<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 24, 1996
REGISTRATION NO. 333-08023
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 1
TO
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
FLORIDA COAST PAPER COMPANY, L.L.C.
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
DELAWARE 2631 59-3379704
<S> <C> <C>
(STATE OR OTHER JURISDICTION (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
OF INCORPORATION OR CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
ORGANIZATION)
</TABLE>
600 U.S. HIGHWAY 98,
PORT ST. JOE,
FLORIDA 32456
(904) 227-1171
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
SEE TABLE OF ADDITIONAL REGISTRANT
------------------------
MICHAEL S. NELSON
KRAMER, LEVIN, NAFTALIS & FRANKEL
919 THIRD AVENUE
NEW YORK, NEW YORK 10022
(212) 715-9100
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the registration statement becomes effective and all other
conditions to the exchange offer (the "Exchange Offer") pursuant to the
registration rights agreement (the "Registration Rights Agreement") described in
the enclosed Prospectus have been satisfied or waived.
If any of the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 21. EXHIBITS AND FINANCIAL SCHEDULES.
(a) Exhibits.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- --------------------------------------------------------------------------------------------------------
<S> <C>
2.1 Asset Purchase Agreement, dated as of November 1, 1995, among Florida Coast Paper Company, L.L.C. (the
"Company"), St. Joe Forest Products Company, St. Joe Container Company, St. Joe Paper Company and Four M
Corporation ("Four M").
3.1 Certificate of Incorporation of the Company.**
3.2 Certificate of Incorporation of Florida Coast Paper Finance Corp. ("Finance Corp.").**
3.7 Operating Agreement of the Company.**
3.8 By-laws of Finance Corp.**
4.1 Indenture, dated as of May 30, 1996, among the Company, Finance Corp. and Norwest Bank Minnesota,
National Association (the "Trustee").
4.2 Form of 12 3/4% Series A and Series B First Mortgage Notes, dated as of May 30, 1996
(incorporated by reference to Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of May 30, 1996, among the Company, Finance Corp. and Bear,
Stearns & Co. Inc.
5.1 Opinion of Kramer, Levin, Naftalis & Frankel ("Kramer, Levin").**
10.1 Output Purchase Agreement, dated as of May 30, 1996, among the Company, Four M and Stone Container
Corporation ("Stone").
10.2 Mortgage Security Agreement, dated as of May 30, 1996, between the Company and the Trustee.
10.3 Security Agreement, dated as of May 30, 1996, between the Company and the Trustee.
10.4 Subordinated Credit Agreement, dated as of May 30, 1996, among the Company, Four M and Stone.
10.5 Environmental Indemnity Agreement, dated as of May 30, 1996, between the Company and Four M.
10.6 Wood Fiber Procurement and Services Agreement, dated as of May 30, 1996, between the Company and Stone.
10.7 Indenture of Lease, dated as of May 30, 1996, between the Company and Box USA
Group, Inc.
23.1 Consent of KPMG Peat Marwick LLP.*
23.2 Consent of Kramer, Levin (to be contained in the opinion filed as Exhibit 5.1).**
24.1 Power of Attorney (incorporated by reference in the signature pages).*
25.1 Form T-1 Statement of Eligibility and Qualification of Norwest Bank Minnesota, National Association, as
trustee.
27.1 Financial Data Schedule.*
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
</TABLE>
- ------------------------
* Previously Filed.
** To be filed by amendment.
Schedules have been omitted because of the absence of conditions under which
they are required or because the information required is set forth in the
financial statements or the notes thereof.
II-1
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
FLORIDA COAST PAPER COMPANY, L.L.C.
By: *
-----------------------------------
Harold D. Wright
CHIEF EXECUTIVE OFFICER AND MEMBER,
BOARD OF MANAGERS
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
* Chief Executive Officer and Member,
------------------------------------------- Board of Managers (Principal Executive July 23, 1996
Harold D. Wright Officer)
*
------------------------------------------- President July 23, 1996
Clinton G. Ames
*
------------------------------------------- Chief Financial Officer and Treasurer July 23, 1996
Green Long (Principal Accounting Officer)
*
------------------------------------------- Member, Board of Managers July 23, 1996
Roger W. Stone
------------------------------------------- Member, Board of Managers July , 1996
Arnold F. Brookstone
*
------------------------------------------- Member, Board of Managers July 23, 1996
Dennis Mehiel
*
------------------------------------------- Member, Board of Managers July 23, 1996
Chris Mehiel
*
------------------------------------------- Member, Board of Managers July 23, 1996
Timothy D. McMillin
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this registration statement or amendment to be signed on its behalf by
the undersigned, thereto duly authorized, in the City of New York, New York, on
July 23, 1996.
FLORIDA COAST PAPER FINANCE CORP.
By: *
-----------------------------------
Harold D. Wright
CHAIRMAN OF THE BOARD, CHIEF
EXECUTIVE
OFFICER AND DIRECTOR
Pursuant to the requirements of the Securities Act of 1933, this
registration statement or amendment has been signed by the following persons in
the capacities and on the date indicated.
<TABLE>
<C> <S> <C>
SIGNATURE TITLE(S) DATE
- ------------------------------------------------------ ---------------------------------------- ---------------
* Chairman of the Board, Chief Executive
------------------------------------------- Officer and Director (Principal July 23, 1996
Harold D. Wright Executive Officer)
*
------------------------------------------- President July 23, 1996
Clinton G. Ames
*
------------------------------------------- Chief Financial Officer and Treasurer July 23, 1996
Green Long (Principal Accounting Officer)
*
------------------------------------------- Director July 23, 1996
Roger W. Stone
------------------------------------------- Director July , 1996
Arnold F. Brookstone
*
------------------------------------------- Director July 23, 1996
Dennis Mehiel
*
------------------------------------------- Director July 23, 1996
Chris Mehiel
*
------------------------------------------- Director July 23, 1996
Timothy D. McMillin
*By: /s/Shari Krouner
Shari Krouner
ATTORNEY-IN-FACT
</TABLE>
II-3
<PAGE>
EXHIBIT 2.1
ORIGINAL EXECUTION COPY
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- --------------------------------------------------------------------------------
ASSET PURCHASE AGREEMENT
dated as of
November 1, 1995
by and between
ST. JOE FOREST PRODUCTS COMPANY,
ST. JOE CONTAINER COMPANY,
and
ST. JOE PAPER COMPANY
on the one hand
and
FOUR M CORPORATION
and
PORT ST. JOE PAPER COMPANY
on the other hand
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
EXECUTION COPY
TABLE OF CONTENTS
Section Page
- ------- ----
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
DEFINITIONS
1.01 Definitions . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE
2.01 Purchase and Sale . . . . . . . . . . . . . . . . . . . . . 25
2.02 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 27
2.03 Assumption of Liabilities . . . . . . . . . . . . . . . . . 30
2.04 Retained Liabilities. . . . . . . . . . . . . . . . . . . . 32
2.05 Benefits of Assets. . . . . . . . . . . . . . . . . . . . . 34
ARTICLE III
PURCHASE PRICE AND CLOSING
3.01 Purchase Price. . . . . . . . . . . . . . . . . . . . . . . 36
3.02 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 37
3.03 Deliveries at the Closing . . . . . . . . . . . . . . . . . 38
3.04 Allocation of the Purchase Price. . . . . . . . . . . . . . 42
3.05 Purchase Price Adjustment . . . . . . . . . . . . . . . . . 43
3.06 Count of Inventory. . . . . . . . . . . . . . . . . . . . . 46
3.07 Resolution of Net Working
Capital and Closing Capital
Expenditures Disputes . . . . . . . . . . . . . . . . . . 46
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EXECUTION COPY
Section Page
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
OF SELLER
4.01 Corporate Existence and Power, Etc. . . . . . . . . . . . . 48
4.02 Corporate Authorization . . . . . . . . . . . . . . . . . . 49
4.03 Consents and Approvals;
No Violation. . . . . . . . . . . . . . . . . . . . . . . 50
4.04 Financial Statements. . . . . . . . . . . . . . . . . . . . 52
4.05 Absence of Certain Changes. . . . . . . . . . . . . . . . . 53
4.06 Tangible Assets . . . . . . . . . . . . . . . . . . . . . . 54
4.06A Disclaimer of Warranties of
Merchantability and Fitness . . . . . . . . . . . . . . . 55
4.07 Title to the Acquired Assets. . . . . . . . . . . . . . . . 55
4.08 Certain Agreements. . . . . . . . . . . . . . . . . . . . . 56
4.09 Legal Matters . . . . . . . . . . . . . . . . . . . . . . . 57
4.10 Environmental Permits; Other Permits. . . . . . . . . . . . 60
4.11 Intellectual Property . . . . . . . . . . . . . . . . . . . 62
4.12 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . 64
4.13 Real Property; Realty Rights. . . . . . . . . . . . . . . . 64
4.14 Labor Controversies, Etc. . . . . . . . . . . . . . . . . . 66
4.15 No Implied Representation . . . . . . . . . . . . . . . . . 67
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF BUYER
5.01 Organization and Existence. . . . . . . . . . . . . . . . . 67
5.02 Authorization . . . . . . . . . . . . . . . . . . . . . . . 68
5.03 Consents and Approvals;
No Violation. . . . . . . . . . . . . . . . . . . . . . . 69
5.04 Finders' Fees . . . . . . . . . . . . . . . . . . . . . . . 70
5.05 Litigation. . . . . . . . . . . . . . . . . . . . . . . . . 70
5.06 Investor Status . . . . . . . . . . . . . . . . . . . . . . 71
5.07 Outstanding Debt. . . . . . . . . . . . . . . . . . . . . . 72
5.08 Title to Properties . . . . . . . . . . . . . . . . . . . . 72
5.09 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
5.10 Financial Statements. . . . . . . . . . . . . . . . . . . . 72
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EXECUTION COPY
Section Page
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ARTICLE VI
COVENANTS OF THE PARTIES
6.01 Conduct of the Business . . . . . . . . . . . . . . . . . . 73
6.02 Access to Information . . . . . . . . . . . . . . . . . . . 75
6.03 Seller Trademarks . . . . . . . . . . . . . . . . . . . . . 76
6.04 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . 78
6.05 Efforts; Further Assurances;
Permits . . . . . . . . . . . . . . . . . . . . . . . . . 80
6.06 Bulk Sales Laws . . . . . . . . . . . . . . . . . . . . . . 81
6.07 Books and Records . . . . . . . . . . . . . . . . . . . . . 82
6.08 Intellectual Property
Cooperation; Etc. . . . . . . . . . . . . . . . . . . . . 83
6.09 Governmental Regulatory Approval. . . . . . . . . . . . . . 84
6.10 HSR Act Review. . . . . . . . . . . . . . . . . . . . . . . 84
6.11 Effect of Due Diligence and
Related Matters . . . . . . . . . . . . . . . . . . . . . 85
6.12 Real Property Transfers . . . . . . . . . . . . . . . . . . 86
6.13 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 91
6.14 Secured Indebtedness. . . . . . . . . . . . . . . . . . . . 91
6.15 Licensing Arrangements. . . . . . . . . . . . . . . . . . . 91
6.16 No Solicitation of Transactions . . . . . . . . . . . . . . 92
6.17 Stockholders' Meeting . . . . . . . . . . . . . . . . . . . 95
6.18 Prompt Payment of Taxes
and Indebtedness. . . . . . . . . . . . . . . . . . . . . 95
6.19 Conduct of Business and
Corporate Existence . . . . . . . . . . . . . . . . . . . 96
6.20 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 97
6.21 Limitation on Distributions,
Investments and Payments. . . . . . . . . . . . . . . . . 97
6.22 Lien, Debt and Other Restrictions . . . . . . . . . . . . . 98
6.23 Non-Competition . . . . . . . . . . . . . . . . . . . . . . 101
6.24 Financing . . . . . . . . . . . . . . . . . . . . . . . . . 101
6.25 Audited Financial Statements. . . . . . . . . . . . . . . . 102
- iv -
<PAGE>
EXECUTION COPY
Section Page
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ARTICLE VII
TAX MATTERS
7.01 Pre-Closing Tax Periods;
Post-Closing Tax Periods;
Bridge Tax Periods. . . . . . . . . . . . . . . . . . . . 103
7.02 Refunds or Credits. . . . . . . . . . . . . . . . . . . . . 106
7.03 Mutual Cooperation. . . . . . . . . . . . . . . . . . . . . 107
7.04 Tax Audits. . . . . . . . . . . . . . . . . . . . . . . . . 108
7.05 No Offset . . . . . . . . . . . . . . . . . . . . . . . . . 110
ARTICLE VIII
EMPLOYEE BENEFITS
8.01 Employee Benefit Plans. . . . . . . . . . . . . . . . . . . 111
8.02 Employees and Offers of Employment. . . . . . . . . . . . . 113
8.03 Seller's Benefit Plans. . . . . . . . . . . . . . . . . . . 114
8.04 Buyer Benefit Plans . . . . . . . . . . . . . . . . . . . . 115
8.05 Seller's 401(k) Plan. . . . . . . . . . . . . . . . . . . . 116
8.06 Early Retirement Incentive. . . . . . . . . . . . . . . . . 117
8.07 Severance . . . . . . . . . . . . . . . . . . . . . . . . . 119
8.08 Labor Controversies . . . . . . . . . . . . . . . . . . . . 122
8.09 No Third Party Beneficiaries. . . . . . . . . . . . . . . . 122
ARTICLE IX
CONDITIONS TO CLOSING
9.01 Conditions to the Obligations
of Each Party . . . . . . . . . . . . . . . . . . . . . . 123
9.02 Conditions to Obligation of Buyer . . . . . . . . . . . . . 123
9.03 Conditions to Obligation of Seller. . . . . . . . . . . . . 125
ARTICLE X
TERMINATION AND ABANDONMENT
10.01 Termination . . . . . . . . . . . . . . . . . . . . . . . . 126
10.02 Effect of Termination . . . . . . . . . . . . . . . . . . . 129
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<PAGE>
EXECUTION COPY
Section Page
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ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . 130
11.02 Indemnification . . . . . . . . . . . . . . . . . . . . . . 131
11.03 Procedures. . . . . . . . . . . . . . . . . . . . . . . . . 133
11.04 Tax, Insurance and Other Benefits . . . . . . . . . . . . . 136
11.05 Environmental Indemnification . . . . . . . . . . . . . . . 137
11.06 Environmental Audit . . . . . . . . . . . . . . . . . . . . 147
11.07 Work To Be Completed by Seller. . . . . . . . . . . . . . . 148
11.08 Work To Be Completed by Buyer . . . . . . . . . . . . . . . 151
11.09 Other Disposal Facilities . . . . . . . . . . . . . . . . . 152
ARTICLE XII
MISCELLANEOUS
12.01 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 153
12.02 Amendments; No Waivers. . . . . . . . . . . . . . . . . . . 155
12.03 Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 156
12.04 Assignment; Parties in Interest . . . . . . . . . . . . . . 157
12.05 Governing Law; Jurisdiction; Forum. . . . . . . . . . . . . 157
12.06 Counterparts; Effectiveness . . . . . . . . . . . . . . . . 158
12.07 Entire Agreement. . . . . . . . . . . . . . . . . . . . . . 158
12.08 Publicity . . . . . . . . . . . . . . . . . . . . . . . . . 159
12.09 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 159
12.10 Severability. . . . . . . . . . . . . . . . . . . . . . . . 159
12.11 Knowledge . . . . . . . . . . . . . . . . . . . . . . . . . 160
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<PAGE>
EXECUTION COPY
ASSET PURCHASE AGREEMENT
AGREEMENT (this "Agreement") dated as of the 1st day of November, 1995 by
and among St. Joe Forest Products Company, a Florida corporation ("SJFP"), St.
Joe Container Company, a Florida corporation ("SJCC") and St. Joe Paper Company,
a Florida corporation ("SJPC"), on the one hand, and Four M Corporation, a
Maryland corporation ("FMC") and Port St. Joe Paper Company, organized by FMC
and SCC as a joint venture ("JV"), on the other hand.
W I T N E S S E T H :
WHEREAS, Seller is engaged in the production of mottled white and
unbleached kraft linerboard and corrugated containers; and
WHEREAS, Seller desires to sell, convey, assign, transfer and deliver to
FMC and JV, and FMC and JV desire to purchase and accept from Seller, certain of
its paper mill, box plants and related assets, upon the terms and conditions set
forth in this Agreement; and
WHEREAS, pursuant to the terms and conditions of this Agreement JV
intends to acquire the Mill Assets and the Mill
<PAGE>
EXECUTION COPY
Business and assume the Assumed Liabilities relating to the Mill Assets and the
Mill Business; and
WHEREAS, pursuant to the terms and conditions set forth in this
Agreement, FMC intends to acquire the Container Assets and the Container
Business and to assume the Assumed Liabilities relating to the Container Assets
and the Container Business.
NOW, THEREFORE, the parties hereto, intending to be legally bound, agree
as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS.
(a) The following terms, as used herein, have the following
meanings:
"Accounts Payable" shall mean all current liabilities of Seller
outstanding as of the Closing Date relating to the Business, other than
Intercompany Payables, to the extent such Accounts Payable are included in the
calculation of Closing Net Working Capital.
"Acquired Agreements" shall mean all contracts, agreements, leases,
purchase orders, instruments and commitments related to the Business to which
Seller is a party, other than Collective
- 2 -
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EXECUTION COPY
Bargaining Agreements, those with respect to Realty Rights, those with respect
to which Rights of First Refusal have been exercised, and those with respect to
Secured Indebtedness and the Security Documents.
"Acquired Assets" has the meaning set forth in Section 2.01.
"Acquired Books and Records" means all of Seller's customer lists and
records, vendor and supplier lists and records, accounts and billing records,
property records, plans, blueprints, specifications, designs, drawings, surveys,
engineering reports, personnel records (where applicable) and all other
documents, computer data and records (including records and files on computer
disks or stored electronically) relating to the Business, the Acquired Assets,
the Transferred Employees and/or the Assumed Liabilities, except to the extent
related to Excluded Assets or Retained Liabilities.
"Acquired Claims" has the meaning set forth in Section 2.01(ix).
"Acquired Equipment" means all personal property (other than the Excluded
Assets, Fixtures and Improvements, Rolling Stock, and Inventories) owned by
Seller and used in connection with the operation of the Business, including, but
not limited to, all
- 3 -
<PAGE>
EXECUTION COPY
furniture and other furnishings, tools, office equipment, machinery and
equipment and other such property used by Seller for the Business or for the use
of raw materials, utilities or supplies therefor (except office furnishings and
equipment used by directors and salaried Eligible Employees located outside the
Real Property who do not become Transferred Employees).
"Acquired Insurance Claims" has the meaning set forth in Section
2.01(xv).
"Acquired Intellectual Property" shall mean the Intellectual Property
used or held for use exclusively in the Business and owned by Seller, which
shall be assigned to Buyer and the Buyer Affiliates under Section 2.01 hereof.
"Acquired Software" shall mean the computer software used or held for use
in the businesses of Seller and its Affiliates other than the Business and also
used in the Business set forth in Section 1.01 of the Disclosure Schedule and
owned by Seller which shall be licensed to Buyer and the Buyer Affiliates under
Section 6.15 hereof.
"Affiliate" shall mean, with respect to any Person, any Person directly
or indirectly controlling, controlled by, or under common control with such
other Person; "Buyer Affiliates" shall mean (i) with respect to FMC, only the
Affiliates of FMC receiving
- 4 -
<PAGE>
EXECUTION COPY
Container Assets hereunder; and (ii) with respect to JV, only Affiliates of JV
receiving the Mill Assets hereunder which Affiliates of JV shall not be deemed
to include SCC or Affiliates of SCC or FMC or Affiliates of FMC and "Seller
Affiliates" shall mean the Affiliates of Seller.
"Ancillary Agreements" shall mean the Assignment and Assumption
Agreement, the Bill of Sale, the Intellectual Property Instruments, the license
for Acquired Software, the lease referred to in Section 3.03(b)(ix) hereof, the
Wood Fiber Supply Contract, the SJLD Deed, the deeds conveying the Real Property
and documents conveying or assigning the Realty Rights.
"Assignment and Assumption Agreement" shall mean the Assignment and
Assumption Agreement in substantially the form attached hereto as Exhibit A.
"Assumed Charges" shall mean all of the following charges incurred with
respect to Acquired Assets to the extent allocable to periods after the Closing
Date: (i) utility charges (which shall include, without limitation, water,
sewer, electricity, gas and other utility charges) with respect to the Real
Property, the SJLD Property and the Realty Rights, (ii) rental charges (which
shall include, without limitation, rental charges and other payments
- 5 -
<PAGE>
EXECUTION COPY
under the Realty Rights) and (iii) payments and assessments for waste water
treatment.
"Assumed Liabilities" has the meaning set forth in Section 2.03.
"Assumed Taxes" shall mean (a) all Taxes allocated or apportioned to
Buyer under Section 7.01(d) and (b) fifty (50%) of all Transfer Taxes.
"Audited Financial Statements" has the meaning set forth in Section 6.25.
"Benefit Plan" has the meaning set forth in Section 8.01(a).
"Bill of Sale" shall mean the Bill of Sale in substantially the form
attached hereto as Exhibit B.
"Bridge Tax Period" has the meaning set forth in Section 7.01(d).
"Business" shall mean the business as conducted by SJFP and SJCC of
producing mottled white and unbleached kraft linerboard and corrugated
containers and products associated therewith and of conducting other related
activities and services; "Mill Business" shall mean the business as conducted by
SJFP of producing mottled white and unbleached kraft linerboard and products
associated therewith; and "Container Business" shall mean the business as
- 6 -
<PAGE>
EXECUTION COPY
conducted by SJCC of producing corrugated containers and products associated
therewith.
"Business Day" shall mean any day except a Saturday, Sunday or other day
on which commercial banks in New York City are generally authorized to close.
"Buyer" shall mean (i) FMC or one or more FMC Affiliates solely with
respect to all matters under this Agreement relating to the Container Assets and
the Container Business; and (ii) JV solely with respect to all matters under
this Agreement relating to the Mill Assets and the Mill Business.
"Buyer's Plan" has the meaning set forth in Section 8.05.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended.
"Change of Control" has the meaning set forth in Section 11.05(g).
"Closing" shall mean the closing of the sale and purchase of the Acquired
Assets pursuant to this Agreement.
"Closing Capital Expenditures" has the meaning set forth in Section 3.05.
"Closing Date" shall mean the date and time of the Closing.
"Closing Inventory Schedule" has the meaning set forth in Section 3.06.
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"Closing Net Working Capital" has the meaning set forth in Section 3.05.
"Closing Sales Proceeds" has the meaning set forth in Section 3.05.
"Cluster Rules" has the meaning set forth in Section 4.10(c).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Collective Bargaining Agreement" has the meaning set forth in Section
8.01(c).
"Confidentiality Agreement" has the meaning set forth in Section 6.02.
"Consents" has the meaning set forth in Section 4.03.
"Container Assets" shall mean the Acquired Assets of SJCC.
"Disclosure Schedule" shall mean the Disclosure Schedule annexed hereto,
including the Introduction thereto.
"Dispute Notice" has the meaning set forth in Section 3.07.
"Eligible Employees" shall mean all employees of Seller or any Seller
Affiliate whose principal employment is for or in connection with the Business,
except for those employees listed on Confidential Section 8.02 of the Disclosure
Schedule which Seller shall provide to Buyer one day after the Financing Date.
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"Environmental Conditions" shall mean any and all acts, omissions,
events, circumstances, and conditions, including any pollution, contamination,
degradation, damage, or injury caused by, related to, or arising from or in
connection with the generation, use, handling, treatment, storage, disposal,
discharge, emission or release of Hazardous Materials.
"Environmental Laws" shall mean all Federal, state, local or municipal
laws, rules, regulations, statutes, ordinances or orders of any Governmental
Entity relating to (a) the control of any potential pollutant, or protection of
the air, water or land, (b) solid, gaseous or liquid waste generation, handling,
treatment, storage, disposal or transportation, and (c) exposure to hazardous,
toxic or other substances alleged to be harmful. "Environmental Laws" shall
include, but not be limited to, the Clean Air Act, the Clean Water Act, the
Resource Conservation Recovery Act, the Superfund Amendments and Reauthorization
Act, the Toxic Substances Control Act, the Safe Drinking Water Act, and CERCLA
and shall also include all state, local and municipal laws, rules, regulations,
statutes, ordinances and orders dealing with the subject matter of the above
listed Federal statutes or promulgated by any governmental or quasi-governmental
agency thereunder in order to
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carry out the purposes of any Federal, state, local or municipal law.
"Environmental Liabilities" shall mean any and all liabilities,
responsibilities, claims, suits, losses, costs (including remedial, removal,
response, abatement, clean-up, investigative and/or monitoring costs and any
other related costs and expenses), other causes of action recognized now or at
any later time, damages, settlements, expenses, charges, assessments, liens,
penalties, fines, pre-judgment and post-judgment interest, attorneys' fees and
other legal costs incurred or imposed (a) pursuant to any agreement, order,
notice of responsibility, directive (including directives embodied in
Environmental Laws), injunction, judgment or similar documents (including
settlements) arising out of, in connection with, or under Environmental Laws, or
(b) pursuant to any claim by a Governmental Entity or other Person for personal
injury, property damage, damage to natural resources, remediation, or payment or
reimbursement of response costs incurred or expended by such Governmental Entity
or Person pursuant to common law or statute, as a result of Environmental
Conditions.
"Environmental Permit" or "Environmental Permits" means any permit,
license, approval, registration, identification number or other authorization
with respect to the Acquired Assets or the
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Business under any applicable law, regulation or other requirement of the United
States or any other country or of any state, municipality or other subdivision
thereof relating to the control of any pollutant or protection of health or the
environment, including laws, regulations or other requirements relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants or hazardous or toxic materials or wastes into ambient air, surface
water, groundwater or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of chemical substances, pollutants, contaminants or hazardous or toxic
materials or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended.
"ERISA Affiliate" shall mean any person, firm or entity (whether or not
incorporated) which, by reason of its relationship with Seller or any Seller
Affiliate, is required to be aggregated with Seller or any Seller Affiliate
under Sections 414(b), (c) or (m) of the Code or which, together with Seller or
any Seller Affiliate, is a member of a controlled group within the meaning of
Section 4001(a) of ERISA.
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"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Excluded Assets" has the meaning set forth in Section 2.02.
"Execution Date" shall mean the date of execution of this Agreement.
"Federal" shall mean of or pertaining to the federal government of the
United States of America.
"Financial Statements" has the meaning set forth in Section 4.04.
"Financing Date" shall mean the sixty-fifth (65th) calendar day after the
Execution Date or January 5, 1996, provided that in the event the Audited
Financial Statements are not delivered on the sixtieth (60th) calendar day after
the Execution Date, such date shall be extended by one day for each day beyond
the sixtieth (60th) day after the Execution Date to and including the date of
delivery of the Audited Financial Statements.
"Fixtures and Improvements" shall mean the buildings and other
improvements referred to in the definition of Real Property.
"FMC" shall mean Four M Corporation.
"FMC Financial Statements" has the meaning set forth in Section 5.10.
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"401(k) Plan" shall mean the St. Joe Paper Company Employee Salary
Deferral Plan.
"GAAP" shall mean generally accepted accounting principles consistently
applied.
"Governmental Entity" has the meaning set forth in Section 4.03.
"Group" shall mean a Person and such Person's Affiliates and their
respective directors, officers, employees, representatives, consultants,
stockholders, controlling persons and agents and each of the heirs, executors,
successors and assigns of any of the foregoing.
"Guarantee" has the meaning set forth in Section 6.04.
"Hazardous Materials" shall mean any (a) petroleum or petroleum products,
(b) hazardous substances as defined by Section 101(14) of CERCLA and (c) any
other chemical, substance or waste that is regulated by any Governmental Entity
under any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"Incentive Program" has the meaning set forth in Section 8.06.
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"Indemnified Parties" has the meaning set forth in Section 11.02.
"Indemnifying Party" has the meaning set forth in Section 11.03.
"Intellectual Property" shall mean all patents, patent applications,
service marks, trademarks, trademark registrations, trademark applications,
copyrights, industrial design registrations, utility models, trade names,
whether or not registered (or by whatever name or designation), used by Seller,
and all proprietary data, and technical or manufacturing know-how or information
(and materials embodying such information) used by Seller, including inventions
and trade secrets and documentation thereof in whatever form.
"Intellectual Property Instruments" shall mean, collectively, a Patent
Assignment in the form attached hereto as Exhibit C, and an Acquired Software
license in the form attached hereto as Exhibit D.
"Intercompany" shall mean a transaction, obligation or account between
Seller, any Seller Affiliate, any other Affiliate of Seller or their divisions,
on the one hand, and any of Seller, any Seller Affiliate, any other Affiliate of
Seller or their
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divisions, on the other hand, arising from the conduct of the Business.
"Intercompany Payables" shall mean all Intercompany payables and other
Intercompany liabilities of the Business of whatever nature and regardless of
whether such liabilities would be treated as short-term or long-term on a
balance sheet prepared in accordance with GAAP.
"Intercompany Receivables" shall mean all Intercompany receivables of the
Business of whatever nature.
"Inventories" shall mean all supplies, spare parts, raw materials, work
in process, and material held for resale, and other inventories, including
without limitation, all as are owned by Seller for use in the Business and all
as are located at, used in connection with, acquired for, produced for,
contained in or in transit to, through or from the Real Property including,
without limitation, those in warehouses or other storage facilities outside the
Real Property; provided, however, that Inventories shall not include any of the
foregoing that have no valid continuing use in Buyer's conduct of the Business
after the Closing Date which are required to be destroyed or returned to Seller
pursuant to Section 6.03.
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"JV" shall mean Port St. Joe Paper Company organized by FMC and SCC as a
joint venture.
"Lenders" has the meaning set forth in Section 11.05(g).
"Lien" shall mean, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset.
"Listed Employee" has the meaning set forth in Confidential Section 8.07
of the Disclosure Schedule which Seller shall provide to Buyer one day after the
Financing Date and which shall not indicate aggregate annual salaries or average
straight time rates materially in excess of that shown on the comparable
schedule dated August 18, 1995 which Seller has previously provided to Buyer.
"Listed Intellectual Property" has the meaning set forth in Section
4.11(a).
"Losses and Damages" has the meaning set forth in Section 11.02.
"Material Adverse Effect" shall, as the case may be, mean a material
adverse effect on the condition (financial or otherwise), business, assets or
results of operations of the Mill Business taken as a whole or the Container
Business taken as a whole.
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"Mill Assets" shall mean the Acquired Assets of SJFP and SJLD.
"Multiemployer Plan" shall mean each Benefit Plan that is a multiemployer
plan, as defined in Section 3(37) of ERISA.
"Net Working Capital" has the meaning set forth in Section 3.05.
"Off-Site Environmental Liabilities" has the meaning set forth in Section
11.05(e).
"On-Site Environmental Liabilities" has the meaning set forth in Section
11.05(e).
"Other Employee" has the meaning set forth in Confidential Section 8.07
of the Disclosure Schedule which Seller shall provide to Buyer one day after the
Financing Date and which shall not indicate aggregate annual salaries or average
straight time rates materially in excess of that shown on the comparable
schedule dated August 18, 1995 which Seller has previously provided to Buyer.
"Parcel" has the meaning set forth in Section 6.12(b).
"Permits" shall mean all franchises, licenses, authorizations, approvals,
permits (including Environmental Permits), consents or other rights granted by
Federal, state or local governmental authorities and all certificates of
convenience or necessity, immunities, privileges, licenses, consents, grants,
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ordinances and other rights, of every character whatsoever, which are used by
Seller in the conduct of the Business.
"Permitted Lien" shall mean, with respect to any of the Acquired Assets,
(a) mechanics', carriers', workers', repairers', purchase money security
interests and other similar Liens arising or incurred in the ordinary course of
business related to obligations as to which there is no default on the part of
Seller; (b) other Liens, imperfections in title, charges, easements,
restrictions and encumbrances; and (c) Liens for Taxes not yet due and payable
in the case of each of (a), (b) and (c) which, individually or in the aggregate,
do not detract from the value, or interfere with the continuation of the present
use, of the property subject thereto or affected thereby, other than in any de
minimis respect and (d) applicable zoning laws and ordinances and municipal
regulations which are not violated in any material respect by the continuation
of the present use of the property subject thereto or affected thereby and
rights in the nature of condemnation reserved to or vested in any municipality
or governmental, statutory or public authority to control or regulate real
property and realty rights.
"Person" shall mean an individual, a limited liability company, a
corporation, a partnership, an association, a trust or
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other entity or organization, including a governmental or political subdivision
or an agency or instrumentality thereof.
"Post-Closing Tax Periods" has the meaning set forth in Section 7.01(c).
"Pre-Closing Tax Periods" has the meaning set forth in Section 7.01(b).
"Principals" has the meaning set forth in Section 11.05(g).
"Purchase Price" has the meaning set forth in Section 3.01(b).
"Purchase Price Adjustment" has the meaning set forth in Section 3.05.
"Real Property" shall mean those tracts or parcels of land described by
metes and bounds or identified in Section 4.13(a)(i) of the Disclosure Schedule
and all buildings and other improvements of every kind and nature thereon,
including fixtures and personalty of a permanent nature.
"Realty Rights" shall mean those easements, privileges, right-of-way
agreements, surface use rights, realty leasehold interests, servitudes, and
other real property interests located outside the Real Property and the SJLD
Property, other than those Acquired Agreements set forth in Section 4.08(a)(i)
and (ii) of the Disclosure Schedule, necessary for access to or which are
ancillary
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or appurtenant to the use and enjoyment of the Real Property, the SJLD Property
and the operation of the Business, as described in Section 4.13(b) of the
Disclosure Schedule.
"Receivables" shall mean accounts receivable relating to the Business
existing as of the Closing Date other than Intercompany Receivables.
"Regulatory Approvals" has the meaning set forth in Section 6.09.
"Releases and Terminations" has the meaning set forth in Section 6.14.
"Retained Books and Records" has the meaning set forth in Section
2.02(ix).
"Retained Liabilities" has the meaning set forth in Section 2.04.
"Reviewing Accountant" has the meaning set forth in Section 3.07.
"Right of First Refusal" shall mean those certain rights to elect to
purchase certain assets of the Business as listed in Section 1.03 of the
Disclosure Schedule.
"Rolling Stock" shall mean all vehicles, certificated and otherwise,
(including, but not limited to automobiles, trucks, rail engines and rail cars),
owned or leased by Seller and used in
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connection with the operation of the Business (other than vehicles used by
directors and salaried Eligible Employees located outside the Real Property who
do not become Transferred Employees).
"Section 6.16 Fee" has the meaning set forth in Section 12.03.
"Secured Indebtedness" shall mean all indebtedness to Secured Parties.
"Secured Parties" shall mean the Polk County Industrial Development
Authority, Groveton Paperboard, Inc. and the holder of any purchase money
security interest.
"Securities Act" has the meaning set forth in Section 5.06.
"Security Documents" shall mean all security agreements, mortgages and
financing statements reflecting a security interest or Lien in the Acquired
Assets and entered into with the Secured Parties.
"Seller" shall mean (i) SJCC solely with respect to all matters under
this Agreement relating to the Container Assets and the Container Business; and
(ii) SJFP solely with respect to all matters under this Agreement relating to
the Mill Assets and the Mill Business.
"Seller Trademarks" has the meaning set forth in Section 6.03(a).
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"SCC" shall mean Stone Container Corporation.
"SJCC" shall mean St. Joe Container Company, a wholly owned subsidiary of
SJFP.
"SJFP" shall mean St. Joe Forest Products Company, a wholly owned
subsidiary of SJPC.
"SJLD" shall mean St. Joseph Land and Development Company, a wholly owned
subsidiary of SJFP.
"SJLD Deed" has the meaning set forth in Section 3.03(b)(vi).
"SJLD Property" has the meaning set forth in Section 3.03(b)(vi).
"SJPC" shall mean St. Joe Paper Company.
"Stock" shall mean 7,483 shares of capital stock of Groveton Paperboard,
Inc., a New Hampshire corporation, 310 of which are held in escrow as of the
Execution Date pending payment therefor in equal installments of $24,799.05 for
62 shares in each of the next five quarters.
"Subsidiary" shall mean a corporation or other entity a majority of whose
capital stock with voting power, under ordinary circumstances, entitling holders
of such capital stock to elect the board of directors or other governing body,
is at the time,
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directly or indirectly, owned by such Person and/or Subsidiary or subsidiaries
of such Person.
"Taxes" shall mean all taxes, charges, fees, levies or other assessments,
including, without limitation, income, gross receipts, alternative minimum,
excise, property, real estate, sales, purchase, use, payroll (including required
withholdings), and franchise taxes imposed by any Governmental Entity with
respect to the Business or the Acquired Assets, but excluding Transfer Taxes.
Such term shall include any interest, penalties or additions payable in
connection with such taxes, charges, fees, levies or other assessments and "Tax"
shall mean one of the foregoing Taxes.
"Tax Returns" shall mean all returns, declarations, reports, statements
and other documents required to be filed with any Governmental Entity in respect
of any Tax and "Tax Return" shall mean one of the foregoing Tax Returns.
"Title Exception" has the meaning set forth in Section 6.12(a).
"Trademark" shall mean any word, name, symbol or device or any
combination thereof, whether or not registered, used to identify and distinguish
a Person's goods, including unique
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products, from those manufactured or sold by others and to indicate the source
of the goods, even if that source is unknown.
"Transaction Proposal" has the meaning set forth in Section 6.16.
"Transfer Taxes" shall mean all sales, transfer, use, gross receipts,
value added, recording, registration, stamp and similar taxes or fees (including
recording fees) imposed by any Governmental Entity in connection with the
transfers by Seller and the Seller Affiliates to Buyer and the Buyer Affiliates
of any of the Acquired Assets pursuant to this Agreement.
"Transferred Employees" has the meaning set forth in Section 8.02.
"Unaudited Financial Statements" has the meaning set forth in Section
6.25.
"WARN" has the meaning set forth in Section 8.07.
"Wood Fiber Supply Contract" shall mean a Wood Fiber Supply Contract in
the form attached hereto as Exhibit E.
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ARTICLE II
PURCHASE AND SALE
2.01 PURCHASE AND SALE. Upon the terms and subject to the conditions
of this Agreement, Buyer agrees to purchase, or cause one or more Buyer
Affiliates to purchase, from Seller and Seller Affiliates and Seller and Seller
Affiliates agree to sell, transfer, assign and deliver to Buyer and its
designated Buyer Affiliates at the Closing (except as provided in Section 2.05),
all of Seller's and Seller Affiliates' right, title and interest in and to the
following assets, wherever located, including all such assets hereafter acquired
by Seller (the "Acquired Assets"), it being understood that the Mill Assets will
be purchased by JV and the Container Assets will be purchased by FMC or one or
more FMC Affiliates:
(i) the Real Property and the SJLD Property;
(ii) the Realty Rights;
(iii) the Acquired Equipment;
(iv) the Rolling Stock;
(v) the Inventories;
(vi) the Receivables;
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(vii) all rights under all Acquired Agreements, except to the
extent related to Excluded Assets or Retained Liabilities;
(viii) the Stock, if the Right of First Refusal has not been
exercised;
(ix) all rights, claims, credits, causes of action or rights of
set-off against third Persons relating to the Acquired Assets, arising after the
Closing Date, including, without limitation, unliquidated rights under
manufacturers' and vendors' warranties, except to the extent related to Excluded
Assets or Retained Liabilities (collectively, the "Acquired Claims");
(x) the Permits (to the extent assignable);
(xi) the Acquired Intellectual Property;
(xii) the Acquired Books and Records;
(xiii) all other intangibles including, but not limited to,
goodwill associated with the Business or the Acquired Assets;
(xiv) cash in an amount equal to all condemnation proceeds and
all property and casualty insurance proceeds (excluding business interruption
insurance) plus an amount equal to any deductible from any Person (other than
Seller or any of its Affiliates) from the Execution Date through the Closing
Date with
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respect to the loss, damage, destruction or condemnation of any of the tangible
Acquired Assets identified in the preceding clauses (i) through (xiii) other
than Inventories, but only to the extent not applied by Seller to the repair,
restoration or replacement thereof on or prior to the Closing Date;
(xv) all claims to property and casualty insurance proceeds and
condemnation proceeds (excluding business interruption insurance) from any
Person (other than Seller or any of its Affiliates) with respect to the loss,
damage, destruction or condemnation of any of the tangible Acquired Assets
identified in the preceding clauses (i) through (xiii) other than Inventories
occurring from the Execution Date through the Closing Date to the extent
proceeds of such claims are not covered in clause (xiv) above, but only to the
extent Seller has not paid for the repair, restoration or replacement with
respect thereto as of the Closing Date ("Acquired Insurance Claims"); and
(xvi) the Acquired Software.
2.02 EXCLUDED ASSETS. Buyer expressly understands and agrees that the
following assets and properties of Seller and the Seller Affiliates (the
"Excluded Assets") shall be excluded from the Acquired Assets and shall be
retained by Seller and the Seller Affiliates:
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(i) all cash, cash equivalents and cash investments of Seller and
any of the Seller Affiliates, except to the extent included within the
definition of Acquired Assets pursuant to clause (xiv) of Section 2.01;
(ii) all Intercompany Receivables;
(iii) all rights and claims, whether now existing or arising
hereafter, for credits or refunds of any Taxes other than Assumed Taxes or Taxes
attributable to Post-Closing Tax Periods upon the terms and subject to the
conditions of Section 7.02;
(iv) all prepaid interest, security deposits and other like
assets related to any Excluded Asset or Retained Liability;
(v) all of Seller Affiliates' (other than Seller's) right, title
and interest in and to all of their assets and properties that are not dedicated
exclusively to the Business and otherwise are not Acquired Assets.
(vi) Seller's interest in the capital stock of SJLD, all of the
assets and businesses of SJLD and any applications or licenses granted with
respect thereto other than the SJLD Property and all of Seller's and Seller
Affiliates' real property other than the Real Property;
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(vii) all prepaid rentals, refunds and dividends on insurance
policies and other prepaid expenses relating to the Business and the Acquired
Assets allocable to periods after the Closing Date, as reflected on Seller's or
Seller Affiliates' books and records as of the Closing Date;
(viii) except as otherwise specifically provided herein, all
rights and claims (whether now existing or arising hereafter) and all other
assets relating to any Benefit Plan;
(ix) all books and records relating to (a) Closing Net Working
Capital until the Purchase Price Adjustment becomes final pursuant to Section
3.07 hereof; (b) Tax Returns and tax records for periods on or prior to the
Closing Date, (c) the other assets and properties of Seller which are included
in the Excluded Assets, and (d) the Retained Liabilities (collectively, the
"Retained Books and Records");
(x) except as otherwise provided in Section 6.03 hereof, all
Trademarks, trade names, trade dress, logos and any other intangible assets that
use or incorporate the words "St. Joe" and any other marks listed in Section
2.02 of the Disclosure Schedule;
(xi) the Stock, if the Right of First Refusal with respect
thereto has been exercised; and
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(xii) all claims to all types of insurance proceeds and
condemnation proceeds to the extent related to Excluded Assets and Retained
Liabilities.
2.03 ASSUMPTION OF LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Buyer and the Buyer Affiliates agree to assume,
and shall defend, indemnify and hold harmless the Seller Group in accordance
with Article XI hereof from and against, all of the following liabilities and
obligations (all such liabilities and obligations being herein referred to as
the "Assumed Liabilities"), it being understood that only those of the Assumed
Liabilities which relate to the Mill Assets and the Mill Business will be
assumed by JV and only those of the Assumed Liabilities which relate to the
Container Assets and the Container Business will be assumed by FMC or one or
more FMC Affiliates and that neither JV nor any JV Affiliates will have any
liability or obligation with respect to the Assumed Liabilities which relate to
the Container Assets or the Container Business and that neither FMC nor any FMC
Affiliates will have any liability or obligation with respect to the Assumed
Liabilities which relate to the Mill Assets or the Mill Business:
(i) Environmental Liabilities specified to Buyer in Section
11.05;
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(ii) current liabilities or obligations reflected in the
calculation of Closing Net Working Capital;
(iii) upon the terms and subject to the conditions of Article
VII, all Assumed Taxes and all other Taxes relating to, arising from or with
respect to the Acquired Assets or the operations of the Business which are
attributable to the Post-Closing Tax Periods;
(iv) all liabilities and obligations to Transferred Employees and
their beneficiaries which are Buyer's responsibility under Article VIII;
(v) Assumed Charges;
(vi) (other than those described in clauses (i) and (ii) above)
all liabilities and obligations under the terms of any of the Acquired
Agreements or that relate to the Real Property, the SJLD Property, the Realty
Rights, the Acquired Equipment, the Rolling Stock, the Inventories, the
Receivables, the Stock (if the Right of First Refusal has not been exercised),
the Acquired Claims, the Permits (to the extent assignable), the Acquired
Intellectual Property, the Acquired Books and Records, the Acquired Insurance
Claims and the Acquired Software relating to periods after the Closing Date; and
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(vii) (other than those described in clauses (i) and (ii) above)
liabilities and obligations attributable to the Acquired Assets or the Business
arising out of any action, suit or proceeding based upon an event occurring, a
condition existing or a claim arising after the Closing Date, except as and to
the extent that Buyer is entitled to indemnification in respect thereof pursuant
to Article XI; provided, however, that nothing in this Section 2.03 shall be
construed to impose any Environmental Liabilities, such liabilities being
treated exclusively under Sections 11.05, 11.07, 11.08 and 11.09.
Notwithstanding the foregoing, the Assumed Liabilities shall not include
any liabilities or obligations if and to the extent they are (a) attributable to
any business or activity of Seller or any of its Affiliates other than the
Business or the Acquired Assets, (b) Retained Liabilities, or (c) related to
Excluded Assets.
2.04 RETAINED LIABILITIES. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to retain, and SJPC and Seller shall
defend, indemnify and hold harmless the Buyer Group in accordance with Article
XI hereof from and against, all of the following liabilities and obligations of
Seller and the Seller
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Affiliates (all such liabilities and obligations being herein referred to as the
"Retained Liabilities"):
(i) Environmental Liabilities specified to Seller in Sections
11.05, 11.07, 11.08 and 11.09;
(ii) upon the terms and subject to the conditions of Article VII,
all liabilities or obligations for Taxes relating to, arising from or with
respect to the Acquired Assets or the Business which are incurred in or
attributable to the Pre-Closing Tax Periods and the portion of Taxes allocated
or apportioned to Seller for Bridge Tax Periods;
(iii) all Intercompany Payables;
(iv) except as specifically assumed by Buyer under Article VIII
or imposed by operation of law, all liabilities and obligations to employees of
Seller whether or not arising under the Benefit Plans;
(v) the Secured Indebtedness and the Security Documents;
(vi) all liabilities or obligations directly relating to any
Excluded Assets;
(vii) fifty percent (50%) of all Transfer Taxes;
(viii) (other than those described in clause (i) above) all
liabilities or obligations attributable to the Acquired
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Assets or the Business arising out of any action, suit or proceeding based upon
an event occurring, a condition existing or a claim arising on or prior to the
Closing Date; provided, however that nothing in this Section 2.04 shall be
construed to impose any Environmental Liabilities, such liabilities being
treated exclusively under Sections 11.05, 11.07, 11.08 and 11.09; and
(ix) accounts payable related to capital expenditures with
respect to matters identified in Section 11.07.
2.05 BENEFITS OF ASSETS. To the extent that any Acquired Agreement,
Permit or other Acquired Asset is not capable of being sold, conveyed, assigned,
transferred, delivered, subleased or sublicensed without the waiver or consent
of any third Person, including a Governmental Entity, Seller and Buyer agree to
use and cause their respective Affiliates to use their best efforts to obtain
such a waiver or consent (which best efforts shall not in any case include the
payment of money or, in the case of Seller and its Affiliates, the providing of
any guarantees). To the extent such consent or waiver cannot be obtained, this
Agreement shall not constitute a sale, conveyance, assignment, transfer,
delivery, sublease or sublicense or an attempted sale, conveyance, assignment,
transfer, delivery, sublease or sublicense thereof notwithstanding anything in
this Agreement to the contrary. In
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those cases where any necessary consents, assignments, releases and/or waivers
have not been obtained at or prior to the Closing Date, this Agreement shall
constitute an equitable assignment by Seller and the Seller Affiliates to Buyer
and the Buyer Affiliates of all of Seller's and the Seller Affiliates' rights,
benefits, title and interest in and to such Acquired Assets, and where necessary
or appropriate, Buyer or a Buyer Affiliate shall be deemed to be Seller's or the
Seller Affiliate's agent for the purpose of completing, fulfilling and
discharging all of Seller's or such Seller Affiliate's rights and liabilities
arising after the Closing Date with respect to such Acquired Assets. Seller
shall take or cause its Seller Affiliate to take all necessary steps and actions
to provide Buyer or a Buyer Affiliate with the benefit of such Acquired Assets
including, without limitation, (i) enforcing, at the request of Buyer and for
the account of Buyer or a Buyer Affiliate, any rights of Seller or any Seller
Affiliate arising with respect to any such Acquired Assets (including, without
limitation, the right to terminate in accordance with the terms thereof upon the
advice of Buyer) or (ii) permitting Buyer or a Buyer Affiliate to enforce any
rights arising with respect to such Acquired Assets as if they had been sold,
conveyed, assigned, transferred, delivered, subleased or sublicensed to Buyer or
a
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Buyer Affiliate, and Buyer or a Buyer Affiliate shall, to the extent Buyer or a
Buyer Affiliate is provided with the benefits of such Acquired Assets, assume,
perform and in due course pay and discharge all debts, obligations and
liabilities of Seller or any Seller Affiliate with respect to such Acquired
Assets, and shall defend, indemnify and hold harmless the Seller Group with
respect thereto. Nothing contained in this Section 2.05 will be deemed to limit
Seller's or the Seller Affiliates' representation and warranty in Section 4.03,
or require Buyer to agree to any material change in any contract, agreement or
commitment. Notwithstanding the foregoing, in the case of the Acquired
Agreements and the Realty Rights, if Seller shall have complied with its
covenants set forth in this Section 2.05, the failure of Seller to obtain the
necessary consents or the formal legal assignment of such Acquired Agreements or
Realty Rights shall not provide grounds for Buyer not to close under Section
9.02(b). Seller and Buyer agree to schedule items subject to this Section 2.05
at and as of the Closing Date.
ARTICLE III
PURCHASE PRICE AND CLOSING
3.01 PURCHASE PRICE. Upon the terms and subject to the conditions of
this Agreement and in consideration of the sale,
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conveyance, assignment and transfer of the Acquired Assets to be sold to Buyer
or one or more Buyer Affiliates hereunder, Buyer will pay or deliver and cause
one or more Buyer Affiliates to pay or deliver to Seller or one or more Seller
Affiliates the following:
(a) on the Closing Date, one or more Assignment and Assumption
Agreements and the other agreements contemplated hereby to effect the assumption
by Buyer or the Buyer Affiliates of all Assumed Liabilities, duly executed by
Buyer or such Buyer Affiliate; and
(b) on the Closing Date, the aggregate sum of three hundred
ninety million dollars ($390,000,000), subject to reduction in the amount of
five million two hundred fifty thousand dollars ($5,250,000) in the event the
Right of First Refusal is exercised, by wire transfer of immediately available
funds in U.S. dollars to an account designated by notice from Seller at least
two (2) Business Days prior to the Closing Date (the "Purchase Price").
3.02 CLOSING. The Closing of the sale and purchase of the Acquired
Assets hereunder shall take place at the offices of Seller's counsel in
Washington, D.C. at 10:00 a.m. EDT (a) on or before the seventh Business Day
following the date on which all conditions to the parties' respective
obligations under Article IX
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have been satisfied; or (b) at such other place, date and time as the parties
hereto may mutually agree.
3.03 DELIVERIES AT THE CLOSING.
(a) At the Closing, Buyer shall deliver, or shall cause one or
more of the Buyer Affiliates to deliver, the following to Seller or to one or
more of the Seller Affiliates:
(i) the Purchase Price as provided for in Section 3.01;
(ii) one or more Assignment and Assumption Agreements,
duly executed by Buyer and/or the Buyer Affiliates;
(iii) a license for the Acquired Software;
(iv) the Wood Fiber Supply Contract;
(v) a lease in the form of Exhibit F annexed hereto
covering approximately 12,000 square feet of office space in Port St. Joe,
Florida;
(vi) the easements referenced in Section 6.12;
(vii) certified copies of resolutions duly adopted by
Buyer and the Buyer Affiliates constituting all necessary authorization for the
consummation by Buyer and the Buyer Affiliates of the transactions contemplated
by this Agreement;
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(viii) the certificate required by Section 9.03(c);
(ix) certificates of incumbency for all relevant officers
of Buyer and the Buyer Affiliates executing this Agreement and any other
documents pursuant to this Agreement;
(x) an opinion of counsel substantially in the forms
annexed hereto as Exhibit G; and
(xi) such other documents, instruments, certificates and
writings as reasonably may be requested by Seller at least three (3) Business
Days prior to the Closing.
(b) At the Closing, Seller shall deliver, or shall cause one or
more of its Affiliates to deliver, the following to Buyer or to one or more of
the Buyer Affiliates:
(i) one or more Bills of Sale duly executed by Seller;
(ii) one or more Assignment and Assumption Agreements duly
executed by Seller;
(iii) the certificates representing the Stock, duly
assigned to FMC (if the Right of First Refusal has not been exercised);
(iv) the Intellectual Property Instruments and such other
assignments or other appropriate documents of
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transfer for the Acquired Intellectual Property and a license for the Acquired
Software;
(v) the Wood Fiber Supply Contract;
(vi) a deed (in form and substance mutually satisfactory
to Seller and JV in accordance with customary practices for the conveyance of
commercial real property rights in the locality) conveying, subject to Section
6.12 hereof, all of SJLD's right, title and interest in that certain tract of
land (the "SJLD Deed") outlined in Section 3.03(b) of the Disclosure Schedule as
it may be altered pursuant to Section 6.12(b)(1) (the "SJLD Property");
(vii) deeds (in form and substance mutually satisfactory
to Seller and Buyer in accordance with customary practices for the conveyance of
commercial real property rights in the locality of the particular Real Property)
conveying the Real Property;
(viii) documents (in form and substance mutually
satisfactory to Seller and Buyer in accordance with customary practices for the
sale of commercial real property in the locality of the particular Real Property
or the SJLD Property) conveying or assigning the Realty Rights;
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(ix) a lease in the form of Exhibit F annexed hereto
covering approximately 12,000 square feet of office space in Port St. Joe,
Florida;
(x) certified copies of resolutions duly adopted by the
Board of Directors of Seller and any Seller Affiliates constituting all
necessary corporate authorization for the consummation by Seller and such Seller
Affiliates of the transactions contemplated by this Agreement;
(xi) the certificate required by Section 9.02(c);
(xii) certificates of incumbency for all relevant officers
of Seller and its Affiliates executing this Agreement and any other documents
pursuant to this Agreement;
(xiii) subject to Section 6.14, evidence of the release of
Liens other than Permitted Liens on the Acquired Assets, including the Releases
and Terminations;
(xiv) an opinion of counsel substantially in the form of
Exhibit H annexed hereto, including without limitation reliance letters to
Buyer's financing institutions; and
(xv) such other documents, instruments, certificates and
writings, including without limitation landlord
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estoppel certificates, as reasonably may be requested by Buyer at least three
(3) Business Days prior to the Closing.
3.04 ALLOCATION OF THE PURCHASE PRICE. The Purchase Price shall be
allocated among the Acquired Assets in a manner to be agreed between Buyer and
Seller prior to the filing of any Tax Returns. The allocation may be changed by
written agreement of the parties after the Closing, and the agreement of the
parties shall be binding for all tax purposes. For Federal income tax purposes
(including, without limitation, Buyer's and Seller's compliance with the
reporting requirements under Section 1060 of the Code), each of Seller and Buyer
hereby agree to use such allocation and to cooperate with each other in
connection with the preparation and filing of any information required to be
furnished to the Internal Revenue Service under Section 1060 of the Code and any
applicable regulations thereunder. Without limiting the generality of the
preceding sentence, Buyer and Seller agree to (i) report such allocations to the
Internal Revenue Service on Form 8594 and, if required, supplemental Forms 8594,
in accordance with the instructions to Form 8594 and the provisions of Section
1060 of the Code and the applicable regulations thereunder, and (ii) coordinate
their respective preparation and filing of each such Form 8594 and any other
forms or information statements or schedules required to
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be filed under Section 1060 of the Code and the applicable regulations
thereunder so that the allocations and information reflected on such forms,
statements and schedules shall be consistent. For the purposes of the reporting
requirements of Section 1060 of the Code, the parties acknowledge that the total
consideration payable by Buyer to Seller shall include the amount referred to
herein as the Purchase Price plus or minus the Purchase Price Adjustment plus
the amount of the Assumed Liabilities fixed at the Closing Date which were an
obligation of Seller prior to the transaction contemplated by this Agreement.
3.05 PURCHASE PRICE ADJUSTMENT. After Closing, the Purchase Price
shall (a) be increased or decreased, as the case may be, by the difference
between Net Working Capital as of the Closing Date, including adjustments made
pursuant to Section 3.07 of this Agreement and Net Working Capital as of June
30, 1995 ("Closing Net Working Capital"), and (b) subject to Section 6.01(e), be
increased by the excess, if any, of capital expenditures of Seller following
June 30, 1995 (exclusive of capital expenditures with respect to matters
identified in Section 11.07) incurred and paid as of the Closing Date over
depreciation of the Business for the period June 30, 1995 through the Closing
Date (exclusive of depreciation with respect to matters identified in Section
11.07) determined in
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accordance with GAAP ("Closing Capital Expenditures") and (c) be decreased by
the aggregate amount of cash proceeds, plus an amount equal to the value of any
other consideration if such consideration is not included in the Acquired
Assets, realized from the sale of any machinery, equipment and fixtures of the
Business after June 30, 1995 and prior to the Closing Date ("Closing Sales
Proceeds"; and collectively with Closing Net Working Capital and Closing Capital
Expenditures, the "Purchase Price Adjustment"). "Net Working Capital" means
Receivables and Inventories, minus Accounts Payable (not including Inventories
or Accounts Payable related to capital expenditures with respect to matters
identified in Section 11.07). For this purpose, Receivables and Accounts
Payable, as defined in Section 1.01, shall be determined in accordance with
GAAP. Inventories as determined under Section 3.06 hereof shall be valued in
accordance with the procedures set forth in Section 3.05 of the Disclosure
Schedule which procedures are, except as otherwise set forth in such Section
3.05 of the Disclosure Schedule, in accordance with GAAP.
Seller shall provide Buyer with a schedule of the Closing Net Working
Capital, Closing Capital Expenditures and Closing Sales Proceeds within forty-
five (45) days after Closing, together with a letter of Seller's independent
certified public accountants
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stating that such schedule has been prepared, in all material respects, in
accordance with the provisions of this Agreement and fairly presents the Closing
Net Working Capital, Closing Capital Expenditures and Closing Sales Proceeds for
the relevant period in accordance with the provisions of this Agreement. If the
Purchase Price Adjustment is a negative number, Seller shall make payment by
wire transfer to Buyer in immediately available funds for the amount of the
Purchase Price Adjustment on or before fifteen (15) days after the Purchase
Price Adjustment becomes final pursuant to Section 3.07. If the Purchase Price
Adjustment is a positive number, Buyer shall, on or before fifteen (15) days
after the Purchase Price Adjustment becomes final pursuant to Section 3.07, make
payment by wire transfer to Seller in immediately available funds for the amount
of the Purchase Price Adjustment. The Purchase Price Adjustment shall be paid
by or to FMC and JV on the basis of the elements of the Purchase Price
Adjustment allocable to the Mill Assets acquired by JV and the Container Assets
acquired by FMC, respectively. All payments of the Purchase Price Adjustment
shall also include interest on the amount of such Purchase Price Adjustment at
the prime rate announced from time to time by The Chase Manhattan Bank N.A. from
the forty-fifth (45th) day after Closing until the day actually paid.
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3.06 COUNT OF INVENTORY. Seller and Buyer and their respective
independent certified public accountants shall conduct a joint physical count as
of the Closing Date, in accordance with the procedures set forth in Section 3.05
of the Disclosure Schedule, of the Inventory, in order to determine the quantity
of all items of such Inventory that qualify as Inventory. Based upon such joint
physical count, Seller shall prepare and deliver to Buyer as part of the
schedule of Closing Net Working Capital a schedule, by item and quantity, of
Inventory (the "Closing Inventory Schedule") accompanied by a letter of agreed
upon procedures of Seller's independent certified public accountant to the
effect that the Closing Inventory Schedule has been prepared, in all material
respects, in accordance with this Section 3.06.
3.07 RESOLUTION OF NET WORKING CAPITAL AND CLOSING CAPITAL EXPENDITURES
DISPUTES. Seller shall make available to Buyer and, if Buyer elects, Buyer's
independent certified public accountants, at no expense, such of the facilities,
books, records and personnel of Seller related to the Business and such of the
work papers of Seller's independent certified public accountants as are
reasonably requested by Buyer to enable it to review and verify Seller's Closing
Net Working Capital calculation, including the Closing Inventory Schedule, the
Closing Capital Expenditures and Closing
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Sales Proceeds calculations. In the event Buyer disputes Seller's calculations,
it shall, within thirty (30) days of delivery thereof, deliver a notice to
Seller (the "Dispute Notice") setting forth in reasonable detail the basis of
such dispute. If the Dispute Notice is not delivered within such thirty (30)
day period, then the Purchase Price Adjustment, as determined by Seller, shall
be final. In the event that the Dispute Notice is so delivered, the parties
shall negotiate to attempt to resolve the portion which is in dispute and the
portion which is not in dispute, together with interest accrued thereon, shall
be promptly paid by the party owing the same. If the parties fail to resolve
any such dispute within ninety (90) days after receipt by Seller of the Dispute
Notice, the parties shall select a firm of independent certified public
accountants of national standing (the "Reviewing Accountant") to review the
portions of Seller's calculation which are subject to dispute or, if the parties
fail to agree upon a Reviewing Accountant within twenty (20) days after receipt
by Seller of the Dispute Notice, such firm shall be selected by lot from among
all so-called "Big Six" firms not having (and not having announced a pending
combination with another firm having) a disqualifying interest with respect to
either party. The performance of any such firm as the Reviewing Accountant
under this
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or any other provision of this Agreement shall not constitute a disqualifying
interest. The parties shall make available to the Reviewing Accountant all work
papers and all other information and material in their possession relating to
the matters asserted in the Dispute Notice. The Reviewing Accountant shall be
instructed by the parties to use its best efforts to deliver to the parties its
determination as promptly as practicable after such submission of the dispute to
the Reviewing Accountant. The determination of the Reviewing Accountant shall
be final and binding on the parties. Each party shall bear its own expenses and
the fees and expenses of its own representatives and experts, including its
independent accountant, in connection with the preparation, review, dispute (if
any) and final determination of the Purchase Price Adjustment. The parties
shall share equally in the costs, expenses and fees of the Reviewing Accountant.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Buyer that:
4.01 CORPORATE EXISTENCE AND POWER, ETC.
(a) Each of SJPC, SJFP and SJCC is a corporation duly
incorporated, validly existing and in good standing under the
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laws of the jurisdiction of its incorporation, and has all required corporate
power and authority to carry on the Business as now conducted by it and, in the
case of SJFP and SJCC, to own any of the Acquired Assets owned by it. Section
4.01 of the Disclosure Schedule sets forth the name and the jurisdiction of
incorporation of each of SJPC, SJFP and SJCC. Each of SJPC, SJFP and SJCC is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the property owned or leased by it or the
nature of its activities make such qualification necessary, except where failure
to be so qualified would not, individually or in the aggregate, materially
adversely affect compliance with this Agreement.
4.02 CORPORATE AUTHORIZATION. The execution and delivery of this
Agreement by SJPC, SJFP and SJCC and the execution and delivery of the Ancillary
Agreements by Seller and each of the Seller Affiliates which is a party thereto,
and the performance by SJPC of this Agreement and by Seller of this Agreement
and each of the Ancillary Agreements to which it is a party and the consummation
by Seller and any Seller Affiliate of the transactions contemplated hereby and
by the Ancillary Agreements to which it is a party are within SJPC's, Seller's
and such Seller Affiliate's corporate powers and have been duly authorized by
all necessary
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corporate action on the part of SJPC, Seller and such Seller Affiliate, subject
to the requirement that this Agreement and the transactions contemplated thereby
are subject to the approval of a majority of the outstanding shares of capital
stock of SJPC. This Agreement constitutes, and when executed and delivered the
Ancillary Agreements will constitute, valid and binding agreements of SJPC,
Seller and each Seller Affiliate which is a party thereto, enforceable against
it in accordance with its terms except that (a) such enforcement may be subject
to bankruptcy, insolvency, reorganization, moratorium (whether general or
specific) or other similar laws now or hereafter in effect relating to
creditor's rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought.
4.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for consents under
any applicable "bulk sales" laws, requirements of the HSR Act, the Right of
First Refusal, those permits and licenses identified in Section 4.10(a) of the
Disclosure Schedule, the stockholder approval referenced in Section 4.02 and
each of the consents set forth in Section 4.03 of the Disclosure Schedule (each
a "Consent" and together the "Consents"), no notice to or filing
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with, and no permit, authorization, consent or approval of, any Person, or any
public body or authority, including courts of competent jurisdiction, domestic
or foreign (a "Governmental Entity"), is necessary for the execution, delivery
and performance of this Agreement and the consummation by Seller and any Seller
Affiliate of the transactions contemplated by this Agreement. Neither the
execution and delivery of this Agreement by Seller and SJPC, nor the
consummation by Seller and any Seller Affiliate of the transactions contemplated
hereby, nor compliance by Seller and any Seller Affiliate with any of the
provisions hereof, will (i) conflict with or result in any breach of any
provision of the certificate of incorporation or by-laws of Seller or such
Seller Affiliate; (ii) assuming the obtaining of all Consents and the Releases
and Terminations, result in a default (with or without due notice or lapse of
time or both), or give rise to any right of termination, cancellation or
acceleration, under any note, bond, mortgage, indenture, license, contract,
agreement or other instrument or obligation to which Seller or any such Seller
Affiliate is a party or by which Seller, any such Seller Affiliate or any of the
Acquired Assets may be bound; or (iii) assuming the obtaining of all Consents,
violate any order, writ, injunction, decree, statute, rule or regulation
applicable to Seller, any such
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Seller Affiliate or any of the Acquired Assets, except in the case of (ii) or
(iii) for violations, breaches or defaults which will not in the aggregate have
a Material Adverse Effect.
4.04 FINANCIAL STATEMENTS. SJFP has delivered to Buyer a copy of
unaudited consolidated financial statements of SJFP and SJCC (without SJLD)
consisting of a balance sheet, statement of operating profit and changes in cash
and investments as of and for the years ended December 31, 1994, 1993 and 1992
and the periods ended March 31, 1995 and June 30, 1995 and unaudited
consolidating balance sheets and income statements as of and for the periods
ended March 31, 1995 and June 30, 1995 (the "Financial Statements"). Subject to
Section 4.04 of the Disclosure Schedule, the Financial Statements were prepared
or will be prepared based upon the books and records of Seller, and fairly
present or will fairly present in all material respects the financial condition
of Seller as of the appropriate periods and the results of operations for the
period then ended, in each case in conformity with GAAP. SJFP shall promptly
deliver to Buyer comparable unaudited or audited financial statements for
periods subsequent to June 30, 1995 and prior to the Closing Date, and they
shall be deemed to be included within the defined term "Financial Statements."
Except as set forth in Section 4.04 of the Disclosure
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Schedule and except as reflected or reserved against on the most recent
Financial Statements delivered to Buyer pursuant to this Section 4.04, as of the
date of such most recent Financial Statements the Business did not have any
liabilities or obligations of a nature that would be required to be reflected or
reserved against on a balance sheet prepared in accordance with GAAP.
4.05 ABSENCE OF CERTAIN CHANGES. Except as set forth in Section 4.05
of the Disclosure Schedule, since January 1, 1995, (a) Seller has conducted the
Business in the ordinary course consistent with past practices; (b) the Business
and the Acquired Assets have not suffered any occurrence which has resulted in
or could reasonably be expected to result in a Material Adverse Effect; (c)
other than transactions wholly within the Business, Seller has not sold,
transferred, or otherwise disposed of, or agreed to sell, transfer, or otherwise
dispose of, any property or asset, real, personal or mixed, which is (or would
be if held by Seller at the Closing Date) an Acquired Asset and which has a
sales price in any single case in excess of $50,000 or in the aggregate for all
such cases in excess of $500,000, except in the ordinary course of business or
in connection with capital improvements or replacements; (d) Seller and the
Seller Affiliates have not received any written notice, or had actual knowledge,
that any
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supplier or customer of the Business has taken any steps which could reasonably
be expected to result in a Material Adverse Effect; and (e) other than
transactions wholly within the Business, Seller has not entered into, amended,
modified or terminated any other agreements, commitments or contracts of a
nature required to be listed in Section 4.08 of the Disclosure Schedule relating
to the Business, except agreements, commitments or contracts made in the
ordinary course of business consistent with past practice.
4.06 TANGIBLE ASSETS. Assets constituting Acquired Equipment as of
September 30, 1995 are listed in Section 4.06 of the Disclosure Schedule.
Acquired Equipment will at the Closing Date constitute all (except as disclosed
in such definition) personal property (other than the Excluded Assets, Fixtures
and Improvements, Rolling Stock, and Inventories) owned by Seller and used in
connection with the operation of the Business. Rolling Stock will at the
Closing Date constitute all (except as disclosed in such definition) vehicles,
certificated and otherwise, (including, but not limited to automobiles, trucks,
rail engines and rail cars), owned or leased by Seller and used in connection
with the operation of the Business. Fixtures and Improvements will at the
Closing Date constitute the buildings, fixtures and other improvements referred
to in the definition of Real Property.
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Seller's tangible assets comprising Acquired Equipment, Fixtures and
Improvements and Rolling Stock are in good operating condition and repair,
normal wear and tear excepted. Except as set forth in Sections 4.09, 4.10(a)
and 11.08 of the Disclosure Schedule, Seller has not received any written notice
within the past twelve (12) months of a violation of any ordinances, regulations
or other laws with respect to such assets that could reasonably be expected to
result in a Material Adverse Effect.
4.06A DISCLAIMER OF WARRANTIES OF MERCHANTABILITY AND FITNESS. EXCEPT
AS EXPRESSLY PROVIDED IN SECTION 4.06, SELLER MAKES NO REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, AS TO THE CONDITION OR FITNESS OF THE TANGIBLE
PERSONAL ACQUIRED ASSETS AND HEREBY DISCLAIMS ANY WARRANTY OF MERCHANTABILITY OR
FITNESS FOR A PARTICULAR PURPOSE.
4.07 TITLE TO THE ACQUIRED ASSETS. Except as set forth in Section 4.07
of the Disclosure Schedule with respect to Secured Indebtedness, there are no
Liens on the Acquired Assets other than Permitted Liens. On the Closing Date,
Seller shall convey to Buyer or a Buyer Affiliate good and marketable title in
and to the Acquired Assets free and clear of all Liens other than Permitted
Liens (except with respect to the Acquired Agreements, Acquired Software,
Acquired Claims, and Acquired Insurance Claims, as to
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which Seller shall convey to Buyer a valid and enforceable leasehold or other
contractual interest in and to each of such Acquired Assets (subject to Section
2.05 and subject to Section 4.08 of the Disclosure Schedule) (except that no
representation is made as to enforceability to the extent it may be affected by
the nature of Buyer or Buyer Affiliates or Buyer's or Buyer Affiliates' acts or
omissions after the Closing Date and except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or hereafter in effect relating to
creditor's rights generally and (b) the remedy of specific performance and
injunctive and other forms of equitable relief may be subject to equitable
defenses and to the discretion of the court before which any proceeding therefor
may be brought) and except with respect to the Real Property, the SJLD Property
and the Realty Rights which are the subject of Section 6.12, and except with
respect to Acquired Intellectual Property which is the subject of Sections 4.11
and 6.08 to the extent related to perfecting title as to third parties.
4.08 CERTAIN AGREEMENTS.
(a) Section 4.08(a) of the Disclosure Schedule sets forth a
list of all of the following agreements constituting
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Acquired Agreements as of September 30, 1995 (other than purchase orders and
replacement parts supply arrangements outstanding in the ordinary course of
business regardless of amount):
(i) each agreement which involves the receipt or payment
of more than fifty thousand dollars ($50,000) per annum;
(ii) each railroad tracking agreement;
(iii) each pipeline agreement; and
(iv) any other agreement that is material to the Business.
(b) Except as set forth in Section 4.08(b) of the Disclosure
Schedule, to Seller's knowledge, each agreement which will constitute Acquired
Agreements as of the Closing Date and each right which will constitute a Realty
Right as of the Closing Date is or will be as of the Closing Date in full force
and effect. Neither Seller nor any Seller Affiliate nor, to Seller's knowledge,
any third party is or will be as of the Closing Date in default under the terms
of any Acquired Agreement or any Realty Right in any manner which could
reasonably be expected to have a Material Adverse Effect.
4.09 LEGAL MATTERS. Except as set forth in Sections 4.09, 4.10(a),
4.14, 8.08 and 11.08 of the Disclosure Schedule and excluding matters pertaining
to Excluded Assets or Retained
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Liabilities, (a) there is no written notice of any action, suit, claim,
arbitration, investigation or proceeding pending against, or to the knowledge of
Seller, threatened against, Seller or any of the Seller Affiliates (i) with
respect to the Business or any Acquired Asset before any court, arbitrator or
any Governmental Entity which could reasonably be expected to have a Material
Adverse Effect or (ii) which in any manner challenges or seeks to prevent or
enjoin the transactions contemplated hereby; (b) none of Seller or the Seller
Affiliates is a party to or, to the knowledge of Seller, is bound by any
judgment, injunction, award or order of any Governmental Entity, arbitrator or
any other Person which would bind the Buyer after the Closing Date and which
could reasonably be expected to have a Material Adverse Effect; (c) the Business
is being conducted in compliance with all applicable laws, statutes, ordinances,
regulations, decrees and orders, including Environmental Laws, except for
violations that have not had and could not reasonably be expected to have a
Material Adverse Effect; (d) Seller has not received any written notice of any
actual or threatened proceeding, claim, lawsuit or loss that relates to Acquired
Assets or the Business and arises under any Environmental Law, except for
notices that have not had and could not reasonably be expected to have a
Material Adverse Effect; (e) to Seller's
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knowledge, no written notice of the type described in the preceding clause (d)
was given to any Person or entity that occupied or owned any of the Real
Property or the SJLD Property prior to Seller's acquisition or use thereof that
could reasonably be expected to have a Material Adverse Effect; (f) Seller is
not currently operating or required to be operating the Business or the Acquired
Assets under any compliance order, schedule, decree or agreement, any consent
decree, order or agreement, and/or any corrective action decree, order or
agreement issued or entered into under any Environmental Law except for those
that have not had and could not reasonably be expected to have a Material
Adverse Effect; and (g) to Seller's knowledge, there are not on the Real
Property or the SJLD Property landfills or land farms where Seller has
intentionally accumulated and disposed of any solid waste or Hazardous Materials
in violation of law which could reasonably be expected to have a Material
Adverse Effect. Except as set forth in Sections 4.09 and 4.10(a) of the
Disclosure Schedule, as of the Execution Date there have been no environmental
reports or studies made by or on behalf of Seller relating to the Acquired
Assets or the Business within the last five (5) years which were prepared as
part of a single plant or a division-wide environmental compliance audit or a
comprehensive review of all media (air, water, and solid
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waste) for all facilities and operations and which were not related to any
reporting obligation under any Environmental Law.
4.10 ENVIRONMENTAL PERMITS; OTHER PERMITS.
(a) Listed in Section 4.10(a) of the Disclosure Schedule are the
Environmental Permits held by Seller and used in the operation of the Business,
which list shall be updated as of the Closing Date. Except as set forth in
Sections 4.09 and 4.10(a) of the Disclosure Schedule, to Seller's knowledge, as
of the Execution Date, Seller possesses all Environmental Permits necessary for
the conduct of the Business and as of the Closing Date will possess all
Environmental Permits necessary for the conduct of the Business except where the
failure to possess the same could not reasonably be expected to have a Material
Adverse Effect. Except as set forth in Sections 4.09 and 4.10(a) of the
Disclosure Schedule, Seller has not received written notice from any
Governmental Entity that it is required to have in effect as of the Execution
Date any additional Environmental Permits. Seller has furnished Buyer a copy of
each such Environmental Permit. To Seller's knowledge, except as set forth in
Section 4.10(a) of the Disclosure Schedule, each such Environmental Permit is in
full force and effect. Except as set forth in Section 4.10(a) of the Disclosure
Schedule, no outstanding notice of cancellation or
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termination has been delivered to Seller in connection with any Environmental
Permit nor to Seller's knowledge is any such cancellation or termination
threatened (i) as of the Execution Date or (ii) as of the Closing Date which
could reasonably be expected to have a Material Adverse Effect. Except as set
forth in Sections 4.09 and 4.10(a) of the Disclosure Schedule, no applications
are known by Seller to be required, as of the Execution Date, for operating
permits or alternatives thereto in connection with the Business under Title V of
the Federal Clean Air Act. Except as set forth in Sections 4.09 and 4.10(a) of
the Disclosure Schedule, there are no complaints or petitions by others, of
which written notice has been given to Seller, with respect to revocation of any
such Environmental Permits (i) as of the Execution Date or (ii) as of the
Closing Date which could reasonably be expected to have a Material Adverse
Effect.
(b) Listed in Section 4.10(b) of the Disclosure Schedule are all
Permits other than Environmental Permits used in the conduct of the Business
which list shall be updated as of the Closing Date. Seller possesses all
Permits necessary for the conduct of the Business, except where the failure to
possess any such Permit could not reasonably be expected to result in a Material
Adverse Effect. To Seller's knowledge, each such Permit
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is in full force and effect. No outstanding notice of cancellation or
termination has been delivered to Seller in connection with any such Permit nor
to Seller's knowledge is any such cancellation or termination threatened (i) as
of the Execution Date or (ii) as of the Closing Date which could reasonably be
expected to have a Material Adverse Effect.
(c) Notwithstanding anything to the contrary in Sections 4.09 and
4.10(a), nothing herein shall be construed as a representation of Seller's
compliance with any provision of Title V of the Clean Air Act or the U.S.
Environmental Protection Agency's Effluent Limitations Guidelines, Pretreatment
Standards, and New Source Performance Standards: Pulp, Paper, and Paperboard
Category; National Emission Standards for Hazardous Air Pollutants for Source
Category; Pulp and Paper Production ("Cluster Rules") which becomes effective or
which must initially be complied with after the Execution Date.
4.11 INTELLECTUAL PROPERTY.
(a) Section 4.11 of the Disclosure Schedule sets forth a list
of (i) all Trademark registrations, patents, copyright registrations and
applications therefor and all material unregistered Trademarks, service marks
and trade names which are owned by Seller or any of the Seller Affiliates and
used
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exclusively or held for use exclusively in the Business, (ii) Acquired Software
which is owned by Seller or any of the Seller Affiliates, and (iii) any written
license, sublicense or other agreement which Seller or any of the Seller
Affiliates has entered granting Seller or any of the Seller Affiliates rights to
use Intellectual Property (the "Listed Intellectual Property").
(b) Buyer understands that Seller has not made or given, and
does not make or give, any warranty as to the value, enforceability, or validity
of any Intellectual Property or that the use by Buyer or Buyer Affiliates of any
Intellectual Property pursuant to this Agreement will not infringe upon other
intellectual property rights.
(c) Nothing contained in this Agreement shall be construed as
an agreement by, or obligation of, Seller to bring or prosecute actions or suits
against third parties for infringement or violation of any Intellectual Property
transferred or licensed hereunder.
(d) Seller shall have no obligation to defend, indemnify or
hold harmless Buyer Group from any damages, costs or expenses resulting from any
obligation, proceeding or suit based upon any claim that any activity,
subsequent to the Closing Date, engaged in by Buyer Group, a customer of Buyer
or Buyer Affiliates
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or anyone claiming under Buyer constitutes direct or contributory infringement
or misuse of any intellectual property rights not licensed under this Agreement.
(e) Buyer shall be liable for and shall hold Seller Group
harmless from and against any and all Losses and Damages resulting from any
obligation, proceeding or suit based upon any claim that any activity conducted
or engaged in, subsequent to the Closing Date, by Buyer Group, a customer of
Buyer or Buyer Affiliates, or anyone claiming under Buyer constitutes direct or
contributory infringement, or misuse, or misappropriation of any intellectual
property right of any third party.
4.12 FINDERS' FEES. Except for Dillon, Read & Co. Inc. whose fees
related thereto, if any, will be paid by Seller, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Seller or any of its Affiliates who would be entitled to any
fee or commission upon consummation of or in connection with the transactions
contemplated by this Agreement.
4.13 REAL PROPERTY; REALTY RIGHTS.
(a) Section 4.13(a)(i) of the Disclosure Schedule sets forth a
description of the Real Property. Subject to Section 6.12 and except as set
forth in Section 4.13(a)(i) of the
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Disclosure Schedule, the Real Property and the SJLD Property include all the
real property (expressly excluding parcels of undeveloped real property) of SJFP
currently used and necessary in the operation of the Mill Business. Subject to
Section 6.12 and except as set forth in Section 4.13(a)(ii) of the Disclosure
Schedule, the Real Property includes all real property owned by SJCC.
(b) Section 4.13(b) of the Disclosure Schedule sets forth the
Realty Rights used in the operation of the Business. Except as set forth in
Section 4.13(b) of the Disclosure Schedule, to Seller's knowledge and subject to
Section 6.12, the Realty Rights set forth in Section 4.13(b) of the Disclosure
Schedule are all those that are currently used and necessary in the operation of
the Business.
(c) To Seller's knowledge, no zoning law or other similar
ordinance or municipal regulation is violated by continuation of the present use
and operation of the Acquired Assets presently on the Real Property or the SJLD
Property and Seller has not received notice of any such violation.
(d) No outstanding notice of condemnation of any of the Real
Property or the SJLD Property has been delivered to
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Seller nor, to Seller's knowledge, is any condemnation proceeding of any of the
Real Property or the SJLD Property threatened.
(e) To Seller's knowledge, no fact or condition exists which
would result in the termination or curtailment of the current access from the
Real Property or the SJLD Property to any presently existing public roads
adjoining the Real Property or the SJLD Property. All of the Real Property and
the SJLD Property has direct access to existing public roads and to all
utilities utilized at such location, except that utilities at the Port St. Joe
container facility are provided from the mill.
(f) Except as set forth in Section 4.13(f) of the Disclosure
Schedule, to Seller's knowledge, no underground storage tanks are present on the
Real Property or the SJLD Property.
(g) Except as set forth in Section 4.13(g) of the Disclosure
Schedule, to Seller's knowledge, no asbestos containing materials remain in
place on any of the Real Property or the SJLD Property.
4.14 LABOR CONTROVERSIES, ETC. Except as set forth in Section 8.08 of
the Disclosure Schedule, as of the Execution Date, and subject to Buyer's and
Buyer Affiliates' compliance with Article VIII hereto, as of the Closing Date:
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(a) there are no controversies between Seller and any Eligible
Employees that could reasonably be expected to have a Material Adverse Effect;
and
(b) to Seller's knowledge, there are no organizational efforts
currently being made or threatened involving any Eligible Employees that could
reasonably be expected to have a Material Adverse Effect.
4.15 NO IMPLIED REPRESENTATION. It is the explicit intent of each
party hereto that neither Seller nor SJPC is making any representation or
warranty whatsoever, express or implied, except those representations and
warranties of Seller and SJPC explicitly set forth in this Agreement, the
Disclosure Schedule or in any certificate contemplated hereby and delivered by
or on behalf of Seller or any Seller Affiliate in connection herewith.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of FMC and JV, severally and not jointly, hereby represents and
warrants to Seller as to itself and where applicable its Affiliates that:
5.01 ORGANIZATION AND EXISTENCE. Each of FMC and JV is duly organized,
validly existing and in good standing under
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the laws of the jurisdiction of its organization and has all requisite corporate
or other organizational power and authority and all governmental licenses,
authorizations, consents and approvals required to carry on its business as now
conducted. Each of FMC and JV is duly qualified or licensed to do business and
is in good standing in each jurisdiction where the character of the property
owned or leased by it or the nature of its activities make such qualification
necessary, except where failure to be so qualified would not, individually or in
the aggregate, materially adversely affect FMC's or JV's compliance with this
Agreement.
5.02 AUTHORIZATION. The execution, delivery and performance by FMC and
JV of this Agreement and the Ancillary Agreements to which FMC or JV is a party
and the consummation by FMC and JV of the transactions contemplated hereby and
thereby are within FMC's and JV's powers and have been duly authorized by all
necessary action on the part of FMC and JV. This Agreement constitutes and,
when executed and delivered, the Ancillary Agreements will constitute, the valid
and binding agreements where applicable of FMC and JV, enforceable against each
of them in accordance with its terms except that (a) such enforcement may be
subject to bankruptcy, insolvency, reorganization, moratorium (whether general
or specific) or other similar laws now or
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hereafter in effect relating to creditor's rights generally and (b) the remedy
of specific performance and injunctive and other forms of equitable relief may
be subject to equitable defenses and to the discretion of the court before which
any proceeding therefor may be brought.
5.03 CONSENTS AND APPROVALS; NO VIOLATION. Except for the applicable
requirements of the HSR Act, or as set forth in Section 5.03 of the Disclosure
Schedule, no notice to or filing with, and no permit, authorization, consent or
approval of, any Person or Governmental Entity is necessary for the execution,
delivery and performance of this Agreement and the consummation by FMC or JV of
the transactions contemplated by this Agreement. Neither the execution and
delivery of this Agreement by FMC or JV nor the consummation by FMC or JV of the
transactions contemplated hereby nor compliance where applicable by FMC or JV
with any of the provisions hereof will (i) conflict with or result in any breach
of any provision of the certificate of incorporation or by-laws (or other
similar charter documents) of FMC or JV; (ii) result in a violation or breach
of, or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under, any of the terms, conditions or provisions of any note, bond, mortgage,
indenture,
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license, contract, agreement or other instrument or obligation to which FMC or
JV is a party or by which FMC or JV or their respective assets may be bound; or
(iii) violate any order, writ, injunction, decree, statute, rule or regulation
applicable to FMC or FMC's assets or JV or JV's assets, except in the case of
(ii) or (iii) for violations, breaches or defaults which will not, in the
aggregate, have a material adverse effect on FMC or JV, respectively.
5.04 FINDERS' FEES. Except for Bear Stearns & Co. Inc., whose fees
related thereto, if any, will be paid by Buyer, there is no investment banker,
broker, finder or other intermediary which has been retained by or is authorized
to act on behalf of Buyer or any Buyer Affiliates or SCC who would be entitled
to any fee or commission upon consummation of the transactions contemplated by
this Agreement.
5.05 LITIGATION. There is no action, suit, investigation or proceeding
pending against, or to the knowledge of Buyer, threatened before any court or
arbitrator or any Governmental Entity which (a) would be reasonably likely to
have a material adverse effect on Buyer or any Buyer Affiliate or (b) in any
manner challenges or seeks to prevent or enjoin the transactions contemplated
hereby.
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5.06 INVESTOR STATUS. FMC is an accredited investor within the meaning
of Rule 501 of the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "Securities Act"), has the financial ability to bear
the economic risk of the investment in the Stock, can afford to sustain a
complete loss of such investment, and has no need for liquidity in the
investment in the Stock. FMC is acquiring the Stock for investment and not with
a view to the sale or distribution thereof, for its own account and not with a
view to the subsequent distribution thereof and not on behalf of or for the
benefit of others and has not granted any other person any right or option or
any participation or beneficial interest in the Stock. FMC acknowledges that
the shares of Stock constitute restricted securities within the meaning of Rule
144 under the Securities Act, and that none of such securities may be sold
except pursuant to an effective registration statement under the Securities Act
or in a transaction exempt from registration under the Securities Act, and
acknowledges that it understands the meaning and effect of such registration.
FMC is aware that no Federal or state regulatory agency or authority has passed
upon the sale of the Stock or the terms of the sale or the accuracy or adequacy
of any material being provided to FMC and that the purchase price thereof was
negotiated
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between the Seller and FMC and does not necessarily bear any relationship to the
underlying assets or value of Groveton Paperboard, Inc.
5.07 OUTSTANDING DEBT. There exists no default under the provisions of
any instrument evidencing debt or of any agreement related thereto to which
Buyer or any Buyer Affiliate or any of their subsidiaries is a party.
5.08 TITLE TO PROPERTIES. Buyer and each Buyer Affiliate has good and
marketable title to its respective real property (other than property which it
leases) and good title to all its other respective property.
5.09 TAXES. Buyer and each Buyer Affiliate has filed all returns for
taxes which are required to be filed, and each has paid all taxes as shown on
said returns and on all assessments received by it to the extent that such taxes
have become due, other than any assessments being contested in good faith by
appropriate proceedings.
5.10 FINANCIAL STATEMENTS.
FMC has delivered to Seller a copy of its audited consolidated
financial statements consisting of a balance sheet, income statement and
statement of cash flows as of and for the year ended July 31, 1995 (the "FMC
Financial Statements"). The FMC
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Financial Statements were prepared based upon the books and records of FMC, and
fairly present in all material respects the financial condition of FMC as of the
appropriate periods and the results of operations for the period then ended, in
each case in conformity with GAAP. FMC shall promptly deliver to Seller
unaudited or comparable audited financial statements for interim quarterly and
annual periods subsequent to July 31, 1995 and prior to the Closing Date, and
they shall be deemed to be included within the defined term "FMC Financial
Statements." Except as reflected or reserved against on the most recent FMC
Financial Statements delivered to Seller pursuant to this Section 5.10, as of
the date of such most recent FMC Financial Statements FMC had no liabilities or
obligations of a nature that would be required to be reflected or reserved
against on a balance sheet prepared in accordance with GAAP.
ARTICLE VI
COVENANTS OF THE PARTIES
6.01 CONDUCT OF THE BUSINESS. From the date hereof until the Closing
Date, except as otherwise expressly set forth in this Agreement or disclosed in
the Disclosure Schedule, Seller shall, and shall cause the Seller Affiliates to,
conduct the Business in
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the ordinary course consistent with past practice. Without limiting the
generality of the foregoing, except as otherwise expressly set forth in this
Agreement or disclosed in the Disclosure Schedule, from the date hereof until
the Closing Date, without the prior written consent of Buyer, Seller will not:
(a) with respect to the Business, acquire a material amount of
assets of any other Person other than in the ordinary course consistent with
past practice;
(b) sell, lease, license or otherwise dispose of (i) any assets
of the Business unless in the ordinary course consistent with past practice or
(ii) any item of equipment or fixtures of the Business for an amount in excess
of $10,000;
(c) cause any of the Acquired Assets to become subject to any
Lien other than Permitted Liens;
(d) except for changes in the ordinary course consistent with
past practice, grant any bonus or any increase in wages or salaries or enter
into, adopt or make any change in any consulting agreement, employment agreement
or other Benefit Plan or Seller benefit arrangement or commit to do so, in each
case as it may relate to Eligible Employees;
(e) make capital expenditures other than those itemized in
Section 6.01 of the Disclosure Schedule without the
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prior written approval of Buyer except as required to remain in compliance with
applicable law; or
(f) agree or commit to do any of the foregoing.
6.02 ACCESS TO INFORMATION. Subject to applicable law and restrictions
contained in any confidentiality agreements to which Seller is subject, Seller
will give Buyer, its counsel, consultants, financial advisors, auditors and
other authorized representatives reasonable access during business hours to the
offices, properties, books and records of Seller relating to the Business and
the Acquired Assets and will instruct the employees, counsel, independent
certified public accountants and financial advisors of Seller to cooperate with
Buyer in its investigation of the Business; PROVIDED that any investigation
pursuant to this Section 6.02 shall be conducted on commercially reasonable
prior notice and in such manner as not to interfere unreasonably with the
conduct of the Business of Seller and in accordance with such reasonable
procedures as Seller may require to protect the confidentiality of proprietary
information. All such information shall be kept confidential pursuant to the
terms of the confidentiality agreements dated as of April 13, 1995 between FMC
and Dillon, Read & Co. Inc. for itself and as a representative of SJPC and SJFP
and dated as of April 12, 1995 between SCC and
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Dillon, Read & Co. Inc. for itself and as a representative of SJPC and SJFP
(collectively, the "Confidentiality Agreement").
6.03 SELLER TRADEMARKS.
(a) Except as set forth in Section 6.03 of the Disclosure
Schedule, after the Closing Date, Buyer and its Affiliates shall not use any
Trademark or trade name owned or used by Seller or any of the Seller Affiliates
other than those constituting Acquired Intellectual Property (the "Seller
Trademarks"). Buyer understands and agrees that the Seller Trademarks, or any
right or license to the Seller Trademarks, are not being transferred pursuant to
this Agreement. Buyer acknowledges Seller's exclusive and proprietary rights in
the use of the Seller Trademarks, and Buyer agrees that it shall not use and
shall not permit its Affiliates to use the Seller Trademarks (or any names or
Trademarks confusingly similar to the Seller Trademarks) except as expressly set
forth in Section 6.03 of the Disclosure Schedule. After the Closing Date, all
Seller Trademarks shall be replaced by Buyer as soon as possible, but in no
event later than one hundred and twenty (120) days after the Closing Date for
items with Seller Trademarks affixed to them with a valid continuing use in
Buyer's conduct of the Business, including, without limitation, buildings,
vehicles, heavy equipment, hard
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hats, tools, tool boxes, kits (safety and others), signs, manual covers and
notebooks. After the Closing Date, Buyer will not use, and will destroy or
deliver to Seller, all such items with Seller Trademarks affixed to them that
have no valid continuing use in Buyer's conduct of the Business, including items
affecting customer or employee relations or items that do not reflect Buyer's
true identity. Specific items to be destroyed or returned include items with
Seller Trademarks affixed to them including, without limitation, giveaways;
order, purchase or materials forms; requisitions; invoices; statements; time
sheets/labor reports; bill inserts; stationery; personalized note pads; maps;
organization charts; bulletins/releases; sales/price literature; manuals or
catalogs; report covers/folders; program materials; and materials such as media
contact lists/cards. Notwithstanding the foregoing, Seller consents to the use
of the locality name "Port St. Joe" in the name of JV, but Buyer agrees to
change the name of JV to exclude use of "St. Joe" therein upon the request of
Seller made prior to December 31, 1995.
(b) Buyer recognizes the value associated with the Seller
Trademarks, and acknowledges that the Seller Trademarks and all rights therein
and the goodwill pertaining thereto belong
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exclusively to Seller, and that the Seller Trademarks have a secondary meaning
in the minds of the public.
(c) Buyer agrees that the conduct of the Business after the
Closing Date by Buyer and Buyer Affiliates using the Seller Trademarks shall be
provided in accordance with all applicable Federal, state and local laws, and
that the same shall not reflect adversely upon the good name of Seller, and that
the conduct of the Business will be of a standard and skill equivalent to that
employed by Seller prior to the Closing Date.
(d) Buyer acknowledges that its or its Affiliates' failure to
cease use of the Seller Trademarks as provided in this Agreement, or its or its
Affiliates' improper use of the Seller Trademarks, will result in immediate and
irreparable damage to Seller. Buyer acknowledges and admits that there is no
adequate remedy at law for such failure to terminate use of the Seller
Trademarks, or for such improper use of the Seller Trademarks, and Buyer agrees
that in the event of such failure or improper use, Seller shall be entitled to
equitable relief by way of temporary restraining order or any other relief
available under this Agreement.
6.04 GUARANTIES. Buyer shall use its best efforts (other than the
payment of money or agreement to substantive changes in
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the applicable document) to cause itself or a Buyer Affiliate to be substituted
in all respects for each member of the Seller Group, effective as of the Closing
Date, in respect of all obligations of any such member allocated to any period,
or to be performed after the Closing Date, under any Acquired Agreement or
Realty Rights under which Seller or a Seller Affiliate is liable and is not
released by the other party thereto to the extent the obligations thereunder
constitute an Assumed Liability (the items described shall be referred to
individually as a "Guarantee" and collectively as the "Guaranties") but such
obligation shall be limited to those Guaranties which are listed in Section 6.04
of the Disclosure Schedule. Section 6.04 of the Disclosure Schedule lists all
Guaranties as of the date hereof which individually or in the aggregate are
material. Following the Closing Date, with respect to any Guarantee which is
not listed in Section 6.04 of the Disclosure Schedule or for which no such
substitution is effected for the benefit of the Business and which relate to an
Assumed Liability, Buyer and Buyer Affiliates shall defend, indemnify and hold
harmless each member of the Seller Group against any obligation and liability
under any such Guarantee.
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6.05 EFFORTS; FURTHER ASSURANCES; PERMITS.
(a) Subject to the terms and conditions of this Agreement, each
party will use its commercially reasonable efforts to take, or cause to be
taken, all actions and to do, or cause to be done, all things necessary or
desirable under applicable laws and regulations to consummate the transactions
contemplated by this Agreement, including, without limitation, preparing and
making any filings required to be made under applicable law. Each party shall
furnish to the other party such necessary information and reasonable assistance
as such other party may request in connection with the foregoing.
(b) In case at any time after the Closing Date any further
action is necessary or desirable to carry out the purposes of this Agreement,
including action to fully vest in Buyer and Buyer Affiliates their rights in the
Acquired Assets, to perfect the assumption by Buyer and Buyer Affiliates of the
Assumed Liabilities or to perfect the retention by Seller of the Excluded Assets
and the Retained Liabilities, the proper officers and/or directors of Seller or
the Seller Affiliates and Buyer or Buyer Affiliates shall on the written request
of any of them take all such necessary or desirable action.
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(c) Seller shall, at its own expense (but without providing any
guarantees), promptly apply for or otherwise seek and use commercially
reasonable efforts to obtain all authorizations, consents, waivers and approvals
as may be required in connection with the assignment of the Acquired Agreements
to Buyer and Buyer Affiliates at the Closing. Upon Buyer's request Seller will
also use, and will cause its Affiliates to use, commercially reasonable efforts
(not including the payment of money, incurring any out-of-pocket costs or
providing any guarantees) to assist Buyer and the Buyer Affiliates in obtaining
any other permits, licenses or other authorizations after the Closing Date
necessary for Buyer's and the Buyer Affiliates' operation of the Business after
the Closing Date in a manner consistent with past practice.
(d) In the event that at any time, any order, decree or
injunction shall be entered which prevents or delays the consummation of any of
the transactions contemplated by this Agreement, each party shall promptly use
its best efforts to cause such order, decree or injunction to be reversed,
vacated or modified in order to permit such transactions to proceed as
expeditiously as possible.
6.06 BULK SALES LAWS. Buyer hereby waives to the fullest extent
possible under applicable laws compliance by Seller and the
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Seller Affiliates with the provisions of any applicable "bulk sales", "bulk
transfer" or similar laws. Seller shall comply with any such laws which cannot
be waived. Seller agrees to defend, indemnify and hold the Buyer Group harmless
against any and all Losses and Damages incurred by Buyer or Buyer Affiliates
arising under any such "bulk sales", "bulk transfer" or similar laws as a result
of the sale of the Acquired Assets pursuant to this Agreement.
6.07 BOOKS AND RECORDS. Buyer and Seller agree to retain, for a period
of ten (10) years after the Closing Date, any and all books and records (hard
copy, electronic or otherwise) related to the Acquired Assets, the Assumed
Liabilities, the Retained Liabilities or the Business for all periods through
the Closing Date or related to the transactions contemplated hereby, provided
that upon expiration of such period, the party with custody of such books and
records shall give written notice to the other party and an opportunity to such
other party to ship such books and records at such other party's cost, expense
and risk to a location chosen by it. In the event either party needs access to
such books and records for purposes of verifying any representations and
warranties contained in this Agreement, responding to inquiries regarding the
Business from Governmental Entities, indemnifying,
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defending and holding harmless the Seller Group or the Buyer Group, as the case
may be, in accordance with applicable provisions of this Agreement or any other
legitimate business purposes, including without limitation books and records
related to businesses conducted by SJLD, each party will allow representatives
of the other party access to such books and records upon reasonable notice
during regular business hours for the sole purpose of obtaining information for
use as aforesaid and will permit such other party to make such extracts and
copies thereof as may be necessary or convenient and, if required for such
purpose, to have access to and possession of original documents.
