the terms or provisions hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.
PLASTIC CONTAINERS, INC.
By /s/
-----------------------------
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By /s/
-----------------------------
Title:
GUARANTORS:
CONTINENTAL PLASTIC
CONTAINERS, INC.
By /s/
-----------------------------
Title:
CONTINENTAL CARIBBEAN
CONTAINERS, INC.
By /s/
-----------------------------
Title:
<PAGE>
Exhibit A
---------
[FORM OF SERIES A NOTE]
[If a restricted security, then insert -- THE NOTE (OR ITS PREDECESSOR)
EVIDENCED HEREBY WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND THE NOTE EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTE EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER
OF THE NOTE EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH
NOTE MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) (a) INSIDE THE
UNITED STATES TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE SECURITIES ACT, (b)
IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT,
(c) OUTSIDE THE UNITED STATES TO A FOREIGN PURCHASER IN A TRANSACTION MEETING
THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT OR (d) IN ACCORDANCE WITH
ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND,
IN THE CASE OF CLAUSE (b), (c) OR (d), BASED UPON AN OPINION OF COUNSEL IF THE
COMPANY SO REQUESTS), (2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE
WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY
OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE NOTE EVIDENCED HEREBY
OR ANY NOTE ISSUED IN EXCHANGE FOR OR IN SUBSTITUTION OF THIS NOTE OF THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.]
Each Temporary Regulation S Global Security shall bear the following
legend on the face thereof:
THIS SECURITY IS A TEMPORARY REGULATION S GLOBAL SECURITY WITHIN THE MEANING OF
THE INDENTURE REFERRED TO HEREINAFTER. EXCEPT IN THE CIRCUMSTANCES DESCRIBED IN
SECTION 2.16 OF THE INDENTURE, INTERESTS IN THIS TEMPORARY REGULATION S GLOBAL
SECURITY MAY NOT BE OFFERED OR SOLD TO A U.S. PERSON OR FOR THE ACCOUNT OR
BENEFIT OF A U.S. PERSON PRIOR TO THE EXPIRATION OF THE RESTRICTED PERIOD (AS
DEFINED IN THE INDENTURE), AND NO TRANSFER OR EXCHANGE OF AN INTEREST IN THIS
TEMPORARY REGULATION S GLOBAL SECURITY MAY BE MADE FOR AN INTEREST IN A
RESTRICTED GLOBAL SECURITY OR IN A PERMANENT REGULATION S GLOBAL SECURITY UNTIL
AFTER THE LATER OF THE DATE OF EXPIRATION OF THE RESTRICTED PERIOD AND THE DATE
ON WHICH THE OWNER SECURITIES CERTIFICATION AND THE DEPOSITORY SECURITIES
CERTIFICATION RELATING TO SUCH INTEREST HAVE BEEN PROVIDED IN
A-1
<PAGE>
ACCORDANCE WITH THE TERMS OF THE INDENTURE, TO THE EFFECT THAT THE BENEFICIAL
OWNER OR OWNERS OF SUCH INTEREST ARE NOT U. S. PERSONS.
Each Permanent Regulation S Security shall bear the following legend
on the face thereof:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, OR
DELIVERED IN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, ANY U.S.
PERSON, UNLESS THE SECURITIES ARE REGISTERED UNDER THE SECURITIES AT OR AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS AVAILABLE.
A-2
<PAGE>
CUSIP NO.: 727547AB7
PLASTIC CONTAINERS, INC.
No. $
10% SENIOR SECURED NOTE DUE 2006, SERIES A
PLASTIC CONTAINERS, INC., a Delaware corporation (the "Company", which
term includes any successor entity) for value received promises to pay to
or registered assigns the principal sum of Dollars on December
15, 2006.
Interest Payment Dates: June 15 and December 15
Record Dates: June 1 and December 1
To the extent set forth in the Collateral Documents, payment hereof is
secured, on an equal and ratable basis with all other Securities, by a valid,
perfected security interest in the Collateral (as defined in the Indenture) with
the priority contemplated in Section 11.01(a) of the Indenture, the terms of
which security interest are more fully set forth in the Collateral Documents.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.
Dated:
PLASTIC CONTAINERS, INC.
By: _______________________________
Chairman of the Board and
Chief Executive Officer
By: ______________________________
Vice President, Secretary
and Treasurer
A-3
<PAGE>
Certificate of Authentication
This is one of the 10% Senior Secured Notes due 2006, Series A
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK, as Trustee
By:___________________________
Authorized Officer
Dated: _____________________
A-4
<PAGE>
(REVERSE OF SECURITY)
PLASTIC CONTAINERS, INC.
10% SENIOR SECURED NOTE DUE 2006, SERIES A
1. Interest. PLASTIC CONTAINERS, INC., a Delaware corporation (the
--------
"Company"), promises to pay, until the principal hereof is paid or made
available for payment, interest on the principal amount set forth on the reverse
side hereof at a rate of 10% per annum. Interest on the Senior Secured Notes
--- -----
will accrue from and including the most recent date or which interest has been
paid or, if no interest has been paid, from and including December 17, 1996.
Interest shall be payable in arrears on June 15 and December 15 of each year,
commencing June 15, 1997. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue
principal and on overdue interest (to the full extent permitted by law) at a
rate of 11% per annum.
--- -----
2. Method of Payment. The Company will pay interest on the Senior
-----------------
Secured Notes (except defaulted interest) to the Persons who are registered
Holders of Senior Secured Notes at the close of business on the June 1 or
December 1 next preceding the interest payment date. Holders must surrender
Senior Secured Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, United States Trust
--------------------------
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice.
Neither the Company nor any of its Subsidiaries may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture. The Company issued the Senior Secured Notes under an
---------
Indenture dated as of December 17, 1996 (the "Indenture") among the Company,
Continental Plastic Containers, Inc. ("CPC"), Continental Caribbean Containers,
Inc. ("Caribbean") and the Trustee. This Senior Secured Note is one of an issue
of Senior Secured Notes of the Company issued, or to be issued, under the
Indenture. The terms of the Senior Secured Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as amended from time
to time. The Senior Secured Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of them. Capitalized
and certain other terms used herein and not otherwise defined have
A-5
<PAGE>
the meanings set forth in the Indenture. This Senior Secured Note is one of a
duly authorized issue of Initial Notes of the Company designated as its 10%
Senior Secured Notes due 2006, Series A (the "Initial Securities"). The Senior
Secured Notes are secured obligations of the Company limited in aggregate
principal amount to $125,000,000. The Senior Secured Notes include the Initial
Securities and the Exchange Securities, as defined below, issued in exchange for
the Initial Securities pursuant to the Indenture. The Initial Securities and
the Exchange Securities are treated as a single class of securities under the
Indenture. The Indenture limits, among other things, the incurrence of
Indebtedness by the Company and its Subsidiaries; Sale-Leaseback Transactions by
the Company and its Subsidiaries; the creation of Liens by the Company and its
Subsidiaries; purchases, redemptions, and other acquisitions or retirements of
Capital Stock of the Company and its Subsidiaries; transactions by the Company
and its Subsidiaries with their respective Affiliates; and the ability of the
Company or any of its Subsidiaries to merge with or into another entity. The
Indenture also requires each Guarantor to comply with each of the covenants that
impose restrictions on such Guarantor. The limitations are subject to a number
of important qualifications and exceptions. The Company must report to the
Trustee quarterly on compliance with the limitations contained in the Indenture.
5. Optional Redemption. The Company, at its option, may redeem all or
-------------------
any of the Senior Secured Notes, in whole or in part, at any time on or after
December 15, 2001 at the redemption prices (expressed in percentages of
principal amount) set forth below plus accrued and unpaid interest to the
Redemption Date, if redeemed during the 12-month period beginning December 15 of
the years indicated below:
Year Percentage
---- ----------
2001......................... 105.000%
2002......................... 103.333%
2003......................... 101.667%
2004 and thereafter.......... 100.000%
In addition, on or prior to December 15, 1999, the Company may, at its
option, following a Public Equity Offering (as defined below) which yields gross
proceeds (before discounts, commissions and expenses) of $15,000,000 or more in
aggregate, redeem up to $40,000,000 of the principal amount of Senior Secured
Notes originally issued from the holders of Senior Secured Notes, on a pro rata
basis (or as nearly pro rata as practicable), at a redemption price equal to
109% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of redemption; provided that at least $85,000,000 aggregate
principal amount of Senior Secured Notes would remain outstanding immediately
after giving effect to any such redemption. In order to effect the
A-6
<PAGE>
foregoing redemption with the net proceeds of a Public Equity Offering, the
Company shall send the redemption notice not later than 60 days after the
consummation of such Public Equity Offering.
As used in the preceding paragraph, a "Public Equity Offering" means
an underwritten public offering of Capital Stock (other than Disqualified Stock)
of the Company made on a primary basis by the Company pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act or an underwritten offering of Capital Stock (other than
Disqualified Stock) of the Company made on a primary basis by the Company
pursuant to Rule 144A under the Securities Act.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder of Senior Secured Notes to be redeemed at his registered address. On and
after the Redemption Date, unless the Company defaults in making the redemption
payment, interest ceases to accrue on Senior Secured Notes or portions thereof
called for redemption.
7. Offers To Purchase. Sections 4.15 and 4.17 of the Indenture
------------------
provide that after an Asset Sale or upon the occurrence of a Change of Control,
and subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Senior Secured Notes in accordance with the
procedures set forth in the Indenture.
8. Security Documents. In order to secure the due and punctual
------------------
payment of the principal of and interest on the Senior Secured Notes and all
other amounts payable by the Company under the Indenture and the Senior Secured
Notes when and as the same shall be due and payable, whether at maturity, by
acceleration or otherwise, according to the terms of the Senior Secured Notes
and the Indenture, each of the Company, CPC and Caribbean has granted security
interests in and Liens on the Collateral owned by it to the Trustee for the
benefit of the Holders of Senior Secured Notes pursuant to the Indenture and the
Security Documents. The Senior Secured Notes will be secured by Liens on and
security interests in the Collateral that are subject only to certain permitted
encumbrances.
Each Holder, by accepting a Senior Secured Note, agrees to all of the
terms and provisions of the Security Documents, as the same may be amended from
time to time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
any of the Security Documents and the terms
A-7
<PAGE>
and provisions of the Indenture will not be deemed for any purpose to be an
impairment of the security under the Indenture.
9. Denominations, Transfer, Exchange. The Senior Secured Notes are in
---------------------------------
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Senior Secured Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay to
it any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Senior Secured Notes or portion of a
Senior Secured Note selected for redemption, or transfer or exchange any Senior
Secured Notes for a period of 15 days before a selection of Senior Secured Notes
to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Senior Secured
---------------------
Note may be treated as the owner of it for all purposes. With respect to Global
Securities, the Depository may grant proxies and otherwise authorize Holders of
Book-Entry Securities to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder of a Security
is entitled to give or take under this Indenture.
11. Unclaimed Money. If money for the payment of principal or interest
---------------
remains unclaimed for two years, the Trustee or Paying Agent will pay the money
back to the Company at its request. After that, Holders entitled to the money
must look to the Company for payment as general creditors unless an "abandoned
property" law designates another Person.
12. Amendment, Supplement, Waiver. The Company and the Guarantors and
-----------------------------
the Trustee (if a party thereto) may, without the consent of the Holders of any
outstanding Senior Secured Notes, amend, waive or supplement the Indenture, the
Security Documents or the Senior Secured Notes for certain specified purposes,
including, among other things, curing ambiguities, defects or inconsistencies,
maintaining the qualification of the Indenture under the Trust Indenture Act of
1939, as amended, making any change that does not adversely affect the rights of
any Holder or mortgaging, pledging or granting a security interest in favor of
the Trustee as additional security for the payment and performance of the
obligations under the Indenture, in any property or assets, including any which
is required to be mortgaged, pledged or hypothecated, or in which a security
interest is required to be granted, to the Trustee pursuant to any Security
Document or otherwise. Other amendments and modifications of the Indenture, the
Senior Secured Notes or the Security Documents may be made by the Company, the
Guarantors and the Trustee with the consent of the Holders of not less than a
majority of the aggregate principal amount of the outstanding Senior Secured
Notes, subject to certain
A-8
<PAGE>
exceptions requiring the consent of the Holders of the particular Senior Secured
Notes to be affected.
13. Successor Corporation. When a successor corporation assumes all
---------------------
the obligations of its predecessor under the Senior Secured Notes and the
Indenture and the transaction complies with the terms of Article V of the
Indenture, the predecessor corporation will be released from those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
---------------------
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(viii) or
(ix) of the Indenture (with respect to the Company, CPC or Caribbean)) occurs
and is continuing, then the Holders of not less than 25% in aggregate principal
amount of the outstanding Senior Secured Notes may, and the Trustee upon the
request of the Holders of not less than 25% in aggregate principal amount of the
outstanding Senior Secured Notes shall, declare the principal of and interest on
all of the Senior Secured Notes to be due and payable immediately. If an Event
of Default specified in Section 6.1(a)(viii) or (ix) of the Indenture (with
respect to the Company, CPC or Caribbean) occurs and is continuing, the
principal of and interest on all of the Senior Secured Notes shall ipso facto
---- -----
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. Holders may not enforce the Indenture
or the Senior Secured Notes except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Senior Secured Notes. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Senior Secured Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
15. Trustee Dealings with Company. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Secured Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Senior Secured Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Secured Notes.
A-9
<PAGE>
17. Discharge. The Company's obligations pursuant to the Indenture
---------
will be discharged, except for obligations pursuant to certain sections thereof,
subject to the terms of the Indenture, upon the payment of all the Senior
Secured Notes or upon the irrevocable deposit with the Trustee of money or U.S.
Government Obligations sufficient to pay when due principal of and interest on
the Senior Secured Notes to maturity or redemption, as the case may be.
18. Authentication. This Senior Secured Note shall not be valid until
--------------
the Trustee signs the certificate of authentication on the other side of this
Senior Secured Note.
19. Abbreviations. Customary abbreviations may be used in the name of
-------------
a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. Governing Law. The laws of the State of New York shall govern this
-------------
Senior Secured Note and the Indenture.
21. Registration Rights. Pursuant to the Registration Rights Agreement
-------------------
among the Company and the Initial Purchasers, the Company will be obligated to
consummate an exchange offer pursuant to which the Holder of this Security shall
have the right to exchange this Security for the Company's 10% Senior Secured
Notes due 2006, Series B (the "Exchange Securities"), which have been registered
under the Securities Act, in like principal amount and having terms identical in
all material respects to the Initial Securities. The Holders of the Initial
Securities shall be entitled to receive Liquidated Damages in the event such
exchange offer is not consummated and upon certain other conditions, all
pursuant to and in accordance with the terms of the Registration Rights
Agreement.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
PLASTIC CONTAINERS, INC.
301 Merritt Corporate Park 7
Norwalk, Connecticut 06856
Attention: Secretary
The form of reverse of a Temporary Regulation S Global Security shall
include the language:
This Temporary Regulation S Global Security is one of a duly
authorized issue of Securities of the Company designated as
A-10
<PAGE>
its Senior Secured Notes due 2006 (the "Securities"), issued under an Indenture,
dated as of December , 1996 (herein called the "Indenture"), among the
Company, the Guarantors and United States Trust Company of New York, as trustee
(herein called the "Trustee", which term includes any successor trustee under
the Indenture). The Securities are limited in aggregate principal amount to
$115,000,000. Reference is hereby made to the Indenture and all indentures
supplemental thereto for a statement of the respective rights, limitations of
rights, duties and immunities thereunder of the Company, the Guarantors, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
Until this Temporary Regulation S Global Security is exchanged for a
Permanent Regulation S Global Security, the Holder hereof shall not be entitled
to receive payments of interest hereon; until so exchanged in full, this
Temporary Regulation S Global Security shall in all other respects be entitled
to the same benefits as other Securities under the Indenture.
This Temporary Regulation S Global Security is exchangeable in whole
or in part for one or more Permanent Regulation S Global Securities or
Restricted Global Securities only (i) on or after the expiration of the
Restricted Period and (ii) upon presentation of certificates (accompanied by an
opinion of Counsel, if applicable) required by Article III of the Indenture.
Upon exchange of this Temporary Regulation S Global Security for one or more
Permanent Regulation S Global Securities or Restricted Global Securities, the
Trustee shall cancel this Temporary Regulation S Global Security.
This Temporary Regulation S Global Security shall not become valid or
obligatory until the certificate of authentication hereon shall have been duly
manually signed by the Trustee in accordance with the Indenture. This Temporary
Regulation S Global Security shall be governed by and construed in accordance
with the laws of the State of New York.
A-11
<PAGE>
GUARANTEE
Each Guarantor (which term includes any successor Person under the
Indenture) has unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, (a) the due and
punctual payment of the principal of and interest on the Senior Secured Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
X of the Indenture and (b) in case of any extension of time of payment or
renewal of any Senior Secured Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of the Guarantors to the Holders of Senior Secured
Notes and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Article X of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee.
Guarantors:
CONTINENTAL PLASTIC CONTAINERS, INC.
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:
-------------------------------
President of each of the
foregoing corporations
By:
-------------------------------
Secretary of each of the
foregoing corporations
A-12
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Senior Secured Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Senior Secured Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number) ____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Senior Secured Note on the books of the Company. The
agent may substitute another to act for him.
- --------------------------------------------------------------------------------
Date: _________________ Your signature:
------------------------
(Sign exactly as your
name appears on the other
side of this Senior
Secured Note)
Signature Guarantee:
--------------------
A-13
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Senior Secured Note purchased by the Company
pursuant to Section 4.15 or 4.17 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Senior Secured Note purchased by
the Company pursuant to Section 4.15 or 4.17 of the Indenture, state the amount:
$_____________
Date: ________________ Your Signature: _____________________
(Sign exactly as your
name appears on the
other side of this
Senior Secured Note)
Signature Guarantee: _____________________
A-14
<PAGE>
Exhibit B
---------
CUSIP No.:
PLASTIC CONTAINERS, INC.
10% SENIOR SECURED NOTE DUE 2006, SERIES B
No. $
PLASTIC CONTAINERS, INC., a Delaware corporation (the "Company," which
term includes any successor entity) for value received promises to pay to
or registered assigns, the principal sum of Dollars, on December 15,
2006.
Interest Payment Dates: June 15 and December 15.
Record Dates: June 1 and December 1.
To the extent set forth in the Collateral Documents, payment hereof is
secured, on an equal and ratable basis with all other Securities, by a valid,
perfected security interest in the Collateral (as defined in the Indenture) with
the priority contemplated in Section 11.01(a) of the Indenture, the terms of
which security interest are more fully set forth in the Collateral Documents.
Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Note to be signed
manually or by facsimile by its duly authorized officers
B-1
<PAGE>
and a facsimile of its corporate seal to be affixed hereto or imprinted hereon.
Dated:
PLASTIC CONTAINERS, INC.
By:
-----------------------------
Chairman of the Board and
Chief Executive Officer
By:
-----------------------------
Vice President, Secretary
and Treasurer
B-2
<PAGE>
Certificate of Authentication
This is one of the 10% Senior Secured Notes due 2006, Series B
referred to in the within-mentioned Indenture.
UNITED STATES TRUST COMPANY
OF NEW YORK
as Trustee
Dated: By:
--------------------------------
Authorized Officer
B-3
<PAGE>
(REVERSE OF SECURITY)
PLASTIC CONTAINERS, INC.
10% SENIOR SECURED NOTE DUE 2006, SERIES B
1. Interest. PLASTIC CONTAINERS, INC., a Delaware corporation (the
--------
"Company"), promises to pay, until the principal hereof is paid or made
available for payment, interest on the principal amount set forth on the reverse
side hereof at a rate of 10% per annum. Interest on the Senior Secured Notes
--- -----
will accrue from and including the most recent date or which interest has been
paid or, if no interest has been paid, from and including December 17, 1996.
Interest shall be payable in arrears on June 15 and December 15 of each year,
commencing June 15, 1997. Interest will be computed on the basis of a 360-day
year of twelve 30-day months. The Company shall pay interest on overdue
principal and on overdue interest (to the full extent permitted by law) at a
rate of 11% per annum.
--- -----
2. Method of Payment. The Company will pay interest on the Senior
-----------------
Secured Notes (except defaulted interest) to the Persons who are registered
Holders of Senior Secured Notes at the close of business on the June 1 or
December 1 next preceding the interest payment date. Holders must surrender
Senior Secured Notes to a Paying Agent to collect principal payments. The
Company will pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar. Initially, United States Trust
--------------------------
Company of New York (the "Trustee") will act as Paying Agent and Registrar. The
Company may change any Paying Agent, Registrar or co-Registrar without notice.
Neither the Company nor any of its Subsidiaries may act as Paying Agent,
Registrar or co-Registrar.
4. Indenture. The Company issued the Senior Secured Notes under an
---------
Indenture dated as of December 17, 1996 (the "Indenture") among the Company,
Continental Plastic Containers, Inc. ("CPC"), Continental Caribbean Containers,
Inc. ("Caribbean") and the Trustee. This Senior Secured Note is one of an issue
of Senior Secured Notes of the Company issued, or to be issued, under the
Indenture. The terms of the Senior Secured Notes include those stated in the
Indenture and those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code Sections 77aaa-77bbbb), as amended from time
to time. The Senior Secured Notes are subject to all such terms, and Holders
are referred to the Indenture and such Act for a statement of them. Capitalized
and certain other terms used herein and not otherwise defined have
B-4
<PAGE>
the meanings set forth in the Indenture. This Senior Secured Note is one of a
duly authorized issue of Exchange Notes of the Company designated as its 10%
Senior Secured Notes due 2006, Series B. The Senior Secured Notes are secured
obligations of the Company limited in aggregate principal amount to
$125,000,000. The Indenture limits, among other things, the incurrence of
Indebtedness by the Company and its Subsidiaries; Sale-Leaseback Transactions by
the Company and its Subsidiaries; the creation of Liens by the Company and its
Subsidiaries; purchases, redemptions, and other acquisitions or retirements of
Capital Stock of the Company and its Subsidiaries; transactions by the Company
and its Subsidiaries with their respective Affiliates; and the ability of the
Company or any of its Subsidiaries to merge with or into another entity. The
Indenture also requires each Guarantor to comply with each of the covenants that
impose restrictions on such Guarantor. The limitations are subject to a number
of important qualifications and exceptions. The Company must report to the
Trustee quarterly on compliance with the limitations contained in the Indenture.
5. Optional Redemption. The Company, at its option, may redeem all or
-------------------
any of the Senior Secured Notes, in whole or in part, at any time on or after
December 15, 2001 at the redemption prices (expressed in percentages of
principal amount) set forth below plus accrued and unpaid interest to the
Redemption Date, if redeemed during the 12-month period beginning December 15 of
the years indicated below:
Year Percentage
---- ----------
2001......................... 105.000%
2002......................... 103.333%
2003......................... 101.667%
2004 and thereafter.......... 100.000%
In addition, on or prior to December 15, 1999, the Company may, at its
option, following a Public Equity Offering (as defined below) which yields gross
proceeds (before discounts, commissions and expenses) of $15,000,000 or more in
aggregate, redeem up to $40,000,000 of the principal amount of Senior Secured
Notes originally issued from the holders of Senior Secured Notes, on a pro rata
basis (or as nearly pro rata as practicable), at a redemption price equal to
109% of the principal amount thereof, plus accrued and unpaid interest, if any,
to the date of redemption; provided that at least $85,000,000 aggregate
principal amount of Senior Secured Notes would remain outstanding immediately
after giving effect to any such redemption. In order to effect the foregoing
redemption with the net proceeds of a Public Equity Offering, the Company shall
send the redemption notice not later than 60 days after the consummation of such
Public Equity Offering.
B-5
<PAGE>
As used in the preceding paragraph, a "Public Equity Offering" means
an underwritten public offering of Capital Stock (other than Disqualified Stock)
of the Company made on a primary basis by the Company pursuant to a registration
statement filed with and declared effective by the Commission in accordance with
the Securities Act or an underwritten offering of Capital Stock (other than
Disqualified Stock) of the Company made on a primary basis by the Company
pursuant to Rule 144A under the Securities Act.
6. Notice of Redemption. Notice of redemption will be mailed at
--------------------
least 30 days but not more than 60 days before the redemption date to each
Holder of Senior Secured Notes to be redeemed at his registered address. On and
after the Redemption Date, unless the Company defaults in making the redemption
payment, interest ceases to accrue on Senior Secured Notes or portions thereof
called for redemption.
7. Offers To Purchase. Sections 4.15 and 4.17 of the Indenture
------------------
provide that after an Asset Sale or upon the occurrence of a Change of Control,
and subject to further limitations contained therein, the Company shall make an
offer to purchase certain amounts of Senior Secured Notes in accordance with the
procedures set forth in the Indenture.
8. Security Documents. In order to secure the due and punctual
------------------
payment of the principal of and interest on the Senior Secured Notes and all
other amounts payable by the Company under the Indenture and the Senior Secured
Notes when and as the same shall be due and payable, whether at maturity, by
acceleration or otherwise, according to the terms of the Senior Secured Notes
and the Indenture, each of the Company, CPC and Caribbean has granted security
interests in and Liens on the Collateral owned by it to the Trustee for the
benefit of the Holders of Senior Secured Notes pursuant to the Indenture and the
Security Documents. The Senior Secured Notes will be secured by Liens on and
security interests in the Collateral that are subject only to certain permitted
encumbrances.
Each Holder, by accepting a Senior Secured Note, agrees to all of the
terms and provisions of the Security Documents, as the same may be amended from
time to time pursuant to the respective provisions thereof and the Indenture.
The Trustee and each Holder acknowledge that a release of any of the
Collateral or any Lien strictly in accordance with the terms and provisions of
any of the Security Documents and the terms and provisions of the Indenture will
not be deemed for any purpose to be an impairment of the security under the
Indenture.
B-6
<PAGE>
9. Denominations, Transfer, Exchange. The Senior Secured Notes are in
---------------------------------
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. A Holder may transfer or exchange Senior Secured Notes in
accordance with the Indenture. The Registrar may require a Holder, among other
things, to furnish appropriate endorsements and transfer documents and to pay to
it any taxes and fees required by law or permitted by the Indenture. The
Registrar need not transfer or exchange any Senior Secured Notes or portion of a
Senior Secured Note selected for redemption, or transfer or exchange any Senior
Secured Notes for a period of 15 days before a selection of Senior Secured Notes
to be redeemed.
10. Persons Deemed Owners. The registered Holder of a Senior Secured
---------------------
Note may be treated as the owner of it for all purposes. With respect to Global
Securities, the Depository may grant proxies and otherwise authorize Holders of
Book-Entry Securities to give or take any request, demand, authorization,
direction, notice, consent, waiver or other action which a Holder of a Security
is entitled to give or take under this Indenture.
11. Unclaimed Money. If money for the payment of principal or
---------------
interest remains unclaimed for two years, the Trustee or Paying Agent will pay
the money back to the Company at its request. After that, Holders entitled to
the money must look to the Company for payment as general creditors unless an
"abandoned property" law designates another Person.
12. Amendment, Supplement, Waiver. The Company and the Guarantors
-----------------------------
and the Trustee (if a party thereto) may, without the consent of the Holders of
any outstanding Senior Secured Notes, amend, waive or supplement the Indenture,
the Security Documents or the Senior Secured Notes for certain specified
purposes, including, among other things, curing ambiguities, defects or
inconsistencies, maintaining the qualification of the Indenture under the Trust
Indenture Act of 1939, as amended, making any change that does not adversely
affect the rights of any Holder or mortgaging, pledging or granting a security
interest in favor of the Trustee as additional security for the payment and
performance of the obligations under the Indenture, in any property or assets,
including any which is required to be mortgaged, pledged or hypothecated, or in
which a security interest is required to be granted, to the Trustee pursuant to
any Security Document or otherwise. Other amendments and modifications of the
Indenture, the Senior Secured Notes or the Security Documents may be made by the
Company, the Guarantors and the Trustee with the consent of the Holders of not
less than a majority of the aggregate principal amount of the outstanding Senior
Secured Notes, subject to certain exceptions requiring the consent of the
Holders of the particular Senior Secured Notes to be affected.
B-7
<PAGE>
13. Successor Corporation. When a successor corporation assumes all
---------------------
the obligations of its predecessor under the Senior Secured Notes and the
Indenture and the transaction complies with the terms of Article V of the
Indenture, the predecessor corporation will be released from those obligations.
14. Defaults and Remedies. Events of Default are set forth in the
---------------------
Indenture. Subject to certain limitations in the Indenture, if an Event of
Default (other than an Event of Default specified in Section 6.1(a)(viii) or
(ix) of the Indenture (with respect to the Company, CPC or Caribbean)) occurs
and is continuing, then the Holders of not less than 25% in aggregate principal
amount of the outstanding Senior Secured Notes may, and the Trustee upon the
request of the Holders of not less than 25% in aggregate principal amount of the
outstanding Senior Secured Notes shall, declare the principal of and interest on
all of the Senior Secured Notes to be due and payable immediately. If an Event
of Default specified in Section 6.1(a)(viii) or (ix) of the Indenture (with
respect to the Company, CPC or Caribbean) occurs and is continuing, the
principal of and interest on all of the Senior Secured Notes shall ipso facto
---- -----
become and be immediately due and payable without any declaration or other act
on the part of the Trustee or any Holder. Holders may not enforce the Indenture
or the Senior Secured Notes except as provided in the Indenture. The Trustee
may require indemnity satisfactory to it before it enforces the Indenture or the
Senior Secured Notes. Subject to certain limitations, Holders of a majority in
principal amount of the then outstanding Senior Secured Notes may direct the
Trustee in its exercise of any trust or power. The Trustee may withhold from
Holders notice of any continuing default (except a default in payment of
principal or interest) if it determines that withholding notice is in their
interests. The Company must furnish an annual compliance certificate to the
Trustee.
15. Trustee Dealings with Company. The Trustee, in its individual or
-----------------------------
any other capacity, may make loans to, accept deposits from, and perform
services for the Company or its Affiliates, and may otherwise deal with the
Company or its Affiliates, as if it were not Trustee.
16. No Recourse Against Others. A director, officer, employee or
--------------------------
stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Senior Secured Notes or the Indenture or
for any claim based on, in respect of, or by reason of, such obligations or
their creation. Each Holder by accepting a Senior Secured Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Senior Secured Notes.
17. Discharge. The Company's obligations pursuant to the Indenture
---------
will be discharged, except for obligations pursuant
B-8
<PAGE>
to certain sections thereof, subject to the terms of the Indenture, upon the
payment of all the Senior Secured Notes or upon the irrevocable deposit with the
Trustee of money or U.S. Government Obligations sufficient to pay when due
principal of and interest on the Senior Secured Notes to maturity or redemption,
as the case may be.
18. Authentication. This Senior Secured Note shall not be valid
--------------
until the Trustee signs the certificate of authentication on the other side of
this Senior Secured Note.
19. Abbreviations. Customary abbreviations may be used in the name
-------------
of a Holder or an assignee, such as: TEN COM (= tenants in common), TENANT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
20. Governing Law. The laws of the State of New York shall govern
-------------
this Senior Secured Note and the Indenture.
The Company will furnish to any Holder upon written request and
without charge a copy of the Indenture. Requests may be made to:
PLASTIC CONTAINERS, INC.
301 Merritt 7 Corporate Park
Norwalk, Connecticut 06856
Attention: Secretary
B-9
<PAGE>
GUARANTEE
Each Guarantor (which term includes any successor Person under the
Indenture) has unconditionally guaranteed, to the extent set forth in the
Indenture and subject to the provisions in the Indenture, (a) the due and
punctual payment of the principal of and interest on the Senior Secured Notes,
whether at maturity, by acceleration or otherwise, the due and punctual payment
of interest on overdue principal, and, to the extent permitted by law, interest,
and the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee all in accordance with the terms set forth in Article
X of the Indenture and (b) in case of any extension of time of payment or
renewal of any Senior Secured Notes or any of such other obligations, that the
same will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, whether at stated maturity, by acceleration
or otherwise.
The obligations of the Guarantors to the Holders of Senior Secured
Notes and to the Trustee pursuant to the Guarantee and the Indenture are
expressly set forth in Article X of the Indenture and reference is hereby made
to the Indenture for the precise terms of the Guarantee.
Guarantors:
CONTINENTAL PLASTIC CONTAINERS, INC.
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:
------------------------------------
President of each of the
foregoing corporations
By:
------------------------------------
Secretary of each of the foregoing
corporations
B-10
<PAGE>
ASSIGNMENT FORM
If you the Holder want to assign this Senior Secured Note, fill in the form
below and have your signature guaranteed:
I or we assign and transfer this Senior Secured Note to
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax ID number) ____________
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code) and irrevocably appoint
- --------------------------------------------------------------------------------
agent to transfer this Senior Secured Note on the books of the Company. The
agent may substitute another to act for him.
Date: ________________ Your Signature: _____________________
(Sign exactly as your
name appears on the other
side of this Senior
Secured Note)
Signature Guarantee:
--------------------
B-11
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you wish to have this Senior Secured Note purchased by the Company
pursuant to Section 4.15 or 4.17 of the Indenture, check the Box: [ ]
If you wish to have a portion of this Senior Secured Note purchased by
the Company pursuant to Section 4.15 or 4.17 of the Indenture, state the amount:
$_____________
Date: ________________ Your Signature: _____________________
(Sign exactly as your
name appears on the
other side of this
Senior Secured Note)
Signature Guarantee: _____________________
B-12
<PAGE>
Exhibit C
---------
[FORM OF CERTIFICATION TO BE GIVEN BY HOLDERS OF
BENEFICIAL INTEREST IN A TEMPORARY
REGULATION S GLOBAL SECURITY
TO EUROCLEAR OR CEDEL]
OWNER SECURITIES CERTIFICATION
PLASTIC CONTAINERS, INC.
10% Senior Secured Notes due 2006
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This is to certify that, as of the date hereof, $______ of the above-
captioned Securities (the "Securities") are beneficially owned by non-U.S.
person(s). As used in this
the term "U.S. person" has the meaning given to it paragraph,
by Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the
date on which you intend to submit your certification relating to the Securities
held by you for our account in accordance with your operating procedures if any
applicable statement herein is not correct on such date, and in the absence of
any such notification it may be assumed that this certification applies as of
such date.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated: ,
-------------------- ----
By:
--------------------------------------------
As, or as agent for, the beneficial owner(s)
of the Securities to which this certificate
relates.
C-1
<PAGE>
Exhibit D
---------
[FORM OF CERTIFICATION TO BE GIVEN
BY THE EUROCLEAR OPERATOR OR
CEDEL]
DEPOSITORY SECURITIES CERTIFICATION
PLASTIC CONTAINERS, INC.
10% Senior Secured Notes due 2006
CUSIP No. 727547AB7
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This is to certify that, with respect to U.S.$__________ principal
amount of the above-captioned Securities (the "Securities"), except as set forth
below, we have received in writing, by tested telex or by electronic
transmission, from member organizations appearing in our records as persons
being entitled to a portion of the principal amount of the Securities (our
"Member Organizations"), certifications with respect to such portion,
substantially to the effect set forth in the Indenture./1/
We further certify (i) that we are not making available herewith for
exchange (or, if relevant, exercise of any rights or collection of any interest)
any portion of the Temporary Regulation S Global Security (as defined in the
Indenture) excepted in such certifications and (ii) that as of the date hereof
we have not received any notification from any of our Member Organizations to
the effect that the statements made by such Member Organizations with respect to
any portion of the part submitted herewith for exchange (or, if relevant,
exercise of any rights or collection of any interest) are no longer true and
cannot be relied upon as of the date hereof.
- ----------
/1/ Unless Morgan Guaranty Trust Company of New York, London Branch is
otherwise informed by the Agent, the long form certificate set out in the
Operating Procedures will be deemed to meet the requirements of this sentence.
D-1
<PAGE>
We understand that this certification is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certification is or would be relevant, we irrevocably authorize
you to produce this certification to any interested party in such proceedings.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated:______________, _____
Yours faithfully,
[MORGAN GUARANTY TRUST COMPANY OF
NEW YORK, as operator of the
Euroclear System]
or
[CEDEL BANK, SOCIETE ANONYME]
By
---------------------------
D-2
<PAGE>
Exhibit E
---------
[FORM OF CERTIFICATION TO BE GIVEN BY
TRANSFEREE OF BENEFICIAL INTEREST IN A
TEMPORARY REGULATION S GLOBAL SECURITY]
TRANSFEREE SECURITIES CERTIFICATION
PLASTIC CONTAINERS, INC.
10% Senior Secured Notes due 2006
CUSIP No. 727547AB7
Reference is hereby made to the Indenture, dated as of December 17, 1996 (the
Indenture"), among Plastic Containers, Inc., as Issuer, Continental Plastic
Containers, Inc. and Continental Caribbean Containers, Inc., as Guarantors, and
United States Trust Company of New York, as Trustee. Capitalized terms used but
not defined herein shall have the meanings given to them in the Indenture.
For purposes of acquiring a beneficial interest in the Temporary Regulation S
Global Security, the undersigned certifies that it is not a U.S. Person as
defined by Regulation S under the Securities Act of 1933, as amended.
We undertake to advise you promptly by tested telex on or prior to the date on
which you intend to submit your certification relating to the Securities held by
you in which we intend to acquire a beneficial interest in accordance with your
operating procedures if any applicable statement herein is not correct on such
date, and in the absence of any such notification it may be assumed that this
certification applies as of such date.
We understand that this certificate is required in connection with certain
securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated: ,
-------------------- ----
By:
-----------------------------------------
As, or as agent for, the beneficial
owner(s) of the Securities to which this
certificate relates.
E-1
<PAGE>
Exhibit F
---------
FORM OF CERTIFICATION FOR TRANSFER OR
EXCHANGE OF RESTRICTED GLOBAL SECURITY
TO TEMPORARY REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16(ii) of the Indenture)
United States Trust Company
of New York
Corporate Trust Division
114 West 47th Street
New York, New York 10036-13
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers Inc. 10%
Senior Secured Notes due
2006 (the "Securities")
-------------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to U.S.$__________ aggregate principal amount of
Securities which are Held in the form of the Restricted Global Security (CUSIP
No.727547AB7) with the Depository in the name of [insert name of transferor]
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Securities to a Person who will take delivery thereof in the
form of an equal aggregate principal amount of Securities evidenced by the
Temporary Regulation S Global Security (CUSIP No._____) to be held with the
Depository in the name of [Euroclear] [Cedel Bank, societe anonyme].
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Securities and
pursuant to and in accordance with Regulation S under the Securities Act of
1933, as amended (the "Securities Act"), and accordingly the Transferor does
hereby certify that:
(1) the offer of the Securities was not made to a person in the United
States;
F-1
<PAGE>
[(2) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on its
behalf reasonably believed that the transferee was outside the United
States]/1/
[(2) the transaction was executed in, on or through the facilities of a
designated offshore securities market and neither the Transferor nor any
person acting on our behalf knows that the transaction was pre-arranged with
a buyer in the United States;]/1/
(3) no directed selling efforts have been made in contravention of the
requirements of Rule 903 (b) or 904(b) of Regulation S, as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(5) upon completion of the transaction, the beneficial interest being
transferred as described above is to be held with the Depository in the name
of [Euroclear] [Cedel Bank, societe anonyme].
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
[Insert Name of Transferor)
By:
-------------------------------
Name:
Title:
Dated:
-----------
cc: Plastic Containers, Inc.
- ----------
/1/ Insert one of these two provisions, which come from the definition of
"offshore transaction" in Regulation S.
F-2
<PAGE>
Exhibit G
---------
FORM OF CERTIFICATION FOR TRANSFER OR EXCHANGE OF
RESTRICTED GLOBAL SECURITY TO
PERMANENT REGULATION S GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16(ii) of the Indenture)
United States Trust Company of New York,
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to U.S.$____________ aggregate principal amount of
Securities which are held in the form of the Restricted Global Security (CUSIP
No. 727547AB7) with the Depository in the name of [insert name of transferor]
(the "Transferor"). The Transferor has requested a transfer of such beneficial
interest in the Securities to a Person who will take delivery thereof in the
form of an equal aggregate principal amount of Securities evidenced by the
Permanent Regulation S Global Security (CUSIP No. __________).
In connection with such request, and in respect of such Securities,
the Transferor does hereby certify that such transfer has been effected in
accordance with the transfer restrictions set forth in the Securities and,
(1) with respect to transfers made in reliance on Regulation S under
the Securities Act of 1933, as amended (the "Securities Act"), the
Transferor does hereby certify that:
(A) the offer of the Securities was not made to a person in the
United States;
G-1
<PAGE>
[(B) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the
United States;]/1/
[(B) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the Transferor
nor any person acting on our behalf knows that the transaction was pre-
arranged with a buyer in the United States;]/1/
(C) no directed selling efforts have been made in contravention of
the requirements of Rule 903 (b) or 904(b) of Regulation S, as
applicable; and
(D) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act; and
(2) with respect to transfers made in reliance on Rule 144 under the
Securities Act, the Transferor does hereby certify that the Securities are
being transferred in a transaction permitted by Rule 144 under the
Securities Act.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
[Insert Name of Transferor]
By:
----------------------------
Name:
Title:
Dated:
-----------------------
cc: Plastic Containers, Inc.
- ----------
/1/ Insert one of these two provisions, which come from the definition of
"offshore transactions" in Regulation S.
G-2
<PAGE>
Exhibit H
---------
FORM OF CERTIFICATION FOR TRANSFER OR EXCHANGE OF
TEMPORARY REGULATION S GLOBAL SECURITY
OR PERMANENT REGULATION S GLOBAL SECURITY TO
RESTRICTED GLOBAL SECURITY
(Exchanges or transfers pursuant to
Section 2.16(iii) of the Indenture)
United States Trust Company of New York,
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to U.S.$____________ principal amount of
Securities which are evidenced by an aggregate [Temporary Regulation S Global
Security (CUSIP No. __________)] [Permanent Regulation S Global Security (CUSIP
No. __________)] and held with the Depository through [Euroclear] [Cedel]
(Common Code __________) in the name of [insert name of transferor] (the
"Transferor"). The Transferor has requested a transfer of such beneficial
interest in Securities to a person that will take delivery thereof in the form
of an equal aggregate principal amount of Securities evidenced by a Restricted
Global Security of the same series and of like tenor as the Securities (CUSIP
No. 727547AB7).
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that such transfer is being effected pursuant to
and in accordance with Rule 144A under the Securities Act and, accordingly, the
Transferor does hereby further certify that the Securities are being transferred
to a person that the Transferor reasonably believes is purchasing the Securities
for its own account, or for one or more accounts with respect to which such
person exercises sole investment discretion, and such person and each such
account is a "qualified institutional buyer" within the meaning of Rule 144A, in
each case in a
H-1
<PAGE>
transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States.
This certificate and the statements contained herein are made for your
benefit and the benefit of the Issuer, the Guarantors and the Initial
Purchasers.
[Insert Name of Transferor]
By:
------------------------------
Name:
Title:
Dated:
-----------------------
cc: Plastic Containers, Inc.
H-2
<PAGE>
Exhibit I
---------
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16(iv) of the Indenture)
United States Trust Company of New York
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers, Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $_____________ principal amount of Restricted
Securities held in definitive form (CUSIP No. 727547AB7) by [insert name of
transferor] (the "Transferor"). The Transferor has requested an exchanged or
transfer of such Securities.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that (i) such Securities are owned by the
Transferor and are being exchanged without transfer or (ii) such transfer has
been effected pursuant to and in accordance with Rule 144A or another exemption
under the United States Securities Act of 1933, as amended (the "Securities
Act") and accordingly the Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 144A:
(A) the Securities are being transferred to a person that the
Transferor reasonably believes is purchasing the Securities for its own
account, or for one or more accounts with respect to which such Person
exercises sole investment discretion;
I-1
<PAGE>
(B) such Person and each such account is a "qualified
institutional buyer" within the meaning of Rule 144A; and
(C) the Securities have been transferred in a transaction
meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States; or
(2) if the transfer has been effected pursuant to another exemption
under the Act:
(A) the Securities were transferred to a person that the Transferor
reasonably believes is an Institutional Accredited Investor; and
(B) the Securities have been transferred pursuant to an exemption
from the Securities Act and made in accordance with any applicable
securities laws of any state of the United States.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated: ,
-------------- ------
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
cc: Plastic Containers, Inc.
I-2
<PAGE>
Exhibit J
---------
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL RESTRICTED SECURITY TO
PERMANENT REGULATION S GLOBAL SECURITY
OR TEMPORARY REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16(iv) of the Indenture)
United States Trust Company of New York
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $___ principal amount of Restricted Securities
held in definitive form (CUSIP No. 727547AB7) by [insert name of transferor]
(the "Transferor"). The Transferor has requested an exchange or transfer of
such Securities.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that (i) such Securities are owned by the
Transferor and are being exchanged without transfer or (ii) such transfer has
been effected pursuant to and in accordance with Rule 903 or Rule 904 under the
Securities Act of 1933, as amended (the "Act"), and accordingly the Transferor
does hereby further certify that:
(A) the offer of the Securities was not made to a person in the
United States;
(B) either:
(i) at the time the buy order was originated, the
transferee was outside the United States or the Transferor
and any person acting on its behalf reasonably believed
that the transferee was outside the United States, or
J-1
<PAGE>
(ii) the transaction was executed in, on or through the
facilities of a designated offshore securities market and
neither the Transferor nor any person acting on its behalf
knows that the transaction was pre-arranged with a buyer in
the United States;
(C) no directed selling efforts have been made in contravention
of the requirements of Rule 903(b) or 904(b) of Regulation S, as
applicable;
(D) the transaction is not part of a plan or scheme to evade the
registration requirements of the Act; and
(E) if such transfer is to occur during the Restricted Period,
upon completion of the transaction, the beneficial interest being
transferred as described above was held with the Depository through
[Euroclear] [CEDEL].
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding.
This certificate and the statements contained herein are made for your benefit
and the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated: ,
-------------- ------
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
cc: Plastic Containers, Inc.
J-2
<PAGE>
Exhibit K-1
-----------
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL PERMANENT REGULATION S
SECURITY TO RESTRICTED GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16(v) of the Indenture)
United States Trust Company of New York
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $___ principal amount of Restricted Securities
held in definitive form (CUSIP No. 727547AB7) by [insert name of transferor]
(the "Transferor"). The Transferor has requested an exchange or transfer of
such Securities.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that (i) such Securities are owned by the
Transferor and are being exchanged without transfer or (ii) such transfer has
been effected pursuant to and in accordance with Rule 144A under the United
States Securities Act of 1933, as amended, and accordingly the Transferor does
hereby further certify that the Securities are being transferred to a person
that the Transferor reasonably believes is purchasing the Securities for its own
account, or for one or more accounts with respect to which such Person exercises
sole investment discretion, and such Person and each such account is a
"qualified institutional buyer" within the meaning of Rule 144A, in each case in
a transaction meeting the requirements of Rule 144A and in accordance with any
applicable securities laws of any state of the United States.
We understand that this certificate is required in connection with
certain securities laws of the United States. In
K-1-1
<PAGE>
connection therewith, if administrative or legal proceedings are commenced or
threatened in connection with which this certificate is or would be relevant, we
irrevocably authorize you to produce this certificate to any interested party in
such proceeding. This certificate and the statements contained herein are made
for your benefit and the benefit of the Issuer, the Guarantors and the Initial
Purchasers.
Dated: ,
-------------- -------
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
cc: Plastic Containers, Inc.
K-1-2
<PAGE>
Exhibit K-2
-----------
FORM OF CERTIFICATION FOR TRANSFER
OR EXCHANGE OF NON-GLOBAL PERMANENT REGULATION S
SECURITY TO PERMANENT REGULATION S GLOBAL SECURITY
(Transfers and exchanges pursuant to
Section 2.16(v) of the Indenture)
United States Trust Company of New York
as Trustee
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Attention: Global Trust Services
International Corporate
Trust Administration
Re: Plastic Containers, Inc.
10% Senior Secured Notes
due 2006 (the "Securities")
---------------------------
Reference is hereby made to the Indenture, dated as of December 17,
1996 (the "Indenture"), among Plastic Containers, Inc., as Issuer, Continental
Plastic Containers, Inc. and Continental Caribbean Containers Inc., as
Guarantors, and United States Trust Company of New York, as Trustee.
Capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture.
This letter relates to $___ principal amount of Restricted Securities
held in definitive form (CUSIP No. 727547AB7) by [insert name of transferor]
(the "Transferor"). The Transferor has requested an exchange or transfer of
such Securities.
In connection with such request and in respect of such Securities, the
Transferor does hereby certify that (i) such Securities are owned by the
Transferor and are being exchanged without transfer or (ii) such transfer has
been effected pursuant to and in accordance with (a) Rule 903 or Rule 904 under
the Securities Act of 1933, as amended (the "Act"), or (b) Rule 144 under the
Act, and accordingly the Transferor does hereby further certify that:
(1) if the transfer has been effected pursuant to Rule 903 or Rule 904:
(A) the offer of the Securities was not made to a person in the United
States;
(B) either;
K-2-1
<PAGE>
(i) at the time the buy order was originated, the transferee was
outside the United States or the Transferor and any person acting on
its behalf reasonably believed that the transferee was outside the
United States, or
(ii) the transaction was executed in, on or through the facilities
of a designated offshore securities market and neither the Transferor
nor any person acting on its behalf knows that the transaction was
pre-arranged with a buyer in the United States;
(C) no directed selling efforts have been made in contravention of the
requirements of Rule 903 (b) or 904 (b) of Regulation S, as applicable;
(D) the transaction is not part of a plan or scheme to evade the
registration requirements of the Act; and
(E) if such transfer is to occur during the Restricted Period, upon
completion of the transaction, the beneficial interest being transferred as
described above was held with the Depository through [Euroclear] [CEDEL];
or
(2) if the transfer has been effected pursuant to Rule 144:
(A) more than two years has elapsed since the date of the closing of
the initial placement of the Securities pursuant to the Purchase Agreement;
and
(B) the Securities have been transferred in a transaction permitted by
Rule 144 and made in accordance with any applicable securities laws of any
state of the United States.
We understand that this certificate is required in connection with
certain securities laws of the United States. In connection therewith, if
administrative or legal proceedings are commenced or threatened in connection
with which this certificate is or would be relevant, we irrevocably authorize
you to produce this certificate to any interested party in such proceeding. This
certificate and the statements contained herein are made for your benefit and
the benefit of the Issuer, the Guarantors and the Initial Purchasers.
Dated: ,
-------------- -------
[Insert Name of Transferor]
By:
--------------------------
Name:
Title:
cc: Plastic Containers, Inc.
K-2-2
<PAGE>
Exhibit L
---------
Transferee Letter of Representation
-----------------------------------
___________, ____
United States Trust Company
of New York
114 West 47th Street
New York, New York 10036-16
Attention: Corporate Trust Division
Re: Plastic Containers Inc. 10%
Senior Secured Notes due 2006
------------------------------
Ladies and Gentlemen:
In connection with our proposed purchase of 10% Senior Secured Notes
due 2006 (the "Notes") of Plastic Containers Inc. (the "Company"), we confirm
that:
1. We understand that the Notes have not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and, unless so
registered, may not be sold except as permitted in the following sentence. We
agree on our own behalf and on behalf of any investor account for which we are
purchasing Notes to offer, sell or otherwise transfer such Notes prior to the
date which is three years after the later of the date of original issue and the
last date on which the Company or any affiliate of the Company was the owner of
such Notes (or any predecessor thereto) (the "Resale Restriction Termination
Date") only (a) to the Company, (b) pursuant to a registration statement which
has been declared effective under the Securities Act, (c) so long as the Notes
are eligible for resale pursuant to Rule 144A under the Securities Act, to a
person we reasonably believe is a qualified institutional buyer under Rule 144A
(a "QIB") that purchases for its own account or for the account of a QIB and to
whom notice is given that the transfer is being made in reliance on Rule 144A,
(d) pursuant to offers and sales that occur outside the United States within the
meaning of Regulation S under the Securities Act, (e) to an institutional
"accredited investor" within the meaning of subparagraph (a)(1), (2), (3) or (7)
of Rule 501 under the Securities Act that is purchasing for his own account or
for the account of such an institutional "accredited investor," in each case in
a minimum principal amount of Notes of $500,000, (f) in an offshore transaction
pursuant to Regulation S of the Securities Act or (g) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and to compliance with any
applicable state securities
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laws. The foregoing restrictions on resale will not apply subsequent to the
Resale Restriction Termination Date. If any resale or other transfer of the
Notes is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Trustee, which shall
provide, among other things, that the transferee is an institutional "accredited
investor" within the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act and that it is acquiring such Notes for investment
purposes and not for distribution in violation of the Securities Act. Each
purchaser acknowledges that the Company and the Trustee reserve the right prior
to any offer, sale or other transfer prior to the Resale Restriction Termination
Date of the Notes pursuant to clause (c), (d) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Company and the Trustee.
2. We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act) purchasing
for our own account or for the account of such an institutional "accredited
investor," and we are acquiring the Notes for investment purposes and not with a
view to, or for offer or sale in connection with, any distribution in violation
of the Securities Act and we have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of our
investment in the Notes, and we and any accounts for which we are acting are
each able to bear the economic risk of our or its investment.
3. We are acquiring at least $500,000 principal amount of the Notes
and we are acquiring the Notes purchased by us for our own account or for one or
more accounts as to each of which we exercise sole investment discretion.
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4. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party in
any administrative or legal proceeding or official inquiry with respect to the
matters covered hereby.
Very truly yours,
----------------------------
(Name of Purchaser)
By:
----------------------------
Date:
--------------------------
Upon transfer the Notes would be registered in the name of the new
beneficial owner as follows:
Name:
------------------------------
Address:
---------------------------
Taxpayer ID Number:
----------------
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EXHIBIT M
---------
FORM OF LEGEND FOR BOOK-ENTRY SECURITIES
Any Global Security authenticated and delivered hereunder shall bear a
legend (which would be in addition to any other legends required in the case of
a Restricted Security) in substantially the following form:
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITORY OR A
NOMINEE OF A DEPOSITORY OR A SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT
EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITORY OR ITS NOMINEE EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
INDENTURE, AND NO TRANSFER OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS
SECURITY AS A WHOLE BY THE DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A
NOMINEE OF THE DEPOSITORY TO THE DEPOSITORY OR ANOTHER NOMINEE OF THE
DEPOSITORY) MAY BE REGISTERED EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN
THE INDENTURE.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR
ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME
AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
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EXHIBIT N
---------
MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
Between
CONTINENTAL PLASTIC CONTAINERS, INC.,
as Mortgagor
And
UNITED STATES TRUST COMPANY OF NEW YORK
as Collateral Agent for the Holders,
as Mortgagee
Dated: December 17, 1996
This instrument was prepared by, and after recording return to, John
Schuster, Esq., Cahill Gordon & Reindel, 80 Pine Street, New York, New York
10005.
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MORTGAGE, SECURITY AGREEMENT
AND ASSIGNMENT OF LEASES AND RENTS
THIS MORTGAGE, SECURITY AGREEMENT AND ASSIGNMENT OF LEASES AND RENTS
("Mortgage") made as of December 17, 1996 between CONTINENTAL PLASTIC
--------
CONTAINERS, INC., having an address at 301 Merritt 7 Corporate Park, Norwalk,
Connecticut 06856 ("Mortgagor"), and UNITED STATES TRUST COMPANY OF NEW YORK,
---------
having an address at 114 West 47th Street, New York, New York 10036, as
collateral agent and as trustee for the Holders (as defined in the Indenture)
under the Indenture (as hereinafter defined) (together with any successors in
such capacity, "Mortgagee").
---------
R E C I T A L S :
- - - - - - - -
A. Plastic Containers, Inc. (the "Company") , a Delaware corporation,
-------
Continental Caribbean Containers, Inc., a Delaware corporation, Mortgagor and
Mortgagee have entered into a certain indenture (as amended from time to time,
the "Indenture"; capitalized terms used herein and not defined shall have the
---------
meanings assigned to such terms in the Indenture), dated as of the date hereof,
pursuant to which the Company has issued 10% Senior Secured Notes due 2006 (the
"Series A Notes") in the aggregate principal amount of $125,000,000 and pursuant
--------------
to which the Company may issue 10% Series B Senior Secured Notes due 2006 (the
"Series B Notes"; together with the Series A Notes, the "Securities").
- --------------- ----------
B. This Mortgage is given by Mortgagor to secure the prompt payment
and 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. Section 362(a), and any successor provision thereto), of (i) all
obligations, indebtedness and liabilities of the Company pursuant to the terms
of the Indenture, the Securities and the Security Documents, including, without
limitation, the obligations of the Company to pay principal of, premium, if any,
and interest on the Securities when due and payable, and all other amounts due
and to become due under or in connection with the Indenture, the Securities and
the Security Documents, (ii) all obligations of Mortgagor pursuant to the terms
of the Indenture, the Security Documents and its Guarantee and (iii) without
duplication of the amounts described in clause (ii), all obligations,
indebtedness and liabilities of Mortgagor pursuant to the terms of this
Mortgage, in each case, whether now existing or hereafter arising and whether in
the regular course of business or otherwise (collectively, the "Secured
-------
Obligations").
- -----------
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A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises set forth herein and
the further sum of One Dollar ($1.00) to Mortgagee in hand well and truly paid
by Mortgagor at and before the sealing and delivery hereof, the receipt whereof
is hereby acknowledged, Mortgagor intending to be legally bound has granted,
bargained and sold, mortgaged, conveyed, alined, released, confirmed, assigned,
transferred and set over, and by these presents does grant, bargain and sell,
mortgage, convey, alien, release, confirm, assign, transfer and set over unto
Mortgagee, its successors and assigns, for the use and benefit of Mortgagee in
its capacity as Collateral Agent under the Indenture, all that certain plot,
piece, or parcel of land more particularly described in Schedule A annexed
----------
hereto and by this reference made a part hereof;
TOGETHER with (1) all and singular the tenements, hereditaments and
appurtenances thereunto belonging or in anywise appertaining, and also in and to
(i) any land lying within the right-of-way of any streets, open or proposed,
adjoining the same, (ii) any easements, rights-of-way and rights used in
connection therewith or as a means of access thereto and (iii) any and all
sidewalks, alleys, strips and gores of land adjacent thereto or used in
connection therewith (all of the foregoing being hereinafter collectively called
the "Premises");
--------
(2) all buildings, structures and other improvements (collectively,
the "Improvements") now or hereafter erected on the Premises and owned by
------------
Mortgagor;
(3) all machinery, apparatus, equipment, fittings, fixtures and other
articles of personal property, including all goods and all goods which become
fixtures (collectively, the "Equipment"), which may now or hereafter be owned by
---------
Mortgagor and which are located on, attached to or used in connection with the
Premises and the Improvements and all replacements thereof, additions thereto
and substitutions therefor (the Premises, the Improvements and the Equipment,
collectively, the "Property");
--------
TOGETHER with all Mortgagor's books and records or other materials
used or useful in the business of the Mortgagor and now or hereafter located on
or in the Property and all replacements thereof, additions thereto and
substitutions therefor;
TOGETHER with the tenements, hereditaments, appurtenances and all the
estates and rights of Mortgagor in and to the Property;
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TOGETHER with the reversions, remainders, easements, rents, issues,
profits and other benefits derived from any of the foregoing arising or issuing
from the Property;
TOGETHER with any and all awards, damages, payments and other
compensation and any and all claims therefor and rights thereto which may result
from any taking or injury by virtue of the exercise of the power of eminent
domain of or to, or any damage, injury or destruction in any manner caused to,
the Property, and any buildings, structures and improvements thereon, or any
part thereof, or from any change of grade or vacation of any street abutting
thereon, all of which awards, damages, payments, compensation, claims and rights
are hereby assigned, transferred and set over to Mortgagee to the fullest extent
that Mortgagor may under the law so do. Mortgagee is hereby irrevocably
appointed attorney-in-fact for Mortgagor to settle for, collect and receive any
such awards, damages, payments and compensation from the authorities making the
same, to appear in and prosecute any proceeding therefor, and to give receipts
and acquittances therefor;
TOGETHER with all right, title and interest of Mortgagor in and to all
unearned premiums accrued, accruing or to accrue under any and all insurance
policies now or hereafter obtained by Mortgagor with regard to any of the
foregoing;
TOGETHER with any other interest Mortgagor may hereafter acquire in
any real property situated at the Premises;
TOGETHER with the cash and noncash proceeds of all of the foregoing;
ALL of which property and rights hereinabove described or mentioned
being hereinafter collectively called the "Mortgaged Property".
------------------
TO HAVE AND TO HOLD unto Mortgagee, its successors and assigns,
forever;
PROVIDED, HOWEVER, that if Secured Obligations secured hereby shall be
paid or performed, as applicable, in full according to the terms and provisions
hereof and of the Transaction Documents, then this Mortgage and the estate
hereby created shall cease, terminate and become void.
Notwithstanding the foregoing, the Mortgaged Property shall not
include (i) Accounts or Inventory (each as defined in the Uniform Commercial
Code as from time to time in effect in the State
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of New York), (ii) any Documents of Title (as defined in that certain financing
agreement, as in effect on the date hereof, executed in connection with the
Revolving Credit Facility), (iii) any 1996 Leaseback Equipment (as defined in
the Pledge and Security Agreement) or (iv) any Previously Leased/Financed
Equipment (as defined in the Pledge and Security Agreement).
Mortgagor covenants, promises and agrees with Mortgagee as follows:
ARTICLE I.
COVENANTS AS TO PAYMENT, PERFORMANCE AND TITLE
SECTION 1.01. Mortgagor shall pay to Mortgagee all sums now or
hereafter due Mortgagee under the terms hereof and of the Transaction Documents,
including the entire unpaid principal indebtedness under the Securities and all
fees, expenses and other amounts payable in connection therewith, together with
all interest thereon, and shall pay and perform all other Secured Obligations,
punctually as and when the same shall become due by the terms thereof and hereof
or otherwise become due and payable. Mortgagor will fully and faithfully
observe and perform all of the terms, provisions, conditions, covenants and
agreements on the part of Mortgagor to be observed and performed under the
Transaction Documents.
SECTION 1.02. Mortgagor warrants to Mortgagee that: (i) it has and
will have title to the Mortgaged Property subject only to those Liens existing
as of the date hereof identified as exceptions to title insurance coverage on
Schedule B-2 (other than the so-called "standard exceptions" and any other
exception which the title insurance company has affirmatively insured Mortgagee
against loss thereof) to the ALTA title insurance policy dated the date hereof
issued to Mortgagee by Chicago Title Insurance Company insuring the Lien of this
Mortgage (the "Prior Liens") and Permitted Liens (as hereinafter defined); (ii)
it has full power and lawful authority to encumber the Mortgaged Property in the
manner and form herein set forth; (iii) subject to Permitted Liens, it owns and
will own all fixtures and articles of personal property now or hereafter affixed
and/or used in connection with the Premises, including any substitutions or
replacements thereof, free and clear of Liens and claims other than Permitted
Liens; (iv) this Mortgage is and will remain a valid and enforceable first Lien
on the Mortgaged Property subject only to Prior Liens; and (v) it will preserve
such title it has as of the date hereof, and will forever warrant and defend the
same to Mortgagee and will forever warrant
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and defend the validity and priority of the Lien (subject to Prior Liens) hereof
against the claims of all persons and parties whomsoever, by, through, or under
Mortgagor.
As used herein, Permitted Liens shall mean those Liens constituting
Permitted Liens, as defined in the Indenture, under clauses (f) and (h) thereof.
ARTICLE II.
COVENANTS AS TO TAXES, IMPOSITIONS, LIENS, ETC.
SECTION 2.01. Mortgagor shall pay and discharge, when the same shall
become due and payable, all taxes of every kind and nature, water rates, sewer
rents and assessments, levies, permits, inspection and license fees and all
other charges imposed upon or assessed against the Mortgaged Property or any
part thereof or upon the revenues, rents, issues, income and profits of the
Premises or arising in respect of the occupancy, use or possession thereof, and
Mortgagor shall exhibit to Mortgagee within five (5) days after written request
by Mortgagee, validated receipts showing the payment of such taxes, assessments,
water rates, sewer rents, levies, fees and other charges which may be or become
a lien on the Mortgaged Property. Should Mortgagor default in the payment of
any of the foregoing taxes, assessments, water rates, sewer rents or other
charges, Mortgagee may, but shall not be obligated to, pay the same or any part
thereof and Mortgagor shall, on demand, reimburse Mortgagee for all amounts so
paid. Notwithstanding the foregoing, if by law, any such payment described
above may at the option of Mortgagor be paid in installments (whether or not
interest accrues thereon), Mortgagor shall have the option to pay the same in
installments as they become due and before any fine, penalty, further interest
or cost may be added thereto.
ARTICLE III.
INSURANCE
SECTION 3.01. Mortgagor will keep the Premises insured for the
benefit of Mortgagee, with such coverage in such amounts and forms, and with
such companies as is customarily maintained by companies similarly situated and
each insurance policy shall provide that all losses payable thereunder shall be
payable to Mortgagee, as sole loss payee or shall name Mortgagee as an
additional insured or both as applicable. Mortgagor shall from time to time
obtain such additional coverage or increase the
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amounts of coverage or modify the forms thereof as Mortgagee shall request from
time to time.
SECTION 3.02. Mortgagor shall carry primary policies of insurance and
Mortgagor shall not carry separate or additional insurance concurrent in form or
contributing, in the event of loss, with that required hereunder unless endorsed
in favor of Mortgagee as loss payee or additional insured, as applicable, and
otherwise acceptable to Mortgagee in all respects. Nothing contained herein
shall prohibit Mortgagor from holding or obtaining an owner's policy of title
insurance covering the Premises.
SECTION 3.03. In the event of foreclosure of this Mortgage, transfer
of title to the Premises by deed in lieu of foreclosure or other transfer of
title or assignment of the Premises in extinguishment, in whole or in part, of
the Secured Obligations, all right, title and interest of Mortgagor in and to
all policies of insurance required under the Indenture or this Article III or
otherwise then in force with respect to the Premises and all proceeds payable
thereunder and unearned premiums thereon shall immediately vest in the purchaser
or other transferee of the Premises.
SECTION 3.04. Mortgagor covenants that it has delivered to Mortgagee,
and shall, from time to time (but not less than once annually), deliver to
Mortgagee, the policies of insurance or certificates in respect thereof to
enable Mortgagee to confirm that the insurance required under the terms of this
Mortgage is in place and in full force and effect.
ARTICLE IV.
REPAIRS, MAINTENANCE AND REMOVAL
SECTION 4.01. Except as otherwise permitted under the Indenture,
Mortgagor will not cause or permit any building, structure or improvement or
other property now or hereafter covered by the Lien of this Mortgage and
comprising part of the Mortgaged Property to be removed, or demolished or
structurally changed or altered, in whole or in part, without the prior written
consent of Mortgagee, which consent shall be granted in accordance with the
terms of the Indenture. Mortgagor shall have the right to remove items of
Equipment from the Mortgaged Property in accordance with Section 5(o) of the
Pledge and Security Agreement. Mortgagor will not abandon or cause or permit
any waste to the Mortgaged Property and will at all times maintain, except as
otherwise permitted under the Indenture, the same in good repair and condition,
and will
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comply with all laws, statutes and ordinances relating to the maintenance or use
of the Mortgaged Property and with all requirements, orders and notices of
violation thereof issued by any governmental authority.
SECTION 4.02. Mortgagor will permit Mortgagee and Mortgagee's
representatives to enter the Mortgaged Property at reasonable times and upon
reasonable prior notice to inspect the same.
ARTICLE V.
COMPLIANCE WITH LAWS, ORDINANCES, ETC.
SECTION 5.01. Subject to the provisions of Section 5.03 hereof,
throughout the term of this Mortgage, Mortgagor shall, at its sole cost and
expense, promptly comply with all present and future laws, ordinances, orders,
rules, regulations and requirements of all federal, state and municipal
governments, courts, departments, commissions, boards and officers, any national
or local Board of Fire Underwriters, or any other body exercising functions
similar to those of any of the foregoing, foreseen or unforeseen, ordinary as
well as extraordinary, which may be applicable to the Mortgaged Property or any
part thereof or to the use or manner of use of the Mortgaged Property whether or
not such law, ordinance, order, rule, regulation or requirement shall
necessitate structural changes or improvements, or the removal of any
encroachments or projections, ornamental, structural or otherwise, onto or over
the streets adjacent to the Mortgaged Property, or onto or over property
contiguous or adjacent thereto.
SECTION 5.02. Subject to the provisions of Section 5.03 hereof,
Mortgagor will promptly perform and observe, or cause to be performed or
observed, all of the terms, covenants and conditions of all instruments of
record affecting the Mortgaged Property, noncompliance with which may affect the
Lien and security of this Mortgage, or which may impose any duty or obligation
upon Mortgagor or any lessee or other occupant of the Mortgaged Property or any
part thereof, and Mortgagor shall do or cause to be done all things necessary to
preserve intact and unimpaired any and all easements, appurtenances and other
interests and rights in favor of or constituting any portion of the Mortgaged
Property.
SECTION 5.03. Notwithstanding anything to the contrary contained in
Sections 5.01 and 5.02 hereof, Mortgagor may, at its own expense, contest by
appropriate legal proceedings promptly initiated and conducted in good faith and
with due diligence, the
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validity or application of any requirements set forth in Sections 5.01 and 5.02
hereof, provided that (i) if any penalty or fine has been assessed and remains
unpaid, such proceedings shall suspend the payment thereof from Mortgagor and
the Mortgaged Property, (ii) neither the Mortgaged Property nor any part thereof
nor any interest therein will be in danger of being forfeited, foreclosed upon
or terminated, and (iii) Mortgagor shall have furnished such security as may be
reasonably requested by Mortgagee.
SECTION 5.04. Mortgagor shall not, without the prior written consent
of Mortgagee which consent shall not be unreasonably withheld or unduly delayed,
(i) initiate or support any zoning reclassification of the Premises or the
Improvements or seek any variance under existing zoning ordinances applicable to
the Land or the Improvements that will have a material adverse effect on the
value, suitability or use of the Mortgaged Property, (ii) use or permit the use
of the Mortgaged Property in a manner which would result in such use becoming a
nonconforming use under applicable zoning ordinances, (iii) permit or suffer the
Mortgaged Property to be used by the public or any person in such manner as
might make possible a claim of adverse possession or of any implied dedication
or easement, or (iv) permit any modification, amendment or supplement to any of
the Prior Liens or Permitted Liens which might adversely affect the Lien of this
Mortgage or the use or value of the Mortgaged Property.
SECTION 5.05. Unless contested in accordance with the provisions of
this Section, Mortgagor shall pay timely all lawful claims and demands of
mechanic's, materialmen, laborers, and all other claims, judgments, demands or
amounts of any nature (other than such matters as are addressed in Sections 5.01
and 5.02) which, if unpaid, might result in or permit the creation of a Lien on
the Mortgaged Property or which might result in the forfeiture of the Mortgaged
Property. Mortgagor may, in good faith and at its own expense, contest the
amount or applicability of any of the obligations described in this Section by
appropriate legal proceedings, the prosecution of which operates to prevent the
collection thereof and the sale or forfeiture of the Mortgaged Property to
satisfy the same; provided, however, that in connection with such contest,
Mortgagor shall have made provision for the payment of such contested amount on
Mortgagor's books if and to the extent required by GAAP.
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ARTICLE VI.
DAMAGE OR DESTRUCTION
SECTION 6.01. In case of casualty to the Mortgaged Property resulting
in damage or destruction, Mortgagor shall promptly give written notice thereof
to Mortgagee and of the filing of any proof of loss under any insurance policy
and take such steps as shall be necessary to preserve any undamaged portion of
the Mortgaged Property.
SECTION 6.02. In the event that any portion of the Mortgaged Property
is so damaged or destroyed, and such damage or destruction is covered, in whole
or in part, by insurance described in Article III hereof, then, (i) Mortgagee
may, but shall not be obligated to, make proof of loss if not made promptly by
Mortgagor and is hereby authorized and empowered by Mortgagor to settle, adjust
or compromise any claims for damage or destruction thereunder, (ii) each
insurance company is hereby authorized and directed, at the instruction of
Mortgagee, to make payment therefor in any amount directly to Mortgagee, and
(iii) such insurance proceeds shall be deemed Trust Moneys subject to retention
and disbursement by Mortgagee in accordance with the applicable provisions of
the Indenture. Mortgagor expressly assumes all risk of loss, including a
decrease in the use, enjoyment or value of the Mortgaged Property from any
casualty whatsoever, whether or not insurable or insured against.
ARTICLE VII.
CONDEMNATION
SECTION 7.01. Mortgagor shall give Mortgagee immediate notice of any
actual or threatened commencement of condemnation proceedings or the exercise of
the right of eminent domain. In the event that the Mortgaged Property, or any
part thereof, shall be taken in condemnation proceedings or by exercise of any
right of eminent domain (hereinafter called, collectively, "condemnation
------------
proceedings"), Mortgagee may on behalf of Mortgagor (but shall not be obligated
- -----------
to) (i) participate in any such condemnation proceedings and Mortgagor shall
from time to time execute and deliver to Mortgagee all instruments requested by
Mortgagee or as may be required to permit such participation and (ii) adjust,
contest, accept, reject or compromise any proposed award and collect and receive
the proceeds thereof and endorse drafts, and Mortgagee is hereby irrevocably
appointed attorney-in-fact of Mortgagor for such purposes. The decision of
Mortgagee with regard
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to the adjustment, contest, acceptance, rejection or compromise of any proposed
award issued in connection with any condemnation proceedings shall be binding
upon Mortgagor.
SECTION 7.02. All proceeds of condemnation awards or proceeds of sale
in lieu of condemnation, and all judgments, decrees and awards for injury or
damage to the Mortgaged Property, are hereby assigned and shall be paid to
Mortgagee, and shall be deemed Trust Moneys subject to retention and
distribution by Mortgagee in accordance with the applicable provisions of the
Indenture. Mortgagor agrees to execute and deliver such further assignments
thereof as Mortgagee may request and authorizes Mortgagee to collect and receive
the same, to give receipts therefor, and to appeal from any such judgment,
decree or award. Mortgagee shall in no event be liable or responsible for
failure to collect, or exercise diligence in the collection of, any of the same.
SECTION 7.03. Notwithstanding any condemnation, taking or other
proceeding referred to in this Article VII causing injury to, or other decrease
in, the value of the Mortgaged Property, or any interest therein, Mortgagor
shall continue to pay and perform the Secured Obligations as provided herein.
Any reduction in the Secured Obligations resulting from any application of any
proceeds of condemnation awards or proceeds of sale in lieu of condemnation to
the Secured Obligations shall be deemed to take effect only on the date of
receipt by Mortgagee of such proceeds, judgments, decrees or awards and
application against the Secured Obligations, provided that if prior to the
receipt by Mortgagee of such proceeds, judgments, degrees or awards the
Mortgaged Property shall have been sold on foreclosure of this Mortgage or shall
have been transferred by deed in lieu of foreclosure of this Mortgage, Mortgagee
shall have the right to receive the same to the extent of any deficiency found
to be due upon such sale, with legal interest thereon together with attorneys'
fees and disbursements incurred by Mortgagee payable in accordance with the
provisions of this Mortgage in connection with the collection thereof.
ARTICLE VIII.
NOTICES
SECTION 8.01. All notices, demands, requests and consents required
under this Mortgage shall be given and shall be effective as set forth in
Section 13.2 of the Indenture and, if to Mortgagor, shall be addressed to it at
its address set forth in the Indenture and, if to Mortgagee, shall be addressed
to it at 114
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West 47th Street, New York, New York 10036, Attention: Corporate Trust
Department.
ARTICLE IX.
GENERAL COVENANTS
SECTION 9.01. Mortgagor warrants that this Mortgage is a valid first
priority Lien on the Mortgaged Property subject only to Prior Liens, and that
there are no offsets, counterclaims or defenses to the Secured Obligations
secured hereby, or to any part thereof, or the interest thereon, either at law
or in equity.
SECTION 9.02. Without limiting any other provision of the Transaction
Documents, Mortgagor shall promptly pay upon request all expenses and costs
incurred by Mortgagee, including reasonable attorneys' fees, together with
interest thereon at the rate provided in the Indenture from the date of the
payment thereof by Mortgagee, in connection with any action, proceeding,
litigation or claim instituted or asserted by or against Mortgagee or in which
Mortgagee becomes engaged, including, without limitation, bankruptcy,
reorganization, arrangements, receivership or similar proceedings, wherein it
becomes necessary in the reasonable opinion of Mortgagee to protect Mortgagee's
interest in the Mortgaged Property or the security afforded hereby, or to defend
or uphold the Lien of this Mortgage, or the validity or effectiveness of any
assignment of any claim, award, payment, property damage insurance policy or any
other right or property conveyed, encumbered or assigned by Mortgagor to
Mortgagee hereunder, or the priority of any of the same, and all such expenses
and costs, and said interest thereon, shall be secured in all respects hereby as
if part of the indebtedness evidenced by the Securities; provided, however, that
-------- -------
in any action to foreclose this Mortgage or to recover or collect the sums due
hereunder the provisions of law and of this Mortgage relative to the recovery of
costs, disbursements, commissions, allowances and attorneys' fees shall prevail
unaffected by this Section 9.02.
SECTION 9.03. In the event of the passage after the date of this
Mortgage of any laws of the state in which the Mortgaged Property is located,
deducting from the value of the Mortgaged Property for the purpose of taxation
any lien thereon, or changing in any way the laws now in force for the taxation
of mortgages, or debts secured thereby, for state or local purposes, or the
manner of the operation of any such taxes so as to affect the interest of
Mortgagee, then and in such event, Mortgagor shall bear and pay the full amount
of such taxes, provided that if for any reason payment
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by Mortgagor of any such new or additional taxes would be unlawful or if the
payment thereof would constitute usury or render the Secured Obligations wholly
or partially usurious under any of the terms or provisions of the Transaction
Documents, including this Mortgage, or otherwise, Mortgagee may, at Mortgagee's
option, pay that amount or portion of such taxes as renders the Secured
Obligations secured hereby unlawful or usurious, in which event Mortgagor shall
concurrently therewith pay the remaining lawful and non-usurious portion or
balance of said taxes.
SECTION 9.04. Wherever used in this Mortgage, unless the context
clearly indicates a contrary intent or unless otherwise specifically provided
herein, the word "Mortgagor" shall mean the party executing this instrument, its
heirs, personal representatives, successors and assigns or any subsequent owner
or owners of the Mortgaged Property; the word "Mortgagee" shall mean the party
to whom this Mortgage is given or any subsequent holder or holders of this
Mortgage; and whenever the singular or plural number, masculine or feminine or
neuter gender is used herein, it shall equally include the others.
SECTION 9.05. This Mortgage cannot be amended except by an agreement
in writing, entered into in accordance with the terms of the Indenture and
signed by the party against whom enforcement of the amendment is sought.
SECTION 9.06. The captions to the Articles of this Mortgage are for
convenience and reference only and in no way define, limit or describe the scope
or intent of this Mortgage nor in any way affect this Mortgage.
SECTION 9.07. This Mortgage shall be construed and enforced in
accordance with the laws of the state in which the Mortgaged Property is
located.
SECTION 9.08. Mortgagor shall, promptly upon reasonable request of
Mortgagee, do all acts and things, including but not limited to the execution of
any further assurances and the recording of any additional documentation, deemed
necessary by Mortgagee, to establish, confirm, maintain and continue the Lien
created and intended to be created hereby, and all other rights and benefits
conferred or intended to be conferred on Mortgagee hereby, and Mortgagor shall
pay all costs incurred by Mortgagee in connection therewith, including all
filing and recording costs, cost of searches and reasonable counsel fees
incurred by Mortgagee.
SECTION 9.09. Mortgagor agrees to indemnify, pay and hold harmless
Mortgagee and each of the Holders and the officers,
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directors, employees, agents and affiliates of Mortgagee and each of the Holders
(collectively, the "Indemnitees") from and against any and all liabilities,
-----------
obligations, losses, damages, penalties, actions, judgments, suits, claims,
costs (including, without limitation, settlement costs), expenses or
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 Mortgage, the
Securities, the Indenture, its Guarantee or any other Security Document
(including, without limitation, any misrepresentation by Mortgagor in this
Mortgage, the Securities, the Indenture, its Guarantee or any other Security
Document) (the "indemnified liabilities"); provided, that Mortgagor shall have
----------------------- --------
no obligation to an Indemnitee hereunder with respect to an indemnified
liability if it has been determined by a final decision (after all appeals and
the expiration of time to appeal) by a court of competent jurisdiction that such
indemnified liability arose from the gross negligence or willful misconduct of
that Indemnitee. 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, Mortgagor 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. The obligations of Mortgagor contained in this
Section 9.09 shall survive the termination of this Mortgage and the discharge of
Mortgagor's other obligations under this Mortgage, the Indenture, the
Securities, its Guarantee and the other Security Documents. Any amount paid by
any Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Mortgaged Property.
SECTION 9.10. This Mortgage and any amendments, waivers, consents or
supplements hereto 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 to be an original, but all such
counterparts together shall constitute one and the same agreement.
SECTION 9.11. All obligations of Mortgagor hereunder shall be absolute
and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Mortgagor;
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(ii) any lack of validity or enforceability of any of the Transaction
Documents, or any other agreement or instrument relating thereto;
(iii) 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
Transaction Documents, or any other agreement or instrument relating
thereto;
(iv) 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 guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of this Mortgage, except as
specifically set forth in a waiver granted pursuant to the provisions of
this Mortgage; or
(vi) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Mortgagor.
ARTICLE X.
SECURITY AGREEMENT
SECTION 10.01. Security Interest. This Mortgage shall be a security
-----------------
agreement between Mortgagor, as a debtor, and Mortgagee, as the secured party,
covering the Mortgaged Property constituting personal property or fixtures
governed by the Pennsylvania Uniform Commercial Code (hereinafter called the
"Uniform Commercial Code"), and Mortgagor grants to Mortgagee a security
interest in such portion of the Mortgaged Property. In addition to Mortgagee's
other rights hereunder, Mortgagee shall have all rights of a secured party under
the Uniform Commercial Code. Mortgagor shall execute and deliver to Mortgagee
all financing statements that may be required by Mortgagee to establish and
maintain the validity and priority of Mortgagee's security interest and
Mortgagor shall bear all costs thereof, including all Uniform Commercial Code
searches reasonably required by Mortgagee. If Mortgagee should dispose of any
of the Mortgaged Property pursuant to the Uniform Commercial Code, then ten (10)
days' written notice by Mortgagee to Mortgagor shall be deemed to be reasonable
notice; provided, however, Mortgagee may dispose of such
-------- -------
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property in accordance with the foreclosure procedures of this Mortgage in lieu
of proceeding under the Uniform Commercial Code.
SECTION 10.02. Notice of Changes. Mortgagor shall give advance
-----------------
notice in writing to Mortgagee of any proposed change in Mortgagor's name,
identity, or structure and will execute and deliver to Mortgagee, prior to or
concurrently with the occurrence of any such change, all additional financing
statements that Mortgagee may require to establish and maintain the validity and
priority of Mortgagee's security interest with respect to any of the Mortgaged
Property described or referred to herein.
SECTION 10.03. Fixtures. Some of the items of the Mortgaged Property
--------
described herein are goods that are, or are to become, fixtures related to the
Premises, and it is intended that, as to those goods, this Mortgage shall be
effective as a financing statement filed as a fixture filing from the date of
its filing for record in the real estate records of the county in which the
Mortgaged Property is situated. Information concerning the security interest
created by this instrument may be obtained from Mortgagee, as secured party, at
the address of Mortgagee stated above. The mailing address of the Mortgagor, as
debtor, is as stated above.
ARTICLE XI.
REMEDIES
SECTION 11.01. If any Event of Default shall occur and be continuing,
then in addition to all other rights and remedies which Mortgagee may have under
the Transaction Documents, at law or in equity or otherwise, Mortgagee may
forthwith, and without further delay, undertake any one or more of the following
in accordance with the terms of, and at the times, if any, specified in the
Indenture:
(1) Foreclosure. Institute an action of mortgage foreclosure, or take
such other action as the law may allow, at law or in equity, for the
enforcement thereof and realization on the mortgage security or any other
security which is herein or elsewhere provided for, and proceed thereon to
final judgment and execution thereon for the entire unpaid balance of the
principal indebtedness, with interest and premiums, if any, of the
Securities and all other outstanding Secured Obligations and together with
all other sums secured by this Mortgage, all costs of suit, interest as
specified in
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the Indenture on any judgment obtained by Mortgagee from and after the date
of any Sheriff's Sale of the Mortgaged Property (which may be sold in one
parcel or in such parcels, manner or order as Mortgagee shall elect) until
actual payment is made by the Sheriff of the full amount due Mortgagee, and
an attorney's commission for collection, which shall be one per cent of the
total of the foregoing sums, without further stay, any law, usage or custom
to the contrary notwithstanding.
(2) Entry. Mortgagee personally, or by its agents or attorneys, may
enter into and upon all or any part of the Mortgaged Property, and each and
every part thereof, and may exclude Mortgagor, its agents and servants
wholly therefrom without liability for trespass, damages or otherwise and
Mortgagor agrees to surrender possession to Mortgagee on demand after the
happening of any Event of Default; and having and holding the same, may
use, operate, manage and control the Mortgaged Property and likewise, from
time to time, at the expense of the Mortgagor, Mortgagee may make all
necessary or proper repairs, renewals and replacements and such useful
alterations, additions, betterments and improvements thereto and thereon as
it may deem advisable; and Mortgagee shall be entitled to collect and
receive all earnings, revenues, rents, issues, profits and income of the
Mortgaged Property and every part thereof. For such purposes Mortgagor
hereby authorizes any attorney of any court of record to appear for
Mortgagor to sign an agreement for entering an action of ejectment for
possession of the Mortgaged Property, and to confess judgment therein
against Mortgagor in favor of Mortgagee, whereupon a writ may forthwith
issue for the immediate possession of the Mortgaged Property, without any
prior writ or proceeding whatsoever; and for so doing this Mortgage or a
copy hereof verified by affidavit shall be a sufficient warrant.
(3) Receivership. Have a receiver appointed to enter into possession
of the Mortgaged Property, collect the earnings, revenues, rents, issues,
profits and income therefrom and apply the same as the court may direct.
Mortgagee shall be entitled to the appointment of a receiver without the
necessity of proving either the inadequacy of the security or the
insolvency of Mortgagor or any other person who may be legally or equitably
liable to pay moneys secured hereby and Mortgagor and each such person
shall be deemed to have waived such proof and to have consented to the
appointment of such receiver. Should Mortgagee or any receiver collect
earnings, revenues, rents, issues, profits or income from the Mortgaged
Property, the moneys so collected shall not be substituted for payment of
the debt nor can they
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be used to cure the default, without the prior written consent of
Mortgagee.
SECTION 11.02. Mortgagor hereby waives and releases (a) all errors,
defects and imperfections in any proceedings instituted by Mortgagee under this
Mortgage, (b) all benefit that might accrue to Mortgagor by virtue of any
present or future laws exempting the Mortgaged Property, or any part of the
proceeds arising from any sale thereof, from attachment, levy or sale under
execution, or providing for any stay of execution, exemption from civil process,
or extension of time for payment, (c) all benefits that might accrue to
Mortgagor from requiring valuation or appraisement of any part of the Mortgaged
Property levied or sold on execution of any judgment recovered for the Secured
Obligations secured hereby and (d) all notices not herein elsewhere specifically
required, of Mortgagor's default or of Mortgagee's exercise, or election to
exercise, any option under this Mortgage. Mortgagor further agrees to waive the
issuance and service of process and enter its voluntary appearance in any
action, suit or proceeding brought in connection with any Event of Default and
if required by Mortgagee, to consent to the appointment of a receiver or
receivers of the Mortgaged Property and of all the earnings, revenues, rents,
issues, profits and income thereof.
Mortgagor will not at any time insist upon, or plead, or in any manner
whatever, claim or take any benefit or advantage of any stay or extension or
moratorium law, any exemption from execution or sale of the Mortgaged Property
or any part thereof, wherever enacted, now or at any time hereafter in force,
which may affect the covenants and terms of performance of this Mortgage, nor
claim, take or insist upon any benefit or advantage of any law now or hereafter
in force providing for the valuation or appraisal of the Mortgaged Property, or
any part thereof, prior to any sale or sales thereof which may be made pursuant
to any provision herein, or pursuant to the decree, judgment or order of any
court of competent jurisdiction; nor, after any such sale or sales, claim or
exercise any right under any statute heretofore or hereafter enacted to redeem
the property so sold, or any part thereof, and Mortgagor hereby expressly waives
all benefit or advantage of any such law or laws, and covenants not to hinder,
delay or impede the execution of any power herein granted or delegated to
Mortgagee, but to suffer and permit the execution of every power as though no
such law or laws had been made or enacted. Mortgagor, for itself and all who
may claim under it, waives, to the extent that it lawfully may, all right to
have the Mortgaged Property marshaled upon any foreclosure hereof.
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SECTION 11.03. No failure by Mortgagee to insist upon the strict
performance of any covenant, agreement, provision, term or condition of this
Mortgage or any of the Transaction Documents or to exercise any right or remedy
consequent upon a breach thereof, shall constitute a waiver of any such breach
or of such covenant, agreement, provision, term or condition. No covenant,
agreement, provision, term or condition of this Mortgage to be performed or
complied with by Mortgagor, and no breach thereof, shall be waived, altered or
modified except by a written instrument executed by Mortgagee. No waiver of any
breach shall affect or alter this Mortgage, but each and every covenant,
agreement, provision, term and condition of this Mortgage shall continue in full
force and effect with respect to any other then existing or subsequent breach
thereof.
SECTION 11.04. Each right and remedy of Mortgagee provided for in
this Mortgage shall be in addition to every other right or remedy provided for
in this Mortgage, in the Transaction Documents or now or hereafter existing at
law, or in equity or by statute or otherwise, and the exercise or beginning of
the exercise by Mortgagee of any one or more of the rights or remedies provided
for in this Mortgage or now or hereafter existing at law, or in equity or by
statute or otherwise shall not preclude the simultaneous or later exercise by
Mortgagee of any or all other rights or remedies provided for in this Mortgage
or now or hereafter existing at law, in equity or by statute or otherwise.
SECTION 11.05. No recovery of any judgment by Mortgagee and no levy
of an execution under any judgment upon the Mortgaged Property or upon any other
property of Mortgagor shall affect in any manner or to any extent the Lien of
this Mortgage upon the Mortgaged Property or any part thereof, or any liens,
rights, powers or remedies of Mortgagee hereunder, but such liens, rights,
powers and remedies of Mortgagee shall continue unimpaired as before.
SECTION 11.06. In the event any provision of this Mortgage conflicts
with any provision in the Indenture, the Indenture shall control.
SECTION 11.07. Notwithstanding anything in this Mortgage to the
contrary, Mortgagee shall exercise any remedy provided for in this Mortgage in
accordance with instructions from the Trustee under the Indenture delivered at
the direction of Holders of at least a majority in principal amount of the
outstanding Securities or refrain from exercising any remedy provided for in
this Mortgage either in the absence of instructions from the Trustee under the
Indenture or in accordance with instructions from Trustee under the
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Indenture delivered at the direction of Holders of at least a majority in
principal amount of the outstanding Securities.
ARTICLE XII.
ASSIGNMENT OF LEASES AND RENTS
SECTION 12.01. Mortgagor hereby absolutely sells, assigns, transfers
and sets over to Mortgagee all Mortgagor's right, title and interest in, to and
under any leases (the "Leases") now or hereafter in effect for all or any part
------
of the Mortgaged Property and the rents therefrom (the "Rents"). Mortgagor
-----
irrevocably appoints Mortgagee as its true and lawful attorney-in-fact, at the
option of Mortgagee at any time and from time to time, to demand, receive and
enforce payment, to give receipts, releases and satisfactions, and to sue, in
the name of Mortgagor or Mortgagee, for all Rents and apply the Rents to the
Secured Obligations; provided, however, that consent is hereby given to
-------- -------
Mortgagor, so long as no Event of Default has occurred and is continuing, to
collect, receive, take, use and enjoy (subject to all the other provisions of
this Mortgage) the Rents, as they become due and payable, but not in advance
thereof. The Rents are hereby assigned absolutely by Mortgagor to Mortgagee,
subject only to the rights of Mortgagor to collect and enjoy the Rents as
aforesaid. Mortgagor agrees that Mortgagor will immediately upon request from
Mortgagee, execute, acknowledge and deliver specific and separate assignments of
the Leases and the Rents.
SECTION 12.02. Mortgagee's rights to collect the Rents upon the
occurrence and during the continuance of an Event of Default pursuant to this
Article XII is in no manner conditional upon Mortgagee first taking possession
of the Mortgaged Property. Should Mortgagee enter and take possession of the
Mortgaged Property or collect the Rents, such act shall not cure or waive any
Default or Event of Default or notice thereof hereunder or invalidate any act
done pursuant to such notice. Nothing contained herein, nor any collection of
Rents by Mortgagee or a receiver, shall be construed to make Mortgagee a
"mortgagee-in-possession" so long as Mortgagee has not itself entered into
actual possession of the Mortgaged Property.
SECTION 12.03. Nothing herein shall be construed to impose any
liability or obligation on Mortgagee under or with respect to any Lease.
Mortgagor shall indemnify and hold Mortgagee and each Holder harmless from and
against any and all liabilities, losses and damages (including, without
limitation, reasonable
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attorneys' fees and disbursements) incurred under any Lease or by reason of any
provision of this Article XII.
ARTICLE XIII.
HAZARDOUS MATERIALS
SECTION 13.01. Mortgagor represents that (i) it has obtained all
material permits, licenses and other authorizations which are required with
respect to the ownership and operation of its business and the Mortgaged
Property under any and all Environmental Laws (as hereinafter defined); (ii) it
is in material compliance with all terms and conditions of such permits,
licenses and authorizations, and is also in material compliance with
Environmental Laws applicable to the Mortgaged Property, including, without
limitation, all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules and timetables contained in
the Environmental Laws; (iii) there is no material civil, criminal or
administrative action, suit, demand, claim, hearing, notice of violation,
investigation, proceeding, notice or demand letter pending or, to its knowledge,
threatened against it or the Mortgaged Property under the Environmental Laws
which could result in a material fine, penalty or other cost or expense (iv) to
its best knowledge, there are no past or present events, conditions,
circumstances, activities, practices, incidents, actions or plans with respect
to its operations at the Mortgaged Property which may materially interfere with
or prevent material compliance with the Environmental Laws, or which may give
rise to any common law or legal liability, including, without limitation,
liability under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or similar state, local or foreign laws, or
otherwise form the basis of any claim, action, demand, suit, proceeding, hearing
or notice of violation, study or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling, or the emission, discharge, release or threatened release
into the environment at or from the Mortgaged Property, of any pollutant,
contaminant, chemical or industrial, toxic or hazardous substance or waste
("Hazardous Material") which, individually or in the aggregate, could reasonably
- --------------------
be expected to result in a material fine, penalty or other cost or expense.
Mortgagor shall (i) take all actions necessary to keep its operations
at the Mortgaged Property in compliance with any and all present and future
Environmental Laws; provided, however, Mortgagor at its expense may, after prior
-------- -------
notice to Mortgagee,
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contest by appropriate legal, administrative or other proceedings conducted in
good faith and with due diligence, the validity or application, in whole or in
part, of any such Environmental Law, (ii) take necessary removal or other
response or corrective action as required by law with respect to any Hazardous
Material present on the Mortgaged Property and keep the Mortgaged Property free
of any lien imposed pursuant to any Environmental Law and (iii) not release,
store, treat, handle or dispose of any Hazardous Materials on the Mortgaged
Property in violation of any Environmental Law. Subject to the proviso in the
-------
preceding sentence, in the event Mortgagor fails to comply with the covenants in
the preceding sentence, Mortgagee may, in addition to any other remedies set
forth herein, take any necessary removal or other response or corrective action
with respect to any Hazardous Materials at the Premises at Mortgagor's sole
cost and expense. Any costs or expenses incurred by Mortgagee for such purpose
shall be immediately due and payable by Mortgagor and shall bear interest at the
highest rate then payable pursuant to the Indenture. Mortgagor shall provide to
Mortgagee and its agents and employees access to the Mortgaged Property and
hereby specifically grants to Mortgagee a license for such purpose. Mortgagor
shall indemnify and hold Mortgagee (and each Holder) harmless from and against
all loss, cost, damage (including, without limitation, consequential damages) or
expense (including, without limitation, reasonable attorneys' fees) that
Mortgagee (or such Holder) may sustain by reason of the assertion against
Mortgagee (or such Holder) by any party of any claim relating to such Hazardous
Material including, without limitation, any necessary removal or other response
or corrective action with respect to such Hazardous Material. The foregoing
indemnification shall survive repayment of all amounts due under the Securities,
the Indenture, the Guarantees and the Security Documents and any release or
assignment of this Mortgage.
For purposes of this Section 13.01, "Environmental Laws" shall mean
------------------
any and all Federal, state, local and foreign laws, rules or regulations, any
orders, decrees, judgments or injunctions and the common law in each case as now
or hereafter in effect, relating to pollution or protection of human health,
safety or the environment, including, without limitation, ambient air, indoor
air, soil, surface water, ground water, wetlands, land or subsurface strata,
including, without limitation, those relating to Releases or threatened Releases
of Hazardous Materials into the environment, or otherwise relating to the
manufacture, processing, generation, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials.
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ARTICLE XIV.
MORTGAGEE'S RIGHT TO SEVER INDEBTEDNESS
SECTION 14.01. Mortgagor acknowledges that (a) the Mortgaged Property
does not constitute the sole source of security for the payment and performance
of the Secured Obligations and that the Secured Obligations are also secured by
property of Mortgagor and its affiliates in other jurisdictions (all such
property, collectively, the "Collateral"), (b) the number of such jurisdictions
----------
and the nature of the transaction of which this instrument is a part are such
that it would have been impracticable for the parties to allocate to each item
of Collateral a specific amount and to execute in respect of such item a
separate indenture and (c) Mortgagor intends that Mortgagee have the same rights
with respect to the Mortgaged Property, in foreclosure or otherwise, that
Mortgagee would have had if each item of Collateral had been secured, mortgaged
or pledged pursuant to a separate indenture, mortgage or security document. In
furtherance of such intent, Mortgagor agrees that Mortgagee may at any time by
notice (an "Allocation Notice") to Mortgagor allocate a portion (the "Allocated
----------------- ---------
Indebtedness") of the Secured Obligations to the Mortgaged Property and sever
- ------------
from the remaining Secured Obligations the Allocated Indebtedness. From and
after the giving of an Allocation Notice with respect to the Mortgaged Property,
the Secured Obligations hereunder shall be limited to the extent set forth in
the Allocation Notice and (as so limited) shall, for all purposes, be construed
as a separate obligation of Mortgagor unrelated to the other transactions
contemplated by any of the Documents or any document related to any thereof. To
the extent that the proceeds on any foreclosure of the Mortgaged Property shall
exceed the Allocated Indebtedness, such proceeds shall belong to Mortgagor and
shall not be available hereunder to satisfy any Secured Obligations of Mortgagor
other than the Allocated Indebtedness. In any action or proceeding to foreclose
the Lien of this Mortgage or in connection with any power of sale foreclosure or
other remedy exercised under this Mortgage commenced after the giving by
Mortgagee of an Allocation Notice, the Allocation Notice shall be conclusive
proof of the limits of the Secured Obligations hereby secured, and Mortgagor may
introduce, by way of defense or counterclaim, evidence thereof in any such
action or proceeding.
SECTION 14.02. Mortgagor hereby waives to the greatest extent
permitted under law the right to a discharge of any of the Secured Obligations
under any statute or rule of law now or hereafter in effect which provides that
foreclosure of the Lien of this Mortgage or other remedy exercised under this
Mortgage constitutes the exclusive means for satisfaction of the Secured
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Obligations or which makes unavailable a deficiency judgment or any subsequent
remedy because Mortgagee elected to proceed with a power of sale foreclosure or
such other remedy or because of the failure by Mortgagee to comply with laws
that prescribe conditions to the entitlement to a deficiency judgment. In the
event that, notwithstanding the foregoing waiver, any court shall for any reason
hold that Mortgagee is not entitled to a deficiency judgment, Mortgagor shall
not (a) introduce in any other jurisdiction such judgment as a defense to
enforcement against Mortgagor of any remedy in any of the Documents or (b) seek
to have such judgment recognized or entered in any other jurisdiction, and any
such judgment shall in all events be limited in application only to the state or
jurisdiction where rendered.
SECTION 14.03. In the event any instrument in addition to the
Allocation Notice is necessary to effectuate the provisions of this Article XIV,
including, without limitation, any amendment to this Mortgage, any substitute
security or affidavit or certificate of any kind, Mortgagee may execute, deliver
or record such instrument as the attorney-in-fact of Mortgagor. Such power of
attorney is coupled with an interest and is irrevocable. Mortgagee shall give
reasonable notice, but no later than 3 days prior to filing any such document,
to Mortgagor that the provisions of this Section 14.03 are necessary to achieve
the purpose of this Article XIV.
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<PAGE>
IN WITNESS WHEREOF, Mortgagor, intending to be legally bound hereby,
has caused this Mortgage to be duly executed, on the day and year first above
written.
CONTINENTAL PLASTIC CONTAINERS, INC.
Witness:
________________ By:
Its: ________________________________
The address of the Mortgagee under
this Mortgage is 114 West 47th
Street, New York, New York 10036,
Attention: Corporate Trust Department
--------------------------------------
On behalf of Mortgagee
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<PAGE>
STATE OF NEW YORK )
: ss:
COUNTY OF NEW YORK)
On this ____ day of December, 1996, before me, _____________________
the undersigned officer, personally appeared __________________________, who
acknowledged himself to be the ___________________ of Continental Plastic
Containers, Inc., a Delaware corporation, and that he, as such
____________________, being authorized so to do, executed the foregoing
instrument for the purposes therein contained, by signing the name of the
corporation by himself as _______________.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------
Notary Public
------------------------------------
(Print Name of Notary)
My commission expires on __________.
N-26
<PAGE>
Schedule A
----------
[Property description]
N-27
<PAGE>
EXHIBIT O-1
-----------
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT ("Security Agreement") dated as of December
17, 1996, made by PLASTIC CONTAINERS, INC., a Delaware corporation ("Grantor"),
in favor of UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation
having an office at 114 West 47th Street, New York, New York 10036, as
collateral agent (together with any successors in such capacity the "Collateral
Agent") and as trustee for the Holders (as defined in the Indenture) under the
Indenture (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Grantor, Continental Caribbean Containers, Inc., a Delaware
corporation, Continental Plastic Containers, Inc., a Delaware corporation and
Collateral Agent have entered into a certain indenture (as amended from time to
time, the "Indenture"; capitalized terms used herein but not defined herein
shall have the meanings ascribed to such terms in the Indenture), dated as of
the date hereof, pursuant to which Grantor has issued 10% Senior Secured Notes
due 2006 (the "Series A Notes") in the aggregate principal amount of
$125,000,000 and pursuant to which Grantor may issue 10% Series B Senior Secured
Notes due 2006 (the "Series B Notes"; together with the Series A Notes, the
"Securities").
B. This Security Agreement is given by Grantor to secure the prompt
payment and 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) and any successor provision thereto) of
(i) all obligations, indebtedness and liabilities of Grantor pursuant to the
terms of the Indenture, the Securities and the Security Documents, including,
without limitation, the obligations of Grantor to pay principal of, premium, if
any, and interest on the Securities when due and payable, and all other amounts
due and to become due under or in connection with the Indenture, the Securities
and the Security Documents and (ii) without duplication of the amounts described
in clause (i), all obligations, indebtedness and liabilities of Grantor pursuant
to the terms of this Security Agreement, in each case, whether now existing or
hereafter arising and whether in the regular course of business or otherwise
(collectively, the "Secured Obligations").
