FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from____________ to _________________
Commission file number: 0-7574
WAUSAU-MOSINEE PAPER CORPORATION
(Exact name of registrant as specified in charter)
WISCONSIN 39-0690900
(State of incorporation) (I.R.S Employer Identification Number)
1244 KRONENWETTER DRIVE
MOSINEE, WISCONSIN 54455-9099
(Address of principal executive office)
Registrant's telephone number, including area code: 715-693-4470
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such report), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
The number of common shares outstanding at October 31, 1999 was
51,416,691.
<PAGE>
WAUSAU-MOSINEE PAPER CORPORATION
AND SUBSIDIARIES
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of
Income, Three Months and Nine Months Ended
September 30, 1999 (unaudited) and
September 30, 1998 (unaudited) 1
Consolidated Balance
Sheets, September 30, 1999 (unaudited)
and December 31, 1998 (derived from
audited financial statements) 2
Consolidated Statements
of Cash Flows, Nine Months
Ended September 30, 1999 (unaudited)
and September 30, 1998 (unaudited) 3
Notes to Consolidated
Financial Statements 3-6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-13
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 6. Exhibits and Reports on Form 8-K 15-17
(i)
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
($ thousands, except per share
data - unaudited) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET SALES $ 245,825 $ 241,603 $ 706,523 $ 722,899
Cost of products sold 212,128 199,340 597,004 585,640
GROSS PROFIT 33,697 42,263 109,519 137,259
Selling and administrative expenses 11,158 8,810 44,200 42,475
Restructuring expense 0 0 0 37,700
OPERATING PROFIT 22,539 33,453 65,319 57,084
Interest expense (3,224) (1,738) (8,314) (5,608)
Other (439) (54) 102 251
EARNINGS BEFORE INCOME TAXES 18,876 31,661 57,107 51,727
Provision for income taxes 7,090 12,050 21,490 19,550
NET EARNINGS $ 11,786 $ 19,611 $ 35,617 $ 32,177
NET EARNINGS PER SHARE BASIC $ 0.23 $ 0.34 $ 0.68 $ 0.56
NET EARNINGS PER SHARE DILUTED $ 0.22 $ 0.34 $ 0.66 $ 0.56
Weighted average shares
outstanding-basic 52,185,355 56,952,824 52,548,312 57,555,637
Weighted average shares
outstanding-diluted 52,312,163 57,002,649 52,686,959 57,700,987
</TABLE>
-1-
<PAGE>
<TABLE>
Wausau-Mosinee Paper Corporation
CONSOLIDATED BALANCE SHEETS
<CAPTION>
($ thousands*) SEPTEMBER 30, December 31,
1999 1998
Assets
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 2,540 $ 2,495
Receivables, net 90,476 66,956
Refundable income taxes 0 3,282
Inventories 147,026 150,217
Deferred income taxes 17,519 18,344
Other current assets 1,826 832
Total current assets 259,387 242,126
Property, plant and equipment, net 647,557 625,065
Other assets 32,020 32,958
TOTAL ASSETS $ 938,964 $ 900,149
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable to banks $ 0 $ 45,466
Current maturities of long-term debt 199 6,051
Accounts payable 61,145 58,419
Accrued and other liabilities 49,071 50,784
Total current liabilities 110,415 160,720
Long-term debt 227,663 127,000
Deferred income taxes 94,397 94,911
Postretirement benefits 58,181 60,558
Pension 41,135 39,235
Other liabilities 13,165 21,139
Total liabilities 544,956 503,563
Stockholders' equity 394,008 396,586
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 938,964 $ 900,149
<FN>
*The consolidated balance sheet at September 30, 1999 is unaudited. The
December 31, 1998 consolidated balance sheet is derived from audited
financial statements.
</TABLE>
-2-
<PAGE>
<TABLE>
Wausau-Mosinee Paper Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Nine Months Ended
September 30,
($ thousands - unaudited) 1999 1998
<S> <C> <C>
Net cash provided by operating activities $ 54,654 $ 89,477
Capital expenditures (62,748) (54,559)
Borrowings under credit agreements 49,031 821
Dividends paid (12,120) (11,684)
Purchase of company stock (29,953) (32,663)
Proceeds on sale of property, plant
and equipment 738 9,468
Other investing and financing activities 443 1,741
Net increase in cash $ 45 $ 2,601
</TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. The accompanying condensed financial statements, in the opinion
of management, reflect all adjustments which are normal and
recurring in nature and which are necessary for a fair statement
of the results for the periods presented. Some adjustments
involve estimates which may require revision in subsequent
interim periods or at year-end. In all regards, the financial
statements have been presented in accordance with generally
accepted accounting principles. Refer to notes to the financial
statements which appear in the Annual Report on Form 10-K for
the year ended December 31, 1998, for the company's accounting
policies which are pertinent to these statements.
Note 2. In connection with the merger of Wausau Paper Mills Company
(Wausau) and Mosinee Paper Corporation (Mosinee) on December 17,
1997, the company implemented a plan to reduce its work force by
over 8%. An after-tax expense of $23.4 million ($37.7 million
pretax) or $0.40 per share was recorded in the three month
-3-
period ended March 31, 1998 to cover the cost of this work force
reduction initiative as well as smaller amounts for other merger
related costs.
Note 3. Net income includes expenses, or credits, for stock-based
incentive plans calculated by using the average price of the
company's stock at the close of the reporting period as if all
plans had been exercised on that day. For the three months
ended September 30, 1999, these plans resulted in after-tax
<PAGE>
income of $2,613,000 or $0.05 per share, compared to after-tax
income of $4,067,000 or $0.07 per share for the same period last
year. Year-to-date, 1999, these plans resulted in after-tax
income of $2,264,000 or $.04 per share compared to after-tax
income of $2,800,000 or $.05 per share for the same period last
year.
<TABLE>
Note 4. Accounts receivable consisted of the following:
<CAPTION>
($ thousands) SEPTEMBER 30, December 31,
1999 1998
<S> <C> <C>
Customer Accounts $98,551 $73,950
Misc. Notes and Accounts Receivable 3,030 3,068
Subtotal 101,581 77,018
Less: Allowances for Discounts,
Doubtful Accounts and Pending
Credits 11,105 10,062
Receivables, Net $90,476 $66,956
</TABLE>
<TABLE>
Note 5. The various components of inventories were as follows:
<CAPTION>
($ thousands) SEPTEMBER 30, December 31,
1999 1998
<S> <C> <C>
Raw Materials and Supplies $ 80,487 $ 86,994
Finished Goods and Work in Process 82,934 75,906
Subtotal 163,421 162,900
Less: LIFO Reserve ( 16,395) ( 12,683)
Net inventories $147,026 $150,217
</TABLE>
Note 6. The accumulated depreciation on fixed assets was $464,065,000 as
of September 30, 1999 and $427,954,000 as of December 31, 1998.
The provision for depreciation, amortization and depletion for
the nine months ended September 30, 1999 and September 30, 1998
was $38,829,000 and $37,325,000, respectively.
Note 7. On August 31, 1999, the Company closed and funded a private
placement note offering for $138,500,000. See Item 2,
"Management's Discussion and Analysis of Financial Condition and
Results of Operations - Financing."
Note 8. Certain legal proceedings are described under Part II, Item 1 of
this report.
-4-
Note 9. Interim Segment Information
FACTORS USED TO IDENTIFY REPORTABLE SEGMENTS
The Company's operations are classified into three principal
reportable segments, the Specialty Paper Group, the Printing &
Writing Group and the Towel & Tissue Group, each providing
different products. Separate management of each segment is
required because each business unit is subject to different
marketing, production and technology strategies.
<PAGE>
PRODUCTS FROM WHICH REVENUE IS DERIVED
The Specialty Paper Group produces specialty papers at its
manufacturing facilities in Rhinelander, Wisconsin; Mosinee,
Wisconsin; Jay, Maine; and Middletown, Ohio. The Printing &
Writing Group produces a broad line of premium printing and writing
grades at manufacturing facilities in Brokaw, Wisconsin and
Groveton, New Hampshire. The Printing & Writing Group also
includes two converting facilities which produce wax-laminated
roll wrap and related specialty finishing and packaging products
and a converting facility which produces school papers. The Towel
& Tissue Group markets a complete line of towel, tissue, soap and
dispensing systems for the "away-from-home" market. The Towel &
Tissue Group operates a paper mill in Middletown, Ohio and a
converting facility in Harrodsburg, Kentucky.
<PAGE>
<TABLE>
RECONCILIATIONS
The following are reconciliations to corresponding totals in the
accompanying consolidated financial statements:
<CAPTION>
Three Months Nine Months
Ended Sept. 30, Ended Sept. 30,
($ in thousands-unaudited) 1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net sales external customers
Specialty Paper $103,549 $102,964 $301,059 $323,452
Printing & Writing 100,091 99,056 289,875 288,166
Towel & Tissue 42,185 39,583 115,589 111,281
$245,825 $241,603 $706,523 $722,899
Net sales intersegment
Specialty Paper $ 1,638 $ 3,665 $ 8,784 $ 11,332
Printing & Writing 1,004 452 1,884 1,222
Towel & Tissue 3 11 101 75
$ 2,645 $ 4,128 $ 10,769 $ 12,629
Operating profit
Specialty Paper $ 1,850 $ 8,934 $ 15,671 $ 37,985
Printing & Writing 11,849 14,056 33,963 40,238
Towel & Tissue 6,421 6,051 18,189 20,097
Total reportable segment
Operating profit 20,120 29,041 67,823 98,320
Corporate & eliminations 2,419 4,412 ( 2,504) ( 3,536)
Restructuring charge 0 0 0 (37,700)
Interest expense ( 3,224) ( 1,738) (8,314) ( 5,608)
Other income/expense ( 439) ( 54) 102 251
Earnings before income taxes $ 18,876 $ 31,661 $ 57,107 $ 51,727
</TABLE>
-5-
<TABLE>
($ in thousands-unaudited) SEPTEMBER 30, December 31,
1999 1998
<S> <C> <C>
Segment Assets
Specialty Paper $391,146 $ 371,986
Printing & Writing 316,099 293,509
Towel & Tissue 186,365 176,303
Corporate & Unallocated* 45,354 58,351
$938,964 $ 900,149
<FN>
* Industry segment assets do not include intersegment accounts
receivable, cash, deferred tax assets and certain other assets
which are not identifiable with industry segments.
</TABLE>
-6-
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS*
RESULTS OF OPERATIONS
NET SALES
For the three months ended September 30, 1999, net sales for the company
<PAGE>
were $245.8 million, an increase of 2% from the prior year's third
quarter net sales of $241.6 million. The total tons shipped for the
three months ended September 30, 1999 were 218,000 tons and also
increased 2% over the prior years third quarter. For the first nine
months of 1999, net sales were $706.5 million compared to $722.9 million
in 1998, or a decrease of 2%. Shipments for the nine months ended
September 30, 1999 were 636,000 tons compared to 632,000 tons in the
prior year.
Net sales for the Specialty Paper Group were $103.5 million compared to
$103.0 million for the third quarters of 1999 and 1998, respectively.
Total tons shipped were 91,000 compared to 90,000 for the third quarter
of 1999 compared to 1998. Average selling prices were lower in the third
quarter of 1999 compared to 1998 due to continued competitive conditions,
particularly in the pressure sensitive products marketed by the
Rhinelander and Otis mills. For the first nine months of 1999, Specialty
Paper Group sales were $301.1 million, down 7% over the same period a
year ago. Shipment volume was 271,000 tons in the first nine months of
1999 and was down 3% from the comparable period in 1998. The principal
reason for the reduction in year-to-date shipment volume was the rebuild
of the Otis #11 paper machine during the second quarter of 1999.
Third quarter sales for the Printing & Writing Group were $100.1 million
in 1999 compared to $99.1 million in 1998, an increase of 1%. Shipment
volume was comparable for both quarters and selling prices improved
approximately 1% over the prior year's third quarter. Printing & Writing
sales were $289.9 million for the first nine months of 1999, very near
the first nine months of 1998 sales of $288.2 million. On a year-to-date
basis shipments were up 2% over that of 1998.
Net sales for the Towel & Tissue Group for the quarter ended September
30, 1999 were $42.2 million, an increase of 7% over the third quarter
net sales in 1998. Shipments were up 10% over the third quarter's
volume in 1998 and were 34,000 tons in the third quarter of 1999.
Competitive conditions in the "away-from-home" towel and tissue markets
caused average selling prices to decline from year ago levels. Net
sales for the Towel & Tissue Group were $115.6 million for the first
nine months of 1999 compared to $111.3 million in the same period
* Matters discussed in this report with respect to the company's
expectations are forward-looking statements that involve risks and
uncertainties. See "Information Concerning Forward-Looking
Statements."
-7-
of 1998. Shipments improved to 92,000 tons, an increase of 9% over that
of the first nine months of 1998.
Order backlog of 47,000 tons at September 30, 1999 was strong in all
operating groups and compared favorably to order backlog at September 30,
1998 of 32,000 tons. However, the company believes backlog totals do not
entirely indicate the strength of its business, since a substantial
percentage of orders are shipped out of inventory promptly upon receipt.
GROSS PROFIT
<PAGE>
Gross profit for the three months ended September 30, 1999 was $33.7
million or 13.7% of net sales, compared to gross profit for the same
period of 1998 of $42.3 million or 17.5% of net sales. The decline in
gross profit margin from 1998 is due primarily to lower selling prices
for a significant portion of the company's products due to continuing
competitive market pressures along with escalating raw material and other
manufacturing costs. Nine month year-to-date margins for 1999 declined
by 3.5 percentage points as a result of similar business conditions to
the quarterly comparison. Continuing increases in raw material and other
manufacturing costs may result in lower gross profit margins for the
Company if the increased costs are not recovered through higher selling
prices. Fiber cost increases are expected to continue in the short term.
The Specialty Paper Group's gross profit margin decreased from 12.5% of
net sales in the third quarter of 1998 to 6.8% this year. The margin
decline was principally due to lower selling prices for the Group's
products, in particular, pressure sensitive products. Raw material and
other manufacturing costs also increased during the quarter and
compressed margins. For the first nine months of 1999 gross profit
margins were 10.2% for the Specialty Paper Group, compared to 15.9% in
the prior year's first nine months. This decline in margins was
principally due to lower selling prices.
The Printing & Writing Group's gross profit margin for the third quarter
of 1999 was 16.9% compared to 20.1% for the prior year. For the first
nine months of 1999 gross profit margin was 17.3% compared to 18.9% for
1998. The decline in margin was due principally to lower selling prices
and higher pulp mill operational costs.
The gross profit margin for the Towel & Tissue Group was 22.4% for the
third quarter of 1999, a decrease of 3.0% from the prior year's gross
margin of 23.0%. For the first nine months of 1999 the Group's gross
profit margin declined by 8% to 24.0% compared to 26.0% in 1998. Volume
increases along with improved production levels favorably impacted gross
profit margins for both the quarter and the first nine months of 1999.
However, selling prices declined during both comparative periods and
resulted in overall lower gross profit margins. Wastepaper costs were
higher in the quarterly comparison and also negatively impacted gross
margins.
-8-
SELLING AND ADMINISTRATIVE EXPENSES
Selling and administrative expenses for the three months ended September
30, 1999 were $11.2 million compared to $8.8 million in the same period
in 1998. Adjustments for incentive compensation programs based on the
market price of the company's stock accounted for $2.4 million of the
quarter over quarter variance as income of $4.2 million was recorded for
the current quarter compared to income of $6.6 million in the third
quarter of 1998. The balance of the increase in expense is attributable
to increased retirement plan costs and general inflationary trends
offset by continued merger savings and reduced bonus expense.
For the nine months ended September 30, 1999, selling and administrative
expenses were $44.2 million compared to $42.5 million in the first nine
months of 1998. Adjustments for stock incentive programs resulted in
<PAGE>
income of $3.6 million in 1999 compared to income of $4.5 million in
1998. Other year to date changes were similar to those discussed for
the quarterly comparison noted above.
CAPITAL RESOURCES AND LIQUIDITY
CASH PROVIDED BY OPERATIONS
For the nine months ended September 30, 1999, cash provided by operations
was $54.7 million, compared to $89.5 million for the same period of 1998.
The decrease in operating cash flows was principally due to reduced
current year earnings when compared to pre-restructuring earnings for the
first nine months last year. In addition, a $23.5 million increase in
accounts receivable from the year-end balance has resulted in decreased
operating cash flows.
CAPITAL EXPENDITURES
Capital expenditures totaled $62.7 million for the nine months ended
September 30, 1999, compared to $54.6 million for the same period last
year.
During the first nine months of 1999, the Specialty Paper Group spent
$2.9 million completing the #1 paper machine upgrades, $2.4 million for a
woodroom modernization, $2.1 million for a wet lap machine and $3.6
million for a boiler precipitator at one of its mills and $16.7 million
on two machine rebuilds at another mill. These projects, when completed,
should expand the production capacity of both mills, add new
manufacturing capabilities and improve the sales mix. The Printing &
Writing Group has spent nearly $8 million in the first nine months of
1999 on a pulp mill digester upgrade, a machine dry-end upgrade, a stock
blending system, and a boiler conversion at two of its mills. The Towel
& Tissue Group has spent $4.4 million to add new converting lines in
order to keep up production for the increased demand for the Bay West
"away-from-home" toweling and tissue products.
In addition to the $62.7 million spent in the first nine months of 1999
for capital assets, the company has commitments to spend another $15.5
million this year. Total capital expenditures for 1999 should
approximate $85 million.
-9-
At the April 1999 meeting, the Board of Directors approved $45 million in
capital improvements at the Specialty Paper Group's Rhinelander mill,
most of which will be expended in 2000. The improvements will upgrade
the production process for pressure sensitive papers to surpass the
customers' technical requirements and improve their operating
efficiencies, while at the same time improving the company's product mix.
These capital improvements are expected to be fully implemented by the
third quarter of the year 2000.
FINANCING
Total current and long-term debt increased for the nine months ended
September 30, 1999 to $227.9 million. The increase in total debt from
<PAGE>
December 1998 is principally due to the authorized repurchase of the
Company's stock during the first nine months of 1999 and the increase in
working capital needs from year end.
Interest expense was $3.2 million in the third quarter of 1999 compared
to $1.7 million in the same period of 1998. The increase in interest
expense is the result of higher funded debt levels in 1999 compared to
1998. The increase as a result of higher debt levels has been partially
offset by reduced borrowing rates and increased capitalized interest.