6.08 INTELLECTUAL PROPERTY COOPERATION; ETC. Seller and the Seller
Affiliates covenant and agree that at any time from and after the Closing Date
upon reasonable and specific written request of Buyer, they will use
commercially reasonable efforts to communicate to Buyer all information known to
them relating to the Acquired Intellectual Property, and they will execute and
deliver any papers, make all rightful oaths, testify in any legal proceedings
and perform all other lawful acts reasonably deemed necessary or desirable by
Buyer to convey or perfect title to the Acquired Intellectual Property and to
enforce or defend Buyer's rights in and to the Acquired Intellectual Property or
assist Buyer
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in obtaining or enforcing Buyer's rights in and to the Acquired Intellectual
Property. Buyer shall reimburse Seller for all reasonable and documented out-
of-pocket expenses incurred in providing cooperation pursuant to this Section
6.08 other than expenses for conveying or perfecting title to such Acquired
Intellectual Property, which shall be handled in accordance with Section 12.03
(except for recordation fees and expenses, which shall be for Buyer's account).
6.09 GOVERNMENTAL REGULATORY APPROVAL. As promptly as practicable
after the Financing Date, Buyer and Seller shall cooperate in filing the
required applications and notices with the appropriate Governmental Entities
seeking authorization to transfer or assign the Permits to Buyer (the
"Regulatory Approvals"). To the extent assignable, Seller will assign the
Permits to Buyer. Each party agrees to use its best efforts to obtain the
Regulatory Approvals and the parties agree to cooperate fully with each other
and with all Governmental Entities to obtain the Regulatory Approvals at the
earliest practicable date.
6.10 HSR ACT REVIEW. As promptly as practicable after the Execution
Date, the parties will make such filings as may be required by the HSR Act with
respect to the sale contemplated by this Agreement. Thereafter, the parties
will file as promptly as
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practicable any supplemental information that may be requested by the U.S.
Federal Trade Commission or the U.S. Department of Justice pursuant to the HSR
Act. If necessary, the parties will use their best efforts in seeking early
termination of the waiting periods under the HSR Act.
6.11 EFFECT OF DUE DILIGENCE AND RELATED MATTERS. Buyer represents
that it is a sophisticated entity that was advised by knowledgeable counsel,
environmental consultants and financial advisors and, to the extent it deemed
necessary, other advisors in connection with this Agreement and by the Closing
Date will have conducted its own independent review, evaluation and inspection
of the Acquired Assets and Assumed Liabilities. Accordingly, Buyer covenants
and agrees that (i) except for the representations and warranties set forth in
this Agreement and the Disclosure Schedule and any other written communication
signed and delivered by an executive officer of Seller, Buyer and Buyer
Affiliates have not relied and will not rely upon any document or written or
oral information furnished to it by or on behalf of Seller or its Affiliates or
discovered by it or its representatives in a review of Seller's or Seller
Affiliates' records, including, without limitation, any financial statements or
data, provided that nothing stated aforesaid shall prevent Buyer and Buyer
Affiliates from
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using any document or written record of Seller or Seller Affiliates in
connection with verification of a representation or warranty in this Agreement,
(ii) there are no representations or warranties by or on behalf of Seller or its
Affiliates or representatives except for those expressly set forth in this
Agreement and the Disclosure Schedule and any other written agreement entered
into with Seller or any of its Affiliates with Buyer in connection with this
Agreement, and (iii) to the fullest extent permitted by law, Buyer's and Buyer
Affiliates' rights and obligations with respect to all of the foregoing matters
will be solely as set forth in this Agreement or in such other written
agreements.
6.12 REAL PROPERTY TRANSFERS.
(a) Within five (5) Business Days after the Financing Date, Buyer
may (at its option and expense) order a preliminary title binder (on a standard
form reasonably acceptable to Buyer), to be issued by a title insurance company
or companies reasonably acceptable to Buyer, with respect to the Real Property
and the SJLD Property. Within thirty (30) days after the Financing Date, Seller
shall provide Buyer with boundary surveys of the Real Property and the SJLD
Property and within seventy-five (75) days after the Financing Date, Seller
shall provide Buyer with ALTA surveys of the Real Property and the SJLD
Property. Buyer shall
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provide Seller with a copy of each preliminary title binder (with copies of
all instruments listed as exceptions to title) and any continuation thereof not
later than five (5) Business Days following Buyer's receipt thereof. If a
preliminary title binder or any continuation thereof indicates an exception
(other than a Permitted Lien) that would impair marketability in any material
respect in Buyer's reasonable judgment (the "Title Exception"), Seller shall,
upon written notice thereof from Buyer given at the time of Buyer's submitting
the preliminary title binder or continuation thereof, as the case may be, not
later than thirty (30) days before the Closing Date, cause such Title Exception
to be removed on or before the Closing Date, or, with Buyer's approval (such
approval not to be unreasonably withheld), to put up a bond with the title
insurer in an amount sufficient to cause the title insurer to insure over such
Title Exception or to remove such Title Exception from the title commitment for
the benefit of Buyer or the Buyer Affiliate. Notwithstanding the foregoing, if
any Title Exception cannot be removed prior to the Closing Date, Seller shall
have such additional time as Seller may reasonably require to remove such Title
Exception and an interest-bearing escrow account shall be established at Closing
out of a portion of the moneys payable by Buyer at the Closing equal to the
estimated reasonable
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cost of curing such Title Exception. To the extent the escrow contains funds
following the cure of all such Title Exceptions, said surplus shall be delivered
to Seller. To the extent the escrow contains inadequate funds to cure all such
Title Exceptions, Seller shall pay the cost of such cure directly.
Notwithstanding the foregoing, Seller shall not be required to incur any expense
to cure Title Exceptions in excess of an aggregate amount of $500,000; provided,
however, that Seller shall be required as of the Closing Date to cure any
mortgage, mechanic's lien, tax lien, or judgment lien capable of being removed
by payment of a fixed sum of money, regardless of the amount thereof, subject to
Seller's right to contest any of the foregoing in good faith and by appropriate
proceedings diligently conducted, and an interest-bearing escrow account shall
be established at Closing out of a portion of the moneys payable by Buyer at
Closing equal to the amount of such contested item. To the extent the escrow
contains funds following the cure of such contested item, said surplus shall be
delivered to Seller. To the extent the escrow contains inadequate funds to cure
such contested item, Seller shall pay the cost of such cure directly. If the
estimated cost to cure Title Exceptions other than mortgages, mechanic's liens,
tax liens or judgment liens, exceeds $500,000 in the aggregate, and Seller shall
elect not to
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cure such Title Exceptions, Buyer shall have the right upon five (5) days' prior
written notice to Seller to either (a) accept title subject to such Title
Exceptions and receive a credit against the Purchase Price in the amount of
$500,000 or (b) terminate this Agreement.
(b) Notwithstanding the foregoing subsection (a), JV agrees to
provide SJLD with a recordable easement with respect to the SJLD Property to
extract water from the canal included therein in an amount up to one million
gallons per day in the event of a forest fire in the environs and to have
reasonable access to the roads currently along and over such real property and
to provide the Apalachicola Northern Railroad with a recordable easement with
respect to the SJLD Property as to its existing rail lines across such property.
Notwithstanding anything to the contrary in this Agreement, JV may at its
election: (1) no less than sixty (60) days prior to the Closing Date, notify
Seller to substitute a single parcel of 100 contiguous undeveloped acres of real
property which, to the reasonable satisfaction of JV, shall be free of any
Environmental Conditions giving rise to Environmental Liabilities (the "Parcel")
to be designated by Seller in place of similar acreage for dredge material along
the water canal supplying water to the mill; or (2) within three (3) years of
the Closing Date
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purchase from Seller the Parcel at the then fair market value thereof for use as
dredge spoil disposal; provided, however, that in either case JV shall bear all
responsibilities for obtaining all necessary permits from Governmental Entities
in connection therewith and JV shall bear all costs associated with the
development and use of the Parcel for such intended use. The Parcel shall have
direct access to an existing public road or recordable easements from Seller or
its Affiliates to provide access over its real property thereto.
(c) In addition, within five (5) Business Days after the
Financing Date, Buyer may (at its option and expense) commence an investigation
of Seller's right, title and interest in the Realty Rights. If any such
investigation indicates an exception other than a Permitted Lien, Seller shall,
upon written notice thereof from Buyer not later than thirty (30) days before
the Closing Date, cause such exception to be removed on or before the Closing
Date or to be addressed in a fashion similar to that for Real Property in this
Section 6.12, except where the failure to obtain any such exception could not
reasonably be expected to have a Material Adverse Effect.
(d) SJFP shall provide JV with a recordable easement to a twenty
foot wide strip of that certain real property not
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constituting Real Property hereunder under which the water canal pipeline to the
mill facility of SJFP runs for ingress and egress for the purpose of repairing
and maintaining such pipeline.
6.13 INSURANCE. Seller shall, prior to the Closing Date, continue to
keep in effect at existing levels and coverage all its insurance for its
properties which are of an insurable nature and of the character usually insured
by companies operating similar properties against loss or damage by fire, which
insurance Seller currently maintains in such amounts as are usually insured
against by such companies. On the Closing Date, the coverage under the
insurance policies and programs applicable to the Acquired Assets will be
terminated, and Buyer and Buyer Affiliates will be responsible for providing all
insurance coverage for the Acquired Assets and the Business.
6.14 SECURED INDEBTEDNESS. Seller shall take, at Seller's sole cost
and expense, all actions necessary with respect to the Secured Parties to obtain
the termination or release, as of the Closing Date, of all Security Documents
(the "Releases and Terminations"). Buyer shall cooperate in good faith with
Seller in obtaining the Releases and Terminations.
6.15 LICENSING ARRANGEMENTS. From and after the Closing Date, Seller
shall license to Buyer the Acquired Software. Such
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license shall be a royalty free license in the form attached hereto as Exhibit
D.
6.16 NO SOLICITATION OF TRANSACTIONS.
(a) SJPC and Seller shall not, and shall cause their
Affiliates, officers, directors, employees, investment bankers, financial
advisors and other representatives not to, initiate, solicit or knowingly
encourage any inquiries or the making of any proposal to acquire all or
substantially all of the Business or enter into or maintain or continue
discussions or negotiate with any person or entity in furtherance of such
inquiries or such proposal; provided, however, that nothing in this Section 6.16
shall prohibit the Board of Directors of SJPC from (i) furnishing information
pursuant to an appropriate confidentiality letter concerning Seller and its
businesses, properties or assets to a third party who has made an unsolicited
Transaction Proposal, or (ii) engaging in discussions or negotiations with such
a third party who has made an unsolicited Transaction Proposal, but in each case
referred to in the foregoing clauses (i) and (ii) only (x) after the Board of
Directors of SJPC concludes in good faith based on the advice of outside counsel
that such action is necessary for the Board of Directors of SJPC to comply with
its fiduciary obligations to stockholders under
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applicable law or (y) if Dillon, Reed & Co. Inc. is unable to render, or
withdraws, its opinion as to the fairness of the transactions contemplated by
this Agreement to the stockholders of SJPC. Notwithstanding anything in this
Agreement to the contrary, Seller shall immediately inform Buyer orally and in
writing of the receipt by it after the Execution Date of any Transaction
Proposal. "Transaction Proposal" means any proposal with respect to any
acquisition or purchase of a substantial amount of assets of, or any equity
interest in, Seller or any of its Subsidiaries or any merger, consolidation, or
business combination, involving Seller or any of its Subsidiaries.
(b) The Board of Directors of SJPC shall not (i) withdraw or
modify, or propose to withdraw or modify, in a manner adverse to Buyer, the
approval or recommendation by such Board of Directors of this Agreement, (ii)
approve or recommend, or propose to approve or recommend, any Transaction
Proposal or (iii) approve Seller entering into any agreement with respect to any
Transaction Proposal, unless an unsolicited Transaction Proposal is received
from a third party and the Board of Directors of SJPC concludes in good faith
based on the advice of outside counsel that in order to comply with its
fiduciary obligations to stockholders under applicable law, it is necessary for
the Board of
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Directors to withdraw or modify its approval or recommendation of this
Agreement, approve or recommend such Transaction Proposal, enter into an
agreement with respect to such Transaction Proposal or terminate this Agreement,
provided that no such action shall be taken prior to ten (10) days after notice
of such Transaction Proposal has been provided to Buyer and provided further
that either the Board of Directors shall reject such Transaction Proposal or
such action shall be taken and notice thereof given to Buyer no later than
forty-five (45) days after notice of such Transaction Proposal has been provided
to Buyer. A failure to reject such Transaction Proposal or to give such notice
to Buyer within such 45-day period shall be deemed an election by Seller to
terminate this Agreement and shall entitle Buyer to immediate payment of the
Section 6.16 Fee. In the event the Board of Directors of SJPC takes any of the
foregoing actions, Seller shall, concurrently with the taking of any such
action, pay Buyer the Section 6.16 Fee. Notwithstanding anything contained in
this Agreement to the contrary, any action by the Board of Directors permitted
by this Section 6.16 shall not constitute a breach of this Agreement by Seller
or SJPC if, concurrently with such action, Seller pays the Section 6.16 Fee.
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6.17 STOCKHOLDERS' MEETING. SJPC shall call and hold a meeting of its
stockholders as promptly as practicable after the Financing Date for the purpose
of approving this Agreement and the consummation of the transactions
contemplated hereby. SJPC shall solicit from its stockholders proxies in favor
of this Agreement and the transactions contemplated hereby; provided, however,
that SJPC shall not be obligated to solicit such proxies if (a) its Board of
Directors takes an action authorized under Section 6.16 in accordance with the
terms and conditions thereof; or (b) if Dillon, Read & Co. Inc. is unable to
render, or withdraws, its opinion as to the fairness of the transactions
contemplated by this Agreement to the stockholders of SJPC; provided, however,
that SJPC shall give Buyer prompt notice of the occurrence of any such event.
6.18 PROMPT PAYMENT OF TAXES AND INDEBTEDNESS. On and prior to the
Closing Date, Buyer covenants that it will, and it will cause each Buyer
Affiliate to promptly pay and discharge, or cause to be paid and discharged,
prior to the earliest date on which any penalty or interest is incurred or
begins to accrue, all lawful taxes, assessments and governmental charges or
levies imposed upon any of its income, profits, property or business and
promptly pay when due all its debt (including all claims or demands of
materialmen, mechanics, carriers, workmen, repairmen,
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warehousemen and landlords which, if unpaid, might result in the creation of a
Lien upon its property); PROVIDED that any such tax, assessment, charge, levy
or debt need not be paid if (i) the same shall currently be contested in good
faith, (ii) accruals shall have been provided which are adequate to pay and
discharge any such tax, assessment, charge, levy or debt that could reasonably
be anticipated, and (iii) no proceedings shall have been commenced to accelerate
the payment of any such tax, assessment, charge, levy or debt or to foreclose
any Lien which may have attached as security therefor.
6.19 CONDUCT OF BUSINESS AND CORPORATE EXISTENCE. On and prior to the
Closing Date, Buyer will, and will cause each Buyer Affiliate to, do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its corporate existence and its rights, franchises, licenses and permits
necessary to continue its business. On and prior to the Closing Date, Buyer
will, and will cause each Buyer Affiliate to, use its best efforts to comply
with all laws, and with all rules, regulations and orders made by governmental
authority, applicable to it or its properties or business (or any part thereof),
non-compliance with which could materially adversely affect the
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properties, business, profits or condition (financial or otherwise) of Buyer or
any Buyer Affiliates.
6.20 INSURANCE. Buyer will, and will cause each Buyer Affiliate to,
prior to the Closing Date, continue to keep in effect at existing levels and
coverage all its insurance for its properties which are of an insurable nature
against loss or damage by fire and from other causes customarily insured against
by similar companies and against liability for loss or damage from such hazards
and risks to the person and property of others as are usually insured against by
companies operating similar property. All such insurance is and shall continue
to be carried with independent insurers of good standing.
6.21 LIMITATION ON DISTRIBUTIONS, INVESTMENTS AND PAYMENTS. Buyer
covenants that, on or prior to the Closing Date, it will not, and will not allow
any Buyer Affiliate to directly or indirectly, (a) declare or make, or incur a
liability to make, a distribution in respect of its capital stock (other than a
distribution to Buyer), (b) make any investments in any Person, whether by
acquisition of stock, indebtedness or other obligation or security or by loan,
guaranty, advance, capital contribution or otherwise or in any property except
property to be used in the ordinary course of business or current assets arising
from the sale
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of goods and services in the ordinary course of business and except for
investments in JV and investments in Buyer or Buyer's Subsidiaries or (c)
subject to Section 6.22(f), make any payment in cash or property to any Buyer
Affiliate or Affiliates of Buyer (other than payments consistent with past
practice to Persons solely as director or officer).
6.22 LIEN, DEBT AND OTHER RESTRICTIONS. Buyer covenants that, prior to
the Closing Date, neither it nor any Buyer Affiliate will:
(a) LIENS. Create, assume or suffer to exist any Lien upon any
of its property whether now owned or hereafter acquired, except
(i) Liens for taxes not yet delinquent or which are being
actively contested in good faith by appropriate proceedings,
(ii) Other Liens incidental to the conduct of its business
or the ownership of its property which were not incurred in connection with the
borrowing of money or the obtaining of advances or credit, and which do not in
the aggregate materially detract from the value of its property or materially
impair the use thereof in the operation of its business,
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(iii) Liens securing obligations for term loans currently
in place and for working capital line(s) of credit at existing advance rates
relative to accounts receivable and inventories, and
(iv) Liens in the nature of purchase money security
interests;
(b) DEBT. Create, incur, assume or suffer to exist any debt
for borrowed money, except (i) debt secured by Liens permitted by the provisions
of clause (iii) of Section 6.22(a), or (ii) the renewal or refunding of existing
debt that is presently outstanding, PROVIDED that the principal amount of such
existing debt is not increased; provided, however, that nothing in this Section
6.22 shall inhibit the incurrence of debt to finance the transactions
contemplated by this Agreement or the creation of Liens in connection therewith;
(c) MERGER AND SALE OF ASSETS. (i) Merge or consolidate with
any other corporation other than one or more Subsidiaries of Buyer or (ii) sell,
lease or transfer or otherwise dispose of all or any part of its assets, rights,
or property other than in the ordinary course of business;
(d) SALE AND LEASEBACK. Enter into any arrangement with any
lender or investor or to which such lender or
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investor is a party providing for the leasing by Buyer or any Buyer Affiliate of
real or personal property which has been or is to be sold or transferred by
Buyer or any Buyer Affiliate to such lender or investor or to any such person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or rental obligations of Buyer or any Buyer Affiliate;
(e) SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, any of its
notes or accounts receivable, except Buyer and any Buyer Affiliate may discount
or otherwise sell for less than the face value thereof, without recourse, notes
or accounts receivable the collection of which is doubtful in accordance with
GAAP; or
(f) TRANSACTIONS WITH AFFILIATES. Directly or indirectly,
purchase, acquire, or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, in the ordinary course of business or
otherwise, any Buyer Affiliate or Affiliate of Buyer unless such transaction or
series of transactions is on terms that are no less favorable than would be
available in a comparable transaction with an unrelated third party.
Notwithstanding the foregoing, this provision will not apply to any transaction
with an officer or director of Buyer or
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any Buyer Affiliate entered into in the ordinary course of business (including
compensation or employee benefit arrangements with any officer or director) and
transactions in existence on the date hereof, PROVIDED that such transactions
were entered into in accordance with the original agreements (as amended) in
effect at that time.
6.23 NON-COMPETITION. If the Closing occurs, Seller and SJPC hereby
agree that, for a period of three (3) years following the Closing Date, Seller
and SJPC will not, and Seller and SJPC will cause their respective Affiliates
(other than individuals) not to, directly or indirectly, engage in any business
which is competitive with the Mill Business within the United States or Canada
or which is competitive with the Container Business within 300 miles of any of
the box plants included in the Real Property. Seller and SJPC acknowledge that
FMC and JV would be irreparably harmed by any breach of this Section 6.23 and
that there would be no adequate remedy in damages to compensate FMC or JV for
any such breach.
6.24 FINANCING. Buyer shall use its best efforts to (a) cause to be
provided the letters and documents listed in Section 10.01(e) hereof; (b) to
obtain the financing contemplated in such letters; and (c) cause to be satisfied
the closing condition set
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forth in Section 9.02(d) hereof. For this purpose, the term "best efforts"
shall not include causing (a) any of the forgoing to be in a form not deemed
commercially reasonable by FMC and JV in the context of transactions similar to
those contemplated by this Agreement or (b) any of the terms and conditions
relating to the issuance of common stock, preferred stock, warrants or other
equity interests in FMC and/or JV to be determined, subject to the terms and
conditions of the letters and documents listed in Section 10.01(e) hereof and
the commitment letters dated as of the Execution Date from FMC and JV, other
than in their sole judgment.
6.25 ADDITIONAL FINANCIAL STATEMENTS. Seller, at its sole cost and
expense, will deliver to Buyer (i) no later than thirty-five (35) days after the
Execution Date, a copy of unaudited unconsolidated financial statements for each
of SJFP and SJCC consisting of a balance sheet, income statement and statement
of cash flows as of and for the years ended December 31, 1994, 1993 and 1992 and
the periods ended March 31, 1995, June 30, 1995 and September 30, 1995 and their
respective comparable fiscal 1994 periods and as soon as available, if available
prior to the Closing Date, comparable unaudited financial statements for periods
subsequent to September 30, 1995 (other than the period ended December 31, 1995)
and prior to the Closing Date (the "Unaudited
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Financial Statements"), and (ii) no later than sixty (60) days after the
Execution Date, a copy of audited unconsolidated financial statements for each
of SJFP and SJCC consisting of a balance sheet, income statement and statement
of cash flows as of and for the years ended December 31, 1994, 1993 and 1992 and
as soon as available comparable audited financial statements as of and for the
year ended December 31, 1995 (the "Audited Financial Statements"). The Audited
Financial Statements but not the Unaudited Statements shall be deemed to be
included in the term "Financial Statements" for purposes of Section 4.04(a)
hereof. Any delay in providing the Unaudited Financial Statements or the
Audited Financial Statements shall be addressed in Section 10.01(e) hereof and
shall not be deemed to be a breach of the covenants in this Section 6.25.
ARTICLE VII
TAX MATTERS
7.01 PRE-CLOSING TAX PERIODS; POST-CLOSING TAX PERIODS; BRIDGE TAX
PERIODS.
(a) Seller represents to Buyer that there are no Liens for any
Tax (other than for any current Tax not yet due and payable) on the Acquired
Assets.
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(b) Seller shall be liable for, and shall indemnify and hold
the Buyer Group harmless from and against, all Taxes with respect to the
Business and the Acquired Assets for all Tax periods ending on or before the
Closing Date ("Pre-Closing Tax Periods") plus 50% of all Transfer Taxes. Except
with respect to Transfer Taxes, Seller shall be responsible for preparing and
filing all Tax Returns with respect to Taxes relating to the Business and the
Acquired Assets for Pre-Closing Tax Periods.
(c) Buyer shall be liable for, and shall indemnify and hold the
Seller Group harmless from and against, all (i) Assumed Taxes and (ii) Taxes
with respect to the Business and the Acquired Assets for all Tax periods
commencing after the Closing Date ("Post-Closing Tax Periods"). Buyer shall be
responsible for preparing and filing all Tax Returns with respect to Transfer
Taxes and with respect to Taxes relating to the Business and the Acquired Assets
for Post-Closing Tax Periods.
(d) For any taxable period or taxable reporting period which
includes (but does not end on) the Closing Date (a "Bridge Tax Period"), there
shall be allocated or apportioned between Seller and Buyer all Taxes other than
Transfer Taxes and Taxes based on income as follows: (i) for any payroll Taxes
in respect of Transferred Employees (including all Taxes under the
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Federal Insurance Contributions Act and the Federal Unemployment Tax Act and
other Taxes or contributions related to compensation paid to such Transferred
Employees), allocation shall be made to the Seller and Buyer respectively based
on actual payroll accrued before and including the Closing Date and based on
actual payroll accrued after the Closing Date; (ii) for sales and use taxes
other than Transfer Taxes, allocation shall be made to Seller and Buyer
respectively based on actual sales before and including the Closing Date and
based on actual sales after the Closing Date using the method used for reporting
sales to Tax authorities; (iii) for purchase or value added Taxes, allocation
shall be made to Seller and Buyer respectively based on actual purchases before
and including the Closing Date and based on actual purchases after the Closing
Date; (iv) for other Taxes on which a measure of activity is used to measure or
assess the Tax, allocation shall be made to Seller and Buyer respectively based
on the actual measure of activity before and including the Closing Date and
based on the actual measure of activity after the Closing Date; (v) for Taxes
which are assessed on the basis of some measurement of value, including real and
personal property Taxes and capital or other intangibles Taxes, apportionment
shall be made to Seller and Buyer respectively based on actual valuations used
by the Tax authorities
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before and after the Closing Date and based on the number of days of the Bridge
Tax Period before and including the Closing Date and after the Closing Date to
Seller and Buyer respectively. Seller shall be liable for, and shall defend and
indemnify the Buyer Group from and against, the proportionate amount of all such
Taxes that are allocated or apportioned to it for the Bridge Tax Period and
Buyer shall be liable for, and shall defend and indemnify the Seller Group from
and against, the proportionate amount of all such Taxes that are allocated or
apportioned to it for the Bridge Tax Period. Buyer shall be responsible for
preparing and filing all Tax Returns for any Bridge Tax Period in a manner
consistent with the past practices (including accounting principles, methods and
elections) followed by Seller and shall submit all Tax Returns to Seller for
review and approval at least twenty (20) days prior to the filing thereof.
Seller shall review all such Tax Returns within ten (10) Business Days of their
receipt and inform Buyer in writing of any item(s) with which Seller does not
agree. Seller and Buyer shall negotiate in good faith to resolve all disputed
items.
7.02 REFUNDS OR CREDITS. Any refunds or credits of Taxes, to the
extent that such refunds or credits are attributable to Taxes (other than
Assumed Taxes) for Pre-Closing Tax Periods, shall
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be for the account of Seller and, to the extent that such refunds or credits are
attributable to Taxes for Post-Closing Tax Periods or to Assumed Taxes they
shall be for the account of Buyer. To the extent that such refunds or credits
are attributable to Taxes for a Bridge Tax Period, such refunds or credits shall
be for the account of the party who bears responsibility for such Taxes pursuant
to Section 7.01(d). In the event Buyer has any discretion to designate whether
any credit or refund is attributable to a Pre-Closing Tax Period, a Bridge Tax
Period or a Post-Closing Tax Period, the credit or refund shall be treated for
purposes of this Agreement as attributable to the earliest taxable period to
which it may be attributed. Each party shall promptly notify the other of any
refund or credit which it receives or expects to receive which is for the
account of the other party. Buyer shall promptly forward to Seller or reimburse
Seller for any refunds or credits due Seller hereunder after receipt thereof by
or on behalf of Buyer with interest from the date of receipt by Buyer, and
Seller shall promptly forward to Buyer or reimburse Buyer for any refunds or
credits due Buyer hereunder after receipt thereof by or on behalf of Seller with
interest from the date of receipt by Seller.
7.03 MUTUAL COOPERATION. As soon as practicable, but in any event
within fifteen (15) days after a party's request, the
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other party shall deliver to it such information and other data relating to Tax
Returns and Taxes with respect to the Business and the Acquired Assets and shall
make available such of its knowledgeable employees as the other party may
reasonably request, including providing the information and other data
customarily required, to cause the completion and filing of all Tax Returns for
which it has responsibility or liability under this Agreement or to respond to
audits by any taxing authorities with respect to any Tax Returns or taxable
periods for which it (or any of its Affiliates) has any responsibility or
liability under this Agreement or to otherwise enable it (or any of its
Affiliates) to satisfy its reasonable accounting or Tax requirements.
7.04 TAX AUDITS. Within thirty (30) days after Buyer or Seller has
received oral or written notice (but in any event not less than thirty (30) days
before any response to any Governmental Entity is due) that any Governmental
Entity is auditing or investigating, or intends to audit or investigate, any
taxable period for which the other party may be liable, in whole or in part,
to it under this Agreement, Buyer or Seller, as the case may be, shall give
to the other party written notice of such audit or investigation, and shall
tender to the other party the defense of such audit or investigation with
respect to Taxes for which the
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other party may be liable in whole under this Article VII. If both Buyer and
Seller may be liable in part as to the same Tax, Buyer and Seller shall have
the right jointly to defend such audit or investigation. If the other party
accepts the tendered defense of any such audit or investigation, (a) the
tendering party shall execute and deliver to the other party all documents
necessary or appropriate (including powers of attorney) (i) to enable the other
party to act, at its sole cost and expense, on behalf of the tendering party in
defending against such audit or investigation, in the case of periods for which
the other party may be liable in whole, or (ii) to enable the other party to
defend against those issues raised in such audit or investigation for which the
other party may be liable, in the case of any taxable period or Taxes for which
the other party may be liable in part, and (b) the other party shall determine,
at its sole discretion, the manner in which such audit or investigation (in the
case of periods for which the other party may be liable in whole) will be
defended or settled and the other party shall defend or settle such audit or
investigation in good faith with respect to future taxes of the tendering party,
PROVIDED, HOWEVER, that the tendering party may reject any settlement (or
portion thereof) proposed by the other party, in which case the other party will
have no obligation to indemnify the
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tendering party with respect to the taxable period or Taxes under audit or
investigation for any amount in excess of the settlement proposed by the other
party, reduced by the actual settlement amount, if any, of the items the
proposed settlement of which was not rejected by the tendering party.
Notwithstanding anything in this Agreement to the contrary, the other party
shall not be liable to the tendering party with respect to any Taxes for which
the other party's defense or settlement of the audit or investigation has been
adversely affected by the tendering party's failure to give the timely written
notice required by this Section 7.04. Each party shall keep the other party
fully informed of the status of all audits and investigations for which the
other party may be liable in whole or in part.
7.05 NO OFFSET. To the extent that any party hereto is responsible for
any Tax pursuant to this Article VII or to receive or remit any refund or credit
in respect of any Tax, such party shall not offset its obligation to pay any
such Tax or to remit any such refund or credit by any claim it may have against
the other party under this Agreement or otherwise.
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ARTICLE VIII
EMPLOYEE BENEFITS
8.01 EMPLOYEE BENEFIT PLANS.
(a) Section 8.01(a) of the Disclosure Schedule lists each of
the following plans, contracts, policies and arrangements which is sponsored,
maintained, administered or contributed to by, or otherwise binding upon Seller
or any Seller Affiliates or, in the case of an "employee pension plan" (as
defined in Section 3(2) of ERISA), an ERISA Affiliate for the benefit of any
Eligible Employee or a beneficiary thereof: (1) any "employee benefit plan," as
such term is defined in Section 3(3) of ERISA, which is subject to ERISA, and
(2) any other employment, consulting, stock option, stock bonus, stock purchase,
phantom stock, incentive, severance, deferred compensation, bonus, vacation,
dependent care, employee assistance, fringe benefit, medical, dental, sick
leave, death benefit, insurance or other material compensatory plan, contract,
policy or arrangement which is not an employee benefit plan as such term is
defined in Section 3(3) of ERISA. Each plan, contract or arrangement described
in the preceding sentence is herein referred to as a "Benefit Plan". With
respect to each Benefit Plan, Seller has provided or made available
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to Buyer a true and complete copy of the governing documents and of the most
recently distributed summary material(s).
(b) No Benefit Plan is a Multiemployer Plan. Neither Seller
nor any ERISA Affiliate has incurred or expects to incur any unpaid liability
(contingent or otherwise) under Title IV of ERISA in connection with a
termination or withdrawal from any funded pension plan (within the meaning of
Section 3(2) of ERISA) that is or could become an obligation of Buyer or any
Buyer Affiliate. With respect to any benefit plan which is a funded pension
plan (within the meaning of Section 3(2) of ERISA), there has been no
accumulated funding deficiency within the meaning of Section 302 of ERISA or
Section 412 of the Code, which has resulted or could result in the imposition of
a Lien upon the Acquired Assets or with respect to which Buyer or any Buyer
Affiliate could have any liability. Groveton Paperboard, Inc. is not, and never
has been, an ERISA Affiliate of Seller.
(c) Section 8.01(c) of the Disclosure Schedule lists each
collective bargaining agreement to which Seller or any Seller Affiliate is a
party and which covers any Eligible Employees ("Collective Bargaining
Agreement"). Seller has provided or made available to Buyer true and complete
copies of each Collective Bargaining Agreement, including any side letters
thereto.
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8.02 EMPLOYEES AND OFFERS OF EMPLOYMENT. On or prior to the Closing
Date, Buyer or a Buyer Affiliate shall offer employment, subject to consummation
of the Closing, to the Eligible Employees, to commence as of the Closing Date.
Seller will provide to Buyer one day after the Financing Date a complete list of
all Eligible Employees, together with their annualized base salary or hourly
wage rate and a description of the amount and basis of their other compensation.
Seller will update the list for Buyer to reflect additions and deletions prior
to the Closing. Prior to the Closing, Seller and the Seller Affiliates will not
terminate the employment of or transfer any Eligible Employee to another
business of Seller other than in the ordinary course of business. All offers of
employment by Buyer or Buyer Affiliates to Eligible Employees shall be at the
same or higher salaries or hourly wage rates and with benefits commencing on the
Closing Date which, in the aggregate, are not less favorable than those in
effect under the Benefit Plans prior to the Closing Date, except that Buyer or
Buyer Affiliate does not maintain any stock option, stock bonus, stock purchase,
or phantom stock plans for its employees and except that Buyer or Buyer
Affiliates may make available participation in a defined contribution profit
sharing plan and not a defined benefit plan aggregate contributions to which
shall be no less than
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3% of the aggregate covered pay of participants therein. As to each collective
bargaining unit covered under a Collective Bargaining Agreement, if a majority
of Eligible Employees in the unit accept an offer of employment from Buyer or a
Buyer Affiliate, the union representing such unit of employees of Seller shall
be recognized by Buyer or Buyer Affiliate as the collective bargaining agent for
such unit of employees of Buyer or Buyer Affiliate. Buyer and Buyer Affiliates
will waive any waiting periods under its welfare plans and any preexisting
conditions restrictions with respect to the disability, life and health coverage
which shall be provided for all Eligible Employees who accept employment with
Buyer or Buyer Affiliates (herein collectively referred to as the "Transferred
Employees").
8.03 SELLER'S BENEFIT PLANS.
(a) Buyer will not assume the sponsorship of, the
responsibility for contributions to, or any liability in connection with, any
Benefit Plan. Except as provided in Section 8.05, with respect to any
Transferred Employee, no assets of any Benefit Plan shall be transferred to
Buyer or any Buyer Affiliates or to any plan of Buyer or any Buyer Affiliates.
Accrued benefits or account balances of Transferred Employees under the Benefit
Plans which are
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funded employee pension plans under Section 3(2) of ERISA shall be fully vested
as of the Closing Date.
(b) With respect to any Transferred Employee (including any
beneficiary or dependent thereof), Seller shall retain (i) all liabilities and
obligations arising under any group life, accident, medical, dental or
disability plan (whether or not insured) to the extent that such liability or
obligation relates to claims or expenses incurred (whether or not then reported)
on or prior to the Closing Date, (ii) all liabilities and obligations arising
under any worker's compensation arrangement to the extent such liability or
obligation arises out of an illness or injury that originated on or prior to the
Closing Date, (iii) all liabilities or other obligations incurred under or
imposed by Section 4980B of the Code due to qualifying events which occur on or
prior to the Closing Date, and (iv) all other liabilities or obligations
incurred or arising under any Collective Bargaining Agreement or individual
employment agreement or by any statute pertaining to employment relationships or
common law pertaining to employment relationships on or prior to the Closing
Date.
8.04 BUYER BENEFIT PLANS. Buyer and Buyer Affiliates will recognize
all service of the Transferred Employees with Seller or any of its Affiliates
for purposes of eligibility to participate
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and vesting in any employee benefit plans (within the meaning of Section 3(3) of
ERISA) of Buyer or any Buyer Affiliates, and for determining the period of
employment under any vacation, sick leave or other paid time off plan of Buyer
or any Buyer Affiliates, as well as for determining other entitlements and terms
of employment affected by seniority under Buyer's or Buyer Affiliates'
employment policies, except to the extent such service with Seller is
disregarded for such purposes under a corresponding plan or policy of Seller.
Buyer or Buyer Affiliates shall be liable for sick leave, vacation or paid time
off benefits accrued and untaken by each Transferred Employee as of the Closing
Date to the extent reflected in the calculation of Closing Net Working Capital
and shall provide such benefits to the Transferred Employees in accordance with
Buyer's and Buyer Affiliates' standard policies concerning the use of or payment
for same, to the extent that the same shall be included in the calculation of
the Closing Net Working Capital.
8.05 SELLER'S 401(K) PLAN. As soon as practicable after the Closing,
Seller will give or will cause to be given to each Transferred Employee the
following choices with respect to the disposition of his or her account balance
under the 401(k) Plan: (a) an immediate payout from the 401(k) Plan, (b) a
deferred payout
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from the 401(k) Plan, or (c) if Buyer or Buyer Affiliate maintains a qualified
plan (under Section 4.01(a) of the Code) (the "Buyer's Plan") direct roll over
to the Buyer's or Buyer Affiliate's Plan.
8.06 EARLY RETIREMENT INCENTIVE. Seller, at JV's request (if made
within six (6) months after the Closing Date), will use its best efforts to
establish an early retirement incentive program (the "Incentive Program")
offering supplemental retirement pension benefits to designated eligible
Transferred Employees of SJFP as reasonably proposed by JV within the
limitations of this Section 8.06. In connection therewith, Seller will use its
best efforts to amend its funded pension plans to provide such supplemental
benefits to those Transferred Employees of SJFP who elect early retirement under
the Incentive Program, provided, however, that (a) Seller's obligation shall be
limited to fifteen salaried and thirty-five hourly Transferred Employees, (b)
the present value of the supplemental benefits provided by Seller's plans,
determined by the plans' actuarial consultants in accordance with the interest
and mortality assumptions used by the plans in determining benefit values, will
be limited to $500,000 in the case of salaried employees and $600,000 in the
case of hourly employees, (c) Seller's obligation will be contingent upon its
receipt of an opinion of Buyer's counsel reasonably satisfactory to Seller's
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counsel to the effect that the amendment of Seller's plans to provide the
supplemental retirement pension benefits will not adversely affect the qualified
status of Seller's plans under Section 401(a) of the Code and will not be in
violation of applicable law, (d) JV will indemnify the Seller Group and Seller's
and Seller Affiliates' plans under which such supplemental benefits are provided
from and against any liability, cost or expense which may be incurred by the
Seller Group or Seller's or Seller Affiliate's plans in connection with claims
or demands arising from the amendment of such plans to provide such benefits
and/or the payment of supplemental retirement pension benefits pursuant to this
Section 8.06 in reliance upon the aforesaid opinion of counsel, except claims
for the payment of supplemental benefits payable pursuant to the amendments, (e)
group health coverage for any Transferred Employee who accepts the early
retirement offer (and his/her eligible dependents) shall be provided by either
Seller or JV as mutually agreed at the expense of Seller and JV until the
Transferred Employee reaches age 65, provided that Seller's share shall be no
greater than 50% of the total cost and no greater than a total of $400,000; and
(f) Seller's obligation under this Section 8.06 will apply only with respect to
early retirement incentive offers which are made within six months after
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the Closing Date and which are accepted within twelve months after the Closing
Date. Seller will furnish JV with copies of the Incentive Program documents and
advance copies of any written materials which Seller proposes to furnish to
Transferred Employees in connection with the Incentive Program. Notwithstanding
anything to the contrary herein, Seller's obligation in this Section 8.06 will
extend to one Incentive Program, irrespective of whether any Transferred
Employees of SJFP accept such early retirement offers.
8.07 SEVERANCE. Buyer shall have the sole responsibility for making or
causing to be made any applicable severance payments and any other applicable
similar payment (including any payment under the Worker Adjustment and
Retraining Act ("WARN"), or any similar law) to Transferred Employees in the
event their services are terminated after the Closing Date. Buyer shall be
liable for any continuation coverage (including any penalties, excise taxes or
interest resulting from the failure to provide continuation coverage) required
by Section 4980B of the Code due to qualifying events which occur with respect
to Transferred Employees (or their dependents) after the Closing Date.
Notwithstanding anything to the contrary contained herein, if Buyer or a Buyer
Affiliate terminates or causes the termination of the employment of (i) any
Listed Employee at any time within one year of the Closing Date,
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then, unless such Listed Employee's employment is terminated for cause (defined
below), Buyer shall pay or cause to be paid to such terminated Listed Employee a
lump sum severance payment in an amount equal to the annual salary of any such
Listed Employee at the time of termination (or, if greater, immediately prior to
the Closing Date), and the prior year's bonus, if any, granted in the ordinary
course of business, which severance and bonus payments shall be subject to
applicable income tax withholding; or (ii) any Other Employee within six months
of the Closing Date, then, unless such Other Employee's employment is terminated
for cause, Buyer shall pay or cause to be paid to such Other Employee a lump sum
severance payment in an amount equal to the gross weekly regular straight-time
rate of pay of such Other Employee at the time of termination (or, if greater,
immediately prior to the Closing Date) multiplied by the aggregate number of
years (including a fraction of a year) of such Other Employee's employment with
Seller, any Seller Affiliate, Buyer and any Buyer Affiliate, with a minimum
severance payment of four weeks of the foregoing weekly rate of pay, and a pro
rata share of the prior year's bonus, if any, granted in the ordinary course of
business, determined by multiplying the prior year's bonus by a fraction, the
numerator of which is the number of weeks for which severance is to be paid and
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the denominator of which is 52, which severance payments shall be subject to
applicable income tax withholding. In addition, any terminated Listed Employee
or Other Employee entitled to a lump sum severance payment under this Section
8.07 shall also be entitled to receive from Buyer or a Buyer Affiliate the first
six months of COBRA continuation coverage at no premium cost to him or her. For
the purpose of this Section 8.07, the term "cause" shall mean (i) the failure or
refusal of an employee to substantially perform the material duties of his or
her employment with Buyer, or any Buyer Affiliate, subject to a written notice
and cure period of at least thirty (30) days; (ii) commission by the employee of
a crime involving moral turpitude, or (iii) the employee's wilful engagement in
conduct which is materially injurious to the business of the Buyer. An employee
shall be deemed to have been terminated by Buyer or a Buyer Affiliate without
cause if he or she terminates employment because of a refusal to accept an offer
of employment by Buyer or a Buyer Affiliate at a business location which is more
than one hundred miles from his or her present location of employment or if his
or her duties or employment status are materially altered by Buyer or Buyer
Affiliate without his or her consent.
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8.08 LABOR CONTROVERSIES. Except as set forth in Section 8.08 of the
Disclosure Schedule, Seller represents and warrants with respect to Eligible
Employees that as of the Execution Date and, subject to Buyer's and Buyer
Affiliates' compliance with this Article VIII, as of the Closing Date neither
Seller nor any of the Seller Affiliates has received written notice of its being
a party to any grievance, arbitration, demand, labor dispute or unfair practice
proceeding with respect to claims of, or obligations to, Eligible Employees that
could reasonably be expected to have a Material Adverse Effect.
8.09 NO THIRD PARTY BENEFICIARIES. No provision of this Article VIII
or this Agreement shall create any third party beneficiary or other rights in
any employee or former employee (including any beneficiary or dependent thereof)
or collective bargaining agent of such present or former employee of Seller or
Seller Affiliates in respect of continued employment (or resumed employment)
with either Buyer, Seller, the Business or any of Buyer or Seller Affiliates and
no provision of this Article VIII or this Agreement shall create any such rights
in any such employee or former employee or collective bargaining agent in
respect of any benefits that may be provided, directly or indirectly, under
any
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Benefit Plan or any plan or arrangement which may be established by Buyer or
Buyer Affiliates.
ARTICLE IX
CONDITIONS TO CLOSING
9.01 CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The obligations of
Buyer and Seller to consummate the Closing are subject to the satisfaction of
the following conditions:
(a) all required waiting periods under the HSR Act shall have
expired or been terminated;
(b) all authorizations, consents, orders or approvals of, or
declarations or filings with, or expirations or terminations of waiting periods
imposed by, any Governmental Entity necessary to effect the transactions
contemplated by this Agreement shall have occurred, been filed or been obtained,
subject to Section 10.01(f)(ii); and
(c) no judgment, injunction, order or decree of any court,
arbitrator or Governmental Entity shall restrain or prohibit the consummation of
the Closing.
9.02 CONDITIONS TO OBLIGATION OF BUYER. The obligation of Buyer to
consummate the Closing is subject to the satisfaction, or waiver by FMC if it
pertains to the Container Assets or JV if it
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pertains to the Mill Assets, of the following further conditions and Seller
shall use its best efforts to cause each such condition to be timely satisfied:
(a) Each of the representations and warranties of Seller in
this Agreement shall be true and correct in all material respects as of the date
hereof and (except the representation in Section 4.09(a)(ii), which shall be
superseded by Section 9.01(b)) at and as of the Closing Date with the same
effect as though such representations and warranties had been made at and as of
the Closing Date, other than representations and warranties that speak as of a
specific date or time (which need only be true and correct as of such date or
time);
(b) Seller shall have performed in all material respects all
obligations and complied in all material respects with all covenants required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date;
(c) Buyer shall have received at the Closing a certificate to
the effect of (a) and (b) above, dated the Closing Date and duly executed on
behalf of Seller; and
(d) Buyer shall have obtained the debt financing required in
order to consummate the transactions contemplated by this Agreement.
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9.03 CONDITIONS TO OBLIGATION OF SELLER. The obligation of Seller to
consummate the Closing is subject to the satisfaction, or waiver by Seller, of
the following further conditions:
(a) The representations and warranties of Buyer in this
Agreement shall be true and correct in all material respects as of the date
hereof and (except for the representation in Section 5.05(b), which shall be
superseded by Section 9.01(b)) at and as of the Closing Date with the same
effect as though such representations and warranties had been made at and as of
such time, other than representations and warranties that speak as of a specific
date or time (which need only be true and correct as of such date or time);
(b) Buyer shall have performed in all material respects all
obligations and complied in all material respects with all covenants required to
be performed or complied with by it under this Agreement at or prior to the
Closing Date;
(c) Seller shall have received at the Closing a certificate to
the effect of (a) and (b) above, dated the Closing Date and duly executed on
behalf of Buyer;
(d) A majority of the outstanding shares of capital stock of
SJPC shall have approved this Agreement and consummation of the transactions
contemplated thereby;
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(e) Dillon, Read & Co. Inc. shall not have withdrawn its
opinion as to the fairness of the transactions contemplated by this Agreement to
the stockholders of SJPC; and
(f) Notwithstanding anything to the contrary herein, Seller
shall not be required to close any portion of the transactions contemplated by
this Agreement unless both FMC and JV have satisfied the aforementioned Closing
conditions.
ARTICLE X
TERMINATION AND ABANDONMENT
10.01 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual consent of Seller and Buyer; or
(b) by either Seller or Buyer if the Closing shall not have
occurred on or before May 31, 1996 (unless the failure to consummate the Closing
by such date shall be due to the action or failure to act of the party seeking
to terminate this Agreement in violation of its covenants pursuant to this
Agreement, in which case the foregoing date shall be extended by the period of
delay due to such action or failure to act); or
(c) by either Seller or Buyer if the other party shall (i) fail
to perform in any material respect its agreements
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contained herein required to be performed by it at or prior to the date of
termination or (ii) materially breach any of its representations or warranties
contained herein as of the date when made, and in either such case such party
fails to cure such failure or breach promptly upon notice from the party
asserting a right to terminate pursuant to this subparagraph (c); or
(d) by either Seller or Buyer in the event that any arbitrator
or Governmental Entity shall have issued a judgment, injunction, order or decree
restraining or prohibiting the consummation of the Closing, and such judgment,
injunction, order or decree shall have become final and nonappealable; or
(e) by Seller or Buyer, if Buyer fails or is unable to provide
Seller (i) an equity commitment letter or letters no later than forty-five (45)
days after the Execution Date, (ii) an updated equity commitment letter or
letters, including from FMC and SCC no later than the Financing Date which
contain no conditions other than debt financing and satisfaction by the parties
of the conditions to Closing set forth in Article IX of this Agreement; (iii) a
highly confident letter from Bear Stearns as to the high yield debt no later
than fifty (50) days after the Execution Date, (iv) an updated highly confident
letter as to the same no later than the Financing Date which contains no
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environmental conditions and, upon the request of Seller, a reaffirmation after
the Financing Date of the highly confident letter issued on the Financing Date;
(v) an initialed term sheet from its bank as to a term loan and revolving credit
facility no later than the Financing Date, in each case satisfactory to Seller
in its sole discretion; and (vi) evidence satisfactory to Seller that FMC and
SCC shall have duly organized JV, subject only to capitalization thereof and
shall have approved by all necessary corporate action and executed and delivered
their shareholders' and any other related agreements with respect thereto no
later than the Financing Date; provided that if the Unaudited Financial
Statements are not delivered to Buyer by the thirty-fifth (35th) day after the
Execution Date, each date in (i) and (iii) above by which Buyer is required to
provide certain documentation shall be increased one day for each day beyond
such thirty-fifth (35th) day after the Execution Date to and including the date
of delivery of the Unaudited Financial Statements; and provided further that
from and after any such failure on the part of Buyer to provide such letters to
Seller when due, the applicability of Section 6.16 of this Agreement shall be
terminated and be of no further force and effect; or
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(f) by Buyer no later than the Financing Date if an
environmental audit report from an environmental consultant of national standing
indicates either (i) that the mill facility of SJFP or any of the other Real
Property is (x) subject to any Environmental Liabilities not identified in
Sections 11.07 and 11.08 of the Disclosure Schedule and (y) subject to On-Site
Environmental Liabilities which could reasonably be expected to involve
aggregate remediation costs in excess of $2,000,000, not including costs
incurred pursuant to Sections 11.07 and 11.08, or (ii) that Environmental
Permits identified in Disclosure Schedule 4.10(a) cannot be transferred or
assigned to Buyer and that the absence of any such Environmental Permits would
have a material adverse effect on the properties, business or condition of Buyer
and Buyer Affiliates taken as a whole.
10.02 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.01 hereof:
(a) Each party will redeliver all documents, work papers and
other materials of the other party relating to the transactions contemplated
hereby, whether so obtained before or after the execution hereof, to the party
furnishing the same; and
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(b) Neither party hereto shall have any liability or further
obligation of any nature to the other party to this Agreement except as provided
in the last sentence of Section 6.02, and in Section 12.03 and except for any
breach of this Agreement prior to such date of which Seller or Buyer, as the
case may be, shall have received notice in accordance with Section 10.01(c).
ARTICLE XI
SURVIVAL; INDEMNIFICATION
11.01 SURVIVAL. All representations and warranties of the parties
contained in this Agreement or in the Disclosure Schedule shall survive for
eighteen months following the earlier of the Closing Date and March 31, 1996,
provided that the survival period shall not be less than one year from the
Closing Date. No action or proceeding may be brought with respect to any of the
representations and warranties unless written notice thereof, setting forth in
reasonable detail the nature of the claimed misrepresentation or breach of
warranty, shall have been delivered to the party alleged to be in breach on or
prior to the expiration of the period provided above. The covenants and
agreements of the parties hereto shall not be subject to the foregoing
limitation, including Seller's obligations with respect to Retained Liabilities
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and Buyer's obligations with respect to Assumed Liabilities upon all of the
terms and conditions hereof, notwithstanding any reference in the applicable
provisions hereof to representations and warranties which may have expired. If
the Closing occurs the exclusive remedy under this Agreement for Environmental
Liabilities incurred by Buyer and Buyer Affiliates for breach of the
representations in Sections 4.09, 4.10 and 4.13(f) and (g) shall be found in
Section 11.05.
11.02 INDEMNIFICATION. Subject to the other provisions of this Article
XI, from and after the Closing (a) SJPC and SJCC, jointly and severally, shall
indemnify and hold harmless the FMC Group from and against any costs or expenses
(including reasonable attorneys' fees), judgments, fines, amounts paid in
settlement, losses, claims and damages (collectively, "Losses and Damages") to
the extent they arise from (i) a breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement with respect to the
Container Assets or the Container Business, (ii) failure to perform any covenant
made by or on behalf of Seller under this Agreement with respect to the
Container Assets or the Container Business, (iii) any Liens other than Permitted
Liens with respect to the Container Assets or the Container Business (other than
the Real Property and Realty Rights which are the subject of
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Section 6.12) and (iv) Retained Liabilities with respect to the Container Assets
or the Container Business, (b) SJPC and SJFP, jointly and severally, shall
indemnify and hold harmless the JV Group from and against Losses and Damages to
the extent they arise from (i) a breach of any representation or warranty of
Seller contained in or made pursuant to this Agreement with respect to the Mill
Assets or the Mill Business, (ii) failure to perform any covenant made by or on
behalf of Seller under this Agreement with respect to the Mill Assets or the
Mill Business, (iii) any Liens other than Permitted Liens with respect to the
Mill Assets or the Mill Business (other than the Real Property, the SJLD
Property and Realty Rights which are the subject of Section 6.12) and (iv)
Retained Liabilities with respect to the Mill Assets or the Mill Business, (c)
FMC shall indemnify and hold harmless the Seller Group from and against all
Losses and Damages to the extent that they arise from (i) a breach of any
representation or warranty of FMC or any FMC Affiliates (other than JV)
contained in or made pursuant to this Agreement, (ii) failure to perform any
covenant made by or on behalf of FMC or any FMC Affiliate (other than JV) under
this Agreement, or (iii) any Assumed Liabilities assumed by FMC or any FMC
Affiliate (other than JV), and (d) JV and JV Affiliates shall indemnify and hold
harmless the Seller Group from
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and against all Losses and Damages to the extent they arise from (i) a breach of
any representation or warranty of JV contained in or made pursuant to this
Agreement, (ii) failure to perform any covenant made by or on behalf of JV under
this Agreement, or (iii) any Assumed Liabilities assumed by JV. The Seller
Group, the FMC Group or the JV Group, as the case may be, are referred to herein
as the "Indemnified Parties." Notwithstanding anything to the contrary in this
Article XI, all indemnification obligations with respect to Environmental
Liabilities shall be exclusively those provided in Sections 11.05 and 11.09.
11.03 PROCEDURES. If an Indemnified Party intends to seek indemnity
under this Article XI, such Indemnified Party shall promptly notify Seller, FMC
or JV, as the case may be (the "Indemnifying Party"), in writing of such claims
setting forth the basis for and the amount of such claims in reasonable detail,
provided that the failure to provide such notice shall not affect the
obligations of the Indemnifying Party unless it is actually prejudiced thereby,
subject, however, to the time periods in Sections 11.01 and 11.05 hereof. In
the event such claim involves a claim by a third party against the Indemnified
Party, the Indemnifying Party shall have thirty (30) days after receipt of such
notice to decide whether it will undertake, conduct and
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control, through counsel of its own choosing and at its own expense, the
settlement or defense thereof, and if it so decides, the Indemnified Party shall
cooperate with it in connection therewith; provided that the Indemnifying Party
may so undertake, conduct and control the settlement or defense thereof only if
it acknowledges its indemnification obligations hereunder and the Indemnified
Party may participate (subject to the Indemnifying Party's control) in such
settlement or defense through counsel chosen by it; and provided further that
the fees and expenses of such Indemnified Party's counsel shall be borne by the
Indemnified Party. If the defendants in any action include the Indemnified
Party and the Indemnifying Party, and the Indemnified Party shall have been
advised by its counsel in writing that there are legal defenses available to the
Indemnified Party which are materially different from or in addition to those
available to the Indemnifying Party, the Indemnified Party shall have the right
to employ its own counsel in such action, and, in such event, the reasonable
fees and expenses of such counsel shall be borne by the Indemnifying Party. The
Indemnifying Party may, without the consent of the Indemnified Party, settle or
compromise or consent to the entry of any judgment in any action involving only
the payment of money which includes as an unconditional term thereof
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the delivery by the claimant or plaintiff to the Indemnified Party of a duly
executed written release of the Indemnified Party from all liability in respect
of such action which written release shall be reasonably satisfactory in form
and substance to the Indemnified Party. The Indemnifying Party shall not,
without the written consent of the Indemnified Party, settle or compromise any
action involving relief other than the payment of money in any manner that, in
the reasonable judgment of the Indemnified Party, would materially and adversely
affect the Indemnified Party; provided, however, that if the Indemnified Party
shall fail or refuse to consent to a settlement, compromise or judgment proposed
by the Indemnifying Party and approved by the third party in any such action and
a judgment thereafter shall be entered or a settlement or compromise thereafter
shall be effected on terms less favorable in the aggregate to the Indemnified
Party than the settlement, compromise or judgment proposed by the Indemnifying
Party and approved by the third Person on such action, the Indemnifying Party
shall have no liability hereunder with respect to any Losses and Damages in
excess of those that were provided for in such settlement, compromise or
judgment so proposed by the Indemnifying Party or any costs or expenses related
to such claim arising after the date such settlement, compromise or judgment was
so proposed.
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So long as the Indemnifying Party is contesting any such claim in good faith,
the Indemnified Party shall not pay or settle any such claim, unless such
settlement includes as an unconditional term thereof the delivery by the
claimant or plaintiff and by the Indemnified Party to the Indemnifying Party of
duly executed written releases of the Indemnifying Party from all liability in
respect of such claim which written releases shall be reasonably satisfactory in
form and substance to the Indemnifying Party. The Indemnified Party shall
cooperate fully in all aspects of any investigation, defense, pre-trial
activities, trial, compromise, settlement or discharge of any claim in respect
of which indemnification is sought pursuant to this Article XI. If the
Indemnifying Party does not notify the Indemnified Party within thirty (30) days
after the receipt of the Indemnified Party's notice of a claim of indemnity
hereunder that it elects to undertake the defense thereof or does not
acknowledge its indemnification obligations with respect thereto, the
Indemnified Party shall have the right to contest, settle or compromise the
claim but shall not thereby waive any right to indemnity therefor pursuant to
this Agreement.
11.04 TAX, INSURANCE AND OTHER BENEFITS. The amount of any claim by an
Indemnified Party shall be reduced by any Tax,
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insurance or other benefits which such party or its Group receives in respect of
or as a result of such claim or the facts or circumstances relating thereto. If
any Losses and Damages for which indemnification is provided hereunder are
subsequently reduced by any Tax benefit, insurance payment or other recovery
from a third party, the amount of such reduction shall be remitted to the
Indemnifying Party. To the extent the receipt of any indemnification payment
will result in an increase of the amount of tax payable by the recipient, the
Indemnifying Party will increase the amount of its indemnification payment so
that the amount received after the payment of all taxes payable as a result of
such receipt shall equal the amount of Losses and Damages for which
indemnification is provided.
11.05 ENVIRONMENTAL INDEMNIFICATION.
(a) Except as otherwise provided in Sections 11.07 and 11.08 if
the Closing occurs, On-Site Environmental Liabilities (as defined in Section
11.05(e)) arising from conditions existing on the Closing Date shall be paid by
Buyer and Seller according to the following schedule:
100% of the first $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer;
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100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Seller;
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer,
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Seller;
100% of the next $2,500,000 of On-Site Environmental
Liabilities shall be paid by Buyer; and
100% of the next $5,000,000 of On-Site Environmental
Liabilities shall be paid by Seller;
provided that (i) Environmental Conditions that give rise to On-Site
Environmental Liabilities are discovered and Seller is notified thereof with
reasonable specificity by Buyer not later than three (3) years after the Closing
Date (which notice shall be sufficient even if the source and extent of the
problem to be remedied cannot be fully or completely identified) consistent with
Exhibit I attached hereto, and (ii) Seller has received invoices or statements
for On-Site Environmental Liabilities within five (5) years after the Closing
Date; provided, however that the running of such five (5) year period shall be
extended (A) until the completion of remedial projects which are substantially
underway or are under continuing contest with a Governmental Entity within five
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(5) years after the Closing Date and (B) for the period of time, if any,
beginning on the date of the applicable Trigger Notice relating to a dispute
described in paragraph 3 of Exhibit I and ending on the date the arbitrator
gives Seller and Buyer notice of its decision pursuant to the terms of Exhibit I
(and any payment of Seller which would be due but for a dispute with respect
thereto as referred to in paragraph 3 of Exhibit I shall be required of Seller
to the extent such dispute is resolved in favor of Buyer promptly after such
resolution). Buyer and Buyer Affiliates shall have no rights against Seller for
On-Site Environmental Liabilities which result from the acts or omissions of
Buyer or Buyer Affiliates after the Closing Date. The payment of On-Site
Environmental Liabilities by JV and FMC and their Affiliates shall be aggregated
for the purposes of determining payments by Buyer in this Section 11.05 and the
payment of On-Site Environmental Liabilities by SJFP, SJCC and SJPC for the
benefit of either JV or FMC shall be aggregated for the purposes of determining
payments by Seller in this Section 11.05. In no event shall Seller or Seller
Affiliates in the aggregate have any obligation to JV, FMC or Affiliates thereof
or to such other Persons or Group to which Seller or Seller Affiliates may have
obligations under Section 11.05(g) for On-Site Environmental Liabilities under
this Agreement or under statute or
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common law (excluding the specific obligations Seller has assumed under Sections
11.07 and 11.08) in excess of $10,000,000.
(b) For purposes of defining Seller's obligations under this
Section 11.05, On-Site Environmental Liabilities shall not include conditions,
claims, losses, or causes of action which arise because of a change in any law
or regulation becoming effective after the Execution Date and imposing new
requirements, conditions, or obligations on Buyer or Buyer Affiliates or the
Acquired Assets, including but not limited to the adoption or modification of
regulations under Title V of the Clean Air Act or related to the Cluster Rules;
provided, however, that On-Site Environmental Liabilities shall be defined to
include for the three (3) years after the Closing Date conditions, claims,
losses or causes of action which both (i) arise for the first time from a
statute or regulation enacted, adopted or amended after the Execution Date and
(ii) arise from an activity or operation not continued or contributed to by
Buyer during that three (3) year period. It is specifically understood that in
no event shall Buyer seek or Buyer Affiliates seek nor recover any payment from
Seller for any Environmental Liabilities Buyer or Buyer Affiliates may incur in
order to comply with any regulatory or permitting requirements which are not, on
the Execution Date, then specially
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and currently enforceable under Federal or state law against the Acquired Assets
or the Business and in no event shall Buyer or Buyer Affiliates seek nor recover
any payments under this Section 11.05 or otherwise for costs Buyer or Buyer
Affiliates may incur to comply with the requirements of Title V of the Clean Air
Act or to comply with the Cluster Rules, it being agreed that all costs required
for compliance with such programs shall be borne entirely by Buyer and Buyer
Affiliates regardless of when those requirements might be deemed specifically
applicable to any of the Acquired Assets or the Business.
(c) If the Closing occurs, Buyer and Buyer Affiliates shall take
full responsibility for all On-Site Environmental Liabilities not specifically
agreed to be assumed by Seller pursuant to Section 11.05(a). In the event that
On-Site Environmental Liabilities arise from Environmental Conditions which were
caused by or arise from acts or omissions which occurred both before and after
the Closing Date, such liabilities shall be allocated between the periods before
and after the Closing Date based upon the relative contribution of the acts or
omissions occurring in each period to such On-Site Environmental Liabilities and
then only that share of the On-Site Environmental Liabilities allocated to the
periods before the Closing Date will be deemed to
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be included within the On-Site Environmental Liabilities covered by Buyer and
Seller in Section 11.05(a).
(d) FMC and JV and their Affiliates shall have no rights to
recovery or indemnification for On-Site Environmental Liabilities under this
Agreement, common law, or any statute or regulation other than the rights and
remedies specifically provided in Sections 11.05(a), 11.07 and 11.08, and all
rights or remedies FMC and JV and their Affiliates may have at common law or
under any statute or regulation with respect to On-Site Environmental
Liabilities are expressly waived. FMC AND JV AND THEIR AFFILIATES DO HEREBY
AGREE, WARRANT, AND COVENANT TO RELEASE, ACQUIT, AND FOREVER DISCHARGE SELLER
GROUP FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION OF WHATSOEVER NATURE,
INCLUDING WITHOUT LIMITATION ALL CLAIMS, DEMANDS, AND CAUSES OF ACTION FOR
CONTRIBUTION AND INDEMNITY UNDER STATUTE OR COMMON LAW, WHICH COULD BE ASSERTED
NOW OR IN THE FUTURE AND THAT RELATE TO OR IN ANY WAY ARISE OUT OF ON-SITE
ENVIRONMENTAL LIABILITIES. FMC AND JV AND THEIR AFFILIATES WARRANT, AGREE, AND
COVENANT NOT TO SUE THE SELLER GROUP UPON ANY CLAIM, DEMAND, OR CAUSE OF ACTION,
INCLUDING WITHOUT LIMITATION ANY CLAIM, DEMAND, OR CAUSE OF ACTION FOR INDEMNITY
AND CONTRIBUTION THAT HAVE BEEN ASSERTED OR COULD BE ASSERTED FOR ENVIRONMENTAL
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LIABILITIES, EXCEPT FOR THE PURPOSE OF ENFORCING SECTIONS 11.05, 11.07, 11.08,
AND 11.09.
(e) With respect to Environmental Conditions existing on the
Closing Date it is intended that the Environmental Liabilities under Section
11.05(a) and 11.05(b) be allocated between the parties based on the property
lines of the Real Property and the SJLD Property conveyed, with Buyer and Buyer
Affiliates taking full responsibility (subject to Section 11.05(a)) for On-Site
Environmental Liabilities and Seller or Buyer taking full responsibility, as the
case may be, or Buyer and Seller sharing responsibility for Off-Site
Environmental Liabilities, as described below. For purposes of this Section
11.05, therefore, "On-Site Environmental Liabilities" shall mean Environmental
Liabilities which are incurred for Environmental Conditions within the
boundaries of the Real Property and the SJLD Property conveyed to Buyer under
this Agreement and which arise out of Environmental Conditions or events
existing or occurring prior to the Closing Date and "Off-Site Environmental
Liabilities" shall mean Environmental Liabilities other than On-Site
Environmental Liabilities; provided that in no event shall Seller be responsible
for acts or omissions of Buyer after the Closing Date. With respect to Off-Site
Environmental Liabilities only, Buyer and
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Seller agree that where the Environmental Liabilities were caused by acts or
omissions which occurred both before and after the Closing Date, responsibility
between Buyer and Seller shall be allocated between the two parties based upon
the relative contribution of acts or omissions during each period to the injury
or harm; provided that if Buyer has not contributed to such acts or omissions
its relative contribution shall be zero and provided further that if Seller has
not contributed to such acts or omissions its relative contribution shall be
zero. Buyer and Seller agree that for purposes of Section 11.05 when an
Environmental Condition exists which requires remediation costs to be incurred
both within and without the boundaries of the Real Property and the SJLD
Property such remediation costs incurred for work within the boundaries of the
Real Property and the SJLD Property will be deemed On-Site Environmental
Liabilities and those remediation costs for work outside such boundaries shall
be deemed Off-Site Environmental Liabilities, provided that where Buyer (or
Buyer Affiliates) and Seller (or Seller Affiliates) both contributed to the harm
beyond the boundaries of the Real Property and the SJLD Property the
Environmental Liabilities will be allocated as provided in the preceding
sentence.
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(f) All claims by Buyer and Buyer Affiliates for payment of
On-Site Environmental Liabilities under Section 11.05(a) which must be resolved
by initiation of construction, remediation, monitoring, disposal or related
activities shall be presented and resolved in accordance with Exhibit I. All
other claims for On-Site Environmental Liabilities shall be asserted and
resolved in accordance with the procedures specified in Section 11.03.
(g) In the event of a Change of Control, all of Seller's
obligations in this Section 11.05 shall terminate, except for Off-Site
Environmental Liabilities for which Seller was solely responsible; however,
Buyer's and Buyer Affiliates' obligations under Section 11.05(d) shall continue.
"Change of Control" means (a) any transaction (including a merger or
consolidation) the result of which is that any Person or Group (as defined in
Rule 13d-5 of the Exchange Act), other than the Principals or the Lenders
acquires, directly or indirectly, more than 50% of the total voting power of all
classes of voting stock of FMC or JV, as the case may be; (b) any transaction
(including a merger or consolidation) the result of which is that any Person or
Group (as defined in Rule 13d-5 of the Exchange Act), other than the Principals
or the Lenders has a sufficient number of its or their nominees elected to the
board of directors of FMC or JV, as the
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case may be such that such nominees so elected (whether new or continuing as
directors) shall constitute a majority of the board of directors of FMC or JV,
as the case may be; or (c) the sale of all or substantially all of the capital
stock of FMC or JV, as the case may be to any Person or Group (as defined in
Rule 13d-5 of the Exchange Act), other than the Principals or the Lenders as an
entirety or substantially as an entirety in one transaction or a series of
related transactions; or (d) the sale or transfer of all or substantially all of
the assets of FMC or JV, as the case may be, as an entirety or substantially as
an entirety in one transaction or series of related transactions to any Person
other than the Principals or the Lenders; provided that in the event any of the
Principals or Lenders is involved in any change of control in which they are
exempted as described in (a)-(d) above and either JV or FMC is no longer the
entity directly holding the Mill Assets or the Container Assets, respectively,
then such Principals or Lenders agree to cause the Person which will directly
hold such assets upon the Change of Control to agree in writing in a form
acceptable to Seller to be bound by Section 11.05(d); otherwise all of Seller's
obligations in Section 11.05 as described in the first sentence of this Section
11.05(g) will terminate upon such Change of Control. For the foregoing
purposes, the term "Principals"
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shall mean (x) Dennis Mehiel in the case of FMC, (y) FMC and SCC in the case of
JV, and (z) any Subsidiary of Dennis Mehiel, FMC or SCC; and the term "Lenders"
shall mean one or more institutional lenders which provided any of the debt
financing that was issued to FMC or JV as of the Closing Date in connection with
the transactions contemplated by this Agreement.
(h) SJPC shall be jointly and severally liable with SJFP or
SJCC, as the case may be, for Seller's obligations under this Section 11.05.
11.06 ENVIRONMENTAL AUDIT. Buyer may desire to engage a third
party environmental consulting firm for the purposes of conducting prior to the
Financing Date an environmental audit or survey of the Real Property and the
SJLD Property satisfactory to the Buyer which may include a phase 1 and phase 2
environmental audit or survey. If Buyer so elects, Seller shall permit such
firm, its agents and employees, and Buyer, its employees, agents and other
representatives, to enter upon such properties and conduct such surveys, tests
and evaluations as may be reasonably requested by Buyer or such firm, all at
Buyer's sole expense, risk and cost under the terms of a Property Access
Agreement in the form attached hereto as Exhibit J. In connection with any such
audit and survey, Seller shall cooperate with Buyer and said firm in
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connection with scheduling and conducting said surveys, tests and evaluations to
the extent the same do not unreasonably interfere with the normal operations of
Seller and Seller Affiliates conducted at such properties. If Buyer elects to
cause such environmental audit or survey to be conducted and a report is
prepared by said firm in connection therewith, Buyer agrees promptly to provide
a copy at no cost to Seller thereof to Seller if requested by Seller at Closing.
11.07 WORK TO BE COMPLETED BY SELLER.
(a) Seller shall use its best efforts to complete the removal
of asbestos from the steam pipe (140 lbs.) which runs from the Turbine Room to
the Digester in the Turbine and old Boiler Room areas and the removal and
replacement of electric transformers (GE5848920, GE5711610, and GE5711609) with
a single transformer, at the mill facility at Port St. Joe at Seller's sole cost
and expense before Closing. If, however, that work is not completed prior to
Closing, Seller shall cause such work to be completed promptly thereafter.
Seller shall have no other obligations under this Agreement for asbestos or
transformers except to the extent such conditions constitute an Environmental
Liability for which Seller is responsible hereunder.
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(b) Seller shall complete, at Seller's sole cost and expense,
remedial actions required for the former land application area adjacent to and
north of the Laurens, South Carolina manufacturing plant. Those remedial
activities will be deemed to be satisfactorily completed by Seller upon receipt
from the South Carolina Department of Environmental Control and any other
Governmental Entity with jurisdiction over the matter of an approval of the
completion of those remedial activities, if a procedure for approval exists,
and, if no such procedure for approval exists, upon delivery to Buyer of a
report from a registered professional engineer that such work has been completed
consistent with good engineering practice and in compliance with all applicable
Environmental Laws. Seller shall have no other obligations under this Agreement
for the conditions described in this paragraph except to the extent such
conditions constitute an Environmental Liability for which Seller is responsible
hereunder.
(c) Seller shall complete, at Seller's sole cost and expense,
remedial actions associated with two underground tanks at the Chicago Container
Division identified in Leaking Underground Storage Tank Incident Number 902200.
Those remedial activities will be deemed to be satisfactorily completed upon
receipt from the Illinois Environmental Protection Agency and any other
Governmental
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Entity with jurisdiction over the matter of an approval of the completion of
those remedial activities, if a procedure for approval exists, and, if no such
procedure for approval exists, upon delivery to Buyer of a report from a
registered professional engineer that such work has been completed consistent
with good engineering practice and in compliance with all applicable
Environmental Laws. Seller shall have no other obligations under this Agreement
for the conditions described in this paragraph except to the extent such
conditions constitute an Environmental Liability for which Seller is responsible
hereunder.
(d) With respect to any remedial activities which must be
undertaken by Seller after the Closing Date under paragraphs (a), (b), or (c) of
this Section 11.07, Buyer agrees to provide its full cooperation to complete the
work required. Such cooperation shall be given at no cost to Seller and shall
include, but shall not be limited to, reasonable access for construction and/or
removal activities, locations for monitor wells, execution of all necessary
reports, plans, certifications, and deed record notices specified under
Environmental Laws, and attendance at meetings with regulatory authorities.
Except for the personnel time of Buyer needed to implement and complete the
remediation activities specified in this Section 11.07, Buyer shall not be
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obligated to incur any out-of-pocket costs in connection with the completion of
such work. Seller shall be responsible for the implementation of remedial plans
and the work specified in this Section 11.07 and Seller's implementation of
those plans shall be consistent with good engineering practice and all
Environmental Laws.
11.08 WORK TO BE COMPLETED BY BUYER.
(a) SJCC shall reimburse FMC or FMC Affiliates for projects
listed in Section 11.08 of the Disclosure Schedule in an amount not to exceed
$1,400,000, provided (i) FMC or FMC Affiliates shall present a reasonable
description of the work performed and all invoices for which reimbursement is
sought within sixty (60) days of incurring that expense and within three (3)
years of the Closing Date and (ii) FMC or FMC Affiliates shall provide all other
reasonable information requested by SJCC to (x) permit a determination that the
work performed was directly related to and required for completion of the
projects listed in Section 11.08 of the Disclosure Schedule, (y) permit a
determination that the costs incurred were reasonable and (iii) a determination
that the work was performed in accordance with all Environmental Laws. If SJCC
and FMC or FMC Affiliates are unable to agree on whether the project for which
reimbursement was sought was specified in Section
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11.08 of the Disclosure Schedule, whether the costs incurred were reasonable, or
whether the work was done in compliance with all Environmental Laws, either
party may on ten (10) days' written notice refer the matter to arbitration as
specified on Exhibit I. If upon completion of all of the projects in Section
11.08 of the Disclosure Schedule FMC or FMC Affiliates have not sought
reimbursement of the entire $1,400,000, the difference between the amount sought
and $1,400,000 shall be remitted to FMC or FMC Affiliates.
11.09 OTHER DISPOSAL FACILITIES. All Environmental Liabilities alleged,
imposed or required by any state or Federal agency arising from off-site
landfills or other land disposal facilities owned and operated by Persons other
than Seller to which municipal and industrial solid waste has been carted or
trucked by Seller, its agents, or contractors prior to the Closing Date and to
which neither Buyer, its agents, or its contractors have carted or trucked any
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solid wastes after the Closing Date, shall be the sole responsibility of Seller,
and Buyer shall have no obligations to Seller or Seller Affiliates for
Environmental Liabilities related to such landfills or facilities. However,
with respect to landfills or other land disposal facilities to which both Seller
and Buyer or their agents or contractors have carted or trucked any solid waste,
responsibility for Environmental Liabilities of Buyer and Seller will be
allocated according to the relative contribution of each party to the harm.
This Section 11.09 does not apply to, alter, modify or change obligations of
Buyer and Buyer Affiliates under Section 11.05 for On-Site Environmental
Liabilities.
ARTICLE XII
MISCELLANEOUS
12.01 NOTICES. All notices, requests, demands, consents and other
communications required or permitted hereunder shall be in writing and shall be
delivered personally or by telecopier or mailed by certified or registered mail
(return receipt requested), postage prepaid, provided that any notice delivered
by certified or registered mail shall also be delivered by telecopy or by hand
at the time that it is mailed. If such telecopy is sent, notices shall be deemed
given on the Business Day of confirmation at the sender's telecopy machine of
receipt at the recipient's telecopy machine (or if such confirmation is received
on a day which is not a Business Day, on the Business Day occurring immediately
thereafter). If the notice is delivered by hand, it shall be deemed given when
so delivered to a responsible representative of the addressee. All
communications hereunder shall be delivered to the respective
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parties at the following addresses (or to such other person or at such other
address for a party as shall be specified by like notice, provided that notices
of a change of address shall be effective only upon receipt thereof):
(a) If to Buyer, in care of:
Dennis Mehiel
Chairman
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
and by telecopy to: (914) 747-2774
Roger W. Stone
Chairman, President and
Chief Executive Officer
Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601
and by telecopy to: (312) 580-4650
with a copy to:
Harvey L. Friedman
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
and by telecopy to: (212) 747-9062
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EXECUTION COPY
with a copy to:
Leslie T. Lederer
Vice President, Corporate Secretary and
General Counsel
Stone Container Corporation
150 N. Michigan Avenue
Chicago, IL 60601
and by telecopy to: (312) 580-4624
(b) If to SJPC or Seller, to:
Winfred L. Thornton
Chairman
St. Joe Paper Company
duPont Center Suite 400
1650 Prudential Drive
Jacksonville, FL 32207
and by telecopy to: (904) 396-1932
with a copy to:
Fulbright & Jaworski L.L.P.
Market Square
801 Pennsylvania Avenue, N.W.
Washington, DC 20004-2604
Attn: Marilyn Mooney, Esq.
and by telecopy to: (202) 662-4643
12.02 AMENDMENTS; NO WAIVERS.
(a) Any provision of this Agreement may be amended or waived
if, and only if, such amendment or waiver is in writing and signed, in the case
of an amendment, by Buyer and Seller, or in
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EXECUTION COPY
the case of a waiver, by the party against whom the waiver is to be effective.
(b) No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided shall be cumulative and not exclusive of any rights or
remedies provided by law.
12.03 EXPENSES. Except as otherwise provided herein, all costs, fees
and expenses incurred in connection with this Agreement shall be paid by the
party incurring such cost, fee or expense. If the Closing does not occur as a
result of Seller's failure to meet the closing conditions in Sections 9.02
(a)-(c) or as a result of the failure of a majority of the outstanding shares of
capital stock of SJPC to have approved this Agreement and consummation of the
transactions contemplated thereby, Seller shall promptly pay to Buyer and SCC
collectively their actual documented out-of-pocket fees and expenses in
connection with this Agreement and the transactions contemplated hereby up to a
maximum amount of two million dollars ($2,000,000); provided, however, Seller
shall, in lieu of the reimbursement of fees and expenses described above,
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EXECUTION COPY
promptly pay to Buyer in immediately available funds a fee of $8,000,000 plus
15% of the excess consideration represented by the Transaction Proposal up to an
aggregate maximum of $12,000,000 ("Section 6.16 Fee") if the Section 6.16 Fee is
payable pursuant to Section 6.16. If the Closing does not occur as a result of
Buyer's failure to meet the closing conditions in Section 9.03(a)-(c), then FMC
and JV shall jointly and severally promptly pay to Seller and Seller Affiliates
their actual documented out-of-pocket fees and expenses in connection with this
Agreement and the transactions contemplated hereby up to a maximum amount of two
million dollars ($2,000,000).
12.04 ASSIGNMENT; PARTIES IN INTEREST. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No party may assign, delegate or otherwise transfer any
of its rights or obligations under this Agreement without the written consent of
the other party hereto.
12.05 GOVERNING LAW; JURISDICTION; FORUM. The parties hereto agree that
all of the provisions of this Agreement and any questions concerning its
interpretation and enforcement shall be governed by the laws of the State of
Florida without regard to any applicable principles of conflicts of law. Each
of the parties
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EXECUTION COPY
irrevocably and unconditionally consents that any suit, action or proceeding
relating to this Agreement may be brought in the United States District Court
for the Middle District of Florida, or, if jurisdiction is lacking in such
court, in a court of record of the State of Florida in Duval County, and each
party hereby irrevocably waives, to the fullest extent permitted by law, any
objection that it may have, whether now or in the future, to the laying of the
venue in, or to the jurisdiction of, any and each of such courts for the purpose
of any such suit, action, proceeding or judgment and further waives any claim
that any such suit, action, proceeding or judgment has been brought in an
inconvenient forum, and each party hereby submits to such jurisdiction.
12.06 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with the same effect
as if the signatures thereto and hereto were upon the same instrument. This
Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
12.07 ENTIRE AGREEMENT. This Agreement and the Disclosure Schedule
hereto constitute the entire agreement between the parties with respect to the
subject matter hereof and supersede all other prior agreements, understandings
and negotiations, both written and
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EXECUTION COPY
oral, between the parties with respect to the subject matter of this Agreement,
except for the Confidentiality Agreement and any amendments or letter agreements
relating to the subject matter referred to herein that may be entered into in
writing by Seller and Buyer. No representation, inducement, promise,
understanding, condition or warranty not set forth herein has been made or
relied upon by either party hereto.
12.08 PUBLICITY. Except as otherwise required by law or the rules of
any national securities exchange, neither the Buyer Group nor the Seller Group
shall issue or cause the publication of any press release or other public
announcement with respect to this Agreement or the transactions contemplated by
this Agreement without the express written prior approval of the parties hereto.
12.09 CAPTIONS. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
12.10 SEVERABILITY. This Agreement shall be deemed severable; the
invalidity or unenforceability of any term or provision of this Agreement shall
not affect the validity or enforceability of this Agreement or of any other term
hereof.
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EXECUTION COPY
12.11 KNOWLEDGE. Whenever information provided herein is based on
"knowledge", such term means the actual knowledge of any person presently
holding the position of Vice President or higher.
[ intentionally left blank ]
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EXECUTION COPY
IN WITNESS WHEREOF, the parties hereto here caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
ST. JOE FOREST PRODUCTS COMPANY ST. JOE CONTAINER COMPANY
By: /s/ R. E. Nedley By: /s/ R. E. Nedley
------------------------------- -------------------------------
Name: R. E. Nedley Name: R. E. Nedley
Title: President Title: Vice-President
ST. JOE PAPER COMPANY FOUR M CORPORATION
By: /s/ R. E. Nedley By: /s/ D. Mehiel
------------------------------- -------------------------------
Name: R. E. Nedley Name: D. Mehiel
Title: President Title: Chairman
PORT ST. JOE PAPER COMPANY
By: Box USA Paper Corporation, a general partner
By: /s/ D. Mehiel
-------------------------------
Name: D. Mehiel
Title: Chairman
PORT ST. JOE PAPER COMPANY
By: SSJ Corporation, a general partner
By: /s/ Leslie T. Lederer
-------------------------------
Name: Leslie T. Lederer
Title: Vice President
<PAGE>
EXHIBIT 4.1
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
-----------------
SERIES A AND SERIES B
12 3/4% FIRST MORTGAGE NOTES DUE 2003
-----------------
INDENTURE
Dated as of May 30, 1996
-----------------
-----------------
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
-----------------
Trustee
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
CROSS-REFERENCE TABLE*
TRUST INDENTURE
ACT SECTION INDENTURE SECTION
310 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(a)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(4) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(a)(5) . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.10
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
311 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.11
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
312 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . 2.05
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 11.03
313 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
(b)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 10.03
(b)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 7.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . 7.06; 11.02
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . 7.06
314 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . 4.03; 4.04
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 10.02
(c)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 11.04
(c)(3) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . 10.03; 10.04; 10.05
(e) . . . . . . . . . . . . . . . . . . . . . . . . . . 11.05
(f). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
315 (a). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(d). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(e). . . . . . . . . . . . . . . . . . . . . . . . . . . 6.11
316 (a)(last sentence) . . . . . . . . . . . . . . . . . . 2.09
(a)(1)(A). . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . . . 6.05
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 6.07
(c) . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
317 (a)(1) . . . . . . . . . . . . . . . . . . . . . . . . . 6.08
(a)(2) . . . . . . . . . . . . . . . . . . . . . . . . . 6.09
(b) . . . . . . . . . . . . . . . . . . . . . . . . . . 2.04
318 (a). . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(b). . . . . . . . . . . . . . . . . . . . . . . . . . . N.A.
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . 11.01
N.A. means not applicable.
*This Cross-Reference Table is not part of this Indenture.
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitions . . . . . . . . . . . . . . . . . . . . . . 14
Section 1.03. Incorporation by Reference of Trust Indenture Act . . . . . . 15
Section 1.04. Rules of Construction . . . . . . . . . . . . . . . . . . . . 15
ARTICLE 2
THE FIRST MORTGAGE NOTES
Section 2.01. Form and Dating . . . . . . . . . . . . . . . . . . . . . . . 16
Section 2.02. Execution and Authentication. . . . . . . . . . . . . . . . . 16
Section 2.03. Registrar and Paying Agent. . . . . . . . . . . . . . . . . . 17
Section 2.04. Paying Agent to Hold Money in Trust . . . . . . . . . . . . . 17
Section 2.05. Holder Lists. . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 2.06. Transfer and Exchange . . . . . . . . . . . . . . . . . . . . 18
Section 2.07. Replacement First Mortgage Notes. . . . . . . . . . . . . . . 24
Section 2.08. Outstanding First Mortgage Notes. . . . . . . . . . . . . . . 24
Section 2.09. Treasury Notes. . . . . . . . . . . . . . . . . . . . . . . . 24
Section 2.10. Temporary First Mortgage Notes. . . . . . . . . . . . . . . . 25
Section 2.11. Cancellation. . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 2.12. Defaulted Interest. . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE 3
REDEMPTION AND PREPAYMENT
Section 3.01. Notices to Trustee. . . . . . . . . . . . . . . . . . . . . . 25
Section 3.02. Selection of First Mortgage Notes to Be Redeemed. . . . . . . 26
Section 3.03. Notice of Redemption. . . . . . . . . . . . . . . . . . . . . 26
Section 3.04. Effect of Notice of Redemption. . . . . . . . . . . . . . . . 27
Section 3.05. Deposit of Redemption Price . . . . . . . . . . . . . . . . . 27
Section 3.06. First Mortgage Notes Redeemed in Part . . . . . . . . . . . . 27
Section 3.07. Optional Redemption . . . . . . . . . . . . . . . . . . . . . 28
Section 3.08. Mandatory Redemption. . . . . . . . . . . . . . . . . . . . . 28
Section 3.09. Repurchase Offers . . . . . . . . . . . . . . . . . . . . . . 28
ARTICLE 4
COVENANTS
Section 4.01. Payment of First Mortgage Notes . . . . . . . . . . . . . . . 30
Section 4.02. Maintenance of Office or Agency . . . . . . . . . . . . . . . 31
Section 4.03. Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 4.04. Compliance Certificate. . . . . . . . . . . . . . . . . . . . 32
Section 4.05. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 4.06. Stay, Extension and Usury Laws. . . . . . . . . . . . . . . . 32
Section 4.07. Restricted Payments . . . . . . . . . . . . . . . . . . . . . 33
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 34
Section 4.09. Incurrence of Indebtedness and Issuance of Preferred
Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
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Section 4.10. Asset Sales and Events of Loss. . . . . . . . . . . . . . . . 37
Section 4.11. Transactions with Affiliates. . . . . . . . . . . . . . . . . 39
Section 4.12. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.13. Line of Business. . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.14. Corporate Existence . . . . . . . . . . . . . . . . . . . . . 40
Section 4.15. Offer to Repurchase Upon Change of Control. . . . . . . . . . 40
Section 4.16. Issuances and Sales of Capital Stock of Wholly
Owned Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 41
Section 4.17. Subsidiary Guaranties . . . . . . . . . . . . . . . . . . . . 41
Section 4.18. Restrictions on Activities of Finance Corp. . . . . . . . . . 41
Section 4.19. Maintenance of Liquidity Facility . . . . . . . . . . . . . . 41
Section 4.20. Payments for Consent. . . . . . . . . . . . . . . . . . . . . 42
ARTICLE 5
SUCCESSORS
Section 5.01. Merger, Consolidation, or Sale of Assets. . . . . . . . . . . 42
Section 5.02. Successor Corporation Substituted . . . . . . . . . . . . . . 43
ARTICLE 6
DEFAULTS AND REMEDIES
Section 6.01. Events of Default . . . . . . . . . . . . . . . . . . . . . . 43
Section 6.02. Acceleration. . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.03. Other Remedies. . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.04. Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . 46
Section 6.05. Control by Majority . . . . . . . . . . . . . . . . . . . . . 46
Section 6.06. Limitation on Suits . . . . . . . . . . . . . . . . . . . . . 46
Section 6.07. Rights of Holders of Notes to Receive Payment . . . . . . . . 47
Section 6.08. Collection Suit by Trustee. . . . . . . . . . . . . . . . . . 47
Section 6.09. Trustee May File Proofs of Claim. . . . . . . . . . . . . . . 47
Section 6.10. Priorities. . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.11. Undertaking for Costs . . . . . . . . . . . . . . . . . . . . 48
ARTICLE 7
TRUSTEE
Section 7.01. Duties of Trustee . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.02. Rights of Trustee . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.03. Individual Rights of Trustee. . . . . . . . . . . . . . . . . 50
Section 7.04. Trustee's Disclaimer. . . . . . . . . . . . . . . . . . . . . 50
Section 7.05. Notice of Defaults. . . . . . . . . . . . . . . . . . . . . . 50
Section 7.06. Reports by Trustee to Holders of the First Mortgage
Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 7.07. Compensation and Indemnity. . . . . . . . . . . . . . . . . . 51
Section 7.08. Replacement of Trustee. . . . . . . . . . . . . . . . . . . . 52
Section 7.09. Successor Trustee by Merger, etc. . . . . . . . . . . . . . . 53
Section 7.10. Eligibility; Disqualification . . . . . . . . . . . . . . . . 53
Section 7.11. Preferential Collection of Claims Against the Issuers . . . . 53
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
Section 8.01. Option to Effect Legal Defeasance or Covenant Defeasance. . . 53
Section 8.02. Legal Defeasance and Discharge. . . . . . . . . . . . . . . . 53
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Section 8.03. Covenant Defeasance . . . . . . . . . . . . . . . . . . . . . 54
Section 8.04. Conditions to Legal or Covenant Defeasance. . . . . . . . . . 54
Section 8.05. Deposited Money and Government Securities to be Held
in Trust; Other Miscellaneous Provisions. . . . . . . . . . . 55
Section 8.06. Repayment to Company. . . . . . . . . . . . . . . . . . . . . 56
Section 8.07. Reinstatement . . . . . . . . . . . . . . . . . . . . . . . . 56
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
Section 9.01. Without Consent of Holders of Notes . . . . . . . . . . . . . 57
Section 9.02. With Consent of Holders of Notes. . . . . . . . . . . . . . . 57
Section 9.03. Compliance with Trust Indenture Act . . . . . . . . . . . . . 59
Section 9.04. Revocation and Effect of Consents . . . . . . . . . . . . . . 59
Section 9.05. Notation on or Exchange of Notes. . . . . . . . . . . . . . . 59
Section 9.06. Trustee to Sign Amendments, etc . . . . . . . . . . . . . . . 59
ARTICLE 10
COLLATERAL AND SECURITY
Section 10.01. Collateral Documents. . . . . . . . . . . . . . . . . . . . . 60
Section 10.02. Recording and Opinions. . . . . . . . . . . . . . . . . . . . 60
Section 10.03. Release of Collateral . . . . . . . . . . . . . . . . . . . . 61
Section 10.04. Certificates of the Issuers . . . . . . . . . . . . . . . . . 62
Section 10.05. Certificates of the Trustee . . . . . . . . . . . . . . . . . 62
Section 10.06. Authorization of Actions to Be Taken by the Trustee
Under the Collateral Documents. . . . . . . . . . . . . . . . 62
Section 10.07. Authorization of Receipt of Funds by the Trustee
Under the Collateral Documents. . . . . . . . . . . . . . . . 62
Section 10.08. Termination of Security Interest. . . . . . . . . . . . . . . 63
Section 10.09. Cooperation of Trustee. . . . . . . . . . . . . . . . . . . . 63
Section 10.10. Collateral Agent. . . . . . . . . . . . . . . . . . . . . . . 63
Section 10.11. Cash Funds Pledge.. . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE 11
MISCELLANEOUS
Section 11.01. Trust Indenture Act Controls. . . . . . . . . . . . . . . . . 66
Section 11.02. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
Section 11.03. Communication by Holders of First Mortgage Notes
with Other Holders of First Mortgage Notes. . . . . . . . . . 68
Section 11.04. Certificate and Opinion as to Conditions Precedent. . . . . . 68
Section 11.05. Statements Required in Certificate or Opinion . . . . . . . . 68
Section 11.06. Rules by Trustee and Agents . . . . . . . . . . . . . . . . . 69
Section 11.07. No Personal Liability of Members, Officers Employees
and Stockholders. . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.08. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.09. No Adverse Interpretation of Other Agreements . . . . . . . . 69
Section 11.10. Successors. . . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.11. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.12. Counterpart Originals . . . . . . . . . . . . . . . . . . . . 69
Section 11.13. Table of Contents, Headings, etc. . . . . . . . . . . . . . . 70
iii
<PAGE>
INDENTURE, dated as of May 30, 1996, by and among Florida Coast Paper
Company, L.L.C., a Delaware limited liability company (the "COMPANY"), Florida
Coast Paper Finance Corp., a Delaware corporation (together with the Company,
the "ISSUERS"), and Norwest Bank Minnesota, National Association, as trustee
(the "TRUSTEE").
The Issuers and the Trustee agree as follows for the benefit of
each other and for the equal and ratable benefit of the Holders of the 12 3/4%
Series A First Mortgage Notes due 2003 (the "SERIES A FIRST MORTGAGE NOTES")
and the 123/4% Series B First Mortgage Notes due 2003 (the "SERIES B FIRST
MORTGAGE NOTES" and, together with the Series A First Mortgage Notes, the
"FIRST MORTGAGE NOTES"):
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or becomes a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10.0% or more of the voting securities of a Person shall
be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation, by way of a sale and
leaseback), other than sales of inventory in the ordinary course of business
consistent with past practices, the sale of the real estate and other assets
subject to the Box USA Lease and the sale of certain real estate to St. Joe
pursuant to an option related thereto and (ii) the issue or sale of Equity
Interests in any of the Company's Restricted Subsidiaries, in the case of either
clause (i) or (ii), whether in a single transaction or a series of related
transactions (a) that have a fair market value in excess of $1.0 million or (b)
for Net Proceeds in excess of $1.0 million. Notwithstanding the foregoing: (i)
a transfer of assets by the Company to a Wholly Owned Restricted Subsidiary or
by a Wholly Owned Restricted Subsidiary to the Company or to another Wholly
Owned Restricted Subsidiary, (ii) a Collateral Asset Sale, (iii) a Restricted
Payment that is permitted by Section 4.07 hereof and (iv) sales, leases,
conveyances or other dispositions of assets described in clause (1) of the
definition of "Excluded Property" in the Security Agreement, will not be deemed
to be Asset Sales.
"ASSET SALE ACCOUNT" means the cash collateral account required to be
established by Sections 4.10 and 10.11 hereof, in which there must be deposited
all Net Proceeds from Asset Sales pursuant to Section 4.10 hereof.
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"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital lease
that would at such time be required to be capitalized on a balance sheet in
accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, corporate
stock, (ii) in the case of an association or business entity, any and all
shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH COLLATERAL" means (a) all amounts required to be deposited into
a Cash Collateral Account pursuant hereto or to any of the Collateral Documents,
(b) the Cash Collateral Accounts and all funds, cash, Cash Equivalents and other
items from time to time acquired by the Bank with funds in the Cash Collateral
Accounts, as well as any earnings, proceeds or income therefrom and (c) any
claims, present or future, of the Company against any Person liable upon or for
the payment of any thereof.
"CASH COLLATERAL ACCOUNT" means the Asset Sale Account, the Event of
Loss Account and any other account established pursuant to Section 10.11 hereof
in which monies, securities or other property is deposited pursuant hereto or to
any of the Collateral Documents, collectively and individually.
"CASH EQUIVALENTS" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof having maturities of not
more than six months from the date of acquisition, (iii) certificates of deposit
and eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank,
including the Trustee, having capital and surplus in excess of $500.0 million
and a Keefe Bank Watch Rating of "B" or better, (iv) repurchase obligations with
a term of not more than seven days for underlying securities of the types
described in clauses (ii) and (iii) above entered into with any financial
institution meeting the qualifications specified in clause (iii) above, (v)
shares of any money market mutual fund that (a) has at least 95% of its assets
invested continuously in the types of investments referred to in clauses (ii)
and (vi) of this paragraph, (b) has net assets of not less than $500.0 million,
and (c) has the highest rating obtainable from either Moody's Investors Service,
Inc. or Standard & Poor's Ratings Corporation and (vi) commercial paper having
the highest rating obtainable from Moody's Investors Service, Inc. or Standard &
Poor's Ratings Corporation and in each case maturing within six months after the
date of acquisition.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the adoption of a plan relating to the liquidation or dissolution of the
Company, (ii) the loss, destruction, damage, condemnation, seizure,
confiscation, requisition of the use or taking by exercise of the power of
eminent domain or otherwise, of a substantial part of the assets comprising the
Mill, (iii) the consummation of any transaction (including, without limitation,
any merger or consolidation) the result of which is that (a) any "person" (as
such term is used in Section 13(d)(3) of the Exchange Act), other than Stone and
its Subsidiaries or Four M and its Subsidiaries, becomes the "beneficial owner"
(as such term is defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act),
directly or indirectly, of more of the voting Capital Stock of the Company than
Stone and its Subsidiaries or (b) Stone and its Subsidiaries are the "beneficial
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owners" (as such term is defined above) of less than 35% of the voting Capital
Stock of the Company, (iv) the first day on which more than 50% of the members
of the Management Committee are not Continuing Members or (v) the first day on
which the Company fails to own 100% of the issued and outstanding Equity
Interests of Finance Corp. For purposes of this definition, any transfer of an
equity interest of an entity that was formed for the purpose of acquiring voting
Capital Stock of the Company will be deemed to be a transfer of such portion of
such voting Capital Stock as corresponds to the portion of the equity of such
entity that has been so transferred.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the Mill and all other property and assets that
from time to time secures the First Mortgage Notes pursuant to this Indenture
and the Collateral Documents.
"COLLATERAL AGENT" means any person appointed by the Trustee as a
collateral agent hereunder.