O-1-1
<PAGE>
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises set forth herein and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Grantor hereby agrees with Collateral Agent as follows:
Section 1. Defined Terms. The following terms which are defined in
-------------
the Code are used herein as so defined: Chattel Paper, Documents, Equipment,
Farm Products, General Intangibles, Instruments and Proceeds. The following
terms shall have the following meanings:
"1996 Leaseback Equipment" shall mean the equipment listed on Schedule
------------------------ --------
I hereto and any additions and accessions thereto.
-
"Code" shall mean the Uniform Commercial Code as from time to time in
----
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2 of
----------
this Security Agreement.
"Contracts" shall mean all contracts between Grantor and any third
---------
party including, without limitation, all customer contracts now existing or
hereafter entered into as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a) all
rights of Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (b) all rights of Grantor to damages arising
out of, or for, breach or default in respect thereof and (c) all rights of
Grantor to perform and to exercise all remedies thereunder.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyrights" shall mean copyrights, owned by or assigned to Grantor,
----------
including, without limitation, the copyrights listed on Schedule II hereto,
-----------
together with any and all (a) renewals and extensions thereof, (b) income,
royalties, damages, claims and payments now and hereafter due and/or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements
O-1-2
<PAGE>
thereof, and (c) rights to sue for past, present and future infringements
thereof.
"GECC" shall mean General Electric Capital Corporation.
----
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to any government, and any corporation or other entity owned
or controlled (through ownership of capital interests or otherwise) by any
of the foregoing.
"Intellectual Property" shall mean Patents, Trademarks and Copyrights.
---------------------
"Patents" shall mean (a) all letters patent of the United States or
-------
any other country, and all applications for letters patent of the United
States or any other country, including, without limitation, any referred to
in Schedule III hereto, (b) all reissues, continuations, continuations-in-
------------
part or extensions thereof and any other rights of any kind related to such
letters patent or applications and (c) any written agreement granting any
right to sell, distribute, manufacture or otherwise use any invention
covered by a Patent owned by a Person other than Grantor, including,
without limitation, any referred to in Schedule III hereto.
------------
"Permitted Liens" shall mean (i) those Liens constituting Permitted
---------------
Liens, as defined in the Indenture under clauses (b), (f) and (h) thereof
and (ii) the non-exclusive royalty free license in respect of certain
Intellectual Property granted to GECC in connection with the 1996
Sale/Leaseback.
"Person" means and includes an individual, a partnership, a firm, a
------
joint venture, a corporation, a trust, an unincorporated organization or
other association or entity and a Governmental Authority.
"Previously Leased/Financed Equipment" shall mean the equipment listed
------------------------------------
on Schedule IV hereto.
-----------
"Prior Liens" shall mean those Liens listed on Schedule V hereto.
----------- ----------
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by-laws or other
O-1-3
<PAGE>
organizational or governing documents of such Person, and any law, treaty,
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such
Person or any of its property or to which such Person or any of its
property is subject.
"Security Agreement" shall mean this Security Agreement, as amended,
------------------
supplemented or otherwise modified from time to time.
"Trademarks" shall mean (a) all trademarks, trade names, corporate
----------
names, company names, business names, fictitious business names, trade
styles, service marks, logos, other sources of business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted
or acquired, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof,
including, without limitation, any referred to in Schedule VI hereto, (b)
-----------
all renewals thereof, (c) all goodwill of the business of Grantor
symbolized by and associated with such Trademarks and (d) any written
agreement granting any right to use any Trademark of a Person other than
Grantor, including, without limitation, any referred to in Schedule VI
-----------
hereto.
"Transaction Documents" shall mean, collectively, the Securities, the
---------------------
Indenture, the Guarantees and the Security Documents.
Section 2. Grant of Security Interest. As collateral security for
--------------------------
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations, Grantor
hereby grants to Collateral Agent a first priority security interest in all of
the following property now owned or at any time hereafter acquired by Grantor
or in which Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
----------
(i) all Chattel Paper;
(ii) all Contracts;
(iii) all Copyrights;
O-1-4
<PAGE>
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Patents;
(ix) all Trademarks; and
(x) all Proceeds and products of any and all of the foregoing.
Notwithstanding the foregoing, the Collateral shall not include (i)
any Inventory or Accounts (each as defined in the Code), (ii) any Documents of
Title (as defined in that certain financing agreement, as in effect on the date
hereof, executed in connection with the Revolving Credit Facility), (iii) any
1996 Leaseback Equipment or (iv) any Previously Leased/Financed Equipment.
Section 3. Rights of Collateral Agent; Limitations on Collateral
-----------------------------------------------------
Agent's Obligations.
- -------------------
(a) Grantor Remains Liable under Contracts. Anything herein to the
--------------------------------------
contrary notwithstanding, Grantor shall remain liable under each of the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each such Contract. Collateral Agent shall not have
any obligation or liability under any Contract by reason of or arising out of
this Security Agreement or the receipt by Collateral Agent of any payment
relating to such Contract pursuant hereto, nor shall Collateral Agent be
obligated in any manner to perform any of the obligations of Grantor under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(b) Notice to Contracting Parties. Upon the request of Collateral
-----------------------------
Agent at any time after the occurrence and during the continuance of a Default
or Event of Default, Grantor shall notify parties to the Contracts that the
Contracts have been assigned to Collateral Agent and that payments in respect
thereof shall be made directly to Collateral Agent. During the continuance of a
Default or Event of Default, Collateral Agent may in its own name or in the name
of others communicate with parties to the Contracts to verify
O-1-5
<PAGE>
with them to its satisfaction the existence, amount and terms of any Contracts.
(c) First Priority. Grantor and Collateral Agent intend the security
--------------
interests granted pursuant to Section 2 of this Security Agreement to constitute
first priority perfected Liens until the Secured Obligations are paid in full
(including payment of principal of, premium, if any, and accrued but unpaid
interest on, the Securities).
(d) No Release. Nothing set forth in this Security Agreement shall
----------
relieve Grantor from the performance of any term, covenant, condition or
agreement on Grantor's part to be performed or observed under or in respect of
any of the Collateral or from any liability to any Person under or in respect of
any of the Collateral or impose any obligation on Collateral Agent or any Holder
to perform or observe any such term, covenant, condition or agreement on
Grantor's part to be so performed or observed or impose any liability on
Collateral Agent or any Holder for any act or omission on the part of the
Grantor relating thereto or for any breach of any representation or warranty on
the part of Grantor contained in any Security Document or in respect of the
Collateral or made in connection therewith.
Section 4. Representations and Warranties. Grantor hereby
------------------------------
represents and warrants that:
(a) Title; No Other Liens. Except for the Lien granted to Collateral
---------------------
Agent pursuant to this Security Agreement, Grantor is, and as to the
Collateral acquired by it from time to time after the date hereof Grantor
will be, except as otherwise permitted by the Indenture or this Security
Agreement, the sole owner of each item of Collateral subject to no other
Liens (other than Prior Liens and Permitted Liens), claims or rights of
others. No security agreement, financing statement or other public notice
with respect to all or any material part of the Collateral is on file or of
record in any public office, except such as may have been filed in favor
of Collateral Agent pursuant to this Security Agreement and in connection
with Prior Liens. As of the date hereof, no Collateral is evidenced by
Instruments required to be delivered to Collateral Agent which have not
been delivered to Collateral Agent.
(b) Perfection of Liens. Financing statements on form UCC-1 have been
-------------------
prepared and delivered to the Collateral Agent herewith. When this
Security Agreement is duly executed and
O-1-6
<PAGE>
delivered and (i) such financing statements have been filed in the
jurisdictions indicated thereon, and (ii) the Notice of Security Interest
is filed and accepted in the United States Patent and Trademark Office,
then all filings shall have been made to create, preserve, protect and
perfect the security interest granted by Grantor to Collateral Agent hereby
in respect of such of the Collateral in which a security interest can be
perfected by the filing of a financing statement or the filing of a
security agreement with the United States Patent and Trademark Office. When
such filings are duly made the security interests granted to Collateral
Agent pursuant to this Security Agreement in and to such Collateral will
constitute perfected Liens and security interests therein and subject to no
liens other than Prior Liens. This Security Agreement is enforceable as
such against all creditors of and purchasers from Grantor and against any
owner or purchaser of the real property where any of the Equipment is
located and any present or future creditor obtaining a Lien on such real
property.
(c) Contracts. Except as set forth in Schedule VII hereto, no consent
--------- ------------
of any party (other than Grantor) to any material Contract is required, or
purports to be required, in connection with the execution, delivery and
performance of this Security Agreement. Each material Contract is in full
force and effect and constitutes a valid and legally enforceable obligation
of the parties thereto. No consent or authorization of, filing with or
other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any of the material Contracts by any party thereto other
than those which have been duly obtained, made or performed, are in full
force and effect and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general in nature. Neither
Grantor nor (to the best of Grantor's knowledge) any other party to any
material Contract is in default or is likely to become in default in the
performance or observance of any of the terms thereof. Grantor has fully
performed its obligations in all material respects under each material
Contract. The right, title and interest of Grantor in, to and under each
material Contract are not subject to any defense, offset, counterclaim or
claim, nor have any of the foregoing been asserted or alleged against
Grantor as to any material Contract. No amount payable to Grantor under or
in connection with any Contract is evidenced by any promissory note, other
Instrument or Chattel Paper which has not been delivered to Collateral
Agent, other than
O-1-7
<PAGE>
in connection with the sale of Inventory in the ordinary course of
business.
(d) Equipment. The Equipment is kept at the locations listed on
---------
Schedule VIII hereto.
-------------
(e) Chief Executive Office. Grantor's chief executive office and
----------------------
chief place of business is located at One Aerial Way, Syosset, New York
11791.
(f) Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
(g) Patents, Trademarks and Copyrights. Schedule III hereto includes
---------------------------------- ------------
all Patents owned by Grantor in its own name as of the date hereof.
Schedule VI hereto includes all Trademarks owned by Grantor in its own name
-----------
as of the date hereof. Schedule II hereto includes all Copyrights owned by
-----------
Grantor in its own name as of the date hereof. Each Patent and Trademark
is valid, subsisting, unexpired and has not been abandoned. Except as set
forth in such Schedules, none of such Patents, Trademarks and Copyrights is
the subject of any licensing or franchise agreement. No holding, decision
or judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Patent, Trademark, or
Copyright. No action or proceeding is pending (i) seeking to limit, cancel
or question the validity of any Patent, Trademark or Copyright, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Patent, Trademark or Copyright.
(h) Valid and Binding Obligation. Grantor has full corporate power,
----------------------------
authority and legal right to pledge and grant a security interest in the
Collateral pursuant to this Security Agreement, and this Security Agreement
constitutes the legal, valid and binding obligation of Grantor, enforceable
against Grantor in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and by general
principles of equity.
(i) Consents and Approvals. Except as set forth in Schedule IX hereto
---------------------- -----------
and other consents which have been obtained as of the date hereof, no
consent of any other Person (including, without limitation, stockholders or
creditors of Grantor) and no consent, approval, authorization of, or
O-1-8
<PAGE>
registration or declaration or filing with, any Governmental Authority or
regulatory body is required to be obtained, effected or given in connection
with either (i) the pledge of, and grant of a security interest in, the
Collateral by Grantor pursuant to this Security Agreement or for the
execution, delivery or performance of this Security Agreement or any of the
other Security Documents by Grantor or (ii) for the exercise by Collateral
Agent of the rights provided for in this Security Agreement or any of the
other Security Documents or the remedies in respect of the Collateral
pursuant to this Security Agreement or any of the other Security Documents.
Section 5. Covenants. Grantor covenants and agrees with Collateral
---------
Agent that until the Secured Obligations are paid in full (including payment of
the principal of, premium, if any, and accrued but unpaid interest on, the
Securities):
(a) Further Documentation; Pledge of Instruments. At any time and
--------------------------------------------
from time to time, upon the written request of Collateral Agent, and at the
sole expense Grantor, Grantor will promptly and duly execute and deliver
such further instruments and documents and take such further action as
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby and
filings in the United States Patent and Trademark Office and the United
States Copyright Office. Grantor hereby authorizes Collateral Agent to
file any such financing or continuation statements and to make such filings
in the United States Patent and Trademark Office and the United States
Copyright Office without the signature of Grantor to the extent permitted
by applicable law. Notwithstanding the foregoing, the Collateral Agent's
right to obtain further instruments and documents from the Grantor shall
not release the Grantor from its obligations under Section 4(b) to make
filings of financing and continuation statements under the Uniform
Commercial Code in appropriate jurisdictions. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by
any promissory note, other Instrument or Chattel Paper, such note,
Instrument or Chattel Paper shall be immediately delivered to Collateral
Agent, duly endorsed in a manner satisfactory to Collateral Agent, to be
held as Collateral pursuant to this Agreement.
O-1-9
<PAGE>
(b) Indemnification. Grantor agrees to indemnify, pay and hold
---------------
harmless Collateral Agent and each of the Holders and the officers,
directors, employees, agents and affiliates of Collateral Agent and each of
the Holders (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, claims, costs (including, without limitation, the settlement costs),
expenses or 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
Indemnitees 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 any of the Transaction Documents (including, without
limitation, any misrepresentation by Grantor in any of the Transaction
Documents) (the "Indemnified Liabilities"); provided, that Grantor shall
--------
have no obligation to an Indemnitee hereunder with respect to an
Indemnified Liability if it has been determined by a final decision (after
all appeals and the expiration of time to appeal) by a court of competent
jurisdiction that such Indemnified Liability arose from the negligence or
willful misconduct of that Indemnitee. 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,
Grantor shall contribute the maximum portion which it is permitted to pay
and satisfy under the applicable law, to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them. The
obligations of Grantor contained in this Section 5 shall survive the
termination of this Security Agreement and the discharge of Grantor's other
obligations under the Transaction Documents. Any amount paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
(c) Maintenance of Records. Grantor will keep and maintain at its own
----------------------
cost and expense satisfactory and complete records in respect of the
Collateral. Grantor will mark its books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. For Collateral Agent's further security, Collateral Agent
is hereby granted a security interest in all of Grantor's books and records
pertaining to the Collateral, and Grantor shall permit access to any such
books and records to
O-1-10
<PAGE>
Collateral Agent or to its representatives during normal business hours at
the reasonable request of Collateral Agent and shall upon Collateral
Agent's request after the occurrence and during the continuation of any
Default or Event of Default turn over any such books and records to
Collateral Agent.
(d) Right of Inspection. Collateral Agent shall at all times have
-------------------
full and free access during normal business hours to all the books,
correspondence and records of Grantor, and
Collateral Agent or its representatives may examine the same, take extracts
therefrom and make photocopies thereof, and Grantor agrees to render to
Collateral Agent, at Grantor's cost and expense, such clerical and other
assistance as may be reasonably requested with regard thereto. Collateral
Agent and its representatives shall at all times also have the right to
enter into and upon any premises where any of the Equipment is located for
the purpose of inspecting the same, observing its use or otherwise
protecting its interests therein.
(e) Compliance with Laws, etc. Grantor will comply in all material
-------------------------
respects with all Requirements of Law applicable to the Collateral or any
part thereof or to the operation of Grantor's business; provided, however,
-------- -------
that Grantor may contest any Requirement of Law in any reasonable manner
which shall not adversely affect Collateral Agent's rights or the priority
of its Liens on the Collateral.
(f) Compliance with Terms of Contracts, etc. Grantor will perform
---------------------------------------
and comply in all material respects with all its obligations under the
Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) Payment of Obligations. Grantor will pay promptly when due all
----------------------
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on Grantor's books in accordance with GAAP.
O-1-11
<PAGE>
(h) Limitation on Liens on Collateral. Grantor will not create, incur
---------------------------------
or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby, Prior Liens, Permitted
Liens and other Liens permitted under Section 4.13 of the Indenture, and
will defend the right, title and interest of Collateral Agent in and to any
of the Collateral against the claims and demands of all Persons whomsoever.
Grantor will take no action which would or, in the reasonable judgment of
Collateral Agent would, adversely affect the existence, enforceability,
priority or perfection of the Liens on and security interests in any of the
Collateral granted hereunder. To the extent any security interest granted
hereunder in any property constituting a part of the Collateral either (i)
does not constitute a perfected first priority Lien on the date hereof (but
is intended to constitute a perfected first priority Lien pursuant to the
terms hereof) or (ii) ceases without consent of Collateral Agent to
constitute a perfected first priority Lien after the date hereof, Grantor
shall make all filings (including financing statements or continuation
statements and filings in the United States Patent and Trademark Office and
the United States Copyright Office) and record such instruments as may be
reasonably requested by Collateral Agent to restore the priority and
perfection of such Lien. The right of the Collateral Agent to require any
such filing shall not be deemed to impose upon the Collateral Agent any
duty or obligation to ascertain whether any circumstances exist which
require such filings or recordations.
(i) Limitations on Dispositions of Collateral. Grantor will not sell,
-----------------------------------------
transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except in accordance with the terms of the
Indenture.
(j) Limitations on Modifications, Waivers, Extensions of Contracts.
--------------------------------------------------------------
Grantor will not (i) amend, modify, terminate or waive any provision of any
material Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral or
impair Grantor's ability to conduct its business, (ii) fail to exercise
promptly and diligently each and every material right which it may have
under each material Contract (other than any right of termination) or (iii)
fail to deliver to Collateral Agent a copy of each material demand, notice
or document received by it relating in any way to any material Contract.
O-1-12
<PAGE>
(k) Maintenance of Equipment. Except as otherwise provided in the
------------------------
Indenture, Grantor will maintain each item of Equipment in good operating
condition, ordinary wear and tear and immaterial impairments of value and
damage by the elements excepted, and will provide all maintenance, service
and repairs necessary for such purpose.
(l) Maintenance of Insurance. Grantor will maintain, with financially
------------------------
sound and reputable companies, insurance policies (i) insuring the
Equipment against loss by fire, explosion, theft and such other casualties
as are usually insured against by companies engaged in the same or similar
businesses and (ii) insuring Grantor and Collateral Agent against liability
for personal injury and property damage relating to such Equipment, such
policies to be in such form and amounts and having such coverage as is
customary for companies engaged in the same or similar businesses, with
losses payable to Grantor and Collateral Agent as their respective
interests may appear. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 10 days after receipt by
Collateral Agent of written notice thereof, (ii) name Collateral Agent as
an additional insured or loss payee, as applicable and (iii) be reasonably
satisfactory in all other respects to Collateral Agent. The Company shall
deliver to Collateral Agent a report of a reputable insurance broker with
respect to such insurance at least once in each calendar year and such
supplemental reports with respect thereto as Collateral Agent may from time
to time reasonably request.
(m) Further Identification of Collateral. Grantor will furnish to
------------------------------------
Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as Collateral Agent may reasonably request,
all in reasonable detail.
(n) Notices. Grantor will advise Collateral Agent promptly, in
-------
reasonable detail, at its address set forth above, (i) of any Lien (other
than Liens created or permitted hereby) on, or material claim asserted
against, any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse effect
on the aggregate value of the Collateral or on the Liens created hereunder.
O-1-13
<PAGE>
(o) Changes in Locations, Name, etc. Without collateral Agent's prior
-------------------------------
written consent, Grantor will not (i) change the location of its chief
executive office/chief place of business from that specified in Section
4(e) or remove its books and records from such location, (ii) permit any of
the Equipment to be kept at a location other than those listed on Schedule
--------
VIII hereto or (iii) change its name, identity or corporate structure to
----
such an extent that any financing statement filed by or on behalf of
Collateral Agent in connection with this Security Agreement would become
reasonably misleading. Collateral Agent's consent to any of the foregoing
will not be unreasonably withheld so long as Grantor shall (x) provide
Collateral Agent with 45 days prior written notice of its intention to take
any of the actions specified in clauses (i) - (iii) above, (y) take all
actions necessary to maintain the perfection of the security interest in
the Collateral intended to be created hereby and (z) in the event that
Grantor proposes to move any Equipment to a location at which any entity
has obtained a mortgage lien on the real property in connection with the
1996 Leaseback Transaction, obtain and deliver to the Collateral Agent an
access agreement substantially in the form of Schedule X hereto, duly
----------
executed by the holder of such mortgage lien and Grantor.
(p) Patents, Trademarks and Copyrights.
----------------------------------
(i) Grantor (either itself or through licensees) will, except
with respect to any Trademark that Grantor shall reasonably determine
is of immaterial economic value to it or which Grantor abandons in
accordance with Section (p)(ii) below, (i) continue to use each
Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such trademark, (iii)
employ such Trademark with the appropriate notice of registration,
(iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless Collateral Agent shall
obtain a perfected security interest in such mark pursuant to this
Security Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become invalidated.
O-1-14
<PAGE>
(ii) Grantor will not, except with respect to any Patent or
Copyright that Grantor shall reasonably determine is of immaterial
economic value to it, do any act, or omit to do any act, whereby any
Patent or copyright may become abandoned or dedicated.
Notwithstanding the foregoing, Grantor, in its good faith business
judgment, may abandon any Patent, Trademark or Copyright, or
application for registration thereof, which is not necessary for the
operation of Grantor's business, upon thirty (30) days' prior written
notice to Collateral Agent.
(iii) Grantor will notify Collateral Agent immediately if it
knows, or has reason to know, that any application or registration
relating to any Patent, Trademark or Copyright may become abandoned or
dedicated, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding Grantor's ownership of any Patent,
Trademark or Copyright or its right to register the same or to keep
and maintain the same.
(iv) Whenever Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or for the registration of any Copyright in the
United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, Grantor shall
report such filing to Collateral Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs. Upon
request of Collateral Agent, Grantor shall execute and deliver any and
all agreements, instruments, documents, and papers as Collateral Agent
may request to evidence Collateral Agent's security interest in any
Patent, Trademark or Copyright and the goodwill and general
intangibles of Grantor relating thereto or represented thereby, and
Grantor hereby constitutes and appoints Collateral Agent its attorney-
in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable
until the Secured Obligations are paid in full.
O-1-15
<PAGE>
(v) Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright
Office, or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each application
(and to obtain the relevant registration) and to maintain each
registration of the Patents, Trademarks and Copyrights (other than any
Patent, Trademark or Copyright which is abandoned by Pledgor in
accordance with Section (p)(ii) above), including, without limitation,
filing of applications for renewal, affidavits of use and affidavits
of incontestability.
(vi) In the event that any Patent, Trademark or Copyright
included in the Collateral is infringed, misappropriated or diluted by
a third party, Grantor shall promptly notify Collateral Agent after it
learns thereof and shall, unless Grantor shall reasonably determine
that such Patent, Trademark or Copyright is not of material economic
value to Grantor, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover
any and all damages for such infringement, misappropriation or
dilution, or take such other actions as Grantor shall reasonably deem
appropriate under the circumstances to protect such Patent, Trademark
or Copyright.
(q) If at any time the Indebtedness of the Grantor in respect of any
Previously Leased/Financed Equipment is repaid in full and the Grantor is
not then required to grant to GECC a security interest in such Previously
Leased/Financed Equipment, Grantor shall grant to the Collateral Agent a
security interest in such Previously Leased/Financed Equipment and shall
take all actions necessary to perfect such security interest, including,
without limitation, the filing of financing statements in the appropriate
jurisdictions.
Section 6. Collateral Agent's Appointment as Attorney-in-Fact.
--------------------------------------------------
(a) Powers. Grantor hereby irrevocably constitutes and appoints
------
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Grantor and in the name of Grantor
or in its own name, from time to time in Collateral Agent's discretion, for the
purpose of carrying
O-1-16
<PAGE>
out the terms of this Security Agreement, to take any and all appropriate action
and to execute any and all documents and instruments which may be necessary or
desirable to accomplish the purposes of this Security Agreement, and, without
limiting the generality of the foregoing, Grantor hereby gives Collateral Agent
the power and right, on behalf of Grantor, without notice to or assent by
Grantor, to do the following:
(i) upon the occurrence and during the continuance of any Event of
Default, in the name of Grantor or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Instrument, General Intangible or Contract and to file any claim or to take
any other action or proceeding in any court of law or equity or
otherwise deemed appropriate by Collateral Agent for the purpose of
collecting any and all such moneys due under any Instrument, General
Intangible or Contract whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event
of Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to Collateral Agent or as Collateral Agent shall
direct; (B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (D)
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any Proceeds thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
Grantor with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as Collateral
Agent may deem appropriate; (G) to assign any Patent, Trademark (along with
O-1-17
<PAGE>
the goodwill of the business to which any such Trademark pertains) or
Copyright, throughout the world for such term or terms, on such conditions,
and in such manner, as Collateral Agent shall in its sole discretion
determine; and (H) generally, to sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Collateral Agent were the absolute owner
thereof for all purposes, and to do, at Collateral Agent's option and
Grantor's expense, at any time, or from time to time, all acts and things
which Collateral Agent deems necessary to protect, preserve or realize upon
the Collateral and Collateral Agent's Liens thereon and to effect the
intent of this Security Agreement, all as fully and effectively as Grantor
might do.
Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) Other Powers. Grantor also authorizes Collateral Agent, at any
------------
time and from time to time, to execute, in connection with the sale provided for
in Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) No Duty on Collateral Agent's Part. The powers conferred on
----------------------------------
Collateral Agent hereunder are solely to protect Collateral Agent's interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Collateral Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to Grantor for
any act or failure to act hereunder, except for its own negligence or willful
misconduct.
Section 7. Performance by Collateral Agent of Grantor's Obligations.
--------------------------------------------------------
If Grantor fails to perform or comply with any of its agreements contained
herein and Collateral Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of Collateral Agent incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum 2% above the rate payable under the Indenture, shall be
payable by Grantor to Collateral Agent on demand and shall constitute Secured
Obligations.
O-1-18
<PAGE>
Section 8. Remedies, Rights Upon Default. (a) Upon the occurrence
-----------------------------
and during the continuance of an Event of Default:
(i) all payments received by Grantor under or in connection with
any of the Collateral shall be held by Grantor in trust for Collateral
Agent for the benefit of the Holders, shall be segregated from other funds
of Grantor and shall forthwith upon receipt by Grantor be paid over to
Collateral Agent as Collateral, in the same form as received by Grantor
(duly endorsed by Grantor to Collateral Agent, if required);
(ii) any and all such payments so received by Collateral Agent
(whether from Grantor or otherwise) shall be held by Collateral Agent as
Trust Moneys and applied by it in such manner and only at such times as
provided in the Indenture;
(iii) Collateral Agent shall have the right to seize and take
possession of any Collateral and the books and records pertaining to the
Collateral (including, without limitation, customer lists, correspondence
with present or future or prospective suppliers or customers, advertising
or marketing materials, credit files, computer tapes, programs, printouts,
and all other computer materials, records and electronic data processing
software pertaining to the Collateral) and may enter the premises where
they, or any of them, are located for the purpose of effecting such
removal; Grantor shall have a reasonable time to make copies of such books
and records before their removal by Collateral Agent; Collateral Agent
shall not be liable to Grantor for any damage suffered by Grantor by reason
of such entry or seizure unless it results from Collateral Agent's
negligence, bad faith or willful misconduct, and Grantor hereby agrees to
indemnify and hold harmless Collateral Agent from and against any and all
claims, expenses or liabilities that it may incur to any Person (other than
to Grantor in connection with any liability of Collateral Agent to Grantor
resulting from Collateral Agent's negligence, bad faith or willful
misconduct) by reason of such entry or seizure;
(iv) Collateral Agent may hire and maintain at Grantor's premises a
custodian or independent contractor selected by Collateral Agent who shall
have full authority to do all lawful acts necessary to protect Collateral
Agent's interest and to report to Collateral Agent thereon. Grantor hereby
agrees to cooperate with any such Person and to do whatever Collateral
Agent may reasonably request to preserve the Collateral.
O-1-19
<PAGE>
(b) Upon the occurrence and during the continuance of an Event of
Default, then, and in any such event, and in accordance with Section 9 hereof,
Collateral Agent may exercise, in addition to all other rights and remedies
granted in this Security Agreement, and in any other instrument or agreement
securing, evidencing or relating to the Secured Obligations, all rights and
remedies of a secured party on default under the Code (or such other comparable
statute) in the applicable jurisdiction. Without limiting the generality of the
foregoing, Grantor expressly agrees that in any such event Collateral Agent may,
without demand or performance or other demand, advertisement or notice of any
kind (except the notice specified below of time and place of public or private
sale) to or upon Grantor or any other Person, all and each of which demands,
advertisements and/or notices are (to the extent permitted by applicable law)
hereby expressly waived, forthwith collect, receive, appropriate and realize
upon the Collateral, or any part thereof, and/or may forthwith sell, lease,
assign, give option or options to purchase, or sell or otherwise dispose of and
deliver the Collateral (or contract to do so), or any part thereof, in one or
more parcels at public or private sale or sales, at any exchange or broker's
board or at any of 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 Collateral Agent may deem commercially reasonable,
irrespective of the impact of any such sales on the market price of the
Collateral. Collateral Agent and any Holder shall have the right on any such
public sale or sales and, to the extent permitted by law, on any such private
sale or sales to purchase the whole or any part of said Collateral so sold and
shall be entitled, for the purpose of bidding and making settlement or payment
of the purchase price of all or any portion of the Collateral sold at any such
public sale, to use and apply any of the Secured Obligations owed to Collateral
Agent or such Holder, as the case may be, as a credit on account of the purchase
price of any Collateral payable by Collateral Agent or such Holder, as the case
may be, 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 Grantor, except for
any right or redemption as may be available by applicable law. Grantor further
agrees, at Collateral Agent's request, to assemble Collateral and make it
available to Collateral Agent at places that Collateral Agent reasonably
selects, whether at Grantor's premises or elsewhere. The proceeds of any such
collection, recovery, receipt, appropriation, realization or sale shall
constitute Trust Moneys and shall be applied by Collateral Agent in accordance
with the Indenture in the manner provided in the Indenture.
O-1-20
<PAGE>
(c) To the extent permitted by applicable law, Grantor waives all
claims, damages and demands against Collateral Agent or any Holder arising out
of the repossession, retention or sale of the Collateral unless resulting from
Collateral Agent's or such Holder's negligence, bad faith or willful misconduct.
Grantor agrees that Collateral Agent need not give more than 10 days' notice
(which notice shall be deemed given when mailed) of the time and place of any
public sale or of the time after which a private sale may take place and that
such notice is reasonable notification of such matters. No notification need be
given to Grantor if it has signed, after default, a statement renouncing or
modifying any right to notification of sale or other intended disposition.
Collateral Agent shall not be obligated to make any sale of Collateral
regardless of notice of sale having been given. 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. Grantor shall remain liable for any
deficiency if the proceeds of any sale or disposition of the Collateral applied
to the Secured Obligations pursuant to the Indenture are insufficient to
indefeasibly pay in full in cash all Secured Obligations and amounts to which
Collateral Agent and the Holders are entitled, Grantor also being liable for the
reasonable fees of any attorneys employed by Collateral Agent or any Holder to
collect such deficiency.
(d) To the extent that it may lawfully do so, Grantor agrees that it
will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any appraisal, valuation, stay, extension or
redemption laws, or any law permitting it to direct the order in which the
Collateral or any part thereof shall be sold, now or at any time hereafter in
force, that may delay, prevent or otherwise affect the performance or
enforcement of this Security Agreement or the Secured Obligations and hereby
expressly waives all benefit or advantage of any such laws and covenants that it
will not hinder, delay or impede the execution of any power granting or
delegated to Collateral Agent or any Holder in this Security Agreement or any
other Security Document, but will suffer and permit the execution of every such
power as though no such laws were in force.
Section 9. Decisions Relating to Exercise of Remedies.
------------------------------------------
Notwithstanding anything in this Agreement to the contrary, Collateral Agent
shall exercise any remedy provided for in Section 8 in accordance with the terms
of, and at the times, if any, specified in the Indenture and in accordance with
instructions from the Trustee delivered at the direction of the Holders of at
least
O-1-21
<PAGE>
a majority in principal amount of the outstanding Securities or refrain from
exercising any remedy provided for in Section 8 either in the absence of
instructions from the Trustee or in accordance with instructions from the
Trustee delivered at the direction of the Holders of at least a majority in
principal amount of the outstanding Securities.
Section 10. Limitation on Collateral Agent's Duties in Respect of
-----------------------------------------------------
Collateral. Collateral Agent's sole duty with respect to the custody,
- ----------
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with
it in the same manner as Collateral Agent deals with similar property for its
own account. Neither Collateral Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of Grantor or otherwise.
Section 11. Expenses. Grantor agrees to pay, without duplication, to
--------
Collateral Agent, from time to time upon demand, all reasonable fees, costs and
expenses of Collateral Agent (including, without limitation, the reasonable
expenses, fees and disbursements of its counsel, experts and agents) incurred by
Collateral Agent or arising in connection with (a) the preparation, execution,
delivery, administration, modification, amendment or termination of this
Security Agreement or the enforcement of any of the provisions hereof, (b) the
custody or preservation and protection of, or the sale of, collection from, or
other realization upon, any of the Collateral, (c) the preservation, protection,
defense, exercise or enforcement of any of the rights of Collateral Agent
hereunder and in and to the Collateral or (d) the failure by Grantor to perform
or observe any of the provisions hereof. When Collateral Agent incurs expenses
or renders services after an Event of Default specified in Sections 6.1(a)(viii)
or (ix) of the Indenture occurs, such expenses and the compensation for such
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 12. Obligations Absolute. All obligations of Grantor
--------------------
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Grantor;
O-1-22
<PAGE>
(ii) any lack of validity or enforceability of any Transaction
Document or any other agreement or instrument relating thereto;
(iii) 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 Transaction
Document or any other agreement or instrument relating thereto;
(iv) 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 guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of any Transaction Document
except as specifically set forth in a waiver granted pursuant to the
provisions of this Security Agreement; or
(vi) any other circumstances except payment which might otherwise
constitute a defense available to, or a discharge of, Grantor.
Section 13. Continuing Security Interest; Transfer of Secured
-------------------------------------------------
Obligations. This Security Agreement shall create a continuing security
- -----------
interest in the Collateral and shall (a) remain in full force and effect until
all Secured Obligations are paid in full in cash (at which time Collateral Agent
will, at Grantor's expense, take all acts necessary or appropriate to return all
Collateral to Grantor and extinguish the security interests granted hereunder,
including, without limitation, the execution and filing of any necessary Uniform
Commercial Code termination statements and any necessary filings with the United
States Patent and Trademark Office and the United States Copyright Office), (b)
be binding upon Grantor, and its successors and assigns, and (c) inure, together
with the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent, and each of the Holders and each of their respective
successors, transferees and assigns; no other Persons (including, without
limitation, any other creditor of Grantor) shall have any interest herein or any
right or benefit with respect hereto. Without limiting the generality of the
foregoing clause (c), Collateral Agent and any Holder may assign or otherwise
transfer any indebtedness held by it secured by this Security Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in
O-1-23
<PAGE>
respect thereof granted to such party herein or otherwise. Neither this Security
Agreement nor any interest herein or in the Collateral, or any part thereof,
except as otherwise permitted herein, may be assigned by Grantor; provided,
--------
however, that this Security Agreement may be assumed by any other
- -------
Person pursuant to and in compliance with Article V of the Indenture if such
Person executes and delivers an amendment hereto whereby it expressly assumes
all obligations of Grantor hereunder as if it were an original party hereto and
if all covenants herein with respect to any change in name or location or
otherwise has been complied with in connection therewith. This Security
Agreement shall be deemed to be automatically assigned by Collateral Agent to
any Person who succeeds to Collateral Agent in its capacity as Trustee under the
Indenture in accordance with the Indenture, and its assignee shall have all
rights and powers of, and shall act as, Collateral Agent.
Section 14. Execution in Counterparts. This Security Agreement and
-------------------------
any amendments, waivers, consents or supplements hereto 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 to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 15. Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
Section 16. Severability. Any provision of this Security Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Paragraph Headings. The paragraph headings used in this
------------------
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
Section 18. No Waiver; Cumulative Remedies. Collateral Agent shall
------------------------------
not by any act (except pursuant to the execution of a written instrument
pursuant to Section 19 hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and
O-1-24
<PAGE>
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of Collateral Agent, any right, power or privilege hereunder shall operate
as a waiver thereof. No single or partial exercise of any right, power or
privilege hereunder shall preclude any other or further exercise thereof or the
exercise or any other right, power or privilege. A waiver by Collateral Agent of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which Collateral Agent would otherwise have on any
future occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Section 19. Waivers and Amendments; Successors and Assigns; Governing
---------------------------------------------------------
Law. None of the terms or provisions of this Security Agreement may be waived,
- ---
amended, supplemented or otherwise modified except by a written instrument
executed by Grantor and Collateral Agent in accordance with the Indenture. This
Security Agreement shall be binding upon the successors and assigns of Grantor
and shall inure to the benefit of Collateral Agent and its successors and
assigns. This Security Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
O-1-25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
PLASTIC CONTAINERS, INC.,
as Grantor
By:
------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By:
------------------------------------
Name:
Title:
O-1-26
<PAGE>
Schedule I - 1996 Leaseback Equipment
-------------------------------------
O-1-27
<PAGE>
Schedule II - Copyrights
------------------------
O-1-28
<PAGE>
Schedule III - Patents
----------------------
O-1-29
<PAGE>
Schedule IV - Previously Leased/Financed Equipment
--------------------------------------------------
O-1-30
<PAGE>
Schedule V - Prior Liens
------------------------
O-1-31
<PAGE>
Schedule VI - Trademarks
------------------------
O-1-32
<PAGE>
Schedule VII - Contracts
------------------------
O-1-33
<PAGE>
Schedule VIII - Location of Equipment
-------------------------------------
O-1-34
<PAGE>
Schedule IX - Consents and Approvals
------------------------------------
O-1-35
<PAGE>
Schedule X - Access Agreement
-----------------------------
O-1-36
<PAGE>
EXHIBIT O-2
-----------
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT ("Security Agreement") dated as of December
17, 1996, made by CONTINENTAL PLASTIC CONTAINERS, INC., a Delaware corporation
("Grantor"), in favor of UNITED STATES TRUST COMPANY OF NEW YORK, a New York
corporation having an office at 114 West 47th Street, New York, New York 10036,
as collateral agent (together with any successors in such capacity the
"Collateral Agent") and as trustee for the Holders (as defined in the Indenture)
under the Indenture (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Grantor, Continental Caribbean Containers, Inc., a Delaware
corporation, Plastic Containers, Inc., a Delaware corporation ("PCI"), and
Collateral Agent have entered into a certain indenture (as amended from time to
time, the "Indenture"; capitalized terms used herein but not defined herein
shall have the meanings ascribed to such terms in the Indenture), dated as of
the date hereof, pursuant to which PCI has issued 10% Senior Secured Notes due
2006 (the "Series A Notes") in the aggregate principal amount of $125,000,000
and pursuant to which PCI may issue 10% Series B Senior Secured Notes due 2006
(the "Series B Notes"; together with the Series A Notes, the "Securities"),
which Securities have been guaranteed by Grantor (the "Guaranty").
B. This Security Agreement is given by Grantor to secure all of its
obligations (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. Section 362(a) and any successor provision thereto) under (i) the
Guaranty and (ii) all obligations, indebtedness and liabilities of Grantor
pursuant to the terms of this Security Agreement, in each case, whether now
existing or hereafter arising and whether in the regular course of business or
otherwise (collectively, the "Secured Obligations").
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees with Collateral Agent as follows:
Section 1. Defined Terms. The following terms which are defined in the
-------------
Code are used herein as so defined: Chattel Paper,
O-2-1
<PAGE>
Documents, Equipment, Farm Products, General Intangibles, Instruments and
Proceeds. The following terms shall have the following meanings:
"1996 Leaseback Equipment" shall mean the equipment listed on Schedule
------------------------ --------
I hereto and any additions and accessions thereto.
-
"Code" shall mean the Uniform Commercial Code as from time to time in
----
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2 of
----------
this Security Agreement.
"Contracts" shall mean all contracts between Grantor and any third
---------
party including, without limitation, all customer contracts now existing or
hereafter entered into as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a) all
rights of Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (b) all rights of Grantor to damages arising
out of, or for, breach or default in respect thereof and (c) all rights of
Grantor to perform and to exercise all remedies thereunder.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyrights" shall mean copyrights, owned by or assigned to Grantor,
----------
including, without limitation, the copyrights listed on Schedule II hereto,
-----------
together with any and all (a) renewals and extensions thereof, (b) income,
royalties, damages, claims and payments now and hereafter due and/or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, and (c) rights
to sue for past, present and future infringements thereof.
"GECC" shall mean General Electric Capital Corporation.
----
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to any
O-2-2
<PAGE>
government, and any corporation or other entity owned or controlled
(through ownership of capital interests or otherwise) by any of the
foregoing.
"Intellectual Property" shall mean Patents, Trademarks and Copyrights.
---------------------
"Patents" shall mean (a) all letters patent of the United States or
-------
any other country, and all applications for letters patent of the United
States or any other country, including, without limitation, any referred to
in Schedule III hereto, (b) all reissues, continuations, continuations-in-
------------
part or extensions thereof and any other rights of any kind related to such
letters patent or applications and (c) any written agreement granting any
right to sell, distribute, manufacture or otherwise use any invention
covered by a Patent owned by a Person other than Grantor, including,
without limitation, any referred to in Schedule III hereto.
------------
"Permitted Liens" shall mean (i) those Liens constituting Permitted
---------------
Liens, as defined in the Indenture under clauses (b), (f) and (h) thereof
and (ii) the non-exclusive royalty free license in respect of certain
Intellectual Property granted to GECC in connection with the 1996
Sale/Leaseback.
"Person" means and includes an individual, a partnership, a firm, a
------
joint venture, a corporation, a trust, an unincorporated organization or
other association or entity and a Governmental Authority.
"Previously Leased/Financed Equipment" shall mean the equipment listed
------------------------------------
on Schedule IV hereto.
-----------
"Prior Liens" shall mean those Liens listed on Schedule V hereto.
----------- ----------
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
O-2-3
<PAGE>
"Security Agreement" shall mean this Security Agreement, as amended,
------------------
supplemented or otherwise modified from time to time.
"Trademarks" shall mean (a) all trademarks, trade names, corporate
----------
names, company names, business names, fictitious business names, trade
styles, service marks, logos, other sources of business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted
or acquired, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof,
including, without limitation, any referred to in Schedule VI hereto, (b)
-----------
all renewals thereof, (c) all goodwill of the business of Grantor
symbolized by and associated with such Trademarks and (d) any written
agreement granting any right to use any Trademark of a Person other than
Grantor, including, without limitation, any referred to in Schedule VI
-----------
hereto.
"Transaction Documents" shall mean, collectively, the Securities, the
---------------------
Indenture, the Guarantees and the Security Documents.
Section 2. Grant of Security Interest. As collateral security for
--------------------------
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations, Grantor
hereby grants to Collateral Agent a first priority security interest in all of
the following property now owned or at any time hereafter acquired by Grantor or
in which Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
----------
(i) all Chattel Paper;
(ii) all Contracts;
(iii) all Copyrights;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Patents;
(ix) all Trademarks; and
O-2-4
<PAGE>
(x) all Proceeds and products of any and all of the foregoing.
Notwithstanding the foregoing, the Collateral shall not include (i)
any Inventory or Accounts (each as defined in the Code), (ii) any Documents of
Title (as defined in that certain financing agreement, as in effect on the date
hereof, executed in connection with the Revolving Credit Facility), (iii) any
1996 Leaseback Equipment or (iv) any Previously Leased/Financed Equipment.
Section 3. Rights of Collateral Agent; Limitations on Collateral
-----------------------------------------------------
Agent's Obligations.
- -------------------
(a) Grantor Remains Liable under Contracts. Anything herein to the
--------------------------------------
contrary notwithstanding, Grantor shall remain liable under each of the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each such Contract. Collateral Agent shall not have
any obligation or liability under any Contract by reason of or arising out of
this Security Agreement or the receipt by Collateral Agent of any payment
relating to such Contract pursuant hereto, nor shall Collateral Agent be
obligated in any manner to perform any of the obligations of Grantor under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(b) Notice to Contracting Parties. Upon the request of Collateral
-----------------------------
Agent at any time after the occurrence and during the continuance of a Default
or Event of Default, Grantor shall notify parties to the Contracts that the
Contracts have been assigned to Collateral Agent and that payments in respect
thereof shall be made directly to Collateral Agent. During the continuance of a
Default or Event of Default, Collateral Agent may in its own name or in the name
of others communicate with parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Contracts.
(c) First Priority. Grantor and Collateral Agent intend the security
--------------
interests granted pursuant to Section 2 of this Security Agreement to constitute
first priority perfected Liens until the Secured Obligations are paid in full
(including payment
O-2-5
<PAGE>
of principal of, premium, if any, and accrued but unpaid interest on, the
Securities).
(d) No Release. Nothing set forth in this Security Agreement shall
----------
relieve Grantor from the performance of any term, covenant, condition or
agreement on Grantor's part to be performed or observed under or in respect of
any of the Collateral or from any liability to any Person under or in respect of
any of the Collateral or impose any obligation on Collateral Agent or any Holder
to perform or observe any such term, covenant, condition or agreement on
Grantor's part to be so performed or observed or impose any liability on
Collateral Agent or any Holder for any act or omission on the part of the
Grantor relating thereto or for any breach of any representation or warranty on
the part of Grantor contained in any Security Document or in respect of the
Collateral or made in connection therewith.
Section 4. Representations and Warranties. Grantor hereby represents
------------------------------
and warrants that:
(a) Title; No Other Liens. Except for the Lien granted to Collateral
---------------------
Agent pursuant to this Security Agreement, Grantor is, and as to the
Collateral acquired by it from time to time after the date hereof Grantor
will be, except as otherwise permitted by the Indenture or this Security
Agreement, the sole owner of each item of Collateral subject to no other
Liens (other than Prior Liens and Permitted Liens), claims or rights of
others. No security agreement, financing statement or other public notice
with respect to all or any material part of the Collateral is on file or of
record in any public office, except such as may have been filed in favor of
Collateral Agent pursuant to this Security Agreement and in connection with
Prior Liens. As of the date hereof, no Collateral is evidenced by
Instruments required to be delivered to Collateral Agent which have not
been delivered to Collateral Agent.
(b) Perfected First Priority Liens. Financing statements on form UCC-
------------------------------
1 have been prepared and delivered to the Collateral Agent herewith. When
this Security Agreement is duly executed and delivered and (i) such
financing statements have been filed in the jurisdictions indicated
thereon, and (ii) the Notice of Security Interest is filed and accepted in
the United States Patent and Trademark Office, then all filings shall have
been made to create, preserve, protect and perfect the security interest
granted by Grantor to Collateral Agent hereby in respect of such of the
O-2-6
<PAGE>
Collateral in which a security interest can be perfected by the filing of a
financing statement or the filing of a security agreement with the United
States Patent and Trademark Office. When such filings are duly made the
security interests granted to Collateral Agent pursuant to this Security
Agreement in and to such Collateral will constitute perfected Liens and
security interests therein and subject to no liens other than Prior Liens.
This Security Agreement is
enforceable as such against all creditors of and purchasers from Grantor
and against any owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor obtaining a Lien on
such real property.
(c) Contracts. Except as set forth in Schedule VII hereto, no consent
--------- ------------
of any party (other than Grantor) to any material Contract is required, or
purports to be required, in connection with the execution, delivery and
performance of this Security Agreement. Each material Contract is in full
force and effect and constitutes a valid and legally enforceable obligation
of the parties thereto. No consent or authorization of, filing with or
other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any of the material Contracts by any party thereto other
than those which have been duly obtained, made or performed, are in full
force and effect and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general in nature. Neither
Grantor nor (to the best of Grantor's knowledge) any other party to any
material Contract is in default or is likely to become in default in the
performance or observance of any of the terms thereof. Grantor has fully
performed its obligations in all material respects under each material
Contract. The right, title and interest of Grantor in, to and under each
material Contract are not subject to any defense, offset, counterclaim or
claim, nor have any of the foregoing been asserted or alleged against
Grantor as to any material Contract. No amount payable to Grantor under or
in connection with any Contract is evidenced by any promissory note, other
Instrument or Chattel Paper which has not been delivered to Collateral
Agent, other than in connection with the sale of Inventory in the ordinary
course of business.
(d) Equipment. The Equipment is kept at the locations listed on
---------
Schedule VIII hereto.
-------------
O-2-7
<PAGE>
(e) Chief Executive Office. Grantor's chief executive office and
----------------------
chief place of business is located at 301 Merritt 7 Corporate Park,
Norwalk, Connecticut 06856.
(f) Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
(g) Patents, Trademarks and Copyrights. Schedule III hereto includes
---------------------------------- ------------
all Patents owned by Grantor in its own name as of the date hereof.
Schedule VI hereto includes all Trademarks owned by Grantor in its own name
-----------
as of the date hereof. Schedule II hereto includes all Copyrights owned by
-----------
Grantor in its own name as of the date hereof. Each Patent and Trademark is
valid, subsisting, unexpired and has not been abandoned. Except as set
forth in such Schedules, none of such Patents, Trademarks and Copyrights is
the subject of any licensing or franchise agreement. No holding, decision
or judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Patent, Trademark, or
Copyright. No action or proceeding is pending (i) seeking to limit, cancel
or question the validity of any Patent, Trademark or Copyright, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Patent, Trademark or Copyright.
(h) Valid and Binding Obligation. Grantor has full corporate power,
----------------------------
authority and legal right to pledge and grant a security interest in the
Collateral pursuant to this Security Agreement, and this Security Agreement
constitutes the legal, valid and binding obligation of Grantor, enforceable
against Grantor in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and by
general principles of equity.
(i) Consents and Approvals. Except as set forth in Schedule IX hereto
---------------------- -----------
and other consents which have been obtained as of the date hereof, no
consent of any other Person (including, without limitation, stockholders or
creditors of Grantor) and no consent, approval, authorization of, or
registration or declaration or filing with, any Governmental Authority or
regulatory body is required to be obtained, effected or given in connection
with either (i) the pledge of, and grant of a security interest in, the
Collateral by Grantor pursuant to this Security Agreement or for the
execution, delivery or performance of this Security Agreement or any of
O-2-8
<PAGE>
the other Security Documents by Grantor or (ii) for the exercise by
Collateral Agent of the rights provided for in this Security Agreement or
any of the other Security Documents or the remedies in respect of the
Collateral pursuant to this Security Agreement or any of the other Security
Documents.
Section 5. Covenants. Grantor covenants and agrees with Collateral
---------
Agent that until the Secured Obligations are paid in full (including payment of
the principal of, premium, if any, and accrued but unpaid interest on, the
Securities):
(a) Further Documentation; Pledge of Instruments. At any time and
--------------------------------------------
from time to time, upon the written request of Collateral Agent, and at the
sole expense Grantor, Grantor will promptly and duly execute and deliver
such further instruments and documents and take such further action as
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby and
filings in the United States Patent and Trademark Office and the United
States Copyright Office. Grantor hereby authorizes Collateral Agent to
file any such financing or continuation statements and to make such filings
in the United States Patent and Trademark Office and the United States
Copyright Office without the signature of Grantor to the extent permitted
by applicable law. Notwithstanding the foregoing, the Collateral Agent's
right to obtain further instruments and documents from the Grantor shall
not release the Grantor from its obligations under Section 4(b) to make
filings of financing and continuation statements under the Uniform
Commercial Code in appropriate jurisdictions. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by
any promissory note, other Instrument or Chattel Paper, such note,
Instrument or Chattel Paper shall be immediately delivered to Collateral
Agent, duly endorsed in a manner satisfactory to Collateral Agent, to be
held as Collateral pursuant to this Agreement.
(b) Indemnification. Grantor agrees to indemnify, pay and hold
---------------
harmless Collateral Agent and each of the Holders and the officers,
directors, employees, agents and affiliates of Collateral Agent and each of
the Holders (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
O-2-9
<PAGE>
suits, claims, costs (including, without limitation, the settlement costs),
expenses or 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
Indemnitees 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 any of the Transaction Documents (including, without
limitation, any misrepresentation by Grantor in any of the Transaction
Documents) (the "Indemnified Liabilities"); provided, that Grantor shall
--------
have no obligation to an Indemnitee hereunder with respect to an
Indemnified Liability if it has been determined by a final decision (after
all appeals and the expiration of time to appeal) by a court of competent
jurisdiction that such Indemnified Liability arose from the negligence or
willful misconduct of that Indemnitee. 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,
Grantor shall contribute the maximum portion which it is permitted to pay
and satisfy under the applicable law, to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them. The
obligations of Grantor contained in this Section 5 shall survive the
termination of this Security Agreement and the discharge of Grantor's other
obligations under the Transaction Documents. Any amount paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
(c) Maintenance of Records. Grantor will keep and maintain at its own
----------------------
cost and expense satisfactory and complete records in respect of the
Collateral. Grantor will mark its books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. For Collateral Agent's further security, Collateral Agent
is hereby granted a security interest in all of Grantor's books and records
pertaining to the Collateral, and Grantor shall permit access to any such
books and records to Collateral Agent or to its representatives during
normal business hours at the reasonable request of Collateral Agent and
shall upon Collateral Agent's request after the occurrence and during the
continuation of any Default or Event of Default turn over any such books
and records to Collateral Agent.
O-2-10
<PAGE>
(d) Right of Inspection. Collateral Agent shall at all times have
-------------------
full and free access during normal business hours to all the books,
correspondence and records of Grantor, and Collateral Agent or its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and Grantor agrees to render to Collateral Agent, at
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Collateral Agent and its
representatives shall at all times also have the right to enter into and
upon any premises where any of the Equipment is located for the purpose of
inspecting the same, observing its use or otherwise protecting its
interests therein.
(e) Compliance with Laws, etc. Grantor will comply in all material
-------------------------
respects with all Requirements of Law applicable to the Collateral or any
part thereof or to the operation of Grantor's business; provided, however,
-------- -------
that Grantor may contest any Requirement of Law in any reasonable manner
which shall not adversely affect Collateral Agent's rights or the priority
of its Liens on the Collateral.
(f) Compliance with Terms of Contracts, etc. Grantor will perform
---------------------------------------
and comply in all material respects with all its obligations under the
Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) Payment of Obligations. Grantor will pay promptly when due all
----------------------
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on Grantor's books in accordance with GAAP.
(h) Limitation on Liens on Collateral. Grantor will not create, incur
---------------------------------
or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby, Prior Liens, Permitted
Liens and other Liens permitted under Section 4.13 of the Indenture, and
will defend the right, title and interest of Collateral Agent
O-2-11
<PAGE>
in and to any of the Collateral against the claims and demands of all
Persons whomsoever. Grantor will take no action which would or, in the
reasonable judgment of Collateral Agent would, adversely affect the
existence, enforceability, priority or perfection of the Liens on and
security interests in any of the Collateral granted hereunder. To the
extent any security interest granted hereunder in any property constituting
a part of the Collateral either (i) does not constitute a perfected first
priority Lien on the date hereof (but is intended to constitute a perfected
first priority Lien pursuant to the terms hereof) or (ii) ceases without
consent of Collateral Agent to constitute a perfected first priority Lien
after the date hereof, Grantor shall make all filings (including financing
statements or continuation statements and filings in the United States
Patent and Trademark Office and the United States Copyright Office) and
record such instruments as may be reasonably requested by Collateral Agent
to restore the priority and perfection of such Lien. The right of the
Collateral Agent to require any such filing shall not be deemed to impose
upon the Collateral Agent any duty or obligation to ascertain whether any
circumstances exist which require such filings or recordations.
(i) Limitations on Dispositions of Collateral. Grantor will not sell,
-----------------------------------------
transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except in accordance with the terms of the
Indenture.
(j) Limitations on Modifications, Waivers, Extensions of Contracts.
--------------------------------------------------------------
Grantor will not (i) amend, modify, terminate or waive any provision of any
material Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral or
impair Grantor's ability to conduct its business, (ii) fail to exercise
promptly and diligently each and every material right which it may have
under each material Contract (other than any right of termination) or (iii)
fail to deliver to Collateral Agent a copy of each material demand, notice
or document received by it relating in any way to any material Contract.
(k) Maintenance of Equipment. Except as otherwise provided in the
------------------------
Indenture, Grantor will maintain each item of Equipment in good operating
condition, ordinary wear and tear and immaterial impairments of value and
damage by the elements excepted, and will provide all maintenance, service
and repairs necessary for such purpose.
O-2-12
<PAGE>
(l) Maintenance of Insurance. Grantor will maintain, with financially
------------------------
sound and reputable companies, insurance policies (i) insuring the
Equipment against loss by fire, explosion, theft and such other casualties
as are usually insured against by companies engaged in the same or similar
businesses and (ii) insuring Grantor and Collateral Agent against liability
for personal injury and property damage relating to such Equipment, such
policies to be in such form and amounts and having such coverage as is
customary for companies engaged in the same or similar businesses, with
losses payable to Grantor and Collateral Agent as their respective
interests may appear. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 10 days after receipt by
Collateral Agent of written notice thereof, (ii) name Collateral Agent as
an additional insured or loss payee, as applicable and (iii) be reasonably
satisfactory in all other respects to Collateral Agent. The Company shall
deliver to Collateral Agent a report of a reputable insurance broker with
respect to such insurance at least once in each calendar year and such
supplemental reports with respect thereto as Collateral Agent may from time
to time reasonably request.
(m) Further Identification of Collateral. Grantor will furnish to
------------------------------------
Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as Collateral Agent may reasonably request,
all in reasonable detail.
(n) Notices. Grantor will advise Collateral Agent promptly, in
-------
reasonable detail, at its address set forth above, (i) of any Lien (other
than Liens created or permitted hereby) on, or material claim asserted
against, any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse effect
on the aggregate value of the Collateral or on the Liens created hereunder.
(o) Changes in Locations, Name, etc. Without collateral Agent's prior
-------------------------------
written consent, Grantor will not (i) change the location of its chief
executive office/chief place of business from that specified in Section
4(e) or remove its books and records from such location, (ii) permit any of
the Equipment to be kept at a location other than those listed on Schedule
--------
VIII hereto or (iii) change its name, identity or corporate
----
O-2-13
<PAGE>
structure to such an extent that any financing statement filed by or on
behalf of Collateral Agent in connection with this Security Agreement would
become reasonably misleading. Collateral Agent's consent to any of the
foregoing will not be unreasonably withheld so long as Grantor shall (x)
provide Collateral Agent with 45 days prior written notice of its intention
to take any of the actions specified in clauses (i) - (iii) above, (y) take
all actions necessary to maintain the perfection of the security interest
in the Collateral intended to be created hereby and (z) in the event that
Grantor proposes to move any Equipment to a location at which any entity
has obtained a mortgage lien on the real property in connection with the
1996 Leaseback Transaction, obtain and deliver to the Collateral Agent an
access agreement substantially in the form of Schedule X hereto, duly
----------
executed by the holder of such mortgage lien and Grantor.
(p) Patents, Trademarks and Copyrights.
----------------------------------
(i) Grantor (either itself or through licensees) will, except
with respect to any Trademark that Grantor shall reasonably determine
is of immaterial economic value to it or which Grantor abandons in
accordance with Section (p)(ii) below, (i) continue to use each
Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such trademark, (iii)
employ such Trademark with the appropriate notice of registration,
(iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless Collateral Agent shall
obtain a perfected security interest in such mark pursuant to this
Security Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become invalidated.
(ii) Grantor will not, except with respect to any Patent or
Copyright that Grantor shall reasonably determine is of immaterial
economic value to it, do any act, or omit to do any act, whereby any
Patent or copyright may become abandoned or dedicated.
Notwithstanding the foregoing, Grantor, in its good faith business
judgment, may abandon any Patent, Trademark or
O-2-14
<PAGE>
Copyright, or application for registration thereof, which is not
necessary for the operation of Grantor's business, upon thirty (30)
days' prior written notice to Collateral Agent.
(iii) Grantor will notify Collateral Agent immediately if it
knows, or has reason to know, that any application or registration
relating to any Patent, Trademark or Copyright may become abandoned or
dedicated, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding Grantor's ownership of any Patent,
Trademark or Copyright or its right to register the same or to keep
and maintain the same.
(iv) Whenever Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or for the registration of any Copyright in the
United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, Grantor shall
report such filing to Collateral Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs. Upon
request of Collateral Agent, Grantor shall execute and deliver any and
all agreements, instruments, documents, and papers as Collateral Agent
may request to evidence Collateral Agent's security interest in any
Patent, Trademark or Copyright and the goodwill and general
intangibles of Grantor relating thereto or represented thereby, and
Grantor hereby constitutes and appoints Collateral Agent its attorney-
in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable
until the Secured Obligations are paid in full.
(v) Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright
Office, or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each application
(and to
O-2-15
<PAGE>
obtain the relevant registration) and to maintain each registration of
the Patents, Trademarks and Copyrights (other than any Patent,
Trademark or Copyright which is abandoned by Grantor in accordance
with Section (p)(ii) above), including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(vi) In the event that any Patent, Trademark or Copyright
included in the Collateral is infringed, misappropriated or diluted by
a third party, Grantor shall promptly notify Collateral Agent after it
learns thereof and shall, unless Grantor shall reasonably determine
that such Patent, Trademark or Copyright is not of material economic
value to Grantor, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover
any and all damages for such infringement, misappropriation or
dilution, or take such other actions as Grantor shall reasonably deem
appropriate under the circumstances to protect such Patent, Trademark
or Copyright.
(q) If at any time the Indebtedness of the Grantor in respect of any
Previously Leased/Financed Equipment is repaid in full and the Grantor is
not then required to grant to GECC a security interest in such Previously
Leased/Financed Equipment, Grantor shall grant to the Collateral Agent a
security interest in such Previously Leased/Financed Equipment and shall
take all actions necessary to perfect such security interest, including,
without limitation, the filing of financing statements in the appropriate
jurisdictions.
Section 6. Collateral Agent's Appointment as Attorney-in-Fact.
--------------------------------------------------
(a) Powers. Grantor hereby irrevocably constitutes and appoints
------
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Grantor and in the name of Grantor
or in its own name, from time to time in Collateral Agent's discretion, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, Grantor hereby
gives Collateral Agent
O-2-16
<PAGE>
the power and right, on behalf of Grantor, without notice to or assent by
Grantor, to do the following:
(i) upon the occurrence and during the continuance of any Event of
Default, in the name of Grantor or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Instrument, General Intangible or Contract and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Collateral Agent for the purpose of collecting any
and all such moneys due under any Instrument, General Intangible or
Contract whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event
of Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to Collateral Agent or as Collateral Agent shall
direct; (B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (D)
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any Proceeds thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
Grantor with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as Collateral
Agent may deem appropriate; (G) to assign any Patent, Trademark (along with
the goodwill of the business to which any such Trademark pertains) or
Copyright, throughout the world for such term or terms, on such conditions,
and in such manner, as Collateral Agent shall in its sole discretion
determine; and (H) generally, to sell, transfer, pledge and make any
agreement
O-2-17
<PAGE>
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Grantor's
expense, at any time, or from time to time, all acts and things which
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and Collateral Agent's Liens thereon and to effect the intent of
this Security Agreement, all as fully and effectively as Grantor might do.
Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) Other Powers. Grantor also authorizes Collateral Agent, at any
------------
time and from time to time, to execute, in connection with the sale provided for
in Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) No Duty on Collateral Agent's Part. The powers conferred on
----------------------------------
Collateral Agent hereunder are solely to protect Collateral Agent's interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Collateral Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to Grantor for
any act or failure to act hereunder, except for its own negligence or willful
misconduct.
Section 7. Performance by Collateral Agent of Grantor's Obligations.
--------------------------------------------------------
If Grantor fails to perform or comply with any of its agreements contained
herein and Collateral Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of Collateral Agent incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum 2% above the rate payable under the Indenture, shall be
payable by Grantor to Collateral Agent on demand and shall constitute Secured
Obligations.
Section 8. Remedies, Rights Upon Default. (a) Upon the
-----------------------------
occurrence and during the continuance of an Event of Default:
(i) all payments received by Grantor under or in connection with
any of the Collateral shall be held by Grantor
O-2-18
<PAGE>
in trust for Collateral Agent for the benefit of the Holders, shall be
segregated from other funds of Grantor and shall forthwith upon receipt by
Grantor be paid over to Collateral Agent as Collateral, in the same form as
received by Grantor (duly endorsed by Grantor to Collateral Agent, if
required);
(ii) any and all such payments so received by Collateral Agent
(whether from Grantor or otherwise) shall be held by Collateral Agent as
Trust Moneys and applied by it in such manner and only at such times as
provided in the Indenture;
(iii) Collateral Agent shall have the right to seize and take
possession of any Collateral and the books and records pertaining to the
Collateral (including, without limitation, customer lists, correspondence
with present or future or prospective suppliers or customers, advertising
or marketing materials, credit files, computer tapes, programs, printouts,
and all other computer materials, records and electronic data processing
software pertaining to the Collateral) and may enter the premises where
they, or any of them, are located for the purpose of effecting such
removal; Grantor shall have a reasonable time to make copies of such books
and records before their removal by Collateral Agent; Collateral Agent
shall not be liable to Grantor for any damage suffered by Grantor by reason
of such entry or seizure unless it results from Collateral Agent's
negligence, bad faith or willful misconduct, and Grantor hereby agrees to
indemnify and hold harmless Collateral Agent from and against any and all
claims, expenses or liabilities that it may incur to any Person (other than
to Grantor in connection with any liability of Collateral Agent to Grantor
resulting from Collateral Agent's negligence, bad faith or willful
misconduct) by reason of such entry or seizure;
(iv) Collateral Agent may hire and maintain at Grantor's premises a
custodian or independent contractor selected by Collateral Agent who shall
have full authority to do all lawful acts necessary to protect Collateral
Agent's interest and to report to Collateral Agent thereon. Grantor hereby
agrees to cooperate with any such Person and to do whatever Collateral
Agent may reasonably request to preserve the Collateral.
(b) Upon the occurrence and during the continuance of an Event of
Default, then, and in any such event, and in accordance with Section 9 hereof,
Collateral Agent may exercise, in addition to all other rights and remedies
granted in this Security
O-2-19
<PAGE>
Agreement, and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
on default under the Code (or such other comparable statute) in the applicable
jurisdiction. Without limiting the generality of the foregoing, Grantor
expressly agrees that in any such event Collateral Agent may, without demand or
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
Grantor or any other Person, all and each of which demands, advertisements
and/or notices are (to the extent permitted by applicable law) hereby expressly
waived, forthwith collect, receive, appropriate and realize upon the Collateral,
or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or sell or otherwise dispose of and deliver the Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of 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
Collateral Agent may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral. Collateral Agent and any
Holder shall have the right on any such public sale or sales and, to the extent
permitted by law, on any such private sale or sales to purchase the whole or any
part of said Collateral so sold and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price of all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations owed to Collateral Agent or such Holder, as the case may
be, as a credit on account of the purchase price of any Collateral payable by
Collateral Agent or such Holder, as the case may be, 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 Grantor, except for any right or redemption as may
be available by applicable law. Grantor further agrees, at Collateral Agent's
request, to assemble Collateral and make it available to Collateral Agent at
places that Collateral Agent reasonably selects, whether at Grantor's premises
or elsewhere. The proceeds of any such collection, recovery, receipt,
appropriation, realization or sale shall constitute Trust Moneys and shall be
applied by Collateral Agent in accordance with the Indenture in the manner
provided in the Indenture.
(c) To the extent permitted by applicable law, Grantor waives all
claims, damages and demands against Collateral Agent or any Holder arising out
of the repossession, retention or sale of the Collateral unless resulting from
Collateral Agent's or such
O-2-20
<PAGE>
Holder's negligence, bad faith or willful misconduct. Grantor agrees that
Collateral Agent need not give more than 10 days' notice (which notice shall be
deemed given when mailed) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. No notification need be given to
Grantor if it has signed, after default, a statement renouncing or modifying any
right to notification of sale or other intended disposition. Collateral Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. 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. Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral applied to the Secured Obligations
pursuant to the Indenture are insufficient to indefeasibly pay in full in cash
all Secured Obligations and amounts to which Collateral Agent and the Holders
are entitled, Grantor also being liable for the reasonable fees of any attorneys
employed by Collateral Agent or any Holder to collect such deficiency.
(d) To the extent that it may lawfully do so, Grantor agrees that it
will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any appraisal, valuation, stay, extension or
redemption laws, or any law permitting it to direct the order in which the
Collateral or any part thereof shall be sold, now or at any time hereafter in
force, that may delay, prevent or otherwise affect the performance or
enforcement of this Security Agreement or the Secured Obligations and hereby
expressly waives all benefit or advantage of any such laws and covenants that it
will not hinder, delay or impede the execution of any power granting or
delegated to Collateral Agent or any Holder in this Security Agreement or any
other Security Document, but will suffer and permit the execution of every such
power as though no such laws were in force.
Section 9. Decisions Relating to Exercise of Remedies.
------------------------------------------
Notwithstanding anything in this Agreement to the contrary, Collateral Agent
shall exercise any remedy provided for in Section 8 in accordance with the terms
of, and at the times, if any, specified in the Indenture and in accordance with
instructions from the Trustee delivered at the direction of the Holders of at
least a majority in principal amount of the outstanding Securities or refrain
from exercising any remedy provided for in Section 8 either in the absence of
instructions from the Trustee or in accordance with instructions from the
Trustee delivered at the direction of
O-2-21
<PAGE>
the Holders of at least a majority in principal amount of the outstanding
Securities.
Section 10. Limitation on Collateral Agent's Duties in Respect of
-----------------------------------------------------
Collateral. Collateral Agent's sole duty with respect to the custody,
- ----------
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with
it in the same manner as Collateral Agent deals with similar property for its
own account. Neither Collateral Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of Grantor or otherwise.
Section 11. Expenses. Grantor agrees to pay, without duplication, to
--------
Collateral Agent, from time to time upon demand, all reasonable fees, costs and
expenses of Collateral Agent (including, without limitation, the reasonable
expenses, fees and disbursements of its counsel, experts and agents) incurred by
Collateral Agent or arising in connection with (a) the preparation, execution,
delivery, administration, modification, amendment or termination of this
Security Agreement or the enforcement of any of the provisions hereof, (b) the
custody or preservation and protection of, or the sale of, collection from, or
other realization upon, any of the Collateral, (c) the preservation, protection,
defense, exercise or enforcement of any of the rights of Collateral Agent
hereunder and in and to the Collateral or (d) the failure by Grantor to perform
or observe any of the provisions hereof. When Collateral Agent incurs expenses
or renders services after an Event of Default specified in Section 6.1(a)(viii)
or (ix) of the Indenture occurs, such expenses and the compensation for such
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 12. Obligations Absolute. All obligations of Grantor
--------------------
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Grantor;
(ii) any lack of validity or enforceability of any Transaction
Document or any other agreement or instrument relating thereto;
O-2-22
<PAGE>
(iii) 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 Transaction
Document or any other agreement or instrument relating thereto;
(iv) 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 guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of any Transaction Document
except as specifically set forth in a waiver granted pursuant to the
provisions of this Security Agreement; or
(vi) any other circumstances except payment which might otherwise
constitute a defense available to, or a discharge of, Grantor.
Section 13. Continuing Security Interest; Transfer of Secured
-------------------------------------------------
Obligations. This Security Agreement shall create a continuing security
- -----------
interest in the Collateral and shall (a) remain in full force and effect until
all Secured Obligations are paid in full in cash (at which time Collateral Agent
will, at Grantor's expense, take all acts necessary or appropriate to return all
Collateral to Grantor and extinguish the security interests granted hereunder,
including, without limitation, the execution and filing of any necessary Uniform
Commercial Code termination statements and any necessary filings with the United
States Patent and Trademark Office and the United States Copyright Office), (b)
be binding upon Grantor, and its successors and assigns, and (c) inure, together
with the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent, and each of the Holders and each of their respective
successors, transferees and assigns; no other Persons (including, without
limitation, any other creditor of Grantor) shall have any interest herein or any
right or benefit with respect hereto. Without limiting the generality of the
foregoing clause (c), Collateral Agent and any Holder may assign or otherwise
transfer any indebtedness held by it secured by this Security Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such party herein or otherwise. Neither
this Security Agreement nor any interest herein or in the Collateral, or any
part thereof, except as otherwise permitted herein, may be assigned by Grantor;
provided, however, that this Security Agreement may be
- -------- -------
O-2-23
<PAGE>
assumed by any other Person pursuant to and in compliance with Article V of the
Indenture if such Person executes and delivers an amendment hereto whereby it
expressly assumes all obligations of Grantor hereunder as if it were an original
party hereto and if all covenants herein with respect to any change in name or
location or otherwise has been complied with in connection therewith. This
Security Agreement shall be deemed to be automatically assigned by Collateral
Agent to any Person who succeeds to Collateral Agent in its capacity as Trustee
under the Indenture in accordance with the Indenture, and its assignee shall
have all rights and powers of, and shall act as, Collateral Agent.
Section 14. Execution in Counterparts. This Security Agreement and
-------------------------
any amendments, waivers, consents or supplements hereto 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 to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 15. Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
Section 16. Severability. Any provision of this Security Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Paragraph Headings. The paragraph headings used in this
------------------
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
Section 18. No Waiver; Cumulative Remedies. Collateral Agent shall
------------------------------
not by any act (except pursuant to the execution of a written instrument
pursuant to Section 19 hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of
Collateral Agent, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder
O-2-24
<PAGE>
shall preclude any other or further exercise thereof or the exercise or any
other right, power or privilege. A waiver by Collateral Agent of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which Collateral Agent would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Section 19. Waivers and Amendments; Successors and Assigns; Governing
---------------------------------------------------------
Law. None of the terms or provisions of this Security Agreement may be waived,
- ---
amended, supplemented or otherwise modified except by a written instrument
executed by Grantor and Collateral Agent in accordance with the Indenture. This
Security Agreement shall be binding upon the successors and assigns of Grantor
and shall inure to the benefit of Collateral Agent and its successors and
assigns. This Security Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
O-2-25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
CONTINENTAL PLASTIC CONTAINERS,
INC., as Grantor
By:
--------------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By:
---------------------------------------
Name:
Title:
O-2-26
<PAGE>
Schedule I - 1996 Leaseback Equipment
-------------------------------------
O-2-27
<PAGE>
Schedule II - Copyrights
------------------------
O-2-28
<PAGE>
Schedule III - Patents
----------------------
O-2-29
<PAGE>
Schedule IV - Previously Leased/Financed Equipment
--------------------------------------------------
O-2-30
<PAGE>
Schedule V - Prior Liens
------------------------
O-2-31
<PAGE>
Schedule VI - Trademarks
------------------------
O-2-32
<PAGE>
Schedule VII - Contracts
------------------------
O-2-33
<PAGE>
Schedule VIII - Location of Equipment
-------------------------------------
O-2-34
<PAGE>
Schedule IX - Consents and Approvals
------------------------------------
O-2-35
<PAGE>
Schedule X - Access Agreement
-----------------------------
O-2-36
<PAGE>
EXHIBIT O-3
-----------
PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT ("Security Agreement") dated as of December
17, 1996, made by CONTINENTAL CARIBBEAN CONTAINERS, INC., a Delaware corporation
("Grantor"), in favor of UNITED STATES TRUST COMPANY OF NEW YORK, a New York
corporation having an office at 114 West 47th Street, New York, New York 10036,
as collateral agent (together with any successors in such capacity the
"Collateral Agent") and as trustee for the Holders (as defined in the Indenture)
under the Indenture (as hereinafter defined).
R E C I T A L S :
- - - - - - - -
A. Grantor, Continental Plastic Containers, Inc., a Delaware corporation,
Plastic Containers, Inc., a Delaware corporation ("PCI"), and Collateral Agent
have entered into a certain indenture (as amended from time to time, the
"Indenture"; capitalized terms used herein but not defined herein shall have the
meanings ascribed to such terms in the Indenture), dated as of the date hereof,
pursuant to which PCI has issued 10% Senior Secured Notes due 2006 (the "Series
A Notes") in the aggregate principal amount of $125,000,000 and pursuant to
which PCI may issue 10% Series B Senior Secured Notes due 2006 (the "Series B
Notes"; together with the Series A Notes, the "Securities"), which Securities
have been guaranteed by Grantor (the "Guaranty").
B. This Security Agreement is given by Grantor to secure all of its
obligations (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. Section 362(a) and any successor provision thereto) under (i) the
Guaranty and (ii) all obligations, indebtedness and liabilities of Grantor
pursuant to the terms of this Security Agreement, in each case, whether now
existing or hereafter arising and whether in the regular course of business or
otherwise (collectively, the "Secured Obligations").
A G R E E M E N T :
- - - - - - - - -
NOW, THEREFORE, in consideration of the premises set forth herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Grantor hereby agrees with Collateral Agent as follows:
Section 1. Defined Terms. The following terms which are defined in the
-------------
Code are used herein as so defined: Chattel Paper,
O-3-1
<PAGE>
Documents, Equipment, Farm Products, General Intangibles, Instruments and
Proceeds. The following terms shall have the following meanings:
"1996 Leaseback Equipment" shall mean the equipment listed on Schedule
------------------------ --------
I hereto and any additions and accessions thereto.
-
"Code" shall mean the Uniform Commercial Code as from time to time in
----
effect in the State of New York.
"Collateral" shall have the meaning assigned to it in Section 2 of
----------
this Security Agreement.
"Contracts" shall mean all contracts between Grantor and any third
---------
party including, without limitation, all customer contracts now existing or
hereafter entered into as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (a) all
rights of Grantor to receive moneys due and to become due to it thereunder
or in connection therewith, (b) all rights of Grantor to damages arising
out of, or for, breach or default in respect thereof and (c) all rights of
Grantor to perform and to exercise all remedies thereunder.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"Copyrights" shall mean copyrights, owned by or assigned to Grantor,
----------
including, without limitation, the copyrights listed on Schedule II hereto,
-----------
together with any and all (a) renewals and extensions thereof, (b) income,
royalties, damages, claims and payments now and hereafter due and/or
payable with respect thereto, including, without limitation, damages and
payments for past, present or future infringements thereof, and (c) rights
to sue for past, present and future infringements thereof.
"GECC" shall mean General Electric Capital Corporation.
----
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions of
or pertaining to any
O-3-2
<PAGE>
government, and any corporation or other entity owned or controlled
(through ownership of capital interests or otherwise) by any of the
foregoing.
"Intellectual Property" shall mean Patents, Trademarks and Copyrights.
---------------------
"Patents" shall mean (a) all letters patent of the United States or
-------
any other country, and all applications for letters patent of the United
States or any other country, including, without limitation, any referred to
in Schedule III hereto, (b) all reissues, continuations, continuations-in-
------------
part or extensions thereof and any other rights of any kind related to such
letters patent or applications and (c) any written agreement granting any
right to sell, distribute, manufacture or otherwise use any invention
covered by a Patent owned by a Person other than Grantor, including,
without limitation, any referred to in Schedule III hereto.
------------
"Permitted Liens" shall mean (i) those Liens constituting Permitted
---------------
Liens, as defined in the Indenture under clauses (b), (f) and (h) thereof
and (ii) the non-exclusive royalty free license in respect of certain
Intellectual Property granted to GECC in connection with the 1996
Sale/Leaseback.
"Person" means and includes an individual, a partnership, a firm, a
------
joint venture, a corporation, a trust, an unincorporated organization or
other association or entity and a Governmental Authority.
"Previously Leased/Financed Equipment" shall mean the equipment listed
------------------------------------
on Schedule IV hereto.
-----------
"Prior Liens" shall mean those Liens listed on Schedule V hereto.
----------- ----------
"Requirement of Law" shall mean as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.
O-3-3
<PAGE>
"Security Agreement" shall mean this Security Agreement, as amended,
------------------
supplemented or otherwise modified from time to time.
"Trademarks" shall mean (a) all trademarks, trade names, corporate
----------
names, company names, business names, fictitious business names, trade
styles, service marks, logos, other sources of business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs
and general intangibles of like nature, now existing or hereafter adopted
or acquired, all registrations and recordings thereof, and all applications
in connection therewith, including, without limitation, registrations,
recordings and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof,
including, without limitation, any referred to in Schedule VI hereto, (b)
-----------
all renewals thereof, (c) all goodwill of the business of Grantor
symbolized by and associated with such Trademarks and (d) any written
agreement granting any right to use any Trademark of a Person other than
Grantor, including, without limitation, any referred to in Schedule VI
-----------
hereto.
"Transaction Documents" shall mean, collectively, the Securities, the
---------------------
Indenture, the Guarantees and the Security Documents.
Section 2. Grant of Security Interest. As collateral security for
--------------------------
the prompt and complete payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Secured Obligations, Grantor
hereby grants to Collateral Agent a first priority security interest in all of
the following property now owned or at any time hereafter acquired by Grantor or
in which Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Collateral"):
----------
(i) all Chattel Paper;
(ii) all Contracts;
(iii) all Copyrights;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Patents;
(ix) all Trademarks; and
O-3-4
<PAGE>
(x) all Proceeds and products of any and all of the foregoing.
Notwithstanding the foregoing, the Collateral shall not include (i)
any Inventory or Accounts (each as defined in the Code), (ii) any Documents of
Title (as defined in that certain financing agreement, as in effect on the date
hereof, executed in connection with the Revolving Credit Facility), (iii) any
1996 Leaseback Equipment or (iv) any Previously Leased/Financed Equipment.
Section 3. Rights of Collateral Agent; Limitations on Collateral
-----------------------------------------------------
Agent's Obligations.
- -------------------
(a) Grantor Remains Liable under Contracts. Anything herein to the
--------------------------------------
contrary notwithstanding, Grantor shall remain liable under each of the
Contracts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with and pursuant to
the terms and provisions of each such Contract. Collateral Agent shall not have
any obligation or liability under any Contract by reason of or arising out of
this Security Agreement or the receipt by Collateral Agent of any payment
relating to such Contract pursuant hereto, nor shall Collateral Agent be
obligated in any manner to perform any of the obligations of Grantor under or
pursuant to any Contract, to make any payment, to make any inquiry as to the
nature or the sufficiency of any payment received by it or as to the sufficiency
of any performance by any party under any Contract, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be entitled
at any time or times.
(b) Notice to Contracting Parties. Upon the request of Collateral
-----------------------------
Agent at any time after the occurrence and during the continuance of a Default
or Event of Default, Grantor shall notify parties to the Contracts that the
Contracts have been assigned to Collateral Agent and that payments in respect
thereof shall be made directly to Collateral Agent. During the continuance of a
Default or Event of Default, Collateral Agent may in its own name or in the name
of others communicate with parties to the Contracts to verify with them to its
satisfaction the existence, amount and terms of any Contracts.
(c) First Priority. Grantor and Collateral Agent intend the security
--------------
interests granted pursuant to Section 2 of this Security Agreement to constitute
first priority perfected Liens until the Secured Obligations are paid in full
(including payment
O-3-5
<PAGE>
of principal of, premium, if any, and accrued but unpaid interest on, the
Securities).
(d) No Release. Nothing set forth in this Security Agreement shall
----------
relieve Grantor from the performance of any term, covenant, condition or
agreement on Grantor's part to be performed or observed under or in respect of
any of the Collateral or from any liability to any Person under or in respect of
any of the Collateral or impose any obligation on Collateral Agent or any Holder
to perform or observe any such term, covenant, condition or agreement on
Grantor's part to be so performed or observed or impose any liability on
Collateral Agent or any Holder for any act or omission on the part of the
Grantor relating thereto or for any breach of any representation or warranty on
the part of Grantor contained in any Security Document or in respect of the
Collateral or made in connection therewith.
Section 4. Representations and Warranties. Grantor hereby represents
------------------------------
and warrants that:
(a) Title; No Other Liens. Except for the Lien granted to Collateral
---------------------
Agent pursuant to this Security Agreement, Grantor is, and as to the
Collateral acquired by it from time to time after the date hereof Grantor
will be, except as otherwise permitted by the Indenture or this Security
Agreement, the sole owner of each item of Collateral subject to no other
Liens (other than Prior Liens and Permitted Liens), claims or rights of
others. No security agreement, financing statement or other public notice
with respect to all or any material part of the Collateral is on file or of
record in any public office, except such as may have been filed in favor of
Collateral Agent pursuant to this Security Agreement and in connection with
Prior Liens. As of the date hereof, no Collateral is evidenced by
Instruments required to be delivered to Collateral Agent which have not
been delivered to Collateral Agent.
(b) Perfected First Priority Liens. Financing statements on form UCC-
------------------------------
1 have been prepared and delivered to the Collateral Agent herewith. When
this Security Agreement is duly executed and delivered and (i) such
financing statements have been filed in the jurisdictions indicated
thereon, and (ii) the Notice of Security Interest is filed and accepted in
the United States Patent and Trademark Office, then all filings shall have
been made to create, preserve, protect and perfect the security interest
granted by Grantor to Collateral Agent hereby in respect of such of the
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<PAGE>
Collateral in which a security interest can be perfected by the filing of a
financing statement or the filing of a security agreement with the United
States Patent and Trademark Office. When such filings are duly made the
security interests granted to Collateral Agent pursuant to this Security
Agreement in and to such Collateral will constitute perfected Liens and
security interests therein and subject to no liens other than Prior Liens.
This Security Agreement is enforceable as such against all creditors of and
purchasers from Grantor and against any owner or purchaser of the real
property where any of the Equipment is located and any present or future
creditor obtaining a Lien on such real property.
(c) Contracts. Except as set forth in Schedule VII hereto, no consent
--------- ------------
of any party (other than Grantor) to any material Contract is required, or
purports to be required, in connection with the execution, delivery and
performance of this Security Agreement. Each material Contract is in full
force and effect and constitutes a valid and legally enforceable obligation
of the parties thereto. No consent or authorization of, filing with or
other act by or in respect of any Governmental Authority is required in
connection with the execution, delivery, performance, validity or
enforceability of any of the material Contracts by any party thereto other
than those which have been duly obtained, made or performed, are in full
force and effect and do not subject the scope of any such Contract to any
material adverse limitation, either specific or general in nature. Neither
Grantor nor (to the best of Grantor's knowledge) any other party to any
material Contract is in default or is likely to become in default in the
performance or observance of any of the terms thereof. Grantor has fully
performed its obligations in all material respects under each material
Contract. The right, title and interest of Grantor in, to and under each
material Contract are not subject to any defense, offset, counterclaim or
claim, nor have any of the foregoing been asserted or alleged against
Grantor as to any material Contract. No amount payable to Grantor under or
in connection with any Contract is evidenced by any promissory note, other
Instrument or Chattel Paper which has not been delivered to Collateral
Agent, other than in connection with the sale of Inventory in the ordinary
course of business.
(d) Equipment. The Equipment is kept at the locations listed on
---------
Schedule VIII hereto.
-------------
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<PAGE>
(e) Chief Executive Office. Grantor's chief executive office and
----------------------
chief place of business is located at 301 Merritt 7 Corporate Park,
Norwalk, Connecticut 06856.
(f) Farm Products. None of the Collateral constitutes, or is the
-------------
Proceeds of, Farm Products.
(g) Patents, Trademarks and Copyrights. Schedule III hereto includes
---------------------------------- ------------
all Patents owned by Grantor in its own name as of the date hereof.
Schedule VI hereto includes all Trademarks owned by Grantor in its own name
-----------
as of the date hereof. Schedule II hereto includes all Copyrights owned by
-----------
Grantor in its own name as of the date hereof. Each Patent and Trademark is
valid, subsisting, unexpired and has not been abandoned. Except as set
forth in such Schedules, none of such Patents, Trademarks and Copyrights is
the subject of any licensing or franchise agreement. No holding, decision
or judgment has been rendered by any Governmental Authority which would
limit, cancel or question the validity of any Patent, Trademark, or
Copyright. No action or proceeding is pending (i) seeking to limit, cancel
or question the validity of any Patent, Trademark or Copyright, or (ii)
which, if adversely determined, would have a material adverse effect on the
value of any Patent, Trademark or Copyright.
(h) Valid and Binding Obligation. Grantor has full corporate power,
----------------------------
authority and legal right to pledge and grant a security interest in the
Collateral pursuant to this Security Agreement, and this Security Agreement
constitutes the legal, valid and binding obligation of Grantor, enforceable
against Grantor in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and by
general principles of equity.
(i) Consents and Approvals. Except as set forth in Schedule IX hereto
---------------------- -----------
and other consents which have been obtained as of the date hereof, no
consent of any other Person (including, without limitation, stockholders or
creditors of Grantor) and no consent, approval, authorization of, or
registration or declaration or filing with, any Governmental Authority or
regulatory body is required to be obtained, effected or given in connection
with either (i) the pledge of, and grant of a security interest in, the
Collateral by Grantor pursuant to this Security Agreement or for the
execution, delivery or performance of this Security Agreement or any of
O-3-8
<PAGE>
the other Security Documents by Grantor or (ii) for the exercise by
Collateral Agent of the rights provided for in this Security Agreement or
any of the other Security Documents or the remedies in respect of the
Collateral pursuant to this Security Agreement or any of the other Security
Documents.
Section 5. Covenants. Grantor covenants and agrees with Collateral
---------
Agent that until the Secured Obligations are paid in full (including payment of
the principal of, premium, if any, and accrued but unpaid interest on, the
Securities):
(a) Further Documentation; Pledge of Instruments. At any time and
--------------------------------------------
from time to time, upon the written request of Collateral Agent, and at the
sole expense Grantor, Grantor will promptly and duly execute and deliver
such further instruments and documents and take such further action as
Collateral Agent may reasonably request for the purpose of obtaining or
preserving the full benefits of this Security Agreement and of the rights
and powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in
effect in any jurisdiction with respect to the Liens created hereby and
filings in the United States Patent and Trademark Office and the United
States Copyright Office. Grantor hereby authorizes Collateral Agent to
file any such financing or continuation statements and to make such filings
in the United States Patent and Trademark Office and the United States
Copyright Office without the signature of Grantor to the extent permitted
by applicable law. Notwithstanding the foregoing, the Collateral Agent's
right to obtain further instruments and documents from the Grantor shall
not release the Grantor from its obligations under Section 4(b) to make
filings of financing and continuation statements under the Uniform
Commercial Code in appropriate jurisdictions. If any amount payable under
or in connection with any of the Collateral shall be or become evidenced by
any promissory note, other Instrument or Chattel Paper, such note,
Instrument or Chattel Paper shall be immediately delivered to Collateral
Agent, duly endorsed in a manner satisfactory to Collateral Agent, to be
held as Collateral pursuant to this Agreement.
(b) Indemnification. Grantor agrees to indemnify, pay and hold
---------------
harmless Collateral Agent and each of the Holders and the officers,
directors, employees, agents and affiliates of Collateral Agent and each of
the Holders (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
O-3-9
<PAGE>
suits, claims, costs (including, without limitation, the settlement costs),
expenses or 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
Indemnitees 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 any of the Transaction Documents (including, without
limitation, any misrepresentation by Grantor in any of the Transaction
Documents) (the "Indemnified Liabilities"); provided, that Grantor shall
--------
have no obligation to an Indemnitee hereunder with respect to an
Indemnified Liability if it has been determined by a final decision (after
all appeals and the expiration of time to appeal) by a court of competent
jurisdiction that such Indemnified Liability arose from the negligence or
willful misconduct of that Indemnitee. 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,
Grantor shall contribute the maximum portion which it is permitted to pay
and satisfy under the applicable law, to the payment and satisfaction of
all Indemnified Liabilities incurred by the Indemnitees or any of them. The
obligations of Grantor contained in this Section 5 shall survive the
termination of this Security Agreement and the discharge of Grantor's other
obligations under the Transaction Documents. Any amount paid by any
Indemnitee as to which such Indemnitee has the right to reimbursement shall
constitute Secured Obligations secured by the Collateral.
(c) Maintenance of Records. Grantor will keep and maintain at its own
----------------------
cost and expense satisfactory and complete records in respect of the
Collateral. Grantor will mark its books and records pertaining to the
Collateral to evidence this Security Agreement and the security interests
granted hereby. For Collateral Agent's further security, Collateral Agent
is hereby granted a security interest in all of Grantor's books and records
pertaining to the Collateral, and Grantor shall permit access to any such
books and records to Collateral Agent or to its representatives during
normal business hours at the reasonable request of Collateral Agent and
shall upon Collateral Agent's request after the occurrence and during the
continuation of any Default or Event of Default turn over any such books
and records to Collateral Agent.
O-3-10
<PAGE>
(d) Right of Inspection. Collateral Agent shall at all times have
-------------------
full and free access during normal business hours to all the books,
correspondence and records of Grantor, and Collateral Agent or its
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and Grantor agrees to render to Collateral Agent, at
Grantor's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. Collateral Agent and its
representatives shall at all times also have the right to enter into and
upon any premises where any of the Equipment is located for the purpose of
inspecting the same, observing its use or otherwise protecting its
interests therein.
(e) Compliance with Laws, etc. Grantor will comply in all material
-------------------------
respects with all Requirements of Law applicable to the Collateral or any
part thereof or to the operation of Grantor's business; provided, however,
-------- -------
that Grantor may contest any Requirement of Law in any reasonable manner
which shall not adversely affect Collateral Agent's rights or the priority
of its Liens on the Collateral.
(f) Compliance with Terms of Contracts, etc. Grantor will perform
---------------------------------------
and comply in all material respects with all its obligations under the
Contracts and all its other Contractual Obligations relating to the
Collateral.
(g) Payment of Obligations. Grantor will pay promptly when due all
----------------------
taxes, assessments and governmental charges or levies imposed upon the
Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor,
materials and supplies) against or with respect to the Collateral, except
that no such charge need be paid if (i) the validity thereof is being
contested in good faith by appropriate proceedings, (ii) such proceedings
do not involve any material danger of the sale, forfeiture or loss of any
of the Collateral or any interest therein and (iii) such charge is
adequately reserved against on Grantor's books in accordance with GAAP.
(h) Limitation on Liens on Collateral. Grantor will not create, incur
---------------------------------
or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created hereby, Prior Liens, Permitted
Liens and other Liens permitted under Section 4.13 of the Indenture, and
will defend the right, title and interest of Collateral Agent
O-3-11
<PAGE>
in and to any of the Collateral against the claims and demands of all
Persons whomsoever. Grantor will take no action which would or, in the
reasonable judgment of Collateral Agent would, adversely affect the
existence, enforceability, priority or perfection of the Liens on and
security interests in any of the Collateral granted hereunder. To the
extent any security interest granted hereunder in any property constituting
a part of the Collateral either (i) does not constitute a perfected first
priority Lien on the date hereof (but is intended to constitute a perfected
first priority Lien pursuant to the terms hereof) or (ii) ceases without
consent of Collateral Agent to constitute a perfected first priority Lien
after the date hereof, Grantor shall make all filings (including financing
statements or continuation statements and filings in the United States
Patent and Trademark Office and the United States Copyright Office) and
record such instruments as may be reasonably requested by Collateral Agent
to restore the priority and perfection of such Lien. The right of the
Collateral Agent to require any such filing shall not be deemed to impose
upon the Collateral Agent any duty or obligation to ascertain whether any
circumstances exist which require such filings or recordations.
(i) Limitations on Dispositions of Collateral. Grantor will not sell,
-----------------------------------------
transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so except in accordance with the terms of the
Indenture.
(j) Limitations on Modifications, Waivers, Extensions of Contracts.
--------------------------------------------------------------
Grantor will not (i) amend, modify, terminate or waive any provision of any
material Contract in any manner which could reasonably be expected to
materially adversely affect the value of such Contract as Collateral or
impair Grantor's ability to conduct its business, (ii) fail to exercise
promptly and diligently each and every material right which it may have
under each material Contract (other than any right of termination) or (iii)
fail to deliver to Collateral Agent a copy of each material demand, notice
or document received by it relating in any way to any material Contract.
(k) Maintenance of Equipment. Except as otherwise provided in the
------------------------
Indenture, Grantor will maintain each item of Equipment in good operating
condition, ordinary wear and tear and immaterial impairments of value and
damage by the elements excepted, and will provide all maintenance, service
and repairs necessary for such purpose.
O-3-12
<PAGE>
(l) Maintenance of Insurance. Grantor will maintain, with financially
------------------------
sound and reputable companies, insurance policies (i) insuring the
Equipment against loss by fire, explosion, theft and such other casualties
as are usually insured against by companies engaged in the same or similar
businesses and (ii) insuring Grantor and Collateral Agent against liability
for personal injury and property damage relating to such Equipment, such
policies to be in such form and amounts and having such coverage as is
customary for companies engaged in the same or similar businesses, with
losses payable to Grantor and Collateral Agent as their respective
interests may appear. All such insurance shall (i) provide that no
cancellation, material reduction in amount or material change in coverage
thereof shall be effective until at least 10 days after receipt by
Collateral Agent of written notice thereof, (ii) name Collateral Agent as
an additional insured or loss payee, as applicable and (iii) be reasonably
satisfactory in all other respects to Collateral Agent. The Company shall
deliver to Collateral Agent a report of a reputable insurance broker with
respect to such insurance at least once in each calendar year and such
supplemental reports with respect thereto as Collateral Agent may from time
to time reasonably request.
(m) Further Identification of Collateral. Grantor will furnish to
------------------------------------
Collateral Agent from time to time statements and schedules further
identifying and describing the Collateral and such other reports in
connection with the Collateral as Collateral Agent may reasonably request,
all in reasonable detail.
(n) Notices. Grantor will advise Collateral Agent promptly, in
-------
reasonable detail, at its address set forth above, (i) of any Lien (other
than Liens created or permitted hereby) on, or material claim asserted
against, any of the Collateral and (ii) of the occurrence of any other
event which could reasonably be expected to have a material adverse effect
on the aggregate value of the Collateral or on the Liens created hereunder.
(o) Changes in Locations, Name, etc. Without collateral Agent's prior
-------------------------------
written consent, Grantor will not (i) change the location of its chief
executive office/chief place of business from that specified in Section
4(e) or remove its books and records from such location, (ii) permit any of
the Equipment to be kept at a location other than those listed on Schedule
--------
VIII hereto or (iii) change its name, identity or corporate
----
O-3-13
<PAGE>
structure to such an extent that any financing statement filed by or on
behalf of Collateral Agent in connection with this Security Agreement would
become reasonably misleading. Collateral Agent's consent to any of the
foregoing will not be unreasonably withheld so long as Grantor shall (x)
provide Collateral Agent with 45 days prior written notice of its intention
to take any of the actions specified in clauses (i) - (iii) above, (y) take
all actions necessary to maintain the perfection of the security interest
in the Collateral intended to be created hereby and (z) in the event that
Grantor proposes to move any Equipment to a location at which any entity
has obtained a mortgage lien on the real property in connection with the
1996 Leaseback Transaction, obtain and deliver to the Collateral Agent an
access agreement substantially in the form of Schedule X hereto, duly
----------
executed by the holder of such mortgage lien and Grantor.
(p) Patents, Trademarks and Copyrights.
----------------------------------
(i) Grantor (either itself or through licensees) will, except
with respect to any Trademark that Grantor shall reasonably determine
is of immaterial economic value to it or which Grantor abandons in
accordance with Section (p)(ii) below, (i) continue to use each
Trademark on each and every trademark class of goods applicable to its
current line as reflected in its current catalogs, brochures and price
lists in order to maintain such Trademark in full force free from any
claim of abandonment for non-use, (ii) maintain as in the past the
quality of products and services offered under such trademark, (iii)
employ such Trademark with the appropriate notice of registration,
(iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless Collateral Agent shall
obtain a perfected security interest in such mark pursuant to this
Security Agreement, and (v) not (and not permit any licensee or
sublicensee thereof to) do any act or knowingly omit to do any act
whereby any Trademark may become invalidated.
(ii) Grantor will not, except with respect to any Patent or
Copyright that Grantor shall reasonably determine is of immaterial
economic value to it, do any act, or omit to do any act, whereby any
Patent or copyright may become abandoned or dedicated.
Notwithstanding the foregoing, Grantor, in its good faith business
judgment, may abandon any Patent, Trademark or
O-3-14
<PAGE>
Copyright, or application for registration thereof, which is not
necessary for the operation of Grantor's business, upon thirty (30)
days' prior written notice to Collateral Agent.
(iii) Grantor will notify Collateral Agent immediately if it
knows, or has reason to know, that any application or registration
relating to any Patent, Trademark or Copyright may become abandoned or
dedicated, or of any adverse determination or development (including,
without limitation, the institution of, or any such determination or
development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or
tribunal in any country) regarding Grantor's ownership of any Patent,
Trademark or Copyright or its right to register the same or to keep
and maintain the same.
(iv) Whenever Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent
and Trademark Office or for the registration of any Copyright in the
United States Copyright Office or any similar office or agency in any
other country or any political subdivision thereof, Grantor shall
report such filing to Collateral Agent within five Business Days after
the last day of the fiscal quarter in which such filing occurs. Upon
request of Collateral Agent, Grantor shall execute and deliver any and
all agreements, instruments, documents, and papers as Collateral Agent
may request to evidence Collateral Agent's security interest in any
Patent, Trademark or Copyright and the goodwill and general
intangibles of Grantor relating thereto or represented thereby, and
Grantor hereby constitutes and appoints Collateral Agent its attorney-
in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and
confirmed; such power being coupled with an interest is irrevocable
until the Secured Obligations are paid in full.
(v) Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United
States Patent and Trademark Office, the United States Copyright
Office, or any similar office or agency in any other country or any
political subdivision thereof, to maintain and pursue each application
(and to
O-3-15
<PAGE>
obtain the relevant registration) and to maintain each registration of
the Patents, Trademarks and Copyrights (other than any Patent,
Trademark or Copyright which is abandoned by Grantor in accordance
with Section (p)(ii) above), including, without limitation, filing of
applications for renewal, affidavits of use and affidavits of
incontestability.
(vi) In the event that any Patent, Trademark or Copyright
included in the Collateral is infringed, misappropriated or diluted by
a third party, Grantor shall promptly notify Collateral Agent after it
learns thereof and shall, unless Grantor shall reasonably determine
that such Patent, Trademark or Copyright is not of material economic
value to Grantor, promptly sue for infringement, misappropriation or
dilution, to seek injunctive relief where appropriate and to recover
any and all damages for such infringement, misappropriation or
dilution, or take such other actions as Grantor shall reasonably deem
appropriate under the circumstances to protect such Patent, Trademark
or Copyright.
(q) If at any time the Indebtedness of the Grantor in respect of any
Previously Leased/Financed Equipment is repaid in full and the Grantor is
not then required to grant to GECC a security interest in such Previously
Leased/Financed Equipment, Grantor shall grant to the Collateral Agent a
security interest in such Previously Leased/Financed Equipment and shall
take all actions necessary to perfect such security interest, including,
without limitation, the filing of financing statements in the appropriate
jurisdictions.
Section 6. Collateral Agent's Appointment as Attorney-in-Fact.
--------------------------------------------------
(a) Powers. Grantor hereby irrevocably constitutes and appoints
------
Collateral Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of Grantor and in the name of Grantor
or in its own name, from time to time in Collateral Agent's discretion, for the
purpose of carrying out the terms of this Security Agreement, to take any and
all appropriate action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes of this Security
Agreement, and, without limiting the generality of the foregoing, Grantor hereby
gives Collateral Agent
O-3-16
<PAGE>
the power and right, on behalf of Grantor, without notice to or assent by
Grantor, to do the following:
(i) upon the occurrence and during the continuance of any Event of
Default, in the name of Grantor or its own name or otherwise, to take
possession of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Instrument, General Intangible or Contract and to file any claim or to take
any other action or proceeding in any court of law or equity or otherwise
deemed appropriate by Collateral Agent for the purpose of collecting any
and all such moneys due under any Instrument, General Intangible or
Contract whenever payable;
(ii) to pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, to effect any repairs or any insurance
called for by the terms of this Security Agreement and to pay all or any
part of the premiums therefor and the costs thereof; and
(iii) upon the occurrence and during the continuance of any Event
of Default, (A) to direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to Collateral Agent or as Collateral Agent shall
direct; (B) to ask or demand for, collect, receive payment of and receipt
for, any and all moneys, claims and other amounts due or to become due at
any time in respect of or arising out of any Collateral; (C) to sign and
endorse any invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments, verifications,
notices and other documents in connection with any of the Collateral; (D)
to commence and prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect the Collateral or
any Proceeds thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action or proceeding brought against
Grantor with respect to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E) above and, in
connection therewith, to give such discharges or releases as Collateral
Agent may deem appropriate; (G) to assign any Patent, Trademark (along with
the goodwill of the business to which any such Trademark pertains) or
Copyright, throughout the world for such term or terms, on such conditions,
and in such manner, as Collateral Agent shall in its sole discretion
determine; and (H) generally, to sell, transfer, pledge and make any
agreement
O-3-17
<PAGE>
with respect to or otherwise deal with any of the Collateral as fully and
completely as though Collateral Agent were the absolute owner thereof for
all purposes, and to do, at Collateral Agent's option and Grantor's
expense, at any time, or from time to time, all acts and things which
Collateral Agent deems necessary to protect, preserve or realize upon the
Collateral and Collateral Agent's Liens thereon and to effect the intent of
this Security Agreement, all as fully and effectively as Grantor might do.