On August 31, 1999, the Company closed and funded a private placement
note offering for $138,500,000. The principal amounts, maturities, and
interest rates on the notes are: (1) $35,000,000, 8 years, 7.20%; (2)
$68,500,000, 10 years, 7.31%; and (3) $35,000,000, 12 years, 7.43%. The
Company also entered into an interest rate swap agreement under which the
interest rate paid by the Company with respect to (1) $58,500,000 of the
10-year notes will be the three month LIBOR rate, plus .4925% and (2)
$30,000,000 of the 12-year notes will be the three month LIBOR rate, plus
.55%. The proceeds from the notes were utilized to pay down existing
bank facilities and other maturing obligations.
Cash provided by operations and the Company's borrowing capacity are
expected to meet capital needs and dividends. The Company also plans to
refinance the existing outstanding bank revolving credit agreement prior
to year end.
COMMON STOCK REPURCHASE
In August, 1998 the Board of Directors authorized the company to
repurchase up to 5,650,000 shares of common stock, subject to adjustment
for future stock splits or dividends. This repurchase authorization
represents approximately ten percent of the shares then outstanding.
Under this authorization, the company repurchased an aggregate of
2,006,926 shares during the nine-month period ended September 30, 1999.
An additional 200,000 shares were purchased subsequent to September 30,
bringing the total to 5,432,026 shares purchased under this
authorization.
-10-
DIVIDENDS
A quarterly cash dividend of $.07 per share was paid February 15 and
cash dividends of $.08 per share were paid on May 17, 1999 and August 16,
1999. On October 21, 1999, the Board of Directors declared a quarterly
cash dividend of $.08 payable November 15, 1999 to shareholders of
record on November 1, 1999.
YEAR 2000
Year 2000 issues apply to the Company's computerized manufacturing
process controllers, environmental systems, order processing, inventory
management, the shipment of finished goods, and internal financial and
other information systems. Year 2000 issues also apply to the Company's
suppliers and customers. For purposes of this discussion, the terms "Year
2000 issues" or "Year 2000 problems", or terms of similar import, refer
to the potential failure of computer applications as a result of the
<PAGE>
failure of a program or hardware to properly recognize the year 2000 and
to properly handle dates beyond the year 1999. The term "Year 2000
readiness", or terms of similar import, mean that the particular
equipment or processes referred to have been modified or replaced and
the Company believes that such modified or replaced equipment or
processes will operate as designed after 1999 without Year 2000
problems.
Readiness
The Company has completed an inventory of mission critical information
systems, process equipment, and manufacturing facilities. The Company
continues to evaluate and test equipment, environmental controls, and
other core functions. An assessment of these functions was completed
during the second quarter with testing having been now completed in its
entirety. The Company believes that the most critical information
systems, primarily the sales order processing, inventory, and shipping
systems, are now Year 2000 ready. The Company's enterprise resource
planning system ("ERP") which was intended to bring the remainder of the
Company's information systems to Year 2000 readiness is now complete.
The broader, non-Year 2000 aspects of the ERP system will be fully
implemented in 2001 and beyond.
Costs
The costs of achieving Year 2000 readiness have not been material to
date and are not expected to be material. The cost of remediation for
key papermaking process controls and equipment is expected to be less
than $2 million. Internal costs for Year 2000 readiness are not being
tracked, but principally relate to payroll costs of Company personnel.
The implementation of the Company-wide ERP system is expected to require
a capital investment of approximately $7.0 million. Although the ERP
implementation timetable was not accelerated to address Year 2000 issues,
those issues were considered in determining the overall timetable for its
implementation.
-11-
Risks
The Company expects no material adverse effect on its consolidated
financial condition, liquidity or results of operations (collectively,
its "business") as a result of problems encountered in its own business
as a result of Year 2000 issues or as a result of the impact of Year 2000
problems on its customers or vendors. However, the risks to the Company
associated with Year 2000 issues are many.
The Company's assessment of possible Year 2000 related problems depends,
to some extent, on the assurances and guidance provided it by the
suppliers of the technology as to its Year 2000 readiness. In addition,
the Company has limited ability to independently verify the possible
effect of Year 2000 problems on its customers and vendors. Therefore, the
Company's assumptions concerning the effect of Year 2000 issues relies,
in part, on its ability to analyze the business and operations of each
of its critical vendors or customers. This process is, by the nature of
the problem, limited to such persons' public statements, their responses
<PAGE>
to the Company's inquiries, and the information available to the Company
from third parties concerning the industries or particular vendors or
customers involved.
The Company expects that Year 2000 problems which cause customers to be
unable to place orders would have a material adverse impact on its
business only if the problem was widespread and long-lived. The Company
has a broad customer base, which would likely alleviate the adverse
effects of isolated customer Year 2000 problems.
Some risk also exists that, despite the Company's best efforts, critical
manufacturing systems may malfunction due to Year 2000 problems and
curtail the manufacturing process. The Company does not anticipate such
interruptions and it is unlikely any such curtailment would be lengthy.
With eleven manufacturing facilities, a temporary interruption at one
facility is unlikely to have a material adverse impact on the Company's
business.
Interruption of raw material supply due to supplier problems caused by
Year 2000 issues are not expected to be material as the Company stocks
raw materials to protect against supply problems and alternative sources
of supply exist to meet the Company's raw material needs. Similarly,
although the Company faces potential disruptions in its operations from
Year 2000 problems as a result of the failure of the power grid,
telecommunications, or other abilities, it is not aware that any
material disruption in these infrastructures is reasonably likely to
occur and the number and widespread location of its facilities is likely
to minimize the impact of any disruption.
Contingency Plan
The Company has evaluated various contingencies that may arise as a
result of Year 2000 issues. The Company anticipates that disruptions in
production, sales, the supply of raw materials, loss of customer orders,
and other foreseeable effects of the Year 2000 issues can be addressed
following normal business alternatives. The Company will continue to
analyze and develop contingency plans where possible and not cost
prohibitive.
-12-
INFORMATION CONCERNING FORWARD LOOKING STATEMENTS
This report contains certain of management's expectations and other
forward-looking information regarding the Company pursuant to the safe-
harbor provisions of the Private Securities Litigation Reform Act of
1995. While the Company believes that these forward-looking statements
are based on reasonable assumptions, such statements are not guarantees
of future performance and all such statements involve risk and
uncertainties that could cause actual results to differ materially from
those contemplated in this report. The assumptions, risks and
uncertainties relating to the forward-looking statements in this report
include general economic and business conditions, changes in the prices
of raw materials, competitive pricing in the markets served by the
Company as a result of economic conditions or overcapacity in the
industry, and possible adverse effects on the Company or the economy
<PAGE>
from Year 2000 problems. These and other assumptions, risks and
uncertainties are described under the caption "Cautionary Statement
Regarding Forward-Looking Information" in Item 1 of the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, and, from time
to time, in the Company's other filings with the Securities and Exchange
Commission.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company does not have a material market risk associated with
interest rate risk, foreign currency exchange risk, or commodity price
risk. The Company conducts U.S. dollar denominated export transactions or
immediately exchanges all foreign currency attributable to export sales
for U.S. dollars.
On July 26, 1999, the Company entered into an interest rate swap
agreement with respect to an aggregate of $88,500,000 in principal amount
of the notes issued pursuant to its $138,500,000 Note Purchase Agreement
dated August 31, 1999 (the "Notes"). The Notes bear interest at fixed
rates over 8, 10, and 12 year terms. The purpose of the interest rate
swap agreement is to reduce the Company's exposure to long-term rates
under the Notes by converting a portion of the interest to short-term
rates. The Company's rate risk under the agreement is based on the
3-month LIBOR rate.
The Company maintains certain derivative commodity instruments as hedges
for anticipated transactions. Such instruments do not have a material
market risk and no such derivative commodity instrument is held for
trading. These instruments have consisted, from time to time, of various
futures contracts for the purchase of natural gas and fuel oil. The
Company continues to consider the purchase of pulp futures contracts as
a hedge against pulp price increases. See Notes 1 and 14 of "Notes to
Consolidated Financial Statements" for additional information relating
to the Company's derivative commodity instruments.
-13-
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In 1997, the Attorney General of the State of Florida filed a civil
complaint in the United States District Court for the Northern District
of Florida against ten manufacturers of commercial sanitary paper
products, including the Company's wholly owned subsidiary, Bay West Paper
Corporation. The lawsuit alleges a conspiracy to fix prices of commercial
sanitary paper products starting at least as early as 1993. Since the
filing of this lawsuit, numerous class action suits have been filed by
private direct purchasers of commercial sanitary paper products in
various federal district courts throughout the country and additional
federal lawsuits have been filed by the Attorneys General of the States
of Kansas, Maryland, New York, and West Virginia. All of these federal
cases have been certified as class actions and consolidated in a
multi-district litigation proceeding in the United States District Court
for the Northern District of Florida in Gainesville. Certain indirect
<PAGE>
purchasers of sanitary commercial paper products have also filed class
action lawsuits in various state courts alleging a conspiracy to fix
prices under state antitrust laws. No class has been certified in the
state actions. All of these actions are in early stages. In the opinion
of management, the Company has not violated any antitrust laws. The
Company is vigorously defending these claims.
-14-
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits required by Item 601 of Regulation S-K
The following exhibits are filed with the Securities and Exchange
Commission as part of this report:
Exhibit
NUMBER DESCRIPTION
3.1 Restated Articles of Incorporation, as amended October 21, 1998
(incorporated by reference to Exhibit 3.1 to the Company's
Current Report on Form 8-K dated October 21, 1998)
3.2 Restated Bylaws, as amended December 17, 1997 (incorporated by
reference to Exhibit 4.2 to the Company's Registration Statement
on Form S-8 dated December 17, 1997)
4.1 Rights Agreement, dated as of October 21, 1998, between the
Company and Harris Trust and Savings Bank, including the Form of
Restated Articles of Incorporation as Exhibit A and the Form of
Rights Certificate as Exhibit B (incorporated by reference to
Exhibit 4.1 to the Company's Current Report on Form 8-K dated
October 21, 1998)
4.2 Summary of Rights to Purchase Preferred Shares, Exhibit C to
Rights Agreement filed as Exhibit 4.1 hereto (incorporated by
reference to Exhibit 4.2 to the Company's Registration Statement
on Form 8-A, filed on October 29, 1998)
4.3 $138,500,000 Note Purchase Agreement dated August 31, 1999
10.1 Supplemental Retirement Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.2 Incentive Compensation Plans (Printing & Writing Division and
Technical Specialty Division), as amended September 17, 1997
(incorporated by reference to Exhibit 10.2 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
November 30, 1997)*
10.3 Corporate Management Incentive Plan, as amended September 18,
1996 (incorporated by reference to Exhibit 10(c) to the
Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1996)*
<PAGE>
-15-
10.4 1988 Stock Appreciation Rights Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.4 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.5 1988 Management Incentive Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.5 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.6 1990 Stock Appreciation Rights Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.6 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.7 Deferred Compensation Agreement dated July 1, 1994, as last
amended March 4, 1999 (incorporated by reference to Exhibit 10.7
to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1998)*
10.8 1991 Employee Stock Option Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.8 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.9 1991 Dividend Equivalent Plan, as last amended March 4, 1999
(incorporated by reference to Exhibit 10.9 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
10.10 Supplemental Retirement Benefit Plan dated January 16, 1992, as
last amended March 4, 1999 (incorporated by reference to
Exhibit 10.10 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)*
10.11 Directors' Deferred Compensation Plan, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.11 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998)*
10.12 Directors Retirement Benefit Policy, as amended April 16, 1998
(incorporated by reference to Exhibit 10.12 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998)*
10.13 Transition Benefit Agreement with former President and CEO
(incorporated by reference to Exhibit 10.13 to the Company's
Annual Report on Form 10-K for the fiscal year ended August 31,
1997)*
10.14 Mosinee Paper Corporation 1985 Executive Stock Option Plan, as
last amended March 4, 1999 (incorporated by reference to Exhibit
10.14 to the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1998)*
<PAGE>
10.15 Mosinee Paper Corporation 1988 Stock Appreciation Rights Plan,
as last amended March 4, 1999 (incorporated by reference to
Exhibit 10.15 to the Company's Annual Report on Form 10-K for
-16-
the fiscal year ended December 31, 1998)*
10.16 Mosinee Paper Corporation 1996 and 1997 Incentive Compensation
Plans for Corporate Executive Officers (incorporated by
reference to Exhibit 10.16 to the Company's Transition Report
on Form 10-Q for the transition period ended December 31,
1997)*
10.18 Mosinee Paper Corporation Supplemental Retirement Benefit
Agreement dated November 15, 1991, as last amended March 4,
1999 (incorporated by reference to Exhibit 10.18 to the
Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998)*
10.19 Mosinee Paper Corporation 1994 Executive Stock Option Plan, as
last amended March 4, 1999 (incorporated by reference to
Exhibit 10.19 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1998)*
10.20 Incentive Compensation Plan for Executive Officers (1998)
(incorporated by reference to Exhibit 10.20 to the Company's
Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1998)*
10.21 1999 Incentive Compensation Plan for Executive Officers
(incorporated by reference to Exhibit 10.21 to the Company's
Annual Report on Form 10-K for the fiscal year ended December
31, 1998)*
21.1 Subsidiaries as of September 30, 1999
27.1 Financial Data Schedule (filed electronically only)
* Executive compensation plans or arrangements. All plans are
sponsored or maintained by the Company unless otherwise noted.
(b) Reports on Form 8-K:
None.
-17-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
WAUSAU-MOSINEE PAPER CORPORATION
November 12, 1999 GARY P. PETERSON
Gary P. Peterson
Senior Vice President-Finance,
Secretary and Treasurer
(On behalf of the Registrant and as
Principal Financial Officer)
-18-
EXHIBIT INDEX
TO
FORM 10-Q
OF
WAUSAU-MOSINEE PAPER CORPORATION
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
Pursuant to Section 102(d) of Regulation S-T
(17 C.F.R. <section> 232.102(d))
EXHIBIT 4.3 $138,000,000 NOTE PURCHASE AGREEMENT DATED AUGUST 31, 1999
EXHIBIT 27.1 FINANCIAL DATA SCHEDULE
Exhibit 4.3
WAUSAU-MOSINEE PAPER CORPORATION
$35,000,000
7.20% Series A Senior Notes due August 31, 2007
* * * * * * * *
$68,500,000
7.31% Series B Senior Notes due August 31, 2009
* * * * * * * *
$35,000,000
7.43% Series C Senior Notes due August 31, 2011
* * * * * * * *
NOTE PURCHASE AGREEMENT
Dated as of August 31, 1999
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
1. AUTHORIZATION OF NOTES ....................................1
2. SALE AND PURCHASE OF NOTES ................................1
3. CLOSING ...................................................1
4. CONDITIONS TO CLOSING .....................................2
4.1. Representations and Warranties ......................2
4.2. Performance; No Default .............................3
4.3. Compliance Certificates .............................3
4.4. Opinions of Counsel .................................3
4.5. Purchase Permitted By Applicable Law, etc. ..........4
4.6. Sale of Other Notes .................................4
4.7. Payment of Special Counsel Fees .....................4
4.8. Private Placement Number ............................4
4.9. Changes in Corporate Structure ......................4
4.10.Proceedings and Documents ............................5
4.11.Subsidiary Guaranties ................................5
4.12.Intercreditor Agreement ..............................5
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY .............5
5.1. Organization; Power and Authority ...................5
5.2. Authorization, etc. .................................6
5.3. Disclosure ..........................................6
5.4. Organization and Ownership of Shares of
Restricted Subsidiaries .............................6
5.5. Financial Statements ................................7
5.6. Compliance with Laws, Other Instruments, etc. .......8
5.7. Governmental Authorizations, etc. ...................8
5.8. Litigation; Observance of Statutes and Orders .......8
5.9. Taxes ...............................................9
5.10. Title to Property; Leases ..........................9
5.11. Licenses, Permits, etc. ............................9
5.12. Compliance with ERISA ..............................9
5.13. Private Offering by the Company ...................10
5.14. Use of Proceeds; Margin Regulations ...............11
5.15. Existing Indebtedness .............................11
5.16. Foreign Assets Control Regulations, etc. ..........12
5.17. Status under Certain Statutes .....................12
5.18. Year 2000 Compliance ..............................12
5.19. Environmental Matters .............................12
6. REPRESENTATIONS OF THE PURCHASER .........................13
6.1. Purchase for Investment ............................13
6.2. Source of Funds ....................................13
7. INFORMATION AS TO COMPANY ................................15
7.1. Financial and Business Information .................15
7.2. Officer's Certificate. .............................17
7.3. Inspection .........................................18
7.4. Information Required by Rule 144A ..................19
<PAGE>
8. PREPAYMENT OF THE NOTES ..................................19
8.1. Optional Prepayments with Make-Whole Amount ........19
8.2. Allocation of Partial Prepayments ..................19
8.3. Maturity; Surrender, etc. ..........................20
8.4. Purchase of Notes ..................................20
8.5. Make-Whole Amount ..................................20
8.6. Prepayment of Notes upon Change in Control .........22
9. AFFIRMATIVE COVENANTS ....................................23
9.1. Compliance with Law ................................23
9.2. Insurance ..........................................24
9.3. Maintenance of Properties ..........................24
9.4. Payment of Taxes ...................................24
9.5. Corporate Existence, etc. ..........................25
9.6. Status as Senior Debt. .............................25
9.7. Designations With Respect to Restricted
Subsidiaries .......................................25
10. NEGATIVE COVENANTS ......................................26
10.1. Transactions with Affiliates ......................26
10.2. Merger, Consolidation, etc. .......................27
10.3. Adjusted Consolidated Net Worth ...................27
10.4. Limitation on Consolidated Total Debt .............28
10.5. Limitation on Priority Debt .......................28
10.6. Restricted Subsidiary Debt ........................29
10.7. Limitation on Liens ...............................30
10.8. Limitation on Sale of Assets ......................32
10.9. Nature of Business ................................32
10.10. Limitation on Speculative Swaps ...................33
11. EVENTS OF DEFAULT .......................................33
12. REMEDIES ON DEFAULT, ETC. ...............................36
12.1. Acceleration ......................................36
12.2. Other Remedies ....................................36
12.3. Rescission ........................................37
12.4. No Waivers or Election of Remedies,
Expenses, etc. ....................................37
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ...........37
13.1. Registration of Notes .............................37
13.2. Transfer and Exchange of Notes ....................38
13.3. Replacement of Notes ..............................38
14. PAYMENTS ON NOTES .......................................39
14.1. Place of Payment ..................................39
14.2. Home Office Payment ...............................39
15. EXPENSES, ETC. ..........................................40
15.1. Transaction Expenses ..............................40
15.2. Survival ..........................................40
16.SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT .................................................41
<PAGE>
17. AMENDMENT AND WAIVER ....................................41
17.1. Requirements ......................................41
17.2. Solicitation of Holders of Notes ..................41
17.3. Binding Effect, etc. ..............................42
17.4. Notes held by Company, etc. .......................42
18. NOTICES .................................................43
19. REPRODUCTION OF DOCUMENTS ...............................43
20. CONFIDENTIAL INFORMATION ................................43
21. SUBSTITUTION OF PURCHASER ...............................44
22. MISCELLANEOUS ...........................................45
22.1. Successors and Assigns ............................45
22.2. Payments Due on Non-Business Days .................45
22.3. Severability ......................................45
22.4. Construction ......................................46
22.5. Counterparts ......................................46
22.6. Governing Law .....................................46
SCHEDULE A -- INFORMATION RELATING TO PURCHASERS
SCHEDULE B -- DEFINED TERMS
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company
and Ownership of Subsidiary
Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.15 -- Existing Indebtedness
SCHEDULE 5.17--Certain Regulatory Matters
SCHEDULE 10.3-Existing Investments
SCHEDULE 10.6--Existing Guaranties
SCHEDULE 10.7--Existing Liens
EXHIBIT 1 --Form of Series A Senior Note
EXHIBIT 2 --Form of Series B Senior Note
EXHIBIT 3 --Form of Series C Senior Note
EXHIBIT 4.4(a) -- Form of Opinion of Special Counsel
for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel
for the Purchasers
EXHIBIT 4.11 -- Form of Guaranty Agreement
<PAGE>
Wausau-Mosinee Paper Corporation
1244 Kronenwetter Drive
Mosinee, Wisconsin 54455
August 31, 1999
TO EACH OF THE PURCHASERS LISTED IN
THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
Wausau-Mosinee Paper Corporation, a Wisconsin corporation (the
"COMPANY"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of (i) $35,000,000
aggregate principal amount of its 7.20% Series A Senior Notes due
August 31, 2007 (the "SERIES A NOTES"), (ii) $68,500,000 aggregate
principal amount of its 7.31% Series B Senior Notes due August 31, 2009
(the "SERIES B NOTES"), and (iii) $35,000,000 aggregate principal
amount of its 7.43% Series C Senior Notes due August 31, 2011 (the
"SERIES C NOTES"; the Series A Notes, Series B Notes and Series C Notes
being, collectively, the "NOTES", and the term Notes is to include any
such notes issued in substitution therefor pursuant to Section 13 of
this Agreement or the Other Agreements (as hereinafter defined)). The
Series A Notes, Series B Notes and Series C Notes shall be
substantially in the forms set out in Exhibits 1, 2 and 3,
respectively, with such changes therefrom, if any, as may be approved
by you and the Company. Certain capitalized terms used in this
Agreement are defined in Schedule B; references to a "SCHEDULE" or an
"EXHIBIT" are, unless otherwise specified, to a Schedule or an Exhibit
attached to this Agreement.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at
the Closing provided for in Section 3, Notes of the Series and in the
principal amount specified opposite your name in Schedule A at the
purchase price of 100% of the principal amount thereof.
Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "OTHER
AGREEMENTS") identical with this Agreement with each of the other
purchasers named in Schedule A (the "OTHER PURCHASERS"), providing for
the sale at such Closing to each of the Other Purchasers of Notes in
the principal amount of the Series specified opposite its name in
Schedule A. Your obligation hereunder and the obligations of the Other
Purchasers under the Other Agreements are several and not joint
obligations and you shall have no obligation under any Other Agreement
and no liability to any Person for the performance or non-performance
by any Other Purchaser thereunder.
<PAGE>
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Schiff Hardin & Waite,
6600 Sears Tower, Chicago, Illinois 60606, at 10:00 a.m., Chicago time,
at a closing (the "CLOSING") on August 31, 1999 or on such other
Business Day thereafter as may be agreed upon by the Company and you
and the Other Purchasers. At the Closing the Company will deliver to
you the Notes to be purchased by you in the form of a single Note (or
such greater number of Notes in denominations of at least $100,000 as
you may request) dated the date of the Closing and registered in your
name (or in the name of your nominee), against delivery by you to the
Company or its order of immediately available funds in the amount of
the purchase price therefor by wire transfer of immediately available
funds for the account of the Company to account number 319406 at M&I
Marshall & Ilsley Bank, Milwaukee, Wisconsin, ABA Routing No.
075000051, Contact: Sheri L. Craker (715) 692-2024. If at the Closing
the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall
not have been fulfilled to your satisfaction, you shall, at your
election, be relieved of all further obligations under this Agreement,
without thereby waiving any rights you may have by reason
of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you
at the Closing is subject to the fulfillment to your satisfaction,
prior to or at the Closing, of the following conditions:
-2-
4.1. REPRESENTATIONS AND WARRANTIES.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2. PERFORMANCE; NO DEFAULT.
The Company shall have performed and complied with all agreements
and conditions contained in this Agreement required to be performed or
complied with by it prior to or at the Closing and after giving effect
to the issue and sale of the Notes (and the application of the proceeds
thereof as contemplated by Section 5.14) no Default or Event of Default
shall have occurred and be continuing.
4.3. COMPLIANCE CERTIFICATES.
(a) OFFICER'S CERTIFICATE. The Company shall have delivered to
you an Officer's Certificate, dated the date of the Closing, certifying
that the conditions specified in Sections 4.1, 4.2 and 4.9 have been
fulfilled.
(b) SECRETARY'S CERTIFICATE. (i) The Company shall have
delivered to you a certificate certifying as to the resolutions
attached thereto and other corporate proceedings relating to the
authorization, execution and delivery of the Notes, this Agreement and
<PAGE>
the Other Agreements. (ii) Each Guarantor shall have delivered to you
a certificate certifying as to the resolutions attached thereto and
other corporate proceedings relating to the authorization, execution
and delivery of the Guaranty Agreements contemplated by Section 4.11.
4.4. OPINIONS OF COUNSEL.
You shall have received opinions in form and substance satisfactory
to you, dated the date of the Closing (a) from Ruder, Ware & Michler, a
Limited Liability S.C., counsel for the Company, covering the matters
set forth in Exhibit 4.4(a) and covering such other matters incident to
the transactions contemplated hereby as you or your counsel may
reasonably request (and the Company hereby instructs its counsel to
deliver such opinion to you) and (b) from Schiff Hardin & Waite, your
special counsel in connection with such transactions, substantially in
the form set forth in Exhibit 4.4(b) and covering such other matters
incident to such transactions as you may reasonably request.
-3-
4.5. PURCHASE PERMITTED BY APPLICABLE LAW, ETC.
On the date of the Closing your purchase of Notes shall (i) be
permitted by the laws and regulations of each jurisdiction to which you
are subject, without recourse to provisions (such as Section 1405(a)(8)
of the New York Insurance Law) permitting limited investments by
insurance companies without restriction as to the character of the
particular investment, (ii) not violate any applicable law or
regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (iii) not subject
you to any tax, penalty or liability under or pursuant to any
applicable law or regulation, which law or regulation was not in effect
on the date hereof. If requested by you, you shall have received an
Officer's Certificate certifying as to such matters of fact as you may
reasonably specify to enable you to determine whether such purchase is
so permitted.
4.6. SALE OF OTHER NOTES.
Contemporaneously with the Closing the Company shall sell to the
Other Purchasers and the Other Purchasers shall purchase each Series of
the Notes to be purchased by them at the Closing as specified in
Schedule A.
4.7. PAYMENT OF SPECIAL COUNSEL FEES.
Without limiting the provisions of Section 15.1, the Company shall
have paid on or before the Closing the fees, charges and disbursements
of your special counsel referred to in Section 4.4 to the extent
reflected in a statement of such counsel rendered to the Company at
least one Business Day prior to the Closing.
4.8. PRIVATE PLACEMENT NUMBER.
A Private Placement number issued by Standard & Poor's CUSIP
Service Bureau (in cooperation with the Securities Valuation Office of
the National Association of Insurance Commissioners) shall have been
<PAGE>
obtained for each Series of Notes.
4.9. CHANGES IN CORPORATE STRUCTURE.
The Company shall not have changed its jurisdiction of
incorporation or been a party to any merger or consolidation and shall
not have succeeded to all or any substantial part of the liabilities of
any other entity, at any time following the date of the most recent
financial statements referred to in Schedule 5.5.
-4-
4.10. PROCEEDINGS AND DOCUMENTS.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and
instruments incident to such transactions shall be satisfactory to you
and your special counsel, and you and your special counsel shall have
received all such counterpart originals or certified or other copies of
such documents as you or they may reasonably request.
4.11. SUBSIDIARY GUARANTIES.
The Company shall have caused to be duly delivered to you the
Closing Date Guaranty Agreement duly executed by each Guarantor.
4.12. INTERCREDITOR AGREEMENT.
The Company shall have caused to be duly delivered to you the
Intercreditor Agreement duly executed by each party thereto.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1. ORGANIZATION; POWER AND AUTHORITY.
The Company is a corporation duly organized, validly existing and
in active status under the laws of its jurisdiction of incorporation,
and is duly qualified as a foreign corporation and is in good standing
in each jurisdiction in which such qualification is required by law,
other than those jurisdictions as to which the failure to be so
qualified or in good standing would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
The Company has the corporate power and authority to own or hold under
lease the properties it purports to own or hold under lease, to
transact the business it transacts and proposes to transact, to execute
and deliver this Agreement and the Other Agreements and the Notes and
to perform the provisions hereof and thereof.
-5-
5.2. AUTHORIZATION, ETC.
This Agreement and the Other Agreements and the Notes have been
duly authorized by all necessary corporate action on the part of the
Company, and this Agreement constitutes, and upon execution and
delivery thereof each Note will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by (i)
<PAGE>
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and (ii) general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
5.3. DISCLOSURE.
The Company, through its agent, Banc One Capital Markets, Inc. has
delivered to you and each Other Purchaser a copy of a Confidential
Offering Memorandum, dated July, 1999 (the "MEMORANDUM"), relating to
the transactions contemplated hereby. This Agreement, the Memorandum,
the documents, certificates or other writings identified in Schedule
5.3 and the financial statements listed in Schedule 5.5, taken as a
whole, do not contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
Since December 31, 1998, there has been no change in the financial
condition, operations, business or properties of the Company or any of
its Restricted Subsidiaries except changes that individually or in the
aggregate would not reasonably be expected to have a Material Adverse
Effect.
5.4. ORGANIZATION AND OWNERSHIP OF SHARES OF RESTRICTED SUBSIDIARIES.
(a) Schedule 5.4 is a complete and correct list of the Company's
Restricted Subsidiaries, showing, as to each Restricted Subsidiary,
the correct name thereof, the jurisdiction of its organization, and the
percentage of shares of each class of its capital stock or similar
equity interests outstanding owned by the Company and each other
Restricted Subsidiary. As of the date hereof (and, if different, the
date of Closing), all Subsidiaries of the Company are Restricted
Subsidiaries.
(b) All of the outstanding shares of capital stock or similar
equity interests of each Restricted Subsidiary shown in Schedule 5.4 as
being owned by the Company and its Restricted Subsidiaries have been
validly issued, are fully paid and nonassessable (subject to Section
180.0622(2)(b) of the Wisconsin Business Corporation Law, relating to
shareholders' liability for employee wages, in the case of Wisconsin
corporations) and are owned by the Company or another Restricted
Subsidiary free and clear of any Lien.
-6-
(c) Each Restricted Subsidiary identified in Schedule 5.4 is a
corporation or other legal entity duly organized, validly existing and
in good standing under the laws of its jurisdiction of organization,
and is duly qualified as a foreign corporation or other legal entity
and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to
which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect. Each such Restricted Subsidiary has the
corporate or other power and authority to own or hold under lease the
properties it purports to own or hold under lease and to transact the
business it transacts and proposes to transact.
(d) Each Guarantor has the corporate power and authority to
<PAGE>
execute, deliver and perform its obligations under the Closing Date
Guaranty Agreement. The Closing Date Guaranty Agreement has been duly
authorized by all necessary corporate action on the part of each
Guarantor. The Closing Date Guaranty Agreement constitutes a legal,
valid and binding obligation of each Guarantor enforceable against such
Guarantor in accordance with its terms, except as such enforceability
may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a
proceeding in equity or at law).
5.5. FINANCIAL STATEMENTS.
The Company has delivered to you and the Other Purchasers copies of
the financial statements of the Company and its Restricted Subsidiaries
listed on Schedule 5.5. All of said financial statements (including in
each case the related schedules and notes) fairly present in all
material respects the consolidated financial position of the Company
and its Restricted Subsidiaries as of the respective dates specified in
such Schedule and the consolidated results of their operations and cash
flows for the respective periods so specified and have been prepared in
-7-
accordance with GAAP consistently applied throughout the periods
involved except as set forth in the notes thereto (subject, in the case
of any interim financial statements, to normal year-end adjustments).
5.6. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC.
The execution, delivery and performance by the Company of this
Agreement and the Notes, and the execution, delivery and performance by
each Guarantor of the Closing Date Guaranty Agreement, will not
(i) contravene, result in any breach of, or constitute a default under,
or result in the creation of any Lien in respect of any property of the
Company or any Restricted Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate
charter or by-laws, or any other Material agreement or instrument to
which the Company or any Restricted Subsidiary is bound or by which the
Company or any Restricted Subsidiary or any of their respective
properties may be bound or affected, (ii) conflict with or result in a
breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Company or any Restricted Subsidiary or
(iii) violate any provision of any statute or other rule or regulation
of any Governmental Authority applicable to the Company or any
Restricted Subsidiary.
5.7. GOVERNMENTAL AUTHORIZATIONS, ETC.
No consent, approval or authorization of, or registration, filing
or declaration with, any Governmental Authority is required in
connection with (a) the execution, delivery or performance by the
Company of this Agreement or the Notes, or (b) the execution, delivery
or performance by any Guarantor of the Closing Date Guaranty Agreement.
<PAGE>
5.8. LITIGATION; OBSERVANCE OF STATUTES AND ORDERS.
(a) There are no actions, suits or proceedings pending or, to the
knowledge of the Company, threatened against or affecting the Company
or any Restricted Subsidiary or any property of the Company or any
Restricted Subsidiary in any court or before any arbitrator of any kind
or before or by any Governmental Authority that, individually or in the
aggregate, would reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Company nor any Restricted Subsidiary is in
default under any order, judgment, decree or ruling of any court,
arbitrator or Governmental Authority or is in violation of any
applicable law, ordinance, rule or regulation (including without
limitation Environmental Laws) of any Governmental Authority, which
default or violation, individually or in the aggregate, would
reasonably be expected to have a Material Adverse Effect.
-8-
5.9. TAXES.
The Company and its Restricted Subsidiaries have filed all income
tax returns that are required to have been filed in any jurisdiction,
and have paid all taxes shown to be due and payable on such returns and
all other taxes and assessments payable by them, to the extent such
taxes and assessments have become due and payable and before they have
become delinquent, except for any taxes and assessments (i) the amount
of which is not individually or in the aggregate Material or (ii) the
amount, applicability or validity of which is currently being contested
in good faith by appropriate proceedings and with respect to which the
Company or a Restricted Subsidiary, as the case may be, has established
adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company has been determined by the Internal Revenue
Service and paid for all fiscal years up to and including its fiscal
year (then) ended August 31, 1993.
5.10. TITLE TO PROPERTY; LEASES.
The Company and its Restricted Subsidiaries have good and
sufficient title to their respective Material properties, including all
such properties reflected in the most recent audited balance sheet
referred to in Section 5.5 or purported to have been acquired by the
Company or any Restricted Subsidiary after said date (except as sold or
otherwise disposed of in the ordinary course of business), in each case
free and clear of Liens prohibited by this Agreement, except for those
defects in title and Liens that, individually or in the aggregate,
would not have a Material Adverse Effect. All Material leases are
valid and subsisting and are in full force and effect in all material
respects.
5.11. LICENSES, PERMITS, ETC.
The Company and its Restricted Subsidiaries own or possess all
licenses, permits, franchises, authorizations, patents, copyrights,
service marks, trademarks and trade names, or rights thereto, that are
Material, without known conflict with the rights of others, except for
those conflicts that, individually or in the aggregate, would not have
a Material Adverse Effect.
<PAGE>
5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan in compliance with all applicable laws except
for such instances of noncompliance as have not resulted in and could
not reasonably be expected to result in a Material Adverse Effect.
Neither the Company nor any ERISA Affiliate has incurred any liability
pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined
in section 3 of ERISA), and no event, transaction or condition has
occurred or exists that would reasonably be expected to result in the
incurrence of any such liability by the Company or any ERISA Affiliate,
or in the imposition of any Lien on any of the rights, properties or
assets of the Company or any ERISA Affiliate, in either case pursuant
to Title I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code, other than such
liabilities or Liens as would not be individually or in the aggregate
Material.
-9-
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of
the end of such Plan's most recently ended plan year on the basis of
the actuarial assumptions specified for funding purposes in such Plan's
most recent actuarial valuation report, did not exceed the aggregate
current value of the assets of such Plan allocable to such benefit
liabilities by more than $12,000,000 in the case of any single Plan and
by more than $20,000,000 in the aggregate for all Plans. The term
"BENEFIT LIABILITIES" has the meaning specified in section 4001 of
ERISA and the terms "CURRENT VALUE" and "PRESENT VALUE" have the
meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of
Multiemployer Plans that individually or in the aggregate are Material.
(d) The expected postretirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in
accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage
mandated by section 4980B of the Code) of the Company and its
Restricted Subsidiaries is not Material.