"COLLATERAL ASSET SALE" means any direct or indirect sale, conveyance,
lease, transfer or other disposition, including, without limitation, by means of
an amalgamation, merger, consolidation or similar transaction (each, a
"Disposition"), or a series of related Dispositions by the Company or any of its
Restricted Subsidiaries involving the Collateral, other than (a) the sale of
machinery, equipment, furniture, apparatus, tools or implements or other similar
property that may be defective or may have become worn out or obsolete or no
longer used or useful in the operation of the Mill, the aggregate fair market
value of which does not exceed $1.0 million in any year; (b) the sale or lease
of undeveloped land on the premises of the Mill with a value not in excess of
$1.0 million which will be dedicated to the construction and/or installation of
environmental control equipment required under applicable law; (c) the sale of
equipment that has been replaced by equipment of substantially equal value in an
alteration or improvement made at the Mill; and (d) a Disposition permitted
pursuant to Section 5.01 hereof. A Collateral Asset Sale shall not include the
requisition of title to or the seizure, condemnation, forfeiture or casualty of
any Collateral.
"COLLATERAL DOCUMENTS" means the Mortgage, the Security Agreement and
any other agreements, instruments, financing statements or other documents that
evidence or set forth the Lien of the Trustee in the Collateral, including,
without limitation, any Subsidiary Guaranty, Subsidiary Pledge Agreement and
Subsidiary Security Agreement executed pursuant to the terms of this Indenture.
"CONSOLIDATED CASH FLOW" means, with respect to any Person for any
period, the Consolidated Net Income of such Person for such period plus (i) an
amount equal to any extraordinary loss plus any net loss realized in connection
with a sale of assets not in the ordinary course of business (to the extent such
losses were deducted in computing such Consolidated Net Income), plus (ii)
provision for taxes based on income or profits or the Tax Amount of such Person
and its Restricted Subsidiaries for such period, to the extent that such
provision for taxes or Tax Amount was included in computing such Consolidated
Net Income, plus (iii) consolidated interest expense of such Person and its
Restricted Subsidiaries for such period, whether paid or accrued and whether or
not capitalized (including, without limitation, amortization of original issue
discount, non-cash interest payments, the interest component of any deferred
payment obligations, the interest component of all payments associated with
Capital Lease Obligations, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings, and
net payments (if any) pursuant to Hedging Obligations), to the extent that any
such expense was deducted in computing such Consolidated Net Income, plus (iv)
depreciation and amortization (including amortization of goodwill and other
intangibles but excluding amortization of prepaid cash expenses that were paid
in a prior period) of such Person and its Restricted Subsidiaries for
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such period to the extent that such depreciation and amortization was deducted
in computing such Consolidated Net Income, in each case, on a consolidated basis
and determined in accordance with GAAP. Notwithstanding the foregoing, the
provision for taxes on the income or profits of, and the depreciation and
amortization of, a Subsidiary of the referent Person shall be added to
Consolidated Net Income to compute Consolidated Cash Flow only to the extent
(and in same proportion) that the Net Income of such Subsidiary was included in
calculating the Consolidated Net Income of such Person and only if a
corresponding amount would be permitted at the date of determination to be
dividended to the Company by such Subsidiary without prior governmental approval
(that has not been obtained), and without direct or indirect restriction
pursuant to the terms of its charter and all agreements, instruments, judgments,
decrees, orders, statutes, rules and governmental regulations applicable to that
Subsidiary or its stockholders.
"CONSOLIDATED NET INCOME" means, with respect to any Person for any
period, the aggregate of the Net Income of such Person and its Restricted
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; PROVIDED that (i) the Net Income (but not loss) of any Person that is
not a Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or distributions
paid in cash to the referent Person or a Wholly Owned Restricted Subsidiary
thereof, (ii) the Net Income of any Restricted Subsidiary shall be excluded to
the extent that the declaration or payment of dividends or similar distributions
by that Restricted Subsidiary of that Net Income is not at the date of
determination permitted without any prior governmental approval (that has not
been obtained) or, directly or indirectly, by operation of the terms of its
charter or any agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary or its
stockholders, (iii) the Net Income of any Person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition shall
be excluded, (iv) the cumulative effect of a change in accounting principles
shall be excluded and (v) the Net Income of any Unrestricted Subsidiary shall be
excluded, whether or not distributed to the Company or one of its Restricted
Subsidiaries.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common equity holders of
such Person and its consolidated Restricted Subsidiaries as of such date plus
(ii) the respective amounts reported on such Person's balance sheet as of such
date with respect to any series of preferred equity (other than Disqualified
Stock) that by its terms is not entitled to the payment of dividends or other
distributions unless such dividends or other distributions may be declared and
paid only out of net earnings in respect of the year of such declaration and
payment, but only to the extent of any cash received by such Person upon
issuance of such preferred equity, less (x) all write-ups (other than write-ups
resulting from foreign currency translations and write-ups of tangible assets of
a going concern business made within 12 months after the acquisition of such
business) subsequent to the date of this Indenture in the book value of any
asset owned by such Person or a consolidated Subsidiary of such Person, (y) all
investments as of such date in unconsolidated Subsidiaries and in Persons that
are not Restricted Subsidiaries (except, in each case, Permitted Investments),
and (z) all unamortized debt discount and expense and unamortized deferred
charges as of such date, all of the foregoing determined in accordance with
GAAP.
"CONTINUING MEMBER" means, as of any date of determination, any member
of the Management Committee who (i) was a member of the Management Committee on
the date of this Indenture or (ii) was nominated for election to the Management
Committee with the approval of at least 50% the Continuing Members who were
members of the Management Committee at the time of such nomination or election
or was designated for election to the Management Committee by Stone or Four M.
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"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of the
Trustee specified in Section 11.02 hereof or such other address as to which the
Trustee may give notice to the Company.
"CUSTODIAN" means the Trustee, as custodian with respect to the First
Mortgage Notes in global form, or any successor entity thereto.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DEFINITIVE NOTES" means Notes that are in the form of the First
Mortgage Notes attached hereto as Exhibit A, that do not include the information
called for by footnotes 1 and 2 thereof.
"DEPOSITARY" means, with respect to the First Mortgage Notes issuable
or issued in whole or in part in global form, the Person specified in Section
2.03 hereof as the Depositary with respect to the First Mortgage Notes, until a
successor shall have been appointed and become such pursuant to the applicable
provision of this Indenture, and, thereafter, "Depositary" shall mean or include
such successor.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or by
the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at
the option of the holder thereof, in whole or in part, on or prior to the date
that is 91 days after the date on which the First Mortgage Notes mature.
"ELIGIBLE INSTITUTION" means (a) the Trustee, (b) an affiliate of the
Trustee or (c) a commercial banking institution that is federally chartered, has
combined capital and surplus in excess of $500 million, conducts banking
operations in the State of New York, and whose debt is rated "A" (or higher)
according to Standard & Poor's Ratings Group or Moody's Investors Service, Inc.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EVENT OF LOSS" means (i) the loss or destruction of or damage to any
assets of the Company or any of its Restricted Subsidiaries, excluding, however,
any loss or destruction of or damage to any assets described in clause (1) of
the definition of "Excluded Property" in the Security Agreement, (ii) the
condemnation, seizure, confiscation, requisition of the use or taking by
exercise of the power of eminent domain or otherwise of any assets of the
Company or any of its Restricted Subsidiaries, excluding, however, the
condemnation, seizure, confiscation, requisition of the use or taking by
exercise of the power of eminent domain or otherwise of any assets described in
clause (1) of the definition of "Excluded Property" in the Security Agreement or
(iii) any consensual settlement in lieu of any event listed in clause (ii), in
each case whether in a single event or a series of related events, that results
in Net Proceeds from all sources in excess of $1.0 million.
"EVENT OF LOSS ACCOUNT" means the cash collateral account required to
be established by Sections 4.10 and 10.11 hereof, in which there must be
deposited all Net Proceeds from Events of Loss pursuant to Section 4.10 hereof.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
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"EXCHANGE OFFER" means the offer that may be made by the Issuers
pursuant to the Registration Rights Agreement to exchange Series B First
Mortgage Notes for Series A First Mortgage Notes.
"EXISTING INDEBTEDNESS" means Indebtedness of the Company and its
Subsidiaries (other than Indebtedness under the Liquidity Facility) in existence
on the date of this Indenture, until such amounts are repaid.
"FIXED CHARGES" means, with respect to any Person for any period, the
sum of (i) the consolidated interest expense of such Person and its Restricted
Subsidiaries for such period, whether paid or accrued (including, without
limitation, amortization of original issue discount, non-cash interest payments,
the interest component of any deferred payment obligations, the interest
component of all payments associated with Capital Lease Obligations,
commissions, discounts and other fees and charges incurred in respect of letter
of credit or bankers' acceptance financings, and net payments (if any) pursuant
to Hedging Obligations) and (ii) the consolidated interest expense of such
Person and its Restricted Subsidiaries that was capitalized during such period,
and (iii) any interest expense on Indebtedness of another Person that is
Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a
Lien on assets of such Person or one of its Restricted Subsidiaries (whether or
not such Guarantee or Lien is called upon) and (iv) the product of (a) all
dividend payments or other distributions on any series of preferred equity of
such Person, other than dividend payments or distributions on preferred equity
of the Company paid solely in additional shares of such preferred equity, times
(b) a fraction, the numerator of which is one and the denominator of which is
one minus the then current combined federal, state and local statutory tax rate
of such Person (or, in the case of a Person that is a partnership or limited
liability company, the Tax Rate), expressed as a decimal, in each case, on a
consolidated basis and in accordance with GAAP.
"FIXED CHARGE COVERAGE RATIO" means with respect to any Person for any
period, the ratio of the Consolidated Cash Flow of such Person for such period
to the Fixed Charges of such Person for such period. In the event that the
Company or any of its Restricted Subsidiaries incurs, assumes, Guarantees or
redeems any Indebtedness (other than revolving credit borrowings) or issues or
redeems preferred stock subsequent to the commencement of the period for which
the Fixed Charge Coverage Ratio is being calculated but prior to the date on
which the event for which the calculation of the Fixed Charge Coverage Ratio is
made (the "Calculation Date"), then the Fixed Charge Coverage Ratio shall be
calculated giving pro forma effect to such incurrence, assumption, Guarantee or
redemption of Indebtedness, or such issuance or redemption of preferred stock,
as if the same had occurred at the beginning of the applicable four-quarter
reference period. In addition, for purposes of making the computation referred
to above, (i) acquisitions that have been made by the Company or any of its
Restricted Subsidiaries, including through mergers or consolidations and
including any related financing transactions, during the four-quarter reference
period or subsequent to such reference period and on or prior to the Calculation
Date shall be deemed to have occurred on the first day of the four-quarter
reference period and Consolidated Cash Flow for such reference period shall be
calculated without giving effect to clause (iii) of the proviso set forth in the
definition of Consolidated Net Income, and (ii) the Consolidated Cash Flow
attributable to discontinued operations, as determined in accordance with GAAP,
and operations or businesses disposed of prior to the Calculation Date, shall be
excluded, and (iii) the Fixed Charges attributable to discontinued operations,
as determined in accordance with GAAP, and operations or businesses disposed of
prior to the Calculation Date, shall be excluded, but only to the extent that
the obligations giving rise to such Fixed Charges will not be obligations of the
referent Person or any of its Restricted Subsidiaries following the Calculation
Date.
"FOUR M" means Four M Corporation, a Maryland corporation.
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"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as have been approved by a significant segment of the accounting
profession, which are in effect on the date of this Indenture.
"GLOBAL NOTE" means a First Mortgage Note that contains the paragraph
referred to in footnote 1 and the additional schedule referred to in footnote 2
to the form of the First Mortgage Note attached hereto as Exhibit A.
"GOVERNMENT SECURITIES" means direct obligations of, or obligations
guaranteed by, the United States of America for the payment of which guarantee
or obligations the full faith and credit of the United States is pledged.
"GUARANTEE" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) interest rate swap agreements, interest
rate cap agreements and interest rate collar agreements and (ii) other
agreements or arrangements designed to protect such Person against fluctuations
in interest rates.
"HOLDER" means a Person in whose name a First Mortgage Note is
registered.
"INDEBTEDNESS" means, with respect to any Person, any indebtedness of
such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or bankers' acceptances
or representing Capital Lease Obligations or the balance deferred and unpaid of
the purchase price of any property or representing any Hedging Obligations,
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness (other than letters of
credit and Hedging Obligations) would appear as a liability upon a balance sheet
of such Person prepared in accordance with GAAP, as well as all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Person) and, to the extent not otherwise
included, the Guarantee by such Person of any indebtedness of any other Person.
"INDEMNIFICATION REIMBURSEMENT AGREEMENT" means that certain
Indemnification Reimbursement Agreement, dated as of the date of this Indenture,
by and between the Company and Four M, as the same may be amended, modified and
supplemented from time to time.
"INDENTURE" means this Indenture, as amended, modified or supplemented
from time to time in accordance with the terms hereof.
"INVESTMENTS" means, with respect to any Person, all investments by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including guarantees of Indebtedness or other obligations),
advances or capital contributions (excluding commission, travel and similar
advances to officers and employees made in the ordinary course of business),
purchases or other acquisitions for consideration of Indebtedness, Equity
Interests or other securities, together with all items
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that are or would be classified as investments on a balance sheet prepared in
accordance with GAAP; PROVIDED that an acquisition of assets, Equity Interests
or other securities by the Company for consideration consisting of common equity
securities of the Company shall not be deemed to be an Investment.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which banking
institutions in the City of New York or at a place of payment are authorized by
law, regulation or executive order to remain closed. If a payment date is a
Legal Holiday at a place of payment, payment may be made at that place on the
next succeeding day that is not a Legal Holiday, and no interest shall accrue
for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien, pledge,
charge, security interest or encumbrance of any kind in respect of such asset,
whether or not filed, recorded or otherwise perfected under applicable law
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, any option or other agreement to sell or give a security
interest in and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction).
"LIQUIDATED DAMAGES" means all liquidated damages then owing pursuant
to Section 5 of the Registration Rights Agreement.
"LIQUIDITY FACILITY" means the Subordinated Credit Agreement and any
Qualifying Facilities (as such term is defined in the Subordinated Credit
Agreement).
"MAKE-WHOLE PREMIUM" with respect to a First Mortgage Note means an
amount equal to the greater of (i) 106.375% of the outstanding principal amount
of such First Mortgage Note and (ii) the excess of (A) the present value of the
remaining interest, premium and principal payments due on such First Mortgage
Note as if such First Mortgage Note were redeemed on June 1, 2000, computed
using a discount rate equal to the Treasury Rate plus 50 basis points, over (B)
the outstanding principal amount of such First Mortgage Note.
"MANAGEMENT COMMITTEE" means (i) for so long as the Company is a
limited liability company, the Board of Managers of the Company and (ii)
otherwise the board of directors of the Company.
"MILL" means the real property described in the Mortgage (excluding
the real estate and other improvements subject to the Box USA Lease), the
linerboard mill located thereon and all other property and assets related
thereto, all as described in the Mortgage and all property and assets
constituting Replacement Collateral.
"MOODY'S" means Moody's Investors Service, Inc., and its successors.
"MORTGAGE" means the Mortgage, Security Agreement, Fixture Filing
Statement and Assignment of Rents, Leases and Leasehold Interests, dated as of
the date of this Indenture, by and between the Trustee and the Company,
substantially in the form attached as Exhibit C hereto, as such agreement may be
amended, modified or supplemented from time to time.
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"NET INCOME" means, with respect to any Person, the net income (loss)
of such Person, determined in accordance with GAAP and before any reduction in
respect of preferred stock dividends, excluding, however, (i) any gain (but not
loss), together with any related provision for taxes or Tax Distributions on
such gain (but not loss), realized in connection with (a) any sale of assets not
in the ordinary course of business (including, without limitation, dispositions
pursuant to sale and leaseback transactions) or (b) the disposition of any
securities by such Person or any of its Restricted Subsidiaries or the
extinguishment of any Indebtedness of such Person or any of its Restricted
Subsidiaries and (ii) any extraordinary or nonrecurring gain (but not loss),
together with any related provision for taxes or Tax Distributions on such
extraordinary or nonrecurring gain (but not loss) and (iii) in the case of any
person that is a limited liability company or a partnership, the Tax Amount for
such period.
"NET PROCEEDS" means the aggregate cash proceeds received by the
Company or any of its Restricted Subsidiaries in respect of any Asset Sale or
Event of Loss (including, without limitation, any cash received upon the sale or
other disposition of any non-cash consideration received in any Asset Sale or
Event of Loss), net of the direct costs relating to such Asset Sale or Event of
Loss (including, without limitation, legal, accounting and investment banking
fees, and sales commissions) and any relocation expenses incurred as a result
thereof, taxes or Tax Distributions paid or payable as a result thereof (after
taking into account any available tax credits or deductions and any tax sharing
arrangements), amounts required to be applied to the repayment of Indebtedness
secured by a Lien on the asset or assets that were the subject of such Asset
Sale or Event of Loss and any reserve for adjustment in respect of the sale
price of such asset or assets established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provides credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a guarantor
or otherwise), or (c) constitutes the lender; and (ii) no default with respect
to which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other than
the First Mortgage Notes being offered hereby) of the Company or any of its
Restricted Subsidiaries to declare a default on such other Indebtedness or cause
the payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they will
not have any recourse to the stock or assets of the Company or any of its
Restricted Subsidiaries.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFERING" means the Offering of the First Mortgage Notes by the
Issuers.
"OFFICER" means, with respect to any Person, the Chairman of the Board
of Directors, Management Committee or similar board or committee, the Chief
Executive Officer, the President, the Chief Operating Officer, the Chief
Financial Officer, the Treasurer, any Assistant Treasurer, the Controller, the
Secretary or any Vice-President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of any
Person by two Officers of such Person, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of such Person, that meets the requirements of
Section 11.05 hereof.
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"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
11.05 hereof. The counsel may be an employee of or counsel to the Company, any
Subsidiary of the Company or the Trustee.
"OUTPUT PURCHASE AGREEMENT" means the Output Purchase Agreement, dated
as of the date of this Indenture, by and among Stone, Four M and the Company, as
such agreement may be amended, modified or supplemented from time to time.
"PERMITTED INVESTMENTS" means (a) any Investment in the Company or in
a Wholly Owned Restricted Subsidiary of the Company; (b) any Investment in Cash
Equivalents; and (c) any Investment by the Company or any Restricted Subsidiary
of the Company in a Person, if as a result of such Investment (i) such Person
becomes a Wholly Owned Restricted Subsidiary of the Company and a Guarantor or
(ii) such Person is merged, consolidated or amalgamated with or into, or
transfers or conveys substantially all of its assets to, or is liquidated into,
the Company or a Wholly Owned Restricted Subsidiary of the Company.
"PERMITTED LIENS" means (i) Liens securing the First Mortgage Notes;
(ii) Liens on inventory and accounts receivable and proceeds thereof and certain
related assets securing the Liquidity Facility; (iii) Liens in favor of the
Company; (iv) Liens on property of a Person existing at the time such Person is
merged into or consolidated with the Company or any Restricted Subsidiary of the
Company; PROVIDED that such Liens were in existence prior to the contemplation
of such merger or consolidation and do not extend to any assets other than those
of the Person merged into or consolidated with the Company; (v) Liens on
property existing at the time of acquisition thereof by the Company or any
Restricted Subsidiary of the Company, PROVIDED that such Liens were in existence
prior to the contemplation of such acquisition; (vi) Liens to secure the
performance of statutory obligations, surety or appeal bonds, performance bonds
or other obligations of a like nature incurred in the ordinary course of
business; (vii) Liens to secure Indebtedness (including Capital Lease
Obligations) permitted by clause (iv) of the second paragraph of Section 4.09
hereof covering only the assets acquired with such Indebtedness; (viii) Liens
existing on the date of this Indenture; (ix) Liens for taxes, assessments or
governmental charges or claims that are not yet delinquent or that are being
contested in good faith by appropriate proceedings promptly instituted and
diligently concluded, PROVIDED that any reserve or other appropriate provision
as shall be required in conformity with GAAP shall have been made therefor; (x)
Liens incurred in the ordinary course of business of the Company or any
Restricted Subsidiary of the Company with respect to obligations that do not
exceed $2.0 million at any one time outstanding and that (a) are not incurred in
connection with the borrowing of money or the obtaining of advances or credit
(other than trade credit in the ordinary course of business) and (b) do not in
the aggregate materially detract from the value of the property or materially
impair the use thereof in the operation of business by the Company or such
Restricted Subsidiary; (xi) the Lien of the Box USA Lease; (xii) the Liens of
the Option Agreement and the Warehouse Agreement, in each case as such terms are
defined in the Mortgage; (xiii) exceptions to title set forth in Title Policy
No. A02-064331 issued by Commonwealth Land Title Insurance Company; and (xii)
Liens on assets of Unrestricted Subsidiaries that secure Non-Recourse Debt of
Unrestricted Subsidiaries.
"PERMITTED REFINANCING DEBT" means any Indebtedness of the Company or
any of its Restricted Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of the Company or any of its Restricted Subsidiaries; PROVIDED
that: (i) the principal amount (or accreted value, if applicable) of such
Permitted Refinancing Debt does not exceed the principal amount (or accreted
value, if applicable) of the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (plus the amount of reasonable fees and
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expenses incurred in connection therewith); (ii) such Permitted Refinancing Debt
has a final maturity date later than the final maturity date of, and has a
Weighted Average Life to Maturity equal to or greater than the Weighted Average
Life to Maturity of, the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded; (iii) if the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded is subordinated in right of
payment to the First Mortgage Notes, such Permitted Refinancing Debt has a final
maturity date later than the final maturity date of, and is subordinated in
right of payment to, the First Mortgage Notes on terms at least as favorable to
the Holders of First Mortgage Notes as those contained in the documentation
governing the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; and (iv) such Indebtedness is incurred either by the
Company or by the Restricted Subsidiary who is the obligor on the Indebtedness
being extended, refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated organization or government or agency or political subdivision
thereof (including any subdivision or ongoing business of any such entity or
substantially all of the assets of any such entity, subdivision or business).
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of the date of this Indenture, by and among the Company and
the other parties named on the signature pages thereof, as such agreement may be
amended, modified or supplemented from time to time.
"REPLACEMENT COLLATERAL" means, at any relevant date in connection
with a Collateral Asset Sale or Event of Loss, assets used in the linerboard
business other than the Collateral, which on such date, (a) constitute similar
assets to Collateral disposed of or destroyed (and do not constitute Capital
Stock of any Person), (b) are acquired by the Company at a purchase price which
does not exceed the fair market value of such Replacement Collateral (as
determined, in the case of each of (a) and (b), in good faith by the Management
Committee, on the basis of the written opinion of a qualified independent
appraiser or financial advisor prepared contemporaneously with such purchase)
and made available to the Trustee, (c) are free and clear of all Liens other
than Permitted Liens and (d) is subject to the Collateral Documents.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration department of the Trustee
(or any successor group of the Trustee) or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of, and familiarity with, the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of the
referent Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poor's Corporation and its successors.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SECURITY AGREEMENT" means the Security Agreement, dated as of the
date of this Indenture, by and between the Issuers and the Trustee and
substantially in the form attached as Exhibit D hereto, as such agreement may be
amended, modified or supplemented from time to time.
"SELLER NOTE" means that certain Indebtedness issued by the Company
pursuant to the Asset Purchase Agreement in an aggregate principal amount not to
exceed $10.0 million.
"SIGNIFICANT SUBSIDIARY" means any Restricted Subsidiary that would be
a "significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Act, as such Regulation is in effect on the date
hereof.
"STONE" means Stone Container Corporation, a Delaware corporation.
"STONE PROCUREMENT AGREEMENT" means the procurement agreement, dated
as of the date of this Indenture by and between the Company and Stone.
"SUBORDINATED CREDIT AGREEMENT" means the Subordinated Credit
Agreement, dated as of the date of this Indenture, among the Company, Stone and
Four M.
"SUBSIDIARY" means, with respect to any Person, (i) any corporation,
association or other business entity of which more than 50% of the total voting
power of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of that Person (or a combination thereof)
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or of one or more Subsidiaries of such
Person (or any combination thereof).
"TAX AMOUNT" means, with respect to any Person for any period, the
combined federal, state and local taxes that would be paid by such Person if it
were a Delaware corporation filing separate tax returns with respect to its
Taxable Income for such Period; PROVIDED, HOWEVER, that in determining the Tax
Amount, the effect thereon of any net operating loss carryforwards or other
carryforwards or tax attributes, such as alternative minimum tax carryforwards,
that would have arisen if such Person were a Delaware corporation shall be taken
into account. Notwithstanding anything to the contrary, Tax Amount shall not
include taxes resulting from such Person's reorganization or change in the
status as a corporation.
"TAX DISTRIBUTION" means a distribution in respect of members' income
tax liability in an amount not to exceed the Tax Amount.
"TAX RATE" means the combined federal, state and local tax rate
applicable to a Delaware corporation filing separate tax returns with respect to
its Taxable Income.
"TAXABLE INCOME" means, with respect to any Person for any period, the
taxable income or loss of such Person (or, with respect to a Tax Distribution,
the taxable income or loss of the Company allocated to such Person) for such
period for federal income tax purposes; PROVIDED, HOWEVER, that all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a)(1) of the Code shall be included in taxable income or loss;
PROVIDED, FURTHER, HOWEVER, that (i) any basis adjustment made in connection
with an election under Section 754 of the Code shall be disregarded and
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(ii) such taxable income shall be increased or such taxable loss shall be
decreased by the amount of any interest expense incurred by such Person that is
not treated as deductible for federal income tax purposes by a partner or member
of such Person.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-
77bbbb), as in effect on the date on which this Indenture is qualified under the
TIA.
"TRANSFER RESTRICTED SECURITIES" means securities that bear or are
required to bear the legend set forth in Section 2.06 hereof.
"TREASURY RATE" means the yield to maturity at the time of the
computation of United States Treasury securities with a constant maturity (as
compiled by and published in the most recent Federal Reserve Statistical Release
H.15(519), which has become publicly available at least two Business Days prior
to the date fixed for prepayment (or, if such Statistical Release is no longer
published, any publicly available source of similar market data) most nearly
equal to the then remaining average life of the series of First Mortgage Notes
for which a Make-Whole Premium is being calculated; PROVIDED, HOWEVER, that if
the average life of such note is not equal to the constant maturity of the
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury securities for which such yields are given, except that if the average
life of such First Mortgage Notes is less than one year, the weekly average
yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.
"TRUSTEE" means the party named as "Trustee" in the first paragraph of
this Indenture, until a successor replaces it in accordance with the applicable
provisions of this Indenture and, thereafter, means the successor serving
hereunder.
"UNRESTRICTED SUBSIDIARY" means (i) any Subsidiary, other than Finance
Corp., that is designated by the Company as an Unrestricted Subsidiary pursuant
to a resolution of the Management Committee, but only to the extent that such
Subsidiary: (a) has no Indebtedness other than Non-Recourse Debt; (b) is not
party to any agreement, contract, arrangement or understanding with the Company
or any Restricted Subsidiary of the Company unless the terms of any such
agreement, contract, arrangement or understanding are no less favorable to the
Company or such Restricted Subsidiary than those that might be obtained at the
time from Persons who are not Affiliates of the Company; (c) is a Person with
respect to which neither the Company nor any of its Restricted Subsidiaries has
any direct or indirect obligation (x) to subscribe for additional Equity
Interests or (y) to maintain or preserve such Person's financial condition or to
cause such Person to achieve any specified levels of operating results; (d) has
not guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries; (e) has
at least one director on its board of directors that is not a member of the
Management Committee or an executive officer of the Company or any of its
Restricted Subsidiaries and has at least one executive officer that is not a
member of the Management Committee or an executive officer of the Company or any
of its Restricted Subsidiaries; and (f) does not own any Collateral. Any such
designation by the Company shall be evidenced to the Trustee by filing with the
Trustee a certified copy of the resolution of the Management Committee giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by Section
4.07 hereof. If, at any time, any Unrestricted Subsidiary would fail to meet
the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter
cease to be an Unrestricted Subsidiary for purposes of this Indenture and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted
Subsidiary of the Company as of such date (and, if such
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Indebtedness is not permitted to be incurred as of such date under Section 4.09
hereof, the Company shall be in default of such covenant). The Company may at
any time designate any Unrestricted Subsidiary to be a Restricted Subsidiary;
PROVIDED that such designation shall be deemed to be an incurrence of
Indebtedness by a Restricted Subsidiary of the Company of any outstanding
Indebtedness of such Unrestricted Subsidiary and such designation shall only be
permitted if (i) such Indebtedness is permitted under Section 4.09 hereof, and
(ii) no Default or Event of Default would be in existence following such
designation.
"WASTE PAPER SUPPLY AGREEMENT" means the Waste Paper Supply Agreement,
by and between the Company and an Affiliate of the Company.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (i) the sum
of the products obtained by multiplying (a) the amount of each then remaining
installment, sinking fund, serial maturity or other required payments of
principal, including payment at final maturity, in respect thereof, by (b) the
number of years (calculated to the nearest one-twelfth) that will elapse between
such date and the making of such payment, by (ii) the then outstanding principal
amount of such Indebtedness.
"WHOLLY OWNED RESTRICTED SUBSIDIARY" of any Person means a Restricted
Subsidiary of such Person all of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly Owned Restricted
Subsidiaries of such Person and one or more Wholly Owned Restricted Subsidiaries
of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Defined in
Term Section
"AFFILIATE TRANSACTION". . . . . . . . . . . . . . 4.11
"BANK" . . . . . . . . . . . . . . . . . . . . . . 10.11
"BOX USA LEASE". . . . . . . . . . . . . . . . . . 4.11
"CHANGE OF CONTROL OFFER". . . . . . . . . . . . . 3.09
"CHANGE OF CONTROL PAYMENT". . . . . . . . . . . . 4.15
"CHANGE OF CONTROL PURCHASE NOTICE". . . . . . . . 3.07
"CHANGE OF CONTROL PURCHASE DATE". . . . . . . . . 3.09
"CHANGE OF CONTROL REDEMPTION" . . . . . . . . . . 3.07
"COVENANT DEFEASANCE". . . . . . . . . . . . . . . 8.03
"COVENANT DEFEASANCE". . . . . . . . . . . . . . . 8.03
"EVENT OF DEFAULT" . . . . . . . . . . . . . . . . 6.01
"EXCESS PROCEEDS". . . . . . . . . . . . . . . . . 4.10
"EXCESS PROCEEDS OFFER". . . . . . . . . . . . . . 3.09
"EXCESS PROCEEDS OFFER TRIGGERING EVENT" . . . . . 4.10
"INCUR". . . . . . . . . . . . . . . . . . . . . . 4.09
"LEGAL DEFEASANCE" . . . . . . . . . . . . . . . . 8.02
"MORTGAGE" . . . . . . . . . . . . . . . . . . . . 10.01
"OFFER AMOUNT" . . . . . . . . . . . . . . . . . . 3.09
"OFFER PERIOD" . . . . . . . . . . . . . . . . . . 3.09
"PAYING AGENT" . . . . . . . . . . . . . . . . . . 2.03
"PARTIAL COLLATERAL ASSET SALE". . . . . . . . . . 4.10
"PAYMENT DEFAULT". . . . . . . . . . . . . . . . . 6.01
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"PURCHASE DATE". . . . . . . . . . . . . . . . . . 3.09
"REGISTRAR". . . . . . . . . . . . . . . . . . . . 2.03
"REPURCHASE OFFER" . . . . . . . . . . . . . . . . 3.09
"RESTRICTED PAYMENTS". . . . . . . . . . . . . . . 4.07
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, such
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the First Mortgage Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a First Mortgage Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE" or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the First Mortgage Notes means the Issuers and any
successor obligor upon the First Mortgage Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the TIA
have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and in the plural
include the singular;
(5) provisions apply to successive events and transactions; and
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(6) references to sections of or rules under the Securities Act shall
be deemed to include substitute, replacement of successor sections or rules
adopted by the SEC from time to time.
ARTICLE 2
THE FIRST MORTGAGE NOTES
SECTION 2.01. FORM AND DATING.
The First Mortgage Notes and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A hereto. The
First Mortgage Notes may have notations, legends or endorsements required by
law, stock exchange rules or usage. Each First Mortgage Note shall be dated the
date of its authentication. The First Mortgage Notes shall be issued initially
in denominations of $1,000 and integral multiples thereof.
The terms and provisions contained in the First Mortgage Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Issuers and the Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound thereby.
First Mortgage Notes issued in global form shall be substantially in
the form of Exhibit A attached hereto (including the text referred to in
footnotes 1 and 2 thereto). First Mortgage Notes issued in definitive form
shall be substantially in the form of Exhibit A attached hereto (but without
including the text referred to in footnotes 1 and 2 thereto). Each Global Note
shall represent such of the outstanding First Mortgage Notes as shall be
specified therein and each shall provide that it shall represent the aggregate
principal amount of outstanding First Mortgage Notes from time to time endorsed
thereon and that the aggregate principal amount of outstanding First Mortgage
Notes represented thereby may from time to time be reduced or increased, as
appropriate, to reflect exchanges and redemptions. Any endorsement of a Global
Note to reflect the amount of any increase or decrease in the amount of
outstanding First Mortgage Notes represented thereby shall be made by the
Trustee or the Note Custodian, at the direction of the Trustee, in accordance
with instructions given by the Holder thereof as required by Section 2.06
hereof.
SECTION 2.02. EXECUTION AND AUTHENTICATION.
Two Officers of each of the Issuers shall sign the First Mortgage
Notes for the Issuers by manual or facsimile signature. The seals of each of
the Issuers shall be reproduced on the First Mortgage Notes and may be in
facsimile form.
If an Officer whose signature is on a First Mortgage Note no longer
holds that office at the time a First Mortgage Note is authenticated, the First
Mortgage Note shall nevertheless be valid.
A First Mortgage Note shall not be valid until authenticated by the
manual signature of the Trustee. The signature shall be conclusive evidence
that the First Mortgage Note has been authenticated under this Indenture. The
form of the Trustee's certificate of authentication to be borne by the First
Mortgage Notes shall be substantially as set forth in Exhibit A attached hereto.
The Trustee shall, upon a written order of both of the Issuers signed
by an Officer or Member of the Management Committee of each Issuer and delivered
to the Trustee, authenticate First Mortgage Notes for original issue up to the
aggregate principal amount stated in paragraph 4 of the First Mortgage
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Notes. The aggregate principal amount of First Mortgage Notes outstanding at
any time may not exceed such amount except as provided in Section 2.07 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate First Mortgage Notes. An authenticating agent may
authenticate First Mortgage Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Issuers or an Affiliate of the Issuers.
SECTION 2.03. REGISTRAR AND PAYING AGENT.
The Issuers shall maintain an office or agency where First Mortgage
Notes may be presented for registration of transfer or for exchange
("REGISTRAR") and an office or agency where First Mortgage Notes may be
presented for payment ("PAYING AGENT"). The Registrar shall keep a register of
the First Mortgage Notes, the names and addresses of the Holders and of their
transfer and exchange. The Issuers may appoint one or more co-registrars and
one or more additional paying agents. The term "Registrar" includes any
co-registrar and the term "Paying Agent" includes any additional paying agent.
The Issuers may change any Paying Agent or Registrar without notice to any
Holder. The Issuers shall notify the Trustee in writing of the name and address
of any Agent not a party to this Indenture. If the Issuers fail to appoint or
maintain another entity as Registrar or Paying Agent, the Trustee shall act as
such. The Company or any of its Subsidiaries may act as Paying Agent or
Registrar. The Issuers shall enter into an appropriate agency agreement with
any Agent not a party to this Indenture, which shall incorporate the provisions
of the TIA. Such agreement shall implement the provisions of this Indenture
that relate to such Agent. The Issuers shall notify the Trustee of the name and
address of such Agent. If the Issuers fail to maintain a Registrar or Paying
Agent, or fails to give the foregoing notice, the Trustee shall act as such, and
shall be entitled to appropriate compensation in accordance with Section 7.07
hereof.
The Issuers initially appoint The Depository Trust Company to act as
Depositary with respect to the Global Notes.
The Issuers initially appoint the Trustee to act as the Registrar and
Paying Agent and to act as Note Custodian with respect to the Global Notes.
SECTION 2.04. PAYING AGENT TO HOLD MONEY IN TRUST.
The Issuers shall require each Paying Agent other than the Trustee to
agree in writing that the Paying Agent will hold in trust for the benefit of
Holders or the Trustee all money held by the Paying Agent for the payment of
principal of, interest on, or Make-Whole Premiums, Liquidated Damages or any
other premiums, if any on the First Mortgage Notes, and such Paying Agent will
notify the Trustee of any default by the Issuers in making any such payment. At
any time during the continuance of any such default, the Trustee may require a
Paying Agent to pay all money held by it as Paying Agent to the Trustee and
account for any funds disbursed. The Issuers at any time may require a Paying
Agent to pay all money held by it as Paying Agent to the Trustee and account for
any funds disbursed. Upon payment over to the Trustee, the Paying Agent (if
other than the Company or a Subsidiary) shall have no further liability for the
money delivered to the Trustee. If the Company or a Subsidiary acts as Paying
Agent, it shall segregate and hold in a separate trust fund for the benefit of
the Holders all money held by it as Paying Agent. Upon any bankruptcy or
reorganization proceedings relating to either of the Issuers, the Trustee shall
serve as Paying Agent for the First Mortgage Notes.
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SECTION 2.05. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
all Holders and shall otherwise comply with TIA Section 312(a). If the Trustee
is not the Registrar, the Issuers shall furnish to the Trustee, at least seven
Business Days before each interest payment date and at such other times as the
Trustee may request in writing, a list in such form and as of such date as the
Trustee may reasonably require of the names and addresses of the Holders,
including the aggregate principal amount of First Mortgage Notes held by each
thereof, and the Issuers shall otherwise comply with TIA Section 312(a).
SECTION 2.06. TRANSFER AND EXCHANGE.
(a) TRANSFER AND EXCHANGE OF DEFINITIVE NOTES. When Definitive Notes
are presented by a Holder to the Registrar with a request:
(x) to register the transfer of the Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal
amount of Definitive Notes of other authorized
denominations,
the Registrar shall register the transfer or make the exchange as requested if
its requirements for such transactions are met; PROVIDED, HOWEVER, that the
Definitive Notes presented or surrendered for register of transfer or exchange:
(i) shall be duly endorsed or accompanied by a written
instruction of transfer in form satisfactory to the
Registrar duly executed by such Holder or by his
attorney-in-fact, duly authorized in writing; and
(ii) in the case of a Definitive Note that is a Transfer
Restricted Security, such request shall be
accompanied by the following additional information
and documents, as applicable:
(A) if such Transfer Restricted Security is being
delivered to the Registrar by a Holder for
registration in the name of such Holder, without
transfer, a certification to that effect from
such Holder (in substantially the form of
Exhibit B attached hereto); or
(B) if such Transfer Restricted Security is being
transferred (1) to a "qualified institutional
buyer" (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A
under the Securities Act, (2) pursuant to an
exemption from registration in accordance with
Rule 144 or Rule 904 under the Securities Act
(and based upon an Opinion of Counsel if the
Company so requests) or (3) pursuant to an
effective registration statement under the
Securities Act, a certification to that effect
from such Holder (in substantially the form of
Exhibit B attached hereto); or
(C) if such Transfer Restricted Security is being
transferred in reliance on another exemption
from the registration requirements of the
Securities Act, a certificate to that effect
from such Holder (in substantially the form of
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Exhibit B attached hereto) and an Opinion of
Counsel from such Holder or the transferee
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act.
(b) TRANSFER OF A DEFINITIVE NOTE FOR A BENEFICIAL INTEREST IN A
GLOBAL NOTE. A Definitive Note may not be exchanged for a beneficial interest
in a Global Note except upon satisfaction of the requirements set forth below.
Upon receipt by the Trustee of a Definitive Note, duly endorsed or accompanied
by appropriate instruments of transfer, in form satisfactory to the Trustee,
together with:
(i) if such Definitive Note is a Transfer Restricted Security,
a certification from the Holder thereof (in substantially
the form of Exhibit B attached hereto) to the effect that
such Definitive Note is being transferred by such Holder
either (x) to a "qualified institutional buyer" (as defined
in Rule 144A under the Securities Act) in accordance with
Rule 144A under the Securities Act or (y) based upon an
Opinion of Counsel from such Holder to the transferee
reasonably acceptable to the Issuers and to the Registrar,
pursuant to another exemption from the registration
requirements of the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer
Restricted Security, written instructions from the Holder
thereof directing the Trustee to make, or to direct the
Note Custodian to make, an endorsement on the Global Note
to reflect an increase in the aggregate principal amount of
the First Mortgage Notes represented by the Global Note,
in which case the Trustee shall cancel such Definitive Note in accordance with
Section 2.11 hereof and cause, or direct the Note Custodian to cause, in
accordance with the standing instructions and procedures existing between the
Depositary and the Note Custodian, the aggregate principal amount of First
Mortgage Notes represented by the Global Note to be increased accordingly. If
no Global Notes are then outstanding, the Issuers shall issue and, upon receipt
of an authentication order in accordance with Section 2.02 hereof, the Trustee
shall authenticate and deliver to the Note Custodian a new Global Note in the
appropriate aggregate principal amount.
(c) TRANSFER AND EXCHANGE OF GLOBAL NOTES. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture and the procedures of the
Depositary therefor, which shall include restrictions on transfer comparable to
those set forth herein to the extent required by the Securities Act.
(d) TRANSFER OF A BENEFICIAL INTEREST IN A GLOBAL NOTE FOR A
DEFINITIVE NOTE.
(i) Any Person having a beneficial interest in a Global Note
may upon request exchange such beneficial interest for a
Definitive Note. Upon receipt by the Trustee of written
instructions or such other form of instructions as is
customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial
interest in a Global Note, and, in the case of a Transfer
Restricted Security, the following additional information
and documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to
the Person designated by the Depositary as being the
beneficial owner, a certification to that effect from
such Person (in substantially the form of Exhibit B
attached hereto); or
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(B) if such beneficial interest is being transferred (1)
to a "qualified institutional buyer" (as defined in
Rule 144A under the Securities Act) in accordance
with Rule 144A under the Securities Act, (2) pursuant
to an exemption from registration in accordance with
Rule 144 or Rule 904 under the Securities Act (and
based on an Opinion of Counsel if the Company or the
Trustee so requests) or (3) pursuant to an effective
registration statement under the Securities Act, a
certification to that effect from the transferor (in
substantially the form of Exhibit B attached hereto);
or
(C) if such beneficial interest is being transferred in
reliance on another exemption from the registration
requirements of the Securities Act, a certification
to that effect from the transferor (in substantially
the form of Exhibit B attached hereto) and an Opinion
of Counsel from the transferee or transferor
reasonably acceptable to the Company and to the
Registrar to the effect that such transfer is in
compliance with the Securities Act,
in which case the Trustee or the Note Custodian, at the direction of the
Trustee, shall, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, cause the aggregate
principal amount of Global Notes to be reduced accordingly and, following such
reduction, the Issuers shall execute and, upon receipt of an authentication
order in accordance with Section 2.02 hereof, the Trustee shall authenticate and
deliver to the transferee a Definitive Note in the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial
interest in a Global Note pursuant to this Section 2.06(d)
shall be registered in such names and in such authorized
denominations as the Depositary, pursuant to instructions
from its direct or indirect participants or otherwise,
shall instruct the Trustee. The Trustee shall deliver such
Definitive Notes to the Persons in whose names such First
Mortgage Notes are so registered.
(e) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL NOTES.
Notwithstanding any other provision of this Indenture (other than the provisions
set forth in subsection (f) of this Section 2.06), a Global Note may not be
transferred as a whole except by the Depositary to a nominee of the Depositary
or by a nominee of the Depositary to the Depositary or another nominee of the
Depositary or by the Depositary or any such nominee to a successor Depositary or
a nominee of such successor Depositary.
(f) AUTHENTICATION OF DEFINITIVE NOTES IN ABSENCE OF DEPOSITARY. If
at any time:
(i) the Depositary for the First Mortgage Notes notifies the
Company that the Depositary is unwilling or unable to
continue as Depositary for the Global Notes and a successor
Depositary for the Global Notes is not appointed by the
Issuers within 90 days after delivery of such notice; or
(ii) the Issuers, at its sole discretion, elects to cause the
issuance of Definitive Notes under this Indenture,
then (1) the Company shall so notify the Trustee in writing, (2) the Trustee
shall cause the Note Custodian to deliver the Global Notes held by the
Depositary to the Trustee and upon receipt thereof shall cancel such Global
Notes and (3) the Issuers shall issue, and the Trustee shall, upon receipt of an
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authentication order in accordance with Section 2.02 hereof, authenticate and
deliver, Definitive Notes in an aggregate principal amount equal to the
principal amount of such Global Notes in exchange for such Global Notes.
(g) LEGENDS.
(i) Except as permitted by the following paragraphs (ii) and
(iii), each First Mortgage Note certificate evidencing
Global Notes and Definitive Notes (and all Notes issued in
exchange therefor or substitution thereof) shall bear
legends in substantially the following form:
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS
ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION
UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND THE SECURITY
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THE
SECURITY EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE
SELLER MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS
OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE ISSUERS THAT (A) SUCH
SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED,
ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (b) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE
SECURITIES ACT OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
(AND BASED UPON AN OPINION OF COUNSEL IF THE ISSUERS SO
REQUEST), (2) TO THE ISSUERS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE
OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN
(A) ABOVE."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by
a Global Note) pursuant to Rule 144 under the Securities
Act or pursuant to an effective registration statement
under the Securities Act:
(A) in the case of any Transfer Restricted Security that
is a Definitive Note, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted
Security for a Definitive Note that does not bear the
legend set forth in (i) above and rescind any
restriction on the transfer of such Transfer
Restricted Security; and
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(B) in the case of any Transfer Restricted Security
represented by a Global Note, such Transfer
Restricted Security shall not be required to bear the
legend set forth in (i) above, but shall continue to
be subject to the provisions of Section 2.06(c)
hereof; PROVIDED, HOWEVER, that with respect to any
request for an exchange of a Transfer Restricted
Security that is represented by a Global Note for a
Definitive Note that does not bear the legend set
forth in (i) above, which request is made in reliance
upon Rule 144, the Holder thereof shall certify in
writing to the Registrar that such request is being
made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit B attached
hereto).
(iii) Notwithstanding the foregoing, upon consummation of the
Exchange Offer, the Issuers shall issue and, upon receipt
of an authentication order in accordance with Section 2.02
hereof, the Trustee shall authenticate, Series B First
Mortgage Notes in exchange for Series A First Mortgage
Notes accepted for exchange in the Exchange Offer, which
Series B First Mortgage Notes shall not bear the legend set
forth in (i) above, and the Registrar shall rescind any
restriction on the transfer of such First Mortgage Notes,
in each case unless the Holder of such Series A First
Mortgage Notes is either (A) a broker-dealer who purchased
such Series A First Mortgage Notes directly from the
Issuers to resell pursuant to Rule 144A or any other
available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A First
Mortgage Notes or (C) a Person who is an affiliate (as
defined in Rule 144) of the Issuers.
(iv) The following legend will appear on the original
$165,000,000 First Mortgage Note issued hereunder:
THE FLORIDA DOCUMENTARY STAMP TAX HAS BEEN PAID AND THE
PROPER STAMPS HAVE BEEN AFFIXED TO THE MORTGAGE AS REFERRED
TO IN PARAGRAPH 4 HEREOF.
(v) With respect to all First Mortgage Notes issued subsequent
to the initial First Mortgage Note, such notes will bear
the following legend:
THIS FIRST MORTGAGE NOTE IS ISSUED PURSUANT TO THE
INDENTURE AND IS GIVEN PURSUANT TO FLA. STAT. Section
201.09, TO CONTINUE THE IDENTICAL CONTRACTUAL OBLIGATIONS
OF THE ORIGINAL FIRST MORTGAGE NOTE IN THE PRINCIPAL AMOUNT
OF $165,000,000 AND EVIDENCES A PORTION OF THE UNPAID
PRINCIPAL BALANCE OF THE ORIGINAL INDEBTEDNESS EVIDENCED BY
THE ORIGINAL FIRST MORTGAGE NOTE, NOT INCLUDING ANY
ACCUMULATED INTEREST THEREON AND WITHOUT ENLARGING IN ANY
WAY THE OBLIGATION OF THE MAKERS UNDER THE ORIGINAL FIRST
MORTGAGE NOTE. PROPER FLORIDA DOCUMENTARY STAMP TAXES WERE
AFFIXED TO THE MORTGAGE REFERRED TO IN PARAGRAPH 4 HEREOF.
THIS FIRST MORTGAGE NOTE IS ONE OF THE FIRST MORTGAGE NOTES
REFERRED TO IN SAID MORTGAGE AND IS SECURED THEREBY.
(h) CANCELLATION AND/OR ADJUSTMENT OF GLOBAL NOTES. At such time as
all beneficial interests in Global Notes have been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, all
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Global Notes shall be returned to or retained and cancelled by the Trustee in
accordance with Section 2.11 hereof. At any time prior to such cancellation, if
any beneficial interest in a Global Note is exchanged for Definitive Notes,
redeemed, repurchased or cancelled, the principal amount of First Mortgage Notes
represented by such Global Note shall be reduced accordingly and an endorsement
shall be made on such Global Note, by the Trustee or the Notes Custodian, at the
direction of the Trustee, to reflect such reduction.
(i) GENERAL PROVISIONS RELATING TO TRANSFERS AND EXCHANGES.
(i) To permit registrations of transfers and exchanges, the
Issuers shall execute and the Trustee shall authenticate
Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any
registration of transfer or exchange, but the Issuers may
require payment of a sum sufficient to cover any transfer
tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or similar
governmental charge payable upon exchange or transfer
pursuant to Sections 3.07, 4.10, 4.15 and 9.05 hereto).
(iii) Neither the Company nor the Registrar shall not be required
to register the transfer of or exchange any First Mortgage
Note selected for redemption in whole or in part, except
the unredeemed portion of any First Mortgage Note being
redeemed in part.
(iv) All Definitive Notes and Global Notes issued upon any
registration of transfer or exchange of Definitive Notes or
Global Notes shall be the valid obligations of the Issuers,
evidencing the same debt, and entitled to the same benefits
under this Indenture, as the Definitive Notes or Global
Notes surrendered upon such registration of transfer or
exchange.
(v) The Issuers shall not be required:
(A) to issue, to register the transfer of or to exchange
First Mortgage Notes during a period beginning at the
opening of business 15 days before the day of any
selection of First Mortgage Notes for redemption
under Section 3.02 hereof and ending at the close of
business on the day of selection; or
(B) to register the transfer of or to exchange any First
Mortgage Note so selected for redemption in whole or
in part, except the unredeemed portion of any First
Mortgage Note being redeemed in part; or
(C) to register the transfer of or to exchange a First
Mortgage Note between a record date and the next
succeeding interest payment date.
(vi) Prior to due presentment for the registration of a transfer
of any First Mortgage Note, the Trustee, any Agent and the
Issuers may deem and treat the Person in whose name any
First Mortgage Note is registered as the absolute owner of
such First Mortgage Note for the purpose of receiving
payment of principal of and
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interest on such First Mortgage Notes, and neither the
Trustee, any Agent nor the Issuers shall be affected by
notice to the contrary.
(vii) The Trustee shall authenticate Definitive Notes and Global
Notes in accordance with the provisions of Section 2.02
hereof.
SECTION 2.07. REPLACEMENT FIRST MORTGAGE NOTES.
If any mutilated First Mortgage Note is surrendered to the Trustee, or
the Issuers and the Trustee receives evidence to their satisfaction of the
destruction, loss or theft of any First Mortgage Note, the Issuers shall issue
and the Trustee, upon the written order of the Issuers signed by two Officers of
each of the Issuers, shall authenticate a replacement First Mortgage Note if the
Trustee's requirements are met. If required by the Trustee or the Issuers, an
indemnity bond must be supplied by the Holder that is sufficient in the judgment
of the Trustee and the Issuers to protect the Issuers, the Trustee, any Agent
and any authenticating agent from any loss that any of them may suffer if a
First Mortgage Note is replaced. The Issuers may charge for its expenses in
replacing a First Mortgage Note.
Every replacement First Mortgage Note is an additional obligation of
the Issuers and shall be entitled to all of the benefits of this Indenture
equally and proportionately with all other First Mortgage Notes duly issued
hereunder.
SECTION 2.08. OUTSTANDING FIRST MORTGAGE NOTES.
The First Mortgage Notes outstanding at any time are all the First
Mortgage Notes authenticated by the Trustee except for those cancelled by it,
those delivered to it for cancellation, those reductions in the interest in a
Global Note effected by the Trustee in accordance with the provisions hereof,
and those described in this Section as not outstanding. Except as set forth in
Section 2.09 hereof, a First Mortgage Note does not cease to be outstanding
because the Issuers or an Affiliate of the Issuers holds the First Mortgage
Note.
If a First Mortgage Note is replaced pursuant to Section 2.07 hereof,
it ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Note is held by a bona fide purchaser.
If the principal amount of any First Mortgage Note is considered paid
under Section 4.01 hereof, it ceases to be outstanding and interest on it ceases
to accrue.
If the Paying Agent (other than the Company, a Subsidiary or an
Affiliate of any thereof) holds, on a redemption date or maturity date, money
sufficient to pay First Mortgage Notes payable on that date, then on and after
that date such First Mortgage Notes shall be deemed to be no longer outstanding
and shall cease to accrue interest.
Upon a "legal defeasance" pursuant to Article 8 hereof, the First
Mortgage Notes shall be deemed to be outstanding to the extent provided in the
applicable section of Article 8 hereof.
SECTION 2.09. TREASURY NOTES.
In determining whether the Holders of the required principal amount of
First Mortgage Notes have concurred in any direction, waiver or consent, First
Mortgage Notes owned by the Company, or by any Affiliate of the Company, shall
be considered as though not outstanding, except that for the
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purposes of determining whether the Trustee shall be protected in relying on any
such direction, waiver or consent, only First Mortgage Notes that a Trustee
knows are so owned shall be so disregarded.
SECTION 2.10. TEMPORARY FIRST MORTGAGE NOTES.
Until definitive First Mortgage Notes are ready for delivery, the
Issuers may prepare and the Trustee shall authenticate temporary First Mortgage
Notes upon a written order of the Issuers signed by an Officer or Member of the
Management Committee of each of the Issuers. Temporary First Mortgage Notes
shall be substantially in the form of definitive First Mortgage Notes but may
have variations that the Issuers consider appropriate for temporary First
Mortgage Notes and as shall be reasonably acceptable to the Trustee. Without
unreasonable delay, the Issuers shall prepare, and the Trustee shall
authenticate definitive First Mortgage Notes in exchange for temporary First
Mortgage Notes. Until such exchange, Holders of temporary First Mortgage Notes
shall be entitled to all of the benefits of this Indenture.
SECTION 2.11. CANCELLATION.
The Issuers at any time may deliver First Mortgage Notes to the
Trustee for cancellation. The Registrar and Paying Agent shall forward to the
Trustee any First Mortgage Notes surrendered to them for registration of
transfer, exchange or payment. The Trustee and no one else shall cancel all
First Mortgage Notes surrendered for registration of transfer, exchange,
payment, replacement or cancellation and shall destroy cancelled First Mortgage
Notes (subject to the record retention requirements of the Exchange Act). The
Issuers may not issue new First Mortgage Notes to replace First Mortgage Notes
that they have paid or that have been delivered to the Trustee for cancellation.
SECTION 2.12. DEFAULTED INTEREST.
If the Issuers default in a payment of interest on the First Mortgage
Notes, they shall pay the defaulted interest specified in 4.01 in any lawful
manner plus, to the extent lawful, interest payable on the defaulted interest,
to the Persons who are Holders on a subsequent special record date, in each case
at the rate provided in the First Mortgage Notes and in Section 4.01 hereof.
The Issuers shall notify the Trustee in writing of the amount of defaulted
interest proposed to be paid on each First Mortgage Note and the date of the
proposed payment. The Issuers shall fix or cause to be fixed each such special
record date and payment date, PROVIDED that no such special record date shall be
less than 10 days prior to the related payment date for such defaulted interest.
At least 15 days before the special record date, the Issuers (or, upon the
written request of the Issuers, the Trustee in the name and at the expense of
the Issuers) shall mail or cause to be mailed to Holders a notice that states
the special record date, the related payment date and the amount of such
interest to be paid.
ARTICLE 3
REDEMPTION AND PREPAYMENT
SECTION 3.01. NOTICES TO TRUSTEE.
If the Issuers elect to redeem First Mortgage Notes pursuant to the
optional redemption provisions of Section 3.07 hereof, they shall furnish to the
Trustee, at least 30 days but not more than 60 days before a redemption date, an
Officers' Certificate setting forth (i) the clause of this Indenture pursuant to
which the redemption shall occur, (ii) the redemption date, (iii) the principal
amount of First Mortgage Notes to be redeemed and (iv) the redemption price.
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If the Issuers are required to make an offer to repurchase First
Mortgage Notes pursuant to the provisions of Section 3.09, 4.10 or 4.15 hereof,
they shall furnish to the Trustee at least 30 days but not more than 60 days
before a repurchase date, an Officers' Certificate setting forth (i) the Section
of this Indenture pursuant to which the repurchase shall occur, (ii) the
repurchase date, (iii) the maximum principal amount of First Mortgage Notes to
be repurchased, (iv) the repurchase price and (v) further setting forth a
statement to the effect that (a) an Excess Proceeds Offer Triggering Event has
occurred and the conditions set forth in Section 4.10 have been satisfied or (b)
a Change of Control has occurred and the conditions set forth in Section 4.15
have been satisfied.
SECTION 3.02. SELECTION OF FIRST MORTGAGE NOTES TO BE REDEEMED.
If less than all of the First Mortgage Notes are to be redeemed at any
time, selection of First Mortgage Notes for redemption will be made by the
Trustee in compliance with the requirements of the principal national securities
exchange, if any, on which the First Mortgage Notes are listed, or, if the First
Mortgage Notes are not so listed, on a PRO RATA basis, by lot or by such method
as the Trustee shall deem fair and appropriate; PROVIDED that no First Mortgage
Notes of $1,000 or less shall be redeemed in part; except that if all of the
First Mortgage Notes of a Holder are to be redeemed, the entire outstanding
amount of Notes held by such Holder, even if not a multiple of $1,000, shall be
redeemed. Notices of redemption shall be mailed by first class mail at least 30
but not more than 60 days before the redemption date to each Holder of First
Mortgage Notes to be redeemed at its registered address. If any First Mortgage
Note is to be redeemed in part only, the notice of redemption that relates to
such First Mortgage Note shall state the portion of the principal amount thereof
to be redeemed. A new First Mortgage Note in principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original First Mortgage Note. On and after the redemption
date, interest ceases to accrue on First Mortgage Notes or portions of them
called for redemption.
SECTION 3.03. NOTICE OF REDEMPTION.
At least 30 days but not more than 60 days before a redemption date,
the Issuers shall mail or cause to be mailed, by first class mail, a notice of
redemption to each Holder whose First Mortgage Notes are to be redeemed at its
registered address.
The notice shall identify the First Mortgage Notes to be redeemed and
shall state:
(a) the redemption date;
(b) the redemption price;
(c) if any First Mortgage Note is being redeemed in part, the portion
of the principal amount of such First Mortgage Note to be redeemed and
that, after the redemption date upon surrender of such First Mortgage Note,
a new First Mortgage Note or First Mortgage Notes in principal amount equal
to the unredeemed portion shall be issued upon cancellation of the original
First Mortgage Note;
(d) the name and address of the Paying Agent;
(e) that First Mortgage Notes called for redemption must be
surrendered to the Paying Agent to collect the redemption price;
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(f) that, unless the Issuers default in making such redemption
payment, interest on First Mortgage Notes or portions thereof called for
redemption ceases to accrue on and after the redemption date;
(g) the paragraph of the First Mortgage Notes and/or Section of this
Indenture pursuant to which the First Mortgage Notes called for redemption
are being redeemed; and
(h) that no representation is made as to the correctness or accuracy
of the CUSIP number, if any, listed in such notice or printed on the First
Mortgage Notes.
At the Issuers' request, the Trustee shall give the notice of
redemption in the Issuers' names and at their expense; PROVIDED, HOWEVER, that
the Issuers shall have delivered to the Trustee, at least 10 days prior to the
redemption date, an Officers' Certificate requesting that the Trustee give such
notice and that the text of such notice shall be prepared or approved by the
Company.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, First Mortgage Notes or portions thereof called for redemption become
irrevocably due and payable on the redemption date at the redemption price. A
notice of redemption may not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
By 10:00 am on the redemption date, the Company shall deposit with the
Trustee or with the Paying Agent money, in same-day funds, sufficient to pay the
redemption price of, accrued interest on and Make-Whole Premiums, Liquidated
Damages and any other premiums, if any, on all First Mortgage Notes to be
redeemed on that date. The Trustee or the Paying Agent shall promptly return to
the Issuers any money deposited with the Trustee or the Paying Agent by the
Issuers in excess of the amounts necessary to pay the redemption price of, and
accrued interest on, and Make-Whole Premiums, Liquidated Damages and any other
premiums, if any, on all First Mortgage Notes to be redeemed.
If the Issuers comply with the provisions of the preceding paragraph,
on and after the redemption date, whether or not such First Mortgage Notes are
presented for payment, interest shall cease to accrue on the First Mortgage
Notes or the portions of First Mortgage Notes called for redemption. If a First
Mortgage Note is redeemed on or after an interest record date but on or prior to
the related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such First Mortgage Note was registered at the
close of business on such record date. If any First Mortgage Note called for
redemption shall not be so paid upon surrender for redemption because of the
failure of the Issuers to comply with the preceding paragraph, interest shall be
paid on the unpaid principal, from the redemption date until such principal is
paid, and to the extent lawful on any interest not paid on such unpaid
principal, in each case at the rate provided in the First Mortgage Notes and in
Section 4.01 hereof.
SECTION 3.06. FIRST MORTGAGE NOTES REDEEMED IN PART.
Upon surrender of a First Mortgage Note that is redeemed in part, the
Issuers shall issue and, upon the Issuers's written request, the Trustee shall
authenticate for the Holder at the expense of the Issuers a new First Mortgage
Note equal in principal amount to the unredeemed portion of the First Mortgage
Note surrendered.
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SECTION 3.07. OPTIONAL REDEMPTION.
(a) Except as set forth in paragraphs (b) and (c) of this Section
3.07, the First Mortgage Notes will not be redeemable at the Issuers'
option prior to June 1, 2000. Thereafter, the First Mortgage Notes will be
subject to redemption at the option of the Issuers, in whole or in part,
upon not less than 30 nor more than 60 days' notice, at the redemption
prices (expressed as percentages of principal amount) set forth below plus
accrued and unpaid interest and Make-Whole Premiums, Liquidated Damages, or
any other premiums, if any, thereon to the applicable redemption date, if
redeemed during the twelve-month period beginning on June 1 of the years
indicated below:
YEAR PERCENTAGE
2000. . . . . . . . . . . . . . . . . . . . . . . . . . . . 106.375%
2001. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103.188%
2002 and thereafter . . . . . . . . . . . . . . . . . . . . 100.000%
(b) Notwithstanding the foregoing, at any time prior to June 1, 1999,
the Issuers may redeem up to one-third in aggregate principal amount of
First Mortgage Notes at a redemption price of 112.75% of the principal
amount thereof, in each case plus accrued and unpaid interest and Make-
Whole Premiums, Liquidated Damages or any other premiums, if any, thereon
to the redemption date, with the net proceeds of a public offering of
Capital Stock (other than Disqualified Stock) of the Company; PROVIDED that
at least two-thirds in aggregate principal amount of the First Mortgage
Notes originally issued under this Indenture remain outstanding immediately
after the occurrence of such redemption; and PROVIDED, further, that such
redemption shall occur within 60 days after the date of the closing of such
public offering of Capital Stock of the Company.
(c) Upon the occurrence of a Change of Control prior to June 1, 2000,
the Issuers, at their option, may redeem all, but not less than all, of the
outstanding First Mortgage Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium (a "CHANGE
OF CONTROL REDEMPTION"). The Issuers shall give not less than 30 and not
more than 60 days' notice (a "CHANGE OF CONTROL PURCHASE NOTICE") of such
redemption within ten days following a Change of Control. In the event
that the Issuers give such notice, the Issuers shall not be obligated to
make a Change of Control Offer as described under Section 4.15 hereof.
(d) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Section 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the Issuers
shall not be required to make mandatory redemption, repurchase or sinking fund
payments with respect to the First Mortgage Notes.
SECTION 3.09. REPURCHASE OFFERS.
In the event that the Issuers shall be required to commence an offer
to all Holders to repurchase First Mortgage Notes (a "REPURCHASE OFFER")
pursuant to Section 4.10 hereof (an "EXCESS PROCEEDS OFFER"), or pursuant to
Section 4.15 hereof (a "CHANGE OF CONTROL OFFER") the Issuers shall follow the
procedures specified below.
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An Repurchase Offer shall commence no later than ten Business Days
after a Change of Control (unless the Company is not required to make such offer
pursuant to Section 4.15(c) hereof) or an Excess Proceeds Offer Triggering
Event, as the case may be, and remain open for a period of 20 Business Days
following its commencement and no longer, except to the extent that a longer
period is required by applicable law (the "OFFER PERIOD"). No later than five
Business Days after the termination of the Offer Period (the "PURCHASE DATE"),
the Issuers shall purchase the principal amount of First Mortgage required to be
purchased pursuant to Section 4.10 hereof, in the case of an Excess Proceeds
Offer, or 4.15 hereof, in the case of a Change of Control Offer (the "OFFER
AMOUNT") or, if less than the Offer Amount has been tendered, all First Mortgage
Notes tendered in response to the Repurchase Offer. Payment for any First
Mortgage Notes so purchased shall be made in the same manner as interest
payments are made.
If the Purchase Date is on or after an interest record date and on or
before the related interest payment date, any accrued and unpaid interest shall
be paid to the Person in whose name a First Mortgage Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender First Mortgage Notes pursuant to the Repurchase
Offer.
Upon the commencement of a Repurchase Offer, the Company shall send,
by first class mail, a notice to the Trustee and each of the Holders, with a
copy to the Trustee. The notice shall contain all instructions and materials
necessary to enable such Holders to tender First Mortgage Notes pursuant to such
Repurchase Offer. The Repurchase Offer shall be made to all Holders. The
notice, which shall govern the terms of the Repurchase Offer, shall describe the
transaction or transactions that constitute the Change of Control (as defined
below) or Excess Proceeds Offer Triggering Event (as defined below), as the case
may be and shall state:
(a) that the Repurchase Offer is being made pursuant to this
Section 3.09 and Section 4.10 or 4.15 hereof, as the case may be, and the
length of time the Repurchase Offer shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any First Mortgage Note not tendered or accepted for
payment shall continue to accrete or accrue interest;
(d) that, unless the Issuers default in making such payment,
any First Mortgage Note accepted for payment pursuant to the Repurchase
Offer shall cease to accrete or accrue interest after the Purchase Date;
(e) that Holders electing to have a First Mortgage Note
purchased pursuant to a Repurchase Offer may only elect to have all or any
portion of such First Mortgage Note purchased;
(f) that Holders electing to have a First Mortgage Note
purchased pursuant to any Repurchase Offer shall be required to surrender
the First Mortgage Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the First Mortgage Note, or such other
customary documents of surrender and transfer as the Company may reasonably
request, duly completed, or transfer by book-entry transfer, to the
Issuers, the Depositary, or the Paying Agent at the address specified in
the notice at least three days before the Purchase Date;
(g) that Holders shall be entitled to withdraw their election
if the Issuers, the Depositary or the Paying Agent, as the case may be,
receives, not later than the expiration of the Offer Period, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal
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amount of the First Mortgage Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such First
Mortgage Note purchased;
(h) that, if the aggregate principal amount of First Mortgage
Notes surrendered by Holders exceeds the Offer Amount, the Issuers shall
select the First Mortgage Notes to be purchased on a PRO RATA basis (with
such adjustments as may be deemed appropriate by the Issuers so that only
First Mortgage Notes in denominations of $1,000, or integral multiples
thereof, shall be purchased); and
(i) that Holders whose First Mortgage Notes were purchased only
in part shall be issued new First Mortgage Notes equal in principal amount
to the unpurchased portion of the First Mortgage Notes surrendered (or
transferred by book-entry transfer).
On (or, at the Company's election, before) the Purchase Date, the
Issuers shall, to the extent lawful, accept for payment, on a PRO RATA basis to
the extent necessary, the Offer Amount of First Mortgage Notes or portions
thereof tendered pursuant to the Repurchase Offer, or if less than the Offer
Amount has been tendered, all First Mortgage Notes tendered, and shall deliver
to the Trustee an Officers' Certificate stating that such First Mortgage Notes
or portions thereof were accepted for payment by the Issuers in accordance with
the terms of this Section 3.09. The Issuers, the Depositary or the Paying
Agent, as the case may be, shall promptly (but in any case not later than five
days after the Purchase Date) mail or deliver to each tendering Holder an amount
equal to the purchase price of the First Mortgage Notes tendered by such Holder
and accepted by the Issuers for purchase, and the Issuers shall promptly issue a
new First Mortgage Note, and the Trustee, upon written request from the Issuers
shall authenticate and mail or deliver such new First Mortgage Note to such
Holder, in a principal amount equal to any unpurchased portion of the First
Mortgage Note surrendered. Any First Mortgage Note not so accepted shall be
promptly mailed or delivered by the Issuers to the Holder thereof. All First
Mortgage Notes or portions thereof purchased pursuant to the Repurchase Offer
will be cancelled by the Trustee. The Issuers shall publicly announce the
results of the Repurchase Offer on or as soon as practicable after the Purchase
Date, but in no case more than five Business Days after the Purchase Date.
Other than as specifically provided in this Section 3.09, any purchase
pursuant to this Section 3.09 shall be made pursuant to the provisions of
Sections 3.01 through 3.06 hereof.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF FIRST MORTGAGE NOTES.
The Issuers shall pay or cause to be paid the principal of, interest
on, Make-Whole Premiums and any other premiums, if any, on the First Mortgage
Notes on the dates and in the manner provided in the First Mortgage Notes.
Principal, premium, if any, and interest shall be considered paid on the
applicable date due if the Paying Agent, if other than the Company or a
Subsidiary thereof, holds as of 10:00 a.m. Eastern Time on the due date money
deposited by the Issuers in immediately available funds and designated for and
sufficient to pay all principal, premium, if any, and interest then due. The
Issuers shall pay all Liquidated Damages, if any, in the same manner on the
dates and in the amounts set forth in the Registration Rights Agreement.
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The Issuers shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal at the rate equal
to 2% per annum in excess of the then applicable interest rate on the First
Mortgage Notes to the extent lawful; it shall pay interest (including
post-petition interest in any proceeding under any Bankruptcy Law) on overdue
installments of interest and Make-Whole Premiums, Liquidated Damages or any
other premiums, if any, at the same rate to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Issuers shall maintain an office or agency (which may be an office
of the Trustee or an affiliate of the Trustee, Registrar or co-registrar) where
First Mortgage Notes may be surrendered for registration of transfer or for
exchange and where notices and demands to or upon the Issuers in respect of the
First Mortgage Notes and this Indenture may be served. The Issuers shall give
prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Issuers shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee.
The Issuers may also from time to time designate one or more other
offices or agencies where the First Mortgage Notes may be presented or
surrendered for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall in
any manner relieve the Issuers of its obligation to maintain an office or agency
for such purposes. The Issuers shall give prompt written notice to the Trustee
of any such designation or rescission and of any change in the location of any
such other office or agency.
The Issuers hereby designate the Corporate Trust Office of the Trustee
as one such office or agency of the Issuers in accordance with Section 2.03.
SECTION 4.03. REPORTS.
Whether or not required by the rules and regulations of the SEC, so
long as any First Mortgage Notes are outstanding, the Company shall furnish to
the Holders of First Mortgage Notes (i) all quarterly and annual financial
information that would be required to be contained in a filing with the SEC on
Forms 10-Q and 10-K if the Company were required to file such forms, including a
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" that describes the financial condition and results of operations of
the Company and its Restricted Subsidiaries and, with respect to the annual
information only, a report thereon by the Company's certified independent
accountants and (ii) all current reports that would be required to be filed with
the SEC on Form 8-K if the Company were required to file such reports. In
addition, if required by the rules and regulations of the SEC, the Company shall
file a copy of all such information and reports with the SEC for public
availability (unless the SEC will not accept such a filing) and make such
information available to securities analysts and prospective investors upon
request. In addition, the Company shall, for so long as any First Mortgage
Notes remain outstanding, furnish to the Holders and to securities analysts and
prospective investors, upon their request, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Securities Act. The Issuers
shall at all times comply with TIA Section 3.14(a).
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SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review of
the activities of the Company and its Subsidiaries during the preceding fiscal
year has been made under the supervision of the signing Officers with a view to
determining whether the Company has kept, observed, performed and fulfilled its
obligations under this Indenture and the Collateral Documents, and further
stating, as to each such Officer signing such certificate, whether to the best
of his or her knowledge the Company has kept, observed, performed and fulfilled
each and every covenant contained in this Indenture and the Collateral Documents
and whether any Default or Event of Default shall have occurred under this
Indenture or the Collateral Documents (and, if a Default or Event of Default
shall have occurred, describing all such Defaults or Events of Default of which
he or she may have knowledge and what action the Company is taking or proposes
to take with respect thereto) and that to the best of his or her knowledge no
event has occurred and remains in existence by reason of which payments on
account of the principal of or interest, Make-Whole Premiums, Liquidated Damages
and any other premiums if any, on the First Mortgage Notes is prohibited or if
such event has occurred, a description of the event and what action the Company
is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Certified Public Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied by a
written statement of the Company's independent public accountants (who shall be
a firm of established national reputation) that in making the examination
necessary for certification of such financial statements, nothing has come to
their attention that would lead them to believe that the Company has violated
any provisions of Article Four or Article Five hereof or, if any such violation
has occurred, specifying the nature and period of existence thereof, it being
understood that such accountants shall not be liable directly or indirectly to
any Person for any failure to obtain knowledge of any such violation.
(c) The Company shall, so long as any of the First Mortgage Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming aware
of any Default or Event of Default, an Officers' Certificate specifying such
Default or Event of Default and what action the Company is taking or proposes to
take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Subsidiaries to
pay, prior to delinquency, all material taxes, assessments, and governmental
levies except such as are contested in good faith and by appropriate
proceedings.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it shall not at any time insist upon, plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay, extension or usury law wherever
enacted, now or at any time hereafter in force, that may affect the covenants or
the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not, by resort to any such law, hinder, delay
or impede the execution of any power herein granted to the Trustee, but shall
suffer and permit the execution of every such power as though no such law has
been enacted.
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SECTION 4.07. RESTRICTED PAYMENTS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly: (i) declare or pay any dividend or make
any other payment or distribution on account of the Company's or any of its
Restricted Subsidiaries' Equity Interests (including, without limitation, any
payment in connection with any merger or consolidation involving the Company) or
to the direct or indirect holders of the Company's Equity Interests in their
capacity as such (other than dividends or distributions payable in Equity
Interests (other than Disqualified Stock) of the Company or dividends or
distributions payable to the Company or any Wholly Owned Restricted Subsidiary
of the Company); (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Company or any direct or indirect parent of the
Company or other Affiliate of the Company (other than any such Equity Interests
owned by the Company or any Wholly Owned Restricted Subsidiary of the Company);
(iii) make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Indebtedness that is subordinated to the First
Mortgage Notes, except at final maturity; (iv) make any payment of cash interest
on any subordinated debt permitting payment of interest with securities
subordinated to the First Mortgage Notes; (v) the payment of cash interest on,
or principal of, any Indebtedness incurred pursuant to clause (xiii) of the
second paragraph of Section 4.09 hereof; or (vi) make any Restricted Investment
(all such payments and other actions set forth in clauses (i) through (vi) above
being collectively referred to as "RESTRICTED PAYMENTS"), unless, at the time of
and after giving effect to such Restricted Payment:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof;
(b) the Company would, at the time of such Restricted Payment and
after giving pro forma effect thereto as if such Restricted Payment had
been made at the beginning of the applicable four-quarter period, have been
permitted to incur at least $1.00 of additional Indebtedness pursuant to
the Fixed Charge Coverage Ratio test set forth in the first paragraph
Section 4.09 hereof; and
(c) such Restricted Payment, together with the aggregate of all other
Restricted Payments made by the Company and its Restricted Subsidiaries
after the date of this Indenture (excluding Restricted Payments permitted
by clauses (2) - (5), but including Restricted Payments permitted by
clauses (1) and (6), of the next succeeding paragraph), is less than the
sum of (i) 50% of the Consolidated Net Income of the Company for the period
(taken as one accounting period) from the beginning of the first fiscal
quarter commencing after the date of this Indenture to the end of the
Company's most recently ended fiscal quarter for which internal financial
statements are available at the time of such Restricted Payment (or, if
such Consolidated Net Income for such period is a deficit, less 100% of
such deficit), plus (ii) 100% of the aggregate net cash proceeds received
by the Company from the issue or sale since the date of this Indenture of
Equity Interests of the Company or of debt securities of the Company that
have been converted into such Equity Interests (other than Equity Interests
(or convertible debt securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or debt securities that have been converted
into Disqualified Stock), plus (iii) to the extent that any Restricted
Investment that was made after the date of this Indenture is sold for cash
or otherwise liquidated or repaid for cash, the lesser of (A) the cash
return of capital with respect to such Restricted Investment (less the cost
of disposition, if any) and (B) the initial amount of such Restricted
Investment.
The foregoing provisions shall not prohibit: (1) the payment of any
dividend within 60 days after the date of declaration thereof, if at said date
of declaration such payment would have complied with
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the provisions of this Indenture; (2) the redemption, repurchase, retirement or
other acquisition of any Equity Interests of the Company in exchange for, or out
of the proceeds of, the substantially concurrent sale (other than to a
Subsidiary of the Company) of other Equity Interests of the Company (other than
any Disqualified Stock); PROVIDED that the amount of any such net cash proceeds
that are utilized for any such redemption, repurchase, retirement or other
acquisition shall be excluded from clause (c)(ii) of the preceding paragraph;
(3) the defeasance, redemption or repurchase of subordinated Indebtedness with
the net cash proceeds from an incurrence of Permitted Refinancing Indebtedness
or the substantially concurrent sale (other than to a Subsidiary of the Company)
of Equity Interests of the Company (other than Disqualified Stock); PROVIDED
that the amount of any such net cash proceeds that are utilized for any such
redemption, repurchase, retirement or other acquisition shall be excluded from
clause (c)(ii) of the preceding paragraph; (4) so long as the Company is a
limited liability company and no Default or Event of Default shall have occurred
and be continuing, distributions in respect of members' income tax liability in
an amount not to exceed the Tax Amount (each such distribution, a "TAX
DISTRIBUTION"); (5) the repayment of borrowings under the Liquidity Facility;
and (6) the repurchase, redemption or other acquisition or retirement for value
of any Equity Interests of the Company or any Restricted Subsidiary of the
Company held by any member of the Company's (or any of its Restricted
Subsidiaries') management pursuant to any management equity subscription
agreement or stock option agreement; PROVIDED that the aggregate price paid for
all such repurchased, redeemed, acquired or retired Equity Interests shall not
exceed $500,000 in any twelve-month period plus the aggregate cash proceeds
received by the Company during such twelve-month period from any reissuance of
Equity Interests by the Company to members of management of the Company and its
Restricted Subsidiaries; and no Default or Event of Default shall have occurred
and be continuing immediately after such transaction.
The Company may designate any Restricted Subsidiary, other than
Finance Corp., to be an Unrestricted Subsidiary if such designation would not
cause a Default. For purposes of making such determination, all outstanding
Investments by the Company and its Restricted Subsidiaries (except to the extent
repaid in cash) in the Subsidiary so designated will be deemed to be Restricted
Payments at the time of such designation and will reduce the amount available
for Restricted Payments under the first paragraph of this covenant. All such
outstanding Investments will be deemed to constitute Investments in an amount
equal to the greatest of (x) the net book value of such Investments at the time
of such designation, (y) the fair market value of such Investments at the time
of such designation and (z) the original fair market value of such Investments
at the time they were made. Such designation will only be permitted if such
Restricted Payment would be permitted at such time and if such Restricted
Subsidiary otherwise meets the definition of an Unrestricted Subsidiary.
The amount of all Restricted Payments (other than cash) shall be the
fair market value (evidenced by a resolution of the Management Committee set
forth in an Officers' Certificate delivered to the Trustee) on the date of the
Restricted Payment of the asset(s) proposed to be transferred by the Company or
such Restricted Subsidiary, as the case may be, pursuant to the Restricted
Payment. Not later than the date of making any Restricted Payment, the Company
shall deliver to the Trustee an Officers' Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by this Section 4.07 were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any encumbrance or restriction on the ability of any
Restricted Subsidiary to (i)(a) pay dividends or make any other distributions to
the
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Company or any of its Restricted Subsidiaries (1) on its Capital Stock or (2)
with respect to any other interest or participation in, or measured by, its
profits, or (b) pay any indebtedness owed to the Company or any of its
Restricted Subsidiaries, (ii) make loans or advances to the Company or any of
its Restricted Subsidiaries or (iii) transfer any of its properties or assets to
the Company or any of its Restricted Subsidiaries, except for such encumbrances
or restrictions existing under or by reason of (a) Existing Indebtedness as in
effect on the date of this Indenture, (b) this Indenture and the First Mortgage
Notes, (c) applicable law, (d) any instrument governing Indebtedness or Capital
Stock of a Person acquired by the Company or any of its Restricted Subsidiaries
as in effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any Person,
or the properties or assets of any Person, other than the Person, or the
property or assets of the Person, so acquired, PROVIDED that, in the case of
Indebtedness, such Indebtedness was permitted by the terms of this Indenture to
be incurred and, in any event, the Consolidated Cash Flow of such Person is not
taken into account in determining whether such acquisition was permitted by the
terms of this Indenture, (e) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent with past
practices, (f) purchase money obligations for property acquired in the ordinary
course of business that impose restrictions of the nature described in clause
(iii) above on the property so acquired, or (g) Permitted Refinancing
Indebtedness, PROVIDED that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive than
those contained in the agreements governing the Indebtedness being refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS AND ISSUANCE OF PREFERRED STOCK.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, issue, assume, guaranty or otherwise
become directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "INCUR") any Indebtedness (including Acquired Debt) and the
Company shall not issue any Disqualified Stock; PROVIDED, HOWEVER, that the
Company may incur Indebtedness (including Acquired Debt) or issue shares of
Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's most
recently ended four full fiscal quarters for which internal financial statements
are available immediately preceding the date on which such additional
Indebtedness is incurred or such Disqualified Stock is issued would have been at
least 2.5 to 1, determined on a pro forma basis (including a pro forma
application of the net proceeds therefrom), as if the additional Indebtedness
had been incurred, or the Disqualified Stock had been issued, as the case may
be, at the beginning of such four-quarter period.
The foregoing provisions will not apply to:
(i) the incurrence by the Company or its Restricted Subsidiaries of
Indebtedness in respect of the Liquidity Facility in an aggregate principal
amount at any time outstanding not to exceed $20.0 million;
(ii) the incurrence by the Company and its Restricted Subsidiaries
of the Existing Indebtedness;
(iii) the incurrence by the Company of Indebtedness represented by
the First Mortgage Notes;
(iv) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness represented by Capital Lease Obligations, mortgage
financings or purchase money obligations, in each case incurred for the purpose
of financing all or any part of the purchase price or cost of construction
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or improvement of property, plant or equipment used in the business of the
Company or such Restricted Subsidiary, in an aggregate principal amount not to
exceed $10.0 million at any time outstanding;
(v) the incurrence by the Company or any of its Restricted
Subsidiaries of Indebtedness in connection with the acquisition of assets or a
new Restricted Subsidiary; PROVIDED that such Indebtedness was incurred by the
prior owner of such assets or such Restricted Subsidiary prior to such
acquisition by the Company or one of its Restricted Subsidiaries and was not
incurred in connection with, or in contemplation of, such acquisition by the
Company or one of it Restricted Subsidiaries; and PROVIDED FURTHER that the
principal amount (or accreted value, as applicable) of such Indebtedness,
together with any other outstanding Indebtedness incurred pursuant to this
clause (v), does not exceed $10.0 million;
(vi) the incurrence by the Company or any of its Restricted
Subsidiaries of Permitted Refinancing Debt in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund,
Indebtedness that was permitted by this Indenture to be incurred;
(vii) the incurrence by the Company or any of its Restricted
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Wholly Owned Restricted Subsidiaries; PROVIDED, HOWEVER, that (1) if the
Company is the obligor on such Indebtedness, such Indebtedness is expressly
subordinate to the payment in full of all Obligations with respect to the First
Mortgage Notes and (2)(A) any subsequent issuance or transfer of Equity
Interests that results in any such Indebtedness being held by a Person other
than the Company or a Wholly Owned Restricted Subsidiary and (B) any sale or
other transfer of any such Indebtedness to a Person that is not either the
Company or a Wholly Owned Restricted Subsidiary shall be deemed, in each case,
to constitute an incurrence of such Indebtedness by the Company or such
Restricted Subsidiary, as the case may be;
(viii) the incurrence by the Company or any of its Restricted
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate risk with respect to any floating rate Indebtedness
that is permitted by the terms of this Indenture to be outstanding;
(ix) the incurrence by the Company's Unrestricted Subsidiaries of
Non-Recourse Debt, PROVIDED, HOWEVER, that if any such Indebtedness ceases to be
Non-Recourse Debt of an Unrestricted Subsidiary, such event shall be deemed to
constitute an incurrence of Indebtedness by a Restricted Subsidiary of the
Company;
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(x) Indebtedness incurred by the Company to finance the
construction of environmental-related capital projects of the Company or its
Restricted Subsidiaries, PROVIDED that the aggregate amount of Indebtedness
incurred pursuant to this clause (x) does not exceed $30.0 million;
(xi) the incurrence by the Company of Indebtedness represented by
the Seller Note;
(xii) Indebtedness of the Company in addition to that described in
clauses (i) through (xi) above so long as the aggregate principal amount of all
such Indebtedness incurred under this clause (xii) shall not exceed $20.0
million at any one time outstanding; and
(xiii) Indebtedness to Stone or Four M in an aggregate amount not to
exceed $25.0 million; PROVIDED that (a) such Indebtedness is subordinated in
right of payment to the Notes at least to the extent of the Indebtedness
pursuant to the Subordinated Credit Facility as in effect on the date of the
Indenture, (b) such Indebtedness contains no events of default or remedies other
than those contained in the Subordinated Credit Facility as in effect on the
date of this Indenture and (c) such Indebtedness has a Weighted Average Life to
Maturity greater than the Weighted Average Life to Maturity of the Notes.
SECTION 4.10. ASSET SALES AND EVENTS OF LOSS.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in an Asset Sale unless (a) the Company or the
applicable Restricted Subsidiary, as the case may be, receives consideration in
respect of and concurrently with such Asset Sale of an amount that is at least
equal to the fair market value of the relevant assets, as determined in good
faith by all of the Management Committee, and (b) 75% of such consideration is
in cash or Cash Equivalents. Within 270 days after the consummation of such
Asset Sale, the Company may apply, or may cause the applicable Restricted
Subsidiary to apply, all of the Net Proceeds therefrom, individually or in
combination, (i) to purchase or otherwise invest in additional assets or (ii) to
repay Indebtedness secured by such assets, PROVIDED that the lien securing such
Indebtedness was permitted to be incurred by this Indenture. Any such Net
Proceeds not so applied shall constitute "EXCESS PROCEEDS" and shall be applied
to make an Excess Proceeds Offer in accordance with the terms of this Section
4.10.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, engage in a Collateral Asset Sale unless (a) such Collateral
Asset Sale involves the Mill in its entirety, or involves Collateral with a fair
market value not exceeding $10.0 million on the date of consummation of the sale
thereof (a "PARTIAL COLLATERAL ASSET SALE"); (b) the Company receives
consideration in respect of and concurrently with such Collateral Asset Sale at
least equal to the fair market value of such Collateral; (c) with respect to
each such Collateral Asset Sale, the Company delivers an Officers' Certificate
to the Trustee dated no more than 30 days prior to the date of consummation of
the relevant Collateral Asset Sale, certifying that (i) such sale complies with
clauses (a) and (b) above, (ii) the fair market value of the Collateral being
sold was determined in good faith by the Management Committee (whose
determination was based on the opinion of a nationally recognized qualified
independent appraiser prepared contemporaneously with such Collateral Asset Sale
and which opinion will be evidenced by an opinion letter of the independent
appraiser and attached to the Officers' Certificate) as evidenced by copies of a
resolution of the Management Committee adopted in respect of and concurrently
with such Collateral Asset Sale; (d) in the case of a Partial Collateral Asset
Sale, the opinion letter of such independent appraiser pursuant to clause (c)
above states that, excluding the fair market value of the portion of the
Collateral being sold, the aggregate fair market value of the portion of such
Collateral not being sold will not be less than the aggregate fair market value
of such portion of such Collateral prior to sale of, and prior to the release of
the Lien of the Trustee, pursuant to the applicable security document, on the
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portion of the Mill; (e) 100% of such consideration is in cash or Cash
Equivalents; and (f) the Net Proceeds therefrom shall be paid directly by the
purchaser thereof to the Trustee, pursuant to the applicable security document,
as additional Collateral. The Net Proceeds of all Asset Sales shall promptly
and without commingling be deposited with the Trustee in the form received to be
held by the Trustee as Collateral in the Asset Sale Account established pursuant
to Section 10.11 hereof until applied as permitted pursuant to this paragraph.
In the case of a Partial Collateral Asset Sale, the Company, within 270 days
from the date of consummation of a Partial Collateral Asset Sale, may apply all
of the Net Proceeds therefrom to purchase or otherwise invest in Replacement
Collateral. Any such Net Proceeds not so applied shall constitute "Excess
Proceeds" and shall be applied to make an Excess Proceeds Offer in accordance
with the terms of the last paragraph of this covenant. In the case of a
Collateral Asset Sale other than a Partial Collateral Asset Sale, the Company
shall comply with Section 5.01 hereof and all of the Net Proceeds therefrom
shall constitute "Excess Proceeds" and shall be applied to make an Excess
Proceeds Offer in accordance with the terms of this Section 4.10.
If the Company suffers an Event of Loss, (a) the Net Proceeds
therefrom shall be paid directly by the party providing such Net Proceeds to the
Trustee, pursuant to the applicable Collateral Document as additional
Collateral, (b) such Net Proceeds shall promptly and without commingling be
deposited with the Trustee in the form received to be held by the Trustee as
Collateral in the Event of Loss Account established pursuant to Section 10.11
hereof until applied as permitted pursuant to this paragraph and (c) the Company
shall take such actions, at its sole expense, as may be required to ensure that
the Trustee, pursuant to the applicable Collateral Document, has from the date
of such deposit a first ranking Lien (subject to Permitted Liens) on such Net
Proceeds pursuant to the terms of the applicable Collateral Document. Within
270 days of receipt of the Net Proceeds from any such Event of Loss, the Company
may apply all the Net Proceeds received therefrom, together with all interest
earned thereon, individually or in combination, (i) to purchase or otherwise
invest in Replacement Collateral or (ii) to restore the relevant Collateral. In
the event that the Company elects to restore the relevant Collateral pursuant to
the foregoing clause (c)(ii), within six months of receipt of such Net Proceeds
from an Event of Loss, the Company shall (x) give the Trustee irrevocable
written notice of such election and (y) enter into a binding commitment to
restore such Collateral, a copy of which shall be supplied to the Trustee, and
shall have 24 months from the date of such binding commitment to complete such
restoration, which shall be carried out with due diligence. Any such Net
Proceeds not so applied shall constitute "Excess Proceeds" and shall be applied
to make an Excess Proceeds Offer in accordance with the terms of the last
paragraph of this covenant.
In the event that the Company decides pursuant to the third sentence
of the second paragraph of this covenant or clause (c)(i) of the preceding
paragraph to apply any portion of the Net Proceeds from a Collateral Asset Sale
or Event of Loss, respectively, to purchase or otherwise invest in Replacement
Collateral, (i) the Company shall deliver an Officers' Certificate to the
Trustee dated no more than 30 days prior to the date of consummation of the
relevant investment in Replacement Collateral, certifying that the purchase
price for the amount of the investment in Replacement Collateral does not exceed
the fair market value of such Replacement Collateral as determined in good faith
by the Management Committee (whose determination based on the opinion of a
qualified independent appraiser prepared contemporaneously with such
consummation of the purchase of or investment in the Replacement Collateral and
which opinion will be evidenced by an opinion letter of the independent
appraiser and attached to the Officers' Certificate), as evidenced by copies of
a resolution of the Management Committee adopted in respect of and concurrently
with the investment in such Replacement Collateral; and (ii) the Company shall
take such actions, at its sole expense, as shall be required to permit the
Trustee, pursuant to the applicable Collateral Document, to release such Net
Proceeds from the Lien of the applicable Collateral Document and to ensure that
the Trustee has, from the date of such purchase
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or investment, a first ranking Lien (subject to Permitted Liens on such
Collateral) on such Replacement Collateral under the applicable Collateral
Document.
When the aggregate amount of Excess Proceeds exceeds $5.0 million (an
"EXCESS PROCEEDS OFFER TRIGGERING EVENT"), the Company shall make an Excess
Proceeds Offer to all Holders of First Mortgage Notes to purchase the maximum
principal amount of First Mortgage Notes that may be purchased out of the Excess
Proceeds, at an offer price in cash in an amount equal to 101% of the principal
amount thereof plus accrued and unpaid interest and Make-Whole Premiums,
Liquidated Damages, or any other premiums, if any, thereon to the date of
purchase, in accordance with the procedures set forth in Section 3.09 hereof and
this Section 4.10. To the extent that the aggregate amount of First Mortgage
Notes tendered pursuant to an Excess Proceeds Offer is less than the Excess
Proceeds, the Company may use any remaining Excess Proceeds for general
corporate purposes. If the aggregate principal amount of First Mortgage Notes
surrendered by Holders thereof exceeds the amount of Excess Proceeds, the
Trustee shall select the First Mortgage Notes to be purchased on a PRO RATA
basis. Upon completion of such offer to purchase, the amount of Excess Proceeds
shall be reset at zero. The Trustee shall continue to have and the Company
shall grant to the Trustee, on behalf of the Holders, a first priority Lien on
any properties or assets acquired with the Net Proceeds of any such Asset Sale
or Event of Loss on the terms set forth in this Indenture and the Collateral
Documents.
SECTION 4.11. TRANSACTIONS WITH AFFILIATES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of its properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless (i) such
Affiliate Transaction is on terms that are no less favorable to the Company or
the relevant Restricted Subsidiary than those that would have been obtained in a
comparable transaction by the Company or such Restricted Subsidiary with an
unrelated Person and (ii) the Company delivers to the Trustee (a) with respect
to any Affiliate Transaction or series of related Affiliate Transactions
involving aggregate consideration in excess of $1.0 million, a resolution of the
Management Committee set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by the unanimous vote of the Management Committee
and (b) with respect to any Affiliate Transaction or series of related Affiliate
Transactions involving aggregate consideration in excess of $5.0 million, an
opinion as to the fairness to the Holders of such Affiliate Transaction from a
financial point of view issued by an investment banking firm of national
standing with total assets in excess of $1.0 billion; PROVIDED that (1) any
employment agreement entered into by the Company or any of its Restricted
Subsidiaries in the ordinary course of business and consistent with the past
practice of the Company or such Restricted Subsidiary, (2) transactions between
or among the Company and/or its Restricted Subsidiaries, (3) transactions
pursuant to the Output Purchase Agreement, the Stone Procurement Agreement, the
Liquidity Facility and the Indemnification Reimbursement Agreement, in each case
as in effect on the date of this Indenture, and the Waste Paper Supply Agreement
to be entered into subsequent to the date of this Indenture, (4) the lease by
Box USA Group, Inc., a New York corporation, of the corrugator facility owned by
the Company (the "BOX USA LEASE") and (5) Restricted Payments and Permitted
Investments that are permitted by the provisions of Section 4.07 hereof, in each
case, shall not be deemed Affiliate Transactions.
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SECTION 4.12. LIENS.
The Company shall not, and shall not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume or suffer to exist any Lien on
any asset now owned or hereafter acquired, or any income or profits therefrom or
assign or convey any right to receive income therefrom, except Permitted Liens.
SECTION 4.13. LINE OF BUSINESS.
The Company shall not, and shall not permit any Subsidiary to, engage
in any business other than the paper manufacturing business and such business
activities as are incidental or related thereto.
SECTION 4.14. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to be done
all things necessary to preserve and keep in full force and effect (i) its
existence as a limited liability company and the corporate, partnership or other
existence of each of its Subsidiaries, in accordance with the respective
organizational documents (as the same may be amended from time to time) of the
Company or any such Subsidiary and (ii) the rights (charter and statutory),
licenses and franchises of the Company and its Subsidiaries; PROVIDED, HOWEVER,
that the Company shall not be required to preserve any such right, license or
franchise, or the corporate, partnership or other existence of any of its
Subsidiaries, if the Management Committee shall determine that the preservation
thereof is no longer desirable in the conduct of the business of the Company and
its Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the First Mortgage Notes.
SECTION 4.15. OFFER TO REPURCHASE UPON CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, unless the Issuers
shall have delivered a Change of Control Purchase Notice as described in Section
3.07 hereof, each Holder of First Mortgage Notes shall have the right to require
the Issuers to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's First Mortgage Notes pursuant to a Change of
Control Offer in accordance with Section 3.09 hereof, at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest and Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, thereon to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). The
Issuers shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the First
Mortgage Notes as a result of a Change of Control.
(b) On the Purchase Date related to any Change of Control (a "CHANGE
OF CONTROL PAYMENT DATE"), the Issuers shall, to the extent lawful, (1) accept
for payment all First Mortgage Notes or portions thereof properly tendered
pursuant to the Change of Control Offer, (2) deposit with the Paying Agent an
amount equal to the Change of Control Payment in respect of all First Mortgage
Notes or portions thereof so tendered and (3) deliver or cause to be delivered
to the Trustee the First Mortgage Notes so accepted together with an Officers'
Certificate stating the aggregate principal amount of First Mortgage Notes or
portions thereof being purchased by the Issuers. The Paying Agent will promptly
mail to each Holder of First Mortgage Notes so tendered the Change of Control
Payment for such First Mortgage Notes, and the Trustee will promptly
authenticate and mail (or cause to be transferred by book entry) to each Holder
a new First Mortgage Note equal in principal amount to any unpurchased portion
of the First Mortgage
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Notes surrendered, if any; PROVIDED that each such new First Mortgage Note will
be in a principal amount of $1,000 or an integral multiple thereof.
The Issuers shall not be required to make a Change of Control Offer
upon a Change of Control if a third party makes the Change of Control Offer in
the manner, at the times and otherwise in compliance with the requirements set
forth in this Section 4.15 and purchases all First Mortgage Notes validly
tendered and not withdrawn under such Change of Control Offer.
SECTION 4.16. ISSUANCES AND SALES OF CAPITAL STOCK OF WHOLLY OWNED RESTRICTED
SUBSIDIARIES
The Company (i) shall not, and shall not permit any of its Wholly
Owned Restricted Subsidiaries to, transfer, convey, sell, lease or otherwise
dispose of any Capital Stock of any Wholly Owned Restricted Subsidiary of the
Company to any Person (other than the Company or another Wholly Owned Restricted
Subsidiary), unless such transfer, conveyance, sale, lease or other disposition
(a) is of all the Capital Stock of such Wholly Owned Restricted Subsidiary and
(b) complies with the covenant described in Section 4.10 hereof and (ii) shall
not permit any Wholly Owned Restricted Subsidiary of the Company to issue any of
its Equity Interests (other than, if required by law, shares of Capital Stock
constituting directors' qualifying shares of a Subsidiary that is organized
outside of the United States) to any Person other than to the Company or a
Wholly Owned Restricted Subsidiary of the Company.
SECTION 4.17. SUBSIDIARY GUARANTIES
If the Company or any of its Subsidiaries shall acquire or create a
Subsidiary after the date of this Indenture, then (i) such newly acquired or
created Subsidiary shall (A) if no such agreements shall have been executed by
any other Subsidiary, execute a Subsidiary Guaranty, a Contribution Agreement
and a Subsidiary Security Agreement in substantially the forms of Exhibits E and
G, respectively, or (B) if another Subsidiary has already executed such
agreements, become a party to each such agreement pursuant to the terms thereof
and (ii) the Person who acquired or created such subsidiary shall execute and
deliver a Pledge Agreement or a Subsidiary Pledge Agreement, in substantially
the forms of Exhibits J and F, respectively, as applicable, unless such Person
shall have already executed a Pledge Agreement or Subsidiary Pledge Agreement.