Grantor hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof. This power of attorney is a power coupled
with an interest and shall be irrevocable.
(b) Other Powers. Grantor also authorizes Collateral Agent, at any
------------
time and from time to time, to execute, in connection with the sale provided for
in Section 8 hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(c) No Duty on Collateral Agent's Part. The powers conferred on
----------------------------------
Collateral Agent hereunder are solely to protect Collateral Agent's interests in
the Collateral and shall not impose any duty upon it to exercise any such
powers. Collateral Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of such powers, and neither it nor any of
its officers, directors, employees or agents shall be responsible to Grantor for
any act or failure to act hereunder, except for its own negligence or willful
misconduct.
Section 7. Performance by Collateral Agent of Grantor's Obligations.
--------------------------------------------------------
If Grantor fails to perform or comply with any of its agreements contained
herein and Collateral Agent, as provided for by the terms of this Security
Agreement, shall itself perform or comply, or otherwise cause performance or
compliance, with such agreement, the expenses of Collateral Agent incurred in
connection with such performance or compliance, together with interest thereon
at a rate per annum 2% above the rate payable under the Indenture, shall be
payable by Grantor to Collateral Agent on demand and shall constitute Secured
Obligations.
Section 8. Remedies, Rights Upon Default. (a) Upon the occurrence
-----------------------------
and during the continuance of an Event of Default:
(i) all payments received by Grantor under or in connection with
any of the Collateral shall be held by Grantor
O-3-18
<PAGE>
in trust for Collateral Agent for the benefit of the Holders, shall be
segregated from other funds of Grantor and shall forthwith upon receipt by
Grantor be paid over to Collateral Agent as Collateral, in the same form as
received by Grantor (duly endorsed by Grantor to Collateral Agent, if
required);
(ii) any and all such payments so received by Collateral Agent
(whether from Grantor or otherwise) shall be held by Collateral Agent as
Trust Moneys and applied by it in such manner and only at such times as
provided in the Indenture;
(iii) Collateral Agent shall have the right to seize and take
possession of any Collateral and the books and records pertaining to the
Collateral (including, without limitation, customer lists, correspondence
with present or future or prospective suppliers or customers, advertising
or marketing materials, credit files, computer tapes, programs, printouts,
and all other computer materials, records and electronic data processing
software pertaining to the Collateral) and may enter the premises where
they, or any of them, are located for the purpose of effecting such
removal; Grantor shall have a reasonable time to make copies of such books
and records before their removal by Collateral Agent; Collateral Agent
shall not be liable to Grantor for any damage suffered by Grantor by reason
of such entry or seizure unless it results from Collateral Agent's
negligence, bad faith or willful misconduct, and Grantor hereby agrees to
indemnify and hold harmless Collateral Agent from and against any and all
claims, expenses or liabilities that it may incur to any Person (other than
to Grantor in connection with any liability of Collateral Agent to Grantor
resulting from Collateral Agent's negligence, bad faith or willful
misconduct) by reason of such entry or seizure;
(iv) Collateral Agent may hire and maintain at Grantor's premises a
custodian or independent contractor selected by Collateral Agent who shall
have full authority to do all lawful acts necessary to protect Collateral
Agent's interest and to report to Collateral Agent thereon. Grantor hereby
agrees to cooperate with any such Person and to do whatever Collateral
Agent may reasonably request to preserve the Collateral.
(b) Upon the occurrence and during the continuance of an Event of
Default, then, and in any such event, and in accordance with Section 9 hereof,
Collateral Agent may exercise, in addition to all other rights and remedies
granted in this Security
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<PAGE>
Agreement, and in any other instrument or agreement securing, evidencing or
relating to the Secured Obligations, all rights and remedies of a secured party
on default under the Code (or such other comparable statute) in the applicable
jurisdiction. Without limiting the generality of the foregoing, Grantor
expressly agrees that in any such event Collateral Agent may, without demand or
performance or other demand, advertisement or notice of any kind (except the
notice specified below of time and place of public or private sale) to or upon
Grantor or any other Person, all and each of which demands, advertisements
and/or notices are (to the extent permitted by applicable law) hereby expressly
waived, forthwith collect, receive, appropriate and realize upon the Collateral,
or any part thereof, and/or may forthwith sell, lease, assign, give option or
options to purchase, or sell or otherwise dispose of and deliver the Collateral
(or contract to do so), or any part thereof, in one or more parcels at public or
private sale or sales, at any exchange or broker's board or at any of 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
Collateral Agent may deem commercially reasonable, irrespective of the impact of
any such sales on the market price of the Collateral. Collateral Agent and any
Holder shall have the right on any such public sale or sales and, to the extent
permitted by law, on any such private sale or sales to purchase the whole or any
part of said Collateral so sold and shall be entitled, for the purpose of
bidding and making settlement or payment of the purchase price of all or any
portion of the Collateral sold at any such public sale, to use and apply any of
the Secured Obligations owed to Collateral Agent or such Holder, as the case may
be, as a credit on account of the purchase price of any Collateral payable by
Collateral Agent or such Holder, as the case may be, 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 Grantor, except for any right or redemption as may
be available by applicable law. Grantor further agrees, at Collateral Agent's
request, to assemble Collateral and make it available to Collateral Agent at
places that Collateral Agent reasonably selects, whether at Grantor's premises
or elsewhere. The proceeds of any such collection, recovery, receipt,
appropriation, realization or sale shall constitute Trust Moneys and shall be
applied by Collateral Agent in accordance with the Indenture in the manner
provided in the Indenture.
(c) To the extent permitted by applicable law, Grantor waives all
claims, damages and demands against Collateral Agent or any Holder arising out
of the repossession, retention or sale of the Collateral unless resulting from
Collateral Agent's or such
O-3-20
<PAGE>
holder's negligence, bad faith or willful misconduct. Grantor agrees that
Collateral Agent need not give more than 10 days' notice (which notice shall be
deemed given when mailed) of the time and place of any public sale or of the
time after which a private sale may take place and that such notice is
reasonable notification of such matters. No notification need be given to
Grantor if it has signed, after default, a statement renouncing or modifying any
right to notification of sale or other intended disposition. Collateral Agent
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. 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. Grantor shall remain liable for any deficiency if the proceeds of
any sale or disposition of the Collateral applied to the Secured Obligations
pursuant to the Indenture are insufficient to indefeasibly pay in full in cash
all Secured Obligations and amounts to which Collateral Agent and the Holders
are entitled, Grantor also being liable for the reasonable fees of any attorneys
employed by Collateral Agent or any Holder to collect such deficiency.
(d) To the extent that it may lawfully do so, Grantor agrees that it
will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any appraisal, valuation, stay, extension or
redemption laws, or any law permitting it to direct the order in which the
Collateral or any part thereof shall be sold, now or at any time hereafter in
force, that may delay, prevent or otherwise affect the performance or
enforcement of this Security Agreement or the Secured Obligations and hereby
expressly waives all benefit or advantage of any such laws and covenants that it
will not hinder, delay or impede the execution of any power granting or
delegated to Collateral Agent or any Holder in this Security Agreement or any
other Security Document, but will suffer and permit the execution of every such
power as though no such laws were in force.
Section 9. Decisions Relating to Exercise of Remedies.
------------------------------------------
Notwithstanding anything in this Agreement to the contrary, Collateral Agent
shall exercise any remedy provided for in Section 8 in accordance with the terms
of, and at the times, if any, specified in the Indenture and in accordance with
instructions from the Trustee delivered at the direction of the Holders of at
least a majority in principal amount of the outstanding Securities or refrain
from exercising any remedy provided for in Section 8 either in the absence of
instructions from the Trustee or in accordance with instructions from the
Trustee delivered at the direction of
O-3-21
<PAGE>
the Holders of at least a majority in principal amount of the outstanding
Securities.
Section 10. Limitation on Collateral Agent's Duties in Respect of
-----------------------------------------------------
Collateral. Collateral Agent's sole duty with respect to the custody,
- ----------
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the Uniform Commercial Code or otherwise, shall be to deal with
it in the same manner as Collateral Agent deals with similar property for its
own account. Neither Collateral Agent nor any of its directors, officers,
employees or agents shall be liable for failure to demand, collect or realize
upon all or any part of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of Grantor or otherwise.
Section 11. Expenses. Grantor agrees to pay, without duplication, to
--------
Collateral Agent, from time to time upon demand, all reasonable fees, costs and
expenses of Collateral Agent (including, without limitation, the reasonable
expenses, fees and disbursements of its counsel, experts and agents) incurred by
Collateral Agent or arising in connection with (a) the preparation, execution,
delivery, administration, modification, amendment or termination of this
Security Agreement or the enforcement of any of the provisions hereof, (b) the
custody or preservation and protection of, or the sale of, collection from, or
other realization upon, any of the Collateral, (c) the preservation, protection,
defense, exercise or enforcement of any of the rights of Collateral Agent
hereunder and in and to the Collateral or (d) the failure by Grantor to perform
or observe any of the provisions hereof. When Collateral Agent incurs expenses
or renders services after an Event of Default specified in Section 6.1(a)(viii)
or (ix) of the Indenture occurs, such expenses and the compensation for such
services are intended to constitute expenses of administration under any
Bankruptcy Law.
Section 12. Obligations Absolute. All obligations of Grantor
--------------------
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Grantor;
(ii) any lack of validity or enforceability of any Transaction
Document or any other agreement or instrument relating thereto;
O-3-22
<PAGE>
(iii) 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 Transaction
Document or any other agreement or instrument relating thereto;
(iv) 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 guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of any Transaction Document
except as specifically set forth in a waiver granted pursuant to the
provisions of this Security Agreement; or
(vi) any other circumstances except payment which might otherwise
constitute a defense available to, or a discharge of, Grantor.
Section 13. Continuing Security Interest; Transfer of Secured
-------------------------------------------------
Obligations. This Security Agreement shall create a continuing security
- -----------
interest in the Collateral and shall (a) remain in full force and effect until
all Secured Obligations are paid in full in cash (at which time Collateral Agent
will, at Grantor's expense, take all acts necessary or appropriate to return all
Collateral to Grantor and extinguish the security interests granted hereunder,
including, without limitation, the execution and filing of any necessary Uniform
Commercial Code termination statements and any necessary filings with the United
States Patent and Trademark Office and the United States Copyright Office), (b)
be binding upon Grantor, and its successors and assigns, and (c) inure, together
with the rights and remedies of Collateral Agent hereunder, to the benefit of
Collateral Agent, and each of the Holders and each of their respective
successors, transferees and assigns; no other Persons (including, without
limitation, any other creditor of Grantor) shall have any interest herein or any
right or benefit with respect hereto. Without limiting the generality of the
foregoing clause (c), Collateral Agent and any Holder may assign or otherwise
transfer any indebtedness held by it secured by this Security Agreement to any
other Person, and such other Person shall thereupon become vested with all the
benefits in respect thereof granted to such party herein or otherwise. Neither
this Security Agreement nor any interest herein or in the Collateral, or any
part thereof, except as otherwise permitted herein, may be assigned by Grantor;
provided, however, that this Security Agreement may be
- -------- -------
O-3-23
<PAGE>
assumed by any other Person pursuant to and in compliance with Article V of the
Indenture if such Person executes and delivers an amendment hereto whereby it
expressly assumes all obligations of Grantor hereunder as if it were an original
party hereto and if all covenants herein with respect to any change in name or
location or otherwise has been complied with in connection therewith. This
Security Agreement shall be deemed to be automatically assigned by Collateral
Agent to any Person who succeeds to Collateral Agent in its capacity as Trustee
under the Indenture in accordance with the Indenture, and its assignee shall
have all rights and powers of, and shall act as, Collateral Agent.
Section 14. Execution in Counterparts. This Security Agreement and
-------------------------
any amendments, waivers, consents or supplements hereto 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 to be an original,
but all such counterparts together shall constitute one and the same agreement.
Section 15. Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
Section 16. Severability. Any provision of this Security Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Paragraph Headings. The paragraph headings used in this
------------------
Security Agreement are for convenience of reference only and are not to affect
the construction hereof or be taken into consideration in the interpretation
hereof.
Section 18. No Waiver; Cumulative Remedies. Collateral Agent shall
------------------------------
not by any act (except pursuant to the execution of a written instrument
pursuant to Section 19 hereof), delay, indulgence, omission or otherwise be
deemed to have waived any right or remedy hereunder or to have acquiesced in any
Default or Event of Default or in any breach of any of the terms and conditions
hereof. No failure to exercise, nor any delay in exercising, on the part of
Collateral Agent, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder
O-3-24
<PAGE>
shall preclude any other or further exercise thereof or the exercise
or any other right, power or privilege. A waiver by Collateral Agent of any
right or remedy hereunder on any one occasion shall not be construed as a bar to
any right or remedy which Collateral Agent would otherwise have on any future
occasion. The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any rights or remedies
provided by law.
Section 19. Waivers and Amendments; Successors and Assigns; Governing
---------------------------------------------------------
Law. None of the terms or provisions of this Security Agreement may be waived,
- ---
amended, supplemented or otherwise modified except by a written instrument
executed by Grantor and Collateral Agent in accordance with the Indenture. This
Security Agreement shall be binding upon the successors and assigns of Grantor
and shall inure to the benefit of Collateral Agent and its successors and
assigns. This Security Agreement shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New York without regard
to principles of conflicts of laws.
O-3-25
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
CONTINENTAL CARIBBEAN CONTAINERS,
INC., as Grantor
By:
------------------------------
Name:
Title:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By:
------------------------------
Name:
Title:
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<PAGE>
Schedule I - 1996 Leaseback Equipment
-------------------------------------
O-3-27
<PAGE>
Schedule II - Copyrights
------------------------
O-3-28
<PAGE>
Schedule III - Patents
----------------------
O-3-29
<PAGE>
Schedule IV - Previously Leased/Financed Equipment
--------------------------------------------------
O-3-30
<PAGE>
Schedule V - Prior Liens
------------------------
O-3-31
<PAGE>
Schedule VI - Trademarks
------------------------
O-3-32
<PAGE>
Schedule VII - Contracts
------------------------
O-3-33
<PAGE>
Schedule VIII - Location of Equipment
-------------------------------------
O-3-34
<PAGE>
Schedule IX - Consents and Approvals
------------------------------------
O-3-35
<PAGE>
Schedule X - Access Agreement
-----------------------------
O-3-36
<PAGE>
EXHIBIT P
---------
STOCK PLEDGE AGREEMENT
STOCK PLEDGE AGREEMENT ("Pledge Agreement"), dated as of December 17, 1996,
made by Plastic Containers, Inc., a Delaware corporation ("Pledgor"), in favor
of UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation having an
office at 114 West 47th Street, New York, New York 10036, as collateral agent
(together with any successors in such capacity, the "Collateral Agent") and as
trustee for the Holders (as defined in the Indenture) under the Indenture (as
hereinafter defined).
W I T N E S S E T H :
- - - - - - - - - -
A. Pledgor, Continental Caribbean Containers, Inc., a Delaware corporation
("CCC"), Continental Plastic Containers, Inc., a Delaware corporation ("CPC")
and Collateral Agent have entered into a certain indenture (as amended from time
to time, the "Indenture"; capitalized terms used herein but not defined herein
shall have the meanings ascribed to such terms in the Indenture) dated as of the
date hereof, pursuant to which Pledgor has issued 10% Senior Secured Notes due
2006 (the "Series A Notes") in the aggregate principal amount of $125,000,000
and pursuant to which Pledgor may issue 10% Series B Senior Secured Notes due
2006 (the "Series B Notes"; together with the Series A Notes, the "Securities").
B. This Pledge Agreement is given by Pledgor to secure the prompt payment
and 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) and any successor provision thereto) of (i) all obligations,
indebtedness and liabilities of Pledgor pursuant to the terms of the Indenture,
the Securities and the Security Documents, including, without limitation, the
obligations of Pledgor to pay principal of, premium, if any, and interest on the
Securities when due and payable, and all other amounts due and to become due
under or in connection with the Indenture, the Securities and the Security
Documents, and (ii) without duplication of the amounts described in clause (i),
all obligations, indebtedness and liabilities of Pledgor pursuant to the terms
of this Pledge Agreement, in each case, whether now existing or hereafter
arising and whether in the regular course of business or otherwise
(collectively, the "Secured Obligations").
P-1
<PAGE>
A G R E E M E N T :
------------------
NOW, THEREFORE, in consideration of the foregoing premises, Pledgor
hereby agrees with Collateral Agent as follows:
Section 1. Defined Terms. The following terms shall have
-------------
the following meanings:
"Code" means the Uniform commercial Code from time to time in effect
----
in the State of New York.
"Collateral" means the Pledged Stock, the Continental Can Note and all
----------
Proceeds.
"Continental Can" means Continental Can Company, Inc., a Delaware
---------------
corporation.
"Continental Can Note" means the Note dated December 17, 1996,
--------------------
evidencing Indebtedness of Continental Can to Pledgor in the aggregate principal
amount of $30,000,000.00.
"Contractual Obligation" means, as to any Person, any provision of any
----------------------
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"GECC" means General Electric Capital Corporation.
----
"Governmental Authority" means any nation or government, any state or
----------------------
other political subdivision thereof and any entity or officer exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to any government, and any corporation or other entity owned or
controlled (through ownership of capital interests or otherwise) by any of the
foregoing.
"Issuers" means CPC and CCC.
-------
"Person" means and includes an individual, a partnership, a firm, a
------
joint venture, a corporation, a trust, an unincorporated organization or other
association or entity and a Governmental Authority.
"Pledge Agreement" means this Pledge Agreement, as amended,
----------------
supplemented or otherwise modified from time to time.
P-2
<PAGE>
"Pledged Stock" means the shares of capital stock of the Issuers
-------------
listed on Schedule I hereto, together with all stock
----------
certificates, options or rights of any nature whatsoever which may be issued or
granted by the Issuers to Pledgor in respect of the Pledged Stock while this
Pledge Agreement is in effect.
"Proceeds" means all "proceeds" as such term is defined in Section 9-
--------
306(l) of the Code and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Stock or the Continental Can Note,
collections thereon or distributions with respect thereto.
"Requirement of Law" means as to any Person, the certificate of
------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Transaction Documents" shall mean, collectively, the Securities, the
---------------------
Indenture, the Guarantees and the Security Documents.
Section 2. Pledge; Grant of Security Interest. The Pledgor hereby
----------------------------------
delivers to Collateral Agent the Pledged Stock and the Continental Can Note duly
endorsed in blank (receipt of which is hereby acknowledged by Collateral Agent)
and hereby grants to Collateral Agent for its benefit and the benefit of the
Holders, a first priority security interest in the Collateral, as collateral
security for the prompt and complete payment and performance when due (whether
at stated maturity, by acceleration or otherwise) of the Secured Obligations
owing to the Holders.
Section 3. Stock Powers. Concurrently with the delivery to
------------
Collateral Agent of each certificate representing one or more shares of the
Pledged Stock, Pledgor shall deliver an undated stock power covering such
certificate, duly executed in blank.
Section 4. Representations and Warranties. Pledgor represents and
------------------------------
warrants that:
(a) Pledgor has the corporate power and authority and the legal right
to execute and deliver, to perform its obligations under, and to grant the
Lien on the Collateral pursuant to, this Pledge Agreement and has taken all
necessary corporate action to authorize its execution, delivery and
P-3
<PAGE>
performance of, and grant of the Lien on the Collateral pursuant to, this
Pledge Agreement;
(b) this Pledge Agreement constitutes a legal, valid and binding
obligation of Pledgor enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors' rights
generally and by general principles of equity;
(c) the execution, delivery and performance of this Pledge Agreement
will not violate any provision of any Requirement of Law or Contractual
Obligation of Pledgor and will not result in the creation or imposition of
any Lien on any of the properties or revenues of Pledgor pursuant to any
Requirement of Law or Contractual Obligation of Pledgor, except as
contemplated hereby;
(d) no consent or authorization of, filing with, or other act by or in
respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of
Pledgor or the Issuers), is required in connection with the execution,
delivery, performance, validity or enforceability of this Pledge Agreement;
(e) no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of
Pledgor, threatened by or against Pledgor or against any of its properties
or revenues with respect to this Pledge Agreement or any of the
transactions contemplated hereby;
(f) the shares of Pledged Stock listed on Schedule I constitute all
----------
the issued and outstanding shares of all classes of the capital stock of
the Issuers;
(g) all the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable;
(h) Pledgor is the beneficial and record owner of, and has good and
marketable title to, the Pledged Stock listed on Schedule I and the
----------
Continental Can Note, free of any and all Liens or options in favor of, or
claims of, any other Person, except (i) the Liens created by this Pledge
Agreement and (ii) with respect to the Continental Can Note, the Lien in
favor of GECC (which Lien shall be subject and subordinate to
P-4
<PAGE>
the Lien created by this Pledge Agreement in favor of Collateral Agent, for
its benefit and the benefit of the Holders) (the "GECC Lien") and there are
no outstanding rights (including, without limitation, preemptive rights),
warrants or options to acquire or instruments convertible into or
exchangeable for any shares of capital stock or other equity interest of or
in either Issuer or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any such capital stock,
any such convertible or exchangeable securities or any such rights,
warrants or options; and
(i) upon delivery to Collateral Agent of the Continental Can Note duly
endorsed in blank and the stock certificates evidencing the Pledged Stock,
the Liens granted pursuant to this Pledge Agreement will constitute a
valid, perfected first priority Lien on the Collateral in favor of the
Collateral Agent for its benefit and the benefit of the Holders, and each
such Lien is enforceable as such against all creditors of Pledgor and any
Persons purporting to purchase any Collateral from Pledgor.
Section 5. Covenants. The Pledgor covenants and agrees with
---------
Collateral Agent that, from and after the date of this Pledge Agreement until
the Secured Obligations are paid in full:
(a) If Pledgor shall, as a result of its ownership of the Pledged
Stock, become entitled to receive or shall receive any stock certificate
(including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification,
increase or reduction of capital or any certificate issued in connection
with any reorganization), option or rights, whether in addition to, in
substitution of, as a conversion of, or in exchange for any shares of the
Pledged Stock, or otherwise in respect thereof, Pledgor shall accept the
same as Collateral Agent's agent, hold the same in trust for and deliver
the same forthwith to Collateral Agent in the exact form received, duly
endorsed by Pledgor to Collateral Agent, if required, together with an
undated stock power covering such certificate duly executed in blank, to be
held by Collateral Agent hereunder as additional collateral security for
the Secured Obligations. Any sums paid upon or in respect of
P-5
<PAGE>
any Pledged Stock upon the liquidation or dissolution of the Issuer thereof
shall be paid over to Collateral Agent to be held by it hereunder as
additional collateral security for the Secured Obligations, and in case any
distribution of capital shall be made on or in respect of any Pledged Stock
or any property shall be distributed upon or with respect to any Pledged
Stock pursuant to the recapitalization or reclassification of the capital
of the Issuer thereof or pursuant to the reorganization thereof, the
property so distributed shall be delivered to Collateral Agent to be held
by it, subject to the terms hereof, as additional collateral security for
the Secured Obligations. If any sums of money or property so paid or
distributed in respect of any Pledged Stock shall be received by Pledgor,
Pledgor shall promptly deliver such money or property to Collateral Agent
and until such money or property is paid or delivered to Collateral Agent,
hold such money or property in trust for Collateral Agent, segregated from
other funds of Pledgor, as additional collateral security for the Secured
Obligations.
(b) If Pledgor shall, as a result of its ownership of the Continental
Can Note, become entitled to receive or shall receive any additional
promissory note payable to Pledgor, whether in addition to or in
substitution of the Continental Can Note, Pledgor shall accept the same as
Collateral Agent's agent, hold the same in trust for and deliver the same
forthwith to Collateral Agent in the exact form received, duly endorsed to
Collateral Agent, if required, to be held by Collateral Agent hereunder as
additional security for the Secured Obligations. Any sums paid upon or in
respect of the Continental Can Note at any time that an Event of Default is
continuing shall be paid over to Collateral Agent to be held by it
hereunder as additional collateral security for the Secured Obligations.
If any sums of money so paid in respect of the Continental Can Note shall
be received by Pledgor at any time that an Event of Default is continuing,
Pledgor shall promptly deliver such money to Collateral Agent and until
such money is paid to the Collateral Agent, hold such money in trust for
Collateral Agent, segregated from other funds of Pledgor, as additional
collateral security for the Secured Obligations.
(c) Pledgor will not (i) vote to enable, or take any other action to
permit, the Issuer of any Pledged Stock to issue any stock or other equity
securities of any nature or to issue any other securities convertible into
or granting the right to purchase or exchange for any stock or other equity
securities of such Issuer, or (ii) sell, assign, transfer, exchange or
otherwise dispose of, or grant any option with respect to, the Collateral,
or (iii) create, incur or permit to exist any Lien or option in favor of,
or any claim of any Person with respect to, any of the Collateral, or any
interest
P-6
<PAGE>
therein, except for (i) the Liens provided for by this Pledge Agreement and
(ii) with respect to the Continental Can Note, the GECC Lien. The Pledgor
will defend the right, title and interest of Collateral Agent in and to the
Collateral against the claims and demands of all Persons whomsoever.
(d) At any time and from time to time, upon the written request of
Collateral Agent, and at the sole expense of Pledgor, Pledgor will promptly
and duly execute and deliver such further instruments and documents and
take such further actions as Collateral Agent may reasonably request for
the purposes of obtaining or preserving the full benefits of this Pledge
Agreement and of the rights and powers herein granted. If any amount
payable under or in connection with any of the Collateral shall be or
become evidenced by any promissory note, other instrument or chattel paper,
such note, instrument or chattel paper shall be immediately delivered to
Collateral Agent, duly endorsed in a manner satisfactory to Collateral
Agent, to be held as Collateral pursuant to this Pledge Agreement.
(e) Pledgor agrees to pay, and to save Collateral Agent harmless from,
any and all liabilities with respect to, or resulting from any delay in
paying, any and all stamp, excise, sales or other taxes which may be
payable or determined to be payable with respect to any of the Collateral
or in connection with any of the transactions contemplated by this Pledge
Agreement.
Section 6. Cash Dividends; Voting Rights. Unless an Event of Default
-----------------------------
shall have occurred and be continuing and Collateral Agent shall have given
notice to Pledgor of Collateral Agent's intent to exercise its corresponding
rights pursuant to Section 7 below, Pledgor shall be permitted to receive all
cash dividends, distributions and income paid on any Pledged Stock and the
Continental Can Note but only to the extent permitted in the Indenture, and to
exercise all voting and corporate rights with respect to the Pledged Stock,
provided, however, that no vote shall be cast or corporate right exercised or
- -------- -------
other action taken which would impair the Collateral or which would be
inconsistent with or result in any violation of any provision of the Transaction
Documents.
Section 7. Rights of Collateral Agent. (a) Subject to the
--------------------------
provisions of applicable laws, if an Event of Default shall occur and be
continuing and Collateral Agent shall give notice of its intent to exercise such
rights to Pledgor: (i) Collateral
P-7
<PAGE>
Agent shall have the right to receive any and all cash dividends, distributions
and income paid in respect of the Collateral and such dividends, distributions
and income shall be held by Collateral Agent as Trust Moneys and applied in
accordance with Section 6.6 of the Indenture, (ii) all shares of the Pledged
Stock may be registered in the name of Collateral Agent or its nominee, and
Collateral Agent or its nominee may thereafter exercise (A) all voting,
corporate and other rights pertaining to such shares of the Pledged Stock at any
meeting of shareholders of the Issuers thereof or otherwise and (B) any and all
rights of conversion, exchange, subscription and any other rights, privileges or
options pertaining to such shares of the Pledged Stock as if it were the
absolute owner thereof (including, without limitation, the right to exchange at
its discretion any and all of the Pledged Stock upon the merger, consolidation,
reorganization, recapitalization or other fundamental change in the corporate
structure of the Issuer thereof, or upon the exercise by Pledgor or Collateral
Agent of any right, privilege or option pertaining to such shares of the Pledged
Stock, and in connection therewith, the right to deposit and deliver any and all
of the Pledged Stock with any committee, depositary, transfer agent, registrar
or other designated agency upon such terms and conditions as it may determine)
and (iii) Collateral Agent shall have the right to accelerate the Continental
Can Note in accordance with its terms and take any other action to collect upon
the Continental Can Note, including, without limitation, to make demand for
payment thereon, in each case without liability except to account for property
actually received by it, but Collateral Agent shall have no duty to exercise any
such right, privilege or option and shall not be responsible for any failure to
do so or delay in so doing.
(b) The rights of Collateral Agent hereunder shall not be conditioned
or contingent upon the pursuit by Collateral Agent of any right or remedy
against Pledgor, the Issuers, Continental Can or against any other Person which
may be or become liable in respect of all or any part of the Secured Obligations
or against any other collateral security therefor, guarantee thereof or right of
offset with respect thereto. Collateral Agent shall not be liable for any
failure to demand, collect or realize upon all or any part of the Collateral or
for any delay in doing so, nor shall it be under any obligation to sell or
otherwise dispose of any Collateral upon the request of Pledgor or to take any
other action whatsoever with regard to the Collateral or any part thereof.
Section 8. Remedies. If an Event of Default shall occur and be
--------
continuing, Collateral Agent may exercise, in addition to all other rights and
remedies granted in this Pledge Agreement and
P-8
<PAGE>
in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the Code.
Without limiting the generality of the foregoing, Collateral Agent, without
demand of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law) to or upon Pledgor, the
Issuers or any other Person (all and each of which demands, defenses,
advertisements and notices are hereby waived to the full extent permitted by
law), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
assign, give option or options to purchase or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of the foregoing), in
one or more parcels at public or private sale or sales, in the over-the-counter
market, at any exchange, broker's board or office of Collateral Agent or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. Collateral Agent shall have the right upon any
such public sale or sales, and, to the extent permitted by law, upon any such
private sale or sales, to purchase the whole or any part of the Collateral so
sold, free of any right or equity of redemption in Pledgor, which right or
equity is hereby waived or released. Any Proceeds from time to time held by
Collateral Agent and the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of Collateral Agent hereunder, including, without limitation, reasonable
attorneys' fees and disbursements, shall constitute Trust Moneys and shall be
applied by Collateral Agent in accordance with the Indenture in the manner
provided in the Indenture. Collateral Agent agrees that any proceeds received by
it in respect of the Continental Can Note and remaining after application of the
Trust Moneys in accordance with and in the manner provided in the Indenture
shall be delivered to GECC. To the extent permitted by applicable law, Pledgor
waives all claims, damages and demands it may acquire against Collateral Agent
arising out of the exercise by Collateral Agent of any of its rights hereunder.
If any notice of a proposed sale or other disposition of Collateral shall be
required by law, such notice shall be deemed reasonable and proper if given in
the manner provided in the Indenture at least 10 days before such sale or other
disposition. Pledgor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of Collateral are insufficient to pay the Secured
Obligations and
P-9
<PAGE>
the reasonable fees and disbursements of any attorneys employed by Collateral
Agent to collect such deficiency.
Section 9. Registration Rights; Private Sales. (a) If Collateral
----------------------------------
Agent shall determine to exercise its right to sell any or all of the Pledged
Stock pursuant to Section 8 hereof, and if in the opinion of Collateral Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act of 1933, as
amended, and the rules and regulations issued thereunder (the
"Securities Act"), Pledgor will cause the Issuer thereof to (i) execute and
--------------
deliver, and cause the directors and officers of such Issuer to execute and
deliver, all such instruments and documents, and do or cause to be done all such
other acts, as may be, in the opinion of Collateral Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of 180 days from the date of the first public offering of
the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the opinion of
Collateral Agent, are necessary or advisable, all in conformity with the
requirements of the Securities Act and the rules and regulations of the
Securities and Exchange Commission applicable thereto. Pledgor also agrees to
cause the Issuer of such Pledged Stock to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which Collateral
Agent shall designate and to make available to its security holders, as soon as
practicable, an earnings statement (which need not be audited) which will
satisfy the provisions of Section 11(a) of the Securities Act.
(b) Pledgor recognizes that Collateral Agent may be unable to effect a
public sale of any or all of the Pledged Stock, by reason of certain
prohibitions contained in the Securities Act and applicable state securities
laws or otherwise, and may be compelled to resort to one or more private sales
thereof to a restricted group of purchasers which will be obliged to agree,
among other things, to acquire such securities for their own account for
investment and not with a view to the distribution or resale thereof. Pledgor
acknowledges and agrees that any such private sale may result in prices and
other terms less favorable to Collateral Agent than if such sale were a public
sale and agrees that such circumstances shall not, in and of themselves, result
in a determination that such sale was not made in a commercially reasonable
manner. Collateral Agent shall be under no obligation
P-10
<PAGE>
to delay a sale of any of the Pledged Stock for the period of time necessary to
permit the Issuer of any Pledged Stock to register such securities for public
sale under the Securities Act, or under applicable state securities laws, even
if such Issuer would agree to do so.
(c) Pledgor further agrees to use its best efforts to do or cause to
be done all such other acts as may be necessary to make any sale or sales of all
or any portion of the Pledged Stock pursuant to this Section 9 valid and binding
and in compliance with any and all other applicable Requirements of Law. Pledgor
further agrees that a breach of any of the covenants contained in this Section 9
will cause irreparable injury to Collateral Agent and the Holders, that
Collateral Agent has no adequate remedy at law in respect of such breach and, as
a consequence, that each and every covenant contained in this Section 9 shall be
specifically enforceable against Pledgor, and Pledgor hereby waives and agrees
not to assert any defenses against an action for specific performance of such
covenants except for a defense that no Event of Default has occurred under the
Indenture.
(d) Notwithstanding anything in this Pledge Agreement to the contrary,
Collateral Agent shall exercise any remedy provided for in Sections 8 or 9 in
accordance with the terms of, and at the times, if any, specified in the
Indenture and in accordance with instructions from the Trustee delivered at the
direction of the Holders of at least a majority in principal amount of the
outstanding Securities or refrain from exercising any remedy provided for in
Sections 8 or 9 either in the absence of instructions from the Trustee or in
accordance with instructions from the Trustee delivered at the direction of the
Holders of at least a majority in principal amount of the outstanding
Securities.
Section 10. Limitation on Duties Regarding Collateral. Collateral
-----------------------------------------
Agent's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as Collateral
Agent deals with similar securities and property for its own account. Neither
Collateral Agent nor any of its directors, officers, employees or agents shall
be liable for failure to demand, collect or realize upon any of the Collateral
or for any delay in doing so or shall be under any obligation to sell or
otherwise dispose of any Collateral upon the request of Pledgor or otherwise.
P-11
<PAGE>
Section 11. Powers Coupled with an Interest. All authorizations and
-------------------------------
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
Section 12. Indemnification. Pledgor agrees to indemnify, pay and
---------------
hold harmless Collateral Agent and each of the Holders and the officers,
directors, employees, agents and affiliates of Collateral Agent and each of the
Holders (collectively, the "Indemnitees") from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
claims, costs (including, without limitation, settlement costs), expenses or
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 any Transaction Document
(including, without limitation, any misrepresentation by Pledgor in any
Transaction Document (collectively the "Indemnified Liabilities"); provided,
--------
that Pledgor shall have no obligation to an Indemnitee hereunder with respect to
an Indemnified Liability if it has been determined by a final decision (after
all appeals and the expiration of time to appeal) by a court of competent
jurisdiction that such Indemnified Liability arose from the negligence or
willful misconduct of that Indemnitee. 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, Pledgor shall
contribute the maximum portion which it is permitted to pay and satisfy under
the applicable law, to the payment and satisfaction of all Indemnified
Liabilities incurred by the Indemnitees or any of them. The obligations of
Pledgor contained in this Section 12 shall survive the termination of this
Pledge Agreement and the discharge of Pledgor's other obligations under the
Transaction Documents. Any amount paid by any Indemnitee as to which such
Indemnitee has the right to reimbursement shall constitute Secured Obligations
secured by the Collateral.
Section 13. Expenses. Pledgor agrees to pay, without duplication, to
--------
Collateral Agent, from time to time, upon demand, all reasonable fees, costs and
expenses of Collateral Agent (including, without limitation, the reasonable
expenses, fees and disbursements of its counsel, experts and agents) incurred by
Collateral Agent or arising in connection with (a) the preparation, execution,
delivery, administration, modification, amendment or termination of this Pledge
Agreement or the enforcement of any of
P-12
<PAGE>
the provisions hereof, (b) the custody or preservation and protection of, or the
sale of, collection from, or other realization upon, any of the Collateral, (c)
the preservation, protection, defense, exercise or enforcement of any of the
rights of Collateral Agent hereunder and in and to the Collateral or (d) the
failure by Pledgor to perform or observe any of the provisions hereof. When
Collateral Agent incurs expenses or renders services after an Event of Default
specified in Sections 6.1(a)(viii) or (ix) of the Indenture occurs, such
expenses and the compensation for such services are intended to constitute
expenses of administration under any Bankruptcy Law.
Section 14. Obligations Absolute. All obligations of Pledgor
--------------------
hereunder shall be absolute and unconditional irrespective of:
(i) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Pledgor;
(ii) any lack of validity or enforceability of any of the
Transaction Documents, or any other agreement or instrument relating
thereto;
(iii) 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
Transaction Documents, or any other agreement or instrument relating
thereto;
(iv) 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 guarantee, for all or any of the Secured Obligations;
(v) any exercise or non-exercise, or any waiver of any right,
remedy, power or privilege under or in respect of any of the Transaction
Documents or any other agreement or instrument relating thereto, except as
specifically set forth in a waiver granted pursuant to the provisions of
this Pledge Agreement; or
(vi) any other circumstances except payment which might otherwise
constitute a defense available to, or a discharge of, Pledgor.
P-13
<PAGE>
Section 15. Continuing Security Interest; Transfer of Secured
-------------------------------------------------
Obligations. This Pledge Agreement shall create a continuing security interest
- -----------
in the Collateral and shall (a) remain in full force and effect until all
Secured Obligations are paid in full in cash (at which time Pledgor shall be
entitled to the return of the Pledged Stock held by Collateral Agent and the
Continental Can Note unless the GECC Lien remains in effect, in which case
Collateral Agent shall deliver the Continental Can Note to GECC), (b) be binding
upon Pledgor, and its successors and assigns, and (c) inure, together with the
rights and remedies of Collateral Agent hereunder, to the benefit of Collateral
Agent, and each of the Holders and each of their respective successors,
transferees and assigns; no other Persons (including, without limitation, any
other creditor of Pledgor) shall have any interest herein or any right or
benefit with respect hereto. Without limiting the generality of the foregoing
clause (c), Collateral Agent or any Holder may assign or otherwise transfer any
indebtedness held by it secured by this Pledge Agreement to any other Person,
and such other Person shall thereupon become vested with all the benefits in
respect thereof granted to such party herein or otherwise. Neither this Pledge
Agreement nor any interest herein or in the Collateral, or any part thereof,
except as otherwise permitted herein, may be assigned by Pledgor; provided,
--------
however, that this Pledge Agreement may be assumed by any other Person pursuant
- -------
to and in compliance with Article V of the Indenture if such Person executes and
delivers an amendment hereto whereby it expressly assumes all obligations of
Pledgor hereunder as if it were an original party hereto and if all covenants
herein with respect to any change in name or location or otherwise has been
complied with in connection therewith. This Pledge Agreement shall be deemed to
be automatically assigned by Collateral Agent to any Person who succeeds to
Collateral Agent in accordance with the Indenture, and its assignee shall have
all rights and powers of, and shall act as, Collateral Agent.
Section 16. Severability. Any provision of this Pledge Agreement
------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 17. Paragraph Headings. The paragraph headings used in this
------------------
Pledge Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.
P-14
<PAGE>
Section 18. No Waiver; Cumulative Remedies. Collateral Agent shall
------------------------------
not by any act (except by a written instrument pursuant to Section 19 hereof),
delay, indulgence, omission or otherwise be deemed to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. No failure to exercise,
nor any delay in exercising, on the part of Collateral Agent, any right, power
or privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by Collateral Agent of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which Collateral
Agent would otherwise have on any future occasion. The rights and remedies
herein provided are cumulative, may be exercised singly or concurrently and are
not exclusive of any rights or remedies provided by law.
Section 19. Waivers and Amendments; Successors and Assigns, Governing
---------------------------------------------------------
Law. None of the terms or provisions of this Pledge Agreement may be waived,
- ---
amended, supplemented or otherwise modified except by a written instrument
executed by Pledgor and Collateral Agent in accordance with the Indenture. This
Pledge Agreement shall be binding upon the successors and assigns of Pledgor and
shall inure to the benefit of Collateral Agent and its successors and assigns.
This Pledge Agreement shall be governed by, and construed and interpreted in
accordance with, the laws of the State of New York.
Section 20. Notices. Notices by Collateral Agent to Pledgor or the
-------
Issuer of any Pledged Stock may be given in the manner provided in the Indenture
to Pledgor or any such Issuer at the address of Pledgor set forth in the
Indenture and notices may be delivered to Collateral Agent at 114 West 47th
Street, New York, New York 10036, Attention: Corporate Trust Department.
Pledgor and the Issuer of any Pledged Stock may change their respective address
and transmission numbers by written notice to Collateral Agent.
Section 21. Irrevocable Authorization and Instruction to Issuers.
----------------------------------------------------
Pledgor hereby authorizes and instructs each Issuer to comply with any
instruction received by it from Collateral Agent in writing that (a) states that
an Event of Default has occurred and (b) is otherwise in accordance with the
terms of this Pledge Agreement, without any other or further instructions from
Pledgor, and Pledgor agrees that such Issuer shall be fully protected in so
complying.
P-15
<PAGE>
Section 22. No Release. Nothing set forth in this Pledge Agreement
----------
shall relieve Pledgor from the performance of any term, covenant, condition or
agreement on Pledgor's part to be performed or observed under or in respect of
any of the Collateral or from any liability to any Person under or in respect of
any of the Collateral or impose any obligation on Collateral Agent or any Holder
to perform or observe any such term, covenant, condition or agreement on
Pledgor's part to be so performed or observed or impose any liability on
Collateral Agent or any Holder for any act or omission on the part of Pledgor
relating thereto or for any breach of any representation or warranty on the part
of Pledgor contained in any Security Document or in any Transaction Document or
in respect of the Collateral or made in connection therewith.
Section 23. Execution in Counterparts. This Pledge Agreement and any
-------------------------
amendments, waivers, consents or supplements hereto 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 to be an original,
but all such counterparts together shall constitute one and the same agreement.
P-16
<PAGE>
IN WITNESS WHEREOF, the undersigned have caused this Pledge Agreement
to be duly executed and delivered as of the date first above written.
PLASTIC CONTAINERS, INC.
By:
----------------------------
Name:
Title:
Accepted and Agreed:
UNITED STATES TRUST COMPANY
OF NEW YORK, as Collateral Agent
By:
- ----------------------------
Name:
Title:
P-17
<PAGE>
ACKNOWLEDGMENT AND CONSENT
The Issuer referred to in the foregoing Pledge Agreement hereby
acknowledges receipt of a copy thereof and agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to it. The
Issuer agrees to notify Collateral Agent promptly in writing of the occurrence
of any of the events described in Section 5(a) of the Pledge Agreement. The
Issuer further agrees that the terms of Section 9(a) of the Pledge Agreement
shall apply to it, mutatis mutandis, with respect to all actions that may be
------- --------
required of it under or pursuant to or arising out of Section 9 of the Pledge
Agreement.
CONTINENTAL PLASTIC CONTAINERS, INC.
By:
---------------------------------------
Address for Notices:
Continental Plastic Containers, Inc.
301 Merritt 7 Corporate Park
Norwalk, CT 06856
P-18
<PAGE>
ACKNOWLEDGMENT AND CONSENT
The Issuer referred to in the foregoing Pledge Agreement hereby
acknowledges receipt of a copy thereof and agrees to be bound thereby and to
comply with the terms thereof insofar as such terms are applicable to it. The
Issuer agrees to notify Collateral Agent promptly in writing of the occurrence
of any of the events described in Section 5(a) of the Pledge Agreement. The
Issuer further agrees that the terms of Section 9(a) of the Pledge Agreement
shall apply to it, mutatis mutandis, with respect to all actions that may be
------- --------
required of it under or pursuant to or arising out of Section 9 of the Pledge
Agreement.
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:
--------------------------------------
Address for Notices:
Continental Caribbean Containers,
Inc.
301 Merritt 7 Corporate Park
Norwalk, CT 06856
P-19
<PAGE>
SCHEDULE I
To Pledge
Agreement
DESCRIPTION OF PLEDGED STOCK
Class Certificate No. of
Issuer of Stock No. Shares
- ------ -------- ----------- ------
Continental Common 6 10,000
Plastic
Containers, Inc.
Continental Common 5 100
Caribbean
Containers, Inc.
P-20
<PAGE>
UNITED STATES TRUST COMPANY OF NEW YORK
114 West 47th Street
New York, New York 10036
December , 1996
Plastic Containers, Inc.
One Aerial Way
Syosset, NY 11791
Dear Sirs:
The undersigned on behalf of United States Trust Company of New York
hereby acknowledges receipt of (i) that certain stock certificate No. 6
representing 10,000 shares of Common Stock, par value $1.00 of Continental
Plastic Containers, Inc., (ii) that certain stock certificate No. 5 representing
100 shares of Common Stock, par value $1.00 of Continental Caribbean Containers,
Inc. and (iii) [that certain Note, dated December 17, 1996 evidencing
Indebtedness of Continental Can Company, Inc. to Plastic Containers, Inc. in the
aggregate principal amount of $30,000,000.00.]
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
By:
-------------------------------
Name:
Title:
P-21
<PAGE>
EXHIBIT Q
---------
NOTICE OF SECURITY INTEREST
---------------------------
WHEREAS, Continental Plastic Containers, Inc. ("CPC"), a Delaware
corporation, having its principal office at 301 Merritt 7 Corporate Park,
Norwalk, Connecticut 06856, is the owner of the United States patents and patent
applications set forth in Schedule A attached hereto and the United States
----------
trademarks and associated United States trademark registrations set forth in
Schedule B attached hereto;
- ----------
WHEREAS, United States Trust Company of New York ("U.S. Trust"), a New York
corporation, having its address at 114 West 47th Street, New York, New York
10036, as Trustee under a certain indenture (the "Indenture") dated the date
hereof among Plastic Containers, Inc. ("PCI"), CPC, Continental Caribbean
Containers, Inc. and U.S. Trust, as Trustee, desires to acquire for the benefit
of the Holders (as defined in the Indenture) a security interest in, and lien
on, said patents, trademarks and trademark registrations and said applications
for patents and trademark registrations and the goodwill of the business
symbolized by said trademarks (collectively, the "Collateral");
WHEREAS, pursuant to a Pledge and Security Agreement dated the date hereof
by CPC in favor of U.S. Trust, as Trustee and as collateral agent for the
Holders (as amended, supplemented or modified from time to time, the "Security
Agreement"), the security interest in the Collateral described above was granted
by CPC to secure the payment of certain 10% Senior Secured Notes due 2006 of PCI
upon the terms and subject to the conditions set forth therein and in the
Indenture;
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, and subject to the terms and conditions of the Security
Agreement, CPC has granted to U.S. Trust, as Trustee and as collateral agent for
the Holders, a security interest in the Collateral.
Q-1
<PAGE>
Executed at New York, New York, the 17th day of December, 1996.
CONTINENTAL PLASTIC CONTAINERS, INC.
By:
-----------------------------------
Name:
Title:
Q-2
<PAGE>
EXHIBIT R
---------
MORTGAGE NOTE PLEDGE AGREEMENT
AGREEMENT entered into this 17th day of December, 1996, among CONTINENTAL
CARIBBEAN CONTAINERS, INC., a corporation organized and existing under the laws
of the State of Delaware, duly qualified and authorized to transact business in
the Commonwealth of Puerto Rico (the "PLEDGOR"), and UNITED STATES TRUST COMPANY
OF NEW YORK, a corporation organized and existing under the laws of the State of
New York (the "PLEDGEE").
1. Reference is made to: (i) that certain Pledge and Security Agreement
executed by PLEDGOR in favor of the PLEDGEE dated December 17, 1996 (the
"Security Agreement", that certain Indenture (the "Indenture") dated December
17, 1996 among Plastic Containers, Inc. (the "Parent"), each of the PLEDGOR and
Continental Plastic Containers, Inc. ("CPC"), as guarantors, and United States
Trust Company of New York, as trustee, pursuant to which the Parent is issuing
$125,000,000 aggregate principal amount 10% Series A Senior Secured Notes due
2006 and may issue Series B Senior Secured Notes (such Series A and Series B
Notes, collectively, the "Notes") and (iii) to that certain Guarantee (the
"Guarantee") executed by the PLEDGOR to the PLEDGEE guaranteeing the obligations
of the Parent under the Indenture and the Notes (all of the obligations of the
PLEDGOR under the Security Agreement, the Indenture, the Notes and the Guarantee
hereinafter referred to as the "Obligations"). The Security Agreement, the
Indenture, the Notes and the Guarantee, and all other documents or instruments
issued thereunder, herein collectively referred to as the "Transaction
Document").
2. PLEDGOR, in order to secure and guarantee the due payment and
performance of the Obligations including interest thereon, as well as for the
payment of any obligation or liability, direct or contingent, with PLEDGEE under
the Transaction Documents, due or to become due, whether now existing or
hereafter arising, in this act, does present, deposit, transfer, assign, and
pledge to PLEDGEE the property specifically detailed in Paragraph 8 hereof
(hereinafter referred to as the "Pledged Security"). It is agreed by the parties
hereto that PLEDGEE shall serve as bailee of the Pledged Security pledged
hereunder, subject to the terms and conditions herein set forth.
3. PLEDGOR hereby grants to PLEDGEE a lien for the amount of all of the
Obligations upon the Pledged Security and any other
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collateral property, now or at any time hereafter given unto or left by the
PLEDGOR in the possession of PLEDGEE, and also to secure payment of the
outstanding balance of any other indebtedness of the PLEDGOR with PLEDGEE which
may hereinafter arise or become due under the Transaction Documents.
4. Upon failure by the PLEDGOR to perform and comply with the terms of
the Guarantee, or any other of the undertakings, obligations or liabilities of
the PLEDGOR with PLEDGEE thereunder, or upon the occurrence of an Event of
Default under the Transaction Documents, or in case of insolvency, bankruptcy,
or failure in business of PLEDGOR then, or in any such event, all obligations
and liabilities, direct or contingent, of the PLEDGOR with PLEDGEE, shall
forthwith become due and payable, without demand or notice, and upon such event
PLEDGEE shall have full power and authority to alienate the Pledged Security
then in its possession at such place as PLEDGEE may deem best, before a Notary
Public, at public auction, upon the giving of the notices required by and as
provided under Article 1771 of the Civil Code of Puerto Rico (31 L.P.R.A. Sec.
5030). PLEDGEE may also, at its option, bring legal action or proceedings for
the collection of such unpaid Obligations, and, at its option, simultaneously
foreclose on any of the Pledged Security, without first alienating the Pledged
Security. Out of the proceeds of the sale, and/or the foreclosure, of the
Pledged Security, PLEDGEE shall apply the net proceeds, after deducting all
costs and expenses of the sale and/or foreclosure, to the payment of any or all
of the Obligations, and to pay PLEDGOR any surplus remaining therefrom.
5. In aid of the rights granted to the PLEDGEE in Paragraph 4 hereof, it
is further stipulated and agreed by the parties herein that PLEDGEE, as holder
for value and in due course of the Pledged Security, is hereby vested with the
right to exercise the actions which pertain to an owner and title holder
thereof, as PLEDGEE, with full power to pass good title to any persons, by
delivery or endorsement; and PLEDGEE or any other holder of said Pledged
Security may collect the same in its own name by judicial proceedings or
otherwise.
6. No delay on the part of PLEDGEE herein in exercising any rights
hereunder, or under the Transaction Documents, or under any other document or
instrument executed and delivered by PLEDGOR or the Parent pursuant to the
Transaction Documents, or under any other document or instrument executed and
delivered by PLEDGOR or the Parent pursuant to the Transaction Documents, shall
operate as a waiver of such rights. Any exercise of remedies by PLEDGEE
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<PAGE>
hereunder shall be done in the manner and at the times, if any, specified in the
Indenture.
7. PLEDGEE, shall have a first priority, general and continuing lien on
the Pledged Security pledged hereunder until all Obligations, are duly and
totally paid to PLEDGEE, regardless of the date when all such Obligations are
incurred or were constituted, or the date when they mature and become due and
payable by default, demand, acceleration, or otherwise, it being the intention
of the parties hereunder, that the Pledged Security pledged with PLEDGEE in
accordance with the terms hereof shall serve as collateral security for all of
the Obligations, and while any of such Obligations remain unpaid and
outstanding.
8. The PLEDGOR hereby delivers to the PLEDGEE, in pledge for the benefit
of the PLEDGEE, the following property hereby deemed the "Pledged Security":
(i) Mortgage Note in the principal amount of $1,631,000,
secured by mortgage constituted by PLEDGOR, as mortgagor, under Deed
of Mortgage Number ________ executed on December 17, 1996, before
Notary Public Javier E. Ferrer Canals.
9. PLEDGOR hereby represents and warrants to PLEDGEE that:
(a) PLEDGOR has good and valid title to, and sole record and
beneficial ownership of, the Pledged Security, which its to be pledged to
PLEDGEE by PLEDGOR pursuant hereto, free and clear of any and all covenants,
conditions, restrictions, voting trust arrangements, security interests, liens,
charges, encumbrances, options and adverse or equitable claims or rights
whatsoever, except for the lien created hereby.
(b) PLEDGOR is not a party to, subject to or bound by any judgment,
order, writ, prohibition, injunction or decree of any court, governmental body
or instrumentality and no action or proceeding is pending against PLEDGOR which
would prevent or adversely affect the execution, delivery or performance of this
Pledge Agreement or the pledge of the Pledged Security.
10. Upon payment in full of the Obligations, this Pledge
Agreement shall cease and terminate and the Pledged Security shall be delivered
by the PLEDGEE (without recourse to or warranty by PLEDGEE) to PLEDGOR duly
endorsed if necessary.
11. All notices required to be given hereunder shall be made in
writing via registered or certified mail, postage prepaid, return receipt
requested or delivered by hand, to the following
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address, and shall be deemed given upon receipt by the parties at the addresses
set forth below:
TO PLEDGOR:
Continental Caribbean Containers, Inc.
Parque Central Avenue
Bairoa Industrial Park
Bairoa
Caguas, Puerto Rico 00652
Attention: Plant Manager
Telecopy Number: (787) 746-2448
with a copy to:
Plastics Containers, Inc.
One Aerial Way
Syosset, New York 11791
Attention: General Counsel
Telecopier: (516) 931-6344
TO PLEDGEE:
United States Trust Company of New York
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Re: Plastic Containers, Inc.
Attention: Corporate Trust Department
Telecopier: (212) 852-1625/6
12. This Pledge Agreement may not be changed, terminated or
modified orally or in any manner other than by an agreement in writing signed by
the respective parties hereto in accordance with the Indenture. The covenants,
agreements, rights and options contained in this Pledge Agreement shall bind
upon and inure to the benefit of the parties hereto and their respective
successors and Permitted assigns.
13. The terms, clauses and provisions of this Pledge Agreement
are in addition and not in limitation or substitution of the terms, clauses and
provisions set forth in the Transaction Documents. In the event of any
inconsistency between the provisions of this Pledge Agreement and those of the
Transaction Documents, the terms hereof shall be controlling as necessary to
create, preserve and/or maintain a valid, enforceable first priority lien
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<PAGE>
and security interest under applicable law upon the Pledged Security, but
otherwise, the provisions of the Transaction Documents shall be controlling.
14. Any provision(s) of this Pledge Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or illegality of such prohibition without invalidating the
remaining provisions hereof or affecting the validity, enforceability or
legality of such provision in any other jurisdiction.
15. The substantive laws of the Commonwealth shall govern the
construction and interpretation of this Pledge Agreement and the rights and
remedies of the parties hereto.
IN WITNESS WHEREOF, the parties hereto execute this Pledge
Agreement as of the day and year first above written.
PLEDGOR
- -------
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By: /s/Abdo Yazgi
----------------------------------
Name: Abdo Yazgi
Title: Vice President
PLEDGEE:
- -------
UNITED STATES TRUST COMPANY OF NEW YORK
By: /s/Patricia Stermer
----------------------------------
Name: Patricia Stermer
Title: Assistant Vice President
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State of )
)
County of )
Sworn and subscribed to before me by ____________________ and
_____________________, as representatives of the appearing parties whom I
personally know and who are of legal age, _______________, the first and
________________ the second, and residents of __________________________, and
__________________________________, respectively.
In _____________________, ______________________, this _____ day
of December, 1996
_______________________________
NOTARY PUBLIC
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<PAGE>
EXHIBIT S
---------
---DEED NUMBER TWELVE (12) ------------------------
---------DEED OF CONSTITUTION OF MORTGAGE----------
---In the City of Caguas, Commonwealth of Puerto Rico, this
seventeenth (17th) day of December, nineteen hundred ninety-
six (1996).----------------
--------------------BEFORE ME----------------------
---JAVIER E. FERRER CANALS, Attorney-at-Law and Notary
Public in and for the Commonwealth of Puerto Rico with
residence in Guaynabo, Puerto Rico and offices at the
Sixteenth Floor of Popular Center Building, Hato Rey, San
Juan, Puerto Rico.---------
----------------------APPEAR-----------------------
---AS PARTY OF THE SOLE PART: CONTINENTAL CARIBBEAN
CONTAINERS, INC (Employer Identification Number 66 0342024),
a corporation organized and existing under the laws of the
State of Delaware, registered to do business in the
Commonwealth of Puerto Rico (hereinafter called the
"Mortgagor"), represented herein by Jose Antonio Zubillaga
Carmona, (Social Security Number ###-##-####) of legal age,
married, a business executive and resident of San Juan,
Puerto Rico, who has been duly authorized to appear in this
public instrument on behalf and in
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representation of the Mortgagor, and which authority he will
show wherever and whenever required to do so.---------------
---------
---I, the Notary, hereby certify that I personally know the
representative of the Mortgagor appearing herein and from
his statements I further attest as to his age, civil status,
occupation and residence. The person appearing herein has
assured me that he has and in my judgment he does have the
legal capacity necessary for this act, and for that purpose
he freely and voluntarily------------------
--------------------------STATE--------------------
---FIRST: The Property: The Mortgagor is the owner of
------------
record with valid, good, insurable and marketable fee simple
title ("pleno dominio") of the real property described in
Paragraph TWENTY FIRST of this Deed, hereinafter referred to
as the "Property".----------------------------------------
---SECOND: The Mortgage Note: Simultaneously herewith
-----------------
Mortgagor has subscribed before the undersigned Notary a
Mortgage Note to the order of Mortgagee (hereinafter called
the "Mortgage Note"), which is literally transcribed in
Paragraph FOURTEENTH hereof.--------------------------------
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---THIRD: Creation of the Mortgage: In order to guarantee
------------------------
and secure:------------------------------
-----(i) The full and complete payment of the principal of
the Mortgage Note and the interest accruing thereon, as
herein established;-----------
-----(ii) The performance and observance of the terms and
conditions contained herein and in the Mortgage Note;-------
------------------------------
-----(iii) An additional credit in the amount set forth in
Paragraph FIFTEENTH hereof to cover interest in addition to
that secured by law (hereinafter called the "Interested
Credit";-------
-----(iv) An additional credit in the amount set forth in
Paragraph FIFTEENTH hereof to cover any amounts that may be
paid by or advanced by the Mortgagee hereunder together with
interest thereon (hereinafter called the "Credit for
Additional Advances"); and----------------------------------
--
-----(v) An additional credit in the amount set forth in
Paragraph FIFTEENTH hereof (hereinafter called "Credit for
Collection Costs and Fees") to cover costs and expenses
(including attorney's fees) of the Mortgagee in the event
that such Mortgagee shall have to take recourse to the
courts, including
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<PAGE>
bankruptcy proceedings, or to any other governmental agency
in order to collect all or any part of the principal thereof
or any interest thereon (by foreclosure or other proceedings
or action), (the Interest Credit, the Credit for Additional
Advances and the Credit for Collection Costs and Fees shall
be hereinafter collectively referred to the "Additional
Credits"),-----------------------------------------
---Mortgagor hereby constitutes and creates a voluntary
first priority mortgage (the "Mortgage") in favor of the
UNITED STATES TRUST COMPANY OF NEW YORK, a corporation
organized and existing under the laws of the State of New
York (herein referred to as the "Mortgagee"), as collateral
agent and trustee under that certain Indenture dated as of
December seventeen (17), 1996, or any future holder or
transferee of the Mortgage Note, on the following property
(hereinafter collectively referred to as the "Mortgaged
Property"):----------
-----(a) the Property described in Paragraph TWENTY FIRST of
this Deed;--------------------------------
-----(b) all of Mortgagor's buildings, structures,
additions, fixtures, improvements, appurtenances and
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<PAGE>
facilities now or hereafter located thereon or hereafter
erected or placed on said Property and all materials
intended for the construction, reconstruction, alteration
and repair of such buildings or improvements now or
hereafter erected thereon, all of which materials shall be
deemed to be included within the Mortgaged Property
immediately upon the delivery thereof to the Property;------
------------------------------------
-----(c) all of the rights, title and interest of the
Mortgagor, in and to, all and singular, tenements,
hereditaments, rights of way, easements, appendages and
appurtenances, licenses, passages, waters, water rights,
riparian rights, and other rights, liberties and privileges
thereof or in any way or hereafter appertaining, including
any other claim at law or in equity, as well as any after
acquired title, franchise or license and the reversion and
reversions and remainder and remainders thereof and any
other property belonging or appertaining to the Property,
and all of the right, title and interest' of the Mortgagor
in and to any and all sidewalks, streets, ways, alleys,
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<PAGE>
strips or gores of the Property adjacent thereto or used in
connection therewith;----------------------
-----(d) all of the Mortgagor's rights, title and interest
(but none of its obligations) as landlord whether named as
such therein or by assignment or otherwise to receive
payments of money under all leases or similar agreements of
all or part of the Property or of space therein, or at any
time hereafter made and any and all amendments,
modifications, supplements, renewals and extensions thereof,
including without limitation all rents, additional rents,
revenues, earnings, profits and income, payments incident to
any assignment, sublease or surrender of any lease, claims
for forfeited deposits and claims for damages, now due or
hereafter to become due with respect to any lease.----------
-----------------------------------
-----(e) any and all awards, damages, payments and other
compensation and any and all claims therefor and rights
thereto which may result from taking or injury by virtue of
the exercise of the power of eminent domain of or to, or any
damage, injury or destruction in any manner caused to, the
Property and any buildings, structures and improvements
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<PAGE>
thereon, or any part thereof or from any change of grade or
vacation of any street abutting thereon, all of which
awards, damages, payments, compensation, claims, and rights
hereby assigned, transferred and set over to Mortgagee to
the fullest extent that Mortgagor may under the law so do.
For such purposes, Mortgagee is hereby irrevocably appointed
attorney-in-fact for Mortgagor to settle for, collect and
receive any such awards, damages, payments and compensation
from the authorities making the same, to appear in and
prosecute any proceeding therefor, and to give receipts and
acquaintances therefor, subject to the terms of paragraph
SEVENTH hereof;-----------------
-----(f) all indemnities to which Mortgagor and the
Mortgagee may be entitled under any policy of insurance
covering the Mortgaged Property or any part thereof;--------
------------------------------
-----(g) all of the Mortgagor's rights, title and interest
to all furniture, furnishings, fixtures machinery, apparatus
and equipment, now or hereinafter located on the Property,
or located in, or used, or procured for use, in connection
with the operation, maintenance or protection of any of the
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<PAGE>
buildings, structures, improvements or facilities located or
to be located in the Property, including without limitation,
lighting, plumbing, sanitary, air conditioning equipment and
fire protection systems, now owned or hereafter acquired by
the Mortgagor, which under the Civil Code of Puerto Rico may
properly be characterized or classified as real or immovable
property either by nature or by its objective; and----------
-----(h) all renewals and replacements of, substitutions for
and additions to the Property, and all other property, real,
personal or mixed now owned or hereafter acquired by
Mortgagor or in any way appertaining to such Property as
well as all lands which may be consolidated or grouped with
the Property;------------------------------------------
---FOURTH: Obligations of Mortgagor: For the consideration
------------------------
heretofore set forth the Mortgagor is obliged and undertakes
as follows:-----------------
-----One: To satisfy the debt as set forth in the Mortgage
Note.-------------------------------------
-----Two: To pay prior to delinquency and without requiring
any notice from Mortgagee, all Impositions (as herein
defined) and satisfy any claim, lien or
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<PAGE>
encumbrance against the Mortgaged Property which may be or
become superior to this Mortgage, and to permit no default
or delinquency on any other lien, encumbrance or charge
against the Mortgaged Property, unless and to the extent
only that any such item is being contested in good faith by
appropriate proceedings and appropriate reserves have been
set aside with respect thereto in conformity with generally
accepted accounting principles in effect from time to time
in the United States of America.--------------------------
-----Three: The Mortgagor shall pay all reasonable costs,
expenses and disbursements including a reasonable amount for
attorney's fees, as well as all reasonable expenses incurred
or satisfied by the Mortgagee at any time for perfection of
title of the Mortgaged Property, and all such costs,
expenses and disbursements of Mortgagee, if satisfied by
Mortgagee, shall be considered secured in their entirety by
the Mortgage herein constituted.----------------------------
-----------
-----Four: Furnish to Mortgagee, within ten (10) business
days after request in person, or within twenty (20) business
days after request by mail, a
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<PAGE>
written statement duly acknowledging the amount on or
secured by, whether for principal or interest, this Mortgage
or the Mortgage Note, and whether any offsets or defenses
exist against he such debt.----
-----Five: (a) Mortgagor shall, at its sole cost and
expense, promptly comply with all present and future laws,
ordinances, orders, rules, regulations and of all federal,
state and municipal governments, courts, departments,
commissions, boards and officers, any national or local
Board of Fire Underwriters, or any other body exercising
functions similar to those of any of the foregoing, which
may be applicable to the Mortgaged Property or any part
thereof or to the use or manner of use of the Mortgaged
Property.-------------------------
-----(b) Mortgagor shall promptly perform and observe, or
cause to be performed or observed, all of the terms,
covenants and conditions of all instruments of record
affecting the Mortgaged Property, noncompliance with which
may affect the lien and security of this Mortgage, or which
may impose any duty or obligation upon Mortgagor or any
lessee or other occupant of the Mortgaged Property or any
part thereof. ------------------------------
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<PAGE>
-----Six: Mortgagor will not abandon or cause or permit any
waste on the Mortgaged Property and will at all times
maintain the same in good repair and condition, and will
comply with all laws, statutes and ordinances relating to
the maintenance or use of the Mortgaged Property and with
all requirements, orders and notices of violation thereof
issued by any governmental authority.------
-----Seven: Mortgagor will permit Mortgagee and Mortgagee's
representatives to enter the Mortgaged Property at
reasonable times and upon reasonable prior notice to inspect
the same.------------------
-----Eight: Throughout the term of this Mortgage,
Mortgagor, with reasonable promptness, will deliver to
Mortgagee such information with respect to the Mortgaged
Property as Mortgagee may request from time to time.--------
------------------------------
-----Nine: Mortgagor shall undertake and do and perform all
other things and acts required of it with respect to the
Mortgaged Property as agreed to with the Mortgagee.---------
-----------------------
---FIFTH: Condemnation: (a) Mortgagor shall give Mortgagee
------------
immediate notice of any actual or threatened commencement of
condemnation event that
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<PAGE>
the Mortgaged Property, or any part thereof, shall be taken
in condemnation proceedings or by exercise of any right of
eminent domain (hereinafter called collectively,
"condemnation proceedings"), and Mortgagee may, on behalf of
Mortgagor, (i) participate in any such condemnation
proceedings and Mortgagor shall from time to time execute
and deliver to Mortgagee all instruments requested by
Mortgagee or as may be required to permit such
participation, and (ii) adjust, contest, accept, reject or
compromise any proposed award and collect and receive the
proceeds thereof and endorse drafts, and Mortgagee is hereby
irrevocably appointed attorney-in-fact of Mortgagor for such
purposes. The decision of Mortgagee with regard to the
adjustment, contest, acceptance, rejection or compromise of
any proposed award issued in connection with any
condemnation proceedings shall be binding upon Mortgagor;---
----------------------
-----(b) all proceeds of condemnation awards or proceeds of
sale in lieu of condemnation, and all judgments, decrees and
awards for injury or damage to the Mortgaged Property, are
hereby assigned and shall be paid to Mortgagee. Mortgagor
agrees to
S-12
<PAGE>
execute and deliver such further assignments thereof as
Mortgagee may request and authorizes Mortgagee to collect
and receive the same, to give receipts therefor, and to
appeal from any such judgment, decree or award. Mortgagee
shall in no event be liable or responsible for failure to
collect, or exercise diligence in the collection of, any of
the same.-------------------------------
---SIXTH: Insurance: (a) the Mortgagor at its expense will
---------
(i) keep the Mortgaged Property insured under an "All Risk"
policy or its equivalent against loss or damage by fire,
standard extended coverage perils and such other hazards
which are normally carried by entities engaged in the same
or similar business in the Commonwealth of Puerto Rico, (ii)
obtain and maintain such other forms of insurance coverage
and with such limits, including commercial general
liability, contractual liability and umbrella policies, with
respect to the Mortgaged Property or the activities of the
Mortgagor which are normally carried by entities engaged in
the same or similar business in the Commonwealth of Puerto
Rico.-----------------------
S-13
<PAGE>
-----(b) All policies of insurance shall be issued by an
insurer acceptable to the Mortgagee lawfully doing business
in the Commonwealth of Puerto Rico and (except for public
liability insurance) shall contain the standard mortgage
non-contribution clause endorsement or an equivalent
endorsement satisfactory to the Mortgagee naming the
Mortgagee as loss payee. The public liability policies will
name the Mortgagee as additional insured. Without the
Mortgagee's consent, Mortgagor shall not name any other
party as an additional insured or loss payee under the
insurance policies nor carry separate or additional
insurance coverage concurrent in form or contributing in the
event of loss with that required by this Mortgage.
Mortgagor shall pay the premiums for the policies as the
same become due and payable. Not later than the expiration
date of each of the policies, Mortgagor will deliver to
Mortgagee a renewal policy or policies "premium paid" or
accompanied by other evidence of payment of premium
satisfactory to the Mortgagee.------------------------------
----
-----(c) In addition to the foregoing requirements, each
policy of insurance required to be carried
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<PAGE>
hereunder shall contain a provision whereby insurer (i)
agrees that such policy shall not be canceled, modified or
denied renewal without at least thirty (30) days prior
written notice to the Mortgagee, (ii) waives any right to
claim any premiums or commissions against the Mortgagee, and
(iii) provides that the Mortgagee is permitted to make
payments to effect the confirmation of such policy upon
notice of cancellation due to nonpayment of premiums. In
any event, any such policy shall not be invalidated by any
action or inaction of the Mortgagor or any other person and
shall insure the Mortgagee regardless of any breach or
violation of any warranty, declarations or conditions
contained in such policy by the Mortgagor or any other
person. Mortgagor will not violate or permit to be violated
any of the conditions, provisions, or requirements of any
insurance policy required hereunder.------------------------
-----------------
-----(d) Notwithstanding anything to the contrary contained
herein, if at any time the Mortgagee is not in receipt of
written evidence that all insurance required hereunder is in
force and effect, the Mortgagee shall have the right, with
prior
S-15
<PAGE>
written notice to Mortgagor, to take such action as the
Mortgagee deems necessary to protect its interest in the
Mortgaged Property, including, without limitation, the
obtaining of such insurance coverage. Any expenses incurred
by the Mortgagee in connection with such action or in
obtaining such insurance and keeping it in effect shall be
paid by Mortgagor upon demand and be secured by this
Mortgage and the Mortgage Note to the extent permitted
herein and therein.----------------------
-----(e) If the Mortgaged Property shall be damaged or
destroyed, in whole or in part, by fire, or other casualty
the Mortgagor shall give prompt notice thereof to the
Mortgagee, and the Mortgagee may make proof of loss if not
promptly made by the Mortgagor.-----------------------------
------------
---SEVENTH: Additional Advances: If Mortgagor should fail
-------------------
to make punctual payment of any Impositions, or should fail
to maintain insurance coverage on the Mortgaged Property as
required from time to time by the Mortgagee, or should fail
to discharge any mortgage lien, encumbrance or charge upon
the Mortgaged Property, or any part thereof, which is
prohibited herein or by the terms of any
S-16
<PAGE>
pledge agreement or other instrument under which the
Mortgage Note is assigned or pledged, or should fail to
maintain the Mortgaged Property in good condition, or should
fail to perform any other term or covenant of such pledge
agreement or other instrument, then Mortgagee, after giving
prior notice to Mortgagor, but without consent of or demand
upon Mortgagor and without waiving or releasing any
obligation or default, may (but shall be under no obligation
to) advance such funds as may in Mortgagee's judgment be
needed for the purpose of performing such terms or covenants
and Mortgagee may, in such event, take such other and
further action as it deems necessary for such purposes. All
sums so advanced or paid by Mortgagee and all reasonable
costs and expenses (including reasonable attorney's fees and
expenses) so incurred, together with interest thereon at the
interest rate then in effect under the Indenture, such
interest to accrue from the date of payment, or disbursement
thereof, shall constitute additional Indebtedness secured by
this Mortgage and shall be paid by Mortgagor to Mortgagee on
demand.--------------------------------------------
S-17
<PAGE>
---EIGHTH: Further Assurances; Additional Security:
------------------------------ --------
Mortgagor, at its expense, will execute, acknowledge,
deliver and record all such instruments and take all such
action as Mortgagee from time to time may reasonably request
for better assuring to Mortgagee the property and rights
hereby mortgaged and assigned or intended so to be. Without
notice to or consent of Mortgagor, and without impairment of
the lien of, and rights under this Mortgage, Mortgagee may
take (but Mortgagor shall not be obligated to furnish) from
Mortgagor, or from any other person or persons, additional
security for the Mortgage Note or for the obligations of the
Mortgagor secured by the assignment or pledge of the
Mortgage Note; and neither the giving of this Mortgage nor
the acceptance of any such additional security shall prevent
Mortgagee from resorting first to such additional security,
or to the security created by this Mortgage, in either case
without affecting Mortgagee's lien and rights under this
Mortgage.---
---NINTH: Foreclosure Valuation: In compliance with
---------------------
Article One Hundred Seventy Nine (179) of the Law of Puerto
Rico (Act Number One Hundred Ninety
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<PAGE>
Eight (198) of August Eight (8), Nineteen Hundred Seventy
Nine (1979); P.R. Laws An., tit. 30, sec. 2575), Mortgagor
hereby declares and agrees that for purposes of any
foreclosure of this Mortgage, the value of the Mortgaged
Property shall be ONE MILLION SIX HUNDRED THIRTY ONE
THOUSAND DOLLARS ($1,631,000).------------------------------
--------
---TENTH: Foreclosure: In the event that the Mortgage
-----------
Note is assigned or pledged or otherwise encumbered as
collateral security for the payment of any other note or
debt, the Mortgagor agrees:---
-----(a) That the Mortgagee may foreclose this Mortgage and
may exercise all other rights, remedies powers and
privileges provided herein or now or hereafter existing at
law, in equity, by statute, or otherwise, without first
foreclosing the pledge or other lien so constituted upon the
Mortgage Note, to the same extent and with the same force
and effect as if the Mortgage Note had been assigned or
transferred directly to Mortgagee rather than assigned or
pledged as collateral security, provided nothing contained
in this Paragraph TENTH shall relieve Mortgagee from the
obligation to comply with the terms of the pledge agreement
or other
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<PAGE>
instrument under which the Mortgage Note is assigned or
pledged.--------------
-----(b) That Mortgagor will not exercise any right which it
might have to cancel the recording of this Mortgage by
reason of lapse of time counted from the date of the
constitution of the Mortgage either under the provisions of
Article One Hundred Forty Five (145) of the Mortgage Law of
Puerto Rico (Act Number One Hundred Ninety Eight (198) of
August Eight (8), Nineteen Hundred Seventy Nine (1979); P.R.
Laws Ann., tit. 30, sec. 2469) or otherwise and further
agrees, whenever requested by the Mortgagee, to execute and
file in the appropriate Registry, at Mortgagor's cost and
expense, any and all supplemental instruments which may be
necessary or convenient for the preservation of the lien of
the Mortgage until full payment of debt so secured by a lien
upon or pledge of the Mortgage Note. Without limiting the
generality of the foregoing, Mortgagor agrees that, unless
the Mortgagee shall consent in writing to the cancellation
of the Mortgage at an earlier date, this Mortgage shall be
conclusively, presumed to subsist for a period of thirty
(30) years from the date of its constitution and the
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<PAGE>
Mortgagor does hereby waive any right which it might
otherwise have under said Article One Hundred Forty Five
(145) of the Mortgage Law of Puerto Rico (P.R. Laws Ann.,
tit. 30, sec. 2469) to request for an earlier cancellation
of the recording of this Mortgage.------------------------
-----(c) The Mortgagee may in any action to foreclose this
Mortgage or the Mortgage Note, or upon the occurrence of a
default under this Mortgage or under any obligation secured
by a lien upon the Mortgage Note, petition the court having
jurisdiction in the premises to appoint a receiver for the
Mortgaged Property, including all rents, issues and profits
therefrom, and said receiver shall have the broadest powers
and faculties usually granted to a receiver by a court and
his appointment shall be made by the court as a matter of
absolute right granted to the Mortgagee without taking into
consideration the value of the Mortgaged Property or the
solvency of the Mortgagor or of any other party to the
action, and the Mortgagor hereby consents to the appointment
of such a receiver and agrees not to oppose the same.-
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<PAGE>
---ELEVENTH: Recording Fees. Mortgagor shall be
--------------
responsible for the payment of all internal revenue stamps
and vouchers, and any notarial fees in connection with the
execution of the original of this Deed and the preparation,
filing and recordation of the certified copy of the same in
the corresponding Section of the Registry of the Property.
Mortgagor shall, promptly upon reasonable request of
Mortgagee, do all acts and things, including, but not
limited to, the execution of any further assurances and the
recording of any additional documentation deemed necessary
by Mortgagee, to establish, confirm, maintain and continue
the lien created and intended to be created hereby, and all
other rights and benefits conferred or intended to be
conferred on Mortgagee hereby, and Mortgagor shall pay all
costs incurred by Mortgagee in connection therewith,
including all filing and recording costs and reasonable
counsel fees.---------------------------
---TWELFTH: Definitions: As used in this Mortgage, the
-----------
following terms are defined as follows:---------------------
----------------------
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<PAGE>
-----(a) "Impositions" shall mean all real estate and other
-----------
taxes, all assessments made (including, without limitation,
all assessments for public improvements or benefits, whether
or not commenced or completed prior to the date hereof or
while this Mortgage is in force), water, sewer, electricity,
utility and other rents, rates and charges, excises, levies,
license fees, permit fees, inspection fees and other
authorization fees and other charges, in each case whether
general or special, ordinary or extraordinary, or foreseen
or unforeseen of every character (including all penalties or
interest thereon which at any time are assessed, levied
confirmed or imposed on or in respect of or be a lien upon
(i) the Mortgaged Property or any part thereof or any rents,
issues, income, profits or earnings therefrom or any estate,
right or interest, therein or (ii) any occupancy, use or
possession of or sales from the Mortgaged Property or any
part thereof, or (iii) this Mortgage, any interest hereon or
any other payments due from the Mortgagor under the terms of
this Mortgage, excepting, however, the income taxes now or
hereafter imposed by the United States under the Internal
Revenue Code of Nineteen
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<PAGE>
Hundred Eighty Six (1986), as amended, and by the
Commonwealth of Puerto Rico under the Puerto Rico Internal
Revenue Code of 1994, as amended, or the License Tax Act of
Nineteen Hundred Seventy Four (1974), as amended, or under
any other Act of Congress or Act of the Legislature of
Puerto Rico of the same nature, modifying, amending, or
substituting the statutes above mentioned as long as they do
not become a lien on the Mortgaged Property; ---------------
--------------------------
-----(b) "Indebtedness" shall mean (i) the Impositions; (ii)
------------
principal and interest of the Mortgage Note; (iii) the
credits referred to in Paragraph FIFTEENTH of this Deed; and
(iv) any and payments which Mortgagor is or may be obliged
to make under the Indenture and this Deed of Mortgage.
------(c) "Permitted Liens" shall mean (i) the liens
constituted by this Mortgage and the liens, charges and
encumbrances or rights indicated in the title insurance
policy issued in favor of Mortgagee; (ii) liens created by
taxes or assessments by governmental bodies, payments of
which is not yet due or the payment of which is being
contested in good faith appropriate proceedings and for
which
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adequate reserves are being maintained in the sole judgment
of the Mortgagee; (iii) easements, rights-of-way, licenses,
rights, exceptions or reservations in the Mortgaged Property
covered by this Mortgage granted or reserved for the purpose
of roads, streets, alleys, parking areas, highways,
railroads, pipelines, ditches, canals, tractor paths,
electric, telephone and telegraph lines, sewers, zoning laws
and ordinances, oil and mineral rights and other similar
purposes and minor defects and irregularities in title,
provided that: (A) all such easements, rights-of-way,
licenses, rights, exceptions, reservations and defects and
irregularities in title do not materially impair the utility
of the Mortgaged Property in the operation of the business
of the Mortgagor and do not materially and adversely affect
the marketability for the title to such property; and (B)
each such easement, right-of-way, license, right, exception
or reservation, to the extent created after the date of this
Mortgage, shall be subordinated to the lien hereby
constituted unless the same is created by operation of law.-
----------
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<PAGE>
---THIRTEENTH: Successors and Assigns: All the terms of
----------------------
this Mortgage shall apply to and be binding upon the
successors and assigns of Mortgagor and all persons claiming
under or through Mortgagor or any such successor or assign,
and shall inure to the benefit of Mortgagee. Neither this
Mortgage nor any term hereof may be changed, waived,
discharged or terminated verbally, except by a public
instrument or deed to that effect signed by the Mortgagee,
and the Mortgagor, notice of which shall be endorsed on the
Mortgage Note.---
---FOURTEENTH: The Mortgage Note: The Mortgage Note
-----------------
referred to in Paragraph FOURTH of this Deed is literally
transcribed herein as follows:--------
----------------"MORTGAGE NOTE"--------------------
VALUE: $1,631,000.---------------------------------
DUE DATE: ON DEMAND-------------------------------
---FOR VALUE RECEIVED, on demand, the undersigned promises
to pay to the order of UNITED STATES TRUST COMPANY OF NEW
YORK (the "Mortgagee") the principal sum of ONE MILLION SIX
HUNDRED THIRTY ONE THOUSAND DOLLARS ($1,631,000). The
unpaid balance of this obligation shall bear interest until
full payment hereof, at an annual rate equal to ten percent
(10%). The principal and interest hereunder shall be
payable simultaneously on demand, and payments of interest
and principal shall be made at the office or domicile of the
Mortgagee within or without the Commonwealth of Puerto Rico,
or at such other place as the Mortgagee may from time to
time designate in writing.------------------------------
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<PAGE>
---The undersigned hereby waives presentment, protest,
demand and notice of non-payment.---------
---Payments of both principal and interest are to be made in
lawful money of the United States of America.---------------
----------------------------
---This Mortgage Note is secured by a mortgage, constituted
pursuant to the terms of Deed Number twelve (12) of
Constitution of Mortgage (the "Mortgage") executed on the
date hereof before the undersigned Notary Public, and the
Mortgagee is entitled to the benefits and the security
provided for in said Deed of Constitution of First
Mortgage.------------------------------------------
---In the event the Mortgagee shall take recourse to
foreclosure or other judicial proceedings for the collection
of all or any of the principal hereof or any interest
hereon, the undersigned hereby agrees to pay all costs and
expenses (including reasonable attorney's fees and expenses)
incurred in connection with such foreclosure or judicial
proceedings.------------------------------
---------------------------------------------------
---In Caguas, Puerto Rico this seventeenth (17th) day of
December, 1996.-----------------------------
------CONTINENTAL CARIBBEAN CONTAINERS, INC.-------
(Signed) Jose Antonio Zubillaga Carmona. ----------
---Affidavit Number: 933 --------------------------
---Acknowledged and subscribed to before me by Jose Antonio
Zubillaga Carmona, of legal age, married, an executive and
resident of San Juan, Puerto Rico, as authorized
representative of Continental Caribbean Containers, Inc. In
Caguas, Puerto Rico, this seventeenth (17th) day of
December, 1996.-----
---By: (Signed) Javier E. Ferrer Canals.-----------
------------------Notary Public--------------------
---(Notarial Seal)---------------------------------
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<PAGE>
---FIFTEENTH: Various Sums:-----------------------
------------
-----(i) The principal Amount of the Mortgage Note is: ONE
MILLION SIXTY THREE THOUSAND ONE HUNDRED DOLLARS
($1,631,000). -----------------------------
-----(ii) The "Interest Credit" is: ONE HUNDRED SIXTY THREE
THOUSAND ONE HUNDRED DOLLARS ($163,100).--------------------
--------------------
-----(iii) The "Credit for Additional Advances' is: ONE
HUNDRED SIXTY THREE THOUSAND ONE HUNDRED DOLLARS
($163,100).--------------------------------
-----(iv) The "Credit for Collection Costs and Fees" is: ONE
HUNDRED SIXTY THREE THOUSAND ONE HUNDRED DOLLARS
($163,100).------------------------
---SIXTEENTH: Representations: Mortgagor represents and
---------------
warrants that.----------------------
-----i) It is the owner with valid, good, marketable,
insurable and fee simple title ("pleno dominio") of the
Mortgaged Property and of all rights and titles appertaining
thereto.------------
-----(ii) It has good and lawful authority to mortgage the
Mortgaged Property and all rights thereto, in the manner and
form hereby mortgaged.--
-----(iii) The Mortgaged Property is free and clear all
liens and encumbrances whatsoever on a parity or
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<PAGE>
superior to the liens of this Mortgage, except for the
"Permitted Liens".-------------------------
-----(iv) The Mortgaged Property is free from taxes and
assessments.-----------------------------
-----(v) It will warrant and defend said Mortgaged Property
and the validity and priority of this Mortgage against all
and every person or persons claiming the same or any part
thereof.-------------
-----(vi) It will execute whatever additional documents or
instruments that may be necessary to record this document as
a first mortgage in the Registry of Property as required by
Mortgagee.-----
---SEVENTEENTH: Notices: All notices, demands, requests
-------
and consents required under this Mortgage shall be given and
shall be addressed to the Mortgagor at Parque Central
Avenue, Bairoa Ward, Caguas, Puerto Rico, and if to
Mortgagee, they shall be addressed to Corporate Trust
Division, 114 West, 47th Street, New York, New York 10036.--
-----
---EIGHTEENTH: Rights of way, Easements and the like: The
-------------------------------- ----
Mortgagor will maintain, preserve and renew all rights of
way, easements, apparent signs, grants, privileges, licenses
and franchises reasonably necessary for the use of the
Mortgaged
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<PAGE>
Property from time to time and will not, without the prior
consent of the Mortgagee, initiate, join in or consent to
any private restrictive covenant, ordinance, or other public
or private restriction as to the use of the Mortgaged
Property which would have a material adverse effect on the
Mortgaged Property.-----------------------------------------
---NINETEENTH: Indemnification: Mortgagor will protect,
---------------
indemnify and save harmless Mortgagee and any holder of the
Mortgage Note, against any liabilities, obligations,
damages, penalties, claims, causes of action, costs, and
expenses (including, without limitation, attorney's fees and
expenses) which may be imposed upon or incurred by or
asserted against Mortgagee (except those caused by
Mortgagee, its agents or employees), by reason of (a) any
accident, injury or damage to any person or property
occurring on or about the Mortgaged Property or any part
thereof; b) any use, or condition of the Mortgaged Property
or any part thereof; (c) any failure of the Mortgagor to
perform or comply with any of the provisions hereof
including, without limitation, the provisions of Paragraph
TWENTY THIRD hereunder; or (d) any
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<PAGE>
necessity to defend any of the rights, title or interest
conveyed or created by this Mortgage.-----
---Upon receipt by Mortgagee of a notice of any claim or of
the commencement of any action against Mortgagee, in respect
to the above indemnity or to any indemnity or contribution
agreement contained herein, Mortgagee will promptly give
written notice of the claim or commencement of action to
Mortgagor. In case such notice or any such claim or action
shall be given, Mortgagor may assume the defense of such
claim or action, including the employment of counsel and
payment of expenses. Mortgagee shall have the right to
employ its own counsel in any such case, and the fees and
expenses of such counsel shall be at the expense of
Mortgagee unless the employment of such counsel shall have
been previously authorized in writing by the Mortgagor or
Mortgagor shall not have promptly employed counsel to have
charge of the defense of such claim or action, or Mortgagee
shall have reasonably concluded that there may be defenses
available to it which are different from or additional to
those available to Mortgagor (in which case, Mortgagor shall
not have the right to direct the defense of such claim or
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<PAGE>
action on behalf of the Mortgagee), in any of which events
such fees and expenses shall be borne by the Mortgagor, but
the Mortgagor shall not be responsible for the fees and
expenses of more than one counsel for Mortgagee. Mortgagor
shall not be liable to indemnify Mortgagee for any
settlement of such claim or action effected without
Mortgagor's consent.----------------------------------------
---Any amounts payable to Mortgagee under this Paragraph
NINETEENTH which are not paid within ten (10) days after
written demand therefor by Mortgagee shall bear interest at
the rate set forth in the Mortgage Note from the date of
such demand, and such amounts, together with interest, shall
be deemed to be indebtedness secured by this Mortgage.------
------------------------------------
---TWENTIETH: Limitations on Liens: Except with the prior
--------------------
written consent of Mortgagee, Mortgagor shall not create,
assume, incur or suffer to exist any mortgage, pledge, lien,
charge or other security interest or encumbrance on the
Mortgaged Property or any part thereof other than the
following:-----------------------------------------
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<PAGE>
-----(a) The lien of the First Mortgage constituted pursuant
to the terms of this Deed;----------------
-----(b) those set forth in Paragraph TWENTY-THIRD of this
Deed;--------------------------------------
-----(c) those permitted under any pledge agreement or other
instrument under which the Mortgage Note is pledged or
assigned or under any security agreement or loan agreement
secured thereby.-------
---TWENTY FIRST: Description of the Property:-----
---------------------------
---The Property is described in the Spanish language as
follows:-------------------------------
-----URBANA: Parcela de terreno zonificada industrial
radicada en el Barrio Bairoa del Municipio de Caguas, con
una cabida superficial de veinte mil trescientos cuarenta y
ocho punto setenta y nueve con cuarenta y tres (20,348.7943)
metros cuadrados, equivalentes a cinco punto uno siete siete
tres (5.1773) cuerdas. En lindes por el Norte, en una
distancia de setenta y ocho punto ocho seis ocho (78.868)
metros cuadrados, con la parcela segregada; por el Sur, en
una distancia de setenta y nueve punto nueve tres tres
(79.933) metros cuadrados con terrenos de Guaracanal
Development Corporation; por el Este, en una distancia de
doscientos cincuenta y uno punto ocho ocho cinco (251.885)
metros cuadrados, con la Avenida Marginal Este; por el
Oeste, en una distancia de doscientos sesenta y cinco punto
tres ocho ocho (265.388) metros cuadrados, con terrenos de
Guaracanal Development Corporation.-------------
---Es el remanente de la finca luego de segregados tres mil
seiscientos sesenta y siete punto cero dos siete siete
(3,667.0277) metros cuadrados, segun escritura numero
treinta y cuatro (34) otorgada en San Juan, Puerto Rico, el
treinta y uno (31) de mayo
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<PAGE>
de mil novecientos ochenta y nueve (1989), ante el notario
publico Jose Francisco Chavez Caraballo inscrita al folio
doscientos sesenta y dos (262) del tomo mil trece (1,013) de
Caguas, inscripcion segunda (2da).-------------------------
---The Property appears recorded in the Registry of
Property, First Section of Caguas at page two hundred and
sixty (260), volume one thousand thirteen (1013) of Caguas,
property number thirty four thousand seven hundred seventy
five (34,775) (formerly nine thousand one hundred ninety
five (9,195)), first (lst) inscription.-----------------
---The Property was acquired by Mortgagor pursuant Deed of
Purchase and Sale number seventy nine (79) executed before
Notary Public Thomas C. Tilley on the twenty-first (21st)
day of April nineteen seventy-five (1975), recorded in the
Registry Property, First Section of Caguas at page hundred
and sixty (260) of volume one thirteen (1013) of Caguas,
property number thirty four thousand seven hundred seventy
five (34,775) (formerly nine thousand one hundred ninety
five (9,195)) first (lst) inscription.----------------------
-----------
---According to a title study prepared by Hato Rey Title
Insurance Agency, Inc., the Property is subject to the
following liens and encumbrances:---
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<PAGE>
-----(a) By its origin: (i) easement in favor of Puerto
Rico Water Resources Authority; (ii) easement in favor of
Puerto Rico Communications Authority; (iii) easement in
favor of the Municipality of Caguas; (iv) easement in favor
of Puerto Rico Aqueduct and Sewer Authority; (v) lease in
favor of Lucila Velazquez de Prieto; (vi) easement in favor
of Eastern Sugar Association; (vii) easement in favor of
Puerto Rico Railway Light and Power Company; (viii)
restrictive covenants of use and edification; and (ix)
conditions and limitations of commercial zones, for a term
of twenty-five (25) years.------------------
-----(b) By itself: Mortgage in the amount of One Million
Three Hundred Ninety Seven Thousand Dollars ($1,397,000)
securing a Mortgage Note of same amount and bearing interest
at ten and three fourths percent (10 3/4%), constituted by
Deed Number eight (8) executed in San Juan, Puerto Rico on
April eight (8), nineteen ninety two (1992) before the
appearing notary, clarified by Deed number eighteen (18)
executed in San Juan, Puerto Rico on July thirteen (13),
nineteen ninety two (1992) before the appearing notary, and
recorded at page two hundred
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<PAGE>
sixty three (263) of volume one thousand thirteen (1,013) of
Caguas, Registry of Property, First (1st) Section of
Caguas.-----------
---TWENTY SECOND: Miscellaneous:-------------------
-------------
-----(a) The headings of the clauses of this Mortgage are
for convenience and reference only and in no way define,
limit or describe the scope or intent of this Mortgage nor
in any way affect this Mortgage.----------------------------
--------------
-----(b) If any one or more of the provisions contained
herein or in the Mortgage Note shall be invalid, illegal or
unforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof
or thereof, but each shall be as if such illegal, invalid or
enforceable provision had never been included.--------------
----------------------------
-----(c) No failure or delay on the part of the Mortgagee in
exercising any power or right hereunder shall operate as a
waiver thereof or a waiver of any provision or condition
hereof (no single partial exercise of any such right or
power shall preclude any other or further exercise thereof
or the exercise of any other right or power hereunder) and
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<PAGE>
that all rights and remedies of the Mortgagee hereunder are
cumulative and shall not be deemed exclusive of any rights
or remedies provided by law.--------------------------------
------------
-----(d) Should the Mortgagor satisfy its obligations
hereunder and the obligations for which the Mortgage Note is
pledged or assigned as collateral security in the time and
manner heretofore set forth, and its obligations under the
Indenture, and it has complied with, and diligently executed
all agreements and stipulations herein set forth, then the
Mortgagee shall execute in its favor the corresponding
release and cancellation of this Mortgage.------------------
-------------------
---TWENTY THIRD: Environmental Matters.------------
---------------------
-----(a) Mortgagor represents that (i) it has obtained all
material permits, licenses and other authorizations which
are required with respect to the ownership and operation of
its business and the Mortgaged Property under any and all
Environmental Laws (as hereinafter defined); (ii) it is in
material compliance with all terms and conditions of such
permits, licenses and authorizations, and is also in
material compliance with Environmental Laws
S-37
<PAGE>
applicable to the Mortgaged Property, including, without
limitation, all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations,
schedules and timetables contained in the Environmental
Laws; (iii) there is no material civil, criminal or
administrative action, suit, demand, claim, hearing, notice
or violation, investigation, proceeding, notice of demand
letter pending or, to its knowledge, threatened against it
or the Mortgaged Property under the Environmental Laws which
could result in a material fine, penalty or other cost or
expense; (iv) to its best knowledge, there are no past or
present events, conditions, circumstances, activities,
practices, incidents, actions or plans with respect to its
operations at the Property which may materially interfere
with or prevent material compliance with the Environmental
Laws, or which may give rise to any common law or legal
liability, including, without limitation, liability under
the Comprehensive Environmental Response, Compensation and
Liability Act of 980, as or similar state, local or foreign
laws herein collectively the "Environmental Law"), or
otherwise form the basis of
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<PAGE>
any claim, action, demand, suit, proceeding, hearing or
notice of violation, study or investigation, based on or
related to the manufacture, processing, distribution, use,
treatment, storage, disposal, or handling or the emission,
discharge, release or threatened release into the
environment at or from the Mortgaged Property, of any
pollutant, contaminant, chemical or industrial, toxic or
hazardous substance or waste which, individually or in the
aggregate, could reasonably be expected to result in a
material fine, penalty or other cost or expense.---
-----(b) Mortgagor shall (i) take all actions necessary to
keep its operations at the Mortgaged Property in compliance
with any and all present and future Environmental Laws;
provided however, the Mortgagor at its expense may, after
prior notice to the Mortgagee, contest by appropriate legal,
administrative or other proceedings conducted in good faith
and with due diligence, the validity or application, in
whole or in part, of any such Environmental Law, (ii) remove
as required by law any hazardous or toxic wastes,
contaminants or materials (collectively, "Hazardous
Material")
S-39
<PAGE>
present on the Mortgaged Property and keep the Mortgaged
Property free of any lien imposed pursuant to any
Environmental Law and (iii) not release or dispose of any
Hazardous Materials on the Mortgaged Property in violation
of any Environmental Law. Subject to the provision in the
preceding sentence, in the event Mortgagor fails to comply
with the covenants in the preceding sentence, Mortgagee may,
in addition to any other remedies set forth herein, cause
any Hazardous Materials to be removed from the Property at
Mortgagor's sole cost and expense. Any costs or expenses
incurred by Mortgagee for such purpose shall be immediately
due and payable by Mortgagor and shall bear interest at the
highest rate then payable pursuant to the Indenture.
Mortgagor shall provide to Mortgagee and its agents and
employees access to the Mortgaged Property and hereby
specifically grants to Mortgagee a license to remove any
Hazardous Material located thereon. Mortgagor shall
indemnify and hold Mortgagee (and each Holder (as this term
is defined in the Indenture) harmless from and against all
loss, cost, damage (including, without limitation,
consequential damages) or expense (including, without
limitation,
S-40
<PAGE>
reasonable attorneys, fees) that Mortgagee (or such Holder)
may sustain by reason of the assertion against Mortgagee (or
such Holder) by any party of any claim relating to such
Hazardous Material or the removal thereof from the Property.
The foregoing indemnification shall survive repayment of all
amounts due under the Mortgage, and any release or
assignment of this Mortgage.--------------------------------
---------------ACCEPTANCE------------------
---The appearing parties ratify, confirm and accept this
Deed because the same has been drawn in accordance with
their instructions.----------------
---I, the Notary, do hereby certify that this document was
read by the appearing parties; that I, the Notary, and the
said appearing parties can read and understand the English
language; that the Notary, advised the appearing parties of
the effects of this document in particular the following:
(a) that title reports were prepared by an independent third
party and not by the undersigned Notary (b) that a certified
copy of this deed must be presented for recordation in the
appropriate section of the Registry of Property; (c) of the
possibility that other documents affecting the rights herein
created
S-41
<PAGE>
are presented for recordation prior to the execution and/or
presentation of a certified copy of this deed and of the
preference or seniority that said intervening liens,
encumbrances, and/or rights may gain by such prior execution
or earlier presentation to the Registry of Property; (d) of
the desirability of verifying the status of liens and
encumbrances on the Property as may appear from the Registry
of the Property on this date and of the adverse consequences
which may result from the failure to do so; and (e) of the
possible existence and pendency of additional unrecorded
statutory liens and real property taxes (including the
statutory legal mortgage in favor of the Commonwealth of
Puerto Rico).----------------------
---I, the Notary, do hereby certify that appearing parties,
after having read all of contents of this Deed, signed this
Deed, and initialed every page hereof in my presence; that
this document was executed by the parties before me, the
Notary,---------------------------------------------------
after waiving their right to request the presence of
witnesses, of which right I appraised them.----
S-42
<PAGE>
EXHIBIT T
---------
MORTGAGE NOTE
VALUE: $1,631,000 DUE DATE: ON DEMAND
- ---FOR VALUE RECEIVED, on demand, the undersigned promises to pay to the order
of UNITED STATES TRUST COMPANY OF NEW YORK (the "Mortgagee") the principal sum
of ONE MILLION SIX HUNDRED THIRTY ONE THOUSAND DOLLARS ($1,631,000). The unpaid
balance of this obligation shall bear interest until full payment hereof, at an
annual rate equal to ten percent (10%). The principal and interest hereunder
shall be payable simultaneously on demand, and payments of interest and
principal shall be made at the office or domicile of the Mortgagee within or
without the Commonwealth of Puerto Rico, or at such other place as the Mortgagee
may from time to time designate in writing.-------------------------------------
- ---The undersigned hereby waives presentment, protest, demand and notice of non-
payment.--------------------------------------------
- ---Payments of both principal and interest are to be made in lawful money of the
United States of America.---------------------
- ---This Mortgage Note is secured by a mortgage, constituted pursuant to the
terms of Deed Number twelve (12) of Constitution of Mortgage (the "Mortgage")
executed on the date hereof before the undersigned Notary Public, and the
Mortgagee is entitled to the benefits and the security provided for in said Deed
of Constitution of First Mortgage.-----------------------------------
- ---In the event the Mortgagee shall take recourse to foreclosure or other
judicial proceedings for the collection of all or any of the principal hereof or
any interest hereon, the undersigned hereby agrees to pay all costs and expenses
(including reasonable attorney's fees and expenses) incurred in connection with
such foreclosure or judicial proceedings.------------------------------
- ---In Caguas, Puerto Rico this seventeenth (17th) day of December, 1996.--------
- ----------------------------------------------------
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By:/s/Jose Antonio Zubillaga Carmona
---------------------------------
Jose Antonio Zubillaga Carmona.
T-1
<PAGE>
Affidavit Number: 933
- ---Acknowledged and subscribed to before me by Jose Antonio Zubillaga Carmona,
of legal age, married, an executive and resident of San Juan, Puerto Rico, as
authorized representative of Continental Caribbean Containers, Inc. In Caguas,
Puerto Rico, this seventeenth (17th) day of December, 1996.--------------------
______________________________
Notary Public
T-2
<PAGE>
EXHIBIT U
---------
PERSONAL PROPERTY MORTGAGE NOTE PLEDGE AGREEMENT
AGREEMENT entered into this 17th day of December, 1996, between CONTINENTAL
CARIBBEAN CONTAINERS, INC. (the "PLEDGOR"), a corporation organized and existing
under the laws of the Commonwealth of Puerto Rico (the "Commonwealth"), and
UNITED STATES TRUST COMPANY OF NEW YORK, a corporation organized and existing
under the laws of the State of New York, as trustee and collateral agent under
that certain Indenture dated December 17, 1996 (the "PLEDGEE").