(e) The execution and delivery of this Agreement and the issuance
and sale of the Notes hereunder will not involve any transaction that
is subject to the prohibitions of section 406 of ERISA or in connection
with which a tax could be imposed pursuant to section 4975(c)(1)(A)-(D)
of the Code. The representation by the Company in the first sentence
of this Section 5.12(e) is made in reliance upon and subject to the
accuracy of your representation in Section 6.2 as to the sources of the
funds to be used to pay the purchase price of the Notes to be purchased
by you.
5.13 PRIVATE OFFERING BY THE COMPANY.
<PAGE>
Neither the Company nor anyone acting on its behalf has offered the
Notes, the Closing Date Guaranty Agreement or any similar securities
for sale to, or solicited any offer to buy any of the same from, or
otherwise approached or negotiated in respect thereof with, any Person
other than you, the Other Purchasers and not more than 48 other
Institutional Investors, each of which has been offered the Notes and
the Closing Date Guaranty Agreement at a private sale for investment.
Neither the Company nor anyone acting on its behalf has taken, or will
take, any action that would subject the issuance or sale of the Notes
and the Closing Date Guaranty Agreement to the registration
requirements of Section 5 of the Securities Act.
-10-
5.14 USE OF PROCEEDS; MARGIN REGULATIONS.
The Company will apply the proceeds of the sale of the Notes to
refinance certain existing Indebtedness and for other general corporate
purposes. No part of the proceeds from the sale of the Notes hereunder
will be used, directly or indirectly, for the purpose of buying or
carrying any margin stock within the meaning of Regulation U of the
Board of Governors of the Federal Reserve System (12 CFR 221), or for
the purpose of buying or carrying or trading in any securities under
such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 CFR 224) or to involve any broker or
dealer in a violation of Regulation T of said Board (12 CFR 220).
Margin stock does not constitute more than 25% of the value of the
consolidated assets of the Company and its Restricted Subsidiaries and
the Company does not have any present intention that margin stock will
constitute more than 25% of the value of such assets. As used in this
Section, the terms "MARGIN STOCK" and "PURPOSE OF BUYING OR CARRYING"
shall have the meanings assigned to them in said Regulation U.
5.15. EXISTING INDEBTEDNESS.
Schedule 5.15 sets forth a complete and correct list of all
outstanding Indebtedness of the Company and its Restricted Subsidiaries
as of June 30, 1999, since which date there has been no Material change
in the amounts, interest rates, sinking funds, instalment payments or
maturities of the Indebtedness of the Company or its Restricted
Subsidiaries. Neither the Company nor any Restricted Subsidiary is in
default and no waiver of default is currently in effect, in the payment
of any principal or interest on any Indebtedness of the Company or such
Restricted Subsidiary and no event or condition exists with respect to
any Indebtedness of the Company or any Restricted Subsidiary that would
permit (or that with notice or the lapse of time, or both, would
permit) one or more Persons to cause such Indebtedness to become due
and payable before its stated maturity or before its regularly
scheduled dates of payment.
-11-
5.16 FOREIGN ASSETS CONTROL REGULATIONS, ETC.
Neither the sale of the Notes by the Company hereunder nor its use
of the proceeds thereof will violate the Trading with the Enemy Act, as
amended, or any of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended)
or any enabling legislation or executive order relating thereto.
<PAGE>
5.17 STATUS UNDER CERTAIN STATUTES.
Neither the Company nor any Restricted Subsidiary is subject to
regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the ICC
Termination Act of 1995, as amended, or except to the limited extent
described on Schedule 5.17, the Federal Power Act, as amended.
5.18. YEAR 2000 COMPLIANCE.
The Company has and its Restricted Subsidiaries have conducted an
analysis of, and developed a compliance program with respect to, the
effect of "Year 2000" upon the material software, tradeware,
telecommunications, physical plant and automated processes of the
Company and its Restricted Subsidiaries and upon the material customers
and suppliers of the Company and its Restricted Subsidiaries. The
Company anticipates that such compliance program will be completed on a
timely basis before September 30, 1999 and that the impact of "Year
2000" on the Company, its Restricted Subsidiaries and the material
customers and suppliers of the Company and its Restricted Subsidiaries
will not be such as to have a Material Adverse Effect.
5.19. ENVIRONMENTAL MATTERS.
Neither the Company nor any Restricted Subsidiary has knowledge of
any claim or has received any notice of any claim, and no proceeding
has been instituted raising any claim against the Company or any of its
Restricted Subsidiaries or any of their respective real properties now
or formerly owned, leased or operated by any of them or other assets,
alleging any damage to the environment or violation of any
Environmental Laws, except, in each case, such as could not reasonably
be expected to result in a Material Adverse Effect. Except as
otherwise disclosed to you in writing:
(a) neither the Company nor any Restricted Subsidiary has knowledge
of any facts which would give rise to any claim, public or private, of
violation of Environmental Laws or damage to the environment emanating
from, occurring on or in any way related to real properties now or
formerly owned, leased or operated by any of them or to other assets or
their use, except in each case, such as could not reasonably be
expected to result in a Material Adverse Effect;
-12-
(b) neither the Company nor any of its Restricted Subsidiaries has
stored any Hazardous Materials on real properties now or formerly
owned, leased or operated by any of them and has not disposed of any
Hazardous Materials in a manner contrary to any Environmental Laws in
each case in any manner that could reasonably be expected to result in
a Material Adverse Effect; and
(c) all buildings on all real properties now owned, leased or
operated by the Company or any of its Restricted Subsidiaries are in
compliance with applicable Environmental Laws, except where failure to
comply could not reasonably be expected to result in a Material Adverse
Effect.
<PAGE>
6. REPRESENTATIONS OF THE PURCHASER.
6.1. PURCHASE FOR INVESTMENT.
You represent that you are a "QUALIFIED INSTITUTIONAL BUYER" as
such term is defined in Rule 144A under the Securities Act or an
"ACCREDITED INVESTOR" as such term is defined in Rule 501 under the
Securities Act. You also represent that you are purchasing the Notes
for your own account or for one or more separate accounts maintained by
you or for the account of one or more pension or trust funds and not
with a view to the distribution thereof, PROVIDED that the disposition
of your or their property shall at all times be within your or their
control. You understand that the Notes have not been registered under
the Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration
is available, except under circumstances where neither such
registration nor such an exemption is required by law, and that the
Company is not required to register the Notes.
6.2. SOURCE OF FUNDS.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "SOURCE") to be
used by you to pay the purchase price of the Notes to be purchased by
you hereunder:
(a) the Source is an "insurance company general account" within
the meaning of Department of Labor Prohibited Transaction Exemption
("PTE") 95-60 (issued July 12, 1995) and there is no employee benefit
plan, treating as a single plan, all plans maintained by the same
employer or affiliate thereof (as defined in PTE 95-60) or employee
organization, with respect to which the amount of the general account
reserves and liabilities for all contracts held by or on behalf of such
plan, exceeds ten percent (10%) of the total reserves and liabilities
of such general account (exclusive of separate account liabilities)
plus surplus, as set forth in the NAIC Annual Statement filed with your
state of domicile; or
-13-
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or
(ii) a bank collective investment fund, within the meaning of the PTE
91-38 (issued July 12, 1991) and, except as you have disclosed to the
Company in writing pursuant to this paragraph (b), no employee benefit
plan or group of plans maintained by the same employer or employee
organization beneficially owns more than 10% of all assets allocated to
such pooled separate account or collective investment fund; or
(c) the Source constitutes assets of an "investment fund" (within
the meaning of Part V of the QPAM Exemption) managed by a "qualified
professional asset manager" or "QPAM" (within the meaning of Part V of
the QPAM Exemption), no employee benefit plan's assets that are
included in such investment fund, when combined with the assets of all
other employee benefit plans established or maintained by the same
employer or by an affiliate (within the meaning of Section V(c)(1) of
the QPAM Exemption) of such employer or by the same employee
<PAGE>
organization and managed by such QPAM, exceed 20% of the total client
assets managed by such QPAM, the conditions of Part I(c) and (g) of the
QPAM Exemption are satisfied, neither the QPAM nor a person controlling
or controlled by the QPAM (applying the definition of "control" in
Section V(e) of the QPAM Exemption) owns a 5% or more interest in the
Company and (i) the identity of such QPAM and (ii) the names of all
employee benefit plans whose assets are included in such investment
fund have been disclosed to the Company in writing pursuant to this
paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a
separate account or trust fund comprised of one or more employee
benefit plans, each of which has been identified to the Company in
writing pursuant to this paragraph (e); or
-14-
(f) the Source does not include assets of any employee benefit
plan, other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "EMPLOYEE BENEFIT PLAN",
"GOVERNMENTAL PLAN", "PARTY IN INTEREST" and "SEPARATE ACCOUNT" shall
have the respective meanings assigned to such terms in section 3 of
ERISA.
7. INFORMATION AS TO COMPANY.
7.1. FINANCIAL AND BUSINESS INFORMATION.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) QUARTERLY STATEMENTS -- within 60 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), duplicate
copies of,
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries, for such quarter and (in the case of the
second and third quarters) for the portion of the fiscal year
ending with such quarter,
setting forth in each case in comparative form the figures for the
corresponding periods in the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial
Officer as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of
operations and cash flows, subject to changes resulting from year-end
adjustments, PROVIDED that delivery within the time period specified
above of copies of the Company's Quarterly Report on Form 10-Q prepared
in compliance with the requirements therefor and filed with the
<PAGE>
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a) to the extent such reports
otherwise satisfy the requirements of this Section 7.1(a);
(b) ANNUAL STATEMENTS -- within 120 days after the end of each
fiscal year of the Company, duplicate copies of,
-15-
(i) a consolidated balance sheet of the Company and its
Restricted Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, changes in
shareholders' equity and cash flows of the Company and its
Restricted Subsidiaries, for such year,
setting forth in each case in comparative form the figures for the
previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which
opinion shall state that such financial statements present fairly, in
all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have
been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and that such
audit provides a reasonable basis for such opinion in the
circumstances, PROVIDED that the delivery within the time period
specified above of the Company's Annual Report on Form 10-K for such
fiscal year (together with the Company's annual report to shareholders,
if any, prepared pursuant to Rule 14a-3 under the Exchange Act)
prepared in accordance with the requirements therefor and filed with
the Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section (b) to the extent such reports otherwise
satisfy such requirements;
(c) SEC AND OTHER REPORTS -- promptly upon their becoming
available, one copy of (i) each financial statement, report, notice
or proxy statement sent by the Company or any Restricted Subsidiary to
public securities holders generally, and (ii) each regular or periodic
report, each registration statement that shall have become effective
(without exhibits except as expressly requested by such holder), and
each final prospectus and all amendments thereto filed by the Company
or any Restricted Subsidiary with the Securities and Exchange
Commission;
(d) NOTICE OF DEFAULT OR EVENT OF DEFAULT -- promptly, and in any
event within five days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default, a written notice
specifying the nature and period of existence thereof and what action
the Company is taking or proposes to take with respect thereto;
(e) ERISA MATTERS -- promptly, and in any event within five days
after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any,
that the Company or an ERISA Affiliate proposes to take with respect
thereto:
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<PAGE>
(i) with respect to any Plan, any reportable event, as
defined in section 4043(b) of ERISA and the regulations thereunder,
for which notice thereof has not been waived pursuant to such
regulations as in effect on the date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under
section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan, or the receipt by the Company or
any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such
Multiemployer Plan; or
(iii) any event, transaction or condition that could result
in the incurrence of any liability by the Company or any ERISA
Affiliate pursuant to Title I or IV of ERISA or the penalty or
excise tax provisions of the Code relating to employee benefit
plans, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate pursuant
to Title I or IV of ERISA or such penalty or excise tax provisions,
if such liability or Lien, taken together with any other such
liabilities or Liens then existing, would reasonably be expected to
have a Material Adverse Effect; and
(f) REQUESTED INFORMATION -- with reasonable promptness, such
other data and information relating to the business, operations,
affairs, financial condition, assets or properties of the Company or
any of its Restricted Subsidiaries or relating to the ability of the
Company to perform its obligations hereunder and under the Notes or the
ability of any Guarantor to perform its obligations under any Guaranty
Agreement as from time to time may be reasonably requested by any such
holder of Notes subject to the terms of Section 20 hereof.
7.2 OFFICER'S CERTIFICATE.
Each set of financial statements delivered to a holder of Notes
pursuant to Section (a) or Section (b) hereof shall be accompanied by a
certificate of a Senior Financial Officer setting forth:
-17-
(a) COVENANT COMPLIANCE -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.2 through Section 10.8
hereof, inclusive, during the quarterly or annual period covered by the
statements then being furnished (including with respect to each such
Section, where applicable, the calculations of the maximum or minimum
amount, ratio or percentage, as the case may be, permissible under the
terms of such Sections, and the calculation of the amount, ratio or
percentage then in existence); and
(b) EVENT OF DEFAULT -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his
or her supervision, a review of the transactions and conditions of the
Company and its Restricted Subsidiaries from the beginning of the
quarterly or annual period covered by the statements then being
furnished to the date of the certificate and that such review shall not
have disclosed the existence during such period of any condition or
<PAGE>
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation,
any such event or condition resulting from the failure of the Company
or any Restricted Subsidiary to comply with any Environmental Law),
specifying the nature and period of existence thereof and what action
the Company shall have taken or proposes to take with respect thereto.
7.3. INSPECTION.
Subject to Section 20 hereof, the Company shall permit the
representatives of each holder of Notes that is an Institutional
Investor:
(a) NO DEFAULT -- if no Default or Event of Default then exists,
at the expense of such holder and upon reasonable prior notice to the
Company, to visit the principal executive office of the Company, to
discuss the affairs, finances and accounts of the Company and its
Restricted Subsidiaries with the Company's officers, and, with the
consent of the Company (which consent will not be unreasonably
withheld) to visit the other offices and properties of the Company and
each Restricted Subsidiary, all at such reasonable times and as often
as may be reasonably requested in writing; and
(b) DEFAULT -- if a Default or Event of Default then exists, at
the expense of the Company to visit and inspect any of the offices or
properties of the Company or any Restricted Subsidiary, to examine all
their respective books of account, records, reports and other papers,
to make copies and extracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers and
independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and
accounts of the Company and its Restricted Subsidiaries), all at such
times and as often as may be requested.
-18-
7.4 INFORMATION REQUIRED BY RULE 144A.
The Company shall, upon the request of the holder of any Note,
provide such holder, and any qualified institutional buyer (as defined
in Rule 144A under the Securities Act) designated by such holder, such
financial and other information as such holder may reasonably determine
to be necessary in order to permit compliance with the information
requirements of Rule 144A under the Securities Act in connection with
the resale of Notes, except at such times as the Company is subject to
the reporting requirements of section 13 or 15(d) of the Exchange Act.
8. PREPAYMENT OF THE NOTES.
8.1. OPTIONAL PREPAYMENTS WITH MAKE-WHOLE AMOUNT.
The Company may, at its option, upon notice as provided below,
prepay at any time all, or from time to time any part of, the Notes,
in an amount not less than 5% of the aggregate principal amount of the
Notes then outstanding in the case of a partial prepayment, at 100% of
the principal amount so prepaid, plus the Make-Whole Amount determined
for the prepayment date with respect to such principal amount. The
Company will give each holder of Notes written notice of each optional
<PAGE>
prepayment under this Section 8.1 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such
notice shall be irrevocable and specify such date, the aggregate
principal amount of the Notes to be prepaid on such date, the principal
amount of each Note held by such holder to be prepaid (determined in
accordance with Section 8.2), and the interest to be paid on the
prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer
as to the estimated Make-Whole Amount due in connection with such
prepayment (calculated as if the date of such notice were the date of
the prepayment), setting forth the details of such computation. Two
Business Days prior to such prepayment, the Company shall deliver to
each holder of Notes a certificate of a Senior Financial Officer
specifying the calculation of such Make-Whole Amount as of the
specified prepayment date.
8.2. ALLOCATION OF PARTIAL PREPAYMENTS.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the
Notes at the time outstanding in proportion, as nearly as practicable,
to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
-19-
8.3. MATURITY; SURRENDER, ETC.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become
due and payable on the date fixed for such prepayment, together with
interest on such principal amount accrued to such date and the
applicable Make-Whole Amount, if any. From and after such date, unless
the Company shall fail to pay such principal amount when so due and
payable, together with the interest and Make-Whole Amount, if any, as
aforesaid, interest on such principal amount shall cease to accrue.
Any Note paid or prepaid in full shall be surrendered to the Company
and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.4. PURCHASE OF NOTES.
The Company will not and will not permit any Affiliate to purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of the
Notes in accordance with the terms of this Agreement and the Notes or
(b) pursuant to an offer to purchase made by the Company or an
Affiliate pro rata to the holders of all Notes at the time outstanding
upon the same terms and conditions. Any such offer shall provide each
holder with sufficient information to enable it to make an informed
decision with respect to such offer, and shall remain open for at least
15 Business Days. If the holders of more than 10% of the principal
amount of the Notes then outstanding accept such offer, the Company
shall promptly notify the remaining holders of such fact and the
expiration date for the acceptance by holders of Notes of such offer
shall be extended by the number of days necessary to give each such
remaining holder at least 10 Business Days from its receipt of such
<PAGE>
notice to accept such offer. The Company will promptly cancel all
Notes acquired by it or any Affiliate pursuant to any payment,
prepayment or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for
any such Notes.
8.5. MAKE-WHOLE AMOUNT.
The term "MAKE-WHOLE AMOUNT" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the
Remaining Scheduled Payments with respect to the Called Principal of
such Note over the amount of such Called Principal, PROVIDED that the
Make-Whole Amount may in no event be less than zero. For the purposes
of determining the Make-Whole Amount, the following terms have the
following meanings:
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"CALLED PRINCIPAL" means, with respect to any Note, the principal
of such Note that is to be prepaid pursuant to Section 8.1 or has
become or is declared to be immediately due and payable pursuant to
Section 12.1, as the context requires.
"DISCOUNTED VALUE" means, with respect to the Called Principal of
any Note, the amount obtained by discounting all Remaining Scheduled
Payments with respect to such Called Principal from their respective
scheduled due dates to the Settlement Date with respect to such Called
Principal, in accordance with accepted financial practice and at a
discount factor (applied on the same periodic basis as that on which
interest on the Notes is payable) equal to the Reinvestment Yield with
respect to such Called Principal.