Notwithstanding the foregoing, this covenant shall not apply to all Subsidiaries
that have been properly designated as Unrestricted Subsidiaries in accordance
with this Indenture for so long as they continue to constitute Unrestricted
Subsidiaries.
SECTION 4.18. RESTRICTIONS ON ACTIVITIES OF FINANCE CORP.
In addition to the other restrictions set forth in this Indenture,
Finance Corp. shall not hold any material assets, become liable for any material
obligations or engage in any significant business activities; PROVIDED that
Finance Corp. may be a co-obligor with respect to Indebtedness if the Company is
a primary obligor of such Indebtedness and the net proceeds of such Indebtedness
are retained by the Company or loaned to one or more of the Company's Restricted
Subsidiaries other than Finance Corp.
SECTION 4.19. MAINTENANCE OF LIQUIDITY FACILITY
The Company shall maintain the Liquidity Facility in existence at all
times and shall enforce its rights thereunder.
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SECTION 4.20. PAYMENTS FOR CONSENT
Neither the Company nor any of its Subsidiaries shall, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any First Mortgage Notes for or as
an inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the First Mortgage Notes unless such
consideration is offered to be paid or is paid to all Holders of the First
Mortgage Notes that consent, waive or agree to amend in the time frame set forth
in the solicitation documents relating to such consent, waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
The Company may not consolidate or merge with or into (whether or not
the Company is the surviving entity), or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its properties or assets in
one or more related transactions, to another corporation, Person or entity
unless: (i) the Company is the survivor or the entity or the Person formed by or
surviving any such consolidation or merger (if other than the Company) or to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made is a corporation or limited liability company organized or
existing under the laws of the United States, any state thereof or the District
of Columbia; (ii) the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company) or the entity or Person to
which such sale, assignment, transfer, lease, conveyance or other disposition
shall have been made assumes all the obligations of the Company under the First
Mortgage Notes and this Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after such transaction
no Default or Event of Default exists; and (iv) except in the case of a merger
of the Company with or into a Wholly Owned Restricted Subsidiary of the Company,
the Company or the entity or Person formed by or surviving any such
consolidation or merger (if other than the Company), or to which such sale,
assignment, transfer, lease, conveyance or other disposition shall have been
made (A) will have Consolidated Net Worth immediately after the transaction
equal to or greater than the Consolidated Net Worth of the Company immediately
preceding the transaction and (B) will, at the time of such transaction and
after giving pro forma effect thereto as if such transaction had occurred at the
beginning of the applicable four-quarter period, be permitted to incur at least
$1.00 of additional Indebtedness pursuant to the Fixed Charge Coverage Ratio
test set forth in the first paragraph of Section 4.09 hereof. For purposes of
this Indenture, a sale by the Company of the Mill, or substantially all the
assets of the Mill, shall be deemed to be a sale of substantially all of the
assets of the Company.
Notwithstanding the foregoing, the Company is permitted to reorganize as a
corporation in accordance with the procedures established in this Indenture,
PROVIDED that the Company shall have delivered to the Trustee an opinion of
counsel in the United States reasonably acceptable to the Trustee confirming
that such reorganization is not adverse to Holders of First Mortgage Notes (it
being recognized that such reorganization shall not be deemed materially adverse
to the holders of First Mortgage Notes solely because (i) of the accrual of
deferred tax liabilities resulting from such reorganization or (ii) the
successor or surviving corporation (A) is subject to income tax as a corporate
entity or (B) is considered to be an "includible corporation" of an affiliated
group of corporations within
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the meaning of Section 1504(a) of the Code or any similar state or local law)
and certain other conditions are satisfied.
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation or merger, or any sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of the assets
of either Issuer in accordance with Section 5.01 hereof, the successor
corporation formed by such consolidation or into or with which such Issuer is
merged or to which such sale, assignment, transfer, lease, conveyance or other
disposition is made shall succeed to, and be substituted for (so that from and
after the date of such consolidation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to such Issuer shall
refer instead to the successor corporation and not to such Issuer), and may
exercise every right and power of such Issuer under this Indenture with the same
effect as if such successor Person had been named as such Issuer herein;
PROVIDED, HOWEVER, that the predecessor shall not be relieved from the
obligation to pay the principal of and interest on the First Mortgage Notes
except in the case of a sale of all of the predecessor's assets that meets the
requirements of Section 5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "EVENT OF DEFAULT":
(a) default for 30 days in the payment when due of interest on,
or Liquidated Damages, if any, with respect to, the First Mortgage
Notes;
(b) default in payment when due of the principal of, Make-Whole
Premiums, or other premiums, if any, on the First Mortgage Notes;
(c) failure by the Company to comply with the provisions
described in Section 4.07, 4.09, 4.10, 4.15 and 4.19;
(d) failure by the Company for 30 days after notice to comply
with any of its other agreements in this Indenture or the First
Mortgage Notes;
(e) default by any party under the Output Purchase Agreement or
the Subordinated Credit Agreement, which default remains uncured for
30 days;
(f) default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or
evidenced any Indebtedness for money borrowed by the Company or any of
its Restricted Subsidiaries (or the payment of which is guaranteed by
the Company or any of its Restricted Subsidiaries) whether such
Indebtedness or guarantee now exists, or is created after the date of
this Indenture, which default (1) is caused by a failure to pay
principal of or premium, if any, or interest on such Indebtedness
prior to the expiration of the grace period provided in such
Indebtedness on the date of such default (a "PAYMENT DEFAULT") or
(2) results in the acceleration of such Indebtedness prior to its
express maturity and, in each case, the outstanding principal amount
of any such Indebtedness, together with the
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outstanding principal amount of any other such Indebtedness under
which there has been a Payment Default or the maturity of which has
been so accelerated, aggregates $5.0 million or more;
(g) failure by the Company or any of its Restricted Subsidiaries
to pay final judgments aggregating in excess of $5.0 million, which
judgments are not paid, discharged or stayed for a period of 60 days;
(h) breach by the Company or any Subsidiary of any material
representation or warranty set forth in any Collateral Document, or
default by the Company or any Subsidiary in the performance of any
covenant set forth in any Collateral Document (after giving effect to
any applicable grace or cure periods), or repudiation by the Company
or any Subsidiary of its obligations under any Collateral Document,
any Collateral Document sahll be held in any judicial proceeding to be
unenforceable or invalid or any Collateral Document shall cease for
any reason to be in full force and effect;
(i) except as permitted by this Indenture, any Subsidiary
Guarantee shall be held in any judicial proceeding to be unenforceable
or invalid or shall cease for any reason to be in full force and
effect or any Guarantor, or any Person acting on behalf of any
Guarantor, shall deny or disaffirm its obligations under its
Subsidiary Guarantee; and
(j) the Company or any of its Significant Subsidiaries or any
group of Subsidiaries that, taken as a whole, would constitute a
Significant Subsidiary pursuant to or within the meaning of Bankruptcy
Law:
(i) commences a voluntary case,
(ii) consents to the entry of an order for relief against
it in an involuntary case,
(iii) consents to the appointment of a custodian of it or
for all or substantially all of its property,
(iv) makes a general assignment for the benefit of its
creditors, or
(v) generally is not paying its debts as they become due;
or
(k) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that:
(i) is for relief against the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary in an
involuntary case;
(ii) appoints a custodian of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary or for all
or substantially all of the property of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary; or
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(iii) orders the liquidation of the Company or any of its
Significant Subsidiaries or any group of Subsidiaries that, taken
as a whole, would constitute a Significant Subsidiary;
and the order or decree remains unstayed and in effect for 60
consecutive days.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (j) or (k) of Section 6.01 hereof) occurs and is continuing, the Trustee
or the Holders of at least 25% in principal amount of the then outstanding First
Mortgage Notes may declare all the First Mortgage Notes to be due and payable
immediately. Notwithstanding the foregoing, if an Event of Default specified in
clause (j) or (k) of Section 6.01 hereof occurs, all outstanding First Mortgage
Notes shall be due and payable immediately without further action or notice.
Holders of the First Mortgage Notes may not enforce this Indenture or the First
Mortgage Notes except as provided in this Indenture. The Holders of a majority
in aggregate principal amount of the then outstanding First Mortgage Notes by
written notice to the Trustee may on behalf of all of the Holders rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal, interest or premium that has become due solely because of the
acceleration) have been cured or waived. The Trustee may withhold from Holders
notice of any continuing Default or Event of Default (except a Default or Event
of Default relating to the payment of principal, interest or Liquidated Damages,
if any) if it determines that withholding notice is in their interest.
In the case of any Event of Default occurring by reason of any willful
action (or inaction) taken (or not taken) by or on behalf of the Company with
the intention of avoiding payment of the premium that the Company would have had
to pay if the Company then had elected to redeem the First Mortgage Notes
pursuant to the optional redemption provisions of this Indenture, an equivalent
premium shall also become and be immediately due and payable to the extent
permitted by law upon the acceleration of the First Mortgage Notes. If an Event
of Default occurs prior to June 1, 2000 by reason of any willful action (or
inaction) taken (or not taken) by or on behalf of the Company with the intention
of avoiding the prohibition on redemption of the First Mortgage Notes prior to
such date, then, upon acceleration of the First Mortgage Notes, an additional
premium shall also become and be immediately due and payable in an amount, for
each of the years beginning on June 1 of the years set forth below, as set forth
below (expressed as a percentage of the Accreted Value to the date of payment
that would otherwise be due but for the provisions of this sentence):
YEAR PERCENTAGE
1996. . . . . . . . . . . . . . . . 119.125%
1997. . . . . . . . . . . . . . . . 115.938%
1998. . . . . . . . . . . . . . . . 112.750%
1999. . . . . . . . . . . . . . . . 109.563%
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal of, interest on,
Make-Whole Premiums, Liquidated Damages or any other premiums, if any, on the
First Mortgage Notes or to enforce the performance of any provision of the First
Mortgage Notes, this Indenture or any Collateral Document.
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The Trustee may maintain a proceeding even if it does not possess any
of the First Mortgage Notes or does not produce any of them in the proceeding.
A delay or omission by the Trustee or any Holder of a First Mortgage Note in
exercising any right or remedy accruing upon an Event of Default shall not
impair the right or remedy or constitute a waiver of or acquiescence in the
Event of Default. All remedies are cumulative to the extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal amount of
the then outstanding First Mortgage Notes by notice to the Trustee (and without
notice to any other Holders) may on behalf of the Holders of all of the First
Mortgage Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in the
payment of the principal of, Make-Whole Premiums, Liquidated Damages, or any
other premiums, if any, or interest on, the First Mortgage Notes (including in
connection with an offer to purchase) (PROVIDED, HOWEVER, that the Holders of a
majority in aggregate principal amount of the then outstanding First Mortgage
Notes may rescind an acceleration and its consequences, including any related
payment default that resulted from such acceleration). Upon any such waiver,
such Default shall cease to exist, and any Event of Default arising therefrom
shall be deemed to have been cured for every purpose of this Indenture; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount of the then outstanding
First Mortgage Notes may direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee or exercising any
trust or power conferred on it. However, the Trustee may refuse to follow any
direction that conflicts with law or this Indenture that the Trustee determines
may be unduly prejudicial to the rights of other Holders of First Mortgage Notes
or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a First Mortgage Note may pursue a remedy with respect to
this Indenture or the First Mortgage Notes only if:
(a) the Holder of a First Mortgage Note gives to the Trustee written
notice of a continuing Event of Default;
(b) the Holders of at least 25% in principal amount of the then
outstanding First Mortgage Notes make a written request to the Trustee to
pursue the remedy;
(c) such Holder of a First Mortgage Note or Holders of First Mortgage
Notes offer and, if requested, provide to the Trustee indemnity
satisfactory to the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days after
receipt of the request and the offer and, if requested, the provision of
indemnity; and
(e) during such 60-day period the Holders of a majority in principal
amount of the then outstanding First Mortgage Notes do not give the Trustee
a direction inconsistent with the request.
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A Holder of a First Mortgage Note may not use this Indenture to prejudice the
rights of another Holder of a First Mortgage Note or to obtain a preference or
priority over another Holder of a First Mortgage Note.
SECTION 6.07. RIGHTS OF HOLDERS OF FIRST MORTGAGE NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, but subject to
the provisions of Sections 6.04 and 6.06, the right of any Holder of a First
Mortgage Note to receive payment of principal, premium and Make-Whole Premiums,
Liquidated Damages or any other premiums, if any, and interest on the First
Mortgage Note, on or after the respective due dates expressed in the First
Mortgage Note (including in connection with an offer to purchase), or to bring
suit for the enforcement of any such payment on or after such respective dates,
shall not be impaired or affected without the consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(a) or (b) occurs and
is continuing, the Trustee is authorized to recover judgment in its own name and
as trustee of an express trust against the Issuers for the whole amount of
principal of, Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, and interest remaining unpaid on the First Mortgage Notes and interest on
overdue principal and, to the extent lawful, interest and such further amount as
shall be sufficient to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized (a) to file proofs of claim for the whole
amount of the principal of, Make-Whole Premium, if any and Liquidated Damages,
if any, and interest on the First Mortgage Notes and to file such proof of claim
and other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
the Holders of the First Mortgage Notes allowed in such judicial proceedings and
(b) to collect, receive and distribute any money or other property payable or
deliverable on any such claims and any custodian in any such judicial proceeding
is hereby authorized by each Holder to make such payments to the Trustee, and in
the event that the Trustee shall consent to the making of such payments directly
to the Holders, to pay to the Trustee any amount due to it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section 7.07 hereof.
To the extent that the payment of any such compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts due
the Trustee under Section 7.07 hereof out of the estate in any such proceeding,
shall be denied for any reason, payment of the same shall be secured by a Lien
on, and shall be paid out of, any and all distributions, dividends, money,
securities and other properties that the Holders may be entitled to receive in
such proceeding whether in liquidation or under any plan of reorganization or
arrangement or otherwise, prior to any payment to such Holder. Nothing herein
contained shall be deemed to authorize the Trustee to authorize or consent to or
accept or adopt on behalf of any Holder any plan of reorganization, arrangement,
adjustment or composition affecting the First Mortgage Notes or the rights of
any Holder, or to authorize the Trustee to vote in respect of the claim of any
Holder in any such proceeding.
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SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article Six, it
shall pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts due under
Section 7.07 hereof, including payment of all compensation, expense and
liabilities incurred, and all advances made, by the Trustee and the costs and
expenses of collection;
SECOND: to Holders of First Mortgage Notes for amounts due and unpaid
on the First Mortgage Notes for principal, Make-Whole Premiums, Liquidated
Damages, or any other premiums, if any, and interest, ratably, without
preference or priority of any kind, according to the amounts due and payable on
the First Mortgage Notes for principal, Make-Whole Premiums, Liquidated Damages
or any other premiums, if any and interest, respectively; and
THIRD: to the Issuers or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any payment to
Holders of First Mortgage Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as a Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in the suit, having due regard to
the merits and good faith of the claims or defenses made by the party litigant.
This Section 6.11 does not apply to a suit by the Trustee, a suit by a Holder of
a First Mortgage Note pursuant to Section 6.07 hereof, or a suit by Holders of
more than 10% in principal amount of the then outstanding First Mortgage Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture and the Collateral Documents, and use the same degree of care and
skill in its exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
(b) Except during the continuance of an Event of Default:
(i) the duties of the Trustee shall be determined solely by the
express provisions of this Indenture and the Collateral
Documents and the Trustee need perform only those duties
that are specifically set forth in this Indenture and the
Collateral Documents and no others, and no implied covenants
or obligations shall be read into this Indenture against the
Trustee; and
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(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture and the
Collateral Documents. However, the Trustee shall examine
the certificates and opinions to determine whether or not
they conform to the requirements of this Indenture and the
Collateral Documents.
(c) The Trustee may not be relieved from liabilities for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is
proved that the Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Trustee shall not be liable with respect to any action
it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 6.05 hereof.
(d) Whether or not therein expressly so provided, every provision of
this Indenture or any Collateral Document that in any way relates to the Trustee
is subject to paragraphs (a), (b) and (c) of this Section 7.01.
(e) No provision of this Indenture or in any of the Collateral
Documents shall require the Trustee to expend or risk its own funds or incur any
financial liability. The Trustee shall be under no obligation to exercise any
of its rights and powers under this Indenture or the Collateral Documents at the
request of any Holders, unless such Holder shall have offered to the Trustee
security and indemnity satisfactory to it against any loss, liability or
expense. The Trustee is not obligated to foreclose on the Collateral, even if
indemnity is offered, if this might subject the Trustee to personal
environmental liability.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Issuers.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) Subject to Section 7.01(b)(ii) hereof, the Trustee may
conclusively rely upon any document believed by it to be genuine and to have
been signed or presented by the proper Person. The Trustee need not investigate
any fact or matter stated in the document.
(b) Before the Trustee acts or refrains from acting, it may require
an Officers' Certificate or an Opinion of Counsel or both. The Trustee shall
not be liable for any action it takes or omits to take in good faith in reliance
on such Officers' Certificate or Opinion of Counsel. The Trustee may consult
with counsel and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in good faith
and in reliance thereon.
(c) The Trustee may act through its attorneys and agents and shall
not be responsible for the misconduct or negligence of any agent appointed with
due care.
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(d) The Trustee shall not be liable for any action it takes or omits
to take in good faith that it believes to be authorized or within the rights or
powers conferred upon it by this Indenture or the Collateral Documents.
(e) Unless otherwise specifically provided in this Indenture or any
Collateral Document, any demand, request, direction or notice from the Issuers
shall be sufficient if signed by an Officer of each of the Issuers.
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture or any Collateral Document at
the request or direction of any of the Holders unless such Holders shall have
offered to the Trustee reasonable security or indemnity against the costs,
expenses and liabilities that might be incurred by it in compliance with such
request or direction. The Trustee is not obligated to foreclose on the
Collateral, even if indemnity is offered, if this might subject the Trustee to
personal environmental liability.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become the
owner or pledgee of First Mortgage Notes and may otherwise deal with the Issuers
or any Affiliate of the Issuers with the same rights it would have if it were
not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and 7.11
hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture, the First Mortgage Notes or
the Collateral Documents, it shall not be accountable for the Issuers' use of
the proceeds from the First Mortgage Notes or the use or application of any
money paid to the Issuers or upon the Issuers' direction under any provision of
this Indenture or any Collateral Document, it shall not be responsible for the
use or application of any money received by any Paying Agent other than the
Trustee, and it shall not be responsible for any statement or recital herein or
any statement in the First Mortgage Notes or any registration statement for the
First Mortgage Notes (other than statements in any Form T-1 filed with the SEC
under the TIA) or in this Indenture or in the Collateral Documents other than
its certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and if it is
known to the Trustee, the Trustee shall mail to Holders of First Mortgage Notes
a notice of the Default or Event of Default within 90 days after it occurs.
Except in the case of a Default or Event of Default in payment of principal of,
premium, Make-Whole Premiums and Liquidated Damages, if any, or interest on any
First Mortgage Note, the Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of the Holders of the First Mortgage Notes.
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SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE FIRST MORTGAGE NOTES.
Within 60 days after each May 15 beginning with the May 15 following
the date of this Indenture, and for so long as First Mortgage Notes remain
outstanding, the Trustee shall mail to the Holders of the First Mortgage Notes a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if no event described in TIA Section 313(a) has occurred within the
twelve months preceding the reporting date, no report need be transmitted). The
Trustee also shall comply with TIA Section 313(b). The Trustee shall also
transmit by mail all reports as required by TIA Section 313(c).
A copy of each report at the time of its mailing to the Holders of
First Mortgage Notes shall be mailed to the Company and filed with the SEC, if
accepted, and each stock exchange on which the First Mortgage Notes are listed
in accordance with TIA Section 313(d). The Issuers shall promptly notify the
Trustee when the First Mortgage Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Issuers shall pay to the Trustee from time to time reasonable
compensation for its acceptance of this Indenture and the Collateral Documents
and services in accordance with any provision of this Indenture and in any
Collateral Document. The Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuers shall reimburse
the Trustee promptly upon request for all reasonable disbursements, advances and
expenses incurred or made by it in addition to the compensation for its services
in accordance with any provision of this Indenture and in any Collateral
Document. Such expenses shall include the reasonable compensation,
disbursements and expenses of the Trustee's agents and counsel.
The Issuers shall indemnify the Trustee against any and all losses,
liabilities or expenses incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture and under the
Collateral Documents, including the costs and expenses of enforcing this
Indenture and the Collateral Documents against the Issuers (including this
Section 7.07) and defending itself against any claim (whether asserted by the
Issuers or any Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except to the
extent any such loss, liability or expense may be attributable to its negligence
or bad faith. The Trustee shall notify the Company promptly of any claim for
which it may seek indemnity. Failure by the Trustee to so notify the Company
shall not relieve the Issuers of their obligations hereunder. The Issuers shall
defend the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel and the Issuers shall pay the reasonable fees and
expenses of such counsel. The Issuers need not pay for any settlement made
without their consent, which consent shall not be unreasonably withheld.
The obligations of the Issuers under this Section 7.07 shall survive
the satisfaction and discharge of this Indenture.
To secure the Issuers' payment obligations in this Section 7.07, the
Trustee shall have a Lien prior to the First Mortgage Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular First Mortgage Notes. Such Lien shall
survive the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(j) or (k) hereof occurs, the expenses and the
compensation for the services (including the
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fees and expenses of its agents and counsel) are intended to constitute expenses
of administration under any Bankruptcy Law.
The Trustee shall comply with the provisions of TIA Section 313(b)(2)
to the extent applicable.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a successor
Trustee shall become effective only upon the successor Trustee's acceptance of
appointment as provided in this Section.
The Trustee may resign in writing at any time and be discharged from
the trust hereby created by so notifying the Company at least 45 days prior to
the date of the proposed resignation. The Holders of First Mortgage Notes of a
majority in principal amount of the then outstanding First Mortgage Notes may
remove the Trustee by so notifying the Trustee and the Company in writing. The
Issuers may remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy Law;
(c) a custodian, receiver or public officer takes charge of the
Trustee or its property; or
(d) the Trustee otherwise becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Issuers shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the then outstanding First Mortgage Notes
may appoint a successor Trustee to replace the successor Trustee appointed by
the Issuers.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Issuers, or
the Holders of First Mortgage Notes of at least 10% in principal amount of the
then outstanding First Mortgage Notes may petition any court of competent
jurisdiction for the appointment of a successor Trustee.
If the Trustee, after written request by any Holder of a First
Mortgage Note who has been a Holder of a First Mortgage Note for at least six
months, fails to comply with Section 7.10, such Holder of a First Mortgage Note
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuers. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and the
successor Trustee shall have all the rights, powers and duties of the Trustee
under this Indenture and the Collateral Documents. The successor Trustee shall
mail a notice of its succession to Holders of the First Mortgage Notes. The
retiring Trustee shall promptly transfer all property held by it as Trustee to
the successor Trustee; PROVIDED that all sums owing to the Trustee hereunder
have been paid and subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Issuers' obligations under Section 7.07 hereof shall continue for the benefit of
the retiring Trustee.
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SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the successor corporation without any further act shall be the successor
Trustee.
SECTION 7.10. ELIGIBILITY; DISQUALIFICATION.
There shall at all times be a Trustee hereunder that is a corporation
organized and doing business under the laws of the United States of America or
of any state thereof that is authorized under such laws to exercise corporate
trustee power, that is subject to supervision or examination by federal or state
authorities and that has a combined capital and surplus of at least $500.0
million as set forth in its most recent published annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee shall comply
with TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST THE ISSUERS.
The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Management Committee evidenced
by a resolution set forth in an Officers' Certificate, at any time, elect to
have either Section 8.02 or 8.03 hereof be applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.02, the Issuers shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be deemed to have been
discharged from their obligations with respect to all outstanding First Mortgage
Notes and any Collateral Documents to which they are a party, on the date the
conditions set forth below are satisfied (hereinafter, "LEGAL DEFEASANCE"). For
this purpose, Legal Defeasance means that the Company shall be deemed to have
paid and discharged the entire Indebtedness represented by the outstanding First
Mortgage Notes, which shall thereafter be deemed to be "outstanding" only for
the purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such First Mortgage Notes and this Indenture (and the Trustee,
on demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall survive
until otherwise terminated or discharged hereunder: (a) the rights of Holders
of outstanding First Mortgage Notes to receive payments in respect of the
principal of, interest on and Make-Whole Premiums, Liquidated Damages or any
other premiums, if any, on such First Mortgage Notes when such payments are due
from
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the trust described in Section 8.04 hereof, and as more fully set forth in such
Section, (b) the Company's obligations with respect to the First Mortgage Notes
concerning issuing temporary First Mortgage Notes, registration of First
Mortgage Notes, mutilated, destroyed, lost or stolen First Mortgage Notes and
the maintenance of an office or agency for payment and money for security
payments held in trust, (c) the rights, powers, trusts, duties and immunities of
the Trustee, and the Company's obligations in connection therewith and (d) this
Article Eight. Subject to compliance with this Article Eight, the Company may
exercise its option under this Section 8.02 notwithstanding the prior exercise
of its option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03, the Company shall, subject to the satisfaction
of the conditions set forth in Section 8.04 hereof, be released from its
obligations under the covenants contained in Sections 4.07, 4.08, 4.09, 4.10,
4.11, 4.12, 4.13, 4.15, 4.16, 4.17, 4.18, 4.19 and 4.20 hereof with respect to
the outstanding First Mortgage Notes on and after the date the conditions set
forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and the First
Mortgage Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction, waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it being
understood that such First Mortgage Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding First Mortgage Notes, the Company may omit to comply
with and shall have no liability in respect of any term, condition or limitation
set forth in any such covenant, whether directly or indirectly, by reason of any
reference elsewhere herein to any such covenant or by reason of any reference in
any such covenant to any other provision herein or in any other document and
such omission to comply shall not constitute a Default or an Event of Default
under Section 6.01 hereof, but, except as specified above, the remainder of this
Indenture and such First Mortgage Notes shall be unaffected thereby. In
addition, upon the Company's exercise under Section 8.01 hereof of the option
applicable to this Section 8.03 hereof, subject to the satisfaction of the
conditions set forth in Section 8.04 hereof, Sections 6.01(c) through 6.01(i)
hereof shall not constitute Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of either
Section 8.02 or 8.03 hereof to the outstanding First Mortgage Notes:
In order to exercise either Legal Defeasance or Covenant Defeasance:
(a) the Company must irrevocably deposit with the Trustee,
in trust, for the benefit of the Holders of the First Mortgage Notes,
cash in U.S. dollars, non-callable Government Securities, or a
combination thereof, in such amounts as will be sufficient, without
reinvestment, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, interest on,
and Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, on the outstanding First Mortgage Notes on the stated maturity or
on the applicable redemption date, as the case may be, and the Company
must specify whether the First Mortgage Notes are being defeased to
maturity or to a particular redemption date;
(b) in the case of Legal Defeasance, the Company shall have
delivered to the Trustee an Opinion of Counsel in the United States
reasonably acceptable to the Trustee confirming that
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(1) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling or (2) since the date of this
Indenture, there has been a change in the applicable federal income
tax law, in either case to the effect that, and based thereon such
Opinion of Counsel shall confirm that, the Holders of the outstanding
First Mortgage Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of Covenant Defeasance, the Company shall
have delivered to the Trustee an Opinion of Counsel in the United
States reasonably acceptable to the Trustee confirming that the
Holders of the outstanding First Mortgage Notes will not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such Covenant Defeasance had not occurred;
(d) no Default or Event of Default shall have occurred and
be continuing on the date of such deposit (other than a Default or
Event of Default resulting from the borrowing of funds to be applied
to such deposit) or insofar as Events of Default from bankruptcy or
insolvency events are concerned, at any time in the period ending on
the 91st day after the date of deposit;
(e) such Legal Defeasance or Covenant Defeasance will not
result in a breach or violation of, or constitute a default under any
material agreement or instrument (other than this Indenture) to which
the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries is bound;
(f) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that after the 91st day following the
deposit, the trust funds will not be subject to the effect of any
applicable bankruptcy, insolvency, reorganization or similar laws
affecting creditors' rights generally;
(g) the Company shall have delivered to the Trustee an
Officers' Certificate stating that the deposit was not made by the
Company with the intent of preferring the Holders of First Mortgage
Notes over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding creditors of the Company
or others; and
(h) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the Legal Defeasance or
the Covenant Defeasance have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SECURITIES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"Trustee") pursuant to Section 8.04 hereof in respect of the outstanding First
Mortgage Notes shall be held in trust and applied by the Trustee, in accordance
with the provisions of such First Mortgage Notes and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as Paying Agent) as the Trustee may determine, to the Holders of such
First Mortgage Notes of all sums due and to become due thereon in respect of
principal, premium,
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Make Whole Premiums and Liquidated Damages, if any, and interest, but such money
need not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the cash or non-callable
Government Securities deposited pursuant to Section 8.04 hereof or the principal
and interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding First
Mortgage Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the request
of the Company any money or non-callable Government Securities held by it as
provided in Section 8.04 hereof which, in the opinion of a nationally recognized
firm of independent public accountants expressed in a written certification
thereof delivered to the Trustee (which may be the opinion delivered under
Section 8.04(a) hereof), are in excess of the amount thereof that would then be
required to be deposited to effect an equivalent Legal Defeasance or Covenant
Defeasance.
SECTION 8.06. REPAYMENT TO COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then held
by the Company, in trust for the payment of the principal of, interest on, and
Make-Whole Premiums, Liquidated Damages, and any other premiums, if any, on any
First Mortgage Note and remaining unclaimed for two years after such principal,
interest, and Make-Whole Premium, Liquidated Damages, and any other premium, if
any, has become due and payable shall be paid to the Company on its request or
(if then held by the Company) shall be discharged from such trust; and the
Holder of such First Mortgage Note shall thereafter, as a secured creditor, look
only to the Company for payment thereof, and all liability of the Trustee or
such Paying Agent with respect to such trust money, and all liability of the
Company as trustee thereof, shall thereupon cease; PROVIDED, HOWEVER, that the
Trustee or such Paying Agent, before being required to make any such repayment,
may at the expense of the Company cause to be published once, in the New York
Times and The Wall Street Journal (national edition), notice that such money
remains unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such notification or publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any United States
dollars or non-callable Government Securities in accordance with Section 8.02 or
8.03 hereof, as the case may be, by reason of any order or judgment of any court
or governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's obligations under this Indenture and the First
Mortgage First Mortgage Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.02 or 8.03 hereof until such time as
the Trustee or Paying Agent is permitted to apply all such money in accordance
with Section 8.02 or 8.03 hereof, as the case may be; PROVIDED, HOWEVER, that,
if the Company makes any payment of principal of, premium, if any, or interest
on any First Mortgage Note following the reinstatement of its obligations, the
Company shall be subrogated to the rights of the Holders of such First Mortgage
Notes to receive such payment from the money held by the Trustee or Paying
Agent.
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ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF FIRST MORTGAGE NOTES.
Notwithstanding Section 9.02 hereof, the Company and the Trustee may
amend or supplement this Indenture, the First Mortgage Notes, the Collateral
Documents the Liquidity Facility or the Output Purchase Agreement without the
consent of any Holder of a First Mortgage Note:
(a) to cure any ambiguity, defect or inconsistency;
(b) to provide for uncertificated First Mortgage Notes in addition to
or in place of certificated First Mortgage Notes;
(c) to provide for the assumption of the Company's obligations to the
Holders of the First Mortgage Notes in the case of a merger or
consolidation pursuant to Article Five hereof;
(d) to make any change that would provide any additional rights or
benefits to the Holders of the First Mortgage Notes or that does not
adversely affect the legal rights hereunder of any Holder of the First
Mortgage Notes;
(e) to provide for additional collateral to secure the First Mortgage
Notes; and
(e) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Management Committee authorizing the execution of any such amended or
supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 9.06 hereof, the Trustee shall join with the Company in the
execution of any amended or supplemental Indenture authorized or permitted by
the terms of this Indenture and to make any further appropriate agreements and
stipulations that may be therein contained, but the Trustee shall not be
obligated to enter into such amended or supplemental Indenture that affects its
own rights, duties or immunities under this Indenture or otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF FIRST MORTGAGE NOTES.
Except as provided below in this Section 9.02, this Indenture, the
Collateral Documents and the First Mortgage Notes may be amended or supplemented
with the consent of the Holders of at least a majority in principal amount of
the First Mortgage Notes then outstanding (including, without limitation,
consents obtained in connection with a purchase of, or tender offer or exchange
offer for, First Mortgage Notes), and any existing default or compliance with
any provision of this Indenture or the First Mortgage Notes may be waived with
the consent of the Holders of a majority in principal amount of the then
outstanding First Mortgage Notes (including consents obtained in connection with
a tender offer or exchange offer for First Mortgage Notes). In addition, the
Collateral Documents, the Liquidity Facility and the Output Purchase Agreement
may not be amended or supplemented without the consent of the Holders of at
least a majority in principal amount of the First Mortgage Notes then
outstanding and any existing default or compliance with any provision of the
Collateral Documents, the Liquidity Facility and the Output Purchase Agreement
may not be waived without the consent of the Holders of a majority in principal
amount of the then outstanding First Mortgage Notes.
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Upon the request of the Issuers accompanied by resolution of their
Management Committee or Board of Directors, as the case may be, authorizing the
execution of any such amended or supplemental Indenture, and upon the filing
with the Trustee of evidence satisfactory to the Trustee of the consent of the
Holders of First Mortgage Notes as aforesaid, and upon receipt by the Trustee of
the documents described in Section 9.02 hereof, the Trustee shall join with the
Issuers in the execution of such amended or supplemental Indenture unless such
amended or supplemental Indenture affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise, in which case the Trustee may in
its discretion, but shall not be obligated to, enter into such amended or
supplemental Indenture.
It shall not be necessary for the consent of the Holders of First
Mortgage Notes under this Section 9.02 to approve the particular form of any
proposed amendment or waiver, but it shall be sufficient if such consent
approves the substance thereof.
After an amendment, supplement or waiver under this Section 9.02
becomes effective, the Company shall mail to the Holders of First Mortgage Notes
affected thereby a notice briefly describing the amendment, supplement or
waiver. Any failure of the Company to mail such notice, or any defect therein,
shall not, however, in any way impair or affect the validity of any such amended
or supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the First Mortgage
Notes then outstanding may waive compliance in a particular instance by the
Company with any provision of this Indenture or the First Mortgage Notes.
However, without the consent of each Holder affected, an amendment or waiver may
not (with respect to any First Mortgage Notes held by a non-consenting Holder):
(a) reduce the principal amount of First Mortgage Notes whose Holders
must consent to an amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any First
Mortgage Note or alter the provisions with respect to the redemption or
repurchase of the First Mortgage Notes (other than provisions relating to
Section 4.10 or 4.15 hereof);
(c) reduce the rate of or change the time for payment of interest on
or Make-Whole Premiums, Liquidated Damages or any other premiums, if any,
on any First Mortgage Note;
(d) waive a Default or Event of Default in the payment of principal
of, interest or Make-Whole Premiums, Liquidated Damages or any other
premiums, if any on the First Mortgage Notes (except a rescission of
acceleration of the First Mortgage Notes by the Holders of at least a
majority in aggregate principal amount of the First Mortgage Notes and a
waiver of the payment default that resulted from such acceleration);
(e) make any First Mortgage Note payable in money other than that
stated in the First Mortgage Notes;
(f) make any change in the provisions of this Indenture relating to
waivers of past Defaults or the rights of Holders of First Mortgage Notes
to receive payments of principal of, interest on, or Make-Whole Premiums,
Liquidated Damages or any other premiums, if any, or interest on the First
Mortgage Notes;
(g) waive a redemption or repurchase payment with respect to any First
Mortgage Note (other than a payment required by Section 4.10 or 4.15
hereof);
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(h) consent to a release of the security interest in the Collateral or
make any change in the provisions of this Indenture or the Collateral
Documents relating to the security interest of the Trustee in Collateral,
except as expressly permitted hereby or in the Collateral Documents; or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the First Mortgage
Notes shall be set forth in an amended or supplemental Indenture that complies
with the TIA as then in effect.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a First Mortgage Note is a continuing consent by the Holder
of a First Mortgage Note and every subsequent Holder of a First Mortgage Note or
portion of a First Mortgage Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any First Mortgage
Note. However, any such Holder of a First Mortgage Note or subsequent Holder of
a First Mortgage Note may revoke the consent as to its Note if the Trustee
receives written notice of revocation before the date the waiver, supplement or
amendment becomes effective. An amendment, supplement or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
SECTION 9.05. NOTATION ON OR EXCHANGE OF FIRST MORTGAGE NOTES.
The Trustee may place an appropriate notation about an amendment,
supplement or waiver on any First Mortgage Note thereafter authenticated. The
Issuers, in exchange for all First Mortgage Notes, may issue and the Trustee
shall authenticate new First Mortgage Notes that reflect the amendment,
supplement or waiver.
Failure to make the appropriate notation or issue a new First Mortgage
Note shall not affect the validity and effect of such amendment, supplement or
waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
Neither Issuer may sign an amendment or supplemental Indenture until its
Management Committee or Board of Directors, as the case may be, approves it. In
executing any amended or supplemental indenture, the Trustee shall be entitled
to receive and (subject to Section 7.01) shall be fully protected in relying
upon, an Officer's Certificate and an Opinion of Counsel stating that the
execution of such amended or supplemental indenture is authorized or permitted
by this Indenture.
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ARTICLE 10
COLLATERAL AND SECURITY
SECTION 10.01. COLLATERAL DOCUMENTS.
The due and punctual payment of the principal of, interest on, Make-
Whole Premiums, Liquidated Damages or any other premiums, if any, on the First
Mortgage Notes when and as the same shall be due and payable, whether on an
interest payment date, at maturity, by acceleration, repurchase, redemption or
otherwise, and interest on the overdue principal of, interest on and Make-Whole
Premiums, Liquidated Damages or any other premiums, if any, (to the extent
permitted by law), if any, on the First Mortgage Notes and performance of all
other obligations of the Issuers to the Holders of First Mortgage Notes or the
Trustee under this Indenture and the First Mortgage Notes, according to the
terms hereunder or thereunder, shall be secured as provided in the Collateral
Documents which the Issuers have entered into simultaneously with the execution
of this Indenture and any Collateral Documents to be entered into subsequent to
the date of this Indenture pursuant to the terms hereof. Each Holder of First
Mortgage Notes, by its acceptance thereof, consents and agrees to the terms of
each Collateral Document (including, without limitation, the provisions
providing for foreclosure and release of Collateral) as the same may be in
effect or may be amended from time to time in accordance with its terms and
authorizes and directs the Trustee, as agent for the ratable benefit of the
Holders, to enter into the Collateral Documents and to perform its obligations
and exercise its rights thereunder in accordance therewith. The Issuers shall
do or cause to be done all such acts and things as may be reasonably necessary
or proper, or as may be required by the provisions of the Collateral Documents,
to assure and confirm to the Trustee the security interest in the Collateral
contemplated hereby, by the Collateral Documents or any part thereof, as from
time to time constituted, so as to render the same available for the security
and benefit of this Indenture and of the First Mortgage Notes secured hereby,
according to the intent and purposes herein expressed. The Issuers shall take,
or shall cause any Subsidiary to take, upon request of the Trustee, any and all
actions reasonably required to cause the Collateral Documents to create and
maintain, as security for the Obligations of the Issuers under this Indenture,
the First Mortgage Notes and the Collateral Documents and the Obligations of any
Subsidiary under the Collateral Documents, a valid and enforceable perfected
first priority Lien in and on all the Collateral, in favor of the Collateral
Agent for the benefit of the Holders of First Mortgage Notes, superior to and
prior to the rights of all third Persons and subject to no other Liens than
Permitted Liens permitted by the applicable Collateral Document.
SECTION 10.02. RECORDING AND OPINIONS.
(a) The Issuers shall furnish to the Trustee simultaneously with the
execution and delivery of this Indenture an Opinion of Counsel either
(i) stating that in the opinion of such counsel all action has been taken with
respect to the recording, registering and filing of this Indenture, financing
statements or other instruments necessary to make effective the Lien intended to
be created by this Indenture and the Collateral Documents, and reciting with
respect to the security interests in the Collateral, the details of such action,
or (ii) stating that, in the opinion of such counsel, no such action is
necessary to make such Lien effective.
(b) The Issuers shall furnish to the Trustee on June 1 in each year
beginning with June 1, 1996, an Opinion of Counsel, dated as of such date,
either (i) (A) stating that, in the opinion of such counsel, action has been
taken with respect to the recording, registering, filing, re-recording,
re-registering and refiling of all supplemental indentures, financing
statements, continuation statements or other instruments of further assurance as
is necessary to maintain the Lien of this Indenture and the Collateral Documents
and reciting with respect to the security interests in the Collateral the
details of such
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action or referring to prior Opinions of Counsel in which such details are
given, (B) stating that, based on relevant laws as in effect on the date of such
Opinion of Counsel, all financing statements and continuation statements have
been executed and filed that are necessary as of such date and during the
succeeding 12 months fully to preserve and protect, to the extent such
protection and preservation are possible by filing, the rights of the Holders of
First Mortgage Notes and the Trustee hereunder and under the Collateral
Documents with respect to the security interests in the Collateral, or (ii)
stating that, in the opinion of such counsel, no such action is necessary to
maintain such Lien and assignment.
(c) The Issuers shall otherwise comply with the provisions of TIA
Section 314(b).
SECTION 10.03. RELEASE OF COLLATERAL.
(a) Subject to subsections (b), (c) and (d) of this Section 10.03,
Collateral may be released from the Lien and security interest created by the
Collateral Documents at any time or from time to time in accordance with the
provisions of the Collateral Documents or as provided hereby. In addition, upon
the request of the Issuers pursuant to an Officers' Certificate certifying that
all conditions precedent hereunder have been met and stating whether or not such
release is in connection with an Asset Sale, the Collateral Agent shall, at the
sole cost and expense of the Issuers, release (i) Collateral that is sold,
conveyed or disposed of in compliance with the provisions of this Indenture;
PROVIDED, that if such sale, conveyance or disposition constitutes an Asset
Sale, the Issuers shall apply the Net Proceeds in accordance with Sections 4.10
and 10.11 hereof. Upon receipt of such Officers' Certificate, the Collateral
Agent shall execute, deliver or acknowledge any necessary or proper instruments
of termination, satisfaction or release to evidence the release of any
Collateral permitted to be released pursuant to this Indenture or the Collateral
Documents.
(b) No Collateral shall be released from the Lien and security
interest created by the Collateral Documents pursuant to the provisions of the
Collateral Documents unless there shall have been delivered to the Collateral
Agent the certificate required by this Section 10.03.
(c) At any time when a Payment Default or a Bankruptcy Default (as
such terms are defined in the Security Agreement) or an Event of Default shall
have occurred and be continuing, no release of Collateral pursuant to the
provisions of the Collateral Documents shall be effective as against the Holders
of First Mortgage Notes.
(d) The release of any Collateral from the terms of this Indenture
and the Collateral Documents shall not be deemed to impair the security under
this Indenture in contravention of the provisions hereof if and to the extent
the Collateral is released pursuant to the terms hereof. To the extent
applicable, the Issuers shall cause TIA Section 313(b), relating to reports, and
TIA Section 314(d), relating to the release of property or securities from the
Lien and security interest of the Collateral Documents or this Indenture and
relating to the substitution therefor of any property or securities to be
subjected to the Lien and security interest of the Collateral Documents or this
Indenture, to be complied with. Any certificate or opinion required by TIA
Section 314(d) may be made by one Officer of each of the Issuers except in cases
where TIA Section 314(d) requires that such certificate or opinion be made by an
independent Person, which Person shall be an independent engineer, appraiser or
other expert selected or approved by the Trustee and the Collateral Agent in the
exercise of reasonable care.
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SECTION 10.04. CERTIFICATES OF THE ISSUERS.
The Issuers shall furnish to the Trustee and the Collateral Agent,
prior to each proposed release of Collateral pursuant to the Collateral
Documents or Section 4.10 hereof, (i) all documents required by TIA Section
314(d) and (ii) an Opinion of Counsel, which may be rendered by internal counsel
to the Issuers, to the effect that such accompanying documents constitute all
documents required by TIA Section 314(d). The Trustee may, to the extent
permitted by Sections 7.01 and 7.02 hereof, accept as conclusive evidence of
compliance with the foregoing provisions the appropriate statements contained in
such documents and such Opinion of Counsel.
SECTION 10.05. CERTIFICATES OF THE TRUSTEE.
In the event that the Issuers wish to release Collateral in accordance
with the Collateral Documents or Section 4.10 hereof and have delivered the
certificates and documents required by the Collateral Documents and Sections
10.03 and 10.04 hereof, the Trustee shall determine whether it has received all
documentation required by TIA Section 314(d) in connection with such release
and, based on such determination and the Opinion of Counsel delivered pursuant
to Section 10.04(ii), shall deliver a certificate to the Collateral Agent
setting forth such determination.
SECTION 10.06. AUTHORIZATION OF ACTIONS TO BE TAKEN BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Subject to the provisions of Section 7.01 and 7.02 hereof, the Trustee
may, in its sole discretion and without the consent of the Holders of First
Mortgage Notes, take all actions it deems necessary or appropriate in order to
(a) enforce any of the terms of the Collateral Documents, (b) collect and
receive any and all amounts payable in respect of the Obligations of the Issuers
hereunder and (c) collect and receive any and all amounts payable in respect of
Obligations of any Subsidiaries under the Collateral Documents. The Trustee
shall have power to institute and maintain such suits and proceedings as it may
deem expedient to prevent any impairment of the Collateral by any acts that may
be unlawful or in violation of the Collateral Documents or this Indenture, and
such suits and proceedings as the Trustee may deem expedient to preserve or
protect its interests and the interests of the Holders of First Mortgage Notes
in the Collateral (including power to institute and maintain suits or
proceedings to restrain the enforcement of or compliance with any legislative or
other governmental enactment, rule or order that may be unconstitutional or
otherwise invalid if the enforcement of, or compliance with, such enactment,
rule or order would impair the security interest hereunder or be prejudicial to
the interests of the Holders of First Mortgage Notes or of the Trustee). The
Trustee is not obligated to foreclose on the Collateral, even if indemnity is
offered, if this might subject the Trustee to personal environmental liability.
SECTION 10.07. AUTHORIZATION OF RECEIPT OF FUNDS BY THE TRUSTEE UNDER THE
COLLATERAL DOCUMENTS.
Upon an Event of Default and so long as such Event of Default
continues, the Trustee may exercise in respect of the Collateral, in addition to
the other rights and remedies provided for herein, in the Collateral Documents
or otherwise available to it, all of the rights and remedies provided for by the
applicable Uniform Commercial Code or other applicable law, and the Trustee may
also upon obtaining possession of the Collateral as set forth herein, without
notice to the Issuers, except as specified below, sell, assign or otherwise
liquidate, or direct the Company to sell, assign or otherwise liquidate, any or
all of the Collateral or any part thereof in one or more parcels at public or
private sale, at any exchange, broker's board or at any of the Trustee's offices
or elsewhere, for cash, on credit or for future delivery, and upon such other
terms as the Trustee may deem commercially reasonable. The Issuers acknowledge
and agree that any such private sale may result in prices and other terms less
favorable to the seller than
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if such sale were a public sale. The Issuers agree that, to the extent notice
of sale shall be required by law, at least 10 days' notice to the Issuers of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification. The Trustee shall not be
obligated to make any sale regardless of notice of sale having being given. The
Trustee may adjourn any public or private sale from time to time by announcement
at the time and placed fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so adjourned.
Any cash that is Collateral held by the Trustee and all cash proceeds
received by the Trustee in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral shall be deposited in the
Cash Collateral Account created pursuant to Section 10.11 hereof and applied
(unless otherwise provided for in the Collateral Documents and after payment of
any and all amounts payable to the Trustee pursuant to this Indenture), as the
Trustee shall determine or as the Holders shall direct pursuant to Section 6.05
hereof, (i) against the Obligations of the Company under this Indenture, the
First Mortgage Notes and the Collateral Documents and the Obligations of any
Subsidiaries under the Collateral Documents for the ratable benefit for the
Holders, (ii) to maintain, repair or otherwise protect the Collateral or (iii)
to take such other action to protect the other rights of the Holders or to take
any other appropriate action or remedy for the benefit of the Holders. Any
surplus of such cash or cash proceeds held by the Trustee and remaining after
payment in full of all the Obligations of the Issuers under this Indenture, the
First Mortgage Notes or the Collateral Documents shall be paid over to the
Issuers or to whomsoever may be lawfully entitled to receive such surplus or as
a court of competent jurisdiction may direct.
SECTION 10.08. TERMINATION OF SECURITY INTEREST.
Upon the payment in full of all Obligations of the Issuers under this
Indenture, the First Mortgage Notes and the Collateral Documents and the
Obligations of any Subsidiary under the Collateral Documents, or upon Legal
Defeasance, the Trustee shall, at the request of the Issuers, deliver a
certificate to the Collateral Agent stating that such Obligations have been paid
in full, and instruct the Collateral Agent to release the Liens pursuant to this
Indenture and the Collateral Documents.
SECTION 10.09. COOPERATION OF TRUSTEE.
In the event the Issuers pledge or grant a security interest in
additional Collateral, the Trustee shall cooperate with the Issuers in
reasonably and promptly agreeing to the form of, and executing as required, any
instruments or documents necessary to make effective the security interest in
the Collateral to be so substituted or pledged. To the extent practicable, the
terms of any security agreement or other instrument or document necessitated by
any such substitution or pledge shall be comparable to the provisions of the
existing Collateral Documents. Subject to, and in accordance with the
requirements of this Article 10 and the terms of the Collateral Documents, in
the event that the Issuers engage in any transaction pursuant to Section 10.03,
the Trustee shall cooperate with the Issuers in order to facilitate such
transaction in accordance with any reasonable time schedule proposed by the
Issuers, including by delivering and releasing the Collateral in a prompt and
reasonable manner.
SECTION 10.10. COLLATERAL AGENT.
The Trustee may, from time to time, appoint one or more Collateral
Agents hereunder. Each of such Collateral Agents may be delegated any one or
more of the duties or rights of the Trustee hereunder or under the Collateral
Documents or which are specified in any Collateral Documents, including without
limitation, the right to hold any Collateral in the name of, registered to, or
in the
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physical possession of, such Collateral Agent, for the rateable benefit of the
Holders. Each such Collateral Agent shall have such rights and duties as may be
specified in an agreement between the Trustee and such Collateral Agent. The
Trustee and any Collateral Agent shall be authorized hereunder to give any
acknowledgment reasonably requested by any party to confirm the rights and
obligations of the parties.
SECTION 10.11. CASH FUNDS PLEDGE.
(a) The Issuers hereby irrevocably grant to the Trustee, for the
ratable benefit of the Holders, a duly perfected continuing first priority and
sole security interest in the Cash Collateral, whether or not deposited in any
Cash Collateral Account, and pledge, assign and set over the Cash Collateral to
the Trustee, for the ratable benefit of the Holders, as security for the payment
of the Obligations of the Issuers under this Indenture, the First Mortgage Notes
and the Collateral Documents and the Obligations of any Subsidiary under the
Collateral Documents. The Issuers also agree not to further pledge or grant
other security interests in the Cash Collateral to any Person.
(b) In order to effectuate the foregoing pledge and grant of security
interest in favor of the Trustee, the Issuers hereby irrevocably direct the
Trustee, as depository bank (collectively with any Eligible Institution that may
be selected by the Trustee or the Holders of a majority in aggregate principal
amount of the then outstanding First Mortgage Notes to replace the Trustee as
depository bank, the "Bank") to open the following bank accounts, in the name of
the Trustee, and the Bank has opened the following bank accounts in the
Trustee's name.
(1) the Event of Loss Account, Account No. __________________,
(2) the Asset Sale Account, Account No. ____________________ and
(3) the General Cash Collateral Account, Account No. _________.
The parties hereto agree that any provision of this Indenture or
any Collateral Document to the contrary notwithstanding, express or implied, the
Trustee shall have, at all times, sole dominion and control over each of the
Cash Collateral Accounts and all funds, cash, Cash Equivalents and other items
from time to time acquired by the Bank with funds in the Cash Collateral
Accounts, as well as any earnings, proceeds or income therefrom.
(c) The Issuers further covenant to maintain each Cash Collateral
Account in existence so long as any Obligation of the Issuers under the First
Mortgage Notes, this Indenture or the Collateral Documents or any Obligation of
any Subsidiary under the Collateral Documents are outstanding.
(d) The Issuers agree to do or cause to be done all things, and to
make all filings, and to enter into any agreements or instruments needed by the
Bank to evidence and perfect the first priority security interest in favor of
the Trustee for the ratable benefit of the Noteholders granted therein, the
rights and interests hereunder of the Trustee for the ratable benefit of the
Holders, in such Cash Collateral Account and to otherwise effect the intention
and purposes of the parties hereunder with respect to such Cash Collateral
Account.
(e) The Issuers hereby agree that all Net Proceeds from Asset Sales
shall promptly and without commingling be remitted to the Trustee for deposit in
the Asset Sale Account, that all Net Proceeds from Events of Loss shall promptly
and without commingling be remitted to the Trustee for deposit in the
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Event of Loss Account, and that all monies, securities and properties required
to be deposited pursuant to any Collateral Document shall be deposited in the
General Cash Collateral Account, and further agree that no Net Proceeds, from
whatever source derived, will be deposited in any other bank account.
(f) Neither the Issuers nor the Bank, as the case may be, shall allow
any Person to withdraw any funds from any Cash Collateral Account except upon a
written direction of the Trustee.
(g) The Bank shall, upon receipt of an Officers' Certificate from the
Company in the form of Exhibit H, to the extent of funds available in the Asset
Sale Account and pursuant to the terms of Section 4.10 hereof, make payments
from the Asset Sale Account to the Persons and in the amounts specified by the
Issuers in said Officers' Certificate, PROVIDED that if a Payment Default or
Bankruptcy Default (as such terms are defined in the Security Agreement) or
Event of Default has occurred and is continuing, no payments may be made from
funds on deposit in the Asset Sale Account except to the Trustee.
(h) The Bank shall, upon receipt of an Officers' Certificate from the
Company in the form of Exhibit I, to the extent of funds available in the Event
of Loss Account, make payments from the Event of Loss Account to the Persons and
in the amounts specified by the Issuers in said Officers' Certificate, provided
that if a Payment Default or Bankruptcy Default (as such terms are defined in
the Security Agreement) or Event of Default has occurred and is continuing, no
payments may be made from funds on deposit in the Event of Loss Account except
to the Trustee.
(i) The Issuers further agree for the benefit of the Trustee and the
Holders of the First Mortgage Notes that:
(1) they shall not request or cause or permit to be requested a
disbursement of funds in the Event of Loss Account or Asset Sale Account, except
for a purpose specifically permitted by the provisions of this Indenture
applicable to such account.
(2) they shall not have the right to, and shall not, request the
Bank to make any withdrawals from the Asset Sale Account or the Event of Loss
Account (A) for payment to any Person other than the Trustee from and after the
date that the First Mortgage Notes shall have been accelerated to and including
the date such acceleration shall have been rescinded or the Obligations of the
Company under this Indenture, the First Mortgage Notes and the Collateral
Documents and the Obligations of any Subsidiary under the Collateral Documents
shall have been paid in full, without the prior written consent of the Trustee;
or (B) for payments to the Issuers upon the occurrence and during the
continuance of a Payment Default or a Bankruptcy Default (as such terms are
defined in the Security Agreement) or an Event of Default.
(j) Pending disbursement in accordance with this Section 10.11, all
funds on deposit in the Cash Collateral Accounts shall be invested in cash;
PROVIDED, however that the Trustee hereby directs the Bank, so long as no
Payment Default or Bankruptcy Default (as such terms are defined in the Security
Agreement) or Event of Default has occurred and is continuing, to invest such
funds in Cash Equivalents if so instructed by the Issuers; PROVIDED FURTHER,
that (1) such Cash Equivalents are denominated and payable in U.S. Dollars, (2)
such Cash Equivalents continue to be Collateral hereunder and (3) the Bank shall
not invest any funds in any investment unless such investment is free and clear
of all Liens, safekeeping or other charges, demands and claims of any nature
whatsoever now or hereafter existing, in favor of anyone other than the Trustee.
The Bank shall hold all Cash Equivalents under the sole dominion and control of
the Bank, as agent for the Trustee for the ratable benefit of Holders. Further,
the Bank shall note in its records that all funds and other assets in the Cash
Collateral Accounts have been
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pledged to the Trustee and that the Bank is holding such items as agent for the
Trustee. Accordingly, such funds shall not be within the bankruptcy "estate" of
the Bank.
(k) The Trustee may exercise in respect of the Cash Collateral, in
addition to other rights and remedies provided for herein or otherwise available
to it, all the rights and remedies of a secured party under the New York Uniform
Commercial Code (now in force and as hereafter amended) or other applicable law.
(l) Any cash that is Cash Collateral held by the Trustee and all cash
proceeds received by the Trustee in respect of any sale of, collection from, or
other realization upon all or any part of the Cash Collateral shall be applied
(after payment of any and all amounts payable to the Trustee pursuant to the
Indenture) against the Obligations of the Company pursuant to this Indenture,
the First Mortgage Notes and the Collateral Documents and the Obligations of any
Subsidiary pursuant to the Collateral Documents for the ratable benefit of the
Holders. Any surplus of such cash or cash proceeds held by the Trustee and
remaining after payment in full of all the Obligations of the Company pursuant
to this Indenture, the First Mortgage Notes and the Collateral Documents and all
of the Obligations of the Subsidiaries pursuant to the Collateral Documents
shall be paid over to the Issuers or to whomever may be lawfully entitled to
receive such surplus or as a court of competent jurisdiction may direct.
ARTICLE 11
MISCELLANEOUS
SECTION 11.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts with
the duties imposed by TIA Section 318(c), the imposed duties shall control.
SECTION 11.02. NOTICES.
Any notice or communication by the Issuers or the Trustee to the
others is duly given if in writing and delivered in person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Issuers:
Florida Coast Paper Company, L.L.C.
600 U.S. Highway 98
Port St. Joe, Florida 32456
Telecopier No.: (904) 227-1160
Attention: Green Long
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With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Avenue
New York, NY 10022
Telecopier No.: (212) 715-8000
Attention: Mike Nelson
And a copy to:
Four M Corporation
115 Stevens Avenue
Valhalla, New York, 10595
Telecopier No.: (914) 747-2774
Attention: Harvey Friedman
And a copy to:
Stone Container Corporation
150 North Michigan Avenue
Chicago, Illinois 60601
Telecopier No.: (312) 346-5645
Attention: Leslie T. Lederer
If to the Trustee:
Norwest Bank Minnesota, National Association
Sixth Street & Marquette Avenue
Minneapolis, MN 55479
Telecopier No.: (612) 667-9825
Attention: Ray Haverstock
The Issuers or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery to
the courier, if sent by overnight air courier guaranteeing next day delivery.
Any notice or communication to a Holder shall be mailed by first class
mail, certified or registered, return receipt requested, or by overnight air
courier guaranteeing next day delivery to its address shown on the register kept
by the Registrar. Any notice or communication shall also be so mailed to any
Person described in TIA Section 313(c), to the extent required by the TIA.
Failure to mail a notice or communication to a Holder or any defect in it shall
not affect its sufficiency with respect to other Holders.
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If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
If the Issuers mail a notice or communication to Holders, it shall
mail a copy to the Trustee and each Agent at the same time.
SECTION 11.03. COMMUNICATION BY HOLDERS OF FIRST MORTGAGE NOTES WITH OTHER
HOLDERS OF FIRST MORTGAGE NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the First Mortgage
Notes. The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 11.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Issuers to the Trustee to take
any action under this Indenture, the Issuers shall furnish to the Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 11.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 11.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a certificate
provided pursuant to TIA Section 314(a)(4)) shall comply with the provisions of
TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied.
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SECTION 11.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 11.07. NO PERSONAL LIABILITY OF MEMBERS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No manager, officer, employee, incorporator or member of the Company
or Finance Corp., as such, shall have any liability for any obligations of the
Issuers under the First Mortgage Notes, this Indenture or any Collateral
Document or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder of First Mortgage Notes by accepting
a First Mortgage Note waives and releases all such liability. The waiver and
release are part of the consideration for issuance of the First Mortgage Notes.
Such waiver may not be effective to waive liabilities under the federal
securities laws and it is the view of the SEC that such a waiver is against
public policy.
SECTION 11.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED TO
CONSTRUE THIS INDENTURE AND THE FIRST MORTGAGE NOTES.
SECTION 11.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture, loan
or debt agreement of the Issuers or their Subsidiaries or of any other Person.
Any such indenture, loan or debt agreement may not be used to interpret this
Indenture.
SECTION 11.10. SUCCESSORS.
All agreements of the Issuers in this Indenture and the First Mortgage
Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 11.11. SEVERABILITY.
In case any provision in this Indenture or in the First Mortgage Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 11.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
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SECTION 11.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall in
no way modify or restrict any of the terms or provisions hereof.
[Signatures on following page]
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SIGNATURES
Dated as of May 30, 1996 FLORIDA COAST PAPER COMPANY, L.L.C.
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
Attest:
(SEAL)
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Dated as of May 30, 1996 FLORIDA COAST PAPER FINANCE CORP.
By: /s/ Mary B. Dopslaff
----------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
Attest:
(SEAL)
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Dated as of May 30, 1996 NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
Trustee
By: /s/ Raymond S. Haverstock
-----------------------------------------
Name: Raymond S. Haverstock
Title: Vice President
Attest:
(SEAL)
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EXHIBIT A
(Face of Note)
12 3/4% [Series A] [Series B] First Mortgage Notes due 2003
No. $
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FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
promise to pay to
or registered assigns,
the principal sum of
Dollars on June 1, 2003.
Interest Payment Dates: June 1, and December 1
Record Dates: May 15, and November 15
Dated: May 30, 1996
FLORIDA COAST PAPER COMPANY, LLC
This is one of the By:______________________________
Notes referred to in the Name:
within-mentioned Indenture: Title:
(SEAL)
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, FLORIDA COAST PAPER FINANCE CORP.
as Trustee
By: By:
----------------------------- ------------------------------
Name:
Title:
(SEAL)
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(Back of Note)
12 3/4% [Series A] [Series B] First Mortgage Notes due 2003
[Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized
representative of The Depositary Trust Company (55 Water Street, New York, New
York) ("DTC"), to the issuer or its agent for registration of transfer, exchange
or payment, and any certificate issued is registered in the name of Cede & Co.
or such other name as may be requested by an authorized representative of DTC
(and any payment is made to Cede & Co. or such other entity as may be requested
by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the
registered owner hereof, Cede & Co., has an interest herein.](1)
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"),
AND THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS HEREBY
NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM THE
PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE 144A
THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED HEREBY AGREES FOR THE
BENEFIT OF THE ISSUERS THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED, ONLY (1) (a) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER (AS DEFINED IN RULE 144A UNDER
THE SECURITIES ACT) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A,
(b) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE
SECURITIES ACT, (c) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT
OR (d) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL IF
THE COMPANY SO REQUESTS), (2) TO THE ISSUERS OR (3) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY
APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT HOLDER
IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY EVIDENCED
HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE.
THE FLORIDA DOCUMENTARY STAMP TAX HAS BEEN PAID AND THE PROPER STAMPS HAVE
BEEN AFFIXED TO THE MORTGAGE AS REFERRED TO IN PARAGRAPH 4 HEREOF.
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1. THIS PARAGRAPH SHOULD BE INCLUDED ONLY IF THE FIRST MORTGAGE NOTE IS ISSUED
IN GLOBAL FORM.
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Capitalized terms used herein shall have the meanings assigned to them in
the Indenture referred to below unless otherwise indicated.
1. INTEREST. Interest on the First Mortgage Notes will accrue at the rate
of 12 3/4% per annum and will be payable semi-annually in arrears on June 1 and
December 1 of each year, commencing on December 1, 1996 (each such date, an
"Interest Payment Date"), to Holders of record on the immediately preceding May
14 and November 15. Interest on the First Mortgage Notes will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from the date of original issuance. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months. Principal of,
interest on, Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, on the First Mortgage Notes will be payable at the office or agency of the
Issuers maintained for such purpose or, at the option of the Issuers, payment of
interest and Make-Whole Premiums, Liquidated Damages or any other premiums, if
any, may be made by check mailed to the Holders of the First Mortgage Notes at
their respective addresses set forth in the register of Holders of First
Mortgage Notes; PROVIDED that all payments with respect to First Mortgage Notes
the Holders of which have given wire transfer instructions to the Issuers will
be required to be made by wire transfer of immediately available funds to the
accounts specified by the Holders thereof. Until otherwise designated by the
Issuers, the Issuers' office or agency will be the office of the Trustee
maintained for such purpose. The First Mortgage Notes will be issued in
denominations of $1,000 and integral multiples thereof.
2. METHOD OF PAYMENT. The Issuers will pay interest on the First Mortgage
Notes (except defaulted interest) and Make-Whole Premiums, Liquidated Damages or
any other premiums, if any, to the Persons who are registered Holders of Notes
at the close of business on the May 15 or November 15 next preceding the
Interest Payment Date, even if such First Mortgage Notes are cancelled after
such record date and on or before such Interest Payment Date, except as provided
in Section 2.12 of the Indenture with respect to defaulted interest. Payments
in respect of the First Mortgage Notes represented by the Global Note (including
principal, premium, if any, interest and Liquidated Damages, if any) be made by
wire transfer of immediately available funds to the accounts specified by the
Global Note Holder. With respect to Certificated Securities, the Issuers will
make all payments of principal, premium, if any, interest and Liquidated
Damages, if any, by wire transfer of immediately available funds to the accounts
specified by the Holders thereof or, if no such account is specified, by mailing
a check to each such Holder's registered address. Such payment shall be in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts.
3. PAYING AGENT AND REGISTRAR. Initially, Norwest Bank Minnesota,
National Association, the Trustee under the Indenture, will act as Paying Agent
and Registrar. The Issuers may change any Paying Agent or Registrar without
notice to any Holder. The Company or any of its Subsidiaries may act in any
such capacity.
4. INDENTURE AND COLLATERAL DOCUMENTS. The Issuers issued the First
Mortgage Notes under an Indenture dated as of May 30, 1996 ("Indenture") among
the Issuers and the Trustee. The terms of the First Mortgage Notes include
those stated in the Indenture and those made part of the Indenture by reference
to the Trust Indenture Act of 1939, as amended (15 U.S. Code Sections
77aaa-77bbbb). The First Mortgage Notes are subject to all such terms, and
Holders are referred to the Indenture and such Act for a statement of such
terms. The First Mortgage Notes are secured obligations of the Issuers limited
to $165.0 million in aggregate principal amount and will mature on June 1, 2003.
The First Mortgage Notes will be issued in denominations of $1,000 and integral
multiples thereof. The First Mortgage Notes are secured by a first mortgage on
all real property and improvements comprising the Mill and a first priority
security interest in substantially all of the equipment of the Mill and certain
other assets (but
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excluding, among other things, inventories and accounts receivable, and the
proceeds thereof) pursuant to the Collateral Documents referred to in the
Indenture.
5. OPTIONAL REDEMPTION.
(a) The First Mortgage Notes will not be redeemable at the Issuers' option
prior to June 1, 2001. Thereafter, the First Mortgage Notes will be subject to
redemption at the option of the Issuers, in whole or in part, upon not less than
30 nor more than 60 days' notice, at the redemption prices (expressed as
percentages of principal amount) set forth below plus accrued and unpaid
interest, Make-Whole Premiums, Liquidated Damages or any other premiums, if any,
thereon to the applicable redemption date, if redeemed during the twelve-month
period beginning on June 1 of the years indicated below:
YEAR PERCENTAGE
2000. . . . . . . . . . . . . . . . . . . . . . . . 106.375%
2001. . . . . . . . . . . . . . . . . . . . . . . . 103.188%
2002 and thereafter . . . . . . . . . . . . . . . . 100.000%
(b) Notwithstanding the foregoing, at any time prior to June 1, 1999, the
Issuers may redeem up to one-third in aggregate principal amount of First
Mortgage Notes at a redemption price of 112.75% of the principal amount thereof,
in each case plus accrued and unpaid interest, Make-Whole Premiums, Liquidated
Damages or any other premiums, if any, thereon to the redemption date, with the
net proceeds of a public offering of Capital Stock (other than Disqualified
Stock) of the Company; PROVIDED that at least two-thirds in aggregate principal
amount of the First Mortgage Notes originally issued under the Indenture remain
outstanding immediately after the occurrence of such redemption; and PROVIDED,
further, that such redemption shall occur within 60 days after the date of the
closing of such public offering of Capital Stock of the Company.
(c) Upon the occurrence of a Change of Control prior to June 1, 2000, the
Issuers, at their option, may redeem all, but not less than all, of the
outstanding First Mortgage Notes at a redemption price equal to 100% of the
principal amount thereof plus the applicable Make-Whole Premium (a "CHANGE OF
CONTROL REDEMPTION"). The Issuers shall give not less than 30 and not more than
60 days' notice (a "CHANGE OF CONTROL PURCHASE NOTICE") of such redemption
within ten days following a Change of Control. In the event that the Issuers
give such notice, the Issuers shall not be obligated to make a Change of Control
Offer as described under Section 4.15 hereof.
6. MANDATORY REDEMPTION.
Except as set forth in paragraph 7 below, the Issuers shall not be required
to make mandatory redemption or repurchase payments with respect to the First
Mortgage Notes.
7. REPURCHASE AT OPTION OF HOLDER.
(a) Upon the occurrence of a Change of Control, unless the Issuers shall
have delivered a Change of Control Purchase Notice as described in paragraph 5
above, each Holder of First Mortgage Notes shall have the right to require the
Issuers to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's First Mortgage Notes pursuant to a Change of Control
Offer in accordance with the terms of the Indenture, at an offer price in cash
equal to 101% of the aggregate principal amount thereof plus accrued and unpaid
interest, Make-Whole Premiums, Liquidated Damages or any other premiums, if any,
thereon to the date of purchase (the "Change of Control Payment"). Within 10
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Business Days following any Change of Control, the Company shall mail a notice
to each Holder setting forth the procedures governing the Change of Control
Offer as required by the Indenture. The Issuers will not be required to make a
Change of Control Offer upon a Change of Control if a third party makes the
Change of Control Offer in the manner, at the times and otherwise in compliance
with the requirements set forth in the Indenture and purchases all First
Mortgage Notes validly tendered and not withdrawn under such Change of Control
Offer.
(b) If the Company or a Subsidiary consummates any Asset Sales or suffers
an Event of Loss, within five days of each date on which the aggregate amount of
Excess Proceeds exceeds $5.0 million, the Company shall make an offer to all
Holders of First Mortgage Notes (an "EXCESS PROCEEDS OFFER") to purchase the
maximum principal amount of First Mortgage Notes that may be purchased out of
the Excess Proceeds, at an offer price in cash in an amount equal to 101% of the
principal amount thereof plus accrued and unpaid interest, Make-Whole Premiums,
Liquidated Damages or any other premiums, if any, thereon to the date of
purchase, in accordance with the procedures set forth in the Indenture. To the
extent that the aggregate amount of First Mortgage Notes tendered pursuant to an
Excess Proceeds Offer is less than the Excess Proceeds, provided that no Payment
Default or Bankruptcy Default (as such terms are defined in the Security
Agreement) or Event of Default shall have occurred and be continuing, the
Company may use any remaining Excess Proceeds for general corporate purposes.
If the aggregate principal amount of First Mortgage Notes surrendered by Holders
thereof exceeds the amount of Excess Proceeds, the Trustee shall select the
First Mortgage Notes to be purchased on a PRO RATA basis. Holders of Notes that
are the subject of an offer to purchase will receive an Asset Sale Offer from
the Company prior to any related purchase date and may elect to have such First
Mortgage Notes purchased by completing the form entitled "Option of Holder to
Elect Purchase" on the reverse of the First Mortgage Notes.
8. NOTICE OF REDEMPTION. Notice of redemption will be mailed at least 30
days but not more than 60 days before the redemption date to each Holder whose
Notes are to be redeemed at its registered address. Notes in denominations
larger than $1,000 may be redeemed in part but only in whole multiples of
$1,000, unless all of the First Mortgage Notes held by a Holder are to be
redeemed. On and after the redemption date interest ceases to accrue on Notes
or portions thereof called for redemption.
9. DENOMINATIONS, TRANSFER, EXCHANGE. The First Mortgage Notes are in
registered form without coupons in denominations of $1,000 and integral
multiples of $1,000. The transfer of Notes may be registered and Notes may be
exchanged as provided in the Indenture. The Registrar and the Trustee may
require a Holder, among other things, to furnish appropriate endorsements and
transfer documents and the Issuers may require a Holder to pay any taxes and
fees required by law or permitted by the Indenture. The Issuers need not
exchange or register the transfer of any First Mortgage Note or portion of a
First Mortgage Note selected for redemption, except for the unredeemed portion
of any First Mortgage Note being redeemed in part. Also, they need not exchange
or register the transfer of any First Mortgage Notes for a period of 15 days
before a selection of First Mortgage Notes to be redeemed or during the period
between a record date and the corresponding Interest Payment Date.
10. PERSONS DEEMED OWNERS. The registered Holder of a First Mortgage Note
may be treated as its owner for all purposes.
11. AMENDMENT, SUPPLEMENT AND WAIVER. Subject to certain exceptions, the
Indenture or the First Mortgage Notes may be amended or supplemented with the
consent of the Holders of at least a majority in principal amount of the then
outstanding Notes, and any existing default or compliance with any provision of
the Indenture or the First Mortgage Notes may be waived with the consent of the
Holders of a majority in principal amount of the then outstanding Notes.
Without the consent of any
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Holder of a First Mortgage Note, the Indenture or the First Mortgage Notes may
be amended or supplemented to cure any ambiguity, defect or inconsistency, to
provide for uncertificated Notes in addition to or in place of certificated
Notes, to provide for the assumption of the Issuers' obligations to Holders of
the First Mortgage Notes in case of a merger or consolidation, to make any
change that would provide any additional rights or benefits to the Holders of
the First Mortgage Notes or that does not adversely affect the legal rights
under the Indenture of any such Holder, or to comply with the requirements of
the SEC in order to effect or maintain the qualification of the Indenture under
the Trust Indenture Act.
12. DEFAULTS AND REMEDIES. Events of Default include: (i) default for 30
days in the payment when due of interest on or Liquidated Damages, if any, with
respect to, the First Mortgage Notes; (ii) default in payment when due of the
principal of, Make-Whole Premiums or any other premiums, if any, on the First
Mortgage Notes; (iii) failure by the Company to comply with the provisions
described in Section 4.07, 4.09, 4.10, 4.15, 4.19, 5.01 of the Indenture; (iv)
failure by the Company for 30 days after notice to comply with any of its other
agreements in the Indenture or the First Mortgage Notes; (v) default by any
party under the Output Purchase Agreement or the Subordinated Credit Agreement,
which default remains uncured for 30 days; (vi) default under any mortgage,
indenture or instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the Company or any
of its Restricted Subsidiaries (or the payment of which is guaranteed by the
Company or any of its Restricted Subsidiaries) whether such Indebtedness or
guarantee now exists, or is created after the date of the Indenture, which
default (a) is caused by a failure to pay principal of or premium, if any, or
interest on such Indebtedness prior to the expiration of the grace period
provided in such Indebtedness on the date of such default (a "PAYMENT DEFAULT")
or (b) results in the acceleration of such Indebtedness prior to its express
maturity and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more; (vii) failure by the Company or
any of its Restricted Subsidiaries to pay final judgments aggregating in excess
of $5.0 million, which judgments are not paid, discharged or stayed for a period
of 60 days; (viii) breach by the Company or any Subsidiary of any material
representation or warranty set forth in the Collateral Documents, or default by
the Company or any Subsidiary in the performance of any covenant set forth in
the Collateral Documents (after giving effect to any applicable grace or cure
periods), repudiation by the Company or any Subsidiary of its obligations under
the Collateral Documents, the holding that the Collateral Documents are
unenforceable or invalid or any Collateral Document shall cease for any reason
to be in full force and effect; and (ix) certain events of bankruptcy or
insolvency with respect to the Company or any of its Significant Subsidiaries or
any group of Subsidiaries that, taken as a whole, would constitute a Significant
Subsidiary. If any Event of Default occurs and is continuing, the Trustee or
the Holders of at least 25% in principal amount of the then outstanding Notes
may declare all the First Mortgage Notes to be due and payable. Notwithstanding
the foregoing, in the case of an Event of Default arising from certain events of
bankruptcy or insolvency, all outstanding Notes will become due and payable
without further action or notice. Holders may not enforce the Indenture or the
First Mortgage Notes except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in principal amount of the then outstanding
Notes may direct the Trustee in its exercise of any trust or power. The Trustee
may withhold from Holders of the First Mortgage Notes notice of any continuing
Default or Event of Default (except a Default or Event of Default relating to
the payment of principal or interest) if it determines that withholding notice
is in their interest. The Holders of a majority in aggregate principal amount
of the First Mortgage Notes then outstanding by notice to the Trustee may on
behalf of the Holders of all of the First Mortgage Notes waive any existing
Default or Event of Default and its consequences under the Indenture except a
continuing Default or Event of Default in the payment of interest on, or the
principal of, the First Mortgage Notes. The Issuers are required to deliver to
the Trustee annually a statement regarding
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compliance with the Indenture, and the Issuers are required upon becoming aware
of any Default or Event of Default, to deliver to the Trustee a statement
specifying such Default or Event of Default.
13. TRUSTEE DEALINGS WITH ISSUERS. The Trustee, in its individual or any
other capacity, may make loans to, accept deposits from, and perform services
for the Issuers or its Affiliates, and may otherwise deal with the Issuers or
its Affiliates, as if it were not the Trustee.
14. NO RECOURSE AGAINST OTHERS. A member, director, officer, employee,
incorporator or stockholder, of the Company, as such, shall not have any
liability for any obligations of the Company under the First Mortgage Notes or
this Indenture or for any claim based on, in respect of, or by reason of, such
obligations or their creation. Each Holder by accepting a First Mortgage Note
waives and releases all such liability. The waiver and release are part of the
consideration for the issuance of the First Mortgage Notes.
15. AUTHENTICATION. This Note shall not be valid until authenticated by
the manual signature of the Trustee or an authenticating agent.
16. ABBREVIATIONS. Customary abbreviations may be used in the name of a
Holder or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).
17. ADDITIONAL RIGHTS OF HOLDERS OF TRANSFER RESTRICTED SECURITIES. In
addition to the rights provided to Holders of Notes under the Indenture, Holders
of Transferred Restricted Securities shall have all the rights set forth in the
A/B Exchange Registration Rights Agreement dated as of May 30, 1996, between the
Company and the parties named on the signature pages thereof (the "Registration
Rights Agreement") and the rights set forth in the Collateral Documents.
18. CUSIP NUMBERS. Pursuant to a recommendation promulgated by the
Committee on Uniform Security Identification Procedures, the Issuers have caused
CUSIP numbers to be printed on the First Mortgage Notes and the Trustee may use
CUSIP numbers in notices of redemption as a convenience to Holders. No
representation is made as to the accuracy of such numbers either as printed on
the First Mortgage Notes or as contained in any notice of redemption and
reliance may be placed only on the other identification numbers placed thereon.
The Issuers will furnish to any Holder upon written request and without
charge a copy of the Indenture, the Collateral Documents and/or the Registration
Rights Agreement. Requests may be made to:
Florida Coast Paper Company, L.L.C.
600 U.S. Highway 98
Port St. Joe, Florida 32456
Attention:
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ASSIGNMENT FORM
To assign this Note, fill in the form below: (I) or (we) assign and
transfer this Note to
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(Insert assignee's soc. sec. or tax I.D. no.)
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(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________________________________
to transfer this Note on the books of the Company. The agent may substitute
another to act for him.
- --------------------------------------------------------------------------------
Date:
------------------------
Your Signature:
---------------------------------------------
(Sign exactly as your name appears on the face of this Note)
Signature Guarantee.
A-8
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company
pursuant to Section 4.10 or 4.15 of the Indenture, check the box below:
/ / Section 4.10 / / Section 4.15
If you want to elect to have only part of the First Mortgage Note
purchased by the Company pursuant to Section 4.10 or Section 4.15 of the
Indenture, state the amount you elect to have purchased: $___________
Date: Your Signature:
------------------------- ------------------------------
(Sign exactly as your name appears on the
First Mortgage Note)
Tax Identification No.:
--------------------
Signature Guarantee.
A-9
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTE(2)
The following exchanges of a part of this Global Note for Definitive
Notes have been made:
<TABLE>
<CAPTION>
Principal Amount of this Signature of
Amount of decrease in Amount of increase in Global Note authorized officer of
Principal Amount of Principal Amount of following such decrease Trustee or Note
Date of Exchange this Global Note this Global Note (or increase) Custodian
- ------------------------- --------------------- --------------------- ------------------------ ---------------------
<S> <C> <C> <C> <C>
</TABLE>
- --------------------
2. THIS SHOULD BE INCLUDED ONLY IF THE FIRST MORTGAGE NOTE IS ISSUED IN GLOBAL
FORM.
A-10
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT B
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF FIRST
MORTGAGE NOTES
Re: 12 3/4% First Mortgage Notes due 2003 of Florida Coast Paper Company,
L.L.C.
and Florida Coast Paper Finance Corp.
This Certificate relates to $_____ principal amount of Notes held in
*________ book-entry or *_______ definitive form by ________________ (the
"Transferor").
The Transferor*:
/ / has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a First
Mortgage Note or Notes in definitive, registered form of authorized
denominations in an aggregate principal amount equal to its beneficial interest
in such Global Note (or the portion thereof indicated above); or
/ / has requested the Trustee by written order to exchange or register the
transfer of a First Mortgage Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above captioned Notes and as provided in Section 2.06 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:*
/ / Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.06(a)(ii)(A) or Section 2.06(d)(i)(A) of
the Indenture).
/ / Such Note is being transferred to a "qualified institutional buyer"
(as defined in Rule 144A under the Securities Act of 1933, as amended (the
"Securities Act")) in reliance on Rule 144A (in satisfaction of Section
2.06(a)(ii)(B), Section 2.06(b)(A) or Section 2.06(d)(i) (B) of the Indenture)
or pursuant to an exemption from registration in accordance with Rule 904 under
the Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture.)
- --------------------
*Check applicable box.
B-1
<PAGE>
/ / Such Note is being transferred in accordance with Rule 144 under the
Securities Act, or pursuant to an effective registration statement under the
Securities Act (in satisfaction of Section 2.06(a)(ii)(B) or Section
2.06(d)(i)(B) of the Indenture).
/ / Such Note is being transferred in reliance on and in compliance with
an exemption from the registration requirements of the Securities Act, other
than Rule 144A, 144 or Rule 904 under the Securities Act. An Opinion of Counsel
to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.06(a)(ii)(C) or Section 2.06(d)(i)(C) of the Indenture).
---------------------------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------------------------
Date:
------------------------------
- --------------------
*Check applicable box.
B-2
<PAGE>
EXHIBIT 4.3
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
FIRST MORTGAGE NOTES
REGISTRATION RIGHTS AGREEMENT
May 30, 1996
BEAR, STEARNS & CO. INC.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
This First Mortgage Notes Registration Rights Agreement (this
"AGREEMENT") is made and entered into as of May 30, 1996 by and among Florida
Coast Paper Company, L.L.C., a limited liability company organized under the
laws of Delaware (the "COMPANY"), Florida Coast Paper Finance Corp., a Delaware
corporation ("FINANCE CORP." and, together with the Company, the "ISSUERS"), and
Bear, Stearns & Co., Inc. (the "PURCHASER"), who has agreed to purchase the
Issuers' __% Series A First Mortgage Notes due 2006 (the "SERIES A FIRST
MORTGAGE NOTES") pursuant to the Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated May
___, 1996 (the "PURCHASE AGREEMENT"), by and among the Issuers and the
Purchaser. In order to induce the Purchaser to purchase the Series A First
Mortgage Notes, the Issuers have agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Purchaser set forth in Section 2 of the
Purchase Agreement.
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
ACT: The Securities Act of 1933, as amended.
BROKER-DEALER: Any broker or dealer registered under the Exchange
Act.
CLOSING DATE: The date of this Agreement.
COMMISSION: The Securities and Exchange Commission.
CONSUMMATE: A Registered Exchange Offer shall be deemed "Consummated"
for purposes of this Agreement upon the occurrence of (i) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B First Mortgage Notes to be issued in the Exchange
Offer, (ii) the maintenance of such Registration Statement continuously
effective and the keeping of the Exchange Offer open for a period not less than
the minimum period required pursuant to Section 3(b) hereof, and (iii) the
delivery by the Issuers to the Registrar under the Indenture of Series B First
Mortgage Notes in the same aggregate principal amount as the aggregate principal
amount of Series A First Mortgage Notes that were tendered by Holders thereof
pursuant to the Exchange Offer.
DAMAGES PAYMENT DATE: With respect to the Series A First Mortgage
Notes, each Interest Payment Date.
EFFECTIVENESS TARGET DATE: As defined in Section 5.
EXCHANGE ACT: The Securities Exchange Act of 1934, as amended.
EXCHANGE OFFER: The registration by the Issuers under the Act of the
Series B First Mortgage Notes pursuant to a Registration Statement pursuant to
which the Issuers shall offer the Holders of all outstanding Transfer Restricted
Securities the opportunity to exchange all such outstanding Transfer Restricted
Securities held by such Holders for Series B First Mortgage Notes in an
aggregate principal
1
<PAGE>
amount equal to the aggregate principal amount of the Transfer Restricted
Securities tendered in such exchange offer by such Holders.
EXCHANGE OFFER REGISTRATION STATEMENT: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
EXEMPT RESALES: The transactions in which the Purchaser proposes to
sell the Series A First Mortgage Notes to certain "qualified institutional
buyers," as such term is defined in Rule 144A under the Act, and to certain
institutional "accredited investors," as such term is defined in Rule 501(a)(1),
(2), (3) and (7) of Regulation D under the Act ("ACCREDITED INSTITUTIONS").
FIRST MORTGAGE NOTES: The Series A First Mortgage Notes and the
Series B First Mortgage Notes.
HOLDERS: As defined in Section 2(b) hereof.
INDEMNIFIED HOLDER: As defined in Section 8(a) hereof.
INDENTURE: The Indenture, dated as of May 30, 1996, by and among the
Issuers and Norwest Bank Minnesota, N.A., as trustee (the "TRUSTEE") pursuant to
which the First Mortgage Notes are to be issued, as such Indenture is amended or
supplemented from time to time in accordance with the terms thereof.
INTEREST PAYMENT DATE: As defined in the Indenture and the First
Mortgage Notes.
NASD: National Association of Securities Dealers, Inc.
PERSON: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
PROSPECTUS: The prospectus included in a Registration Statement, as
amended or supplemented by any prospectus supplement and by all other amendments
thereto, including post-effective amendments, and all material incorporated by
reference into such Prospectus.
PURCHASER: As defined in the preamble hereto.
RECORD HOLDER: With respect to any Damages Payment Date relating to
First Mortgage Notes, each Person who is a Holder of First Mortgage Notes on the
record date with respect to the Interest Payment Date on which such Damages
Payment Date shall occur.
REGISTRATION DEFAULT: As defined in Section 5 hereof.
REGISTRATION STATEMENT: Any registration statement of the Issuers
relating to (a) an offering of Series B First Mortgage Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, which is filed pursuant
to the provisions of this Agreement, in each case, including the Prospectus
included therein, all amendments and supplements thereto (including post-
effective amendments) and all exhibits and material incorporated by reference
therein.
2
<PAGE>
SERIES B FIRST MORTGAGE NOTES: The Issuers' 12 3/4% Series B First
Mortgage Notes due 2006 to be issued pursuant to the Indenture in the Exchange
Offer.
SHELF FILING DEADLINE: As defined in Section 4 hereof.
SHELF REGISTRATION STATEMENT: As defined in Section 4 hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
TRANSFER RESTRICTED SECURITIES: Each First Mortgage Note, until the
earliest to occur of (a) the date on which such First Mortgage Note is exchanged
in the Exchange Offer and entitled to be resold to the public by the Holder
thereof without complying with the prospectus delivery requirements of the Act,
(b) the date on which such First Mortgage Note has been effectively registered
under the Act and disposed of in accordance with a Shelf Registration Statement
and (c) the date on which such First Mortgage Note is distributed to the public
pursuant to Rule 144 under the Act or by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein).
UNDERWRITTEN REGISTRATION or UNDERWRITTEN OFFERING: A registration in
which securities of the Issuers are sold to an underwriter for reoffering to the
public.
SECTION 2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) TRANSFER RESTRICTED SECURITIES. The securities entitled to the
benefits of this Agreement are the Transfer Restricted Securities.
(b) HOLDERS OF TRANSFER RESTRICTED SECURITIES. A Person is deemed to
be a holder of Transfer Restricted Securities (each, a "HOLDER") whenever such
Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permissible under
applicable law or Commission policy (after the procedures set forth in Section
6(a) below have been complied with), the Issuers shall (i) cause to be filed
with the Commission as soon as practicable after the Closing Date, but in no
event later than 45 days after the Closing Date, a Registration Statement under
the Act relating to the Series B First Mortgage Notes and the Exchange Offer,
(ii) use their best efforts to cause such Registration Statement to become
effective at the earliest possible time, but in no event later than 120 days
after the Closing Date, (iii) in connection with the foregoing, file (A) all
pre-effective amendments to such Registration Statement as may be necessary in
order to cause such Registration Statement to become effective, (B) if
applicable, a post-effective amendment to such Registration Statement pursuant
to Rule 430A under the Act and (C) cause all necessary filings, if any, in
connection with the registration and qualification of the Series B First
Mortgage Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer, except as would subject
them to service of process in suits or taxation, in each case, other than as to
matters and transactions relating to the Offering Memorandum, Exchange Offer or
Exempt Resales, in any jurisdiction where they
3
<PAGE>
are not now so subject and (iv) upon the effectiveness of such Registration
Statement, commence the Exchange Offer. The Exchange Offer shall be on the
appropriate form permitting registration of the Series B First Mortgage Notes to
be offered in exchange for the Transfer Restricted Securities and to permit
resales of First Mortgage Notes held by Broker-Dealers as contemplated by
Section 3(c) below.
(b) The Issuers shall cause the Exchange Offer Registration Statement
to be effective continuously and shall keep the Exchange Offer open for a period
of not less than the minimum period required under applicable federal and state
securities laws to Consummate the Exchange Offer; PROVIDED, HOWEVER, that in no
event shall such period be less than 20 business days. The Issuers shall cause
the Exchange Offer to comply with all applicable federal and state securities
laws. Without the consent of the Purchaser, no securities other than the First
Mortgage Notes shall be included in the Exchange Offer Registration Statement.
The Issuers shall use their best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Issuers shall indicate in a "Plan of Distribution" section
contained in the Prospectus contained in the Exchange Offer Registration
Statement that any Broker-Dealer who holds Series A First Mortgage Notes that
are Transfer Restricted Securities and that were acquired for its own account as
a result of market-making activities or other trading activities (other than
Transfer Restricted Securities acquired directly from the Issuers or an
affiliate of the Issuers), may exchange such Series A First Mortgage Notes
pursuant to the Exchange Offer; however, such Broker-Dealer may be deemed to be
an "underwriter" within the meaning of the Act and must, therefore, deliver a
prospectus meeting the requirements of the Act in connection with any resales of
the Series B First Mortgage Notes received by such Broker-Dealer in the Exchange
Offer, which prospectus delivery requirement may be satisfied by the delivery by
such Broker-Dealer of the Prospectus contained in the Exchange Offer
Registration Statement. Such "Plan of Distribution" section shall also contain
all other information with respect to such resales by Broker-Dealers that the
Commission may require in order to permit such resales pursuant thereto, but
such "Plan of Distribution" shall not name any such Broker-Dealer or disclose
the amount of First Mortgage Notes held by any such Broker-Dealer except to the
extent required by the Commission as a result of a change in policy after the
date of this Agreement.
The Issuers shall use their best efforts to keep the Exchange Offer
Registration Statement continuously effective, supplemented and amended as
required by the provisions of Section 6(c) below to the extent necessary to
ensure that it is available for resales of First Mortgage Notes acquired by
Broker-Dealers for their own accounts as a result of market-making activities or
other trading activities, and to ensure that it conforms with the requirements
of this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of 270 days from the
date on which the Exchange Offer Registration Statement is declared effective.
The Issuers shall provide sufficient copies of the latest version of
such Prospectus to Broker-Dealers promptly upon request at any time during such
270 day period in order to facilitate such resales.
SECTION 4. SHELF REGISTRATION
(a) SHELF REGISTRATION. If (i) the Issuers are not required to file
an Exchange Offer Registration Statement or to consummate the Exchange Offer
because the Exchange Offer is not permitted by applicable law or Commission
policy (after the procedures set forth in Section 6(a) below have been
4
<PAGE>
complied with) or (ii) if any Holder of Transfer Restricted Securities shall
notify the Company within 20 business days of the Consummation of the Exchange
Offer (A) that such Holder is prohibited by applicable law or Commission policy
from participating in the Exchange Offer, or (B) that such Holder may not resell
the Series B First Mortgage Notes acquired by it in the Exchange Offer to the
public without delivering a prospectus and that the Prospectus contained in the
Exchange Offer Registration Statement is not appropriate or available for such
resales by such Holder, or (C) that such Holder is a Broker-Dealer and holds
Series A First Mortgage Notes acquired directly from the Issuers or one of their
affiliates, then the Issuers shall:
(x) cause to be filed a shelf registration statement
pursuant to Rule 415 under the Act, which may be an amendment to the
Exchange Offer Registration Statement (in either event, the "SHELF
REGISTRATION STATEMENT") on or prior to the earliest to occur of (1)
the 60th day after the date on which the Company determines that it is
not required to file the Exchange Offer Registration Statement, (2)
the 60th day after the date on which the Company receives notice from
a Holder of Transfer Restricted Securities as contemplated by clause
(ii) above, and (3) the 120th day after the Closing Date (such
earliest date being the "SHELF FILING DEADLINE"), which Shelf
Registration Statement shall provide for resales of all Transfer
Restricted Securities the Holders of which shall have provided the
information required pursuant to Section 4(b) hereof; and
(y) use its best efforts to cause such Shelf Registration
Statement to be declared effective by the Commission on or before the
90th day after the Shelf Filing Deadline.
The Issuers shall use their best efforts to keep such Shelf Registration
Statement continuously effective, supplemented and amended as required by the
provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
that it is available for resales of First Mortgage Notes by the Holders of
Transfer Restricted Securities entitled to the benefit of this Section 4(a), and
to ensure that it conforms with the requirements of this Agreement, the Act and
the policies, rules and regulations of the Commission as announced from time to
time, for a period of three years following the Closing Date.
(b) PROVISION BY HOLDERS OF CERTAIN INFORMATION IN CONNECTION WITH
THE SHELF REGISTRATION STATEMENT. No Holder of Transfer Restricted Securities
may include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 business days after receipt of a request
therefor, such information as the Company may reasonably request for use in
connection with any Shelf Registration Statement or Prospectus or preliminary
Prospectus included therein. No Holder of Transfer Restricted Securities shall
be entitled to Liquidated Damages pursuant to Section 5 hereof unless and until
such Holder shall have used its best efforts to provide all such reasonably
requested information. Each Holder as to which any Shelf Registration Statement
is being effected agrees to furnish promptly to the Company all information
required to be disclosed in order to make the information previously furnished
to the Company by such Holder not materially misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any of the Registration Statements required by this Agreement
is not filed with the Commission on or prior to the date specified for such
filing in this Agreement, (ii) any of such Registration Statements has not been
declared effective by the Commission on or prior to the date
5
<PAGE>
specified for such effectiveness in this Agreement (the "EFFECTIVENESS TARGET
DATE"), (iii) the Exchange Offer has not been Consummated within 30 business
days after the Effectiveness Target Date with respect to the Exchange Offer
Registration Statement or (iv) any Registration Statement required by this
Agreement is filed and declared effective but shall thereafter cease to be
effective or fail to be usable for its intended purpose without being succeeded
immediately by a post-effective amendment to such Registration Statement that
cures such failure and that is itself immediately declared effective (each such
event referred to in clauses (i) through (iv), a "REGISTRATION DEFAULT"), the
Issuers hereby agree, jointly and severally, to pay liquidated damages to each
Holder of Transfer Restricted Securities with respect to the first 90-day
period, or any portion thereof, immediately following the occurrence of such
Registration Default, in an amount equal to 50 basis points per annum of the
principal amount of the Series A First Mortgage Notes held by such Holder. The
amount of the liquidated damages will increase by an additional fifty basis
points per annum of the principal amount of the Series A First Mortgage Notes
held by such Holder for each subsequent 90-day period, or any portion thereof,
until all Registration Defaults have been cured, up to a maximum amount of two
hundred basis points per annum. All accrued liquidated damages shall be paid to
the affected Record Holders by the Issuers by wire transfer of immediately
available funds or by federal funds check on each Damages Payment Date, as
provided in the Indenture. As of the date the cure of all Registration Defaults
relating to any particular Transfer Restricted Securities, the accrual of
liquidated damages with respect to such Transfer Restricted Securities will
cease.
All obligations of the Issuers set forth in the preceding paragraph
that are outstanding with respect to any Transfer Restricted Security at the
time such security ceases to be a Transfer Restricted Security shall survive
until such time as all such obligations with respect to such Security shall have
been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) EXCHANGE OFFER REGISTRATION STATEMENT. In connection with the
Exchange Offer, the Issuers shall comply with all of the provisions of Section
6(c) below, shall use their best efforts to effect such exchange to permit the
sale of Transfer Restricted Securities being sold in accordance with the
intended method or methods of distribution thereof, and shall comply with all of
the following provisions:
(i) If in the reasonable opinion of counsel to the Issuers there
is a question as to whether the Exchange Offer is permitted by applicable
law, the Issuers hereby agree, to the extent reasonably practicable, to
seek a no-action letter or other favorable decision from the Commission
allowing the Issuers to Consummate an Exchange Offer for such Series A
First Mortgage Notes. The Issuers hereby agree to pursue the issuance of
such a decision to the Commission staff level but shall not be required to
take commercially unreasonable action to effect a change of Commission
policy. The Issuers hereby agree, however, to (A) participate in
telephonic conferences with the Commission, (B) deliver to the Commission
staff an analysis prepared by counsel to the Issuers setting forth the
legal bases, if any, upon which such counsel has concluded that such an
Exchange Offer should be permitted and (C) diligently pursue a resolution
(which need not be favorable) by the Commission staff of such submission.
(ii) As a condition to its participation in the Exchange Offer
pursuant to the terms of this Agreement, each Holder of Transfer Restricted
Securities shall furnish, upon the request of the Company, prior to the
Consummation thereof, a written representation to the Issuers (which may be
6
<PAGE>
contained in the letter of transmittal contemplated by the Exchange Offer
Registration Statement) to the effect that (A) it is not an affiliate of
either of the Issuers, (B) it is not engaged in, and does not intend to
engage in, and has no arrangement or understanding with any person to
participate in, a distribution of the Series B First Mortgage Notes to be
issued in the Exchange Offer, (C) it is acquiring the Series B First
Mortgage Notes in its ordinary course of business and (D) it is not acting
on behalf of any person who could not make the foregoing representations.
In addition, all such Holders of Transfer Restricted Securities shall
otherwise cooperate in the Issuers' preparations for the Exchange Offer.