1. Reference is made to that certain Pledge and Security Agreement executed by
PLEDGOR in favor of the PLEDGEE dated December 17, 1996 (the "Security
Agreement", to that certain Indenture (the "Indenture") dated December 17, 1996
among Plastic Containers, Inc. (the "Parent"), each of the PLEDGOR and
Continental Plastic Containers, Inc. ("CPC"), as guarantors, and United States
Trust Company of New York, as trustee, pursuant to which the Parent is issuing
$125,000,000 aggregate principal amount 10% Series A Senior Secured Notes due
2006 any may issue Series B Senior Secured Notes (such Series A and Series B
Notes, collectively, the "Notes"), and to that certain Guarantee (the
"Guarantee") executed by the PLEDGOR to the PLEDGEE guaranteeing the obligations
of the Parent under the Indenture and the Notes (all of the obligations of the
PLEDGOR under the Security Agreement, the Indenture, the Notes and the Guarantee
hereinafter referred to as the "Obligations"). The Security Agreement, the
Indenture, the Notes and the Guaranties, and all other documents or instruments
issued thereunder, herein collectively referred to as the "Transaction
Documents").
2. PLEDGOR, in order to secure and guarantee the due payment and
performance of its Obligations with PLEDGEE, including interest thereon, due or
to become due, whether now existing or hereafter arising, in this act, does
present, deposit, transfer, assign, and pledge to PLEDGEE the property
specifically detailed in Paragraph 9 hereof (hereinafter referred to as the
"Pledged Security"). It is agreed by the parties hereto that PLEDGEE shall
serve as bailee of the Pledged Security pledged hereunder, subject to the terms
and conditions herein set forth.
3. PLEDGOR hereby grants to PLEDGEE a lien for the amount of all of
PLEDGOR's Obligations with PLEDGEE upon the Pledged Security and any other
collateral property, now or at any time hereafter
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given unto or left by the PLEDGOR in the possession of PLEDGEE, and also to
secure payment of the outstanding balance of any other indebtedness of the
PLEDGOR with PLEDGEE which may hereinafter arise or become due.
4. Upon failure by the PLEDGOR to perform and comply with the terms of
the Guarantee, or any other of the undertakings, obligations or liabilities of
PLEDGOR with PLEDGEE thereunder, or upon the occurrence of an Event of Default
under the other Transaction Documents, or in case of insolvency, bankruptcy, or
failure in business of PLEDGOR then, or in any such event, all obligations and
liabilities, direct or contingent, of PLEDGOR owing to PLEDGEE, shall forthwith
become due and payable, without demand or notice, and upon such event PLEDGEE
shall have full power and authority to alienate the Pledged Security then in its
possession at such place as PLEDGEE may deem best, before a Notary Public, at
public auction, upon the giving of the notices required by and as provided under
Article 1771 of the Civil Code of Puerto Rico (31 L.P.R.A. Sec. 5030). PLEDGEE
may also, at its option, bring legal action or proceedings for the collection of
such unpaid Obligations, and, at its option, simultaneously foreclose on any of
the Pledged Security, without first alienating the Pledged Security. Out of the
proceeds of the sale, and/or the foreclosure, of the Pledged Security, PLEDGEE
shall apply the net proceeds, after deducting all costs and expenses of the sale
and/or foreclosure, to the payment of any or all of the liabilities of PLEDGOR
to PLEDGEE, and to pay PLEDGOR any surplus remaining therefrom.
5. In aid of the rights granted to the PLEDGEE in Paragraph 4 hereof, it
is further stipulated and agreed by the parties herein that PLEDGEE, as holder
for value and in due course of the Pledged Security, is hereby vested with the
right to exercise the actions which pertain to an owner and title holder
thereof, as PLEDGEE, with full power to pass good title to any persons, by
delivery or endorsement; and PLEDGEE or any other holder of said Pledged
Security may collect the same in its own name by judicial proceedings or
otherwise.
6. PLEDGOR hereby authorizes and empowers PLEDGEE, at its option, upon
the occurrence and during the continuance of an event contemplated in Paragraph
4 above, to appropriate and apply to the pro tanto payment and extinguishment of
any of the obligations or liabilities of PLEDGOR with PLEDGEE, whether now
existing or hereafter contracted, and whether then due or not due, any and all
monies now or hereafter in the possession of PLEDGEE, on deposit or otherwise,
to the credit of, or belonging to the PLEDGOR.
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7. No delay on the part of PLEDGEE herein in exercising any rights
hereunder, or under the Transaction Documents, shall operate as a waiver of such
rights. Any exercise of remedies by the PLEDGEE hereunder shall be done in the
manner and at the times, if any, specified in the Indenture.
8. PLEDGEE, shall have a first priority, general and continuing lien on
the Pledged Security pledged hereunder until all Obligations of PLEDGOR owing to
PLEDGEE, whether now existing or hereafter arising, are duly and totally paid to
PLEDGEE, regardless of the date when all such Obligations are incurred or were
constituted, or the date when they mature and become due and payable by default,
demand, acceleration, or otherwise, it being the intention of the parties
hereunder, that the Pledged Security pledged with PLEDGEE in accordance with the
terms hereof shall serve as collateral security for all of the Obligations, and
while any of such Obligations remain unpaid and outstanding.
9. The PLEDGOR hereby delivers to the PLEDGEE, in pledge for the benefit
of the PLEDGEE, the following property hereby deemed the "Pledged Security":
Personal Property Mortgage Note in the principal amount of $1,857,000,
secured by a Personal Property Mortgage constituted by PLEDGOR, as
mortgagor, under a Personal Property Mortgage and Affidavit dated December
17, 1996 by and between PLEDGOR and PLEDGEE.
10. PLEDGOR hereby represents and warrants to PLEDGEE:
(a) PLEDGOR has good and valid title to, and sole record and
beneficial ownership of, the Pledged Security, which is to be pledged to PLEDGEE
by PLEDGOR pursuant hereto, free and clear of any and all covenants, conditions,
restrictions, voting trust arrangements, security interests, liens, charges,
encumbrances, options and adverse or equitable claims or rights whatsoever,
except for the lien created hereby.
(b) PLEDGOR is not a party to, subject to or bound by any judgment,
order, writ, prohibition, injunction or decree of any court, governmental body
or instrumentality and no action or proceeding is pending against PLEDGOR which
would prevent or adversely affect the execution, delivery or performance of this
Pledge Agreement or the pledge of the Pledged Security.
11. Upon payment in full of all of the Obligations, this Pledge
Agreement shall cease and terminate and the Pledged Security
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shall be delivered by the PLEDGEE (without recourse to or warranty by PLEDGEE)
to PLEDGOR duly endorsed if necessary.
12. All notices required to be given hereunder shall be made in
writing via registered or certified mail, postage prepaid, return receipt
requested or delivered by hand, to the following address, and shall be deemed
given upon receipt by the parties at the addresses set forth below:
TO PLEDGOR:
Continental Caribbean Containers, Inc.
Parque Central Avenue
Bairoa Industrial Park
Bairoa
Caguas, Puerto Rico 00652
Attention: Plant Manager
Telecopy Number: (787) 746-2448
with a copy to:
Plastics Containers, Inc.
One Aerial Way
Syosset, New York 11791
Attention: General Counsel
Telecopier: (516) 931-6344
TO PLEDGEE:
United States Trust Company of New York
Corporate Trust Division
114 West 47th Street
New York, New York 10036-16
Re: Plastic Containers, Inc.
Attention: Corporate Trust Department
Telecopier: (212) 852-1625/6
13. This Pledge Agreement may not be changed, terminated or modified
orally or in any manner other than by an agreement in writing signed by the
respective parties hereto in accordance with the Indenture. The covenants,
agreements, rights and options contained in this Pledge Agreement shall bind
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
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14. The terms, clauses and provisions of this Pledge Agreement are in
addition and not in limitation or substitution of the terms, clauses and
provisions set forth in the Transaction Documents. In the event of any
inconsistency between the provisions of this Pledge Agreement and those of the
Transaction Documents, the terms hereof shall be controlling as necessary to
create, preserve and/or maintain a valid, enforceable first priority lien and
security interest under applicable law upon the Pledged Security, but otherwise,
the provisions of the Transaction Documents shall be controlling.
15. Any provision(s) of this Pledge Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or illegality of such prohibition without invalidating the remaining provisions
hereof or affecting the validity, enforceability or legality of such provision
in any other jurisdiction.
16. The substantive laws of the Commonwealth shall govern the
construction and interpretation of this Pledge Agreement and the rights and
remedies of the parties hereto.
IN WITNESS WHEREOF, the parties hereto execute this Pledge Agreement
as of the day and year first above written.
PLEDGOR: PLEDGEE:
------- -------
CONTINENTAL CARIBBEAN UNITED STATES TRUST COMPANY
CONTAINERS, INC. OF NEW YORK,
as Collateral Agent
By:/s/Abdo Yazgi By:/s/Patricia Stermer
--------------------------- ----------------------------
Name: Abdo Yazgi Name: Patricia Stermer
Title: Vice President Title: Assistant Vice President
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State of )
)
County of )
Sworn and subscribed to before me by ____________________ and
_____________________, as representatives of the appearing parties whom I
personally know and who are of legal age, _______________, the first and
________________ the second, and residents of __________________________, and
__________________________________, respectively.
In _____________________, ______________________, this _____ day of
December, 1996
_______________________________
NOTARY PUBLIC
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EXHIBIT V
---------
PERSONAL PROPERTY MORTGAGE AND AFFIDAVIT
THIS MORTGAGE, made this 17th day of December, 1996, by CONTINENTAL
CARIBBEAN CONTAINERS, INC. as mortgagor (the "MORTGAGOR"), a corporation
organized and existing under the laws of the State of Delaware duly qualified
and authorized to do business in the Commonwealth of Puerto Rico (the
"Commonwealth"), with principal offices and place of business at Parque Central
Avenue, Bairoa Industrial Park, Bairoa, Caguas, Puerto Rico 00652 in favor of
UNITED STATES TRUST COMPANY OF NEW YORK, a New York corporation with offices at
114 West 47th Street, New York, New York 10036, as collateral agent and as
trustee (the "MORTGAGEE"), under that certain Indenture dated December 17, 1996,
among Plastic Containers, Inc. Mortgagor, Continental Plastic Containers, Inc.
and Mortgagee (the "Indenture").
W I T N E S S E T H
-------------------
FIRST: The MORTGAGOR, pursuant to the provisions of "The Personal Property
Mortgage Law", Act 19 of June 3, 1927, Title 30 L.P.R.A. Sections 1871 through
1886, as amended (the "Law"), hereby mortgages in favor of MORTGAGEE all of the
personal property described in Exhibit "A" hereof and all of the attachments,
parts
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and accessories now affixed or used in connection therewith, including without
limitation, the substitutions and replacements thereof (hereinafter collectively
referred to as the "Mortgaged Property"). The Mortgaged Property is and shall
be located at the location described above as the principal official place of
business of MORTGAGOR. The Mortgagor hereby irrevocably mortgages, transfers,
pledges, sets over and confirms unto the Mortgagee, under and subject to the
terms and conditions hereinafter set forth, the Mortgaged Property in order to
secure:
(a) The full and complete payment of the principal amount of that
certain demand promissory note (the "Note") dated the date hereof, issued by the
MORTGAGOR to the order of the MORTGAGEE in the principal amount of ONE MILLION
EIGHT HUNDRED AND FIFTY SEVEN THOUSAND DOLLARS ($1,857,000.00) bearing interest
at the rate stated therein.
(b) A credit of ONE HUNDRED EIGHTY FIVE THOUSAND SEVEN HUNDRED DOLLARS
($185,700.00), provided for any interest accrued thereon, which credit does not
exceed five annuities of interest;
(c) An additional credit of ONE HUNDRED EIGHTY FIVE THOUSAND SEVEN
HUNDRED DOLLARS ($185,700.00), provided for the attorneys' fees, costs and
expenses which the Mortgagee may incur in the event it resorts to the courts or
initiates mortgage foreclosure proceedings to collect in whole or in part such
principal amount or any interest accrued thereon;
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(d) An additional credit of ONE HUNDRED EIGHTY FIVE THOUSAND SEVEN
HUNDRED DOLLARS ($185,700.00), to cover payment of: (i) any disbursements that
the Mortgagee may make, in the use of its sole discretion; (ii) any fees related
to the recordation of this Mortgage; (iii) any taxes, including any interest,
charges and penalties related thereto, assessed on the Mortgaged Property or
that may otherwise affect the same; (iv) any insurance premiums related to any
insurance policies required by or pursuant to this Mortgage; (v) any and all
costs and expenses, including reasonable attorneys' fees, in order to defend
itself or its mortgage interest in any action or proceeding that may affect this
Mortgage; (vi) any disbursements that the Mortgagee might make for the
Mortgagor's account hereunder and those it may incur for the protection or
preservation of the Mortgaged Property if the Mortgagor defaults in any of its
obligations hereunder; and (vii) any interest earned thereby; and
(e) In general, each of the terms and conditions of the Note and of
this Mortgage.
SECOND: That this personal property mortgage is given as security for the
performance by MORTGAGOR of the above stated obligations (hereinafter referred
to as the "Obligations") undertaken by the MORTGAGOR pursuant to the terms and
conditions of the Note, and which Note literally reads as follows:
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PERSONAL PROPERTY MORTGAGE NOTE
VALUE: $1,857,00.00 San Juan, Puerto Rico
DUE: ON DEMAND.
FOR VALUE RECEIVED, the undersigned promises to pay to the order of
UNITED STATES TRUST COMPANY OF NEW YORK, on demand, the principal sum of ONE
MILLION EIGHT HUNDRED AND FIFTY-SEVEN THOUSAND DOLLARS ($1,857,000.00). The
unpaid balance of this obligation shall bear interest from the date of this
Personal Property Mortgage Note until full payment hereof, at the rate equal to
10%. Interest hereunder shall be computed on the basis of a 360-day year.
In the event the holder of this Personal Property Mortgage Note is
required to initiate legal action for collection thereof (including proceedings
under the bankruptcy laws), the undersigned agrees to pay the expenses of such
proceedings, court costs, disbursements and reasonable attorneys fees, which
amount will become due and payable immediately upon the filing of such judicial
proceedings.
The undersigned, and all others who may become liable for all or any
part of this obligation whether as maker, principal, surety, guarantor or
endorser, agree hereby to be jointly and severally ("in solidum") liable and
jointly and severally waive demand,
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presentment, protest, notice of dishonor and nonpayment and any and all lack of
diligence or delays in collection or enforcement hereof, and expressly agree to
extend to the holder the right of set-off or compensation prior to, on or after
maturity or default, and consent to any application of payment of any monies in
possession of the holder belonging to the undersigned or any obligor hereunder
related with this Personal Property Mortgage Note and to any extension of time,
modification of the terms of payment, release of any party liable for this
obligation, release, substitution or exchange of any property, real or personal,
tangible or intangible, guaranteeing payment of the Personal Property Mortgage
securing this Personal Property Mortgage Note, agreeing also to any other
indulgence or forbearance whatsoever. Any such extension, release, modification,
substitution, exchange, indulgence or forbearance may be made without notice to
said party, and without in any way affecting the personal liability of any party
obliged hereunder.
As security for the payment of the principal of and interest on this
Personal Property Mortgage Note; for the payment of an additional amount
equivalent to five annuities of interest on this Personal Property Mortgage
Note; for the payment of an additional amount equal to Ten Percent (10%) of the
principal sum of this Personal Property Mortgage Note to cover any additional
sums which may be paid or advanced by the holder in order to protect the
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interest of the holder in the Personal Property Mortgage Note as defined herein
and the interest that may accrue on such payments or advances; and for the
payment of an additional amount equivalent to Ten Percent (10%) of the principal
sum of this Personal Property Mortgage Note to cover costs and expenses of the
holder in the event of recourse to the courts for collection thereof, the
undersigned has constituted a chattel mortgage over the personal property
located in the Municipality of Caguas, Puerto Rico pursuant to a Personal
Property Mortgage and Affidavit dated the date hereof (the "Personal Property
Mortgage").
In the event that this Personal Property Mortgage Note shall be
assigned or pledged or otherwise encumbered as collateral security for the
payment of any obligation of the undersigned or of any other person, the holder
of this Personal Property Mortgage Note shall be entitled to the benefits and
security afforded by the Personal Property Mortgage constituted as security for
this Personal Property Mortgage Note and by any agreement executed by the
undersigned assigning, pledging, or encumbering this Personal Property Mortgage
Note as security therefor, and may enforce the agreements of the undersigned
contained in each of said instruments, and may exercise the remedies provided
thereby or otherwise in respect thereof without being required first to
foreclose the pledge or other lien or encumbrance so constituted upon this
Personal Property Mortgage Note, all in accordance with
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the terms of said instruments. No reference herein to said instruments, and no
provision of this Personal Property Mortgage Note or of said instruments, shall
alter or impair the obligation of the undersigned hereon, which is continuing,
absolute and unconditional, nor shall such reference affect the negotiability
hereof under the Negotiable Instruments Law of Puerto Rico.
IN WITNESS WHEREOF, the undersigned has caused this Personal Property
Mortgage Note to be executed this 17th day of December, 1996.
CONTINENTAL CARIBBEAN
CONTAINERS, INC.
By: (signed)
-----------------------------
Affidavit No. ____
Subscribed and acknowledged before me in San Juan, Puerto Rico, this
_____ day of December, 1996, by ____________________, who is to me personally
known, as __________ of Continental Caribbean Containers, Inc., of legal age,
married, business executive and resident of __________, Puerto Rico.
By: (signed)
-----------------------------
NOTARY PUBLIC
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The security interest in the Mortgaged Property shall stand as one,
general, continuing collateral security for the prompt payment and performance
of the Obligations under the Note until such Obligations have been satisfied in
full. The mortgage lien created hereunder shall at all times constitute a
[first] rank lien on the Mortgaged Property, superior to any other. In the
event the MORTGAGEE's lien in the Mortgaged Property should loose its [first]
lien ranking or become inferior or subordinate to any other lien, the MORTGAGEE
shall be entitled, but not obligated, to discharge such senior lien or
encumbrance or otherwise act to restore the priority of the lien created hereby
in accordance with Paragraph THIRTEENTH hereof, or to declare a default under
this Mortgage and to exercise its remedies hereunder.
The Mortgage constituted hereby shall extend to the Mortgaged Property
and, in addition, to the full extent allowed by law, to any indemnities and/or
compensation granted or owed to the MORTGAGOR by any insurers, or by reason of
condemnation of any of the Mortgaged Property, and by any third parties on
account of any damages caused thereto.
THIRD: So long as any of the Obligations shall remain outstanding,
the MORTGAGOR will not sell or offer to sell, lease, pledge, assign or otherwise
exchange, alienate or transfer all or any part of the Mortgaged Property or any
interest therein, or
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dispose of the Mortgaged Property without the prior written consent of the
MORTGAGEE.
FOURTH: The MORTGAGOR represents and warrants to the MORTGAGEE that
it is the sole owner, with valid, good and marketable, fee simple title of the
Mortgaged Property, and that it has the legal power and authority to pledge,
sell, assign and transfer the Mortgaged Property free and clear of any adverse
lien, security interest, encumbrance or other claims in favor of others, and
hereby covenants to warrant and, at the MORTGAGEE's request, defend the same
from all claims and demands of all persons.
FIFTH: The MORTGAGOR shall (i) maintain the Mortgaged Property in
good working condition (except for normal wear and tear) and free from any and
all liens or other encumbrances (other than the lien created hereby and others
consented to by the MORTGAGEE) (ii) not misuse, abuse or illegally use the
Mortgaged Property, (iii) not permit, allow or cause the Mortgaged Property to
come into the possession of any person, party or entity, nor sell, remove or
allow its removal from its current location without the prior written consent of
the MORTGAGEE, (iv) provide and maintain adequate insurance coverage over the
Mortgaged Property to cover public liability and all risks of fire, flooding,
hurricane, extended coverage and against such other risk as may either be
customary, in amount, from coverage and insurer, as may be
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satisfactory to the MORTGAGEE, or as may reasonably be requested by the
MORTGAGEE in writing, at the MORTGAGOR's sole expense, endorsed to include the
MORTGAGEE as an additional insured and loss payee; such policies (a copy of
which shall be made available to the MORTGAGEE) shall contain a provision
requiring thirty (30) days prior written notice to the MORTGAGEE of any change
or coverage or pending termination of coverage; MORTGAGEE shall also have the
right to purchase such policies, upon MORTGAGOR's refusal to so insure, at
MORTGAGOR's expense; and (v) comply with all laws, ordinances and regulations
affecting the Mortgaged Property or its use and with all plans, specifications,
instructions and/or manuals regarding the same and/or its use.
SIXTH: The occurrence of any of the following events or conditions
shall constitute an event of default ("Event of Default") hereunder:
(a) Default in the payment or performance of the Obligations; or
(b) Any warranty, representation, or statement made or furnished to
the MORTGAGEE by or on behalf of the MORTGAGOR under or in connection with this
Mortgage or the Note or any document, instrument or certificate delivered in
connection herewith or therewith shall prove to be have been incorrect or false
in any material respect when made or furnished; or
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(c) The making of any levy, seizure, lien, attachment or encumbrance
with respect to any of the Mortgaged Property either resulting from any
proceeding against the MORTGAGOR or any of its stockholders or affiliates or
otherwise; or
(d) The dissolution, termination of existence, bankruptcy, insolvency,
business failure, appointment of a receiver of all or a part of the property of,
assignment for the benefit of creditors by, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against, the MORTGAGOR;
or
(e) The occurrence of any event which constitutes a default, or an
event of default, by the MORTGAGOR under the Note or under any legal document,
instrument or agreement referred to hereunder or thereunder.
SEVENTH: That upon the occurrence of any Event of Default hereunder
or under the Note, and at any time thereafter, so long as all or part of the
Obligations shall remain outstanding, the MORTGAGEE shall have all rights and
remedies available to a mortgagee under a personal property mortgage pursuant to
the laws of the Commonwealth, including without limitation, the right to
foreclose upon or execute against the Mortgaged Property. The MORTGAGEE shall
furnish the MORTGAGOR with reasonable notice of the time and place of any public
sale of the Mortgaged Property or of the time after which any private sale or
any other intended dis position thereof is to be made in accordance with Article
14 of the
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Law. The requirements of reasonable notice shall be met if such notice is
mailed, postage prepaid, to the MORTGAGOR at least ten (10) days before the time
of the sale or disposition. Expenses of retaking, holding, preparing for sale,
selling or the like, with respect to the Mortgaged Property, including
attorneys' fees and legal expenses, shall be for the account of the MORTGAGOR.
EIGHTH: No waiver by the MORTGAGEE of any Event of Default shall
operate as a waiver of any other Event of Default or of the same Event of
Default on a future occasion. All rights of the MORTGAGEE hereunder shall inure
to the benefit of its successors and assigns; and all of the Obligations of the
MORTGAGOR hereunder shall bind its successors and permitted assigns.
NINTH: The conditions of this Mortgage are that if the MORTGAGOR
shall well and duly perform the Obligations above stated in full, according to
the terms thereof, then this Mortgage may be canceled.
TENTH: The MORTGAGOR hereby acknowledges, covenants and agrees that,
notwithstanding the valuation given to the Obligations hereunder, this MORTGAGE
shall remain of record, and the lien created hereby shall remain valid and in
full force and effect, until such time as all of the Obligations have been
satisfied in full.
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ELEVENTH: Upon the exercise of the rights of the MORTGAGEE hereunder
or under the Note, all or part of the Mortgaged Property or such other rights or
security given to secure the Obligations may be offered for sale for one total
aggregate price, and the proceeds of any such sale accounted for in one account
without distinction between such items of security, or without assignment to
them of any proportion of such proceeds, the MORTGAGOR hereby waiving the
application of any doctrine of marshaling.
TWELFTH: The cost and expenses of the execution of this Mortgage and
of any other instrument utilized to extend this Mortgage to cover any additional
personal property, as well as the recordation in the proper public registry(ies)
and the cancellation of said instruments upon the full payment and performance
of the Obligations, shall be payable by the MORTGAGOR.
THIRTEENTH: At any time, and from time to time, MORTGAGOR will
execute, acknowledge where appropriate and deliver, and cause to be executed,
acknowledged where appropriate and delivered, any and all further instruments,
mortgages, conveyances, deeds, extension agreements, certificates and other
instruments or documents as may, in the reasonable opinion of the MORTGAGEE, be
necessary or desirable in order to effectuate, complete, confirm, enlarge or
perfect or to continue and preserve this Mortgage, and the MORTGAGOR hereby
agrees to acknowledge, execute and deliver, or cause the acknowledgment,
execution and delivery of such documents
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or instruments without delay, at no expense to the MORTGAGEE. Upon any failure
by MORTGAGOR to do so, the MORTGAGEE may make, execute, deliver and record or
cause to be made, executed, delivered and recorded any and all such instruments,
certificates, extension agreements and documents for and in the name of the
MORTGAGOR and the MORTGAGOR hereby irrevocably appoints the MORTGAGEE the agent
and attorney-in-fact of the MORTGAGOR to do so. The MORTGAGOR agrees to pay all
filing, registration and recording fees and all federal, state, county,
Commonwealth and municipal stamp taxes or other duties, imports, assessments and
charges on account of the making, execution, delivery and recording of all such
instruments, certificates and documents.
FOURTEENTH: If the MORTGAGEE becomes a party (by intervention or
otherwise) to any action or proceeding affecting the Mortgaged Property, the
title thereto or the MORTGAGEE's interest under this Mortgage, or employs an
attorney to collect any of the indebtedness or to enforce performance of the
Obligations, covenants and agreements secured hereby or to advise MORTGAGEE with
respect to its rights and remedies hereunder and in case of an Event of Default
or threatened default, MORTGAGOR shall reimburse MORTGAGEE, forthwith upon
written notice and without further demand, for all reasonable costs, expenses,
charges and counsel fees incurred by MORTGAGEE, in any such case.
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FIFTEENTH: This Mortgage shall be binding upon and inure to the
benefit of MORTGAGOR and the MORTGAGEE and their respective successors and
assigns, except that MORTGAGOR shall not have the right to assign its
obligations hereunder without the prior written consent of the MORTGAGEE.
SIXTEENTH: Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition, unenforceability
or non-authorization without invalidating the remaining provisions hereof or
affecting the validity, enforceability or legality of such provision in any
other jurisdiction.
SEVENTEENTH: This Mortgage shall be governed by and construed in
accordance with the laws of the Commonwealth.
EIGHTEENTH: The Mortgagor does hereby agree that in the event the
Note is validly pledged or otherwise validly assigned as collateral security for
any obligations, the pledgee, pledge holder or assignee of the same shall have
all those rights, remedies, powers and privileges provided herein or by law to a
holder of a mortgage note or to the Mortgagee, to the same extent and with the
same force and effect as if the pledgee were the owner thereof, to the fullest
extent allowed by law. In such event, the pledgee,
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pledge holder or assignee of the Note shall be entitled to demand payment on the
Note, foreclose on the Note or otherwise foreclose on any other collateral
securing the Note under this Mortgage. In such event, the Mortgagee shall be
entitled to simultaneously foreclose both the pledge and the mortgage granted
hereby.
Executed in New York, New York as of the 17th day of December, 1996.
MORTGAGEE MORTGAGOR
- --------- ---------
UNITED STATES TRUST COMPANY CONTINENTAL CARIBBEAN
OF NEW YORK CONTAINERS, INC.
By:/s/Patricia Stermer By:/s/Abdo Yazgi
----------------------- ----------------------------
Patricia Stermer Abdo Yazgi
Assistant Vice President Vice President
WITNESSES:
/s/ /s/
- --------------------------- ---------------------------
V-16
<PAGE>
CERTIFICATE OF RECEIPT
I, the MORTGAGOR, do hereby certify that I have received a true and exact
copy of the foregoing Personal Property Mortgage and Affidavit.
CONTINENTAL CARIBBEAN
CONTAINERS, INC.
By: /s/Abdo Yazgi
-------------------------------
Abdo Yazgi
Vice President
AFFIDAVIT
---------
Abdo Yazgi, of legal age, married, business executive and resident of Glen
Cove, New York, being duly sworn, deposes and says that:
He is the Secretary and Vice President of Continental Caribbean Containers,
Inc., a corporation organized and existing under the laws of the State of
Delaware duly qualified and authorized to transact business in the Commonwealth
of Puerto Rico, and having its principal office in the municipality of Caguas,
Puerto Rico; that Continental Caribbean Containers, Inc. is the lawful owner of
the property described in the foregoing Mortgage, of which this affidavit forms
a part thereof; that the said
V-17
<PAGE>
property is free of liens and encumbrances, except the Mortgage of which this
affidavit forms a part thereof; that there are no judgments or executions
pending against Continental Caribbean Containers, Inc. that affect the title of
said property described in Exhibit A of the Mortgage; that the Mortgage is made
for the purpose of securing the obligations specified therein and for no other
purpose, and that the same is a just and valid obligation.
CONTINENTAL CARIBBEAN
CONTAINERS, INC.
By: /s/Abdo Yazgi
-------------------------------
Abdo Yazgi
Vice President
Affidavit No. ___
Sworn and subscribed to before me by _______________________, of legal age,
married, a business executive and resident of ________, Puerto Rico, as
_________ of Continental Caribbean Containers, Inc., personally known to me,
this _____ day of December, 1996, in San Juan, Puerto Rico.
___________________________________
Notary Public
V-18
<PAGE>
EXHIBIT A
MORTGAGED PROPERTY
V-19
<PAGE>
EXHIBIT X
---------
PREVIOUSLY LEASED / FINANCED EQUIPMENT
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Oil City, PA:
65 1506 Sep-95 RANDOLPH TESTER 065-0140 065-00070 $50,682.00
65 2101 Jan-96 BOLDT MILLING MACHINE 065-0143 065-1070 $29,371.64
65 2302 Apr-96 AIS CONVEYOR 065-0153 065-00359 $75,971.00
65 2613 Jul-96 APT COMPRESSOR SYSTEM 134-1926 134-50304 $18,778.38
$174,803.02
Santa Ana, CA:
110 104 Sep-94 TCM FORKLIFT 110-0827 A23C44868 $25,855.00
110 104 Sep-94 TCM FORKLIFT 110-0827 A23C44835 $25,855.00
110 907 Apr-95 DAVIS EXTRUDER 110-0851 110-00036 R04054 $189,552.00
110 908 Apr-95 DAVIS CO-EXTRUDER 110-0851 110-00036 4057 $56,695.00
110 1001 May-95 ELKHART RAISING FRAME 110-0851 110-00031 $43,675.00
110 1002 May-95 RANDOLPH INSPECTOR 110-0852 134-10640 $50,682.00
110 1003 May-95 INTEC HEAT CONTROL CABINET 110-0851 110-00032 $15,913.00
110 1011 May-95 INTEC HEAT CONTROL CABINET 110-0851 $15,913.00
110 1105 May-95 RAPID GRANULATOR 110-0845 134-10641 $35,054.00
110 1201 Jul-95 OULETTE PALLETIZER 110-0851 134-10644 $241,746.00
110 1218 Jul-95 SIGNODE STRAPPER 110-0851 142-02932? 100927 $34,704.00
110 1220 Jul-95 PAC ENGINEERING BLENDER 110-0851 $51,580.00
110 1701 Sep-95 DAVIS CO-EXTRUDER 110-0855 110-00521 $89,851.00
110 1704 Sep-95 ELKHART RAISING FRAME 110-0855 $49,143.00
110 1705 Sep-95 DAVIS EXTRUDER 110-0855 110-00614 $227,293.00
110 1803 Oct-95 RAPID GRANULATOR 110-0855 110-00729 $37,771.21
110 1804 Oct-95 PACIFIC ENGINEERING BLENDER 110-0855 M110-781 $109,235.87
110 1907 Dec-95 INTEC HEAT CONTROL CABINET 110-0855 110-0657 $19,801.22
110 1911 Dec-95 RANDOLPH INSPECTOR 110-0855 110-00727 $55,579.61
110 1912 Dec-95 BWI INEX LABEL INSPECTOR 110-0855 110-00731 $51,612.25
110 2002 Dec-95 AIS AIR ELEVATORS 110-0855 110-00769 $142,475.58
110 2003 Dec-95 OULLETTE CONVEYOR 110-0855 110-00776 $77,442.32
110 2102 Jan-96 FLEETWOOD SCRAP CONVEYOR 110-0855 110-00770 $8,975.00
110 2310 Apr-96 THERMAL CARE CHILLER 110-0862 110-01089 $158,484.09
110 2402 May-96 APT COMPRESSOR SYSTEM 134-1926 134-50144 $22,385.06
$1,837,273.21
Suisun City, CA:
121 105 Sep-94 CLARK FORKLIFT 121-0197 GXE230501579372 $18,548.00
121 105 Sep-94 CLARK FORKLIFT 121-0197 GXE230501589372 $18,548.00
121 202 Sep-94 INEX GEMINI VISION SYSTEM 121-0205 G5016-079 $34,000.00
121 905 Apr-95 SOUTHERN PKG SEALER 121-0220 121-00110 5808 $37,665.00
121 1301 Jul-95 APEX FORKLIFT 121-0217 $21,287.00
121 1402 Jul-95 AIS CONTAINER 121-0235 121-00544 $6,138.00
121 1403 Jul-95 AIS CONTAINER 121-0235 121-00544 $9,207.00
121 1501 Sep-95 SOUTHERN PKG CASE ERECTOR 121-0220 146-02687 5851 $43,020.00
121 2004 Dec-95 PRO-PAK CONVEYOR 121-0209 121-00937 $21,260.00
121 2005 Dec-95 SIGNODE STRAPPER 121-0209 121-00834 $10,503.76
121 2006 Dec-95 SOUTHERN PKG CASE SEALER 121-0233 121-00957 $44,020.00
121 2103 Jan-96 FLEETWOOD CABLE BELT CONVEYOR 121-0240 121-991 $6,855.00
121 2301 Apr-96 AIS CONVEYOR 121-0245 121-01222 $16,457.51
121 2508 Jul-96 CONAIR VACUUM LOADER 121-0280 121-00233 $4,812.94
121 2509 Jul-96 PRO-PAK CONVEYOR $12,032.38
121 2601 Jul-96 BWI INEX VISON SYSTEM 121-0291 134-50339 $43,865.25
$348,219.84
</TABLE>
X - 1
<PAGE>
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Cincinnati, OH:
122 1209 Jul-95 INEX GEMINI VISION SYSTEM 122-0840 $45,000.00
122 1805 Oct-95 AIS AIR ELEVATOR BYPASS 122-0813 122-01010 $22,440.00
122 1902 Dec-95 AIS TABLE TOP CONVEYER 122-0862 122-01239 $33,508.00
122 2403 May-96 APT COMPRESSOR SYSTEM 134-1926 134-50144 $21,638.95
122 2501 Jul-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $58,000.00
122 2610 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $990.40
122 2611 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $55,331.82
122 2612 Jul-96 AIS CONVEYOR 122-0888 122-00771 $48,101.00
$285,010.17
West Chicago, IL:
123 207 Sep-94 LYLE TRIMMER 123-0284 123-00086 C033934 $67,805.00
123 401 Oct-94 DAVIS EXTRUDER 123-0285 123-00089 P-2588 $97,280.00
123 502 Dec-94 DAVIS EXTRUDER 123-0290 123-01716 R0075 $88,800.00
123 703 Feb-95 INEX GEMINI VISION SYSTEM 123-0285 G091-124 $45,000.00
123 1215 Jul-95 NAUTICA DEHUMIDIFIER 134-1834 134-50039 0003 $14,500.00
123 1303 Jul-95 NAUTICA DEHUMIDIFIER 134-1834 134-50039 0005 $14,500.00
123 2410 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $29,000.00
123 2507 Jul-96 ELKHART RAISING FRAME 123-0336 $24,549.00
123 2510 Jul-96 DAVIS STANDARD EXTRUDER 123-0336 123-07724 $745,700.00
123 2603 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $13,712.50
$1,140,846.50
Baltimore, MD:
124 705 Feb-95 DOBOY CASE ERECTOR 124-1326 124-0543 94-16781 $58,425.00
124 1905 Dec-95 CONTROL ELECTRIC CONTROL PANEL 124-1339 124-691 $17,431.10
124 1906 Dec-95 SIGNODE STRAPPER 124-1346 124-697 $19,691.91
124 2506 Jul-96 APT COMPRESSOR SYSTEM 134-1926 134-50144 $20,375.00
124 2608 Jul-96 BWI INEX VISON SYSTEM 134-1981 134-50339 $40,900.00
$156,823.01
Elk Grove, IL (tech center):
134 601 Feb-95 AT & T PHONE SYSTEM 134-1812 $156,549.00
134 1401 Jul-95 LYLE TRIMMER 148-0669 134-10639 $39,991.00
134 2007 Dec-95 BWI INEX GEMINI QR STROBE 134-1904 134-50563 $15,108.50
134 2008 Dec-95 LYLE TRIMMER 134-1885 134-50464 $42,096.00
134 2104 Jan-96 KAMAN TRIMMER TRANSFORMER 134-1885 065-1137 $26,687.97
134 2304 Apr-96 ALPHEUS BLAST CLEANER 134-1928 134-50004 $58,549.00
134 2511 Jul-96 PANAMETRICS THICKNESS GAUGE 134-1959 135-05022 $6,361.75
$345,343.22
</TABLE>
X - 2
<PAGE>
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Houston, TX:
142 101 Sep-94 NISSAN FORKLIFT 142-0953 900902 $24,294.00
142 101 Sep-94 NISSAN FORKLIFT 142-0953 900090 $24,294.00
142 204 Sep-94 WAYNE CASEMAKER 142-0949 142-01338 24797-3130 $62,925.00
142 301 Nov-94 OULETTE PALLETIZER 142-0973 142-02045 270 $267,845.00
142 902 Apr-95 SOUTHERN PKG SEALER 142-0985 142-02849 5805 $37,665.00
142 1013 May-95 KAMAN SERVO 142-0987 065-456 $0.00
142 1013 May-95 LYLE TRIMMER 142-0987 C035278 $65,313.00
142 1014 May-95 INEX GEMINI VISION SYTEM 142-0987 $45,000.00
142 1015 May-95 IDEAL RAISING FRAME 142-0987 $49,500.00
142 1112 May-95 DAVIS EXTRUDER 142-0987 142-02865 $379,100.00
142 1113 May-95 INTEC HEAT CONTROL CABINET 142-0987 142-02933 $17,504.00
142 1114 May-95 RANDOLPH INSPECTOR 142-0987 134-10640 $50,682.00
142 1115 May-95 RAPID GRANULATOR 142-0987 134-10641 $35,054.00
142 1203 Jul-95 NAUTICA DEHUMIDIFIER 134-1834 134-50039 0002 $14,500.00
142 1206 Jul-95 NOVATECH BLENDER 142-0987 $40,405.00
142 1217 Jul-95 UNISOURCE WRAPPER 142-0987 142-02947 $50,620.00
142 1502 Sep-95 SIGNODE STRAPPER 142-0987 110-00023 200090 $36,034.97
142 1503 Sep-95 OULETTE PALLETIZER 142-0987 134-50162 $263,950.00
142 1904 Dec-95 AIS LEAK DETECTOR 142-1006 142-01815 $9,845.00
142 2009 Dec-95 ACTION HANDLING FORKLIFTS 142-1009 142-2005 $26,968.00
142 2010 Dec-95 ACTION HANDLING FORKLIFTS 142-1009 142-2005 $20,368.00
142 2011 Dec-95 ACTION HANDLING FORKLIFT 142-1011 142-2006 $27,346.00
142 2303 Apr-96 AIS CONVEYOR 142-1022 142-03009 $16,645.00
142 2306 Apr-96 BWI INEX INSPECTOR 142-1013 142-02152 $50,900.00
142 2309 Apr-96 SOUTHERN PKG CASE SEALER 142-1026 142-03025 $40,684.22
142 2404 May-96 APT COMPRESSOR SYSTEM 134-1926 134-50144 $21,736.00
142 2405 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $58,000.00
142 2503 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $71,000.00
142 2614 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $8,587.39
$1,816,765.58
Lima, OH:
143 103 Sep-94 NISSAN FORKLIFT 143-316 901684 $17,800.00
143 103 Sep-94 NISSAN FORKLIFT 143-316 901686 $17,800.00
143 2201 Feb-96 RANDOLPH CONTAINER TESTER 143-0341 143-01216 $55,426.00
143 2305 Apr-96 BWI INEX INSPECTOR 143-0351 143-01951 $25,820.86
143 2502 Jul-96 RANDOLPH TESTER 143-0353 143-00023 $55,426.00
143 2505 Jul-96 APT COMPRESSOR SYSTEM 134-1926 134-50144 $22,116.16
143 2609 Jul-96 NAUTICA DEHUMIDIFIER 143-0365 143-00438 $14,500.00
143 2609 Jul-96 NAUTICA DEHUMIDIFIER 143-0365 143-00438 $14,500.00
143 2609 Jul-96 NAUTICA DEHUMIDIFIER 143-0365 143-00438 $14,500.00
$237,889.02
</TABLE>
X - 3
<PAGE>
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Elk Grove, IL (plant):
145 901 Apr-95 KAMAN SERVO 145-1148 065-454 N/A $0.00
145 901 Apr-95 LYLE TRIMMER 145-1148 145-03087 C035277 $65,313.00
145 906 Apr-95 INTEC HEAT CONTROL CABINET 145-1148 $15,913.00
145 1005 May-95 INEX GEMINI VISION SYTEM 145-1148 145-03089 $45,000.00
145 1006 May-95 RANDOLPH INSPECTOR 145-1148 145-03088 $50,682.00
145 1007 May-95 RAPID GRANULATOR 145-1148 145-03090 $35,054.00
145 1106 May-95 NOVATECH BLENDER 145-1148 145-03024 $40,405.00
145 1107 May-95 SIGNODE STRAPPER 145-1148 145-30017 $34,704.00
145 1202 Jul-95 NAUTICA DEHUMIDIFIER 134-1834 134-50039 0004 $14,500.00
145 1207 Jul-95 OULETTE PALLETIZER 145-1148 134-10644 $239,718.00
145 1208 Jul-95 INEX GEMINI VISION SYSTEM 145-1148 $45,000.00
145 1216 Jul-95 UNISOURCE WRAPPER 145-1148 145-03032 $44,065.00
145 1302 Jul-95 NAUTICA DEHUMIDIFIER 134-1834 134-50039 0006 $14,500.00
145 1801 Oct-95 AUTOMATIC FEEDER 145-1154 145-03113 $106,712.00
145 1910 Dec-95 FLEETWOOD SCRAP CONVEYORS 145-1153 145-03209 $9,199.00
145 2411 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $29,000.00
$789,765.00
New Market, NJ:
146 205 Sep-94 LYLE TRIMMER 480-0004 134-50058 C034200 $67,805.00
146 1219 Jul-95 DAVIS CO-EXTRUDER 146-0697 134-10153 $745,700.00
146 1221 Jul-95 ELKHART RAISING FRAME 146-0697 134-10204 $25,482.00
146 1222 Jul-95 DATACOLOR SPEC-PHOTOMETER 146-0695 $14,900.00
146 1504 Sep-95 AIS LEAK TESTER 146-0697 146-05051 20079? $15,345.00
146 1505 Sep-95 RAPID GRANULATOR 146-0697 $35,054.49
146 1703 Sep-95 SIGNODE STRAPPER 146-0697 146-02685 $36,981.00
146 1706 Sep-95 BERINGER JET CLEANER 146-0697 $25,700.00
146 1708 Sep-95 FOREMOST VACUUM CHAMBER 146-0697 146-02649 $61,500.00
146 1807 Oct-95 AIS CABLE CONVEYOR 146-0697 146-03107 $36,052.00
146 1809 Oct-95 OUELLETTE PALLETIZER 146-0697 146-02641 $313,020.80
146 2203 Feb-96 APT CONTROLLER 146-0705 146-03386 $74,955.00
$1,452,495.29
</TABLE>
X - 4
<PAGE>
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Lenexa, KS:
148 203 Sep-94 INEX GEM INI VISION SYSTEM 148-0661 00140? $34,000.00
148 206 Sep-94 LYLE TRI MMER 123-0285 123-00091 C033868 $67,805.00
148 701 Feb-95 LYLE TRIMMER 148-0665 123-00136 C34729 $42,096.00
148 704 Feb-95 INEX GEMINI VISION SYSTEM 148-0654 148-00562 G089-114 $45,000.00
148 903 Apr-95 SOUTHERN PKG SEALER 148-0671 148-00483 5806 $37,665.00
148 904 Apr-95 SOUTHERN PKG SEALER 148-0670 148-00483 5805 $37,665.00
148 1004 May-95 RELIANCE EXTRUDER DRIVE CAB 121-0211 121-00124? $13,922.00
148 1008 May-95 ELKHART RAISING FRAME 148-0668 148-00466 $43,675.00
148 1009 May-95 ELKHART RAISING FRAME 148-0669 148-00467 $43,675.00
148 1010 May-95 INTEC HEAT CONTROL CABINET 148-0668 148-00132 $15,913.00
148 1012 May-95 KAMAN SERVO 148-0665 065-455 $25,322.00
148 1108 May-95 DAVIS EXTRUDER 148-0669 148-00743 $189,552.00
148 1109 May-95 DAVIS EXTRUDER 148-0668 148-00739 189,552.00
148 1110 May-95 KOMATSU FORKLIFT 148-0677 $18,251.00
148 1110 May-95 KOMATSU FORKLIFT 148-0677 $18,251.00
148 1211 Jul-95 INEX GEMINI VISION SYSTEM 148-0669 148-00744 $45,000.00
148 1212 Jul-95 KAMAN SERVO 148-0668 $0.00
148 1212 Jul-95 LYLE TRIMMER 148-0668 C035371 $65,313.00
148 1213 Jul-95 RAPID GRANULATOR 148-0669 148-00745 $35,054.00
148 1304 Jul-95 AIR POWER COMPRESSOR 148-0676 $70,337.00
148 1305 Jul-95 FOREMOST BLENDER 148-0668 148-00394 $45,793.00
148 1306 Jul-95 FOREMOST BLENDER 148-0669 148-00393 $45,793.00
148 1404 Jul-95 AIS CONTAINER 148-0669 148-00384 $6,138.00
148 1405 Jul-95 AIS CONTAINER 148-0669 148-00384 $9,207.00
148 1507 Sep-95 RANDOLPH TESTER 148-0668 $41,754.00
148 1601 Sep-95 ESP CASE PACKER 148-0665 $105,495.00
148 1602 Sep-95 ESP CASE PACKER 148-0670 148-00319 3034C $105,495.00
148 1603 Sep-95 ESP CASE PACKER 148-0671 148-00318 3033C $105,495.00
148 1806 Oct-95 AIS AIR ELEVATORS & CHUTES 148-0695 148-00786 $13,810.00
148 1808 Oct-95 COMPRESSED AIR DRYER 148-0676 148-00693 $30,500.00
148 2307 Apr-96 FLEETWOOD CONVEYORS 148-0702 148-00293 $35,618.00
148 2308 Apr-96 SOUTHERN PKG CASE SEALER 148-0702 148-00288 $42,522.00
148 2401 May-96 AIS CONVEYOR 148-0702 148-00287 $52,198.00
148 2408 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $116,000.00
148 2604 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $70,371.53
148 2605 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $1,687.27
148 2606 Jul-96 NAUTICA DEHUMIDIFIER 134-1913 134-50234 $14,500.00
148 2607 Jul-96 TOP WAVE BOTTLE GAUGE 104-0465 134-50189 $61,900.00
$1,942,324.80
Lakeland, FL:
150 102 Sep-94 TOYOTA FORKLIFT 150-0060 150-0720 80423 $18,400.00
150 102 Sep-94 TOYOTA FORKLIFT 150-0060 150-0720 80421 $18,400.00
150 201 Sep-94 INEX GEMINI VISION SYSTEM 150-0087 G5017-079 $34,000.00
150 501 Dec-94 TOYOTA FORKLIFT 150-0104 82318 $18,900.00
150 1204 Jul-95 TOYOTA FORKLIFT 150-0110 $19,600.00
150 1204 Jul-95 TOYOTA FORKLIFT 150-0110 $19,600.00
150 1204 Jul-95 TOYOTA FORKLIFT 150-0110 $19,600.00
150 1702 Sep-95 JOHNSON BLOW MOLDER 150-0130 134-50157 $459,710.00
150 2407 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $43,500.00
150 2504 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $53,250.00
$704,960.00
</TABLE>
X - 5
<PAGE>
<TABLE>
<CAPTION>
loc # asset # Lease Month Equipment Description PEA # PO # Serial # Total Cost
<S> <C> <C> <C> <C> <C> <C> <C>
Atlanta, GA:
430 2202 Feb-96 NORTHSIDE FORKLIFTS 430-0001 134-50752 $38,294.40
430 2602 Jul-96 TOP WAVE BOTTLE GAUGE 148-0708 148-00263 $65,000.00
$103,294.40
Congo, WV:
475 702 Feb-95 LYLE TRIMMER 475-0002 134-50215 C34810 $42,096.00
475 2409 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $29,000.00
475 2615 Jul-96 MAT HANDLING ENCLOSURE 134-1913 134-50611 $17,383.25
475 2616 Jul-96 NAUTICA DEHUMIDIFIER 475-0016 134-50312 $14,500.00
475 2617 Jul-96 CONTROL ELECTRIC 475-0015 475-00057 $41,951.05
$144,930.30
West Memphis, AR:
480 503 Dec-94 US TAPE LABELLER 480-0009 6-0589305 $58,850.00
480 504 Dec-94 LSI WRAPPER 480-0012 LS160 $25,000.00
480 801 Mar-95 OULETTE PALLETIZER 480-0013 134-50239 280 $246,480.00
480 1101 May-95 DAVIS EXTRUDER 480-0016 480-00345 $379,100.00
480 1102 May-95 IDEAL RAISING FRAME 480-0016 480-00347 $49,500.00
480 1103 May-95 INTEC HEAT CONTROL CABINET 480-0016 480-00364 $17,504.00
480 1104 May-95 SIGNODE STRAPPER 480-0015 480-00363 $34,704.00
480 1111 May-95 KAMAN SERVO 480-0016 $0.00
480 1111 May-95 LYLE TRIMMER 480-0016 480-0037 C035279 $65,313.00
480 1205 Jul-95 NOVATECH BLENDER 480-0016 $40,405.00
480 1210 Jul-95 INEX GEMINI VISION SYSTEM 480-0016 $45,000.00
480 1214 Jul-95 RANDOLPH-ALCOA LEAK TESTER 480-0016 480-0038 $50,682.00
480 1406 Jul-95 FOREMOST RAILCAR UNLOADER 480-0010 480-00390 $40,750.00
480 1707 Sep-95 BERG CHILLER 480-0020 480-00703 CT-644-20X10 $13,100.00
480 1802 Oct-95 COCHRANE COMPRESSOR 480-0022 480-00783 $48,716.70
480 1901 Dec-95 AIS CABLE CONVEYER 480-0016 480-00389 $122,656.75
480 1903 Dec-95 AIS AIR ELEVATORS 480-0023 480-00968 $18,165.00
480 1908 Dec-95 MATERIAL HANDLING FORKLIFTS 480-0027 480-980 $16,825.00
480 1909 Dec-95 MATERIAL HANDLING FORKLIFTS 480-0027 480-980 $18,444.00
480 2001 Dec-95 BWI INEX GEMINI INSPECTOR 146-0697 146-02686 $45,900.00
480 2406 May-96 NAUTICA DEHUMIDIFIER 134-1913 134-50603 $43,500.00
$1,380,595.45
===============
Grand Total $12,861,338.81
</TABLE>
X - 6
<PAGE>
Location: Atlanta, GA
<TABLE>
<CAPTION>
PEA Item # Vendor Equipment Description Total Cost
<S> <C> <C> <C> <C>
0001 9430009 Assurance Tech., Inc. Optical Comparator $6,478.86
0001 9430010 Atlas Copco Compressors $67,674.88
0001 9430014 Compressed Air Co. Air Dryer $27,344.28
0001 9430015 Conair Franklin Vacuum Loader $3,138.50
0001 9430021 Englewood Bus Plug $6,127.00
0001 9430022 Fischer Scientific D18K and XL-610 $3,806.63
0001 9430039 Fryer Company Power Adapter $63.94
0001 9430040 Fryer Company Diascopic Condenser, etc. $3,803.22
0001 9430041 Fryer Company Profile Projector, etc. $12,333.69
0001 9430042 Hunkar Smart Box $9,101.50
0001 9430049 Inter-Tel Phone System $12,214.52
0001 9430059 Pacific Engineering Plum Bob $3,008.80
0001 9430060 Pacific Engineering Railcar Unloader $28,124.00
0001 9430063 Panametrics Thcknss Gge & Probe Cbl $19,079.99
0001 9430064 Pneu-Con Take-Off Boxes $3,717.80
0001 9430073 Southern Copy Mach. Canon Copier $6,349.40
0001 9430074 Testing Machines, Inc. Bottle Crush & Insp. Gge. $11,175.00
0001 9430075 Thermal Care Chillers & Accessories $149,407.50
0001 9430077 Webb-Stiles Company Bottle Drop Tester $5,970.00
0001 9430085 Northside Forklifts Forklift $21,841.50
0001 9430093 Atlanta Wood Trends Cabinets for QC Lab $7,906.86
0001 9430098 Dorn & Hart Microedge Microtome & Blade Holder $2,115.00
0001 9430100 Fisher Scientific QC Scale $1,136.87
0001 9430106 Fryer Company Prof. Projector Lens & Access. $2,840.26
0001 9430109 Koehler Scale KWI Pallet Weight Truck $4,875.57
0001 9430110 Maintenance Equip. Co. Floor Scrubber $5,294.74
0001 9430111 Nautica Dehumidifiers Dehumidifiers $28,927.50
0001 9430112 Northside Forklift Carriage Forks $616.00
0001 9430113 Northside Forklift Carriage $3,270.00
0001 9430114 Olsun Electrics Corp. 15 KVA Transformer $795.00
0001 9430117 Peabody Techtank Welded Carbon Steel Tanks $40,885.00
0001 9430118 Romac Supply Switchgear $34,625.00
0001 9430124 B & S Sheet Metal Fabricators Regrind Box $144.00
0001 9430130 B & S Sheet Metal Fabricators Hopper Gate $525.00
0001 9430133 B & S Sheet Metal Fabricators Grinder Receiving Bin $1,992.00
0001 9430134 Cameron & Barkley Company Pipe Threading Machine $3,668.10
0001 9430136 Fox Valley Metal Conveyor & Platform Assy. $4,100.00
0001 9430140 Prestige Sales Co., Inc. Workbenches $1,433.58
0001 9430143 Cameron & Barkley Machine Stand $586.12
0001 9430144 Grainger Equipment Cabinets $325.13
0001 9430145 LAI Maintenance Lube Cart $1,460.00
0001 9430146 Prime Equipment Scissor Lift $15,370.00
0002 9430001 AEC, Inc. Dryers & Accessories $960.00
0002 9430003 AEC, Inc. Dryers & Accessories $3,395.00
0002 9430005 AEC, Inc. Dryers & Accessories $5,215.00
0002 9430007 AEC, Inc. Dryers & Accessories $11,320.00
0002 9430011 Beringer Jet Cleaner $25,700.00
0002 9430013 Blades Mach. Grinder $42,374.40
0002 9430016 David Standard Flatpak Extruder $745,700.00
0002 9430018 Davis Standard Extruder Installation $135,000.00
</TABLE>
X - 7
<PAGE>
Location: Atlanta, GA
<TABLE>
<S> <C> <C> <C> <C>
0002 9430020 Elkhart Raising Frame $24,549.00
0002 9430025 Fleetwood Systems Conveyors $124,985.00
0002 9430026 Foremost Vacuum Assemblies $3,540.00
0002 9430028 Fox Valley Metal Support Stands $210.00
0002 9430030 Fox Valley Metal Operator's Platform $2,750.00
0002 9430032 Fox Valley Metal Hoppers and Accessories $3,550.00
0002 9430034 Fox Valley Metal Transformer Stand $5,400.00
0002 9430036 Fox Valley Metal Hoppers and Accessories $9,246.00
0002 9430043 Hunkar Smart Box $9,101.50
0002 9430045 Ideal Tool Die Head Accessories $14,868.76
0002 9430047 Ideal Tool Die Head $141,193.64
0002 9430050 Olsun Electrics Transformers $14,618.00
0002 9430051 Oulette Machinery Palletizer $261,804.30
0002 9430053 Pacific Engineering Vacuum Chmbr. & Accss. $43.25
0002 9430055 Pacific Engineering Vacuum Chmbr. & Accss. $315.50
0002 9430057 Pacific Engineering Vacuum Chmbr. & Accss. $1,900.15
0002 9430061 Pacific Engineering Blenders $54,682.00
0002 9430066 Randolph Container Tester $50,406.00
0002 9430067 Signode Strappers $38,461.50
0002 9430069 Simplex Systems Sampling Cabinet $965.00
0002 9430071 Simplex Systems Conveyor Controls $5,182.00
0002 9430086 Simplex Systems Extruder Controls $3,573.50
0002 9430088 Southeast Polymer Mach. Take-off boxes $1,134.75
0002 9430091 All Phase Electric 112.5 KVA Transformer $2,187.84
0002 9430096 B&S Sheet Metal Conveyor Chute $1,215.00
0002 9430103 Fox Valley Metal Hopper Stands $1,947.50
0002 9430105 Fox Valley Metal Hopper Extensions $1,960.00
0002 9430108 Kaman Industrial Tech BBM Package $8,588.57
0002 9430115 Oullette Machinery Palletizer Installation $11,215.00
0002 9430119 Scott Industrial Systems Power Unit $4,300.00
0002 9430125 B & S Sheet Metal Fabricators Drip Pans $146.50
0002 9430128 B & S Sheet Metal Fabricators Unloading Chute $270.00
0002 9430129 B & S Sheet Metal Fabricators Conveyor Extension & Deflector $418.00
0002 9430131 B & S Sheet Metal Fabricators Conveyor Brackets $689.00
0002 9430132 B & S Sheet Metal Fabricators Discharge Chutes $924.00
0002 9430135 Fox Valley Metal Missed Bottle Detector $510.00
0002 9430137 Fox Valley Metal Conveyor & Platform Assy. $4,100.00
0002 9430139 McMaster Carr Supply Crossover Bridge Assembly $1,026.36
0002 9430141 Blades Machinery Sound Enclosures & Silencers $1,898.50
0003 9430002 AEC, Inc. Dryers & Accessories $960.00
0003 9430004 AEC, Inc. Dryers & Accessories $3,395.00
0003 9430006 AEC, Inc. Dryers & Accessories $5,215.00
0003 9430008 AEC, Inc. Dryers & Accessories $11,320.00
0003 9430012 Blades Mach. Grinder $32,819.60
0003 9430017 Davis Standard Extruder Installation $71,810.00
0003 9430019 Davis Standard Flatpak Extruder $1,081,313.00
0003 9430023 Fleetwood Systems Vacuum System $28,343.25
0003 9430024 Fleetwood Systems Conveyors $70,955.00
0003 9430027 Foremost Vacuum Assemblies $3,540.00
0003 9430029 Fox Valley Metal Support Stands $210.00
0003 9430031 Fox Valley Metal Operator's Platform $2,750.00
</TABLE>
X - 8
<PAGE>
Location: Atlanta, GA
<TABLE>
<S> <C> <C> <C> <C>
0003 9430033 Fox Valley Metal Hoppers and Accessories $3,550.00
0003 9430035 Fox Valley Metal Transformer Stand $5,400.00
0003 9430037 Fox Valley Metal Hoppers and Accessories $9,246.00
0003 9430038 Fox Valley Metal Extruder Platform $10,300.00
0003 9430044 Hunkar Smart Box $9,101.50
0003 9430046 Ideal Tool Die Head Accessories $64,561.28
0003 9430048 Ideal Tool BBM $532,139.47
0003 9430052 Oulette Machinery Palletizer $293,771.50
0003 9430054 Pacific Engineering Vacuum Chmbr. & Accss. $43.25
0003 9430056 Pacific Engineering Vacuum Chmbr. & Accss. $315.50
0003 9430058 Pacific Engineering Vacuum Chmbr. & Accss. $1,900.15
0003 9430062 Pacific Engineering Blenders $54,682.00
0003 9430065 Randolph Container Tester $45,946.00
0003 9430068 Signode Strappers $38,461.50
0003 9430070 Simplex Systems Sampling Cabinet $965.00
0003 9430072 Simplex Systems Conveyor Controls $5,182.00
0003 9430076 Turnkey Eng Conveyor $13,450.00
0003 9430080 Fleetwood Systems Air Bladders and Access. $2,208.00
0003 9430081 Fox Valley Metal Flanges $210.00
0003 9430082 Fox Valley Metal Hoppers and Accessories $6,180.00
0003 9430087 Simplex Systems Extruder Controls $3,573.50
0003 9430089 Southeast Polymer Mach. Take-off boxes $1,134.75
0003 9430090 All Phase Electric 75 KVA Transformer $1,361.25
0003 9430092 Armin Tool & Mfg. Hydra II Die Head $234,310.00
0003 9430094 B&S Sheet Metal Air Conveyor Access Doors $288.00
0003 9430095 B&S Sheet Metal Hopper Extensions $627.00
0003 9430097 Deublin Rotary Union $17,000.00
0003 9430099 Fast Heat Plate Heaters for Hydra II $6,795.71
0003 9430101 Fleetwood Systems Bottle Detector/Ejector $1,125.00
0003 9430102 Fox Valley Metal Hopper Extensions $300.00
0003 9430104 Fox Valley Metal Hopper Stands $1,947.50
0003 9430107 Hydra-Tech Filter System $2,825.80
0003 9430116 Oullette Machinery Palletizer Installation $11,215.95
0003 9430120 Simplex System Controls Extruder Table Elec. Control $3,355.00
0003 9430121 South Bend Lathe, Inc. Blast Cabinet $1,205.00
0003 9430122 Armin Tool & Mfg. Company Hydra II Die Head Assemblies $9,600.00
0003 9430123 B & S Sheet Metal Fabricators Crossover Steps $130.00
0003 9430126 B & S Sheet Metal Fabricators Drip Pans $146.50
0003 9430127 B & S Sheet Metal Fabricators Conveyor Floor Guards $233.00
0003 9430138 Fox Valley Metal Conveyor & Platform Assy. $4,100.00
0003 9430142 Blades Machinery Sound Enclosures & Silencers $1,898.50
==================
$5,060,609.72
</TABLE>
X - 9
<PAGE>
SCHEDULE A
----------
LIST OF MORTGAGED REAL PROPERTIES
---------------------------------
1. Santa Ana, California
2. Fairfield, California
3. Oil City, Pennsylvania
4. Caguas, Puerto Rico
<PAGE>
EXHIBIT 4.2
================================================================================
REGISTRATION RIGHTS AGREEMENT
Dated as of December 17, 1996
by and among
PLASTIC CONTAINERS, INC.
CONTINENTAL PLASTIC CONTAINERS, INC.
AND
CONTINENTAL CARIBBEAN CONTAINERS, INC.
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
LEHMAN BROTHERS INC.
and
SOCIETE GENERALE SECURITIES CORPORATION
================================================================================
<PAGE>
-2-
This Registration Rights Agreement (this "Agreement") is made and entered
---------
into as of December 17, 1996, by and among Plastic Containers, Inc., a Delaware
corporation (the "Company"), Continental Plastic Containers, Inc., a Delaware
-------
corporation ("CPC"), Continental Caribbean Containers, Inc., a Delaware
---
corporation ("Caribbean", and, together with CPC, the "Guarantors"), and
--------- ----------
Donaldson, Lufkin & Jenrette Securities Corporation, Lehman Brothers Inc. and
Societe Generale Securities Corporation (each, an "Initial Purchaser" and,
-----------------
collectively, the "Initial Purchasers").
------------------
This Agreement is made pursuant to the Purchase Agreement, dated December
11, 1996 (the "Purchase Agreement"), by and among the Company, the Guarantors
------------------
and the Initial Purchasers. In order to induce the Initial Purchasers to
purchase thereunder the Company's 10% Senior Secured Notes due 2006, Series A
(the "Series A Notes"), the Company has agreed to provide the registration
--------------
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the obligations of the Initial Purchasers set forth
in the Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have the
following meanings:
Act: The Securities Act of 1933, as amended.
---
Business Day: Any day except a Saturday, Sunday or other day in the City
------------
of New York, or in the city of the corporate trust office of the Trustee, on
which banks are authorized to close.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
-------------
Broker-Dealer Transfer Restricted Securities: Series B Notes that are
--------------------------------------------
acquired by a Broker-Dealer in the Exchange Offer in exchange for Series A Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its affiliates).
Closing Date: The date hereof.
------------
Commission: The Securities and Exchange Commission.
----------
Consummate: The Exchange Offer shall be deemed "Consummated" for purposes
----------
of this Agreement upon the occurrence of (a) the filing and effectiveness under
the Act of the Exchange Offer Registration Statement relating to the Series B
Notes to be issued in the Exchange Offer, (b) the maintenance of such
Registration Statement continuously effective and the keeping of the Exchange
Offer open for a period not less than the minimum period required pursuant to
Section 3(b) hereof and (c) the delivery by the Company to the Trustee under the
Indenture of Series B Notes in the same aggregate principal amount as the
aggregate principal amount of Series A Notes tendered by Holders thereof
pursuant to the Exchange Offer.
<PAGE>
-3-
Damages Payment Date: With respect to the Series A Notes, each Interest
--------------------
Payment Date.
Exchange Act: The Securities Exchange Act of 1934, as amended.
------------
Exchange Offer: The offer by the Company to Holders of all outstanding
--------------
Transfer Restricted Securities pursuant to the Exchange Offer Registration
Statement to exchange any or all such outstanding Transfer Restricted Securities
for an equal principal amount of Series B Notes.
Exchange Offer Registration Statement: The Registration Statement relating
-------------------------------------
to the Exchange Offer.
Exempt Resales: The transactions in which the Initial Purchasers propose
--------------
to sell the Series A Notes to certain "qualified institutional buyers," as such
term is defined in Rule 144A under the Act, to certain institutional "accredited
investors," as such term is defined in Rule 501(a)(1), (2), (3), (5) and (7) of
Regulation D under the Act, and outside the United States in compliance with
Regulation S under the Act.
Global Note: As defined in the Indenture.
-----------
Holders: As defined in Section 2 hereof.
-------
Indemnified Holder: As defined in Section 8(a) hereof.
------------------
Indenture: The Indenture, dated the Closing Date, among the Company, the
---------
Guarantors and United States Trust Company of New York, as trustee (the
"Trustee"), pursuant to which the Notes are to be issued, as such Indenture is
-------
amended or supplemented from time to time in accordance with the terms thereof.
Interest Payment Date: As defined in the Indenture and the Notes.
---------------------
NASD: National Association of Securities Dealers, Inc.
----
Named Holder: As defined in Section 6(c)(iv) hereof.
------------
Notes: The Series A Notes and the Series B Notes.
-----
Person: An individual, partnership, corporation, trust, unincorporated
------
organization, other business entity or a government or agency or political
subdivision thereof.
Physical Securities: As defined in the Indenture.
-------------------
Prospectus: The prospectus included in a Registration Statement at the
----------
time such Registration Statement is declared effective, or as amended or
supplemented by any prospectus
<PAGE>
-4-
supplement and by all other amendments thereto, including those included in
post-effective amendments to the Registration Statement, and all material
incorporated by reference into such Prospectus.
Record Holder: With respect to any Damages Payment Date, each Person who
-------------
is a Holder of Notes on the record date with respect to the Interest Payment
Date on which such Damages Payment Date shall occur.
Registration Default: As defined in Section 5 hereof.
--------------------
Registration Statement: Any registration statement of the Company and the
----------------------
Guarantors under the Act relating to (a) an offering of Series B Notes pursuant
to the Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) which
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Restricted Broker-Dealer: Any Broker-Dealer which holds Broker-Dealer
------------------------
Transfer Restricted Securities.
Series A Notes: As defined in the preamble hereto.
--------------
Series B Notes: The Company's 10% Senior Secured Notes due 2006, Series B,
--------------
to be issued pursuant to the Indenture (i) in the Exchange Offer or (ii) upon
the request of any Holder of Series A Notes covered by a Shelf Registration
Statement, in exchange for such Series A Notes.
Shelf Registration Statement: As defined in Section 4 hereof.
----------------------------
TIA: The Trust Indenture Act of 1939 as in effect on the date of the
---
Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur of
------------------------------
(a) the date on which such Note is exchanged in the Exchange Offer for a Series
B Note which may be resold to the public by the Holder thereof without complying
with the prospectus delivery requirements of the Act, (b) the date on which such
Note has been sold or otherwise disposed of in accordance with a Shelf
Registration Statement, (c) the date on which such Note is disposed of by a
Broker-Dealer pursuant to the "Plan of Distribution" contemplated by the
Exchange Offer Registration Statement (including delivery of the Prospectus
contained therein) and (d) the date on which such Note is distributed to the
public pursuant to Rule 144 under the Act.
underwriters: As defined in Section 11 hereof.
------------
Underwritten Registration or Underwritten Offering: A registration or
------------------------- ---------------------
offering in which Notes are sold to an underwriter for reoffering to the public.
<PAGE>
-5-
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities (each,
a "Holder") whenever such Person owns Transfer Restricted Securities of record.
------
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable federal
law (after the procedures set forth in Section 6(a)(i) below have been complied
with), the Company and the Guarantors shall (i) cause to be filed with the
Commission, as soon as practicable after the Closing Date but in no event later
than 35 days after the Closing Date, the Exchange Offer Registration Statement,
(ii) use their respective best efforts to cause such Exchange Offer Registration
Statement to become effective at the earliest possible time, but in no event
later than 130 days after the Closing Date, (iii) unless the Exchange Offer
would not be permitted by applicable law or Commission policy, commence the
Exchange Offer on or prior to five Business Days after the date on which the
Exchange Offer Registration Statement is declared effective by the Commission,
and use their respective best efforts to issue Series B Notes in exchange for
all Transfer Restricted Securities tendered prior thereto in the Exchange Offer,
(iv) in connection with the foregoing, (A) file all pre-effective amendments to
such Exchange Offer Registration Statement as may be necessary in order to cause
such Exchange Offer Registration Statement to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer; provided, however, that
neither the Company nor any Guarantor shall be required in this connection to
register or qualify as a foreign corporation or a dealer where it is not now so
qualified or to take any action that would subject it to the service of process
in suits or to taxation, other than as to matters and transactions relating to
the Registration Statement, in any jurisdiction where it is not now so subject;
and (v) upon the effectiveness of such Exchange Offer Registration Statement,
commence and Consummate the Exchange Offer. The Exchange Offer Registration
Statement shall be on the appropriate form under the Act for the registration of
the Series B Notes to be offered in exchange for the Series A Notes that are
Transfer Restricted Securities and to permit sales of Broker-Dealer Transfer
Restricted Securities by Restricted Broker-Dealers as contemplated by Section
3(c) below.
(b) The Company and the Guarantors shall use their respective best efforts
to cause the Exchange Offer Registration Statement to be effective continuously,
and shall keep the Exchange Offer open for a period of not less than the minimum
period required under applicable federal and state securities laws; provided,
however, that in no event shall such period be less than 20 Business Days. The
Company and the Guarantors shall cause the Exchange Offer to comply with all
applicable federal and state securities laws. No securities other than the
Notes shall be included in the Exchange Offer Registration Statement. The
Company and the Guarantors shall use their respective best efforts to cause the
Exchange Offer to be Consummated on the earliest practicable date after the
Exchange Offer Registration Statement has become effective, but in no event
later than 30 Business Days thereafter.
<PAGE>
-6-
(c) The "Plan of Distribution" section in the Prospectus contained in the
Exchange Offer Registration Statement shall indicate that any Restricted Broker-
Dealer who holds Series A Notes that are Transfer Restricted Securities and that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities may exchange such Series A Notes (other
than Transfer Restricted Securities acquired directly from the Company or any
Affiliate of the Company) pursuant to the Exchange Offer; however, such Broker-
Dealer may be deemed to be an "underwriter" within the meaning of the Act and
must, therefore, deliver a prospectus meeting the requirements of the Act in
connection with its initial sale of the Broker-Dealer Transfer Restricted
Securities received by such Restricted Broker-Dealer in the Exchange Offer,
which prospectus delivery requirement may be satisfied by the delivery by such
Broker-Dealer of the Prospectus. Such "Plan of Distribution" section shall also
contain all other information with respect to such sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers that the Commission
may require in order to permit such sales pursuant thereto, but such "Plan of
Distribution" shall not name any such Restricted Broker-Dealer or disclose the
amount of Notes held by any such Restricted Broker-Dealer, except to the extent
required by the Commission as a result of a change in policy after the date of
this Agreement.
The Company and the Guarantors shall use their respective best efforts to
keep the Exchange Offer Registration Statement continuously effective,
supplemented and amended as required by the provisions of Section 6(c) below to
the extent necessary to ensure that it is available for sales of Broker-Dealer
Transfer Restricted Securities by Restricted Broker-Dealers, and to ensure that
such Registration Statement conforms with the requirements of this Agreement,
the Act and the policies, rules and regulations of the Commission as announced
from time to time, for a period of one year from the date on which the Exchange
Offer is Consummated.
The Company and the Guarantors shall promptly provide sufficient copies of
the latest version of the Prospectus to such Restricted Broker-Dealers promptly
upon request, and in no event later than one day after such request, at any time
during such one-year period in order to facilitate such sales.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Company is not required to file an
------------------
Exchange Offer Registration Statement with respect to the Series B Notes because
the Exchange Offer is not permitted by applicable federal law (after the
procedures set forth in Section 6(a)(i) below have been complied with) or
Commission policy or (ii) any Holder of Transfer Restricted Securities shall
notify the Company within 20 Business Days following the Consummation of the
Exchange Offer that (A) such Holder was prohibited by law or Commission policy
from participating in the Exchange Offer or (B) such Holder may not resell the
Series B Notes acquired by it in the Exchange Offer to the public without
delivering a prospectus and the Prospectus contained in the Exchange Offer
Registration Statement is not appropriate or available for such resales by such
Holder, then the Company and the Guarantors shall (x) cause to be filed, on or
prior to 35 days after the date on which the Company determines that it is not
required to file the Exchange Offer Registration Statement pursuant to clause
(i) above, or 35 days after the date on which the Company receives the notice
specified in clause (ii) above, a shelf registration statement pursuant to Rule
415 under the Act (which may be an amendment to the Exchange Offer Registration
<PAGE>
-7-
Statement (in either event, the "Shelf Registration Statement")), relating to
----------------------------
all Transfer Restricted Securities as to which the Holders have complied with
Section 4(b) hereof, and (y) use their respective best efforts to cause such
Shelf Registration Statement to become effective on or prior to 130 days after
the date on which the Company becomes obligated to file such Shelf Registration
Statement; provided if the Exchange Offer has not been Consummated within 180
days of the Closing Date, then the Company and the Guarantors will file the
Shelf Registration Statement with the Commission on or prior to the 181st day
after the Closing Date. If, after the Company has filed an Exchange Offer
Registration Statement which satisfies the requirements of Section 3(a) above,
the Company is required to file and make effective a Shelf Registration
Statement solely because the Exchange Offer is not permitted under applicable
federal law, then the filing of the Exchange Offer Registration Statement shall
be deemed to satisfy the requirements of clause (x) of the preceding sentence
but shall have no effect on the requirements of clause (y) of the preceding
sentence. The Company and the Guarantors shall use their respective best
efforts to keep the Shelf Registration Statement continuously effective,
supplemented and amended as required by and subject to the provisions of
Sections 6(b) and (c) hereof to the extent necessary to ensure that it is
available for sales of Transfer Restricted Securities by the Holders thereof
entitled to the benefit of this Section 4(a), and to ensure that it conforms
with the requirements of this Agreement, the Act and the policies, rules and
regulations of the Commission as announced from time to time, for a period of at
least three years (as extended pursuant to Section 6(d)) following the date on
which such Shelf Registration Statement first becomes effective under the Act or
such shorter period that will terminate when all the Series A Notes covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or are eligible for sale pursuant to Rule 144(k) under
the Act.
(b) Conditions to Company's and Guarantors' Obligations. No Holder of
---------------------------------------------------
Transfer Restricted Securities may include any of its Transfer Restricted
Securities in any Shelf Registration Statement pursuant to this Agreement unless
and until such Holder (i) furnishes to the Company in writing, within 30 days
after the mailing by the Company of a request therefor, the information with
respect to such Holder specified in Items 507 and 508 of Regulation S-K under
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein and (ii) agrees to be
bound by the terms of this Agreement, including, without limitation, Sections
6(d), 8, 10, 11 and 12(d). No Holder of Transfer Restricted Securities shall be
entitled to liquidated damages pursuant to Section 5 hereof unless and until
such Holder shall have complied in all material respects with the foregoing
sentence. In addition, each Holder desiring to include Transfer Restricted
Securities in a Shelf Registration Statement shall also agree to furnish
promptly to the Company all information required to be disclosed in order to
make the information previously furnished to the Company by such Holder not
materially misleading.
SECTION 5. LIQUIDATED DAMAGES
A "Registration Default" shall mean any of the following: (i) any
--------------------
Registration Statement is not filed with the Commission on or prior to the date
specified for such filings in Sections 3 and 4 of this Agreement; (ii) any
Registration Statement has not been declared effective by the Commission on or
prior to the date specified for such effectiveness in this Agreement; (iii) the
Exchange Offer has not been Consummated within 30 Business Days after the
Exchange Offer Registration Statement is first declared
<PAGE>
-8-
effective by the Commission; (iv) any Registration Statement is filed and
declared effective but shall thereafter cease to be effective for a period of
one Business Day; or (v) at any time when the Prospectus is required by the Act
to be delivered in connection with sales of Transfer Restricted Securities, the
Company shall conclude, or the Holders of a majority in principal amount of the
affected Transfer Restricted Securities shall reasonably conclude, based on
advise of their counsel, and shall give notice to the Company, that either (A)
any event shall occur or fact exist as a result of which it is necessary to
amend or supplement the Prospectus in order that it will not include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements made, in light of the circumstances under which they were
made, not misleading, or (B) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus in order to comply with the
requirements of the Act or the rules of the Commission thereunder, and in the
case of clause (A) or (B), the Registration Statement is not appropriately
amended by an effective post-effective amendment, or the Prospectus is not
amended or supplemented, in a manner reasonably satisfactory to the Holders of
Transfer Restricted Securities within one Business Day after the Company shall
so conclude or shall receive the above-mentioned notice from Holders of Transfer
Restricted Securities. Upon the occurrence of a Registration Default, the
Company and the Guarantors hereby jointly and severally agree to pay liquidated
damages to each Holder of Transfer Restricted Securities affected by the
Registration Default with respect to the first 90-day period immediately
following the occurrence of such Registration Default, in an amount equal to
$.05 per week per $1,000 principal amount of Transfer Restricted Securities held
by such Holder for each week or portion thereof during which the Registration
Default continues. The amount of the liquidated damages shall increase by an
additional $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities with respect to each subsequent 90-day period until all Registration
Defaults have been cured, up to a maximum amount of liquidated damages of $.50
per week per $1,000 principal amount of Transfer Restricted Securities.
Notwithstanding anything to the contrary set forth herein, (1) upon filing of
the Registration Statement, in the case of (i) above, (2) upon the effectiveness
of the Registration Statement, in the case of (ii) above, (3) upon Consummation
of the Exchange Offer, in the case of (iii) above, or (4) upon the renewal of
effectiveness of the Registration Statement, or the effectiveness of a post-
effective amendment thereto reasonably satisfactory to the Holders of a majority
in principal amount of the Transfer Restricted Securities affected by the
Registration Default, or the date of issuance of an amended or supplemented
Prospectus reasonably satisfactory to the Holders of a majority in principal
amount of the Transfer Restricted Securities affected by the Registration
Default, in the case of (iv) above, the accrual of liquidated damages payable
with respect to the Transfer Restricted Securities shall cease.
All accrued liquidated damages shall be paid to the Holder or Holders of
the Global Note by wire transfer of immediately available funds or by federal
funds check, and to Holders of Physical Securities by mailing checks to their
registered addresses on each Damages Payment Date. All obligations of the
Company and the Guarantors set forth in the preceding paragraph that are
outstanding with respect to any Transfer Restricted Security shall cease to
accrue at the time when it ceases to be a Transfer Restricted Security but any
obligations then outstanding shall remain payable.
<PAGE>
-9-
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the Exchange
-------------------------------------
Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
Consummate the Exchange Offer and to permit the resale of Broker-Dealer Transfer
Restricted Securities, and shall comply with all of the following provisions:
(i) If, following the date hereof there has been published a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, such that in the reasonable opinion of counsel to the
Company, there is a substantial question as to whether the Exchange Offer
is permitted by applicable federal law, the Company and the Guarantors
hereby agree to request a no-action or interpretive letter from the
Commission staff allowing the Company and the Guarantors to Consummate the
Exchange Offer. The Company and the Guarantors will not be obligated to
pursue the issuance of such a letter beyond the Commission staff level. In
connection with the foregoing, the Company and the Guarantors hereby agree
to take all such other actions as are requested by the Commission staff in
connection with the issuance of such letter, including without limitation
(A) participating in telephonic conferences with the Commission staff, (B)
delivering to the Commission staff an analysis prepared by counsel to the
Company setting forth the legal bases, if any, upon which such counsel has
concluded that such an Exchange Offer should be permitted and (C)
diligently pursuing a resolution (which need not be favorable) by the
Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation of the Exchange Offer, a written representation to the Company
and the Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect
that (A) it is not an affiliate of the Company, (B) it is not engaged in,
and does not intend to engage in, and has no arrangement or understanding
with any person to participate in, a distribution of the Series B Notes to
be issued in the Exchange Offer and (C) it is acquiring the Series B Notes
in its ordinary course of business. Each Holder shall also acknowledge and
agree that any Holder using the Exchange Offer to participate in a
distribution of the Series B Notes to be acquired in the Exchange Offer (1)
could not rely on the position of the Commission staff enunciated in Morgan
------
Stanley and Co., Inc. (available June 5, 1991), Exxon Capital Holdings
--------------------- ----------------------
Corporation (available May 13, 1988), Shearman & Sterling (available July
----------- -------------------
2, 1993), and similar interpretive letters (including, if applicable, any
no-action letter obtained pursuant to clause (i) above), and (2) must
comply with the registration and prospectus delivery requirements of the
Act in connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective registration
statement containing the selling security holder information required by
Item 507 of Regulation S-K.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Company and the Guarantors shall provide a supplemental
letter to the Commission (A) stating that the Company and the Guarantors
are registering the Exchange Offer in reliance on the
<PAGE>
-10-
position of the Commission staff enunciated in the above-mentioned
interpretive letters and, if applicable, any other interpretive letter
obtained pursuant to clause (i) above, (B) including a representation that
neither the Company nor any Guarantor has entered into any arrangement or
understanding with any Person to distribute the Series B Notes to be
received in the Exchange Offer and that, to the best of the Company's and
each Guarantor's information and belief, each Holder participating in the
Exchange Offer is acquiring the Series B Notes in its ordinary course of
business and has no arrangement or understanding with any Person to
participate in the distribution of the Series B Notes to be received in the
Exchange Offer and (C) including any other undertaking or representation
required by the Commission as set forth in any interpretive letter obtained
pursuant to clause (i) above.
(b) Shelf Registration Statement. In connection with the unrestricted
----------------------------
resale of Transfer Restricted Securities, the Company and the Guarantors shall
comply with all applicable provisions of Section 6(c) below and shall use their
respective best efforts to provide for such unrestricted resale and pursuant
thereto, the Company and the Guarantors will prepare and file with the
Commission a Registration Statement on any appropriate form relating to the
registration under the Act of the Transfer Restricted Securities not excluded by
Section 4(b) hereof.
(c) General Provisions. In connection with any Registration Statement and
------------------
any related Prospectus required by this Agreement (including, without
limitation, any Exchange Offer Registration Statement and the related Prospectus
to the extent that the same are required to be available to permit sales of
Broker-Dealer Transfer Restricted Securities by Restricted Broker-Dealers), the
Company and the Guarantors shall:
(i) prepare and file with the Commission such amendments and post-
effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement effective and usable for resales of
Transfer Restricted Securities for the applicable periods set forth in
Section 3 or 4 hereof, or such shorter period as will terminate when all
Transfer Restricted Securities covered by such Registration Statement have
ceased to be such; cause the Prospectus to be amended or supplemented as
necessary for it to be usable for resales of Transfer Restricted
Securities; and comply fully with Rules 424, 430A and 462, as applicable,
under the Act in a timely manner;
(ii) comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the selling Holders and their underwriters promptly
and, if requested by them, confirm such advice in writing, (A) when the
Prospectus or any Prospectus supplement or post-effective amendment has
been filed, and, with respect to any Shelf Registration Statement or any
post-effective amendment thereto, when the same has become effective, (B)
of any request by the Commission for amendments to the Shelf Registration
Statement or amendments or supple ments to the Prospectus or for additional
information relating thereto, (C) of the issuance by the
<PAGE>
-11-
Commission of any stop order suspending the effectiveness of the Shelf
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the occurrence of any event described in clause (v) of the
definition of Registration Default in Section 5. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption from qualification of the Transfer Restricted Securities under
state securities or Blue Sky laws, the Company and the Guarantors shall use
their respective best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
(iv) furnish to (i) the Initial Purchasers, (ii) each selling
Holder named in any Registration Statement or related Prospectus, (each, a
"Named Holder"), (iii) any underwriter of a Named Holder, and (iv) any
----- ------
person known to the Company to be a Restricted Broker-Dealer before filing
with the Commission, copies of such Registration Statement or Prospectus
and any amendments or supplements thereto (not including any documents
incorporated by reference in the Registration Statement) which Registration
Statement, Prospectus, amendment or supplement will be subject to the
review and reasonable comment of the Initial Purchasers, the Named Holders
and such underwriters, and the Company will not file any such Registration
Statement, Prospectus, amendment or supplement (not including any documents
incorporated by reference in the Registration Statement) to which the
Initial Purchasers, such the Named Holders or such underwriters shall
reasonably object within five Business Days after their receipt thereof. A
Named Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed, contains
a material misstatement or omission or fails to comply with the applicable
requirements of the Act;
(v) promptly upon the filing after the Closing Date of any
document that is to be incorporated by reference into a Registration
Statement or Prospectus, provide copies of such document to the Named
Holders and to their underwriters and any known Restricted Broker-Dealer,
and make the Company's and the Guarantors' representatives available for
discussion of such document and other customary due diligence matters;
(vi) make available at reasonable times for inspection by the
Named Holders, any managing underwriter participating in any disposition
pursuant to a Registration Statement, any attorney or accountant retained
by such Named Holders or any of such underwriters, and any known Restricted
Broker-Dealer, all financial and other records, pertinent corporate
documents and properties of the Company and the Guarantors, and cause the
Company's and the Guarantors' officers, directors and employees to supply
all information reasonably requested by any such Named Holder, underwriter,
attorney or accountant in connection with such Registration Statement or
any post-effective amendment thereto subsequent to the filing thereof and
prior to its effectiveness;
<PAGE>
-12-
(vii) if requested by any Named Holders or known Restricted
Broker-Dealer, promptly include in any Registration Statement or related
Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such Named Holders and their underwriters,
if any, may reasonably request to have included therein, including, without
limitation, information relating to the "Plan of Distribution" of the
Transfer Restricted Securities, information with respect to the principal
amount of Transfer Restricted Securities being sold to such underwriters,
the purchase price being paid therefor and any other terms of the offering
of the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be included in such Prospectus supplement or post-effective
amendment;
(viii) furnish to each Named Holder, and their underwriters, if
any, and any known Restricted Broker-Dealer without charge, at least one
copy of the Registration Statement as first filed with the Commission, and
of each amendment thereto, including all documents incorporated by
reference therein and all exhibits (including, if requested, exhibits
incorporated therein by reference);
(ix) deliver to each Named Holder, and their underwriters, if any,
and any known Restricted Broker-Dealer without charge, as many copies of
the Prospectus (including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; the Company and
the Guarantors hereby consent to the use (in accordance with law) of the
Prospectus and any amendment or supplement thereto by each of the Named
Holders and Restricted Broker-Dealers, and their underwriters, if any, in
connection with the offering and the resale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto;
(x) enter into such agreements (including an underwriting
agreement) and make such representations and warranties and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any Shelf
Registration Statement as may be reasonably requested by the Named Holders
of a majority in principal amount of the Transfer Restricted Securities to
be registered for resale pursuant to such Shelf Registration Statement
contemplated by this Agreement, and in such connection, whether or not an
underwriting agreement is entered into and whether or not the registration
is an Underwritten Registration, the Company and the Guarantors shall:
(A) furnish (or in the case of paragraphs (2) and (3), use its
best efforts to furnish) to each Named Holder and each underwriter, if
any, upon the effectiveness of the Shelf Registration Statement:
(1) certificates, dated the date of effectiveness of the
Shelf Registration Statement, as the case may be, signed on behalf
of the Company and each of the Guarantors by (x) the President or
any Vice President and (y) a principal financial or accounting
officer of the Company and each Guarantor, confirming,
<PAGE>
-13-
as of the date thereof, the matters set forth in paragraphs (a),
(c) and (d) of Section 7 of the Purchase Agreement (with
references therein to the Offering Memorandum changed to reference
the Shelf Registration Statement), and such other matters as the
Named Holders and their underwriters, if any, may reasonably
request;
(2) an opinion, dated the date of effectiveness of the Shelf
Registration Statement, of counsel for the Company and the
Guarantors covering matters similar to those set forth in
paragraphs (f) and (g) of Section 7 of the Purchase Agreement and
such other matters as the Named Holders, and their underwriters,
if any, may reasonably request, and in any event, including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the Company
and the Guarantors, and representatives of the independent public
accountants for the Company and the Guarantors, in connection with
the preparation of the Shelf Registration Statement (as
appropriate) and although such counsel has not independently
verified the accuracy, completeness or fairness of any statements
in the Shelf Registration Statement, on the basis of the
foregoing, no facts came to such counsel's attention that caused
such counsel to believe that the Shelf Registration Statement, at
the time it or any post-effective amendment thereto became
effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, or that
the Prospectus contained in such Registration Statement as of its
date, contained an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Such counsel may state further that such
counsel assumes no responsibility for, and has not indepen dently
verified, the accuracy, completeness or fairness of the financial
statements, notes and schedules and other financial and
statistical data included in any such Shelf Registration
Statement; and
(3) a comfort letter, dated as of the date of effectiveness
of the Shelf Registration Statement, from the Company's
independent accountants, substantially in the form and covering
matters covered in the comfort letters delivered pursuant to
Section 7(i) of the Purchase Agreement;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, in connection with any resale pursuant
to any Shelf Registration Statement, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; an d
(C) deliver such other documents and certificates as may be
reasonably requested by the Named Holders, and their underwriters, if
any, to evidence compliance with clause (A) above and with any
customary conditions contained in the underwriting
<PAGE>
-14-
agreement or other agreement entered into by the Company and the
Guarantors pursuant to this clause (x).
The above shall be done at each closing under such underwriting or similar
agreement, as and to the extent required thereunder, and if at any time the
representations and warranties of the Company and the Guarantors contemplated in
(A)(1) above cease to be true and correct, the Company and the Guarantors shall
so advise the underwriters, if any and the Named Holders promptly and if
requested by such Persons, shall confirm such advice in writing;
(xi) prior to any public offering of Transfer Restricted
Securities, cooperate with the Named Holders, their underwriters, if
any, and their respective counsel in connection with the registration
and qualification of the Transfer Restricted Securities under the
securities or Blue Sky laws of such jurisdictions as the Named Holders
or underwriters, if any, may reasonably request, and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided, however, that neither
the Company nor any Guarantor shall be required in this connection to
register or qualify as a foreign corporation or a dealer where it is
not now so qualified or to take any action that would subject it to the
service of process in suits or to taxation, other than as to matters
and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject ;
(xii) issue, upon the request of any Named Holder of Series A
Notes covered by any effective Shelf Registration Statement, Series B
Notes having an aggregate principal amount equal to the aggregate
principal amount of Series A Notes surrendered to the Company by such
Holder in exchange therefor; such Series B Notes to be registered in
the name of such person designated by such Holder; provided that the
Series A Notes held by such Holder shall be surrendered to the Company
for cancellation;
(xiii) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriters, if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be
resold and not bearing any restrictive legends; and to register such
Transfer Restricted Securities in such denominations and such names as
the Holders or the underwriters, if any, may request at least two
Business Days prior to such resale of Transfer Restricted Securities;
(xiv) use their respective best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate
the disposition of such Transfer Restricted Securities, subject to the
proviso contained in clause (xi) above;
(xv) subject to Section 6(c)(i), if any fact or event
contemplated by Section 6(c)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment
<PAGE>
-15-
to the Registration Statement or related Prospectus or any document
incorporated therein by reference, or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(xvi) provide a CUSIP number for all Series B Notes not later
than the effective date of the first Registration Statement required by
this Agreement and provide the Trustee under the Indenture with printed
certificates for the Series B Notes which are in a form eligible for
deposit with The Depository Trust Company;
(xvii) cooperate and assist in any filings required to be
made with the NASD and in the performance of any due diligence
investigation by any underwriter (including any "qualified independent
underwriter") that is required to be retained in accordance with the
rules and regulations of the NASD;
(xviii) otherwise use their respective best efforts to
comply with all applicable rules and regulations of the Commission, and
make generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders of Notes to effect such changes to the
Indenture as may be required for such Indenture to be so qualified in
accordance with the terms of the TIA; and execute and use its best
efforts to cause the Trustee to execute, all documents that may be
required to effect such changes and all other forms and documents
required to be filed with the Commission to enable such Indenture to be
so qualified in a timely manner; and
(xx) provide promptly to each Holder upon request each
document filed by the Company with the Commission pursuant to the
requirements of Section 13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Named, Holder, upon receipt of any
-----------------------
notice from the Company of the existence of any fact of the kind described in
clause (v) of the definition of Registration Default in Section 5 hereof, will
forthwith discontinue disposition of Transfer Restricted Securities pursuant to
the Shelf Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof,
or until it is advised in writing by the Company that the use of the Prospectus
may be resumed, and has received copies of any additional or supplemental
filings that are incorporated by reference in the Prospectus ("Advice"). If so
------
directed by the Company, each Named Holder will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such
<PAGE>
-16-
Transfer Restricted Securities that was current at the time of receipt of either
such notice. In the event the Company shall give any such notice, the time
periods regarding the effectiveness of such Shelf Registration Statement set
forth in Section 4 hereof shall be extended by the number of days during the
period from and including the date of the giving of such notice pursuant to
Section 6(c)(iii)(D) hereof to and including the date when each selling Holder
covered by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xv) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors' performance
of or compliance with this Agreement will be borne by the Company, regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Initial Purchaser, Named Holder or underwriter with the NASD (and,
if applicable, the fees and expenses of any "qualified independent underwriter"
and its counsel) that may be required by the rules and regulations of the NASD);
(ii) all fees and expenses of compliance with federal securities and state Blue
Sky or securities laws; (iii) all expenses of printing (including printing
certificates for the Series B Notes to be issued in the Exchange Offer and
printing of Prospectuses), messenger and delivery services and telephone; (iv)
all fees and disbursements of counsel for the Company and the Guarantors; (v)
all application and filing fees in connection with listing the Notes on a
national securities exchange or automated quotation system pursuant to the
requirements hereof; and (vi) all fees and disbursements of independent
certified public accountants of the Company and the Guarantors (including the
expenses of any special audit and comfort letters required by or incident to
such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
(b) In connection with any Registration Statement required by this
Agreement, the Company and the Guarantors will reimburse the Initial Purchasers
and the Holders of Transfer Restricted Securities for the reasonable fees and
disbursements of not more than one counsel, who shall be Cahill Gordon & Reindel
or such other counsel chosen by the Holders of a majority in principal amount of
the Transfer Restricted Securities for whose benefit such Registration Statement
is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless (i) each Holder and (ii) each person, if any, who
controls (within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act) any Holder (any of the persons referred to in this clause (ii)
being hereinafter referred to as a "controlling person") and (iii) the
respective officers,
<PAGE>
-17-
directors, partners, employees, representatives and agents of any Holder or any
controlling person (any person referred to in clause (i), (ii) or (iii) may
hereinafter be referred to as an "Indemnified Holder"), to the fullest extent
------------------
lawful, from and against any and all losses, claims, damages, liabilities,
judgments, actions and expenses (including, without limitation and as incurred,
reimbursement of all reasonable costs of investigating, preparing, pursuing or
defending any claim or action, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, including the reasonable
fees and expenses of counsel to any Indemnified Holder) directly or indirectly
caused by, related to, based upon, arising out of or in connection with any
untrue statement or alleged untrue statement of a material fact contained in any
Registration Statement, preliminary Prospectus or Prospectus (or any amendment
or supplement thereto), or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses are caused by an untrue statement or omission or alleged
untrue statement or omission that is made in reliance upon and in conformity
with information relating to any of the Holders furnished in writing to the
Company by any of the Holders expressly for use therein; provided, however, that
a Holder and its related Indemnified Holders will not be entitled to indemnity
hereunder if (i) such untrue statement or omission or alleged untrue statement
or omission was contained or made in any preliminary Prospectus and was
identified in writing at such time to the Holders and corrected in the
Prospectus or any amendment or supplement thereto, (ii) the Prospectus does not
contain any other untrue statement or omission or alleged untrue statement or
omission of a material fact that was the subject matter of the related
proceeding, (iii) any such loss, liability, claim, damage or expense suffered or
incurred by such Holder resulted from any action, claim or suit by any Person
who purchased Notes which are the subject thereof from such Holder and (iv) it
is established in the related proceeding that such Holder failed to deliver or
provide a copy of the Prospectus (as amended or supplemented) to such Person
with or prior to the confirmation of the sale of such Notes sold to such Person
if required by applicable law, unless such failure to deliver or provide a copy
of the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 6(c)(ix) of this Agreement.
In case any action or proceeding (including any governmental or regulatory
investigation or proceeding) shall be brought or asserted against any of the
Indemnified Holders with respect to which indemnity may be sought against the
Company or the Guarantors, such Indemnified Holder (or the Indemnified Holder
controlled by such controlling person) shall promptly notify the Company and the
Guarantors in writing (provided, that the failure to give such notice shall not
relieve the Company or the Guarantors of their obligations pursuant to this
Section 8 unless the Company was otherwise unaware of such obligations and only
to the extent the Company was actually and materially prejudiced by such
failure). Such Indemnified Holder shall have the right to employ its own
counsel in any such action and the fees and expenses of such counsel shall be
paid, as incurred, by the Company and the Guarantors (regardless of whether it
is ultimately determined that an Indemnified Holder is not entitled to
indemnification hereunder). However, the Company and the Guarantors shall not,
in connection with any one such action or proceeding or separate but
substantially similar or related actions or proceedings in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such Indemnified Holders, which
firm shall be designated by the Holders of a majority in principal amount of the
Notes which are the subject of such action or proceeding. The Company and the
Guarantors shall be liable for any settlement of any such action or proceeding
effected
<PAGE>
-18-
with the Company's prior written consent, which consent shall not be withheld
unreasonably, and the Company and the Guarantors agree to indemnify and hold
harmless each Indemnified Holder from and against any loss, claim, damage,
liability or expense by reason of any settlement of any action effected with the
written consent of the Company. Neither the Company nor any Guarantor shall,
without the prior written consent of each Indemnified Holder, settle or
compromise or consent to the entry of judgment in or otherwise seek to terminate
any pending or threatened action, claim, litigation or pro ceeding in respect of
which indemnification or contribution may be sought hereunder (whether or not
any Indemnified Holder is a party thereto), unless such settlement, compromise,
consent or termination includes an unconditional release of each Indemnified
Holder from all liability arising out of such action, claim, litigation or
proceeding.
(b) Each Holder of Transfer Restricted Securities agrees, severally and not
jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors, officers, and any person controlling (within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act) the Company,
and the respective officers, directors, partners, employees, representatives and
agents of each such person, to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified Holders, but only with
respect to claims and actions based on information relating to such Holder
furnished in writing by such Holder expressly for use in any Registration
Statement. In case any action or proceeding shall be brought against the
Company, any Guarantor or its directors or officers or any such controlling
person in respect of which indemnity may be sought against a Holder of Transfer
Restricted Securities, such Holder shall have the rights and duties given the
Company and the Guarantors, and the Company, such Guarantor, such directors or
officers or such controlling person shall have the rights and duties given to
each Holder by the immediately preceding paragraph. In no event shall any
Holder be liable or responsible for any amount in excess of the amount by which
the total received by such Holder with respect to its sale of Transfer
Restricted Securities pursuant to a Registration Statement exceeds (i) the
amount paid by such Holder for such Transfer Restricted Securities and (ii) the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission.
(c) If the indemnification provided for in this Section 8 is unavailable to
an indemnified party under Section 8(a) or Section 8(b) hereof (other than by
reason of exceptions provided in those Sections) in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Holders, on the other hand,
from their sale of Transfer Restricted Securities or if such allocation is not
permitted by applicable law, the relative fault of the Company and the
Guarantors, on the one hand, and of the Indemnified Holder, on the other hand,
in connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other relevant
equitable considerations. The relative fault of the Company and the Guarantors,
on the one hand, and of the Indemnified Holder, on the other hand, shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or such Guarantor
or by the Indemnified Holder and the parties' relative intent,
<PAGE>
-19-
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The amount paid or payable by a party as a result of the
losses, claims, damages, liabilities and expenses referred to above shall be
deemed to include, subject to the limitations set forth in the second paragraph
of Section 8(a), any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
The Company, the Guarantors and each Holder of Transfer Restricted
Securities agree that it would not be just and equitable if contribution
pursuant to this Section 8(c) were determined by pro rata allocation (even if
the Holders were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or payable
by an indemnified party as a result of the losses, claims, damages, liabilities
or expenses referred to in the immediately preceding paragraph shall be deemed
to include, subject to the limitations set forth above, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8, no Holder or its related Indemnified Holders shall
be required to contribute, in the aggregate, any amount in excess of the amount
by which the total received by such Holder with respect to the sale of its
Transfer Restricted Securities pursuant to a Registration Statement exceeds the
sum of (A) the amount paid by such Holder for such Transfer Restricted
Securities plus (B) the amount of any damages which such Holder has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Holders' obligations to contribute pursuant to this
Section 8(c) are several in proportion to the respective principal amount of
Transfer Restricted Securities held by each of them, and not joint.
SECTION 9. RULE 144A
The Company and each Guarantor hereby undertake for so long as any Transfer
Restricted Securities remain outstanding and during any period in which the
Company or such Guarantor is not subject to Section 13 or 15(d) of the
Securities Exchange Act, to make available, upon request of any Holder of
Transfer Restricted Securities, to any Holder or beneficial owner of Transfer
Restricted Securities in connection with any sale thereof, and any prospective
purchaser of such Transfer Restricted Securities designated by such Holder or
beneficial owner, the information required by Rule 144A(d)(4) under the Act in
order to permit resales of such Transfer Restricted Securities pursuant to Rule
144A.
SECTION 10. UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder unless
such Holder (a) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in customary underwriting arrangements entered into in
connection therewith and (b) completes and executes all reasonable
questionnaires, powers of attorney, and other documents required under the terms
of such underwriting arrangements.