"REINVESTMENT YIELD" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business
Day preceding the Settlement Date with respect to such Called
Principal, on the display designated as "Page PX 1" on the Bloomberg
Financial Markets Services Screen (or such other display as may replace
Page PX 1 on the Bloomberg Financial Markets Services Screen) for on
the run U.S. Treasury securities having a maturity equal to the
Remaining Average Life of such Called Principal as of such Settlement
Date, or (ii) if such yields are not reported as of such time or the
yields reported as of such time are not ascertainable, the Treasury
Constant Maturity Series Yields reported, for the latest day for which
such yields have been so reported as of the second Business Day
preceding the Settlement Date with respect to such Called Principal, in
Federal Reserve Statistical Release H.15 (519) (or any comparable
successor publication) for on the run U.S. Treasury securities having a
constant maturity equal to the Remaining Average Life of such Called
Principal as of such Settlement Date. Such implied yield will be
determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted
financial practice and (b) interpolating linearly between (1) the on
the run U.S. Treasury security with the final maturity closest to and
greater than the Remaining Average Life and (2) the on the run U.S.
Treasury security with the final maturity closest to and less than the
Remaining Average Life.
<PAGE>
"REMAINING AVERAGE LIFE" means, with respect to any Called
Principal, the number of years (calculated to the nearest one-twelfth
year) obtained by dividing (i) such Called Principal into (ii) the sum
of the products obtained by multiplying (a) the principal component of
each Remaining Scheduled Payment with respect to such Called Principal
by (b) the number of years (calculated to the nearest one-twelfth year)
that will elapse between the Settlement Date with respect to such
Called Principal and the scheduled due date of such Remaining Scheduled
Payment.
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"REMAINING SCHEDULED PAYMENTS" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and
interest thereon that would be due after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal
were made prior to its scheduled due date, PROVIDED that if such
Settlement Date is not a date on which interest payments are due to be
made under the terms of the Notes, then the amount of the next
succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such Settlement Date and required to be paid on
such Settlement Date pursuant to Section 8.1 or 12.1.
"SETTLEMENT DATE" means, with respect to the Called Principal of
any Note, the date on which such Called Principal is to be prepaid
pursuant to Section 8.1 or has become or is declared to be immediately
due and payable pursuant to Section 12.1, as the context requires.
8.6. PREPAYMENT OF NOTES UPON CHANGE IN CONTROL .
(a) NOTICE OF IMPENDING CHANGE IN CONTROL. The Company will not
take any action that consummates or finalizes a Change in Control
unless (i) at least 30 days prior to such action it shall have given to
each holder of a Note written notice of such impending Change in
Control, which notice shall (1) contain and constitute an offer to
prepay the Notes as described in paragraph (c) below on the date of the
Change in Control and (2) be accompanied by the certificate described
in paragraph (f) below and (ii) contemporaneously with such Change in
Control, the Company prepays the Notes pursuant to such offer and in
accordance with this Agreement.
(b) NOTICE OF CHANGE IN CONTROL. The Company will, within three
Business Days after any Responsible Officer has knowledge of the
occurrence of any Change in Control, give written notice of such Change
in Control to each holder of a Note, unless notice has already been
given in accordance with paragraph (a) above. Such notice shall contain
and constitute an offer to prepay Notes as described in paragraph (c)
below and shall be accompanied by the certificate described in
paragraph (f) below.
(c) OFFER TO PREPAY NOTES. The offer to prepay Notes
contemplated by paragraphs (a) and (b) of this Section 8.6 shall be an
irrevocable offer to prepay at par (and without payment of the
Make-Whole Amount or any premium), in accordance with and subject to
this Section 8.6, all, but not less than all, the Notes held by each
holder (in this case only, "holder" in respect of any Note registered
in the name of a nominee for a disclosed beneficial owner shall mean
such beneficial owner) on a date, in the case of offers pursuant to
<PAGE>
paragraph (b), specified in such offer (the "PROPOSED PREPAYMENT
DATE"). Such Proposed Prepayment Date shall be not less than 20 days
and not more than 30 days after the date of such offer (if the Proposed
Prepayment Date shall not be specified in such offer, the Proposed
Prepayment Date shall be the 20th day after the date of such offer).
-22-
(d) ACCEPTANCE OR REJECTION. A holder of a Note may accept the
offer to prepay made pursuant to this Section 8.6 by causing a notice
of such acceptance to be delivered to the Company prior to the Proposed
Prepayment Date. A failure by a holder of a Note to respond to an offer
to prepay made pursuant to this Section 8.6 shall be deemed to
constitute a rejection of such offer by such holder.
(e) PREPAYMENT. Prepayment of the Notes to be prepaid pursuant
to this Section 8.6 shall be at 100% of the principal amount of such
Notes, together with interest on such Notes accrued to the date of
prepayment. On the Business Day preceding the date of prepayment, the
Company shall deliver to each holder of Notes being prepaid a statement
showing the amount due in connection with such prepayment and setting
forth the details of the computation of such amount. The prepayment
shall be made concurrently with the Change in Control, in the case of
an offer pursuant to paragraph (a) and on the Proposed Prepayment Date
in the case of an offer pursuant to paragraph (b). Prepayment pursuant
to this Section 8.6 is conditioned upon the occurrence of a Change in
Control.
(f) OFFICER'S CERTIFICATE. Each offer to prepay the Notes
pursuant to this Section 8.6 shall be accompanied by a certificate,
executed by a Senior Financial Officer of the Company and dated the
date of such offer, specifying: (i) the Proposed Prepayment Date; (ii)
that such offer is made pursuant to this Section 8.6; (iii) the
principal amount of each Note offered to be prepaid; (iv) the interest
that would be due on each Note offered to be prepaid, accrued to the
Proposed Prepayment Date; (v) that the conditions of this Section 8.6
have been fulfilled; and (vi) in reasonable detail, the nature and date
or proposed date of the Change in Control.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1. COMPLIANCE WITH LAW.
The Company will and will cause each of its Subsidiaries to comply
with all laws, ordinances or governmental rules or regulations to which
each of them is subject, including, without limitation, Environmental
Laws, and will obtain and maintain in effect all licenses,
certificates, permits, franchises and other governmental authorizations
necessary to the ownership of their respective properties or to the
conduct of their respective businesses, in each case to the extent
necessary to ensure that non-compliance with such laws, ordinances or
governmental rules or regulations or failures to obtain or maintain in
effect such licenses, certificates, permits, franchises and other
governmental authorizations would not reasonably be expected,
individually or in the aggregate, to have a materially adverse effect
<PAGE>
on the business, operations, affairs, financial condition, properties
or assets of the Company and its Restricted Subsidiaries taken as a
whole.
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9.2. INSURANCE.
The Company will and will cause each of its Restricted Subsidiaries
to maintain, with financially sound and reputable insurers, insurance
with respect to their respective properties and businesses against such
casualties and contingencies, of such types, on such terms and in such
amounts (including deductibles, co-insurance and self-insurance, if
adequate reserves are maintained with respect thereto) as is customary
in the case of entities of established reputations engaged in the same
or a similar business and similarly situated.
9.3. MAINTENANCE OF PROPERTIES.
The Company will and will cause each of its Restricted Subsidiaries
to maintain and keep, or cause to be maintained and kept, their
respective properties in good repair, working order and condition
(other than ordinary wear and tear), so that the business carried on in
connection therewith may be properly conducted at all times, PROVIDED
that this Section shall not prevent the Company or any Restricted
Subsidiary from discontinuing the operation and the maintenance of any
of its properties if such discontinuance is desirable in the conduct of
its business and the Company has concluded that such discontinuance
would not, individually or in the aggregate, have a materially adverse
effect on the business, operations, affairs, financial condition,
properties or assets of the Company and its Restricted Subsidiaries
taken as a whole.
9.4. PAYMENT OF TAXES.
The Company will and will cause each of its Subsidiaries to file
all income tax or similar tax returns required to be filed in any
jurisdiction and to pay and discharge all taxes shown to be due and
payable on such returns and all other taxes, assessments, governmental
charges, or levies payable by any of them, to the extent such taxes and
assessments have become due and payable and before they have become
delinquent, PROVIDED that neither the Company nor any Subsidiary need
pay any such tax or assessment if (i) the amount, applicability or
validity thereof is contested by the Company or such Subsidiary on a
timely basis in good faith and in appropriate proceedings, and the
Company has established adequate reserves therefor in accordance with
GAAP on the books of the Company or (ii) the nonpayment of all such
taxes and assessments in the aggregate would not reasonably be expected
to have a materially adverse effect on the business, operations,
affairs, financial condition, properties or assets of the Company and
its Restricted Subsidiaries taken as a whole.
-24-
9.5. CORPORATE EXISTENCE, ETC.
Subject to Section 10.2, the Company will at all times preserve and
keep in full force and effect its corporate existence. Subject to
Section 10.8, the Company will at all times preserve and keep in full
<PAGE>
force and effect the corporate existence of each of its Restricted
Subsidiaries (unless merged into the Company or another Restricted
Subsidiary that is a Wholly-Owned Subsidiary) and all rights and
franchises of the Company and its Restricted Subsidiaries unless, in
the good faith judgment of the Company, the termination of or failure
to preserve and keep in full force and effect such corporate existence,
right or franchise would not, individually or in the aggregate, have a
materially adverse effect on the business, operations, affairs,
financial condition, properties or assets of the Company and its
Restricted Subsidiaries taken as a whole.
9.6. STATUS AS SENIOR DEBT.
The Company will at all times ensure that the Notes will not be
subordinate to, and will in all respects rank at least PARI PASSU with,
the claims of every other senior unsecured and unsubordinated creditor
of the Company.
9.7. DESIGNATIONS WITH RESPECT TO RESTRICTED SUBSIDIARIES.
(a) Upon not less than thirty (30) days prior written notice (the
"DESIGNATION NOTICE") given to each holder of a Note, the Board of
Directors of the Company may at any time and from time to time
designate (i) any Restricted Subsidiary, or any newly acquired or
formed Subsidiary, as an Unrestricted Subsidiary or (ii) any
Unrestricted Subsidiary, or any newly acquired or formed Subsidiary, as
a Restricted Subsidiary, in each case subject to satisfaction of the
conditions that immediately before and after such designation and after
giving effect to such designation, (i) no Default or Event of Default
would exist, and (ii) the Company would be permitted to incur at least
$1.00 of additional Indebtedness under the terms of Section 10.4. In
the event no Designation Notice is given with respect to any newly
acquired or formed Subsidiary, such Subsidiary shall be deemed to be a
Restricted Subsidiary unless a Designation Notice to the contrary is
given in accordance with the terms of this Agreement.
-25-
(b) Simultaneously with any Designation Notice, the Company shall
give to each holder of a Note a certificate executed by the chief
financial officer of the Company stating (i) the effective date of
such designation (which date shall be not more than forty-five (45)
days nor less than thirty (30) days after such certificate is so
given), (ii) that the foregoing conditions contained in paragraph (a)
of this Section have been and will be satisfied, and (iii) the name of
each Subsidiary which has or will become a Restricted Subsidiary or
Unrestricted Subsidiary (as the case may be) as a result of such
designation.
(c) All Investments, Indebtedness, Liens, Guaranties and other
obligations that an Unrestricted Subsidiary has at the time of being
designated a Restricted Subsidiary hereunder shall be deemed to have
been acquired, made or incurred, as a case may be, at the time of such
designation.
(d) The Company may not change the designation of any Subsidiary
more than twice and, without limiting the foregoing, in the event the
<PAGE>
Company changes the designation of a Subsidiary then the designation of
such Subsidiary may not be changed again unless, thereafter, at least
four (4) complete fiscal quarters of the Company have lapsed.
(e) Neither the Company nor any Restricted Subsidiary may give a
Guaranty for, or otherwise be directly or indirectly liable for, any
liabilities or obligations of any Unrestricted Subsidiary.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
10.1. TRANSACTIONS WITH AFFILIATES.
The Company will not, and will not permit any Restricted Subsidiary
to, enter into directly or indirectly any Material transaction or
Material group of related transactions (including, without limitation,
the purchase, lease, sale or exchange of properties of any kind or the
rendering of any service) with any Affiliate (other than the Company or
a Restricted Subsidiary that is a Wholly-Owned Subsidiary), except
pursuant to the reasonable requirements of the Company's or such
Restricted Subsidiary's business and upon fair and reasonable terms no
less favorable to the Company or such Restricted Subsidiary than would
be obtainable in a comparable arm's-length transaction with a Person
not an Affiliate.
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10.2. MERGER, CONSOLIDATION, ETC.
The Company will not consolidate with or merge with any other
corporation or convey, transfer or lease substantially all of its
assets in a single transaction or series of transactions to any Person
unless:
(a) the successor formed by such consolidation or the survivor
of such merger or the Person that acquires by conveyance, transfer or
lease substantially all of the assets of the Company as an entirety, as
the case may be, shall be a solvent corporation organized and existing
under the laws of the United States or any State thereof (including the
District of Columbia), and, if the Company is not such corporation,
such corporation shall have executed and delivered to each holder of
any Notes its assumption of the due and punctual performance and
observance of each covenant and condition of this Agreement, the Other
Agreements and the Notes pursuant to an agreement in form and substance
acceptable to each holder;
(b) immediately after giving effect to such transaction, (i) no
Default or Event of Default shall have occurred and be continuing and
(ii) the Company would be permitted to incur at least $1.00 of
additional Indebtedness under the terms of Section 10.4; and
(c) each Subsidiary that has executed and delivered a Guaranty
Agreement hereunder which is then in effect confirms by written
instrument delivered to each holder of a Note such Subsidiary's
obligations and liabilities under such Guaranty Agreement.
<PAGE>
No such conveyance, transfer or lease of substantially all of the
assets of the Company shall have the effect of releasing the Company or
any successor corporation that shall theretofore have become such in
the manner prescribed in this Section 10.2 from its liability under
this Agreement or the Notes.
10.3. ADJUSTED CONSOLIDATED NET WORTH.
The Company will not at any time permit Adjusted Consolidated Net
Worth to be less than the sum of (a) $300,000,000 and (b) 25% of
Consolidated Net Income for each completed fiscal quarter of the
Company beginning with its fiscal quarter ending September 30, 1999
(but, in each case, only if a positive number).
-27-
10.4. LIMITATION ON CONSOLIDATED TOTAL DEBT.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly, create, incur, assume, guarantee, or
otherwise become directly or indirectly liable with respect to, any
Consolidated Total Debt, unless on the date the Company or such
Restricted Subsidiary becomes liable with respect to any such
Consolidated Total Debt and immediately after giving effect thereto and
the concurrent retirement of any other Consolidated Total Debt:
(i) no Default or Event of Default exists,
(ii) the ratio of Consolidated Total Debt to Consolidated
Total Capitalization would not exceed .60 to 1.0, and
(iii) in the case that such Consolidated Total Debt
constitutes Priority Debt, such Priority Debt is permitted by
Section 10.5.
10.5. LIMITATION ON PRIORITY DEBT.
The Company will not at any time permit Priority Debt to exceed 25%
of Adjusted Consolidated Net Worth (determined as of the then most
recently ended fiscal quarter of the Company).
10.6. RESTRICTED SUBSIDIARY DEBT.
The Company will not at any time permit any Restricted Subsidiary,
directly or indirectly, to create, incur, assume, guarantee, permit to
exist or otherwise become directly or indirectly liable with respect
to, any Indebtedness other than:
(a) Indebtedness of a Restricted Subsidiary (other than
Guaranties) outstanding on the date hereof and described on Schedule
5.15, and any extension, renewal or refunding of such Indebtedness,
PROVIDED that the principal amount of such Indebtedness being so
extended, renewed or refunded shall not be increased from the principal
amount thereof outstanding immediately prior to such extension, renewal
or refunding;
(b) Indebtedness of a Restricted Subsidiary owed to the Company or
a Wholly-Owned Subsidiary that is a Restricted Subsidiary;
<PAGE>
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(c) Indebtedness evidenced by Swaps permitted under Section 10.10;
and Indebtedness evidenced by Guaranties by a Restricted Subsidiary of
such permitted Swap Indebtedness; PROVIDED that concurrently with
making any such Guaranty (i) such Restricted Subsidiary duly executes
and delivers a Guaranty Agreement to each holder of a Note (unless such
a Guaranty Agreement has already been so executed and delivered and
remains in effect), and (ii) each creditor in favor of which such
Guaranty is made duly executes and delivers an intercreditor agreement
identical to the Intercreditor Agreement (MUTATIS MUTANDIS) or
otherwise satisfactory in form and substance to the Required Holders;
(d) Indebtedness evidenced by the Existing Senior Note Guaranties,
PROVIDED that the aggregate principal amount guarantied thereby does
not at any time exceed $6,000,000 and such Existing Senior Note
Guaranties cease to be of any effect on or before June 16, 2000;
(e) Indebtedness evidenced by Other Existing Guaranties and by
Guaranty Agreements delivered to holders of Notes pursuant to the terms
of this Agreement and the Other Agreements;
(f) Indebtedness evidenced by any Future Revolving Lender Guaranty
made by a Restricted Subsidiary after the date of Closing, PROVIDED
that concurrently with making such Future Revolving Lender Guaranty (i)
such Restricted Subsidiary duly executes and delivers a Guaranty
Agreement to each holder of a Note (unless such a Guaranty Agreement
has already been so executed and delivered and remains in effect), and
(ii) each creditor in favor of which such Future Revolving Lender
Guaranty is made duly executes and delivers an intercreditor agreement
identical to the Intercreditor Agreement (MUTATIS MUTANDIS) or
otherwise satisfactory in form and substance to the Required Holders;
and
(g) additional Indebtedness (other than in respect of Swaps),
PROVIDED that on the date the Restricted Subsidiary incurs or otherwise
becomes liable with respect to any such additional Indebtedness and
immediately after giving effect thereto and to the application of the
proceeds thereof:
(i) no Default or Event of Default would exist;
(ii) such Indebtedness can be incurred within the applicable
limitations provided in Sections 10.4 and 10.5; and
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(iii) if such Indebtedness constitutes a Guaranty, then such
Restricted Subsidiary shall concurrently with making such Guaranty
execute and deliver a Guaranty Agreement to each holder of a Note
(unless such Guaranty Agreement has already been so executed and
delivered and remains in effect) and recourse to any rights or
remedies under such Guaranty shall be subject to the Intercreditor
Agreement or such other intercreditor agreement as is satisfactory
in form and substance to the Required Holders.