Each Holder hereby acknowledges and agrees that any Broker-Dealer and any
such Holder using the Exchange Offer to participate in a distribution of
the securities to be acquired in the Exchange Offer (1) could not under
Commission policy as in effect on the date of this Agreement rely on the
position of the Commission enunciated in MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and EXXON CAPITAL HOLDINGS CORPORATION (available
May 13, 1988), as interpreted in the Commission's letter to Shearman &
Sterling dated July 2, 1993, and similar no-action letters (including, if
applicable, any no-action letter obtained pursuant to clause (i) above),
and (2) must comply with the registration and prospectus delivery
requirements of the Act in connection with a secondary resale transaction
and that such a secondary resale transaction should be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K
if the resales are of Series B First Mortgage Notes obtained by such Holder
in exchange for Series A First Mortgage Notes acquired by such Holder
directly from the Issuers.
(iii) Prior to effectiveness of the Exchange Offer Registration
Statement, the Issuers shall provide a supplemental letter to the
Commission (A) stating that the Issuers are registering the Exchange Offer
in reliance on the position of the Commission enunciated in EXXON CAPITAL
HOLDINGS CORPORATION (available May 13, 1988), MORGAN STANLEY AND CO., INC.
(available June 5, 1991) and, if applicable, any no-action letter obtained
pursuant to clause (i) above and (B) including a representation that the
Issuers have not entered into any arrangement or understanding with any
Person to distribute the Series B First Mortgage Notes to be received in
the Exchange Offer and that, to the best of the Issuers' information and
belief, each Holder participating in the Exchange Offer is acquiring the
Series B First Mortgage Notes in its ordinary course of business and has no
arrangement or understanding with any Person to participate in the
distribution of the Series B First Mortgage Notes received in the Exchange
Offer.
(b) SHELF REGISTRATION STATEMENT. In connection with the Shelf
Registration Statement, the Issuers shall comply with all the provisions of
Section 6(c) below and shall use their best efforts to effect such registration
to permit the sale of the Transfer Restricted Securities being sold in
accordance with the intended method or methods of distribution thereof (as
indicated in the information furnished to the Company pursuant to Section 4(b)
hereof), and pursuant thereto the Company will prepare and file with the
Commission a Registration Statement relating to the registration on any
appropriate form under the Act, which form shall be available for the sale of
the Transfer Restricted Securities in accordance with the intended method or
methods of distribution thereof.
(c) GENERAL PROVISIONS. In connection with any Registration
Statement and any related Prospectus required by this Agreement to permit the
sale or resale of Transfer Restricted Securities (including, without limitation,
any Registration Statement and the related Prospectus required to permit resales
of First Mortgage Notes by Broker-Dealers), the Issuers shall:
7
<PAGE>
(i) use their best efforts to keep such Registration Statement
continuously effective and provide all requisite financial statements for
the period specified in Section 3 or 4 of this Agreement, as applicable;
upon the occurrence of any event that would cause any such Registration
Statement or the Prospectus contained therein (A) to contain a material
misstatement or omission or (B) not to be effective and usable for resale
of Transfer Restricted Securities during the period required by this
Agreement, the Issuers shall file promptly an appropriate amendment to such
Registration Statement, in the case of clause (A), correcting any such
misstatement or omission, and, in the case of either clause (A) or (B), use
its best efforts to cause such amendment to be declared effective and such
Registration Statement and the related Prospectus to become usable for
their intended purpose(s) as soon as practicable thereafter;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for the applicable period set
forth in Section 3 or 4 hereof, as applicable, or such shorter period as
will terminate when all Transfer Restricted Securities covered by such
Registration Statement have been sold; cause the Prospectus to be
supplemented by any required Prospectus supplement, and as so supplemented
to be filed pursuant to Rule 424 under the Act, and to comply fully with
the applicable provisions of Rules 424 and 430A under the Act in a timely
manner; and comply with the provisions of the Act with respect to the
disposition of all securities covered by such Registration Statement during
the applicable period in accordance with the intended method or methods of
distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;
(iii) advise the underwriter(s), if any, and selling Holders
promptly and, if requested by such Persons, to confirm such advice in
writing, (A) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to any Registration
Statement or any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus or
for additional information relating thereto, (C) of the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation of
any proceeding for any of the preceding purposes, (D) of the existence of
any fact or the happening of any event that makes any statement of a
material fact made in the Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by reference
therein untrue, or that requires the making of any additions to or changes
in the Registration Statement or the Prospectus in order to make the
statements therein not misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of the Registration
Statement, or any state securities commission or other regulatory authority
shall issue an order suspending the qualification or exemption from
qualification of the Transfer Restricted Securities under state securities
or Blue Sky laws, the Issuers shall use their best efforts to obtain the
withdrawal or lifting of such order at the earliest possible time;
(iv) furnish to each of the selling Holders named in any
Registration Statement or Prospectus and each of the underwriter(s) in
connection with such sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein or
any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review of such Holders and underwriter(s) in connection with
such
8
<PAGE>
sale, if any, for a period of at least five business days, and the Issuers
shall not file any such Registration Statement or Prospectus or any
amendment or supplement to any such Registration Statement or Prospectus
(including all such documents incorporated by reference) to which a selling
Holder of Transfer Restricted Securities covered by such Registration
Statement or the underwriter(s), if any, shall reasonably object within
five business days after the receipt thereof. A selling Holder or
underwriter, if any, shall be deemed to have reasonably objected to such
filing if such Registration Statement, amendment, Prospectus or supplement,
as applicable, as proposed to be filed, contains a material misstatement or
omission;
(v) promptly prior to the filing of any document that is to be
incorporated by reference into a Registration Statement or Prospectus,
provide copies of such document to the selling Holders covered by such
Registration Statement and to the underwriter(s) in connection with such
sale, if any, make the Issuers' representatives available for discussion of
such document and other customary due diligence matters on reasonable prior
notice, and include such information in such document prior to the filing
thereof as such selling Holders or underwriter(s), if any, reasonably may
request within five business days of the receipt of the proposed filing;
(vi) make available at reasonable times for inspection by the
selling Holders, any underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant retained by
such selling Holders or any of the underwriter(s), all financial and other
records, pertinent corporate documents and properties of the Issuer and
cause the Issuers' officers, directors, Committee Members and employees, as
applicable, to supply all information reasonably requested by any such
Holder, underwriter, attorney or accountant in connection with such
Registration Statement subsequent to the filing thereof and prior to its
effectiveness;
(vii) if requested by any selling Holders covered by such
Registration Statement or the underwriter(s) in connection with such sale,
if any, promptly incorporate in any Registration Statement or Prospectus,
pursuant to a supplement or post-effective amendment if necessary, such
information as such selling Holders and underwriter(s), if any, may
reasonably request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities, information with respect to the principal amount of
Transfer Restricted Securities being sold to such underwriter(s), the
purchase price being paid therefor and any other terms of the offering of
the Transfer Restricted Securities to be sold in such offering; and make
all required filings of such Prospectus supplement or post-effective
amendment as soon as practicable after the Company is notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;
(viii) cause the Transfer Restricted Securities covered by the
Registration Statement to be rated with the appropriate rating agencies, if
so requested by the Holders of a majority in aggregate principal amount of
First Mortgage Notes covered thereby or the underwriter(s), if any;
(ix) furnish to each selling Holder covered by such Registration
Statement and each of the underwriter(s) in connection with such sale, if
any, without charge, at least one copy of the Registration Statement, as
first filed with the Commission, and of each amendment thereto, including
all documents incorporated by reference therein and all exhibits (including
exhibits incorporated therein by reference);
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(x) deliver to each selling Holder and to each of the
underwriter(s), if any, without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or supplement
thereto as such Persons reasonably may request; the Issuers hereby consent
to the use of the Prospectus and any amendment or supplement thereto by
each of the selling Holders and each of the underwriter(s), if any, in
connection with the offering and the sale of the Transfer Restricted
Securities covered by the Prospectus or any amendment or supplement
thereto, PROVIDED that the Company has not advised such persons otherwise
pursuant to Section 6(c)(iii);
(xi) enter into such agreements (including an underwriting
agreement), and make such representations and warranties, and take all such
other actions in connection therewith in order to expedite or facilitate
the disposition of the Transfer Restricted Securities pursuant to any
Registration Statement contemplated by this Agreement, all to such extent
as may be requested by any Purchaser or by any Holder of Transfer
Restricted Securities or underwriter in connection with any sale or resale
pursuant to any Registration Statement contemplated by this Agreement; and
whether or not an underwriting agreement is entered into and whether or not
the registration is an Underwritten Registration, each Issuer shall:
(A) furnish to the Purchaser, each selling Holder and each
underwriter, if any, in such substance and scope as they may request
and as are customarily made by issuers to underwriters in primary
underwritten offerings, upon the date of the Consummation of the
Exchange Offer and, if applicable, the effectiveness of the Shelf
Registration Statement:
(1) a certificate, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, signed by (y) the
President or any Vice President and (z) a principal financial or
accounting officer of such Issuer confirming, as of the date
thereof, the matters set forth in paragraphs (a), (b), (c) and
(d) of Section 8 of the Purchase Agreement and such other matters
as such parties may reasonably request;
(2) an opinion, dated the date of Consummation of the
Exchange Offer or the date of effectiveness of the Shelf
Registration Statement, as the case may be, of counsel for the
Issuers, covering the matters set forth in paragraph (f) of
Section 8 of the Purchase Agreement and such other matters as
such parties may reasonably request, and in any event including a
statement to the effect that such counsel has participated in
conferences with officers and other representatives of the
Issuers, representatives of the independent public accountants
for the Issuers, the Purchaser's representatives and the
Purchaser's counsel in connection with the preparation of such
Registration Statement and the related Prospectus and have
considered the matters required to be stated therein and the
statements contained therein, although such counsel has not
independently verified the accuracy, completeness or fairness of
such statements; and that such counsel advises that, on the basis
of the foregoing (relying as to materiality to a large extent
upon facts provided to such counsel by officers and other
representatives of the Issuers and without independent check or
verification), no facts came to such counsel's attention that
caused such counsel to believe that the applicable Registration
Statement, at the time such Registration Statement or any
post-effective amendment thereto became effective, and, in the
case of the Exchange Offer Registration Statement, as of the date
of Consummation, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or
that the Prospectus contained in such
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Registration Statement as of its date and, in the case of the
opinion dated the date of Consummation of the Exchange Offer, as
of the date of Consummation, contained an untrue statement of a
material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
Without limiting the foregoing, such counsel may state further
that such counsel assumes no responsibility for, and has not
independently verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and other financial
data included in any Registration Statement contemplated by this
Agreement or the related Prospectus; and
(3) provided that the requesting Holders, underwriters, if
any, or other such financial intermediary furnish the undertaking
required in SAS 72, if required, a customary comfort letter,
dated as of the date of Consummation of the Exchange Offer or the
date of effectiveness of the Shelf Registration Statement, as the
case may be, from the Issuers' independent accountants, in the
customary form and covering matters of the type customarily
covered in comfort letters by underwriters in connection with
primary underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to Section 8(h)
of the Purchase Agreement, without exception;
(B) set forth in full or incorporate by reference in the
underwriting agreement, if any, the indemnification provisions and
procedures of Section 8 hereof with respect to all parties to be
indemnified pursuant to said Section; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Issuers
pursuant to this clause (xi), if any.
If at any time the representations and warranties of the Issuers
contemplated in clause (A)(1) above cease to be true and correct, the
Issuers shall so advise the Purchaser and the underwriter(s), if any, and
each selling Holder promptly and, if requested by such Persons, shall
confirm such advice in writing;
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s), if any,
and their respective counsel in connection with the registration and
qualification of the Transfer Restricted Securities under the securities or
Blue Sky laws of such jurisdictions as the selling Holders or
underwriter(s), if any, may request and do any and all other acts or things
necessary or advisable to enable the disposition in such jurisdictions of
the Transfer Restricted Securities covered by the Shelf Registration
Statement; PROVIDED, HOWEVER, that the Issuers shall not be required to
register or qualify as a foreign corporation where it is not now so
qualified or to take any action that would subject it to the service of
process in suits or to taxation, other than as to matters and transactions
relating to the Registration Statement, in any jurisdiction where it is not
now so subject;
(xiii) upon the request of any Holder of Series A First Mortgage
Notes covered by the Shelf Registration Statement contemplated by this
Agreement, issue Series B First Mortgage Notes having an aggregate
principal amount equal to the aggregate principal amount of Series A First
Mortgage Notes surrendered to the Issuers by such Holder in exchange
therefor or being sold by such
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Holder; such Series B First Mortgage Notes to be registered in the name of
such Holder or in the name of the purchaser(s) of such First Mortgage
Notes, as the case may be; in return, the Series A First Mortgage Notes
held by such Holder shall be surrendered to the Issuers for cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders and the
underwriter(s), if any, to facilitate the timely preparation and delivery
of certificates representing Transfer Restricted Securities to be sold and
not bearing any restrictive legends; and enable such Transfer Restricted
Securities to be in such denominations and registered in such names as the
Holders or the underwriter(s), if any, may request at least two business
days prior to any sale of Transfer Restricted Securities made by such
underwriter(s);
(xv) use its best efforts to cause the Transfer Restricted
Securities covered by the Registration Statement to be registered with or
approved by such other governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof or the underwriter(s), if
any, to consummate the disposition of such Transfer Restricted Securities;
(xvi) if any fact or event contemplated by clause 6(c)(iii)(D)
hereof shall exist or have occurred, prepare a supplement or post-effective
amendment to the Registration Statement or related Prospectus or any
document incorporated therein by reference or file any other required
document so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made, not misleading;
(xvii) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of the Registration Statement
and provide the Trustee under the Indenture with printed certificates for
the Transfer Restricted Securities which are in a form eligible for deposit
with the Depository Trust Company;
(xviii) cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence investigation by
any underwriter (including any "qualified independent underwriter") that is
required to be retained in accordance with the rules and regulations of the
NASD, and use its reasonable best efforts to cause such Registration
Statement to become effective and approved by such governmental agencies or
authorities as may be necessary to enable the Holders selling Transfer
Restricted Securities to consummate the disposition of such Transfer
Restricted Securities;
(xix) otherwise use their best efforts to comply with all
applicable rules and regulations of the Commission, and make generally
available to its security holders, as soon as practicable, a consolidated
earnings statement meeting the requirements of Rule 158 (which need not be
audited) for the twelve-month period (A) commencing at the end of any
fiscal quarter in which Transfer Restricted Securities are sold to
underwriters in a firm or best efforts Underwritten Offering or (B) if not
sold to underwriters in such an offering, beginning with the first month of
the Issuers' first fiscal quarter commencing after the effective date of
the Registration Statement;
(xx) use its best efforts to cause the Indenture to be qualified
under the TIA not later than the effective date of the first Registration
Statement required by this Agreement, and, in connection therewith,
cooperate with the Trustee and the Holders of First Mortgage Notes to
effect such changes
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to the Indenture as may be required for such Indenture to be so qualified
in accordance with the terms of the TIA; and execute, and use its best
efforts to cause the Trustee to execute, all documents that may be required
to effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified in a
timely manner;
(xxi) cause all Transfer Restricted Securities covered by the
Registration Statement to be listed on each securities exchange on which
similar securities issued by the Issuers are then listed if requested by
the Holders of a majority in aggregate principal amount of Series A First
Mortgage Notes or the managing underwriter(s), if any; and
(xxii) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of Section
13 and Section 15 of the Exchange Act.
Each Holder agrees by acquisition of a Transfer Restricted Security
that, upon receipt of any notice from the Issuers of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof, such Holder will forthwith
discontinue disposition of Transfer Restricted Securities pursuant to the
applicable Registration Statement until such Holder's receipt of the copies of
the supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof,
or until it is advised in writing (the "ADVICE") by the Issuers that the use of
the Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated by reference in the Prospectus. If
so directed by the Issuers, each Holder will deliver to the Company (at the
Issuers' expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice. In the event
the Issuers shall give any such notice, the time period regarding the
effectiveness of such Registration Statement set forth in Section 3 or 4 hereof,
as applicable, shall be extended by the number of days during the period from
and including the date of the giving of such notice pursuant to Section
6(c)(iii)(D) hereof to and including the date when each selling Holder covered
by such Registration Statement shall have received the copies of the
supplemented or amended Prospectus contemplated by Section 6(c)(xvi) hereof or
shall have received the Advice.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Issuers' performance of or
compliance with this Agreement will be borne by the Issuers regardless of
whether a Registration Statement becomes effective, including without
limitation: (i) all registration and filing fees and expenses (including filings
made by any Purchaser or Holder with the NASD (and, if applicable, the fees and
expenses of any "qualified independent underwriter" and its counsel that may be
required by the rules and regulations of the NASD)); (ii) all fees and expenses
of compliance with federal securities and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing certificates for the Series B
First Mortgage Notes to be issued in the Exchange Offer and printing of
Prospectuses), messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Issuers and, subject to Section 7(b) below, the
Holders of Transfer Restricted Securities; (v) all application and filing fees
in connection with listing First Mortgage Notes on a national securities
exchange or automated quotation system pursuant to the requirements hereof; and
(vi) all fees and disbursements of independent certified public accountants of
the Issuers (including the expenses of any special audit and comfort letters
required by or incident to such performance).
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The Issuers will, in any event, bear its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal or accounting duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuers.
(b) In connection with any Registration Statement required by this
Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Issuers will reimburse the
Purchaser and the Holders of Transfer Restricted Securities being tendered in
the Exchange Offer and/or resold pursuant to the "Plan of Distribution"
contained in the Exchange Offer Registration Statement or registered pursuant to
the Shelf Registration Statement, as applicable, for the reasonable fees and
disbursements of not more than one counsel, who shall be Latham & Watkins or
such other counsel as may be chosen by the Holders of a majority in principal
amount of the Transfer Restricted Securities for whose benefit such Registration
Statement is being prepared.
SECTION 8. INDEMNIFICATION
(a) The Issuers agree to indemnify and hold harmless (i) each Holder,
(ii) each person, if any, who controls any Holder within the meaning of Section
15 of the Act or Section 20(a) of the Exchange Act and (iii) the respective
officers, directors, partners, employees, representatives and agents of any
Holder or any controlling person to the fullest extent lawful, from and against
any and all losses, liabilities, claims, damages and expenses whatsoever
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
investigation or litigation, commenced or threatened, or any claim whatsoever,
and any and all amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
Preliminary Offering Memorandum or the Offering Memorandum, or in any supplement
thereto or amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; PROVIDED, HOWEVER, that the Issuers
will not be liable in any such case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense (i) arises out of or is based
upon any such untrue statement or alleged untrue statement or omission or
alleged omission made therein in reliance upon and in conformity with written
information furnished to the Issuers by or on behalf of any Holder expressly for
use therein or (ii) is caused by any untrue statement or omission, or any
alleged untrue statement or omission, made in a Preliminary Offering Memorandum
but eliminated or remedied in a subsequent Offering Memorandum, if (A) the
Company shall have previously furnished copies thereof to the Initial Purchaser
in accordance with this Agreement, (B) a copy of the Offering Memorandum was not
sent or given by such Initial Purchaser or on its behalf to such person at or
prior to the written confirmation of the sale of the Senior Secured Notes to
such person, (C) such subsequent Offering Memorandum would have completely
corrected such untrue statement or omission and (D) such allegations are upheld
by a final judgement of a court of competent jurisdiction. This indemnity
agreement will be in addition to any liability which the Issuers may otherwise
have, including, under this Agreement.
(b) Each Holder, severally and not jointly, agrees to indemnify and
hold harmless (i) the Issuers, (ii) each person, if any, who controls the
Issuers within the meaning of Section 15 of the Act or
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Section 20(a) of the Exchange Act and (iii) their respective officers,
directors, partners, members, employees, representatives and agents or any
controlling person to the fullest extent lawful from and against any losses,
liabilities, claims, damages and expenses whatsoever (including but not limited
to attorneys' fees and any and all expenses whatsoever incurred in
investigating, preparing or defending against any investigation or litigation,
commenced or threatened, or any claim whatsoever and any and all amounts paid in
settlement of any claim or litigation), joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Offering Memorandum or
the Offering Memorandum, or in any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is based
upon any untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Issuers by or on behalf of that Holder expressly
for use therein; PROVIDED, HOWEVER, that in no case shall any Holder be liable
or responsible for any amount in excess of the dollar amount of the proceeds
received by such Holder upon the sale of the Registrable Securities giving rise
to such indemnification obligation. This indemnity will be in addition to any
liability which any Holder may otherwise have, including under this Agreement.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent that it
has been prejudiced in any material respect by such failure or from any
liability which it may otherwise have). In case any such action is brought
against any indemnified party, and it notifies an indemnifying party of the
commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case, but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action, (ii) the indemnifying parties
shall not have employed counsel to take charge of the defense of such action
within a reasonable time after notice of commencement of the action, or (iii)
such indemnified party or parties shall have reasonably concluded that there may
be defenses available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (in which case the
indemnifying party or parties shall not have the right to direct the defense of
such action on behalf of the indemnified party or parties), in any of which
events such fees and expenses of counsel shall be borne by the indemnifying
parties; PROVIDED, HOWEVER, that the indemnifying party under subsection (a) or
(b) above, shall only be liable for the legal expenses of one counsel (in
addition to any local counsel) for all indemnified parties in each jurisdiction
in which any claim or action is brought. Anything in this subsection to the
contrary notwithstanding, an indemnifying party shall not be liable for any
settlement of any claim or action effected without its prior written consent;
PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
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(d) In order to provide for contribution in circumstances in which
the indemnification provided for in this Section 8 is for any reason held to be
unavailable from the Issuers or is insufficient to hold harmless a party
indemnified thereunder, the Issuers, on the one hand, and the Holders, on the
other hand, shall contribute to the aggregate losses, claims, damages,
liabilities and expenses of the nature contemplated by such indemnification
provision (including any investigation, legal and other expenses incurred in
connection with, and any amount paid in settlement of, any action, suit or
proceeding or any claims asserted, but after deducting in the case of losses,
claims, damages, liabilities and expenses suffered by the Issuers, any
contribution received by the Issuers from persons, other than the Holders, who
may also be liable for contribution, including persons who control the Issuers
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange
Act) to which the Issuers and any Holder may be subject, in such proportion as
is appropriate to reflect the relative benefits received by the Issuers, on one
hand, and the Holder, on the other hand, from their sale of Transfer Restricted
Securities or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in this Section 8, in such proportion as is
appropriate to reflect the relative fault of the Issuers, on one hand, and the
Holder, on the other hand, in connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of the Issuers,
on one hand, and of the Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuers or the Holder and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Issuers and the Holders agree that it
would not be just and equitable if contribution pursuant to this Section 8 were
determined by PRO RATA allocation or by any other method of allocation which
does not take into account the equitable considerations referred to above.
Notwithstanding the provisions of this Section 8, (i) in no case shall any
Holder be required to contribute any amount in excess of the amount by which the
total value of the Series A First Mortgage Notes held by such Holder exceeds the
amount of any damages which such Holder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, (A) each person, if any, who controls any Holder within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act and (B)
the respective officers, directors, partners, employees, representatives and
agents of any Holder or any controlling person shall have the same rights to
contribution as such Holder, and each person, if any, who controls the Issuers
within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act
shall have the same rights to contribution as the Issuers, subject in each case
to clauses (i) and (ii) of this Section 8(d). Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section 8,
notify such party or parties from whom contribution may be sought, but the
failure to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 8 or otherwise. No party shall be liable for
contribution with respect to any action or claim settled without its prior
written consent; PROVIDED, HOWEVER, that such written consent was not
unreasonably withheld.
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SECTION 9. RULE 144A
The Issuers hereby agree with each Holder, for so long as any Transfer
Restricted Securities remain outstanding, to make available, upon request, to
any Holder or beneficial owner of Transfer Restricted Securities in connection
with any sale thereof and any prospective purchaser of such Transfer Restricted
Securities from such Holder or beneficial owner, the information required by
Rule 144A(d)(4) under the Act in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144A.
SECTION 10. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS
No Holder may participate in any Underwritten Registration hereunder
unless such Holder (a) agrees to sell such Holder's Transfer Restricted
Securities on the basis provided in any underwriting arrangements approved by
the Persons entitled hereunder to approve such arrangements and (b) completes
and executes all reasonable questionnaires, powers of attorney, indemnities,
underwriting agreements, lock-up letters and other documents required under the
terms of such underwriting arrangements.
SECTION 11. SELECTION OF UNDERWRITERS
The Holders of Transfer Restricted Securities covered by the Shelf
Registration Statement who desire to do so may sell such Transfer Restricted
Securities in an Underwritten Offering. In any such Underwritten Offering, the
investment banker or investment bankers and manager or managers that will
administer the offering will be selected by the Holders of a majority in
aggregate principal amount of the Transfer Restricted Securities included in
such offering; PROVIDED, that such investment bankers and managers must be
reasonably satisfactory to the Issuers.
SECTION 12. MISCELLANEOUS
(a) REMEDIES. The Issuers agree that monetary damages (including the
liquidated damages contemplated hereby) would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agree to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Issuers will not, after the date
of this Agreement, enter into any agreement with respect to its securities that
is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. The Issuers have not previously
entered into any agreement granting any registration rights with respect to its
securities to any Person. The rights granted to the Holders hereunder do not in
any way conflict with and are not inconsistent with the rights granted to the
holders of the Issuers' securities under any agreement in effect on the date
hereof.
(c) ADJUSTMENTS AFFECTING THE FIRST MORTGAGE NOTES. The Issuers will
not take any action, or permit any change to occur, with respect to the First
Mortgage Notes that would materially and adversely affect the ability of the
Holders to Consummate any Exchange Offer.
(d) AMENDMENTS AND WAIVERS. The provisions of this Agreement may not
be amended, modified or supplemented, and waivers or consents to or departures
from the provisions hereof may not
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be given unless the Issuers have obtained the written consent of Holders of a
majority of the outstanding principal amount of Transfer Restricted Securities.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof that relates exclusively to the rights of Holders whose
securities are being tendered pursuant to the Exchange Offer and that does not
affect directly or indirectly the rights of other Holders whose securities are
not being tendered pursuant to such Exchange Offer may be given by the Holders
of a majority of the outstanding principal amount of Transfer Restricted
Securities being tendered or registered.
(e) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under the
Indenture; and
(ii) if to the Issuers, to:
Florida Coast Paper Company, L.L.C.
600 U.S. Highway 98
Telecopier No.:
Attention:
With a copy to:
Kramer, Levin, Naftalis & Frankel
919 Third Ave
New York, New York 10022
Telecopier No.: (212) 751-8000
Attention: Michael S. Nelson
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if telecopied; and on the
next business day, if timely delivered to an air courier guaranteeing overnight
delivery.
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
(f) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; PROVIDED,
HOWEVER, that this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign acquired Transfer Restricted Securities from such Holder.
(g) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
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(h) HEADINGS. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) SEVERABILITY. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the remaining
provisions contained herein shall not be affected or impaired thereby.
(k) ENTIRE AGREEMENT. This Agreement together with the other
Operative Documents (as defined in the Purchase Agreement) is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties hereto
in respect of the subject matter contained herein. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein with respect to the registration rights granted by the Issuers with
respect to the Transfer Restricted Securities. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matter.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
FLORIDA COAST PAPER COMPANY, L.L.C.
By: /s/ Chris Mehiel
----------------------------------------
Name: Chris Mehiel
Title: Vice President
FLORIDA COAST PAPER FINANCE CORP.
By: /s/ Chris Mehiel
----------------------------------------
Name: Chris Mehiel
Title: Vice President
BEAR, STEARNS & CO. INC.
By: /s/ Paul D. Jetter
---------------------------
Name: Paul Jetter
Title: Managing Director
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EXHIBIT 10.1
OUTPUT PURCHASE AGREEMENT
This Output Purchase Agreement (the "Agreement"), dated as of May 30,
1996, among Florida Coast Paper Company, L.L.C., a Delaware limited liability
company (the "Company"), Stone Container Corporation, a Delaware corporation
("Stone"), and Four M Corporation, a Maryland corporation ("Four M").
W I T N E S S E T H
WHEREAS, the Company owns a linerboard mill located in Port St. Joe,
Florida (the "Mill");
WHEREAS, Stone and Four M, indirectly through subsidiaries and through
Florida Coast Paper Holding Co., L.L.C., control the operation and management of
the Mill; and
WHEREAS, subject to the terms and conditions hereof, the parties
hereto desire that the Company sell to Stone and Four M, and Stone and Four M
purchase from the Company, all of the linerboard manufactured by the Mill.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements hereinafter set forth, the parties hereto agree as follows:
1. TERM OF AGREEMENT.
(a) This Agreement shall become effective on the date hereof.
(b) Subject to subsection 1(c) hereof, this Agreement shall have an
initial term of one year; PROVIDED that this Agreement shall automatically be
renewed for successive one-year terms unless either the Company, Stone or Four M
provides written notice no less than 90-days
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prior to the end of the term to the other parties of the termination of this
Agreement. In addition, subject to subsection 1(c) hereof, (i) the Company may
terminate this Agreement as to such party upon the occurrence of a breach by
Stone or Four M of any of their obligations pursuant to this Agreement, which
breach remains uncured for 45 days after written notice from the Company, and
(ii) Stone and Four M may terminate this Agreement upon the occurrence of a
breach by the Company of any of its obligations pursuant to this Agreement,
which breach remains uncured for 45 days after written notice from Stone or Four
M.
(c) Notwithstanding anything to the contrary contained in this Agreement,
none of the Company, Stone or Four M may terminate this Agreement, and this
Agreement shall remain in full force and effect, so long as any of the Company's
12 3/4% First Mortgage Notes due 2003 (the "Notes") remain outstanding.
2. PURCHASE OF PRODUCTS.
(a) During the term of this Agreement, Stone and Four M each agree to
purchase one-half of the entire production of linerboard manufactured by the
Mill. Such production shall be in the sizes, grades and amounts designated
jointly by Stone and Four M as the Mill can reasonably produce; PROVIDED that,
unless otherwise agreed to by Stone and Four M, each of Stone and Four M shall
be required to purchase one-half of the kraft linerboard and one-half of the
mottled white linerboard produced by the Mill; and PROVIDED, FURTHER, that the
parties shall use their best efforts to cause the Mill to be operated in each
calendar year at a production rate not less than the average capacity
utilization rate of all other domestic linerboard producers as reported by the
American Forest Products and Paper Association for such year.
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(b) Instructions designating size, grades and relative amounts of
linerboard to be shipped and shipping instructions shall be furnished to the
Company in accordance with Stone's and Four M's respective standard practices.
3. PURCHASE PRICE.
(a) Subject to subsection (b) hereof, the purchase price for each
shipment of kraft and mottled white linerboard shall be $25 per ton less than
the price of such linerboard (on a 42 pound basis) quoted in the most recently
published edition of PULP & PAPER WEEK under the caption "Price Watch: Paper and
Paperboard" (the "Purchase Price"). The Purchase Price shall be adjusted based
upon (i) the actual basis weight of the linerboard purchased in accordance with
then current industry practice and (ii) any zone differentials in shipping in
accordance with current industry practice. The parties hereby agree to adjust
the amounts in (i) and (ii) of this Section 3(a) from time to time, as
necessary, to reflect current market conditions regarding basis weight price
differentials and shipping zone differentials, respectively.
(b) Notwithstanding anything to the contrary contained in this
Agreement, in the event that the sum of (i) Consolidated Cash Flow (as defined
below) of the Company for any fiscal quarter commencing on or after July 1,
1996, PLUS (ii) Excess Cash (as defined below) for such fiscal quarter is
insufficient to cover the sum of (A) the greater of (1) one-fourth of the
Company's maintenance capital expenditure budget for the fiscal year in which
such quarter occurred or (2) $2.5 million, PLUS (B) interest expense on the
Notes and other cash interest expense accrued during such quarter, then the
Purchase Price shall be adjusted as set forth in subsection (c) hereof.
(c) Within 30 calendar days following the end of the first three
quarters of each fiscal year of the Company (commencing with the quarter ending
September 30, 1996), and
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within 45 calendar days following the end of the fourth quarter of each fiscal
year of the Company (commencing with the quarter ending December 31, 1996), the
Chief Financial Officer of the Company shall provide each of Stone, Four M and
the trustee relating to the Notes (the "Trustee") with a certificate setting
forth (i) a detailed calculation of the Consolidated Cash Flow for such quarter,
(ii) a detailed calculation of Excess Cash for such quarter and (iii) the sum of
(A) the greater of (1) one-fourth of the Company's maintenance capital
expenditure budget for the fiscal year in which such quarter occurred or (2)
$2.5 million, PLUS (B) the amount of interest expense on the Notes and other
cash interest expense accrued during such quarter (such sum being referred to as
the "Fixed Charge Amount"). To the extent that the Fixed Charge Amount for any
fiscal quarter of the Company exceeds the sum of Consolidated Cash Flow for such
quarter, plus Excess Cash for such quarter, the Purchase Price for all products
purchased during such quarter shall be retroactively increased to an amount such
that Consolidated Cash Flow for such quarter, calculated on a pro forma basis to
give effect to such Purchase Price increase, plus such Excess Cash equals the
Fixed Charge Amount for such quarter. Each of Stone and Four M shall pay the
amount of any such Purchase Price increase to the Company within five days of
the delivery of such certificate.
(d) For purposes hereof:
(i) "Consolidated Cash Flow" shall have the meaning ascribed to it in
the indenture (the "Indenture") pursuant to which the Notes will be issued; and
(ii) "Excess Cash" shall mean, for any quarter, (A) the amount of
cash shown on the Company's balance sheet on the first day of such quarter,
MINUS (B) the amount of any outstanding checks or other drafts and dividends or
other distributions declared and not yet paid as of the first day of such
quarter, MINUS (C) $3.0 million, MINUS (D) any amounts outstanding
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as of the first day of such quarter under the Liquidity Facility (as such term
is defined in the Indenture) or any other similar lines of credit, MINUS (E)
Restricted Payments (as defined in the Indenture) made during such quarter,
including Restricted Payments made pursuant to the second paragraph Section 4.07
of the Indenture, MINUS (F) cash capital expenditures made during such quarter,
excluding capital expenditures constituting part of the Fixed Charge Amount for
such or any other quarter, MINUS (G) income taxes paid in cash during such
quarter, MINUS (H) the increase, if any, in the amount of Working Capital as of
the last day of such quarter as compared to the amount of Working Capital as of
the first day of such quarter; PROVIDED, that in the event that the average
outstanding amount of accounts payable of the Company as of the first day of
such quarter is in excess of 45 days old, then the amount of excess cash as of
such date shall be deemed to be $0.
(iii) "Working Capital" shall mean, as of any date of determination,
(A) the Company's current assets, excluding cash, as shown on the Company's
balance sheet as of such date, MINUS (B) the Company's current liabilities,
excluding short-term debt and current maturities of long-term debt, as shown on
the Company's balance sheet as of such date.
4. TITLE.
Anything to the contrary notwithstanding, title to and possession of
the linerboard products sold hereunder to Stone and Four M shall pass to Stone
and Four M in accordance with then current industry practice.
5. INVOICES; TERMS OF PAYMENT.
Invoices setting forth the purchase price as determined pursuant to
Section 3 hereof shall be forwarded to Stone and Four M at the time or shipment
and Stone and Four M shall pay such invoices within 15 days of the receipt
thereof.
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6. SEPARATE SALES.
Each shipment of linerboard products under this Agreement shall
constitute a separate and distinct sale.
7. WARRANTY.
The Company warrants that the quality of all linerboard sold hereunder
shall be in conformity with Stone's standard linerboard warranty. EXCEPT AS
STATED HEREIN, THE COMPANY DOES NOT WARRANT FITNESS FOR ANY PARTICULAR PURPOSE
OR MAKE ANY OTHER WARRANTY EXPRESSED OR IMPLIED WITH RESPECT TO THE LINERBOARD
PRODUCTS SOLD HEREUNDER.
8. STONE AND FOUR M MAY RESELL.
Stone and Four M may resell all or any part of the linerboard products
which it purchases hereunder to any person, corporation or entity (including any
affiliate or subsidiary of Stone or Four M), without restriction as to the price
or terms thereof.
9. AGREEMENT NOT A GUARANTEE OF INDEBTEDNESS.
This Agreement, its provisions, and any actions taken pursuant hereto
by Stone or Four M shall not constitute or be deemed to constitute (a) a direct
or indirect guaranty by Stone or Four M of any indebtedness or other obligation
or liability of any kind or character whatsoever of the Company or (b) an
assurance by Stone or Four M that the owner of any indebtedness of the Company
will not incur loss on such indebtedness.
10. ENTIRE AGREEMENT.
This Agreement contains the entire understanding of the parties hereto
with respect to the subject matter hereof and supersedes any prior
understandings or agreements of the parties hereto with respect to such subject
matter.
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11. TERMINATION; AMENDMENT AND WAIVER.
This Agreement may be terminated or amended, or any provision waived,
with the mutual written consent of each of the parties hereto; PROVIDED,
HOWEVER, that so long as any of the Notes are outstanding, no such termination,
amendment or waiver shall be effective unless consented to by the Holders (as
defined in the Indenture) of at least a majority in outstanding principal amount
of the Notes, as certified by the Trustee.
12. NOTICE.
All notice, consents or other communications required or permitted
hereunder shall be in writing and shall be deemed given or delivered when
delivered personally or when sent by registered or certified mail addressed as
follows:
If to the Company, to:
Florida Coast Paper Company, L.L.C.
600 U.S. Highway 98
Port St. Joe, FL 32456
Attention: Chief Financial Officer
If to Stone, to:
Stone Container Corporation
150 North Michigan Avenue
Chicago, IL 60601
Attention: General Counsel
If to Four M, to:
Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
Attention: General Counsel
or to such other address or such other persons as such party may indicate by a
notice delivered to the other party hereto.
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13. HEADINGS.
The headings of the Sections of this Agreement are for the convenience
of reference only and shall not be construed to be part of or to affect the
meaning or interpretation of this Agreement.
14. PARTIAL INVALIDITY.
Wherever possible each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision shall be prohibited by or invalid under applicable law such
provision shall be ineffective to the extent, but only to the extent, of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Agreement, unless such a construction of
such provision would be unreasonable.
15. ASSIGNMENT.
(a) No party hereto may assign any of its rights or delegate any of
its obligations hereunder without the prior written consent of the other parties
(which shall not unreasonably be withheld); PROVIDED, HOWEVER, that without the
consent of the other parties hereto, each of Stone and Four M may assign its
rights, including its rights to receive linerboard products, but may not
delegate its obligations, including, without limitation, its obligation to
purchase and pay for one-half of the Mill's production, under this Agreement to
any of its consolidated subsidiaries; and PROVIDED, FURTHER, HOWEVER, that
neither Stone nor Four M may delegate any of its obligations hereunder (i) so
long as any of the Notes remain outstanding or (ii) unless a Change of Control
(as defined in the Indenture) has occurred and the Company has complied with the
Change of Control provisions of the Indenture.
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(b) Any attempted assignment or delegation in violation of this
section 15 shall be null and void. Subject to this section 15, this Agreement
shall be binding upon and inure to the benefit of the parties hereto, their
successors and their permitted assigns.
16. GOVERNING LAW.
This Agreement shall be governed by the laws of the State of New York.
17. EXECUTION IN COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed an original, but all of which shall constitute one and the
same Agreement, and shall become a binding Agreement when each of the parties
hereto shall have executed and delivered a counterpart of this Agreement to the
other party.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed the day and year first above written.
FLORIDA COAST PAPER COMPANY, L.L.C.
By: /s/ Dennis Mehiel
--------------------------------
Name: Dennis Mehiel
Title: Vice President
STONE CONTAINER CORPORATION
By: /s/ Leslie T. Lederer
--------------------------------
Name: Leslie T. Lederer
Title: Vice President
FOUR M CORPORATION
By: /s/ Dennis Mehiel
--------------------------------
Name: Dennis Mehiel
Title: Vice President
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WHEN RECORDED MAIL ORIGINAL TO:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: S.H. Spencer Compton, Esq.
_____SPACE ABOVE THIS LINE FOR RECORDER'S USE_____
MORTGAGE, SECURITY AGREEMENT,
FIXTURE FILING STATEMENT AND ASSIGNMENT OF RENTS,
LEASES AND LEASEHOLD INTERESTS
THIS MORTGAGE, SECURITY AGREEMENT, FIXTURE FILING STATEMENT AND
ASSIGNMENT OF RENTS, LEASES AND LEASEHOLD INTERESTS (the "MORTGAGE") is made and
entered into as of May 30, 1996, by and between FLORIDA COAST PAPER COMPANY,
L.L.C., a Delaware limited liability company ("MORTGAGOR"), whose mailing
address is 600 U.S. Highway 98, Port St. Joe, Florida 32456, and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, a national banking association, in its capacity
as trustee under the Indenture (as defined below), for the ratable benefit of
the current and future holders (the "NOTEHOLDERS") of the First Mortgage Notes
(as defined below) as mortgagee ("MORTGAGEE"), whose mailing address is Norwest
Center, Sixth Street and Marquette Avenue, Minneapolis, Minnesota 55479.
RECITALS
A. Mortgagor is a party to that certain indenture dated as of the
date hereof (as amended, supplemented or otherwise modified from time to time,
the "INDENTURE"), among Mortgagor and Florida Coast Paper Finance Corp.
(together with Mortgagor, collectively, "ISSUERS") and Mortgagee, pursuant to
which Issuers will issue ONE HUNDRED SIXTY FIVE MILLION DOLLARS ($165,000,000)
principal amount of their 12.75% First Mortgage Notes due 2006 (including all
Series A and Series B first mortgage notes to be issued from time to time
pursuant to the Indenture, collectively, the "FIRST MORTGAGE NOTES"), the
proceeds of which (the "LOAN") will be used in part to fund the acquisition by
Mortgagor of certain real property more particularly described on EXHIBIT "A"
<PAGE>
attached hereto, all improvements located thereon and certain personal property.
All terms, covenants, conditions, provisions and requirements of the Indenture
are incorporated by reference in this Mortgage for all purposes and made a part
hereof and a true copy thereof, as well as true copies of the Security
Agreement, the SC Agreement, the Option Agreement, the Warehouse Agreement and
the Box USA Lease (all as hereinafter defined) are available for inspection at
the offices of Mortgagee at Norwest Center, Sixth Street and Marquette Avenue,
Minneapolis, Minnesota 55479. Any capitalized term used in this Mortgage
without definition, but defined in the Indenture, shall have the same meaning
here as in the Indenture.
B. The Indenture requires that the obligations of each of the
Issuers under the Indenture, the First Mortgage Notes and the Collateral
Documents be secured by liens and security interests covering certain real and
personal property of Mortgagor for the ratable benefit of the Noteholders. In
connection therewith, Mortgagor is required to execute and deliver this
Mortgage.
NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, Mortgagor covenants, represents and warrants as follows:
DEFINED TERMS
"BANKRUPTCY" means the occurrence of any of the events described in
Section 6.01(j) or (k) of the Indenture.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(j) or (k) of
the Indenture, without giving effect to any applicable notice and/or cure
periods.
"BOX USA LEASE" means that certain Lease, dated the date hereof,
between Mortgagor as landlord and Box USA Lease Tenant as tenant, demising the
Box USA Leased Property with respect to which a Memorandum of Lease will be
recorded contemporaneously herewith in the Official Records of Gulf County,
Florida.
"BOX USA LEASED PROPERTY" means that portion of the Mortgaged Property
more particularly described on EXHIBIT "B" attached hereto and made a part
hereof.
"BOX USA LEASE TENANT" means Box USA Group, Inc., a New York
corporation, its successors and the assigns of all but not less than all of the
capital stock of Box USA Group, Inc. or of all or substantially all of the
assets of Box USA Group, Inc.
"CASUALTY" has the meaning assigned in Section 2.04.
"COLLATERAL DOCUMENT(S)" has the meaning assigned in the Indenture.
"DEFAULT" has the meaning assigned in the Indenture.
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"DEFAULT RATE" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) two percent (2%) per annum in excess of the
interest rate borne by the First Mortgage Notes upon issuance thereof.
"EVENT OF DEFAULT" has the meaning assigned in Section 4.01.
"EVENT OF LOSS" has the meaning assigned in the Indenture.
"EXCLUDED PROPERTY" has the meaning assigned in the Security
Agreement.
"INDENTURE" has the meaning assigned in Recital A.
"LIEN" has the meaning assigned in the Indenture.
"LIQUIDATED DAMAGES" has the meaning assigned in the Indenture.
"LOAN" has the meaning assigned in Recital A.
"MAKE-WHOLE PREMIUM" has the meaning assigned in the Indenture.
"OPTION PROPERTY" means that portion of the Mortgaged Property more
particularly described on EXHIBIT "C" attached hereto and made a part hereof and
which is subject to the purchase option in favor of St. Joe Forest Products
Company ("OPTIONEE") set forth in the Option Agreement (the "OPTION AGREEMENT"),
dated as of May 30, 1996 between Mortgagor and Optionee.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of the
Indenture, without giving effect to any applicable notice and/or cure periods.
"PERMITTED LIENS" has the meaning assigned in the Indenture.
"PROTECTIVE ADVANCES" has the meaning assigned in Section 4.08.
"QUALIFYING FACILITY" has the meaning assigned in the SC Agreement.
"RELEASE" has the meaning assigned in Section 5.01.
"RELEASE CONDITIONS" has the meaning assigned in Section 5.01.
"RELEASE COSTS" has the meaning assigned in Section 5.01.
"RELEASE PARCEL" has the meaning assigned in Section 5.01.
"RELEASE REQUEST" has the meaning assigned in Section 5.01.
"REMAINING PARCEL" has the meaning assigned in Section 5.01.
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"SC AGREEMENT" means the Subordinated Credit Agreement, dated as of
the date hereof, by and among Florida Coast Paper Company, L.L.C., Stone
Container Corporation and Four M Corporation.
"SECURED OBLIGATIONS" has the meaning assigned in Section 1.03.
"SECURITY AGREEMENT" means the Security Agreement, dated of even date
herewith between Mortgagor and Mortgagee.
"SINGLE INDEBTEDNESS" has the meaning assigned in Section 4.03.
"TAKING" has the meaning assigned in Section 2.05.
"WAREHOUSE AGREEMENT" means, collectively, the provisions of Article
31 of the Box USA Lease governing the rights of the parties with respect to the
use and occupancy of the warehouse (the "WAREHOUSE") located on that part of the
Mortgaged Property adjacent to the Box USA Leased Property and forming a part of
the parcel of land more particularly described on EXHIBIT "D" attached hereto
and made a part hereof.
ARTICLE I - GRANT OF MORTGAGE
1.01 GRANT OF MORTGAGE. Mortgagor does hereby mortgage, pledge,
assign, bargain, hypothecate, convey, grant, transfer, warrant and set over unto
Mortgagee and grants unto Mortgagee a security interest in all of Mortgagor's
right, title and interest in and to all of the following property (collectively,
the "MORTGAGED PROPERTY"):
(a) The property described in EXHIBIT "A" attached hereto and by this
reference incorporated herein, including, without limitation, (i) any easements
and rights of ingress and egress appurtenant to the above described property,
(ii) any street or road adjacent or contiguous to the above described property,
(iii) any strips, gores or pieces of land abutting, adjoining, adjacent to or
contiguous to the above described property (owned
or claimed by deed, limitation or otherwise), and (iv) all air rights with
respect thereto (the "LAND");
(b) Any and all buildings and all other improvements now on or in, or
hereafter constructed on or in, the Land;
(c) Any and all lands, fittings, fixtures, structures, improvements,
tenements, hereditaments, equipment, machinery, pipelines, pipes, boilers,
tanks, appliances, construction or other materials and supplies, personal
property, tools, art work, plants, books, records and files, of whatever kind or
description and wherever situated, now owned by, or at any time hereafter
acquired by or for, Mortgagor and contiguous or appurtenant to the Land, and all
other things of whatsoever kind now owned by or at any time hereafter
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acquired by or for Mortgagor and in any way or at any time belonging or
appurtenant to, or used in connection with, any Mortgaged Property;
(d) Any and all rents, leases and leasehold rights now held or
hereafter acquired by Mortgagor for use in connection with or belonging or
appertaining to any of Mortgagor's property now or hereafter subject to the lien
of this Mortgage;
(e) Any and all replacements, additions, betterments and improvements
hereafter acquired or constructed upon or in connection with any other property,
real or personal, now or at any time hereafter subject to the lien of this
Mortgage;
(f) Any and all rights, powers, easements, rights of way, interests
in land, franchises, privileges, immunities, possessory or prescriptive rights,
permits and licenses, now or hereafter owned or possessed by Mortgagor that now
or at any time hereafter may be necessary for, or appurtenant to, the use,
operation, management, maintenance, renewal, alteration or improvement of any of
the Mortgaged Property, including, without limitation, to any and all rights to
(i) utilities and fees or charges paid in connection therewith, (ii)
reimbursements or other rights pertaining to utilities or utility services
thereto, (iii) docking rights, railroad and trackage rights pursuant to
licenses, permits, franchises, authorizations, easements, deed covenants or
agreements (including options, option rights, and contract rights, and further
including permits in the nature of easements, crossing agreements or crossing
permits) to the extent the same pertain to or benefit the Mortgaged Property,
including all reservations of or commitments covering any such use in the
future, whether now owned or hereafter acquired, whether or not recorded, and
(iv) the present or future use or availability of docking facilities, waste
water facilities, water, water and storm drainage or other utility facilities to
the extent the same pertain to or benefit any of the Mortgaged Property,
including all reservations of or commitments covering any such use in the
future, whether now owned or hereafter acquired;
(g) All of the interest, right, title and other claim or demand, both
in law and in equity, including claims or demands with respect to any insurance
policies, returned premiums or casualty awards, or the Net Proceeds (as defined
in the Indenture) of any thereof, which Mortgagor now has or may hereafter
acquire in or as a result of any of the Mortgaged Property (excluding any such
Net Proceeds (as defined in the Indenture) with respect to the Box USA Leased
Property to the extent required to be paid to the Box USA Lease Tenant and the
Option Property to the extent required to be paid to Optionee), and any other
Net Proceeds (as defined in the Indenture) from any sale or disposition thereof
which Mortgagor now has or may hereafter acquire and any and all awards made as
a result of the taking by eminent domain, or by any proceeding or purchase in
lieu thereof, of the whole or any part of such property (excluding any part of
any such award attributable to a taking, proceeding or purchase of all or any
part of the Box USA Leased Property to the extent required to be paid to the Box
USA Lease Tenant or the Option Property to the extent required to be paid to
Optionee), all of which awards, damages, premiums and payments are hereby
assigned to Mortgagee and may be at any time collected by it; and
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(h) With respect to the Mortgaged Property, all of the right, title,
interest and claim whatsoever, at law or in equity, to all other reversions,
remainders, proceeds, rents, revenues, issues, earnings, income, products and
profits thereof.
TO HAVE AND TO HOLD the Mortgaged Property unto Mortgagee, its
successors and assigns forever, for the purpose of securing in such order of
priority as provided herein or in the Indenture, the indebtedness and
obligations described in SECTION 1.03 hereof.
Notwithstanding the foregoing, the Mortgaged Property shall not
include any of the Excluded Property. Additionally, it is the intention of the
parties that "Mortgaged Property" shall not include any personal property owned
by the Box USA Lease Tenant or leased by it from any Person other than from
Mortgagor or a Subsidiary thereof and located from time to time on the Box USA
Leased Property.
1.02 STATUS OF TITLE. Mortgagor is the owner of and has good and
merchantable title in fee simple to the Mortgaged Property and is lawfully
seized and possessed of an indefeasible estate in fee simple in the Mortgaged
Property and has good right, full power and lawful authority to convey, mortgage
and encumber the same by way of this Mortgage. The Mortgaged Property is and
shall at all times be free and clear of all liens, charges and encumbrances,
except for Permitted Liens of the nature described in clauses (i), (iv), (v),
(vi), (vii), (viii), (ix), (x), (xi), (xii) and (xiii) of the definition of
Permitted Liens, and the lien created by this Mortgage is a first and prior lien
and encumbrance on the Mortgaged Property, except for Permitted Liens of the
nature described in clauses (iv), (v), (vii), (viii), (ix), (x), (xi), (xii) and
(xiii) of the definition of Permitted Liens. Mortgagor will warrant and defend
its title to the Mortgaged Property against the claims and demands of all other
persons. Mortgagor agrees to protect, preserve and defend Mortgagee's interest
in the Mortgaged Property and its title thereto. Mortgagor shall at all times
appear in and defend any suit, action or proceeding that might in any way
materially and adversely affect Mortgagor's title to or value of the Mortgaged
Property, the priority of this Mortgage or the rights and powers of Mortgagee
hereunder or under any other Collateral Document, and to pay all costs and
expenses incurred by Mortgagee in or in connection with any such action or
proceeding, including attorneys' fees, whether or not any such action or
proceeding progresses to judgment and whether or not brought by or against
Mortgagee. Mortgagor shall, at all times, defend, indemnify, hold harmless and
reimburse Mortgagee on demand from and against any and all loss, damage, expense
or cost, including cost of evidence of title and attorneys' fees, arising out
of, or incurred in connection with, any such suit, action or proceeding and the
sum of such expenditures shall be secured by this Mortgage, shall accrue
interest at the Default Rate from the date incurred and be payable upon demand
and shall be part of the Secured Obligations. Mortgagee, after notice to
Mortgagor, may, but shall not be under any obligation to, appear or intervene in
any such action or proceeding and retain counsel therein and defend the same or
otherwise take such action therein as such party may be advised and may settle
or compromise the same and, in that behalf and for any of such purposes, may
expend and advance such sums of money as it reasonably may deem necessary, and
shall be reimbursed therefor as provided in the next
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sentence. Such expenditures shall be secured by this Mortgage and shall accrue
interest at the Default Rate from the date incurred and shall be payable upon
demand.
1.03 OBLIGATIONS SECURED. This Mortgage is given for the purpose of
securing (i) the Loan as evidenced by the First Mortgage Notes in the original
and/or aggregate, as the case may be, principal amount of One Hundred Sixty Five
Million Dollars ($165,000,000), (ii) all interest, premiums, late charges,
attorneys' fees and expenses and any and all other amounts now or hereafter
secured or intended to be secured hereby pursuant to any provision of this
Mortgage or any other Collateral Document, including but not limited to
Protective Advances, (iii) any Liquidated Damages, (iv) any Make-Whole Premium,
(v) all of the other "Obligations," as defined in the Indenture, arising under,
evidenced or created by or with respect to the First Mortgage Notes, the
Indenture, this Mortgage and the other Collateral Documents, including, without
limitation, (a) all amounts that would become due with respect to the Loan but
for the operation of the automatic stay under Section 362(a) of the United
States Bankruptcy Code, 11 U.S.C. Section 101 ET SEQ., (b) all interest with
respect to the Loan that, but for any Bankruptcy affecting Mortgagor, would
accrue on or with respect to the Secured Obligations (as herein defined),
whether or not a claim against Mortgagor is allowed for such interest in any
Bankruptcy, and (c) all amounts due or which shall become due to Mortgagee
pursuant to Section 7.07 of the Indenture, (vi) all unpaid balances of all loans
and other such extensions of credit made by Mortgagee to Mortgagor as FUTURE
ADVANCES within seven (7) years after the date of this Mortgage, whether such
loans or other such extensions of credit are made pursuant to an obligation of
Mortgagee to make such loans or extensions, provided such loans or other
extensions of credit shall not exceed a maximum principal amount of $1,000,000
(exclusive of the Loan) plus interest thereon, and (vii) performance by each of
the Issuers of all of their respective non-monetary covenants in the Indenture
and the Collateral Documents (all of the foregoing, collectively, the "SECURED
OBLIGATIONS"). Any agreement hereafter made by Mortgagor and Mortgagee pursuant
to this Mortgage shall be superior to the rights of the holder of any
intervening lien or encumbrance to the extent allowed by law.
1.04 AFTER-ACQUIRED PROPERTY. If Mortgagor hereafter acquires (a)
any property that is of the kind or nature described in SECTION 1.01 hereof and
is or is intended to become a part thereof, or (b) an interest in any of the
Mortgaged Property greater than the interest now held, then such property or
interest shall, immediately upon such acquisition, become subject to the lien of
this Mortgage as fully and completely and with the same effect as though now
owned by Mortgagor and specifically described herein, without need for the
delivery and/or recording of a supplement to this Mortgage or any other
instrument; but nevertheless Mortgagor shall from time to time, if requested by
Mortgagee, execute and deliver any and all such further assurances, conveyances
and assignments thereof as Mortgagee may require for the purpose of expressly
and specifically subjecting to the lien of this Mortgage any and all such
property or interest, subject, however, to any Permitted Liens affecting such
property.
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ARTICLE II - COVENANTS CONCERNING THE MORTGAGED PROPERTY
2.01 TAXES, CHARGES AND GOVERNMENTAL IMPOSITIONS.
(a) PAYMENT. Mortgagor will pay, or cause to be paid, before any
fine, penalty, interest or cost may be added thereto, and, upon written request
from Mortgagee, will promptly exhibit to Mortgagee receipts for the payment of,
all taxes, assessments, charges, fees, fines and impositions of every nature
whatsoever charged, imposed, levied or assessed or to be charged, imposed,
levied or assessed upon or against the Mortgaged Property or any part thereof,
or upon the interest of Mortgagee in the Mortgaged Property, as well as all
income taxes, assessments and other governmental charges lawfully levied and
imposed by the United States or any state, county, municipality or other taxing
authority in respect of the Mortgaged Property or any part thereof or any charge
that, if unpaid, would or could become a lien or charge upon the Mortgaged
Property, or any part thereof. Mortgagor will pay all costs, fees and expenses
of this lien and all filing, registration, recording and search and information
fees, and all expenses incident to the execution and acknowledgement of this
Mortgage. Notwithstanding the foregoing, Mortgagor may elect to pay any special
assessment lawfully charged, imposed, levied or assessed upon or against the
Mortgaged Property or any part thereof in so many installments and otherwise as
may be permitted under and in accordance with applicable laws.
(b) CONTESTS. Nothing in this Section 2.01 shall require the payment
or discharge of any obligation imposed upon Mortgagor by subparagraph (a) of
this Section 2.01 so long as Mortgagor shall in good faith and at its own
expense contest the same or the validity thereof by appropriate legal
proceedings which proceedings must operate to prevent the collection thereof or
other realization thereon and the sale or forfeiture of Mortgagor's interest in
the Mortgaged Property or any part thereof to satisfy the same; provided that
during such contest Mortgagor shall, at the option of Mortgagee, provide
security satisfactory to Mortgagee, assuring the discharge of Mortgagor's
obligations hereunder and of any additional interest, charge, penalty or expense
arising from or incurred as a result of such contest; and provided, further,
that if at any time payment of any obligation imposed upon Mortgagor by
subsection (a) of this Section 2.01 shall become necessary to prevent a
forfeiture of title, whether by operation of law or otherwise, including without
limitation, the delivery of a tax deed or other instrument conveying all or any
of Mortgagor's interest in the Mortgaged Property or any portion thereof because
of non-payment, then Mortgagor shall pay the same in sufficient time to prevent
such forfeiture of title, including without limitation, the delivery of such tax
deed or other instrument, and provided, further, that such non-payment shall not
result in a default under any of the Leases giving a right to terminate to the
Tenant thereunder; and provided, further, that such proceedings are diligently
prosecuted.
2.02 MECHANICS' AND OTHER LIENS. Mortgagor will not suffer any
mechanic's, laborer's, materialmen's, statutory or other lien or any security
interest or encumbrance to be created or to remain outstanding upon any of the
Mortgaged Property or on the revenues, rents, issues, income and profits arising
therefrom, except for Permitted Liens of the nature described in clauses (vi)
and (ix) of the definition thereof.
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2.03 UTILITIES. Mortgagor will pay, or cause to be paid, before any
fine, penalty,interest or cost may be added thereto, any charges for utilities,
whether public or private, with respect to the Mortgaged Property or any part
thereof.
2.04 INSURANCE. (a) CASUALTY; BUSINESS INTERRUPTION. Mortgagor
shall keep the Mortgaged Property insured against damage by fire and the other
hazards covered by a standard extended coverage and all-risk insurance policy
for the full insurable value thereof (without reduction for depreciation or co-
insurance), and shall maintain such other casualty insurance (which shall
include, without limitation, boiler and machinery coverage) of such types and
against such risks, hazards, liabilities, casualties and contingencies, in such
amounts and with such deductibles as are usually insured against by business
entities engaged in the same or similar business as Mortgagor, which amounts
shall in no event be less than, and which deductibles shall in no event be
greater than, those existing as of the date hereof. Mortgagor shall keep the
Mortgaged Property insured against loss by flood if the Mortgaged Property is
located in an area identified by the Secretary of Housing and Urban Development
as an area having special flood hazards and in which flood insurance has been
made available under the National Flood Insurance Act of 1968 (or any successor
act thereto) in an amount at least equal to the lesser of (a) the maximum amount
of the Loan or (b) the maximum limit of coverage available under said act.
Mortgagor shall maintain use and occupancy insurance covering, as applicable,
rental income or business interruption, with coverage in an amount not less than
twelve (12) months anticipated gross rental income or gross business earnings,
as applicable in each case, attributable to the Mortgaged Property. Mortgagor
shall not maintain any separate or additional insurance which is contributing in
the event of loss unless it is properly endorsed and otherwise satisfactory to
Mortgagee in all respects. The proceeds of insurance paid on account of any
damage or destruction to the Mortgaged Property (other than Excluded Property)
shall be paid and applied as provided in Section 2.04(f).
(b) LIABILITY. Mortgagor shall maintain (i) commercial general
liability insurance and/or umbrella insurance policies with respect to the
Mortgaged Property providing for aggregate limits of liability of not less than
$20,000,000 for both injury to or death of a person and for property damage per
occurrence, and (ii) other liability insurance as reasonably required by
Mortgagee, and which insurance shall include, without limitation, automobile
liability, products liability, contractual liability, workers'
compensation/employer's liability, excess umbrella liability, and directors' and
officers' liability insurance in such amounts and with such deductibles as are
usually carried by business entities engaged in the same or similar business as
Mortgagor, which amounts shall in no event be less than, and which deductibles
shall in no event be greater than, those existing as of the date hereof.
(c) OTHER INSURANCE. Mortgagor shall maintain such other insurance
in such amounts and against such risks as in Mortgagee's judgment is commonly
obtained in the case of properties similar to the Mortgaged Property and located
in the locality where the Mortgaged Property is located, or as Mortgagee
reasonably may require from time to time.
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(d) FORM AND QUALITY. All insurance policies shall be endorsed in
form and substance acceptable to Mortgagee to name Mortgagee as an additional
insured, loss payee or mortgagee thereunder, as its interest may appear, with
loss payable to Mortgagee, without contribution, under a standard New York (or
local equivalent) mortgagee clause. All such insurance policies and
endorsements shall be fully paid for and contain such provisions and expiration
dates and be in such form and issued by such insurance companies as are
acceptable to Mortgagee on the date hereof. All replacements, amendments or
modifications to such insurance policies and endorsements shall be fully paid
for and, to the extent any such replacement, amendment or modification shall
vary in any way from the policies deemed acceptable by Mortgagee on the date
hereof, such replacement, amendment or modification shall contain such
provisions and expiration dates and be in such form and issued by such insurance
companies licensed to do business in the State of Florida, with a rating of
"A-IX" or better as established by Best's Rating Guide (or an equivalent rating)
approved by Mortgagee. Each policy shall provide that such policy may not be
cancelled or materially changed except upon thirty (30) days' prior written
notice of intention of non-renewal, cancellation or material change to Mortgagee
and that no act or thing done by Mortgagor shall invalidate any policy as
against Mortgagee. If Mortgagor fails to maintain insurance in compliance with
this Section 2.04, Mortgagee may, but shall not be obligated to, obtain such
insurance and pay the premium therefor and Mortgagor shall reimburse Mortgagee
for all expenses incurred in connection therewith, which amounts shall be so
much additional Secured Obligations, shall accrue interest at the Default Rate
from the date paid or incurred and, together with such interest, shall become
immediately due and payable upon demand. Mortgagor shall assign the policies or
proofs of insurance to Mortgagee, in such manner and form that Mortgagee and its
successors and assigns shall at all times have and hold the same as security for
the payment of the Loan and the other Secured Obligations. Mortgagor shall
deliver certificates of insurance naming Mortgagee as an additional insured,
loss payee or mortgagee and evidencing the insurance policies required herein.
The proceeds of insurance policies coming into the possession of Mortgagee shall
not be deemed trust funds, and Mortgagee shall be entitled to apply such
proceeds as herein provided. Mortgagor may satisfy the provisions of this
Section 2.04 by (i) maintaining insurance under a blanket insurance policy,
provided such policy shall specifically identify the Mortgaged Property and
shall in all other respects be in compliance with the provisions of this
Section 2.04, and (ii) with respect to the Box USA Leased Property, requiring
the Box USA Lease Tenant to either maintain insurance under the Box USA Lease in
compliance with the provisions of this Section 2.04 or pay to Mortgagor the cost
of such insurance allocable to the Box USA Leased Property. Mortgagor shall
cause the Box USA Lease Tenant to comply with all of the provisions of this
Section 2.04(d)(ii).
(e) ADJUSTMENTS. Mortgagor shall give immediate written notice of
any loss to the insurance carrier. Mortgagor hereby irrevocably authorizes and
empowers Mortgagee, as attorney-in-fact for Mortgagor coupled with an interest,
to (i) make proof of loss, (ii) adjust and compromise any claim under insurance
policies, (iii) appear in and prosecute any action arising from such insurance
policies, and (iv) collect and receive insurance proceeds, and to deduct
therefrom Mortgagee's expenses incurred in the collection of such proceeds;
provided, however, that Mortgagee hereby authorizes Mortgagor to perform the
acts enumerated in (i) through (iv) above unless and until an Event of Default,
a
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Bankruptcy Default or a Payment Default shall have occurred and be continuing
and Mortgagee gives notice to Mortgagor that it intends to exercise its right to
perform any of the acts enumerated in (i) through (iv) above. Nothing contained
in this Section 2.04, however, shall require Mortgagee to incur any expense or
take any action hereunder.
(f) If the Mortgaged Property or any part thereof is damaged by fire
or any other cause (each, a "CASUALTY") (i) which constitutes an Event of Loss
or (ii) which shall occur at any time that a Payment Default, a Bankruptcy
Default or an Event of Default shall have occurred and be continuing, Mortgagor
shall cause to be delivered to Mortgagee directly all Net Proceeds (as defined
in the Indenture) of such insurance or other payments (excluding any such Net
Proceeds (as defined in the Indenture) arising out of a Casualty affecting all
or any part of the Box USA Leased Property (other than the Warehouse) or the
Option Property to the extent required to be paid to Optionee) in the form
received promptly in accordance with the provisions of the Indenture to be held
in the Collateral Account as additional collateral for the Secured Obligations,
and Mortgagor shall not apply such proceeds except in accordance with the
provisions of the Indenture. If such Casualty shall not constitute an Event of
Loss, provided no Bankruptcy Default, Payment Default or Event of Default shall
have occurred and be continuing, all proceeds of such insurance or other
payments shall be paid to Mortgagor. From and after the entry of judgment of
foreclosure, all rights and powers of Mortgagee to settle or participate in the
settlement of losses under policies of insurance or to hold and disburse or
otherwise control use of insurance proceeds shall continue in Mortgagee as
judgment creditor or mortgagee until confirmation of sale, to the extent
permitted by the judgment of foreclosure.
(g) Mortgagee shall disburse insurance proceeds which, in accordance
with the provisions of the Indenture, are to be applied to the restoration of
the Mortgaged Property on receipt of satisfactory (i) plans and specifications,
(ii) contracts and subcontracts, (iii) schedules, (iv) budgets, (v) lien waivers
and (vi) architects' certificates, and otherwise in accordance with prudent
commercial construction lending practices for construction loan advances as
determined by Mortgagee from time to time in its reasonable discretion. The
foregoing requirements (i) through (vi) shall be waived with respect to
insurance proceeds which, with respect to any one Casualty, (x) shall be in an
aggregate amount less than $1,000,000 and (y) in accordance with the provisions
of the Indenture, are to be applied to the restoration of the Mortgaged
Property.
2.05 CONDEMNATION. Mortgagor hereby assigns, transfers and sets over
unto Mortgagee the entire proceeds of any award and any claim for damages for
any of the Mortgaged Property taken or damaged under the power of eminent domain
or by condemnation (collectively, an "AWARD"). If all or any part of the
Mortgaged Property shall be damaged, diminished in value or taken through
condemnation or eminent domain proceedings, or if a consent settlement is
entered or a transfer is made under threat of such proceedings, either
temporarily or permanently (each, a "TAKING"), then, if such Taking shall
constitute an Event of Loss and/or if a Bankruptcy Default, Payment Default or
Event of Default shall have occurred and be continuing, Mortgagor shall cause
the Net Proceeds (as defined in the Indenture) of such Award (excluding any such
Net Proceeds (as defined in the Indenture) arising out of a Taking of all or any
part of the Box USA Leased Property (other
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than the Warehouse) or the Option Property to the extent required to be paid to
Optionee) to be paid directly to Mortgagee in the form received to be held in
the Collateral Account as additional Collateral and applied in accordance with
the provisions of the Indenture. If such Taking shall not constitute an Event
of Loss, provided no Bankruptcy Default, Payment Default or Event of Default
shall have occurred and be continuing, the Net Proceeds of such Award shall be
paid to Mortgagor.
2.06 CARE OF THE MORTGAGED PROPERTY.
(a) PRESERVATION AND MAINTENANCE. Mortgagor will preserve and
maintain the Mortgaged Property in good condition and repair, will not commit or
suffer any waste thereof, and will cause to be made from time to time all
needful or proper replacements, repairs and renewals, and will perform all acts
necessary to the continued operation of the Mortgaged Property in accordance
with its existing use as of the date hereof. Mortgagor will not abandon or
leave the Mortgaged Property unprotected, unguarded, vacant or deserted.
(b) NO CHANGE. Mortgagor will not materially change the nature of
use of the Mortgaged Property without Mortgagee's prior written consent.
(c) NOTICE OF DAMAGE. In the event of a Casualty which shall
constitute an Event of Loss, Mortgagor will give prompt written notice thereof
to Mortgagee.
(d) RIGHT TO INSPECT. Mortgagee or any of its representatives is
hereby authorized, with reasonable advance notice to Mortgagor, to enter upon
and inspect the Mortgaged Property at any time during normal business hours.
(e) REPAIR AND REPLACEMENT. If all or any part of the Mortgaged
Property shall be damaged by a Casualty, Mortgagor will promptly restore the
Mortgaged Property (other than the Box USA Leased Property) to the equivalent of
its condition immediately before the occurrence of such Casualty, regardless of
whether or not there shall be any insurance or casualty proceeds therefor and
whether or not the same are made available by Mortgagee for such purpose.
2.07 LIENS ON EXCLUDED PROPERTY. Mortgagor shall not grant a Lien on
the Excluded Property of the nature described in paragraph 1 of the definition
thereof (other than Permitted Liens of the nature described in clauses (ii) and
(ix) of the definition of Permitted Liens) without the prior written consent of
the holders of more than fifty percent (50%) of the aggregate principal amount
of the First Mortgage Notes then outstanding, except to secure a Qualifying
Facility.
2.08 SUBORDINATE LIENS. Mortgagor shall not grant a Lien on the
Mortgaged Property or any part thereof subordinate to the Lien of this Mortgage
(other than Permitted Liens of the nature described in clauses (iv), (v), (vi),
(vii), (viii), (ix), (x), (xi), (xii) or (xiii) of the definition of Permitted
Liens) without the prior written consent of the holders of more than fifty
percent (50%) of the aggregate principal amount of the First Mortgage Notes then
outstanding.
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2.09 FUTURE ADVANCES: NO NOTICE FILING. As of the date hereof,
Mortgagor has not, and, hereafter, shall not, without first obtaining
Mortgagee's written consent, file for record a notice pursuant to Florida
Statutes Section 697.04(b) limiting the maximum principal amount of future
advances pursuant to Section 1.03(vi) of this Mortgage that may be secured under
this Mortgage.
ARTICLE III - ASSIGNMENT OF RENTS
3.01 ASSIGNMENT OF RENTS AND LEASES. As additional consideration for
the Secured Obligations, Mortgagor hereby absolutely assigns and transfers to
Mortgagee the following:
(a) all leases or subleases (if any) written or oral, now in
existence or hereafter arising and all agreements for the use and occupancy of
all or any portion of the Mortgaged Property including, without limitation, the
Box USA Lease and the Warehouse Agreement (collectively, the "LEASES");
(b) any and all guaranties of the obligations of the tenants (the
"TENANTS") under any of such Leases; and
(c) all of the rents, income, receipts, revenues, issues and profits
now due or that may become due or to which Mortgagor may now or shall hereafter
(whether during any applicable period of redemption, or otherwise) become
entitled or may demand or claim, arising or issuing from or out of the Leases,
or from or out of the Mortgaged Property or any part thereof (collectively, the
"RENTS") and the immediate and continuing right to collect and receive the
Rents.
3.02 MORTGAGOR'S LIMITED LICENSE. Provided that no Payment Default,
Bankruptcy Default or Event of Default has occurred and is continuing, Mortgagor
shall have the right under a license granted hereby and Mortgagee hereby grants
to Mortgagor a license to collect, but not more than one month in advance, all
of the Rents arising from or out of the Leases or any renewals or extensions
thereof, or from or out of the Mortgaged Property or any part thereof, but only
as trustee for the benefit of Mortgagee. Mortgagee may, in its sole discretion,
revoke the license granted hereby from and after the occurrence and during the
continuance of any Payment Default or Event of Default (other than a Bankruptcy
Default) and upon the occurrence of any Bankruptcy Default and thereafter.
3.03 MORTGAGOR'S OBLIGATIONS. (a) Mortgagor shall not enter into any
Lease for all or any part of the Mortgaged Property other than the Box USA Lease
and the Warehouse Agreement without the prior written consent of the holders of
a majority of the aggregate principal amount of the First Mortgage Notes then
outstanding.
(b) Mortgagor shall, at its sole cost and expense: (i) at all times
promptly and faithfully abide by, discharge and perform all of the covenants,
conditions and agreements contained in the Box USA Lease and the Warehouse
Agreement on the part of the landlord
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or grantor to be kept and performed; (ii) enforce or secure the performance of
all of the covenants, conditions and agreements of the Box USA Lease and the
Warehouse Agreement on the part of the Box USA Lease Tenant to be kept and
performed, but Mortgagor shall not modify or amend the Box USA Lease or the
Warehouse Agreement without the prior written consent of the holders of a
majority of the aggregate principal amount of the First Mortgage Notes then
outstanding if such modification or amendment would adversely affect Mortgagor
or extend the term of the Warehouse Agreement or reduce the rental or other fees
thereunder, provided, however, that Mortgagor may terminate or cancel the Box
USA Lease or the Warehouse Agreement without first obtaining the foregoing
consent; (iii) appear in and defend any action or proceeding arising under,
growing out of or in any manner connected with the Box USA Lease, the Warehouse
Agreement or the obligations, duties or liabilities of the landlord or of the
Box USA Lease Tenant thereunder; (iv) transfer and assign or cause to be
separately transferred and assigned to Mortgagee, upon written request of
Mortgagee, the Warehouse Agreement, and make, execute and deliver to Mortgagee
upon demand, any and all instruments required to effectuate said assignment; (v)
furnish Mortgagee, within ten (10) days after a request by Mortgagee, a written
statement containing the names of all Tenants and the terms of all Leases,
including the spaces occupied and the rentals payable thereunder; and (vi)
exercise within five (5) days of any demand therefor by Mortgagee any right to
request from the Tenant under any Lease, including the Box USA Lease and the
Warehouse Agreement, a certificate with respect to the status thereof. Nothing
in this Section 3.04 shall be deemed to constitute Mortgagee's consent to any
Lease or agreement other than the Box USA Lease and the Warehouse Agreement.
3.05 LIMITATION. The acceptance by Mortgagee of the assignment
provided in this Article III, together with all of the rights, powers,
privileges and authority created in this Article III or elsewhere in this
Mortgage, shall not, prior to entry upon and taking possession of the Mortgaged
Property by Mortgagee be deemed or construed to constitute Mortgagee a
"mortgagee in possession" nor thereafter or at any time or in any event obligate
Mortgagee to appear in or defend any action or proceeding relating to the
Leases, the Rents or the Mortgaged Property or to take any action hereunder or
to expend any money or incur any expenses or perform or discharge any obligation
or responsibility for any security deposits or other deposits delivered to
Mortgagor by any Tenant and not assigned and delivered to Mortgagee, nor shall
Mortgagee be liable in any way for any injury or damage to person or property
sustained by any person or persons, firm or corporation in or about the
Mortgaged Property.
ARTICLE IV - DEFAULTS AND REMEDIES
4.01 EVENTS OF DEFAULT. The occurrence of any Event of Default under
the Indenture shall constitute an event of default under this Mortgage ("EVENT
OF DEFAULT").
4.02 PERFORMANCE OF DEFAULTED ACTS. From and after the occurrence
and during the continuance of any Payment Default or Event of Default (other
than a Bankruptcy Default) and upon the occurrence of any Bankruptcy Default and
thereafter, Mortgagee may, but need not, make any payment or perform any act
herein required of Mortgagor or
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required in order for there to be compliance with the terms herein or any other
Collateral Document, in any form and manner deemed expedient or desirable,
including, without limitation, making full or partial payments for principal or
interest on prior encumbrances (if any), service, utility or maintenance
charges, or insurance premiums, curing the default of the landlord under a
Lease, and purchasing, discharging, compromising or settling any tax lien or
other prior lien or title or claim thereof, or redeeming from any tax sale or
forfeiture affecting the Mortgaged Property or contesting any tax or assessment.
All moneys paid for any of the purposes herein authorized and all expenses paid
or incurred in connection therewith, including attorneys' fees, shall be so much
additional Secured Obligations, shall accrue interest at the Default Rate, and
together with such interest, shall become immediately due and payable from the
date paid or incurred upon demand. Inaction of Mortgagee shall never be
considered as a waiver of any right accruing to Mortgagee hereunder or under any
of the other Collateral Documents on account of any default on the part of
Mortgagor. Mortgagee, making any payment hereby authorized relating to taxes,
assessments, insurance premiums, or service or utility charges, may do so
according to any bill, statement or estimate procured from the appropriate
public office or entity, without inquiry into the accuracy of such bill,
statement or estimate or into the validity of any tax, assessment, sale,
forfeiture, tax lien, title, claim premium or charge thereof.
4.03 FORECLOSURE. From and after the occurrence and during the
continuance of any Payment Default or Event of Default (other than a Bankruptcy
Default) and upon the occurrence of any Bankruptcy Default and thereafter,
Mortgagee may, at its option, declare the Secured Obligations immediately due
and payable. When the Secured Obligations shall become due whether at maturity,
upon prepayment, by acceleration or otherwise, Mortgagee shall have and may
exercise any and all rights and remedies available to Mortgagee and the
Noteholders hereunder, or at law or in equity, including, without limitation,
the right to foreclose the lien hereof. In the event of a foreclosure,
Mortgagor agrees that the then indebtedness evidenced by all of the First
Mortgage Notes then outstanding and all other Secured Obligations then due and
secured by this Mortgage shall be deemed consolidated as a single indebtedness
in the aggregate amount thereof and shall constitute a single indebtedness (the
"SINGLE INDEBTEDNESS") in which each of the then Noteholders will hold an
undivided interest based on its pro rata share of the Single Indebtedness.
Mortgagor agrees that the Single Indebtedness is and will be secured by the lien
of this Mortgage and that Mortgagee as holder of this Mortgage and the lien
thereof as agent for and for the ratable benefit of the then Noteholders may, as
sole party plaintiff, exercise all rights and remedies of Mortgagee hereunder
and of the then Noteholders under the Single Indebtedness, may foreclose this
Mortgage and the Single Indebtedness as agent for the then Noteholders for the
amount of the Single Indebtedness then due and payable, may bid as agent for the
then Noteholders at a foreclosure sale of this Mortgage and may apply as credit
on such bid so much of the Single Indebtedness as is necessary to satisfy such
bid. In any suit to foreclose the lien hereof, there shall be allowed and
included as additional indebtedness in the decree for sale all expenditures and
expenses that may be paid or incurred by or on behalf of Mortgagee for court
costs, attorneys' fees, appraiser's fees, environmental audit fees, outlays for
documentary and expert evidence, stenographers' charges, publication costs and
costs (which may be estimated as to items to be expended after entry of the
decree) of procuring all such abstracts of title, title searches and
examinations, title insurance policies, Torrens
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certificates, and similar data and assurances with respect to title as Mortgagee
may deem to be reasonably necessary either to prosecute such suit or to evidence
to the holder at any sale that may be had pursuant to such decree the true
condition of the title to or the value of the Mortgaged Property. All
expenditures and expenses of the nature mentioned in this Section shall become
additional Secured Obligations and shall be immediately due and payable upon
demand, with interest thereon at the Default Rate from and after the date when
paid or incurred by Mortgagee in connection with (a) any proceeding, including
probate and bankruptcy proceedings, to which Mortgagee shall be a party, either
as plaintiff, claimant or defendant, by reason of this Mortgage or any Secured
Obligations; or (b) preparations for the commencement of any suit for the
foreclosure hereof after accrual of such right to foreclose whether or not
actually commenced; or (c) preparations for the defense of any threatened suit
or proceedings that might affect the Mortgaged Property, whether or not actually
commenced.
4.04 APPLICATION OF PROCEEDS OF FORECLOSURE SALE. The proceeds of
any foreclosure sale of the Mortgaged Property shall be distributed and applied
in the following order of priority: first, on account of all costs and expenses
incident to the foreclosure proceedings, including all such items as are
mentioned in SECTION 4.03 hereof; second, all amounts owed Mortgagee as trustee
under the Indenture as provided in the Indenture; third, the Secured
Obligations; and fourth, any excess to Mortgagor and its successors and assigns,
as their rights may appear.
4.05 POSSESSION. From and after the occurrence and during the
continuance of any Payment Default or Event of Default (other than a Bankruptcy
Default) and upon the occurrence of any Bankruptcy Default and thereafter,
Mortgagee shall, at its option, have the right, acting through its agents or
attorneys, to enter upon and take possession of the Mortgaged Property, expel
and remove any persons, goods, or chattels, occupying or upon the same, and to
collect or receive all the Rents, issues and profits thereof (subject to the
terms of the Box USA Lease and the rights of the Box USA Lease Tenant
thereunder), including any amounts past due, and to manage and control the same,
and to lease the same or any part thereof from time to time, and, after
deducting all attorney's fees, and all expenses incurred in the protection,
care, maintenance, management and operation of the Mortgaged Property, apply the
remaining net income, subject to the rights of any lender with respect to
Excluded Property described in paragraph 1 of the definition thereof in
connection with a Qualifying Facility, upon the Secured Obligations or upon any
deficiency decree entered in any foreclosure proceedings. The entering upon and
taking possession of said property, the collection of such Rents, issues and
profits and the application thereof as aforesaid shall not cure or waive any
Event of Default or invalidate any act done pursuant to such Event of Default or
notice given with respect to such Event of Default.
4.06 APPOINTMENT OF RECEIVER. From and after the occurrence and
during the continuance of any Payment Default or Event of Default (other than a
Bankruptcy Default) and upon the occurrence of any Bankruptcy Default and
thereafter, Mortgagee shall have the right, in accordance with the laws of the
state of Florida ("FLORIDA LAW"), to have a receiver appointed (without notice
or posting of bond, except to the extent required by non-waivable law), and such
receiver, if and when placed in possession, shall have, in addition to any
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other powers provided in this Mortgage, all rights, powers, immunities, and
duties as provided for under Florida Law. Mortgagor agrees that such receiver
may be appointed without regard to the adequacy of any security for the Secured
Obligations, including the Loan, and without regard to the solvency of
Mortgagor.
4.07 RIGHTS CUMULATIVE. No remedy or right of Mortgagee shall be
exclusive of, but each such remedy or right shall be in addition to, every other
remedy or right now or hereafter existing at law or in equity. No delay in the
exercise or omission to exercise of any remedy or right accruing on any default
shall impair any such remedy or right or be construed to be a waiver of any such
default or an acquiescence therein, nor shall it affect any subsequent default
of the same or a different nature. Every such remedy or right may be exercised
concurrently or independently, and when and as often as may be deemed expedient
by Mortgagee. Mortgagor agrees that without affecting the liability of any
person for payment of the Secured Obligations or affecting the lien of this
Mortgage upon the Mortgaged Property or any part thereof, Mortgagee pursuant to
the terms of the Indenture may, at any time and from time to time, on request of
Mortgagor, without notice to any person liable for payment of any Secured
Obligations, extend the time or agree to alter the terms of payment of such
indebtedness. Acceptance by Mortgagee of any payment in an amount less than the
amount then due on the Secured Obligations shall be deemed an acceptance on
account only, and the failure to pay the entire amount then due shall continue
to be an Event of Default. At any time thereafter and until the entire amount
then due on the debt has been paid, Mortgagee shall be entitled to exercise all
rights conferred upon it in this Mortgage, at law or in equity, from and after
the occurrence and during the continuance of any Payment Default or Event of
Default (other than a Bankruptcy Default) and upon the occurrence of any
Bankruptcy Default and thereafter.
4.08 PROTECTIVE ADVANCES. (a) All advances, disbursements and
expenditures made or incurred by Mortgagee before and during a foreclosure, and
before and after judgment of foreclosure, and at any time prior to sale, and,
where applicable, after sale, and during the pendency of any related
proceedings, for the following purposes, in addition to those otherwise
authorized by this Mortgage or by Florida Law (collectively "PROTECTIVE
ADVANCES"), shall have the benefit of all applicable provisions of Florida Law.
(b) All Protective Advances shall be additional Secured Obligations
secured by this Mortgage, and shall become immediately due and payable upon
demand and with interest thereon from the occurrence of the advance until paid
at the Default Rate. This Mortgage shall be a lien for all Protective Advances
as to subsequent purchasers and judgment creditors from the time this Mortgage
is recorded pursuant to Florida Law.
(c) All Protective Advances shall, except to the extent, if any, that
any of the same is clearly contrary to or inconsistent with the provisions of
Florida Law, apply to and be included in:
(i) any determination of the amount of indebtedness secured by
this Mortgage at any time;
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(ii) the indebtedness found due and owing to Mortgagee in the
judgment of foreclosure and any subsequent supplemental judgments, orders,
adjudications or finding by the court of any additional indebtedness
becoming due after such entry of judgment, it being agreed that in any
foreclosure judgment, the court may reserve jurisdiction for such purpose;
(iii) if right of redemption has not been waived by this
Mortgage, computation of amounts required to redeem, pursuant to Florida
Law;
(iv) determination of amounts deductible from sale proceeds
pursuant to Florida Law;
(v) application of income in the hands of any receiver or
mortgagee in possession; and
(vi) computation of any deficiency judgment pursuant to Florida
Law.
4.09 ENVIRONMENTAL INSPECTIONS. Mortgagee may, at any time after the
occurrence and during the continuance of a Default, enter the Mortgaged Property
to ascertain its environmental condition and in so doing may sample building
materials, take soil samples, test borings and otherwise inspect the Mortgaged
Property. The costs and expenses paid or incurred by Mortgagee in connection
with such inspections and activities shall be reimbursed by Mortgagor and shall
constitute additional Secured Obligations secured by this Mortgage.
ARTICLE V - GENERAL PROVISIONS
5.01 RELEASE. (a) Mortgagee shall release this Mortgage and the lien
hereof by proper instrument upon payment and discharge of all of the Secured
Obligations and termination of all of Mortgagee's obligations under the
Collateral Documents, provided, however, that it shall be a condition to
Mortgagee's obligation to record any release instrument that Issuers shall have
paid (i) the Secured Obligations and (ii) all costs and fees in connection with
any such recording including, without limitation, attorneys' fees and expenses
incurred by Mortgagee in such regard. In addition, upon the written request of
Mortgagor in accordance with the provisions of the Indenture (which request
shall be accompanied by all of the documents required under the Indenture in
connection therewith), Mortgagee shall deliver to Mortgagor releases of parts of
the Mortgaged Property from time to time in accordance with the provisions of
the Indenture.
(b) RELEASE OF BOX USA LEASED PROPERTY AND OPTION PROPERTY. (i) (A)
If Mortgagor or the Box USA Lease Tenant at any time shall effectuate the
subdivision of the Box USA Leased Property (hereinafter, the "RELEASE PARCEL")
into a separate tax lot, upon Mortgagor's satisfaction of all of the conditions
set forth in subparagraphs (ii), (iii) and (iv) below (collectively, the
"RELEASE CONDITIONS"), Mortgagee shall (x) release (the "RELEASE")
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the Release Parcel from the lien of this Mortgage and (y) at Mortgagor's sole
cost and expense, execute all documents and instruments as may be necessary or
appropriate to evidence and effectuate the Release.
(B) If Mortgagor shall deliver written notice to Mortgagee of the proposed
exercise by Optionee of its option to purchase the Option Property pursuant to
the Option Agreement, which notice shall be received by Mortgagee at least
thirty (30) days prior to the date of the proposed conveyance of the Option
Property, provided Mortgagor satisfies all of the requirements of this paragraph
(B), Mortgagee shall release the Option Property from the lien of this Mortgage
concurrently with the consummation of such conveyance and, at Mortgagor's sole
cost and expense, execute all documents and instruments as may be necessary or
appropriate to evidence and effectuate such release. Concurrently with the
release of the Option Property from the lien of this Mortgage, Mortgagor shall
deliver to Mortgagee (1) an updated title report or an endorsement to the
mortgagee title insurance policy insuring the Lien of this Mortgage with respect
to the remaining real property encumbered by this Mortgage after the release of
the Option Property, dated as of the date of such conveyance and showing no
exceptions to title other than Permitted Liens, (2) an opinion of counsel
licensed in the State of Florida and otherwise acceptable to Trustee to the
effect that, solely based on its review of the foregoing updated title report or
endorsement there are no exceptions to title other than Permitted Liens
affecting the remaining real property encumbered by this Mortgage after the
release of the Option Property, and (3) affirmative insurance or other evidence
satisfactory to Mortgagee that such remaining real property will be taxed
separately from the Option Property. Such transfer of the Option Property shall
not be deemed to be an Asset Sale under the Indenture.
(ii) (A) Concurrently with the execution and delivery of this
Mortgage, Mortgagor shall have delivered to Mortgagee an Officer's Certificate
certifying that the conveyance of the Release Parcel will not have a material
adverse effect on Mortgagor's operation of the business currently located on the
Land as currently operated.
(B) At least thirty (30) days prior to the date of the Release,
Mortgagor shall deliver to Mortgagee:
(1) a written request (the "RELEASE REQUEST") for the Release, signed
by an authorized officer of Mortgagor, specifying the requested date
of the Release and certifying the location of the Release Parcel on
the plan of subdivision.
(2) (i) a survey of the Land in form and substance as was delivered
to Mortgagee contemporaneously with the execution and delivery of this
Mortgage, prepared by a public surveyor containing a metes and bounds
description of the Release Parcel and a metes and bounds description
of the remaining real property after the Release (the "REMAINING
PARCEL") and certifying the total area of the Release Parcel and the
Remaining Parcel and including a location of all easements,
improvements, appurtenances, utilities, rights of way and means of
ingress and egress with respect to the Remaining Parcel and the
Release Parcel, together with (ii) a certificate, signed by such
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surveyor, confirming to Mortgagee that the metes and bounds
description of the Release Parcel set forth in the Release Request is
the same as the metes and bounds description of the Release Parcel set
forth in the survey prepared in accordance with (i) above;
(3) true, correct and complete copies of any mutual covenants,
easements, plans or agreements to be executed, acknowledged and
delivered by Mortgagor and any subsequent owner of fee title in and to
the Release Parcel, provided the same shall not materially adversely
affect the value or use of the Remaining Parcel.
4) (a) an updated title report or an endorsement to the mortgagee
title insurance policy insuring the Lien of this Mortgage with respect
to the Remaining Parcel encumbered by this Mortgage, dated as of the
date of the Release and showing no exceptions to title other than
Permitted Liens, (b) an opinion of counsel licensed in the State of
Florida and otherwise acceptable to Trustee to the effect that, solely
based on its review of the foregoing updated title report or
endorsement, there are no exceptions to title other than Permitted
Liens affecting the Remaining Parcel encumbered by this Mortgage, and
(c) affirmative insurance or other evidence satisfactory to Mortgagee
that the Remaining Parcel will be taxed separately from the Release
Parcel;
(5) copies of all documents to be executed by Mortgagee in connection
with the Release; and
(6) an opinion of counsel, or if Mortgagor engages an engineer or
architect (which engineer or architect shall be certified or
registered in the State of Florida) to effectuate the subdivision of
the Release Parcel, a letter from such engineer or architect,
satisfactory to Mortgagee stating that any subsequent transfer of the
Release Parcel will not create a violation of any applicable zoning,
building code, parking, platting, subdivision or other land-use laws
or regulations and evidence satisfactory to Mortgagee that neither the
Release Parcel and any improvements thereon nor the Remaining Parcel
and any improvements thereon shall be dependent upon the other for
compliance with the aforesaid laws, rules and regulations.
(iii) On or before the date of the Release, Mortgagor shall deliver
to Mortgagee an Officer's Certificate confirming to Mortgagee that all of the
conditions precedent to the Release have been satisfied.
(iv) Notwithstanding anything to the contrary contained herein,
Mortgagor shall be solely responsible for the payment of all costs and expenses
incurred in connection with the Release and the release contemplated under
Section 5.01(b)(i)(B) above, including, without limitation, any attorneys' fees
and disbursements incurred by Mortgagee (collectively, the "RELEASE COSTS").
Mortgagor's failure to pay or reimburse Mortgagee for all or any part of the
Release Costs on demand shall constitute an Event of Default hereunder
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and the Release Costs shall be added to the Secured Obligations and secured by
the lien of this Mortgage and shall bear interest from the date incurred at the
Default Rate until repaid.
5.02 MORTGAGOR. This Mortgage and all provisions hereof, shall
extend to and be binding upon Mortgagor and all persons claiming under or
through Mortgagor. Whenever in this Mortgage there is reference made to any of
the parties hereto, such reference shall be deemed to include, wherever
applicable, a reference to the successors and assigns (as the case may be) of
Mortgagor and Mortgagee and any Replacement Mortgagee pursuant to Section 5.15.
Mortgagor's successors and assigns shall include, without limitation, a
receiver, trustee or debtor-in-possession of or for Mortgagor. Mortgagor shall
not, without the prior written consent of Mortgagee, assign any rights, duties
or obligations hereunder.
5.03 WAIVER OF RIGHTS. To the extent permitted by applicable law,
Mortgagor hereby waives any and all right of redemption. Mortgagor waives and
will not avail itself of any appraisement, valuation, stay, moratorium,
extension or exemption laws now existing or hereafter enacted (including,
without limitation, all rights under and by virtue of the homestead exemption
laws and redemption laws). Mortgagor waives any right to have the property
comprising the Mortgaged Property marshalled upon any foreclosure and agrees
that upon a foreclosure the Mortgaged Property may be sold as an entirety.
5.04 MORTGAGOR AND LIEN NOT RELEASED. From time to time, Mortgagee
may, at its sole option, without giving notice to or obtaining the consent of
Mortgagor or the consent of any junior lien holder, guarantor or Tenant, without
liability on the part of Mortgagee and notwithstanding Mortgagor's breach of any
covenant, agreement or condition: (i) release anyone primarily or secondarily
liable on any of the Secured Obligations; (ii) accept a renewal or amended note
or notes therefor; (iii) release from the lien of this Mortgage any part of the
Mortgaged Property; (iv) take or release other or additional security for the
Secured Obligations; (v) consent to any plat, map or plan of the Mortgaged
Property; (vi) consent to the granting of any easement; (vii) join in any
extension or subordination agreement; and (viii) waive or fail to exercise any
right, power or remedy granted by law or herein or in any other instrument given
at any time to evidence or secure the payment of the Secured Obligations. Any
actions taken by Mortgagee pursuant to the terms of this Section shall not
impair or affect: (a) the obligation of Mortgagor to pay any sums at any time
secured by this Mortgage and to observe all of the covenants, agreements and
conditions contained herein and in the other Collateral Documents; (b) the
guaranty of any individual or legal entity for payment of the Secured
Obligations; or (c) the lien or priority of this Mortgage with respect to the
Mortgaged Property.
5.05 ADDITIONAL DOCUMENTS. Mortgagor agrees that, upon request of
Mortgagee, it will from time to time execute, acknowledge and deliver all such
additional instruments and further assurances of title and will do or cause to
be done all such further acts and things as may be necessary or desirable fully
to effectuate the intent of this Mortgage.
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5.06 NOTICES. All notices and other communications under this
Mortgage shall be in writing, except as otherwise provided in this Mortgage. A
notice, if in writing, shall be considered as properly given if given in
accordance with the provisions of the Indenture.
5.07 GOVERNING LAW. Mortgagor's and Mortgagee's substantive rights
and obligations under this Mortgage and the other Collateral Documents, and any
dispute arising out of, connected with, related to, or incidental to the
relationship established between Mortgagor and Mortgagee in connection with this
Mortgage and the other Collateral Documents, and whether arising in contract,
tort, equity, or otherwise, shall be governed by, and construed and interpreted
in accordance with, and resolved pursuant to, New York law. Mortgagor and
Mortgagee agree and stipulate that the state of New York has a substantial
relationship to them and to the Loan. Notwithstanding the foregoing: (a) to
the extent required by Florida Law, Mortgagee shall comply with Florida law to
the extent that Florida Law requires in connection with any foreclosure, any
sale or other enforcement of Mortgagee's remedies, including provisional
remedies, replevin, claim and delivery of property, injunctive relief, or
appointment of a receiver; and (b) Mortgagee may at its option (without thereby
limiting Mortgagee's rights under Florida Law) enforce its rights under the
Collateral Documents, including (but not limited to) its rights to sue Mortgagor
for any outstanding indebtedness or to obtain a judgment for any deficiency
following foreclosure, in accordance with New York law.
5.08 TIME OF ESSENCE. Time is of the essence of this Mortgage and of
every part hereof of which time is an element.
5.09 SEVERABILITY. If any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such illegality or unenforceability shall, at the option of
Mortgagee, not affect any other provision hereof, but this Mortgage shall be
construed as if such invalid, illegal or unenforceable provision had never been
contained herein.
5.10 ESTOPPEL CERTIFICATE. Mortgagor within fifteen (15) days after
mailing of a written request by Mortgagee agrees to furnish from time to time a
signed statement setting forth the amount of the Secured Obligations and whether
or not any default, offset or defense then is alleged to exist against the
Secured Obligations and, if so, specifying the nature thereof.
5.11 NON-JOINDER OF TENANT. From and after the occurrence and during
the continuance of any Payment Default or Event of Default (other than a
Bankruptcy Default) and upon the occurrence of any Bankruptcy Default and
thereafter, Mortgagee shall have the right and option to commence a civil action
to foreclose the lien of this Mortgage without joinder of the Box USA Lease
Tenant so that such foreclosure will be subject to the rights of the Box USA
Lease Tenant under the Box USA Lease and under the Warehouse Agreement. The
failure to join any other Tenant as party defendant or defendants in any such
civil action or the failure of any such order or judgment to foreclose their
rights shall not be asserted by Mortgagor as a defense in any civil action
instituted to collect the Secured Obligations or any
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part thereof or any deficiency remaining unpaid after foreclosure of the
Mortgaged Property, any statute or rule of law at any time existing to the
contrary notwithstanding.
5.12 FIXTURE FILING NOTICE. This Mortgage (including the fixture
filing) is to be recorded and/or indexed in the real estate records of the
County in which the Land is located.