<PAGE>
-20-
SECTION 11. SELECTION OF UNDERWRITERS
For any Underwritten Offering, the investment banker or investment bankers
and manager or managers for any Underwritten Offering that will administer such
offering will be selected by the Holders of a majority in aggregate principal
amount of the Transfer Restricted Securities included in such offering. Such
investment bankers and managers are referred to herein as the "underwriters."
SECTION 12. MISCELLANEOUS
(a) Remedies. Each Holder, in addition to being entitled to exercise all
--------
rights provided herein, in the Indenture, the Purchase Agreement or granted by
law, including recovery of liquidated or other damages, will be entitled to
specific performance of its rights under this Agreement. The Company and the
Guarantors agree that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by them of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
--------------------------
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantors' securities under any agreement in effect on the date hereof.
(c) Adjustments Affecting the Notes. Neither the Company nor any Guarantor
-------------------------------
will take any action, or voluntarily permit any change to occur, with respect to
the Notes that would materially and adversely affect the ability of the Company
and the Guarantors to Consummate any Exchange Offer.
(d) Amendments and Waivers. The provisions of this Agreement may not be
----------------------
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 12(d)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii) in the
case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority in aggregate principal amount of Transfer
Restricted Securities then outstanding. Notwithstanding the foregoing, a waiver
or consent to departure from the provisions hereof that relates exclusively to
the rights of Holders whose securities are being tendered pursuant to the
Exchange Offer, and that does not affect directly or indirectly the rights of
other Holders whose securities are not being tendered pursuant to such Exchange
Offer, may be given by the Holders of a majority of the outstanding principal
amount of Transfer Restricted Securities being tendered pursuant to such
Exchange Offer.
<PAGE>
-21-
(e) Notices. All notices and other communications provided for or
-------
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of the Trustee
under the Indenture, with a copy to the Trustee under the Indenture; and
(ii) if to the Company or the Guarantors:
301 Merritt 7 Corporate Park
Norwalk, CT 06856
Telecopier No.: (203) 750-5856
Attention:
With a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Telecopier No.: (212) 732-3232
Attention: Vincent Monte-Sano
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when receipt
acknowledged, if telecopied or sent by telex; and on the next business day, if
timely delivered to an air courier guaranteeing overnight delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) Successors and Assigns. This Agreement shall inure to the benefit of
----------------------
and be binding upon the successors and assigns of each of the parties, including
without limitation and without the need for an express assignment, subsequent
Holders of Transfer Restricted Securities; provided, however, that this
Agreement shall not inure to the benefit of or be binding upon a successor or
assign of a Holder unless and to the extent such successor or assign acquired
Transfer Restricted Securities directly from such Holder.
(g) Counterparts. This Agreement may be executed in any number of
------------
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
--------
reference only and shall not limit or otherwise affect the meaning hereof.
<PAGE>
-22-
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
-------------
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
------------
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a final
----------------
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted with respect to the Transfer
Restricted Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
<PAGE>
-23-
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.
PLASTIC CONTAINERS, INC.
By:/s/
-------------------------------
Name:
Title:
CONTINENTAL PLASTIC CONTAINERS, INC.
By:/s/
-------------------------------
Name:
Title:
CONTINENTAL CARIBBEAN CONTAINERS,
INC.
By:/s/
-------------------------------
Name:
Title:
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
LEHMAN BROTHERS INC.
SOCIETE GENERALE SECURITIES CORPORATION
By: Donaldson, Lufkin & Jenrette
Securities Corporation
By:/s/
-----------------------------------
Name:
Title:
<PAGE>
EXHIBIT 5
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, N. Y. 10005
--------
(212) 732-3200
FAX: (212) 732-3232
January 16, 1997
Plastic Containers, Inc.
One Aerial Way
Syosset, New York 11791
Re: 10% Senior Secured Notes due 2006, Series B
Gentlemen:
We have acted as counsel for Plastic Containers, Inc., a Delaware
corporation (the "Company"), in connection with its offer to exchange
$125,000,000 aggregate principal amount of the Company's 10% Senior Secured
Notes due 2006, Series B (the "New Notes"), for $125,000,000 aggregate
principal amount of the Company's outstanding 10% Senior Notes due 2006,
Series A (the "Old Notes"). The New Notes will be offered pursuant to a
Registration Statement on Form S-4 under the Securities Act of 1933, as
amended, (the "Registration Statement"). The New Notes, like the Old Notes,
will be unconditionally guaranteed, jointly and severally (the "Guarantees"),
by the Company's wholly-owned subsidiaries, Continental Plastic Containers,
Inc. and Continental Caribbean Containers, Inc. (the "Guarantors").
It is proposed that the New Notes (i) will be issued pursuant to the terms
of the Indenture dated as of December 17, 1996, among the Company, as issuer,
the Guarantors and United States Trust Company of New York, as Trustee (the
"Indenture"), which is being filed as Exhibit 4.1 to the Registration
Statement, and (ii) will be exchanged for Old Notes as contemplated by the
terms of a Registration Rights Agreement dated as of December 17, 1996, by and
among the Company and the Guarantors and Donaldson, Lufkin & Jenrette
Securities Corporation, Lehman Brothers Inc. and Societe Generale Securities
Corporation (the "Registration Agreement"), which is being filed as Exhibit
4.2 to the Registration Statement. We have examined the Indenture, the
Registration Agreement, the By-laws of the Company and the Guarantors,
resolutions adopted by the Boards of Directors of the Company and the
Guarantors relating to the authorization of the issuance and sale of the Old
Notes and the New Notes, and such other records and documents as we have
deemed necessary as a basis for this opinion. In such examination, we have
assumed the genuineness of all signatures and the authenticity of all
documents submitted to us as originals and the conformity with the originals
of all documents submitted to us as copies.
Based upon the foregoing, it is our opinion that (i) the New Notes, when
duly executed by the Company, authenticated as provided in the Indenture and
issued and delivered in exchange for Old Notes as contemplated by the
Registration Agreement, will be legally issued and binding obligations of the
Company, and (ii) the Guarantees, when the New Notes are so duly executed,
authenticated, issued and delivered, will be legally issued and binding
obligations of the Guarantors.
We hereby consent to the references to our name under the captions "Certain
Tax Consequences" and "Legal Matters" in the Prospectus, and to the filing of
this opinion as an exhibit to the Registration Statement. In giving this
consent, we do not acknowledge that we come within the category of persons
whose consent is required by the Securities Act of 1933, as amended, or by the
rules and regulations promulgated thereunder.
Very truly yours,
/s/ Carter, Ledyard & Milburn
VM-S:nva
<PAGE>
EXHIBIT 8
CARTER, LEDYARD & MILBURN
COUNSELLORS AT LAW
2 WALL STREET
NEW YORK, N. Y. 10005
--------
(212) 732-3200
FAX: (212) 732-3232
January 16, 1997
Plastic Containers, Inc.
One Aerial Way
Syosset, New York 11791
Re: 10% Senior Secured Notes due 2006, Series B
Gentlemen:
We have acted as counsel for Plastic Containers, Inc., a Delaware
corporation (the "Company"), in connection with the preparation and filing
under the Securities Act of 1933, as amended (the "Securities Act"), and the
rules and regulations promulgated thereunder, of a Registration Statement on
Form S-4 (the "Registration Statement"), including the prospectus constituting
a part thereof (the "Prospectus"). The Registration Statement relates to a
proposed offer by the Company (the "Exchange Offer") to issue 10% Senior
Secured Notes due 2006, Series B of the Company (the "New Notes") in exchange
for all its currently outstanding 10% Senior Secured Notes due 2006, Series A
(the "Old Notes").
We have examined original or copies, certified or otherwise identified to
our satisfaction, of all such agreements, certificates and other statements of
corporate officers and other representatives of the Company, and such other
documents, as we have deemed necessary as a basis for this opinion. In such
examination we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals and the conformity
with the originals of all documents submitted to us. We have, when relevant
facts material to our opinion were not independently established by us,
relied, to the extent we deemed such reliance proper, upon written or oral
statements of officers and other representatives of the Company.
Based on and subject to the foregoing, we are of the opinion that the
section entitled "Certain Tax Consequences" in the Prospectus contains an
accurate general description, under currently applicable law, of the material
United States federal income tax considerations that will apply to an exchange
of Old Notes for New Notes pursuant to the Exchange Offer.
We consent to the filing of this opinion as an exhibit to the Registration
Statement and to the references to our firm under the captions "Certain Tax
Consequences" and "Legal Matters" in the Prospectus. In giving this consent,
we do not acknowledge that we come within the category of persons whose
consent is required by the Securities Act or the rules and regulations
promulgated thereunder.
Very truly yours,
/s/ Carter, Ledyard & Milburn
HS/lrh
<PAGE>
EXHIBIT 10.1
AMENDED AND RESTATED
--------------------
FINANCING AGREEMENT
-------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
(AS LENDER)
AND
PLASTIC CONTAINERS, INC.
(as Borrower)
DECEMBER 17, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
SECTION 1. Definitions.............................. 3
SECTION 2. Conditions Precedent..................... 19
SECTION 3. Revolving Loans.......................... 22
SECTION 4. Letters of Credit........................ 26
SECTION 5. Collateral............................... 29
SECTION 6. Representations, Warranties and Covenants 31
SECTION 7. Interest, Fees and Expenses.............. 37
SECTION 8. Powers................................... 39
SECTION 9. Events of Default and Remedies........... 40
SECTION 10. Termination 42
SECTION 11. Miscellaneous............................ 43
EXHIBITS
- --------
Exhibit A - Borrowing Base Report
SCHEDULES
- ---------
Schedule 1 - Existing Liens
Schedule 2 - Location of Collateral and Chief Executive Office
-2-
<PAGE>
THE CIT GROUP/BUSINESS CREDIT, INC., a New York corporation, (hereinafter
"CITBC") with offices located at 1211 Avenue of the Americas, New York, New York
10036, is pleased to confirm the terms and conditions under which CITBC shall
make revolving loans, advances and other financial accommodations to Plastic
Containers, Inc. (herein the "Company"), a Delaware corporation with a principal
place of business at One Aerial Way, Syosset, New York 11791.
PRELIMINARY STATEMENTS
- ----------------------
The Company and CITBC are parties to that certain Financing Agreement dated as
of October 30, 1995, as amended from time to time prior to the date hereof (the
"Original Financing Agreement"). The Company and CITBC now wish to amend and
restate the Original Financing Agreement, all as hereinafter set forth.
STATEMENT OF AGREEMENT
- ----------------------
The Company and CITBC desire that the Original Financing Agreement be amended
and restated in its entirety subject to and in accordance with the terms and
conditions set forth herein. It being the intention of the Company and CITBC
that this Amended and Restated Financing Agreement and the execution and
delivery of any other documents or agreements in connection therewith shall not
effect a novation of the Obligations of the Company under the Original Financing
Agreement, but merely a restatement and, where applicable, a substitution of the
terms governing and evidencing such Obligations as of the effective date.
Upon and after the effective date hereof, all references to the "Financing
Agreement" in any document now or hereafter entered into between us shall mean
this Amended and Restated Financing Agreement. Without limiting the generality
of the foregoing, the liens securing all or any part of the Obligations and all
of the Collateral described in the Original Financing Agreement do and shall
continue (without any break in the continuity thereof) to secure the payment of
all Obligations of the Company under this Amended and Restated Financing
Agreement.
Accordingly, in consideration of the mutual agreements contained herein, and
subject to the terms, provisions and conditions hereof, the Original Financing
Agreement is hereby amended and restated in its entirety and superseded and
replaced by the terms, provisions and conditions hereof, and the parties hereto
agree, as follows:
SECTION 1. DEFINITIONS
-----------
ACCOUNTS shall mean all now existing and future: (A) accounts (as defined in
- --------
the U.C.C.) and any and all other receivables created by or arising from the
sale of goods or rendition of services, (whether or not specifically listed on
schedules furnished to CITBC), including any and all instruments (as defined in
the U.C.C.), documents (as defined in the U.C.C.), contract rights (as defined
in the U.C.C.), and chattel paper (as defined in the U.C.C.) created solely by
or arising solely from the sale of goods or rendition of services and
representing an amount payable with respect to any such sales
-3-
<PAGE>
of goods or renditions of services, including, without limitation, all accounts
created by or arising from all sales of goods or rendition of services to
customers, and all accounts arising from sales or rendition of services made
under any trade names or styles, or through any divisions; (B) unpaid seller's
rights (including rescission, replevin, reclamation and stoppage in transit)
relating to the foregoing or arising therefrom; (C) rights to any goods
represented by any of the foregoing, including rights to returned or repossessed
goods; (D) reserves and credit balances arising hereunder; (E) guarantees or
collateral for any of the foregoing; (F) insurance policies or rights relating
to any of the foregoing; and (G) cash and non-cash proceeds of any and all the
foregoing.
ACCOUNTS RECEIVABLE ADVANCE PERCENTAGE shall have the meaning specified in
- --------------------------------------
Section 3, Paragraph 1 hereof.
ACTUAL CONSOLIDATED INTEREST COVERAGE RATIO shall mean a ratio determined as of
- -------------------------------------------
the relevant calculation date by dividing consolidated EBITDA for the Company
and its subsidiaries (including, without limitation, the Guarantors) by
consolidated Interest Expense for the Company and its subsidiaries (including,
without limitation, the Guarantors) for the 12 month period ending on such date.
ANNIVERSARY DATE shall mean the date occurring seven (7) years from the date
- ----------------
hereof and the same date in every year thereafter.
APPLICABLE MARGIN shall mean the increment over the Chase Bank Rate or Libor as
- -----------------
determined at the beginning of each Fiscal Quarter based upon the Funded Debt
Ratio calculated as at the end the prior Fiscal Quarter and shall be equal to:
FUNDED DEBT INCREMENT OVER Chase INCREMENT OVER
RATIO BANK RATE LIBOR
- ------------------------ --------------------- ---------------
Less than 2.5 to 1 0% 1.00%
2.5 to 1 but less than
3.0 to 1 0.25% 1.25%
3.0 to 1 but less than
3.5 to 1 0.25% 1.50%
3.5 to 1 but less than
4.0 to 1 0.50% 1.75%
Equal to or greater than
4.0 to 1 0.50% 2.00%
-4-
<PAGE>
Notwithstanding the foregoing the Applicable Margin in effect from the Closing
Date until the first day of the first Fiscal Quarter commencing thereafter shall
be 0.25% with respect to the Chase Bank Rate and 1.5% with respect to Libor.
AVAILABILITY shall mean at any time the excess of the sum of a) Eligible
- ------------
Accounts Receivable multiplied by the Accounts Receivable Advance Percentage and
b) Eligible Inventory multiplied by the Inventory Advance Percentage, provided
that the amount computed pursuant to (i) clause a) and b) with respect to
Eligible Accounts Receivable and Eligible Inventory of Caribbean shall not
exceed the Caribbean Loan Cap and (ii) clause (b) shall not exceed the Inventory
Loan Cap, over the outstanding aggregate amount of all Obligations of the
Company.
BORROWING BASE REPORT shall have the meaning specified in Section 3, Paragraph
- ---------------------
2(b) of this Financing Agreement.
BUSINESS DAY shall mean any day that CITBC is open for business in New York, New
- ------------
York, which is not (i) a Saturday, Sunday or legal holiday in the state of New
York or (ii) a day on which banking institution chartered by the state of New
York or the United States are legally required to close.
CAPITAL EXPENDITURES for any period shall mean the aggregate of all expenditures
- --------------------
of the Company during such period that in conformity with GAAP are required to
be included in or reflected by the property, plant or equipment or similar fixed
asset account reflected in the balance sheet of the Company.
CAPITAL LEASE shall mean any lease of property (whether real, personal or mixed)
- -------------
which, in conformity with GAAP, is accounted for as a capital lease or a Capital
Expenditure on the balance sheet of the Company.
CAPITALIZED LEASE OBLIGATIONS shall mean any obligation to pay rent or other
- -----------------------------
amounts under a Capital Lease, and, for the purposes of this Financing
Agreement, the amount of such obligation at any date shall be the capitalized
amount thereof at such date, determined in accordance with GAAP.
CARIBBEAN shall mean Continental Caribbean Containers, Inc., a Delaware
- ---------
Corporation and a wholly owned subsidiary of the Company.
CARIBBEAN LOAN CAP shall mean $2,000,000 in the aggregate at any one time
- ------------------
outstanding.
CARIBBEAN CONDITIONS PRECEDENT shall have the meaning specified in Section 2(b)
- ------------------------------
hereof.
CHASE BANK RATE shall mean the rate of interest per annum announced by Chase
- ---------------
Bank from time to time as its prime rate in effect at its principal office in
the City of New York. (The prime rate is not intended to be the lowest rate of
interest charged by Chase Manhattan Bank to its borrowers).
CITBC COMMITMENT LETTER shall have the meaning specified in Section 2(a),
- -----------------------
Paragraph s hereof.
-5-
<PAGE>
CLOSING DATE shall mean the date on or after the date hereof upon which CITBC
- ------------
makes the initial extension of credit hereunder whether in the form of Revolving
Loans or Letters of Credit.
COLLATERAL shall mean all present and future Accounts, Inventory, Documents of
- ----------
Title and Other Collateral.
COLLATERAL MANAGEMENT FEE shall mean the sum of $75,000.00 which shall be paid
- -------------------------
to CITBC in accordance with paragraph 8 of Section 7 hereof to offset the
expenses and costs of CITBC in connection with record keeping, periodic
examinations, analyzing and evaluating the Collateral.
CONSOLIDATED BALANCE SHEET shall mean a consolidated balance sheet for the
- --------------------------
Company and its consolidated subsidiaries (including, without limitation, CPC
and Caribbean) eliminating all inter-company transactions and prepared in
accordance with GAAP.
CONSOLIDATED CASH FLOW shall mean, for any period, the Consolidated Net Income
- ----------------------
of the Company and its subsidiaries (including, without limitation, the
Guarantors) for such period increased (to the extent deducted in determining
Consolidated Net Income) by the sum of : (i) all income taxes of the Company and
its subsidiaries (including, without limitation, the Guarantors) paid or accrued
in accordance with GAAP for such period (other than income taxes attributable to
extraordinary, unusual or non-recurring gains or losses); (ii) all interest
expense of the Company and its subsidiaries (including, without limitation, the
Guarantors) paid or accrued in accordance with GAAP (net of any interest income)
for such period (including amortization of original issue discount and the
interest portion of deferred payment obligations); (iii) depreciation; (iv)
amortization, including, without limitation, amortization of capitalized debt
issuance costs; and (v) any other non-cash charges to the extent deducted from
Consolidated Net Income (including non-cash expenses recognized in accordance
with Financial Accounting Standards Bulletin Number 106).
CONSOLIDATED INTEREST COVERAGE RATIO shall mean, the ratio of (i) Consolidated
- ------------------------------------
Cash Flow of the Company and its subsidiaries (including, without limitation,
the Guarantors) for the four full Fiscal Quarters for which financial statements
are available that immediately precede the date of the transaction or other
circumstances giving rise to the need to calculate the Consolidated Interest
Coverage Ratio hereunder (the "Transaction Date") to (ii) all cash and non-cash
interest expense (including capitalized interest) of the Company and its
subsidiaries (including, without limitation, the Guarantors) determined in
accordance with GAAP (net of any interest income to the extent received in cash
by the Company or its subsidiaries and exclusive of deferred financing fees) and
the aggregate amount of cash dividends or other distributions declared or paid
on capital stock (other than common stock) of the Company and its subsidiaries
(including, without limitation, the Guarantors), in each case for such four full
Fiscal Quarters period. For purposes of this definition, if the Transaction
Date occurs prior to the date on which the Company's consolidated financial
statements for the four full Fiscal Quarters subsequent to the date on which the
Senior Notes were originally issued are first available, "Consolidated Cash
Flow" and the items referred to in the preceding clause (ii) shall be
calculated, in the case of the Company, after giving effect on a pro forma basis
as if the Senior Notes outstanding on the Transaction Date were issued on the
first day of such four full Fiscal Quarter period. In addition and without
limitation of the foregoing, for purposes of
-6-
<PAGE>
this definition, "Consolidated Cash Flow" and the items referred to in the
preceding clause (ii) shall be calculated after giving effect on a pro forma
basis for the period of such calculation to (x) the incurrence of any
Indebtedness of the Company and its subsidiaries (including, without limitation,
the Guarantors) at any time during the period (the "Reference Period") (A)
commencing on the first day of the four full Fiscal Quarter period for which
financial statements are available that precedes the Transaction Date,
including, without limitation, the incurrence of the Indebtedness giving rise to
the need to make such calculation, as if such incurrence occurred on the first
day of the Reference Period; provided that if the Company or any of its
--------
subsidiaries (including, without limitation, the Guarantors) directly or
indirectly guarantees Indebtedness of a third person (that is, any person other
than the Company or the Guarantors), the above clause shall give effect to the
incurrence of such guaranteed Indebtedness as if the Company or any of its
subsidiaries (including, without limitation, the Guarantors) had directly
incurred such guaranteed Indebtedness and (y) any asset sales or asset
acquisitions (including, without limitation, any asset acquisition giving rise
to the need to make such calculation as a result of the Company or any of its
subsidiaries (including, without limitation, the Guarantors and any subsidiary
which becomes a subsidiary as a result of the asset acquisition) incurring
acquired Indebtedness) occurring during the Reference Period and any retirement
of Indebtedness in connection with such asset acquisitions, as if such asset
sale or asset acquisition and/or retirement occurred on the first day of the
Reference Period. Furthermore, in calculating the denominator (but not the
numerator) of this "Consolidated Interest Coverage Ratio," (1) subject to clause
(3) below, interest on Indebtedness determined on a fluctuating basis as of the
Transaction Date and which will continue to be so determined thereafter shall be
deemed to accrue at a fixed rate per annum equal to the rate of interest on such
--- -----
Indebtedness in effect on the Transaction Date; (2) if interest on any
Indebtedness actually incurred on the Transaction Date may optionally be
determined at an interest rate based upon a factor of a prime or similar rate,
or eurocurrency interbank offered rate, or other rates, then the interest rate
based upon a factor of a prime or similar rate shall be deemed to have been in
effect; and (3) notwithstanding clause (1) above, interest on Indebtedness
determined on a fluctuating basis, to the extent such interest is covered by
agreements relating to interest rate protection obligations, shall be deemed to
accrue at the rate per annum resulting after giving effect to the operation of
--- -----
such agreements.
CONSOLIDATED NET INCOME shall mean for any period, the aggregate of net income
- -----------------------
(loss) determined in accordance with GAAP (which in the case of the Company
shall include any cash interest payment received on the Continental Can Note)
(herein the "Net Income") of the Company and its subsidiaries (including,
without limitation, the Guarantors) for such period on a consolidated basis,
determined in accordance with GAAP; provided, however, that (i) the Net Income
-------- -------
of any person (the "Other Person") in which the Company and/or its subsidiaries
(including, without limitation, the Guarantors) has a joint interest with a
third party (which interest does not cause the income of such Other Person to be
consolidated into the net income of the Company and/or its subsidiaries
(including, without limitation, the Guarantors) in accordance with GAAP) shall
be included only to the extent of the amount of dividends or distributions paid
to the Company and/or its subsidiaries (including, without limitation, the
Guarantors), (ii) the Net Income of any subsidiary of the Company and its
subsidiaries (including, without limitation, the Guarantors) that is subject to
any restriction or limitation on the payment of dividends or the making of other
distributions shall be excluded to the extent of such restriction or limitation,
(iii) the Net Income of any subsidiary acquired in a pooling of interests
-7-
<PAGE>
transaction for any period prior to the date of the acquisition of such
subsidiary shall be excluded, and (iv) any net gain or loss resulting from an
asset sale by the Company or any of its subsidiaries (including, without
limitation, the Guarantors) other than in the ordinary course of business shall
be excluded.
CONTINENTAL CAN NOTE shall mean the promissory note dated December 17, 1996
- --------------------
issued by Continental Can Company, Inc., in the principal amount of $30,000,000,
with principal and interest payable on June 15, 2007.
CPC shall mean Continental Plastic Containers, Inc., a Delaware Corporation and
- ---
a wholly owned subsidiary of the Company.
CURRENT ASSETS shall mean those assets which in accordance with GAAP are
- --------------
classified as current.
CURRENT LIABILITIES shall mean, wherever used through out this Financing
- -------------------
Agreement, those liabilities which in accordance with GAAP, are classified as
"current", provided, however, that notwithstanding GAAP, the Revolving Loans and
the current portion of Permitted Indebtedness shall be considered "current
liabilities".
CUSTOMARILY PERMITTED LIENS shall mean
- ---------------------------
(a) liens of local or state authorities for franchise or other like taxes
provided the aggregate amounts of such liens shall not exceed $100,000.00 in the
aggregate at any one time;
(b) statutory liens of landlords and liens of carriers, warehousemen,
mechanics, materialmen and other like liens imposed by law, created in the
ordinary course of business and for amounts not yet due (or which are being
contested in good faith by appropriate proceedings or other appropriate actions
which are sufficient to prevent imminent foreclosure of such liens) and with
respect to which adequate reserves or other appropriate provisions are being
maintained in accordance with GAAP;
(c) deposits made (and the liens thereon) in the ordinary course of business
(including, without limitation, security deposits for leases, surety bonds and
appeal bonds) in connection with workers' compensation, unemployment insurance
and other types of social security benefits or to secure the performance of
tenders, bids, contracts (other than for the repayment or guarantee of borrowed
money or purchase money obligations), statutory obligations and other similar
obligations arising as a result of progress payments under government contracts;
and
(d) easements (including, without limitation, reciprocal easement agreements
and utility agreements), encroachments, minor defects or irregularities in
title, variation and other restrictions, charges or encumbrances (whether or not
recorded) affecting the Real Estate and which in the aggregate (i) do not
materially interfere with the occupation, use or enjoyment of the property so
encumbered and (ii) does not materially and adversely diminish the value of such
property.
-8-
<PAGE>
DEFAULT shall mean any event specified in Section 9 hereof, whether or not any
- -------
requirement for the giving of notice, the lapse of time, or both, or any other
condition, event or act, has been satisfied.
DEFAULT RATE OF INTEREST shall mean a rate of interest per annum equal to the
- ------------------------
sum of: a) four percent (4%) and b) the Chase Bank Rate, which CITBC shall be
entitled to charge the Company on all Obligations due CITBC by the Company to
the extent provided in Paragraph 2 of Section 9 of this Financing Agreement.
DEPOSITORY ACCOUNTS shall have the meaning specified in Section 3, Paragraph 4
- -------------------
hereof.
DISQUALIFIED STOCK shall mean any capital stock which, by its terms (or by the
- ------------------
terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or is
exchangeable for Indebtedness, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to the termination of this Financing
Agreement and payment of all Obligations hereunder.
DOCUMENTATION FEE shall mean I) the sum included in the Loan Facility Fee
- -----------------
intended to compensate CITBC for the use of CITBC's in-house Legal Department
and facilities in documenting, in whole or in part, the initial transaction
solely on behalf of CITBC, exclusive of Out-of-Pocket Expenses, and II) CITBC's
standard fees computed based upon the hourly allocated cost thereof determined
by CITBC from time to time and relating to the preparation by CITBC's in-house
Legal Department of any and all future modifications, waivers, releases or
amendments with respect to this Financing Agreement, the Collateral and/or the
Obligations.
DOCUMENTS OF TITLE shall mean all present and future warehouse receipts, bills
- ------------------
of lading, shipping documents, instruments and similar documents evidencing
ownership of, or the right to receive or dispose of, Inventory, all whether
negotiable or not and all Inventory relating thereto and all cash and non-cash
proceeds of the foregoing.
EARLY TERMINATION DATE shall mean the date on which the Company terminates this
- ----------------------
Financing Agreement or the Line of Credit which date is prior to the expiration
of three (3) years from the date hereof.
EARLY TERMINATION FEE shall: X) mean the fee CITBC is entitled to charge the
- ---------------------
Company in the event the Company terminates the Line of Credit or this Financing
Agreement on a date prior to the expiration of three (3) years from the date
hereof and (y) shall be equal to: (I) $375,000 if the Early Termination Date
occurs on or before one (1) year from the date hereof; (II) $300,000 if the
Early Termination Date occurs after one (1) year from the date hereof but prior
to the expiration of two (2) years from the date hereof; (III) $200,000 if the
Early Termination Date occurs after two (2) years from the date hereof but prior
to the expiration of three (3) years from the date hereof; and (IV) $0 if the
Early Termination Date occurs after three (3) years from the date hereof.
-9-
<PAGE>
EBITDA shall mean, in any period, all earnings (including any cash interest
- ------
payment received by the Company with respect to the Continental Can Note) before
all (i) interest and tax obligations, (ii) depreciation and (iii) amortization
for said period, all determined in accordance with GAAP on a basis consistent
with the latest audited financial statements of the Company.
ELIGIBLE ACCOUNTS RECEIVABLE shall mean the gross amount of CPC's and, upon
- ----------------------------
satisfaction of the Caribbean Conditions Precedent, Caribbean's Trade Accounts
Receivable that are payable in cash or on open account terms in the ordinary
course of business of CPC and Caribbean and are payable in cash or on open
account terms in the ordinary course of business of CPC and Caribbean and are
not evidenced by an instrument, note or chattel paper and are subject to a
valid, first priority and fully perfected security interest in favor of CITBC
and which conform to the warranties contained herein and at all times continue
to be acceptable to CITBC in the exercise of its reasonable business judgment,
less, without duplication, the sum of a) any returns, discounts, claims, credits
and allowances of any nature (whether issued, owing, granted or outstanding) and
b) reserves for: I) sales to the United States of America or to any agency,
department or division thereof; II) foreign sales other than sales x) secured by
stand-by letters of credit (in form and substance satisfactory to CITBC) issued
or confirmed by, and payable at, banks having a place of business in the United
States of America and payable in United States currency, or y) to customers
residing in Canada provided such sales otherwise comply with all of the other
criteria for eligibility hereunder, are payable in United States currency and
such sales do not exceed $5,000,000.00 in the aggregate at any one time; III)
accounts that remain unpaid more than one hundred eighty (180) days from invoice
date or ninety (90) days from due date, provided that the aggregate amount of
Eligible Accounts Receivable which are unpaid more than sixty (60) days from due
date shall not exceed at any time the lesser of (x) $1,500,000 or (y) five
percent (5%) of total Eligible Accounts Receivable at such time; IV) amounts
representing contra accounts or other offsets; V) sales to any subsidiary, or to
any company affiliated with the Company or any Guarantor in any way; VI) bill
and hold (deferred shipment) or consignment sales; VII) sales to any customer
which is a) insolvent, b) the debtor in any bankruptcy, insolvency, arrangement,
reorganization, receivership or similar proceedings under any federal or state
law, c) negotiating, or has called a meeting of its creditors for purposes of
negotiating, a compromise of its debts or d) financially unacceptable to CITBC
or has a credit rating unacceptable to CITBC in the exercise of CITBC's
reasonable business judgment; VIII) all sales to any customer if fifty percent
(50%) or more of either x) all outstanding invoices or y) the aggregate dollar
amount of all outstanding invoices, are unpaid more than the applicable time
periods specified in clause iii) above; IX) any other reasons deemed necessary
by CITBC in its reasonable business judgment and which are customary either in
the commercial finance industry or in the lending practices of CITBC; and X) an
amount representing, historically, returns, discounts, claims, credits and
allowances (herein "Dilution Reserve"), provided that no such Dilution Reserve
shall be established or maintained unless and until such time as the monthly
average (computed for any consecutive 2 year period) of such returns, discounts,
claims, credits and allowances exceeds six percent (6%) of the monthly average
of total sales for such 2 year period.
ELIGIBLE INVENTORY shall mean the gross amount of CPC's and, upon satisfaction
- ------------------
of the Caribbean Conditions Precedent, Caribbean's Inventory that is subject to
a valid, first priority and fully perfected security interest in favor of CITBC
and which conforms to the warranties contained herein and which
-10-
<PAGE>
at all times continue to be acceptable to CITBC in the exercise of its
reasonable business judgment less any work-in-process, supplies (other than raw
material), goods not present in the United States of America or, upon
satisfaction of the Caribbean Conditions Precedent, Puerto Rico, goods returned
or rejected by the Company's or the Guarantors' customers other than goods that
are undamaged and resalable in the normal course of business, goods to be
returned to the Company's or the Guarantors' suppliers, goods in transit to
third parties (other than the Company's or the Guarantors' agents or
warehouses), commencing six (6) months after the date hereof Inventory in
possession of a warehouseman, bailee or other third party unless such
warehouseman, bailee or other third party has executed a notice of security
interest agreement (in form and substance satisfactory to CITBC) and CITBC has
taken all other action required to perfect its security interest in such
Inventory and less any reserves required by CITBC in its reasonable discretion
for market value declines and bill and hold (deferred shipment) or consignment
sales.
EQUIPMENT shall mean all present and hereafter acquired machinery, equipment,
- ---------
furnishings and fixtures, and all additions, substitutions and replacements
thereof, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto and all proceeds
of whatever sort.
ERISA shall mean the Employee Retirement Income Security Act or 1974, as amended
- -----
from time to time and the rules and regulations promulgated thereunder from time
to time.
EVENT(S) OF DEFAULT shall have the meaning provided for in Section 9 of this
- -------------------
Financing Agreement.
EXECUTIVE OFFICERS shall mean the Chairman, President, Chief Executive Officer,
- ------------------
Chief Operating Officer, Chief Financial Officer, Executive Vice President(s),
Senior Vice President(s), Treasurer, Assistant Treasurer, Controller and
Secretary of the Company.
FISCAL QUARTER shall mean each three (3) month period ending on March 31, June
- --------------
30, September 30, and December 31 of each year.
FISCAL YEAR shall mean each twelve (12) month period commencing on January 1 of
- -----------
each year and ending on the following December 31.
FIXED CHARGE COVERAGE RATIO shall mean, for the relevant period, the ratio
- ---------------------------
determined by dividing EBITDA by the sum of (i) all interest obligations paid or
due, (ii) the amount of principal repaid or scheduled to be repaid on the Senior
Notes, (iii) Capital Expenditures and (iv) all federal, state and local income
tax expenses due and payable after giving effect to applicable net operating
losses.
FUNDED DEBT shall mean the sum of the outstanding balances of (i) the Senior
- -----------
Notes and (ii) Obligations hereunder.
FUNDED DEBT RATIO shall mean a ratio determined by dividing Funded Debt by
- -----------------
EBITDA calculated for the twelve (12) month period then ended.
-11-
<PAGE>
GAAP shall mean generally accepted accounting principles in the United States of
- ----
America as in effect from time to time and for the period as to which such
accounting principles are to apply.
GUARANTIES shall have the meaning specified in Section 2(a), Paragraph (d) of
- ----------
this Financing Agreement.
GUARANTOR SECURITY AGREEMENTS shall mean the Security Agreement dated of even
- -----------------------------
date executed by the Guarantors and all other pledge and/or security agreements
that may at any time be executed by the Guarantors in favor of CITBC, including,
without limitation, all such documents that may be executed in connection with
the satisfaction of the Caribbean Conditions Precedent.
GUARANTORS shall mean CPC and Caribbean.
- ----------
INDEBTEDNESS shall mean, without duplication, all liabilities, contingent or
- ------------
otherwise, which are any of the following: (a) obligations in respect of money
(borrowed or otherwise) or for the deferred purchase price of property, services
or assets, other than Inventory, or (b) lease obligations which, in accordance
with GAAP, have been, or which should be capitalized.
INTERCOMPANY LIEN shall have the meaning specified in Section 2(b)b) hereof.
- -----------------
INTERCOMPANY NOTE shall have the meaning specified in Section 2(b)b) hereof.
- -----------------
INTEREST EXPENSE shall mean total interest obligations (paid or accrued)
- ----------------
determined in accordance with GAAP on a basis consistent with the latest audited
financial statements of the Company.
INVENTORY shall mean all present and hereafter acquired inventory (as defined in
- ---------
the U.C.C.) and all additions, substitutions and replacements thereof, wherever
located, together with all goods and materials used or usable in manufacturing,
processing, packaging or shipping same; in all stages of production- from raw
materials through work-in-process to finished goods - and any and all proceeds
thereof of whatever sort.
INVENTORY ADVANCE PERCENTAGE shall have the meaning specified in Section 3,
- ----------------------------
Paragraph 1 hereof.
INVENTORY LOAN CAP shall have the meaning specified in Section 3, Paragraph 1
- ------------------
hereof.
ISSUING BANK shall mean the bank issuing Letters of Credit for the Company.
- ------------
LETTERS OF CREDIT shall mean all letters of credit issued with the assistance of
- -----------------
CITBC by the Issuing Bank for or on behalf of the Company.
LETTER OF CREDIT GUARANTY shall mean the guaranty delivered by CITBC to the
- -------------------------
Issuing Bank of the Company's reimbursement obligation under the Issuing Bank's
Reimbursement Agreement, Application for Letter of Credit or other like
document.
-12-
<PAGE>
LETTER OF CREDIT GUARANTY FEE shall mean the fee CITBC may charge the Company
- -----------------------------
under paragraph 3 of Section 7 of this Financing Agreement for: i) issuing the
Letter of Credit Guaranty or ii) otherwise aiding the Company in obtaining
Letters of Credit.
LIBOR shall mean at any time of determination, and subject to availability, for
- -----
each interest period the higher of the applicable London Interbank Offered Rate
paid in London on dollar deposits from other banks as (x) quoted by Chase Bank,
(y) published under "Money Rates" in the New York City edition of the Wall
Street Journal or if there is no such publication or statement therein as to
Libor then in any publication used in the New York City financial community or
(z) determined by CITBC based upon information presented on Telerate Systems at
Page 3750 as of 11:00 a.m. (London Time).
LIBOR LOAN shall mean those Revolving Loans for which the Company has elected to
- ----------
use Libor for interest rate computations.
LIBOR PERIOD shall mean the Libor for one month, two month, three month or six
- ------------
month U.S. dollar deposits, as selected by the Company.
LIGHT MONITORING ARRANGEMENT shall have the meaning specified in Section 3,
- ----------------------------
Paragraph 2(b) of this Financing Agreement.
LIGHT MONITORING CONDITIONS shall have the meaning specified in Section 3,
- ---------------------------
Paragraph 2(b) of this Financing Agreement.
LIGHT MONITORING TERMINATION OPTION shall have the meaning specified in Section
- -----------------------------------
3, Paragraph 2(c) hereof.
LINE OF CREDIT shall mean the commitment of CITBC to make Revolving Loans to,
- --------------
and open Letters of Credit for, the Company pursuant to Sections 3 and 4 of this
Financing Agreement in the aggregate amount equal to $50,000,000.00.
LINE OF CREDIT FEE shall: X) mean the fee due CITBC at the end of each month
- ------------------
for the Line of Credit, and Y) be computed at the applicable rate set forth
below on the difference between (i) the Line of Credit and (ii) the sum of the
average daily outstanding balance of Revolving Loans and average daily balance
of outstanding Letters of Credit (herein such difference shall be referred to as
the "Unused Line"). The applicable rate shall be: (A) one quarter of one
percent (1/4 of 1%) per annum on the amount of the Unused Line up to
$25,000,000; and (B) one half of one percent ( 1/2 of 1%) per annum on the
amount of the Unused Line in excess of $25,000,000.
LOAN FACILITY FEE shall mean the fee payable to CITBC in accordance with, and
- -----------------
pursuant to, the provisions of Paragraph 7 of Section 7 of this Financing
Agreement.
MERRYWOOD AGREEMENT shall mean the Stock Purchase Agreement dated as of October
- -------------------
22, 1996 by and among the Company, Continental Can, Merrywood and Plaza Limited.
-13-
<PAGE>
NET WORTH shall mean assets in excess of liabilities, and determined in
- ---------
accordance with GAAP, on a consistent basis with the latest audited statements.
THE 1996 LEASEBACK GUARANTEE shall mean the guaranty of the Company, which is
- ----------------------------
described in clause (vi) of paragraph 8 of Section 11 of this Financing
Agreement.
THE 1996 LEASEBACK SUBORDINATED LIENS shall mean (x) the subordinated security
- -------------------------------------
interests by the Company in the Continental Can Note, which is described in
clause (vi) of paragraph 8 of Section 11 of this Financing Agreement and (y) the
subordinated security interest granted by CPC in its Accounts and Inventories,
which is described in clause (v) of paragraph 8 of Section 11 of this Financing
Agreement.
OBLIGATIONS shall mean all Revolving Loans and other advances made or to be made
- -----------
by CITBC to the Company or to others for the Company's account; any and all
indebtedness and obligations which may at any time be owing by the Company to
CITBC howsoever arising, whether now in existence or incurred by the Company
from time to time hereafter; whether secured by pledge, lien upon or security
interest in any of the Company's assets or property or the assets or property of
any other person, firm, entity or corporation; whether such indebtedness is
absolute or contingent, joint or several, matured or unmatured, direct or
indirect and whether the Company is liable to CITBC for such indebtedness as
principal, surety, endorser, guarantor or otherwise. Obligations shall also
include indebtedness owing to CITBC by the Company under this Financing
Agreement or under any other agreement or arrangement now or hereafter entered
into between the Company and CITBC; indebtedness or obligations incurred by, or
imposed on, CITBC as a result of environmental claims (other than as a result of
actions of CITBC) arising out of the Company's operation, premises or waste
disposal practices or sites; the Company's liability to CITBC as maker or
endorser on any promissory note or other instrument for the payment of money;
the Company's liability to CITBC under any instrument of guaranty or indemnity,
or arising under any guaranty, endorsement or undertaking which CITBC may make
or issue to others for the Company's account, including any accommodation
extended with respect to applications for Letters of Credit, CITBC's acceptance
of drafts or CITBC's endorsement of notes or other instruments for the Company's
account and benefit.
OPERATING LEASES shall mean all leases of property (whether real, personal or
- ----------------
mixed) other than Capital Leases.
OTHER COLLATERAL shall mean all now owned and hereafter acquired deposit
- ----------------
accounts maintained with any bank or financial institution into which the
proceeds of Accounts or Inventory are deposited; all cash and other monies and
property in the possession or control of CITBC, to the extent that such cash,
money or property represents proceeds of Inventory or Accounts; all books,
records, ledger cards, disks and related data processing software at any time
evidencing or containing information relating to any of the Collateral described
herein or otherwise necessary or helpful in the collection thereof or
realization thereon, and all cash and non-cash proceeds of the foregoing.
OUT-OF-POCKET EXPENSES shall mean all of CITBC's present and future expenses
- ----------------------
incurred relative to this Financing Agreement, whether incurred heretofore or
hereafter, which expenses shall include,
-14-
<PAGE>
without being limited to reasonable attorney's fees, the cost of record
searches, all costs and expenses incurred by CITBC in opening bank accounts,
depositing checks, receiving and transferring funds, and any charges imposed on
CITBC due to "insufficient funds" of deposited checks and CITBC's standard fee
relating thereto, any amounts paid by CITBC, incurred by or charged to CITBC by
the Issuing Bank under the Letter of Credit Guaranty or the Company's
Reimbursement Agreement, Application for Letter of Credit or other like document
which pertain either directly or indirectly to such Letters of Credit, and
CITBC's standard fees relating to the Letters of Credit and any drafts
thereunder, fees and taxes relative to the filing of financing statements, and
all expenses, costs and fees set forth in paragraph 3 of Section 9 of this
Financing Agreement.
PATENTS shall mean all present and hereafter acquired patents and/or patent
- -------
rights and all cash and non-cash proceeds thereof.
PERMITTED ASSET DISPOSITIONS shall mean (i) sales of assets (other than
- ----------------------------
Collateral) which are sold for fair market value with eighty-five percent (85%)
or more of the sales proceeds payable in cash and applied in accordance with the
provisions of the Senior Notes, including without limitation Section 4.15(a)(i)
thereof, all as in effect on the date hereof and (ii) any sale, transfer or
disposition of assets (other than Collateral) permitted under the Senior Note
Indenture (as in effect on the date hereof and without giving effect to any
future amendment thereto).
PERMITTED ENCUMBRANCES shall mean: I) the Intercompany Lien, the 1996
- ----------------------
Sale/Leaseback Subordinated Liens, liens and security interests securing the
Senior Notes, liens and security interests (other than with respect to
Collateral) otherwise permitted under the terms of the Senior Notes (as in
effect on the date hereof and without giving effect to any future amendment
thereto) and not inconsistent with any provision contained in this definition of
Permitted Encumbrances, liens listed on Schedule 1 hereto and other liens
expressly permitted, or consented to, by CITBC; II) liens arising pursuant to
Capitalized Lease Obligations and Purchase Money Liens; III) Customarily
Permitted Liens; IV) liens granted CITBC by the Company and/or the Guarantors;
V) liens of judgment creditors provided such liens do not exceed, in the
aggregate, at any time, $50,000.00 (other than liens bonded or insured to the
reasonable satisfaction of CITBC); VI) liens for taxes not yet due and payable
or which are being diligently contested in good faith by the Company by
appropriate proceedings and which liens are not x) other than with respect to
Real Estate, senior to the liens of CITBC or y) for taxes due the United States
of America; VII) leases and subleases of Real Estate which do not interfere with
the ordinary conduct of the business of the Company and/or the Guarantors and
which are made on customary and usual terms applicable to similar properties;
VIII) liens on the assets or property (other than Collateral) of a subsidiary of
the Company existing at the time such subsidiary became a subsidiary of the
Company and not incurred as a result of (or in connection with or in
anticipation of) such subsidiary becoming a subsidiary of the Company; provided,
--------
that such liens do not extend to or cover any property or assets of the Company
or any of its subsidiaries (other than the property or assets so acquired); IX)
liens securing Indebtedness which is incurred to refinance Indebtedness which
has been secured by a lien permitted under this Financing Agreement and is
permitted to be refinanced under this Financing Agreement; provided, that such
--------
liens do not extend to or cover any Collateral and/or property or assets of the
Company or any of its subsidiaries not securing the Indebtedness so refinanced;
and (X) in addition to liens permitted under the foregoing
-15-
<PAGE>
clauses, liens securing an aggregate of $5,000,000 of Indebtedness or other
obligations, provided such Indebtedness is Permitted Indebtedness hereunder and
--------
is not secured by any Collateral hereunder.
PERMITTED INDEBTEDNESS shall mean: I) current indebtedness maturing in less
- ----------------------
than one year and incurred in the ordinary course of business for raw materials,
supplies, equipment, services, taxes or labor; II) the indebtedness secured by
the Purchase Money Liens or arising out of Capitalized Lease Obligations; III)
Subordinated Debt; IV) indebtedness arising under the Letters of Credit and this
Financing Agreement; V) deferred taxes and other expenses incurred in the
ordinary course of business; VI) the Senior Notes and other indebtedness
existing on the date of execution of this Financing Agreement and listed in the
most recent financial statement delivered to CITBC or otherwise disclosed to
CITBC in writing; VII) interest rate protection obligations covering
Indebtedness of the Company and/or the Guarantors (which Indebtedness (A) bears
interest at fluctuating interest rates and (B) is otherwise permitted to be
incurred hereunder and under the Senior Notes) to the extent the notional
principal amount of such interest rate protection obligation does not exceed the
principal amount of the Indebtedness to which such interest rate protection
obligations relate; VIII) without duplication, Indebtedness secured by a
Permitted Encumbrance; IX) Indebtedness if, immediately after giving effect
thereto, the Consolidated Interest Coverage Ratio of the Company and its
subsidiaries (including, without limitation, the Guarantors) would be greater
than or equal to 2.25 to 1 on or prior to December 31, 1999 and 2.50 to 1 on or
after January 1, 2000; X) Indebtedness representing Permitted Intercompany
Payments and/or Permitted Investments; and XI) any replacements, renewals
refinancing and extensions of the Indebtedness incurred under clauses vi) and
ix) hereof, provided, that any such replacements, renewals, refinancings and
extensions (A) shall not provide for any mandatory redemption, amortization or
sinking fund requirement in an amount greater than or at a time prior to the
amounts and times specified in the Indebtedness being replaced, renewed,
refinanced or extended, and (B) shall not exceed the principal amount (plus
accrued interest) of the Indebtedness being replaced, renewed, refinanced or
extended, provided that in any instance hereunder pursuant to clauses (i)
-------- ----
through (xi), the Permitted Indebtedness is not secured by nor are any liens
permitted with respect to the Collateral.
PERMITTED INTERCOMPANY PAYMENTS shall mean (i) the advances of the proceeds of
- -------------------------------
Revolving Loans from the Company to CPC and Caribbean as provided in Section 3,
Paragraph 9 hereof , (ii) any payments from CPC and Caribbean to the Company
(whether as a dividend, distribution, loan, advance or otherwise) for the
purpose of enabling the Company to make payments (whether constituting
principal, interest or other amounts due) with respect to the Senior Notes,
(iii) any payments from CPC and Caribbean to the Company (whether as a dividend,
distribution, loan, advance or otherwise) for the purpose of enabling the
Company to make payment of any Obligations owing to CITBC hereunder, (iv) any
payment by the Company or the Guarantors to Continental Can Company, Inc.
permitted under the Senior Note Indenture (as in effect on the date hereof and
without giving effect to any future amendment thereto), and (v) any payments by
and among the Company and/or the Guarantors for the purpose of enabling the
recipient of such payment to make any expenditure for working capital or other
general corporate purposes not prohibited under Section 6, Paragraphs 9 and 10
hereof, provided that no such payments under clauses (ii), (iv) and (v) above
shall be made unless after giving effect to any such intended payment the
Company would have (x)
-16-
<PAGE>
an additional Availability hereunder of $5,000,000 or more and all of the debts,
obligations and payables of the Company and the Guarantors are current in
accordance with their usual business practices and (y) a consolidated Net Worth
of at least $5,000,000 and provided further than no such payments under clauses
(ii), (iv) and (v) above shall be made unless after giving effect to any such
intended payments no Default or Event of Default has occurred or would occur
hereunder.
PERMITTED INVESTMENTS shall mean (i) obligations of the U.S. government due
- ---------------------
within one (1) year, (ii) certificates of deposit or Eurodollar deposits due
within one (1) year with a commercial bank organized under the laws of the
United States of America or any state thereof having capital funds of at least
$500,000,000 or more, (iii) A-1, P-1 commercial paper; (iv) debt of any state or
political subdivision that is rated A or better, and v) investments by the
Company or any of its subsidiaries (x) in new wholly owned subsidiaries of the
Company or its subsidiaries and (y) in entities that are not wholly owned
subsidiaries not exceeding $5,000,000 in the aggregate during the term of this
Financing Agreement, in each case for the purpose of acquiring businesses
related to the Company's or any Guarantor's business, provided that after giving
-------- ----
effect to any Permitted Investment hereunder, (x) the Company would have an
additional Availability hereunder of $5,000,000 or more and all of the debts,
obligations and payables of the Company and the Guarantors are current in
accordance with their usual business practices, (y) no Default or Event of
Default has occurred or would occur hereunder and (z) with respect to clause v)
above, the Company would have a consolidated Net Worth of at least $5,000,000.
PERMITTED RESTRICTED PAYMENTS shall mean:
- -----------------------------
(a) any dividend or other distribution to shareholders of the Company (herein
"Payment") if immediately after giving effect to such Payment, the aggregate of
all Payments declared or made after the date on which the Senior Notes were
originally issued does not exceed the sum of (a) 75% of the Consolidated Net
Income of the Company (or in the event such Consolidated Net Income shall be a
deficit, minus 100% of such deficit) from January 1, 1997, and (b) 100% of the
aggregate net cash proceeds and the fair market value of marketable securities
received by the Company from the issue or sale, after the date on which the
Senior Notes are originally issued, of capital stock (other than Disqualified
Stock) of the Company, or any Indebtedness or other securities of the Company
convertible into or exercisable for capital stock (other than Disqualified
Stock) of the Company which has been so converted or exercised, as the case may
be, plus (c) solely to the extent such payment is made to provide Continental
Can Company, Inc. with the funds necessary to purchase shares of the Company
pursuant to the Merrywood Agreement, $7,500,000, provided that at the time of
any payment made pursuant to this clause (c), the Consolidated Interest Coverage
Ratio of the Company computed on a pro forma basis is not less 2.75 to 1.
Notwithstanding the foregoing, no Permitted Restricted Payments shall be made
unless after giving effect thereto the Company would have (x) an additional
Availability of $5,000,000 or more and all of the debts, obligations and
payables of the Company and the Guarantors are current in accordance with their
usual business practices and (y) a consolidated Net Worth of at least
$5,000,000.
-17-
<PAGE>
PURCHASE MONEY LIENS shall mean liens on any assets or property (other than
- --------------------
Collateral) acquired after the date of this Financing Agreement provided that:
i) each such lien shall attach only to the property to be acquired, II) a
description of the property so acquired is furnished to CITBC, and III) the sum
of (x) the debt incurred in connection with such acquisitions plus (y)
Capitalized Lease Obligations shall not exceed in the aggregate for the Company
and its subsidiaries (including, without limitation, for the Guarantors) the
maximum amount of Capital Expenditures permitted under Section 6, Paragraph 10
hereof.
REAL ESTATE shall mean all fee and/or leasehold interests in the real property.
- -----------
REVOLVING LOAN ACCOUNT shall have the meaning specified in Section 3, Paragraph
- ----------------------
6 hereof.
REVOLVING LOANS shall mean the loans and advances made, from time to time, to or
- ---------------
for the account of the Company by CITBC pursuant to Section 3 of this Financing
Agreement.
SENIOR NOTES shall mean the Company's 10% Senior Notes due 2006 in the aggregate
- ------------
original principal amount of $125,000,000.00.
SENIOR NOTE GUARANTEES shall mean the joint and several guarantees of CPC and
- ----------------------
Caribbean of the obligations of the Company with respect to the Senior Notes.
SENIOR NOTE INDENTURE shall mean the indenture dated as of December 1, 1996
- ---------------------
among the Company, CPC, Caribbean and United States Trust Company of New York,
as trustee
SUBORDINATED DEBT shall mean the debt due a Subordinating Creditor (and the note
- -----------------
evidencing such) which has been subordinated, by the Subordination Agreement, to
the prior payment and satisfaction of the Obligations of the Company to CITBC.
SUBORDINATING CREDITOR shall mean any party now or hereafter executing a
- ----------------------
Subordination Agreement.
SUBORDINATION AGREEMENT shall mean an agreement in form and substance
- -----------------------
satisfactory to CITBC in its reasonable judgment pursuant to which Subordinated
Debt is subordinated to the prior payment and satisfaction of the Obligations.
TRADE ACCOUNTS RECEIVABLE shall mean that portion of Accounts which arises from
- -------------------------
the sale of Inventory or the rendition of services in the ordinary course of
business.
TRADEMARKS shall mean all present and hereafter acquired trademarks and/or
- ----------
trademark rights (together with the goodwill associated therewith) and all cash
and non-cash proceeds thereof.
WORKING CAPITAL shall mean Current Assets in excess of Current Liabilities.
- ---------------
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<PAGE>
U.C.C. shall mean the Uniform Commercial Code as in effect from time to time in
- ------
the state of New York.
SECTION 2. (a) CONDITIONS PRECEDENT TO CLOSING AND INITIAL FUNDING
---------------------------------------------------
The obligation of CITBC to make loans hereunder is subject to the satisfaction
of, or waiver of, immediately prior to or concurrently with the making of such
loans, the following conditions precedent:
a) LIEN SEARCHES - CITBC shall have received tax, judgment and Uniform
-------------
Commercial Code searches satisfactory to CITBC for all locations presently
occupied or used by the Company, CPC and Caribbean.
b) CASUALTY INSURANCE - The Company shall have delivered to CITBC evidence
------------------
satisfactory to CITBC that casualty insurance policies covering the Company, CPC
and Caribbean and listing CITBC as loss payee or mortgagee, as the case may be,
with respect to the Inventory, are in full force and effect, all as set forth in
Section 6, Paragraph 5 of this Financing Agreement.
c) UCC FILINGS - Any documents (including without limitation, financing
-----------
statements) required to be filed in order to create, in favor of CITBC, a first
and exclusive perfected security interest in the Collateral hereunder and under
the Guarantor Security Agreement(s) with respect to which a security interest
may be perfected by a filing under the Uniform Commercial Code shall have been
properly filed in each office in each jurisdiction required in order to create
in favor of CITBC a perfected lien on such Collateral. CITBC shall have
received acknowledgment copies of all such filings (or, in lieu thereof, CITBC
shall have received other evidence satisfactory to CITBC that all such filings
have been made); and CITBC shall have received evidence that all necessary
filing fees and all taxes or other expenses related to such filings have been
paid in full.
d) GUARANTIES - The Guarantors shall have executed and delivered to CITBC
----------
guaranties, in form acceptable to CITBC, guaranteeing all present and future
obligations of the Company to CITBC (herein the "Guaranties").
e) GUARANTOR SECURITY AGREEMENTS Each Guarantor shall have executed and
-----------------------------
delivered to CITBC a Guarantor Security Agreement and UCC financing statements
and such other similar documents as CITBC may reasonably require to perfect its
liens on the Collateral (all in form and substance satisfactory to CITBC).
f) OPINIONS - Counsel for the Company and the Guarantors shall have
--------
delivered to CITBC opinions satisfactory to CITBC opining, inter alia, that,
subject to the i) filing, priority and remedies provisions of the U.C.C., ii)
the provisions of the Bankruptcy Code, insolvency statutes or other like laws,
iii) the equity powers of a court of law and iv) such other matters as may be
agreed upon with CITBC: a) the Guaranties of the Guarantors and the Guarantor
Security Agreements and; b) this Financing Agreement; and (c) all other loan
documents of the Company and the Guarantors are x) valid, binding and
enforceable according to their terms, y) are duly authorized and z) do not
violate any terms, provisions, representations or covenants in the charter or
by-laws of the Company or the Guarantors (as the case may be) or, to the best
knowledge of such counsel, of any loan agreement, mortgage, deed of trust, note,
security or pledge agreement or indenture to which the Company or the Guarantors
is a signatory or by which they or their assets are bound.
-19-
<PAGE>
g) ADDITIONAL DOCUMENTS - The Company shall have executed and delivered to
----------------------
CITBC all loan documents necessary to consummate the lending arrangement
contemplated between the Company and CITBC.
h) ENVIRONMENTAL REPORT - CITBC shall have received, environmental audit
--------------------
reports on i) all of the Company's and the Guarantor's leasehold and fee
interests, and ii) the Company's and the Guarantor's waste disposal practices.
The reports must x) be satisfactory to CITBC and y) not disclose or indicate any
liability (real or potential) stemming from the Company's and the Guarantor's
premises, its operations, its waste disposal practices or waste disposal sites
used by them.
i) BOARD RESOLUTION - CITBC shall have received a copy of the resolutions of
----------------
the Board of Directors of (i) the Company authorizing the execution, delivery
and performance of (x) this Financing Agreement, and (y) and other loan
documents, and (ii) the Guarantors authorizing the execution, delivery and
performance of (x) the Guaranties and Guarantor Security Agreements and (y) any
other loan documents in each case certified by the Secretary or Assistant
Secretary thereof as of the date hereof, together with a certificate of the
Secretary or Assistant Secretary thereof as to the incumbency and signature of
the officers executing such agreement and any certificate or other documents to
be delivered pursuant hereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary.
j) CORPORATE ORGANIZATION - CITBC shall have received (i) a copy of the
----------------------
Certificate of Incorporation of the Company and the Guarantors certified by the
Secretary of State of its incorporation, and (ii) a copy of the By-Laws (as
amended through the date hereof) of the Company and the Guarantors and certified
by the Secretary or Assistant Secretary thereof.
k) OFFICER'S CERTIFICATE - CITBC shall have received an executed Officer's
---------------------
Certificate of the Company, satisfactory in form and substance to CITBC,
certifying that (i) the representations and warranties contained herein and in
the Guaranties and Guarantor Security Agreement are true and correct in all
material respects on and as of the date hereof; (ii) the Company is in
compliance with all of the terms and provisions set forth herein; and (iii) no
Event of Default has occurred.
l) ABSENCE OF DEFAULT - No Default, Event of Default or material adverse
------------------
change in the financial condition, business, prospects, profits, operations or
assets of the Company or the Guarantors shall have occurred.
m) LEGAL RESTRAINTS/LITIGATION - At the date of execution of this Financing
---------------------------
Agreement, there shall be no x) litigation, investigation or proceeding
(judicial or administrative) pending or threatened against the Company or the
Guarantors or their assets, by any agency, division or department of any county,
city, state or federal government arising out of or in connection with this
Financing Agreement, y) injunction, writ or restraining order restraining or
prohibiting the consummation of the financing arrangements contemplated under
this Financing Agreement or z) to the best knowledge of the Company, suit,
action, investigation or proceeding (judicial or administrative) pending or
threatened against the Company or the Guarantors or their assets, which, in the
opinion of CITBC, if adversely determined could have a material adverse effect
on the business, operation, assets, financial condition or Collateral of the
Company and/or the Guarantors.
n) DISBURSEMENT AUTHORIZATION - The Company shall have delivered to CITBC all
--------------------------
information necessary for CITBC to issue wire transfer instructions on behalf of
the Company for the initial and subsequent loans and/or advances to be made
under this Agreement including, but not limited to, disbursement authorizations
in form acceptable to CITBC.
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<PAGE>
o) EXAMINATION & VERIFICATION - CITBC shall have completed to the
--------------------------
satisfaction of CITBC an examination and verification of the Accounts,
Inventory, books and records of the Company and the Guarantors which examination
shall indicate that, after giving effect to all loans, advances and extensions
of credit to be made at closing, the Company shall have an opening additional
Availability of $25,000,000, all as more fully required by the CITBC Commitment
Letter. It is understood that such requirement contemplates that all debts,
obligations and payables are current.
p) CASH BUDGET PROJECTIONS - CITBC shall have received, reviewed and be
-----------------------
satisfied with a 12 month cash budget projection prepared by the Company in the
form provided by CITBC.
q) COLLECTION ACCOUNTS - The Company shall have established a system of bank
-------------------
accounts with respect to the collection of Accounts and the deposit of proceeds
of Inventory as shall be acceptable to CITBC in all respects.
r) EXISTING REVOLVING CREDIT AGREEMENT - The Company's existing credit
-----------------------------------
agreement with Citibank, N.A. shall be (x) terminated, (y) all loans and
obligations of the Company and/or the Guarantors thereunder shall be paid or
satisfied in full utilizing the proceeds of the initial Revolving Loans to be
made under this Financing Agreement and (z) all liens upon or security interest
in favor of Citibank, N.A. in connection therewith shall be terminated and/or
released upon such payment.
s) CITBC COMMITMENT LETTER - The Company shall have fully complied, to the
-----------------------
satisfaction of CITBC, with all of the terms and conditions of the commitment
letter, dated July 31, 1995 issued by CITBC to, and accepted by, the Company.
Upon the execution of this Financing Agreement and the initial disbursement of
loans hereunder, all of the above Conditions Precedent shall have been deemed
satisfied except as the Company and CITBC shall otherwise agree herein or in a
separate writing.
(b) CARIBBEAN CONDITIONS PRECEDENT
------------------------------
Notwithstanding any provision to the contrary contained in this Financing
Agreement, the inclusion of Accounts and Inventory of Caribbean within Eligible
Accounts Receivable and Eligible Inventory and CITBC's obligation to make
Revolving Loans and/or assist the Company in opening Letters of Credit under
Sections 3 and 4 of this Financing Agreement with respect to such Eligible
Accounts Receivable and Eligible Inventory of Caribbean shall be, and hereby is,
subject to the fulfillment of the following conditions precedent to CITBC
satisfaction (herein the "Caribbean Conditions Precedent"):
a) the execution and delivery to CITBC of all documentation requested by
CITBC to validly perfect CITBC's first and exclusive lien upon and security
interest in all Accounts and Inventory of Caribbean (other than Permitted
Encumbrances), including, without limitation, all documents required to be filed
on the public records under the laws of Puerto Rico, all in form and substance
satisfactory to CITBC;
b) the execution and delivery to CITBC of all documentation requested by
CITBC to (x) evidence outstanding intercompany advances from the Company to
Caribbean, including, without limitation, a Promissory Note (herein the
"Intercompany Note"), (y) secure such intercompany advances and Intercompany
Note by a lien upon and security interest in all such Accounts and Inventory of
Caribbean in favor of the Company (herein the "Intercompany Lien") and (z)
pledge, assign and
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<PAGE>
transfer to CITBC such Intercompany Note and Intercompany Lien as security for
the Company's Obligations hereunder, all in form and substance satisfactory to
CITBC;
c) the recordation of all such documents referred to in sub-paragraphs a) and
b) above required to be filed under the laws of Puerto Rico, and the completion
of all other actions reasonably requested by CITBC or its counsel, to validly
perfect the priority of such liens and security interests; and
d) the Company shall pay to CITBC all Out-of-Pocket Expenses incurred by
CITBC in connection with the satisfaction of the Caribbean Conditions Precedent,
including the reasonable fees and disbursements of CITBC legal counsel in Puerto
Rico and all applicable recording costs with respect thereto, all of which may
(at CITBC's option) be charged to the Company's Revolving Loan Account in
accordance with the provisions of Section 7, Paragraph 5 hereof.
SECTION 3. REVOLVING LOANS
---------------
1. CITBC agrees, subject to the terms and conditions of this Financing
Agreement from time to time, and within x) the Availability and y) the Line of
Credit, but subject to CITBC's right to make "overadvances", to make loans and
advances to the Company on a revolving basis (i.e. subject to the limitations
set forth herein, the Company may borrow, repay and re-borrow Revolving Loans).
Such loans and advances shall be in amounts up to the sum of: A) eighty-five
percent (85%) (herein the "Accounts Receivable Advance Percentage") of the
outstanding Eligible Accounts Receivable of CPC and, upon satisfaction of the
Caribbean Conditions Precedent, Caribbean and B) the lesser of (i) sixty percent
(60%) (herein the "Inventory Advance Percentage") of the aggregate value of
Eligible Inventory of CPC and, upon satisfaction of the Caribbean Conditions
Precedent, Caribbean as determined at the lower of cost or market or (ii)
$25,000,000 in the aggregate at any one time outstanding (herein the "Inventory
Loan Cap"), provided that in no event shall the aggregate amount of all loans
and advances against Eligible Accounts Receivable and Eligible Inventory of
Caribbean exceed the Caribbean Loan Cap. All requests for loans and advances
must be received by an officer of CITBC no later than 1:00 p.m., New York time,
of the day on which such loans and advances are required. Each such request
for a Revolving Loan shall be subject to the terms and provisions of paragraph 9
of this Section 3 and shall be accompanied by: (i) a Borrowing Base Report;
(ii) a Certificate executed by the Company's chief financial officer setting
forth what portion (if any) of the proceeds of such requested Revolving Loan are
to be advanced by CPC and/or Caribbean to the Company and used for the purposes
of making any payment (whether principal, interest or other amounts due) with
respect to the Senior Notes. Each request shall constitute, unless otherwise
disclosed to CITBC in writing, a representation and warranty by the Company that
(i) after giving effect to such requested Revolving Loan, no Default or Event of
Default has occurred or would occur hereunder and (ii) such requested advance is
within Availability and the Line of Credit. Should CITBC for any reason honor
requests for advances in excess of the limitations set forth herein, such
advances shall be considered "overadvances" and shall be made in CITBC's sole
discretion, subject to any additional terms CITBC deems necessary.
2.(a) Subject to the provisions of subparagraph (b)of this Paragraph 2, of
Section 3 of this Financing Agreement, in furtherance of the continuing
assignment and security interest in the Company's and
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<PAGE>
Guarantor's Accounts, the Company will, and it will cause each Guarantor to,
upon the creation of Accounts, execute and deliver to CITBC in such form and
manner as CITBC may reasonably require, solely for CITBC's convenience in
maintaining records of collateral, such confirmatory schedules of Accounts as
CITBC may reasonably request, and such other appropriate reports designating,
identifying and describing the Accounts as CITBC may reasonably require. In
addition, upon CITBC's request the Company shall, and it shall cause each
Guarantor to, provide CITBC with copies of agreements with, or purchase orders
from, the Company's customers, and copies of invoices to customers, proof of
shipment or delivery and such other documentation and information relating to
said Accounts and other collateral as CITBC may reasonably require. Failure to
provide CITBC with any of the foregoing shall in no way affect, diminish, modify
or otherwise limit the security interests granted herein. The Company hereby
authorizes CITBC to regard the Company's printed name or rubber stamp signature
on assignment schedules or invoices as the equivalent of a manual signature by
one of the Company's authorized officers or agents.
(b) Until the Company is notified to the contrary as herein provided, CITBC
shall handle the Company's account under a light monitoring arrangement (herein
the "Light Monitoring Arrangement"), and the Company shall not be required to
comply with the Collateral reporting requirements of Section 3, Paragraph 2(a)
above so long as the Company provides to CITBC within ten (10) Business Days of
the end of each month the reports with respect to Accounts and Inventory
attached hereto as Exhibit A (herein collectively the "Borrowing Base Report")
and within fifteen (15) Business Days of the end of each month a monthly ageing
of Accounts and monthly inventory confirmation form, all in form satisfactory to
CITBC, provided that the following conditions (herein collectively the "Light
Monitoring Conditions") are met:
(x) The Company's Availability is $5,000,000 or more; and
(y) No Default and/or Event of Default has occurred under the Financing
Agreement.
Should either of the foregoing Light Monitoring Conditions not be met CITBC
shall have the immediate right by notification to the Company, and to any
applicable financial institution at which the Depository Account is maintained,
to revoke this Light Monitoring Arrangement and require the Company to comply
with all of the terms and provisions of subparagraph (a) of Paragraph 2 of this
Section 3 of this Financing Agreement.
(c) In addition to any reports with respect to Collateral that the Company
may be required to provide to CITBC pursuant to sub-paragraphs (a) and (b)
above, upon satisfaction of the Caribbean Conditions Precedent, the Company
shall provide to CITBC from time to time such Confirmatory Schedules of Assigned
Accounts Receivable with respect to the Accounts of Caribbean (both with respect
to the lien and security interest granted directly to CITBC by Caribbean to
secure its Guaranty and the Intercompany Lien granted to the Company and
assigned to CITBC) as CITBC shall reasonably require to perfect CITBC's lien
upon and security interest in such Accounts of Caribbean under the laws of
Puerto Rico.
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<PAGE>
3. (a) The Company hereby represents and warrants that: each Trade Account
Receivable (whether created by the Company's or either Guarantors' sales) is
based on an actual and bona fide sale and delivery of goods or rendition of
services to customers, made by them in the ordinary course of business; the
Inventory being sold and the Accounts created are their exclusive property and
are not and shall not be subject to any lien, consignment arrangement,
encumbrance, security interest or financing statement whatsoever, other than the
Permitted Encumbrances; the invoices evidencing such Accounts are in their names
and their customers have accepted the goods or services, owe and are obligated
to pay the full amounts stated in the invoices according to their terms, without
dispute, offset, defense, counterclaim or contra, except for disputes and other
matters arising in the ordinary course of business of which the Company has
complied with the notice requirements of paragraph 5 of this Section 3. The
Company confirms to CITBC that any and all taxes or fees relating to the
Company's or the Guarantors business, sales, Accounts or Inventory relating
thereto, are their sole responsibility and that same will be paid by them when
due and that none of said taxes or fees represent a lien on or claim against
such Accounts. The Company also warrants and represents that the Company and
each Guarantor are duly and validly existing corporations and are qualified in
all states where the failure to so qualify would have an adverse effect on their
business or their ability to enforce collection of Accounts due from customers
residing in that state. The Company agrees to maintain, and to cause each
Guarantor to maintain, such books and records regarding Accounts as CITBC may
reasonably require and agrees that the books and records of the Company and the
Guarantors will reflect CITBC's interest in the Accounts. All of the books and
records of the Company and the Guarantors will be available to CITBC at normal
business hours, including any records handled or maintained for the Company or
the Guarantors by any other company or entity.
(b) The Company hereby represents, warrants and covenants that neither the
Company nor any Guarantor:
(i) has made, or will at any time hereafter make, any sale or other
transfer of Inventory whereby chattel paper and/or an instrument (as such
terms are defined in the U.C.C.) are created or arise from or in connection
with such sale or other transfer; and
(ii) has accepted or been issued, or will at any time hereafter accept or
be issued, any such chattel paper and/or instrument with respect to, or
evidencing the outstanding amount of any Account.
In addition, the Company further represents, warrants and covenants that it will
execute and deliver to CITBC a certificate (in form and substance satisfactory
to CITBC) certifying compliance (or non-compliance) by the Company and each of
the Guarantors with the foregoing provisions of this subparagraph (b) on (x) the
dates and at the times it is required to deliver Borrowing Base Reports under
Section 3, Paragraph 2 hereof and (y) at any other time upon the reasonable
request of CITBC.
4. Until CITBC has advised the Company to the contrary after the occurrence
of an Event of Default, the Company may and will, and will cause each Guarantor
to, enforce, collect and receive all amounts owing on their Accounts for
CITBC's benefit and on CITBC's behalf, but at their expense; such privilege
shall terminate automatically upon the institution by or against the Company or
any Guarantor of any proceeding under any bankruptcy or insolvency law or, at
the election of CITBC,
-24-
<PAGE>
upon the occurrence of any other Event of Default and until such Event of
Default is waived in writing by CITBC or cured to CITBC's satisfaction. Any
checks, cash, notes or other instruments or property received by the Company or
the Guarantors with respect to any Accounts or the sale of Inventory shall be
held by them in trust for CITBC, separate from their own property and funds, and
immediately turned over to CITBC with proper assignments or endorsements by
deposit to the special depository accounts in the Company's name designated by
CITBC for such purposes (the "Depository Accounts"). The institutions holding
Depository Accounts will be instructed that when it is satisfied that such funds
on deposit are "good funds" such institution will remit such "good funds" to the
Company's operating account, which shall be an account (other than a payroll
account) with an institution in the United States. Notwithstanding the foregoing
or anything herein contained to the contrary, if (i) any one of the Light
Monitoring Conditions is not met or (ii) CITBC exercises the Light Monitoring
Termination Option then CITBC may upon concurrent notice to the Company advise
the institutions holding Depository Accounts to remit all amounts then or
thereafter on deposit in such Depository Accounts to CITBC to be applied by
CITBC to the reduction of the Obligations in such order as CITBC may determine.
CITBC will promptly rescind such instructions upon the Light Monitoring
Conditions being met to its satisfaction. All amounts received by CITBC in
payment of Accounts will be credited to the Company's Revolving Loan Account
upon CITBC's receipt of "collected funds" at CITBC's bank account in New York,
New York on the Business Day of receipt if received no later than 1:00 pm or on
the next succeeding Business Day if received after 1:00 pm. No checks, drafts or
other instrument received by CITBC shall constitute final payment to CITBC
unless and until such instruments have actually been collected.
5. The Company agrees to notify CITBC promptly of any matters materially
affecting the value, enforceability or collectibility of any of the Company's or
the Guarantor's Accounts and of all material customer disputes, offsets,
defenses, counterclaims, returns, rejections and all reclaimed or repossessed
merchandise or goods. The Company agrees to, and shall cause each Guarantor to,
issue credit memoranda promptly (with duplicates to CITBC upon request after the
occurrence of an Event of Default) upon accepting returns or granting
allowances, and may continue to do so until CITBC has notified the Company that
an Event of Default has occurred and that all future credits or allowances are
to be made only after CITBC's prior written approval. Upon the occurrence of an
Event of Default and until such time as such Event of Default is waived in
writing by CITBC or cured to CITBC's satisfaction and on notice from CITBC, the
Company agrees that all returned, reclaimed or repossessed merchandise or goods
shall be set aside by the Company and the Guarantors, marked with CITBC's name
and held by them for CITBC's account as owner and assignee.
6. CITBC shall maintain a separate account on its books in the Company's name
(herein the "Revolving Loan Account") in which the Company will be charged with
Revolving Loans and other advances made by CITBC to it or for its account, and
with any other Obligations, including any and all costs, expenses and reasonable
attorney's fees which CITBC may incur in connection with the exercise by or for
CITBC of any of the rights or powers herein conferred upon CITBC, or in the
prosecution or defense of any action or proceeding to enforce or protect any
rights of CITBC in connection with this Financing Agreement or the Collateral
assigned hereunder, or any Obligations owing to CITBC by the Company. Subject
to the provisions of Paragraph 4 of Section 3 of this Financing Agreement, the
Company will be credited with all amounts received by CITBC from the
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<PAGE>
Company or from others for the Company's account, including, as above set forth,
all amounts received by CITBC in payment of assigned Accounts and such amounts
will be applied to payment of the Obligations. In no event shall prior recourse
to any Accounts or other security granted to or by the Company or any Guarantor
be a prerequisite to CITBC's right to demand payment of any Obligation. Further,
it is understood that CITBC shall have no obligation whatsoever to perform in
any respect any of the Company's or Guarantors' contracts or obligations
relating to the Accounts.
7. After the end of each month, CITBC shall promptly send the Company a
statement showing the accounting for the charges, loans, advances and other
transactions occurring between CITBC and the Company during that month. The
monthly statements shall be deemed correct and binding upon the Company and
shall constitute an account stated between the Company and CITBC unless CITBC
receives a written statement of the exceptions within sixty (60) days of the
date of the monthly statement.
8. In the event that the sum of (i) the outstanding balance of Revolving
Loans and (ii) outstanding balance of Letters of Credit exceeds (x) the maximum
amount thereof available under Section 3 hereof or (y) the Line of Credit
(herein the amount of any such excess under clauses (i) or (ii) shall be
referred to as the "Excess") such Excess shall be due and payable to CITBC
immediately upon CITBC's demand therefor.
9. The Company agrees that in the event it receives the proceeds of any
requested Revolving Loan, it shall immediately remit one hundred percent (100%)
of such proceeds to CPC and, upon satisfaction of the Caribbean Conditions
Precedent, Caribbean based upon the respective Eligible Accounts Receivable and
Eligible Inventory of each such Guarantor for such subsidiary's Working Capital
purposes and for other general corporate purposes not prohibited under Section
6, Paragraphs 9 and 10 hereof. The Company further irrevocably authorizes and
instructs CITBC to advance the proceeds of each such requested Revolving Loan
directly to the operating account of CPC and, upon satisfaction of the Caribbean
Conditions Precedent, Caribbean as the case may be, all as more fully set forth
in the Disbursement Authorization executed in conjunction herewith. In
addition, the Company hereby agrees that CITBC shall have no obligation to make
any requested Revolving Loan to the Company hereunder to the extent that the
proceeds thereof are to be used to make any payment with respect to the Senior
Notes unless after giving effect thereto the Company would have (x) an
additional Availability hereunder of $5,000,000 or more and in each case, all of
the debts, obligations and payables of the Company and the Guarantors are
current in accordance with their usual business practices and (y) a consolidated
Net Worth of at least $5,000,000.
SECTION 4. LETTERS OF CREDIT
-----------------
In order to assist the Company in establishing or opening Letters of Credit
with an Issuing Bank for the benefit of (a) CPC based upon CPC's Eligible
Accounts Receivable and Eligible Inventory and (b) Caribbean, provided that (i)
the Caribbean Conditions Precedent have been satisfied and then based upon
Caribbean's Eligible Accounts Receivable and Eligible Inventory or (ii) after
giving effect to any such Letter of Credit the Company's Availability hereunder
would be $5,000,000 or more, the Company has requested CITBC to join in the
applications for such Letters of
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Credit, and/or guarantee payment or performance of such Letters of Credit and
any drafts or acceptances thereunder through the issuance of the Letters of
Credit Guaranty, thereby lending CITBC's credit to the Company and CITBC has
agreed to do so. These arrangements shall be handled by CITBC subject to the
terms and conditions set forth below.
1. Within the Line of Credit and Availability, CITBC shall assist the Company
in obtaining Letter(s) of Credit in an amount not to exceed $10,000,000 in the
aggregate outstanding at any one time. CITBC's assistance for amounts in excess
of the limitation set forth herein shall at all times and in all respects be in
CITBC's sole discretion. It is understood that the form and purpose of each
Letter of Credit must be acceptable to CITBC in its reasonable business
judgment. Any and all outstanding Letters of Credit shall be treated as a
Revolving Loan for Availability purposes. Notwithstanding anything herein to the
contrary, upon the occurrence of a Default and/or an Event of Default, CITBC's
assistance in connection with the Letter of Credit Guaranty shall be in CITBC's
sole discretion unless such Default and/or Event of Default is cured to CITBC's
satisfaction or waived by CITBC in writing.
2. CITBC shall have the right, without notice to the Company, to charge the
Company's Revolving Loan Account on CITBC's books with the amount of any and all
indebtedness, liability or obligation of any kind incurred by CITBC under the
Letters of Credit Guaranty at the earlier of a) payment by CITBC under the
Letters of Credit Guaranty, or b) the occurrence of an Event of Default. Any
amount charged to Company's Revolving Loan Account shall be deemed a Revolving
Loan hereunder and shall incur interest at the rate provided in Section 7,
Paragraph 1 of this Financing Agreement.
3. The Company unconditionally indemnifies CITBC and holds CITBC harmless
from any and all loss, claim or liability incurred by CITBC arising from any
transactions or occurrences relating to Letters of Credit established or opened
for the Company's account, the collateral relating thereto and any drafts or
acceptances thereunder, and all Obligations thereunder, including any such loss
or claim due to any action taken by any Issuing Bank, other than for any such
loss, claim or liability arising out of the gross negligence or willful
misconduct by CITBC under the Letters of Credit Guaranty. The Company further
agrees to hold CITBC harmless from any errors or omission, negligence or
misconduct by the Issuing Bank. The Company's unconditional obligation to CITBC
hereunder shall not be modified or diminished for any reason or in any manner
whatsoever, other than as a result of CITBC's gross negligence or willful
misconduct. The Company agrees that any charges incurred by CITBC for the
Company account by the Issuing Bank shall be conclusive on CITBC and may be
charged to the Company's account.
4. CITBC shall not be responsible for: the existence, character, quality,
quantity, condition, packing, value or delivery of the goods purporting to be
represented by any documents; any difference or variation in the character,
quality, quantity, condition, packing, value or delivery of the goods from that
expressed in the documents; the validity, sufficiency or genuineness of any
documents or of any endorsements thereon, even if such documents should in fact
prove to be in any or all respects invalid, insufficient, fraudulent or forged;
the time, place, manner or order in which shipment is made; partial or
incomplete shipment, or failure or omission to ship any or all of the goods
referred to in the Letters of Credit or documents; any deviation from
instructions; delay, default, or fraud by the shipper and/or anyone else in
connection with the Collateral or the shipping thereof; or
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any breach of contract between the shipper or vendors and the Company.
Furthermore, without being limited by the foregoing, CITBC shall not be
responsible for any act or omission with respect to or in connection with any
Collateral.
5. The Company agrees that any action taken by CITBC, if taken in good faith,
or any action taken by any Issuing Bank, under or in connection with the Letters
of Credit, the guarantees, the drafts or acceptances, or the Collateral, shall
be binding on the Company and shall not put CITBC in any resulting liability to
the Company. In furtherance thereof, CITBC shall have the full right and
authority to clear and resolve any questions of non-compliance of documents; to
give any instructions as to acceptance or rejection of any documents or goods;
to execute any and all steamship or airways guaranties (and applications
therefore), indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances, or documents; and to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; all in CITBC's
sole name, and the Issuing Bank shall be entitled to comply with and honor any
and all such documents or instruments executed by or received solely from CITBC,
all without any notice to or any consent from the Company.
6. Without CITBC's express consent and endorsement in writing, the Company
agrees: a) not to execute any and all applications for steamship or airway
guaranties, indemnities or delivery orders; to grant any extensions of the
maturity of, time of payment for, or time of presentation of, any drafts,
acceptances or documents; or to agree to any amendments, renewals, extensions,
modifications, changes or cancellations of any of the terms or conditions of any
of the applications, Letters of Credit, drafts or acceptances; and b) after the
occurrence of an Event of Default which is not cured within any applicable grace
period, if any, or waived by CITBC, not to i) clear and resolve any questions of
non-compliance of documents, or ii) give any instructions as to acceptances or
rejection of any documents or goods.
7. The Company agrees that any necessary import, export or other licenses or
certificates for the import or handling of the Collateral will have been
promptly procured; all foreign and domestic governmental laws and regulations in
regard to the shipment and importation of the Collateral, or the financing
thereof will have been promptly and full complied with; and any certificates in
that regard that CITBC may at any time request will be promptly furnished. In
this connection, the Company warrants and represents that all shipments made
under any such Letters of Credit are in accordance with the laws and regulations
of the countries in which the shipments originate and terminate, and are not
prohibited by any such laws and regulations. The Company assumes all risk,
liability and responsibility for, and agrees to pay and discharge, all present
and future local, state, federal or foreign taxes, duties, or levies. Any
embargo, restriction, laws, customs or regulations of any country, state, city,
or other political subdivision, where the Collateral is or may be located, or
wherein payments are to be made, or wherein drafts may be drawn, negotiated,
accepted, or paid, shall be solely the Company's risk, liability and
responsibility.
8. Upon any payments made to the Issuing Bank under the Letter of Credit
Guaranty, CITBC shall acquire by subrogation, any rights, remedies, duties or
obligations granted or undertaken by the
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Company to the Issuing Bank in any application for Letters of Credit, any
standing agreement relating to Letters of Credit or otherwise, all of which
shall be deemed to have been granted to CITBC and apply in all respects to CITBC
and shall be in addition to any rights, remedies, duties or obligations
contained herein.
SECTION 5. COLLATERAL
----------
1. As security for the prompt payment in full of all loans and advances made
and to be made to the Company from time to time by CITBC pursuant hereto, as
well as to secure the payment in full of the other Obligations, the Company
hereby pledges and grants to CITBC a continuing general lien upon and security
interest in all of its:
(a) present and hereafter acquired Inventory;
(b) present and future Accounts;
(c) present and future Documents of Title; and
(d) present and hereafter acquired Other Collateral.
2. The security interests granted hereunder shall extend and attach to:
(a) All Collateral which is presently in existence and which is owned by the
Company or in which the Company has any interest, whether held by the Company or
others for its account; and
(b) All Inventory and any portion thereof which may be returned, rejected,
reclaimed or repossessed by either CITBC or the Company from the Company's
customers, as well as to all supplies, goods, incidentals, packaging materials,
labels and any other items which are used or useable in the finished goods or
products manufactured or processed by the Company, or in connection with the
sale and/or shipment thereof.
3. The Company agrees to safeguard, protect and hold all Inventory for
CITBC's account and make no disposition thereof except in the regular course of
the business of the Company as herein provided. Until CITBC has given the
Company notice to the contrary, as provided for below, any Inventory may be sold
and shipped by the Company to its customers in the ordinary course of the
Company's business, on open account and on terms currently being extended by the
Company to its customers, provided that all proceeds of all sales (including
cash, accounts receivable, checks, notes, instruments for the payment of money
and similar proceeds) are forthwith transferred, endorsed, and turned over and
delivered to CITBC in accordance with paragraph 4 of Section 3 of this Financing
Agreement. CITBC shall have the right to withdraw this permission at any time
upon the occurrence of an Event of Default and until such time as such Event of
Default is waived in writing by CITBC or cured to CITBC's satisfaction, in which
event no further disposition shall be made of the Inventory by the Company
without CITBC's prior written approval. Sales of Inventory in which a lien
upon, or security interest in, Inventory is retained by the Company shall be
made by the Company only with
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the approval of CITBC, and the proceeds of such sales or sales of Inventory for
cash shall not be commingled with the Company's other property, but shall be
segregated, held by the Company in trust for CITBC as CITBC's exclusive
property, and shall be delivered immediately by the Company to CITBC in the
identical form received by the Company by deposit to the Depository Accounts.
Upon the sale, exchange, or other disposition of Inventory, as herein provided,
the security interest in the Company's Inventory provided for herein shall,
without break in continuity and without further formality or act, continue in,
and attach to, all proceeds, including any instruments for the payment of money,
accounts receivable, contract rights, documents of title, shipping documents,
chattel paper and all other cash and non-cash proceeds of such sale, exchange or
disposition. As to any such sale, exchange or other disposition, CITBC shall
have all of the rights of an unpaid seller, including stoppage in transit,
replevin, rescission and reclamation.
4. The Company agrees at its own cost and expense to keep its Equipment in as
good and substantial repair and condition as the same is now, reasonable wear
and tear excepted, making any and all repairs and replacements when and where
necessary.
5. The rights and security interests granted to CITBC hereunder are to
continue in full force and effect, notwithstanding the termination of this
Financing Agreement or the fact that the account maintained in the Company's
name on the books of CITBC may from time to time be temporarily in a credit
position, until the final payment in full to CITBC of all Obligations and the
termination of this Financing Agreement. Any delay, or omission by CITBC to
exercise any right hereunder, shall not be deemed a waiver thereof, or be deemed
a waiver of any other right, unless such waiver be in writing and signed by
CITBC. A waiver on any one occasion shall not be construed as a bar to or
waiver of any right or remedy on any future occasion.
6. To the extent that the Obligations are now or hereafter secured by any
assets or property other than the Collateral or by the guarantee, endorsement,
assets or property of any other person, then CITBC shall have the right in its
sole discretion to determine which rights, security, liens, security interests
or remedies CITBC shall at any time pursue, foreclose upon, relinquish,
subordinate, modify or take any other action with respect to, without in any way
modifying or affecting any of them, or any of CITBC's rights hereunder.
7. Any reserves or balances to the credit of the Company and any other
property or assets of the Company in the possession of CITBC may be held by
CITBC as security for any Obligations and applied in whole or partial
satisfaction of such Obligations when due. The liens and security interests
granted herein and any other lien or security interest CITBC may have in any
other assets of the Company, shall secure payment and performance of all now
existing and future Obligations. CITBC may in its discretion charge any or all
of the Obligations to the account of the Company when due.
8. The Company shall cause each Guarantor to give to CITBC, from time to time
such pledge or security agreements with respect to their Accounts, Inventory,
Documents of Title and Other Collateral as CITBC shall require to obtain valid
first liens thereon.
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9. The Company agrees to use its best efforts to obtain Landlord's Waivers
(in form and substance satisfactory to CITBC) with respect to the Company's and
the Guarantors' leased locations with ninety (90) days of the date hereof and to
advise CITBC of the status of all such waivers by the end of such ninety (90)
days period.
SECTION 6. REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
1. The Company hereby warrants and represents and/or covenants that: i) the
fair value of the Company's and each Guarantors' assets exceeds the book value
of their respective liabilities; ii) the Company and each Guarantor is generally
able to pay its debts as they become due and payable; and iii) the Company and
each Guarantor does not have unreasonably small capital to carry on its business
as it is currently conducted absent extraordinary and unforeseen circumstances.
The Company further warrants and represents that Schedule 2 hereto correctly and
completely sets forth the locations of the Company's and each Guarantors' Chief
Executive Office and all Collateral hereunder and under the Guarantor Security
Agreements; except for the Permitted Encumbrances, the security interests
granted herein constitute and shall at all times constitute the first and only
liens on the Collateral; that, except for the Permitted Encumbrances, the
Company is or will be at the time additional Collateral is acquired by it, the
absolute owner of the Collateral with full right to pledge, sell, consign,
transfer and create a security interest therein, free and clear of any and all
claims or liens in favor of others; that the Company will at its expense forever
warrant and, at CITBC's request, defend the same from any and all claims and
demands of any other person other than the Permitted Encumbrances; that the
Company will not grant, create or permit to exist, any lien upon or security
interest in the Collateral, or any proceeds thereof, in favor of any other
person other than the holders of the Permitted Encumbrances; and that the
Equipment does not comprise a part of the Inventory of the Company, CPC or
Caribbean and that the Equipment is and will only be used by the Company, CPC or
Caribbean in their respective businesses and will not be held for sale or lease,
or removed from its premises, or otherwise disposed of by the Company, CPC or
Caribbean without the prior written approval of CITBC except for obsolete
Equipment or Equipment no longer needed in the Company's, CPC's or Caribbean's
business.
2. The Company agrees to maintain books and records pertaining to the
Collateral in such detail, form and scope as CITBC shall reasonably require.
The Company agrees that CITBC or its agents may enter upon the Company's
premises at any time during normal business hours, and from time to time, for
the purpose of inspecting the Collateral, and any and all records pertaining
thereto. The Company agrees to afford CITBC prior written notice of any change
in the location of any Collateral, other than to locations, that as of the date
hereof, are known to CITBC and at which CITBC has filed financing statements and
otherwise fully perfected its liens thereon. The Company is also to advise
CITBC promptly, in sufficient detail, of any material adverse change relating to
the type, quantity or quality of the Collateral or on the security interests
granted to CITBC therein.
3. The Company agrees to: execute and deliver to CITBC, from time to time,
solely for CITBC's convenience in maintaining a record of the Collateral, such
written statements, and schedules as CITBC may reasonably require, designating,
identifying or describing the Collateral pledged to CITBC
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hereunder. The Company's failure, however, to promptly give CITBC such
statements, or schedules shall not affect, diminish, modify or otherwise limit
CITBC's security interests in the Collateral.
4. The Company agrees to comply with the requirements of all state and
federal laws in order to grant to CITBC valid and perfected first security
interests in the Collateral, subject only to the Permitted Encumbrances. CITBC
is hereby authorized by the Company to file any financing statements covering
the Collateral whether or not the Company's signature appears thereon. The
Company agrees to do whatever CITBC may reasonably request, from time to time,
by way of: filing notices of liens, financing statements, amendments, renewals
and continuations thereof; cooperating with CITBC's custodians; keeping stock
records; transferring proceeds of Collateral to CITBC's possession by deposit to
the Depository Accounts; and performing such further acts as CITBC may
reasonably require in order to effect the purposes of this Financing Agreement.
5. The Company agrees to maintain insurance on the Real Estate owned by it or
either Guarantor, Equipment and Inventory under such policies of insurance, with
such insurance companies, in such reasonable amounts and covering such insurable
risks as are at all times reasonably satisfactory to CITBC. All policies
covering the Inventory are, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to CITBC, to be made payable to CITBC, in
case of loss, under a standard non-contributory "mortgagee", "lender" or
"secured party" clause and are to contain such other provisions as CITBC may
require to fully protect CITBC's interest in the Inventory and to any payments
to be made under such policies. All original policies or true copies thereof
are to be delivered to CITBC, premium prepaid, with the loss payable endorsement
in CITBC's favor with respect to Inventory, and shall provide for not less than
thirty (30) days prior written notice to CITBC of the exercise of any right of
cancellation. At the Company's request, or if the Company fails to maintain
such insurance, CITBC may arrange for such insurance, but at the Company's
expense and without any responsibility on CITBC's part for: obtaining the
insurance, the solvency of the insurance companies, the adequacy of the
coverage, or the collection of claims. Upon the occurrence of an Event of
Default which is not waived in writing by CITBC or cured to CITBC's
satisfaction, CITBC shall, subject to the rights of any holders of Permitted
Encumbrances holding claims senior to CITBC, have the sole right, in the name of
CITBC or the Company, to file claims with respect to Inventory under any
insurance policies, to receive, receipt and give acquittance for any payments
that may be payable thereunder, and to execute any and all endorsements,
receipts, releases, assignments, reassignments or other documents that may be
necessary to effect the collection, compromise or settlement of any claims under
any such insurance policies. In the event of any loss or damage by fire or
other casualty, insurance proceeds relating to Inventory shall be applied to the
Company's Revolving Loan Account;
6. The Company agrees to pay, when due, all taxes, assessments, claims and
other charges (herein "taxes") lawfully levied or assessed upon the Company or
the Collateral and if such taxes remain unpaid after the date fixed for the
payment thereof unless such taxes are being diligently contested in good faith
by the Company by appropriate proceedings or if any lien shall be claimed
thereunder x) for taxes due the United States of America or y) which in CITBC's
reasonable opinion might create a valid obligation having priority over the
rights granted to CITBC herein, CITBC may, on the Company's behalf pay such
taxes, and the amount thereof shall be an Obligation secured hereby
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and due to CITBC on demand, provided that prior to the occurrence of an Event of
Default hereunder CITBC shall give the Company prior notice of any such intended
payment by CITBC.
7. The Company: (a) agrees to comply with all acts, rules, regulations and
orders of any legislative, administrative or judicial body or official, which
the failure to comply with would have a material and adverse impact on the
Collateral, or any material part thereof, or on the operation of the Company's
business; provided that the Company may contest any acts, rules, regulations,
orders and directions of such bodies or officials in any reasonable manner which
will not, in CITBC's reasonable opinion, materially and adversely effect CITBC's
rights or priority in the Collateral; (b) agrees to comply with all
environmental statutes, acts, rules, regulations or orders as presently existing
or as adopted or amended in the future, applicable to the ownership and/or use
of its real property and operation of its business, which the failure to comply
with would have a material and adverse impact on the Collateral, or any material
part thereof, or on the operation of the business of the Company. The Company
hereby indemnifies CITBC and agrees to defend and hold CITBC harmless from and
against any and all loss, damage, claim, liability, injury or expense which
CITBC may sustain or incur (other than as a result of actions of CITBC) in
connection with: any claim or expense asserted against CITBC as a result of any
environmental pollution, hazardous material or environmental clean-up of the
Company's real property; or any claim or expense which results from the
Company's operations (including, but not limited to, the Company's off-site
disposal practices) and the Company further agrees that this indemnification
shall survive termination of this Financing Agreement as well as the payment of
all Obligations or amounts payable hereunder; and (c) shall not be deemed to
have breached any provision of this paragraph 7 if (i) the failure to comply
with the requirements of this paragraph 7 resulted from good faith error or
innocent omission, (ii) the Company promptly commences and diligently pursues a
cure of such breach and (iii) such failure is cured within sixty (60) days
following the Company's receipt of notice of such failure.
8. Until termination of the Financing Agreement and payment and satisfaction
of all Obligations due hereunder, the Company agrees that, unless CITBC shall
have otherwise consented in writing, the Company will furnish to CITBC, within
ninety (90) days after the end of each Fiscal Year of the Company, an audited
Consolidated Balance Sheet as at the close of such year and audited consolidated
statements of profit and loss, cash flow and reconciliation of surplus of the
Company and all subsidiaries (including, without limitation, the Guarantors) for
such year, audited by independent public accountants selected by the Company and
satisfactory to CITBC; within sixty (60) days after the end of each Fiscal
Quarter an unaudited Consolidated Balance Sheet as at the end of such period and
unaudited consolidated statements of profit and loss, cash flow and surplus of
the Company and all subsidiaries (including, without limitation, the Guarantors)
certified by an authorized financial or accounting officer of the Company; and
within thirty (30) days after the end of each month an unaudited Consolidated
Balance Sheet as at the end of such period and unaudited consolidated statements
of profit and loss, cash flow and surplus of the Company and all subsidiaries
(including, without limitation, the Guarantors) for such period, certified by an
authorized financial or accounting officer of the Company; without duplication,
any financial statements and any material notices which the Company is required
to deliver pursuant to the terms of the Senior Notes; and from time to time,
such further information regarding the business affairs and financial condition
of the Company and such subsidiaries (including, without limitation, the
Guarantors) as CITBC may reasonably request,
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including without limitation annual cash flow projections in form satisfactory
to CITBC and the accountants management practice letter. Each financial
statement which the Company is required to submit hereunder must be accompanied
by an officer's certificate, signed by the President, Vice President,
Controller, Treasurer or Assistant Treasurer, pursuant to which any one such
officer must certify that: (i) the financial statement(s) fairly and accurately
represent(s) the Company's financial condition at the end of the particular
accounting period, as well as the Company's operating results during such
accounting period, subject to year-end audit adjustments; (ii) during the
particular accounting period: (x) there has been no default or condition which,
with the passage of time or notice, or both, would constitute a Default or Event
of Default under this Financing Agreement, provided, however, that if any such
------------------
officer has knowledge that any such Default or Event of Default, has occurred
during such period, the existence of and a detailed description of same shall be
set forth in such officer's certificate; and (y) the Company has not received
any notice of cancellation with respect to its property insurance policies; and
(iii) the exhibits attached to such financial statement(s) constitute detailed
calculations showing compliance with all financial covenants contained in this
Financing Agreement.
9. Until termination of this Financing Agreement and payment and satisfaction
of all Obligations hereunder, the Company agrees that, without the prior written
consent of CITBC, except as otherwise herein provided, the Company will not nor
will it permit any subsidiary (including, without limitation, any Guarantor) to
and shall cause each subsidiary not to :
A. Mortgage, assign, pledge, otherwise permit any lien, charge, security
interest, encumbrance or judgment, (whether as a result of a purchase
money or title retention transaction, or other security interest, or
otherwise) to exist on any of its assets or goods, whether real, personal
or mixed, whether now owned or hereafter acquired, except for the
Permitted Encumbrances;
B. Incur or create any Indebtedness other than the Permitted Indebtedness;
C. Borrow any money on the security of its Inventory or Accounts from
sources other than CITBC;
D. Sell, lease, assign, transfer or otherwise dispose of i) Collateral
hereunder and under the Guarantor Security Agreements, except as
otherwise specifically permitted by this Financing Agreement or such
Guarantor Security Agreements, and ii) any assets (which do not
constitute such Collateral) except Permitted Assets Dispositions;
E. Merge, consolidate or otherwise alter or modify its corporate name,
principal place of business, structure, status or existence, or enter
into or engage in any operation or activity materially different from
that presently being conducted by them, except that (i) either Guarantor
may be merged into the Company with the Company being the surviving
corporation thereof, (ii) the Company and/or any Guarantor may change its
name and/or the location of its chief executive office, and (iii) any
entity may be merged with and into the Company or any Guarantor, provided
that:
(x) the Company or any such Guarantor shall be the surviving corporation
thereof, and
(y) after giving effect to any such merger:
(A) the consolidated Net Worth of the Company and its subsidiaries
(including, without limitation, the Guarantors) shall be equal to or
greater than the consolidated Net Worth of
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the Company and its subsidiaries (including, without limitation, the
Guarantors) immediately prior to such merger;
(B) no Default or Event of Default has occurred or would occur as a
result thereof;
(C) the Consolidated Interest Coverage Ratio of the Company and its
subsidiaries (including, without limitation, the Guarantors) shall in no
event be less than (x) 2.25 to 1, if the effective date of such merger is
prior to January 1, 2000 or (y) 2.50 to 1, if the effective date of such
merger is on or after January 1, 2000; and
(D) the Company would have an additional Availability of $5,000,000 or
more;
provided that with respect to each of (i), (ii), and (iii) in the first
-------- ----
paragraph of this Paragraph E (x) CITBC receives thirty (30) days prior
written notice thereof and (y) the Company and/or the Guarantors promptly
executes and delivers any and all documents and/or agreements reasonably
requested by CITBC to preserve and maintain CITBC's liens upon and
security interests in the Collateral and the priority of such liens and
security interests and to evidence the assumption by the surviving
corporation of all of the Company's and/or the Guarantor's obligations to
CITBC under this Financing Agreement and the Guaranties and Guarantor
Security Agreements;
F. Assume, guarantee, endorse, or otherwise become liable upon the
obligations of any person, firm, entity or corporation, except (i)
pursuant to the Guaranties and Guarantor Security Agreement, (ii) the
Senior Note Guarantees, (iii) the 1996 Leaseback Guaranty, (iv) other
guarantees permitted under the terms of the Senior Notes (as in effect on
the date hereof and without giving effect to any future amendment
thereto) and (v) by the endorsement of negotiable instruments for deposit
or collection or similar transactions in the ordinary course of business;
G. Declare or pay any dividend of any kind on, or purchase, acquire, redeem
or retire, any of the capital stock or equity interest, of any class
whatsoever, whether now or hereafter outstanding, except i) Permitted
Intercompany Payments; ii) Permitted Restricted Payments; and except that
the Guarantors may declare and pay dividends on their capital stock in an
amount sufficient to enable the Company to a) make scheduled payments of
principal and interest due on the Senior Notes; or b) redeem the capital
stock owned by its retired, deceased or terminated officers or
shareholders which the Company is contractually obligated to redeem,
provided that in no event shall the aggregate amount of any dividend to
permit the Company to make the redemption contemplated under this clause
(b) exceed $100,000.00 in the aggregate in any Fiscal Year; or c) pay
income or franchise taxes of the Guarantors due as a result of the filing
of a consolidated, combined or unitary tax return in which the operations
of the Guarantors are included; provided that, in any instance under this
subparagraph G (other than clause a) above, after giving effect to such
payment, no Default or Event of Default has occurred hereunder; or
H. Make any advance or loan to, or any investment in, any firm, entity,
person or corporation except (i) the Permitted Intercompany Payments,
(ii) Accounts created or arising in the
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ordinary course of business, (iii) investments by the Company in the
Guarantors, (iv) advances to employees in connection with business
expenses incurred in the ordinary course of business (v) Permitted
Investments and (vi) Permitted Restricted Payment, provided that after
giving effect to any Permitted Restricted Payment no Default or Event of
Default has occurred or would occur hereunder.