For purposes of this Agreement (including Sections 10.4, 10.5 and
10.6), any Person becoming a Restricted Subsidiary after the date of
<PAGE>
this Agreement shall be deemed, at the time it becomes a Restricted
Subsidiary, to have incurred all of its then outstanding Indebtedness.
10.7. LIMITATION ON LIENS.
The Company will not, and will not permit any Restricted Subsidiary
to, directly or indirectly create, incur, assume or permit to exist
(upon the happening of a contingency or otherwise) any Lien on or with
respect to any property or asset (including, without limitation, any
document or instrument in respect of goods or accounts receivable) of
the Company or any such Restricted Subsidiary, whether now owned or
held or hereafter acquired, or any income or profits therefrom or
assign or otherwise convey any right to receive income or profits,
except:
(a) Liens for taxes, assessments or other governmental charges
which are not yet due and payable;
(b) Liens consisting of judgment or judicial attachment Liens,
PROVIDED that (i) the claims giving rise to such Liens are being
diligently contested in good faith by appropriate proceedings, (ii)
adequate reserves for the obligations secured by such Liens have been
established and (iii) enforcement of such Liens have been stayed;
(c) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other similar Liens, in each
case, incurred in the ordinary course of business for sums not yet due
and payable;
(d) Liens (other than any Lien imposed by ERISA) incurred or
deposits made in the ordinary course of business (i) in connection with
workers' compensation, unemployment insurance and other types of social
security or retirement benefits, or (ii) to secure (or to obtain
letters of credit that secure) the performance of tenders, statutory
obligations, surety bonds, appeal bonds, bids, leases (other than
Capital Leases), performance bonds, purchase, construction or sales
contracts and other similar obligations, in each case not incurred or
made in connection with the borrowing of money, the obtaining of
advances or credit or the payment of the deferred purchase price of
property;
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(e) leases or subleases granted to others, easements,
rights-of-way, restrictions and other similar charges or encumbrances,
in each case incidental to, and not interfering with, the ordinary
conduct of the business of the Company or any of its Restricted
Subsidiaries, and which do not in the aggregate materially impair the
use of such property in the operation of the business of the Company
and its Restricted Subsidiaries, taken as a whole, or the value of such
property for the purposes of such business;
(f) Liens existing on the date hereof and reflected in Schedule
10.7 and the extension, renewal or replacement of any such Lien;
PROVIDED that the Lien under such extension, renewal or replacement
encumbers only the same property as that which was previously
encumbered by the Lien being so extended, renewed or replaced and
<PAGE>
secures obligations in an aggregate principal amount not in excess of
the principal amount secured immediately prior to such extension,
renewal or replacement;
(g) Liens on property or assets of the Company or any Restricted
Subsidiary securing Indebtedness owing to the Company or any
Wholly-Owned Subsidiary that is a Restricted Subsidiary;
(h) any Liens existing on the property of a corporation at the
time such corporation is merged into or consolidated with the Company
or a Restricted Subsidiary or at the time of a sale, lease or other
disposition of the properties of a corporation or firm as an entirety
to the Company or a Restricted Subsidiary, PROVIDED that (i) such Liens
were not incurred, extended or renewed in contemplation of such
acquisition, (ii) the Lien shall attach solely to the assets acquired
or purchased, (iii) the aggregate principal amount of Indebtedness
secured by such Liens shall be incurred within the applicable
limitations set forth in Sections 10.4 and 10.6, and (iv) such Liens
shall not secure Indebtedness which exceeds 100% of the Fair Market
Value of the related property at the time of incurrence;
(i) Liens incurred after the date of Closing on any property
acquired or improved by the Company or a Restricted Subsidiary and
created contemporaneously with or within 180 days of such acquisition
or improvement which secure only Indebtedness incurred to finance the
purchase or improvement of such property, PROVIDED that (i) such Lien
extends only to the property acquired or improved (and rights relating
thereto), (ii) the aggregate principal amount of Indebtedness secured
by such Lien and all other Indebtedness secured by any other Lien on
such property or such improvement does not exceed in the aggregate 100%
of the lesser of (y) the cost of such property or improvement or (z)
-31-
the Fair Market Value thereof at the time of incurrence, and (iii) all
such Indebtedness shall be incurred within the applicable limitations
set forth in Sections 10.4 and 10.6; and
(j) Liens on property securing Priority Debt of the Company or any
Restricted Subsidiary, PROVIDED that such Priority Debt is permitted by
the applicable limitations set forth in Section 10.5.
10.8. LIMITATION ON SALE OF ASSETS.
Except as permitted under Section 10.2, the Company will not, and
will not permit any Restricted Subsidiary to, make any Asset
Disposition unless:
(a) in the good faith opinion of the Company, the Asset
Disposition is in exchange for consideration having a Fair Market Value
at least equal to that of the property exchanged;
(b) immediately before and after giving effect to the Asset
Disposition, (i) no Default or Event of Default would exist and (ii)
the Company would be permitted to incur at least $1.00 of additional
Indebtedness under the terms of Section 10.4; and
<PAGE>
(c) immediately after giving effect to the Asset Disposition, the
Net Proceeds Amount of all property that was the subject of any Asset
Disposition occurring (i) during the then current fiscal year of the
Company, would not exceed 15% of Consolidated Total Assets determined
as of the end of the then most recently ended fiscal quarter of the
Company, and (ii) during the period from and after the date of Closing
and ending on the date of such Asset Disposition, would not exceed 25%
of Consolidated Total Assets determined as of the end of the then most
recently ended fiscal quarter of the Company (cumulatively for all
Asset Dispositions during such period).
If the Net Proceeds Amount for any Transfer is applied to a Debt
Prepayment Application or a Property Reinvestment Application within
365 days after such Transfer, then such Transfer, only for the purpose
of determining compliance with subsection (c) of this Section 10.8 as
of any date, shall be deemed not to be an Asset Disposition.
10.9. NATURE OF BUSINESS.
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The Company will not, and will not permit any Restricted Subsidiary
to, engage in any business if, as a result thereof, the general nature
of the businesses of the Company and its Restricted Subsidiaries, taken
as a whole, would be substantially changed from the business of the
Company and its Restricted Subsidiaries as conducted on the date of
this Agreement.
10.10. LIMITATION ON SPECULATIVE SWAPS.
The Company will not, and will not permit any Restricted Subsidiary
to, enter into or incur any Indebtedness with respect to any Swap other
than Swaps entered into and maintained in the ordinary course of
business of the Company or such Restricted Subsidiary (as the case may
be) to hedge exchange rate, interest rate or commodity price exposures
arising from the operation or financing of its business and not for
speculative purposes.
11. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" shall exist if any of the following
conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or
Make-Whole Amount, if any, on any Note when the same becomes due and
payable, whether at maturity or at a date fixed for prepayment or by
declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any
Note for more than five Business Days after the same becomes due and
payable; or
(c) (i) the Company defaults in the performance of or compliance
with any term contained in Sections 7.1(d) and 10.2 through 10.8
(inclusive); or (ii) the Company defaults in the performance of or
compliance with any term contained in Sections 9.4, 9.5, 9.6, 10.1,
10.9 and 10.10 and such default continues for five Business Days; or
<PAGE>
(d) the Company defaults in the performance of or compliance with
any term contained herein (other than those referred to in paragraphs
(a), (b) and (c) of this Section 11) and such default is not remedied
within 30 days after the earlier of (i) a Responsible Officer obtaining
actual knowledge of such default and (ii) the Company receiving written
notice of such default from any holder of a Note (any such written
notice to be identified as a "notice of default" and to refer
specifically to this paragraph (d) of Section 11); or
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(e) any representation or warranty made in writing by or on behalf
of the Company or by any officer of the Company in this Agreement or in
any writing furnished in connection with the transactions contemplated
hereby proves to have been false or incorrect in any material respect
on the date as of which made; or
(f) (i) the Company or any Significant Subsidiary is in default
(as principal or as guarantor or other surety) in the payment of any
principal of or premium or make-whole amount or interest on any
Indebtedness that is outstanding in an aggregate principal amount of at
least $10,000,000 beyond any period of grace provided with respect
thereto, or (ii) the Company or any Significant Subsidiary is in
default in the performance of or compliance with any term of any
evidence of any Indebtedness in an aggregate outstanding principal
amount of at least $10,000,000 or of any mortgage, indenture or other
agreement relating thereto or any other condition exists, and as a
consequence of such default or condition such Indebtedness has become,
or has been declared due and payable before its stated maturity or
before its regularly scheduled dates of payment or all or any portion
thereof is required to be prepaid, redeemed or defeased (or an offer to
do so is required to be made); or
(g) the Company or any Significant Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they
become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization,
moratorium or other similar law of any jurisdiction, (iii) makes an
assignment for the benefit of its creditors, (iv) consents to the
appointment of a custodian, receiver, trustee or other officer with
similar powers with respect to it or with respect to any substantial
part of its property, (v) is adjudicated as insolvent or to be
liquidated, or (vi) takes corporate action for the purpose of any of
the foregoing; or
(h) a court or governmental authority of competent jurisdiction
enters an order appointing, without consent by the Company or any of
its Significant Subsidiaries, a custodian, receiver, trustee or other
officer with similar powers with respect to it or with respect to any
substantial part of its property, or constituting an order for relief
or approving a petition for relief or reorganization or any other
petition in bankruptcy or for liquidation or to take advantage of any
bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its
Significant Subsidiaries, or any such petition shall be filed against
the Company or any of its Significant Subsidiaries and such petition
<PAGE>
shall not be dismissed within 60 days; or
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(i) a final judgment or judgments for the payment of money
aggregating in excess of $10,000,000 are rendered against one or more
of the Company and its Significant Subsidiaries and which judgments are
not, within 90 days after entry thereof, bonded, discharged or stayed
pending appeal, or are not discharged within 90 days after the
expiration of such stay; or
(j) any Guaranty Agreement shall cease to be in full force and
effect for any reason with respect to any party (unless pursuant to the
terms of Section 22.7) or any Guarantor shall contest or deny the
validity or enforceability of any of its obligations under a Guaranty
Agreement; or
(k) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is
sought or granted under section 412 of the Code, (ii) a notice of
intent to terminate any Plan shall have been or is reasonably expected
to be filed with the PBGC or the PBGC shall have instituted proceedings
under section 4042 of ERISA to terminate or appoint a trustee to
administer any Plan or the PBGC shall have notified the Company or any
ERISA Affiliate that a Plan may become a subject of any such
proceedings, (iii) there exists any "amount of unfunded benefit
liabilities" (within the meaning of section 4001(a)(18) of ERISA) under
any Plan, determined in accordance with Title IV of ERISA, (iv) the
Company or any ERISA Affiliate shall have incurred or is reasonably
expected to incur any liability pursuant to Title I or IV of ERISA or
the penalty or excise tax provisions of the Code relating to employee
benefit plans, (v) the Company or any ERISA Affiliate withdraws
from any Multiemployer Plan, or (vi) the Company or any Restricted
Subsidiary establishes or amends any employee welfare benefit plan that
provides post-employment welfare benefits in a manner that would
increase the liability of the Company or any Restricted Subsidiary
thereunder; and any such event or events described in clauses (i)
through (vi) above, either individually or together with any other such
event or events, would reasonably be expected to have a Material
Adverse Effect.
As used in Section 11(k), the terms "EMPLOYEE BENEFIT PLAN" and
"EMPLOYEE WELFARE BENEFIT PLAN" shall have the respective meanings
assigned to such terms in Section 3 of ERISA.
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12. REMEDIES ON DEFAULT, ETC.
12.1. ACCELERATION.
(a) If an Event of Default with respect to the Company described
in paragraph (g) or (h) of Section 11 (other than an Event of Default
described in clause (i) of paragraph (g) or described in clause (vi) of
paragraph (g) by virtue of the fact that such clause encompasses clause
(i) of paragraph (g)) has occurred, all the Notes then outstanding
shall automatically become immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
<PAGE>
any holder or holders of more than 51% in principal amount of the Notes
at the time outstanding may at any time at its or their option, by
notice or notices to the Company, declare all the Notes then
outstanding to be immediately due and payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of
Notes at the time outstanding affected by such Event of Default may at
any time, at its or their option, by notice or notices to the Company,
declare all the Notes held by it or them to be immediately due and
payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith
mature and the entire unpaid principal amount of such Notes, plus (x)
all accrued and unpaid interest thereon and (y) the Make-Whole Amount
determined in respect of such principal amount (to the full extent
permitted by applicable law), shall all be immediately due and payable,
in each and every case without presentment, demand, protest or further
notice, all of which are hereby waived. The Company acknowledges, and
the parties hereto agree, that each holder of a Note has the right to
maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for
payment of a Make-Whole Amount by the Company in the event that the
Notes are prepaid or are accelerated as a result of an Event of
Default, is intended to provide compensation for the deprivation of
such right under such circumstances.
12.2. OTHER REMEDIES.
If any Default or Event of Default has occurred and is continuing,
and irrespective of whether any Notes have become or have been declared
immediately due and payable under Section 12.1, the holder of any Note
at the time outstanding may proceed to protect and enforce the rights
of such holder by an action at law, suit in equity or other appropriate
proceeding, whether for the specific performance of any agreement
contained herein or in any Note, or for an injunction against a
violation of any of the terms hereof or thereof, or in aid of the
exercise of any power granted hereby or thereby or by law or otherwise.
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12.3. RESCISSION.
At any time after any Notes have been declared due and payable
pursuant to paragraph (b) or (c) of Section 12.1, the holders of not
less than 50% in principal amount of the Notes then outstanding, by
written notice to the Company, may rescind and annul any such
declaration and its consequences if (a) the Company has paid all
overdue interest on the Notes, all principal of and Make-Whole Amount,
if any, on any Notes that are due and payable and are unpaid other than
by reason of such declaration, and all interest on such overdue
principal and Make-Whole Amount, if any, and (to the extent permitted
by applicable law) any overdue interest in respect of the Notes, at the
Default Rate, (b) all Events of Default and Defaults, other than
non-payment of amounts that have become due solely by reason of such
declaration, have been cured or have been waived pursuant to Section
<PAGE>
17, and (c) no judgment or decree has been entered for the payment of
any monies due pursuant hereto or to the Notes. No rescission and
annulment under this Section 12.3 will extend to or affect any
subsequent Event of Default or Default or impair any right consequent
thereon.
12.4. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver
thereof or otherwise prejudice such holder's rights, powers or remedies.
No right, power or remedy conferred by this Agreement or by any Note
upon any holder thereof shall be exclusive of any other right, power or
remedy referred to herein or therein or now or hereafter available at
law, in equity, by statute or otherwise. Without limiting the
obligations of the Company under Section 15, the Company will pay to
the holder of each Note on demand such further amount as shall be
sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1. REGISTRATION OF NOTES.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of Notes. The name
and address of each holder of one or more Notes, each transfer thereof
and the name and address of each transferee of one or more Notes shall
be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be
registered shall be deemed and treated as the owner and holder thereof
for all purposes hereof, and the Company shall not be affected by any
notice or knowledge to the contrary. The Company shall give to any
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holder of a Note that is an Institutional Investor promptly upon
request therefor, a complete and correct copy of the names and
addresses of all registered holders of Notes.
13.2. TRANSFER AND EXCHANGE OF NOTES.
(a) Upon surrender of any Note at the principal executive office
of the Company for registration of transfer or exchange (and in the
case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the
registered holder of such Note or its attorney duly authorized in
writing and accompanied by the address for notices of each transferee
of such Note or part thereof), the Company shall execute and deliver,
at the Company's expense (except as provided below), one or more new
Notes of the same Series (as requested by the holder thereof) in
exchange therefor, in an aggregate principal amount equal to the unpaid
principal amount of the surrendered Note. Each such new Note shall be
payable to such Person as such holder may request and shall be
substantially in the form of Exhibits 1, 2 or 3 (as the case may be
with respect to Series A Notes, Series B Notes and Series C Notes,
<PAGE>
respectively). Each such new Note shall be dated and bear interest
from the date to which interest shall have been paid on the surrendered
Note or dated the date of the surrendered Note if no interest shall
have been paid thereon. The Company may require payment of a sum
sufficient to cover any stamp tax or governmental charge imposed in
respect of any such transfer of Notes. Notes of each Series shall not
be transferred in denominations of less than $100,000, PROVIDED that if
necessary to enable the registration of transfer by a holder of its
entire holding of Notes of a Series, one Note may be in a denomination
of less than $100,000. Any transferee, by its acceptance of a Note
registered in its name (or the name of its nominee), shall be deemed to
have made the representation set forth in Section 6.2 and the first
sentence of Section 6.1.
(b) Each holder of a Note may in its sole discretion make any
transfer of its Note to any transferee subject to such transferee
agreeing to join the Intercreditor Agreement (and any similar
agreement) as a party pursuant to the terms thereof.
13.3. REPLACEMENT OF NOTES.
Upon receipt by the Company of evidence reasonably satisfactory to
it of the ownership of and the loss, theft, destruction or mutilation
of any Note (which evidence shall be, in the case of an Institutional
Investor, notice from such Institutional Investor of such ownership and
such loss, theft, destruction or mutilation), and
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(a) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the holder of such Note
is, or is a nominee for, an original purchaser or another holder of a
Note with a minimum net worth of at least $50,000,000, such Person's
own unsecured agreement of indemnity shall be deemed to be
satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof, the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note of the same Series, dated and bearing interest from
the date to which interest shall have been paid on such lost, stolen,
destroyed or mutilated Note or dated the date of such lost, stolen,
destroyed or mutilated Note if no interest shall have been paid thereon.
14. PAYMENTS ON NOTES.
14.1. PLACE OF PAYMENT.
Subject to Section 14.2, payments of principal, Make-Whole Amount,
if any, and interest becoming due and payable on the Notes shall be
made in Mosinee, Wisconsin at the principal office of the Company in
such jurisdiction. The Company may at any time, by notice to each
holder of a Note, change the place of payment of the Notes so long as
such place of payment shall be either the principal office of the
Company in the United States of America or the principal office of a
bank or trust company in the United States of America.