5.13 WAIVER OF JURY TRIAL. TO THE MAXIMUM EXTENT PERMITTED BY LAW,
MORTGAGOR AND MORTGAGEE HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE
THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, ARISING
OUT OF, UNDER OR IN CONNECTION WITH THIS MORTGAGE OR ANY OTHER COLLATERAL
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENT (WHETHER VERBAL
OR WRITTEN) OR ACTION OR OMISSION OF EITHER PARTY OR ANY EXERCISE BY ANY PARTY
OF THEIR RESPECTIVE RIGHTS UNDER THE COLLATERAL DOCUMENTS OR IN ANY WAY RELATING
TO THE LOAN OR THE MORTGAGED PROPERTY (INCLUDING, WITHOUT LIMITATION, ANY ACTION
TO RESCIND OR CANCEL THIS MORTGAGE, AND ANY CLAIM OR DEFENSE ASSERTING THAT THIS
MORTGAGE WAS FRAUDULENTLY INDUCED OR IS OTHERWISE VOID OR VOIDABLE). THIS
WAIVER IS A MATERIAL INDUCEMENT FOR MORTGAGEE TO ENTER INTO THIS MORTGAGE AND
FOR THE NOTEHOLDERS TO ACQUIRE THE FIRST MORTGAGE NOTES.
5.14 LIMITATION ON LIABILITY. No manager, officer, employee,
incorporator or Member of Mortgagor, as such, shall have any liability for any
obligations of Mortgagor under this Mortgage or for any claim based on, in
respect of, or by reason of, such obligations or their creation.
5.15 REPLACEMENT OF MORTGAGEE AS "TRUSTEE." Mortgagee may resign as
"Trustee" at any time and a successor "Trustee" may be appointed, or Mortgagee
may otherwise be replaced as "Trustee," from time to time as provided in, and in
compliance with, the Indenture. Upon any such replacement of Mortgagee as
"Trustee" and appointment of a successor "Trustee" (the "REPLACEMENT
MORTGAGEE"), the outgoing "Trustee" and the Replacement Mortgagee may jointly
execute, acknowledge and record an instrument giving notice of such succession
and assigning all liens, rights and remedies hereunder of the outgoing "Trustee"
to the Replacement Mortgagee (a "SUCCESSION NOTICE"). A Succession Notice need
not bear any signature, authorization, evidence of authority, or other
confirmation of compliance with the Indenture, other than the signatures of
Mortgagee and the Replacement Mortgagee. From and after the recordation of a
Succession Notice, Replacement Mortgagee shall (to the exclusion of the outgoing
"Trustee") have the sole right to exercise any and all rights and remedies as
Mortgagee under this Mortgage. Without limiting the generality of the preceding
sentence, Replacement Mortgagee shall have the sole and exclusive right and
authority to do any of the following, all in accordance with and pursuant to the
Indenture and this Mortgage: (a) foreclose this Mortgage; (b) exercise any
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other Mortgagee's remedies; (c) assign or release this Mortgage or release any
Mortgaged Property; or (d) take or omit to take any other action(s) as holder of
this Mortgage.
5.16 OTHER COLLATERAL. This Mortgage is delivered by or on behalf of
Mortgagor pursuant to the Indenture and securing the Secured Obligations. All
potential junior lien holders are placed on notice that, under the Indenture or
otherwise (such as by separate future unrecorded agreement between Mortgagor and
Mortgagee), other collateral for the Secured Obligations (I.E., collateral other
than the Mortgaged Property) may, under certain circumstances, be released
without a corresponding reduction in the total principal amount secured by this
Mortgage. Such a release would decrease the amount of collateral securing the
same indebtedness, thereby increasing the burden on the remaining Mortgaged
Property created and continued by this Mortgage. No such release shall impair
the priority of the lien of this Mortgage. By accepting its interest in the
Mortgaged Property, each and every junior lien holder shall be deemed to have
acknowledged the possibility of, and consented to, any such release. Nothing in
this paragraph shall impose any obligation upon Mortgagee.
5.17 LIMITATION ON INTEREST. All agreements between Mortgagor and
Mortgagee under this Mortgage and under the Collateral Documents with respect to
the Secured Obligations are expressly limited so that in no contingency or event
whatsoever shall the amount paid or agreed to be paid to Mortgagee or any
Noteholder for the use, forbearance or detention of the indebtedness secured
hereby exceed the highest lawful rate permissible under applicable law. If,
from any circumstances whatsoever, fulfillment of any provision of this
Mortgage, or any Collateral Document with respect to the Secured Obligations, at
the time performance of such provision shall be due, shall involve payment of
interest at a rate which exceeds the highest lawful rate permissible under
applicable law, then IPSO FACTO the obligation to be fulfilled shall be reduced
to such highest lawful rate. If, from any circumstances whatsoever, Mortgagee
or any Noteholder shall ever receive interest, the amount of which would exceed
such highest lawful rate, the portion thereof which would be excessive interest
shall be deemed applicable to the reduction of the unpaid principal balance due
under the Mortgage or such Collateral Document and not to the payment of
interest or otherwise handled in accordance with applicable law.
5.18 ATTORNEYS' FEES. Whenever attorneys' fees are provided to be
paid, the term shall include any and all attorneys' fees, paralegal and law
clerk fees, including but not limited to, fees at the pretrial, trial and
appellate levels as well as fees arising out of negotiations and settlements
whether or not any legal proceedings are commenced, which are incurred or paid
by Mortgagee in protecting its interest in the Mortgaged Property and enforcing
its rights hereunder.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, Mortgagor has duly executed and delivered this
Mortgage, Security Agreement, Fixture Filing and Assignment of Rents, Leases and
Leaseholds as of the day and year first above written.
Signed, sealed and delivered FLORIDA COAST PAPER COMPANY, L.L.C.
in the presence of:
/s/ J. Michael Mayerfeld Name: Mary B. Dopslaff
- -------------------------------- ------------------------
Print Name: J. Michael Mayerfeld Title: Vice President
---------------------
/s/ Richard K. Elbaum
- --------------------------------
Print Name: Richard K. Elbaum
---------------------
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District of Columbia
The foregoing instrument was acknowledged before me this 29th day of
May, 1996 by Mary B. Dopslaff, a member of FLORIDA COAST PAPER COMPANY, L.L.C.,
a Delaware limited liability company, on behalf of the company. He/She is
personally known to me or has produced _______________ as identification. I am
a notary public of the District of Columbia and my commission expires on
2/14/98.
/s/ Judy L. Modlin
----------------------------------
Name: Judy L. Modlin
Title: Notary Public
Serial number: N/A
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EXHIBIT 10.3
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (as amended, supplemented or otherwise
modified from time to time, this "SECURITY AGREEMENT") is made and entered into
as of May 30, 1996 by FLORIDA COAST PAPER COMPANY, L.L.C., a Delaware limited
liability company, whose mailing address is 600 U.S. Highway 98, Port St. Joe,
Florida 32456 (the "DEBTOR"), in favor of NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, in its capacity as trustee for the
ratable benefit of the holders (the "SECURITYHOLDERS") from time to time of the
First Mortgage Notes (as hereinafter defined) (the "TRUSTEE").
RECITALS
a. Debtor is a party to that certain indenture dated as of the date
hereof (as amended, supplemented or otherwise modified from time to time, the
"INDENTURE"), among Debtor, Florida Coast Paper Finance Corp. (together with
Debtor, collectively, "ISSUERS") and Trustee, pursuant to which Issuers will
issue $165.0 million principal amount of their 12.75% First Mortgage Notes due
2006 (including all Series A and Series B first mortgage notes to be issued from
time to time pursuant to the Indenture, collectively, the "FIRST MORTGAGE
NOTES"), the proceeds of which (the "LOAN") will be used to fund in part the
acquisition by Debtor of certain real property, all improvements located thereon
and certain personal property. All terms, covenants, conditions, provisions and
requirements of the Indenture are incorporated by reference in this Security
Agreement.
B. The terms of the Indenture require that Debtor execute and
deliver this Security Agreement in order to secure the payment and performance
by Issuers of all of their Obligations (as defined in the Indenture) under the
Indenture, the First Mortgage Notes and the Collateral Documents to which either
Issuer is a party (collectively, the "SECURED OBLIGATIONS").
AGREEMENT
NOW, THEREFORE, in consideration of the premises, to induce the
Securityholders to purchase the First Mortgage Notes and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees with Trustee, for Trustee's benefit and the
ratable benefit of the Securityholders, as follows:
1. DEFINITIONS. Capitalized terms used herein and not otherwise
defined herein shall have the meaning given to such terms in the Indenture
unless the context otherwise requires. Terms used herein which are defined in
the Uniform Commercial Code
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as in effect from time to time in the State of New York (THE "UCC") and not
otherwise defined herein shall have the meanings ascribed thereto in the UCC.
In addition to those terms elsewhere expressly defined in this
Security Agreement, as used herein, the following terms shall be defined as set
forth below:
"ACCELERATION DATE" has the meaning assigned in Section 9.
"ACCELERATION PERIOD" has the meaning assigned in Section 9.
"ACCELERATION RIGHTS" has the meaning assigned in Section 9.
"ACCOUNTS" means any "account," as such term is defined in
Section 9-106 of the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now has or hereafter acquires any rights, and shall also include all cash
and bank accounts, but in no event shall include Accounts with respect to
Inventory and other Excluded Property described in paragraph 1 of the definition
thereof.
"ARTICLE 8 SECURITIES" means all "securities" as defined in Article 8
of the UCC, whether now owned or hereafter acquired by Debtor or in which Debtor
now has or hereafter acquires any rights.
"ASSEMBLY DATE" has the meaning assigned in Section 9.
"BANKRUPTCY CODE" means the United States Bankruptcy Code, as amended
from time to time.
"BANKRUPTCY DEFAULT" means a Default under Section 6.01(j) or (k) of
the Indenture, without giving effect to the passage of time.
"BOX PROPERTY" has the meaning assigned in Section 2.
"BOX USA LEASED PROPERTY" has the meaning assigned in the Mortgage.
"BOX USA LEASE TENANT" has the meaning assigned in the Mortgage.
"CHATTEL PAPER" means any "chattel paper," as such term is defined in
Section 9-105(1)(b) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located, but
in no event shall include any property of Debtor described in paragraph 1 of the
definition of Excluded Property.
"COLLATERAL" has the meaning assigned in Section 2.
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"COLLATERAL ACCOUNT" means, collectively, the accounts established by
Debtor for the benefit of Trustee pursuant to Section 10.11 of the Indenture and
this Security Agreement and designated as the "Cash Collateral Accounts."
"CONTRACTS" means all contracts, undertakings, or other agreements
(other than rights evidenced by Chattel Paper, Documents or Instruments) in or
under which Debtor may now or hereafter have any right, title or interest and
wherever located.
"COPYRIGHT LICENSE" means (a) any written agreement naming Debtor as
licensor or licensee, granting any right in or to any Copyright or copyright
registration in the United States or any foreign country, including, without
limitation, any thereof referred to in Schedule F hereto, or (b) any and all
present and future agreements, including, without limitation, assignments and
consents, as any such agreements may from time to time be amended or
supplemented, pursuant to which Debtor now has or hereafter acquires any direct
or beneficial interest in any Copyright, or is a grantor of rights to any third
party with respect any Copyright, whether as a party to any such agreement or as
an assignee of any rights under any such agreement, including, without
limitation, any thereof referred to in Schedule F hereto.
"COPYRIGHT" means (a) the copyrights in all original works of
authorship fixed in any tangible medium of expression (including, without
limitation, any thereof referred to in Schedule F hereto), including, without
limitation, all databases, source codes, object codes and manuals, whether
published or unpublished, now or hereafter existing, in the United States and
all foreign countries, and all applications, registrations, renewals, extensions
and recordings relating thereto filed in the United States Copyright Office or
in any other governmental offices or agency in the United States or any foreign
country, in each case in which Debtor has any right, title or interest, and all
other rights which Debtor presently has or hereafter acquires pursuant to any
Copyright License, including, without limitation, copyright assignments,
exclusive and nonexclusive license, and (b) all right, title and interest of
Debtor in all physical materials embodying works with respect to which Debtor
owns or holds rights in any Copyrights or Copyright Licenses.
"CREDIT AGREEMENT" means (1) a Qualifying Facility (as defined in the
SC Agreement) in an amount up to $20,000,000 to be secured solely by Excluded
Property of the nature described in paragraph 1 of the definition thereof and
the proceeds of which shall be used solely to provide working capital to Debtor,
and (2) any amendments, modifications, successor or replacement agreements
thereof, provided none of the foregoing contravene (a) the provisions of the
Indenture or (b) Section 3(i) of this Security Agreement.
"DEFAULT RATE" means the lesser of (a) the maximum rate of interest
allowed by applicable law, and (b) two percent (2%) per annum in excess of the
interest rate borne by the First Mortgage Notes upon issuance thereof.
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"DOCUMENTS" means any "documents," as such term is defined in
Section 9-105(1)(f) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located, but
in no event shall include any property of Debtor described in paragraph 1 of the
definition of Excluded Property.
"EQUIPMENT" means any "equipment," as such term is defined in Section
9-109(2) of the UCC, now owned or hereafter acquired by Debtor or in which
Debtor now has or hereafter acquires any rights and wherever located, and, in
any event, shall include, without limitation, all machinery, equipment,
furnishings, Fixtures, vehicles and computers and other electronic
data-processing and other office equipment now owned or hereafter acquired by
Debtor or in which Debtor now has or hereafter acquires any rights and wherever
located, and any and all additions, substitutions and replacements of any of the
foregoing, wherever located, together with all attachments, components, parts,
equipment and accessories installed thereon or affixed thereto.
"EXCLUDED PROPERTY" means, with respect to Debtor:
(1) (a) all presently existing or hereafter acquired or created
accounts of Debtor (whether or not earned by performance) and other rights of
Debtor to receive the payment of money or other consideration under present or
future contracts (including, without limitation, all rights of Debtor to receive
payments under presently existing or hereafter acquired or created letters of
credit) of Debtor to the extent any of the foregoing arise out of the sale or
lease of Inventory of Debtor or services rendered by Debtor, whether or not any
or all of the foregoing is on open account or evidenced by or set forth in or
arising out of any present or future chattel paper (as defined in clause (c)
below), note, draft, lease, acceptance, writing, bond, credit insurance policy,
instrument (as defined in clause (e) below), document (as defined in clause (d)
below), or writings and all extensions and renewals of any thereof, all
collateral security of any kind (including real property mortgages and deeds of
trust) and letters of credit given by any Person with respect to any or all of
the foregoing, and all claims or causes of action (whether at law or in equity,
arising from contract, tort, by operation of law or otherwise) now existing or
hereafter arising in connection with or under any or all of the foregoing, and
all proceeds (cash and non-cash) of the foregoing;
(b) (i) all goods (excluding equipment, fixtures, vehicles,
railroad cars, boats and barges, aircraft, and other goods which Debtor
purchased or leased for use in Debtor's business) which are held by Debtor for
sale or lease, which are to be furnished under contracts of service or are so
furnished, or which are raw materials, work in process or materials (including,
without limitation, packing materials) used or consumed in Debtor's business,
and (ii) all warranties (express or implied, including, without limitation,
warranties of title, fitness for use, and merchantability) and other rights of
Debtor against Persons in their capacity as sellers with respect to such goods
and all cash and non-cash proceeds thereof (all of the foregoing, collectively,
"INVENTORY");
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(c) any writing or writings which evidence both a monetary
obligation with respect to and a security interest in or lease of Debtor's
Inventory and all cash and non-cash proceeds thereof; and any returned, rejected
or repossessed Inventory of Debtor covered by any such writing or writings and
all cash and non-cash proceeds thereof (in any form including, without
limitation, accounts, contract rights, documents, chattel paper, instruments and
general intangibles) of such returned, rejected or repossessed Inventory;
(d) all documents of title relating to Debtor's Inventory,
whether now existing or hereafter acquired or created, and all proceeds (cash
and non-cash) of the foregoing;
(e) any negotiable instrument (as defined under Article 3 of the
Uniform Commercial Code) or any other writing (and all proceeds (cash and non-
cash) of the foregoing) which both (i) evidences a right of Debtor to payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
indorsement and (ii) has been received by Debtor with respect to Debtor's
accounts (as defined in clause (a)), chattel paper (as defined in clause (c)) or
Inventory;
(f) all credit insurance policies and insurance covering Debtor's
Inventory and all cash and non-cash proceeds thereof; and
(g) all books and records in whatever media (paper, electronic or
otherwise) recorded or stored, with respect to any or all of the foregoing items
(a) through (f).
(2) any property which is the subject of a purchase money financing
permitted by the provisions of the Indenture to the extent the terms of such
permitted purchase money financing prohibit such property to be pledged in favor
of Trustee and constitutes a Permitted Lien; and
(3) in the case of Equipment leased in accordance with the terms of
the Indenture, such Equipment to the extent the pledge thereof to Trustee is
prohibited by the terms of such lease.
"FACILITY REAL PROPERTY" means, collectively and individually, all
buildings and improvements owned or leased by Debtor, including any such
buildings and improvements where any Collateral is located.
"FIXTURES" means all materials, supplies, equipment, systems,
apparatus, and other items now owned or hereafter acquired by Debtor and now or
hereafter attached to, installed in, or used in connection with (temporarily or
permanently) any of the Facility Real Property, and including, but not limited
to, any and all partitions, dynamos, window screens and shades, draperies, rugs
and other floor coverings, awnings, motors, engines, boilers, furnaces, pipes,
cleaning, call and sprinkler systems, fire extinguishing apparatus and
equipment, water tanks, swimming pools, heating, ventilating, refrigeration,
plumbing,
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laundry, lighting, security systems and equipment (including cameras),
telecommunication installations (including wiring and fiber optic cable),
generating, cleaning, waste disposal, transportation (of people or things,
including, but not limited to, stairways, elevators, escalators, and conveyors),
incinerating, air conditioning and air cooling equipment and systems, gas and
electric machinery, appurtenances and equipment, disposals, dishwashers,
refrigerators and ranges, recreational equipment and facilities of all kinds,
and water, gas, electrical, telephone, storm and sanitary sewer facilities, and
all other utilities whether or not situated in easements, together with all
accessions, appurtenances, replacements, betterments, and substitutions for any
of the foregoing.
"GENERAL INTANGIBLES" means any "general intangibles," as such term is
defined in Section 9-106 of the UCC, now owned or hereafter acquired by Debtor
or in which Debtor now has or hereafter acquires any rights, and, in any event,
shall include, without limitation, all right, title and interest which Debtor
may now or hereafter have in or under any Contract, causes of action,
franchises, tax refund claims, customer lists, Trademarks, Patents, rights in
intellectual property, Licenses, permits, Copyrights, trade secrets, proprietary
or confidential information, inventions and discoveries (whether patented or
patentable or not) and technical information, procedures, designs, knowledge,
know-how, software, data bases, business records data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill, all
claims under guaranties, security interests or other security held by or granted
to Debtor to secure payment of the Accounts by an account debtor obligated
thereon, all rights of indemnification and all other intangible property of any
kind and nature.
"GOVERNMENTAL AUTHORITY" means (a) any international, foreign,
federal, state, county or municipal government, or political subdivision
thereof, (b) any governmental agency, authority, board, bureau, commission,
department or instrumentality, (c) any court or administrative tribunal, (d) any
non-governmental agency or entity that is vested by a governmental agency with
applicable jurisdiction over a Person, or (e) any arbitration tribunal or other
non-governmental authority to whose jurisdiction a Person has given its general
consent.
"INSTRUMENTS" means any "instrument," as such term is defined in
Section 9-105(1)(i) of the UCC, now owned or hereafter acquired by Debtor or in
which Debtor now has or hereafter acquires any rights and wherever located,
other than instruments that constitute, or are a part of a group of writings
that constitute, Chattel Paper, but in no event shall include any property of
Debtor described in paragraph 1 of the definition of Excluded Property.
"INSURANCE AND CONDEMNATION PROVISIONS" has the meaning assigned in
Section 4(k).
"INTERCOMPANY DEBT" means any indebtedness payable to Debtor by any
Person which is a direct or indirect Subsidiary of Debtor.
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"INVENTORY LIQUIDATION PERIOD" has the meaning assigned in Section 9.
"ITEM OF PAYMENT" means each check, draft, cash, money, instrument,
item, and other remittance, in each of the foregoing cases, which is received in
payment or on account of payment of the Collateral or otherwise with respect to
any Collateral; and "Items of Payment" means the collective reference to all of
the foregoing.
"LANDLORD WAIVER" has the meaning assigned in Section 4(o).
"LAWS" means all ordinances, statutes, rules, regulations, orders,
injunctions, writs or decrees of any Governmental Authority or political
subdivision or agency thereof, or any court or similar entity established by any
thereof.
"LICENSE" means any Patent License, Trademark License or other license
under which Debtor is the licensor or licensee and in the case of Licenses under
which Debtor is the licensor, all rights to collect royalties thereunder.
"MORTGAGE" means the Mortgage, Security Agreement, Fixture Filing
Statement and Assignment of Rents, Leases and Leasehold Interests, dated of even
date herewith between Debtor and Trustee.
"MORTGAGEE WAIVER" has the meaning assigned in Section 4(o).
"OPTIONEE" has the meaning assigned in the Mortgage.
"OPTION PROPERTY" has the meaning assigned in the Mortgage.
"PATENT" or "PATENTS" means one or all of the following now owned or
hereafter acquired by Debtor or in which Debtor now has or hereafter acquires
any rights, including, without limitation, pursuant to any Patent License, and
wherever located: (a) all letters patent of the United States or any other
country and all applications for letters patent of the United States or any
other country, (b) all reissues, reexaminations, continuations, continuations-
in-part, divisions, and extensions of any of the foregoing, and (c) all
inventions claimed and disclosed in the Patents and any and all trade secrets
and know-how related thereto.
"PATENT LICENSE" means any written agreement granting any right to
make, use, sell and/or practice any invention or discovery that is the subject
matter of a Patent now owned or hereafter acquired by Debtor or in which Debtor
now has or hereafter acquires any rights.
"PAYMENT DEFAULT" means a Default under Section 6.01(a) or (b) of the
Indenture, without giving effect to any applicable notice and/or cure periods.
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"PROCEEDS" means "Proceeds," as such term is defined in Section
9-306(1) of the UCC and, in any event, shall include, without limitation, (a)
any and all Proceeds of any insurance, indemnity, warranty or guaranty payable
to Debtor from time to time with respect to any of the Collateral or the
Facility Real Property including, without limitation, in connection with the
insurance policies required to be maintained pursuant to the provisions of
Section 4(k), (b) any and all payments (in any form whatsoever) made or due and
payable to Debtor from time to time in connection with any requisition,
confiscation, condemnation, seizure or forfeiture of all or any part of the
Collateral or the Facility Real Property by any Governmental Agency (or any
Person acting under color of governmental authority), (c) any claim of Debtor
against third parties (i) for past, present or future infringement of any Patent
or Patent License or (ii) for past, present or future infringement or dilution
of any Trademark or Trademark License or for injury to the goodwill associated
with any Trademark, Trademark registration or Trademark licensed under any
Trademark License, and (d) any and all other amounts from time to time paid or
payable under or in connection with any of the Collateral or the Facility Real
Property.
"PROPERTY" means any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"PURCHASE AGREEMENT" means that certain Asset Purchase Agreement dated
as of November 1, 1995, as amended, supplemented or otherwise modified from time
to time, among Four M Corporation, Port St. Joe Paper Company, Seller and
certain of its affiliates, as that Asset Purchase Agreement was amended by
first, second and third letter agreements, letter, dated January 10, 1996 and
letter, dated May 16, 1996 and as the same may from time to time be amended,
restated, supplemented or modified, together with all exhibits and schedules
thereto.
"PURCHASE AGREEMENT DOCUMENTS" means collectively the Purchase
Agreement and any and all other agreements, documents or instruments,
previously, now or hereafter executed and delivered by Seller, in connection
with the Purchase Agreement Transaction.
"PURCHASE AGREEMENT RIGHTS" means all of Debtor's rights, title and
interest in, to, and under, the Purchase Agreement and all of the Purchase
Agreement Documents, including, without limitation, all of the benefits of any
representations and warranties provided by Seller and any and all rights of
Debtor to indemnification from Seller or any other Person contained therein.
"PURCHASE AGREEMENT TRANSACTION" means that portion of the purchase
agreement transaction under the provisions of the Purchase Agreement dealing
with the sale of the Mill Assets and the Mill Business (as each such term is
defined in the Purchase Agreement) by Seller.
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"REFINANCING INDEBTEDNESS" means any indebtedness issued in exchange
for or the proceeds of which are used to extend, refinance, renew, replace,
substitute or refund the Secured Obligations in a transaction in which the same
are repaid or satisfied in full.
"SC AGREEMENT" means the Subordinated Credit Agreement, dated of even
date herewith, by and among Florida Coast Paper Company, L.L.C., Stone Container
Corporation and Four M Corporation.
"SC AGREEMENT RIGHTS" means all of Debtor's reimbursement and other
rights including the right to enforce the performance by the other parties
thereto of the SC Agreement.
"SELLER" means St. Joe Container Company, a Florida corporation, as
seller of the Mill Assets.
"STOCK COLLATERAL" means all of the capital stock of any Person owned
by Debtor or any Guarantor, including, without limitation, the capital stock of
Debtor owned by any Guarantor.
"TRADEMARK" or "TRADEMARKS" means one or all of the following now
owned or hereafter acquired by Debtor or in which Debtor now has or,hereafter
acquires any rights (including, without limitation, pursuant to any Trademark
License) : (a) all trademarks, trade names, corporate names, business names,
trade styles, service marks, logos, other source or business identifiers, prints
and labels on which any of the foregoing have appeared or appear, designs and
general intangibles of like nature, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications in
connection therewith, including, without limitation, registrations, recordings
and applications in the United States Patent and Trademark Office or in any
similar office or agency of any State of the United States or any other country
or any political subdivision thereof, (b) all extensions or renewals thereof and
(c) the goodwill of Debtor's business and other General Intangibles connected
with the use of, and symbolized by, any of the foregoing.
"TRADEMARK LICENSE" means any written agreement granting any right to
use any Trademark or Trademark registration now owned or hereafter acquired by
Debtor or in which Debtor now has or hereafter acquires any rights.
"WAREHOUSE" has the meaning assigned in the Mortgage.
2. CREATION OF SECURITY INTEREST. In order to secure the Secured
Obligations, Debtor hereby grants to Trustee, for Trustee's benefit and the
ratable benefit of the Securityholders, a continuing security interest in all
Debtor's rights, title and interest in and to any and all of the personal
property and fixtures now owned or at any time hereafter acquired by Debtor or
in which Debtor now or hereafter has any interest in, including but not limited
to the following (collectively, but excluding the Excluded Property, the
"COLLATERAL"):
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(i) the Purchase Agreement Rights;
(ii) the SC Agreement Rights;
(iii) (a) all Accounts;
(b) all Article 8 Securities;
(c) all Chattel Paper;
(d) all Contracts;
(e) all Documents;
(f) all Equipment;
(g) all General Intangibles;
(h) all Instruments;
(i) all Intercompany Debt;
(j) all Patents;
(k) all Patent Licenses;
(l) all Refinancing Indebtedness;
(m) all Stock Collateral;
(n) all Trademarks;
(o) all Trademark Licenses;
(p) all Items of Payment;
(q) all books and records pertaining to the Collateral; and
(r) to the extent not otherwise included, all Proceeds and
products of any of the foregoing.
Notwithstanding anything contained in this Security Agreement to the contrary,
"Collateral" shall not include (i) any Excluded Property and (ii) any personal
property owned by the Box USA Lease Tenant or leased by it from any person other
than from Debtor or any Subsidiary of Debtor and located from time to time on
the Box USA Leased Property or in the Warehouse (collectively, the "BOX
PROPERTY").
3. REPRESENTATIONS AND WARRANTIES. Debtor hereby represents and
warrants that:
(a) LEGAL POWER. The execution, delivery and performance by
Debtor of this Security Agreement and all documents contemplated hereby are
within Debtor's legal powers, have been duly authorized by all requisite action
of Debtor, require no action by or in respect of, or filing with (except for any
filings provided for hereunder), any Governmental Authority, require no consent
of any other person (other than Landlord Waivers and Mortgagee Waivers which
have been obtained) and do not contravene, or constitute a default under, any
provision of applicable law or regulation or of the certificate of incorporation
or bylaws of Debtor or of any agreement, judgment, injunction, order, decree or
other instrument binding upon Debtor or result in the creation or imposition of
any Lien on any asset of Debtor (other than the Lien created by this Security
Agreement).
(b) ENFORCEABILITY. This Security Agreement constitutes a
legally valid and binding obligation of Debtor, enforceable against Debtor in
accordance with its
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terms, except as such enforceability may be limited by the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting creditors' rights generally and general principles of equity and
commercial reasonableness.
(c) SECURITY INTEREST. The Collateral is (or, to the extent
Collateral is acquired after the date hereof, will be) owned by Debtor. The
security interest created hereby in the Collateral is a valid, enforceable and,
except with respect to items of Collateral in which a security interest cannot
be created pursuant to the Uniform Commercial Code as in effect from time to
time in the applicable jurisdictions, such security interest constitutes a
perfected security interest in the Collateral subject in priority only to Liens
of the nature described in clauses (iv), (v), (vii), (viii), (ix), (x), (xi),
(xii) and (xiii) of the definition of Permitted Liens in the Indenture (the
Liens described in said clauses being hereinafter referred to as the "PERMITTED
LIENS"). There are no other security interests in, or Liens on the Collateral
or any portion thereof, except for Permitted Liens, and no financing statement,
notice of Lien, assignment or collateral assignment, mortgage or deed of trust
covering the Collateral or any portion thereof ("LIEN NOTICE") exists or is on
file in any public office, except with respect thereto and with respect to the
Lien created by this Security Agreement and the other Collateral Documents, and
Liens to be released concurrently with the issuance of the First Mortgage Notes.
(d) FEDERAL TAXPAYER I.D. NUMBER; OFFICES. The chief executive
office of Debtor is located at 600 U.S. Highway 98, Port St. Joe, Florida 32456
("CHIEF EXECUTIVE OFFICE"). Debtor has no places of business other than those
set forth in SCHEDULE A, except as permitted hereafter by Section 4(c) hereof.
Debtor's federal employer taxpayer identification number is 59-3379704.
(e) BUSINESS NAMES. Debtor has not conducted business under
any name during the five (5) years preceding the date hereof, other than the
names set forth on SCHEDULE B hereto.
(f) VEHICLES. SCHEDULE C is a complete and correct list of all
motor vehicles owned or leased by Debtor on the date hereof.
(g) ROLLING STOCK. SCHEDULE D is a complete and correct list of
all rolling stock and locomotives owned or leased by Debtor on the date hereof.
(h) SHIPS. SCHEDULE E is a complete and correct list of all
ships, boats and barges owned or leased by Debtor on the date hereof.
(i) CREDIT AGREEMENT SECURITY INTEREST. None of the agent for
or the lenders under the Credit Agreement shall have a security interest in the
Collateral or any part thereof under or arising out of the Credit Agreement or
any other agreement or document contemplated thereby. None of the agent for or
the lenders under the Credit Agreement shall have any right to or shall have
taken or claimed or attempted to take or claim a security interest in any
property of Debtor other than the Excluded Property
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described in paragraph 1 of the definition thereof. The agent for and the
lenders under the Credit Agreement shall have reviewed this Security Agreement.
4. COVENANTS.
(a) LIEN NOTICES. Debtor will defend its interest in the
Collateral against all claims and demands of all Persons at any time claiming
the same or any part thereof or interest therein, will not grant any security
interest (whether senior, junior or PARI PASSU with the Lien granted to Trustee
hereunder) to any other Person in the Collateral or any part thereof or any
interest therein and will not permit any Lien Notices with respect to the
Collateral or any portion thereof to exist or be on file in any public office
for more than thirty (30) days, except with respect to the Lien in favor of
Trustee for the benefit of the Securityholders and Permitted Liens.
(b) LOCATION OF COLLATERAL. Debtor will keep all of its
Collateral now held or subsequently acquired by it at the locations specified on
SCHEDULE A hereto, or at locations hereafter established in compliance with
Section 4(c) hereof (except for (i) Collateral held by Trustee, (ii) motor
vehicles, trailers and rolling stock, and (iii) Collateral temporarily in
transit between such locations), unless Debtor shall have given Trustee prior
written notice thereof and shall have in advance executed and caused to be filed
and/or delivered to Trustee any financing statements or other documents required
in order to perfect, protect and preserve the Liens created hereby, all in form
and substance satisfactory to Trustee.
(c) LOCATION OF OFFICES; LEGAL STRUCTURE. Debtor will not
change the location of its Chief Executive Office or establish any place of
business other than those set forth on SCHEDULE A hereto, or voluntarily or
involuntarily change its legal structure, unless Debtor shall have given Trustee
prior written notice thereof and shall have in advance executed and caused to be
filed and/or delivered to Trustee any financing statements or other documents
required in order to perfect, protect and preserve the Liens created hereby, all
in form and substance satisfactory to Trustee.
(d) FURTHER ASSURANCES. Debtor will, promptly upon request by
Trustee, execute and deliver or use its best efforts to give any notices,
execute and file or procure any financing statements or other documents, all in
form and substance satisfactory to Trustee, mark any chattel paper constituting
Collateral, deliver any chattel paper or instruments constituting Collateral to
Trustee and take any other actions that are necessary or, in the reasonable
opinion of Trustee, desirable to perfect or continue the perfection and the
priority of Trustee's security interest in the Collateral, to protect the
Collateral against the rights, claims, or interests of third persons other than
holders of Permitted Liens or to effect the purposes of this Security Agreement.
Debtor hereby authorizes Trustee to file any financing or continuation
statements with respect to the Collateral without the signature of Debtor to the
extent permitted by applicable law. Debtor will pay all costs incurred in
connection with any of the foregoing.
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(e) NO LIENS; AMENDMENT OF THE CREDIT AGREEMENT. Without the
prior written consent of Trustee, Debtor will not (i) in any way hypothecate or
create or permit to exist any Lien on or other interest in (A) the Collateral
except for the Permitted Liens and Liens described in clauses (i) and (vi) of
the definition of Permitted Liens in the Indenture or (B) the Excluded Property
described in paragraph 1 of the definition thereof except with respect to
indebtedness permitted to be incurred under the Credit Agreement in accordance
with the provisions of Section 4.09(i) of the Indenture, (ii) amend, modify or
enter into a replacement of the Credit Agreement or enter into a similar
agreement, which amendment, modification, replacement or similar agreement would
grant a security interest in any property of Debtor to the agent for or to the
lenders under the Credit Agreement other than Excluded Property described in
paragraph 1 of the definition thereof, or (iii) grant a security interest in
Excluded Property of the type described in paragraph 1 of the definition thereof
to any Person other than the agent for or the lenders under the Credit Agreement
from time to time.
(f) DISPOSITION OF COLLATERAL. Debtor will not sell, transfer,
assign, pledge, collaterally assign, exchange or otherwise dispose of the
Collateral in violation of the Indenture. If the Proceeds of any such sale are
money, notes, instruments, securities, documents of title, letters of credit or
chattel paper, such Proceeds shall be promptly delivered to Trustee in the form
received to be deposited in the Collateral Account and held as Collateral
thereunder and applied as provided in the Indenture. If the Collateral, or any
part thereof, is sold, transferred, assigned, exchanged, or otherwise disposed
of in violation of these provisions, the security interest of Trustee shall
continue in such Collateral or part thereof notwithstanding such sale, transfer,
assignment, exchange or other disposition, and Debtor will hold the Proceeds
thereof in a separate account for the benefit of Trustee and the Securityholders
and transfer such Proceeds to Trustee in kind to be deposited in the Collateral
Account and held as Collateral hereunder.
(g) RIGHTS OF TRUSTEE. Trustee shall have the right, but not
the obligation, at any time to make any payments and do any other acts that
Trustee may deem necessary to protect its security interest in the Collateral,
including, without limitation, the rights to pay, purchase, contest or
compromise any Lien (other than a Permitted Lien referred to in Section 4(e)),
whether senior, JUNIOR or PARI PASSU with the Lien granted to Trustee hereunder,
and challenge any action or proceeding purporting to affect its security
interests in the Collateral. Debtor hereby agrees to reimburse Trustee for all
payments made and expenses incurred under this Security Agreement including
reasonable fees, expenses and disbursements of attorneys and paralegals acting
for Trustee, including any of the foregoing payments under or acts taken to
perfect or protect its security interests in the Collateral, which amounts shall
constitute part of the Secured Obligations and shall be secured under this
Security Agreement, and agrees that it shall be bound by any payment made or act
taken by Trustee hereunder. All such amounts shall earn interest at the Default
Rate from the date incurred and be payable by Debtor to Trustee upon demand.
Trustee shall have no obligation to make any of the foregoing payments or
perform any of the foregoing acts.
(h) CERTIFICATES OF TITLE. Promptly upon request by Trustee,
Debtor will deliver to Trustee all original certificates of title with respect
to motor vehicles, trailers
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and other titled Collateral hereunder owned by Debtor, duly granting a security
interest in favor of Trustee and accompanied by all required duly executed
transfer forms.
(i) RECORDS. Debtor will keep and maintain at its own cost and
expense satisfactory and complete records of the Collateral.
(j) ACCESS. Trustee shall at all times upon reasonable prior
notice to Debtor have full and free access during normal business hours to all
the books, correspondence and records of Debtor relating to the Collateral, and
Trustee and its representatives may examine the same, take extracts therefrom
and make photocopies thereof, and Debtor agrees to render to Trustee, at
Debtor's cost and expense, such clerical and other assistance, at all times and
in such manner as may reasonably be requested with regard thereto. Trustee and
its representatives upon reasonable prior notice to Debtor shall at all times
also have the right to enter, during normal business hours, into and upon any
Facility Real Property for the purpose of inspecting the same, observing its use
or otherwise protecting its interests therein.
(k) INSURANCE AND CONDEMNATION. All of the provisions (the
"INSURANCE AND CONDEMNATION PROVISIONS") of Sections 2.04 and 2.05 of the
Mortgage are incorporated herein by this reference, and Debtor covenants to
comply with the Insurance and Condemnation Provisions as if they were fully set
forth herein, irrespective of whether or not the Mortgage is in full force and
effect.
(l) CARE OF THE EQUIPMENT AND THE FACILITY REAL PROPERTY.
(i) Debtor will preserve and maintain the Equipment in the
same condition, repair and working order as on the date hereof or, if
hereafter acquired, on the date when acquired, ordinary wear and tear
excepted, and to the extent consistent with current business practices in
accordance with any manufacturer's manual, and shall as quickly as
practicable after the occurrence of any Casualty, make or cause to be made
all repairs, replacements and other improvements in connection therewith
which are necessary or desirable to such end.
(ii) NOTICE OF DAMAGE. In the event of a Casualty which
shall constitute an Event of Loss, Debtor will give prompt written notice
thereof to Trustee.
(iii) RIGHT TO INSPECT. Trustee or any of its
representatives is hereby authorized, with reasonable advance notice to
Debtor, to enter upon the real property where the Collateral is located and
inspect the Collateral at any time during normal business hours.
(iv) REPAIR AND REPLACEMENT. If all or any part of the
Equipment shall be damaged by a Casualty, Debtor will promptly restore the
Equipment to the equivalent of its condition immediately before the
occurrence of
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such Casualty, regardless of whether or not there shall be any insurance or
casualty Proceeds therefor and whether or not the same are made available
by Trustee for such purpose. If a Casualty shall constitute an Event of
Loss, or from and after the occurrence and during the continuance of any
Payment Default or Event of Default (other than a Bankruptcy Default) and
upon the occurrence of any Bankruptcy Default and thereafter, all insurance
or casualty Net Proceeds (as defined in the Indenture) payable to Debtor in
connection with such Casualty (excluding any such Net Proceeds (as defined
in the Indenture) with respect to a Casualty affecting the Box Property)
shall be paid to Trustee promptly upon receipt by Debtor in the form
received to be held in the Collateral Account as additional Collateral for
the Secured Obligations and applied in accordance with the provisions of
the Indenture.
(m) NOTICE OF LIENS. Debtor will advise Trustee promptly, in
reasonable detail, at the address set forth in the Indenture, of any Lien (other
than Permitted Liens) on, or claim asserted against, any of the Collateral.
(n) TAXES. Debtor shall pay all taxes, assessments and levies
as and to the extent required by the Indenture; PROVIDED, HOWEVER, that Debtor
shall in any event pay such taxes, assessments or levies prior to the earlier of
(i) subject to Debtor's contest rights set forth in Section 4.05 of the
Indenture, the date any fine, penalty, interest or cost may be added thereto and
(ii) the date five (5) days prior to the date of any proposed sale under any
judgment, writ or warrant of attachment with regard to any Collateral entered or
filed against Debtor as a result of the failure to make such payment.
(o) LANDLORD WAIVERS; MORTGAGEE WAIVERS. Debtor shall use its
best efforts to cause (i) any landlord of, and (ii) the holder of any mortgage
encumbering, any premises owned by Debtor where any of the Collateral is or
shall hereafter be located to execute and deliver to Trustee a landlord waiver
or a mortgagee waiver, as the case may be, substantially in the forms annexed
hereto as EXHIBIT A (each a "LANDLORD WAIVER") and EXHIBIT B (EACH A "MORTGAGEE
WAIVER"), respectively. Debtor shall not enter into any such lease hereafter
unless, contemporaneously with the execution and delivery thereof, the Landlord
thereunder shall execute and deliver a Landlord Waiver in the form of Exhibit A
to Trustee.
(p) GUARANTY AND CONTRIBUTION AGREEMENTS; SUBSIDIARY SECURITY
AGREEMENTS AND STOCK PLEDGE AGREEMENTS. Upon the formation of any Subsidiary
other than an Unrestricted Subsidiary, Debtor shall execute and deliver to
Trustee a Company Pledge Agreement in the form annexed hereto as Exhibit C.
Debtor shall cause each Subsidiary of Debtor (other than Subsidiaries that are
Unrestricted Subsidiaries, while such Subsidiaries are Unrestricted
Subsidiaries), presently existing or hereafter created or acquired, to execute
and deliver to Trustee (i) a Guaranty and Contribution Agreement in the form
annexed to the Indenture as Exhibit E, (ii) a Subsidiary Security Agreement with
respect to all of each such Subsidiary's right, title and interest in and to all
personal property and fixtures (other than excluded property specified therein)
in the form annexed to the Indenture as Exhibit G, and (iii) a Subsidiary Pledge
Agreement in the form annexed to the Indenture as Exhibit F.
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5. REMEDIES UPON AN EVENT OF DEFAULT.
(i) The occurrence of any Event of Default under the
Indenture shall constitute an Event of Default under this Security Agreement.
(ii) From and after the occurrence and during the
continuance of any Payment Default or Event of Default (other than a Bankruptcy
Default) and upon the occurrence of any Bankruptcy Default and thereafter,
Trustee may, subject to the provisions of the Indenture, without notice to or
demand upon Debtor, do any one or more of the following:
(a) Exercise any or all of the rights and remedies provided
for by the applicable Uniform Commercial Code, including, without limitation,
the right to recover the fees and expenses incurred by Trustee in the
enforcement of the Secured Obligations and/or this Security Agreement or in
connection with Debtor's redemption of the Collateral, including fees, expenses
and disbursements of attorneys, paralegals and agents;
(b) personally, or by agents or attorneys, immediately
retake possession of the Collateral or any part thereof, from Debtor or any
other person who then has possession of any part thereof with or without notice
or process of law, and for that purpose may enter upon Debtor's premises where
any of the Collateral is located and remove the same and use in connection with
such removal any and all services, supplies, aids and other facilities of
Debtor;
(c) sell, assign or otherwise liquidate, or direct Debtor
to sell, assign or otherwise liquidate, any or all of the Collateral or any part
thereof, and take possession of the proceeds of any such sale or liquidation;
(d) require Debtor to assemble the Collateral or any part
thereof and make it available at one or more places as Trustee may designate and
to deliver possession of the Collateral or any part thereof to Trustee;
(e) use, manage, operate and control the Collateral and
Debtor's businesses and properties to preserve the Collateral or its value,
including, without limitation, the rights to take possession of all of Debtor's
premises and property, to exclude any third parties (subject to the rights of
the agent for and the lenders under the Credit Agreement with respect to
Excluded Property described in paragraph 1 of the definition thereof and subject
to the rights of the Box USA Lease Tenant with respect to the Box USA Leased
Property), whether or not claiming under Debtor, from such premises and
property, to complete any unfinished inventory, to make repairs, replacements,
alterations, additions and improvements to the Collateral, and to dispose of all
or any portion of the Collateral in the ordinary course of Debtor's business;
(f) use, in connection with any assembly, use or
disposition of the Collateral, any intellectual property, intangibles or other
technical knowledge or process used or utilized from time to time by Debtor;
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(g) enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent Trustee from
pursuing any other or further remedy which it may have, and any repossession or
retaking or sale of the Collateral pursuant to the terms hereof shall not
operate to release Debtor until full and final payment of any deficiency has
been made in cash;
(h) in connection with any public or private sale under the
applicable Uniform Commercial Code, Trustee shall give Debtor at least ten (10)
days' prior written notice of the time and place of any public sale of its
Collateral or of the time after which any private sale or other intended
disposition thereof may be made, which shall be deemed to be reasonable notice
of such sale or other disposition. Such notice may be given to Debtor in
accordance with the provisions of Section 12(a) hereof;
(i) proceed by an action or actions at law or in equity to
recover the Secured Obligations or to foreclose this Security Agreement and sell
the Collateral, or any portion thereof, pursuant to a judgment or decree of a
court or courts of competent jurisdiction; and
(j) if Trustee recovers possession of all or any part of
the Collateral pursuant to a writ of possession or other judicial process,
whether prejudgment or otherwise, Trustee may thereafter retain, sell or
otherwise dispose of such Collateral in accordance with this Security Agreement
or the applicable Uniform Commercial Code, and following such retention, sale or
other disposition, Trustee may voluntarily dismiss without prejudice the
judicial action in which such writ of possession or other judicial process was
issued. Debtor hereby consents to the voluntary dismissal by Trustee of such
judicial action, and Debtor further consents to the exoneration of any bond that
Trustee files in such action.
6. COLLATERAL ACCOUNT. All money received by Debtor and required to
be deposited in the Collateral Account shall be promptly and without commingling
remitted to Trustee for deposit therein. Amounts held in the Collateral Account
shall be applied or disposed of only in a manner permitted by the Indenture.
Provided no Default or Event of Default shall have occurred and be continuing,
all or any part of the money held in the Collateral Account shall, upon the
direction of Debtor, be invested by Trustee in Cash Equivalents; PROVIDED THAT
such Cash Equivalents are denominated and payable in U.S. dollars; and PROVIDED
FURTHER, that all such Cash Equivalents and any interest earned thereon shall
continue to be Collateral hereunder.
7. PROVISIONS RELATING TO COPYRIGHTS.
(a) REPRESENTATIONS AND WARRANTIES. As of the date hereof,
SCHEDULE F hereto lists all of the Copyrights and Copyright Licenses owned by
Debtor. Debtor has registered or filed for registration all such Copyrights.
Each such Copyright is valid, subsisting, unexpired, enforceable and has not
been abandoned and, to the best of Debtor's knowledge, has not entered the
public domain. No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity
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of any Copyright and which could reasonably be expected to have a material
adverse effect on the business operations or financial condition of Debtor and
its Subsidiaries, taken as a whole. No action or proceeding is pending seeking
to limit, cancel or question the validity of any Copyright which could
reasonably be expected to have a material adverse effect on the business
operations or financial condition of Debtor and its Subsidiaries, taken as a
whole.
8. PROVISIONS RELATING TO PATENTS AND TRADEMARKS.
(a) REPRESENTATIONS AND WARRANTIES. (i) SCHEDULE G hereto lists
all Patents and Patent Licenses owned by Debtor in its own name as of the date
hereof.
(ii) SCHEDULE H hereto lists all Trademarks and Trademark
Licenses owned by Debtor in its own name as of the date hereof.
(iii) No action or proceeding is pending seeking to limit,
cancel or question the validity of any Patent or Trademark which could
reasonably be expected to have a material adverse effect on the business,
operations or financial condition of Debtor and its Subsidiaries, taken as a
whole.
(b) COVENANTS. Debtor shall advise Trustee of (i) any change to
Schedule G or Schedule H that would reasonably be expected to have a materially
adverse affect on the security interests created hereby or on the aggregate
value of the Collateral and (ii) the addition of any item to Schedule G or
Schedule H.
9. RIGHTS OF THE AGENT FOR AND THE LENDERS UNDER THE CREDIT
AGREEMENT TO USE COPYRIGHTS, PATENTS, TRADEMARKS AND EQUIPMENT AND TO COPY BOOKS
AND RECORDS. (a) Trustee agrees that, notwithstanding anything to the contrary
in this Security Agreement, so long as the Credit Agreement shall be in full
force and effect, the agent for and the lenders under the Credit Agreement shall
have
(i) during the Inventory Liquidation Period, the non-exclusive
right to use all Copyrights, Patents and Trademarks of Debtor necessary or
desirable to sell Inventory (provided the use of such Copyrights, Patents
and Trademarks does not infringe upon any third party's rights (other than
Debtor's) therein), and
(ii) during the Acceleration Period, the right to use the
Equipment to complete Debtor's work in process and to copy and process any
of Debtor's books, records and software with respect to the Inventory
accounts and other property described in paragraph 1 (a) of the definition
of Excluded Property (provided that the copying of such software shall not
infringe upon any third party's rights (other than Debtor's) therein). All
of the foregoing rights set forth in (i) and (ii) are referred to
collectively as "Acceleration Rights." As used herein, the terms:
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"INVENTORY LIQUIDATION PERIOD" means a period of up to ninety
(90) days which shall terminate ninety (90) days after the date on which
the indebtedness represented by the First Mortgage Notes is accelerated;
and
"ACCELERATION PERIOD" means the seven (7) day period commencing
on the date (the "ACCELERATION DATE") which shall be no earlier than three
(3) business days nor later than seven (7) business days after the date on
which the agent for the lenders under the Credit Agreement shall deliver
written notice to Trustee of the lenders' intention to exercise their
rights under Section 9(a)(ii), such Acceleration Date to be as specified in
such notice, provided however that in any event such Acceleration Period
shall terminate on the date (the "ASSEMBLY DATE") on which Trustee shall
cause the Equipment and any other Collateral to be assembled, prepared or
shown to third parties for sale. Trustee shall endeavor to give reasonable
prior notice of the Assembly Date to the agent for the lenders under the
Credit Agreement, but Trustee's failure to deliver such notice shall not
preclude Trustee from (y) requiring the agent for and the lenders under the
Credit Agreement to cease exercising their rights under Section 9(a)(ii) or
(z) selling the Equipment and any other Collateral in accordance with the
provisions of the Indenture and the Collateral Documents free of any such
rights of the agent for or the lenders under the Credit Agreement.
All of the Acceleration Rights granted hereunder to the agent for and the
lenders under the Credit Agreement are granted subject to the provisions of
Sections 9(b) and (c), and (A) shall be subject to Trustee's absolute right to
sell all or part of the Collateral, and (B) may not be assigned (except to the
limited extent Inventory sold bears Debtor's Trademarks or contains materials
which are Copyrights or Patents which would have accompanied such Inventory if
sold by Debtor in the ordinary course of business) by the agent for or the
lenders under the Credit Agreement in whole or in part to any Person without the
prior written consent of the holders of a majority of the First Mortgage Notes.
(b) Prior to the agent for or the lenders under the Credit
Agreement exercising any Acceleration Rights, the agent for or the lenders under
the Credit Agreement shall (i) maintain or cause to be maintained liability
insurance with respect to any of their activities conducted on the Facility Real
Property in such amounts and against such risks as shall exist as of the date
hereof pursuant to the provisions of Section 4(k), (ii) have agreed in writing,
in form and substance satisfactory to Trustee, to defend, indemnify and hold
harmless Trustee and each of the Securityholders from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements that may be imposed upon, incurred by or
asserted against any of them as a result of the exercise of the Acceleration
Rights by the agent for or the lenders under the Credit Agreement and (iii) have
agreed in writing, in form and substance satisfactory to Trustee, to pay upon
demand all costs of replacement or repair of any Equipment destroyed or damaged
as a result of their exercise of the Acceleration Rights.
(c) Debtor hereby consents to the provisions of this Section 9
and represents and warrants to Trustee and the Securityholders that the
foregoing provisions of this Section 9 do not violate, conflict with or cause a
breach of any agreement, instrument or
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other document to which Debtor is a party. All of the rights granted by Trustee
under the provisions of Section 9(a) are contingent upon the accuracy of the
representations and warranties of Debtor under this Section 9(c).
10. TRUSTEE'S RIGHTS TO ENFORCE PURCHASE AGREEMENT RIGHTS AND SC
AGREEMENT RIGHTS. In addition to the security interest granted by Debtor to
Trustee pursuant to Section 2 of this Security Agreement, Debtor hereby assigns
to Trustee for the ratable benefit of the Securityholders all its rights, title
and interest in and to the Purchase Agreement Rights and the SC Agreement Rights
including, without limitation, the right to enforce the same and collect the
proceeds thereof. Notwithstanding the foregoing, provided no Bankruptcy
Default, Payment Default or Event of Default shall have occurred and be
continuing and Trustee has not given notice to Debtor that it intends to
exercise its rights under this Section 10, Debtor shall have the right to
enforce the Purchase Agreement Rights and the SC Agreement Rights.
11. FURTHER ASSURANCES RELATING TO COPYRIGHTS, PATENTS AND
TRADEMARKS. Within ten (10) days after receipt of Trustee's request, Debtor
shall prepare (if so requested by Trustee), execute and file in all applicable
places, at Debtor's sole cost and expense, all documents (the form and content
of which shall be reasonably acceptable to Trustee) which, in Trustee's
reasonable judgment, shall be necessary and desirable to obtain a first
priority, perfected security interest in and to any or all of the Copyrights,
Copyright Licenses, Patents, Patent Licenses, Trademarks and Trademark Licenses.
12. GENERAL PROVISIONS.
(a) NOTICES. All notices, approvals, consents or other
communications required or desired to be given hereunder shall be in the form
and manner, and delivered to each of the parties hereto at their respective
addresses, as provided in the Indenture.
(b) NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS. This
Security Agreement may not be used to interpret another pledge, security or debt
agreement of Debtor or any subsidiary of Debtor. No such pledge, security or
debt agreement may be used to interpret this Security Agreement.
(c) SEVERABILITY. The provisions of this Security Agreement are
severable, and if any clause or provision shall be held invalid, illegal or
unenforceable in whole or in part in any jurisdiction, then such invalidity or
unenforceability shall affect in that jurisdiction only such clause or
provision, or part thereof, and shall not in any manner affect such clause or
provision in any other jurisdiction or any other clause or provision of this
Security Agreement in any jurisdiction.
(d) HEADINGS. The headings in this Security Agreement have been
inserted for convenience of reference only, are not to be considered a part
hereof and shall in no way modify or restrict any of the terms or provisions
hereof.
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(e) COUNTERPART ORIGINALS. This Security Agreement may be
signed in one or more counterparts, each of which shall be deemed an original,
but all of which shall together constitute one and the same agreement.
(f) BENEFITS OF SECURITY AGREEMENT; SUCCESSORS AND ASSIGNS.
Nothing in this Security Agreement, express or implied, shall give to any
person, other than Trustee, the Securityholders and their respective successors,
transferees and assigns, any benefit or any legal or equitable right, remedy or
claim under this Security Agreement except to the limited extent set forth in
Section 9(c) and Section 12(u). This Security Agreement shall be binding upon
Debtor, its successors and assigns, and inure, together with the rights and
remedies of Trustee hereunder, to the benefit of Trustee, the Securityholders
and their respective successors, transferees and assigns. Debtor shall not,
without the prior written consent of Trustee, assign any rights, duties or
obligations under this Security Agreement.
(g) AMENDMENTS, WAIVERS AND CONSENTS. Any amendment or waiver
of any provision of this Security Agreement and any consent to any departure by
Debtor from any provision of this Security Agreement shall be effective only if
made or given in compliance with all of the terms and provisions of the
Indenture and neither Trustee nor any Securityholder shall be deemed, by any
act, delay, indulgence, omission or otherwise, to have waived any right or
remedy hereunder or to have acquiesced in any Default or Event of Default or in
any breach of any of the terms and conditions hereof. Failure of Trustee to
exercise, or delay in exercising, any right, power or privilege hereunder shall
not operate as a waiver thereof. No single or partial exercise of any right,
power or privilege hereunder shall preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. A waiver by
Trustee or any Securityholder of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy that Trustee or
such Securityholder would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any rights or remedies provided by law.
(h) INTERPRETATION OF SECURITY AGREEMENT. All terms not defined
herein or in the Indenture shall have the meaning set forth in the applicable
Uniform Commercial Code, except where the context otherwise requires. To the
extent a term or provision of this Security Agreement conflicts with the
Indenture, the Indenture shall control with respect to the subject matter of
such term or provision. Acceptance of or acquiescence in a course of
performance rendered under this Security Agreement shall not be relevant in
determining the meaning of this Security Agreement even though the accepting or
acquiescing party had knowledge of the nature of the performance and opportunity
for objection.
(i) CONTINUING SECURITY INTEREST; TRANSFER OF COLLATERAL. This
Security Agreement shall create a continuing security interest in the Collateral
and shall unless otherwise provided in the Indenture or this Security Agreement,
remain in full force and effect until payment in full of the Secured
Obligations; PROVIDED, HOWEVER, that after receipt from Debtor by Trustee of a
request (which request shall be accompanied by all
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documentation required under the Indenture in connection with such request) for
a release of any Collateral permitted under the Indenture upon the sale,
transfer, assignment, exchange or other disposition of such Collateral not
prohibited by the Indenture (and upon receipt by Trustee of (x) all proceeds of
such sale, transfer, assignment, exchange or other disposition, unless not
required to be remitted to Trustee under the Indenture or this Security
Agreement, and, if applicable, (y) a perfected first priority security interest
in Replacement Collateral subject to Permitted Liens), such Collateral shall be
released from the Lien and security interest created hereunder in the manner and
pursuant to the terms set forth in Section 12(o)(iii) below, and shall no longer
constitute Collateral. Upon the payment in full of all Secured Obligations,
Debtor shall be entitled to the return, upon its request and at its expense, of
such of the Collateral pledged by it as shall not have been sold or otherwise
applied pursuant to the terms hereof.
(j) REINSTATEMENT. This Security Agreement shall continue to be
effective or be reinstated, as the case may be, if at any time any amount
received by Trustee or any Securityholder in respect of the Secured Obligations
is rescinded or must otherwise be restored or returned by Trustee or any
Securityholder upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Debtor or upon the appointment of any receiver, intervenor,
conservator, trustee or similar official for Debtor or any substantial part of
its assets, or otherwise, all as though such payments had not been made.
(k) SURVIVAL OF PROVISIONS. All representations, warranties and
covenants of Debtor contained herein shall survive the execution and delivery of
this Security Agreement, and shall terminate only upon the full and final
payment and performance by Issuers of the Secured Obligations.
(l) POWER OF ATTORNEY. In addition to all of the powers granted
to Trustee pursuant to the Indenture, Debtor hereby appoints and constitutes
Trustee as Debtor's attorney-in-fact to exercise all of the following powers
from and after the occurrence and during the continuance of any Payment Default
or Event of Default (other than a Bankruptcy Default) and upon the occurrence of
any Bankruptcy Default and thereafter: (i) collection of proceeds of any
Collateral, (ii) in any transaction authorized by Section 5 of this Security
Agreement, conveyance of any item of Collateral to any purchaser thereof, (iii)
giving of any notices or recording of any Liens under Section 4(d) hereof, (iv)
making of any payments or taking any acts under Section 4(h) hereof, and (v)
payment or discharge of taxes or Liens levied or placed upon or threatened
against the Collateral, the legality or validity thereof and the amounts
necessary to discharge the same to be determined by Trustee in its sole
discretion, and such payments made by Trustee to become the obligations of
Debtor to Trustee, due and payable immediately without demand. Trustee's
authority hereunder shall include, without limitation, the authority to endorse
and negotiate any checks or instruments constituting or representing Collateral
in the name of Debtor, execute and give receipt for any certificate of ownership
or any document constituting or representing Collateral, transfer title to any
item of Collateral, sign Debtor's name on all financing statements or any other
documents deemed necessary or appropriate by Trustee to preserve, protect or
perfect the security interest in the Collateral (to the extent permitted by
applicable law) and to file the same, prepare, file and sign Debtor's name on
any notice of Lien, and prepare, file and sign
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Debtor's name on a proof of claim in bankruptcy or similar document against any
customer of Debtor with respect to any claim of Debtor comprising part of the
Collateral, and to take any other actions arising from or incident to the powers
granted to Trustee in this Security Agreement. This power of attorney is
coupled with an interest and is irrevocable by Debtor.
(m) WAIVERS. Debtor waives presentment and demand for payment
of any of the Secured Obligations, protest and notice of dishonor or default
with respect to any of the Secured Obligations, and all other notices to which
Debtor might otherwise be entitled, except as otherwise expressly provided
herein or in the Indenture.
(n) AUTHORITY OF TRUSTEE. (i) Trustee shall have and be
entitled to exercise all powers hereunder that are specifically granted to
Trustee by the terms hereof, together with such powers as are reasonably
incident thereto. Trustee may perform any of its duties hereunder or in
connection with the Collateral by or through agents or employees and shall be
entitled to retain counsel and to act in reliance upon the advice of counsel
concerning all such matters. Neither Trustee, any director, officer, employee,
attorney or agent of Trustee nor the Securityholders shall be liable to Debtor
for any action taken or omitted to be taken by it or them hereunder, except for
its or their own gross negligence or willful misconduct, nor shall Trustee be
responsible for the validity, effectiveness or sufficiency hereof or of any
document or security furnished pursuant hereto. Trustee and its directors,
officers, employees, attorneys and agents shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or persons.
(ii) Debtor acknowledges that the rights and responsibilities of
Trustee under this Security Agreement with respect to any action taken by
Trustee or the exercise or non-exercise by Trustee of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Security Agreement shall, as between Trustee and the
Securityholders, be governed by the Indenture and by such other agreements with
respect thereto as may exist from time to time among them, but, as between
Trustee and Debtor, Trustee shall be conclusively presumed to be acting as agent
for the Securityholders with full and valid authority so to act or refrain from
acting, and Debtor shall not be obligated or entitled to make any inquiry
respecting such authority.
(o) RELEASE; TERMINATION OF SECURITY AGREEMENT.
(i) Subject to the provisions of Section 12(j) hereof, this
Security Agreement shall terminate upon payment in full of the Secured
Obligations.
(ii) Debtor agrees that it will not sell or otherwise
dispose of any of the Collateral in violation of the Indenture.
(iii) Upon any termination of this Security Agreement or
release of any Collateral as permitted by the Indenture, Trustee will, at the
expense of Debtor, execute and deliver to Debtor such documents, which shall be
prepared by Debtor if Trustee so requests, and take such other actions as Debtor
shall reasonably request to
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evidence the termination of this Security Agreement or the release of such
Collateral, as the case may be. Any such action taken by Trustee shall be
without warranty by or recourse to Trustee, except as to the absence of any
prior assignments by Trustee of its interests in the Collateral, and shall be at
the expense of Debtor. Trustee may conclusively rely on any certificate
delivered to it by Debtor stating that the execution of such documents and
release of the Collateral is in accordance with and permitted by the terms of
this Security Agreement and the Indenture.
(p) NO DUTY. The powers conferred on Trustee and the
Securityholders hereunder are solely to protect their interests in the
Collateral and shall not impose any duty upon them to exercise any such powers.
Except for the safe custody of any Collateral that may come into its possession
and the accounting for moneys actually received by it hereunder, Trustee shall
have no duty as to any Collateral or as to the taking of any necessary steps to
preserve rights against prior parties or any other rights pertaining to any
Collateral. Trustee shall be deemed to exercise reasonable care in the custody
and preservation of the Collateral if such Collateral is accorded treatment
substantially equal to that which Trustee accords similar property in similar
situations, it being understood that Trustee shall have no responsibility or
liability for the collection of any proceeds of any Collateral or by reason of
any invalidity, lack of value or uncollectibility of any of the payments
received by it from obligors or otherwise.
(q) PAYMENT OF FEES AND EXPENSES. Debtor will upon demand pay
to Trustee, without duplication, the amount of any and all expenses with
interest thereon at the Default Rate from the date incurred, including, without
limitation, the fees and disbursements of its counsel and of any experts and
agents, that Trustee may incur in connection with (i) the administration of this
Security Agreement, (ii) the custody, preservation, use or operation of, or the
sale of, collection from, or other realization upon, any of the Collateral,
(iii) the exercise or enforcement of any of the rights of Trustee hereunder or
(iv) the failure by Debtor to perform or observe any of the provisions hereof.
(r) FINAL EXPRESSION. This Security Agreement, together with
any other agreement executed in connection herewith, is intended by the parties
as a final expression of this Security Agreement and is intended as a complete
and exclusive statement of the terms and conditions thereof.
(s) DEBTOR REMAINS LIABLE; OBLIGATIONS ABSOLUTE. (i) Anything
herein to the contrary notwithstanding: (a) Debtor shall remain liable under
any contracts and agreements included in the Collateral, to the extent set forth
therein, to perform all of its duties and obligations thereunder to the same
extent as if this Security Agreement had not been executed, (b) the exercise by
Trustee of any of the rights hereunder shall not release Debtor from any of its
duties or obligations under the contracts and agreements included in the
Collateral, and (c) Trustee shall not have any obligation or liability under any
contracts and agreements included in the Collateral by reason of this Security
Agreement, nor shall Trustee be obligated to perform any of the obligations or
duties of Debtor thereunder or to take any action to collect or enforce any
claim for payment assigned hereunder.
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(ii) All obligations of Debtor hereunder shall be absolute
and unconditional irrespective of:
(a) any bankruptcy, insolvency, reorganization, arrangement,
readjustment, composition, liquidation or the like of Debtor;
(b) any lack of validity or enforceability of the Indenture or any
other Collateral Document, or any other agreement or instrument relating
thereto;
(c) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Secured Obligations, or any other
amendment or waiver of or any consent to any departure from the Indenture
or any other Collateral Document, or any other agreement or instrument
relating thereto;
(d) any exchange, release or non-perfection of any Collateral or any
other collateral, or any release or amendment or waiver of or consent to
any departure from any guarantee, for all or any of the Secured
Obligations;
(e) any exercise or non-exercise, or any waiver of any right, remedy,
power or privilege under or in respect of this Security Agreement or any
other Collateral Document except as specifically set forth in a waiver
granted pursuant to the provisions of Section 12(g) hereof or the
provisions of such other Collateral Document; or
(f) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Debtor.
(t) RIGHTS OF SECURITYHOLDERS. No Securityholder shall have any
independent rights hereunder other than those rights granted to individual
Securityholders pursuant to the Indenture; PROVIDED THAT nothing in this
subsection (t) shall limit any rights granted to Trustee under the First
Mortgage Notes, the Indenture or the Collateral Documents.
(u) LIENS; SETOFF. Debtor hereby grants to Trustee a continuing
Lien for all of the Secured Obligations upon any and all monies, securities, and
other property (other than Excluded Property described in paragraph 1 of the
definition thereof, and subject to the rights of the Box USA Lease Tenant with
respect to the Box USA Leased Property) of Debtor, now or hereafter held or
received by or in transit to, Trustee, from or for Debtor and also upon any and
all deposit accounts (general or special) and credits of if any, with Trustee,
at any time existing, excluding any deposit accounts held by Debtor in its
capacity as trustee for Persons who are not Restricted Subsidiaries. Without
implying any limitation on any other rights Trustee may have under the
Collateral Documents or applicable Laws, from and after the occurrence and
during the continuance of any Payment Default or Event of Default (other than a
Bankruptcy Default) and upon the occurrence of any Bankruptcy Default and
thereafter, Trustee is hereby authorized by Debtor at any time and from time to
time, without notice to Debtor, to offset and apply to all or any part of the
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Secured Obligations then outstanding (whether or not then due) all moneys,
credits and other property of any nature whatsoever of Debtor now or at any time
hereafter in the possession of, in transit to or from, under the control or
custody of, or on deposit with, Trustee or any Affiliate of Trustee, all in such
order and manner as shall be determined by Trustee in its sole and absolute
discretion. Notwithstanding the foregoing, Trustee acknowledges that the agent
for and the lenders under the Credit Agreement have a first priority security
interest in the Excluded Property described in paragraph 1 of the definition
thereof and agrees that all such Excluded Property which is received by Trustee
shall not be subject to the rights of Trustee under this Section 12(u) and shall
be returned to the agent for or the lenders under the Credit Agreement, as the
case may be, promptly upon demand by any thereof.
(v) GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; WAIVER OF DAMAGES.
(i) THIS SECURITY AGREEMENT SHALL BE
GOVERNED BY AND INTERPRETED UNDER THE LAWS OF THE STATE OF NEW YORK, AND ANY
DISPUTE ARISING OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN DEBTOR AND TRUSTEE ON BEHALF OF THE
SECURITYHOLDERS IN CONNECTION WITH THIS SECURITY AGREEMENT, AND WHETHER ARISING
IN CONTRACT, TORT, EQUITY OR OTHERWISE, SHALL BE RESOLVED IN ACCORDANCE WITH THE
INTERNAL LAWS (AS OPPOSED TO THE CONFLICTS OF LAWS PROVISIONS) AND DECISIONS OF
THE STATE OF NEW YORK.
(ii) DEBTOR AGREES THAT TRUSTEE SHALL, IN
ITS CAPACITY AS TRUSTEE OR IN THE NAME AND ON BEHALF OF ANY SECURITYHOLDER(S),
HAVE THE RIGHT, TO THE EXTENT PERMITTED BY APPLICABLE LAW, TO PROCEED AGAINST
DEBTOR OR ITS PROPERTY IN A COURT IN ANY LOCATION REASONABLY SELECTED IN GOOD
FAITH TO ENABLE TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER ENTERED IN FAVOR OF TRUSTEE. DEBTOR AGREES THAT IT WILL NOT
ASSERT ANY PERMISSIVE COUNTERCLAIMS, SETOFFS OR CROSS-CLAIMS IN ANY PROCEEDING
BROUGHT BY TRUSTEE TO REALIZE ON SUCH PROPERTY, OR TO ENFORCE A JUDGMENT OR
OTHER COURT ORDER IN FAVOR OF TRUSTEE. DEBTOR WAIVES ANY OBJECTION THAT IT MAY
HAVE TO THE LOCATION OF THE COURT IN WHICH TRUSTEE HAS COMMENCED A PROCEEDING
DESCRIBED IN THIS PARAGRAPH INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE
LAYING OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS.
(iii) DEBTOR AND TRUSTEE EACH WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT, OR OTHERWISE ARISING OUT OF, CONNECTED WITH, RELATED TO OR
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
SECURITY
26
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AGREEMENT. INSTEAD, ANY DISPUTES RESOLVED IN COURT WILL BE RESOLVED IN A BENCH
TRIAL WITHOUT A JURY.
(iv) DEBTOR AGREES THAT NEITHER TRUSTEE NOR
ANY SECURITYHOLDER SHALL HAVE ANY LIABILITY TO DEBTOR (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) FOR LOSSES SUFFERED BY DEBTOR IN CONNECTION WITH, ARISING
OUT OF, OR IN ANY WAY RELATED TO, THE TRANSACTIONS CONTEMPLATED AND THE
RELATIONSHIP ESTABLISHED BY THIS SECURITY AGREEMENT, OR ANY ACT, OMISSION OR
EVENT OCCURRING IN CONNECTION THEREWITH, UNLESS IT IS DETERMINED BY A FINAL AND
NONAPPEALABLE JUDGMENT OF A COURT THAT IS BINDING ON TRUSTEE OR SUCH
SECURITYHOLDER, AS THE CASE MAY BE, THAT SUCH LOSSES WERE THE RESULT OF ACTS OR
OMISSIONS ON THE PART OF TRUSTEE OR SUCH SECURITYHOLDER, AS THE CASE MAY BE,
CONSTITUTING GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(v) DEBTOR WAIVES ALL RIGHTS OF NOTICE AND
HEARING OF ANY KIND PRIOR TO THE EXERCISE BY TRUSTEE OR ANY SECURITYHOLDER OF
ITS RIGHTS DURING THE CONTINUANCE OF AN EVENT OF DEFAULT TO REPOSSESS THE
COLLATERAL WITH JUDICIAL PROCESS OR TO REPLEVY, ATTACH OR LEVY UPON THE
COLLATERAL OR OTHER SECURITY FOR THE SECURED OBLIGATIONS. DEBTOR WAIVES THE
POSTING OF ANY BOND OTHERWISE REQUIRED OF TRUSTEE OR ANY SECURITYHOLDER IN
CONNECTION WITH ANY JUDICIAL PROCESS OR PROCEEDING TO OBTAIN POSSESSION OF,
REPLEVY, ATTACH OR LEVY UPON COLLATERAL OR OTHER SECURITY FOR THE SECURED
OBLIGATIONS, TO ENFORCE ANY JUDGMENT OR OTHER COURT ORDER ENTERED IN FAVOR OF
TRUSTEE OR ANY SECURITYHOLDER, OR TO ENFORCE BY SPECIFIC PERFORMANCE, TEMPORARY
RESTRAINING ORDER OR PRELIMINARY OR PERMANENT INJUNCTION THIS SECURITY AGREEMENT
OR ANY OTHER AGREEMENT OR DOCUMENT AMONG DEBTOR ON THE ONE HAND AND TRUSTEE
AND/OR THE SECURITYHOLDERS ON THE OTHER HAND.
[Signature Page Follows]
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IN WITNESS WHEREOF, the undersigned has caused this Security Agreement
to be duly executed and delivered as of the day and year first above written.
FLORIDA COAST PAPER COMPANY, L.L.C.
By: /s/ Mary B. Dopslaff
------------------------------------------
Name: Mary B. Dopslaff
Title: Vice President
By its acceptance hereof, as of the day and year first above written,
Trustee agrees to be bound by the provisions hereof.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By: /s/ Raymond S. Haverstock
------------------------------------------
Name: Raymond S. Haverstock
Title: Vice President
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<PAGE>
EXHIBIT 10.4
SUBORDINATED CREDIT AGREEMENT
dated
May 30, 1996
By and Among
FLORIDA COAST PAPER COMPANY, L.L.C.
("Borrower")
and
STONE CONTAINER CORPORATION
("Lender")
and
FOUR M CORPORATION
("Lender")
<PAGE>
TABLE OF CONTENTS
Page
----
PREAMBLE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
Section 1.1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . 2
ARTICLE TWO
THE CREDITS
Section 2.1. COMMITMENTS . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. BORROWINGS. . . . . . . . . . . . . . . . . . . . . 7
Section 2.3. USE OF PROCEEDS . . . . . . . . . . . . . . . . . . 7
Section 2.4. REPAYMENT . . . . . . . . . . . . . . . . . . . . . 7
Section 2.5. PREPAYMENTS . . . . . . . . . . . . . . . . . . . . 7
Section 2.6. INTEREST. . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7. PRO RATA PAYMENTS . . . . . . . . . . . . . . . . . 8
ARTICLE THREE
REPRESENTATIONS AND COVENANTS
Section 3.1. REPRESENTATIONS OF BORROWER . . . . . . . . . . . . 8
Section 3.2. REPRESENTATIONS OF LENDERS. . . . . . . . . . . . . 9
Section 3.3. BORROWER COVENANTS. . . . . . . . . . . . . . . . . 9
Section 3.4. LENDER COVENANTS. . . . . . . . . . . . . . . . . . 9
Section 3.5. UNSECURED OBLIGATIONS . . . . . . . . . . . . . . . 9
ARTICLE FOUR
EVENTS OF DEFAULT AND REMEDIES
Section 4.1. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . 9
Section 4.2. REMEDIES. . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE FIVE
SUBORDINATION
Section 5.1. AGREEMENT TO SUBORDINATE. . . . . . . . . . . . . . 10
Section 5.2. LIQUIDATION, DISSOLUTION ETC. . . . . . . . . . . . 11
Section 5.3. SUBROGATION; ENFORCEMENT. . . . . . . . . . . . . . 11
Section 5.4. PAYMENT BAR . . . . . . . . . . . . . . . . . . . . 12
Section 5.5. STANDSTILL. . . . . . . . . . . . . . . . . . . . . 13
Section 5.6. HOLDING OF PAYMENTS . . . . . . . . . . . . . . . . 13
Section 5.7. LEGEND. . . . . . . . . . . . . . . . . . . . . . . 14
Section 5.8. RELIANCE ON COURT ORDER . . . . . . . . . . . . . . 14
Section 5.9. OBLIGATIONS UNCONDITIONAL . . . . . . . . . . . . . 14
Section 5.10. NO WAIVER . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE SIX
MISCELLANEOUS
Section 6.1. CUMULATIVE REMEDIES; NO WAIVER. . . . . . . . . . . 15
Section 6.2. AMENDMENTS; CONSENTS. . . . . . . . . . . . . . . . 15
Section 6.3. COSTS AND EXPENSES. . . . . . . . . . . . . . . . . 15
i
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Section 6.4. NATURE OF LENDERS' OBLIGATIONS. . . . . . . . . . . 15
Section 6.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . 15
Section 6.6. NOTICES . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.7. EXECUTION IN COUNTERPARTS . . . . . . . . . . . . . 16
Section 6.8. BINDING EFFECT; ASSIGNMENT. . . . . . . . . . . . . 16
Section 6.9. INTEGRATION . . . . . . . . . . . . . . . . . . . . 17
Section 6.10. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 17
Section 6.11. HEADINGS. . . . . . . . . . . . . . . . . . . . . . 17
SIGNATURE PAGE AND ADDRESSES . . . . . . . . . . . . . . . . . . . . . . 18
ii
<PAGE>
SUBORDINATED CREDIT AGREEMENT
This Subordinated Credit Agreement (as amended, supplemented, modified or
restated from time to time, this "AGREEMENT"), dated as of May 30, 1996, is made
and entered into by and among Florida Coast Paper Company, L.L.C., a limited
liability company organized under the laws of Delaware (the "BORROWER"), Stone
Container Corporation, a Delaware corporation ("STONE"), and Four M Corporation,
a Maryland corporation ("FOUR M" and, collectively with Stone, the "LENDERS,"
and each of them individually, a "LENDER").
R E C I T A L S
a. The Borrower has been formed for the purpose of acquiring the paper
mill of St. Joe Forest Products Company located in Port St. Joe, Florida,
pursuant to an Asset Purchase Agreement dated as of November 1, 1995, as amended
(the "ACQUISITION"); and
b. Concurrently herewith, the Borrower and Florida Coast Paper Finance
Corp. (collectively with the Borrower, the "ISSUERS") are issuing their 12.75%
First Mortgages Notes due 2006 in the aggregate principal amount of $165,000,000
(as amended, supplemented, modified or restated from time to time, and including
all Series A and Series B First Mortgage Notes to be issued from time to time
pursuant to and as contemplated by the Indenture, the "MORTGAGE NOTES"), the net
proceeds of which will be used to fund a portion of the purchase price of the
Acquisition; and
c. The Borrower is a 99% owned subsidiary of Florida Coast Paper Holding
Co., L.L.C. ("HOLDCO"), a limited liability company organized under the laws of
Delaware; and each of SSJ Corporation ("SSJ CORP."), a Delaware corporation
wholly owned by Stone, and Box USA Paper Corporation, a Delaware corporation
wholly owned by Four M, owns beneficially and of record fifty percent (50%) of
all issued and outstanding Common Member Interests in Holdco; and
d. It is a condition precedent to the issuance of the Mortgage Notes that
this Agreement be entered into by each of the Lenders with the Borrower, and the
purchasers of the Mortgage Notes are purchasing the same in reliance upon, among
other things, the agreements of each of the Lenders in favor of the Borrower set
forth in this Agreement; and
e. It is in the best interests of each of the Lenders that the Borrower
issue the Mortgage Notes and fund the Acquisition with the proceeds thereof.
<PAGE>
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.1. DEFINITIONS. As used in this Agreement, the following terms
have the following meanings (terms defined in the singular to have a correlative
meaning when used in the plural and VICE VERSA):
"Acquisition": Has the meaning set forth in Recital A.
"Aggregate Commitment": Means, as of any date of determination, twenty
million dollars ($20,000,000) less the Credited
Amount, if any, as of such date.
"Agreement": Has the meaning set forth in the Preamble.
"Borrower": Has the meaning set forth in the Preamble, and
includes the successors and assigns of Florida
Coast Paper Company, L.L.C.
"Credited Amount": Means, as of any date of determination, the sum of
(i) the aggregate principal amount actually
borrowed and outstanding as of such date under all
Qualifying Facilities and (ii) the aggregate
principal amount available for borrowing as of
such date under all Qualifying Facilities,
PROVIDED that (a) upon the acceleration of the
indebtedness incurred under any Qualifying
Facility, the Credited Amount shall be deemed to
be zero dollars under such Qualifying Facility,
and (b) if the lenders' obligation to make loans
under any Qualifying Facility shall have been
suspended or terminated for any reason other than
the use of the commitments thereunder in full,
then the Credited Amount shall be
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<PAGE>
reduced by a dollar amount equal to the dollar
amount of the commitments that are so suspended or
terminated.
"Custodian": Means any receiver, trustee, assignee, liquidator
or similar official under title 11, U.S. Code or
any similar federal or state law for the relief of
debtors (any such law being referred to as a
"BANKRUPTCY LAW").
"Excluded Property": Means "Excluded Property" as defined in clause (1)
of the definition of such term set forth in the
Security Agreement dated as of the date hereof
between the Borrower and the Trustee.
"Four M": Has the meaning set forth in the Preamble.
"Indenture": Means that certain Indenture dated as of May 30,
1996, as amended, supplemented, modified or
restated from time to time, among the Issuers and
the Trustee.
"Individual Commitment": Means, with respect to either Lender, as of any
date of determination, one half of the Aggregate
Commitment as of such date.
"Interest Period": Means the six-month period commencing June 1, 1996
and each successive six-month period thereafter
commencing December 1, and June 1, respectively,
in each year.
"Lender": Has the meaning set forth in the Preamble, and
includes the successors and assigns of Four M or
Stone, as applicable.
"LIBOR Rate": For each Interest Period, LIBOR Rate shall be
determined in accordance with the following
provisions:
(i) The arithmetic mean (rounded up, if
necessary, to the nearest
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<PAGE>
basis point) of the offered rates for deposits in
Dollars for a period of time comparable to such
Interest Period which appear on the Telerate LIBOR
Page at approximately 10:00 a.m., New York City
time, on the second business day prior to the
commencement of such Interest Period (the
"INTEREST DETERMINATION DATE"). "Telerate LIBOR
Page," as used herein, means the display
designated as Page 3750 on the Telerate Service
(or such other page as may replace such page on
that service for the purpose of displaying London
interbank offered rates of major banks, or, if
such display is not available at any such time, a
comparable display of London interbank offered
rates of major banks as may be available from a
similar source).
(ii) If fewer than two offered rates appear on
the Telerate LIBOR Page, the LIBOR Rate will be
the arithmetic mean (rounded up, if necessary, to
the nearest basis point) of at least two offered
quotations from the principal London office of
each of Citibank N.A. and NationsBank, N.A. (the
"REFERENCE BANKS") for deposits in Dollars for a
period of time comparable to such Interest Period
to prime banks in the London interbank market at
approximately 10:00 A.M., New York City time, on
such Interest Determination Date and in a
principal amount of not less than $10,000,000 that
is representative for a single transaction in such
market at such time. If fewer than two quotations
are provided, the LIBOR Rate in respect of such
Interest Determination Date will be the arithmetic
mean (rounded up, if necessary, to the nearest
basis point) of the rates quoted by the Reference
Banks in The City of New York at approximately
10:00 A.M., New York City time, on such interest
determination date for
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<PAGE>
loans in Dollars to leading European banks, for a
period of time comparable to such Interest Period
and in a principal amount of not less than
$10,000,000 that is representative of a single
transaction in such market at such time; PROVIDED,
HOWEVER, that if the Reference Banks are not
quoting as mentioned in this sentence, the LIBOR
Rate for such Interest Period will be the same as
the LIBOR Rate for the immediately preceding
Interest Period.
"Loan": Has the meaning set forth in Section 2.1.
"Maturity Date": Means the ninetieth (90th) day next following the
day on which the Senior Indebtedness shall have
been paid in full to the holders of the Mortgage
Notes and the Trustee or, if such day is not a
business day, the next succeeding day which is a
business day.
"Mortgage Notes": Has the meaning set forth in Recital B.
"Obligations": Means any and all obligations and indebtedness
(whether matured or unmatured, liquidated or
unliquidated, contingent or non-contingent) of
Borrower to either or both of the Lenders arising
under or with respect to this Agreement,
including, without limitation, the principal of
and interest on the Loans and all other amounts
payable under or pursuant to this Agreement. All
interest accrued in the Obligations shall
constitute a part of the Obligations both for
periods before and for periods after the
Commencement of any bankruptcy or insolvency of
the Borrower.
"Qualifying Facility": Means a revolving credit facility entered into by
the Borrower with a commercial bank or asset-based
lender of recognized standing which is engaged in
the business of
5
<PAGE>
making loans in the ordinary course of its
business and is not affiliated with either Lender,
PROVIDED that in order for such a facility to
qualify as a Qualifying Facility, the following
conditions must be met: (i) the net proceeds of
borrowings under such facility may only be used
for working capital purposes (including capital
expenditures) and, if permitted by Section 2.5, to
repay Loans outstanding (and accrued and unpaid
interest on the amount being repaid), and (ii) no
indebtedness incurred under such facility may be
secured by (A) any property or assets of the
Borrower or any of its subsidiaries, other than
Excluded Property, or (B) any property or assets
of the Borrower subject to the lien or intended to
be subject to the lien of the Indenture or any
Collateral Document (as defined in the Indenture),
or subject to a negative pledge covenant of the
Borrower set forth in the Indenture or any
Collateral Document (as defined in the Indenture).
"Senior Indebtedness": Means any and all obligations and indebtedness
(whether matured or unmatured, liquidated or
unliquidated, contingent or non-contingent)
arising under or with respect to the Mortgage
Notes and the Indenture, including, without
limitation, the principal of and interest on the
Mortgage Notes, and all fees, expenses,
indemnities and other amounts payable under the
Mortgage Notes, the Indenture or any Collateral
Document (as defined in the Indenture). All
interest accrued on any Senior Indebtedness shall
constitute a part of the Senior Indebtedness both
for periods before and for periods after the
commencement of any bankruptcy or insolvency of
the Borrower.
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<PAGE>
"Senior Indebtedness
Default": Means a Default or Event of Default under and as
defined in the Indenture.
"Stone": Has the meaning set forth in the Preamble.
"Trustee": Means Norwest Bank Minnesota, N.A., a national
banking association, as trustee under the
Indenture, and includes each successor trustee, if
any, under the Indenture.
ARTICLE TWO
THE CREDITS
SECTION 2.1. COMMITMENTS. Subject to the terms and conditions of this
Agreement, the Lenders hereby agree to make loans (the "LOANS") to the Borrower
in an aggregate amount not to exceed the Aggregate Commitment, from time to time
through and including the Maturity Date; PROVIDED that the respective
obligations of the Lenders to make Loans hereunder shall be several and not
joint and neither Lender shall be obligated to make any Loans to the Borrower
hereunder in excess of such Lender's Individual Commitment; PROVIDED, FURTHER,
that the failure of either Lender to make Loans hereunder to the Borrower shall
not excuse the other Lender from its obligation to make Loans to the Borrower
hereunder; and PROVIDED, STILL FURTHER, that amounts borrowed and prepaid
hereunder may be reborrowed and shall be reborrowed thereafter in the
circumstances specified hereunder.
SECTION 2.2. BORROWINGS. Subject to the provisions of Section 2.1 and
Article Four, each Lender hereby covenants that it shall make a Loan to the
Borrower within two business days of receipt of a written notice from the
Borrower addressed to both Lenders requesting such Loans to be made, each such
Lender's Loan to be in an amount equal to one-half of the aggregate amount of
the Loans specified in such notice.
SECTION 2.3. USE OF PROCEEDS. The proceeds of the Loans shall be used by
the Borrower for general corporate purposes.
SECTION 2.4. REPAYMENT. The Borrower hereby unconditionally promises to
pay to each Lender on the Maturity Date the principal amount of each then
outstanding Loan made by such Lender, together with all accrued and unpaid
interest thereon.
SECTION 2.5. PREPAYMENTS. The Borrower may prepay the principal of the
Loans, in whole or in part, at any time and from time to time, without premium
or penalty, if, but only if,
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(a) such prepayment is not otherwise prohibited under ARTICLE FIVE, and (b) such
prepayment is not prohibited by the provisions of any agreement to which the
Borrower or any of its subsidiaries is a party or by which it is bound. Except
as otherwise specifically permitted in this Section 2.5, the Loans may not be
prepaid prior to the Maturity Date and the Borrower shall not make and neither
Lender shall accept any prepayment made in violation of this Section 2.5.
SECTION 2.6. INTEREST. (a) Each Loan shall bear interest for each day on
which it is outstanding during any Interest Period at a rate per annum equal to
the LIBOR Rate applicable to such Interest Period, plus 3.625% per annum.
(b) Unless otherwise prohibited by the provisions of ARTICLE FIVE,
interest on the average daily principal balance of any Loans outstanding during
any Interest Period shall be due and payable in arrears on the fifth business
day next succeeding the last day of such Interest Period.
SECTION 2.7. PRO RATA PAYMENTS. All payments (including prepayments) to
be made by the Borrower hereunder, whether on account of principal, interest or
otherwise, shall be made to the Lenders PRO RATA based upon the respective
principal amounts of the Loans made by each Lender, at the address of such
Lender specified herein or such other address as such Lender shall specify from
time to time in writing to the Borrower; PROVIDED that if, as a result of a
failure by either Lender to make Loans hereunder to the Borrower, the
outstanding principal amount of Loans made by the other Lender hereunder shall
be greater than the outstanding principal amount of Loans made by the defaulting
Lender hereunder, then the amount of such excess shall be repaid to the non-
defaulting Lender prior to the making of any payment (including any prepayment)
on account of the principal of the Loans made by the defaulting Lender.
ARTICLE THREE
REPRESENTATIONS AND COVENANTS
SECTION 3.1. REPRESENTATIONS OF BORROWER. The Borrower represents that
(a) it has full power and authority to borrow funds hereunder, (b) the execution
and delivery of this Agreement, the making of borrowings hereunder and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary action on the part of Borrower, (c) this Agreement
has been duly executed and delivered by the Borrower, and is a legal and valid
obligation of the Borrower, enforceable against the Borrower in accordance with
its terms, and (d) the execution and delivery of, and performance of its
obligations under, this Agreement by the Borrower does not and will not violate,
conflict with or result in a default under the Borrower's charter documents, any
agreement to which the Borrower is a party or by which it or its property is
bound or
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any statute, law, regulation, rule, order, decree, injunction, writ, award or
judgment applicable to the Borrower or any of its subsidiaries.
SECTION 3.2. REPRESENTATIONS OF LENDERS. Each Lender represents that
(a) it has full power and authority to make the Loans hereunder, (b) the
execution and delivery of this Agreement, the making of such Loans and the
consummation of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of such Lender,
(c) this Agreement has been duly executed and delivered by such Lender, and is a
legal and valid obligation of such Lender, enforceable against such Lender in
accordance with its terms, and (d) the execution and delivery of, and
performance of its obligations under, this Agreement by such Lender does not and
will not violate, conflict with or result in a default under such Lender's
charter documents, any agreement to which such Lender is a party or by which it
or its property is bound or any statute, law, regulation, rule, order, decree,
injunction, writ, award or judgment applicable to such Lender or any of its
subsidiaries.
SECTION 3.3. BORROWER COVENANTS. The Borrower hereby covenants that it
shall provide the Lenders with a borrowing request under Section 2.2 whenever
desirable, in the reasonable business judgment of the Borrower, to meet the
Borrower's working capital needs.
SECTION 3.4. LENDER COVENANTS. Each Lender covenants to make Loans as
provided hereunder to the Borrower (a) whether or not the Borrower shall have
complied with its covenants in Section 3.3 or otherwise in this Agreement and
(b) without set-off, counterclaim or the raising of any defense applicable or
with respect to the Borrower or the other Lender.
SECTION 3.5. UNSECURED OBLIGATIONS. The Borrower and the Lenders agree
that the Loans shall be made on an unsecured basis, and that neither the
Borrower nor any of its subsidiaries shall be required (or offer) at any time
to, and the Lenders shall not at any time demand (or permit) the Borrower or any
of its subsidiaries to, encumber, grant a security interest in, pledge or
otherwise hypothecate any of the property and assets of any of the Borrower and
its subsidiaries as security for the Loans or any of the other Obligations.
ARTICLE FOUR
EVENTS OF DEFAULT AND REMEDIES
SECTION 4.1. EVENTS OF DEFAULT. The occurrence of any one of the
following shall constitute an Event of Default (an "EVENT OF DEFAULT") under
this Agreement:
(a) the repayment of the indebtedness evidenced by the Mortgage Notes
shall have been accelerated by the holders thereof
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pursuant to the terms of the Indenture, and the Borrower shall have agreed that
such acceleration is permitted by the terms of the Indenture under the
circumstances;
(b) the Borrower pursuant to or within the meaning of Bankruptcy Law:
(i) commences a voluntary case; (ii) consents to the entry of an order for
relief against it in an involuntary case; (iii) consents to the appointment of a
Custodian of it or for all or substantially all of its property; or (iv) makes a
general assignment for the benefit of its creditors;
(c) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that: (i) is for relief against Borrower in an involuntary
case; (ii) appoints a Custodian of the Borrower or for all or substantially all
of the property of the Borrower; or (iii) orders the liquidation of the
Borrower, and the order or decree remains unstayed and in effect for 60
consecutive days; and
(d) the Borrower shall fail to pay the principal amount of the Loans
on the Maturity Date, together with all accrued and unpaid interest thereon.
SECTION 4.2. REMEDIES. If an Event of Default shall have occurred and be
continuing under Section 4.1 with respect to the Borrower, (a) each Lender's
Individual Commitment shall immediately terminate (i) upon written notice given
by both Lenders to the Borrower in the case of an Event of Default under
Section 4.1(a) and (ii) automatically and without the need for any further
notice in the case of an Event of Default under Section 4.1(b), (c) or (d) and
(b) subject to the provisions of ARTICLE FIVE, all outstanding Loans hereunder
(together with accrued and unpaid interest thereon) shall immediately become due
and payable, (i) upon written notice given by both Lenders to the Borrower in
the case of an Event of Default under Section 4.1(a) and (ii) automatically and
without the need for any further notice in the case of an Event of Default under
Section 4.1(b), (c) or (d). Except as expressly provided above in this Section,
presentment, demand, protest and all other notices of any kind are hereby
expressly waived.
ARTICLE FIVE
SUBORDINATION
SECTION 5.1. AGREEMENT TO SUBORDINATE. The Borrower covenants and agrees
for itself and its successors, and each Lender likewise covenants and agrees,
that the Obligations are hereby expressly subordinated, to the extent and in the
manner hereinafter set forth, to the prior payment in full of all Senior
Indebtedness. This ARTICLE FIVE shall constitute a continuing offer to all
persons who become holders of, or continue to hold, Senior Indebtedness.
Notwithstanding anything to the contrary in this Agreement, the provisions of
this ARTICLE FIVE are made for
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the benefit of the holders of Senior Indebtedness, each of whom is an obligee
hereunder and is entitled to enforce such holder's rights hereunder, without any
act or notice of acceptance hereof or reliance hereon. No amendment,
modification or discharge of any provision of this ARTICLE FIVE shall be
effective against any holder of Senior Indebtedness unless expressly consented
to in writing by such holder. The provisions of this ARTICLE FIVE apply
notwithstanding anything to the contrary contained in this Agreement.
SECTION 5.2. LIQUIDATION, DISSOLUTION ETC. In the event of any
dissolution, winding up, liquidation or reorganization of the Borrower (whether
voluntary or involuntary and whether in bankruptcy, insolvency, reorganization
or receivership proceedings, or upon an assignment for the benefit of creditors
or any other marshalling of the assets and liabilities of the Borrower or
otherwise), the Borrower and each Lender covenant and agree that:
(a) the holders of all Senior Indebtedness shall first be entitled to
receive payment in full (or to have such payment duly provided for in cash or in
a manner satisfactory to such holders) of principal, interest and all other
amounts due thereon, before any payment or distribution is made upon the
principal of or interest or other amounts due on the Obligations;
(b) any payment or distribution of assets of the Borrower, whether in
cash, property or securities, to which the Lenders would be entitled except for
the provisions of this ARTICLE FIVE (including any such payments or
distributions which may be payable or deliverable by reason of the payment of
any other indebtedness of the Borrower being subordinated to the payment of the
Obligations or any part thereof), shall be paid or delivered by the Borrower or
any receiver, trustee in bankruptcy, liquidating trustee, agent or other person
making such payment or distribution directly to the holders of Senior
Indebtedness or their representative or representatives, to the extent necessary
to pay in full all Senior Indebtedness remaining unpaid, after giving effect to
any concurrent payment or distribution to the holders of such Senior
Indebtedness, before any payment or distribution is made to the Lenders.
SECTION 5.3. SUBROGATION; ENFORCEMENT. (a) Subject to and only after the
payment in full of all Senior Indebtedness, the Lenders jointly shall be
subrogated to the rights of the holders of Senior Indebtedness (to the extent of
payments or distributions previously made to such holders of Senior Indebtedness
pursuant to the provisions of Section 5.2) to receive payments or distributions
of assets of the Borrower applicable to the Senior Indebtedness until the
Obligations shall be paid in full. No payments or distributions applicable to
Senior Indebtedness which the Lenders receive by reason of their being
subrogated to the rights of the holders of Senior Indebtedness pursuant to the
provisions of this Section 5.3
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shall, as among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, be deemed to be a payment by the Borrower to or
for the account of the Lenders; and for the purposes of such subrogation, no
payments or distributions to the holders of Senior Indebtedness of any cash,
property or securities to which the Lenders would be entitled except for the
provisions of this ARTICLE FIVE, and no payment over pursuant to the provisions
of this ARTICLE FIVE to the holders of Senior Indebtedness by the Lenders shall,
as among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, be deemed to be a payment by the Borrower to or
for the account of the holders of Senior Indebtedness, it being understood that
the provisions of this ARTICLE FIVE are intended solely for the purpose of
defining the relative rights of the Lenders, on the one hand, and the holders of
the Senior Indebtedness, on the other hand, and nothing contained in this
ARTICLE FIVE or elsewhere in this Agreement is intended to or shall impair, as
among the Borrower, its creditors (other than the holders of Senior
Indebtedness) and the Lenders, the obligation of the Borrower, which is absolute
and unconditional, to pay to the Lenders, subject to the rights of the holders
of Senior Indebtedness, the Obligations as and when the same shall become due
and payable in accordance with their terms, or is intended to or shall affect
the relative rights of the Lenders and creditors of the Borrower (other than the
holders of the Senior Indebtedness).
(b) Each Lender, if and so long as payment with respect to its Loans
and the other Obligations owing to it is prohibited under this ARTICLE FIVE,
irrevocably authorizes and empowers the representative or representatives of the
holders of the Senior Indebtedness at any time outstanding to demand, sue for,
collect, and receive for the Lenders payments and distributions in respect to it
which are to be paid or delivered to the holders of Senior Indebtedness as
provided in this ARTICLE FIVE and to file and prove all claims therefor and take
all such other action in the name of the Lenders, or otherwise as such holders
of Senior Indebtedness or their representative or representatives may determine
to be necessary or appropriate for the enforcement of the provisions of this
ARTICLE FIVE and agrees to execute and deliver to the Trustee under the
Indenture all such further instruments confirming the authorization hereinabove
set forth and all powers of attorney, proofs of claim and other instruments and
to take all such other action as may be requested by such holders of Senior
Indebtedness or such holders' representative or representatives in order to
enable such holders or representative(s) to enforce all claims upon or in
respect of the Lenders' payments and distributions in respect of the
Obligations.
SECTION 5.4. PAYMENT BAR. (a) Upon the maturity of the Senior
Indebtedness by lapse of time, acceleration or otherwise, all principal thereof
and interest thereon and other amounts due in connection therewith shall first
be paid in full, or such
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payment duly provided for in cash or in a manner satisfactory to the holders of
such Senior Indebtedness, before any payment is made on account of the
Obligations or this Agreement.