10. Until termination of this Financing Agreement and payment and
satisfaction of all Obligations hereunder, without the prior written consent of
CITBC, the Company will not contract for, purchase, make expenditures for, lease
pursuant to a Capital Lease, or otherwise incur obligations with respect to
Capital Expenditures (whether subject to a security interest or otherwise) in
the aggregate amount for the Company and its subsidiaries (including, without
limitation, the Guarantors) in excess of $75,000,000 during any consecutive
three (3) Fiscal Years, provided that in no event shall the aggregate amount of
Capital Expenditures for the Company and its subsidiaries (including, without
limitation, the Guarantors) in any Fiscal Year exceed $30,000,000, or incur any
Capitalized Lease Obligations if after giving effect thereto the aggregate
Capitalized Lease Obligations of the Company and its subsidiaries (including,
without limitation, the Guarantors) entered into after December 31, 1996 would
exceed $10,000,000.
11. Until termination of this Financing Agreement and payment satisfaction of
all Obligations hereunder, the Company shall maintain at all times during the
particular fiscal periods below, a consolidated Net Worth of the Company and its
subsidiaries (including, without limitation, the Guarantors) of not less than
$1.00.
12. Until termination of this Financing Agreement and payment and
satisfaction of all Obligations hereunder, the Company shall maintain, as at the
end of each Fiscal Quarter during each fiscal period below :
(a) a consolidated Fixed Charge Coverage Ratio of the Company and its
subsidiaries (including, without limitation, the Guarantors) of at least:
FISCAL PERIOD RATIO
- ------------- -----
12 Months ending June 30, 1997 0.85 to 1
12 Months ending September 30, 1997 0.85 to 1
Fiscal Year ending December 31, 1997 1.00 to 1
Fiscal Year ending December 31, 1998 1.00 to 1
Fiscal Year ending December 31, 1999 1.10 to 1
Fiscal Year ending December 31, 2000 1.10 to 1
Fiscal Year ending December 31, 2001 and
thereafter 1.20 to 1
(b) an Actual Consolidated Interest Coverage Ratio of the Company and its
subsidiaries (including, without limitation, the Guarantors) of at least 2.25 to
1 as of the end of each Fiscal Quarter in the
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Fiscal Years 1996 through 1999 and 2.50 to 1 as of the end of each Fiscal
Quarter in the Fiscal Years 2000 and thereafter..
13. The Company agrees to advise CITBC in writing of: a) all expenditures
(actual or anticipated) in excess of $150,000.00 for x) environmental clean-up,
y) environmental compliance or z) environmental testing and the impact of said
expenses on the Company's Working Capital; and b) any notices the Company
receives from any local, state or federal authority advising the Company of any
environmental liability (real or potential) stemming from the Company's
operations, its premises, its waste disposal practices, or waste disposal sites
used by the Company, which liability the Company determines in its reasonable
business judgement could equal or exceed $150,000 and to provide CITBC with
copies of all such notices if so required.
14. Without the prior written consent of CITBC, the Company agrees that it
will not enter into any transaction, including, without limitation, any
purchase, sale, lease, loan or exchange of property with any subsidiary or
affiliate of the Company except (i) Permitted Intercompany Payments, (ii) sales
or other transfers of Equipment by and among the Company and the Guarantors
provided that (x) such sales or other transfers are made in arms length
transactions for fair consideration and (y) no Default or Event of Default has
occurred and (iii) sales or other transfers of Inventory by and among the
Company and/or the Guarantors provided that (x) such sales or other transfers
are made in arms length transactions for fair consideration, (y) the aggregate
amount of all such sales or other transfers during any Fiscal Year does not
exceed the lesser of (A) $1,000,000 or (B) 7 1/2% of total Inventory at such
time and (z) no Default or Event of Default has occurred.
SECTION 7. INTEREST, FEES AND EXPENSES
---------------------------
1. Interest on the Revolving Loans shall be payable monthly as of the end of
each month and shall be an amount equal to the sum of (i) the Chase Bank Rate
plus the Applicable Margin, on a per annum basis on the average of the net
balances owing by the Company to CITBC in the Company's Revolving Loan Account
at the close of each day during such month (other than Libor Loans) and (ii)
Libor plus the Applicable Margin, on a per annum basis on the average of the net
balances of Libor Loans owing by the Company to CITBC in the Company's Revolving
Loan Account at the close of each day during such month. In the event of any
change in said Chase Bank Rate, the rate computed pursuant to clause (i) above
shall change, as of the first of the month following any change, so as to remain
equal to the Applicable Margin above the Chase Bank Rate. The rate hereunder
shall be calculated based on a 360-day year. CITBC shall be entitled to charge
the Company's account at the rate provided for herein when due until all
Obligations have been paid in full.
2. The Company may elect to use Libor as to any other outstanding Revolving
Loans provided A) there is then no Event of Default, B) the Company has so
advised CITBC of its election to use Libor and the Libor Period selected no
later than three (3) Business Days preceding the first day of a Libor Period and
C) the election and Libor shall be effective, provided, there is then no Event
of Default, on the fourth Business Day following said notice. The Libor
elections must be for $1,000,000 or whole multiples thereof and except as
otherwise permitted below there shall be no more than three (3) Libor Loans
outstanding at one time. If no such election is timely made or can be made, or
if the Libor rate
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can not be determined, then CITBC shall use the Chase Bank Rate to compute
interest. In the event the Company requests more than (3) Libor elections the
Company shall pay to CITBC a $500 processing fee upon the effective date of each
such Libor election hereunder, provided that in no event shall there be more
than ten (10) Libor elections outstanding at any one time. In addition, the
Company shall pay to CITBC, upon the request of CITBC such amount or amounts as
shall compensate CITBC for any loss, costs or expenses incurred by CITBC (as
reasonably determined by CITBC) as a result of: (i) any payment or prepayment on
a date other than the last day of a Libor Period for such Libor Loan, or (ii)
any failure of the Company to borrow a Libor Loan on the date for such borrowing
specified in the relevant notice; such compensation to include, without
limitation, an amount equal to any loss or expense suffered by CITBC during the
period from the date of receipt of such payment or prepayment or the date of
such failure to borrow to the last day of such Libor Period if the rate of
interest obtained by CITBC upon the reemployment of an amount of funds equal to
the amount of such payment, prepayment or failure to borrow is less than the
rate of interest applicable to such Libor Loan for such Libor Period. The
determination by CITBC of the amount of any such loss or expense, when set forth
in a written notice to the Company, containing CITBC calculations thereof in
reasonable detail, shall be conclusive on the Company, in the absence of
manifest error.
3. In consideration of the Letter of Credit Guaranty of CITBC, the Company
shall pay CITBC the Letter of Credit Guaranty Fee which shall be an amount equal
to one and one-half (1 1/2%) per annum, payable monthly, on the face amount of
each Letter of Credit less the amount of any and all amounts previously drawn
under the Letter of Credit.
4. Any charges, fees, commissions, costs and expenses charged to CITBC for
the Company's account by any Issuing Bank in connection with or arising out of
Letters of Credit issued pursuant to this Financing Agreement or out of
transactions relating thereto will be charged to the Company's account in full
when charged to or paid by CITBC and when made by any such Issuing Bank shall be
conclusive on CITBC.
5. The Company shall reimburse or pay CITBC, as the case may be, for: i) all
Out-of-Pocket Expenses of CITBC and b) any applicable Documentation Fee.
6. Upon the last business day of each month, commencing with the last day of
the month in which this Financing Agreement is executed (with respect to which
month the Line of Credit Fee shall be pro-rated) the Company shall pay CITBC the
monthly installment of the Line of Credit Fee.
7. To induce CITBC to enter into this Financing Agreement and to extend to
the Company the Revolving Loan and the Letter of Credit facility, the Company
shall pay to CITBC a Loan Facility Fee in the amount of $275,000.00 payable upon
execution of this Financing Agreement.
8. Upon the date hereof and on the same date in each year thereafter the
Company shall pay to CITBC the Collateral Management Fee. Such fee shall be
payable annually in advance and shall be non-refundable, not subject to rebate
under any circumstance, and deemed fully earned on the due date thereof in each
year.
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9. The Company shall pay CITBC's standard charges for, and the fees and
expenses of, the CITBC personnel used by CITBC for reviewing the books and
records of the Company and for verifying, testing protecting, safeguarding,
preserving or disposing of all or any part of the Collateral provided, however,
that the foregoing shall not be payable until the occurrence of an Event of
Default if the Company is paying a Collateral Management Fee.
10. The Company hereby authorizes CITBC to charge the Company's Revolving Loan
Account with CITBC with the amount of all payments due hereunder as such
payments become due. The Company confirms that any charges which CITBC may so
make to the Company's account as herein provided will be made as an
accommodation to the Company and solely at CITBC's discretion.
11. All payments of principal, interest, fees and other amounts to be made
pursuant to this Financing Agreement or the Guaranties and Guarantor Security
Agreement, shall be made free and clear of and without deduction for any and all
present and future taxes arising under the laws of any foreign jurisdiction,
including, without limitation, Puerto Rico (including but not limited to any
taxes due and payable pursuant to the Section 150 of the Puerto Rico Internal
Revenue Code of 1994, withholdings, levies, duties, and charges of any
governmental agency and all liabilities with respect thereto, and without set-
off, withholding or deduction of any kind whatsoever and if, with regard to any
payment to be made by the Company or any Guarantor to CITBC solely pursuant to
this Financing Agreement or the Guaranties and Guarantor Security Agreement, any
deduction for any and all present and future taxes, withholdings, levies, duties
or charges of a governmental agency or any liability with respect thereto is
required to be made by the Company or any Guarantor, the Company or any
Guarantor shall pay such additional amounts to CITBC as may be necessary in
order that the net amount received by CITBC after such deduction shall equal
such payment which would have been received by CITBC in the absence of such
deduction.
SECTION 8. POWERS
------
The Company hereby constitutes CITBC or any person or agent CITBC may
designate as its attorney-in-fact, at the Company's cost and expense, to
exercise all of the following powers, which being coupled with an interest,
shall be irrevocable until all of the Company's Obligations to CITBC have been
paid in full:
(a) To receive, take, endorse, sign, assign and deliver, all in the name of
CITBC or the Company, any and all checks, notes, drafts, and other documents or
instruments relating to the Collateral, provided that all such items shall be
deposited to the Depository Accounts;
(b) To receive, open and dispose of all mail addressed to the Company and to
notify postal authorities to change the address for delivery thereof to such
address as CITBC may designate;
(c) To request from customers indebted on Accounts at any time, in the name
of CITBC or the Company or that of CITBC's designee, information concerning the
amounts owing on the Accounts;
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(d) To transmit to customers indebted on Accounts notice of CITBC's interest
therein and to notify customers indebted on Accounts to make payment directly to
CITBC for the Company's account; and
(e) To take or bring, in the name of CITBC or the Company, all steps,
actions, suits or proceedings deemed by CITBC necessary or desirable to enforce
or effect collection of the Accounts.
Notwithstanding anything hereinabove contained to the contrary, the powers set
forth in (b), (d) and (e) above may only be exercised after the occurrence of an
Event of Default and until such time as such Event of Default is waived or cured
to CITBC's satisfaction. In addition, the power set forth in (c) above will
only be exercised in the Company's name or in the name of a certified public
accountant designated by CITBC prior to the occurrence of an Event of Default
and so long as the Light Monitoring Arrangement continues in effect not more
often than 2 times in any calendar year.
SECTION 9. EVENTS OF DEFAULT AND REMEDIES
------------------------------
1. Notwithstanding anything hereinabove to the contrary, CITBC may terminate
this Financing Agreement immediately upon the occurrence of any of the following
(herein "Events of Default"):
a) cessation of the business of the Company or any Guarantor or the calling
of a meeting of the creditors of the Company or any Guarantor for purposes
of compromising their debts and obligations;
b) the failure of the Company or any Guarantor to generally meet debts as
they mature;
c) the commencement by or against the Company or any Guarantor of any
bankruptcy, insolvency, arrangement, reorganization, receivership or
similar proceedings under any federal or state law, provided that in the
event of any such involuntary proceeding commenced against the Company or
any Guarantor such proceeding is not dismissed or discharged within 30
days after commencement thereof;
d) breach by the Company of any warranty, representation or covenant
contained herein (other than those referred to in sub-paragraph e below)
or in any other written agreement between the Company or CITBC, provided
that such breach by the Company of any of the warranties, representations
or covenants referred in this clause d shall not be deemed to be an Event
of Default unless and until such breach shall remain unremedied to CITBC's
satisfaction for a period of thirty (30) days from the date of such
breach;
e) breach by the Company of any warranty, representation or covenant of
Section 3, Paragraphs 2(d), 3(a) and (b) (other than the third sentence of
paragraph 3 a), 4, and 9; Section 5, Paragraph 3, Section 6, Paragraphs
1,5,6, and 9 through 12;
f) failure of the Company to pay any of the Obligations within five (5)
business days of the due date thereof, provided that nothing contained
herein shall prohibit CITBC from charging such amounts to the Company's
account on the due date thereof;
g) the Company shall i) engage in any "prohibited transaction" as defined in
ERISA, ii) have any "accumulated funding deficiency" as defined in ERISA,
iii) have any Reportable Event as defined in ERISA, iv) terminate any
Plan, as defined in ERISA or v) be engaged in any proceeding in which the
Pension Benefit Guaranty Corporation shall seek appointment, or is
appointed, as trustee or administrator of any Plan, as defined in ERISA,
and with respect to this
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sub-paragraph g such event or condition x) remains uncured for a period of
thirty (30) days from date of occurrence and y) could, in the reasonable
opinion of CITBC, subject the Company to any tax, penalty or other
liability material to the business, operations or financial condition of
the Company;
h) without the prior written consent of CITBC, the Company shall x) amend or
modify the Senior Notes or Subordinated Debt, or y) make any payment or
prepayment on account of any Subordinated Debt except as permitted in a
Subordination Agreement(s), or z) make any prepayment on the Senior Notes
unless after giving effect thereto the Company would have (A) an
additional Availability hereunder of $10,000,000 or more and all of the
debts, obligations and payables of the Company and the Guarantors are
current in accordance with their usual practices and (B) a consolidated
Net Worth of at least $5,000,000;
i) the occurrence of any Default under the Guarantor Security Agreement(s) or
failure to promptly pay any amount due pursuant to any demand by CITBC on
any Guarantor;
J) the occurrence of any event of default of (after giving effect to any
applicable grace or cure periods) under any instrument or agreement
evidencing (x) Subordinated Debt or (y) any other Indebtedness of the
Company or any Guarantor having a principal amount in excess of $250,000
(including without limitation the Senior Notes); or
K) the stock of the Guarantors presently held by the Company is transferred;
or the stock of the Company presently held by Continental Can Company,
Inc. is transferred; or Continental Can Company, Inc. shall cease at any
time to have the ability to elect at least fifty percent (50%) of the
members of the board of directors of the Company; or Continental Can
Company, Inc. shall cease at any time to have the ability to vote a
majority of the common stock of the Company (whether by proxy or
otherwise).
2. Upon the occurrence of a Default and/or an Event of Default, at the option
of CITBC, all Revolving Loans provided for in Paragraph 1 of Section 3 of this
Financing Agreement and Letters of Credit provided for in Paragraph 1 of Section
4 of this Financing Agreement shall be thereafter in CITBC's sole discretion and
the obligation of CITBC to make Revolving Loans and/or open Letters of Credit
shall cease unless such Default or Event of Default is waived in writing by
CITBC or cured to CITBC's satisfaction, and at the option of CITBC upon the
occurrence of an Event of Default: I) all Obligations shall become immediately
due and payable; II) CITBC may charge the Company the Default Rate of Interest
on all then outstanding or thereafter incurred Obligations in lieu of the
interest provided for in paragraph one of Section 7 of this Financing Agreement
provided that with respect to such Default Rate of Interest a) CITBC has given
the Company written notice of the Event of Default, provided, however, that no
notice is required if the Event of Default is the Event listed in paragraph 1(c)
of this Section 9 and b) the Company has failed to cure the Event of Default
within ten (10) Business Days after x) CITBC deposited such notice in the United
States mail or y) the occurrence of the Event of Default listed in paragraph
1(c) of this Section 9; and III) CITBC may immediately terminate this Financing
Agreement upon notice to the Company, provided, however, that no notice of
termination is required if the Event of Default is the Event listed in paragraph
1(c) of this Section 9. The exercise of any option is not exclusive of any other
option which may be exercised at any time by CITBC.
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3. Immediately upon the occurrence of any Event of Default, CITBC may to the
extent permitted by law: (a) remove from any premises where same may be located
any and all documents, instruments, files and records, and any receptacles or
cabinets containing same, relating to the Accounts, or CITBC may use, at the
Company's expense, such of the Company's personnel, supplies or space at the
Company's places of business or otherwise, as may be necessary to properly
administer and control the Accounts or the handling of collections and
realizations thereon; (b) bring suit, in the name of the Company or CITBC, and
generally shall have all other rights respecting said Accounts, including
without limitation the right to: accelerate or extend the time of payment,
settle, compromise, release in whole or in part any amounts owing on any
Accounts and issue credits in the name of the Company or CITBC; (c) sell, assign
and deliver the Collateral and any returned, reclaimed or repossessed
merchandise, with or without advertisement, at public or private sale, for cash,
on credit or otherwise, at CITBC's sole option and discretion, and CITBC may bid
or become a purchaser at any such sale, free from any right of redemption, which
right is hereby expressly waived by the Company; (d) foreclose the security
interests created herein by any available judicial procedure, or to
take possession of any or all of the Inventory without judicial process, and to
enter any premises where any Inventory may be located for the purpose of taking
possession of or removing the same and (e) exercise any other rights and
remedies provided in law, in equity, by contract or otherwise. CITBC shall have
the right, without notice or advertisement, to sell, lease, or otherwise dispose
of all or any part of the Collateral whether in its then condition or after
further preparation or processing, in the name of the Company or CITBC, or in
the name of such other party as CITBC may designate, either at public or private
sale or at any broker's board, in lots or in bulk, for cash or for credit, with
or without warranties or representations, and upon such other terms and
conditions as CITBC in its sole discretion may deem advisable, and CITBC shall
have the right to purchase at any such sale. If any Inventory and Equipment
shall require rebuilding, repairing, maintenance or preparation, CITBC shall
have the right, at its option, to do such of the aforesaid as is necessary, for
the purpose of putting the Inventory and Equipment in such saleable form as
CITBC shall deem appropriate. The Company agrees, at the request of CITBC, to
assemble the Inventory and Equipment and to make it available to CITBC at
premises of the Company or elsewhere and to make available to CITBC the premises
and facilities of the Company for the purpose of CITBC's taking possession of,
removing or putting the Inventory and Equipment in saleable form. However, if
notice of intended disposition of any Collateral is required by law, it is
agreed that ten (10) days notice shall constitute reasonable notification and
full compliance with the law. The net cash proceeds resulting from CITBC's
exercise of any of the foregoing rights, (after deducting all charges, costs and
expenses, including reasonable attorneys' fees) shall be applied by CITBC to the
payment of the Company's Obligations, whether due or to become due, in such
order as CITBC may elect, and the Company shall remain liable to CITBC for any
deficiencies, and CITBC in turn agrees to remit to the Company or its successors
or assigns, any surplus resulting therefrom. The enumeration of the foregoing
rights is not intended to be exhaustive and the exercise of any right shall not
preclude the exercise of any other rights, all of which shall be cumulative.
SECTION 10. TERMINATION
-----------
Except as otherwise permitted herein, the Company or CITBC may terminate this
Financing Agreement and the Line of Credit only as of the initial Anniversary
Date or any subsequent
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Anniversary Date and then only by giving the other at least sixty (60) days
prior written notice of termination. Notwithstanding the foregoing CITBC may
terminate the Financing Agreement immediately upon the occurrence of an Event of
Default, provided, however, that if the Event of Default is an event listed in
paragraph 1(c) of Section 10 of this Financing Agreement, CITBC may regard the
Financing Agreement as terminated and notice to that effect is not required.
This Financing Agreement, unless terminated as herein provided, shall
automatically continue from Anniversary Date to Anniversary Date.
Notwithstanding the foregoing, the Company may terminate this Financing
Agreement and the Line of Credit prior to any applicable Anniversary Date upon
sixty (60) days' prior written notice to CITBC, provided that the Company pays
to CITBC immediately on demand, an Early Termination Fee, if applicable. All
Obligations shall become due and payable as of any termination hereunder or
under Section 9 hereof and, pending a final accounting, CITBC may withhold any
balances in the Company's account (unless supplied with an indemnity
satisfactory to CITBC) to cover all of the Company's Obligations, whether
absolute or contingent. All of CITBC's rights, liens and security interests
shall continue after any termination until all Obligations have been paid and
satisfied in full.
SECTION 11. MISCELLANEOUS
-------------
1. The Company hereby waives diligence, demand, presentment and protest and
any notices thereof as well as notice of nonpayment. No delay or omission of
CITBC or the Company to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by CITBC of any right or remedy precludes any
other or further exercise thereof, or precludes any other right or remedy.
2. This Financing Agreement and the documents executed and delivered in
connection therewith constitute the entire agreement between the Company and
CITBC; supersede any prior agreements; can be changed only by a writing signed
by both the Company and CITBC; and shall bind and benefit the Company and CITBC
and their respective successors and assigns.
3. In no event shall the Company, upon demand by CITBC for payment of any
indebtedness relating hereto, by acceleration of the maturity thereof, or
otherwise, be obligated to pay interest and fees in excess of the amount
permitted by law. Regardless of any provision herein or in any agreement made
in connection herewith, CITBC shall never be entitled to receive, charge or
apply, as interest on any indebtedness relating hereto, any amount in excess of
the maximum amount of interest permissible under applicable law. If CITBC ever
receives, collects or applies any such excess, it shall be deemed a partial
repayment of principal and treated as such; and if principal is paid in full,
any remaining excess shall be refunded to the Company. This paragraph shall
control every other provision hereof and of any other agreement made in
connection herewith.
4. If any provision hereof or of any other agreement made in connection
herewith is held to be illegal or unenforceable, such provision shall be fully
severable, and the remaining provisions of the applicable agreement shall remain
in full force and effect and shall not be affected by such provision's
severance. Furthermore, in lieu of any such provision, there shall be added
automatically as a part of
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the applicable agreement a legal and enforceable provision as similar in terms
to the severed provision as may be possible.
5. THE COMPANY AND CITBC EACH HEREBY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING ARISING OUT OF THIS FINANCING AGREEMENT. THE COMPANY
HEREBY IRREVOCABLY WAIVES PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE
OF PROCESS BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED.
6. Except as otherwise herein provided, any notice or other communication
required hereunder shall be in writing, and shall be deemed to have been validly
served, given or delivered when hand delivered or sent by telegram or telex, or
three days after deposit in the United State mails, with proper first class
postage prepaid and addressed to the party to be notified as follows:
(A) if to CITBC, at:
The CIT Group/Business Credit, Inc.
1211 Avenue of the Americas
New York, New York 10036
Attn: Charles Abrams, Assistant Vice President
Fax# (212) 536-1295
(B) if to the Company at:
Plastic Containers, Inc.
One Aerial Way
Syosset, New York 11791
Attn: Abdo Yazgi
Fax: (516) 931-6344
and
301 Merritt 7 Corporate Park
Norwalk, CT 06856
Attn: Jay W. Hereford, Assistant Treasurer
Fax # (203) 750-5856
or to such other address as any party may designate for itself by like notice.
7. THE VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS FINANCING AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
8. Notwithstanding anything to the contrary in this Amended and Restated
Financing Agreement, CITBC hereby consents and agrees to the following
transactions:
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(i) the Company's purchase for cash, pursuant to the tender offer commenced
October 24, 1996, of up to $104.7 million principal amount of the its
outstanding 10 3/4% Senior Secured Notes due 2001, which were originally
issued on April 9, 1992 (the "10 3/4% Notes");
(ii) if less than all of the outstanding 10 3/4% Notes are tendered pursuant to
such tender offer, the discharge and defeasance by the Company of its
obligations with respect to any untendered 10 3/4% Notes by depositing
with the trustee for the 10 3/4% Notes cash in an amount sufficient to
redeem all untendered 10 3/4% Notes on April 1, 1997, at redemption prices
of (y) 100% of the principal amount of up to $22 million principal amount
of untendered 10 3/4% Notes (pursuant to the mandatory redemption
provisions of the 10 3/4% Notes Indenture), and (z) 105% of the principal
amount of all other untendered 10 3/4% Notes which remain outstanding
(pursuant to the optional redemption provisions of the 10 3/4% Note
Indenture), together, in each case, with accrued and unpaid interest to
such date;
(iii) the issuance by the Company of its Senior Notes in an aggregate principal
amount of not more than $125,000,000 and, to secure its obligations with
respect to the Senior Notes, the granting by the Company of a first
priority security interest in (x) the Continental Can Note (y) all of the
outstanding common stock of CPC and Caribbean owned by the Company and (z)
all of the other equipment, machinery and other assets (other than
Accounts and Inventory) of the Company;
(iv) the issuance by CPC and Caribbean of joint and several guarantees of the
Company's obligations with respect to the Senior Notes and, to secure
their obligations with respect to such guarantees, the granting by CPC and
Caribbean of first priority security interests in all of their machinery,
equipment and other assets (other than Accounts and Inventory);
(v) the sale, for approximately $40.9, million, by CPC to General Electric
Capital Corporation and certain other financial institutions, and the
leaseback to CPC (the "1996 Leaseback"), of all of the plastic container
manufacturing and ancillary equipment located in CPC's facilities in
Baltimore, Maryland; Cincinnati, Ohio; Elk Grove, Illinois; DuPage,
Illinois; and Houston, Texas and, to secure its obligations under the 1996
Leaseback, (x) the assignment by CPC of the ground leases for such
facilities leased by CPC (Cincinnati, Elk Grove, DuPage and Houston), (y)
the granting by CPC of a first mortgage on the real property at CPC's
Baltimore facility, and (z) the granting by CPC of a security interest
(subject and subordinate to the security interest in favor of CITBC
pursuant to an intercreditor agreement in form and substance satisfactory
to CITBC in all respects) in its Accounts and Inventory; and
(vi) the issuance by the Company of a guarantee of the obligations of CPC with
respect to the 1996 Leaseback and, to secure its obligations under such
guarantee, the granting by the Company of a security interest (subject and
subordinate to the security interests granted for the benefit of the
holders of the Company's Senior Notes) in the Continental Can Note; and
(vii) the payment by CPC of a dividend on its common stock in the amount of
$30,000,000 and the loan by the Company of $30,000,000 to Continental Can
Company, Inc., such loan to be
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evidenced by the Continental Can Note, provided that the Company shall not
borrow such funds from CITBC hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Amended and Restated
Financing Agreement to be executed and delivered by their proper and duly
authorized officers as of the date set forth above. This Financing Agreement
shall take effect as of the date set forth above after being accepted below by
an officer of CITBC after which, CITBC shall forward to the Company a fully
executed original for its files.
Very truly yours,
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/
-----------------------------------
Sr. Vice President
Read and Agreed to:
PLASTIC CONTAINERS INC.
By /s/ ABDO YAZGI
--------------------------------------------
Title: Vice President
Executed and Accepted at
New York, New York
------------------
THE CIT GROUP/BUSINESS CREDIT, INC.
By /s/
-----------------------------------
Sr. Vice President
REAFFIRMATION OF GUARANTORS
---------------------------
The undersigned hereby consent to the execution of the foregoing Amended and
Restated Financing Agreement and confirm that their respective guaranties and/or
security agreements shall continue in full force and effect in accordance with
the terms, provisions and conditions thereof with respect to the Company's
Obligations notwithstanding the execution of the foregoing Amended and Restated
Financing Agreement.
-46-
<PAGE>
CONTINENTAL PLASTIC CONTAINERS, INC.
By: /s/ ABDO YAZGI
-------------------------------------------------------
Title: Vice President
CONTINENTAL CARIBBEAN CONTAINERS, INC.
By: /s/ ABDO YAZGI
------------------------------------------------------
Title: Vice President
-47-
<PAGE>
EXHIBIT A - BORROWING BASE REPORTS
----------------------------------
000'S OMITTED
DATE
-----
Net Receivables as reported on balance sheet 0
Plus Reserves 0
Minus miscellaneous receivables 0
----
Gross Trade Accounts Receivable 0
Less:
Sales to the US 0
Foreign sales not secured by L/C 0
Sales to Canada (excess of $5,000M) 0
Sales more than 90 days past due 0
Sales more than 60 but less than 90 days past due 0
Credit balance past due 0
Crossage 0
Contra accounts 0
Sales to parent or affiliate 0
Bill and hold/consignment sales 0
Sales to customers in bankruptcy/insolvency 0
Claims payable 0
Reserve for rebate 0
Charge Backs 0
Other reserves - Puerto Rico 0
----
Sub Total 0
----
Total Eligible Accounts Receivable 0
----
Accounts Receivable advance percentage 85.0%
----
Availability from accounts receivable 0
====
-48-
<PAGE>
DATE
----
Inventories net of reserve as reported on balance 0
sheet
Minus:
Slow moving/obsolete 0
Supplies - parts 0
Molds 0
Puerto Rico 0
----
Total eligible inventory 0
----
Inventory advance percentage 60.0%
----
Availability from inventory 0
====
DATE
----
Availability from Accounts Receivable 0
Availability from Inventory 0
----
Total Availability 0
Less Outstanding Borrowings 0
Less Outstanding L/C's 0
----
Remaining Availability 0
-49-
<PAGE>
SCHEDULE 1 - EXISTING LIENS
---------------------------
Liens on assets and property of the Company and the Guarantors existing on the
date hereof and disclosed by lien searches conducted by National Code
Corporation ("NCC") and reflected in NCC letters to CITBC dated August 7, 1995,
August 10, 1995, August 17, 1995, August 24, 1995, August 30, 1995, October 2,
1995, October 24, 1995, October 26, 1995 and October 27, 1995.
-50-
<PAGE>
SCHEDULE 2 - LOCATIONS OF CHIEF EXECUTIVE OFFICE AND COLLATERAL
---------------------------------------------------------------
Chief Executive Office
- ----------------------
Plastic Containers, Inc.
One Aerial Way
Syosset, New York 11791 (Nassau County)
Continental Plastic Containers, Inc.
301 Merritt 7 Corporate Park
Norwalk, CT 06856 (Fairfield County)
Continental Caribbean Containers, Inc.
Avenida Parque Central 1000
Parque Industrial Bairos
Caguas, PR 00725
Collateral Locations
--------------------
Plants
------
(a) Owned
-----
(1) 15 Mineral Street
Oil City, PA 16301 (Venango County)
(2) 1217 E. St. Gertrude Pl.
Santa Ana, CA 92707 (Orange County)
(3) 5000 Fulton Drive
Suisun City, CA 94585 (Solano County)
(4) 7100 E. Baltimore Street
Baltimore, Md 21224 (Baltimore City and County)
*(5) Avenida Parque Central 1000
Parque Industrial Bairos
Caguas, PR 00725
-51-
<PAGE>
(b) Leased
------
(6) 95 W. Cresentville Rd.
Springdale, OH 45246 (Hamilton County)
(7) 435 Roush Rd.
Lima, OH 45801 (Allen County)
(8) 19801 Holland Rd.
Brookpark, OH 44142 (Cuyahoga County)
(9) 1300 Northwest Avenue
West Chicago, IL 60185 (DuPage County)
(10) 2727 E. Higgins Rd.
Elk Grove, IL 60007 (Cook County)
(11) 5200 Region Court
Lakeland, FL. 33801 (Polk County)
(12) Route 2 Congo Rd.
Newell, WV 26050 (Hancock County)
(13) 170 Circle Dr. North
Piscataway, NJ 08854 (Middlesex County)
(14) 6831 Silsbee Rd.
Houston, TX 77033 (Harris County)
(15) 11725 W. 85th St.
Lenexa, KS 66214 (Johnson County)
(16) 1234 North 7th St.
West Memphis, Arkansas 72303 (Crittenden County)
(17) 400 Indeco Drive - Suite A
Atlanta, GA, 30336 (Fulton County)
Computer and Billing Records
- ----------------------------
8420 West Dodge Road, Suite 301
Omaha, Nebraska 68114 (Douglas County)
-52-
<PAGE>
Sales Offices
- -------------
(a) 2727 E. Higgins
Elk Grove, IL 60007 (Cook County)
(b) 4050 Executive Park Dr.
Suite 400
Cincinnati, OH 45241 (Hamilton County)
(c) 1217 E. St. Gertrude Pl.
Santa Ana, CA 92707 (Orange County)
(d) 654 N. Sam Houston Parkway E.
Suite 117
Houston, TX 77060 (Harris County)
* Caribbean assets only
Schedule of Finished Goods Warehousing Facilities
- -------------------------------------------------
Warehouse Name Location
- -------------- --------
Foster Forbes Warehouse Route 5, Rouseville PA (Venango
County)
Dependable Plastics WHSE 4900 Fulton Dr.,
Suisun City, CA 94585 (Solano County)
American Stitching & Box, Inc. 2320 Cordella Road
Fairfield, CA 94533 (Solano County)
American Stitching & Box, Inc. 2500 Huntington
Fairfield, CA 94533 (Solano County)
H & O Distribution 3250 Osborne Drive
Fairfield OH 45014 (Butler County)
Lagrou Distribution Center 1800 West Hawthorne Lane
W. Chicago, IL 60185 (DuPage County)
Sterns Warehouse 3825 Stern Avenue
St. Charles, IL 60174 (Kane County)
-53-
<PAGE>
Bridgestone/Firestone, Inc. 19700 Holland Road
Brook Park, OH 44142 (Cuyahoga County)
Southern Merchandise & Storage 3232 Panama Expressway
San Antonio, TX 78208 (Bexar County)
Young Chemical (formerly Caravan) 6427 Eastland Rd.
Brook Park, OH 44142
Travelers Insurance Co. 6114 Donoho Street
Houston, TX 77053 (Harris County)
Angus Corporation 2611 Lathrop
Houston, TX 77020 (Harris County)
Security Capital Industrial Trust 7800 Mykawa
Houston, TX 77033 (Harris County)
Warehouse-Double L Williams Ave & Sugar St.
Lima, OH 45802 (Allen County)
Clausen Warehouse 1219 South 2nd Street
Clinton, VA 32792 (Clinton County)
R.M.I Warehouse 39149 W. Red Arrow Highway
PawPaw, MI 49079 (Van Buren County)
Midwest Warehouse 505 Northwest Avenue
North Lake, IL 60164 (Cook County)
National Distribution Centers 1099 Pratt Blvd.
Elk Grove, IL 60007 (Cook County)
Newport Distribution 51-53 Hook Road
Bayonne, NJ 07008 (Hudson County)
Ambridge Industrial Center 338 14th Street
Ambridge, PA 15003 (Beaver County)
Cotton Service Warehouse 100 South 6th Street
West Memphis, AR 72303 (Crttenden County)
JMB Warehouse (Plant 142) 810 L.H. 10 South
Beaumont, TX 77707 (Jefferson County)
-54-
<PAGE>
Empire Container 1843 N. Toppino
N. Kansas City, MO 64100 (Clay County)
R & S Warehouse 1700 E. Keating
Muskegan, MI 49412 (Muskegan County)
Newport Distribution 991 Englehart Ave
Avenel, NJ 07001 (Middlesex County) .
-55-
<PAGE>
EXHIBIT 10.2
MASTER LEASE AGREEMENT
THIS MASTER LEASE AGREEMENT, dated as of 5/20/94 ("Agreement"),
---------
between General Electric Capital Corporation, with an office at 44-2 Old
Ridgebury Road, Danbury, CT 86810-5105 (hereinafter called, together with its
successors and assigns, if any, "Lessor"), and Continental Plastic Containers,
Inc., a corporation organized and existing under the laws of the State of
Delaware with its mailing address and chief place of business at 800 Connecticut
Ave., Norwalk, CT 06856 (hereinafter called "Lessee").
WITNESSETH:
I. LEASING:
(a) Subject to the terms and conditions set forth below, Lessor
agrees to lease to Lessee, and Lessee agrees to lease from Lessor, the equipment
("Equipment") described in Annex A to any schedule hereto ("Schedule"). Terms
defined in a Schedule and not otherwise defined herein shall have the meanings
ascribed to them in such Schedule.
(b) The obligation of Lessor to purchase Equipment from the
manufacturer or supplier thereof ("Supplier") and to lease the same to Lessee
under any Schedule shall be subject to receipt by Lessor, prior to the Lease
Commencement Date (with respect to such Equipment), of each of the following
documents in form and substance satisfactory to Lessor: (i) a Schedule relating
to the Equipment then to be leased hereunder, (ii) a Purchase Order Assignment
and Consent in the form of Annex B to the applicable Schedule, unless Lessor
shall have delivered its purchaser order for such Equipment, (iii) evidence of
insurance which complies with the requirements of Section X, and (iv) such other
documents as Lessor may reasonably request. As a further condition to such
obligations of Lessor, Lessee shall, upon delivery of such Equipment (but not
later than the Last Delivery Date specified in the applicable Schedule) execute
and deliver to Lessor a Certificate of Acceptance (in the form of Annex C to
the applicable Schedule) covering such Equipment, and deliver to Lessor a bill
of sale therefor (in form and substance satisfactory to Lessor). Lessor hereby
appoints Lessee its agent for inspection and acceptance of the Equipment from
the Supplier. Upon execution by Lessee of any Certificate of Acceptance, the
Equipment described thereon shall be deemed to have been delivered to, and
irrevocably accepted by, Lessee for lease hereunder.
II. TERM, RENT AND PAYMENT:
(a) The rent payable hereunder and Lessee's right to use the
Equipment shall commence on the date of execution by Lessee of the Certificate
of Acceptance for such Equipment ("Lease Commencement Date"). The term of this
Agreement shall be the period specified in the applicable Schedule. If any term
is extended, the word "term" shall be deemed to refer to all extended terms, and
all provisions of this Agreement shall apply during any extended terms, except
as may be otherwise specifically provided in writing.
<PAGE>
(b) Rent shall be paid to Lessor at its address stated above, except
as otherwise directed by Lessor. Payments of rent shall be in the amount set
forth in, and due in accordance with, the provisions of the applicable Schedule.
If one or more Advance Rentals are payable, such Advance Rentals shall be (i)
set forth on the applicable Schedule, (ii) due upon acceptance by Lessor of such
Schedule, and (iii) when received by Lessor, applied to the first rent payment
and the balance, if any, to the final rental payment(s) under such Schedule. In
no event shall any Advance Rental or any other rent payments be refunded to
Lessee. If rent is not paid within ten days of its due date, Lessee agrees to
pay a late charge of five cents ($.05) per dollar on, and in addition to, the
amount of such rent but not exceeding the lawful maximum, if any.
III. RENT ADJUSTMENT:
(a) The periodic rent payments in each Schedule have been calculated
on the assumption (which, as between Lessor and Lessee, is mutual) that the
maximum effective corporate income tax rate (exclusive of any minimum tax rate)
for calendar-year taxpayers ("Effective Rate") will be thirty-five percent (35%)
each year during the lease term.
(b) If, solely as a result of Congressional enactment of any law
(including, without limitation, any modification of, or amendment or addition
to, the Internal Revenue Code of 1986, as amended, (the "Code")), the Effective
Rate is higher than thirty-five percent (35%) for any year during the lease
term, then Lessor shall have the right to increase such rent payments by
requiring payment of a single additional sum equal to the produce of (i) the
Effective Rate (expressed as a decimal) for such year less .35 (or, in the event
that any adjustment has been made hereunder for any previous year, the Effective
Rate (expressed as a decimal) used in calculating the next previous adjustment)
times (ii) the adjusted Termination Value. The adjusted Termination Value shall
be the Termination Value (calculated as of the first rental due in the year for
which such adjustment is being made) less the product of the Tax Benefits that
would be allowable under Section 168 of the Code (as of the first day of the
year for which such adjustment is being made and all subsequent years of the
lease term) times the Effective Rate (expressed as a decimal) (in the year for
which such adjustment is being made). Lessee shall pay to Lessor the full
amount of the additional rent payment on the later of (i) receipt of notice or
(ii) the first day of the year for which such adjustment is being made.
(c) Lessee's obligations under this Section III shall survive any
expiration or termination of this Agreement.
IV. TAXES: Except as provided in Sections III and XV(c), Lessee shall have no
liability for taxes imposed by the United States of America or any State or
political subdivision thereof which are on or measured by the net income of
Lessor. Lessee shall report (to the extent that it is legally permissible) and
pay promptly all other taxes, fees and assessments due, imposed, assessed or
levied against any Equipment (or the purchase, ownership, delivery, leasing,
possession, use or operation thereof), this Agreement (or any rentals or
receipts hereunder), any Schedule, Lessor or Lessee by any foreign, federal,
state or local government or taxing authority during or related to the term of
-2-
<PAGE>
this Agreement, including, without limitation, all license and registration
fees, and all sales, use, personal property, excise, gross receipts, franchise,
stamp or other taxes, imposts, duties and charges, together with any penalties,
fines or interest thereon (all hereinafter called "Taxes"). Lessee shall (i)
reimburse Lessor upon receipt of written request for reimbursement for any Taxes
charged to or assessed against Lessor, (ii) on request of Lessor, submit to
Lessor written evidence of Lessee's payment of Taxes, (iii) on all reports or
returns show the ownership of the Equipment by Lessor, and (iv) send a copy
thereof to Lessor.
V. REPORTS:
(a) Lessee will notify Lessor in writing, within ten (10) days after
any tax or other lien shall attach to any Equipment, of the full particulars
thereof and of the location of such Equipment on the date of such notification.
(b) Lessee will within ninety (90) days of the close of each fiscal
year of Lessee, deliver to Lessor, Lessee's balance sheet and profit and loss
statement, certified by a recognized firm of certified public accountants. Upon
request Lessee will deliver to Lessor quarterly, within ninety (90) days of the
close of each fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
quarterly financial report certified by the chief financial officer of Lessee.
(c) Lessee will permit Lessor to inspect any Equipment during normal
business hours.
(d) Lessee will keep the Equipment at the Equipment Location
(specified in the applicable Schedule) and will promptly notify Lessor of any
relocation of Equipment. Upon the written request of Lessor, Lessee will notify
Lessor forthwith in writing of the location of any Equipment as of the date of
such notification.
(e) Lessee will promptly and fully report to Lessor in writing if any
Equipment is lost or damaged (where the estimated repair costs would exceed ten
percent (10%) of its then fair market value), or is otherwise involved in an
accident causing personal injury or property damage.
(f) Within sixty (60) days after any request by Lessor, Lessee will
furnish a certificate of an authorized officer of Lessee stating that he has
reviewed the activities of Lessee and that, to the best of his knowledge, there
exists no default (as described in Section XII) or event which with notice or
lapse of time (or both) would become such a default.
VI. DELIVERY, USE AND OPERATION:
(a) All Equipment shall be shipped directly from the Supplier to
Lessee.
(b) Lessee agrees that the Equipment will be used by Lessee solely in
the conduct of its business and in a manner complying with all applicable
federal, state, and local laws and regulations.
-3-
<PAGE>
(c) LESSEE SHALL NOT ASSIGN, MORTGAGE, SUBLET OR HYPOTHECATE ANY
EQUIPMENT, OR THE INTEREST OF LESSEE HEREUNDER, NOR SHALL LESSEE REMOVE ANY
EQUIPMENT FROM THE CONTINENTAL UNITED STATES, WITHOUT THE PRIOR WRITTEN CONSENT
OF THE LESSOR.
(d) Lessee will keep the Equipment free and clear of all liens and
encumbrances other than those which result from acts of Lessor.
VII. SERVICE:
(a) Lessee will, at its sole expense, maintain each unit of Equipment
in good operating order, repair, condition and appearance in accordance with
manufacturer's recommendations, normal wear and tear excepted. Lessee shall,
if any time requested by Lessor, affix in a prominent position on each unit of
Equipment plates, tags or other identifying labels showing ownership thereof by
Lessor.
(b) Lessee will not, without the prior consent of Lessor, affix or
install any accessory, equipment or device on any Equipment if such addition
will impair the originally intended function or use of such Equipment. All
additions, repairs, parts, supplies, accessories, equipment, and devices
furnished, attached or affixed to any Equipment which are not readily removable
shall be made only in compliance with applicable law, including Internal Revenue
Service guidelines, and shall become the property of Lessor. Lessee will not,
without the prior written consent of Lessor and subject to such conditions as
Lessor may impose for its protection, affix or install any Equipment to or in
any other personal or real property.
(c) Any alterations or modifications to the Equipment that may, at
any time during the terms of this Agreement, be required to comply with any
applicable law, rule or regulation shall be made at the expense of Lessee.
VIII. STIPULATED LOSS VALUE: Lessee shall promptly and fully notify Lessor in
writing if any unit of Equipment shall be or become worn out, lost, stolen,
destroyed, irreparably damaged in the reasonable determination of Lessee, or
permanently rendered unfit for use from any cause whatsoever (such occurrences
being hereinafter called "Casualty Occurrences"). On the rental payment date
next succeeding a Casualty Occurrence (the "Payment Date"), Lessee shall pay
Lessor the sum of (x) the Stipulated Loss Value of such unit calculated as of
the rental next preceding such Casualty Occurrence ("Calculation Date"); and (y)
all rental and other amounts which are due hereunder as of the Payment Date.
Upon payment of all sums due hereunder, the term of this lease as to such unit
shall terminate and (except in the case of the loss, theft or complete
destruction of such unit) Lessor shall be entitled to recover possession of such
unit.
IX. LOSS OR DAMAGE: Lessee hereby assumes and shall bear the entire risk of
any loss, theft, damage to, or destruction of, any unit of Equipment from any
cause whatsoever from the time the Equipment is shipped to Lessee.
-4-
<PAGE>
X. INSURANCE: Lessee agrees, at its own expense, to keep all Equipment insured
for such amounts and against such hazards as Lessor may require, including, but
not limited to, insurance for damage to or loss of such Equipment and liability
coverage for personal injuries, death or property damage, with Lessor named as
additional insured and with a loss payable clause in favor of Lessor, as its
interest may appear, irrespective of any breach of warranty or other act or
omission of Lessee. All such policies shall be with companies, and on terms,
satisfactory to Lessor. Lessee agrees to deliver to Lessor evidence of
insurance satisfactory to Lessor. No insurance shall be subject to any co-
insurance clause. Lessee hereby appoints Lessor as Lessee's attorney-in-fact to
make proof of loss and claim for insurance, and to make adjustments with
insurers and to receive payment of and execute or endorse all documents, checks
or drafts in connection with payments made as a result of such insurance
policies. Any expense of Lessor in adjusting or collecting insurance shall be
borne by Lessee. Lessee will not make adjustments with insurers except (i) with
respect to claims for damage to any unit of Equipment where the repair costs do
not exceed ten percent (10%) of such unit's fair market value, or (ii) with
Lessor's written consent. Said policies shall provide that the insurance may
not be altered or cancelled by the insurer until after thirty (30) days written
notice to Lessor. Lessor may, at its option, apply proceeds of insurance, in
whole or in part, to (i) repair or replace Equipment or any portion thereof, or
(ii) satisfy any obligation of Lessee to Lessor hereunder.
XI. RETURN OF EQUIPMENT:
(a) Upon any expiration or termination of this Agreement or any
Schedule, Lessee shall promptly, at its own cost and expense: (i) perform any
testing and repairs required to place the affected units of Equipment in the
same condition and appearance as when received by Lessee (reasonable wear and
tear excepted) and in good working order for their originally intended purpose;
(ii) if deinstallation, disassembly or crating is required, cause such units to
be deinstalled, disassembled and crated by an authorized manufacturer's
representative or such other service person as is satisfactory to Lessor; and
(iii) return such units to a location within the continental United States as
Lessor shall direct.
(b) Until Lessee has fully complied with the requirements of Section
XI(a) above, Lessee's rent payment obligation and all other obligations under
this Agreement shall continue from month to month notwithstanding any expiration
or termination of the lease term. Lessor may terminate such continued leasehold
interest upon ten (10) days notice to Lessee.
XII. DEFAULT:
(a) Lessor may in writing declare this Agreement in default if:
Lessee breaches its obligation to pay rent or any other sum when due and fails
to cure the breach within ten (10) days; Lessee breaches any of its insurance
obligations under Section X; Lessee breaches any of its other obligations and
fails to cure that breach within thirty (30) days after written notice thereof;
any representation or warranty made by Lessee in connection with this Agreement
shall be false or misleading in any material respect; Lessee becomes insolvent
or ceases to do business as a going
-5-
<PAGE>
concern; any Equipment is illegally used; or a petition is filed by or against
Lessee or any guarantor of Lessee's obligations to Lessor under any bankruptcy
or insolvency laws. Such declaration shall apply to all Schedules except as
specifically excepted by Lessor.
(b) After default, at the request of Lessor, Lessee shall comply with
the provisions of Section XI(a). Lessee hereby authorizes Lessor to enter, with
or without legal process, any premises where any Equipment is believed to be and
take possession thereof. Lessee shall, without further demand, forthwith pay to
Lessor (i) as liquidated damages for loss of a bargain and not as a penalty, the
Stipulated Loss Value of the Equipment (calculated as of the rental next
preceding the declaration of default), and (ii) all rentals and other sums then
due hereunder. Lessor may, but shall not be required to, sell Equipment at
private or public sale, in bulk or in parcels, with or without notice, and
without having the Equipment present at the place of sale; or Lessor may, but
shall not be required to, lease, otherwise dispose of or keep idle all or part
of the Equipment; and Lessor may use Lessee's premises for any or all of the
foregoing without liability for rent, costs, damages or otherwise. The proceeds
of sale, lease or other disposition, if any, shall be applied in the following
order of priorities: (1) to pay all of Lessor's costs, charges and expenses
incurred in taking, removing, holding, repairing and selling, leasing or
otherwise disposing of Equipment; then, (2) to the extent not previously paid by
Lessee, to pay Lessor all sums due from Lessee hereunder; then (3) to reimburse
to Lessee any sums previously paid by Lessee as liquidated damages; and (4) any
surplus shall be retained by Lessor. Lessee shall pay any deficiency in (1) and
(2) forthwith.
(c) The foregoing remedies are cumulative, and any or all thereof may
be exercised in lieu of or in addition to each other or any remedies at law, in
equity, or under statute. Lessee waives notice of sale or other disposition
(and the time and place thereof), and the manner and place of any advertising.
Lessee shall pay Lessor's actual attorney's fees incurred in connection with the
enforcement, assertion, defense or preservation of Lessor's rights and remedies
hereunder, or if prohibited by law, such lesser sum as may be permitted. Waiver
of any default shall not be a waiver of any other or subsequent default.
(d) Any default under the terms of this or any other agreement
between Lessor and Lessee may be declared by Lessor a default under this and any
such other agreement.
XIII. ASSIGNMENT: Lessor may, without the consent of Lessee, assign this
Agreement or any Schedule. Lessee agrees that if Lessee receives written notice
of an assignment from Lessor, Lessee will pay all rent and all other amounts
payable under any assigned Equipment Schedule to such assignee or as instructed
by Lessor. Lessee further agrees to confirm in writing receipt of the notice of
assignment as may be reasonably requested by assignee. Lessee hereby waives
and agrees not to assert against any such assignee any defense, set-off,
recoupment claim or counterclaim which Lessee has or may at any time have
against Lessor for any reason whatsoever.
XIV. NET LEASE; NO SET-OFF, ETC: This Agreement is a net lease. Lessee's
obligation to pay rent and other amounts due hereunder shall be absolute and
unconditional. Lessee shall not be entitled to any abatement or reductions of,
or set-offs against, said rent or other amounts, including,
-6-
<PAGE>
without limitation, those arising or allegedly arising out of claims (present or
future, called or actual, and including claims arising out of strict tort or
negligence of Lessor) of Lessee against Lessor under this Agreement or
otherwise. Nor shall this Agreement terminate or the obligations of Lessee be
affected by reason of any defect in or damage to, or loss of possession, use or
destruction of, any Equipment from whatsoever cause. It is the intention of the
parties that rents and other amounts due hereunder shall continue to be payable
in all events in the manner and at the times set forth herein unless the
obligation to do so shall have been terminated pursuant to the express terms
hereof.
XV. INDEMNIFICATION:
(a) Lessee hereby agrees to indemnify, save and keep harmless Lessor,
its agents, employees, successors and assigns from and against any and all
losses, damages, penalties, injuries, claims, actions and suits, including legal
expenses, of whatsoever kind and nature, in contract or tort, whether caused by
the active or passive negligence of Lessor or otherwise, and including, but not
limited to, Lessor's strict liability in tort, arising out of (i) the selection,
manufacture, purchase, acceptance or rejection of Equipment, the ownership of
Equipment during the term of this Agreement, and the delivery, lease,
possession, maintenance, uses, condition, return or operation of equipment
(including, without limitation, latent and other defects, whether or not
discoverable by Lessor or Lessee and any claim for patent, trademark or
copyright infringement or environmental damage) or (ii) the condition of
Equipment sold or disposed of after use by Lessee, any sublessee or employees of
Lessee. Lessee shall, upon request, defend any actions based on, or arising out
of, any of the foregoing.
(b) Lessee hereby represents, warrants and covenants that (i) on the
Lease Commencement Date for any unit of Equipment, such unit will qualify for
all of the items of deduction and credit specified in Section C of the
applicable Schedule ("Tax Benefits") in the hands of Lessor (all references to
Lessor in this Section XV include Lessor and the consolidated taxpayer group of
which Lessor is a member), and (ii) at no time during the term of this Agreement
will Lessee take or omit to take, nor will it permit any sublessee or assignee
to take or omit to take, any action (whether or not such act or omission is
otherwise permitted by Lessor or the terms of this Agreement), which will result
in the disqualification of any Equipment for, or recapture of, all or any
portion of such Tax Benefits.
(c) If as a result of a breach of any representation, warranty or
covenant of the Lessee contained in this Agreement or any Schedule (x) tax
counsel of Lessor shall determine that Lessee was not entitled to claim on its
Federal income tax return all or any portion of the Tax Benefits with respect to
any Equipment, or (y) any such Tax Benefit claimed on the Federal income tax
return of Lessor is disallowed or adjusted by the Internal Revenue Service or
(z) any such Tax Benefit is recomputed or recaptured (any such determination,
disallowance, adjustment, recomputation or recapture being hereinafter called a
"Loss"), then Lessee shall pay to Lessor, as an indemnity and as additional
rent, such amount as shall, in the reasonable opinion of Lessor, cause Lessor's
after-tax economic yields and cash flows, computed on the same assumptions,
including tax rates (unless any adjustment has been made under Section III
hereof, in which case the Effective Rate used in the next
-7-
<PAGE>
preceding adjustment shall be substituted), as were utilized by Lessor in
originally evaluating the transaction (such yields and flows being hereinafter
called the "Net Economic Return") to equal the Net Economic Return that would
have been realized by Lessor if such Loss had not occurred. Such amount shall be
payable upon demand accompanied by a statement describing in reasonable detail
such Loss and the computation of such amount.
(d) All of Lessor's rights, privileges and indemnities contained in
this Section XV shall survive the expiration or other termination of this
Agreement and the rights, privileges and indemnities contained herein are
expressly made for the benefit of, and shall be enforceable by Lessor, its
successors and assigns.
XVI. DISCLAIMER: LESSEE ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT
WITHOUT ANY ASSISTANCE FROM LESSOR, ITS AGENTS OR EMPLOYEES. LESSOR DOES NOT
MAKE, HAS NOT MADE, NOR SHALL BE DEEMED TO MAKE OR HAVE MADE, ANY WARRANTY OR
REPRESENTATION, EITHER EXPRESS OR IMPLIED, WRITTEN OR ORAL, WITH RESPECT TO THE
EQUIPMENT LEASED HEREUNDER OR ANY COMPONENT THEREOF, INCLUDING, WITHOUT
LIMITATION, ANY WARRANTY AS TO DESIGN, COMPLIANCE WITH SPECIFICATIONS, QUALITY
OF MATERIALS OR WORKMANSHIP, MERCHANTABILITY, FITNESS FOR ANY PURPOSE, USE OR
OPERATION, SAFETY, PATENT, TRADEMARK OR COPYRIGHT INFRINGEMENT, OR TITLE. All
such risks, as between Lessor and Lessee, are to be borne by Lessee. Without
limiting the foregoing, Lessor shall have no responsibility or liability to
Lessee or any other person with respect to any of the following, regardless of
any negligence of Lessor (i) any liability, loss or damage caused or alleged to
be caused directly or indirectly by any Equipment, any inadequacy thereof, any
deficiency or defect (latent or otherwise) therein, or any other circumstance in
connection therewith; (ii) the use, operation or performance of any Equipment or
any risks relating thereto; (iii) any interruption of service, loss of business
or anticipated profits or consequential damages; or (iv) the delivery,
operation, servicing, maintenance, repair, improvement or replacement of any
Equipment. If, and so long as, no default exists under this Lease, Lessee shall
be, and hereby is, authorized during the term of this Lease to assert and
enforce, at Lessee's sole cost and expense, from time to time, in the name of
and for the account of Lessor and/or Lessee, as their interests may appear,
whatever claims and rights Lessor may have against any Supplier of the
Equipment.
XVII. REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee hereby represents and
warrants to Lessor that on the date hereof and on the date of execution of each
Schedule:
(a) Lessee has adequate power and capacity to enter into, and perform
under, this Agreement and all related documents (together, the "Documents") and
is duly qualified to do business wherever necessary to carry on its present
business and operations, including the jurisdiction(s) whether the Equipment is
or is to be located.
(b) The Documents have been duly authorized, executed and delivered
by Lessee and constitute valid, legal and binding agreements, enforceable in
accordance with their terms, except
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to the extent that the enforcement of remedies therein provided may be limited
under applicable bankruptcy and insolvency laws.
(c) No approval, consent or withholding of objections is required
from any governmental authority or instrumentality with respect to the entry
into or performance by Lessee of the Documents except such as have already been
obtained.
(d) The entry into and performance by Lessee of the Documents will
not: (i) violate any judgment, order, law or regulation applicable to Lessee or
any provision of Lessee's Certificate of Incorporation or By-Laws; or (ii)
result in any breach of, constitute a default under or result in the creation of
any lien, charge, security interest or other encumbrance upon any Equipment
pursuant to any indenture, mortgage, deed of trust, bank loan or credit
agreement or other instrument (other than this Agreement) to which Lessee is a
party.
(e) There are no suits or proceedings pending or threatened in court
or before any commission, board or other administrative agency against or
affecting Lessee, which will have a material adverse effect on the ability of
Lessee to fulfill its obligations under this Agreement.
(f) The Equipment accepted under any Certificate of Acceptance is and
will remain tangible personal property.
(g) Each Balance Sheet and Statement of Income delivered to Lessor
has been prepared in accordance with generally accepted accounting principles,
and since the date of the most recent such Balance Sheet and Statement of
Income, there has been no material adverse change.
(h) Lessee is and will be at all times validly existing and in good
standing under the laws of the State of its incorporation (specified in the
first sentence of this Agreement).
(i) The Equipment will at all times be used for commercial or
business purposes.
XVIII. EARLY TERMINATION:
(a) On or after the First Termination Date (specified in the
applicable Schedule), Lessee may, so long as no default exists hereunder,
terminate this Agreement as to all (but not less than all) of the Equipment on
such Schedule as of a rent payment date ("Termination Date") upon at least
ninety (90) days prior written notice to Lessor.
(b) Lessee shall, and Lessor may, solicit cash bids for the Equipment
on an AS IS, WHERE IS BASIS without recourse to or warranty from Lessor, express
or implied ("AS IS BASIS"). Prior to the Termination Date, Lessee shall (i)
certify to Lessor any bids received by Lessee and (ii) pay to Lessor (A) the
Termination Value (calculated as of the rental due on the Termination Date) for
the Equipment, and (B) all rent and other sums due and unpaid as of the
Termination Date.
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(c) Provided that all amounts due hereunder have been paid on the
Termination Date, Lessor shall (i) sell the Equipment on an AS IS BASIS for cash
to the highest bidder and (ii) refund the proceeds of such sale (net of any
related expenses) to Lessee up to the amount of the Termination Value. If such
sale is not consummated, no termination shall occur and Lessor shall refund the
Termination Value and any expenses incurred by Lessor) to Lessee.
(d) Notwithstanding the foregoing, Lessor may elect by written
notice, at any time prior to the Termination Date, not to sell the Equipment.
In that event, on the Termination Date Lessee shall (i) return the Equipment (in
accordance with Section XI) and (ii) pay to Lessor all amounts required under
Section XVIII(b) less the amount of the highest bid certified by Lessee to
Lessor.
XIX. PURCHASE OPTION:
(a) So long as no default exists hereunder and the lease has not been
earlier terminated, Lessee may at lease expiration, upon at least one hundred
eighty (180) days prior written notice to Lessor, purchase all (but not less
than all) of the Equipment in any Schedule on an AS IS BASIS for cash equal to
its then Fair Market Value (plus all applicable sales taxes).
(b) "Fair Market Value" shall mean the price which a willing buyer
(who is neither a lessee in possession nor a used equipment dealer) would pay
for the Equipment in an arm's-length transaction to a willing seller under no
compulsion to sell; provided, however, that in such determination: (i) the
-------- -------
Equipment shall be assumed to be in the condition in which it is required to be
maintained and returned under this Agreement; (ii) in the case of any installed
Equipment, that Equipment shall be valued on an installed basis; and (iii) costs
of removal from current location shall not be a deduction from such valuation.
If Lessor and Lessee are unable to agree on the Fair Market Value at least one
hundred thirty-five (135) days before lease expiration, Lessor shall appoint an
independent appraiser (reasonably acceptable to Lessee) to determine Fair Market
Value, and that determination shall be final, binding and conclusive. Lessee
shall bear all costs associated with any such appraisal.
(c) Lessee shall be deemed to have waived this option unless it
provides Lessor with written notice of its irrevocable election to exercise the
same within fifteen (15) days after Fair Market Value is determined (by
agreement or appraisal).
XX. MISCELLANEOUS:
(a) LESSEE HEREBY UNCONDITIONALLY WAIVES ITS RIGHTS TO A JURY TRIAL
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS LEASE, ANY OF THE RELATED DOCUMENTS, ANY DEALINGS BETWEEN
LESSEE AND LESSOR RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY
RELATED TRANSACTIONS, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN
LESSEE AND LESSOR. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING
OF ANY AND ALL DISPUTES THAT
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MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).
THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS LEASE, ANY RELATED DOCUMENTS, OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. IN THE EVENT OF LITIGATING, THIS LEASE MAY BE FIELD AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
(b) Unless and until Lessee exercises its rights under Section XIX
above, nothing herein contained shall give or convey to Lessee any right, title
or interest in and to any Equipment except as a lessee. Any cancellation or
termination by Lessor, pursuant to the provision of this Agreement, any
Schedule, supplement or amendment hereto, or the lease of any Equipment
hereunder, shall not release Lessee from any then outstanding obligations to
Lessor hereunder. All Equipment shall at all times remain personal property of
Lessor regardless of the degree of its annexation to any real property and shall
not by reason of any installation in, or affixation to, real or personal
property become a part thereof.
(c) Time is of the essence of this Agreement. Lessor's failure at
any time to require strict performance by Lessee of any of the provisions hereof
shall not waive or diminish Lessor's right thereafter to demand strict
compliance therewith. Lessee agrees, upon Lessor's request, to execute any
instrument necessary or expedient for filing, recording or perfecting the
interest of Lessor. All notices required to be given hereunder shall be deemed
adequately given if sent by registered or certified mail to the addressee at its
address stated herein, or at such other place as such addressee may have
designated in writing. This Agreement and any Schedule and Annexes thereto
constitute the entire agreement of the parties with respect to the subject
matter hereof. NO VARIATION OR MODIFICATION OF THIS AGREEMENT OR ANY WAIVER OF
ANY OF ITS PROVISIONS OR CONDITIONS, SHALL BE VALID UNLESS IN WRITING AND SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE PARTIES HERETO.
JH/JWH
------
intials
(d) In case of a failure of Lessee to comply with any provision of
this Agreement, Lessor shall have the right, but shall not be obligated to,
effect such compliance, in whole or in part; and all moneys spent and expenses
and obligations incurred or assumed by Lessor in effecting such compliance shall
constitute additional rent due to Lessor within five days after the date Lessor
sends notice to Lessee requesting payment. Lessor's effecting such compliance
shall not be a waiver of Lessee's default.
(e) Any rent or other amount not paid to Lessor when due hereunder
shall bear interest, both before and after any judgment or termination hereof,
at the lesser for eighteen percent (18%) per annum or the maximum rate allowed
by law. Any provisions in this Agreement and any Schedule which are in conflict
with any statute, law or applicable rule shall be deemed omitted, modified or
altered to conform thereto.
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<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
General Electric Capital Corporation Continental Plastic Containers, Inc.
By: /s/ John Hadostian By: /s/Jay W. Hereford
--------------------------- --------------------------
Title: Region Credit Analyst Title: Treasurer
------------------------- -------------------------
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EXHIBIT 10.3
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-1
DATED THIS 17TH DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address: Lessee & Mailing Address:
General Electric Capital Corporation Continental Plastic Containers, Inc.
4 North Park Drive 301 Merritt Seven Corporate Park
Suite 500 Norwalk, Connecticut 06856
Hunt Valley, MD 21030
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease
to Lessee the Equipment listed on Annex A attached hereto and made a part
hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $8,023,000.00
2. Basic Term Lease Rate Factor:
Installments one through fifty-four: 1.053239%; and installments
---------
fifty-five through one hundred nine: 1.287293%.
---------
3. Daily Lease Rate Factor: .035107967%.
----------
4. Basic Term:
One hundred nine months.
------------------------
5. Basic Term Commencement Date: January 1, 1997.
----------------
<PAGE>
6. Equipment Location PLANT #142, 6831 SILSBEE ROAD, HOUSTON, HARRIS
COUNTY, TEXAS 77033(the "Premises")
7. Lessee Federal Tax ID No.: 06-1056158
----------
8 Last Delivery Date: December 31, 1996.
------------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Eighty three months after the Basic Term Commencement Date.
11. FMV Special Purchase Option Price:
48.656% of the Capitalized Lessor's Cost.
------
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times
the Capitalized Lessor's Cost of all Equipment on this Schedule. Each date for
the payment of rent during the Basic Term is herein referred to as a "Rent
Payment Date".
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<PAGE>
3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
" (b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the
Lease Commencement Date or the Last Delivery Date therefor, of each of
the following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased hereunder,
(ii) a Bill of Sale, in the form of Annex B to the applicable
Schedule, in favor of Lessor, (iii) evidence of insurance which
complies with the requirements of Section X hereof, (iv) a Collateral
Assignment of Leasehold Interest in the form of Annex F to the
applicable Schedule ( the 'Collateral Assignment'), together with a
certified true copy of the ground lease or premises lease of the real
property at the Equipment Location (v) an independent third party
appraisal (by Norman Levy & Associates or another firm acceptable to
Lessor) to substantiate the Equipment's fair market value and
remaining economic useful life and requisite value at selected points
throughout the Term (as hereinafter defined), including Lessor's
residual value assumption, (vi) any available information relating to
environmental issues concerning the Equipment Location specified on
the applicable Schedule, (vii) satisfactory results of a search by an
attorney or company satisfactory
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<PAGE>
to Lessor of the Uniform Commercial Code filings with respect to
Lessee in each jurisdiction in which Lessee conducts or has a place of
business, (viii) certified copies of the articles of incorporation,
the by-laws and applicable resolutions, and certificates of good
standing and incumbency certificates, with respect to Lessee and
Guarantor, as required by Lessor; (ix) opinions of counsel of Lessee
and Guarantor, reasonably satisfactory in form and substance to
Lessor, together with evidence of all other legal matters incident to
the sale and leasing of the Equipment hereunder, as Lessor may
require; (x) releases of liens and termination statements covering
such of Lessee's assets as required by Lessor in connection with the
sale and leasing of the Equipment hereunder, each of which shall be
fully and properly executed, in recordable form, and sufficient in the
opinion of counsel for Lessor to terminate the interest of the
creditors of Lessee in such assets, (xi) such Uniform Commercial Code
financing statements as may be required by Lessor, (xii) a certificate
of an officer of Lessee confirming the placement of not less than
$115,000,000 of new Senior Notes issued by Lessee, having a ten (10)
year term, requiring no payment of principal until December, 2006, and
of the purchase for cancellation or discharge and defeasance of
$104,700,000 of Lessee's 10-3/4% Senior Secured Notes Due 2001, and
that there are no unsatisfied conditions to such placement and
redemption, and (xiii) such other documents as Lessor reasonably may
request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall
have been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996, as now or hereafter amended ( the "CIT Financing Agreement"),
between The CIT Group/Business Credit, Inc. and Guarantor, now or
hereafter owned by Lessee, or in the
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<PAGE>
prospects or projections of Lessee and/or Guarantor, (ii) no
litigation commenced which, if successful, would have a material
adverse impact on Lessee or Guarantor, its or their businesses, or the
ability of Lessee to pay its obligations pursuant to this Agreement,
or which would question the validity or enforceability of this
Agreement, and (iii) since the date of the most recent audited
financial statements of Lessee, no material increase in the
liabilities, or a material decrease in the assets, of Lessee; and
(5) Lessee shall obtain and provide to Lessor, not more than one
hundred eighty (180) days after the Basic Term Commencement Date, an
Estoppel/Waiver Agreement in substantially the form attached hereto as
Annex E, duly executed by each landlord and mortgagee (if applicable)
with respect to the Equipment Location specified on the Schedule, in
form and substance acceptable to Lessor. If Lessee fails timely to
provide all such required Estoppel/Waiver Agreements, the implicit
rate used to calculate the Basic Term Lease Factor specified on the
Schedule shall be increased by two hundred (200) basis points from and
after the expiration of such one hundred eighty (180) day period after
the Basic Term Commencement Date until the date on which all required
Estoppel/Waiver Agreements have been obtained and provided to Lessor.
If all such required Estoppel/Waiver Agreements are not provided to
Lessor within five hundred forty-five (545) days after the Basic Term
Commencement Date, Lessor may elect (at its sole discretion) to
terminate the Lease with respect to all of the Equipment described on
the Schedule. On the termination date, Lessee shall purchase the
Equipment on an AS IS BASIS (as hereinafter defined) for cash equal to
the greater of (1) the Stipulated Loss Value, or (2) the Fair Market
Value (as hereinafter defined), of the Equipment (plus all applicable
sales taxes), together with all Rent and other amounts then due under
such Schedule.
Simultaneously with the execution of the Bill of Sale, Lessee
shall also execute a Certificate of Acceptance, in the form of Annex C
to the applicable Schedule, covering all of the Equipment described in
the Bill of Sale. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee for lease
hereunder."
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<PAGE>
(b) The first sentence of Section II(b) is hereby deleted and the following
is inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on
the Schedule or, if directed by Lessor or its assignee, by remitting
payments through such party's electronic payment system, except as
otherwise directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment
shall be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit
and loss statement, prepared in accordance with generally accepted
accounting principles consistently applied ('GAAP') certified by a
recognized firm of certified public accountants, together with
Lessee's annual operating plan approved by Lessee's board of
directors, which includes the monthly budget for the following year
and integrates operating profits, and (ii) Lessee will deliver to
Lessor quarterly, within forty-five (45) days of the close of each
fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash
flows and balance sheet as of the end of such fiscal quarter certified
by the chief financial officer of Lessee, which provides comparisons
to the prior years' equivalent period and to Lessee's budget, together
with a 'management letter' in form and content satisfactory to Lessor,
and a certificate executed by the chief financial officer of Lessee
certifying that no Default (as hereinafter defined) or event which,
with the giving of notice or the lapse of time, or both, would become
a Default has then occurred hereunder. In addition, upon request,
Lessee shall provide to Lessor such additional financial information
as reasonably may be required by Lessor."
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general
condition of the Equipment, Lessor will communicate these
discrepancies to Lessee in writing, and Lessee shall have thirty (30)
days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
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<PAGE>
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment
at the Equipment Location (specified in the applicable Schedule), and
will not relocate the Equipment without the prior written consent of
Lessor (such consent not to be unreasonably withheld). Notwithstanding
the foregoing, Lessee may relocate items of the Equipment to locations
within the continental United States without the prior written consent
of Lessor upon satisfaction of the following conditions: (1) the
aggregate Capitalized Lessor's Cost of all relocated equipment from an
Equipment Location shall not exceed twenty-five percent (25%) of the
original aggregate Capitalized Lessor's Cost of all of the Equipment
at such Equipment Location (on an Equipment Location by Equipment
Location basis). To the extent the Equipment Schedule does not give a
specific dollar value for the Equipment to be relocated, then the
Lessee and Lessor must mutually agree on the dollar value for the
Equipment to be relocated. If Lessee and Lessor are not able to agree
on a dollar value then Lessee and Lessor will mutually select an
appraiser to render a value (at the expense of Lessee) and such value
determined by the appraiser will be final and binding; (2) Lessee
shall provide to Lessor not less than thirty (30) days' prior written
notice, identifying in reasonable detail the categories or items of
Equipment to be relocated, the present Equipment Location and the
proposed new location; (3) Lessee shall obtain and provide to Lessor
an Estoppel/Waiver Agreement in the form of Annex E to the applicable
Schedule from the landlord and each mortgagee with respect to the new
location, such agreements to be in form and substance satisfactory to
Lessor; (4) Lessee shall provide to Lessor such Uniform Commercial
Code financing statements and related documents as reasonably may be
required by Lessor in connection with such relocation; and (5) all
costs and expenses incurred by Lessor in connection with such
relocation shall be the responsibility of Lessee and paid to Lessor
upon demand. Upon the written request of Lessor, Lessee will notify
Lessor forthwith in writing of the location of any Equipment as of the
date of such notification."
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback
transaction and the Equipment is in Lessee's possession as of the
Lease Commencement Date."
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<PAGE>
(h) Section VI is hereby amended by inserting the following new Subsection
(e) at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then
have occurred and be continuing, at Lessee's expense, upon thirty (30)
days' prior written notice to Lessor, Lessee may elect to replace a
unit of Equipment (a 'Substituted Item') with a new unit of Equipment
(a 'Replacement Item'). Each Replacement Item shall be free and clear
of all liens and encumbrances and shall have at least the value,
residual value, utility and remaining useful life and be in as good an
operating condition as the Substituted Item, assuming that the
Substituted Item has been maintained in accordance with the provisions
of this Agreement. Replacement pursuant hereto shall be limited to
once per six (6) month period during the Term for any number of
Substituted Items. The aggregate Capitalized Lessor's Cost of all
Substituted Items replaced during each successive six (6) month period
shall not exceed $100,000. Lessee shall pay to Lessor a fee of $2,500
in connection with each exercise by Lessee of the replacement option
provided hereunder (which fee shall be applicable regardless of the
number of units of Equipment replaced at any one time). Lessee shall
execute and deliver to Lessor a Bill of Sale and an amended Annex A to
the applicable Schedule with respect to each Replacement Item,
together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including
(without limitation) Uniform Commercial Code financing statements, to
be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), all of Lessor's right, title and interest in
and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever interest it received in
such Substituted Item free and clear of any lien or encumbrance
created by or through Lessor)."
(i) The following is added to the end of the first sentence of Section
VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee
shall maintain the Equipment in an operable state and shall not
discontinue operation of the Equipment during the Term. Lessee shall
maintain the Equipment under a preventive maintenance program by
qualified professionals who possess a working
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<PAGE>
knowledge of the mechanical operation of the Equipment, including (to
the extent applicable) electrical systems, motors, drives, controls,
accessories, lubricants and all other items necessary to make the
Equipment operate to its original manufacturer's specifications."
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this
Paragraph and Annex G, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Lessor may
terminate such continued leasehold interest upon ten (10) days' notice
to Lessee. In addition to these rents, Lessor shall have all of its
other rights and remedies available as a result of this non-
performance."
(k) The following is added to the end of the first sentence of Section
XII(a):
"; there shall be an anticipatory repudiation by Plastic Containers,
Inc. ('Guarantor') of its obligations pursuant to that certain
Corporate Guaranty dated May 20, 1994, as now or hereafter amended
(the 'Guaranty') or Guarantor shall be in Default (as such term is
defined therein) under the Guaranty; or Guarantor sells, disposes or
assigns any or all of its interest in or loses its management control
of, Lessee; or Lessee is in default beyond any applicable notice and
cure period under the Premises Lease or any other ground lease or
premises lease of the Equipment Location (if the Equipment Location is
leased by Lessee); or Lessee shall be in default under any material
obligation for an original amount in excess of Five Million Dollars
($5,000,000) for borrowed money, for the deferred purchase price of
property or any lease agreement; or Lessee is in default under any
Schedule executed pursuant hereto."
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease
pursuant to this Agreement as to any or all of the Equipment; may
operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise
any or all rights pursuant to any Deed of Trust or Collateral
Assignment and/or may proceed against Guarantor pursuant to the
Guaranty."
9
<PAGE>
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement
or any Schedule, or the right to enter into any Schedule. Lessee
agrees that it will pay all Rent and other amounts payable under each
Schedule to the Lessor named therein; provided, however, if Lessee
receives written notice of any assignment from Lessor, Lessee will pay
all Rent and other amounts payable under any assigned Schedule to such
assignee (each being herein referred to as an 'Assignee' and,
collectively, as the 'Assignees') or as instructed by such Assignee.
Each Schedule, incorporating by reference the terms and conditions of
this Agreement, constitutes a separate instrument of lease, and the
Lessor named therein or its Assignee shall have all rights as 'Lessor'
thereunder separately exercisable by such named Lessor or Assignee as
the case may be, exclusively and independently of Lessor or any
Assignee with respect to other Schedules executed pursuant hereto.
Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by such Assignee. Lessee
hereby waives and agrees not to assert against any such Assignee any
defense, set-off, recoupment claim or counterclaim which Lessee has or
may at any time have against Lessor or any other person for any reason
whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in
part, and may be used as security for financing obtained from, one or
more Assignees without the consent of Lessee (the 'Syndication').
Lessee agrees to cooperate with Lessor in connection with the
Syndication, including the preparation of any offering materials and
the participation of any relevant management of Lessee in any meetings
with potential assignees, and will certify as true, correct and
complete any description of Lessee and its affairs contained in such
materials based upon information provided by Lessee; and the execution
and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by
Lessor or such Assignee; provided, however in no event shall Lessee be
required to consent to any change that would adversely affect any of
the economic terms of the transactions contemplated herein.
10
<PAGE>
(c) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the
parties hereto and of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also
to the Assignees.
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental
Claim or Environmental Loss and, unless Lessee is then contesting in
good faith such Environmental Claim or Environmental Loss and Lessee
has set aside on its books appropriate reserves therefor, Lessee shall
fully and promptly pay, perform and discharge any such Environmental
Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to
any Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ('PCBs'), and radioactive substances.
11
<PAGE>
(4) 'Environmental Claim' shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
(5) 'Environmental Emission' shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ('CERCLA') (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. Section 1251 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
-- ---
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
-- ---
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et seq.), and
-- ---
the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--
seq.), as these laws have been amended or supplemented, and any
---
analogous foreign, Federal, state or local statutes, and the
regulations promulgated pursuant thereto.
(7) 'Environmental Loss' shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including, without
limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out
of or related to any Adverse Environmental Condition.
12
<PAGE>
(8) 'Person' shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related
documents" are deleted and the following inserted in lieu thereof: "this
Agreement, the Schedule, the Premises Lease, the Collateral Assignment and all
related documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
(r) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any
other sum hereunder then exists hereunder and the Term has not been
earlier terminated, upon at least thirty (30) days' but not more than
two hundred seventy (270) days' prior written irrevocable notice to
Lessor, Lessee may purchase all (but not less than all) of the
Equipment described on any Schedule designated as Series A on an AS IS
BASIS, on the FMV Special Purchase Option Date specified in the
applicable Schedule, for cash equal to the FMV Special Purchase Option
Price of such Equipment (as specified in the applicable Schedule).
Lessor and Lessee agree that the FMV Special Purchase Option Price is
a reasonable prediction of the Fair Market Value of such Equipment at
the time the option is exercisable. Lessor and Lessee agree that if
Lessee makes any non-severable improvement to the Equipment which
increases the value of such Equipment, then at the time of such option
being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated
to result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof,
then on the FMV Special Purchase Option Date, Lessee shall pay to
Lessor any accrued but unpaid rent then due (expressly excluding the
rent due on the next succeeding Rent Payment Date) and any other sums
due and unpaid on the FMV Special Purchase Option Date, together with
the FMV Special Purchase Option Price, plus all applicable sales
taxes, in immediately available funds.
13
<PAGE>
(c) If, at any time during the Term, Lessee determines that it wishes
to terminate production at the Equipment Location specified on a
Schedule designated as Series A and to cannibalize the production line
by relocating items of the Equipment to other Lessee production
facilities on a piece-meal basis (without relocating the entire
production line), Lessee shall provide notice thereof to Lessor and,
so long as no Default exists hereunder, Lessee shall terminate the
lease as to all (but not less than all) items of the Equipment at such
Equipment Location, as of the next Rent Payment Date (the 'Special
Termination Date') upon at least ninety (90) days' prior written
notice to Lessor. On the Special Termination Date, Lessee shall
purchase all (but not less all such items of the Equipment on an AS IS
BASIS for cash equal to the greater of (1) the then Termination Value,
or (2) the then Fair Market Value, of such items of the Equipment
(plus all applicable sales taxes), together with all rent and other
amounts then due hereunder with respect to such items of the
Equipment. At Lessor's sole discretion, if requested by Lessee, in
lieu of terminating the lease Lessee may continue the lease as to
certain items of the Equipment which have been relocated by Lessee in
connection with the termination of production at the Equipment
Location and/or may continue the lease with respect to certain items
of the Equipment which remain at the Equipment Location on the
applicable Schedule as to which Lessee has terminated production even
though Lessee may discontinue use of such items of the Equipment. In
connection with any such continued lease, Lessee shall provide to
Lessor such documents and instruments as reasonably may be required by
Lessor.
(s) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by
overnight courier service, to the addressee at its address stated
herein, or at such other place as such addressee may have designated
in writing."
(t) Section XX is hereby amended by inserting the following Subsections at
the end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
14
<PAGE>
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(g) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. The
obligations of Lessee under Sections III, IV, XI, and XV which accrue
during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive
the termination of this Agreement.
(h) Whether or not any Equipment is leased hereunder, Lessee
shall pay upon demand all fees, commissions, costs, charges and other
expenses incurred by Lessor in connection with the commitment
expressed in that certain letter dated November 26, 1996, between
Lessor and Lessee and the documenting and servicing of the facility
described in such letter, including (but not limited to) fees and
expenses of Lessor's counsel, insurance premiums, transfer taxes, lien
searches and all recording fees and charges."
(u) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern
District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of
itself without the transfer or possession of the original of a
15
<PAGE>
Schedule executed pursuant to this Agreement and incorporating this
Agreement by reference; and no security interest in this Agreement and
a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which
shall be identified as the document marked 'Original' and all other
counterparts shall be marked 'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment. Title to the
Equipment shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity, or interest in
the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. The parties agree
that the lease is a 'Finance Lease' as defined in Uniform Commercial
Code Article 2A -- Leases ('Article 2A'). Lessee acknowledges: (a)
that Lessee has selected the 'Supplier' (as defined in Article 2A) and
directed Lessor to purchase the Equipment from the Supplier; (b) that
Lessee has been informed in writing in this Lease, before signing this
Lease, that Lessee is entitled under Article 2A to the promises and
warranties, including those of any third party, provided to Lessor by
the Supplier in connection with or as part of the contract by which
Lessor acquired the Equipment, and that Lessee may communicate with
the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of
them or of remedies. To the extent permitted by applicable law,
Lessee hereby waives any and all rights and remedies conferred upon a
lessee in Article 2A and any rights now or hereafter conferred by
statute or otherwise which may limit or modify any of Lessor's rights
or remedies under Section XII hereof; provided, however, that such
waiver shall not preclude Lessee from asserting any claim of Lessee
against Lessor in a separate cause of action; and provided further
that such waiver shall not affect Lessor's obligations of good faith,
diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a
court of competent jurisdiction determine that this Agreement is not a
true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee shall be
deemed to have hereby granted Lessor a security interest in the lease,
the Equipment, and all accessions thereto, substitutions and
replacements therefor, and proceeds
16
<PAGE>
(including insurance proceeds) thereof (but without power of sale); to
secure the prompt payment and performance as and when due of all
obligations and indebtedness of Lessee (or any affiliate of Lessee) to
Lessor, now existing or hereafter created. For the purposes of this
paragraph, this Agreement, the Schedule, or a photocopy of either
thereof may be filed as a financing statement under the Uniform
Commercial Code.
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has not been
earlier terminated, Lessee may, at the expiration of the Term of the
Schedule, upon at least one hundred eighty (180) days' prior written
notice to Lessor, purchase all (but not less than all) of the
Equipment described on such Schedule on an AS IS BASIS, for cash equal
to the greater of (1) eighteen percent (18%) of the Capitalized
Lessor's Cost of the Equipment, or (2) the then Fair Market Value of
the Equipment (plus all applicable sales taxes ). On the Basic Term
Expiration Date, Lessor shall receive in cash the full purchase price
(plus all applicable sales taxes), together with any rent or other
sums then due hereunder on such date. Lessee shall be deemed to have
waived this option unless it provides Lessor with written notice of
its irrevocable election to exercise the same within fifteen (15) days
after Fair Market Value is determined (by agreement or appraisal). If
Lessee fails timely to exercise the option specified herein, Lessee
shall return such Equipment to Lessor in compliance with the terms of
Section XI of the Agreement and Annex G attached to the Schedule on or
prior to the date of expiration of the Term and shall pay to Lessor on
the date of expiration of the Term a fee calculated as five percent
(5%) of the Capitalized Lessor's Cost of such Equipment.
(b) 'Fair Market Value' shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length transaction to
a willing seller under no compulsion to sell; provided, however, that
in such determination: (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned
under this Agreement; (ii) in the case of any installed Equipment,
that Equipment shall be valued on an installed basis; and (iii) costs
of removal from the current location shall not be a deduction from
such valuation. If Lessor and Lessee are unable to agree on the Fair
Market Value at least one hundred thirty-five (135)
17
<PAGE>
days before expiration of the Term, Lessor shall appoint an
independent appraiser (reasonably acceptable to Lessee) to determine
Fair Market Value, and that determination shall be final, binding and
conclusive. Lessee shall bear all costs associated with any such
appraisal."
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule to
be executed by their duly authorized representatives as of the date first
above written.
LESSOR: LESSEE:
General Electric Capital Corporation CONTINENTAL PLASTIC CONTAINERS, INC.
By:____________________________ By:_______________________________
Name:__________________________ Name:_____________________________
Title:_________________________ Title:____________________________
Attest:
By:____________________________
Name:__________________________
Title:_________________________
19
<PAGE>
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-2
DATED THIS 17th DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address: Lessee & Mailing Address:
MDFC Equipment Leasing Corporation Continental Plastic Containers, Inc.
4060 Lakewood Blvd., 6th Floor 301 Merritt Seven Corporate Park
Long Beach, CA 90808 Norwalk, Connecticut 06856
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to
Lessee the Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $8,303,000.00.
-------------
2. Basic Term Lease Rate Factor:
Installments one through fifty-four: 1.119359%; and installments
--------
fifty-five through one hundred nine: 1.368105%.
--------
3. Daily Lease Rate Factor: .037311967%
-----------
4. Basic Term:
One hundred nine (109) months
-----------------------------
5. Basic Term Commencement Date: January 1, 1997.
----------------
<PAGE>
6. Equipment Location: Plant #123, 1300 Northwest Ave, West Chicago,
---------------------------------------------
DuPage County, IL 60185 (the "Premises").
-----------------------------------------
7. Lessee Federal Tax ID No.: 06-1056158
----------
8 Last Delivery Date: December 31, 1996.
------------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Eighty-three (83) months after the Basic Term Commencement Date
11. FMV Special Purchase Option Price:
48.75% of the Capitalized Lessor's Cost.
-----
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
- ---------------
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
---------------
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times
the Capitalized Lessor's Cost of all Equipment on this Schedule. Each date for
the payment of rent during the Basic Term is herein referred to as a "Rent
Payment Date".
2
<PAGE>
3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the Lease
Commencement Date or the Last Delivery Date therefor, of each of the
following documents in form and substance satisfactory to Lessor: (i)
a Schedule relating to the Equipment then to be leased hereunder, (ii)
a Bill of Sale, in the form of Annex B to the applicable Schedule, in
favor of Lessor, (iii) evidence of insurance which complies with the
requirements of Section X hereof, (iv) a Collateral Assignment of
Leasehold Interest in the form of Annex F to the applicable Schedule (
the 'Collateral Assignment'), together with a certified true copy of
the ground lease or premises lease of the real property at the
Equipment Location (v)an independent third party appraisal (by Norman
Levy & Associates or another firm acceptable to Lessor) to
substantiate the Equipment's fair market value and remaining economic
useful life and requisite value at selected points throughout the Term
(as hereinafter defined), including Lessor's residual value
assumption, (vi) any available information relating to environmental
issues concerning the Equipment Location specified on the applicable
Schedule, (vii) satisfactory results of a search by an attorney or
company satisfactory to Lessor of the Uniform
3
<PAGE>
Commercial Code filings with respect to Lessee in each jurisdiction in
which Lessee conducts or has a place of business, (viii) certified
copies of the articles of incorporation, the by-laws and applicable
resolutions, and certificates of good standing and incumbency
certificates, with respect to Lessee and Guarantor, as required by
Lessor; (ix) opinions of counsel of Lessee and Guarantor, reasonably
satisfactory in form and substance to Lessor, together with evidence
of all other legal matters incident to the sale and leasing of the
Equipment hereunder, as Lessor may require; (x) releases of liens and
termination statements covering such of Lessee's assets as required by
Lessor in connection with the sale and leasing of the Equipment
hereunder, each of which shall be fully and properly executed, in
recordable form, and sufficient in the opinion of counsel for Lessor
to terminate the interest of the creditors of Lessee in such assets,
(xi) such Uniform Commercial Code financing statements as may be
required by Lessor, (xii) a certificate of an officer of Lessee
confirming the placement of not less than $115,000,000 of new Senior
Notes issued by Lessee, having a ten (10) year term, requiring no
payment of principal until December, 2006, and of the purchase for
cancellation or discharge and defeasance of $104,700,000 of Lessee's
10-3/4% Senior Secured Notes Due 2001, and that there are no
unsatisfied conditions to such placement and redemption, and (xiii)
such other documents as Lessor reasonably may request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall have
been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996, as now or hereafter amended ( the "CIT Financing Agreement"),
between The CIT Group/Business Credit, Inc. and Guarantor, now or
hereafter owned by Lessee, or in the prospects or projections of
Lessee and/or Guarantor, (ii) no litigation commenced
4
<PAGE>
which, if successful, would have a material adverse impact on Lessee
or Guarantor, its or their businesses, or the ability of Lessee to pay
its obligations pursuant to this Agreement, or which would question
the validity or enforceability of this Agreement, and (iii) since the
date of the most recent audited financial statements of Lessee, no
material increase in the liabilities, or a material decrease in the
assets, of Lessee; and
(5) Lessee shall obtain and provide to Lessor, not more than one
hundred eighty (180) days after the Basic Term Commencement Date, an
Estoppel/Waiver Agreement in substantially the form attached hereto as
Annex E, duly executed by each landlord and mortgagee (if applicable)
with respect to the Equipment Location specified on the Schedule, in
form and substance acceptable to Lessor. If Lessee fails timely to
provide all such required Estoppel/Waiver Agreements, the implicit
rate used to calculate the Basic Term Lease Factor specified on the
Schedule shall be increased by two hundred (200) basis points from and
after the expiration of such one hundred eighty (180) day period after
the Basic Term Commencement Date until the date on which all required
Estoppel/Waiver Agreements have been obtained and provided to Lessor.
If all such required Estoppel/Waiver Agreements are not provided to
Lessor within such one hundred eighty (180) day period after the Basic
Term Commencement Date, on or prior to the expiration of such period
Lessee shall cause to be provided to Lessor an irrevocable standby
letter of credit in the amount of $3,000,000 from a bank or other
financial institution, and in form and substance, acceptable to
Lessor, such Letter of Credit to secure the obligations of Lessee
pursuant to Schedule A-2 and to be released on the date that all
required Estoppel/Waiver Agreements have been obtained and provided to
Lessor (provided that no Default or event which, with the giving of
notice, or the lapse of time, or both, would constitute a Default has
then occurred and is continuing hereunder.]
Simultaneously with the execution of the Bill of Sale, Lessee
shall also execute a Certificate of Acceptance, in the form of Annex C
to the applicable Schedule, covering all of the Equipment described in
the Bill of Sale. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee for lease
hereunder."
5
<PAGE>
(b) The first sentence of Section II(b) is hereby deleted and the following
is inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on
the Schedule or, if directed by Lessor or its assignee, by remitting
payments through such party's electronic payment system, except as
otherwise directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment
shall be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit
and loss statement, prepared in accordance with generally accepted
accounting principles consistently applied ('GAAP') certified by a
recognized firm of certified public accountants, together with
Lessee's annual operating plan approved by Lessee's board of
directors, which includes the monthly budget for the following year
and integrates operating profits, and (ii) Lessee will deliver to
Lessor quarterly, within forty-five (45) days of the close of each
fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash
flows and balance sheet as of the end of such fiscal quarter certified
by the chief financial officer of Lessee, which provides comparisons
to the prior years' equivalent period and to Lessee's budget, together
with a 'management letter' in form and content satisfactory to Lessor,
and a certificate executed by the chief financial officer of Lessee
certifying that no Default (as hereinafter defined) or event which,
with the giving of notice or the lapse of time, or both, would become
a Default has then occurred hereunder. In addition, upon request,
Lessee shall provide to Lessor such additional financial information
as reasonably may be required by Lessor."
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general
condition of the Equipment, Lessor will communicate these
discrepancies to Lessee in writing, and Lessee shall have thirty (30)
days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
6
<PAGE>
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment
at the Equipment Location (specified in the applicable Schedule), and
will not relocate the Equipment without the prior written consent of
Lessor (such consent not to be unreasonably withheld). Notwithstanding
the foregoing, Lessee may relocate items of the Equipment to locations
within the continental United States without the prior written consent
of Lessor upon satisfaction of the following conditions: (1) the
aggregate Capitalized Lessor's Cost of all relocated equipment from an
Equipment Location shall not exceed twenty-five percent (25%) of the
original aggregate Capitalized Lessor's Cost of all of the Equipment
at such Equipment Location (on an Equipment Location by Equipment
Location basis); (2) Lessee shall provide to Lessor not less than
thirty (30) days' prior written notice, identifying in reasonable
detail the categories or items of Equipment to be relocated, the
present Equipment Location and the proposed new location; (3) Lessee
shall obtain and provide to Lessor an Estoppel/Waiver Agreement in the
form of Annex E to the applicable Schedule from the landlord and each
mortgagee with respect to the new location, such agreements to be in
form and substance satisfactory to Lessor; (4) Lessee shall provide to
Lessor such Uniform Commercial Code financing statements and related
documents as reasonably may be required by Lessor in connection with
such relocation; and (5) all costs and expenses incurred by Lessor in
connection with such relocation shall be the responsibility of Lessee
and paid to Lessor upon demand. Upon the written request of Lessor,
Lessee will notify Lessor forthwith in writing of the location of any
Equipment as of the date of such notification."
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback
transaction and the Equipment is in Lessee's possession as of the
Lease Commencement Date."
(h) Section VI is hereby amended by inserting the following new Subsection
(e) at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then
have occurred and be continuing, at Lessee's expense, upon thirty (30)
days' prior written notice to Lessor, Lessee may elect to replace a
unit of Equipment (a 'Substituted Item') with a new unit of
7
<PAGE>
Equipment (a 'Replacement Item'). Each Replacement Item shall be free
and clear of all liens and encumbrances and shall have at least the
value, residual value, utility and remaining useful life and be in as
good an operating condition as the Substituted Item, assuming that the
Substituted Item has been maintained in accordance with the provisions
of this Agreement. Replacement pursuant hereto shall be limited to
once per six (6) month period during the Term for any number of
Substituted Items. The aggregate Capitalized Lessor's Cost of all
Substituted Items replaced during each successive six (6) month period
shall not exceed $100,000. Lessee shall pay to Lessor a fee of $2,500
in connection with each exercise by Lessee of the replacement option
provided hereunder (which fee shall be applicable regardless of the
number of units of Equipment replaced at any one time). Lessee shall
execute and deliver to Lessor a Bill of Sale and an amended Annex A to
the applicable Schedule with respect to each Replacement Item,
together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including
(without limitation) Uniform Commercial Code financing statements, to
be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), all of Lessor's right, title and interest in
and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever interest it received in
such Substituted Item free and clear of any lien or encumbrance
created by or through Lessor)."
(i) The following is added to the end of the first sentence of Section
VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee
shall maintain the Equipment in an operable state and shall not
discontinue operation of the Equipment during the Term. Lessee shall
maintain the Equipment under a preventive maintenance program by
qualified professionals who possess a working knowledge of the
mechanical operation of the Equipment, including (to the extent
applicable) electrical systems, motors, drives, controls, accessories,
lubricants and all other items necessary to make the Equipment operate
to its original manufacturer's specifications."
8
<PAGE>
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this
Paragraph and Annex G, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Lessor may
terminate such continued leasehold interest upon ten (10) days' notice
to Lessee. In addition to these rents, Lessor shall have all of its
other rights and remedies available as a result of this non-
performance."
(k) The following is added to the end of the first sentence of Section
XII(a):
"; there shall be an anticipatory repudiation by Plastic Containers,
Inc. ('Guarantor') of its obligations pursuant to that certain
Corporate Guaranty dated May 20, 1994, as now or hereafter amended
(the 'Guaranty') or Guarantor shall be in Default (as such term is
defined therein) under the Guaranty; or Guarantor sells, disposes or
assigns any or all of its interest in or loses its management control
of, Lessee; or Lessee is in default beyond any applicable notice and
cure period under the Premises Lease or any other ground lease or
premises lease of the Equipment Location (if the Equipment Location is
leased by Lessee); or Lessee shall be in default under any material
obligation for an original amount in excess of Five Million Dollars
($5,000,000) for borrowed money, for the deferred purchase price of
property or any lease agreement; or Lessee is in default under any
Schedule executed pursuant hereto."
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease
pursuant to this Agreement as to any or all of the Equipment; may
operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise
any or all rights pursuant to any Deed of Trust or Collateral
Assignment and/or may proceed against Guarantor pursuant to the
Guaranty."
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement
or any Schedule, or the right to enter into any Schedule.
9
<PAGE>
Lessee agrees that it will pay all Rent and other amounts payable
under each Schedule to the Lessor named therein; provided, however, if
Lessee receives written notice of any assignment from Lessor, Lessee
will pay all Rent and other amounts payable under any assigned
Schedule to such assignee (each being herein referred to as an
'Assignee' and, collectively, as the 'Assignees') or as instructed by
such Assignee. Each Schedule, incorporating by reference the terms
and conditions of this Agreement, constitutes a separate instrument of
lease, and the Lessor named therein or its Assignee shall have all
rights as 'Lessor' thereunder separately exercisable by such named
Lessor or Assignee as the case may be, exclusively and independently
of Lessor or any Assignee with respect to other Schedules executed
pursuant hereto. Lessee further agrees to confirm in writing receipt
of a notice of assignment as reasonably may be requested by such
Assignee. Lessee hereby waives and agrees not to assert against any
such Assignee any defense, set-off, recoupment claim or counterclaim
which Lessee has or may at any time have against Lessor or any other
person for any reason whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in
part, and may be used as security for financing obtained from, one or
more Assignees without the consent of Lessee (the 'Syndication').
Lessee agrees to cooperate with Lessor in connection with the
Syndication, including the preparation of any offering materials and
the participation of any relevant management of Lessee in any meetings
with potential assignees, and will certify as true, correct and
complete any description of Lessee and its affairs contained in such
materials based upon information provided by Lessee; and the execution
and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by
Lessor or such Assignee; provided, however in no event shall Lessee be
required to consent to any change that would adversely affect any of
the economic terms of the transactions contemplated herein.
(c) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the
parties hereto and of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also
to the Assignees.
10
<PAGE>
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental
Claim or Environmental Loss and, unless Lessee is then contesting in
good faith such Environmental Claim or Environmental Loss and Lessee
has set aside on its books appropriate reserves therefor, Lessee shall
fully and promptly pay, perform and discharge any such Environmental
Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to
any Person that directly or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ('PCBs'), and radioactive substances.
(4) 'Environmental Claim' shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
11
<PAGE>
(5) 'Environmental Emission' shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ('CERCLA') (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. Section 1251 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
-- ---
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
-- ---
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et seq.), and
-- ---
the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--
seq.), as these laws have been amended or supplemented, and any
---
analogous foreign, Federal, state or local statutes, and the
regulations promulgated pursuant thereto.
(7) 'Environmental Loss' shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including, without
limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out
of or related to any Adverse Environmental Condition.
(8) 'Person' shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related
documents" are deleted and the following inserted in lieu thereof: "this
Agreement, the Schedule, the Premises Lease, the Collateral Assignment and all
related documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
12
<PAGE>
(r) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any
other sum hereunder then exists hereunder and the Term has not been
earlier terminated, upon at least thirty (30) days' but not more than
two hundred seventy (270) days' prior written irrevocable notice to
Lessor, Lessee may purchase all (but not less than all) of the
Equipment described on any Schedule designated as Series A on an AS IS
BASIS, on the FMV Special Purchase Option Date specified in the
applicable Schedule, for cash equal to the FMV Special Purchase Option
Price of such Equipment (as specified in the applicable Schedule).
Lessor and Lessee agree that the FMV Special Purchase Option Price is
a reasonable prediction of the Fair Market Value of such Equipment at
the time the option is exercisable. Lessor and Lessee agree that if
Lessee makes any non-severable improvement to the Equipment which
increases the value of such Equipment, then at the time of such option
being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated
to result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof,
then on the FMV Special Purchase Option Date, Lessee shall pay to
Lessor any accrued but unpaid rent then due (expressly excluding the
rent due on the next succeeding Rent Payment Date) and any other sums
due and unpaid on the FMV Special Purchase Option Date, together with
the FMV Special Purchase Option Price, plus all applicable sales
taxes, in immediately available funds.