14.2. HOME OFFICE PAYMENT.
<PAGE>
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in Section 14.1 or in such Note to
the contrary, the Company will pay all sums becoming due on such Note
for principal, Make-Whole Amount, if any, and interest by the method
and at the address specified for such purpose below your name in
Schedule A, or by such other method or at such other address as you
shall have from time to time specified to the Company in writing for
such purpose, without the presentation or surrender of such Note or the
making of any notation thereon, except that upon written request of the
Company made concurrently with or reasonably promptly after payment or
prepayment in full of any Note, you shall surrender such Note for
cancellation, reasonably promptly after any such request, to the
Company at its principal executive office or at the place of payment
most recently designated by the Company pursuant to Section 14.1.
Prior to any sale or other disposition of any Note held by you or your
nominee you will, at your election, either endorse thereon the amount
of principal paid thereon and the last date to which interest has been
paid thereon or surrender such Note to the Company in exchange for a
new Note or Notes pursuant to Section 13.2. The Company will afford
the benefits of this Section 14.2 to any Institutional Investor that is
the direct or indirect transferee of any Note purchased by you under
this Agreement and that has made the same agreement relating to such
Note as you have made in this Section 14.2.
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15. EXPENSES, ETC.
15.1. TRANSACTION EXPENSES.
Whether or not the transactions contemplated hereby are
consummated, the Company will pay all costs and expenses (including
reasonable attorneys' fees of a special counsel and, if reasonably
required, local or other counsel) incurred by you and each Other
Purchaser or holder of a Note in connection with such transactions and
in connection with any amendments, waivers or consents under or in
respect of this Agreement, any Guaranty Agreement or the Notes (whether
or not such amendment, waiver or consent becomes effective), including,
without limitation: (a) the costs and expenses incurred in enforcing or
defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the Notes or in responding to any
subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the Notes, or by reason of being a
holder of any Note, and (b) the costs and expenses, including financial
advisors' fees, incurred in connection with the insolvency or
bankruptcy of the Company or any Restricted Subsidiary or in connection
with any work-out or restructuring of the transactions contemplated
hereby, any Guaranty Agreement and by the Notes. The Company will pay,
and will save you and each other holder of a Note harmless from, all
claims in respect of any fees, costs or expenses if any, of brokers and
finders (other than those retained by you).
15.2. SURVIVAL.
The obligations of the Company under this Section 15 will survive
the payment or transfer of any Note, the enforcement, amendment or
waiver of any provision of this Agreement, any Guaranty Agreement or
<PAGE>
the Notes, and the termination of this Agreement and any Guaranty
Agreement.
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16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive
the execution and delivery of this Agreement and the Notes, the
purchase or transfer by you of any Note or portion thereof or interest
therein and the payment of any Note, and may be relied upon by any
subsequent holder of a Note, regardless of any investigation made at
any time by or on behalf of you or any other holder of a Note. All
statements contained in any certificate or other instrument delivered
by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this
Agreement. Subject to the preceding sentence, this Agreement and the
Notes embody the entire agreement and understanding between you and the
Company and supersede all prior agreements and understandings relating
to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1. REQUIREMENTS.
This Agreement and the Notes may be amended, and the observance of
any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company
and the Required Holders, except that (a) no amendment or waiver of any
of the provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any
defined term (as it is used therein), will be effective as to you
unless consented to by you in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at
the time outstanding affected thereby, (i) subject to the provisions of
Section 12 relating to acceleration or rescission, change the amount or
time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or
of the Make-Whole Amount on, the Notes, (ii) change the percentage of
the principal amount of the Notes the holders of which are required to
consent to any such amendment or waiver, or (iii) amend any of Sections
8, 11(a), 11(b), 12, 17 or 20.
17.2. SOLICITATION OF HOLDERS OF NOTES.
(a) SOLICITATION. The Company will provide each holder of the
Notes (irrespective of the amount of Notes then owned by it) with
sufficient information, sufficiently far in advance of the date a
decision is required, to enable such holder to make an informed and
considered decision with respect to any proposed amendment, waiver or
consent in respect of any of the provisions hereof, any Guaranty
Agreement or of the Notes. The Company will deliver executed or true
and correct copies of each amendment, waiver or consent effected
pursuant to the provisions of this Section 17 to each holder of
outstanding Notes promptly following the date on which it is executed
and delivered by, or receives the consent or approval of, the requisite
holders of Notes.
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(b) PAYMENT. The Company will not directly or indirectly pay or
<PAGE>
cause to be paid any remuneration, whether by way of supplemental or
additional interest, fee or otherwise, or grant any security, to any
holder of Notes as consideration for or as an inducement to the
entering into by any holder of Notes or any waiver or amendment of any
of the terms and provisions hereof or any Guaranty Agreement unless
such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then
outstanding even if such holder did not consent to such waiver or
amendment.
17.3. BINDING EFFECT, ETC.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and
upon each future holder of any Note and upon the Company without regard
to whether such Note has been marked to indicate such amendment or
waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not
expressly amended or waived or impair any right consequent thereon. No
course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used
herein, the term "THIS AGREEMENT" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented.
17.4. NOTES HELD BY COMPANY, ETC.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then
outstanding approved or consented to any amendment, waiver or consent
to be given under this Agreement or the Notes, or have directed the
taking of any action provided herein or in the Notes to be taken upon
the direction of the holders of a specified percentage of the aggregate
principal amount of Notes then outstanding, Notes directly or
indirectly owned by the Company or any of its Affiliates shall be
deemed not to be outstanding.
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18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent (a) by telecopy if the sender on the same day sends a
confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with
return receipt requested (postage prepaid), or (c) by a recognized
overnight delivery service (with charges prepaid). Any such notice
must be sent:
(i) if to you or your nominee, to you or it at the address
specified for such communications in Schedule A, or at such other
address as you or it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
<PAGE>
(iii) if to the Company, to the Company at its address set forth
at the beginning hereof to the attention of the chief financial
officer, or at such other address as the Company shall have specified
to the holder of each Note in writing. Notices under this Section 18
will be deemed given only when actually received.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating thereto, including,
without limitation, (a) consents, waivers and modifications that may
hereafter be executed, (b) documents received by you at the Closing
(except the Notes themselves), and (c) financial statements,
certificates and other information previously or hereafter furnished to
you, may be reproduced by you by any photographic, photostatic,
microfilm, microcard, miniature photographic or other similar process
and you may destroy any original document so reproduced. The Company
agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made
by you in the regular course of business) and any enlargement,
facsimile or further reproduction of such reproduction shall likewise
be admissible in evidence. This Section 19 shall not prohibit the
Company or any other holder of Notes from contesting any such
reproduction to the same extent that it could contest the original, or
from introducing evidence to demonstrate the inaccuracy of any such
reproduction.
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20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "CONFIDENTIAL INFORMATION"
means information delivered to you by or on behalf of the Company or
any Restricted Subsidiary in connection with the transactions
contemplated by or otherwise pursuant to this Agreement that is
proprietary in nature and that was clearly marked or labeled or
otherwise adequately identified in writing when received by you as
being confidential information of the Company or such Restricted
Subsidiary, PROVIDED that such term does not include information
that (a) was publicly known or otherwise known to you prior to the time
of such disclosure, (b) subsequently becomes publicly known through no
act or omission by you or any person acting on your behalf, (c)
otherwise becomes known to you other than through disclosure by the
Company or any Restricted Subsidiary or (d) constitutes financial
statements delivered to you under Section 7.1 that are otherwise
publicly available. You will maintain the confidentiality of such
Confidential Information in accordance with procedures adopted by you
in good faith to protect confidential information of third parties
delivered to you, PROVIDED that you may deliver or disclose
Confidential Information to (i) your directors, trustees, officers,
employees, agents, attorneys and affiliates, (to the extent such
disclosure reasonably relates to the administration of the investment
represented by your Notes), (ii) your financial advisors and other
professional advisors who agree to hold confidential the Confidential
Information substantially in accordance with the terms of this Section
20, (iii) any other holder of any Note, (iv) any Institutional Investor
<PAGE>
to which you sell or offer to sell such Note or any part thereof or any
participation therein (if such Person has agreed in writing prior to
its receipt of such Confidential Information to be bound by the
provisions of this Section 20), (v) any Person from which you offer to
purchase any security of the Company (if such Person has agreed in
writing prior to its receipt of such Confidential Information to be
bound by the provisions of this Section 20), (vi) any federal or state
regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or
any nationally recognized rating agency that requires access to
information about your investment portfolio, or (viii) any other Person
to which such delivery or disclosure may be necessary or appropriate
(w) to effect compliance with any law, rule, regulation or order
applicable to you, (x) in response to any subpoena or other legal
process, (y) in connection with any litigation to which you are a party
or (z) if an Event of Default has occurred and is continuing, to the
extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of
the rights and remedies under your Notes, this Agreement or any
Guaranty Agreement. Each holder of a Note, by its acceptance of a
Note, will be deemed to have agreed to be bound by and to be entitled
to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the
delivery to any holder of a Note of information required to be
delivered to such holder under this Agreement or requested by such
holder (other than a holder that is a party to this Agreement or its
nominee), such holder will enter into an agreement with the Company
embodying the provisions of this Section 20.
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21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates
as the purchaser of the Notes that you have agreed to purchase
hereunder, by written notice to the Company, which notice shall be
signed by both you and such Affiliate, shall contain such Affiliate's
agreement to be bound by this Agreement and shall contain a
confirmation by such Affiliate of the accuracy with respect to it of
the representations set forth in Section 6. Upon receipt of such
notice, wherever the word "YOU" is used in this Agreement (other than
in this Section 21), such word shall be deemed to refer to such
Affiliate in lieu of you. In the event that such Affiliate is so
substituted as a purchaser hereunder and such Affiliate thereafter
transfers to you all of the Notes then held by such Affiliate, upon
receipt by the Company of notice of such transfer, wherever the word
"YOU" is used in this Agreement (other than in this Section 21), such
word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder
of the Notes under this Agreement.
22. MISCELLANEOUS.
22.1. SUCCESSORS AND ASSIGNS.
All covenants and other agreements contained in this Agreement by
or on behalf of any of the parties hereto bind and inure to the benefit
of their respective successors and assigns (including, without
<PAGE>
limitation, any subsequent holder of a Note) whether so expressed or
not.
22.2. PAYMENTS DUE ON NON-BUSINESS DAYS.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or
interest on any Note that is due on a date other than a Business Day
shall be made on the next succeeding Business Day without including the
additional days elapsed in the computation of the interest payable on
such next succeeding Business Day.
22.3. SEVERABILITY.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating
the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent
permitted by law) not invalidate or render unenforceable such provision
in any other jurisdiction.
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22.4. CONSTRUCTION.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant
contained herein, so that compliance with any one covenant shall not
(absent such an express contrary provision) be deemed to excuse
compliance with any other covenant. Where any provision herein refers
to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is
taken directly or indirectly by such Person.
22.5. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each
of which shall be an original but all of which together shall
constitute one instrument. Each counterpart may consist of a number of
copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
22.6. GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the
State of New York excluding choice-of-law principles of the law of such
State that would require the application of the laws of a jurisdiction
other than such State.
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22.7. RELEASE OF GUARANTIES.
You agree, and each subsequent holder of a Note issued hereunder by
its acceptance of such Note shall be deemed to have agreed, that any
Guaranty Agreement executed and delivered in its favor by a Restricted
Subsidiary hereunder shall be released (without further action by the
Company or such Restricted Subsidiary) upon termination of all Third
<PAGE>
Party Guaranties issued by such Restricted Subsidiary and delivery of
reasonable evidence thereof to each holder of a Note.
[SIGNATURES PAGE TO FOLLOW.]
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If you are in agreement with the foregoing, please sign the form
of agreement on the accompanying counterpart of this Agreement and
return it to the Company, whereupon the foregoing shall become a
binding agreement between you and the Company.
Very truly yours,
WAUSAU-MOSINEE PAPER
CORPORATION
By: Gary P. Peterson
Title: Sr. Vice President Finance
SCHEDULE B
DEFINED TERMS
As used herein, the following terms have the respective meanings
set forth below or set forth in the Section hereof following such term:
"ACCEPTABLE BANK" means any commercial bank organized under the laws
of the United States of America or Canada which has capital, surplus and
undivided profits aggregating at least $100,000,000 and whose long-term
unsecured debt obligations (or the long-term unsecured debt obligations
of the bank holding company owning all of the capital stock of such
commercial bank) shall have been given a rating of "A" or better by S&P,
"A2" or better by Moody's or an equivalent rating by any other credit
rating agency of recognized national standing.
"ACCEPTABLE BROKER-DEALER" means any Person other than a natural
person (i) which is registered as a broker or dealer pursuant to the
Exchange Act and (ii) whose long-term unsecured debt obligations shall
have been given a rating of "A" or better by S&P, or "A2" or better by
Moody's.
"ACQUIROR" means any person (as such term is used in Section 13(d)
and Section 14(d)(2) of the Exchange Act as in effect on the date of the
Closing) or persons constituting a group (as such term is used in Rule
13d-5 under the Exchange Act as in effect on the date of the Closing),
other than such a group consisting of a Senior Management Group.
"ADJUSTED CONSOLIDATED NET WORTH" means, at any time, Consolidated
Net Worth at such time LESS the amount (if a positive number) by which
the value of Restricted Investments outstanding at such time exceeds 20%
of Consolidated Net Worth at such time, in each case determined without
regard to any unrealized gains and losses recorded by the Company
<PAGE>
pursuant to FASB 115 and FASB 52 promulgated by the Financial
Accounting Standards Board of the American Institute of Certified
Public Accountants (as such statements may be amended from time to
time).
"AFFILIATE" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or
more intermediaries Controls, or is Controlled by, or is under common
Control with, such first Person. As used in this definition, "CONTROL"
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an
"AFFILIATE" is a reference to an Affiliate of the Company.
Schedule B-1
SCHEDULE B
"ASSET DISPOSITION" means any Transfer except:
(a) any
(i) Transfer from a Restricted Subsidiary to the Company or a
Wholly-Owned Subsidiary that is a Restricted Subsidiary, and
(ii) Transfer from the Company to a Wholly-Owned Subsidiary that is
a Restricted Subsidiary, so long as immediately before and immediately
after the consummation of any such Transfer and after giving effect
thereto, no Default or Event of Default exists; and
(b) any Transfer made in the ordinary course of business of property
that is either (i) inventory held for sale or (ii) equipment, fixtures,
supplies or materials no longer required in the operation of the
business of the Company or any of its Restricted Subsidiaries or that
is obsolete.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks in New York City are required or
authorized to be closed.
"CAPITAL LEASE" means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
"CHANGE IN CONTROL" means the occurrence of any Acquiror (a)
becoming the "BENEFICIAL OWNER" (as such term is used in Rule 13d-3
under the Exchange Act as in effect on the date of the Closing),
directly or indirectly, of more than 50% of the capital stock of the
Company having ordinary voting power in the election of the Company's
board of directors or (b) obtaining the power to elect, appoint or
cause the election or appointment of at least a majority of the members
of the board of directors of the Company, through beneficial ownership
of the capital stock of the Company or otherwise.
"CLOSING" is defined in Section 3.
<PAGE>
Schedule B-2
"CLOSING DATE GUARANTY AGREEMENT" means the guaranty agreement,
substantially in the form of Exhibit 4.11, executed on the date of
Closing by each of the Guarantors.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time, and the rules and regulations promulgated thereunder from
time to time.
"COMPANY" means Wausau-Mosinee Paper Corporation, a Wisconsin
corporation.
"CONFIDENTIAL INFORMATION" is defined in Section 20.
"CONSOLIDATED NET INCOME" means, with reference to any period, the
consolidated net income (or loss) of the Company and its Restricted
Subsidiaries for such period (taken as a cumulative whole), as
determined in accordance with GAAP, after eliminating all offsetting
debits and credits between the Company and its Restricted Subsidiaries
and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and its
Restricted Subsidiaries in accordance with GAAP; PROVIDED that there
shall be excluded in each such determination of Consolidated Net
Income: (a) any net income (or loss) during such period from any
extraordinary items, (b) any non-cash gains or losses attributable to
changes in accounting principles followed by the Company in accordance
with GAAP, and (c) the income of any Person (other than a Restricted
Subsidiary that is a Wholly-Owned Subsidiary) in which the Company or a
Restricted Subsidiary has an ownership interest except to the extent
that any such income has been actually received by the Company or such
Restricted Subsidiary in the form of cash dividends or similar cash
distributions.
"CONSOLIDATED NET WORTH" means, at any time, the stockholders'
equity of the Company at such time determined on a consolidated basis
for the Company and its Restricted Subsidiaries in accordance with
GAAP.
"CONSOLIDATED TOTAL ASSETS" means the total assets of the Company
and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP (after eliminating all amounts properly
attributable to minority interests, if any, in the stock and surplus of
Restricted Subsidiaries).
"CONSOLIDATED TOTAL CAPITALIZATION" means the sum of Consolidated
Net Worth and Consolidated Total Debt.
Schedule B-3
SCHEDULE B
"CONSOLIDATED TOTAL DEBT" means the total amount of all
Indebtedness of the Company and its Restricted Subsidiaries (including,
without limitation, current maturities of all such Indebtedness),
determined in accordance with GAAP; PROVIDED that for purposes of
<PAGE>
Section 10.4, Indebtedness described in clause (f) of the definition of
"Indebtedness" and Guaranties of Indebtedness described in clause (f)
shall be excluded in determining Consolidated Total Debt.
"DEBT PREPAYMENT APPLICATION" means, with respect to any Transfer
of property, the application by the Company of cash in an amount equal
to the Net Proceeds Amount with respect to such Transfer to pay
Consolidated Total Debt (other than Consolidated Total Debt which is
(a) subordinate in right of payment to the Notes, (b) owing to any
Affiliate of the Company, or (c) in respect of any revolving credit or
similar credit facility providing the Company or any of its Restricted
Subsidiaries with the right to obtain loans or other extensions of
credit from time to time, except to the extent that in connection with
such application the availability of credit under such credit facility
is permanently reduced by an amount not less than the amount of such
proceeds so applied).
"DEFAULT" means an event or condition the occurrence or existence
of which would, with the lapse of time or the giving of notice or both,
become an Event of Default.
"DEFAULT RATE" means, in respect of any Note, that rate of interest
that is the greater of (a) 2% per annum above the rate of interest
stated in clause (a) of the first paragraph of such Note or (b) 2% over
the rate of interest publicly announced by The First National Bank of
Chicago (or its successors) in Chicago, Illinois as its "BASE" or
"PRIME" rate.