(b) Upon (i) a Senior Indebtedness Default resulting from (x) a
default in payment of the principal of or interest or any other amount due on
any Senior Indebtedness when the same becomes due and payable (without giving
effect to any grace period or notice requirement) whether upon maturity,
acceleration or otherwise or (y) a Default under Section 6.01(j) or 6.01(k) of
the Indenture or under Section 4.1(b) or (c) of this Agreement or (ii) the
happening of any other Senior Indebtedness Default which permits the holders
thereof to accelerate the maturity thereof, then, unless and until such Senior
Indebtedness Default shall have been cured or waived or shall have ceased to
exist, no payment shall be made by the Borrower with respect to the Obligations
(whether for principal of or interest on the Loans or other amounts due under
this Agreement).
(c) The Borrower shall give prompt written notice to the Lenders of
any Senior Indebtedness Default referred to in Section 5.4(b)(i) or (ii).
Failure to give such notice shall not affect the subordination of the
Obligations to the Senior Indebtedness provided in this ARTICLE FIVE. The
Lenders acknowledge that, in light of their joint ownership of the Borrower,
they have and will have full access to any and all information necessary to
determine whether any Senior Indebtedness Default has occurred, and that they
will not be relying upon any notice with respect thereto being given to them,
whether by the Borrower or by the Trustee. Nevertheless, the Trustee shall have
the right (but not the obligation) to give notice to the Lenders of any Senior
Indebtedness Default.
SECTION 5.5. STANDSTILL. Upon the occurrence of any Senior Indebtedness
Default referred to in Section 5.4(b)(i) or (ii), the Borrower shall not make
and the Lenders shall not ask, demand, sue for, or otherwise exercise their
remedies with respect to the Obligations or this Agreement, unless and until
such Senior Indebtedness Default shall have been cured or waived by the holders
thereof.
SECTION 5.6. HOLDING OF PAYMENTS. In furtherance of the provisions of
Section 5.1, in the event that, notwithstanding the foregoing provisions of
Section 5.2 or 5.4, any payment on account of the Obligations (whether for
principal of or interest on the Loans or otherwise) shall be made by or on
behalf of the Borrower and received by the Lenders or either of them, at a time
when such payment was prohibited by or in contravention of the provisions of
Section 5.2 or 5.4, then unless and until such payment is no longer prohibited
by or in contravention of Section 5.2 or 5.4, such payment shall be held in
trust for the benefit of and shall be immediately paid over to the holders of
the Senior Indebtedness or their representative or representatives, for
application to the payment of the Senior
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Indebtedness remaining unpaid to the extent necessary to pay the Senior
Indebtedness in full in accordance with its terms, after giving effect to any
concurrent payment or distribution or provision therefor to or for the holders
of Senior Indebtedness.
SECTION 5.7. LEGEND. Any promissory notes or other instruments that may
be issued evidencing any of the Obligations arising under this Agreement will,
on the date issued, be inscribed with a legend conspicuously indicating that (a)
the payment thereof is subordinated to the Senior Indebtedness pursuant to the
terms of this Agreement and (b) such promissory note or other instrument is not
assignable by the holder thereof.
SECTION 5.8. RELIANCE ON COURT ORDER. Upon any payment or distribution
of assets of the Borrower referred to in Section 5.2, the Lenders shall be
entitled to rely upon a certificate of the receiver, trustee in bankruptcy,
liquidating trustee, agent or other persons making such payment or distribution,
delivered to the Lenders for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Senior Indebtedness and other
indebtedness of the Borrower, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this ARTICLE FIVE.
SECTION 5.9. OBLIGATIONS UNCONDITIONAL. Except as expressly provided in
this ARTICLE FIVE, nothing contained in this ARTICLE FIVE shall affect the
obligation of the Borrower to make payments of principal and interest and other
amounts due on the Loans at the times and in accordance with the provisions
hereof.
SECTION 5.10. NO WAIVER. No right of any present or future holder of any
Senior Indebtedness to enforce subordination as herein provided shall at any
time in any way be prejudiced or impaired by any act or failure to act on the
part of the Borrower or by any act or failure to act by any such holder, or by
any noncompliance by the Borrower with the terms and provisions and covenants of
this Agreement, regardless of any knowledge thereof which any such holder may
have or be otherwise charged with. The holders of Senior Indebtedness may
extend, renew, modify or amend the terms of the Senior Indebtedness or any
security or guarantee thereof, or therefor, and release, sell, exchange or
enforce such security or guarantee or elect any right or remedy, or delay in
enforcing, or release any right or remedy or otherwise deal freely with the
Borrower and any security for the Senior Indebtedness all without notice to the
Lenders and all without affecting the liabilities and obligations of the parties
to this Agreement, even if any right of reimbursement or subrogation or other
right or remedy of the Lenders is extinguished, affected or impaired thereby.
No provision of any supplement or amendment to this Agreement or of any
promissory notes issued to evidence the Loans which adversely affects in any way
the holders of Senior
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Indebtedness shall be effective against the holders of Senior Indebtedness who
have not consented thereto in writing.
ARTICLE SIX
MISCELLANEOUS
SECTION 6.1. CUMULATIVE REMEDIES; NO WAIVER. The rights, powers, and
remedies of the Lenders provided herein are cumulative and not exclusive of any
right, power or remedy provided by law or equity. No failure or delay on the
part of the Lenders in exercising any right, power, or remedy may be, or may be
deemed to be, a waiver thereof; nor may any single or partial exercise of any
right, power, or remedy preclude any other or further exercise of any other
right, power or remedy.
SECTION 6.2. AMENDMENTS; CONSENTS. No amendment, modification,
supplement, termination or waiver of any provision of this Agreement, and no
consent to any departure by the Borrower or the Lenders therefrom, may in any
event be effective (a) unless in writing signed by the holders of more than 50%
of the principal amount of the Loans then outstanding and by the Borrower and
(b) unless such amendment, modification, supplement, termination, waiver or
consent has been approved previously in writing by the holders of more than 50%
in aggregate principal amount of the Mortgage Notes then outstanding.
Any amendment, modification, supplement, termination, waiver or consent
pursuant to this Section 6.2 shall apply equally to, and shall be binding upon,
each Lender.
SECTION 6.3. COSTS AND EXPENSES. Each Lender shall pay its own costs and
expenses incurred in connection with the negotiation, preparation, execution and
delivery of this Agreement, and in connection with any amendment or waiver
thereof. The Borrower shall pay the reasonable costs and expenses of the
Lenders incurred in connection with any refinancing, restructuring,
reorganization (including a bankruptcy reorganization) and enforcement or
attempted enforcement of this Agreement, and any matter related thereto,
including out-of-pocket expenses and the reasonable fees and out-of-pocket
expenses of any legal counsel retained by the Lenders.
SECTION 6.4. NATURE OF LENDERS' OBLIGATIONS. The obligations of the
Lenders hereunder are several and not joint or joint and several. Nothing
contained in this Agreement and no action taken by the Lenders or either of them
pursuant hereto may, or may be deemed to, make the Lenders a partnership, an
association, a joint venture or other entity among themselves.
SECTION 6.5. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrower and the Lenders contained herein
will survive the making of the Loans hereunder and the execution and delivery of
this Agreement, and
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the holders of the Mortgage Notes are hereby authorized to rely thereon.
SECTION 6.6. NOTICES. Except as otherwise provided herein, all notices,
requests, demands, directions, and other communications provided for hereunder
must be in writing and must be mailed, telegraphed, delivered, or sent by telex,
telecopier or cable to the appropriate party at the address set forth on the
signature page of this Agreement or as may be designated by it in a written
notice sent to the other parties in accordance with this Section. Any notice,
request, demand, direction, or other communication given by telegram, telex,
telecopier or cable must be confirmed within 48 hours by letter mailed or
delivered to the appropriate party at its respective address. Except as
otherwise provided herein, if any notice, request, demand, direction, or other
communication is given by mail it will be effective on the third business day
after being deposited in the United States mails with the first class or airmail
postage prepaid; if given by telegraph or cable, when delivered to the telegraph
company with charges prepaid; if given by telex or telecopier, when sent; or if
given by personal delivery, when delivered.
SECTION 6.7. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and any party hereto or thereto may execute any
counterpart, each of which when executed and delivered will be deemed to be an
original and all of which counterparts of this Agreement taken together will be
deemed to be but one and the same instrument. The execution of this Agreement
by any party hereto will not become effective until counterparts hereof have
been executed by all the parties hereto.
SECTION 6.8. BINDING EFFECT; ASSIGNMENT. This Agreement will be binding
upon and inure to the benefit of the Borrower and each Lender, and their
respective successors and assigns, EXCEPT that (a) the Borrower may not assign
its rights (except as provided in clause (c) below) or obligations hereunder or
any interest herein or therein, (b) neither Lender may assign any of its rights
or obligations hereunder or any interest herein or therein except that (I) Four
M may and intends to assign its repayment rights hereunder to the holders of its
Senior Secured Notes to be issued pursuant to an Indenture dated as of even date
herewith between Four M, as borrower, and Norwest Bank Minnesota, N.A., as
trustee, and (II) each of Four M and Stone may assign all of its rights and
obligations hereunder to any person or entity to which Four M or Stone, as the
case may be, has the right to, and actually does, assign all of its rights and
obligations under the Output Purchase Agreement as of even date herewith by and
among the Borrower, Four M and Stone pursuant to and in accordance with the
terms of said Output Purchase Agreement and (c) the Borrower shall have the
right to and intends to assign to the Trustee for the ratable benefit of the
holders of the Mortgage Notes the Borrower's right to (i) enforce the Borrower's
rights and (ii) cause the Lenders to perform their
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respective obligations under this Agreement; and the Lenders and the Borrower
hereby consent to such assignments. Each of the Borrower and the Lenders hereby
acknowledges that, as a condition to the extension of credit under the Mortgage
Notes, the holders of the Mortgage Notes are relying upon the execution,
delivery and performance by the Borrower and the Lenders of this Agreement, and
on the exercise of its rights by the Borrower to borrow hereunder and on the
performance by the Lenders of their respective obligations to make Loans under
this Agreement. No person or entity other than the Borrower, the Lenders, the
holders from time to time of Four M's Senior Secured Notes referred to above,
the trustee under the Indenture under which said Senior Secured Notes were
issued, the holders from time to time of the Mortgage Notes and the Trustee
shall have the right to rely upon the provisions of this Agreement.
SECTION 6.9. INTEGRATION. This Agreement comprises the complete and
integrated agreement of the parties on the subject matter hereof and supersedes
all prior agreements, written or oral, on the subject matter hereof, except as
expressly provided herein to the contrary.
SECTION 6.10. GOVERNING LAW. THE AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6.11. HEADINGS. Article and section headings in this Agreement
are included for convenience of reference only and are not part of this
Agreement for any other purpose.
[Balance of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
BORROWER:
Address: FLORIDA COAST PAPER
COMPANY, L.L.C., a Delaware
600 U.S. Highway 98 limited liability company
Port St. Joe, Forida 32456
Attn: President
Fax number:
Phone number: (904) 227-1171 By: /s/ Mary B. Dopslaff
-------------------------------------
Its: Vice President
------------------------------------
LENDERS:
Address: STONE CONTAINER CORPORATION, a
150 North Michigan Avenue Delaware corporation
Chicago, Illinois 60601
Attn: General Counsel
Fax number: (312) 346-5645
Phone number: (312) 346-6600 By: /s/ Leslie T. Lederer
-------------------------------------
Its: Vice President
------------------------------------
Address: FOUR M CORPORATION, a Maryland
115 Stevens Avenue corporation
Valhalla, New York 10595
Attn: General Counsel
Fax number:
Phone number: (914) 747-2600 By: /s/ Mary B. Dopslaff
-------------------------------------
Its: Vice President
------------------------------------
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EXHIBIT 10.5
ENVIRONMENTAL INDEMNITY AGREEMENT, dated as of May 30, 1996, by and
between FOUR M CORPORATION, a Maryland corporation ("FMC"), and FLORIDA COAST
PAPER COMPANY, L.L.C., a Delaware limited liability company ("JV").
WHEREAS, FMC and a predecessor in interest of JV are parties to that
certain Asset Purchase Agreement (as amended, the "Asset Purchase Agreement"),
dated as of November 1, 1995, with St. Joe Forest Products Company, St. Joe
Container Company and St. Joe Paper Company (collectively, the "St. Joe
Indemnitors");
WHEREAS, pursuant to Section 11.05 of the Asset Purchase Agreement,
FMC and JV are the beneficiaries of certain environmental indemnification from
the St. Joe Indemnitors (the "Contractual Indemnification Rights");
WHEREAS, the Asset Purchase Agreement does not allocate the
Contractual Indemnification Rights between FMC and JV; and
WHEREAS, FMC and JV have entered this Agreement to allocate as between
themselves the Contractual Indemnification Rights, without thereby in any way
altering the rights and obligations of FMC and JV, on the one hand, and the St.
Joe Indemnitors, on the other hand, under the Asset Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the adequacy of
which is hereby acknowledged, and intending to be legally bound, the parties
hereto do hereby agree as follows:
1. Each of FMC and JV is entitled to pursue on its own behalf the
Contractual Indemnification Rights to which it is entitled under the Asset
Purchase Agreement. As between FMC and JV, FMC shall be entitled to Contractual
Indemnification Rights which relate to the Container Business (as defined in the
Asset Purchase Agreement) and JV shall be entitled to Contractual
Indemnification Rights which relate to the Mill Business (as defined in the
Asset Purchase Agreement). Each of FMC and JV shall cooperate with one another
and shall take all actions as may reasonably be requested by the other in order
to maximize the aggregate recoveries of FMC and JV under the Contractual
Indemnification Rights.
2. Subject to the provisions of the remainder of this paragraph 2,
each of FMC and JV shall be entitled to retain the full amount of their
respective recoveries from the St. Joe Indemnitors with respect to the
Contractual Indemnification Rights. Notwithstanding the foregoing, in the
event either FMC or JV is not entitled under the Asset Purchase Agreement to
recover from the St. Joe Indemnitors the full amount to which it would have
been entitled under the Contractual Indemnification Rights had the other not
previously obtained recoveries from the St. Joe Indemnitors under the
Contractual Indemnification Rights,
<PAGE>
the parties agree that FMC and JV shall share the aggregate amount of all
such recoveries received by FMC and JV under the Asset Purchase Agreement
(such aggregate amount being referred to herein as the "Indemnification
Recoveries") as follows: (A) JV shall be entitled to receive or retain the
lesser of (i) the amount to which it would have been entitled under the
Contractual Indemnification Rights had FMC made no claims thereunder and (ii)
80% of the Indemnification Recoveries, and (B) FMC shall be entitled to
receive or retain the lesser of (i) the amount to which it would have been
entitled under the Contractual Indemnification Rights had JV made no claims
thereunder and (ii) 20% of the Indemnification Recoveries. Each of FMC and
JV agrees to reimburse the other, to the extent it receives from the St. Joe
Indemnitors an amount in excess of the amount calculated pursuant to the
immediately preceding sentence and the other receives an amount which is less
than the amount calculated pursuant to such sentence.
3. Notwithstanding anything to the contrary contained in the
provisions of paragraph 1 above which incorporate the definitions of the
"Container Business" and the "Mill Business" contained in the Asset Purchase
Agreement, FMC and JV agree that, for purposes of this Agreement, the "Premises"
defined in, and leased pursuant to, that certain Indenture of Lease of even date
herewith between JV and Box USA Group, Inc. shall be deemed to be a property of
the Mill Business.
4. This Agreement is intended solely to delineate certain rights and
obligations as between FMC and JV. Nothing in this Agreement is intended to, or
shall, alter in any way the rights of FMC and JV as against the St. Joe
Indemnitors pursuant to the Asset Purchase Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written,
FOUR M CORPORATION
By /s/ Harvey L. Friedman
----------------------
FLORIDA COAST PAPER COMPANY, L.L.C.
By /s/ Dennis Mehiel
-----------------------
<PAGE>
EXHIBIT 10.6
WOOD FIBER PROCUREMENT AND SERVICES AGREEMENT
This Wood Fiber Procurement Agreement (the "Agreement") dated as of May 30,
1996, between STONE CONTAINER CORPORATION, a Delaware corporation ("Stone"), and
FLORIDA COAST PAPER COMPANY, L.L.C., a Delaware limited liability company (the
"Company").
WITNESSETH:
WHEREAS, the Company owns a linerboard mill located in Port St. Joe,
Florida (the "Mill"); and
WHEREAS, subject to the terms and conditions hereof, the parties hereto
desire to provide for the provision by Stone of certain wood fiber procurement
services to the Company.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
1. STONE TO PROVIDE PROCUREMENT SERVICES. During the term of the
Operating Agreement dated May 30, 1996 (the "Operating
Agreement") between SSJ Corporation and Box USA Paper Corporation
with respect to the Company, including any extensions thereof,
Stone agrees to use its best efforts to provide, from time to
time as requested by the Company, services designed to procure,
on behalf of the Company, wood fiber for use by the Mill in the
manufacture of linerboard. The term "best efforts" as used
herein shall mean the same efforts used by Stone to procure wood
fiber for use at Stone's mill in Panama City, Florida. Any such
services so performed shall be as agent of the Company.
Stone will use best
<PAGE>
efforts to procure wood fiber of the kind and type required by
the Mill at net prices no higher than the prevailing market
prices for such kind any type at the time of procurement. Stone
makes no representation or warranty, and none of its activities
hereunder shall give rise to any representation or warranty, as
to cost or supply of any wood fiber with respect to which
services are performed or not performed hereunder. In the event
of a shortfall of wood fiber generally, taking into account wood
fiber received by the Company from St. Joe Land and Development
Company ("St. Joe") pursuant to Wood Fiber Supply Agreement
between St. Joe and the Company; Stone and the Company will share
all wood fiber procured on a pro-rata basis based upon historical
uses at the Company's mill and Stone's mill located at Panama
City, Florida for the past twelve (12) months preceding the
shortfall.
Notwithstanding the foregoing, if Stone is, at the time of
procurement, purchasing such kind and type of wood for use by the
Panama City, Florida mill, such prices shall be at the same net
price that would be paid by Stone for its Panama City, Florida
mill, subject to adjustment to the extent of increased shipping
zone costs, if any.
2. PAYMENT OF PURCHASE PRICE OF SUPPLIES. With respect to the
supply of any wood fiber procured or arranged by Stone as agent
hereunder, Stone, at its option, may pay to the supplier thereof,
on behalf of the Company, the purchase price thereof in
accordance with the terms and conditions under which such supply
is furnished. In such event, within 7 days following the
delivery to the Company of an invoice with respect to any such
payment, the Company shall pay to Stone the amount of such
payment made by Stone.
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<PAGE>
3. REIMBURSEMENT OF FEES AND EXPENSES OF STONE. In consideration
for Stone's services hereunder, the Company shall reimburse Stone
for all of its reasonable costs and expenses incurred or made in
carrying out this Agreement based upon the allocable portion of
such costs and expenses included in the functional department
cost center relating to the services supplied. Stone shall
provide a detailed invoice to the Company each month (or, at the
option of Stone, any less frequent period) for such costs and
expenses incurred or made during the previous month. The Company
shall pay such invoice no later than the 7th day after the date
on which it receives such invoice.
4. TERMINATION, AMENDMENT AND WAIVER. This Agreement may be (a)
amended, or any provision waived, by the mutual consent of Stone
and the Company; and (b) terminated by the Company on not less
than 24 months notice to Stone; PROVIDED, however, that any such
termination, amendment or waiver pursuant to this Section 4 shall
require the approval of holders of at least 50% in principal
amount of the then outstanding First Mortgage Notes of the
Company.
5. LIMITATION OF STONE'S LIABILITY. Anything in this Agreement to
the contrary notwithstanding, neither Stone nor any of its
employees or agents shall be liable to the Company for any
expense, loss or damage of any nature incurred or suffered by the
Company occasioned by or arising from the act, default or
negligence of Stone or such employee or agent in the performance
or the non-performance of this Agreement or any part hereof,
except expense, loss or damage to the Company caused by Stone's
or such employee's or such agent's gross negligence, misconduct,
recklessness or material breach of this Agreement. In no event
shall Stone or any of its employees or agents be liable to the
Company in respect of indirect or consequential damages or
commercial loss, damage or injury, such as loss or profits
or production, which may be suffered by the Company. The
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<PAGE>
Company shall indemnify and hold harmless Stone, its officers, employees
and agents, to the full extent now or hereafter permitted by law, with
respect to the performance of this Agreement.
6. ENTIRE AGREEMENT. This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter hereof and supersedes any
prior understandings or agreements of the parties hereto with respect to
such subject matter.
7. NOTICES. All notices, consents or other communications required or
permitted hereunder shall be in writing and shall be deemed given or
delivered when delivered personally or when sent by registered or certified
mail addressed as follows:
IF TO STONE: Stone Container Corporation
150 North Michigan Avenue
Chicago, IL 60601
ATTENTION: President
WITH COPIES TO: Stone Container Corporation
150 North Michigan Avenue
Chicago, IL 60601
ATTENTION: Counsel
IF TO COMPANY: Florida Coast Paper Company, L.L.C.
300 First Street
Port St. Joe, FL 32456
ATTENTION: Green Long
WITH COPIES TO: Four M Corporation
115 Stevens Avenue
Valhalla, NY 10595
ATTENTION: President
4
<PAGE>
All such addresses shall remain effective until such time as the same shall
have been superseded by written notice of change of address given by a
party to the other party hereto.
8. HEADINGS. The headings of the Sections of this Agreement are for the
convenience of reference only and shall not be construed to be part of or
to affect the meaning of interpretation of this Agreement.
9. PARTIAL INVALIDITY. Wherever possible each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision shall be prohibited by or invalid
under applicable law such provision shall be ineffective to the extent, but
only to the extent, of such prohibition or invalidity, without invalidating
the remainder of such provision or the remaining provisions of this
Agreement, unless such a construction of such provision would be
unreasonable.
10. ASSIGNMENT. Neither Stone nor the Company may assign any of its rights or
delegate any of its duties under this Agreement unless the other party
consents to such assignment or delegation (which consent shall not be
unreasonably withheld), except that Stone, without the consent of the
Company, may assign its rights, but may not delegate its duties, under this
Agreement to any subsidiary of Stone or to any corporation in which it
holds an equity interest and which it manages under a contractual
arrangement. No party may delegate any of its duties hereunder unless such
party shall remain primarily obligated hereunder with respect to such
duties. Any attempted assignment in violation of this Section 10 shall be
void. Subject to the preceding sentences, this Agreement shall be binding
upon and inure to the benefit of the parties hereto, their successors
and permitted assigns.
5
<PAGE>
11. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of Illinois.
12. EXECUTION IN COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all
of which shall constitute one and the same agreement, and shall
become a binding agreement when each of the parties hereto shall have
executed and delivered a counterpart of this Agreement to the other
party.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed and delivered as of the day and year first above written.
FLORIDA COAST PAPER COMPANY, L.L.C.
BY: /s/ Dennis Mehiel
--------------------------------
NAME: Dennis Mehiel
TITLE: Member, Board of Managers
STONE CONTAINER CORPORATION
BY: /s/ Leslie T. Lederer
--------------------------------
NAME: Leslie T. Lederer
TITLE: Vice President
6
<PAGE>
EXHIBIT 10.7
INDENTURE OF LEASE
between
FLORIDA COAST PAPER COMPANY, L.L.C.
-and-
BOX USA GROUP, INC.
____________________________________
Dated as of
May 30, 1996
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE 1 - PREMISES AND TERM OF LEASE........................ 1
ARTICLE 2 - POSSESSION AND CONDITION OF PREMISES.............. 2
ARTICLE 3 - RENT.............................................. 2
ARTICLE 4 - IMPOSITIONS AND UTILITIES......................... 2
ARTICLE 5 - INSURANCE......................................... 5
ARTICLE 6 - DAMAGE OR DESTRUCTION AND
USE OF CASUALTY INSURANCE PROCEEDS................... 7
ARTICLE 7 - CONDEMNATION...................................... 8
ARTICLE 8 - ASSIGNMENT AND SUBLETTING......................... 9
ARTICLE 9 - REPAIRS AND MAINTENANCE........................... 9
ARTICLE 10 - CHANGES, ALTERATIONS AND ADDITIONS............... 10
ARTICLE 11 - GOVERNMENTAL REQUIREMENTS
AND INSURANCE REQUIREMENTS....................... 10
ARTICLE 12 - DISCHARGE OF LIENS; BONDS........................ 11
ARTICLE 13 - REPRESENTATIONS.................................. 11
ARTICLE 14 - INDEMNIFICATION OF LANDLORD...................... 12
ARTICLE 15 - RIGHT OF ACCESS.................................. 13
ARTICLE 16 - SELF-HELP........................................ 14
ARTICLE 17 - PERMITTED USE; NO UNLAWFUL OCCUPANCY............. 15
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ARTICLE 18 - EVENTS OF DEFAULT,
CONDITIONAL LIMITATIONS, REMEDIES, ETC................... 15
ARTICLE 19 - NOTICES......................................... 18
ARTICLE 20 - SUBORDINATION................................... 19
ARTICLE 21 - PURCHASE OPTION................................. 20
ARTICLE 22 - CERTIFICATES BY TENANT AND LANDLORD............. 21
ARTICLE 23 - CONSENTS AND APPROVALS.......................... 21
ARTICLE 24 - SURRENDER AT END OF TERM........................ 22
ARTICLE 25 - QUIET ENJOYMENT................................. 22
ARTICLE 26 - INVALIDITY OF CERTAIN PROVISIONS................ 23
ARTICLE 27 - RECORDING OF MEMORANDUM......................... 23
ARTICLE 28 - WAIVER OF TRIAL BY JURY......................... 23
ARTICLE 29 - BROKER.......................................... 24
ARTICLE 30 - MISCELLANEOUS................................... 24
ARTICLE 31 - WAREHOUSE FACILITY.............................. 26
ACKNOWLEDGMENTS
EXHIBIT A DESCRIPTION - CONTAINER FACILITY
EXHIBIT A-1 DESCRIPTION - WAREHOUSE FACILITY
EXHIBIT B PERMITTED EXCEPTIONS
EXHIBIT C LESSOR'S AGREEMENT
ii
<PAGE>
THIS INDENTURE OF LEASE made as of the 30th day of May 1996, between
FLORIDA COAST PAPER COMPANY, L.L.C. ("Landlord"), a Delaware limited liability
company and BOX USA GROUP, INC. ("Tenant"), a New York corporation.
W I T N E S S E T H :
ARTICLE 1
---------
PREMISES AND TERM OF LEASE
--------------------------
SECTION 1.01 Landlord, for and in consideration of the rentals to be paid
and all of the terms, covenants and agreements hereinafter set forth, to be
kept, observed and performed by Tenant, does hereby demise and lease to Tenant
and Tenant does hereby hire and take from Landlord, subject to the terms,
covenants, conditions and reservations hereof, and the Exhibits annexed hereto
and made a part hereof all that certain lot, piece or parcel of land, together
with the buildings and improvements thereon, situate, lying and being in the
City of Port St. Joe, Florida, County of Gulf and State of Florida as described
in EXHIBIT A annexed hereto and made a part hereof;
TOGETHER WITH the fixtures, apportenant to, attached to or used in
connection with the operation of said premises; and
TOGETHER WITH all easements, appurtenances and other rights and privileges
now or hereafter belonging or appertaining to said premises. All of the
foregoing property leased to Tenant pursuant to this Section 1.01 is here in
called the "Premises".
SUBJECT ONLY TO the encumbrances and conditions of title set forth on
EXHIBIT B annexed hereto and made a part hereof (the "Permitted Exceptions").
TO HAVE AND TO HOLD the Premises unto Tenant, for a term of fifty (50)
years (the "Term") commencing on the date hereof (the "Commencement Date") and
expiring on May 31, 2046 both dates inclusive, unless sooner terminated in
accordance with the terms of this Lease. Notwithstanding the foregoing, Tenant
shall have the right to terminate this Lease and the Term at any time upon not
less than one hundred (180) days' prior notice to Landlord.
<PAGE>
ARTICLE 2
POSSESSION AND
CONDITION OF PREMISES
Tenant acknowledges and represents to Landlord that it has inspected and
examined, or caused to be inspected and examined, the Premises and that it is
familiar with the physical condition and state of repair thereof, and Tenant
hereby accepts same in its existing condition and state of repair and Landlord
shall have no obligation to do any work or make any installation, repair or
alteration of any kind to or in respect thereof. Tenant acknowledges and agrees
that, except as otherwise expressly set forth in this Lease, no representations,
statements, or warranties, express or implied, as to condition, fitness for a
particular use or otherwise, have been made by or on behalf of Landlord.
ARTICLE 3
RENT
SECTION 3.01. Tenant shall pay rent at the net rent per annum (herein
sometimes called the "Base Rent") of One ($1.00) Dollar commencing on the 1st
day of June 1, 1996, and continuing through and including May 31,2046, the Base
Rent for the Term to be paid in advance on the date hereof, receipt of which is
hereby acknowledged by Landlord.
ARTICLE 4
IMPOSITIONS AND UTILITIES
SECTION 4.01.
(a) Tenant covenants and agrees to bear, pay and discharge, as additional
rent hereunder, any and all of the following items (collectively,
"Impositions"):
(i)real estate taxes and assessments; (ii) personal property taxes, if
any; (iii) occupancy and rent taxes; (iv) water, water meter and sewer
rents, rates, and charges;(v) license and permit fees; (vi) any fines,
penalties, and other similar or like governmental charges applicable
to the foregoing, together with any interest or costs with respect to
the foregoing incurred by reason of Tenant's failure to comply with
the terms hereof; and (vii) any other governmental levies, fees,
rents, assessments, or taxes and charges, general and special, ordinary
and extraordinary, foreseen and unforeseen, of any kind and nature
whatsoever,
2
<PAGE>
which at any time during the Term are (A) assessed, levied, confirmed or imposed
upon the Premises or any part thereof, and/or any personal property, equipment
or other facility used exclusively by Tenant in the operation thereof; or (B)
imposed upon Tenant by the terms of this Lease. Except as otherwise provided in
subparagraph (c) of this Section 4.01, each such Imposition, or installment
thereof, during the Term to be paid shall be paid directly to the taxing
authority not later than the date on which any fine, penalty, interest, or cost
may be added thereto or imposed by law for the nonpayment thereof; provided,
however, that if by law any Imposition, at the option of the taxpayer, may be
paid in installments (whether or not interest shall accrue on the unpaid balance
of such Imposition), Tenant may exercise the option to pay the same in such
installments, in which event Tenant shall pay only such installment payments as
shall become due prior to the date herein definitely fixed for the expiration of
the Term.
(b)Nothing herein contained shall require Tenant to pay any municipal,
state or federal income or franchise taxes imposed upon Landlord, whether based
upon the income or capital of Landlord, or any municipal, state, or federal
succession, transfer or gift taxes of Landlord; provided, nevertheless, that if
at any time during the Term the present method of taxation or assessment shall
be changed so that in substitution for, or in lieu of or in addition to, the
whole or any part of the taxes, assessments or other charges now levied,
assessed or imposed on real estate or the improvements thereon, there shall be
levied, assessed or imposed wholly or partially a franchise tax, capital levy or
other tax on real estate as such, or on the use and occupancy thereof, or if any
such tax or charge, or any part thereof, howsoever called, shall be measured by
or based on the Premises, then all such taxes, assessments, levies or charges or
the part thereof so measured or based shall be deemed to be included within the
definition of the term "Impositions" for the purpose of this Lease.
(c) Landlord and Tenant acknowledge that the Premises are part of a
larger parcel and do not constitute a single tax lot. Tenant will make
application and diligently prosecute and use its best efforts to effect the
subdivision of the Premises from such larger parcel and to obtain all
subdivision and other municipal approvals necessary to effect such subdivision
and to establish a separate tax lot, assessment and bill for the Premises
(collectively "Subdivision Approval"). Unless and until Subdivision Approval is
obtained, the real estate taxes and assessments and related Impositions to be
paid by Tenant under this Article shall be paid to Landlord in advance of the
due date thereof and determined as follows: (a) real estate taxes shall be the
sum of (i) such taxes attributable to the building and improvements calculated
by multiplying the assessed valuation thereof by the then applicable tax rate,
and (ii) such taxes attributable to the land calculated by multiplying the
assessed valuation of the entire parcel by the then applicable tax rate and
apportioning the result on a square foot basis; and (b) other such Impositions
not separately fixed shall be apportioned on the basis of the number of square
feet in all the buildings in the tax lot. At such time as Subdivision Approval
is obtained, the real estate taxes and assessments and related Impositions to be
paid by Tenant under this Article shall be paid by Tenant directly to the
applicable taxing authority. Landlord or Tenant, as the case may be, shall give
evidence of the payment of Impositions to the other within thirty (30) days of
payment. Landlord agrees to cooperate with Tenant in connection with Tenant's
efforts to obtain Subdivision Approval and, to the extent required by the
applicable municipal authorities having jurisdiction, execute and deliver such
applications and other instruments required
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<PAGE>
to be filed in connection therewith.
SECTION 4.02. Any Imposition which Tenant is required to bear, pay or
discharge under this Lease, relating to a fiscal period of a taxing authority, a
part of which period is included within the Term and a part of which is included
in a period of time prior to the Commencement Date or after the expiration or
sooner termination of the Term shall (whether or not such Imposition shall be
assessed, levied, confirmed, imposed upon or in respect of or become a lien upon
the Premises, or shall become payable, during the Term) be apportioned between
Landlord and Tenant as of the Commencement Date and the expiration or sooner
termination of the Term, so that Tenant shall pay that portion of such
Imposition with is attributable to that part of such fiscal period included in
the Term and Landlord shall pay or cause to be discharged the remainder thereof.
SECTION 4.03. Tenant, after prior notice to Landlord in each instance,
shall have the right, at its sole cost and expense and free of any expense to
Landlord, to contest the amount or validity, in whole or in part, of any
Imposition which Tenant is required to bear, pay or discharge under this Lease
by appropriate proceedings, instituted promptly and in good faith and conducted
diligently; provided, however, that:
(a) neither the Premises nor any part thereof, would, by reason of
such postponement or nonpayment, in the reasonable judgment of Landlord, be in
danger of being forfeited or lost; and
(b) Tenant continues to prosecute such proceeding diligently to final
adjudication. Upon the termination of such proceedings, it shall be the
obligation of Tenant to pay the amount of such Imposition or the part thereof as
finally determined in such proceedings, the payment of which may have been
deferred during the prosecution of such proceedings, together with interest,
penalties or other liabilities in connection therewith.
SECTION 4.04. Any certificate, advice or bill issued by the appropriate
official designated by law to make or issue the same or to receive payment of
any Imposition, of non-payment of such Imposition, shall be PRIMA FACIE evidence
that such Imposition is due and unpaid at the time or date stated therein.
Landlord, upon request of Tenant, shall furnish Tenant with a copy of any such
certificate, advice or bill.
SECTION 4.05. Landlord shall, during the Term, supply electricity and
water to the Premises in quantities from time to time required by Tenant.
Landlord shall not be liable to Tenant for any interruption in the supply of any
such services; provided, however, that the same shall not have been caused by
the willful acts or gross negligence of Landlord or its agents. Tenant shall
reimburse Landlord, as additional rent, for the cost of all such utilities
provided to the Premises, as determined by Landlord in its reasonable opinion.
4
<PAGE>
ARTICLE 5
INSURANCE
SECTION 5.01.
(a) Throughout the Term, Tenant, at its sole cost and expense, shall
provide and maintain in force or cause to be provided and maintained in force in
respect of the Premises:
(i) Insurance against loss or damage or injury or destruction to or of
any building(s) now or hereafter erected on the Premises resulting
from fire or from any hazard included in the so-called standard
extended coverage endorsement, in an amount not less than the full
replacement value of the building(s) and other improvements at the
Premises, which policies shall provide that the loss, if any, be
payable to Tenant;
(ii) General liability insurance against liability for bodily injury
and property damage in amounts not less than $1,000,000 per
occurrence, $3,000,000 annual aggregate, and such policies shall name
Landlord as an additional insured; and
(iii) If and when the Premises contain a boiler, boiler insurance in
an amount not less than $500,000 and such policy or policies shall
insure both Landlord and Tenant, as their interests may appear, except
as otherwise provided herein.
(b) Prior to the commencement of any Material Improvement (as
hereinafter defined), and until completion thereof, Tenant shall provide and
maintain in force or cause to be provided and maintained in force, in addition
to the insurance coverages described in subsection (a) of this Section 5.01:
(i) Owner's and Contractor's Protective Liability insurance naming
Tenant as an insured and Landlord, and the general contractor, if
any, as additional insureds, for a combined single limit of not less
than $1,000,000 for bodily injury, personal injury and property
damage; and
(ii) Builder's Risk Insurance (standard "all risk" or equivalent
coverage) written on a completed value (non-reporting) basis, naming
Tenant as an insured, and Landlord and the general contractor, if any,
and all subcontractors employed by Tenant or the general contractor,
if any, as additional insureds, as their respective interests may
appear.
5
<PAGE>
(c) Upon any failure of Tenant to procure and deliver to Landlord any
of the policies of insurance or, in lieu thereof, certificates evidencing same,
required hereunder, at least thirty (30) days before the expiration of the prior
insurance policies, if any, or to pay the premiums therefor, Landlord may
procure such insurance and pay the premiums therefor, and any sums paid by
Landlord shall be and become and are hereby declared to be additional rent under
this Lease and Tenant shall pay Landlord the annual premiums therefor within
five (5) days after delivery of Landlord's statement setting forth the amount
due.
(d) The term "Material Improvement" shall mean the making of an
Improvement (as defined in Section 10.01) the estimated cost of which, as
determined by a reputable contractor, or as set forth in a construction
agreement with a reputable contractor, will exceed $250,000.
SECTION 5.02
(a) All insurance required by any provision of this Lease shall be issued
by responsible insurance companies licensed to do business in the State of
Florida. All policies referred to in this Lease shall be procured, or caused to
be procured, for periods of not less than one (1) year. Certificates of
insurance evidencing the insurance required to be maintained pursuant to this
Lease shall be delivered to Landlord on or before the Commencement Date, and
certificates of insurance evidencing new or renewal policies replacing any
policies expiring during the Term shall be delivered to Landlord at least ten
(10) days before the date of expiration of any policy.
(b) Tenant and Landlord shall cooperate in connection with the collection
of any insurance proceeds that may be due in the event of loss and Tenant shall
execute and deliver such proofs of loss and other instruments which may be
required for the purpose of obtaining the recovery of any such insurance
proceeds.
(c) All adjustments of claims with insurers under the property and casualty
insurance policies which are required to be carried hereunder by Tenant shall be
made solely by Tenant.
(d) Tenant shall not violate or permit to be violated any of the conditions
or provisions of any such policies procured by it or by Landlord in respect of
the Premises and Tenant shall timely perform and satisfy or cause to be
performed and satisfied the written requirements of the companies writing such
policies so that at all times companies of good standing shall be willing to
write and/or continue such insurance.
(e) Every policy of insurance required to be obtained by Tenant hereunder
shall provide, to the extent obtainable, that no cancellation shall be effective
until at least ten (10) days after written notice thereof to Landlord.
(f) Each property and casualty insurance policy and every policy insuring
an economic loss resulting from any risks covered by any such property and
casualty insurance (whether or not required
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<PAGE>
to be carried hereunder), shall contain a clause or endorsement, if obtainable
(whether or not additional premium shall be charged therefor), whereby the
insurance company waives all rights of subrogation against Landlord and Tenant,
or consents to the release of liability among all such parties. The parties
hereby release each other from any and all liability for loss or damage covered
by such insurance under a policy containing such a clause or endorsement to the
extent of any proceeds paid thereunder.
(g) Any insurance required by this Article 5 may be effected by policies of
blanket insurance which may cover other property not included, as well as
property included, in the Premises, provided that the amount of the total
insurance allocated to the Premises shall be specified either in any such policy
or in a written statement from the insurer or its agent, and, provided further,
that in all other respects any such policy shall substantially comply with the
other provisions of this Article.
ARTICLE 6
DAMAGE OR DESTRUCTION AND
USE OF CASUALTY INSURANCE PROCEEDS
SECTION 6.01. If all or any part of the Premises shall be damaged or
destroyed in whole or in part by fire or other casualty of any kind or nature,
ordinary or extraordinary, foreseen or unforeseen, Tenant shall give Landlord
immediate notice there of, and Tenant at its election, may, but shall not be
obligated, to demolish, repair, restore, replace and rebuild (collectively
"Restore"), or cause to be Restored, the damaged or destroyed portions of the
Premises with such changes or alterations thereto as may be made at Tenant's
election in conformity with and subject to the terms and conditions of Article
10; provided, however, that Tenant shall (a) Restore the Premises to the extent,
if any, required by Governmental Requirements; and (b) Restore all damaged or
destroyed portions of the common wall between the Premises and the Warehouse (as
hereinafter defined).
SECTION 6.02. This Lease shall not terminate, be forfeited or otherwise
affected in any manner and there shall be no reduction or abatement of the
rental payable hereunder, by reason of damage to or destruction of the
Premises or any part thereof or otherwise. It is the intention of Landlord
and Tenant that the foregoing is an "express agreement to the contrary" as
provided in the applicable laws, if any, of the Sate of Florida and shall
govern and control in lieu thereof.
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<PAGE>
ARTICLE 7
CONDEMNATION
SECTION 7.01
(a) If at any time during the Term, the whole or substantially all of the
Premises shall be taken for any public or quasi-public purpose by any lawful
power or authority by the exercise of the right of condemnation or eminent
domain or by agreement between Landlord and those authorized to exercise such
right, this Lease and the Term shall terminate on the date of taking (as
hereinafter defined) and the rental payable by Tenant hereunder shall be
apportioned and paid to the date of taking.
(b) If the whole or any part of the Premises or any interest therein, shall
be taken or condemned as provided in this Article, the aggregate of all awards
and/or damages (collectively, the "award") in respect of any such taking shall
be paid out and distributed to Tenant. Landlord hereby waives any and all
claims, and releases and relinquishes all of its interest in and to any award.
(c) In case of any taking and whether or not this Lease shall terminate by
reason thereof, each of the parties agrees to execute any and all documents that
may be required in order to effect and facilitate the collection of the award
for the taking.
SECTION 7.02. If less than substantially all of the Premises shall be
taken, this Lease and the Term shall continue (except that this Lease shall
terminate in respect of the portion of the Premises taken and the Base Rent
shall be reduced proportionately). Tenant shall proceed diligently to Restore
any remaining part of the building on the Premises not so taken so that the same
shall be a complete, self-contained architectural unit.
SECTION 7.03. In case of any governmental action, not resulting in the
taking or condemnation of any portion of the Premises but creating a right to
compensation therefor, such as the change of grade or widening of any street
upon which the Premises abut, this Lease shall continue in full force and
effect.
SECTION 7.04. It is the intention of Landlord and Tenant that the
provisions of this Article 7 shall constitute an "express agreement to the
contrary" as provided in the applicable laws, if any, of the State of Florida
and shall govern and control in lieu thereof.
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ARTICLE 8
ASSIGNMENT AND SUBLETTING
SECTION 8.01. Tenant may not assign this Lease without the prior written
consent of Landlord which can be withheld by Landlord at Landlord's sole
discretion; except, however, that Tenant without the consent of Landlord may,
pledge and assign this Lease to NorWest Bank Minnesota, N.A. as Trustee (the
"Trustee") for the holders of all Series A and Series B Senior Secured Notes
to be issued from time to time pursuant to the Indenture of even date
herewith between the Trustee and Four M Corporation. Tenant, without the
consent of Landlord, may at any time and from time to time, sublet the
Premises or any part thereof. If the Premises are sublet, Tenant shall
deliver to Landlord a duplicate original of said agreement of subletting.
Tenant, without the consent of Landlord, upon complying with the provisions
of this Section, may, at any time pledge and/or assign this Lease or Tenant's
interest in the Premises. Tenant shall deliver to Landlord, within five (5)
days after the execution and delivery of such pledge and/or assignment, a
duplicate original of an instrument executed by the assignee providing that
the assignee, assumes and agrees to perform each and every provision of this
Lease on the part of Tenant to be performed from and after the effective date
of such assignment with the same force and effect as if the assignee in said
assignment was named as the original Tenant hereunder; provided, however,
that any so-called institutional lender to which this Lease or Tenant's
interest in the Premises shall be pledged and/or assigned, including, without
limitation, the Trustee, shall not be required to assume this Lease or to
perform or discharge any obligation, duty or liability of Tenant under this
Lease or any covenant herein. Each and every subsequent assignment of this
Lease by Tenant shall comply with the provisions of this Section.
ARTICLE 9
REPAIRS AND MAINTENANCE
Throughout the Term, Tenant, at its sole cost and expense, covenants and
agrees to keep the Premises in a safe, sound and lawful order and condition,
and in compliance with all Governmental Requirements. It is intended by the
parties that Landlord shall have no obligation whatsoever, to repair and
maintain the Premises. Tenant shall reimburse Landlord for Tenant's pro-rata
share of the costs of repairs to the warehouse and other areas adjoining the
Premises used in common by Landlord and Tenant, and for common items such as
the roof, common walls and HVAC systems, etc.
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ARTICLE 10
CHANGES, ALTERATIONS AND ADDITIONS
Tenant, without the consent of Landlord, may at any time and from time to
time during the Term, at its own cost and expense, demolish and /or make any
alterations, rebuildings, replacements, changes, additions and improvements
in, to or at the Premises and to the buildings from time to time thereon
(singly or collectively, an "Improvement"); provided, however, that any
Improvement shall be performed in compliance with all applicable permits and
authorizations and all Governmental and Insurance Requirements. All such
alterations, improvements and additions which may be made on the Premises
shall become the property of Landlord and remain upon and be surrendered with
the Premises at the expiration of the Term.
ARTICLE 11
GOVERNMENTAL REQUIREMENTS
AND INSURANCE REQUIREMENTS
SECTION 11.01. Tenant, at Tenant's sole cost and expense, shall comply
with (i) any and all present and future laws, rules, orders, ordinances
(including zoning ordinances), regulations and requirements to the extent
applicable solely to the Premises, or any part thereof, now or hereafter enacted
or promulgated by any Federal, state or municipal governmental authority having
jurisdiction over the Premises, including, without limitation, the American
with Disabilities Act (collectively, "Governmental Requirements"), if and to the
extent that Tenant's non-compliance therewith shall subject Landlord to any
liability for non-compliance therewith and (ii) all requirements of insurance
authorities or companies and the Board of Fire Underwriters or Insurance
Services Office related solely to the Premises or any part thereof
(collectively, "Insurance Requirements").
SECTION 11.02. Notwithstanding anything to the contrary contained in this
Lease, (a) Tenant shall have the right to contest the validity or applicability
of any Governmental Requirements or Insurance Requirements affecting the
Premises or Landlord's adjacent property by appropriate legal or administrative
proceedings and Tenant shall be entitled to postpone compliance with the
obligation being contested so long as noncompliance shall not subject Landlord
to any criminal penalty or to prosecution for a crime, forfeit in danger of
being suspended by reason of such contest; and (b) the term Governmental
Requirements shall not include Environmental Laws (as defined in the Agreement,
as hereinafter defined).
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ARTICLE 12
DISCHARGE OF LIENS: BONDS
SECTION 12.01. Tenant shall not create, suffer or permit to be created or
to remain, any mechanic's, laborer's, materialman's lien upon the Premises
SECTION 12.02. If any mechanic', laborer's or materialman's lien at any
time shall be filed or permitted to exist against the Premises or any part
thereof, by reason of any work, labor or services performed or materials
furnished, or claimed to have been performed or furnished to or on behalf of
Tenant or those claiming under Tenant, Tenant, within twenty (20) days after
receipt of notice of filing thereof, shall cause the same to be vacated or
discharged of record by payment, deposit, bond, order of a court of competent
jurisdiction or otherwise.
SECTION 12.03. Nothing contained in the Lease shall be deemed or
construed in any way as constituting the consent or request of Landlord,
express or implied, by inference or otherwise, to any contractor,
subcontractor, laborer or materialman for the performance of any labor or
services or the furnishing of any materials for any specific improvement,
alteration to or repair of the Premises or any part thereof, nor as giving
Tenant any right, power or authority to contract for or permit the rendering
of any labor or services of the furnishing of materials that would give rise
to the filing of any lien against the estate or interest of Landlord in the
Premises or Landlord's adjacent property. Notice is hereby given, and Tenant
shall cause all construction agreements to which it is a party to provide,
that Landlord shall not be liable for any work or other services performed or
to be performed at the Premises or for any materials furnished or to be
furnished at the Premises, that the contractor performing any work or
services and/or furnishing any materials to the premises for or on behalf of
Tenant shall not look to Landlord for the payment therefor, and that no
mechanic's or other lien for such work, services or materials shall attach to
or affect the estate or interest of Landlord in and to the Premises.
ARTICLE 13
REPRESENTATIONS
SECTION 13.01. Landlord represents that it owns the Premises and that the
execution and delivery of this Lease have been duly authorized by all necessary
and proper action on the part of Landlord.
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SECTION 13.02. Tenant represents that the execution and delivery of
this Lease have been duly authorized by all necessary and proper action on
the part of Tenant.
ARTICLE 14
INDEMNIFICATION OF LANDLORD
SECTION 14.01 Tenant agrees to indemnify and save Landlord harmless from
and against any and all claims, obligations, liabilities, suits, actions,
proceedings, judgments, damages, costs, charges and expenses, including,
without limitation, reasonable attorneys' fees and disbursements, imposed upon
or incurred by Landlord by reason of any of the following occurring during the
Term, unless resulting from any act, omission or negligence of Landlord, or
Landlord's agents or employees:
(a) any use, non-use, possession, occupation, repair, alteration,
condition, operation, maintenance or management of the Premises or any part
thereof, or the streets abutting the same by Tenant, or its agents or employees;
(b) any act, omission or negligence on the part of tenant or its agents;
(c) any accident, injury (including death) or damage to any person or
property occurring in, on or about the Premises or any part thereof or the
streets abutting the same;
(d) any lien or claim which may be asserted against the Premises or any
part thereof, arising from any failure by Tenant to perform its obligations
under this Lease; and
(e) for On-Site Environmental Liabilities, as defined in the Asset
Purchase Agreement dated as of November 1, 1995 between St. Joe Forest
Products Company, St. Joe Container Company and St. Joe Paper Company
(separately and collectively the "Sellers"), on the one hand and Four M
Corporation and Landlord, on the other hand, as amended (the "Agreement"),
related to the Premises and for Off-Site Environmental Liabilities (as
defined in the Agreement) arising out of acts or omission of Tenant from and
after the Commencement Date. The foregoing undertaking is not intended, nor
shall be deemed, to be for the benefit of the Sellers nor to modify or amend
the respective rights and obligations of any of the parties to the Agreement
with respect to On-Site and/or Off-Site Environmental Liabilities thereunder
or otherwise.
SECTION 14.02. The obligations of Tenant under this Article 14 shall not
be limited or affected in any way by the limits of insurance required to be
carried or caused to be carried by Tenant hereunder or by the absence in any
case of covering insurance or by the failure or refusal of any insurance carrier
to perform any obligation on its part under insurance policies affecting the
Premises,
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or any parts thereof.
SECTION 14.03. If any claim, action or proceeding is made or brought
against Landlord by reason of any event with respect to which Tenant has
indemnified Landlord hereunder, then, Landlord shall promptly notify Tenant
and Tenant, at its sole cost and expense, shall resist or defend such claim,
action or proceeding, in Landlord's name if necessary,-by the attorneys for
Tenant's insurance carrier (if such claim, action or proceeding is covered by
insurance) or otherwise by such attorneys as Tenant shall select and Landlord
shall approve, which approval shall not be unreasonably withheld or delayed.
Nothing herein contained shall prohibit Landlord, at its own expense, from
participation in such claim, action or proceeding with counsel of its own
choice.
SECTION 14.04. The provisions of this Article 14 shall survive the
termination or expiration of the Term in respect of any occurrence prior to the
termination or expiration of the Term.
SECTION 14.05. Tenant hereby agrees that except to the extent caused by
the willful acts or negligence of Landlord, or Landlord's employees, invitees,
contractors or agents, Landlord shall not be liable for injury to Tenant's
business or any loss of income therefrom or for damage to the goods, wares,
merchandise or other property of Tenant, Tenant's employees, invitees, customers
or other person in or about the Premises, nor shall Landlord be liable for
injury to the person of Tenant, Tenant's employees, agents or contractors,
whether such damage is caused by or results from fire, steam, electricity, gas
water or rain, or from the breakage, leakage, obstruction or other defects of
pipes, sprinklers, wires, appliances, plumbing air conditioning or lighting
fixtures, or from any other cause, whether the said damage or injury results
from conditions arising upon the Premises, or from other sources or places and
regardless of whether the cause of such damage or injury or the means or
repairing the same is inaccessible to Tenant.
ARTICLE 15
RIGHT OF ACCESS
Upon reasonable notice to Tenant, Tenant shall permit Landlord and its
agents and representatives to enter at all reasonable time for the purpose of
inspecting the same.
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ARTICLE 16
SELF-HELP
SECTION 16.01. If at any time Tenant shall fail to pay, in accordance with
the provisions hereof, any Imposition for which it is obligated hereunder, or to
take out, pay for, maintain or deliver any of the insurance policies required of
it herein or certificates evidencing same, or to perform any other act on its
part to be made or performed under this Lease, then Landlord, without waiving or
releasing Tenant from any obligation contained in this Lease and in addition to
any and all other remedies Landlord may have hereunder, may (but shall be under
no obligation to), upon the giving of notice to Tenant of such failure and the
continuance of such failure by Tenant for fifteen (15) days after the giving of
such notice (except that shorter notice, to the extent feasible, or no notice,
need be given in the case of an emergency, or in cases when any insurance policy
described in Article 7 would lapse in less than ten (10) days or if such failure
cannot be cured within said fifteen (15) days, the failure of Tenant to
commence to cure within said fifteen (15) days or to diligently and continuously
thereafter prosecute such cure:
(a) pay or cause to be paid any Imposition required to be paid by Tenant
pursuant to the provisions hereof, or
(b) take out, pay for and maintain any of the insurance policies provided
for herein; or
(c) pay any other sums, costs, expenses, charges, payments or deposits
payable by Tenant hereunder, or perform any other act on Tenant's part to be
made or performed as in this Lease set forth, and Landlord may enter upon the
Premises for such purpose and take all such action thereon as may be necessary
therefor.
SECTION 16.02. All sums paid by Landlord and all reasonable costs and
expenses incurred by Landlord in connection with the performance of any act
permitted by Section 16.01 shall be paid by Tenant to Landlord as additional
rent on demand. Any payment or performance by Landlord pursuant to the
foregoing provisions of this Article 16 shall not be nor be deemed to be a
waiver or release of the breach or default of Tenant with respect thereto or of
the right of Landlord to terminate this Lease, institute summary proceedings
and/or take such other action as may be permissible hereunder or otherwise if an
Event of Default by Tenant shall have occurred and exist.
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ARTICLE 17
PERMITTED USE: NO UNLAWFUL OCCUPANCY
SECTION 17.01. During the Term, Tenant may use and occupy the Premises for
light manufacturing, warehouse and distribution purposes and/or any other lawful
purposes.
SECTION 17.02. Tenant shall not use or occupy, nor permit or suffer the
Premises or any part thereof, to be used or occupied for any unlawful purpose.
ARTICLE 18
EVENTS OF DEFAULT,
CONDITIONAL LIMITATIONS, REMEDIES, ETC.
SECTION 18.01. The occurrence at any time during the Term of any one or
more of the events set forth in subsections (a), (b) or (c) of this Section
18.01, and the continuation thereof, shall constitute an "Event of Default"
hereunder:
(a) if Tenant shall fail to pay in full any item of additional rent, or
any other payment required to be paid by Tenant under this Lease, when
the same shall become due and payable hereunder, and such default
shall continue for a period of ten (10) days after notice thereof from
Landlord to Tenant; or
(b) if Tenant shall fail to keep, observe or perform any of the other
terms, covenants, conditions or agreements of this Lease on Tenant's
part to be kept, observed or performed, and such default shall
continue for a period of thirty (30) days after notice thereof by
Landlord to Tenant specifying such default (unless such default
requires work to be performed, acts to be done or conditions to be
removed which cannot by their nature reasonably be performed, done or
removed, as the case may be, within such thirty (30) day period, then
if Tenant shall not have commenced during the same within such thirty
(30)-day period or shall thereafter fail diligently and continuously
to prosecute the same to completion); or
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(c) (i) if Tenant is generally not paying its debts as such debts become
due, within the meaning of such phrase under Title 11 of the United
States Code, or shall admit in writing that it is unable to pay its
debts as such debts become due; or
(ii) if Tenant shall make an assignment for the benefit of creditors;
or
(iii) if Tenant shall file a voluntary petition under Title 11 of the
United States Code, as the same may be amended, or if such a petition
is filed against Tenant and an order is entered as a result of such
petition, or if Tenant shall file any petition or answer seeking,
consenting to or acquiescing in any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any present or future federal bankruptcy code or any other
present or future applicable federal or state or other statute or law,
or shall seek or consent to or acquiesce in the appointment of any
custodian, trustee, receiver, sequestrator, liquidator or other
similar official of Tenant or of all or any substantial part of its
property or of the Premises or any interest of Tenant therein, or if
Tenant shall take any action in furtherance of any action described in
subdivisions (i), (ii) or (iii) of this Section 18.01 (c); or
(iv) if within ninety (90) days after the commencement of any
proceeding against Tenant seeking any reorganization, arrangement,
composition, readjustment, liquidation, dissolution or similar relief
under any present or future federal bankruptcy code or any other
present or future applicable federal or state statute or law, such
proceeding shall not have been dismissed, or if within ninety (90)
days after the appointment, without the consent or acquiescence of
Tenant, of any custodian, trustee, receiver, assignee, sequestrator,
liquidator or any other similar official of Tenant or of all or any
substantial part of its properties or of the Premises or any interest
of Tenant therein, such appointment shall not have been vacated or
stayed on appeal or otherwise, or if within sixty (60) days after the
expiration of any such stay, such appointment shall not have been
vacated.
SECTION 18.02
(a) Upon the occurrence of any of the Events of Default set forth in
Section 18.01 (c), Landlord may at any time thereafter serve upon Tenant a ten
(10)-day notice of termination of this Lease and upon the expiration of such ten
(10)-day period, this Lease and the Term shall cease, terminate and expire as
fully and completely as if the expiration of such ten (10)-day period were the
date herein definitely fixed for the end and expiration of the Lease and the
Term, and Tenant immediately shall quit and surrender the Premises; or if such
termination shall be proscribed by any law applicable to the proceeding or
stayed by order of any court having jurisdiction over the proceeding, then,
following the expiration of any stay, or if the trustee appointed in any such
proceeding, Tenant or Tenant as
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debtor-in-possession shall fail to assume this Lease in its entirety and all
of the covenants thereof within the period prescribed therefor by law or as
may be allowed by the court, and/or said trustee, Tenant or Tenant as
debtor-in-possession shall fail to provide adequate protection of Landlord's
right, title and interest in and to the Premises and adequate assurances of
the complete and continuous future performance of Tenant's obligations under
this Lease, Landlord, to the extent permitted by law or by leave of the court
having jurisdiction over the proceeding, shall have the right, at its
election, to terminate this Lease on ten (10) days' notice to Tenant, Tenant
as debtor-in-possession or said trustee, and upon the expiration of said ten
(10)-day period this Lease shall cease and expire as fully and completely as
if such date were the date herein definitely fixed for the end and expiration
of this Lease and the Term, and thereupon neither Tenant nor any subtenant or
other person claiming through or under Tenant or by virtue of any statute or
order of any court shall be entitled to the possession of the Premises, or
any part thereof, and Landlord, in addition to the other rights and remedies
given pursuant to this Article, or by virtue of any other provision in this
Lease contained, or by virtue of any statute or rule of law, may retain or
receive as partial liquidated damages any rental, or other moneys received by
it from Tenant or others on behalf of Tenant.
(b) If this Lease shall terminate and expire pursuant to the provisions of
Section 18.02 (a) Landlord shall be entitled to prove and recover in any such
bankruptcy, insolvency, receivership, reorganization or dissolution proceeding
all arrears in rental and, in addition thereto as liquidated damages an amount
equal to the maximum allowed by statute or rule of law in effect at the time
when and governing the proceedings in which such damages are to be proved,
whether or not such amount be greater or less than the amount referred to in
subsection (a) of this Section 18.02.
SECTION 18.03. Upon the occurrence of any of the Events of Default set
forth in Sections 18.01 (a) and (b) which shall be continuing, Landlord may
serve upon Tenant a ten (10)-day notice of termination of this Lease and upon
the expiration of such ten (10)-day period, this Lease and the Term shall cease,
end and expire as fully and completely as if the expiration of such ten (10)-day
period were the date herein definitely fixed for the end and expiration of this
Lease and the Term and Tenant shall pay to Landlord all rental payable under
this Lease to the date upon which this Lease and the Term shall have terminated,
expired and come to an end.
SECTION 18.04. No termination of this Lease pursuant to Section 18.03,
shall relieve Tenant of its liabilities and obligations under this Article 18,
all of which shall survive.
SECTION 18.05. Tenant waives any and all right of redemption provided by
any law or statute now in force or hereafter enacted or otherwise, or re-entry
or repossession or to restore the operation of this Lease in case Tenant shall
be dispossessed by a judgment or by warrant of any court or judge or in case of
reentry or repossession by Landlord or in case of any expiration or termination
of this Lease. The terms "enter," "re-enter," "entry" or "re-entry," as used in
this Lease are not restricted to their technical legal meaning.
SECTION 18.06. No failure by Landlord to insist upon the strict
performance of any agreement, term, covenant or condition of this Lease or to
exercise any right or remedy consequent upon a breach
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thereof, and no acceptance of full or partial rental during the continuance
of any such breach, shall constitute a waiver of any such breach or of such
agreement, term, covenant or condition. No agreement, term, covenant or
condition of this Lease to be performed or complied with by Tenant, and no
breach thereof, shall be or be deemed to be waived, altered or modified
except by a written instrument executed by Landlord. No waiver of any breach
shall affect or alter this Lease, but each and every agreement, term,
covenant and condition of this Lease shall continue in full force and effect
with respect to any other then existing or subsequent breach thereof.
SECTION 18.07. Tenant shall pay to Landlord all reasonable costs and
expenses, including, without limitation, reasonable attorneys' fees and
disbursements, incurred by Landlord in any action or proceeding to which
Landlord may be made a party by reason of any act or omission of Tenant,
provided that such act or omission does not result from any act or omission of
Landlord.
ARTICLE 19
NOTICES
SECTION 19.01. Whenever it is provided herein or prescribed by law that
notice, demand, request, consent, approval or other communication shall or may
be given to or served upon either of the parties hereto such notice, demand,
request, consent, approval or other communication shall be in writing and,
unless otherwise prescribed by law or governmental regulation, shall be
effective for any purpose only if delivered personally against receipt
therefor or sent by registered or certified mail, postage prepaid, return
receipt requested, to the parties at the respective addresses set forth below,
or to such other addresses as either party may from time to time designate by
like notice given to the other.
(a) If to Tenant:
Box USA Group, Inc.
115 Stevens Avenue
Valhalla, NY 10595
Attn: Chief Operating Officer
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(b) If to Landlord:
FLORIDA COAST PAPER COMPANY, L.L.C.
300 First Street
Port St. Joe, FL 32456
Attn: Chief Operating Officer
With a copy to:
STONE CONTAINER CORPORATION
150 No. Michigan Avenue
Chicago, Illinois 60601
Attn: Counsel
SECTION 19.02. Every notice, demand, request, consent, approval or other
communication hereunder shall be deemed to have been given or served on the date
personally delivered or three (3) business days after the date that the same
shall have been deposited in the United States mails postage prepaid, in the
manner aforesaid, except that a notice of change of address shall be deemed to
have been given only when received by the addressee.
ARTICLE 20
SUBORDINATION
SECTION 20.01. Subject to the non-disturbance provisions of Paragraph 20.03
hereof, this Lease, the leasehold estate of Tenant created hereby and all rights
of Tenant hereunder shall be subject and subordinate to any and all Fee
Mortgage(s) which may now or hereafter cover all or any part of the Premises
and to all renewals, modifications, consolidations, replacements and extensions
thereof. Tenant agrees that the Fee Mortgagee(s), shall have no duty, liability
or obligation to perform any of the obligations of Landlord under this Lease,
but in the event of Landlord's default with respect to any such obligation,
Tenant will give any Fee Mortgagee(s) whose name and address have been furnished
Tenant in writing for such purpose notice of Landlord's default and allow such
Fee Mortgagee(s) thirty (30) days following receipt of such notice for the cure
of said default before invoking any remedies Tenant may have by reason thereof.
If any Fee Mortgagee(s) shall elect to have this Lease superior to the lien of
its Fee Mortgage and shall give written notice thereof to Landlord and Tenant,
this Lease shall be deemed prior to such Fee Mortgage, notwithstanding the
relative dates of the documentation
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or recordation thereof.
SECTION 20.02. Subject to the non-disturbance provisions of paragraph
20.03, Tenant agrees to attorn to any Fee Mortgagee(s) or any other party who
acquires ownership of the Premises by reason of foreclosure of a Fee Mortgage,
and that in the event of such foreclosure, such new owner shall not: (i) be
liable for any act or omission of any prior lessor or with respect to events
occurring prior to acquisition of ownership, or (ii) be subject to any offsets
or defenses which Tenant may have against any prior lessor.
SECTION 20.03. Tenant's subordination of this Lease shall be subject to
receiving assurance (a "non-disturbance agreement") from the Fee Mortgagee(s)
that, among other things, Tenant's possession of the Premises and this Lease,
will not be disturbed so long as Tenant is not in default thereof and attorns to
the record owner of the Premises and expressing such Fee Mortgagee(s)
unconditional agreement to release the Premises from the applicable Fee Mortgage
upon Tenant's purchase of the Premises pursuant to the provisions of Article 21
hereof or otherwise.
SECTION 20.04. The agreements contained in this Article 20 shall be
effective without the execution of any further documents; provided, however,
that, upon request from Landlord or a Fee Mortgagee(s) in connection with a
sale, financing or refinancing of the Premises, Tenant and Landlord shall
execute such further writings as may be reasonably required to separately
document any such subordination or non-subordination, attornment and/or non-
disturbance agreement as is provided for herein.
ARTICLE 21
PURCHASE OPTION
Tenant shall have the option to purchase the Premises at any time during
the Term by Tenant's giving notice to Landlord not later than four (4) months
prior to the expiration of the Term of its election to exercise the same. Such
notice shall designate the date for the title closing selected by Tenant;
provided, however, that Tenant shall not designate a date for the title closing
which shall be less than thirty (30) days nor more than sixty (60) days
following the date of such notice. The purchase price shall be One Hundred
($100.00) Dollars.
The title closing shall take place at 10:00 a.m. at the address of Tenant
set forth in Article 19 hereof (or at such other place as Tenant shall designate
by notice to Landlord) on the date designated therefor in said notice from
Tenant to Landlord, except that Tenant may, at its option, adjourn the title
closing from time to time for a period not to exceed sixty (60) days. At the
closing, Landlord shall deliver to Tenant or its designee, a bargain and sale or
special warranty deed, with covenant against grantor's acts, in recordable form,
so as to convey to Tenant or its designee, the fee title to the
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Premises, subject only to the Permitted Exceptions and such other conditions of
title as are permitted under this Lease or consented to or created by Tenant (or
by any person holding or claiming through or under Tenant).
ARTICLE 22
CERTIFICATES BY TENANT AND LANDLORD
Tenant and Landlord agree, at any time and from time to time upon not
less than ten (10) days' prior notice by the other, to execute, acknowledge
and deliver to the other (or any other parties specified by the other) a
statement certifying (i) that this Lease is unmodified and in full force and
effect (or if there have been any modifications, or supplements that the
same, as modified and/or supplemented, is in full force and effect and
stating the modifications and/or supplements), (ii) the date(s) to which the
Base Rent has been paid, (iii) whether to the best knowledge of the person
executing such certificate there is then any existing default in the
performance of the other party's obligations under this Lease and, if so,
specify each such default, and (iv) whether to the best knowledge of the
person executing such certificate there then exist any set-offs or defenses
to the enforcement of this Lease by Landlord or any claims by Tenant against
Landlord, and it being intended that any such statement may be relied upon by
the other party and/or such third parties as the other party shall have
designated.
ARTICLE 23
CONSENTS AND APPROVALS
All consents and approvals which may be given under this Lease shall, as a
condition of their effectiveness, be in writing. The granting of any consent or
approval by Landlord to the performance of any act by Tenant requiring the
consent or approval of Landlord, under any of the terms or provisions of this
Lease shall relate only to the specified act or acts thereby consented to or
approved and, unless otherwise specified, shall not be deemed a waiver of the
necessity for such consent or approval for the same or any similar act in the
future, and/or the failure on the part of Landlord to object to any such action
taken by Tenant without the consent or approval of Landlord, shall not be deemed
a waiver of its right to require such consent or approval for any further
similar act. Whenever the consent of Landlord is required hereunder, Landlord
agrees not to unreasonably withhold or delay such consent.
21
<PAGE>
ARTICLE 24
SURRENDER AT END OF TERM
SECTION 24.01. On the last day of the Term or upon any sooner termination
of this Lease, Tenant it shall well and truly surrender and deliver up to
Landlord the Premises, together with all additions, alterations and improvements
thereto, in the condition and state of repair in which Tenant is obligated to
maintain the same pursuant to Article 9, reasonable wear and tear and damage by
fire or other casualty excepted, free and clear of all subleases, occupancies,
and, if and to the extent created by Tenant, liens and encumbrances.
SECTION 24.02. Nothing in this Lease shall be construed to give Landlord
title to or to prevent Tenant's removal of inventory, trade fixtures,
furnishings and equipment installed in the Premises by Tenant and Landlord
hereby waives and releases any right to distraint and all landlord lien rights
which Landlord may now or hereafter have at law, in equity or otherwise with
respect thereto. Landlord has concurrently herewith executed and delivered to
the Trustee, and to NationsBank, N.A., as Agent, Lessor's Acknowledgment and
Agreements in the respective forms contained in EXHIBIT C annexed hereto and
made a part hereof (each a "Lessor's Agreement"). Landlord agrees to promptly
following request by Tenant, execute and deliver instruments in form and
substance materially similar to the Lessor's Agreement for the benefit of any
party(s) now or hereafter holding an interest in all or any part of Tenant's
inventory, trade fixtures, furniture, furnishings and/or equipment. Subject to
the terms and conditions of any Lessor's Agreement in effect at such time, in
the event that Tenant does not remove its inventory, trade fixtures, furnishing
and equipment within one hundred eighty (180) days following the expiration or
sooner termination of the Term such items shall be deemed to have been abandoned
by Tenant and shall become the property of Landlord.
ARTICLE 25
QUIET ENJOYMENT
Landlord covenants that Tenant shall and may (subject, however, to the
terms and conditions of this Lease), peaceably and quietly have, hold and enjoy
the Premises during the Term without molestation or disturbance by or from
Landlord or any person claiming by, through or under Landlord.
22
<PAGE>
ARTICLE 26
INVALIDITY OF CERTAIN PROVISIONS
If any term or provision of this Lease, or the application thereof to any
person or circumstances shall, to any extent, be invalid or unenforceable, the
remainder of this Lease, or the application of such term or provision to persons
or circumstances other than those as to which it is held invalid or
unenforceable, shall not be affected thereby, and each term and provision of
this Lease shall be valid and be enforced to the fullest extent permitted by
law.
ARTICLE 27
RECORDING OF MEMORANDUM
Landlord and Tenant, upon the written request of the other, shall join in
the execution of a Memorandum, or Short Form, of this Lease and of any
amendments or supplements to this Lease in proper form for recording, setting
forth such provisions as shall be required by law or requested by either party
to give notice of the existence of this Lease, such amendment or supplement and
the provisions thereof. Either party may cause such Memorandum or Short Form to
be recorded, and Tenant shall pay and discharge all costs and fees in connection
therewith.
ARTICLE 28
WAIVER OF TRIAL BY JURY
To the fullest extent permitted by law, Landlord and Tenant do hereby
waive and will waive all rights to trial by jury on any cause of action,
proceeding or counterclaim directly or indirectly arising out of or in any
way connected with this Lease, the Premises, Tenant's use and occupancy of
the Premises or any matters whatsoever arising out of or in any way connected
with this Lease. The provisions of this Lease relating to waiver of a jury
trial shall survive the expiration of the Term.
23
<PAGE>
ARTICLE 29
BROKER
Tenant and Landlord acknowledge, represent and warrant to each other that
it has not dealt with any broker in respect of this Lease or the Premises. As
a special inducement for the execution and delivery of this Lease by the other,
Landlord and Tenant hereby covenant and agree forever to defend, indemnify and
hold the other and its successors and assigns harmless from and against any and
all claims, demands or judgments (and for all expenses, including, but not
limited to, reasonable counsel fees and expenses incurred by the other in
connection therewith) for any commissions, fees or other compensation of any
kind by or in favor of any broker or other party, claiming to have brought the
availability of the Premises to the attention of the indemnifying party and/or
claiming to have dealt with the indemnifying party in connection with this
Lease.
ARTICLE 30
MISCELLANEOUS
SECTION 30.01. The captions of this Lease are for convenience of reference
only and in no way define, limit or describe the scope or intent of this Lease
or in any way affect this Lease.
SECTION 30.02. The Table of Contents is for convenience of reference only
and is not to be deemed or construed in any way as part of this Lease or as
supplemental thereto or amendatory thereof. All references herein to Articles,
Sections, subsections or subdivisions, shall, unless the context shall clearly
evidence a contrary intention, refer to the Articles, Sections, subsections and
subdivisions of this Lease.
SECTION 30.03. Any reference herein to any one gender, masculine, feminine
or neuter, includes the other two, and the singular includes the plural and vice
versa, unless the context requires otherwise. The use herein of the words
"successors and assigns" or "successors or assigns" of Landlord or Tenant
shall be deemed to include the heirs, legal representatives and assigns of
any individual Landlord or Tenant.
SECTION 30.04. If more than one party is named as or becomes Landlord or
Tenant hereunder, Landlord or Tenant, as the case may be, may require the
signatures of all such other parties in connection with any notice to be given
or action to be taken by the other party hereunder, unless such other parties
designate otherwise in form satisfactory to the relying party. Each person or
entity named as Landlord or Tenant shall be jointly and severally liable for all
obligations of such party hereunder.
24
<PAGE>
Any notice by Landlord to any party named as Tenant or by Tenant to any party
named as Landlord shall be sufficient and shall have the same force and effect
as though given to all parties named as Tenant or Landlord, as the case may be.
So long as Stone Container Corporation ("Stone"), its successor or assigns, have
any ownership interest, direct or indirect, in the building in which the
Premises is contained, this Lease may not be amended or terminated without the
prior written consent of Stone, its successors or assigns.
SECTION 30.05. The term "Landlord" on the date as of which this Lease is
delivered, shall mean Florida Coast Paper Company, L.L.C., but thereafter
"Landlord" shall mean the holder of landlord's interest in this Lease at the
time in question so that if Florida Coast Paper Company, L.L.C., or any
successor to its interest hereunder ceases to have any interest in the Premises
or there is any transfer or transfers of Landlord's interest in the Premises,
the transferor shall be and hereby is entirely freed and relieved of all
agreements, covenants and obligations of Landlord hereunder to be performed on
or after the date of such transfer, and it shall be deemed and construed without
further agreement between the parties or their successors in interest or between
the parties and the person who acquires Landlord's interest in this Lease that
such person has assumed and agreed to carry out any and all agreements,
covenants and obligations of Landlord hereunder accruing from and after the date
of such transfer.
SECTION 30.06. This Lease or any of its provisions may not be waived,
changed, modified or terminated orally, but only by a written instrument of
waiver, change, modification, or termination executed by the party against whom
enforcement of any such waiver, change, modification or termination is sought.
SECTION 30.07. This Lease shall be governed by and construed in accordance
with the internal laws of the State of Florida without giving effect to any
principles of conflict of laws.
SECTION 30.08. The agreements, terms, covenants and conditions herein
contained shall be binding upon, and shall inure to the benefit of, Landlord and
Tenant and their respective successors and assigns.
SECTION 30.09. This Lease, the Agreement and the Environmental Indemnity
Agreement of even date herewith between Landlord and Four M Corporation, contain
the entire agreement between the parties with respect to the Premises and
supersedes all prior written and oral agreements and understandings with respect
hereto between Landlord and Tenant with respect to the Premises.
SECTION 30.10. This Lease may be executed in multiple counterparts and all
of said counterparts
25
<PAGE>
taken together shall be deemed to constitute one and the same instrument.
SECTION 30.11. Notwithstanding any other term or provision of this
Lease except with respect to Landlord's obligations under Article 21 of this
Lease, the liability of Landlord for its obligations under this Lease is
limited solely to Landlord's interest in the Premises as the same may from
time to time be encumbered, and no personal liability shall at any time be
asserted or enforceable against any other assets of Landlord or against
Landlord's members, stockholders, directors, managers, officers or employees
on account of any of Landlord's obligations or actions under this Lease.
Landlord shall upon conveying title to Tenant pursuant to Article 21 of this
Lease, be relieved of all liability with respect to Landlord's obligations to
be performed under this Lease after the date of such conveyance.
ARTICLE 31
WAREHOUSE
SECTION 31.01. Landlord hereby grants to Tenant the right, throughout
the Term, to utilize the warehouse (the "Warehouse") located on property
adjacent to the Premises, and forming a part of the parcel of land, situate,
lying and being in the City of Port St. Joe, Florida, as described on EXHIBIT
A-1 annexed hereto and made a part hereof, jointly with Landlord, for
warehouse and distribution purposes. In addition, Landlord hereby grants to
Tenant any and all rights-of-way and other access rights which Tenant may
reasonably require in order to access and utilize the Warehouse.
SECTION 31.02. Landlord shall supply all necessary electric and
utilities in connection with the use of the Warehouse and Tenant shall pay to
Landlord, within ten (10) days after demand therefor, Tenant's pro rata share
of the cost thereof. In addition, Landlord and Tenant shall be jointly
responsible for the maintenance and repair of the Warehouse; provided,
however, that neither party shall have the right to make any additions,
alterations or improvements to the Warehouse which may interfere with the use
of the Warehouse by the other party.
SECTION 31.03. In the event that Tenant shall exercise the purchase
option contained in Article 21 hereof, Landlord and Tenant shall execute,
acknowledge and deliver any and all mutual covenants, easements, plans or
agreements as shall be reasonable or appropriate to (a) grant the owner of
the Premises the right to utilize the Warehouse in accordance with the
provisions of Section 31.01; and (b) protect the value of the remainder of
the parcel of which the Premises forms a part and shall otherwise comply with
the requirements of Section 5.01(b) of the Mortgage, Security Agreement,
Fixture Filing Statement and Assignment of Rents, Leases and Leasehold
Interests of even date herewith between Landlord and NorWest Bank Minnesota,
N.A., as Trustee, covering the Premises and other property (the rights
granted to Tenant pursuant to this Article, and the mutual covenants,
easements, plans or agreements
26
<PAGE>
to be executed, acknowledged and delivered pursuant to this Section 31.03 are
collectively referred to as the "Warehouse Agreement").
IN WITNESS WHEREOF, Landlord and Tenant have executed this Lease as of the
day and year first above written.
WITNESS: Florida Coast Paper Company, L.L.C.
/s/ Shari Krouner
- ------------------------------ By: /s/ Dennis Mehiel
----------------------------
/s/ Harvey L. Friedman A Member
- ------------------------------
WITNESS: Box USA Group, Inc.
/s/ Karen Bond
- ------------------------------ By: /s/ Chris Mehiel
----------------------------
Chris Mehiel
/s/ Lurlene Arco Executive Vice President
- ------------------------------
27
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK)
On the 30th day of May, 1996, before me personally came Dennis
Mehiel to me known, who, being by me duly sworn, did depose and say that he
resides at ________________, that he is a member of Florida Coast Paper
Company, L.L.C., Inc., the limited liability company described in and which
executed the foregoing instrument and that he signed his name thereto by
order of the members of such company.
/s/ Shari K. Krouner
-----------------------------------
Notary Public
SHARI K. KROUNER
NOTARY PUBLIC, STATE OF NEW YORK
NO. 31-4953231
QUALIFIED IN NEW YORK COUNTY
COMMISSION EXPIRES JULY 10, 1997
STATE OF NEW YORK )
: ss.:
COUNTY OF WESTCHESTER)
On the 29th day of May, 1996, before me personally came Chris Mehiel, to me
known, who, being by me duly sworn, did depose and say that he resides at 40
West Elm Street, Apt. 3-C, Greenwich, Connecticut, that he is an Executive Vice
President of Box USA, Inc., the corporation described in and which executed the
foregoing instrument; that he knows the seal of said corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the board of directors of said corporation, and that he signed his name
thereto by like order.
/s/ Lurlene Arco
-----------------------------------
Notary Public
LURLENE ARCO
NOTARY PUBLIC, STATE OF NEW YORK
NO. 47___551
QUALIFIED IN WESTCHESTER COUNTY
COMMISSION EXPIRES OCTOBER 31, 1997
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------
FORM T-1
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
--------------------------
___CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT
TO SECTION 305(b) (2)
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
(Exact name of trustee as specified in its charter)
A NATIONAL BANKING ASSOCIATION 41-1592157
(Jurisdiction of incorporation or (I.R.S. Employer
organization if not a U.S. national Identification No.)
bank)
SIXTH STREET AND MARQUETTE AVENUE
Minneapolis, Minnesota 55479
(Address of principal executive offices) (Zip code)
_____________________________
FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
(Exact name of obligor as specified in its charter)
DELAWARE 59-3379704
DELAWARE 59-3379707
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
600 U.S. HIGHWAY 98
PORT ST. JOE, FLORIDA 32456
(Address of principal executive offices) (Zip code)
_____________________________
12 3/4% SERIES A AND SERIES B FIRST MORTGAGE NOTES DUE 2003
(Title of the indenture securities)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
Item 1. GENERAL INFORMATION. Furnish the following information as to the
trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
Comptroller of the Currency
Treasury Department
Washington, D.C.
Federal Deposit Insurance Corporation
Washington, D.C.
The Board of Governors of the Federal Reserve System
Washington, D.C.
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust
powers.
Item 2. AFFILIATIONS WITH OBLIGOR. If the obligor is an affiliate of the
trustee, describe each such affiliation.
None with respect to the trustee.
No responses are included for Items 3-15 of this Form T-1 because the obligor is
not in default as provided under Item 13.
Item 16. LIST OF EXHIBITS. List below all exhibits filed as a part of
this Statement of Eligibility. Norwest Bank
incorporates by reference into this Form T-1
the exhibits attached hereto.
Exhibit 1. a. A copy of Articles of Association of the
trustee now in effect. *
Exhibit 2. a. A copy of the certificate of authority of the
trustee to commence business issued June 28,
1872, by the Comptroller of the Currency to
The Northwestern National Bank of
Minneapolis.*
b. A copy of the certificate of the Comptroller
of the Currency dated January 2, 1934,
approving the consolidation of the
Northwestern National Bank of Minneapolis and
the Minnesota Loan and Trust Company of
Minneapolis.*
c. A copy of the certificate of the Acting
Comptroller of the Currency dated January 12,
1943, as to change of corporate title of
Northwestern National Bank and Trust Company
of Minneapolis to Northwestern National Bank
of Minneapolis.*
d. A copy of the certificate of the Comptroller
of the Currency dated May 1, 1983,
authorizing Norwest Bank Minneapolis,
National Association, to act as fiduciary.*
<PAGE>
Exhibit 3. A copy of the authorization of the trustee to
exercise corporate trust powers issued January 2,
1934, by the Federal Reserve Board.*
Exhibit 4. Copy of By-laws of the trustee as now in effect.*
Exhibit 5. Not applicable.
Exhibit 6. The consent of the trustee required by Section
321(b) of the Act.
Exhibit 7. A copy of the latest report of condition of the
trustee published pursuant to law or the
requirements of its supervising or examining
authority.
Exhibit 8. A copy of the certificate dated May 10, 1983 of
name change from Northwestern National Bank
Minneapolis to Norwest Bank Minneapolis, National
Association.*
Exhibit 9. A copy of the certificate dated January 11, 1988,
of name change from Norwest Bank Minneapolis,
National Association to Norwest Bank Minnesota,
National Association.*
* INCORPORATED BY REFERENCE TO THE EXHIBIT OF THE SAME NUMBER FILED WITH THE
REGISTRATION STATEMENT NUMBER 33-66086.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as amended, the
trustee, Norwest Bank Minnesota, National Association, a national banking
association organized and existing under the laws of the United States of
America, has duly caused this statement of eligibility to be signed on its
behalf by the undersigned, thereunto duly authorized, all in the City of
Minneapolis and State of Minnesota on the 10th day of July, 1996.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
/s/ Raymond S. Haverstock
---------------------------
Raymond S. Haverstock
Vice President
<PAGE>
EXHIBIT 6
July 10, 1996
Securities and Exchange Commission
Washington, D.C. 20549
Gentlemen:
In accordance with Section 321 (b) of the Trust Indenture Act of 1939, as
amended, the undersigned hereby consents that reports of examination of the
undersigned made by Federal or State authorities authorized to make such
examination may be furnished by such authorities to the Securities and Exchange
Commission upon its request therefor.
Very truly yours,
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION
Raymond S. Haverstock
Vice President
<PAGE>
Board of Governors of the Federal Reserve System
QMB Number: 7100-0036
Federal Deposit Insurance Corporation
QMB Number: 3064-0052
Office of the Comptroller of the Currency
QMB Number: 1557-0081
Expires March 31, 1999
Federal Financial Institutions Examination Counsel
Please refer to page i,
Table of Contents, for
the required disclosure
of estimated burden.
CONSOLIDATED REPORTS OF CONDITION AND INCOME FOR
A BANK WITH DOMESTIC AND FOREIGN OFFICES -- FFIEC -031
Report at the close of business March 31, 1996 (960331)
-----------
(RCRI 9999)
This report is required by law: 12 U.S.C. Section 324 (State member banks); 12
U.S.C. Section 1817 (State nonmember banks); and 12 U.S.C. Section 161 (National
banks).
This report form is to be filed by banks with branches and consolidated
subsidiaries in U.S. territories and possessions, Edge or Agreement
subsidiaries, foreign branches, consolidated foreign subsidiaries, or
International Banking Facilities.
NOTE: The Reports of Condition and Income must be signed by an authorized
officer and the Report of Condition must be attested to by not less than two
directors (trustees) for State nonmember banks and three directors for State
member and National banks.
The Reports of Condition and Income are to be prepared in accordance with
Federal regulatory authority instructions. NOTE: These instructions may in
some cases differ from generally accepted accounting principles.
I, Mark P. Wagener, Director of Bank & Service ACCOUNTING NAME AND TITLE OF
OFFICER AUTHORIZED TO SIGN REPORT of the named bank do hereby declare that
these Reports of Condition and Income (including the supporting schedules)
have been prepared in conformance with the instructions issued by the
appropriate Federal regulatory authority and are true to the best of my
knowledge and belief.
- --------------------------------------------------------------------------------
Signature of Officer Authorized to Sign Report
- --------------------------------------------------------------------------------
Date of Signature
We, the undersigned directors (trustees), attest to the correctness of this
Report of Condition (including the supporting schedules) and declare that it has
been examined by us and to the best of our knowledge and belief has been
prepared in conformance with the instructions issued by the appropriate Federal
regulatory authority and is true and correct.
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
- --------------------------------------------------------------------------------
Director (Trustee)
<PAGE>
For Banks Submitting Hard Copy Report forms:
State Member Banks: Return the original and one copy to the appropriate
Federal Reserve District Bank.
State Nonmember Banks: Return the original only in the SPECIAL RETURN ADDRESS
ENVELOPE PROVIDED. If express mail is used in lieu of the special return
address envelope, return the original only to the FDIC, c/o Quality Data
Systems, 2127 Espey Court, Suite 204, Crofton, MD 21114.
FDIC Certificate Number 0 5 2 0 8
National Banks: Return the original only in the SPECIAL RETURN ADDRESS ENVELOPE
PROVIDED. If express mail is used in lieu of the special return address
envelope, return the original only to the FDIC, c/o Quality Data Systems, 2127
Espey Court, Suite 204, Crofton, MD 21114.
Banks should affix the address label in this space.
NORWEST BANK MINNESOTA, NATIONAL ASSN.
MINNEAPOLIS
MN 55479-0016
Board of Governors of the Federal Reserve System, Federal Deposit Insurance
Corporation, Office of the Comptroller of the Currency
<PAGE>
Consolidated Reports of Condition and Income for
A Bank With Domestic and Foreign Offices
Table of Contents
Signature Page Cover
Report of Income
Schedule RI - Income Statement . . . . . . . . . . . . . . . . . . . .RI-1, 2, 3
Schedule RI-A - Changes in Equity Capital. . . . . . . . . . . . . . . . . .RI-4
Schedule RI-B - Charge-offs and Recoveries and
Changes in Allowance for Loan and
Lease Losses. . . . . . . . . . . . . . . . . . . . . . . . . . . . . RI-4, 5
Schedule RI-C - Applicable Income Taxes by
Taxing Authority. . . . . . . . . . . . . . . . . . . . . . . . . . . . .RI-5
Schedule RI-D - Income from
International Operations . . . . . . . . . . . . . . . . . . . . . . . .RI-6
Schedule RI-E - Explanations . . . . . . . . . . . . . . . . . . . . . . RI-7, 8
Disclosure of Estimated Burden
The estimated average burden associated with this information collection is 32.2
hours per respondent and is estimated to vary from 15 to 230 hours per response,
depending on individual circumstances. Burden estimates include the time for
reviewing instructions, gathering and maintaining data in the required form, and
completing the information collection, but exclude the time for compiling and
maintaining business records in the normal course of a respondent's activities.
Comments concerning the accuracy of this burden estimate and suggestions for
reducing this burden should be directed to the Office of Information and
Regulatory Affairs, Office of Management and Budget, Washington, D.C. 20503, and
to one of the following:
Secretary
Board of Governors of the Federal Reserve System
Washington, D.C. 20551
Legislative and Regulatory Analysis Division
Office of the Comptroller of the Currency
Washington, D.C. 20219
Assistant Executive Secretary
Federal Deposit Insurance Corporation
Washington, D.C. 20429
Report of Condition
Schedule RC - Balance Sheet. . . . . . . . . . . . . . . . . . . . . . . RC-1, 2
Schedule RC-A - Cash and Balances Due
From Depository Institutions. . . . . . . . . . . . . . . . . . . . . . .RC-3
Schedule RC-B - Securities . . . . . . . . . . . . . . . . . . . . . .RC-3, 4, 5
Schedule RC-C - Loans and Lease Financing
Receivables:
Part I. Loans and Leases. . . . . . . . . . . . . . . . . . . . . . . RC-6, 7
Part II. Loans to Small Businesses and
Small Farms (included in the forms
for June 30 only). . . . . . . . . . . . . . . . . . . . . . . . RC-7a, 7b
Schedule RC-D - Trading Assets and Liabilities
(to be completed only by selected
banks). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .RC-8
Schedule RC-E - Deposit Liabilities. . . . . . . . . . . . . . . . .RC-9, 10, 11
Schedule RC-F - Other Assets . . . . . . . . . . . . . . . . . . . . . . . RC-11
Schedule RC-G - Other Liabilities. . . . . . . . . . . . . . . . . . . . . RC-11
Schedule RC-H - Selected Balance Sheet Items
for Domestic Office . . . . . . . . . . . . . . . . . . . . . . . . . . RC-12
Schedule RC-I - Selected Assets and Liabilities
of IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-13
Schedule RC-K - Quarterly Averages . . . . . . . . . . . . . . . . . . . . RC-13
Schedule RC-L - Off-Balance Sheet
Items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-14, 15, 16
Schedule RC-M - Memorandum . . . . . . . . . . . . . . . . . . . . . . RC-17, 18
Schedule RC-N - Past Due and Nonaccrual
Loans, Leases, and
Other Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . RC-19, 20
Schedule RC-O - Other Data for Deposit
Insurance Assessments . . . . . . . . . . . . . . . . . . . . . . . RC-21, 22
Schedule RC-R - Regulatory Capital . . . . . . . . . . . . . . . . . . RC-23, 24
Optional Narrative Statement Concerning
the Amounts Reported in the Reports
of Condition and Income . . . . . . . . . . . . . . . . . . . . . . . . RC-25
Special Report (to be completed by all banks)
Schedule RC-J - Repricing Opportunities (sent only to and to be completed only
by savings bank)
For information or assistance, National and State nonmember banks should
contact the FDIC's Call Reports Analysis Unit. 550 17th Street, NW,
Washington, D.C. 20429, toll free on (800) 688-FDIC (3342), Monday through
Friday between 8:00 a.m. and 5:00 p.m., Eastern time. State member banks
should contact their Federal Reserve District Bank.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 3
</TABLE>
Transit Number: 91000019
Consolidated Report of Income
for the period January 1, 1996 - March 31, 1996
All Report of Income schedules are to be reported on a calendar year-to-date
basis in thousands of dollars.
<TABLE>
<CAPTION>
Schedule RI - Income Statement I480
Dollar Amounts in Thousands
<S> <C> <C> <C>
1. Interest income: RIAD
----
a. Interest and fee income on loans:
(1) In domestic offices:
(a) Loans secured by real estate 4011 79,875 1.a.1a
(b) Loans to depository institutions 4019 4,266 1.a.1b
(c) Loans to finance agricultural production
and other loans to farmers 4024 286 1.a.1c
(d) Commercial and industrial loans 4012 73,340 1.a.1d
(e) Acceptances of other banks 4026 88 1.a.1e
(f) Loans to individuals for household,
family, and other personal
expenditures:
(1) Credit cards and related plans 4054 5,750 1.a.1f1
(2) Other 4055 14,502 1.a1f2
(g) Loans to foreign governments and
official institutions 4056 0 1.a.1g
(h) Obligations (other than securities
and leases) of states and political
subdivisions in the U.S.:
(1) Taxable obligations 4503 3 1.a.1h1
(2) Tax-exempt obligations 4504 482 1.a.1h2
(i) All other loans in domestic offices 4058 282 1.a.1i
(2) In foreign offices, Edge and Agreement
subsidiaries, and IBFS 4059 2,421 1.a.2
b. Income from lease financing receivables:
(1) Taxable leases 4505 9,744 1.b.1
(2) Tax-exempt leases 4307 98 1.b.2
c. Interest income on balances due from
depoisitory instructions: (1)
(1) In domestic offices 4105 49 1.c.1
(2) In foreign offices, Edge and Agreement
subsidiaries, and IBFs 4106 29 1.c.2
d. Interest and dividend income on securities:
(1) U.S. Treasury securities and U.S. Government
agency and corporation obligations 4027 17,391 1.d.1
(2) Securities issued by states and political
subdivisions in the U.S.:
(a) Taxable securities 4506 28 1.d.2a
(b) Tax-exempt securities 4507 1,735 1.d.2b
(3) Other domestic debt securities 3657 401 1.d.3
(4) Foreign debt securities 3658 0 1.d.4
(5) Equity securities (including investments
in mutual funds) 3659 4,542 1.d.5
e. Interest income from trading assets 4069 2,107 1.e
</TABLE>
(1) Includes interest income on time certificates of deposit not held for
tradings.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 4
</TABLE>
Transit Number: 91000019
Schedule RI - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
RIAD Year-to-date
----
<S> <C> <C> <C> <C>
1. Interest income (continued)
f. Interest income on federal funds sold and
securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs 4020 64,777 1.f
g. Total interest income (sum of items 1.a through
1.f) 4107 282,196 1.g
2. Interest expense:
a. Interest on deposits:
(1) Interest on deposits in domestic offices:
(a) Transaction accounts (NOW accounts,
ATS accounts, and telephone and
preauthorized transfer accounts) 4508 2,844 2.a.1a
(b) Nontransaction accounts:
(1) Money market deposit accounts
(MMDAs) 4509 10,380 2.a.1b1
(2) Other savings deposits 4511 1,696 2.a.1b2
(3) Time certificates of deposit of
$100,000 or more 4174 2,732 2.a.1b3
(4) All other time deposits 4512 25,437 2.a.1b4
(2) Interest on deposits in foreign offices, Edge
and Agreement subsidiaries, and IBFs 4172 7,688 2.a.2
b. Expense of federal funds purchased and securities
sold under agreements to repurchase in domestic
offices of the bank and of its Edge and
Agreement subsidiaries, and in IBFs 4180 62,237 2.b
c. Interest on demand notes issued to the U.S.
Treasury, trading liabilities, and other borrowed
money 4185 36,716 2.c
d. Interest on mortgage indebtedness and obligations
under capitalized leases 4072 26 2.d
e. Interest on subordinated notes and debentures 4200 2,466 2.e
f. Total interest expense (sum of items 2.a through
2.e) 4073 152,222 2.f
3. Net interest income (item 1.g minus 2.f) 4074 129,974 3.
4. Provisions:
a. Provision for loan and lease losses 4230 4,752 4.a
b. Provision for allocated transfer risk 4243 0 4.b
5. Noninterest income:
a. Income from fiduciary activities 4070 43,257 5.a
b. Service charges on deposit accounts in domestic
offices 4080 19,037 5.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-3
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 5
</TABLE>
Transit Number: 91000019
Schedule RI - Continued
<TABLE>
<CAPTION>
RIAD Year-to-date
----
<S> <C> <C> <C> <C>
c. Trading revenue (must equal Schedule RI, sum of
Memorandum items 8.a through 8.d) A220 (20,258) 5.c
d. Other foreign transaction gains (losses) 4076 547 5.d
e. Not applicable
f. Other noninterest income:
(1) Other fee income 5407 30,637 5.f.1
(2) All other noninterest income* 5408 16,211 5.f.2
g. Total noninterest income (sum of items 5.a
through 5.f) 4079 89,431 5.g
6. a. Realized gains (losses) on held-to-maturity
securities 3521 0 6.a
b. Realized gains (losses) on available-for-sale
securities 3196 6,666 6.b
7. Noninterest expense:
a. Salaries and employee benefits 4135 76,555 7.a
b. Expenses of premises and fixed assets (net of
rental income) (excluding salaries and employee
benefits and mortgage interest) 4217 19,505 7.b
c. Other noninterest expense* 4092 75,737 7.c
d. Total noninterest expense (sum of items 7.a
through 7.c) 4093 171,797 7.d
8. Income (loss) before income taxes and extraordinary
items and other adjustments (item 3 plus or minus
items 4.a, 4.b, 5.g, 6.a, 6.b, and 7.d) 4301 49,512 8.
9. Applicable income taxes (on item 8) 4302 16,869 9.
10. Income (loss) before extraordinary items and other
adjustments (item 8 minus 9) 4300 32,643 10.