(c) If, at any time during the Term, Lessee determines that it wishes
to terminate production at the Equipment Location specified on a
Schedule designated as Series A and to cannibalize the production line
by relocating items of the Equipment to other Lessee production
facilities on a piece-meal basis (without relocating the entire
production line), Lessee shall provide notice thereof to Lessor and,
so long as no Default exists hereunder, Lessee shall terminate the
lease as to all items of the Equipment at such Equipment Location, as
of the next Rent Payment Date (the 'Special Termination Date') upon at
least ninety (90) days' prior written notice to Lessor. On the Special
Termination Date, Lessee shall purchase all such
13
<PAGE>
items of the Equipment on an AS IS BASIS for cash equal to the greater
of (1) the then Termination Value, or (2) the then Fair Market Value,
of such items of the Equipment (plus all applicable sales taxes),
together with all rent and other amounts then due hereunder with
respect to such items of the Equipment. At Lessor's sole discretion,
if requested by Lessee, in lieu of terminating the lease Lessee may
continue the lease as to certain items of the Equipment which have
been relocated by Lessee in connection with the termination of
production at the Equipment Location and/or may continue the lease
with respect to certain items of the Equipment which remain at the
Equipment Location on the applicable Schedule as to which Lessee has
terminated production even though Lessee may discontinue use of such
items of the Equipment. In connection with any such continued lease,
Lessee shall provide to Lessor such documents and instruments as
reasonably may be required by Lessor.
(s) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by
overnight courier service, to the addressee at its address stated
herein, or at such other place as such addressee may have designated
in writing."
(t) Section XX is hereby amended by inserting the following Subsections at
the end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(g) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. The
obligations of Lessee under Sections III, IV, XI, and XV which accrue
during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive
the termination of this Agreement.
14
<PAGE>
(h) Whether or not any Equipment is leased hereunder, Lessee
shall pay upon demand all fees, commissions, costs, charges and other
expenses incurred by Lessor in connection with the commitment
expressed in that certain letter dated November 26, 1996, between
Lessor and Lessee and the documenting and servicing of the facility
described in such letter, including (but not limited to) fees and
expenses of Lessor's counsel, insurance premiums, transfer taxes, lien
searches and all recording fees and charges."
(u) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern
District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of
itself without the transfer or possession of the original of a
Schedule executed pursuant to this Agreement and incorporating this
Agreement by reference; and no security interest in this Agreement and
a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which
shall be identified as the document marked 'Original' and all other
counterparts shall be marked 'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment.
15
<PAGE>
Title to the Equipment shall at all times remain in Lessor, and Lessee
shall acquire no ownership, title, property, right, equity, or
interest in the Equipment other than its leasehold interest solely as
Lessee subject to all the terms and conditions hereof. The parties
agree that the lease is a 'Finance Lease' as defined in Uniform
Commercial Code Article 2A -- Leases ('Article 2A'). Lessee
acknowledges: (a) that Lessee has selected the 'Supplier' (as defined
in Article 2A) and directed Lessor to purchase the Equipment from the
Supplier; (b) that Lessee has been informed in writing in this Lease,
before signing this Lease, that Lessee is entitled under Article 2A to
the promises and warranties, including those of any third party,
provided to Lessor by the Supplier in connection with or as part of
the contract by which Lessor acquired the Equipment, and that Lessee
may communicate with the Supplier and receive an accurate and complete
statement of those promises and warranties, including any disclaimers
and limitations of them or of remedies. To the extent permitted by
applicable law, Lessee hereby waives any and all rights and remedies
conferred upon a lessee in Article 2A and any rights now or hereafter
conferred by statute or otherwise which may limit or modify any of
Lessor's rights or remedies under Section XII hereof; provided,
however, that such waiver shall not preclude Lessee from asserting any
claim of Lessee against Lessor in a separate cause of action; and
provided further that such waiver shall not affect Lessor's
obligations of good faith, diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a
court of competent jurisdiction determine that this Agreement is not a
true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee shall be
deemed to have hereby granted Lessor a security interest in the lease,
the Equipment, and all accessions thereto, substitutions and
replacements therefor, and proceeds (including insurance proceeds)
thereof (but without power of sale); to secure the prompt payment and
performance as and when due of all obligations and indebtedness of
Lessee (or any affiliate of Lessee) to Lessor, now existing or
hereafter created. For the purposes of this paragraph, this
Agreement, the Schedule, or a photocopy of either thereof may be filed
as a financing statement under the Uniform Commercial Code.
16
<PAGE>
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has
not been earlier terminated, Lessee may, at the expiration of the Term
of the Schedule, upon at least one hundred eighty (180) days' prior
written notice to Lessor, purchase all (but not less than all) of the
Equipment described on such Schedule on an AS IS BASIS, for cash equal
to the greater of (1) eighteen percent (18%) of the Capitalized
Lessor's Cost of the Equipment, or (2) the then Fair Market Value of
the Equipment (plus all applicable sales taxes ). On the Basic Term
Expiration Date, Lessor shall receive in cash the full purchase price
(plus all applicable sales taxes), together with any rent or other
sums then due hereunder on such date. Lessee shall be deemed to have
waived this option unless it provides Lessor with written notice of
its irrevocable election to exercise the same within fifteen (15) days
after Fair Market Value is determined (by agreement or appraisal). If
Lessee fails timely to exercise the option specified herein, Lessee
shall return such Equipment to Lessor in compliance with the terms of
Section XI of the Agreement and Annex G attached to the Schedule on or
prior to the date of expiration of the Term and shall pay to Lessor on
the date of expiration of the Term a fee calculated as five percent
(5%) of the Capitalized Lessor's Cost of such Equipment.
(b) 'Fair Market Value' shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length transaction to
a willing seller under no compulsion to sell; provided, however, that
in such determination: (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned
under this Agreement; (ii) in the case of any installed Equipment,
that Equipment shall be valued on an installed basis; and (iii) costs
of removal from the current location shall not be a deduction from
such valuation. If Lessor and Lessee are unable to agree on the Fair
Market Value at least one hundred thirty-five (135) days before
expiration of the Term, Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine Fair Market Value, and
that determination shall be final, binding and conclusive. Lessee
shall bear all costs associated with any such appraisal."
17
<PAGE>
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule
to be executed by their duly authorized representatives as of the date first
above written.
LESSOR: LESSEE:
MDFC EQUIPMENT LEASING CONTINENTAL PLASTIC CONTAINERS, INC.
CORPORATION
By:_____________________________ By:_____________________________
Name:___________________________ Name:___________________________
Title:__________________________ Title:__________________________
Attest:
By:_____________________________
Name:___________________________
Title:__________________________
19
<PAGE>
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-3
DATED THIS 17TH DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address: Lessee & Mailing Address:
Mellon US Leasing, a Division of Mellon
Equipment Leasing Continental Plastic Containers, Inc.
733 Front Street 301 Merritt Seven Corporate Park
San Francisco, CA 94111 Norwalk, Connecticut 06856
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to
Lessee the Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $7,435,130.00
------------
2. Basic Term Lease Rate Factor:
Installments one through forty-four: 1.156655%; and installments
--------
forty-five through eighty-eight: 1.278408%.
--------
3. Daily Lease Rate Factor:.038555%.
4. Basic Term:
Eighty-eight (88) months.
------------------------
<PAGE>
5. Basic Term Commencement Date: January 1, 1997.
----------------
6. Equipment Location: Plant #145, 2727 E. Higgins Road, Elk Grove, Cook
-------------------------------------------------
County, IL 60007
-----------------
("the Premises")
----------------
7. Lessee Federal Tax ID No.: 06-1056158
----------
8. Last Delivery Date: December 31, 1996.
------------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Seventy-eight (78) months after the Basic Term Commencement Date.
11. FMV Special Purchase Option Price:
46.10% of the Capitalized Lessor's Cost.
-----
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent")
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the product of the Basic Term Lease Rate Factor times the Capitalized Lessor's
Cost of all Equipment on this Schedule. Each date for the payment of rent
during the Basic Term is herein referred to as a "Rent Payment Date".
3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
" (b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the
Lease Commencement Date or the Last Delivery Date therefor, of each of
the following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased hereunder,
(ii) a Bill of Sale, in the form of Annex B to the applicable
Schedule, in favor of Lessor, (iii) evidence of insurance which
complies with the requirements of Section X hereof, (iv) a Collateral
Assignment of Leasehold Interest in the form of Annex F to the
applicable Schedule ( the 'Collateral Assignment'), together with a
certified true copy of the ground lease or premises lease of the real
property at the Equipment Location (v) an independent third party
appraisal (by Norman Levy & Associates or another firm acceptable to
Lessor) to substantiate the Equipment's fair market value and
remaining economic useful life and requisite value at selected points
throughout the Term (as hereinafter defined),
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including Lessor's residual value assumption, (vi) any available
information relating to environmental issues concerning the Equipment
Location specified on the applicable Schedule, (vii) satisfactory
results of a search by an attorney or company satisfactory to Lessor
of the Uniform Commercial Code filings with respect to Lessee in each
jurisdiction in which Lessee conducts or has a place of business,
(viii) certified copies of the articles of incorporation, the by-laws
and applicable resolutions, and certificates of good standing and
incumbency certificates, with respect to Lessee and Guarantor, as
required by Lessor; (ix) opinions of counsel of Lessee and Guarantor,
reasonably satisfactory in form and substance to Lessor, together with
evidence of all other legal matters incident to the sale and leasing
of the Equipment hereunder, as Lessor may require; (x) releases of
liens and termination statements covering such of Lessee's assets as
required by Lessor in connection with the sale and leasing of the
Equipment hereunder, each of which shall be fully and properly
executed, in recordable form, and sufficient in the opinion of counsel
for Lessor to terminate the interest of the creditors of Lessee in
such assets, (xi) such Uniform Commercial Code financing statements as
may be required by Lessor, (xii) a certificate of an officer of
Lessee confirming the placement of not less than $115,000,000 of new
Senior Notes issued by Lessee, having a ten (10) year term, requiring
no payment of principal until December, 2006, and of the purchase for
cancellation or discharge and defeasance of $104,700,000 of Lessee's
10-3/4% Senior Secured Notes Due 2001, and that there are no
unsatisfied conditions to such placement and redemption, and (xiii)
such other documents as Lessor reasonably may request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall
have been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated
4
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Financing Agreement dated as of October 30, 1995, as amended as of
December 17, 1996, as now or hereafter amended ( the "CIT Financing
Agreement"), between The CIT Group/Business Credit, Inc. and
Guarantor, now or hereafter owned by Lessee, or in the prospects or
projections of Lessee and/or Guarantor, (ii) no litigation commenced
which, if successful, would have a material adverse impact on Lessee
or Guarantor, its or their businesses, or the ability of Lessee to pay
its obligations pursuant to this Agreement, or which would question
the validity or enforceability of this Agreement, and (iii) since the
date of the most recent audited financial statements of Lessee, no
material increase in the liabilities, or a material decrease in the
assets, of Lessee; and
(5) Lessee shall obtain and provide to Lessor, not more
than one hundred eighty (180) days after the Basic Term Commencement
Date, an Estoppel/Waiver Agreement in substantially the form attached
hereto as Annex E, duly executed by each landlord and mortgagee (if
applicable) with respect to the Equipment Location specified on the
Schedule, in form and substance acceptable to Lessor. If Lessee fails
timely to provide all such required Estoppel/Waiver Agreements, the
implicit rate used to calculate the Basic Term Lease Factor specified
on the Schedule shall be increased by two hundred (200) basis points
from and after the expiration of such one hundred eighty (180) day
period after the Basic Term Commencement Date until the date on which
all required Estoppel/Waiver Agreements have been obtained and
provided to Lessor.
If all such required Estoppel/Waiver Agreements are not provided to
Lessor within such one hundred eighty (180) day period after the Basic
Term Commencement Date, on or prior to the expiration of such period
Lessee shall cause to be provided to Lessor an irrevocable standby
letter of credit in the amount of $3,000,000 from a bank or other
financial institution, and in form and substance, acceptable to
Lessor, such Letter of Credit to secure the obligations of Lessee
pursuant to Schedule A-3 and to be released on the date that all
required Estoppel/Waiver Agreements have been obtained and provided to
Lessor (provided that no Default or event which, with the giving of
notice, or the lapse of time, or both, would constitute a Default has
then occurred and is continuing hereunder.
Simultaneously with the execution of the Bill of Sale, Lessee
shall also execute a Certificate of Acceptance, in the form of Annex
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C to the applicable Schedule, covering all of the Equipment described
in the Bill of Sale. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee for lease
hereunder."
(b) The first sentence of Section II(b) is hereby deleted and the following
is inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on
the Schedule or, if directed by Lessor or its assignee, by remitting
payments through such party's electronic payment system, except as
otherwise directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment
shall be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit
and loss statement, prepared in accordance with generally accepted
accounting principles consistently applied ('GAAP') certified by a
recognized firm of certified public accountants, together with
Lessee's annual operating plan approved by Lessee's board of
directors, which includes the monthly budget for the following year
and integrates operating profits, and (ii) Lessee will deliver to
Lessor quarterly, within forty-five (45) days of the close of each
fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash
flows and balance sheet as of the end of such fiscal quarter certified
by the chief financial officer of Lessee, which provides comparisons
to the prior years' equivalent period and to Lessee's budget, together
with a 'management letter' in form and content satisfactory to Lessor,
and a certificate executed by the chief financial officer of Lessee
certifying that no Default (as hereinafter defined) or event which,
with the giving of notice or the lapse of time, or both, would become
a Default has then occurred hereunder. In addition, upon request,
Lessee shall provide to Lessor such additional financial information
as reasonably may be required by Lessor."
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<PAGE>
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general
condition of the Equipment, Lessor will communicate these
discrepancies to Lessee in writing, and Lessee shall have thirty (30)
days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment
at the Equipment Location (specified in the applicable Schedule), and
will not relocate the Equipment without the prior written consent of
Lessor (such consent not to be unreasonably withheld). Notwithstanding
the foregoing, Lessee may relocate items of the Equipment to locations
within the continental United States without the prior written consent
of Lessor upon satisfaction of the following conditions: (1) the
aggregate Capitalized Lessor's Cost of all relocated equipment from an
Equipment Location shall not exceed twenty-five percent (25%) of the
original aggregate Capitalized Lessor's Cost of all of the Equipment
at such Equipment Location (on an Equipment Location by Equipment
Location basis); (2) Lessee shall provide to Lessor not less than
thirty (30) days' prior written notice, identifying in reasonable
detail the categories or items of Equipment to be relocated, the
present Equipment Location and the proposed new location; (3) Lessee
shall obtain and provide to Lessor an Estoppel/Waiver Agreement in the
form of Annex E to the applicable Schedule from the landlord and each
mortgagee with respect to the new location, such agreements to be in
form and substance satisfactory to Lessor; (4) Lessee shall provide to
Lessor such Uniform Commercial Code financing statements and related
documents as reasonably may be required by Lessor in connection with
such relocation; and (5) all costs and expenses incurred by Lessor in
connection with such relocation shall be the responsibility of Lessee
and paid to Lessor upon demand. Upon the written request of Lessor,
Lessee will notify Lessor forthwith in writing of the location of any
Equipment as of the date of such notification."
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<PAGE>
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback
transaction and the Equipment is in Lessee's possession as of the
Lease Commencement Date."
(h) Section VI is hereby amended by inserting the following new Subsection
(e) at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then
have occurred and be continuing, at Lessee's expense, upon thirty (30)
days' prior written notice to Lessor, Lessee may elect to replace a
unit of Equipment (a 'Substituted Item') with a new unit of Equipment
(a 'Replacement Item'). Each Replacement Item shall be free and clear
of all liens and encumbrances and shall have at least the value,
residual value, utility and remaining useful life and be in as good an
operating condition as the Substituted Item, assuming that the
Substituted Item has been maintained in accordance with the provisions
of this Agreement. Replacement pursuant hereto shall be limited to
once per six (6) month period during the Term for any number of
Substituted Items. The aggregate Capitalized Lessor's Cost of all
Substituted Items replaced during each successive six (6) month period
shall not exceed $100,000. Lessee shall pay to Lessor a fee of $2,500
in connection with each exercise by Lessee of the replacement option
provided hereunder (which fee shall be applicable regardless of the
number of units of Equipment replaced at any one time). Lessee shall
execute and deliver to Lessor a Bill of Sale and an amended Annex A to
the applicable Schedule with respect to each Replacement Item,
together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including
(without limitation) Uniform Commercial Code financing statements, to
be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), all of Lessor's right, title and interest in
and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever interest it received in
such Substituted Item free and clear of any lien or encumbrance
created by or through Lessor)."
8
<PAGE>
(i) The following is added to the end of the first sentence of Section
VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee
shall maintain the Equipment in an operable state and shall not
discontinue operation of the Equipment during the Term. Lessee shall
maintain the Equipment under a preventive maintenance program by
qualified professionals who possess a working knowledge of the
mechanical operation of the Equipment, including (to the extent
applicable) electrical systems, motors, drives, controls, accessories,
lubricants and all other items necessary to make the Equipment operate
to its original manufacturer's specifications."
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this
Paragraph and Annex G, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Lessor may
terminate such continued leasehold interest upon ten (10) days' notice
to Lessee. In addition to these rents, Lessor shall have all of its
other rights and remedies available as a result of this non-
performance."
(k) The following is added to the end of the first sentence of Section
XII(a):
"; there shall be an anticipatory repudiation by Plastic Containers,
Inc. ('Guarantor') of its obligations pursuant to that certain
Corporate Guaranty dated May 20, 1994, as now or hereafter amended
(the 'Guaranty') or Guarantor shall be in Default (as such term is
defined therein) under the Guaranty; or Guarantor sells, disposes or
assigns any or all of its interest in or loses its management control
of, Lessee; or Lessee is in default beyond any applicable notice and
cure period under the Premises Lease or any other ground lease or
premises lease of the Equipment Location (if the Equipment Location is
leased by Lessee); or Lessee shall be in default under any material
obligation for an original amount in excess of Five Million Dollars
($5,000,000) for borrowed money, for the deferred purchase price of
property or any lease agreement; or Lessee is in default under any
Schedule executed pursuant hereto." The occurance of any of the
defaults in this Section XIIa are herewith collectively called the
"Defaults."
9
<PAGE>
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease
pursuant to this Agreement as to any or all of the Equipment; may
operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise
any or all rights pursuant to any Deed of Trust or Collateral
Assignment and/or may proceed against Guarantor pursuant to the
Guaranty."
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement
or any Schedule, or the right to enter into any Schedule. Lessee
agrees that it will pay all Rent and other amounts payable under each
Schedule to the Lessor named therein; provided, however, if Lessee
receives written notice of any assignment from Lessor, Lessee will pay
all Rent and other amounts payable under any assigned Schedule to such
assignee (each being herein referred to as an 'Assignee' and,
collectively, as the 'Assignees') or as instructed by such Assignee.
Each Schedule, incorporating by reference the terms and conditions of
this Agreement, constitutes a separate instrument of lease, and the
Lessor named therein or its Assignee shall have all rights as 'Lessor'
thereunder separately exercisable by such named Lessor or Assignee as
the case may be, exclusively and independently of Lessor or any
Assignee with respect to other Schedules executed pursuant hereto.
Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by such Assignee. Lessee
hereby waives and agrees not to assert against any such Assignee any
defense, set-off, recoupment claim or counterclaim which Lessee has or
may at any time have against Lessor or any other person for any reason
whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in
part, and may be used as security for financing obtained from, one or
more Assignees without the consent of Lessee (the 'Syndication').
Lessee agrees to cooperate with Lessor in connection with the
Syndication, including the preparation of any offering materials and
the participation of any relevant management of Lessee in any meetings
with potential assignees, and will certify as true, correct and
complete any description of Lessee and its affairs contained in such
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materials based upon information provided by Lessee; and the execution
and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by
Lessor or such Assignee; provided, however in no event shall Lessee be
required to consent to any change that would adversely affect any of
the economic terms of the transactions contemplated herein.
(c) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the
parties hereto and of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also
to the Assignees.
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental
Claim or Environmental Loss and, unless Lessee is then contesting in
good faith such Environmental Claim or Environmental Loss and Lessee
has set aside on its books appropriate reserves therefor, Lessee shall
fully and promptly pay, perform and discharge any such Environmental
Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to
any Person that directly or indirectly through one or more
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intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ('PCBs'), and radioactive substances.
(4) 'Environmental Claim' shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
(5) 'Environmental Emission' shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ('CERCLA') (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. Section 1251 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
-- ---
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
-- ---
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et seq.), and
-- ---
the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--
seq.), as these laws have been amended or supplemented, and any
---
analogous foreign, Federal, state or local statutes, and the
regulations promulgated pursuant thereto.
(7) 'Environmental Loss' shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including,
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without limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out
of or related to any Adverse Environmental Condition.
(8) 'Person' shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related
documents" are deleted and the following inserted in lieu thereof: "this
Agreement, the Schedule, the Premises Lease, the Collateral Assignment and all
related documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
(r) The following new Paragraph (e) is added to Section XVIII:
" (e) Notwithstanding anything to the contrary contained in
Paragraphs (a) through (d) of this Section, on the First Termination
Date (specified in the applicable Schedule), Lessee may, so long as no
Default exists hereunder, terminate this Agreement as of a Rent
Payment Date as to all (but not less than all) of the Equipment
specified on Schedules A-3, A-4, A-5 and A-6, upon at least ninety
(90) days' prior written notice to Lessor. If Lessee exercises this
option, on the First Termination Date, Lessee shall return the
Equipment described on such Schedule to Lessor, in accordance with the
terms of Section XI hereof and Annex G to the applicable Schedule, and
shall pay to Lessor a fee calculated as sixty-seven and one-half
percent (67.5%) of the aggregate Capitalized Lessor's Cost of the
Equipment described on such Schedule, together with all rent and other
sums due and unpaid with respect to such Schedule as of the First
Termination Date."
(s) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any
other sum hereunder then exists hereunder and the Term has not been
earlier terminated, upon at least thirty (30) days' but not more than
two hundred seventy (270) days' prior written irrevocable notice
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<PAGE>
to Lessor, Lessee may purchase all (but not less than all) of the
Equipment described on any Schedule designated as Series A on an AS IS
BASIS, on the FMV Special Purchase Option Date specified in the
applicable Schedule, for cash equal to the FMV Special Purchase Option
Price of such Equipment (as specified in the applicable Schedule).
Lessor and Lessee agree that the FMV Special Purchase Option Price is
a reasonable prediction of the Fair Market Value of such Equipment at
the time the option is exercisable. Lessor and Lessee agree that if
Lessee makes any non-severable improvement to the Equipment which
increases the value of such Equipment, then at the time of such option
being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated
to result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof,
then on the FMV Special Purchase Option Date, Lessee shall pay to
Lessor any accrued but unpaid rent then due (expressly excluding the
rent due on the next succeeding Rent Payment Date) and any other sums
due and unpaid on the FMV Special Purchase Option Date, together with
the FMV Special Purchase Option Price, plus all applicable sales
taxes, in immediately available funds.
(c) If, at any time during the Term, Lessee determines that it wishes
to terminate production at the Equipment Location specified on a
Schedule designated as Series A, and to cannibalize the production
line by relocating items of the Equipment to other Lessee production
facilities on a piece-meal basis (without relocating the entire
production line), Lessee shall provide notice thereof to Lessor.
(1) Lessee shall terminate the lease as to al items of the
Equipment at the Equipment Location specified on a Schedule designated
as Series A, which Lessee does not intend to relocate, such
termination to be effective as of the nextRent Payment Date (the
"Special Termination Date"). On the Special Termination Date, Lessee
shall purchase all such times of the Equipment which Lessee does not
intend to relocate on an AS IS BASIS for cash equal to the greater of
(a) the then Termination Value, or (b) the then Fair Market Value, of
all such items of the Equipment (plus all applicable taxes), together
with all rental other amounts then due hereunder with respect to all
such items of the Equipment.
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At Lessor's sole discretion, if requested by Lessee, Lessee may
nevertheless continue the lease with respect to the items s of the
Equipment which remain at the Equipment Location specified on a
Schedule designated as Series A as to which Lessee has terminated
production, even though Lessee may discontinue use of such items of
the Equipment. In connection with any such continued lease, Lessee
shall provide to Lessor such documents and instruments as reasonably
may be required by Lessor.
(2) Notwithstanding the foregoing, Lessee shall continue the
lease as to al times of the Equipment which are to be or have been
relocated by Lessee. In connection with such continued lease at any
such new location, Lessee shall provide to Lessor such documents and
instruments as reasonably may be required by Lessor.
(t) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by
overnight courier service, to the addressee at its address stated
herein, or at such other place as such addressee may have designated
in writing."
(u) Section XX is hereby amended by inserting the following Subsections at
the end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(g) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. The
obligations of Lessee under Sections III, IV, XI, and XV which accrue
during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive
the termination of this Agreement.
(h) Whether or not any Equipment is leased hereunder, Lessee
shall pay upon demand all fees, commissions, costs, charges
15
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and other expenses incurred by Lessor in connection with the
commitment expressed in that certain letter dated November 26, 1996,
between Lessor and Lessee and the documenting and servicing of the
facility described in such letter, including (but not limited to) fees
and expenses of Lessor's counsel, insurance premiums, transfer taxes,
lien searches and all recording fees and charges."
(v) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern
District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of
itself without the transfer or possession of the original of a
Schedule executed pursuant to this Agreement and incorporating this
Agreement by reference; and no security interest in this Agreement and
a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which
shall be identified as the document marked 'Original' and all other
counterparts shall be marked 'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment. Title to the
Equipment shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity, or interest in
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the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. The parties agree
that the lease is a 'Finance Lease' as defined in Uniform Commercial
Code Article 2A -- Leases ('Article 2A'). Lessee acknowledges: (a)
that Lessee has selected the 'Supplier' (as defined in Article 2A) and
directed Lessor to purchase the Equipment from the Supplier; (b) that
Lessee has been informed in writing in this Lease, before signing this
Lease, that Lessee is entitled under Article 2A to the promises and
warranties, including those of any third party, provided to Lessor by
the Supplier in connection with or as part of the contract by which
Lessor acquired the Equipment, and that Lessee may communicate with
the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of
them or of remedies. To the extent permitted by applicable law,
Lessee hereby waives any and all rights and remedies conferred upon a
lessee in Article 2A and any rights now or hereafter conferred by
statute or otherwise which may limit or modify any of Lessor's rights
or remedies under Section XII hereof; provided, however, that such
waiver shall not preclude Lessee from asserting any claim of Lessee
against Lessor in a separate cause of action; and provided further
that such waiver shall not affect Lessor's obligations of good faith,
diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a
court of competent jurisdiction determine that this Agreement is not a
true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee shall be
deemed to have hereby granted Lessor a security interest in the lease,
the Equipment, and all accessions thereto, substitutions and
replacements therefor, and proceeds (including insurance proceeds)
thereof (but without power of sale); to secure the prompt payment and
performance as and when due of all obligations and indebtedness of
Lessee (or any affiliate of Lessee) to Lessor, now existing or
hereafter created. For the purposes of this paragraph, this
Agreement, the Schedule, or a photocopy of either thereof may be filed
as a financing statement under the Uniform Commercial Code.
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has not
been earlier terminated, Lessee shall have the option upon the
expiration of the Basic Term of the Schedule upon at least one hundred
eighty (180) days'
17
<PAGE>
prior written notice to Lessor, to renew the Term with respect to, or
to purchase, all (but not less than all) of the Equipment described on
such Schedule upon the following terms and conditions:
(1) Upon expiration of the Basic Term, Lessee may elect to renew
the Term with respect to all, but not less than all, of such Equipment
for a renewal term of thirty-one (31) months (the "Renewal Term") at a
monthly rent calculated as 1.279720% of the Capitalized Lessor's Cost
--------
of such Equipment.
(2) Upon expiration of the Basic Term, Lessee may elect to
purchase all (but not less than all) of such Equipment on the Basic
Term Expiration Date on an AS IS BASIS for cash equal to the greater
of (x) thirty-five percent (35%) of the Capitalized Lessor's Cost of
such Equipment, or (2) the then Fair Market Value of such Equipment
(plus all applicable sales taxes). On the Basic Term Expiration Date,
Lessee shall pay to Lessor in immediately available funds the full
purchase price (plus all applicable sales taxes), together with any
rent or other sums then due hereunder on such date. Lessee shall be
deemed to have waived this option unless it provides Lessor with
written notice of its irrevocable election to exercise the same within
fifteen (15) days after Fair Market Value is determined (by agreement
or appraisal).
(3) If Lessee timely exercises its renewal option above, then,
upon expiration of the Renewal Term, so long as no Default exists
hereunder, Lessee may elect , upon at least one hundred eighty (180)
days' prior written notice to Lessor:
(A) further to renew the Term with respect to all, but not
less than all, of such Equipment for an additional renewal term and at
a periodic rent subject to mutual agreement of the parties; or
(B) to purchase on the expiration date of the first Renewal
Term all (but not less than all) of such Equipment on an AS IS BASIS
for cash equal to the then Fair Market Value of such Equipment (plus
all applicable sales taxes). On the expiration date of the first
Renewal Term, Lessor shall receive in cash the full purchase price
(plus all applicable sales taxes), together with any rent or other
sums then due hereunder on such date. Lessee shall be deemed to have
waived this option unless it provides Lessor with written notice of
its irrevocable election to exercise the same within
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fifteen (15) days after Fair Market Value is determined (by agreement
or appraisal).
(C) If Lessee is then in Default under the Lease, or if
Lessee fails timely to elect to renew the Term pursuant to Paragraph A
above, or to purchase the Equipment pursuant to Paragraph B above,
then on the expiration date of the Renewal Term, Lessee shall return
such Equipment in full compliance with Section XI of the Agreement and
Annex G to the Schedule on or prior to the expiration date of the
Renewal Term.
(b) 'Fair Market Value' shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length transaction to
a willing seller under no compulsion to sell; provided, however, that
in such determination: (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned
under this Agreement; (ii) in the case of any installed Equipment,
that Equipment shall be valued on an installed basis; and (iii) costs
of removal from the current location shall not be a deduction from
such valuation. If Lessor and Lessee are unable to agree on the Fair
Market Value at least one hundred thirty-five (135) days before
expiration of the Term, Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine Fair Market Value, and
that determination shall be final, binding and conclusive. Lessee
shall bear all costs associated with any such appraisal."
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule
to be executed by their duly authorized representatives as of the date first
above written.
LESSOR: LESSEE:
MELLON US LEASING, A DIVISION CONTINENTAL PLASTIC CONTAINERS, INC.
OF MELLON LEASING CORPORATION
By:__________________________ By:__________________________
Name:________________________ Name:________________________
Title:_______________________ Title:_______________________
Attest:
By:__________________________
Name:________________________
Title:_______________________
20
<PAGE>
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-4
DATED THIS 17th DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address: Lessee & Mailing Address:
John Hancock Leasing Corporation Continental Plastic Containers, Inc.
John Hancock Place 301 Merritt Seven Corporate Park
197 Clarendon Street, C-6 Norwalk, Connecticut 06856
Boston, Massachusetts 02117
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to
Lessee the Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $4,664,000.00
------------
2. Basic Term Lease Rate Factor:
Installments one through forty-four: 1.156655%; and installments
--------
forty-five through eighty-eight: 1.278408%.
--------
3. Daily Lease Rate Factor: .038555%.
-------
4. Basic Term:
Eighty-eight (88) months..
--------------------------
5. Basic Term Commencement Date: January 1, 1997.
----------------
<PAGE>
6. Equipment Location: Plant #122, 95 N. Chresentville Road, Springdale,
Hamilton County, OH 45246 (the "Premises")
7. Lessee Federal Tax ID No.: 06-1056158
----------
8 Last Delivery Date: December 31, 1996.
------------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Seventy-eight (78) months after the Basic Term Commencement Date.
11. FMV Special Purchase Option Price:
46.10% of the Capitalized Lessor's Cost.
-----
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times
the Capitalized Lessor's Cost of all Equipment on this Schedule. Each date for
the payment of rent during the Basic Term is herein referred to as a "Rent
Payment Date".
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<PAGE>
3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
" (b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the
Lease Commencement Date or the Last Delivery Date therefor, of each of
the following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased hereunder,
(ii) a Bill of Sale, in the form of Annex B to the applicable
Schedule, in favor of Lessor, (iii) evidence of insurance which
complies with the requirements of Section X hereof, (iv) a Collateral
Assignment of Leasehold Interest in the form of Annex F to the
applicable Schedule ( the 'Collateral Assignment'), together with a
certified true copy of the ground lease or premises lease of the real
property at the Equipment Location (v) an independent third party
appraisal (by Norman Levy & Associates or another firm acceptable to
Lessor) to substantiate the Equipment's fair market value and
remaining economic useful life and requisite value at selected points
throughout the Term (as hereinafter defined), including Lessor's
residual value assumption, (vi) any available information relating to
environmental issues concerning the Equipment Location specified on
the applicable Schedule, (vii) satisfactory results of a search by an
attorney or company satisfactory
3
<PAGE>
to Lessor of the Uniform Commercial Code filings with respect to
Lessee in each jurisdiction in which Lessee conducts or has a place of
business, (viii) certified copies of the articles of incorporation,
the by-laws and applicable resolutions, and certificates of good
standing and incumbency certificates, with respect to Lessee and
Guarantor, as required by Lessor; (ix) opinions of counsel of Lessee
and Guarantor, reasonably satisfactory in form and substance to
Lessor, together with evidence of all other legal matters incident to
the sale and leasing of the Equipment hereunder, as Lessor may
require; (x) releases of liens and termination statements covering
such of Lessee's assets as required by Lessor in connection with the
sale and leasing of the Equipment hereunder, each of which shall be
fully and properly executed, in recordable form, and sufficient in the
opinion of counsel for Lessor to terminate the interest of the
creditors of Lessee in such assets, (xi) such Uniform Commercial Code
financing statements as may be required by Lessor, (xii) a certificate
of an officer of Lessee confirming the placement of not less than
$115,000,000 of new Senior Notes issued by Lessee, having a ten (10)
year term, requiring no payment of principal until December, 2006, and
of the purchase for cancellation or discharge and defeasance of
$104,700,000 of Lessee's 10-3/4% Senior Secured Notes Due 2001, and
that there are no unsatisfied conditions to such placement and
redemption, and (xiii) such other documents as Lessor reasonably may
request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall
have been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996, as now or hereafter amended ( the "CIT Financing Agreement"),
between The CIT Group/Business Credit, Inc. and Guarantor, now or
hereafter owned by Lessee, or in the
4
<PAGE>
prospects or projections of Lessee and/or Guarantor, (ii) no
litigation commenced which, if successful, would have a material
adverse impact on Lessee or Guarantor, its or their businesses, or the
ability of Lessee to pay its obligations pursuant to this Agreement,
or which would question the validity or enforceability of this
Agreement, and (iii) since the date of the most recent audited
financial statements of Lessee, no material increase in the
liabilities, or a material decrease in the assets, of Lessee; and
(5) Lessee shall obtain and provide to Lessor, not more than one
hundred eighty (180) days after the Basic Term Commencement Date, an
Estoppel/Waiver Agreement in substantially the form attached hereto as
Annex E, duly executed by each landlord and mortgagee (if applicable)
with respect to the Equipment Location specified on the Schedule, in
form and substance acceptable to Lessor. If Lessee fails timely to
provide all such required Estoppel/Waiver Agreements, the implicit
rate used to calculate the Basic Term Lease Factor specified on the
Schedule shall be increased by two hundred (200) basis points from and
after the expiration of such one hundred eighty (180) day period after
the Basic Term Commencement Date until the date on which all required
Estoppel/Waiver Agreements have been obtained and provided to Lessor.
If all such required Estoppel/Waiver Agreements are not provided to
Lessor within five hundred forty-five (545) days after the Basic Term
Commencement Date, Lessor may elect (at its sole discretion) to
terminate the Lease with respect to all of the Equipment described on
the Schedule. On the termination date, Lessee shall purchase the
Equipment on an AS IS BASIS (as hereinafter defined) for cash equal to
the greater of (1) the Stipulated Loss Value, or (2) the Fair Market
Value (as hereinafter defined), of the Equipment (plus all applicable
sales taxes), together with all Rent and other amounts then due under
such Schedule.
Simultaneously with the execution of the Bill of Sale, Lessee
shall also execute a Certificate of Acceptance, in the form of Annex C
to the applicable Schedule, covering all of the Equipment described in
the Bill of Sale. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee for lease
hereunder."
5
<PAGE>
(b) The first sentence of Section II(b) is hereby deleted and the following
is inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on
the Schedule or, if directed by Lessor or its assignee, by remitting
payments through such party's electronic payment system, except as
otherwise directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment
shall be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit
and loss statement, prepared in accordance with generally accepted
accounting principles consistently applied ('GAAP') certified by a
recognized firm of certified public accountants, together with
Lessee's annual operating plan approved by Lessee's board of
directors, which includes the monthly budget for the following year
and integrates operating profits, and (ii) Lessee will deliver to
Lessor quarterly, within forty-five (45) days of the close of each
fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash
flows and balance sheet as of the end of such fiscal quarter certified
by the chief financial officer of Lessee, which provides comparisons
to the prior years' equivalent period and to Lessee's budget, together
with a 'management letter' in form and content satisfactory to Lessor,
and a certificate executed by the chief financial officer of Lessee
certifying that no Default (as hereinafter defined) or event which,
with the giving of notice or the lapse of time, or both, would become
a Default has then occurred hereunder. In addition, upon request,
Lessee shall provide to Lessor such additional financial information
as reasonably may be required by Lessor."
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general
condition of the Equipment, Lessor will communicate these
discrepancies to Lessee in writing, and Lessee shall have thirty (30)
days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
6
<PAGE>
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment
at the Equipment Location (specified in the applicable Schedule), and
will not relocate the Equipment without the prior written consent of
Lessor (such consent not to be unreasonably withheld). Notwithstanding
the foregoing, Lessee may relocate items of the Equipment to locations
within the continental United States without the prior written consent
of Lessor upon satisfaction of the following conditions: (1) the
aggregate Capitalized Lessor's Cost of all relocated equipment from an
Equipment Location shall not exceed twenty-five percent (25%) of the
original aggregate Capitalized Lessor's Cost of all of the Equipment
at such Equipment Location (on an Equipment Location by Equipment
Location basis). To the extent the Equipment Schedule does not give a
specific dollar value for the Equipment to be relocated, then the
Lessee and Lessor must mutually agree on the dollar value for the
Equipment to be relocated. If Lessee and Lessor are not able to agree
on a dollar value then Lessee and Lessor will mutually select an
appraiser to render a value (at the expense of Lessee) and such value
determined by the appraiser will be final and binding; (2) Lessee
shall provide to Lessor not less than thirty (30) days' prior written
notice, identifying in reasonable detail the categories or items of
Equipment to be relocated, the present Equipment Location and the
proposed new location; (3) Lessee shall obtain and provide to Lessor
an Estoppel/Waiver Agreement in the form of Annex E to the applicable
Schedule from the landlord and each mortgagee with respect to the new
location, such agreements to be in form and substance satisfactory to
Lessor; (4) Lessee shall provide to Lessor such Uniform Commercial
Code financing statements and related documents as reasonably may be
required by Lessor in connection with such relocation; and (5) all
costs and expenses incurred by Lessor in connection with such
relocation shall be the responsibility of Lessee and paid to Lessor
upon demand. Upon the written request of Lessor, Lessee will notify
Lessor forthwith in writing of the location of any Equipment as of the
date of such notification."
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback
transaction and the Equipment is in Lessee's possession as of the
Lease Commencement Date."
7
<PAGE>
(h) Section VI is hereby amended by inserting the following new Subsection
(e) at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then
have occurred and be continuing, at Lessee's expense, upon thirty (30)
days' prior written notice to Lessor, Lessee may elect to replace a
unit of Equipment (a 'Substituted Item') with a new unit of Equipment
(a 'Replacement Item'). Each Replacement Item shall be free and clear
of all liens and encumbrances and shall have at least the value,
residual value, utility and remaining useful life and be in as good an
operating condition as the Substituted Item, assuming that the
Substituted Item has been maintained in accordance with the provisions
of this Agreement. Replacement pursuant hereto shall be limited to
once per six (6) month period during the Term for any number of
Substituted Items. The aggregate Capitalized Lessor's Cost of all
Substituted Items replaced during each successive six (6) month period
shall not exceed $100,000. Lessee shall pay to Lessor a fee of $2,500
in connection with each exercise by Lessee of the replacement option
provided hereunder (which fee shall be applicable regardless of the
number of units of Equipment replaced at any one time). Lessee shall
execute and deliver to Lessor a Bill of Sale and an amended Annex A to
the applicable Schedule with respect to each Replacement Item,
together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including
(without limitation) Uniform Commercial Code financing statements, to
be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), all of Lessor's right, title and interest in
and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever interest it received in
such Substituted Item free and clear of any lien or encumbrance
created by or through Lessor)."
(i) The following is added to the end of the first sentence of Section
VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee
shall maintain the Equipment in an operable state and shall not
discontinue operation of the Equipment during the Term. Lessee shall
maintain the Equipment under a preventive maintenance program by
qualified professionals who possess a working
8
<PAGE>
knowledge of the mechanical operation of the Equipment, including (to
the extent applicable) electrical systems, motors, drives, controls,
accessories, lubricants and all other items necessary to make the
Equipment operate to its original manufacturer's specifications."
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this
Paragraph and Annex G, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Lessor may
terminate such continued leasehold interest upon ten (10) days' notice
to Lessee. In addition to these rents, Lessor shall have all of its
other rights and remedies available as a result of this non-
performance."
(k) Section XII(a) is hereby amended as follows:
(a) The following is added to the end of the first sentence of Section
XII(a)
"; there shall be an anticipatory repudiation by Plastic Containers,
Inc. ('Guarantor') of its obligations pursuant to that certain
Corporate Guaranty dated May 20, 1994, as now or hereafter amended
(the 'Guaranty') or Guarantor shall be in Default (as such term is
defined therein) under the Guaranty; or Guarantor sells, disposes or
assigns any or all of its interest in or loses its management control
of, Lessee; or Lessee is in default beyond any applicable notice and
cure period under the Premises Lease or any other ground lease or
premises lease of the Equipment Location (if the Equipment Location is
leased by Lessee); or Lessee shall be in default under any material
obligation for an original amount in excess of Five Million Dollars
($5,000,000) for borrowed money, for the deferred purchase price of
property or any lease agreement; or Lessee is in default under any
Schedule executed pursuant hereto."
(b) Section XII is hereby amended by adding after the word
"Agreement" in the third line the following:
"or in any supplement, certificate, financial report, bill of sale or
other instrument or document heretofore or hereafter furnished by or
on behalf of Lessee".
9
<PAGE>
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease
pursuant to this Agreement as to any or all of the Equipment; may
operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise
any or all rights pursuant to any Deed of Trust or Collateral
Assignment and/or may proceed against Guarantor pursuant to the
Guaranty."
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement
or any Schedule, or the right to enter into any Schedule. Lessee
agrees that it will pay all Rent and other amounts payable under each
Schedule to the Lessor named therein; provided, however, if Lessee
receives written notice of any assignment from Lessor, Lessee will pay
all Rent and other amounts payable under any assigned Schedule to such
assignee (each being herein referred to as an 'Assignee' and,
collectively, as the 'Assignees') or as instructed by such Assignee.
Each Schedule, incorporating by reference the terms and conditions of
this Agreement, constitutes a separate instrument of lease, and the
Lessor named therein or its Assignee shall have all rights as 'Lessor'
thereunder separately exercisable by such named Lessor or Assignee as
the case may be, exclusively and independently of Lessor or any
Assignee with respect to other Schedules executed pursuant hereto.
Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by such Assignee. Lessee
hereby waives and agrees not to assert against any such Assignee any
defense, set-off, recoupment claim or counterclaim which Lessee has or
may at any time have against Lessor or any other person for any reason
whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in
part, and may be used as security for financing obtained from, one or
more Assignees without the consent of Lessee (the 'Syndication').
Lessee agrees to cooperate with Lessor in connection with the
Syndication, including the preparation of any offering materials and
the participation of any relevant management of Lessee in any meetings
with potential assignees, and will certify as true, correct and
10
<PAGE>
complete any description of Lessee and its affairs contained in such
materials based upon information provided by Lessee; and the execution
and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by
Lessor or such Assignee; provided, however in no event shall Lessee be
required to consent to any change that would adversely affect any of
the economic terms of the transactions contemplated herein.
(c) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the
parties hereto and of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also
to the Assignees.
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental
Claim or Environmental Loss and, unless Lessee is then contesting in
good faith such Environmental Claim or Environmental Loss and Lessee
has set aside on its books appropriate reserves therefor, Lessee shall
fully and promptly pay, perform and discharge any such Environmental
Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to
any Person that directly or indirectly through one or more
11
<PAGE>
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ('PCBs'), and radioactive substances.
(4) 'Environmental Claim' shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
(5) 'Environmental Emission' shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ('CERCLA') (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. Section 1251 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
-- ---
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
-- ---
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et seq.), and
-- ---
the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--
seq.), as these laws have been amended or supplemented, and any
---
analogous foreign, Federal, state or local statutes, and the
regulations promulgated pursuant thereto.
(7) 'Environmental Loss' shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including,
12
<PAGE>
without limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out
of or related to any Adverse Environmental Condition.
(8) 'Person' shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related
documents" are deleted and the following inserted in lieu thereof: "this
Agreement, the Schedule, the Premises Lease, the Collateral Assignment and all
related documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
(r) The following new Paragraph (e) is added to Section XVIII:
" (e) Notwithstanding anything to the contrary contained in
Paragraphs (a) through (d) of this Section, on the First Termination
Date (specified in the applicable Schedule), Lessee may, so long as no
Default exists hereunder, terminate this Agreement as of a Rent
Payment Date as to all (but not less than all) of the Equipment
specified on Schedules A-3, A-4, A-5 and A-6, upon at least ninety
(90) days' prior written notice to Lessor. If Lessee exercises this
option, on the First Termination Date, Lessee shall return the
Equipment described on such Schedule to Lessor, in accordance with the
terms of Section XI hereof and Annex G to the applicable Schedule, and
shall pay to Lessor a fee calculated as sixty-seven and one-half
percent (67.5%) of the aggregate Capitalized Lessor's Cost of the
Equipment described on such Schedule, together with all rent and other
sums due and unpaid with respect to such Schedule as of the First
Termination Date."
(s) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any
other sum hereunder then exists hereunder and the Term has not been
earlier terminated, upon at least thirty (30) days' but not more than
two hundred seventy (270) days' prior written irrevocable notice
13
<PAGE>
to Lessor, Lessee may purchase all (but not less than all) of the
Equipment described on any Schedule designated as Series A on an AS IS
BASIS, on the FMV Special Purchase Option Date specified in the
applicable Schedule, for cash equal to the FMV Special Purchase Option
Price of such Equipment (as specified in the applicable Schedule).
Lessor and Lessee agree that the FMV Special Purchase Option Price is
a reasonable prediction of the Fair Market Value of such Equipment at
the time the option is exercisable. Lessor and Lessee agree that if
Lessee makes any non-severable improvement to the Equipment which
increases the value of such Equipment, then at the time of such option
being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated
to result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof,
then on the FMV Special Purchase Option Date, Lessee shall pay to
Lessor any accrued but unpaid rent then due (expressly excluding the
rent due on the next succeeding Rent Payment Date) and any other sums
due and unpaid on the FMV Special Purchase Option Date, together with
the FMV Special Purchase Option Price, plus all applicable sales
taxes, in immediately available funds.
(c) If, at any time during the Term, Lessee determines that it wishes
to terminate production at the Equipment Location specified on a
Schedule designated as Series A and to cannibalize the production line
by relocating items of the Equipment to other Lessee production
facilities on a piece-meal basis (without relocating the entire
production line), Lessee shall provide notice thereof to Lessor and,
so long as no Default exists hereunder, Lessee shall terminate the
lease as to all (but not less than all) items of the Equipment at such
Equipment Location, as of the next Rent Payment Date (the 'Special
Termination Date') upon at least ninety (90) days' prior written
notice to Lessor. On the Special Termination Date, Lessee shall
purchase all (but not less all such items of the Equipment on an AS IS
BASIS for cash equal to the greater of (1) the then Termination Value,
or (2) the then Fair Market Value, of such items of the Equipment
(plus all applicable sales taxes), together with all rent and other
amounts then due hereunder with respect to such items of the
Equipment. At Lessor's sole discretion, if requested by Lessee, in
lieu of terminating the lease Lessee may continue the lease as to
certain items of the Equipment which have been relocated by Lessee in
connection with the termination of production at the Equipment
14
<PAGE>
Location and/or may continue the lease with respect to certain items
of the Equipment which remain at the Equipment Location on the
applicable Schedule as to which Lessee has terminated production even
though Lessee may discontinue use of such items of the Equipment. In
connection with any such continued lease, Lessee shall provide to
Lessor such documents and instruments as reasonably may be required by
Lessor.
(t) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by
overnight courier service, to the addressee at its address stated
herein, or at such other place as such addressee may have designated
in writing."
(u) Section XX is hereby amended by inserting the following Subsections at
the end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(g) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. The
obligations of Lessee under Sections III, IV, XI, and XV which accrue
during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive
the termination of this Agreement.
(h) Whether or not any Equipment is leased hereunder, Lessee
shall pay upon demand all fees, commissions, costs, charges and other
expenses incurred by Lessor in connection with the commitment
expressed in that certain letter dated November 26, 1996, between
Lessor and Lessee and the documenting and servicing of the facility
described in such letter, including (but not limited to) fees and
expenses of Lessor's counsel, insurance premiums, transfer taxes, lien
searches and all recording fees and charges."
15
<PAGE>
(v) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern
District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of
itself without the transfer or possession of the original of a
Schedule executed pursuant to this Agreement and incorporating this
Agreement by reference; and no security interest in this Agreement and
a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which
shall be identified as the document marked 'Original' and all other
counterparts shall be marked 'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment. Title to the
Equipment shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity, or interest in
the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. The parties agree
that the lease is a 'Finance Lease' as defined in Uniform Commercial
Code Article 2A -- Leases ('Article 2A'). Lessee acknowledges: (a)
that Lessee has selected the 'Supplier' (as defined in Article 2A) and
directed Lessor to purchase the Equipment from the Supplier; (b) that
Lessee has been informed in writing in this Lease, before signing this
16
<PAGE>
Lease, that Lessee is entitled under Article 2A to the promises and
warranties, including those of any third party, provided to Lessor by
the Supplier in connection with or as part of the contract by which
Lessor acquired the Equipment, and that Lessee may communicate with
the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of
them or of remedies. To the extent permitted by applicable law,
Lessee hereby waives any and all rights and remedies conferred upon a
lessee in Article 2A and any rights now or hereafter conferred by
statute or otherwise which may limit or modify any of Lessor's rights
or remedies under Section XII hereof; provided, however, that such
waiver shall not preclude Lessee from asserting any claim of Lessee
against Lessor in a separate cause of action; and provided further
that such waiver shall not affect Lessor's obligations of good faith,
diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a
court of competent jurisdiction determine that this Agreement is not a
true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee shall be
deemed to have hereby granted Lessor a security interest in the lease,
the Equipment, and all accessions thereto, substitutions and
replacements therefor, and proceeds (including insurance proceeds)
thereof (but without power of sale); to secure the prompt payment and
performance as and when due of all obligations and indebtedness of
Lessee (or any affiliate of Lessee) to Lessor, now existing or
hereafter created. For the purposes of this paragraph, this
Agreement, the Schedule, or a photocopy of either thereof may be filed
as a financing statement under the Uniform Commercial Code.
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has not
been earlier terminated, Lessee shall have the option upon the
expiration of the Basic Term of the Schedule upon at least one hundred
eighty (180) days' prior written notice to Lessor, to renew the Term
with respect to, or to purchase, all (but not less than all) of the
Equipment described on such Schedule upon the following terms and
conditions:
(1) Upon expiration of the Basic Term, Lessee may elect to renew
the Term with respect to all, but not less than all, of such
17
<PAGE>
Equipment for a renewal term of thirty-one (31) months (the "Renewal
Term") at a monthly rent calculated as 1.279720% of the Capitalized
--------
Lessor's Cost of such Equipment.
(2) Upon expiration of the Basic Term, Lessee may elect to
purchase all (but not less than all) of such Equipment on the Basic
Term Expiration Date on an AS IS BASIS for cash equal to the greater
of (x) thirty-five percent (35%) of the Capitalized Lessor's Cost of
such Equipment, or (2) the then Fair Market Value of such Equipment
(plus all applicable sales taxes). On the Basic Term Expiration Date,
Lessee shall pay to Lessor in immediately available funds the full
purchase price (plus all applicable sales taxes), together with any
rent or other sums then due hereunder on such date. Lessee shall be
deemed to have waived this option unless it provides Lessor with
written notice of its irrevocable election to exercise the same within
fifteen (15) days after Fair Market Value is determined (by agreement
or appraisal).
(3) If Lessee timely exercises its renewal option above, then,
upon expiration of the Renewal Term, so long as no Default exists
hereunder, Lessee may elect , upon at least one hundred eighty (180)
days' prior written notice to Lessor:
(A) further to renew the Term with respect to all, but not
less than all, of such Equipment for an additional renewal term and at
a periodic rent subject to mutual agreement of the parties; or
(B) to purchase on the expiration date of the first Renewal
Term all (but not less than all) of such Equipment on an AS IS BASIS
for cash equal to the then Fair Market Value of such Equipment (plus
all applicable sales taxes). On the expiration date of the first
Renewal Term, Lessor shall receive in cash the full purchase price
(plus all applicable sales taxes), together with any rent or other
sums then due hereunder on such date. Lessee shall be deemed to have
waived this option unless it provides Lessor with written notice of
its irrevocable election to exercise the same within fifteen (15) days
after Fair Market Value is determined (by agreement or appraisal).
(C) If Lessee is then in Default under the Lease, or if
Lessee fails timely to elect to renew the Term pursuant to Paragraph A
above, or to purchase the Equipment pursuant to
18
<PAGE>
Paragraph B above, then on the expiration date of the Renewal Term,
Lessee shall return such Equipment in full compliance with Section XI
of the Agreement and Annex G to the Schedule on or prior to the
expiration date of the Renewal Term.
(b) 'Fair Market Value' shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length transaction to
a willing seller under no compulsion to sell; provided, however, that
in such determination: (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned
under this Agreement; (ii) in the case of any installed Equipment,
that Equipment shall be valued on an installed basis; and (iii) costs
of removal from the current location shall not be a deduction from
such valuation. If Lessor and Lessee are unable to agree on the Fair
Market Value at least one hundred thirty-five (135) days before
expiration of the Term, Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine Fair Market Value, and
that determination shall be final, binding and conclusive. Lessee
shall bear all costs associated with any such appraisal."
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
19
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
JOHN HANCOCK LEASING CORPORATION CONTINENTAL PLASTIC CONTAINERS, INC.
By:____________________________ By:____________________________
Name:__________________________ Name:__________________________
Title:_________________________ Title:_________________________
Attest:
By:____________________________
Name:__________________________
Title:_________________________
20
<PAGE>
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-5
DATED THIS 17th DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address Lessee & Mailing Address:
MBC LEASING CORP. Continental Plastic Containers, Inc.
Two Hopkins Plaza 301 Merritt Seven Corporate Park
Baltimore, MD 21203 Norwalk, Connecticut 06856
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to
Lessee the Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $7,438,000.00.
------------
2. Basic Term Lease Rate Factor:
Installments one through forty-four: 1.156655%; and installments
--------
forty-five through eighty-eight: 1.278408%.
--------
3. Daily Lease Rate Factor: .038555%.
---------
4. Basic Term:
Eighty-eight (88) months.
------------------------
5. Basic Term Commencement Date: January 1, 1997.
----------------
<PAGE>
6. Equipment Location: Plant #124, 7100 East Baltimore Street, Baltimore,
-------------------------------------------------
MD 21224 (the"Premises")
-----------------------
7. Lessee Federal Tax ID No.: 06-1056158
----------
8 Last Delivery Date: December 31, 1996.
-----------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Seventy-eight (78) months after the Basic Term Commencement Date.
11. FMV Special Purchase Option Price:
46.10% of the Capitalized Lessor's Cost.
-----
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times
the Capitalized Lessor's Cost of all Equipment on this Schedule. Each date for
the payment of rent during the Basic Term is herein referred to as a "Rent
Payment Date".
2
<PAGE>
3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
" (b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the
Lease Commencement Date or the Last Delivery Date therefor, of each of
the following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased hereunder,
(ii) a Bill of Sale, in the form of Annex B to the applicable
Schedule, in favor of Lessor, (iii) evidence of insurance which
complies with the requirements of Section X hereof, (iv) a Deed of
Trust in the form of Annex F to the applicable Schedule (the 'Deed of
Trust'), together with such title insurance policies, evidence of
zoning compliance, evidence of completion of improvements and
installation of the Equipment, and surveys, as Lessor shall require,
(v) an independent third party appraisal (by Norman Levy & Associates
or another firm acceptable to Lessor) to substantiate the Equipment's
fair market value and remaining economic useful life and requisite
value at selected points throughout the Term (as hereinafter defined),
including Lessor's residual value assumption, (vi) any available
information relating to environmental issues concerning the Equipment
Location specified on the applicable Schedule, (vii) satisfactory
results of a search by an attorney or
3
<PAGE>
company satisfactory to Lessor of the Uniform Commercial Code filings
with respect to Lessee in each jurisdiction in which Lessee conducts
or has a place of business, (viii) certified copies of the articles of
incorporation, the by-laws and applicable resolutions, and
certificates of good standing and incumbency certificates, with
respect to Lessee and Guarantor, as required by Lessor; (ix) opinions
of counsel of Lessee and Guarantor, reasonably satisfactory in form
and substance to Lessor, together with evidence of all other legal
matters incident to the sale and leasing of the Equipment hereunder,
as Lessor may require; (x) releases of liens and termination
statements covering such of Lessee's assets as required by Lessor in
connection with the sale and leasing of the Equipment hereunder, each
of which shall be fully and properly executed, in recordable form, and
sufficient in the opinion of counsel for Lessor to terminate the
interest of the creditors of Lessee in such assets, (xi) such Uniform
Commercial Code financing statements as may be required by Lessor,
(xii) a certificate of an officer of Lessee confirming the placement
of not less than $115,000,000 of new Senior Notes issued by Lessee,
having a ten (10) year term, requiring no payment of principal until
December, 2006, and of the purchase for cancellation or discharge and
defeasance of $104,700,000 of Lessee's 10-3/4% Senior Secured Notes
Due 2001, and that there are no unsatisfied conditions to such
placement and redemption, and (xiii) such other documents as Lessor
reasonably may request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall
have been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996, as now or hereafter amended ( the "CIT Financing Agreement"),
between The CIT Group/Business Credit, Inc. and Guarantor, now or
hereafter owned by Lessee, or in the
4
<PAGE>
prospects or projections of Lessee and/or Guarantor, (ii) no
litigation commenced which, if successful, would have a material
adverse impact on Lessee or Guarantor, its or their businesses, or the
ability of Lessee to pay its obligations pursuant to this Agreement,
or which would question the validity or enforceability of this
Agreement, and (iii) since the date of the most recent audited
financial statements of Lessee, no material increase in the
liabilities, or a material decrease in the assets, of Lessee.
Simultaneously with the execution of the Bill of Sale, Lessee
shall also execute a Certificate of Acceptance, in the form of Annex C
to the applicable Schedule, covering all of the Equipment described in
the Bill of Sale. Upon execution by Lessee of any Certificate of
Acceptance, the Equipment described thereon shall be deemed to have
been delivered to, and irrevocably accepted by, Lessee for lease
hereunder."
(b) The first sentence of Section II(b) is hereby deleted and the following
is inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on
the Schedule or, if directed by Lessor or its assignee, by remitting
payments through such party's electronic payment system, except as
otherwise directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment
shall be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit
and loss statement, prepared in accordance with generally accepted
accounting principles consistently applied ('GAAP') certified by a
recognized firm of certified public accountants, together with
Lessee's annual operating plan approved by Lessee's board of
directors, which includes the monthly budget for the following year
and integrates operating profits, and (ii) Lessee will deliver to
Lessor quarterly, within forty-five (45) days of the close of each
fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash
flows and balance sheet as of the end of such fiscal quarter certified
by the chief financial officer of Lessee, which provides comparisons
to the prior
5
<PAGE>
years' equivalent period and to Lessee's budget, together with a
'management letter' in form and content satisfactory to Lessor, and a
certificate executed by the chief financial officer of Lessee
certifying that no Default (as hereinafter defined) or event which,
with the giving of notice or the lapse of time, or both, would become
a Default has then occurred hereunder. In addition, upon request,
Lessee shall provide to Lessor such additional financial information
as reasonably may be required by Lessor."
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general
condition of the Equipment, Lessor will communicate these
discrepancies to Lessee in writing, and Lessee shall have thirty (30)
days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment
at the Equipment Location (specified in the applicable Schedule), and
will not relocate the Equipment without the prior written consent of
Lessor (such consent not to be unreasonably withheld). Notwithstanding
the foregoing, Lessee may relocate items of the Equipment to locations
within the continental United States without the prior written consent
of Lessor upon satisfaction of the following conditions: (1) the
aggregate Capitalized Lessor's Cost of all relocated equipment from an
Equipment Location shall not exceed twenty-five percent (25%) of the
original aggregate Capitalized Lessor's Cost of all of the Equipment
at such Equipment Location (on an Equipment Location by Equipment
Location basis); (2) Lessee shall provide to Lessor not less than
thirty (30) days' prior written notice, identifying in reasonable
detail the categories or items of Equipment to be relocated, the
present Equipment Location and the proposed new location; (3) Lessee
shall obtain and provide to Lessor an Estoppel/Waiver Agreement in the
form of Annex E to the applicable Schedule from the landlord and each
mortgagee with respect to the new location, such agreements to be in
form and substance satisfactory to Lessor; (4) Lessee shall provide to
Lessor such Uniform Commercial Code financing statements and related
documents as reasonably may be required by Lessor in connection with
such relocation; and (5) all costs and expenses incurred by
6
<PAGE>
Lessor in connection with such relocation shall be the responsibility
of Lessee and paid to Lessor upon demand. Upon the written request of
Lessor, Lessee will notify Lessor forthwith in writing of the location
of any Equipment as of the date of such notification."
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback
transaction and the Equipment is in Lessee's possession as of the
Lease Commencement Date."
(h) Section VI is hereby amended by inserting the following new Subsection
(e) at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then
have occurred and be continuing, at Lessee's expense, upon thirty (30)
days' prior written notice to Lessor, Lessee may elect to replace a
unit of Equipment (a 'Substituted Item') with a new unit of Equipment
(a 'Replacement Item'). Each Replacement Item shall be free and clear
of all liens and encumbrances and shall have at least the value,
residual value, utility and remaining useful life and be in as good an
operating condition as the Substituted Item, assuming that the
Substituted Item has been maintained in accordance with the provisions
of this Agreement. Replacement pursuant hereto shall be limited to
once per six (6) month period during the Term for any number of
Substituted Items. The aggregate Capitalized Lessor's Cost of all
Substituted Items replaced during each successive six (6) month period
shall not exceed $100,000. Lessee shall pay to Lessor a fee of $2,500
in connection with each exercise by Lessee of the replacement option
provided hereunder (which fee shall be applicable regardless of the
number of units of Equipment replaced at any one time). Lessee shall
execute and deliver to Lessor a Bill of Sale and an amended Annex A to
the applicable Schedule with respect to each Replacement Item,
together with such documents and instruments as reasonably may be
required by Lessor in connection with such replacement, including
(without limitation) Uniform Commercial Code financing statements, to
be filed at Lessee's expense. Upon compliance by Lessee with the
provisions hereof, Lessor will transfer to Lessee, on an AS IS BASIS
(as hereinafter defined), all of Lessor's right, title and interest in
and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever
7
<PAGE>
interest it received in such Substituted Item free and clear of any
lien or encumbrance created by or through Lessor)."
(i) The following is added to the end of the first sentence of Section
VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee
shall maintain the Equipment in an operable state and shall not
discontinue operation of the Equipment during the Term. Lessee shall
maintain the Equipment under a preventive maintenance program by
qualified professionals who possess a working knowledge of the
mechanical operation of the Equipment, including (to the extent
applicable) electrical systems, motors, drives, controls, accessories,
lubricants and all other items necessary to make the Equipment operate
to its original manufacturer's specifications."
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this
Paragraph and Annex G, Lessee's rent payment obligation and all other
obligations under this Agreement shall continue from month to month
notwithstanding any expiration or termination of the Term. Lessor may
terminate such continued leasehold interest upon ten (10) days' notice
to Lessee. In addition to these rents, Lessor shall have all of its
other rights and remedies available as a result of this non-
performance."
(k) The following is added to the end of the first sentence of Section
XII(a):
"; there shall be an anticipatory repudiation by Plastic Containers,
Inc. ('Guarantor') of its obligations pursuant to that certain
Corporate Guaranty dated May 20, 1994, as now or hereafter amended
(the 'Guaranty') or Guarantor shall be in Default (as such term is
defined therein) under the Guaranty; or Guarantor sells, disposes or
assigns any or all of its interest in or loses its management control
of, Lessee; or Lessee is in default beyond any applicable notice and
cure period under the Premises Lease or any other ground lease or
premises lease of the Equipment Location (if the Equipment Location is
leased by Lessee); or Lessee shall be in default under any material
obligation for an original amount in excess of Five Million Dollars
($5,000,000) for borrowed money, for the deferred purchase price of
property or any lease agreement; or Lessee is in default under any
Schedule executed pursuant hereto."
8
<PAGE>
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease
pursuant to this Agreement as to any or all of the Equipment; may
operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise
any or all rights pursuant to any Deed of Trust or Collateral
Assignment and/or may proceed against Guarantor pursuant to the
Guaranty."
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement
or any Schedule, or the right to enter into any Schedule. Lessee
agrees that it will pay all Rent and other amounts payable under each
Schedule to the Lessor named therein; provided, however, if Lessee
receives written notice of any assignment from Lessor, Lessee will pay
all Rent and other amounts payable under any assigned Schedule to such
assignee (each being herein referred to as an 'Assignee' and,
collectively, as the 'Assignees') or as instructed by such Assignee.
Each Schedule, incorporating by reference the terms and conditions of
this Agreement, constitutes a separate instrument of lease, and the
Lessor named therein or its Assignee shall have all rights as 'Lessor'
thereunder separately exercisable by such named Lessor or Assignee as
the case may be, exclusively and independently of Lessor or any
Assignee with respect to other Schedules executed pursuant hereto.
Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by such Assignee. Lessee
hereby waives and agrees not to assert against any such Assignee any
defense, set-off, recoupment claim or counterclaim which Lessee has or
may at any time have against Lessor or any other person for any reason
whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and
documents and/or the Equipment may be conveyed to, in whole or in
part, and may be used as security for financing obtained from, one or
more Assignees without the consent of Lessee (the 'Syndication').
Lessee agrees to cooperate with Lessor in connection with the
Syndication, including the preparation of any offering materials and
the participation of any relevant management of Lessee in any meetings
with potential assignees, and will certify as true, correct and
complete any description of Lessee and its affairs contained in such
9
<PAGE>
materials based upon information provided by Lessee; and the execution
and delivery of such other documents, instruments, notices, opinions,
certificates and acknowledgments as reasonably may be required by
Lessor or such Assignee; provided, however in no event shall Lessee be
required to consent to any change that would adversely affect any of
the economic terms of the transactions contemplated herein.
(c) Subject always to the foregoing, this Agreement inures to the
benefit of, and is binding upon, the successors and assigns of the
parties hereto and of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also
to the Assignees.
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental
Claim or Environmental Loss and, unless Lessee is then contesting in
good faith such Environmental Claim or Environmental Loss and Lessee
has set aside on its books appropriate reserves therefor, Lessee shall
fully and promptly pay, perform and discharge any such Environmental
Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the
existence or the continuation of the existence, of an Environmental
Emission (including, without limitation, a sudden or non-sudden
accidental or non-accidental Environmental Emission), of, or exposure
to, any Contaminant, odor or audible noise in violation of any
Applicable Environmental Law, at, in, by, from or related to any
Equipment, (ii) the environmental aspect of the transportation,
storage, treatment or disposal of materials in connection with the
operation of any Equipment in violation of any Applicable
Environmental Law, or (iii) the violation, or alleged violation, of
any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to
any Person that directly or indirectly through one or more
10
<PAGE>
intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are
regulated by or form the basis of liability under any Environmental
Law, including, without limitation, asbestos, polychlorinated
biphenyls ('PCBs'), and radioactive substances.
(4) 'Environmental Claim' shall refer to any accusation,
allegation, notice of violation, claim, demand, abatement or other
order or direction (conditional or otherwise) by any governmental
authority or any Person for personal injury (including sickness,
disease or death), tangible or intangible property damage, damage to
the environment or other adverse effects on the environment, or for
fines, penalties or restrictions, resulting from or based upon any
Adverse Environmental Condition.
(5) 'Environmental Emission' shall refer to any actual or
threatened release, spill, omission, leaking, pumping, injection,
deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, or into or out of any of the
Equipment, including, without limitation, the movement of any
Contaminant or other substance through or in the air, soil, surface
water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state
or local law, rule or regulation pertaining to the protection of the
environment, including, but not limited to, the Comprehensive
Environmental Response, Compensation, and Liability Act ('CERCLA') (42
U.S.C. Section 9601 et seq.), the Hazardous Material Transportation
-- ---
Act (49 U.S.C. Section 1801 et seq.), the Federal Water Pollution
-- ---
Control Act (33 U.S.C. Section 1251 et seq.), the Resource
-- ---
Conservation and Recovery Act (42 U.S.C. Section 6901 et seq.), the
-- ---
Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances
-- ---
Control Act (15 U.S.C. Section 2601 et seq.), the Federal Insecticide,
-- ---
Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et seq.), and
-- ---
the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--
seq.), as these laws have been amended or supplemented, and any
---
analogous foreign, Federal, state or local statutes, and the
regulations promulgated pursuant thereto.
(7) 'Environmental Loss' shall mean any loss, cost, damage,
liability, deficiency, fine, penalty or expense (including,
11
<PAGE>
without limitation, reasonable attorneys' fees, engineering and other
professional or expert fees), investigation, removal, cleanup and
remedial costs (voluntarily or involuntarily incurred) and damages to,
loss of the use of or decrease in value of the Equipment arising out
of or related to any Adverse Environmental Condition.
(8) 'Person' shall include any individual, partnership,
corporation, trust, unincorporated organization, government or
department or agency thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related
documents" are deleted and the following inserted in lieu thereof: "this
Agreement, the Schedule, the Deed of Trust and all related documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
(r) The following new Paragraph (e) is added to Section XVIII:
" (e) Notwithstanding anything to the contrary contained in
Paragraphs (a) through (d) of this Section, on the First Termination
Date (specified in the applicable Schedule), Lessee may, so long as no
Default exists hereunder, terminate this Agreement as of a Rent
Payment Date as to all (but not less than all) of the Equipment
specified on Schedules A-3, A-4, A-5 and A-6, upon at least ninety
(90) days' prior written notice to Lessor. If Lessee exercises this
option, on the First Termination Date, Lessee shall return the
Equipment described on such Schedule to Lessor, in accordance with the
terms of Section XI hereof and Annex G to the applicable Schedule, and
shall pay to Lessor a fee calculated as sixty-seven and one-half
percent (67.5%) of the aggregate Capitalized Lessor's Cost of the
Equipment described on such Schedule, together with all rent and other
sums due and unpaid with respect to such Schedule as of the First
Termination Date."
(s) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any
other sum hereunder then exists hereunder and the Term has not been
earlier terminated, upon at least thirty (30) days' but not more than
two hundred seventy (270) days' prior written irrevocable notice
12
<PAGE>
to Lessor, Lessee may purchase all (but not less than all) of the
Equipment described on any Schedule designated as Series A on an AS IS
BASIS, on the FMV Special Purchase Option Date specified in the
applicable Schedule, for cash equal to the FMV Special Purchase Option
Price of such Equipment (as specified in the applicable Schedule).
Lessor and Lessee agree that the FMV Special Purchase Option Price is
a reasonable prediction of the Fair Market Value of such Equipment at
the time the option is exercisable. Lessor and Lessee agree that if
Lessee makes any non-severable improvement to the Equipment which
increases the value of such Equipment, then at the time of such option
being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated
to result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof,
then on the FMV Special Purchase Option Date, Lessee shall pay to
Lessor any accrued but unpaid rent then due (expressly excluding the
rent due on the next succeeding Rent Payment Date) and any other sums
due and unpaid on the FMV Special Purchase Option Date, together with
the FMV Special Purchase Option Price, plus all applicable sales
taxes, in immediately available funds.
(c) If, at any time during the Term, Lessee determines that it wishes
to terminate production at the Equipment Location specified on a
Schedule designated as Series A and to cannibalize the production line
by relocating items of the Equipment to other Lessee production
facilities on a piece-meal basis (without relocating the entire
production line), Lessee shall provide notice thereof to Lessor and,
so long as no Default exists hereunder, Lessee shall terminate the
lease as to all items of the Equipment at such Equipment Location, as
of the next Rent Payment Date (the 'Special Termination Date') upon at
least ninety (90) days' prior written notice to Lessor. On the Special
Termination Date, Lessee shall purchase all such items of the
Equipment on an AS IS BASIS for cash equal to the greater of (1) the
then Termination Value, or (2) the then Fair Market Value, of such
items of the Equipment (plus all applicable sales taxes), together
with all rent and other amounts then due hereunder with respect to
such items of the Equipment. At Lessor's sole discretion, if
requested by Lessee, in lieu of terminating the lease Lessee may
continue the lease as to certain items of the Equipment which have
been relocated by Lessee in connection with the termination of
production at the Equipment Location and/or may
13
<PAGE>
continue the lease with respect to certain items of the Equipment
which remain at the Equipment Location on the applicable Schedule as
to which Lessee has terminated production even though Lessee may
discontinue use of such items of the Equipment. In connection with
any such continued lease, Lessee shall provide to Lessor such
documents and instruments as reasonably may be required by Lessor.
(t) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by
overnight courier service, to the addressee at its address stated
herein, or at such other place as such addressee may have designated
in writing."
(u) Section XX is hereby amended by inserting the following Subsections at
the end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability
without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
(g) The representations, warranties and covenants of Lessee
herein shall be deemed to survive the closing hereunder. The
obligations of Lessee under Sections III, IV, XI, and XV which accrue
during the term of this Agreement and obligations which by their
express terms survive the termination of this Agreement, shall survive
the termination of this Agreement.
(h) Whether or not any Equipment is leased hereunder, Lessee
shall pay upon demand all fees, commissions, costs, charges and other
expenses incurred by Lessor in connection with the commitment
expressed in that certain letter dated November 26, 1996, between
Lessor and Lessee and the documenting and servicing of the facility
described in such letter, including (but not limited to) fees and
expenses of Lessor's counsel, insurance premiums, transfer taxes, lien
searches and all recording fees and charges."
14
<PAGE>
(v) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF
THE LOCATION OF THE EQUIPMENT. The parties agree that any action or
proceeding arising out of or relating to this Agreement may be
commenced in the United States District Court for the Southern
District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper,
as such term is defined in the Uniform Commercial Code as in effect in
any applicable jurisdiction, no security interest therein may be
created through the transfer or possession of this Agreement in and of
itself without the transfer or possession of the original of a
Schedule executed pursuant to this Agreement and incorporating this
Agreement by reference; and no security interest in this Agreement and
a Schedule may be created by the transfer or possession of any
counterpart of the Schedule other than the original thereof, which
shall be identified as the document marked 'Original' and all other
counterparts shall be marked 'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment. Title to the
Equipment shall at all times remain in Lessor, and Lessee shall
acquire no ownership, title, property, right, equity, or interest in
the Equipment other than its leasehold interest solely as Lessee
subject to all the terms and conditions hereof. The parties agree
that the lease is a 'Finance Lease' as defined in Uniform Commercial
Code Article 2A -- Leases ('Article 2A'). Lessee acknowledges: (a)
that Lessee has selected the 'Supplier' (as defined in Article 2A) and
directed Lessor to purchase the Equipment from the Supplier; (b) that
Lessee has been informed in writing in this Lease, before signing this
15
<PAGE>
Lease, that Lessee is entitled under Article 2A to the promises and
warranties, including those of any third party, provided to Lessor by
the Supplier in connection with or as part of the contract by which
Lessor acquired the Equipment, and that Lessee may communicate with
the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of
them or of remedies. To the extent permitted by applicable law,
Lessee hereby waives any and all rights and remedies conferred upon a
lessee in Article 2A and any rights now or hereafter conferred by
statute or otherwise which may limit or modify any of Lessor's rights
or remedies under Section XII hereof; provided, however, that such
waiver shall not preclude Lessee from asserting any claim of Lessee
against Lessor in a separate cause of action; and provided further
that such waiver shall not affect Lessor's obligations of good faith,
diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a
court of competent jurisdiction determine that this Agreement is not a
true lease, but rather one intended as security, then solely in that
event and for the expressly limited purposes thereof, Lessee shall be
deemed to have hereby granted Lessor a security interest in the lease,
the Equipment, and all accessions thereto, substitutions and
replacements therefor, and proceeds (including insurance proceeds)
thereof (but without power of sale); to secure the prompt payment and
performance as and when due of all obligations and indebtedness of
Lessee (or any affiliate of Lessee) to Lessor, now existing or
hereafter created. For the purposes of this paragraph, this
Agreement, the Schedule, or a photocopy of either thereof may be filed
as a financing statement under the Uniform Commercial Code.
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has not
been earlier terminated, Lessee shall have the option upon the
expiration of the Basic Term of the Schedule upon at least one hundred
eighty (180) days' prior written notice to Lessor, to renew the Term
with respect to, or to purchase, all (but not less than all) of the
Equipment described on such Schedule upon the following terms and
conditions:
16
<PAGE>
(1) Upon expiration of the Basic Term, Lessee may elect to renew
the Term with respect to all, but not less than all, of such Equipment
for a renewal term of thirty-one (31) months (the "Renewal Term") at a
monthly rent calculated as 1.279720% of the Capitalized Lessor's Cost
--------
of such Equipment.
(2) Upon expiration of the Basic Term, Lessee may elect to
purchase all (but not less than all) of such Equipment on the Basic
Term Expiration Date on an AS IS BASIS for cash equal to the greater
of (x) thirty-five percent (35%) of the Capitalized Lessor's Cost of
such Equipment, or (2) the then Fair Market Value of such Equipment
(plus all applicable sales taxes). On the Basic Term Expiration Date,
Lessee shall pay to Lessor in immediately available funds the full
purchase price (plus all applicable sales taxes), together with any
rent or other sums then due hereunder on such date. Lessee shall be
deemed to have waived this option unless it provides Lessor with
written notice of its irrevocable election to exercise the same within
fifteen (15) days after Fair Market Value is determined (by agreement
or appraisal).
(3) If Lessee timely exercises its renewal option above, then,
upon expiration of the Renewal Term, so long as no Default exists
hereunder, Lessee may elect , upon at least one hundred eighty (180)
days' prior written notice to Lessor:
(A) further to renew the Term with respect to all, but not
less than all, of such Equipment for an additional renewal term and at
a periodic rent subject to mutual agreement of the parties; or
(B) to purchase on the expiration date of the first Renewal
Term all (but not less than all) of such Equipment on an AS IS BASIS
for cash equal to the then Fair Market Value of such Equipment (plus
all applicable sales taxes). On the expiration date of the first
Renewal Term, Lessor shall receive in cash the full purchase price
(plus all applicable sales taxes), together with any rent or other
sums then due hereunder on such date. Lessee shall be deemed to have
waived this option unless it provides Lessor with written notice of
its irrevocable election to exercise the same within fifteen (15) days
after Fair Market Value is determined (by agreement or appraisal).
17
<PAGE>
(C) If Lessee is then in Default under the Lease, or if
Lessee fails timely to elect to renew the Term pursuant to Paragraph A
above, or to purchase the Equipment pursuant to Paragraph B above,
then on the expiration date of the Renewal Term, Lessee shall return
such Equipment in full compliance with Section XI of the Agreement and
Annex G to the Schedule on or prior to the expiration date of the
Renewal Term.
(b) 'Fair Market Value' shall mean the price which a willing
buyer (who is neither a lessee in possession nor a used equipment
dealer) would pay for the Equipment in an arm's-length transaction to
a willing seller under no compulsion to sell; provided, however, that
in such determination: (i) the Equipment shall be assumed to be in
the condition in which it is required to be maintained and returned
under this Agreement; (ii) in the case of any installed Equipment,
that Equipment shall be valued on an installed basis; and (iii) costs
of removal from the current location shall not be a deduction from
such valuation. If Lessor and Lessee are unable to agree on the Fair
Market Value at least one hundred thirty-five (135) days before
expiration of the Term, Lessor shall appoint an independent appraiser
(reasonably acceptable to Lessee) to determine Fair Market Value, and
that determination shall be final, binding and conclusive. Lessee
shall bear all costs associated with any such appraisal."
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule to be
executed by their duly authorized representatives as of the date first above
written.
LESSOR: LESSEE:
MBC LEASING CORP. CONTINENTAL PLASTIC CONTAINERS, INC.
By:___________________________ By:___________________________
Name:_________________________ Name:_________________________
Title:________________________ Title:________________________
Attest:
By:___________________________
Name:_________________________
Title:________________________
19
<PAGE>
SERIES A EQUIPMENT SCHEDULE
SCHEDULE NO. A-6
DATED THIS 17th DAY OF DECEMBER, 1996
TO MASTER LEASE AGREEMENT DATED AS OF MAY 20, 1994, AS AMENDED,
BETWEEN GENERAL ELECTRIC CAPITAL CORPORATION AND
CONTINENTAL PLASTIC CONTAINERS, INC.
Lessor & Mailing Address: Lessee & Mailing Address:
Nynex Credit Company Continental Plastic Containers, Inc.
200 Park Ave, 33rd Floor 301 Merritt Seven Corporate Park
New York, NY10166 Norwalk, Connecticut 06856
This Equipment Schedule is executed pursuant to, and incorporates by reference
the terms and conditions of, and capitalized terms not defined herein shall have
the meanings assigned to them in, the Master Lease Agreement identified above
("Agreement"; said Agreement and this Schedule being collectively referred to as
the "Lease"). This Equipment Schedule, incorporating by reference the terms and
conditions of the Agreement, constitutes a separate instrument of lease between
the Lessor specified above ("Lessor") and the Lessee specified above ("Lessee").
This Equipment Schedule is designated as a Series A Schedule.
A. Equipment.
---------
Pursuant to the terms of the Lease, Lessor agrees to acquire and lease to
Lessee the Equipment listed on Annex A attached hereto and made a part hereof.
B. Financial Terms.
---------------
1. Capitalized Lessor's Cost: $4,703,000.00
------------
2. Basic Term Lease Rate Factor:
Installments one through forty-four: 1.156655 %; and installments
---------
forty-five through eighty-eight: 1.278408 %.
----------
3. Daily Lease Rate Factor: .038555%.
-------
4. Basic Term:
Eighty-eight (88) months.
------------------------
5. Basic Term Commencement Date: January 1, 1997.
----------------
<PAGE>
6. Equipment Location: Plant #122, 95 Chresentville Road, Springdale,
---------------------------------------------
Hamilton County, OH 45246 (the "Premises")
-----------------------------------------
7. Lessee Federal Tax ID No.: 06-1056158
----------
8 Last Delivery Date: December 31, 1996.
------------------
9. Stipulated Loss and Termination Value: See Annex D attached for
calculation of the Stipulated Loss and Termination Value of the
Equipment during the Term.
10. FMV Special Purchase Option Date:
Seventy-eight (78) months after the Basic Term Commencement Date.
11. FMV Special Purchase Option Price:
46.10% of the Capitalized Lessor's Cost.
-----
12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
------------
Depreciation Deductions:
1. Depreciation Method: 200% declining balance method, switching to
straight line method for the first taxable year for which using the
straight line method with respect to the adjusted basis as of the
beginning of such year will yield a larger allowance.
2. Recovery Period: seven (7) years.
3. Basis: 100% of Capitalized Lessor's Cost.
D. Rent.
----
1. Interim Rent. For the period from and including the Lease
Commencement Date to the Basic Term Commencement Date ("Interim Period"), Lessee
shall pay as rent ("Interim Rent") for each unit of Equipment, the product of
the Daily Lease Rate Factor times the Capitalized Lessor's Cost of such unit
times the number of days in the Interim Period. Interim Rent shall be due on
January 1, 1997 (the "Interim Rent Payment Date").
- ---------------
2. Basic Term Rent. Commencing on January 1, 1997, and on the first day
---------------
of each month thereafter during the Basic Term, Lessee shall pay, in advance, as
rent ("Basic Term Rent") the product of the Basic Term Lease Rate Factor times
the Capitalized Lessor's Cost of all Equipment on this Schedule. Each date for
the payment of rent during the Basic Term is herein referred to as a "Rent
Payment Date".
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3. If the Interim Rent Payment Date or any Rent Payment Date is not a
Business Day, the rent otherwise due on such date shall be payable on the
immediately preceding Business Day. As used herein, "Business Day" shall mean
any day other than Saturday, Sunday, and any day on which banking institutions
located in the States of Connecticut or Maryland are authorized by law or other
governmental action to close.
E. Insurance.
---------
1. Public Liability: $10,000,000.00, total liability per occurrence.
2. Casualty and Property Damage: An amount equal to the higher of the
Stipulated Loss Value or the full replacement cost of the Equipment.
F. Amendments to Master Lease Agreement.
------------------------------------
Solely to the extent incorporated by reference in this Schedule, the Master
Lease Agreement is further amended as follows:
(a) Section I(b) is hereby deleted and the following is inserted in lieu
thereof:
" (b) The obligation of Lessor to purchase the Equipment from Lessee
and to lease the same to Lessee shall be subject to satisfaction of
the following:
(1) receipt by Lessor, on or prior to the earlier of the
Lease Commencement Date or the Last Delivery Date therefor, of each of
the following documents in form and substance satisfactory to Lessor:
(i) a Schedule relating to the Equipment then to be leased hereunder,
(ii) a Bill of Sale, in the form of Annex B to the applicable
Schedule, in favor of Lessor, (iii) evidence of insurance which
complies with the requirements of Section X hereof, (iv) a Collateral
Assignment of Leasehold Interest in the form of Annex F to the
applicable Schedule ( the 'Collateral Assignment'), together with a
certified true copy of the ground lease or premises lease of the real
property at the Equipment Location (v) an independent third party
appraisal (by Norman Levy & Associates or another firm acceptable to
Lessor) to substantiate the Equipment's fair market value and
remaining economic useful life and requisite value at selected points
throughout the Term (as hereinafter defined), including Lessor's
residual value assumption, (vi) any available information relating to
environmental issues concerning the Equipment Location specified on
the applicable Schedule, (vii) satisfactory results of a search by an
attorney or company satisfactory
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to Lessor of the Uniform Commercial Code filings with respect to
Lessee in each jurisdiction in which Lessee conducts or has a place of
business, (viii) certified copies of the articles of incorporation,
the by-laws and applicable resolutions, and certificates of good
standing and incumbency certificates, with respect to Lessee and
Guarantor, as required by Lessor; (ix) opinions of counsel of Lessee
and Guarantor, reasonably satisfactory in form and substance to
Lessor, together with evidence of all other legal matters incident to
the sale and leasing of the Equipment hereunder, as Lessor may
require; (x) releases of liens and termination statements covering
such of Lessee's assets as required by Lessor in connection with the
sale and leasing of the Equipment hereunder, each of which shall be
fully and properly executed, in recordable form, and sufficient in the
opinion of counsel for Lessor to terminate the interest of the
creditors of Lessee in such assets, (xi) such Uniform Commercial Code
financing statements as may be required by Lessor, (xii) a certificate
of an officer of Lessee confirming the placement of not less than
$115,000,000 of new Senior Notes issued by Lessee, having a ten (10)
year term, requiring no payment of principal until December, 2006, and
of the purchase for cancellation or discharge and defeasance of
$104,700,000 of Lessee's 10-3/4% Senior Secured Notes Due 2001, and
that there are no unsatisfied conditions to such placement and
redemption, and (xiii) such other documents as Lessor reasonably may
request;
(2) all governmental consents, approvals or withholding of
objections, necessary or appropriate in connection with the sale and
leasing of the Equipment hereunder, shall have been obtained by Lessee
and provided to Lessor;
(3) the funding of the Equipment hereunder shall occur on or
before December 31, 1996;
(4) as of the date of execution of the Schedule, there shall
have been (i) since the date of the most recent audited financial
statements of Lessee, no material adverse change in the business,
financial or other condition of Lessee or Guarantor, the industry in
which it or they operate, the Equipment or the assets directly or
indirectly securing that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996, as now or hereafter amended ( the "CIT Financing Agreement"),
between The CIT Group/Business Credit, Inc. and Guarantor, now or
hereafter owned by Lessee, or in the
4
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prospects or projections of Lessee and/or Guarantor, (ii) no
litigation commenced which, if successful, would have a material
adverse impact on Lessee or Guarantor, its or their businesses, or the
ability of Lessee to pay its obligations pursuant to this Agreement,
or which would question the validity or enforceability of this
Agreement, and (iii) since the date of the most recent audited
financial statements of Lessee, no material increase in the
liabilities, or a material decrease in the assets, of Lessee; and
(5) Lessee shall obtain and provide to Lessor, not more than
one hundred eighty (180) days after the Basic Term Commencement Date, an
Estoppel/Waiver Agreement in substantially the form attached hereto as
Annex E, duly executed by each landlord and mortgagee (if applicable)
with respect to the Equipment Location specified on the Schedule, in
form and substance acceptable to Lessor. If Lessee fails timely to
provide all such required Estoppel/Waiver Agreements, the implicit rate
used to calculate the Basic Term Lease Factor specified on the Schedule
shall be increased by two hundred (200) basis points from and after the
expiration of such one hundred eighty (180) day period after the Basic
Term Commencement Date until the date on which all required
Estoppel/Waiver Agreements have been obtained and provided to Lessor.
If all such required Estoppel/Waiver Agreements are not provided to
Lessor within five hundred forty-five (545) days after the Basic Term
Commencement Date, Lessor may elect (at its sole discretion) to terminate
the Lease with respect to all of the Equipment described on the Schedule.
On the termination date, Lessee shall purchase the Equipment on an AS IS
BASIS (as hereinafter defined) for cash equal to the greater of (1) the
Stipulated Loss Value, or (2) the Fair Market Value (as hereinafter
defined), of the Equipment (plus all applicable sales taxes), together
with all Rent and other amounts then due under such Schedule.
Simultaneously with the execution of the Bill of Sale, Lessee shall also
execute a Certificate of Acceptance, in the form of Annex C to the
applicable Schedule, covering all of the Equipment described in the Bill
of Sale. Upon execution by Lessee of any Certificate of Acceptance, the
Equipment described thereon shall be deemed to have been delivered to, and
irrevocably accepted by, Lessee for lease hereunder."
5
<PAGE>
(b) The first sentence of Section II(b) is hereby deleted and the following is
inserted in lieu thereof:
"Rent shall be paid to Lessor or its assignee at its address stated on the
Schedule or, if directed by Lessor or its assignee, by remitting payments
through such party's electronic payment system, except as otherwise
directed by Lessor or its assignee."
(c) The following is added to the end of Section III(b): "Such payment shall
be made on an after-tax basis."
(d) Section V(b) is hereby deleted and the following is inserted in lieu
thereof:
"(b)(i) Lessee will deliver to Lessor, within ninety (90) days of the
close of each fiscal year of Lessee, Lessee's balance sheet and profit and
loss statement, prepared in accordance with generally accepted accounting
principles consistently applied ('GAAP') certified by a recognized firm of
certified public accountants, together with Lessee's annual operating plan
approved by Lessee's board of directors, which includes the monthly budget
for the following year and integrates operating profits, and (ii) Lessee
will deliver to Lessor quarterly, within forty-five (45) days of the close
of each fiscal quarter of Lessee, in reasonable detail, copies of Lessee's
internally prepared consolidated income statement, statement of cash flows
and balance sheet as of the end of such fiscal quarter certified by the
chief financial officer of Lessee, which provides comparisons to the prior
years' equivalent period and to Lessee's budget, together with a
'management letter' in form and content satisfactory to Lessor, and a
certificate executed by the chief financial officer of Lessee certifying
that no Default (as hereinafter defined) or event which, with the giving
of notice or the lapse of time, or both, would become a Default has then
occurred hereunder. In addition, upon request, Lessee shall provide to
Lessor such additional financial information as reasonably may be required
by Lessor."
(e) The following is added to the end of Section V(c):
"If any discrepancies are found as they pertain to the general condition
of the Equipment, Lessor will communicate these discrepancies to Lessee in
writing, and Lessee shall have thirty
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<PAGE>
(30) days to rectify these discrepancies at its sole expense. Lessee shall
pay all expenses of a re-inspection by a Lessor-appointed expert if
corrective measures are required."
(f) Section V(d) is hereby deleted and the following is inserted in lieu
thereof:
"Except as expressly set forth herein, Lessee will keep the Equipment at
the Equipment Location (specified in the applicable Schedule), and will
not relocate the Equipment without the prior written consent of Lessor
(such consent not to be unreasonably withheld). Notwithstanding the
foregoing, Lessee may relocate items of the Equipment to locations within
the continental United States without the prior written consent of Lessor
upon satisfaction of the following conditions: (1) the aggregate
Capitalized Lessor's Cost of all relocated equipment from an Equipment
Location shall not exceed twenty-five percent (25%) of the original
aggregate Capitalized Lessor's Cost of all of the Equipment at such
Equipment Location (on an Equipment Location by Equipment Location basis);
(2) Lessee shall provide to Lessor not less than thirty (30) days' prior
written notice, identifying in reasonable detail the categories or items
of Equipment to be relocated, the present Equipment Location and the
proposed new location; (3) Lessee shall obtain and provide to Lessor an
Estoppel/Waiver Agreement in the form of Annex E to the applicable
Schedule from the landlord and each mortgagee with respect to the new
location, such agreements to be in form and substance satisfactory to
Lessor; (4) Lessee shall provide to Lessor such Uniform Commercial Code
financing statements and related documents as reasonably may be required
by Lessor in connection with such relocation; and (5) all costs and
expenses incurred by Lessor in connection with such relocation shall be
the responsibility of Lessee and paid to Lessor upon demand. Upon the
written request of Lessor, Lessee will notify Lessor forthwith in writing
of the location of any Equipment as of the date of such notification."
(g) Section VI(a) is hereby deleted and the following is inserted in lieu
thereof:
"(a) The parties acknowledge that this is a sale/leaseback transaction and
the Equipment is in Lessee's possession as of the Lease Commencement
Date."
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<PAGE>
(h) Section VI is hereby amended by inserting the following new Subsection (e)
at the end thereof:
"(e) Provided that no Default (as hereinafter defined) shall then have
occurred and be continuing, at Lessee's expense, upon thirty (30) days'
prior written notice to Lessor, Lessee may elect to replace a unit of
Equipment (a 'Substituted Item') with a new unit of Equipment (a
'Replacement Item'). Each Replacement Item shall be free and clear of all
liens and encumbrances and shall have at least the value, residual value,
utility and remaining useful life and be in as good an operating condition
as the Substituted Item, assuming that the Substituted Item has been
maintained in accordance with the provisions of this Agreement.
Replacement pursuant hereto shall be limited to once per six (6) month
period during the Term for any number of Substituted Items. The aggregate
Capitalized Lessor's Cost of all Substituted Items replaced during each
successive six (6) month period shall not exceed $100,000. Lessee shall
pay to Lessor a fee of $2,500 in connection with each exercise by Lessee
of the replacement option provided hereunder (which fee shall be
applicable regardless of the number of units of Equipment replaced at any
one time). Lessee shall execute and deliver to Lessor a Bill of Sale and
an amended Annex A to the applicable Schedule with respect to each
Replacement Item, together with such documents and instruments as
reasonably may be required by Lessor in connection with such replacement,
including (without limitation) Uniform Commercial Code financing
statements, to be filed at Lessee's expense. Upon compliance by Lessee
with the provisions hereof, Lessor will transfer to Lessee, on an AS IS
BASIS (as hereinafter defined), all of Lessor's right, title and interest
in and to the Substituted Item. Lessor shall not be required to make and
may specifically disclaim any representation or warranty as to the
condition of the Substituted Item and any other matters (except that
Lessor shall warrant that it conveyed whatever interest it received in
such Substituted Item free and clear of any lien or encumbrance created by
or through Lessor)."
(i) The following is added to the end of the first sentence of Section VII(a):
"and in a similar manner and fashion as if the Equipment were owned by
Lessee; and in no event less than current industry standards. Lessee shall
maintain the Equipment in an operable
8
<PAGE>
state and shall not discontinue operation of the Equipment during the
Term. Lessee shall maintain the Equipment under a preventive maintenance
program by qualified professionals who possess a working knowledge of the
mechanical operation of the Equipment, including (to the extent
applicable) electrical systems, motors, drives, controls, accessories,
lubricants and all other items necessary to make the Equipment operate to
its original manufacturer's specifications."
(j) The following is added to the end of Section XI(a):
"Until Lessee fully has complied with the requirements of this Paragraph
and Annex G, Lessee's rent payment obligation and all other obligations
under this Agreement shall continue from month to month notwithstanding
any expiration or termination of the Term. Lessor may terminate such
continued leasehold interest upon ten (10) days' notice to Lessee. In
addition to these rents, Lessor shall have all of its other rights and
remedies available as a result of this non-performance."
(k) The following is added to the end of the first sentence of Section XII(a):
"; there shall be an anticipatory repudiation by Plastic Containers, Inc.
('Guarantor') of its obligations pursuant to that certain Corporate
Guaranty dated May 20, 1994, as now or hereafter amended (the 'Guaranty')
or Guarantor shall be in Default (as such term is defined therein) under
the Guaranty; or Guarantor sells, disposes or assigns any or all of its
interest in or loses its management control of, Lessee; or Lessee is in
default beyond any applicable notice and cure period under the Premises
Lease or any other ground lease or premises lease of the Equipment
Location (if the Equipment Location is leased by Lessee); or Lessee shall
be in default under any material obligation for an original amount in
excess of Five Million Dollars ($5,000,000) for borrowed money, for the
deferred purchase price of property or any lease agreement; or Lessee is
in default under any Schedule executed pursuant hereto."
(l) Section XII(b) is hereby amended by inserting the following at the end
thereof:
"In addition to the foregoing rights, Lessor may cancel the lease pursuant
to this Agreement as to any or all of the Equipment;
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<PAGE>
may operate the Equipment in place (subject to the terms of any applicable
premise leases with respect to the Equipment Location); may exercise any
or all rights pursuant to any Deed of Trust or Collateral Assignment
and/or may proceed against Guarantor pursuant to the Guaranty."
(m) Section XIII is hereby deleted and the following is inserted in lieu
thereof:
"(a) Lessor may, without the consent of Lessee, assign this Agreement or
any Schedule, or the right to enter into any Schedule. Lessee agrees that
it will pay all Rent and other amounts payable under each Schedule to the
Lessor named therein; provided, however, if Lessee receives written notice
of any assignment from Lessor, Lessee will pay all Rent and other amounts
payable under any assigned Schedule to such assignee (each being herein
referred to as an 'Assignee' and, collectively, as the 'Assignees') or as
instructed by such Assignee. Each Schedule, incorporating by reference the
terms and conditions of this Agreement, constitutes a separate instrument
of lease, and the Lessor named therein or its Assignee shall have all
rights as 'Lessor' thereunder separately exercisable by such named Lessor
or Assignee as the case may be, exclusively and independently of Lessor or
any Assignee with respect to other Schedules executed pursuant hereto.
Lessee further agrees to confirm in writing receipt of a notice of
assignment as reasonably may be requested by such Assignee. Lessee hereby
waives and agrees not to assert against any such Assignee any defense,
set-off, recoupment claim or counterclaim which Lessee has or may at any
time have against Lessor or any other person for any reason whatsoever.
(b) Lessee acknowledges that it has been advised that the interest of
Lessor in this Agreement, the Schedules, related instruments and documents
and/or the Equipment may be conveyed to, in whole or in part, and may be
used as security for financing obtained from, one or more Assignees
without the consent of Lessee (the 'Syndication'). Lessee agrees to
cooperate with Lessor in connection with the Syndication, including the
preparation of any offering materials and the participation of any
relevant management of Lessee in any meetings with potential assignees,
and will certify as true, correct and complete any description of Lessee
and its affairs contained in such materials based upon information
provided by
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Lessee; and the execution and delivery of such other documents,
instruments, notices, opinions, certificates and acknowledgments as
reasonably may be required by Lessor or such Assignee; provided, however in
no event shall Lessee be required to consent to any change that would
adversely affect any of the economic terms of the transactions contemplated
herein.
(c) Subject always to the foregoing, this Agreement inures to the benefit of,
and is binding upon, the successors and assigns of the parties hereto and
of the Assignees."
(n) In Section XV, each reference to "Lessor" shall be deemed to refer also to
the Assignees.
(o) Section XV is amended by adding the following new Paragraph (e):
"(e) Lessee shall defend, indemnify and hold harmless Lessor, the
Assignees, and their Affiliates, successors and assigns, directors,
officers, employees and agents, from and against any Environmental Claim or
Environmental Loss and, unless Lessee is then contesting in good faith such
Environmental Claim or Environmental Loss and Lessee has set aside on its
books appropriate reserves therefor, Lessee shall fully and promptly pay,
perform and discharge any such Environmental Claim or Environmental Loss.
As used herein,
(1) 'Adverse Environmental Condition' shall refer to (i) the existence
or the continuation of the existence, of an Environmental Emission
(including, without limitation, a sudden or non-sudden accidental or non-
accidental Environmental Emission), of, or exposure to, any Contaminant,
odor or audible noise in violation of any Applicable Environmental Law, at,
in, by, from or related to any Equipment, (ii) the environmental aspect of
the transportation, storage, treatment or disposal of materials in
connection with the operation of any Equipment in violation of any
Applicable Environmental Law, or (iii) the violation, or alleged violation,
of any Environmental Law connected with any Equipment.
(2) 'Affiliate' shall refer, with respect to any given Person, to any
Person that directly or indirectly through one or
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more intermediaries, controls, or is controlled by, or is under common
control with, such Person.
(3) 'Contaminant' shall refer to those substances which are regulated by
or form the basis of liability under any Environmental Law, including,
without limitation, asbestos, polychlorinated biphenyls ('PCBs'), and
radioactive substances.
(4) 'Environmental Claim' shall refer to any accusation, allegation,
notice of violation, claim, demand, abatement or other order or direction
(conditional or otherwise) by any governmental authority or any Person for
personal injury (including sickness, disease or death), tangible or
intangible property damage, damage to the environment or other adverse
effects on the environment, or for fines, penalties or restrictions,
resulting from or based upon any Adverse Environmental Condition.
(5) 'Environmental Emission' shall refer to any actual or threatened
release, spill, omission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the indoor or outdoor
environment, or into or out of any of the Equipment, including, without
limitation, the movement of any Contaminant or other substance through or
in the air, soil, surface water, groundwater, or property.
(6) 'Environmental Law' shall mean any Federal, foreign, state or local
law, rule or regulation pertaining to the protection of the environment,
including, but not limited to, the Comprehensive Environmental Response,
Compensation, and Liability Act ('CERCLA') (42 U.S.C. Section 9601 et
--
seq.), the Hazardous Material Transportation Act (49 U.S.C. Section 1801 et
--- --
seq.), the Federal Water Pollution Control Act (33 U.S.C. Section 1251 et
--- --
seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section 6901
---
et seq.), the Clean Air Act (42 U.S.C. Section 7401 et seq.), the Toxic
-- --- -- ---
Substances Control Act (15 U.S.C. Section 2601 et seq.), the Federal
-- ---
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Section 1361 et
--
seq.), and the Occupational Safety and Health Act (19 U.S.C. Section 651 et
--- --
seq.), as these laws have been amended or supplemented, and any analogous
---
foreign, Federal, state or local statutes, and the regulations promulgated
pursuant thereto.
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(7) 'Environmental Loss' shall mean any loss, cost, damage, liability,
deficiency, fine, penalty or expense (including, without limitation,
reasonable attorneys' fees, engineering and other professional or expert
fees), investigation, removal, cleanup and remedial costs (voluntarily or
involuntarily incurred) and damages to, loss of the use of or decrease in
value of the Equipment arising out of or related to any Adverse
Environmental Condition.
