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.
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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.
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1. Capitalized Lessor's Cost: $8,023,000.00
2. Basic Term Lease Rate Factor:
Installments one through fifty-four: 1.053239%; and installments
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fifty-five through one hundred nine: 1.287293%.
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3. Daily Lease Rate Factor: .035107967%.
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4. Basic Term:
One hundred nine months.
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5. Basic Term Commencement Date: January 1, 1997.
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6. Equipment Location PLANT #142, 6831 SILSBEE ROAD, HOUSTON, HARRIS
COUNTY, TEXAS 77033(the "Premises")
7. Lessee Federal Tax ID No.: 06-1056158
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8 Last Delivery Date: December 31, 1996.
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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.
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12. First Termination Date: three (3) years after the Basic Term
Commencement Date.
C. Tax Benefits.
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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.
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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.
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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.
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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
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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."
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(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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(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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(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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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."
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(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.
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(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.
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(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.
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(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.
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(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
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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
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
(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
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
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
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.
----------------
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
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
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
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
(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
(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
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
(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
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
(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
(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
(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
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
(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
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
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
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
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
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.
------------------------
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")
2
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),
3
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
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
5
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."
6
(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."
7
(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
(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
(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
10
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
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
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
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.
14
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
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
16
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
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
18
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
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
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.
----------------
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".
2
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
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
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
(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
(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
(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
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
(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
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
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
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
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
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
(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
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
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
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
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
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.
----------------
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
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
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
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
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
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
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
(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
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
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
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
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
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
(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
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
(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
(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
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
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.
----------------
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".
2
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
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
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
(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
6
(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."
7
(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
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;
9
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
10
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
11
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.
12
(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."
13
(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
14
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
15
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
16
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
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
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
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
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