11. Extraordinary items and other adjustments:
a. Extraordinary items and other adjustments, gross
of income taxes* 4310 0 11a
b. Applicable income taxes (on item 11.a)* 4315 0 11.b
c. Extraordinary items and other adjustments, net of
income taxes (item 11.a minus 11.b) 4320 0 11.c
12. Net income (loss) (sum of items 10 and 11.c) 4340 32,643 12.
</TABLE>
- -------------------------------------
* Describe on Schedule RI-E - Explanations.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 6
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Memoranda I481
Dollars Amounts in Thousands
<S> <C> <C> <C>
RIAD Year-to-date
----
1. Interest expense incurred to carry tax-exempt securities, loans, and
leases acquired after August 7, 1986, that is not deductible for federal
income tax purposes 4513 2 M.1
2. Income from the sale and servicing of mutual funds and annuities in
domestic offices (included in Schedule RI, item 8) 8431 496 M.2
3. Not applicable
4. Not applicable Number
------
5. Number of full-time equivalent employees on payroll at end of current
period (round to nearest whole number) 4150 5,607 M.5
6. Not applicable
7. If the reporting bank has restated its balance sheet as a result
of applying push down accounting this calendar year, report the date of the MM DD YY
bank's acquisition 9106 N/A M.7
8. Trading revenue (from cash instruments and off-balance sheet derivative
instruments) (Sum of Memorandum items 8.a through 8.d must equal
Schedule RI, item 5.c): RIAD Year-to-date
----
a. Interest rate exposures 8757 (22,362) M.8.a
b. Foreign exchange exposures 8758 2,104 M.8.b
c. Equity security and index exposures 8759 0 M.8.c
d. Commodity and other exposures 8760 0 M.8.d
9. Impact on income of off-balance sheet derivatives held for purposes
other than trading:
a. Net increase (decrease) to interest income 8761 (89) M.9.a
b. Net (increase) decrease to interest expense 8762 (4,918) M.9.b
c. Other (noninterest) allocations 8763 0 M.9.c
10. Credit losses on off-balance sheet derivatives (see instructions) A251 0 M.10
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-4
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 7
</TABLE>
Transit Number: 91000019
Schedule RI-A - Changes in Equity Capital
Indicate decreases and losses in parentheses
<TABLE>
<CAPTION>
I483
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Total equity capital originally reported in the December 31, 1995, Reports of
Condition and Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3215 1,125,067 1.
2. Equity capital adjustments from amended Reports of Income, net* . . . . . . . . . . 3216 0 2.
3. Amended balance end of previous calendar year (sum of items 1 and 2). . . . . . . . 3217 1,125,067 3.
4. Net income (loss) (must equal Schedule RI, item 12) . . . . . . . . . . . . . . . . 4340 32,643 4.
5. Sale, conversion, acquisition, or retirement of capital stock, net. . . . . . . . . 4346 0 5.
6. Changes incident to business combinations, net. . . . . . . . . . . . . . . . . . . 4356 0 6.
7. LESS: Cash dividends declared on preferred stock . . . . . . . . . . . . . . . . . 4470 0 7.
8. LESS: Cash dividends declared on common stock. . . . . . . . . . . . . . . . . . . 4460 15,000 8.
9. Cumulative effect of changes in accounting principles from prior years* (see
instructions for this schedule) . . . . . . . . . . . . . . . . . . . . . . . . . . 4411 0 9.
10. Corrections of material accounting errors from prior years* (see instructions for
this schedule). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4412 0 10.
11. Change in net unrealized holding gains (losses) on available-for-sale securities. . 8433 (7,513) 11.
12. Foreign currency translation adjustments. . . . . . . . . . . . . . . . . . . . . . 4414 2 12
13. Other transactions with parent holding company* (not included in items 5, 7, or
8 above). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4415 0 13.
14. Total equity capital end of current period (sum of items 3 through 13) (must
equal Schedule RC, item 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3210 1,135,199 14.
</TABLE>
- ---------------
* Describe on Schedule RI-E - Explanations.
Schedule RI-B - Charge-offs and Recoveries and Changes in Allowance for Loan and
Lease Losses
Part I. Charge-offs and Recoveries on Loans and Leases
Part I excludes charge-offs and recoveries through the allocated transfer risk
reserve.
<TABLE>
<CAPTION>
I486
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
--------calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
---------------- ----------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate: RIAD RIAD
---- ----
a. To U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4651 380 4661 889 1.a
b. To non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4652 0 4662 0 1.b
2. Loans to depository institutions and acceptances of other banks:
a. To U.S. banks and other U.S. depository institutions. . . . . 4653 0 4663 0 2.a
b. To foreign banks. . . . . . . . . . . . . . . . . . . . . . . 4654 0 4664 0 2.b
3. Loans to finance agricultural production and other loans to
farmers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4655 0 4665 3 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4645 4,637 4617 1,291 4.a
b. To non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4646 0 4618 181 4.b
5. Loans to individuals for household, family, and other personal
expenditures:
a. Credit cards and related plans. . . . . . . . . . . . . . . . 4656 360 4666 59 5.a
b. Other (includes single payment, installment, and all student
loans) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4657 1,711 4667 587 5.b
6. Loans to foreign governments and official institutions. . . . . . 4643 344 4627 63 6.
7. All other loans . . . . . . . . . . . . . . . . . . . . . . . . . 4644 0 4628 0 7.
8. Lease financing receivables:
a. Of U.S. addressees (domicile) . . . . . . . . . . . . . . . . 4658 545 4668 229 8.a
b. Of non-U.S. addressees (domicile) . . . . . . . . . . . . . . 4659 0 4669 0 8.b
9. Total (sum of items 1 through 8). . . . . . . . . . . . . . . . . 4635 7,977 4605 3,302 9.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-6
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 8
</TABLE>
Transit Number: 91000019
Schedule RI-B - Continued
Part I. Continued
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
--------calendar year-to-date------
(Column A) (Column B)
Charge-offs Recoveries
---------------- ----------------
<S> <C> <C> <C> <C> <C>
RIAD RIAD
---- ----
1.-3. Not applicable.
4. Loans to finance commercial real estate, construction, and
land development activities (not secured by real estate
included in Schedule RI-B, part I, items 4 and 7, above . . . . 5409 0 5410 0 M.4
5. Loans secured by real estate in domestic offices (included in
Schedule RI-B, part I, item 1, above):
a. Construction and land development . . . . . . . . . . . . . 3582 0 3583 0 M.5.a
b. Secured by farmland . . . . . . . . . . . . . . . . . . . . 3584 0 3585 0 M.5.b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured by 1-4 family
residential properties and extended under lines of
credit . . . . . . . . . . . . . . . . . . . . . . . . 5411 0 5412 0 M.5.c1
(2) All other loans secured by 1-4 family residential
properties . . . . . . . . . . . . . . . . . . . . . . 5413 303 5414 98 M.5.c2
d. Secured by multifamily (5 or more) residential properties . 3588 0 3589 0 M.5.d
e. Secured by nonfarm nonresidential properties. . . . . . . . 3590 77 3591 791 M.5.e
</TABLE>
Part II. Changes in Allowance for Loan and Lease Losses
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Balance originally reported in the December 31, 1995, Reports of Condition and
Income. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3124 187,020 1.
2. Recoveries (must equal part I, item 9, column B above). . . . . . . . . . . . . . . 4605 3,302 2.
3. LESS: Charge-offs (must equal part I, item 9, column A above). . . . . . . . . . . 4635 7,977 3.
4. Provision for loan and lease losses (must equal Schedule RI, item 4.a). . . . . . . 4230 4,762 4.
5. Adjustments* (see instructions for this schedule) . . . . . . . . . . . . . . . . . 4815 ( 2) 5.
6. Balance end of current period (sum of items 1 through 5) (must equal Schedule
RC, item 4.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3123 187,105 6.
</TABLE>
- ---------------
* Describe on Schedule RI-E - Explanations.
Schedule RI-C - Applicable Income Taxes by Taxing Authority
<TABLE>
<CAPTION>
I489
Schedule RI-C is to be reported with the December Report of Income. Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4780 N/A 1.
2. State and local . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4790 N/A 2.
3. Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4795 N/A 3.
4. Total (sum of items 1 through 3) (must equal sum of Schedule RI, items 9 and
11.b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4770 N/A 4.
5. Deferred portion of item 4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4772 N/A 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 9
</TABLE>
Transit Number: 91000019
Schedule RI-D - Income from International Operations
For all banks with foreign offices, Edge or Agreement subsidiaries, or IBFs
where international operations account for more than 10 percent of total
revenues, total assets, or net income.
Part I. Estimated Income from International Operations
<TABLE>
<CAPTION>
I492
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD Year-to-date
----
1. Interest income and expense booked at foreign offices, Edge and Agreement
subsidiaries, and IBFs:
a. Interest income booked. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4837 N/A 1.a
b. Interest expense booked . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4838 N/A 1.b
c. Net interest income booked at foreign offices, Edge and Agreement
subsidiaries, and IBFs (item 1.a minus 1.b) . . . . . . . . . . . . . . . . . . 4839 N/A 1.c
2. Adjustments for booking location of international operations:
a. Net interest income attributable to international operations booked at
domestic offices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4840 N/A 2.a
b. Net interest income attributable to domestic business booked at foreign
offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4841 N/A 2.b
c. Net booking location adjustment (item 2.a minus 2.b). . . . . . . . . . . . . . 4842 N/A 2.c
3. Noninterest income and expense attributable to international operations:
a. Noninterest income attributable to international operations . . . . . . . . . . 4097 N/A 3.a
b. Provision for loan and lease losses attributable to international operations. . 4235 N/A 3.b
c. Other noninterest expense attributable to international operations. . . . . . . 4239 N/A 3.c
d. Net noninterest income (expense) attributable to international operations
(item 3.a minus 3.b and 3.c). . . . . . . . . . . . . . . . . . . . . . . . . . 4843 N/A 3.d
4. Estimated pretax income attributable to international operations before capital
allocation adjustment (sum of items 1.c, 2.c and 3.d) . . . . . . . . . . . . . . . 4844 N/A 4.
5. Adjustment to pretax income for internal allocations to international operations
to reflect the effects of equity capital on overall bank funding costs. . . . . . . 4845 N/A 5.
6. Estimated pretax income attributable to international operations after capital
allocation adjustment (sum of items 4 and 5). . . . . . . . . . . . . . . . . . . . 4846 N/A 6.
7. Income taxes attributable to income from international operations as estimated in
item 6. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4797 N/A 7.
8. Estimated net income attributable to international operations (item 6 minus 7). . . 4341 N/A 8.
</TABLE>
Memoranda
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Intercompany interest income included in item 1.a above . . . . . . . . . . . . . . 4847 N/A M.1
2. Intercompany interest expense included in item 1.b above. . . . . . . . . . . . . . 4848 N/A M.2
</TABLE>
Part II. Supplementary Details on Income from International Operations Required
by the Departments of Commerce and Treasury for Purposes of the U.S.
International Accounts and the U.S. National Income and Product Accounts
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RIAD
----
1. Interest income booked at IBFs. . . . . . . . . . . . . . . . . . . . . . . . . . . 4849 N/A 1.
2. Interest expense booked at IBFs . . . . . . . . . . . . . . . . . . . . . . . . . . 4850 N/A 2.
3. Noninterest income attributable to international operations booked at domestic
offices (excluding IBFs):
a. Gains (losses) and extraordinary items. . . . . . . . . . . . . . . . . . . . . 5491 N/A 3.a
b. Fees and other noninterest income . . . . . . . . . . . . . . . . . . . . . . . 5492 N/A 3.b
4. Provision for loan and lease losses attributable to international operations booked
at domestic offices (excluding IBFs). . . . . . . . . . . . . . . . . . . . . . . . 4852 N/A 4.
5. Other noninterest expense attributable to international operations booked at
domestic offices (excluding IBFs) . . . . . . . . . . . . . . . . . . . . . . . . . 4853 N/A 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-7
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 10
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RI-E - Explanations
Schedule RI-E is to be completed each quarter on a calendar year-to-date basis.
Detail all adjustments in Schedules RI-A and RI-B, all extraordinary items and
other adjustments in Schedule RI, and all significant items of other
noninterest income and other noninterest expense in Schedule RI. (See
instructions for details.)
I495 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. All other noninterest income (from Schedule RI, item 5.f.(2)) Report
amounts that exceed 10% of Schedule RI, item 5.f.(2): RIAD Year-to-date
----
a. Net gains on other real estate owned. . . . . . . . . . . . . . . . . 5415 N/A 1.a
b. Net gains on sales of loans . . . . . . . . . . . . . . . . . . . . . 5416 N/A 1.b
c. Net gains on sales of premises and fixed assets . . . . . . . . . . . 5417 N/A 1.c
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 5.f.(2):
TEXT RIAD
---- ----
d. 4461: Gain on Sale of Loan Servicing Rights. . . . . . . . . . . . . 4461 6,754 1.d
e. 4462: Processing Fees. . . . . . . . . . . . . . . . . . . . . . . . 4462 4,761 1.e
f. 4463: Rental Income. . . . . . . . . . . . . . . . . . . . . . . . . 4463 2,016 1.f
2. Other noninterest expense (from Schedule RI, item 7.c):
a. Amortization expense of intangible assets . . . . . . . . . . . . . . 4531 1,579 2.a
Report amounts that exceed 10% of Schedule RI, item 7.c:
b. Net losses on other real estate owned . . . . . . . . . . . . . . . . 5418 N/A 2.b
c. Net losses on sales of loans. . . . . . . . . . . . . . . . . . . . . 5419 N/A 2.c
d. Net losses on sales of premises and fixed assets. . . . . . . . . . . 5420 N/A 2.d
Itemize and describe the three largest other amounts that exceed 10% of
Schedule RI, item 7.c:
TEXT RIAD
---- ----
e. 4464: Processing fees. . . . . . . . . . . . . . . . . . . . . . . . 4464 22,195 2.e
f. 4467: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4467 N/A 2.f
g. 4468: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4468 N/A 2.g
3. Extraordinary items and other adjustments (from Schedule RI, item 11.a)
and applicable income tax effect (from Schedule RI, item 11.b) (itemize
and describe all extraordinary items and other adjustments):
TEXT RIAD
---- ----
a. (1) 4469: . . . . . . . . . . . 4469 0 3.a.1
(2) Applicable income tax effect. . . . . . .4486 0 3.a.2
b. (1) 4487: . . . . . . . . . . . 4487 0 3.b.1
(2) Applicable income tax effect. . . . . . .4488 0 3.b.2
c. (1) 4489: . . . . . . . . . . . 4489 0 3.c.1
(2) Applicable income tax effect. . . . . . .4491 0 3.c.2
4. Equity capital adjustments from amended Reports of Income (from
Schedule RI-A, item 2) (itemize and describe all adjustments):
TEXT RIAD
---- ----
a. 4492: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4492 N/A 4.a
b. 4493: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4493 N/A 4.b
5. Cumulative effect of changes in accounting principles from prior years
(from Schedule RI-A, item 9) (itemize and describe all changes in
accounting principles):
TEXT RIAD
---- ----
a. 4494: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4494 N/A 5.a
b. 4495: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4495 N/A 5.b
6. Corrections of material accounting errors from prior years (from Schedule
RI-A, item 10) (itemize and describe all corrections):
TEXT RIAD
---- ----
a. 4496: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4496 N/A 6.a
b. 4497: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4497 N/A 6.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-9
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 11
</TABLE>
Transit Number: 91000019
Schedule RI-E - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
7. Other transaction with parent holding company (from
Schedule RI-A, item 13) (itemize and describe all such
transactions):
TEXT RIAD Year-to-date
---- ----
a. 4498: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4498 N/A 7.a
b. 4499: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4499 N/A 7.b
8. Adjustments to allowance for loan and lease losses (from
Schedule RI-B, part II, item 5) (itemize and describe all
adjustments):
TEXT
----
a. 4521: Sale of loans. . . . . . . . . . . . . . . . . . . . . . . . . 4521 ( 2) 8.a
b. 4522: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4522 N/A 8.b
I498 I499
9. Other explanations (the space below is provided for the bank
to briefly describe, at its option, any other significant items
affecting the Report of Income):
No comment: X (RIAD 4769)
Other explanations (please type or print clearly):
(TEXT 4769)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-1
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 12
</TABLE>
Transit Number: 91000019
Consolidated Report of Condition for Insured Commercial and
State-Chartered Savings Banks for March 31, 1996
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, report the amount outstanding as of the last business day of the
quarter.
Schedule RC - Balance Sheet
<TABLE>
<CAPTION>
C400 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
<S> <C> <C> <C>
1. Cash and balances due from depository institutions (from Schedule RC-A): RCFD
----
a. Noninterest-bearing balances and currency and coin (1) . . . . . . . . . . . .0081 799,948 1.a
b. Interest-bearing balances (2). . . . . . . . . . . . . . . . . . . . . . . . .0071 8,680 1.b
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A) . . . . . . . . . .1754 0 2.a
b. Available-for-sale securities (from Schedule RC-B, column D) . . . . . . . . .1773 1,248,762 2.b
3. Federal funds sold and securities purchased under agreements to resell in
domestic offices of the bank and of its Edge and Agreement subsidiaries, and in
IBFs:
a. Federal funds sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .0276 4,849,904 3.a
b. Securities purchased under agreements to resell. . . . . . . . . . . . . . . .0277 166,612 3.b
4. Loans and lease financing receivables:
RIAD
a. Loans and leases, net of unearned income ----
(from Schedule RC-C). . . . . . . . . . . . . . 2122 9,047,263 4.a
b. LESS: Allowance for loan and lease losses. . . 3123 187,105 4.b
c. LESS: Allocated transfer risk reserve . . . . . 3128 0 4.c
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c) . . . . . . . . . . . . . .2125 8,860,158 4.d
5. Trading assets (from Schedule RC-D) . . . . . . . . . . . . . . . . . . . . . . . .3545 218,920 5.
6. Premises and fixed assets (including capitalized leases). . . . . . . . . . . . . .2145 109,833 6.
7. Other real estated owned (from Schedule RC-M) . . . . . . . . . . . . . . . . . . .2150 3,507 7.
8. Investments in unconsolidated subsidiaries and associated companies (from
Schedule RC-M). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2130 0 8.
9. Customers' liability to this bank on acceptances outstanding. . . . . . . . . . . .2155 26,494 9.
10. Intangible assets (from Scheudle RC-M). . . . . . . . . . . . . . . . . . . . . . .2143 12,617 10.
11. Other assets (from Schedule RC-F) . . . . . . . . . . . . . . . . . . . . . . . . .2160 241,962 11.
12. Total assets (sum of items 1 through 11). . . . . . . . . . . . . . . . . . . . . .2170 16,547,397 12.
</TABLE>
- ------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RC-2
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 13
</TABLE>
Transit Number: 91000019
Schedule RC - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
<S> <C> <C> <C>
13. Deposits: RCON
----
a. In domestic offices (sum of totals of
columns A and C from Schedule RC-E, Part I). . . . . . . . . . . . . . .2200 7,689,048 13.a
RCON
----
(1) Noninterest-bearing (1). . . . . 6631 2,511,465 13.a.1
(2) Interest-bearing. . . . . . . . . 6636 5,177,583 13.a.2
RCFN
----
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from
Schedule RC-E, part III). . . . . . . . . . . . . . . . . . . . . . . . 2200 1,153,638 13.b
RCFN
----
(1) Non-interest-bearing. . . . . . . 6631 14,651 13.b.1
(2) Interest-bearing. . . . . . . . . 6636 1,138,987 13.b.2
14. Federal funds purchased and securities sold under agreements to repurchase
in domestic offices of the bank and of its Edge and Agreement subsidiaries,
and in IBFs: RCFD
----
a. Federal funds purchased. . . . . . . . . . . . . . . . . . . . . . . . .0278 2,757,413 14.a
b. Securities sold under agreements to repurchase . . . . . . . . . . . . .0279 604,944 14.b
RCON
----
15. a. Demand notes issued to the U.S. Treasury . . . . . . . . . . . . . . . .2840 166,014 15.a
RCFD
----
b. Trading liabilities (from Schedule RC-D) . . . . . . . . . . . . . . . .3548 15,346 15.b
16. Other borrowed money:
a. With a remaining maturity of one year or less. . . . . . . . . . . . . .2332 80,846 16.a
b. With a remaining maturity of more than one year. . . . . . . . . . . . .2333 2,288,426 16.b
17. Mortgage indebtedness and obligations under capitalized leases . . . . . . .2910 1,171 17.
18. Bank's liability on acceptances executed and outstanding . . . . . . . . . .2920 26,494 18.
19. Subordinated notes and debentures. . . . . . . . . . . . . . . . . . . . . .3200 161,695 19.
20. Other liabilities (from Schedule RC-G) . . . . . . . . . . . . . . . . . . .2930 467,163 20.
21. Total liabilities (sum of items 13 through 20) . . . . . . . . . . . . . . .2948 15,412,198 21.
22. Limited-life preferred stock and related surplus . . . . . . . . . . . . . .3282 0 22.
EQUITY CAPITAL
REFD
----
23. Perpetual preferred stock and related surplus. . . . . . . . . . . . . . . .3838 0 23.
24. Common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3230 100,000 24.
25. Surplus (exclude all surplus related to preferred stock) . . . . . . . . . .3839 594,981 25.
26. a. Undivided profits and capital reserves . . . . . . . . . . . . . . . . .3632 431,558 26.a
b. Net unrealized holding gains (losses) on available-for-sale securities .8434 9,005 26.b
27. Cumulative foreign currency translation adjustments. . . . . . . . . . . . .3284 ( 345) 27.
28. Total equity capital (sum of items 23 through 27). . . . . . . . . . . . . .3210 1,135,199 28.
29. Total liabilities, limited-life preferred stock, and equity capital
(sum of items 21, 22 and 28) . . . . . . . . . . . . . . . . . . . . . . . .3300 16,547,397 29.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 14
Transit Number: 91000019
</TABLE>
Memorandum
To be reported only with the March Report of Condition.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
1. Indicate in the box at the right the number of the statement below that
best describes the most comprehensive level of auditing work performed RDFD Number
for the bank by independent external auditors as of any date durng RDFD 2 M.1
1995. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ----
</TABLE>
1 = Independent audit of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm which
submits a report on the bank
2 = Independent audit of the bank's parent holding company conducted in
accordance with generally accepted auditing standards by a certified
public accounting firm which submits a report on the consolidated holding
company (but not on the bank separately)
3 = Directors' examination of the bank conducted in accordance with generally
accepted auditing standards by a certified public accounting firm (may be
required by state chartering authority)
4 = Directors' examination of the bank performed by other external auditors
(may be required by state chartering authority)
5 = Review of the bank's financial statements by external auditors
6 = Compilation of the bank's financial statements by external auditors
7 = Other audit procedures (excluding tax preparation work)
8 = No external audit work
- -------------------
(1) Includes total demand deposits and noninterest-bearing time and savings
deposits.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 15
Transit Number: 91000019
</TABLE>
Schedule RC-A - Cash and Balances Due from Depository Institutions
Exclude assets held for trading
<TABLE>
<CAPTION>
C405 -
Dollar Amounts in Thousands
- --------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Consolidated Bank Domestic Offices
---------------------------- ---------------------------
<S> <C> <C> <C> <C> <C>
RCFD RCON
---- ----
1. Cash items in process of collection, unposted
debits, and currency and coin. . . . . . . . . . . . 0022 661,057 1.
a. Cash items in process of collection and unposted
debits. . . . . . . . . . . . . . . . . . . . . 0020 569,258 1.a
b. Currency and coin . . . . . . . . . . . . . . . 0080 91,778 1.b
2. Balances due from depository institutions in the U.S. 0082 81,946 2.
a. U.S. branches and agencies of foreign banks
(including their IBFs). . . . . . . . . . . . . 0083 0 2.a
b. Other commercial banks in the U.S. and other
depository institutions in the U.S.
(including their IBFs). . . . . . . . . . . . . 0085 90,620 2.b
3. Balances due from banks in foreign countries and
foreign central banks. . . . . . . . . . . . . . . . 0070 7,549 3.
a. Foreign branches of other U.S. banks. . . . . . 0073 7,549 3.a
b. Other banks in foreign countries and foreign
central banks . . . . . . . . . . . . . . . . . 0074 2,714 3.b
4. Balances due from Federal Reserve Banks. . . . . . . 0090 46,688 0090 46,451 4.
5. Total (sum of items 1 through 4) (total of column A
must equal Schedule RC, sum of items 1.a and 1.b). . 0010 808,628 0010 796,982 5.
</TABLE>
Memorandum
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCON
----
1. Noninterest-bearing balances due from commercial banks in the U.S.
(included in item 2, column B above) . . . . . . . . . . . . . . . . . . . . 0050 . . . . . 74,367 M.1
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 16
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-B - Securities
Exclude assets held for trading.
C410 -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
-------------------- ---------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
RCFD RCFD RCFD RCFD
---- ---- ---- ----
1. U.S. Treasury
securities. . . . . . . 0211 0 0213 0 1286 285,450 1287 286,976 1.
2. U.S. Government agency
and corporation
obligations (exclude
mortgage-backed
securities): 0
a. Issued by U.S. RCFD RCFD RCFD RCFD
Government ---- ---- ---- ----
agencies(2) 1289 0 1290 0 1291 0 1293 0 2.a
b. Issued by U.S.
Government-
sponsored
agencies(3) 1294 0 1295 0 1297 11,725 1298 11,678 2.b
</TABLE>
- ----------------------------
(1) Includes equity securities without readily determinable fair values at
historical cost in item 6.c, column D.
(2) Includes Small Business Administration "Guaranteed Loan Pool
Certificates," U.S. Maritime Administration obligations, and Export-Import
Bank participation certificates.
(3) Includes obligations (other than mortgage-backed securities) issued by the
Farm Credit System, the Federal Home Loan Bank System, the Federal Home
Loan Mortgage Corporation, the Federal National Mortgage Association, the
Financing Corporation, Resolution Funding Corporation, the Student Loan
Marketing Association, and the Tennessee Valley Authority.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 17
</TABLE>
Transit Number: 91000019
Schedule RC-B - Continued
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
-------------------- ---------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
3. Securities issued by states
and political subdivisions
in the U.S.:
RCFD RCFD RCFD RCFD
---- ---- ---- ----
a. General obligations. .1676 0 1677 0 1678 21,741 1679 22,097 3.a
b. Revenue obligations. .1681 0 1686 0 1690 78,332 1691 81,852 3.b
c. Industrial
development and
similar obligations. .1694 0 1695 0 1696 4,500 1697 5,170 3.c
4. Mortgage-backed
securities (MBS):
a. Pass-through
securities:
(1) Guaranteed by
GNMA . . . . . .1698 0 1699 0 1701 82,072 1702 83,608 4a1
(2) Issued by
FNMA and
FHLMC. . . . . .1703 0 1705 0 1706 430,355 1707 437,175 4a2
(3) Other pass-
through
securities . . .1709 0 1710 0 1711 0 1713 0 4a3
b. Other mortgage-
backed securities
(include CMOs,
REMICs, and
stripped MBS):
(1) Issued or
guaranteed by RCFD RCFD RCFD RCFD
FMNA, FHLMC, ---- ---- ---- ----
or GNMA 1714 0 1715 0 1716 26,261 1717 26,300 4b1
(2) Collateralized
by MBS issued
or guaranteed
by FMNA, RCFD RCFD RCFD RCFD
FHLMC, or ---- ---- ---- ----
GNMA 1718 0 1719 0 1731 41 1732 41 4b2
(3) All other
mortgage-
backed
securities . . .1733 0 1734 0 1735 108 1736 108 4b3
5. Other debt securities:
RCFD RCFD RCFD RCFD
a. Other domestic debt ---- ---- ---- ----
securities 1737 0 1738 0 1739 2,149 1761 2,207 5.A
b. Foreign debt
securities . . . . . .1742 0 1743 0 1744 0 1746 0 5.b
</TABLE>
- --------------------------
(1) Includes equity services without readily determinable fair values at
historical cost in item 6.c, column D.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 18
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------------------------------
Held-to-maturity Available-for-sale
(Column A) (Column B) (Column C) (Column D)
Amortized Cost Fair Value Amortized Cost Fair Value (1)
------------------- ----------------- ------------------- ----------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
6. Equity Securities:
RCFD RCFD RCFD RCFD
a. Investments in ---- ---- ---- ----
mutual funds . . . . 1747 143 1748 143 6.a
b. Other equity
securities with
readily determinable
fair values. . . . . 1749 0 1751 0 6.b
c. All other equity
securities (1) . . . 1752 291,407 1753 291,407 6.c
7. Total (sum of items 1
through 6) (total of
column A must equal
Schedule RC, item 2.a)
(total of column D must
equal Schedule RC, item
2.b). . . . . . . . . . . 1754 0 1771 0 1772 1,234,284 1773 1,248,762 7.
</TABLE>
- ---------------------------
(1) Includes equity services without readily determinable fair values at
historical cost in item 6.c, column D.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 19
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-B - Continued
Memoranda C412 -
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1. Pledged securities (2). . . . . . . . . . . . . . . . . . . . . . . .0416 120,386 M.1.
2. Maturity and repricing data for debt securities (2,3,4)
(excluding those in nonaccrual status):
a. Fixed rate debt securities with a remaining maturity of:
(1) Three months or less. . . . . . . . . . . . . . . . . . . .0343 173,710 M.2.a1
(2) Over three months through 12 months . . . . . . . . . . . .0344 123,524 M.2.a2
(3) Over one year through five years. . . . . . . . . . . . . .0345 15,063 M.2.a3
(4) Over five years . . . . . . . . . . . . . . . . . . . . . .0346 457,854 M.2.a4
(5) Total fixed rate debt securities (sum of Memorandum
items 2.a(1) through 2.a(4)). . . . . . . . . . . . . . . .0347 770,151 M.2.a5
b. Floating rate debt securities with a repricing frequency of:
(1) Quarterly or more frequently. . . . . . . . . . . . . . . .4544 106,107 M.2.b1
(2) Annually or more frequently, but less frequently than
quarterly . . . . . . . . . . . . . . . . . . . . . . . . .4545 80,954 M.2.b2
(3) Every five years or more frequently, but less
frequently than annual. . . . . . . . . . . . . . . . . . .4551 0 M.2.b3
(4) Less frequently than every five years . . . . . . . . . . .4552 0 M.2.b4
(5) Total floating rate debt securities (sum of
Memorandum items 2.b(1) through 2.b(4)) . . . . . . . . . .4553 187,061 M.2.b5
c. Total debt securities (sum of Memorandum items 2.a(5)
and 2.b(5)) (must equal total debt securities from
Schedule RC-B, sum or items 1 through 5, columns A
and D, minus nonaccural debt securities included in
Schedule RC-N, item 9, column C) . . . . . . . . . . . . . . . .0393 957,212 M.2.c
3. Not applicable. . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Held-to-maturity debt securities restructured and in
compliance with modified terms (included in Schedule RC-B,
items 3 through 5, column A, above). . . . . . . . . . . . . . . . .5365 0 M.4
5. Not applicable. . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Floating rate debt securities with a remaining maturity of one
year or less (2,4) (included in Memorandum items 2.b.(1) through
2.b.(4) above). . . . . . . . . . . . . . . . . . . . . . . . . . . .5519 901 M.6
7. Amortized cost of held-to-maturity securities sold or
transferred to available-for-sale or trading securities during
the calendar year-to-date (report the amortized cost at date
of sale or transfer). . . . . . . . . . . . . . . . . . . . . . . . .1778 0 M.7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 20
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8. High -risk mortgage securities (included in the held-to-
maturity and available-for-sale accounts in Schedule RC-B,
item 4.b):
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . .8780 115 M.8.a
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .8781 109 M.8.b
9. Structured notes (included in the held-to-maturity and
available-for-sale accounts in Schedule RC-B, items 2, 3 and
5):
a. Amortized cost . . . . . . . . . . . . . . . . . . . . . . . . .8782 3,502 M.9.a
b. Fair value . . . . . . . . . . . . . . . . . . . . . . . . . . .8783 3,456 M.9.b
</TABLE>
- ----------------------
(2) Includes held-to-maturity securities at amortized cost and
available-for-sale securities at fair value.
(3) Exclude equity securities, e.g., investments in mutual funds, Federal
Reserve stock, common stock, and preferred stock.
(4) Memorandum items 2 and 6 are not applicable to savings banks that
must complete supplemental Schedule RC-J.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 21
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION>
Schedule RC-C - Loans and Lease Financing Receivables
Part I. Loans and Leases
Do not deduct the allowance for loan and lease from amounts reported in this
schedule. Report total loans and leases, net of unearned income. Exclude
assets held for trading.
C415-
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
RCFD Consolidated Bank RCON Domestic Offices
---- ----------------- ---- ----------------
<S> <C> <C> <C> <C> <C>
1. Loans secured by real estate. . . . . . . . . . .1410 3,520,733 1.
a. Construction and land development. . . . . . 1415 34,868 1.a
b. Secured by farmland (including farm
residential and other improvements . . . . . 1420 1,640 1.b
c. Secured by 1-4 family residential
properties:
(1) Revolving, open-end loans secured
by 1-4 family residential
properties and extended under lines
of credit . . . . . . . . . . . . . . . 1797 103,321 1.c1
(2) All other loans secured by 1-4
family residential properties:
(a) Secured by first liens . . . . . . 5367 2,637,682 1.c2a
(b) Secured by junior liens. . . . . . 5368 301,422 1.2cb
d. Secured by multifamily (5 or more)
residential properties . . . . . . . . . . . 1460 57,978 1.d
e. Secured by nonfarm nonresidential
properties . . . . . . . . . . . . . . . . . 1480 383,822 1.e
2. Loans to depository institutions:
a. To commercial banks in the U.S.. . . . . . . 1505 35,153 2.a
(1) To U.S. branches and agencies of
foreign banks . . . . . . . . . . . . .1506 0 2.a1
(2) To other commercial banks
in the U.S. . . . . . . . . . . . . . .1507 40,935 2.a2
b. To other depository institutions
in the U.S.. . . . . . . . . . . . . . . . .1517 0 1517 0 2.b
c. To banks in foreign countries. . . . . . . . 1510 466 2.c
(1) To foreign branches of other U.S.
banks . . . . . . . . . . . . . . . . .1513 265 2.c1
(2) To other banks in foreign
countries . . . . . . . . . . . . . . .1516 73,193 2.c2
3. Loans to finance agricultural production
and other loans to farmers. . . . . . . . . . . .1590 19,942 1580 19,942 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile). . . . . . . .1763 34,117,994 1763 3,081,820 4.a
b. To non-U.S. addressees (domicile) . . . . .1764 45.174 1764 1,259 4.6
5. Acceptances of other banks:
a. Of U.S. banks. . . . . . . . . . . . . . . .1756 0 1756 0 5.a
b. Of foreign banks . . . . . . . . . . . . . .1757 2,351 1757 2,351 5.b
6. Loans to individuals for household,
family, and other personal expenditures
(i.e., consumer loans) (includes purchased
paper) . . . . . . . . . . . . . . . . . . . 1975 1,001,690 6.
a. Credit cards and related plans
(includes check credit and other
revolving credit plans). . . . . . . . . . .2008 194,157 6.a
b. Other (includes single payment,
installment, and all student loans). . . . .2011 807,803 6.b
7. Loans to foreign governments and
official institutions (including foreign
central banks). . . . . . . . . . . . . . . . . .2081 5,000 2081 5,000 7.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST-BK: 27-4095 FFIEC 031
Sixth Street and Marquette Avenue Page RI-8
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 22
</TABLE>
Transit Number: 91000019
<TABLE>
<CAPTION> (Column A) (Column B)
RCFD Consolidated Bank RCON Domestic Offices
---- ----------------- ---- ----------------
<S> <C> <C> <C> <C> <C>
8. Obligations (other than securities and
leases) of states and political subdivisions
in the U.S. (includes nonrated industrial
development obligations). . . . . . . . . . . . .2107 22,612 2107 22,612 8.
9. Other loans . . . . . . . . . . . . . . . . . . .1563 549,366 9.
a. Loans for purchasing or carrying
securities (secured and unsecured) . . . . . 1545 32,160 9.a
b. All other loans (exclude consumer
loans) . . . . . . . . . . . . . . . . . . . 1565 517,205 9.b
10. Lease financing receivables (net of
unearned income). . . . . . . . . . . . . . . . . 2165 650,824 10.
a. Of U.S. addresses (domicile) . . . . . . . .2182 650,824 10.a
b. Of non-U.S. addressees . . . . . . . . . . .2173 0 10.b
11. LESS: Any unearned income on loans
reflected in items 1-9 above. . . . . . . . . . .2123 3,085 2123 2,062 11.
12. Total loans and leases, net of unearned
income (sum of items 1 through 10 minus
item 11) (total of column A must equal
Schedule RC, item 4.a). . . . . . . . . . . . . .2122 9,047,263 2122 8,889,153 12.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 23
</TABLE>
SCHEDULE RC-I - SELECTED ASSETS AND LIABILITIES OF IBFs
TO BE COMPLETED ONLY BY BANKS WITH IBFs AND OTHER "FOREIGN" OFFICES.
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFN
----
1. Total IBF assets of the consolidated bank (component of Schedule RC,
item 12)__________________________________________________________ 2133 N/A 1.
2. Total IBF loans and lease financing receivables (component of
Schedule RC-C, part I, item 12, column A)__________________________ 2076 N/A 2.
3. IBF commercial and industrial loans (component of Schedule RC-C,
part I, item 4, column A)__________________________________________ 2077 N/A 3.
4. Total IBF liabilities (component of Schedule RC, item 21)__________ 2898 N/A 4.
5. IBF deposit liabilities due to banks, including other IBFs
(component of Schedule RC-E, part II, items 2 and 3________________ 2379 N/A 5.
6. Other IBF deposit liabilities (component of Schedule RC-E, part II,
items 1, 4, 5, and 6)_______________________________________________ 2381 N/A 6.
</TABLE>
SCHEDULE RC-K - QUARTERLY AVERAGES (1)
<TABLE>
<CAPTION>
C445
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ASSETS RCFD
----
1. Interest-bearing balances due from depository institutions ________ 3381 5,998 1.
2. U.S Treasury securities and U.S. Government agency and corporation
obligations(2)_____________________________________________________ 3382 1,001,802 2.
3. Securities issued by states and political subdivisions in the
U.S.(2)____________________________________________________________ 3383 103,328 3.
4. a. Other debt securities (2)______________________________________ 3647 17,456 4.a
b. Equity securities (3) (includes investments in mutual funds and
Federal Reserve stock)_____________________________________________ 3648 272,439 4.b
5. Federal funds sold and securities purchased under agreements to
resell in domestic offices of the bank and of its Edge and Agreement
subsidiaries, and in IBFs__________________________________________ 3365 4,677,186 5.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 24
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
6. Loans: RCON
a. Loans in domestic offices: ----
(1) Total loans_______________________________________________ 3360 9,994,223 6.a.1
(2) Loans secured by real estate______________________________ 3385 4,398,702 6.a.2
(3) Loans to finance agricultural production and other loans
to farmers________________________________________________ 3386 18,110 6.a.3
(4) Commercial and industrial loans___________________________ 3387 3,607,561 6.a.4
(5) Loans to individuals for household, family, and other
personal expenditures_____________________________________ 3388 1,024,361 6.a.5
RCFN
b. Total loans in foreign offices, Edge and Agreement subsidiaries, ----
IBFs___________________________________________________________ 3360 130,108 6.b
RCFD
----
7. Trading assets_____________________________________________________ 3401 134,219 7.
8. Lease financing receivables (net of unearned income)_______________ 3484 651,401 8.
9. Total assets(4)____________________________________________________ 3368 17,547,871 9.
LIABILITIES
10. Interest-bearing transaction accounts in domestic offices (NOW RCON
accounts, ATS accounts, and telephone and preauthorized transfer ----
accounts) (exclude demand deposits)_______________________________ 3485 1,004,412 10.
11. Nontransaction accounts in domestic offices:
a. Money market deposit accounts (MMDAs)_________________________ 3486 1,697,619 11.a
b. Other savings deposits________________________________________ 3487 418,939 11.b
c. Time certificates of deposit of $100,000 or more______________ 3345 172,740 11.c
d. All other time deposits_______________________________________ 3469 1,917,949 11.d
RCFN
12. Interest-bearing deposits in foreign offices, Edge and Agreement ----
subsidiaries, and IBFs____________________________________________ 3404 619,999 12.
13. Federal funds purchased and securities sold under agreements to RCFD
repurchase in domestic offices of the bank and of its Edge and ----
Agreement subsidiaries, and in IBFs_______________________________ 3353 4,694,049 13.
14. Other borrowed money______________________________________________ 3355 2,498,775 14.
</TABLE>
_____________________________
(1) For all items, banks have the option of reporting either (1) an average of
daily figures for the quarter, or (2) an average of weekly figures (i.e.,
the Wednesday of each week of the quarter).
(2) Quarterly averages for all debt securities should be based on amortized
cost.
(3) Quarterly averages for all equity securities should be based on historical
cost.
(4) The quarterly average for total assets should reflect all debt securities
(not held for trading) at amortized cost, equity securities with readily
determinable fair values at the lower of cost or fair value, and equity
securities without readily determined fair values at historical cost.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 25
</TABLE>
SCHEDULE RC-L - OFF-BALANCE SHEET ITEMS
Please read carefully the instructions for the preparation of Schedule RC-L.
Some of the amounts reported in Schedule RC-L are regarded as volume
indicators and not necessarily as measures of risk.
<TABLE>
<CAPTION>
C460
Dollar Amount in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
1. Unused commitments:
a. Revolving, open-end lines secured by 1-4 family residential RCFD
properties, e.g., ----
home equity lines_______________________________________________ 3814 158,989 1.a
b. Credit card lines_______________________________________________ 3815 0 1.b
c. Commercial real estate, construction, and land development:
(1) Commitments to fund loans secured by real estate___________ 3816 43,972 1.c.1
(2) Commitments to fund loans not secured by real estate_______ 6550 38 1.c.2
d. Securities underwriting_________________________________________ 3817 0 1.d
e. Other unused commitments________________________________________ 3818 3,576,381 1.e
2. Financial standby letters of credit and foreign office guarantees___ 3819 723,895 2.
a. Amount of financial standby letters of credit conveyed to RCDF
others__________________________________________________________ ----
3820 286,936 2.a
3. Performance standby letters of credit and foreign office
guarantees__________________________________________________________ 3821 67,278 3.
RCFD
a. Amount of performance standby letters of credit conveyed to ----
others__________________________________________________________ 3822 18,113 3.a
4. Commercial and similar letters of credit____________________________ 3411 404,317 4.
5. Participations in acceptances (as described in the instructions)
conveyed to others by the reporting bank____________________________ 3428 0 5.
6. Participations in acceptances (as described in the instructions)
acquired by the reporting (nonaccepting) bank_______________________ 3429 0 6.
7. Securities borrowed_________________________________________________ 3432 3,027,443 7.
8. Securities lent (including customers' securities lent when the
customer is indemnified against loss by the reporting bank)_________ 3433 207,795 8.
9. Loans transferred (i.e., sold or swapped) with recourse that
have been treated as sold for Call Report purposes:
a. FNMA and FHLMC residential mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred
as of the report date______________________________________ 3650 25,817 9.a.1
(2) Amount of recourse exposure on these mortgages as
of the report date_________________________________________ 3651 25,817 9.a.2
b. Private (nongovernment-issued or -guaranteed) residential
mortgage loan pools:
(1) Outstanding principal balance of mortgages
transferred as of the report date__________________________ 3652 0 9.b.1
(2) Amount of recourse exposure on these mortgages as of
the report date____________________________________________ 3653 0 9.b.2
c. Farmer Mac agricultural mortgage loan pools:
(1) Outstanding principal balance of mortgages transferred as
of the report date_________________________________________ 3654 0 9.c.1
(2) Amount of recourse exposure on these mortgages as of the
report date________________________________________________ 3655 0 9.c.2
d. Small business obligations transferred with recourse
under Section 208 of the Riegle Community Development
and Regulatory Improvement Act of 1994:
(1) Outstanding principal balance of small business
obligations transferred as of the report date______________ A249 0 9.d.1
(2) Amount of retained recourse on these obligations as of
the report date____________________________________________ A250 0 9.d.2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 26
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
10. When-issued securities:
a. Gross commitments to purchase__________________________________ 3434 0 10.a
b. Gross commitments to sell______________________________________ 3435 0 10.b
11. Spot foreign exchange contracts____________________________________ 8765 320,819 11.
12. All other off-balance sheet liabilities (exclude off-balance sheet
derivatives) (itemize and describe each component of this item over
25% of Schedule RC, item 28, "Total equity capital")________________ 3430 12.
TEXT RCFD
---- ----
a. 3555:___________________________________________________________ 3555 N/A 12.a
b. 3556:___________________________________________________________ 3556 N/A 12.b
c. 3557:___________________________________________________________ 3557 N/A 12.c
d. 3558:___________________________________________________________ 3558 N/A 12.d
13. All other off-balance sheet assets (exclude off-balance sheet
derivatives) cls (itemize and describe each component of this
item over 25% of Schedule RC, item 28, "Total equity capital")_____ 5591 0 13.
TEXT RCON
---- ----
a. 5592:__________________________________________________________ 5592 N/A 13.a
b. 5593:__________________________________________________________ 5593 N/A 13.b
c. 5594:__________________________________________________________ 5594 N/A 13.c
d. 5595:__________________________________________________________ 5595 N/A 13.d
</TABLE>
<TABLE>
<CAPTION>
C461
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-Balance Sheet
Derivatives Interest Rate Foreign Equity Commodity
Position Indicators Contracts Exchange Derivative and Other
Contracts Contracts Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
14. Gross amounts (e.g., notional amounts) (for
each column, sum of items 14.a through 14.e
must equal sum of items 15, 16.a, and 16.b):
a. Futures contracts__________________________ 249,100 1,000 0 0 14.a
RCFD 8693 RCFD 8694 RCFD 8695 RCFD 8696
b. Forward contracts___________________________ 0 358,121 0 0 14.b
RCFD 8697 RCFD 8698 RCFD 8699 RCFD 8700
c. Exchange-traded option contracts:
(1) Written options_________________________ 0 0 0 0 14.c.1
RCFD 8701 RCFD 8702 RCFD 8703 RCFD 8704
(2) Purchased options_______________________ 0 0 0 0 14.c.2
RCFD 8705 RCFD 8706 RCFD 8707 RCFD 8708
d. Over-the counter option contracts:
(1) Written options_________________________ 1,017,628 50,131 0 0 14.d.1
RCFD 8709 RCFD 8710 RCFD 8711 RCFD 8712
(2) Purchased options_______________________ 598,342 25,617 0 0 14.d.2
RCFD 8713 RCFD 8714 RCFD 8715 RCFD 8716
e. Swaps____________________________________ 4,323,376 55,108 0 0 14.e
RCFD 3450 RCFD 3826 RCFD 8719 RCFD 8720
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 27
</TABLE>
<TABLE>
<CAPTION>
C461
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C) (Column D)
Off-Balance Sheet
Derivatives Interest Rate Foreign Equity Commodity
Position Indicators Contracts Exchange Derivative and Other
Contracts Contracts Contracts
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
15. Total gross notional amount of derivative
contracts held for trading_____________________ 3,315,446 485,758 0 0 15.
RCFD A126 RCFD A127 RCFD 8723 RCFD 8724
16. Total gross notional amount of derivative con-
tracts held for purposes other than trading:
a. Contracts marked to market_________________ 0 4,219 0 0 16.a
RCFD 8725 RCFD 8726 RCFD 8727 RCFD 8728
b. Contracts not marked to market_____________ 2,918,000 0 0 0 16.b
RCFD 8729 RCFD 8730 RCFD 8731 RCFD 8732
17. Gross fair values of derivative contracts:
a. Contracts held for trading: RCFD RCFD RCFD RCFD
---- ---- ---- ----
(1) Gross positive fair value_____________ 8733 7,124 8734 3,826 8735 8736 17.a.1
0 0
(2) Gross negative fair value_____________ 8737 6,287 8738 4,312 8739 8740 17.a.2
0 0
b. Contracts held for purposes other than
trading that are marked to market:
(1) Gross positive fair value_____________ 8741 0 8742 0 8743 0 8744 0 17.b.1
(2) Gross negative fair value_____________ 8745 0 8746 0 8747 0 8748 0 17.b.2
c. Contracts held for purposes other than
trading that are not marked to market:
(1) Gross positive fair value_____________ 8749 11,495 8750 0 8751 0 8752 0 17.c.1
(2) Gross negative fair value_____________ 8753 8754 8755 8756 17.c.2
34,370 0 0 0
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 28
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA
Dollar Amount
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
RCFD
----
1.-2. Not applicable___________________________________________________________
3. Unused commitments with an original maturity exceeding one year that are
reported in Schedule RC-L, items 1.a through 1.e, above (report only the
unused portions of commitments that are fee paid or otherwise legally
binding)_________________________________________________________________ 3833 3,336,356 M.3
RCFD
a. Participations in commitments with an original maturity exceeding one ----
year conveyed to others______________________________________________ 3834 58,699 M.3a
4. To be completed only by banks with $1 billion or more in total assets:
Standby letters of credit and foreign office guarantees (both financial
and performance) issued to normal U.S. addressed (domicile) included in
Schedule RC-L, items 2 and 3, above______________________________________ 3377 150 M.4
5. Installment loans to individuals for household, family, and other
personal expenditures that have been securitized and sold without
recourse (with servicing retained), amounts outstanding by type of loan:
a. Loans to purchase private passenger automobiles (to be completed
for the September report only)_______________________________________ 2741 N/A M.5.a
b. Credit cards and related plans (TO BE COMPLETED QUARTERLY)___________ 2742 0 M.5.b
c. All other consumer installment credit (including mobile home loans)
(to be completed for the September report only)______________________ 2743 N/A M.5.c
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 29
</TABLE>
<TABLE>
<CAPTION>
SCHEDULE RC-M - MEMORANDUM
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Extensions of credit by the reporting bank to its executive officers, directors,
principal shareholders and their related interests as of the report date: RCFD
a. Aggregate amount of all extensions of credit to all executive officers, ----
directors, principal shareholders, and their related interests_________________ 6164 35,324 1.a
b. Number of executive officers, directors, principal shareholders to whom
the amount of all extensions of credit by the reporting bank (including
extensions of credit to related interests) equals or exceeds the lesser of a RCFD Number
$500,000 or 5 percent of total capital as defined for this purpose in ---- ------
agency regulations_____________________________________________________________ 6165 6 1.b
2. Federal funds sold and securities purchased under agreements to resell with U.S.
branches and agencies of foreign banks (1) (included in Schedule RC, items 3.a and
3.b)_______________________________________________________________________________ 3405 0 2.
3. Not applicable.
4. Outstanding principal balance of 1-4 family residential mortgage loans serviced
for others (include both retained servicing and purchased servicing):
a. Mortgage serviced under a GNMA contract________________________________________ 5500 0 4.a
b. Mortgages serviced under FHLMC contract:
(1) Serviced with recourse to service_________________________________________ 5501 0 4.b.1
(2) Serviced without recourse to service______________________________________ 5502 0 4.b.2
c. Mortgages serviced under a FNMA contract:
(1) Serviced under a regular option contract__________________________________ 5503 0 4.c.1
(2) Serviced under a special option contract__________________________________ 5504 0 4.c.2
d. Mortgages serviced under other servicing contracts_____________________________ 5505 0 4.d
5. To be completed only by banks with $1 billion or more in total assets:
Customers' liability to this bank on acceptance outstanding (sum of items 5.a and
5.b must equal Schedule RC, item 9):
a. U.S. addresses (domicile)______________________________________________________ 2103 19,935 N.5.a
b. Non-U.S. addresses (domicile)__________________________________________________ 2104 6,559 N.5.b
6. Intangible assets:
a. Mortgage servicing rights______________________________________________________ 3164 0 6.a
b. Other identifiable intangible assets:
(1) Purchased credit card relationships_______________________________________ 5506 0 6.b.1
(2) All other identifiable intangible assets__________________________________ 5507 491 6.b.2
c. Goodwill_______________________________________________________________________ 3163 12,126 6.c
d. Total (sum of items 6.a through 6.c) (must equal Schedule RC, item 10)_________ 2143 12,617 6.d
e. Amount of intangible assets (included in item 6.b.(2) above) that have
been grandfathered or are otherwise qualifying for regulatory capital
purposes_______________________________________________________________________ 6442 0 6.e
7. Mandatory convertible debt, net of common or perpetual preferred stock dedicated
to redeem the debt_________________________________________________________________ 3295 0 7.
</TABLE>
_________________
(1) Do not report federal funds sold and securities purchased under agreements
to resell with other commercial banks in the U.S. in this item.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 30
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
8. a. Other real estate owned: RCFD
----
(1) Direct and indirect investments in real estate ventures___________________ 5372 0 8.a.1
RCON
(2) All other real estate owned: ----
(a) Construction and land development in domestic offices________________ 5508 0 8.a.2a
(b) Farmland in domestic offices_________________________________________ 5509 0 8.a.2b
(c) 1-4 family residential properties in domestic offices________________ 5510 3,327 8.a.2c
(d) Multifamily (5 or more) residential properties in domestic
offices______________________________________________________________ 5511 0 8.a.2d
(e) Nonfarm nonresidential properties in domestic offices________________ 5512 180 8.a.2e
RCFN
----
(f) In foreign offices___________________________________________________ 5513 0 8.a.2f
RCFD
(3) Total (sum of items 8.a.(1) and 8.a.(2)) (must equal Schedule RC, ----
item 7)___________________________________________________________________ 2150 3507 8.a.3
b. Investments in unconsolidated subsidiaries and associated companies:
(1) Direct and indirect investments in real estate ventures_______________ 5374 0 8.b.1
(2) All other investments in unconsolidated subsidiaries and associated
companies_____________________________________________________________ 5375 0 8.b.2
(3) Total (sum of items 8.b.(1) and 8.b.(2)) (must equal Schedule RC,
item 8)_______________________________________________________________ 2130 0 8.b.3
c. Total assets of unconsolidated subsidiaries and associate companies________ 5376 0 8.c
9. Noncumulative perpetual preferred stock and related surplus included in Schedule
RC, item 23, "Perpetual preferred stock and related surplus")______________________ 3778 0 9/
10. Mutual fund and annuity sales in domestic offices during the quarter (include
proprietary, private label, and third party actual funds):
RCON
----
a. Money market funds_____________________________________________________________ 6441 3,324,154 10.a
b. Equity securities funds________________________________________________________ 8427 0 10.b
c. Debt securities funds__________________________________________________________ 8428 0 10.c
d. Other mutual funds_____________________________________________________________ 8429 31,178 10.d
e. Annuities______________________________________________________________________ 8430 12,612 10.e
f. Sales or proprietary mutual funds and annuities (included in items 10.a
through 10.e above)____________________________________________________________ 8784 2,933,010 10.f
</TABLE>
<TABLE>
<CAPTION>
MEMORANDA
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Interbank holding of capital instruments (to be completed for the December report
only):
RCFD
----
a. Reciprocal holdings of banking organizations' capital instruments______________ 3836 N/A M.1.a
b. Nonreciprocal holdings of banking organizations' capital instruments___________ 3837 N/A M.1.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4095 FFIEC 0301
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 91000019 31
SCHEDULE RC-N - PAST DUE AND NONACCRUAL LOANS, LEASES, AND OTHER ASSETS
The FFIEC regards the information reported in all of Memorandum item 1, in items 1 through 10, column A, and in Memorandum items 2
through 4, column A, as confidential.
</TABLE>
<TABLE>
<CAPTION>
C470
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B) (Column C)
Past due 30 through
89 days and still Past due 90 days or
accruing more and still accruing Nonaccrual
------------------- ----------------------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
RCFD RCFD RCFD
1. Loans secured by real estate: ---- ---- ----
a. To U.S. addressees (domicile)______________ 1245 14,529 1246 2,904 1247 10,623 1.a
b. To non-U.S. addressees (domicile)___________ 1248 0 1249 0 1250 0 1.b
2. Loans to depository institutions and acceptances
of other banks:
a. To U.S. banks and other U.S. depository
institutions_______________________________ 5377 0 5378 0 5379 0 2.a
b. To foreign banks___________________________ 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and
other loans to farmers_________________________ 1594 0 1597 2 1583 0 3.
4. Commercial and industrial loans:
a. To U.S. addressees (domicile)______________ 1251 51,906 1252 0 1253 15,562 4.a
b. To non-U.S. addressees (domicile)___________ 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family,
and other personal expenditures:
a. Credit cards and related plans_____________ 5383 288 5384 895 5385 0 5.a
b. Other (includes single payment, installment,
and all student loans)_____________________ 5386 7,182 5387 1,193 5388 98 5.b
6. Loans to foreign governments and official
institutions___________________________________ 5389 0 5390 0 5391 0 6.
7. All other loans________________________________ 5459 387 5460 38 5461 7,911 7.
8. Lease financing receivables:
a. To U.S. addressees (domicile)______________ 1257 0 1258 0 1259 14,576 8.a
b. To non-U.S. addressees (domicile)___________ 1271 0 1272 0 1791 0 8.b
9. Debt securities and other assets (exclude other
estate owned and other repossessed assets)______ 3505 0 3506 0 3507 0 9.
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portions of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
10. Loans and leases reported in items 1
through 8 above which are wholly or partially RCFD RCFD RCFD
guaranteed by the U.S. guaranteed by the ---- ---- ----
U.S. Government_______________________________ 5612 683 5613 50 5614 507 10.
a. Guaranteed portion of loans and leases
included in item 10 above__________________ 5615 559 5616 48 5617 328 10.a
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 32
SCHEDULE RC-N - CONTINUED
MEMORANDA
C473
Dollar Amounts in Thousands
____________________________________________________________________________________________________________________________________
(Column A) (Column B) (Column C)
Past due 30 through Past due 90 days or
89 days and still accruing more and still accruing Nonaccrual
-------------------------- ----------------------- ----------
<S> <C> <C> <C> <C> <C> <C>
1. Restructured loans and leases included in
Schedule RC-N, items 1 through 8, above (and not RCFD RCFD RCFD
reported in Schedule RC-C, Part I, Memorandum item ---- ---- ----
2)_________________________________________________ 1658 0 1659 0 1661 0 M.1
2. Loans to finance commercial real estate,
construction, and land development
activities (not secured by real estate) included in
Schedule RC-N, items 4 and 7, above________________ 6558 0 6559 0 6560 0 M.2
3. Loans secured by real estate in domestic RCON RCON RCON
offices (included in Schedule RC-N, item 1, above): ---- ---- ----
a. Construction and land development______________ 2759 0 2769 0 3492 145 M.3a
b. Secured by farmland____________________________ 3493 89 3494 0 3495 0 M.3b
c. Secured by 1-4 family residential properties:
(1) Revolving, open-end loans secured
by 1-4 family residential properties
and extended under lines of credit________ 5398 0 5399 146 5400 0 M.3c1
(2) All other loans secured by 1-4 family
residential properties____________________ 5401 12,476 5402 2,758 5403 7,161 M.3c2
d. Secured by multifamily (5 or more) residential
properties_____________________________________ 3499 0 3500 0 3501 1,168 M.3d
e. Secured by nonfarm nonresidential properties___ 3502 1,964 35030 3504 2,149 M.3e
<CAPTION>
(Column A) (Column B)
Past due 30 through Past due 90 days or
89 days and still accruing more and still accruing
-------------------------- -----------------------
<S> <C> <C> <C> <C> <C>
4. Interest rate, foreign exchange rate, and RCFD RCFD
other commodity and equity contracts: ---- ----
a. Book value of amounts carried as assets________ 3522 0 3528 0 M.4.a
b. Replacement cost of contracts with a positive
replacement cost_______________________________ 3529 0 3530 0 M.4.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 33
SCHEDULE RC-O - OTHER DATA FOR DEPOSIT INSURANCE ASSESSMENTS
C475
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------
RCON
----
<S> <C> <C> <C>
1. Unposted debits (see instructions):
a. Actual amount of all unposted debits__________________________ 0030 N/A 1.a
OR
b. Separate amount of unposted debits:
(1) Actual amount of unposted debits to demand deposits______ 0031 0 1.b1
(2) Actual amount of unposted debits to time and savings
deposits (1)_________________________________________________ 0032 0 1.b2
2. Unposted credits (see instructions):
a. Actual amount of all unposted credits_________________________ 3510 N/A 2.a
OR
b. Separate amount of unposted credits:
(1) Actual amount of unposted credits to demand deposits_____ 3512 0 2.b1
(2) Actual amount of unposted credits to time and savings
deposits (1)__________________________________________________ 3514 0 2.b2
3. Uninvested trust funds (cash) held in bank's own trust department
(not included in total deposits in domestic offices)______________ 3520 0 3.
4. Deposits of consolidated subsidiaries in domestic offices and in 4.
insured branches in Puerto Rico and U.S. territories and
possessions (not included in total deposits):
a. Demand deposits of consolidated subsidiaries__________________ 2211 17,265 4.a
b. Time and savings deposits (1) of consolidated subsidiaries____ 2351 0 4.b
c. Interest accrued and unpaid on deposits of consolidated
subsidiaries__________________________________________________ 5514 0 4.c
5. Deposits in insured branches in Puerto Rico and U.S. territories
and possessions:
a. Demand deposits in insured branches (not included in Schedule
RC-E, Part II)________________________________________________ 2229 0 5.a
b. Time and savings deposits (1) in insured branches (included in
Schedule RC-E, Part II)______________________________________ 2383 0 5.b
c. Interest accrued and unpaid on deposits in insured branches
(included in Schedule RC-G, item 1.b)_________________________ 5515 0 5.c
Item 6 is not applicable to state nonmember banks that have not been
authorized by the Federal Reserve to act as pass-through correspondents.
6. Reserve balances actually passed through to the Federal Reserve by
the reporting bank on behalf of its respondent depository
institutions that are also reflected as deposit liabilities of
the reporting bank: RCON
a. Amount reflected in demand deposits (included in Schedule RC-E, ----
Part I, Memorandum item 4.a)__________________________________ 2314 341 6.a
b. Amount reflected in time and savings deposits (1) (included in
Schedule RC-E, Part I, Memorandum item 4.b)___________________ 2315 0 6.b
7. Unamortized premiums and discounts on time and savings deposits: (1)
a. Unamortized premiums__________________________________________ 5516 59 7.a
b. Unamortized discounts_________________________________________ 5517 28,532 7.b
_____________
(1) For FDIC insurance assessment purposes, "time and savings deposits" consists of nontransaction
accounts and all transaction accounts other than demand deposits.
<PAGE>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 34
SCHEDULE RC-O - CONTINUED
Dollar Amounts in Thousands
- -----------------------------------------------------------------------------------------------------------
8. To be completed by banks with "Oakar deposits."
Total "Adjusted Attributable Deposits" of all institutions RCON
acquired under Section 5(d)(3) of the Federal Deposit Insurance ----
Act (from most recent FDIC Oakar Transaction Worksheet(s))________ 5518 2,403,177 8.
9. Deposits in lifeline accounts_____________________________________ 9.
10. Benefit-responsive "Depository Institution Investment Contracts"
(included in total deposits in domestic offices)__________________ 8432 0 10.
11. Adjustments to demand deposits reported in Schedule RC-E for
certain reciprocal demand balances:
a. Amount by which demand deposits would be reduced if reciprocal
demand balances between the reporting bank and savings RCON
associations were reported on a net basis rather than a gross ----
basis in Schedule RC-E________________________________________ 8785 0 11.a
b. Amount by which demand deposits would be increased if
reciprocal demand balances between the reporting bank and
U.S. branches and agencies of foreign banks were reported
on a gross basis rather than a net basis in Schedule RC-E_____ A181 0 11.b
c. Amount by which demand deposits would be reduced if cash
items in process of collection were included in the
calculation of net reciprocal demand balances between the
reporting bank and the domestic offices of U.S. banks and
savings associations in Schedule RC-E_________________________ A182 0 11.c
MEMORANDA
(to be completed each quarter except as noted) Dollar Amounts in Thousands
- ----------------------------------------------------------------------------------------------------------
1. Total deposits in domestic offices of the bank (sum of Memorandum
items 1.a.(1) and 1.b.(1) must equal Schedule RC, item 13.a): RCON
a. Deposit accounts of $100,000 or less: ----
(1) Amount of deposit accounts of $100,000 or less___________ 2702 4,942,185 M.1a1
RCON Number
(2) Number of deposit accounts of $100,000 or less (to be ---- ------
completed for the June report only)______________________ 3779 N/A M.1a2
b. Deposit accounts of more than $100,000:
(1) Amount of deposit accounts of more than $100,000_________ 2710 2,746,863 M.1b1
RCON Number
---- ------
(2) Number of deposit accounts of more than $100,000_________ 2722 5,998 M.1b2
2. Estimated amount of uninsured deposits in domestic offices of the
bank:
a. An estimate of your bank's uninsured deposits can be determined
by multiplying the number of deposit accounts of more than
$100,000 reported in Memorandum item 1.b.(2) above by $100,000
and subtracting the result from the amount of deposit accounts
of more than $100,000 reported in Memorandum item 1.b.(1)
above.
Indicate in the appropriate box at the right whether your bank has RCON YES NO
a method or procedure for determining a better estimate of ----
uninsured deposits than the estimate described above______________ 6861 X M.2.a
b. If the box marked YES has been checked, report the estimate of
uninsured deposits determined by using your bank's method or
procedure______________________________________________________ 5597 N/A M.2.b
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 35
__________________________________________________________________________________________________________________
Person to whom questions about the Reports of Condition and Income should be directed:
612 667 9895
CHRIS HUPP, SUPERVISOR REG REPORTING
- ------------------------------------------------------------------------------------------------------------------
Name and Title (TEXT 8901) Area code/phone number/extension (TEXT 8902)
SCHEDULE RC-R - REGULATORY CAPITAL
This schedule must be completed by all banks as follows: Banks that reported total assets of $1 billion or more in Schedule RC,
item 12, for June 30, 1995, must complete items 2 through 9 and Memoranda items 1 and 2. Banks with assets of less than $1
billion must complete items 1 through 3 below or Schedule RC-R in its entirety, depending on their response to item 1 below.
<S> <C> <C> <C> <C>
1. Test for determining the extent to which Schedule RC-R must be completed. C480
To be contemplated only by banks with total assets of less than $1 billion.
Indicate in the appropriate box at right whether the bank has total capital RCFD YES NO
greater than or equal to eight percent of adjusted total ---- --- --
assets_____________________________________________________________________ 6056 N/A 1.
For purposes of this test, adjusted total assets equals total assets less cash, U.S. Treasuries, U.S. Government agency
obligations, and 80 percent of U.S. Government-sponsored agency obligations plus the allowance for loan and lease losses
and selected off-balance sheet items as reported on Schedule RC-L (see instructions).
If the box marked YES has been checked, then the bank only has to complete items 2 and 3 below. If the box marked NO has
been checked, the bank must complete the remainder of this schedule.
A NO response to item 1 does not necessarily mean that the bank's actual risk-based capital ratio is less than eight percent
or that the bank is not in compliance with the risk-based capital guidelines.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 36
Dollar Amounts in Thousands
- ------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Subordinated Debt (1) and
Intermediate Term Other Limited-Life
Items 2 and 3 are to be completed by all banks. Preferred Stock Capital Instruments
------------------------- -------------------
<S> <C> <C> <C> <C> <C>
2. Subordinated debt(1) and other limited-life
capital instruments (original weighted
average maturity of at least five years)
with a remaining maturity of: RCFD RCFD
---- ----
a. One year or less____________________________ 3780 1,508 3786 0 2.a
b. Over one year through two years_____________ 3781 8 3787 0 2.b
c. Over two years through three years__________ 3782 8 3788 0 2.c
d. Over three years through four years_________ 3783 8 3789 0 2.d
e. Over four years through five years__________ 3784 8 3790 0 2.e
f. Over five years_____________________________ 3785 160,155 3791 0 2.f
3. Amounts used in calculating regulatory capital
ratios (report amounts determined by the bank for RCFD
its own internal regulatory capital analyses): ----
a. Tier 1 capital______________________________________________________________ 8274 1,114,626 3.a
b. Tier 1 capital______________________________________________________________ 8275 301,688 3.b
c. Total risk-based capital____________________________________________________ 3792 1,416,314 3.c
d. Excess allowance for loan and lease losses__________________________________ A222 45,590 3.d
e. Risk-weighted assets________________________________________________________ A223 11,275,633 3.e
f. "Average total assets"______________________________________________________ A224 17,534,721 3.f
</TABLE>
Items 4-9 and Memoranda items 1 and 2 are to be completed by
banks that answered NO to item 1 above and by banks with total
assets of $1 billion or more.
______________________________
(1) Exclude mandatory convertible debt reported in Schedule RC-M, item 7.
(2) Do not report in column B the risk-weighted amount of assets reported in
column A.
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 37
SCHEDULE RC-R - CONTINUED
Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
(Column A) (Column B)
Assets Recorded Credit Equivalent Amount
on the Balance Sheet of Off-Balance Sheet Items (2)
-------------------- ------------------------------
<S> <C> <C> <C> <C> <C>
4. Assets and credit equivalent amounts of
off-balance sheet items assigned to the
Zero percent risk category:
a. Assets recorded on the balance sheet:
(1) Securities issued by, other
claims on, and claims unconditionally
guaranteed by, the U.S. Government RCFD RCFD
and its agencies and other OECD ---- ----
central governments__________________ 3794 556,001 4.a.1
(2) All other____________________________ 3795 182,772 4.a.2
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3796 0 4.b
5. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 20
percent risk category:
a. Assets recorded on the balance sheet:
(1) Claims conditionally guaranteed by
the U.S. Government and its agencies
and other OECD central
governments_________________________ 3798 769,044 5.a.1
(2) Claims collateralized by securities
issued by the U.S. Government and
its agencies and other OECD central
governments; by securities issued by
U.S. Government-sponsored agencies;
and by cash on deposit______________ 3799 0 5.a.2
(3) All other___________________________ 3800 6,597,084 5.a.3
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3801 570,283 5.b
6. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 50
percent risk category:
a. Assets recorded on the balance sheet:_____ 3802 2,024,083 6.a
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3803 125,737 6.b
7. Assets and credit equivalent amounts of
off-balance sheet items assigned to the 100
percent risk category:
a. Assets recorded on the balance sheet______ 3804 6,583,563 7.a
b. Credit equivalent amount of off-balance
sheet items_______________________________ 3805 2,088,083 7.b
8. On-balance sheet asset values excluded from
the calculation of the risk-based capital
ratio(2)___________________________________ 3806 21,955 8.
9. Total assets recorded on the balance sheet
(sum of items 4.a, 5.a, 6.a, 7.a, and 8,
column A) (must equal Schedule RC, item 12
plus items 4.b and 4.c)_____________________ 3807 16,734,502 9.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Norwest Bank Minnesota, N.A. Call Date: 03/31/96 ST - BK: 27-4905 FFIEC 031
Sixth Street and Marquette Avenue
Minneapolis, MN 55479 Vendor ID: D CERT: 05208 Page RC- 13
Transit Number: 919000019 38
MEMORANDUM Dollar Amounts in Thousands
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
1. Current credit exposure across all off-balaance sheet RCFD
derivative contracts covered by the risk-based capital ----
standards___________________________________________ 8764 22,275 N.1
<CAPTION>
With a remaining maturity of
(Column A) (Column B) (Column C)
Over one year
One year or less through five years more Over five years
----------------- ----------------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
2. Notional principal amount of off-balance RCFD RCFD RCFD
sheet derivative contracts(3) ---- ---- ----
a. Interest rate contracts________________ 3809 2,190,447 8766 1,451,188 8767 570,083 M.2a
b. Foreign exchange contracts_____________ 3812 395,100 8769 36,627 8770 N/A M.2b
2. Loans to depository institutions and
acceptances of other banks:
a. To U.S. banks and other U.S. depository
institutions___________________________ 5377 0 5378 0 5379 2,904 2.a
b. To foreign banks_______________________ 5380 0 5381 0 5382 0 2.b
3. Loans to finance agricultural production and
other loans to farmers______________________ 1594 0 1597 2 1583 0 3.
4. Commercial and industrial loans
a. To U.S. addressees (domicile)__________ 1251 51,906 1252 0 1253 15,562 4.1
b. To non-U.S. addresses (domicile)_______ 1254 0 1255 0 1256 0 4.b
5. Loans to individuals for household, family,
other personal expenditures:
a. Credit cards and related plans_________ 5383 288 5384 895 5385 0 5.a
b. Other (includes single payment,
installment, and all student
loans)_________________________________ 5386 7,182 5387 1,193 5388 98 5.b
6. Loans to foreign government and official
institutions________________________________ 5389 0 5390 0 5391 0 6.
7. All other loans_____________________________ 5459 0 5460 38 5461 7,911 7.
8. Lease financing receivables:
a. To U.S. addressees (domicile)___________ 1257 0 1258 0 1259 14,576 8.a
b. To non-U.S. addresses (domicile)________ 1271 0 1272 0 1291 0 8.b
9. Debt securities and other assets (exclude
other estate owned and other repossessed
assets______________________________________ 3505 0 3506 0 3507 0 9.
- -------------------------------------------------------------------------------------------------------------------------------
Amounts reported in items 1 through 8 above include guaranteed and unguaranteed portion of past due and nonaccrual loans and
leases. Report in item 10 below certain guaranteed loans and leases that have already been included in the amounts reported in
items 1 through 8.
10. Loans and leases reported in items 1
through 8 above which are wholly or
partially guaranteed by RCFD RCFD RCFD
the U.S. guaranteed by the U.S. ---- ---- ----
Government__________________________________ 5612 683 5613 50 5614 507 10.
a. Guaranteed portion of loans and
leases included in item 10
above__________________________________ 5615 683 5617 48 5617 328 10.a
</TABLE>
<PAGE>
EXHIBIT 99.1
LETTER OF TRANSMITTAL
FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
OFFER TO EXCHANGE
ALL OF ITS
12 3/4% SERIES B FIRST MORTGAGE NOTES DUE 2003
FOR ALL OF ITS OUTSTANDING
12 3/4% SERIES A FIRST MORTGAGE NOTES DUE 2003
PURSUANT TO THE PROSPECTUS DATED , 1996
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME,
ON , 1996, UNLESS EXTENDED.
To: EXCHANGE AGENT
Norwest Bank Minnesota, National Association
<TABLE>
<S> <C>
BY MAIL: BY HAND/OVERNIGHT EXPRESS:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
FACSIMILE TRANSMISSION:
(612) 667-4927
TO CONFIRM RECEIPT:
Tel. (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE, OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE LISTED
ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED HEREIN
SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated ,
1996 ("Exchange Offer"), of Florida Coast Paper Company, L.L.C., a Delaware
limited liability company, and Florida Coast Paper Finance Corp., a Delaware
corporation (collectively, the "Company"), relating to the offer of the Company,
upon the terms and subject to the conditions set forth in the Exchange Offer and
in this Letter of Transmittal and the instructions hereto (which together with
the Exchange Offer and the instructions hereto constitute the "Offer"), to
exchange its 12 3/4% Series B First Mortgage Notes due 2003 ("New Notes") for
any and all of its outstanding 12 3/4% Series A First Mortgage Notes due 2003
("Old Notes"), at the rate of $1,000 principal amount of the New Notes for each
$1,000 principal amount of the Old Notes. Capitalized terms used but not defined
herein have the meanings given to them in the Exchange Offer.
The undersigned has completed the appropriate boxes below and signed this
Letter of Transmittal to indicate the action the undersigned desires to take
with respect to the Offer.
This Letter of Transmittal is to be used whether the Old Notes are to be
physically delivered herewith, or whether guaranteed delivery procedures or
book-entry delivery procedures are being used, pursuant to the procedures set
forth under "The Exchange Offer" in the Exchange Offer. If delivery of Old Notes
is to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company ("DTC"), this Letter of Transmittal need
not be manually executed, PROVIDED, HOWEVER, that tenders of Old Notes
<PAGE>
must be effected in accordance with the procedures mandated by DTC and the
procedures set forth in the Exchange Offer under the caption "The Exchange Offer
- -- Procedures for Tendering." If a Registered Holder desires to tender Old Notes
and such Old Notes are not immediately available or time will not permit all
documents required by the Offer to reach the Exchange Agent (or such Registered
holder is unable to complete the procedure for book-entry transfer on a timely
basis) prior to the Expiration Date, a tender may be effected in accordance with
the guaranteed delivery procedures set forth in the Exchange Offer under the
caption "The Exchange Offer -- Guaranteed Delivery Procedures." See Instruction
1.
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of the Old Notes indicated
below. Subject to, and effective upon, the acceptance for exchange of the Old
Notes tendered hereby, the undersigned hereby irrevocably sells, assigns and
transfers to or upon the order of the Company all right, title and interest in
and to such Old Notes and hereby irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said Exchange Agent also acts as the agent of the
Company) with respect to such Old Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to take such further action as may be required in connection with the
delivery, tender and exchange of the Old Notes.
The undersigned acknowledges that this Offer is being made in reliance on an
interpretation by the staff of the Securities and Exchange Commission (the
"SEC") that the New Notes issued pursuant to the Exchange Offer in exchange for
the Old Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than (i) a broker-dealer who purchased Old Notes directly
from the Company for resale pursuant to Rule 144A under the Securities Act of
1933, as amended (the "Securities Act"), or (ii) a person that is an "affiliate"
of the Company within the meaning of Rule 405 under the Securities Act) without
compliance with the registration and prospectus delivery provisions of the
Securities Act provided that such New Notes are acquired in the ordinary course
of such holders' business and such holders have no arrangement with any person
to participate in the distribution of such New Notes. SEE "Morgan Stanley & Co.
Inc.," SEC No-Action Letter (available June 5, 1991); the Exchange Offer under
the caption "The Exchange Offer -- Purposes and Effects."
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE RIGHT
NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY
DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD
RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents, or,
if the undersigned is a broker, dealer, commercial bank, trust company or other
nominee, represents that it has received representations from the Beneficial
Owners (as defined in the Securities and Exchange Act of 1934) of the Old Notes
stating (as defined in the Exchange Offer) that (i) the New Notes to be acquired
in connection with the Exchange Offer by the Eligible Holder and each Beneficial
Owner of the Old Notes are being acquired by the Eligible Holder (as defined in
the Exchange Offer) and each Beneficial Owner in the ordinary course of business
of the Eligible Holder and each Beneficial Owner, (ii) the Eligible Holder and
each Beneficial Owner are not participating, do not intend to participate, and
have no arrangement or understanding with any person to participate, in the
distribution of the New Notes, (iii) the Eligible Holder and each Beneficial
Owner acknowledge and agree that any person participating in the Exchange Offer
for the purpose of distributing the New Notes must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction of the New Notes acquired by such person and cannot
rely on the position of the staff of the SEC set forth in no-action letters that
are discussed in the Exchange Offer under the caption "The Exchange Offer --
PURPOSES AND EFFECTS," (iv) that if the Eligible Holder is a broker-dealer that
acquired Old Notes as a result of market-making or other trading activities, it
will deliver a prospectus in connection with any resale of New Notes acquired in
the Exchange Offer, (v) the Eligible Holder and each Beneficial Owner understand
that a secondary resale transaction described in clause (iii) above should be
covered by an effective registration statement containing the selling security
holder information required by item 507 of Regulations S-K of the Securities Act
and (vi) neither the Eligible Holder nor any Beneficial Owner is an "affiliate,"
as defined under Rule 405 of the Securities Act, of the Company except as
otherwise disclosed to the Company in writing.
<PAGE>
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer that will
receive New Notes for its own account in exchange for Old Notes, it represents
that the Old Notes to be exchanged for New Notes were acquired by it as a result
of market-making activities or other trading activities and acknowledges that it
will deliver a prospectus in connection with any resale of such New Notes;
however, by so acknowledging and by delivering a prospectus, the undersigned
will not be deemed to admit that it is an "underwriter" within the meaning of
the Securities Act.
The undersigned understands and acknowledges that the Company reserves the
right in its sole discretion to purchase or make offers for any Old Notes that
remain outstanding subsequent to the Expiration Date or as set forth in the
Exchange Offer under the caption "The Exchange Offer -- Procedures for
Tendering," to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Old Notes in the open market, in privately negotiated
transactions or otherwise. The term of any such purchases or offers could differ
from the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned accepts
the terms and conditions of the Offer, has full power and authority to tender,
exchange, assign and transfer the Old Notes tendered hereby, and that when the
same are accepted for exchange by the Company, the Company will acquire good and
unencumbered title thereto, free and clear of all liens, restrictions, charges
and encumbrances and not subject to any adverse claim or right. The undersigned
will, upon request, execute and deliver any additional documents deemed by the
Exchange Agent or the Company to be reasonably necessary or desirable to
complete the sale, assignment and transfer of the Old Notes tendered hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrations, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that tenders of the Old Notes pursuant to any
one of the procedures described under "The Exchange Offer -- Procedures for
Tendering" in the Exchange Offer and in the instructions hereto will constitute
a binding agreement between the undersigned and the Company in accordance with
the terms and subject to the conditions of the Offer.
The undersigned understands that by tendering Old Notes pursuant to one of
the procedures described in the Exchange Offer and the instructions thereto, the
tendering holder will be deemed to have waived the right to receive any payment
in respect of interest on the Old Notes accrued up to the date of issuance of
the New Notes.
The undersigned recognizes that, under certain circumstances set forth in
the Exchange Offer, the Company may not be required to accept for exchange any
of the Old Notes tendered. Old Notes not accepted for exchange or withdrawn will
be returned to the undersigned at the address set forth below unless otherwise
indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein under the box entitled "Special Exchange
Instructions" below, please deliver New Notes in the name of the undersigned.
Similarly, unless otherwise indicated under the box entitled "Special Delivery
Instructions" below, please send New Notes to the undersigned at the address
shown below the signature of the undersigned. The undersigned recognizes that
the Company has no obligation pursuant to the "Special Exchange Instructions" to
transfer any Old Notes from the name of the Registered Holder thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
<PAGE>
THE UNDERSIGNED, BY COMPLETING THE BOX "DESCRIPTION OF OLD NOTES" BELOW AND
SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AND MADE
CERTAIN REPRESENTATIONS DESCRIBED HEREIN AND IN THE EXCHANGE OFFER.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(SEE INSTRUCTIONS 1 AND 3 AND THE FOLLOWING
PARAGRAPH)
(IMPORTANT: ALSO COMPLETE SUBSTITUTE FORM W-9 ON THE REVERSE
SIDE)
...............................................................................
...............................................................................
Signature(s) of
Owner(s)
Dated: .................................................................. , 1996
If the holder(s) is/are tendering any Old Notes, this Letter of Transmittal must
be signed by the Registered Holder(s) as the name(s) appear(s) on the Old Notes
or on a security position listing or by person(s) authorized to become
Registered Holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s) ........................................................................
...............................................................................
(Please Type or
Print)
Capacity: ......................................................................
Address: .......................................................................
...............................................................................
(Include Zip
Code)
Area Code and Telephone Number .................................................
Tax Identification or
Social Security No.: ...........................................................
(See Instruction 12 and complete Substitute Form W-9 on the
Reverse Side)
SIGNATURE
GUARANTEE
(IF REQUIRED BY INSTRUCTION
3)
Signature(s) Guaranteed by
an Eligible Institution:
Authorized Signature: ..........................................................
Printed Name: ..................................................................
Title: .........................................................................
Name of Firm: ..................................................................
Address: .......................................................................
...............................................................................
(Include Zip
Code)
Area Code and Telephone Number .................................................
Dated: .................................................................. , 1996
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE OLD NOTES OR A
NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
<PAGE>
List below the Old Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, the certificate numbers and principal
amounts should be listed on a separate signed schedule affixed hereto. See
Instruction 7. The minimum permitted tender is $1,000 principal amount of Old
Notes; all other tenders must be in integral multiples of $1,000.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ---------------------------------------------------------------------------------------------------
(I) (II) (III) (IV)
AGGREGATE
PRINCIPAL PRINCIPAL
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE AMOUNT AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER(S) REPRESENTED TENDERED
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------
TOTAL...............................................
- ----------------------------------------------------------------------------------------------------
* Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the
terms and conditions of the Offer, the undersigned will be deemed to have tendered the entire
aggregate principal amount represented by the Old Notes indicated in the column labeled "Aggregate
Principal Amount Represented." See Instruction 8.
- ----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
/ / CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
/ / CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND COMPLETE
THE FOLLOWING (See Instructions 1 and 3):
Name(s) of Registered Holder(s): ...........................................
Date of Execution of Notice of Guaranteed Delivery: ........................
Name of Eligible Institution that Guaranteed Delivery: .....................
/ / CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10 ADDITIONAL
COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR SUPPLEMENTS
THERETO.
Name: ......................................................................
Address: ...................................................................
......................................
If delivery of Old Notes is to be made by book-entry transfer to the account
maintained by the Exchange Agent at DTC, then tenders of Old Notes must be
effected in accordance with the procedures mandated by DTC and the procedures
set forth in the Exchange Offer under the caption "The Exchange Offer --
Procedures for Tendering."
<PAGE>
<TABLE>
<S> <C>
SPECIAL EXCHANGE INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 4 AND 5) (SEE INSTRUCTIONS 4 AND 5)
To be completed ONLY if Old Notes in a To be completed ONLY if Old Notes in a
principal amount not exchanged and/or principal amount not exchanged and/or
New Notes are to be registered in the New Notes are to be sent to someone
name of or issued to someone other than other than the person or persons whose
the person or persons whose signature(s) appear(s) on this Letter
signature(s) appear(s) on this Letter of Transmittal above or to such person
of Transmittal above. or persons at an address other than
Mail and deliver (check appropriate that shown in the box entitled
box(es)): "Description of Old Notes" on this
/ / New Notes to: / / Old Notes Letter of Transmittal above.
to: Mail and deliver (check appropriate
Name(s) ............................... box(es)):
(Please Type or / / New Notes to: / / Old Notes
Print) to:
...................................... Name(s) ...............................
(Please Type or (Please Type or Print)
Print) .......................................
Address ............................... (Please Type or Print)
...................................... Address ...............................
(Zip .......................................
Code) (Zip Code)
...................................... .......................................
Employer Identification or Social Employer Identification or Social
Security Number Security Number
(Complete the Substitute Form
W-9)
</TABLE>
<PAGE>
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. DELIVERY OF THIS LETTER OF TRANSMITTAL AND OLD NOTES; GUARANTEED
DELIVERY PROCEDURES. To be effectively tendered pursuant to the Offer, the Old
Notes, together with a properly completed Letter of Transmittal (or manually
signed facsimile hereof) duly executed by the Eligible Holder thereof, and any
other documents required by this Letter of Transmittal must be received by the
Exchange Agent at one of its addresses set forth on the front page of this
Letter of Transmittal and tendered Old Notes must be received by the Exchange
Agent at one of such addresses on or prior to the Expiration Date; PROVIDED,
HOWEVER, that book-entry transfers of Old Notes may be effected in accordance
with the procedures set forth in the Exchange Offer under the caption "The
Exchange Offer -- Procedures For Tendering Old Notes." If the Beneficial Owner
of any Old Notes is not the Eligible Holder, then such person may validly tender
such person's Old Notes only by obtaining and submitting to the Exchange Agent a
properly completed Letter of Transmittal from the Eligible Holder. LETTERS OF
TRANSMITTAL OF OLD NOTES SHOULD BE DELIVERED ONLY BY HAND OR BY COURIER, OR
TRANSMITTED BY MAIL, AND ONLY TO THE EXCHANGE AGENT AND NOT TO THE COMPANY OR TO
ANY OTHER PERSON.
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO THE
EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, AND IF SUCH DELIVERY
IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED
MAIL WITH RETURN RECEIPT REQUESTED. IF OLD NOTES ARE SENT BY MAIL, IT IS
SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
If a holder desires to tender Old Notes and such holder's Old Notes are not
immediately available or time will not permit such holder to complete the
procedures for book-entry transfer on a timely basis or time will not permit
such holder's Letter of Transmittal and other required documents to reach the
Exchange Agent on or before the Expiration Date, such holder's tender may be
effected if:
(a) such tender is made by or through an Eligible Institution (as
defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has received
a telegram, facsimile transmission or letter from such Eligible Institution
setting forth the name and address of the holder of such Old Notes, the
certificate number(s) of such Old Notes (except in the case of book-entry
tenders) and the principal amount of Old Notes tendered and stating that the
tender is being made thereby and guaranteeing that, within three business
days after the Expiration Date, a duly executed Letter of Transmittal, or
facsimile thereof, together with the Old Notes, and any other documents
required by this Letter of Transmittal and Instructions, will be deposited
by such Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal, or a manually signed facsimile hereof,
and Old Notes, in proper form for transfer (or a Book-Entry confirmation
with respect to such Old Notes), and all other required documents are
received by the Exchange Agent within three business days after the
Expiration Date.
2. WITHDRAWAL OF TENDERS. Tendered Old Notes may be withdrawn at any time
prior to 5:00 p.m., New York City time, on the Expiration Date.
To be effective, a written, telegraphic or facsimile transmission notice of
withdrawal must (i) be timely received by the Exchange Agent at one of its
addresses set forth on the first page of this Letter of Transmittal before the
Exchange Agent receives notice of acceptance from the Company, (ii) specify the
name of the person who tendered the Old Notes, (iii) contain the description of
the Old Notes to be withdrawn, the certificate number(s) of such Old Notes
(except in the case of book-entry tenders) and the aggregate principal amount
represented by such Old Notes or a Book-Entry Confirmation with respect to such
Old Notes, and (iv) be signed by the holder of such Old Notes in the same manner
as the original signature appears on this Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old Notes. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Old Notes have been tendered
(i) by an Eligible Holder (which term for purposes of this document shall
include any participant tendering by book-entry transfer) of Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii)
for the account of an Eligible Institution. If the Old Notes have been tendered
pursuant to the procedure for book-entry tender set forth in the Exchange Offer
under the caption "Procedures for Tendering,"
<PAGE>
a notice of withdrawal is effective immediately upon receipt by the Exchange
Agent of a written, telegraphic or facsimile transmission notice of withdrawal
even if physical release is not yet effected. In addition, such notice must
specify, in the case of Old Notes tendered by delivery of such Old Notes, the
name of the Eligible Holder (if different from that of the tendering holder) to
be credited with the withdrawn Old Notes. Withdrawals may not be rescinded, and
any Old Notes withdrawn will thereafter be deemed not validly tendered for
purposes of the Offer. However, properly withdrawn Old Notes may be retendered
by following one of the procedures described under "The Exchange Offer --
Procedures for Tendering" in the Exchange Offer at any time on or prior to the
Expiration Date.
3. SIGNATURES ON THIS LETTER OF TRANSMITTAL, BOND POWERS AND ENDORSEMENTS;
GUARANTEE OF SIGNATURES. If this Letter of Transmittal is signed by the
Eligible Holder of the Old Notes tendered hereby, the signature must correspond
exactly with the name as written on the face of the Old Notes without any change
whatsoever.
If any Old Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different names, it will
be necessary to complete, sign and submit as many separate copies of this Letter
of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the Eligible Holder or Holders
specified herein and tendered hereby, no endorsements of such Old Notes or
separate bond powers are required. If, however, New Notes are to be issued, or
any untendered principal amount of Old Notes are to be reissued to a person
other than the Eligible Holder, then endorsements of any Old Notes transmitted
hereby or separate bond powers are required.
If this Letter of Transmittal is signed by a person other than the Eligible
Holder or Holders, such Old Notes must be endorsed or accompanied by appropriate
bond powers, in either case signed exactly as the name or names of the
Registered Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any Old
Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as described in this paragraph, signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by
an Eligible Institution which is a firm which is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or otherwise be an "eligible guarantor institution" within the
meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible Institution").
Signatures on this Letter of Transmittal or a notice of withdrawal, as the case
may be, need not be guaranteed if the Old Notes tendered pursuant hereto are
tendered (i) by an Eligible Holder of Old Notes who has not completed either the
box entitled "Special Exchange Instructions" or the box entitled "Special
Delivery Instructions" on this Letter of Transmittal or (ii) for the account of
an Eligible Institution.
Endorsement on Old Notes or signatures on bond forms required by this
Instruction 3 must be guaranteed by an Eligible Institution.
4. SPECIAL ISSUANCE AND DELIVERY INSTRUCTIONS. Tendering holders should
indicate in the applicable box the name and address to which New Notes and/or
substitute Old Notes for the principal amounts not exchanged are to be issued or
sent, if different from the name and address of the person signing this Letter
of Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. If no such instructions are given, such Old Notes not exchanged will
be returned to the name and address of the person signing this Letter of
Transmittal.
5. TAX IDENTIFICATION NUMBER AND BACKUP WITHHOLDING. Federal income tax
law of the United States requires that a holder of Old Notes whose Old Notes are
accepted for exchange provide the Company with such holder's correct taxpayer
identification number, which, in the case of a holder who is an individual, is
the holder's social security number, or otherwise establish an exemption from
backup withholding. If the Company is not provided with the holder's correct
taxpayer identification number, the exchanging holder of Old Notes may be
subject to a penalty imposed by the Internal Revenue Service. In addition,
interest on the New Notes acquired
<PAGE>
pursuant to the Offer may be subject to backup withholding in an amount equal to
31 percent of any interest payment. If withholding occurs and results in an
overpayment of taxes, a refund may be obtained from the Internal Revenue Service
by the filing of a return.
To prevent backup withholding, each exchanging holder of Old Notes subject
to backup withholding must provide his correct taxpayer identification number by
completing the Substitute Form W-9 provided in this Letter of Transmittal,
certifying that the taxpayer identification number provided is correct (or that
the exchanging holder of Old Notes is awaiting a taxpayer identification number)
and that either (a) the exchanging holder has not been notified by the Internal
Revenue Service that he is subject to backup withholding as a result of failure
to report all interest or dividends or (b) the Internal Revenue Service has
notified the exchanging holder that he is no longer subject to backup
withholding.
Certain exchanging holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual and other exempt holders (e.g.,
corporations) should certify, in accordance with the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9, to such
exempt status on the Substitute Form W-9 provided in this Letter of transmittal.
6. TRANSFER TAXES. Holders tendering pursuant to the Offer will not be
obligated to pay brokerage commissions or fees or to pay transfer taxes with
respect to their exchange under the Offer unless the box entitled "Special
Issuance Instructions" in this Letter of Transmittal has been completed, or
unless the securities to be received upon exchange are to be issued to any
person other than the holder of the Old Notes tendered for exchange. The Company
will pay all other charges or expenses in connection with the Offer. If holders
tender Old Notes for exchange and the Offer is not consummated, such Old Notes
will be returned to the holders at the Company's expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
7. INADEQUATE SPACE. If the space provided herein is inadequate, the
aggregate principal amount of the Old Notes being tendered and the certificate
number(s) (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter of
Transmittal.
8. PARTIAL TENDERS. Tenders of Old Notes will be accepted only in integral
multiples of $1,000. If tenders are to be made with respect to less than the
entire principal amount of any Old Notes, fill in the principal amount of Old
Notes which are tendered in column (iv) of the box labeled "Description of Old
Notes." In the case of partial tenders, the Old Notes in fully registered form
for the remainder of the principal amount of the Old Notes will be sent to the
person(s) signing this Letter of Transmittal, unless otherwise indicated in the
appropriate place on this Letter of Transmittal, as promptly as practicable
after the expiration or termination of the Offer.
Unless otherwise indicated in column (iv) in the box labeled "Description of
Old Notes," and subject to the terms and conditions of the Offer, tenders made
pursuant to this Letter of Transmittal will be deemed to have been made with
respect to the entire aggregate principal amount represented by the Old Notes
indicated in column (iii) of such box.
9. MUTILATED, LOST, STOLEN OR DESTROYED OLD NOTES. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. VALIDITY AND ACCEPTANCE OF TENDERS. All questions as to the validity,
form, eligibility (including time of receipt), acceptance and withdrawal of Old
Notes tendered for exchange will be determined by the Company in its sole
discretion, which determination shall be final and binding. The Company reserves
the absolute right to reject any and all Old Notes not properly tendered and to
reject any Old Notes the Company's acceptance of which might, in the judgment of
the Company or its counsel, be unlawful. The Company also reserves the absolute
right to waive any defects or irregularities or conditions of the Exchange Offer
as to particular Old Notes either before or after the Expiration Date (including
the right to waive the ineligibility of any holder who seeks to tender Old Notes
in the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such period of time as the Company shall
determine. The Company will use
<PAGE>
reasonable efforts to give notification of defects or irregularities with
respect to tenders of Old Notes for exchange but shall not incur any liability
for failure to give such notification. Tenders of the Old Notes will not be
deemed to have been made until such irregularities have been cured or waived.
11. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Norwest Bank Minnesota,
National Association is the Exchange Agent. All tendered Old Notes, executed
Letters of Transmittal and other related documents should be directed to the
Exchange Agent at the addresses or facsimile number set forth on the first page
of this Letter of Transmittal. Questions and requests for assistance and
requests for additional copies of the Prospectus, the Letter of Transmittal and
other related documents should be addressed to the Exchange Agent as follows:
Norwest Bank Minnesota, National Association
FACSIMILE TRANSMISSION:
(612) 667-4927
TO CONFIRM RECEIPT:
Tel. (612) 667-9764
<PAGE>
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
FLORIDA COAST PAPER COMPANY, L.L.C.
FLORIDA COAST PAPER FINANCE CORP.
OFFER TO EXCHANGE
ALL OF ITS
12 3/4% SERIES B FIRST MORTGAGE NOTES DUE 2003
FOR ALL OF ITS OUTSTANDING
12 3/4% SERIES A FIRST MORTGAGE NOTES DUE 2003
As set forth in the Prospectus described below, this Notice of Guaranteed
Delivery or one substantially equivalent hereto must be used to tender for
exchange 12 3/4% Series A Senior First Mortgage Notes due 2003 ("Old Notes"), of
Florida Coast Paper Company, L.L.C., a Delaware limited liability company, and
Florida Coast Paper Finance Corp., a Delaware corporation (collectively, the
"Company"), pursuant to the Exchange Offer (as defined below) if certificates
for Old Notes are not immediately available or the certificates for Old Notes
and all other required documents cannot be delivered to the Exchange Agent on or
prior to the Expiration Date (as defined in the Prospectus), or if the
procedures for delivery by book-entry transfer cannot be completed on a timely
basis. This instrument may be delivered by hand or transmitted by facsimile
transmission or mail to the Exchange Agent.
THE EXCHANGE AGENT FOR THE EXCHANGE OFFER IS:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
<TABLE>
<S> <C>
BY MAIL: BY HAND OR OVERNIGHT DELIVERY:
Norwest Bank Minnesota, National Association Norwest Bank Minnesota, National Association
Corporate Trust Operations Corporate Trust Operations
P.O. Box 1517 Norwest Center
Minneapolis, MN 55480-1517 Sixth and Marquette
Minneapolis, MN 55479-0113
</TABLE>
BY FACSIMILE TRANSMISSION:
(612) 667-4927
CONFIRM BY TELEPHONE:
Tel. (612) 667-9764
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the Instructions to the Letter of
Transmittal, such signature guarantee must appear in the applicable space
provided in the signature box in the Letter of Transmittal.
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON , 1996,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and subject to
the conditions set forth in the Prospectus dated , 1996
("Prospectus") and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Exchange
Offer"), receipt of each of which is hereby acknowledged, the principal amount
of Old Notes indicated below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Guaranteed
Delivery Procedures."
<TABLE>
<S> <C>
Signature(s) ------------------------------------- Address(es) --------------------------------------
Name(s) of Eligible Holders -------------------------------------------------
- ------------------------------------------------- Zip Code
- ------------------------------------------------- Area Code and Tel. No.(s) ------------------------
Please Type or (Check box if shares will be tendered by
Print book-entry transfer)
Principal Amount of Old Notes Tendered for / / The Depository Trust Company
Exchange $ -------------------------------------- Account Number --------------------------------
Old Note Certificate No(s). (If available)
- ------------
- -------------------------------------------------
- -------------------------------------------------
Dated -------------------------------------, 1996
</TABLE>
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the Prospectus),
having an office or correspondent in the United States, hereby (a) represents
that the above named person(s) "own(s)" the Old Notes tendered hereby within
the meaning of Rule 14e-4 promulgated under the Securities Exchange Act of
1934, as amended ("Rule 14e-4"), (b) represents that such tender of Old Notes
complies with Rule 14e-4, and (c) guarantees to either deliver to the Exchange
Agent the certificates representing all the Old Notes tendered hereby, in
proper form for transfer, or to deliver such Old Notes pursuant to the
procedure for book-entry transfer into the Exchange Agent's account at The
Depository Trust Company, in either case together with the Letter of
Transmittal (or a facsimile thereof), properly completed and duly executed,
with any required signature guarantees or an Agent's Message (as defined in
the Prospectus) in the case of a book-entry transfer, and any other required
documents, all within three New York Stock Exchange trading days after the
date hereof.
<TABLE>
<S> <C>
------------------------------- -------------------------------
Name of Firm Authorized Signature
Name
------------------------------- ---------------------------
Address Please Type or Print
Title
------------------------------- --------------------------
Zip Code
</TABLE>
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