(8) 'Person' shall include any individual, partnership, corporation,
trust, unincorporated organization, government or department or agency
thereof and any other entity."
(p) In Section XVII(a), the words "this Agreement and all related documents"
are deleted and the following inserted in lieu thereof: "this Agreement, the
Schedule, the Premises Lease, the Collateral Assignment and all related
documents".
(q) In Section XVIII(a), the words "such Schedule" are deleted and the
following is inserted in lieu thereof: "all Schedules designated as Series A".
(r) The following new Paragraph (e) is added to Section XVIII:
" (e) Notwithstanding anything to the contrary contained in Paragraphs
(a) through (d) of this Section, on the First Termination Date (specified
in the applicable Schedule), Lessee may, so long as no Default exists
hereunder, terminate this Agreement as of a Rent Payment Date as to all
(but not less than all) of the Equipment specified on Schedules A-3, A-4,
A-5 and A-6, upon at least ninety (90) days' prior written notice to
Lessor. If Lessee exercises this option, on the First Termination Date,
Lessee shall return the Equipment described on such Schedule to Lessor, in
accordance with the terms of Section XI hereof and Annex G to the
applicable Schedule, and shall pay to Lessor a fee calculated as sixty-
seven and one-half percent (67.5%) of the aggregate Capitalized Lessor's
Cost of the Equipment described on such Schedule, together with all rent
and other sums due and unpaid with respect to such Schedule as of the First
Termination Date."
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(s) Section XIX is hereby deleted and the following is inserted in lieu
thereof:
"XIX. SPECIAL PURCHASE OPTION:
(a) So long as no Default with respect to the payment of rent or any other
sum hereunder then exists hereunder and the Term has not been earlier
terminated, upon at least thirty (30) days' but not more than two hundred
seventy (270) days' prior written irrevocable notice to Lessor, Lessee may
purchase all (but not less than all) of the Equipment described on any
Schedule designated as Series A on an AS IS BASIS, on the FMV Special
Purchase Option Date specified in the applicable Schedule, for cash equal
to the FMV Special Purchase Option Price of such Equipment (as specified in
the applicable Schedule). Lessor and Lessee agree that the FMV Special
Purchase Option Price is a reasonable prediction of the Fair Market Value
of such Equipment at the time the option is exercisable. Lessor and Lessee
agree that if Lessee makes any non-severable improvement to the Equipment
which increases the value of such Equipment, then at the time of such
option being exercised, Lessor and Lessee shall adjust the FMV Special
Purchase Option Price to reflect any addition to the price anticipated to
result from such improvement.
(b) If Lessee exercises the option specified in Paragraph (a) hereof, then
on the FMV Special Purchase Option Date, Lessee shall pay to Lessor any
accrued but unpaid rent then due (expressly excluding the rent due on the
next succeeding Rent Payment Date) and any other sums due and unpaid on the
FMV Special Purchase Option Date, together with the FMV Special Purchase
Option Price, plus all applicable sales taxes, in immediately available
funds.
(c) If, at any time during the Term, Lessee determines that it wishes to
terminate production at the Equipment Location specified on a Schedule
designated as Series A and to cannibalize the production line by relocating
items of the Equipment to other Lessee production facilities on a piece-
meal basis (without relocating the entire production line), Lessee shall
provide notice thereof to Lessor and, so long as no Default exists
hereunder, Lessee shall terminate the lease as to all items of the
Equipment at such Equipment Location, as of the next Rent
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<PAGE>
Payment Date (the 'Special Termination Date') upon at least ninety (90)
days' prior written notice to Lessor. On the Special Termination Date,
Lessee shall purchase all such items of the Equipment on an AS IS BASIS for
cash equal to the greater of (1) the then Termination Value, or (2) the
then Fair Market Value, of such items of the Equipment (plus all applicable
sales taxes), together with all rent and other amounts then due hereunder
with respect to such items of the Equipment. At Lessor's sole discretion,
if requested by Lessee, in lieu of terminating the lease Lessee may
continue the lease as to certain items of the Equipment which have been
relocated by Lessee in connection with the termination of production at the
Equipment Location and/or may continue the lease with respect to certain
items of the Equipment which remain at the Equipment Location on the
applicable Schedule as to which Lessee has terminated production even
though Lessee may discontinue use of such items of the Equipment. In
connection with any such continued lease, Lessee shall provide to Lessor
such documents and instruments as reasonably may be required by Lessor.
(t) in Section XX(c), the fourth sentence is deleted and the following
inserted in lieu thereof:
"All notices required to be given hereunder shall be deemed adequately
given if sent by certified mail, or delivered in person or by overnight
courier service, to the addressee at its address stated herein, or at such
other place as such addressee may have designated in writing."
(u) Section XX is hereby amended by inserting the following Subsections at the
end thereof:
" (f) Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
(g) The representations, warranties and covenants of Lessee herein shall
be deemed to survive the closing hereunder. The obligations of Lessee under
Sections III, IV, XI, and XV
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<PAGE>
which accrue during the term of this Agreement and obligations which by
their express terms survive the termination of this Agreement, shall
survive the termination of this Agreement.
(h) Whether or not any Equipment is leased hereunder, Lessee shall pay
upon demand all fees, commissions, costs, charges and other expenses
incurred by Lessor in connection with the commitment expressed in that
certain letter dated November 26, 1996, between Lessor and Lessee and the
documenting and servicing of the facility described in such letter,
including (but not limited to) fees and expenses of Lessor's counsel,
insurance premiums, transfer taxes, lien searches and all recording fees
and charges."
(v) The following new Sections are added to the end of Agreement:
XXI. CHOICE OF LAW; JURISDICTION:
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF
LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE EQUIPMENT. The
parties agree that any action or proceeding arising out of or relating to
this Agreement may be commenced in the United States District Court for the
Southern District of New York.
XXII. CHATTEL PAPER:
To the extent that any Schedule would constitute chattel paper, as such
term is defined in the Uniform Commercial Code as in effect in any
applicable jurisdiction, no security interest therein may be created
through the transfer or possession of this Agreement in and of itself
without the transfer or possession of the original of a Schedule executed
pursuant to this Agreement and incorporating this Agreement by reference;
and no security interest in this Agreement and a Schedule may be created by
the transfer or possession of any counterpart of the Schedule other than
the original thereof, which shall be identified as the
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<PAGE>
document marked 'Original' and all other counterparts shall be marked
'Duplicate'.
XXIII. INTENT; TITLE; ADDITIONAL COLLATERAL:
(a) It is the express intent of the parties that this Agreement
constitute a true lease and not a sale of the Equipment. Title to the
Equipment shall at all times remain in Lessor, and Lessee shall acquire no
ownership, title, property, right, equity, or interest in the Equipment
other than its lease hold interest solely as Lessee subject to all the
terms and conditions hereof. The parties agree that the lease is a 'Finance
Lease' as defined in Uniform Commercial Code Article 2A --Leases ('Article
2A'). Lessee acknowledges: (a) that Lessee has selected the 'Supplier' (as
defined in Article 2A) and directed Lessor to purchase the Equipment from
the Supplier; (b) that Lessee has been informed in writing in this Lease,
before signing this Lease, that Lessee is entitled under Article 2A to the
promises and warranties, including those of any third party, provided to
Lessor by the Supplier in connection with or as part of the contract by
which Lessor acquired the Equipment, and that Lessee may communicate with
the Supplier and receive an accurate and complete statement of those
promises and warranties, including any disclaimers and limitations of them
or of remedies. To the extent permitted by applicable law, Lessee hereby
waives any and all rights and remedies conferred upon a lessee in Article
2A and any rights now or hereafter conferred by statute or otherwise which
may limit or modify any of Lessor's rights or remedies under Section XII
hereof; provided, however, that such waiver shall not preclude Lessee from
asserting any claim of Lessee against Lessor in a separate cause of action;
and provided further that such waiver shall not affect Lessor's obligations
of good faith, diligence, reasonableness and care.
(b) Notwithstanding the express intent of the parties, should a court of
competent jurisdiction determine that this Agreement is not a true lease,
but rather one intended as security, then solely in that event and for the
expressly limited purposes thereof, Lessee shall be deemed to have hereby
granted Lessor a security interest in the lease, the Equipment, and all
accessions thereto, substitutions and replacements therefor, and proceeds
(including insurance proceeds) thereof (but without
17
<PAGE>
power of sale); to secure the prompt payment and performance as and when
due of all obligations and indebtedness of Lessee (or any affiliate of
Lessee) to Lessor, now existing or hereafter created. For the purposes of
this paragraph, this Agreement, the Schedule, or a photocopy of either
thereof may be filed as a financing statement under the Uniform Commercial
Code.
XXIV. END OF TERM OPTIONS:
(a) So long as no Default exists hereunder and the Term has not been
earlier terminated, Lessee shall have the option upon the expiration of the
Basic Term of the Schedule upon at least one hundred eighty (180) days'
prior written notice to Lessor, to renew the Term with respect to, or to
purchase, all (but not less than all) of the Equipment described on such
Schedule upon the following terms and conditions:
(1) Upon expiration of the Basic Term, Lessee may elect to renew the
Term with respect to all, but not less than all, of such Equipment for a
renewal term of thirty-one (31) months (the "Renewal Term") at a monthly
rent calculated as 1.279720% of the Capitalized Lessor's Cost of such
--------
Equipment.
(2) Upon expiration of the Basic Term, Lessee may elect to purchase all
(but not less than all) of such Equipment on the Basic Term Expiration Date
on an AS IS BASIS for cash equal to the greater of (x) thirty-five percent
(35%) of the Capitalized Lessor's Cost of such Equipment, or (2) the then
Fair Market Value of such Equipment (plus all applicable sales taxes). On
the Basic Term Expiration Date, Lessee shall pay to Lessor in immediately
available funds the full purchase price (plus all applicable sales taxes),
together with any rent or other sums then due hereunder on such date.
Lessee shall be deemed to have waived this option unless it provides Lessor
with written notice of its irrevocable election to exercise the same within
fifteen (15) days after Fair Market Value is determined (by agreement or
appraisal).
(3) If Lessee timely exercises its renewal option above, then, upon
expiration of the Renewal Term, so long as no
18
<PAGE>
Default exists hereunder, Lessee may elect, upon at least one hundred
eighty (180) days' prior written notice to Lessor:
(A) further to renew the Term with respect to all, but not less than
all, of such Equipment for an additional renewal term and at a periodic
rent subject to mutual agreement of the parties; or
(B) to purchase on the expiration date of the first Renewal Term all
(but not less than all) of such Equipment on an AS IS BASIS for cash equal
to the then Fair Market Value of such Equipment (plus all applicable sales
taxes). On the expiration date of the first Renewal Term, Lessor shall
receive in cash the full purchase price (plus all applicable sales taxes),
together with any rent or other sums then due hereunder on such date.
Lessee shall be deemed to have waived this option unless it provides Lessor
with written notice of its irrevocable election to exercise the same within
fifteen (15) days after Fair Market Value is determined (by agreement or
appraisal).
(C) If Lessee is then in Default under the Lease, or if Lessee fails
timely to elect to renew the Term pursuant to Paragraph A above, or to
purchase the Equipment pursuant to Paragraph B above, then on the
expiration date of the Renewal Term, Lessee shall return such Equipment in
full compliance with Section XI of the Agreement and Annex G to the
Schedule on or prior to the expiration date of the Renewal Term.
(b) 'Fair Market Value' shall mean the price which a willing buyer (who
is neither a lessee in possession nor a used equipment dealer) would pay
for the Equipment in an arm's-length transaction to a willing seller under
no compulsion to sell; provided, however, that in such determination: (i)
the Equipment shall be assumed to be in the condition in which it is
required to be maintained and returned under this Agreement; (ii) in the
case of any installed Equipment, that Equipment shall be valued on an
installed basis; and (iii) costs of removal from the current location shall
not be a deduction from such valuation. If Lessor and Lessee are unable to
agree on the Fair Market Value at least one hundred thirty-five (135) days
before expiration of the Term, Lessor shall appoint an independent
appraiser (reasonably acceptable to Lessee) to determine Fair Market Value,
and that determination shall be final, binding and
19
<PAGE>
conclusive. Lessee shall bear all costs associated with any such
appraisal."
This Schedule is not binding or effective with respect to the Agreement or
Equipment until executed on behalf of Lessor and Lessee by authorized
representatives of Lessor and Lessee, respectively.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
20
<PAGE>
IN WITNESS WHEREOF, Lessee and Lessor have caused this Series A Schedule
to be executed by their duly authorized representatives as of the date first
above written.
LESSOR: LESSEE:
NYNEX CREDIT COMPANY CONTINENTAL PLASTIC CONTAINERS, INC.
By:_______________________________ By:_______________________________
Name:_____________________________ Name:_____________________________
Title:____________________________ Title:____________________________
Attest:
By:_______________________________
Name:_____________________________
Title:____________________________
21
<PAGE>
EXHIBIT 10.4
CORPORATE GUARANTY
Date: 5/20 , 1994
-------------- --
General Electric Capital Corporation
44-2 Old Ridgebury Road
Danbury, CT 06810-5105
To induce you to enter into, purchase or otherwise acquire, now or at
any time hereafter, any promissory notes, security agreements, chattel
mortgages, pledge agreements, conditional sale contracts, lease agreements,
and/or any other documents or instruments evidencing, or relating to, any lease,
loan, extension of credit or other financial accommodation (collectively
"Account Documents" and each an "Account Document") to Continental Plastic
Containers, Inc., a corporation organized and existing under the laws of the
State of Delaware ("Customer"), but without in any way binding you to do so, the
undersigned, for good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, does hereby guarantee to you, your successors and
assigns, the due regular and punctual payment of any sum or sums of money which
the Customer may owe to you now or at any time hereafter, whether evidenced by
an Account Document, on open account or otherwise, and whether it represents
principal, interest, rent, late charges, indemnities, an original balance, an
accelerated balance, liquidated damages, a balance reduced by partial payment, a
deficiency after sale or other disposition of any leased equipment, collateral
or security, or any other type of sum of any kind whatsoever that the Customer
may owe to you now or at any time hereafter, and does hereby further guarantee
to you, your successors and assigns, the due, regular and punctual performance
of any other duty or obligation of any kind or character whatsoever that the
Customer may owe to you now or at any time hereafter (all such payment and
performance obligations being collectively referred to as "Obligations").
Undersigned does hereby further guarantee to pay upon demand all losses, costs,
attorneys' fees and expenses which may be suffered by you by reason of
Customer's default or default of the undersigned.
This Guaranty is a guaranty of prompt payment and performance (and
not merely a guaranty of collection). Nothing herein shall require you to first
seek or exhaust any remedy against the Customer, its successors and assigns, or
any other person obligated with respect to the Obligations, or to first
foreclose,
<PAGE>
exhaust or otherwise proceed against any leased equipment, collateral or
security which may be given in connection with the Obligations. It is agreed
that you may, upon any breach or default of the Customer, or at any time
thereafter, make demand upon the undersigned and receive payment and performance
of the Obligations, with or without notice or demand for payment or performance
by the Customer, its successors or assigns, or any other person. Suit may be
brought and maintained against the undersigned, at your election, without
joinder of the Customer or any other person as parties thereto. The obligations
of each signatory to this Guaranty shall be joint and several.
The undersigned agrees that its obligations under this Guaranty shall
be primary, absolute, continuing and unconditional, irrespective of and
unaffected by any of the following actions or circumstances (regardless of any
notice to or consent of the undersigned): (a) the genuineness, validity,
regularity and enforceability of the Account Documents or any other document;
(b) any extension, renewal, amendment, change, waiver or other modification of
the Account Documents or any other document; (c) the absence of, or delay in,
any action to enforce the Account Documents, this Guaranty or any other
document; (d) your failure or delay in obtaining any other guaranty of the
Obligations (including, without limitation, your failure to obtain the
signature of any other guarantor hereunder); (e) the release of, extension of
time for payment or performance by, or any other indulgence granted to the
Customer or any other person with respect to the Obligations by operation of law
or otherwise; (f) the existence, value, condition, loss, subordination or
release (with or without substitution) of, or failure to have title to or
perfect and maintain a security interest in, or the time, place and manner of
any sale or other disposition of any leased equipment, collateral or security
given in connection with the Obligations, or any other impairment (whether
intentional or negligent, by operation of law or otherwise) or the rights of the
undersigned; (g) the Customer's voluntary or involuntary bankruptcy, assignment
for the benefit of creditors, reorganization, or similar proceedings affecting
the Customer or any of its assets; or (h) any other action or circumstances
which might otherwise continue a legal or equitable discharge or defense of a
surety or guarantor.
This Guaranty may be terminated upon delivery to you (at your address
shown above) of a written termination notice from the undersigned. However, as
to all Obligations (whether matured, unmatured, absolute, contingent or
otherwise) incurred by the Customer prior to your receipt of such written
termination
2
<PAGE>
notice (and regardless of any subsequent amendment, extension or other
modification which may be made with respect to such Obligations), this Guaranty
shall nevertheless continue and remain undischarged until all such Obligations
are indefeasibly paid and performed in full.
The undersigned agrees that this Guaranty shall remain in full force
and effect or be reinstated (as the case may be) if at any time payment or
performance of any of the Obligations (or any part thereof) is rescinded,
reduced or must otherwise be restored or returned by you, all as though such
payment or performance had not been made. If, by reason of any bankruptcy,
insolvency or similar laws effecting the rights of creditors, you shall be
prohibited from exercising any of your rights or remedies against the Customer
or any other person or against any property, then, as between you and the
undersigned, such prohibition shall be of no force and effect, and you shall
have the right to make demand upon, and receive payment from the undersigned of
all amounts and other sums that would be due to you upon a default with respect
to the Obligations.
Notice of acceptance of this Guaranty and of any default by the
Customer or any other person is hereby waived. Presentment, protest demand, and
notice of protest, demand and dishonor of any of the Obligations, and the
exercise of possessory, collection or other remedies for the Obligations, are
hereby waived. The undersigned warrants that it has adequate means to obtain
from the Customer on a continuing basis financial data and other information
regarding the Customer and is not relying upon you to provide any such data or
other information. Without limiting the foregoing, notice of adverse change in
the Customer's financial condition or of any other fact which might materially
increase the risk of the undersigned is also waived. All settlements,
compromises, accounts stated and agreed balances made in good faith between the
Customer, its successors or assigns, and you shall be binding upon and shall not
affect the liability of the undersigned.
Payment of all amounts now or hereafter owed to the undersigned by
the Customer or any other obligor for any of the Obligations is hereby
subordinated in right of payment to the indefeasible payment in full to you of
all Obligations and is hereby assigned to you as a security therefor. The
undersigned hereby irrevocably and unconditionally waives and relinquishes all
statutory, contractual, common law, equitable and all other claims against the
Customer, any other obligor for any of the Obligations, any collateral therefor,
or any other assets of the
3
<PAGE>
Customer or any such other obligor, for subrogation, reimbursement,
exoneration, contribution, indemnification, setoff or other recourse in respect
of sums paid or payable to you by the undersigned hereunder, and the
undersigned hereby further irrevocably and unconditionally waives and
relinquishes any and all other benefits which it might otherwise directly or
indirectly receive or be entitled to receive by reason of any amounts paid by,
or collected or due from, it, the Customer or any other obligor for any of the
Obligations, or recovered from any of their respective assets.
THE UNDERSIGNED HEREBY UNCONDITIONALLY WAIVES ITS RIGHT TO A JURY
TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF, DIRECTLY OR
INDIRECTLY, THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, ANY OF THE RELATED
DOCUMENTS, ANY DEALINGS BETWEEN US RELATING TO THE SUBJECT MATTER HEREOF OR
THEREOF, AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN US. THE SCOPE
OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT
MAY BE FILED IN ANY COURT (INCLUDING, WITHOUT LIMITATION, CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS).
THIS WAIVER IS IRREVOCABLE MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS GUARANTY, THE OBLIGATIONS GUARANTEED HEREBY, OR ANY
RELATED DOCUMENTS. IN THE EVENT OF LITIGATION, THIS GUARANTY MAY BE FILED AS A
WRITTEN CONSENT TO A TRIAL BY THE COURT.
As used in this Guaranty, the word "person" shall include any
individual, corporation, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, or any government or any political
subdivision thereof.
This Guaranty is intended by the parties as a final expression of the
guaranty of the undersigned and is also intended as a complete and exclusive
statement of the terms thereof. No course of dealing, course of performance or
trade usage, nor any paid evidence of any kind, shall be used to supplement or
modify any of the terms hereof. Nor are there any conditions to the full
effectiveness of this Guaranty. This Guaranty and each of its provisions may
only be waived, modified, varied, released, terminated or surrendered, in whole
or in part, by a duly authorized written instrument signed by you. No failure
by you to exercise your rights hereunder shall give rise to any estoppel against
you, or excuse the undersigned from performing hereunder. Your waiver of any
right to demand performance hereunder shall
4
<PAGE>
not be a waiver of any subsequent or other right to demand performance
hereunder.
This Guaranty shall bind the undersigned's successors and assigns and
the benefits thereof shall extend to and include your successors and assigns.
In the event of default hereunder, you may at any time inspect undersigned's
records, or at your option, undersigned shall furnish you with a current
independent audit report.
If any provisions of this Guaranty are in conflict with any applicable
statute, rule or law, then such provisions shall be deemed null and void to the
extent that they may conflict therewith, but without invalidating any other
provisions hereof.
Each signatory on behalf of a corporate guarantor warrants that he had
authority to sign on behalf of such corporation and by so signing, to bind said
guarantor corporation hereunder.
IN WITNESS WHEREOF, this Guaranty is executed
the day and year above written.
PLASTIC CONTAINERS, INC.
By: /s/Jay W. Hereford
------------------
(Signature)
Title: Asst. Treasurer
-----------------------
(Officer's Title)
ATTEST:/s/Stephen Bermas
-----------------------------
Secretary/Assistant Secretary
Abdo Yazgi hereby certifies that he is the Secretary of Plastic Containers,
Inc., that the persons who signed this Corporate Guaranty are duly elected
officers of Plastic Containers, Inc., and that their signatures are genuine.
/s/Abdo Yazgi
------------------------------
Abdo Yazgi
5
<PAGE>
AMENDMENT NO. 1 TO CORPORATE GUARANTY
THIS AMENDMENT NO. 1 TO CORPORATE GUARANTY is made as of the 17th day of
December, 1996 (the "Amendment"), between GENERAL ELECTRIC CAPITAL CORPORATION
("Lessor") and PLASTIC CONTAINERS, INC. ("Guarantor").
Lessor and Continental Plastic Containers, Inc. ("Lessee") have heretofore
executed that certain Master Lease Agreement dated as of May 20, 1994, as
amended (the "Agreement"), pursuant to which Lessor agreed to lease to Lessee
and Lessee agreed to lease from Lessor the equipment described on Schedules
executed and delivered pursuant thereto. In connection with the Agreement,
Guarantor has heretofore executed that certain Corporate Guaranty dated May 20,
1994 (the "Guaranty"), in favor of Lessor. The Agreement is one of the "Account
Documents" as such term used in the Guaranty.
The parties have concurrently herewith amended the Agreement and desire to
amend the Guaranty, solely to the extent they relate to Schedules executed on or
after the date hereof and which are designated as Series A.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Effective as of the date hereof, the Guaranty, solely to the extent it
relates to Schedules designated as Series A, is hereby amended and modified by
adding the following additional paragraphs:
" The undersigned covenants and agrees that: (a) it will provide to
you: (1) copies of all Forms 10K and 10Q as and when filed by
Guarantor with the Securities and Exchange Commission. If at any time
the undersigned ceases to be a reporting entity under the Securities
Act of 1934, as amended, then the undersigned will deliver to you,
within ninety (90) days of the close of each fiscal year of the
undersigned, the balance sheet and profit and loss statement of the
undersigned, prepared in accordance with generally accepted accounting
principles consistently applied ('GAAP'), certified by a
<PAGE>
recognized firm of certified public accountants; (2) within sixty
(60) days after the end of each fiscal quarter of the undersigned, an
officer's certificate, signed by the President, Vice President,
Controller, Treasurer or Assistant Treasurer, pursuant to which any
one such officer must certify that no Default or event which, with the
giving of notice or the lapse of time, or both, would become a Default
has then occurred hereunder, and that the exhibits attached to such
statement constitute detailed calculations showing compliance with
all financial covenants to which the undersigned is subject pursuant
hereto; and (3) from time to time upon request, such additional
financial information as reasonably may be required by you; and (b) it
will promptly execute and deliver to you such further documents,
instruments and assurances and take such further action as you from
time to time reasonably may request in order to carry out the intent
and purpose of this Guaranty and to establish and protect the rights
and remedies created or intended to be created in your favor
hereunder.
So long as this Guaranty continues and remains undischarged, the
undersigned shall comply: (a) with the provisions of Paragraphs 9
through 12 of Section 6 of that certain Amended and Restated Financing
Agreement dated as of October 30, 1995, as amended as of December 17,
1996 (the 'CIT Financing Agreement'), between the undersigned and The
CIT Group/Business Credit, Inc. ('CITBC'); (b) with the provisions of
Sections 4.10, 4.11, 4.12, 4.13, 4.14, 4.15, 4.16, 4.18, 4.19, 4.20,
4.21, 4.22 and 4.26 of that certain Indenture dated as of December
17, 1996 (the "Indenture"), among Continental Plastic Containers,
Inc., Continental Caribbean Containers, Inc., United States Trust
Company of New York, as Trustee (the "Trustee"), and the undersigned
with respect to $125,000,000 10% Senior Secured Notes due 2006, Series
A, and 10% Senior Secured Notes due 2006, Series B; and (c) provide to
the Lessor copies of the
2
<PAGE>
Compliance Certificates described in Section 4.7 of the Indenture at
the same time that such Compliance Certificates are delivered to the
Trustee. Notwithstanding the provisions of the foregoing referenced
Sections, in all events, the undersigned shall maintain, as at the end
of each fiscal quarter on a rolling four (4) fiscal quarter basis
measured during each period specified below, a consolidated Fixed
Charge Coverage Ratio (as hereinafter defined) of the undersigned and
its subsidiaries of at least:
FISCAL PERIOD RATIO
------------- -----
fiscal quarter ending June 30, 1997 0.85 to 1
fiscal quarter ending September 30, 1997 0.85 to 1
fiscal quarters ending December 31, 1997
through December 31, 1998 1.00 to 1
fiscal quarters ending March 31, 1999
through December 31, 2000 1.10 to 1
fiscal quarter ending March 31, 2001
and each fiscal quarter thereafter 1.20 to 1
As used herein, 'Fixed Charge Coverage' shall have the meaning given
such term in the CIT Financing Agreement as in effect on the date of
execution thereof (without amendment or modification, except to the
extent you expressly consent to such amendment or modification for
the purposes hereof). In addition, the undersigned shall provide to
you a copy of each notice provided by the undersigned to CITBC
pursuant to Paragraph 13 of Section 6 of the CIT Financing Agreement
that contains information not previously furnished to you.
The undersigned shall be deemed to be in default hereunder
('Default') if: (a) it shall fail to perform or observe any covenant,
condition or agreement to be performed or observed by it hereunder and
such failure shall continue unremedied for a period of thirty (30)
days after the earlier of the actual knowledge of the undersigned or
written notice thereof to the undersigned by
3
<PAGE>
you; or (b) it shall (1) be generally not paying its debts as they
become due, (2) take action for the purpose of invoking the protection
of any bankruptcy or insolvency law, or any such law is invoked
against or with respect to it or its property, and such petition filed
against it is not dismissed within sixty (60) days; or (c) there is an
anticipatory repudiation of its obligations pursuant to this Guaranty;
or (d) any certificate, statement, representation, warranty or audit
contained herein or heretofore or hereafter furnished with respect to
this Guaranty by or on behalf of the undersigned proving to have been
false in any material respect at the time as of which the facts
therein set forth were stated or certified, or having omitted any
substantial contingent or unliquidated liability or claim against it;
or (e) it shall be in default under any material obligation for
borrowed money, for the deferred purchase price of property or any
lease agreement, and the applicable grace period with respect thereto
shall have expired; or (f) the corporate existence of the undersigned
is terminated and its obligations in connection with this Guaranty are
not assumed by a successor in interest reasonably satisfactory to you;
or (g) Continental Can Company, Inc. sells, disposes of or assigns,
any or all of its interest in, or loses its management control of, the
undersigned.
Upon a Default hereunder, you may, at your option, declare this
Guaranty to be in default by written notice to the undersigned
(without election of remedies), and at any time thereafter, may do any
one or more of the following, all of which are hereby authorized by
the undersigned:
A. declare the Account Document to be in default and thereafter
sue and recover from the undersigned all liquidated damages,
accelerated rentals and/or other sums
4
<PAGE>
otherwise recoverable from Customer under the Account Document; and/or
B. recover from the undersigned all damages then or thereafter
incurred by you as a result of such Default; and/or
C. seek specific performance of the obligations of the
undersigned hereunder.
In addition, the undersigned shall be liable for all reasonable
attorneys' fees and other costs and expenses incurred by reason of any
Default or the exercise of your remedies hereunder and/or under the
Account Document. No right or remedy referred to herein is intended
to be exclusive, but each shall be cumulative, and shall be in
addition to any other remedy referred to above or otherwise available
at law or in equity, and may be exercised concurrently or separately
from time to time.
THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT
REGARD TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING
ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE. The parties
agree that any action or proceeding arising out of or relating to this
Agreement may be commenced in the United States District Court for the
Southern District of New York.
All notices required to be given hereunder shall be deemed
adequately given if sent by certified mail or personally delivered or
sent by overnight courier, to the addressee at its address stated
herein, or in the Schedules executed pursuant to the Agreement or at
such other place as such addressee may have designated in writing.
Any provision of this Agreement which is prohibited or
unenforceable in any
5
<PAGE>
jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction."
2. Effective as of the date hereof, the Guaranty solely to the extent it
relates to Schedules designated Series A, is hereby amended and modified by
deleting in its entirety the fourth paragraph from page 1 of the Guaranty.
3. Except as expressly set forth herein, the terms and conditions of the
Guaranty remain unmodified and in full force and effect.
4. Guarantor confirms that the Guaranty remains in full force and effect
and applicable to the Agreement as amended herein and to all Schedules executed
on or after the date hereof and designated as Series A.
5. Guarantor further acknowledges and agrees that the Guaranty is for the
benefit of, and may be enforced by, General Electric Capital Corporation, the
Assignees (as such term is defined in the Agreement) (including, without
limitation, MDFC EQUIPMENT LEASING CORPORATION, MELLON US LEASING, A DIVISION OF
MELLON LEASING CORPORATION, MBC LEASING CORP., NYNEX CREDIT COMPANY, JOHN
HANCOCK LEASING CORPORATION) and their successors and assigns.
6. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. The parties agree that any action or proceeding arising out of or
relating to this Amendment may be commenced in the United States District Court
for the Southern District of New York.
6
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment No. 1 to
Corporate Guaranty to be executed by their duly authorized representatives as of
the date first above written.
LESSOR: GUARANTOR:
GENERAL ELECTRIC CAPITAL PLASTIC CONTAINERS, INC.
CORPORATION
By: By:/s/Abdo Yazgi
----------------------------- -----------------------------
Name: Name: Abdo Yazgi
--------------------------- -----------------------------
Title: Title: Vice President
-------------------------- -----------------------------
7
<PAGE>
AMENDMENT NO. 2 TO CORPORATE GUARANTY
THIS AMENDMENT NO. 2 TO CORPORATE GUARANTY is made as of the 17th day of
December, 1996 (the "Amendment"), between GENERAL ELECTRIC CAPITAL CORPORATION
("Lessor") and PLASTIC CONTAINERS, INC. ("Guarantor").
Lessor and Continental Plastic Containers, Inc. ("Lessee") have heretofore
executed that certain Master Lease Agreement dated as of May 20, 1994, as
amended (the "Agreement"), pursuant to which Lessor agreed to lease to Lessee
and Lessee agreed to lease from Lessor the equipment described on Schedules
executed and delivered pursuant thereto. In connection with the Agreement,
Guarantor has heretofore executed that certain Corporate Guaranty dated May 20,
1994 (the "Guaranty"), in favor of Lessor. The Agreement is one of the "Account
Documents" as such term used in the Guaranty.
The parties have concurrently herewith amended the Agreement and desire to
amend the Guaranty, solely to the extent they relate to Schedules executed on or
after the date hereof and which are designated as Series A.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
1. Effective as of the date hereof, the Guaranty is hereby amended and
modified by adding the following additional paragraph:
"To secure the performance as and when due of all obligations of the
undersigned to you, now existing or hereafter arising hereunder, the
undersigned hereby grants to you a 'silent' second priority security
interest in that certain Promissory Note of Continental Can Company,
Inc. payable to Plastic Containers, Inc. in the original principal
amount of Thirty Million Dollars ($30,000,000) due June 15, 2007,
bearing interest at the rate of 6.66 percent per annum, providing for
the payment of principal and interest upon maturity (the 'Continental
Can Note'), together with the proceeds (both cash and non-cash)
thereof (but without the undersigned having a
<PAGE>
power of sale); and the undersigned shall execute and deliver to you
such documents and instruments as you reasonably may require to
perfect the security interest granted herein. You acknowledge that the
security interest granted to you with respect to the Continental Can
Note is subject and subordinate in all respects to the security
interest granted to United States Trust Company of New York, in its
capacity as trustee (the 'Trustee'), under that certain Indenture
dated as of December 17, 1996, among the Continental Plastic
Containers, Continental Caribbean Containers, the Trustee and the
undersigned. You agree that you shall not take any enforcement action
or exercise any remedies hereunder in respect of the Continental Can
Note unless you have received a notice from the Trustee that all of
the obligations of the Account Party and the other parties under the
Indenture and related documents have been satisfied in full."
2. Except as expressly set forth herein, the terms and conditions of the
Guaranty remain unmodified and in full force and effect.
3. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE. The parties agree that any action or proceeding arising out of or
relating to this Amendment may be commenced in the United States District Court
for the Southern District of New York.
2
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Amendment No. 2 to
Corporate Guaranty to be executed by their duly authorized representatives as
of the date first above written.
LESSOR: GUARANTOR:
GENERAL ELECTRIC CAPITAL PLASTIC CONTAINERS, INC.
CORPORATION
By: By:/s/Abdo Yazgi
----------------------------- -----------------------------
Name: Name: Abdo Yazgi
--------------------------- -----------------------------
Title: Title: Vice President
-------------------------- -----------------------------
3
<PAGE>
EXHIBIT 10.5
================================================================================
STOCK PURCHASE AGREEMENT
BY AND AMONG
CONTINENTAL CAN COMPANY, INC.,
PLASTIC CONTAINERS, INC.,
MERRYWOOD, INC., AND
PLAZA LIMITED
DATED AS OF OCTOBER 22, 1996
================================================================================
<PAGE>
STOCK PURCHASE AGREEMENT
------------------------
THIS STOCK PURCHASE AGREEMENT (the "Agreement") is entered into as of October
---------
22, 1996, by and among PLASTIC CONTAINERS, INC., a Delaware corporation ("PCI"),
---
CONTINENTAL CAN COMPANY, INC., a Delaware corporation ("Continental"),
-----------
MERRYWOOD, INC., a Delaware corporation ("Merrywood"), and PLAZA LIMITED, a
---------
British Virgin Island corporation ("Plaza").
-----
RECITALS
--------
A. PCI has outstanding an aggregate of 100 shares of common stock, par value
$1.00 per share ("PCI Common Stock"), of which 50 shares are owned by
----------------
Continental and 50 shares are owned by Merrywood.
B. PCI, Continental and Merrywood are parties to the Shareholders Agreement,
dated as of October 19, 1991 (the "Original Shareholders Agreement"), and,
-------------------------------
together with Plaza, are parties to the Agreement Among PCI Shareholders, dated
as of September 10, 1992, as amended by Addendum No. 1, dated as of November 15,
1995, (the "Agreement Among PCI Shareholders").
--------------------------------
C. Pursuant to the provisions of Section 2.1 of the Agreement Among PCI
Shareholders, Merrywood delivered to Continental a notice dated July 31, 1996
(the "Merrywood Put Notice"), pursuant to which Merrywood exercised its right to
require Continental to purchase Merrywood's 50 shares of PCI Common Stock on
December 2, 1996 at a price anticipated to be approximately $45,424,838.00.
<PAGE>
D. Merrywood and Continental desire to enter into this Agreement to confirm
their agreement that in lieu of purchasing all of Merrywood's 50 shares of PCI
Common Stock on December 2, 1996, Continental will (i) purchase from Merrywood
34 shares of PCI Common Stock on or before January 31, 1997, and (ii) will
purchase Merrywood's remaining 16 shares of PCI Common Stock on or before
December 31, 2000, in each case, at the price and on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
PURCHASE AND SALE OF PCI SHARES
-------------------------------
Section 1.1. Purchase and Sale of PCI Shares. Subject to the terms and
-------------------------------
conditions of this Agreement, at the Initial Closing (as defined in Section 2.1)
Merrywood shall sell to Continental, and Continental shall purchase from
Merrywood, 34 shares of PCI Common Stock (the "Initial PCI Shares"), and at the
------------------
Final Closing (as defined in Section 2.2) Merrywood shall sell to Continental,
and Continental shall purchase from Merrywood, all remaining shares of PCI
Common Stock (the "Remaining PCI Shares") owned then by it, (to the extent not
--------------------
previously purchased by Continental at one or more Intermediate Closings (as
defined in Section 2.3)).
-2-
<PAGE>
ARTICLE II
CLOSINGS AND PAYMENT
---------------------
Section 2.1. Initial Closing: Purchase Price: and Documents to be Delivered.
---------------------------------------------------------------
(a) The initial closing of the sale by Merrywood of 34 shares of PCI Common
Stock owned by it shall be held at the offices of Loeb, Block, Wacksman &
Selzer, LLP, 505 Park Avenue, New York, New York, at 10:00 a.m. on February 7,
1997, or on such earlier date and at such other place as the parties hereto
shall mutually agree (the "Initial Closing", and such date the "Initial Closing
--------------- ---------------
Date"). Continental agrees that if PCI's High-Yield Bond Offering (as defined
- ----
in Section 2.2 hereof) is consummated prior to February 7, 1997, the Initial
Closing shall be held within two business days thereafter. The total purchase
price for the Initial Shares to be paid at the Initial Closing shall be
$30,000,000, (the "Initial PCI Shares Purchase Price").
---------------------------------
(b) At the Initial Closing, Merrywood shall deliver to Continental:
(i) One or more certificates representing the Initial PCI Shares;
(ii) stock powers endorsed in blank and executed by the President or any
Vice President of Merrywood;
(iii) resignations of Charles Marquardt and Cayo Zapata as directors of
PCI and of Jose-Luis Zapata as President of PCI; and
(iv) resignations of Charles Marquardt and Cayo Zapata as directors of
Continental and of Patricio Zapata as an Advisory Director of
Continental.
(c) At the Initial Closing, Continental shall deliver to Merrywood and Plaza:
(i) a check payable to Merrywood, issued or certified by a New York
Clearing House Bank, in the amount of the Initial PCI Shares
Purchase Price (or if
-3-
<PAGE>
Merrywood shall have so requested, such payment shall be made by
wire transfer of such funds to an account maintained by Merrywood at
a United States banking institution which is a member of the Federal
Reserve System);
(ii) a check payable to Plaza in reimbursement of Merrywood's legal
expenses, as provided in Section 6.3 hereof;
(iii) a Warrant issued to Plaza to purchase, at any time prior to January
1, 2001, up to 150,000 shares of Continental common stock, $.25 par
value per share, at a price equal to the lower of (x) $20.00 per
share or (y) the per share book value of Continental common stock as
of December 31, 1996, which warrant shall include registration
rights (similar to those set forth in section 3.3 hereof) with
respect to shares of Continental common stock issuable on such
warrant's exercise, such Warrant to be in the form attached as
Exhibit A hereto; and
(iv) a Stock Pledge Agreement, pursuant to which, Continental will grant
to Merrywood, as security for the performance by Continental of its
obligations under this Agreement, a security interest in all of the
shares of PCI Common Stock owned by Continental (including the 34
shares of PCI Common Stock purchased at the Initial Closing), such
Stock Pledge Agreement to be in the form attached as Exhibit B
hereto.
(d) At the Initial Closing, Continental shall deliver to Loeb, Block,
Wacksman & Selzer, LLP one or more certificates representing the 84
shares of PCI Common Stock pledged pursuant to the Stock Pledge
Agreement, together with stock powers endorsed in blank and executed
by the President or any Vice President of Continental.
-4-
<PAGE>
Section 2.2. Final Closing; Purchase Price; and Documents to be Delivered.
------------------------------------------------------------
(a) Subject to any sale of PCI Common Stock at one or more Intermediate Closings
pursuant to Section 2.3 hereof, the final closing for the sale by Merrywood to
Continental of the Remaining PCI Shares shall be held at Loeb, Block, Wacksman &
Selzer, LLP, 505 Park Avenue, New York, New York, at 10:00 a.m. on December 31,
2000, or on such other date and at such other place as the parties shall
mutually agree (the "Final Closing", and such date the "Final Closing Date").
------------- ------------------
The total purchase price to be paid by Continental for the Remaining PCI Shares
shall be an amount (the "Remaining PCI Shares Purchase Price") equal to (i) the
Remaining Balance of the Total Purchase Price for PCI Shares, less (ii) an
amount equal to the portion of any Intermediate Closing PCI Shares Purchase
Price referred to clauses (x) and (y) of the definition of that term in Section
2.3 hereof, plus (iii) interest on such difference, compounded monthly, from the
Initial Closing Date to (but not including) the Final Closing Date at a rate
equal to 0.75% above the nominal interest rate of the senior secured notes
(which PCI intends to sell in an underwritten public offering (the "High-Yield
----------
Bond Offering") for the purposes of (x) raising funds to pay the Initial PCI
- -------------
Shares Purchase Price purchase price under the Initial Closing and (y)
refinancing PCI's currently outstanding 10-3/4% Senior Secured Notes). The term
"Remaining Balance of the Total Purchase Price for PCI Shares" shall mean (i)
$45,424,838.00 as adjusted to appropriately reflect (x) any increase resulting
from any period between December 2, 1996 and the Initial Closing Date, and (y)
any change in the prime rate as announced by Citibank, N.A. from the prime rate
in effect as of the date of this Agreement (8.25% per annum), less (ii)
$30,000,000.
-5-
<PAGE>
(b) At the Final Closing Merrywood shall deliver to Continental:
(i) one or more certificates representing all of the Remaining PCI
Common Stock;
(ii) stock powers endorsed in blank and executed by the President or any
Vice President of Merrywood;
(iii) resignation of all directors of PCI and Continental appointed or
designated by Merrywood pursuant to this Agreement; and
(iv) the Stock Pledge Agreement and all certificates for shares of PCI
Common Stock (and related stock powers) pledged pursuant to the
Stock Pledge Agreement and held by Loeb, Block, Wacksman & Selzer,
LLP.
(c) At the Final Closing, Continental shall deliver to Merrywood:
(i) a check payable to Merrywood issued or certified by a New York
Clearing House Bank in the amount of the Remaining PCI Shares
Purchase Price (or if Merrywood shall have so requested, such
payment shall be made by wire transfer of such funds to an account
maintained by Merrywood at a United States banking institution which
is member of the Federal Reserve System);
(ii) a check payable to Plaza in reimbursement of Merrywood's expenses in
obtaining an opinion regarding the financial condition of PCI, as
provided in Section 6.4 hereof.
Section 2.3. Intermediate Closing; Purchase Price; and Documents to be
---------------------------------------------------------
Delivered.
- ---------
(a) Continental shall have the right from time to time, upon not less than 20
days' prior written notice, to purchase all or any portion of the Remaining PCI
Shares for a price (the "Intermediate Closing PCI Shares Purchase Price")
----------------------------------------------
calculated by multiplying (x) the Remaining
-6-
<PAGE>
Balance of the Total Purchase Price for PCI Shares by (y) a fraction, (i) the
numerator of which shall be the number of Remaining PCI Shares to be purchased
at such Intermediate Closing and (ii) the denominator of which shall be 16, plus
(z) interest, compounded monthly, on such product from the Initial Closing Date
to (but not including) the date of the Intermediate Closing Date (as defined in
paragraph (c) of this Section) at a rate equal to 0.75% above the nominal
interest rate of the High Yield Bond Offering, provided, however, that the
-------- -------
Intermediate Closing PCI Shares Purchase Price shall not be less than
$3,000,000.
(b) If Continental desires to exercise its right to purchase all or any
portion of the Remaining PCI Shares, Continental shall give Merrywood not less
than 20 days prior written notice, which notice shall specify: (i) the number of
Remaining PCI Shares to be purchased; (ii) the Intermediate Closing PCI Shares
Purchase Price; and (iii) the date of the Intermediate Closing.
(c) The closing of the purchase of all or a portion of the Remaining PCI
Shares shall be held at the offices of Loeb, Block, Wacksman & Selzer, LLP, 505
Park Avenue, New York, New York, at 10:00 a.m. on the date specified in the
notice referred to in paragraph (b) above (an "Intermediate Closing" and any
--------------------
such date the "Intermediate Closing Date").
-------------------------
(d) At each Intermediate Closing, Merrywood shall deliver to Continental:
(i) one or more certificates representing the number of Remaining PCI
Shares to be purchased at the Intermediate Closing;
(ii) stock powers endorsed in blank and executed by the President or any
Vice President of Merrywood; and
-7-
<PAGE>
(iii) if all Remaining Shares are being purchased, resignations of all
officers and directors of PCI and Continental appointed or nominated by
Merrywood pursuant to this Agreement.
(e) At each Intermediate Closing, Continental shall deliver to Merrywood:
(i) a check payable to Merrywood issued or certified by a New York Clearing
House Bank in the amount of the Intermediate Closing PCI Shares
Purchase Price (or if Merrywood shall have so requested, such payment
shall be made by wire transfer of such funds to an account maintained
by Merrywood at a United States banking institution which is a member
of the Federal Reserve System); and
(ii) an addendum to the Stock Pledge Agreement, pursuant to which
Continental grants Merrywood a security interest in the Remaining PCI
Shares purchased by Continental at such Intermediate Closing.
(f) At such Intermediate Closing, Continental shall deliver to Loeb, Block,
Wacksman & Selzer, LLP one or more certificates representing the Remaining PCI
Shares purchased by Continental at such Intermediate Closing and pledged
pursuant to the Stock Pledge Agreement (together with stock powers endorsed in
blank and executed by the President or any Vice President of Continental).
ARTICLE III
CERTAIN REMEDIES OF MERRYWOOD
-----------------------------
Section 3.1. Failure to Pay Initial PCI Shares Purchase Price. In the event
------------------------------------------------
that Continental shall fail to pay the Initial PCI Shares Purchase Price at the
Initial Closing, then this
-8-
<PAGE>
Agreement shall terminate and be of no further force or effect (except that
Continental shall continue to be obligated (i) to reimburse Merrywood for its
legal expenses, as set forth in Section 6.3 hereof and (ii) to reimburse
Merrywood for its expenses in obtaining an opinion regarding the financial
condition of PCI, as set forth in Section 6.4 hereof). Furthermore, the
Original Shareholders Agreement, the Agreement Among PCI Shareholders and the
Merrywood Put Notice shall automatically be reinstated and be in full force and
effect, with the same effect as if they had not been terminated pursuant to this
Agreement.
Section 3.2. Failure to Pay Remaining PCI Shares Purchase Price. If for
--------------------------------------------------
any reason Continental shall fail to pay the Remaining PCI Shares Purchase Price
on the Final Closing Date, Merrywood may, at its option, either (i) enforce its
right to receive payment of the Remaining PCI Shares Purchase Price or (ii)
elect, in a written notice to Continental, to receive shares of Continental
Common Stock in lieu of the Remaining PCI Shares Purchase Price. In the event
that Merrywood elects to receive shares of Continental Common Stock in lieu of
the Remaining PCI Shares Purchase Price, Merrywood shall be entitled to receive
that number of shares of Continental Common Stock (the "Continental Exchange
Shares") equal to the number obtained by dividing (x) the Remaining PCI Shares
Purchase Price by (y) the lower of (aa) $11.93 (appropriately adjusted to
reflect any stock split) or (bb) the average closing price for Continental
Common Stock for the 20 business days prior to the Final Closing Date. The
Continental Exchange shares shall not be subject to any restriction on the
rights of the holder thereof to vote or dispose of such shares, other than any
restriction under the Securities Act of 1933 or any other applicable law.
-9-
<PAGE>
Section 3.3. Registration of Continental Exchange Shares. (a) Promptly
-------------------------------------------
following the issuance and delivery of the Continental Exchange Shares,
Continental will, at its sole cost, use its best efforts to prepare and file
with the Securities and Exchange Commission (the "Commission"), within 30 days
after the issuance and delivery of the Continental Exchange Shares, a
registration statement (the "Registration Statement") registering the resales by
----------------------
Merrywood of the Continental Exchange Shares under the Securities Act of 1933,
as amended (the "1993 Act") and will use its best efforts to cause such
-------------
Registration Statement to be declared effective by the Commission as
expeditiously as possible and will prepare and file with the Commission such
amendments and supplement to such Registration Statement and the related
prospectus used in connection therewith (the "Prospectus") as may be necessary
----------
to keep such Registration Statement effective and to comply with the provisions
of the 1933 Act with respect to the offer of the Continental Exchange Shares
covered by such Registration Statement;
(b) In connection with the filing of any Registration Statement and any
related Prospectus for the registration of the Continental Exchange Shares,
Continental shall also
(i) use its best efforts to register or qualify the Continental Exchange
Shares (or obtain exemptions from such registration or qualification)
under all state securities or blue sky laws reasonably requested by
writing by Merrywood, and otherwise comply with all applicable blue sky
laws;
(ii) otherwise use its best efforts to comply with all applicable rules and
regulations of the Commission relating to the Registration Statement;
-10-
<PAGE>
(iii) cause all Continental Exchange Shares to be listed on the New York
Stock Exchange (or such other exchange (if any) on which the
Continental Common Stock is then listed), upon official notice of
issuance;
(iv) provide promptly to Merrywood upon request each document filed by
Continental with the Commission pursuant to the requirement of Section
13 or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act")
during the effectiveness period;
(v) pay all registration expenses incident to the registration under the
1933 Act of the Continental Exchange Shares, regardless of whether a
Registration Statement becomes effective;
(vi) from time to time furnish Merrywood and Plaza and their affiliates such
number of copies of the Prospectus as may reasonably be requested, all
at the expense of Continental;
(vii) Continental agrees to indemnify Merrywood, Plaza and their affiliates,
each officer and director thereof, and each person who shall control
Merrywood within the meaning of Sections 15 of the 1933 Act and 20 of
the Exchange Act, and each underwriter of any of the Continental
Exchange Shares being registered, under the 1933 Act, against all
claims, losses, damages and liabilities or actions in respect thereof
(including reasonable attorneys' fees and expenses) arising out of or
based upon any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement or Prospectus or
any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements
therein
-11-
<PAGE>
not misleading, or any violation by Continental of any rule or regulation
promulgated under the 1933 Act applicable to Continental in connection with such
registration; provided, that the forgoing shall not apply to the extent that any
--------
claims, losses, damages or liabilities are based upon written information
furnished to Continental by Merrywood, Plaza, their affiliates or any such
underwriter specifically for inclusion in the Registration Statement or
Prospectus.
(c) In connection with the filing of any Registration Statement and any
related Prospectus for the registration of the Continental Exchange Shares,
Merrywood, Plaza and their affiliates
(i) agree to furnish to Continental such information concerning the
distribution of the Continental Exchange Shares being registered under the
1933 Act, and the holders thereof, as shall be required in connection with
such registration; and
(ii) Merrywood and Plaza agree that they shall jointly and severally
indemnify Continental, each officer and director thereof, and such person
who controls Continental within the meaning of Sections 15 of the 1933 Act
and 20 of the Exchange Act, against all claims, losses, damages and
liabilities or action in respect thereof (including reasonable attorneys'
fees and expenses) arising out of or based upon any untrue statement (or
alleged untrue statement) of a material fact relating to Plaza or Merrywood
and based on information supplied by them required to be stated therein or
necessary to make the statements therein not misleading, or any violation
by Merrywood or Plaza of any rule or regulation
-12-
<PAGE>
promulgated under the 1933 Act, applicable to Merrywood or Plaza in
connection with such registration.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CONTINENTAL AND PCI
-----------------------------------------------------
Continental and PCI represent and warrant to Merrywood as follows which
representations and warranties shall survive the Initial Closing, any
Intermediate Closing and the Final Closing, as the case may be:
Section 4.1 Authority. The execution, delivery and performance of this
---------
Agreement, and each of the Stock Pledge Agreement and the Warrant has been duly
authorized and approved by all requisite corporate action, and this Agreement
has been, and such agreements will be, duly executed and delivered by
Continental and PCI pursuant to such authorization and shall constitute valid
and binding obligations of Continental and PCI, enforceable against them in
accordance with their terms, except as the enforcement thereof may be limited by
applicable bankruptcy laws and laws generally affecting creditor's rights and
equitable remedies. Neither the execution or delivery of this Agreement or such
other agreements, the consummation of the transactions contemplated hereby or
thereby, nor compliance by Continental and PCI with any of the provisions hereof
or thereof:
(i) violates or conflicts with, or results in a breach of any provisions of
the Certificate of Incorporation or Bylaws of Continental and PCI, as the
case may be; or
-13-
<PAGE>
(ii) contravenes or constitutes a breach of, or default under, any agreement,
instrument, obligation or document of, or binding upon, Continental or
PCI, as the case may be; or
(iii) violates any order, writ, injunction or decree applicable to Continental
and PCI or any of their respective material assets, as the case may be.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF MERRYWOOD AND PLAZA
----------------------------------
Merrywood and Plaza represent and warrant to Continental as follows, which
representations and warranties shall survive the Initial Closing, any
Intermediate Closing and the Final Closing, as the case may be:
Section 5.1 Title to Shares. Merrywood has valid and marketable title to
---------------
the Initial Shares and the Remaining Shares, free and clear of any security
interests, pledges, liens or similar encumbrances of any other person, and has
the absolute and unrestricted right, power, authority and capacity to sell such
shares, and, upon delivery thereof to Continental, Merrywood will transfer to
Continental good and marketable title thereto, free and clear of any security
interests, pledges, liens or encumbrances.
Section 5.2 Authority. The execution, delivery and performance of this
---------
Agreement and the Stock Pledge Agreement has been duly authorized and approved
on behalf of each of Merrywood and Plaza, as the case may be, by all requisite
corporate action, and each of such agreements has been duly executed and
delivered by Merrywood and Plaza, as the case may be, pursuant to such
authorization and constitutes a valid and binding obligation of each of them
-14-
<PAGE>
enforceable in accordance with its terms, except as the enforcement thereof may
be limited by applicable bankruptcy laws and laws generally affecting creditor's
rights and equitable remedies. Neither the execution or delivery of this
Agreement, or the Stock Pledge Agreement, the consummation of the transactions
contemplated hereby and thereby, nor compliance by Merrywood and Plaza with any
of the provisions hereof or thereof;
(i) violates or conflicts with, or results in a breach of any provisions of
the Certificate of Incorporation or Bylaws of either of Merrywood or
Plaza, as the case may be; or
(ii) contravenes or constitutes a breach of, or default under, any agreement,
instrument, obligation or document of, or binding upon, each of Merrywood
or Plaza, as the case may be; or
(iii) violates any order, writ, injunction or decree applicable to Merrywood or
Plaza.
ARTICLE VI
OTHER AGREEMENTS
-----------------
Section 6.1 Termination of Shareholder Agreements. Effective as of the date
-------------------------------------
hereof (and subject to Section 3.1 hereof), the Original Shareholders Agreement,
the Agreement Among PCI Shareholders and the Merrywood Put Notice are terminated
and shall be of no further force or effect.
Section 6.2 Appointment of Directors. (a) Continental agrees that as long as
------------------------
this Agreement remains in full force and effect, Continental and its management
shall cause Jose-Luis Zapata (or some other member of the Zapata family
designated by Merrywood) to be included
-15-
<PAGE>
in the slate of directors submitted by the management of Continental to the
Continental stockholders for election at each annual meeting of stockholders.
(b) Continental agrees that as long as this Agreement remains in full force
and effect, Continental and its management shall cause Jose-Luis Zapata (or some
other member of the Zapata family designated by Merrywood) to be elected a
director of PCI.
(c) The director of Continental designated by Merrywood pursuant to paragraph
(a) above and the director of PCI designated by Merrywood pursuant to paragraph
(b) above, shall have full and complete access to the books, records, operating
results (including monthly operating reports), financial records and financial
and operating projections of Continental and PCI, as the case may be.
Section 6.3. Reimbursement of Legal Expenses. On the Initial Closing Date,
-------------------------------
Continental will reimburse Plaza for any legal expenses of Merrywood (up to an
aggregate maximum of $100,000) related to the negotiation, execution and
delivery of this Agreement.
Section 6.4. Reimbursement for Financial Opinion Expense. On the Final
-------------------------------------------
Closing Date (or any Intermediate Closing Date on which Continental purchases
Shares of the Remaining PCI Shares), Continental shall reimburse Plaza for the
expense of Merrywood (up to a maximum of $150,000) of obtaining an opinion
regarding the financial condition of PCI, from a reputable investment banking
firm or other financial advisor. In addition to the reimbursing to Plaza for
such expense, Continental shall pay Plaza interest, compounded monthly, on such
amount from the Initial Closing Date to (but not including) the date of payment
at a rate equal to 0.75% above the nominal interest rate of the High Yield Bond
Offering. If for any reason Continental shall fail to pay the Initial PCI
Shares Purchase Price at the Initial Closing, then PCI shall be obligated
-16-
<PAGE>
to reimburse Plaza on the Initial Closing Date in the amount set forth in the
first sentence of this Section.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Headings. The section headings herein are for convenience of
--------
reference only, do not constitute a part of this Agreement, and shall not be
deemed to limit or otherwise affect any of the provisions hereof.
Section 7.2 Notices. Except as otherwise expressly provided herein, all
-------
notices and other communications hereunder, including notice of a change of
address, shall be in writing and shall be deemed to have been duly given if
delivered personally or mailed by certified mail, postage prepaid, addressed as
follows (provided that any notice of a change of address shall only be effective
upon receipt):
(a) If to PCI, to:
Plastic Containers, Inc.
c/o Continental Can, Inc.
One Aerial Way
Syosset, New York 11791
Attn: Abdo Yazgi, Esq.
Vice President, Treasurer and Secretary
(b) If to Continental, to:
Continental Can Company, Inc.
One Aerial Way
Syosset, New York 11791
Attn: Abdo Yazgi, Esq.
Executive Vice President and Chief Administrative Officer
-17-
<PAGE>
(c) If to Merrywood, to:
Merrywood, Inc.
c/o Loeb, Block, Wacksman & Selzer, LLP
505 Park Avenue
New York, New York 10022
Attn: Charles J. Block, Esq.
(d) If to Plaza, to:
Plaza Limited
c/o Loeb, Block, Wacksman & Selzer, LLP
505 Park Avenue
New York, New York 10022
Attn: Charles J. Block, Esq.
Section 7.3. Cumulative Rights and No Waiver. Each and every right granted
-------------------------------
to any party hereunder or under any other document delivered hereunder or in
connection herewith, or allowed it by law or equity, shall be cumulative and may
be exercised from time to time. No failure on the part of any party to exercise
any right shall operate as a waiver thereof, nor shall any single or partial
exercise by any party of any right preclude any other or future exercise thereof
or the exercise of any other right.
Section 7.4. Transfers and Assignments; Binding Agreement. The rights and
--------------------------------------------
obligations of the parties hereto shall inure to the benefit of and shall be
binding upon the successors, transferees, assigns, executors, administrators or
personal representatives of each of them; provided, however, that this Agreement
shall not be transferable or assignable by any party without the prior written
consent of the other parties hereto, and any attempted transfer or assignment
shall be void and of no effect, except, that Merrywood shall have the right to
assign
-18-
<PAGE>
its rights under this Agreement to Plaza, or any other corporation controlled
by, or under common control with Merrywood.
Section 7.5 Governing Law. This Agreement shall be governed by the Federal
-------------
laws of the United States and, to the extent of the absence of any controlling
Federal law, by the laws of the State of New York, excluding the conflicts of
law provisions thereof.
Section 7.6. Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which counterparts shall have the same force and effect as
if the parties hereto had executed a single copy of this Agreement.
Section 7.7. Amendment. This Agreement may not be changed orally, but only
---------
by an agreement in writing signed by the person against whom enforcement of any
waiver, change, modification or discharge shall be sought.
Section 7.8 Severability. If, and insofar as, any part or provision of this
------------
Agreement is or becomes void or unenforceable, it shall be deemed not to be a
part of this Agreement, and the remaining Provisions of this Agreement shall
continue in full force and effect.
Section 7.9. Entire Agreement. This Agreement constitutes and contains the
----------------
entire agreement of the parties respecting the subject matter hereof and
supersedes any and all prior negotiations, correspondence, understandings, and
agreements between the parties respecting the subject matter hereof.
-19-
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement at the locations
and on the dates indicated below.
PLASTIC CONTAINERS, INC.
By: /s/Donald J. Bainton
-------------------------------
Name: Donald J. Bainton
Title: Chief Executive Officer
Executed at: Syosset, New York , on October 22, 1996
--------------------
CONTINENTAL CAN COMPANY, INC.
By: /s/Donald J. Bainton
--------------------------------
Name: Donald J. Bainton
Title: Chief Executive Officer
Executed at: Syosset, New York , on October 22, 1996
--------------------
MERRYWOOD, INC.
By: /s/Howard Berke
---------------------------------
Name: Howard Berke
Title: Vice-President
Executed at: New York, N.Y. , on October 23, 1996
-------------------
PLAZA LIMITED
By: /s/Gath A. T. Hewlett
---------------------------------
Name: Gath A. T. Hewlett
Title: Vice-President
Executed at: Tortola, B.V.I. , on October 23, 1996
--------------------
-20-
<PAGE>
EXHIBIT 12
COMPUTATION OF RATIOS OF EARNINGS TO FIXED CHARGES
(in thousands, except ratios)
<TABLE>
<CAPTION>
Nine
Months
Year Ended December 31, Ended
---------------------------------------------------------- September 30,
1991 1992 1993 1994 1995 1996
------- -------- -------- -------- ------- --------
<S> <C> <C> <C> <C> <C> <C>
Earnings (loss) before income taxes
and extraordinary loss.................... $ 3,716 $ (8,947) $ (8,182) $ (3,414) $ (2,500) $ (2,384)
Add: fixed charges as defined
One-third of rents(a).................... 1,448 1,471 1,476 1,585 2,030 1,867
Interest expense......................... 1,203 11,623 12,250 11,831 11,807 9,618
Amortization of financing fees........... 50 598 628 615 801 561
------- -------- -------- -------- ------- --------
Total fixed charges........................ $ 2,701 $ 13,692 $ 14,354 $ 14,031 $ 14,638 $ 12,046
------- -------- -------- -------- ------- --------
Total earnings before fixed
charges................................ $ 6,417 $ 4,745 $ 6,172 $ 10,617 $ 12,138 $ 9,662
======= ======== ======== ======== ======= ========
Ratios of earnings to fixed charges........ 2.4x - (b) - (b) - (b) - (b) - (b)
Ratios of earnings to fixed charges --
pro forma.................................. - (c) - (c)
======= ======== ======== ======== ======= ========
</TABLE>
- ----------
(a) Estimated by management as being representative of the interest factor
relating to rental expense.
(b) Earnings were insufficient to cover fixed charges for the years ended
December 31, 1992, 1993, 1994 and 1995, and for the nine months ended
September 30, 1996 by $8,947, $8,182, $3,414, $2,500, and $2,384,
respectively.
(c) On a pro forma basis, earnings were insufficient to cover fixed charges by
$3,380 for the year ended December 31, 1995 and by $2,784 for the nine
months ended September 30, 1996.
<PAGE>
EXHIBIT 21
Subsidiaries of Plastic Containers, Inc.
Jurisdiction
of
Incorporation
-------------
Continental Plastic Containers, Inc. Delaware
Continental Caribbean Containers, Inc. Delaware
Neither of the above listed subsidiaries has any subsidiaries.
<PAGE>
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Plastic Containers, Inc.
The audits referred to in our report dated February 2, 1996 (page F-2 of the
prospectus in this Registration Statement) included the consolidated financial
statement Schedule II for each of the years in the three-year period ended
December 31, 1995, included in this Registration Statement. This financial
statement schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement schedule
based on our audits. In our opinion, such financial statement schedule, when
considered in relation to the basic consolidated financial statements taken as
a whole, presents fairly, in all material respects, the information set forth
therein.
We consent to the inclusion in this Registration Statement of the above
report and our report dated February 2, 1996, and to the reference to our firm
under the heading "Experts" in the prospectus included herein. Such report
refers to a change in accounting for postemployment benefits in 1994.
KPMG Peat Marwick LLP
Omaha, Nebraska
January 16, 1997
<PAGE>
EXHIBIT 25
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
__________________________
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF
A CORPORATION DESIGNATED TO ACT AS TRUSTEE
__________________________
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) _______
__________________________
UNITED STATES TRUST COMPANY OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-3818954
(Jurisdiction of incorporation (I.R.S. Employer
if not a U.S. national bank) Identification Number)
114 West 47th Street 10036-1532
New York, New York (Zip Code)
(Address of principal
executive offices)
__________________________
Plastic Containers, Inc.
(Exact name of OBLIGOR as specified in its charter)
Delaware 13-3632393
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Aerial Way 11791
Syosset, NY
(Address of principal executive offices) (Zip code)
__________________________
Continental Plastic Containers, Inc.
(Exact name of OBLIGOR as specified in its charter)
Delaware 06-1056158
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 Merritt 7 Corporate Park 06856
Norwalk, CT
(Address of principal executive offices) (Zip code)
<PAGE>
- 2 -
__________________________
Continental Caribbean Containers, Inc.
(Exact name of OBLIGOR as specified in its charter)
Delaware 66-0342024
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
301 Merritt 7 Corporate Park 06856
Norwalk, CT
(Address of principal executive offices) (Zip code)
__________________________
10% Senior Secured Notes due 2006, Series B
(Title of the indenture securities)
<PAGE>
- 3 -
GENERAL
1. GENERAL INFORMATION
-------------------
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Federal Reserve Bank of New York (2nd District), New York, New York
(Board of Governors of the Federal Reserve System).
Federal Deposit Insurance Corporation, Washington, D.C.
New York State Banking Department, Albany, New York
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
2. AFFILIATIONS WITH THE OBLIGOR
-----------------------------
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
3,4,5,6,7,8,9,10,11,12,13,14 and 15.
Plastic Containers, Inc., Continental Plastic Containers, Inc. and
Continental Caribbean Containers, Inc. is currently not in default under
any of its outstanding securities for which United States Trust Company of
New York is Trustee. Accordingly, responses to Items 3, 4, 5, 6, 7, 8, 9,
10, 11, 12, 13, 14 and 15 of Form T-1 are not required under General
Instruction B.
<PAGE>
- 4 -
16. LIST OF EXHIBITS
----------------
T-1.1 -- Organization Certificate, as amended, issued by the
State of New York Banking Department to transact business as a
Trust Company, is incorporated by reference to Exhibit T-1.1 to
Form T-1 filed on September 15, 1995 with the Commission pursuant
to the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.2 -- Included in Exhibit T-1.1.
T-1.3 -- Included in Exhibit T-1.1.
T-1.4 -- The By-Laws of United States Trust Company of New York,
as amended, is incorporated by reference to Exhibit T-1.4 to Form
T-1 filed on September 15, 1995 with the Commission pursuant to
the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990 (Registration No. 33-97056).
T-1.6 -- The consent of the trustee required by Section 321(b)
of the Trust Indenture Act of 1939, as amended by the Trust
Indenture Reform Act of 1990.
T-1.7 -- A copy of the latest report of condition of the trustee
pursuant to law or the requirements of its supervising or
examining authority.
NOTE
As of January 10, 1997, the trustee had 2,999,020 shares of Common Stock
outstanding, all of which are owned by its parent company, U. S. Trust
Corporation. The term "trustee" in Item 2, refers to each of United States
Trust Company of New York and its parent company, U. S. Trust Corporation.
In answering Item 2 in this statement of eligibility, as to matters
peculiarly within the knowledge of the obligor or its directors, the
trustee has relied upon information furnished to it by the obligor and will
rely on information to be furnished by the obligor and the trustee
disclaims responsibility for the accuracy or completeness of such
information.
_____________________
<PAGE>
- 5 -
Pursuant to the requirements of the Trust Indenture Act of 1939, the
trustee, United States Trust Company of New York, a corporation organized
and existing under the laws of the State of New York, has duly caused this
statement of eligibility to be signed on its behalf by the undersigned,
thereunto duly authorized, all in the City of New York, and State of New
York, on the 10th day of January, 1997.
UNITED STATES TRUST COMPANY OF
NEW YORK, Trustee
By: /s/ Patricia Stermer
------------------------------
Patricia Stermer
Assistant Vice President
Pst/pg
(rv:kk011097)
<PAGE>
EXHIBIT T-1.6
-------------
The consent of the trustee required by Section 321(b) of the Act.
United States Trust Company of New York
114 West 47th Street
New York, NY 10036
September 1, 1995
Securities and Exchange Commission
450 5th Street, N.W.
Washington, DC 20549
Gentlemen:
Pursuant to the provisions of Section 321(b) of the Trust Indenture Act of 1939,
as amended by the Trust Indenture Reform Act of 1990, and subject to the
limitations set forth therein, United States Trust Company of New York ("U.S.
Trust") hereby consents that reports of examinations of U.S. Trust by Federal,
State, Territorial or District authorities may be furnished by such authorities
to the Securities and Exchange Commission upon request therefor.
Very truly yours,
UNITED STATES TRUST COMPANY
OF NEW YORK
/S/Gerard F. Ganey
------------------
By: Gerard F. Ganey
Senior Vice President
<PAGE>
EXHIBIT T-1.7
UNITED STATES TRUST COMPANY OF NEW YORK
CONSOLIDATED STATEMENT OF CONDITION
SEPTEMBER 30, 1996
------------------
(IN THOUSANDS)
<TABLE>
<CAPTION>
ASSETS
- ------
<S> <C>
Cash and Due from Banks $ 38,257
Short-Term Investments 82,377
Securities, Available for Sale 861,975
Loans 1,404,930
Less: Allowance for Credit Losses 13,048
----------
Net Loans 1,391,882
Premises and Equipment 60,012
Other Assets 133,673
----------
TOTAL ASSETS $2,568,176
==========
LIABILITIES
- -----------
Deposits:
Non-Interest Bearing $ 466,849
Interest Bearing 1,433,894
----------
Total Deposits 1,900,743
Short-Term Credit Facilities 369,045
Accounts Payable and Accrued Liabilities 143,604
----------
TOTAL LIABILITIES $2,413,392
==========
STOCKHOLDER'S EQUITY
- --------------------
Common Stock 14,995
Capital Surplus 42,394
Retained Earnings 98,402
Unrealized Gains (Losses) on Securities
Available for Sale, Net of Taxes (1,007)
----------
TOTAL STOCKHOLDER'S EQUITY 154,784
----------
TOTAL LIABILITIES AND
STOCKHOLDER'S EQUITY $2,568,176
==========
</TABLE>
I, Richard E. Brinkmann, Senior Vice President & Comptroller of the named bank
do hereby declare that this Statement of Condition has been prepared in
conformance with the instructions issued by the appropriate regulatory authority
and is true to the best of my knowledge and belief.
Richard E. Brinkman, SVP & Controller
October 24, 1996
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
TO TENDER 10% SENIOR SECURED NOTES DUE 2006, SERIES A
IN EXCHANGE FOR 10% SENIOR SECURED NOTES DUE 2006, SERIES B
OF
PLASTIC CONTAINERS, INC.
THE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON , 1997,
UNLESS EXTENDED (THE "EXPIRATION DATE"). TENDERS OF 10% SENIOR SECURED
NOTES DUE 2006, SERIES A (THE "OLD NOTES") MAY BE WITHDRAWN AT ANY TIME
PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION DATE.
The Exchange Agent for the Offer is
UNITED STATES TRUST COMPANY OF NEW YORK
By Facsimile
By Mail: Transmission: By Hand:
United States Trust (212) 420-6152 United States Trust
Company Company
of New York Confirm by telephone: of New York
P.O. Box 844 111 Broadway
Cooper Station (800) 548-6565 Lower Level
New York, New York Corporate Trust Window
10276-0844 New York, New York
By Overnight Courier:
United States Trust Company
of New York
770 Broadway
New York, New York 10003
Attention: Corporate Trust
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OR FACSIMILE NUMBER
OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS CONTAINED HEREIN SHOULD BE READ CAREFULLY BEFORE THIS
LETTER OF TRANSMITTAL IS COMPLETED.
ALL CAPITALIZED TERMS USED BUT NOT DEFINED HEREIN SHALL HAVE THE MEANINGS
GIVEN TO THEM IN THE PROSPECTUS DATED , 1997, RELATING TO THIS OFFER
(THE "PROSPECTUS").
<PAGE>
This Letter of Transmittal is to be used by Holders of Old Notes if
certificates representing Old Notes are to be physically delivered to the
Depositary herewith by such Holders. This Letter of Transmittal will also be
deemed to have been executed and delivered with respect to all Old Notes
tendered in the Offer pursuant to the Automated Tender Offer Program of The
Depository Trust Company ("DTC"). Delivery of documents to DTC does not
constitute delivery to the Exchange Agent.
Your bank or broker can assist you in completing this Letter of Transmittal.
The instructions included herein must be followed. Questions and requests for
assistance may be directed to the Exchange Agent at its address and telephone
number given in Instruction 9 to this Letter of Transmittal. Requests for
copies of the Prospectus, this Letter of Transmittal or other documents may be
directed to the Exchange Agent, and copies will be furnished promptly at the
expense of Plastic Containers, Inc.
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this
Letter of Transmittal. Tenders of Old Notes will be accepted only in principal
amounts equal to $1,000 or an integral multiple thereof.
DESCRIPTION OF NOTES
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NAME(S) AND
ADDRESS(ES)
OF
HOLDER(S) AGGREGATE
(PLEASE PRINCIPAL PRINCIPAL
FILL IN IF CERTIFICATE AMOUNT AMOUNT
BLANK) NUMBERS* REPRESENTED** TENDERED
- ------------------------------------------------------
------------
------------
------------
------------
<S> <C> <C> <C>
TOTAL PRINCI-
PAL AMOUNT OF
NOTES
</TABLE>
- -------------------------------------------------------------------------------
* Need not be completed by holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered," and subject to the terms and conditions of the Prospectus, a
holder will be deemed to have tendered the entire aggregate principal
amount represented by the Old Notes indicated in the column labeled
"Aggregate Principal Amount Represented." See Instruction 2.
2
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY.
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the Prospectus
dated , 1997 (the "Prospectus") of Plastic Containers, Inc., a Delaware
corporation (the "Company"), (which Prospectus, together with this Letter of
Transmittal and the instructions hereto, constitutes the "Offer") offering to
exchange $1,000 principal amount of the Company's 10% Senior Secured Notes due
2006, Series B (the "New Notes") for each $1,000 principal amount of the
Company's 10% Senior Secured Notes due 2006, Series A (the "Old Notes"). Upon
the terms and subject to the conditions of the Offer, the undersigned hereby
tenders to the Company the principal amount of Old Notes indicated in the box
above.
Subject to and effective upon the acceptance for exchange of Old Notes
tendered hereby, by executing and delivering this Letter of Transmittal, the
undersigned (i) irrevocably sells, assigns and transfers to or upon the order
of the Company all rights, title and interest in and to all the Old Notes
tendered hereby, and (ii) irrevocably constitutes and appoints the Exchange
Agent the true and lawful agent and attorney-in-fact of the undersigned (with
full knowledge that the Exchange Agent also acts as agent of the Company) with
respect to such tendered Old Notes, with full power of substitution and
resubstitution (such power of attorney being deemed to be an irrevocable power
coupled with an interest) to (a) deliver certificates representing such Old
Notes, or transfer ownership of such Old Notes on the account books maintained
by DTC, together, in any such case, with all accompanying evidences of
transfer and authenticity, to or upon the order of the Company, (b) present
such Old Notes for transfer on the register for the Old Notes, and (c) receive
all benefits or otherwise exercise all rights of beneficial ownership of such
Old Notes, all in accordance with the terms of the Offer.
For purposes of the Offer, the undersigned understands that the Company will
be deemed to have accepted for exchange all validly tendered Old Notes (or
defectively tendered Old Notes with respect to which the Company has waived
such defect) if, as and when the Company gives oral or written notice thereof
to the Exchange Agent.
The undersigned understands that tenders of Old Notes may be withdrawn by
written notice of withdrawal received by the Exchange Agent at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. See Instruction 1 to
this Letter of Transmittal. In the event of a termination of the Offer, the
Old Notes tendered pursuant to the Offer will be returned to the tendering
Holder promptly. Tenders of Old Notes may also be withdrawn if the Offer is
terminated without any Old Notes being purchased thereunder or as otherwise
provided in the Prospectus. In the event of a termination of the Offer, the
Old Notes tendered pursuant to the Offer will be returned to the tendering
Holder promptly.
The undersigned acknowledges that the Offer is being made in reliance upon
interpretive advice given by the staff of the Securities and Exchange
Commission (the "SEC") in connection with transactions similar to the Offer,
so that the New Notes issued pursuant to the Offer in exchange for the Old
Notes may in general be offered for resale, resold and otherwise transferred
by holders thereof without compliance with the registration and prospectus
delivery provisions of the Securities Act, provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders
have no arrangement with any person to participate in the distribution of such
New Notes. See, e.g., Morgan Stanley & Co. Incorporated (SEC No-Action Letter,
June 5, 1991), Exxon Capital Holdings Corporation (SEC No-Action Letter, April
13, 1988), and Shearman & Sterling (SEC No-Action Letter, July 2, 1993). The
undersigned understands that if the undersigned were to be participating in
the Offer for the purposes of distributing securities in a manner not
permitted by the interpretive advice described in the preceding sentence, the
undersigned (i) could not rely on the position of the staff of the SEC
enunciated in such no-action letters and (ii) must comply with the
registration and prospectus delivery requirements of the Securities Act in
connection with a secondary resale transaction.
3
<PAGE>
The undersigned understands and agrees that the Company reserves the right
not to accept tendered Old Notes from any tendering holder if the Company
determines, in its sole and absolute discretion, that such acceptance could
result in a violation of applicable securities laws.
The undersigned represents that (i) the New Notes acquired pursuant to the
Offer are being obtained in the ordinary course of business of the persons
receiving New Notes (which shall be the undersigned unless otherwise indicated
in the box entitled "Special Issuance Instructions" below) (the "Recipient"),
(ii) neither the undersigned nor the Recipient (if different) has any
arrangement with any person to participate in the distribution of such New
Notes, and (iii) neither the undersigned nor the Recipient (if different) is
an "affiliate" of the Company as defined in Rule 405 under the Securities Act.
The undersigned further represents that it is not engaged in, and does not
intend to engage in, a distribution of the New Notes. If the undersigned is a
broker-dealer, the undersigned further (x) represents that it acquired Old
Notes for the undersigned's own account as a result of market-making
activities or other trading activities, (y) represents that it has not entered
into any arrangement or understanding with the Company or any "affiliate" of
the Company (within the meaning of Rule 405 under the Securities Act) to
distribute the New Notes to be received in the Offer, and (z) acknowledges
that it will deliver a prospectus meeting the requirements of the Securities
Act (for which purposes delivery of the Prospectus, as the same may be
hereafter supplemented or amended, shall be sufficient) in connection with the
resale of New Notes received in the Offer. Such a broker-dealer will not be
deemed, solely by reason of such acknowledgment and prospectus delivery, to be
admitting that it is an "underwriter" within the meaning of the Securities
Act.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or, as set forth in the
Prospectus under the caption "The Exchange Offer--Condition to the Exchange
Offer," to terminate the Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions or
otherwise. The terms of any such purchases or offers could differ from the
terms of the Offer.
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Offer and has full power and authority to
tender, exchange, assign and transfer the Old Notes tendered hereby, and that
when the same are accepted for exchange by the Company, the Company will
acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim or
right. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Exchange Agent or the Company to be necessary or
desirable to complete the sale, assignment and transfer of Old Notes tendered
hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the
undersigned hereunder shall be binding upon the successors, assigns, heirs,
executors, administrators, trustees in bankruptcy and legal representatives of
the undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described in the Prospectus under the caption "The
Exchange Offer--Procedures for Tendering" and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Offer.
The undersigned understands that the first interest payment following the
Expiration Date will include interest on the Old Notes accrued through the
Expiration Date, which will be the date of issuance of the New Notes.
The undersigned understands that, under certain circumstances set forth in
the Prospectus, the Company may not be required to accept for purchase any of
the Old Notes tendered (including any Old Notes tendered after the Expiration
Date). Any Old Notes not accepted for purchase will be returned promptly to
the undersigned at the address set forth above, unless otherwise indicated
herein under "Special Delivery Instructions" below.
4
<PAGE>
The undersigned understands that the delivery and surrender of the Notes
will not be effective, and the risk of loss of the Old Notes does not pass to
the Exchange Agent, until receipt by the Exchange Agent of this Letter of
Transmittal, or a facsimile hereof, properly completed and duly executed,
together with all accompanying evidences of authority, the certificates
evidencing the Old Notes being delivered (if any), and any other required
documents in form satisfactory to the Company. All questions as to form of all
documents and the validity (including time of receipt) and acceptance of
tenders and withdrawals of Old Notes will be determined by the Company in its
sole discretion, which determination shall be final and binding.
Unless otherwise indicated herein under "Special Issuance Instructions," the
undersigned hereby requests that any New Notes issued to the undersigned in
the Offer, and any Old Notes representing principal amounts not tendered or
not accepted for exchange, be issued in the name(s) of the undersigned.
Similarly, unless otherwise indicated herein under "Special Delivery
Instructions," the undersigned hereby requests that any New Notes issued to
the undersigned in the Offer, and any Old Notes representing principal amounts
not tendered or not accepted for purchase, be delivered to the undersigned at
the address(es) shown above. The undersigned recognizes that the Company has
no obligation pursuant to the "Special Issuance Instructions" box or "Special
Delivery Instructions" box to transfer any Old Notes from the name of the
holder(s) thereof if the Company does not accept for exchange any of the
principal amount of such Old Notes so tendered.
5
<PAGE>
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS OF OLD NOTES)
This Letter of Transmittal must be signed by the Holder(s) of Old Notes
tendered herewith exactly as their name(s) appear(s) on certificate(s) for
such Old Notes, or by person(s) authorized to become Holder(s) by
endorsements and documents transmitted with this Letter of Transmittal. If
signature is by a trustee, executor, administrator, guardian, attorney-in-
fact, officer or other person acting in a fiduciary or representative
capacity, such person must set forth his or her full title below under
"Capacity" and submit evidence satisfactory to the Company of such person's
authority so to act. See Instruction 3 below.
If the signature appearing below is not of the Holder(s) of the Notes,
then this Letter of Transmittal must be delivered with a valid proxy of the
Holder(s).
X............................................................................
X............................................................................
SIGNATURE(S) OF REGISTERED HOLDER(S) OR AUTHORIZED SIGNATORY
Date: ................................................................ , 1997
Name(s): ....................................................................
(PLEASE TYPE OR PRINT)
Capacity: ...................................................................
Address: ....................................................................
.............................................................................
(INCLUDING ZIP CODE)
Area Code and Telephone No.: ................................................
MEDALLION SIGNATURE GUARANTEE (SEE INSTRUCTION 4 BELOW)
CERTAIN SIGNATURES MUST BE GUARANTEED BY AN ELIGIBLE INSTITUTION.
.............................................................................
(NAME OF ELIGIBLE INSTITUTION GUARANTEEING SIGNATURES)
.............................................................................
(ADDRESS (INCLUDING ZIP CODE) AND TELEPHONE NUMBER (INCLUDING AREA CODE) OF
INSTITUTION FIRM)
.............................................................................
(AUTHORIZED SIGNATURE)
.............................................................................
(PRINTED NAME)
.............................................................................
(TITLE)
Dated: ............................................................... , 1997
6
<PAGE>
SPECIAL ISSUANCE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2, 3, 4 AND 5) (SEE INSTRUCTIONS 2, 3, 4 AND 5)
To be completed ONLY if certifi- To be completed ONLY if certifi-
cates for New Notes, or for Old cates for New Notes, or for Old
Notes in a principal amount not Notes in a principal amount not
tendered or not accepted for ex- tendered or not accepted for ex-
change, are to be issued in the change, are to be sent to someone
name of someone other than the per- other than the person or persons
son or persons whose signature(s) whose signature(s) appear(s) on
appear(s) on this Letter of Trans- this Letter of Transmittal, or to
mittal. an address different from that
shown in the box entitled "Descrip-
tion of Notes" in this Letter of
Transmittal.
Issue: [_] New Notes to:
[_] Old Notes to:
(check as applicable)
Deliver: [_] New Notes to:
Name: ______________________________ [_] Old Notes to:
(PLEASE TYPE OR PRINT) (check as applicable)
_______________________________ Name: ______________________________
(PLEASE TYPE OR PRINT) (PLEASE TYPE OR PRINT)
Address: ___________________________ Address: ___________________________
____________________________________ ____________________________________
(ZIP CODE) (ZIP CODE)
____________________________________
(TAX IDENTIFICATION OR SOCIAL
SECURITY NUMBER)
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND CERTIFICATES FOR OLD NOTES;
BOOK-ENTRY CONFIRMATIONS; WITHDRAWAL OF TENDERS. For a holder validly to
tender Old Notes pursuant to the Offer, a confirmation of any book-entry
transfer into the Exchange Agent's account with DTC of Notes tendered
electronically, or physical delivery of certificates for Old Notes, as well as
a properly completed and duly executed copy or facsimile of this Letter of
Transmittal, together with any signature guarantees, and any other documents
required by this Letter of Transmittal, must be received by the Exchange
Agent, at one of its addresses set forth at the head of this Letter of
Transmittal, prior to 5:00 p.m., New York City time, on the Expiration Date.
Tenders of Old Notes pursuant to the Offer will be accepted prior to the time
and in the manner described in the preceding sentence and otherwise in
compliance with this Letter of Transmittal. No provision has been made for the
delayed guaranteed delivery of Old Note certificates. The method of delivery
of this Letter of Transmittal, certificates representing Old Notes and all
other required documents to the Exchange Agent is at the election and risk of
holders. If such delivery is by mail, it is suggested that holders use
properly insured registered mail, return receipt requested, and that the
mailing be made sufficiently in advance of the expiration of the Offer to
permit delivery to the Exchange Agent prior thereto. Except as otherwise
provided below, the delivery will be deemed made when actually received or
confirmed by the Exchange Agent. This Letter of Transmittal and Old Notes
should be sent only to the Exchange Agent, not to the Company.
Tenders of Old Notes may be withdrawn by written notice of withdrawal
received by the Exchange Agent by mail, hand delivery or facsimile
transmission. Notice of withdrawal of tendered Old Notes, to be effective,
must (i) be received by the Exchange Agent, at one of its addresses set forth
at the head of this Letter of Transmittal, prior to 5:00 p.m., New York City
time, on the Expiration Date, (ii) specify the name of the holder of the Old
Notes to be withdrawn, (iii) contain a description of the Old Notes to be
withdrawn, the certificate numbers shown on the particular certificates
representing such Old Notes, and the aggregate principal amounts
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represented by such Old Notes, and (iv) be signed by the holder of such Old
Notes in the same manner as the original signature on the Letter of
Transmittal (including any required signature guarantees), or be accompanied
by documents of transfer sufficient to have the Trustee register the transfer
of the Old Notes into the name of the persons withdrawing such Old Notes. The
signature(s) on the notice of withdrawal of any tendered Old Notes must be
guaranteed by an Eligible Institution unless such Old Notes were tendered for
the account of an Eligible Institution. If the Old Notes to be withdrawn have
been delivered or otherwise identified to the Exchange Agent, a signed notice
of withdrawal is effective immediately upon receipt by the Exchange Agent of
written or facsimile transmission of the notice of withdrawal even if physical
release is not yet effected.
2. PARTIAL TENDERS AND CONSENTS. Tenders of Old Notes pursuant to the Offer
will be accepted only in principal amounts equal to $1,000 or an integral
multiple thereof. If less than the entire principal amount of any Old Notes
evidenced by a submitted certificate is tendered, the tendering Holder must
fill in the principal amount tendered in the last column of the box entitled
"Description of Notes" herein. The entire principal amount represented by the
certificates for all Old Notes delivered to the Exchange Agent will be deemed
to have been tendered unless otherwise indicated. The entire principal amount
of all Old Notes not tendered or not accepted for purchase will be sent to the
person(s) signing this Letter of Transmittal unless otherwise provided in the
appropriate box on this Letter of Transmittal (see Instruction 4), promptly
after the Old Notes are accepted for purchase.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL; BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. The signature(s) of the holder(s) on this Letter of
Transmittal must correspond with the name(s) as written on the face of the
certificate(s) without alteration, enlargement or any change whatsoever. If
this Letter of Transmittal is signed by a participant in the DTC system whose
name is shown as the owner of the Old Notes tendered hereby, the signature
must correspond with the name shown on the security position listing as the
owner of the Old Notes.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A PERSON OR ENTITY WHO IS NOT
THE REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID BOND POWER
AND PROXY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER MEDALLION GUARANTEED
BY A RECOGNIZED MEMBER OF THE MEDALLION SIGNATURE GUARANTEE PROGRAM OR OTHER
SIMILAR PROGRAM HEREIN REFERRED TO AS AN "ELIGIBLE INSTITUTION."
If any of the Old Notes tendered hereby are registered in the name of two or
more holders, all such holders must sign this Letter of Transmittal. If any
tendered Old Notes are registered in different names on several certificates,
it will be necessary to complete, sign and submit as many separate copies of
this Letter of Transmittal and any necessary accompanying documents as there
are different names in which certificates are held.
If this Letter of Transmittal is signed by a registered holder of Old Notes,
and certificates for any principal amount of New Notes, or Old Notes not
tendered or not accepted for exchange, are to be issued, reissued or returned
to such holder, then the holder need not endorse any certificates for tendered
Old Notes nor provide a separate bond power. In any other case (including if
this Letter of Transmittal is not signed by a registered holder), the
registered holder(s) must either properly endorse the certificates for Old
Notes tendered or transmit a separate properly completed bond power with this
Letter of Transmittal (in either case, executed exactly as the name(s) of the
holder(s) appear(s) on such Old Notes) with the signature on the endorsement
or bond power guaranteed by an Eligible Institution, unless such certificates
or bond powers are executed by an Eligible Institution.
If this Letter of Transmittal or any certificates for Old Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
proper evidence satisfactory to the Company of their authority so to act must
be submitted with this Letter of Transmittal.
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Endorsements on certificates for Old Notes, and signatures on bond powers,
proxies and Consents provided in accordance with this Instruction 3 by holders
not executing this Letter of Transmittal, must be guaranteed by an Eligible
Institution.
Signatures on this Letter of Transmittal need not be guaranteed if the Old
Notes tendered thereby are tendered (i) by the registered holder thereof,
unless such holder has completed the box entitled "Special Delivery
Instructions" in this Letter of Transmittal, or (ii) for the account of an
Eligible Institution that is a participant in the Security Transfer Agents
Medallion Program or the Stock Exchange Medallion Program (generally a member
of a registered national securities exchange, a member of the National
Association of Securities Dealers, Inc. or a commercial bank or trust company
having an office in the United States). In all other cases, all signatures on
these Letters of Transmittal accompanying Old Notes must be guaranteed by an
Eligible Institution.
4. SPECIAL ISSUANCE AND SPECIAL DELIVERY INSTRUCTIONS. Tendering Holders
should indicate in the applicable box or boxes the name and address to which
New Notes, or Old Notes in principal amounts not tendered or not accepted for
exchange, are to be issued or sent, if different from the name and address of
the holder signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification number of the person named must
also be indicated. If no instructions are given, Old Notes not tendered or not
accepted for exchange will be returned to the Holder of the Old Notes
tendered. Any such Old Notes tendered by book-entry transfer and not accepted
for purchase will be returned by crediting the account at DTC of such holder.
5. TRANSFER TAXES. The Company will pay all transfer taxes applicable to the
exchange and transfer of Old Notes for New Notes pursuant to the Offer, unless
the box entitled "Special Issuance Instructions" above has been completed.
Except as provided in this Instruction 5, it will not be necessary for
transfer tax stamps to be affixed to the certificates listed in this Letter of
Transmittal.
6. IRREGULARITIES. All questions as to the form of all documents and the
validity (including time of receipt) and acceptance of tenders and withdrawals
of Old Notes will be determined by the Company in its sole discretion, which
determination shall be final and binding. The Company reserves the absolute
right to reject any or all tenders of Old Notes that are not in proper form or
the acceptance of which would, in the Company's opinion, be unlawful. The
Company also reserves the right to waive any defects, irregularities or
conditions of tender as to particular Old Notes. The Company's interpretation
of the terms and conditions of the Offer (including the instructions in this
Letter of Transmittal) will be final and binding. Any defect or irregularity
in connection with tenders of Old Notes or accompanying deliveries of Consents
must be cured within such reasonable time as the Company determines, unless
waived by the Company. Tenders of Old Notes shall not be deemed to have been
made until all defects or irregularities have been waived by the Company or
cured. None of the Company, the Exchange Agent or another person will be under
any duty to give notice of any defects or irregularities in tenders of Old
Notes, or will incur any liability to holders for failure to give any such
notice.
7. WAIVER OF CONDITIONS. The Company expressly reserves the absolute right,
in its sole discretion, to amend or waive any of the conditions to the Offer,
in whole or in part, at any time and from time to time.
8. MUTILATED, LOST, STOLEN OR DESTROYED CERTIFICATES FOR OLD NOTES. Any
holder whose certificates for Old Notes have been mutilated, lost, stolen or
destroyed should write or telephone the Exchange Agent at the address or
telephone number set forth in Instruction 9 below.
9. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions and requests for
assistance may be directed to the Customer Service Department at United States
Trust Company of New York, the Exchange Agent, 770 Broadway, New York, New
York 10003, Telephone 1-800-548-6565. Requests for copies of the Prospectus,
this Letter of Transmittal or other documents may also be directed to the
Exchange Agent, and copies will be furnished promptly at the Company's
expense.
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EXHIBIT 99.2
PLASTIC CONTAINERS, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SECURED NOTES DUE 2006, SERIES B, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10% SENIOR SECURED NOTES DUE 2006, SERIES A,
WHICH HAVE NOT BEEN SO REGISTERED
To Securities Brokers and Dealers, Commercial Banks, Trust Companies and Other
Nominees:
Plastic Containers, Inc. (the "Company") is making an offer (the "Exchange
Offer") to exchange its 10% Senior Secured Notes due 2006, Series B for any
and all of its outstanding 10% Senior Secured Notes due 2006, Series A (the
"Old Notes"), upon the terms and subject to the conditions set forth in the
enclosed Prospectus dated , 1997 (the "Prospectus") and the enclosed Letter
of Transmittal ("Letter of Transmittal").
We are asking you to contact your clients for whom you hold Old Notes
registered in your name or in the name of your nominee or who hold Old Notes
registered in their own names.
The Company will not pay any fees or commissions to any broker or dealer or
other person for soliciting tenders of Old Notes pursuant to the Exchange
Offer. You will be reimbursed for customary mailing and handling expenses
incurred by you in forwarding any of the enclosed materials to your clients.
The Company will pay all transfer taxes, if any, applicable to the exchange
and transfer of Old Notes for New Notes, except as otherwise provided in
Instruction 5 to the Letter of Transmittal.
Enclosed are copies of the following documents:
1. The Prospectus.
2. The Letter of Transmittal for your use and for the information of your
clients.
3. A form of letter which may be sent to your clients for whose accounts
you hold Old Notes registered in your name or the name of your nominee,
with space provided for obtaining such clients' instructions with regard to
the Exchange Offer.
4. A return envelope addressed to United States Trust Company of New
York, the Exchange Agent.
Your prompt action is required. The Exchange Offer will expire at 5:00 p.m.
New York City time, on , 1997 (the "Expiration Date") unless the Exchange
Offer is extended by the Company. Tendered Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date.
To participate in the Exchange Offer, either (i) book-entry confirmation of
a valid book-entry transfer must be received by the Exchange Agent prior to
the expiration of the Exchange Offer, or (ii) certificates for Old Notes and a
duly executed and properly completed Letter of Transmittal thereof, together
with any other required documents, must be delivered to the Exchange Agent as
indicated in the Letter of Transmittal and the Prospectus prior to the
expiration of the Exchange Offer.
Additional copies of the enclosed material may be obtained from United
States Trust Company of New York, the Exchange Agent (telephone 1-800-548-
6565).
Very truly yours,
PLASTIC CONTAINERS, INC.
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR
ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF EITHER OF THEM WITH
RESPECT TO THE EXCHANGE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE
PROSPECTUS OR THE LETTER OF TRANSMITTAL.
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EXHIBIT 99.3
PLASTIC CONTAINERS, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SECURED NOTES DUE 2006, SERIES B, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10% SENIOR SECURED NOTES DUE 2006, SERIES A,
WHICH HAVE NOT BEEN SO REGISTERED
To Our Clients:
Enclosed for your consideration are the Prospectus dated , 1997 (the
"Prospectus") and the related Letter of Transmittal (which, together with the
Prospectus, constitute the "Exchange Offer") issued in connection with the
offer by Plastic Containers, Inc., a Delaware corporation (the "Company"), to
exchange its 10% Senior Secured Notes due 2006, Series B (the "New Notes") for
any and all of its outstanding 10% Senior Secured Notes due 2006, Series A
(the "Old Notes"), upon the terms and subject to the conditions set forth in
the Exchange Offer.
The Exchange Offer is being forwarded to you as the beneficial owner of Old
Notes carried by us for your account or benefit but not registered in your
name. A tender of your Old Notes pursuant to the Exchange Offer may only be
made by the registered holder of such Old Notes (us or The Depository Trust
Company) and pursuant to your instructions. Therefore, please contact us
promptly if you wish to tender your Old Notes in the Exchange Offer. THE
ENCLOSED LETTER OF TRANSMITTAL IS BEING FURNISHED TO YOU FOR YOUR INFORMATION
ONLY AND CANNOT BE USED BY YOU TO EXCHANGE THE OLD NOTES HELD BY US FOR YOUR
ACCOUNT.
We request information as to whether you wish us to exchange any or all of
the Old Notes held by us for your account upon the terms and subject to the
conditions of the Exchange Offer.
Your attention is directed to the following:
1. The New Notes will be exchanged for the Old Notes at the rate of
$1,000 principal amount of New Notes for each $1,000 principal amount of
Old Notes. The New Notes will bear interest from the Expiration Date, and
interest on the Old Notes accepted for exchange will cease to accrue on the
Expiration Date. Holders of Old Notes that are accepted for exchange will
receive accrued interest thereon at the rate of 10% per annum through the
Expiration Date, which interest will be payable in cash on June 15, 1997,
with the first interest payment on the New Notes. The form and terms of the
New Notes are the same as the form and terms of the Old Notes except that
the New Notes have been registered under the Securities Act of 1933, as
amended (the "Securities Act"), whereas the Old Notes were not.
Accordingly, the New Notes will not in general be subject to the
restrictions on resale applicable to the Old Notes.
2. Based on interpretations by the staff of the Securities and Exchange
Commission set forth in no-action letters issued to persons other than the
Company, management of the Company believes that New Notes issued pursuant
to the Exchange Offer in exchange for Old Notes may in general be offered
for resale, resold and otherwise transferred by any holder thereof without
compliance with the registration and prospectus delivery requirements of
the Securities Act, provided that such New Notes are acquired in the
ordinary course of such holder's business and such holder has no
arrangement or understanding with any person to participate in the
distribution of such New Notes. In addition, any tendering holder which is
a broker-dealer and which, having made certain representations in the
Letter of Transmittal, receives New Notes may be deemed to be an
"underwriter" with respect to such New Notes and in connection with any
resale of such New Notes must comply with the prospectus delivery
requirements of the Securities Act (for which purpose the Prospectus, as
amended or supplemented from time to time, may be used as the required
prospectus). See "The Exchange Offer--Purpose and Effect of the Exchange
Offer" in the Prospectus.
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3. The Exchange Offer is not conditioned on any minimum principal amount
of Old Notes being tendered.
4. Notwithstanding any other provision of the Exchange Offer, the Company
will not be required to accept any Old Notes tendered in the Exchange
Offer, and may terminate or amend the Exchange Offer before the acceptance
of such Old Notes, if any legal or governmental action, any law, statute,
rule or regulation or any interpretation thereof by the staff of the
Commission might, in the Company's sole judgment, prohibit the Exchange
Offer or otherwise materially impair the ability of the Company to proceed
with the Exchange Offer.
5. Tendered Old Notes may be withdrawn at any time prior to 5:00 p.m.,
New York City time, on the Expiration Date if such Old Notes have not
previously been accepted for exchange pursuant to the Exchange Offer.
6. Any transfer taxes applicable to the exchange of the Old Notes
pursuant to the Exchange Offer will be paid by the Company, except as
otherwise provided in Instruction 5 to the Letter of Transmittal.
7. The Exchange Offer does not provide a procedure for holders to tender
by means of guaranteed delivery.
If you wish to have us tender any or all of your Old Notes, please so
instruct us by completing and returning to us the instruction form attached
hereto. If you authorize a tender of your Old Notes, the entire principal
amount of Old Notes held for your account will be tendered unless otherwise
specified on the instruction form. Your instructions should be forwarded to us
in ample time to permit us to submit a tender on your behalf by the Expiration
Date.
THE EXCHANGE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM
OR ON BEHALF OF, HOLDERS OF THE OLD NOTES IN ANY JURISDICTION IN WHICH THE
MAKING OF THE EXCHANGE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE
WITH THE LAWS OF SUCH JURISDICTION OR WOULD OTHERWISE NOT BE IN COMPLIANCE
WITH ANY PROVISION OF ANY APPLICABLE SECURITY LAW.
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PLASTIC CONTAINERS, INC.
OFFER TO EXCHANGE ITS
10% SENIOR SECURED NOTES DUE 2006, SERIES B, WHICH HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
FOR ANY AND ALL OF ITS OUTSTANDING
10% SENIOR SECURED NOTES DUE 2006, SERIES A,
WHICH HAVE NOT BEEN SO REGISTERED
The undersigned acknowledges receipt of the Prospectus dated , 1997
(the "Prospectus"), and the related Letter of Transmittal (which, together
with the Prospectus, constitute the "Exchange Offer") in connection with the
offer by Plastic Containers, Inc., a Delaware corporation (the "Company"), to
exchange its 10% Senior Secured Notes due 2006, Series B (the "New Notes") for
any and all of its outstanding 10% Senior Secured Notes due 2006, Series A
(the "Old Notes"), upon the terms and subject to the conditions set forth in
the Exchange Offer.
You are hereby instructed to tender the principal amount of Old Notes
indicated below held by you for the account of the undersigned, upon the terms
and subject to the conditions set forth in the Prospectus and the related
Letter of Transmittal. By signing below, the undersigned will be deemed to
have executed and delivered to the Company the Letter of Transmittal, and thus
agrees to be bound by all the terms thereof and makes all the representations
of a tendering holder set forth therein.
SIGN HERE
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SIGNATURE(S)
Principal Amount of Old Notes to be Tendered:* $ _______
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NAME(S) (PLEASE TYPE OR PRINT)
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ADDRESS
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ZIP CODE
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AREA CODE AND TELEPHONE NO.
Date: , 1997
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* Unless otherwise indicated, it will be assumed that
all the Old Notes listed are to be tendered.
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