"DESIGNATION NOTICE" is defined in Section 9.7 (a).
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants, franchises, licenses,
agreements or governmental restrictions relating to pollution and the
protection of the environment or the release of any materials into the
environment, including but not limited to those related to hazardous
substances or wastes, air emissions and discharges to waste or public
systems.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
promulgated thereunder from time to time in effect.
Schedule B-4
SCHEDULE B
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the
Company under section 414 of the Code.
"EVENT OF DEFAULT" is defined in Section 11.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
<PAGE>
"EXISTING CREDIT FACILITY" means that certain Third Amended and
Restated Credit Agreement dated as of March 29, 1996 among the Company,
Harris Trust and Savings Bank, M&I Marshall & Ilsley Bank, The First
National Bank of Chicago and Bank of America, N.A. (successor by merger
to NationsBank, N.A.), as last amended as of December 15, 1997.
"EXISTING SENIOR NOTE GUARANTIES" means, collectively, each of the
Guaranties made by Subsidiaries of the Company in favor of holders of
the Company's 6.03% Series A Senior Notes due June 16, 2000.
"FAIR MARKET VALUE" means, at any time and with respect to any
property, the sale value of such property that would be realized in an
arm's-length sale at such time between an informed and willing buyer and
an informed and willing seller (neither being under a compulsion to buy
or sell).
"FUTURE REVOLVING LENDER GUARANTY" means any Guaranty made after the
date of Closing by any Restricted Subsidiary in favor of any one or more
financial institutions (or one or more agents acting on their behalf)
guarantying up to $200,000,000 principal amount (outstanding at any one
time) of the obligations of the Company under the revolving credit
facility (if any) which refinances and replaces the Company's Existing
Credit Facility.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America applied on a basis
consistent with the most recent audited consolidated financial
statements of the Company delivered to holders of Notes pursuant to
Section 7.1(b) or, if no such statements have been so delivered, the
most recent financial statements referred to in Section 5.5.
Schedule B-5
SCHEDULE B
"GOVERNMENTAL AUTHORITY" means
(a) the government of
(i) the United States of America or any State or other
political subdivision thereof, or
(ii) any jurisdiction in which the Company or any
Subsidiary conducts all or any part of its business, or which
asserts jurisdiction over any properties of the Company or any
Subsidiary, or
(b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GUARANTOR" means, collectively, each Subsidiary of the Company
existing on the date hereof (other than (a) Wausau Papers Export
Corporation, a Wisconsin corporation, and (b) Wausau-Mosinee
International, Inc., a U.S. Virgin Islands corporation, in each case
<PAGE>
unless and until such Subsidiary executes and delivers a Third Party
Guaranty) and each other Subsidiary of the Company that executes and
delivers a Guaranty Agreement in connection with this Agreement.
"GUARANTY" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any indebtedness, dividend or
other obligation of any other Person in any manner, whether directly or
indirectly, including (without limitation) obligations incurred through
an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or payment
of such indebtedness or obligation, or (ii) to maintain any working
capital or other balance sheet condition or any income statement
condition of any other Person or otherwise to advance or make available
funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase Securities or other
properties or services primarily for the purpose of assuring the owner
of such indebtedness or obligation of the ability of any other Person to
make payment of the indebtedness or obligation; or
Schedule B-6
SCHEDULE B
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
For the purposes of all computations made under this Agreement, the
amount of any Guaranty in respect of any indebtedness for borrowed
money shall be deemed to be equal to the principal amount of such
indebtedness which has been guarantied, and the amount of any Guaranty
in respect of any other obligation or liability or any dividend shall
be deemed to be equal to the maximum aggregate amount of such
obligation, liability or dividend.
"GUARANTY AGREEMENT" means the Closing Date Guaranty Agreement and
any other guaranty agreement in the form of Exhibit 4.11.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to
health or safety, the removal of which may be required or the
generation, manufacture, refining, production, processing, treatment,
storage, handling, transportation, transfer, use, disposal, release,
discharge, spillage, seepage, or filtration of which is or shall be
restricted, prohibited or penalized by any applicable law (including,
without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company
<PAGE>
pursuant to Section 13.1.
"INDEBTEDNESS" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock;
(b) its liabilities for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including all liabilities
created or arising under any conditional sale or other title retention
agreement with respect to any such property);
Schedule B-7
SCHEDULE B
(c) all liabilities appearing on its balance sheet in
accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by any Lien
with respect to any property owned by such Person (whether or not it
has assumed or otherwise become liable for such liabilities);
(e) all its liabilities in respect of letters of credit or
instruments serving a similar function issued or accepted for its
account by banks and other financial institutions (whether or not
representing obligations for borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities
of a type described in any of clauses (a) through (f) hereof.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a
Note, (b) any holder of a Note holding more than 5% of the aggregate
principal amount of the Notes then outstanding, and (c) any bank, trust
company, savings and loan association or other financial institution,
any pension plan, any investment company, any insurance company, any
broker or dealer, or any other similar financial institution or entity,
regardless of legal form.
"INTERCREDITOR AGREEMENT" means that certain Amended and Restated
Intercreditor Agreement dated as of the date of Closing by and among
Harris Trust and Savings Bank, M & I Marshall & Ilsley Bank, The First
National Bank of Chicago, Bank of America, N.A. (successor by merger to
NationsBank, N.A.), Bank One, Michigan, The Prudential Insurance
Company of America and each holder of the Notes.
"INVESTMENT" means any investment, made in cash or by delivery of
property, by the Company or any of its Restricted Subsidiaries (i) in
any Person, whether by acquisition of stock, Indebtedness or other
obligation or Security, or by loan, guaranty (including performance
bonds), advance, capital contribution or otherwise, or (ii) in any
property.
<PAGE>
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any interest
or title of any vendor, lessor, lender or secured party to or of such
Person under any conditional sale or other title retention agreement or
Capital Lease, upon or with respect to any property or asset of such
Person (including in the case of stock, stockholder agreements, voting
trust agreements and all similar arrangements).
Schedule B-8
SCHEDULE B
"MAKE-WHOLE AMOUNT" is defined in Section 8.5.
"MATERIAL" means material in relation to the business, operations,
affairs, financial condition, assets, or properties of the Company and
its Restricted Subsidiaries taken as a whole.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, operations, affairs, financial condition, assets or
properties of the Company and its Restricted Subsidiaries taken as a
whole, or (b) the ability of the Company to perform its obligations
under this Agreement and the Notes, or (c) the validity or
enforceability of this Agreement, any Guaranty Agreement or the Notes.
"MEMORANDUM" is defined in Section 5.3.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means any Plan that is a "MULTIEMPLOYER PLAN"
(as such term is defined in section 4001(a)(3) of ERISA).
"NET PROCEEDS AMOUNT" means, with respect to any Transfer of any
property by any Person, an amount equal to the difference of:
(a) the aggregate amount of the consideration (valued at the Fair
Market Value of such consideration at the time of the consummation of
such Transfer) received by such Person in respect of such Transfer,
MINUS
(b) all taxes actually paid on account of such Transfer and all
ordinary and reasonable out-of-pocket costs and expenses actually
incurred by such Person in connection with such Transfer.
"NOTES" is defined in Section 1.
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities
extend to the subject matter of such certificate.
"OTHER AGREEMENTS" is defined in Section 2.
Schedule B-9
SCHEDULE B
<PAGE>
"OTHER EXISTING GUARANTIES" means Guaranties made by any Restricted
Subsidiary (other than an Existing Senior Note Guaranty) outstanding on
the date of Closing and described on Schedule 10.6.
"OTHER PURCHASERS" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or
a government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been
established or maintained, or to which contributions are or, within the
preceding five years, have been made or required to be made, by the
Company or any ERISA Affiliate or with respect to which the Company or
any ERISA Affiliate may have any liability.
"PREFERRED STOCK" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of
such corporation as to the payment of dividends or the payment of any
amount upon liquidation or dissolution of such corporation.
"PRIORITY DEBT" means the sum, without duplication, of (a) all
Indebtedness of the Company and its Restricted Subsidiaries secured by
Liens (other than Liens permitted to exist under paragraphs (a) through
(i) of Section 10.7), and (b) all Indebtedness of all Restricted
Subsidiaries of the Company (other than such Indebtedness permitted to
exist under paragraphs (a), (b), (d), (e) and (f) of Section 10.6).
"PROPERTY" or "PROPERTIES" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible,
choate or inchoate.
"PROPERTY REINVESTMENT APPLICATION" means, with respect to any
Transfer of property, the application of an amount equal to the Net
Proceeds Amount with respect to such Transfer to the acquisition by the
Company of operating assets to be used in the principal business of the
Company.
Schedule B-10
SCHEDULE B
"QPAM EXEMPTION" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"REPURCHASE AGREEMENT" means any written agreement:
(a) that provides for (i) the transfer of one or more United States
Governmental Securities in an aggregate principal amount at least equal
to the amount of the Transfer Price (defined below) to the Company or
any of its Restricted Subsidiaries from an Acceptable Bank or an
Acceptable Broker-Dealer against a transfer of funds (the "TRANSFER
<PAGE>
PRICE") by the Company or such Restricted Subsidiary to such Acceptable
Bank or Acceptable Broker-Dealer, and (ii) a simultaneous agreement by
the Company or such Restricted Subsidiary, in connection with such
transfer of funds, to transfer to such Acceptable Bank or Acceptable
Broker-Dealer the same or substantially similar United States
Governmental Securities for a price not less than the Transfer Price
plus a reasonable return thereon at a date certain not later than 365
days after such transfer of funds,
(b) in respect of which the Company or such Restricted Subsidiary
shall have the right, whether by contract or pursuant to applicable law,
to liquidate such agreement upon the occurrence of any default
thereunder, and
(c) in connection with which the Company or such Restricted
Subsidiary, or an agent thereof, shall have taken all action required by
applicable law or regulations to perfect a Lien in such United States
Governmental Securities.
"REQUIRED HOLDERS" means, at any time, the holders of at least 51%
in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by the Company or any of its Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company with responsibility for the administration
of the relevant portion of this Agreement.
"RESTRICTED INVESTMENTS" means all Investments of the Company and
its Restricted Subsidiaries except the following:
(a) Investments in property or assets to be used in the ordinary
course of the Company's or a Restricted Subsidiary's business;
Schedule B-11
SCHEDULE B
(b) Investments constituting current assets arising from the sale
of goods and services in the ordinary course of business of the Company
and its Restricted Subsidiaries;
(c) Investments in one or more Wholly-Owned Subsidiaries that are
Restricted Subsidiaries or any Person that concurrently with such
Investment becomes a Wholly-Owned Subsidiary that is a Restricted
Subsidiary;
(d) Investments existing on the date of the Closing and disclosed
in Schedule 10.3, including (without limitation) Investments in joint
ventures in which the Company or a Restricted Subsidiary owns at least
20% of the equity interests or rights to receive profits of such joint
venture;
(e) Investments in United States Governmental Securities, PROVIDED
that such obligations mature within 365 days from the date of
acquisition thereof;
<PAGE>
(f) Investments in tax-exempt obligations of any state of the
United States of America, or any municipality of any such state which
mature within 365 days from the date of acquisition thereof and which,
in each case, are rated "AA" or better by S&P, or "Aa2" or better by
Moody's;
(g) Investments in certificates of deposit and bankers' acceptances
maturing within one year from the date of issuance thereof, issued by
Acceptable Banks;
(h) Investments in commercial paper of corporations organized under
the laws of the United States of America or any state thereof maturing
in 270 days or less from the date of issuance which is rated"A-1" or
better by S&P, or "P-1" or better by Moody's;
(i) Investments in Repurchase Agreements;
(j) Investments in money market preferred stock which is rated "A"
or better by S&P, or "A2" or better by Moody's;
(k) Investments in publicly traded shares of any open-ended mutual
fund organized and existing under the laws of the United States of
America, the aggregate asset value of which "marked to market" is at
least $250,000,000, which is managed by a fund manager of recognized
national standing, and which invests not less than 95% of its assets in
obligations described in clauses (e) through (j) above; and
Schedule B-12
SCHEDULE B
(l) Investments constituting common stock of the Company which the
Company has purchased and is held as treasury stock pursuant to a stock
repurchase program or otherwise (PROVIDED that such stock is not deemed
to be an asset for purposes of determining Consolidated Net Worth).
As of any date of determination, each Restricted Investment shall
be valued at the greater of:
(x) the amount at which such Investment is shown on the books of
the Company or any of its Restricted Subsidiaries (or zero if such
Investment is not shown on any such books); and
(y) the excess of (1) the greater of (A) the amount originally
entered on the books of the Company or any of its Restricted
Subsidiaries with respect thereto and (B) the cost thereof to the
Company or its Restricted Subsidiary over (2) any return of capital
(after income taxes applicable thereto) upon such Investment through
the sale or other liquidation thereof or otherwise.
"RESTRICTED SUBSIDIARY" means any Subsidiary of the Company, none
of the equity interests of which is owned by any Unrestricted
Subsidiary and which is designated as a Restricted Subsidiary as
provided in Section 9.7, PROVIDED that (a) on and after the date of
Closing every Subsidiary of the Company shall be a Restricted
<PAGE>
Subsidiary unless and until otherwise designated pursuant to Section
9.7, and (b) to the extent a newly formed or acquired Subsidiary is not
designated a Restricted Subsidiary or an Unrestricted Subsidiary at or
prior to the effective time of its formation or acquisition, such
Subsidiary shall be deemed a Restricted Subsidiary.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw
Hill, Inc.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY" shall have the same meaning as in Section 2(1) of the
Securities Act.
Schedule B-13
SCHEDULE B
"SENIOR FINANCIAL OFFICER" means the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company.
"SENIOR MANAGEMENT GROUP" means any two or more persons who are
either a member of the Company's board of directors or a senior
corporate officer of the Company, in each case holding such position as
of the date of Closing and as of the date of any Change in Control.
"SERIES" OR "SERIES OF NOTES" means Notes which have the same
(i) maturity date, (ii) interest rate, (iii) interest payment periods
and (iv) date of issuance (which, in the case of a Note issued in
exchange for another Note, shall be deemed for this purpose to be the
date on which such Note's ultimate predecessor Note was originally
issued); E.G., the Series A Notes, Series B Notes and Series C Notes,
respectively, each constitute a Series of Notes.
"SERIES A NOTES" is defined in Section 1.
"SERIES B NOTES" is defined in Section 1.
"SERIES C NOTES" is defined in Section 1.
"SIGNIFICANT SUBSIDIARY" means at any time any Subsidiary that
would at such time constitute a "significant subsidiary" (as such term
is defined in Regulation S-X of the Securities and Exchange Commission
as in effect on the date of the Closing) of the Company.
"SUBSIDIARY" means, as to any Person, any corporation,
association or other business entity in which such Person or one or
more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or voting interests to enable it or
them (as a group) ordinarily, in the absence of contingencies, to elect
a majority of the directors (or Persons performing similar functions)
of such entity, and any partnership or joint venture if more than a 50%
interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
<PAGE>
Subsidiaries (unless such partnership can and does ordinarily take
major business actions without the prior approval of such Person or one
or more of its Subsidiaries). Unless the context otherwise clearly
requires, any reference to a "SUBSIDIARY" is a reference to a
Subsidiary of the Company.
"SUBSIDIARY STOCK" means, with respect to any Person, the stock (or
any options or warrants to purchase stock or other Securities
exchangeable for or convertible into stock) of any Subsidiary of such
Person.
Schedule B-14
SCHEDULE B
"SWAPS" means with respect to any Person, payment obligations with
respect to interest rate swaps, currency swaps, commodity swaps,
futures contracts, commodity options, caps, floors, collars and similar
obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes
of this Agreement, the amount of the obligation under any Swap shall be
the amount determined in respect thereof as of the end of the then most
recently ended fiscal quarter of such Person, based on the assumption
that such Swap had terminated at the end of such fiscal quarter, and in
making such determination, if any agreement relating to such Swap
provides for the netting of amounts payable by and to such Person
thereunder or if any such agreement provides for the simultaneous
payment of amounts by and to such Person, then in each such case, the
amount of such obligation shall be the net amount so determined.
"THIRD PARTY GUARANTIES" means, collectively, all Other Existing
Guaranties, all Future Revolving Lender Guaranties and all other
Guaranties (other than an Existing Senior Note Guaranty).
"TRANSFER" means, with respect to any Person, any transaction in
which such Person sells, conveys, transfers or leases (as lessor) any of
its property (including, without limitation, Subsidiary Stock) directly
or indirectly (including, without limitation, disposition of any
Subsidiary by merger, consolidation or otherwise).
"UNITED STATES GOVERNMENTAL SECURITY" means any direct obligation
of, or obligation guarantied by, the United States of America, or any
agency controlled or supervised by or acting as an instrumentality of
the United States of America pursuant to authority granted by the
Congress of the United States of America, so long as such obligation or
guarantee shall have the benefit of the full faith and credit of the
United States of America which shall have been pledged pursuant to
authority granted by the Congress of the United States of America.
"UNRESTRICTED SUBSIDIARY" means any Subsidiary of the Company other
than a Restricted Subsidiary.
"WHOLLY-OWNED SUBSIDIARY" means, at any time, any Subsidiary one
hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned
<PAGE>
by any one or more of the Company and the Company's other Wholly-Owned
Subsidiaries at such time.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1999 OF WAUSAU-MOSINEE PAPER CORPORATION AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 2,540
<SECURITIES> 0
<RECEIVABLES> 101,581
<ALLOWANCES> 11,105
<INVENTORY> 147,026
<CURRENT-ASSETS> 259,387
<PP&E> 1,111,622
<DEPRECIATION> 464,065
<TOTAL-ASSETS> 938,964
<CURRENT-LIABILITIES> 110,415
<BONDS> 227,663
<COMMON> 170,681
0
0
<OTHER-SE> 223,327
<TOTAL-LIABILITY-AND-EQUITY> 938,964
<SALES> 706,523
<TOTAL-REVENUES> 706,523
<CGS> 597,004
<TOTAL-COSTS> 641,204
<OTHER-EXPENSES> (102)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,314
<INCOME-PRETAX> 57,107
<INCOME-TAX> 21,490
<INCOME-CONTINUING> 35,617
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 35,617
<EPS-BASIC> 0.68
<EPS-DILUTED> 0.66
</TABLE>
