FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1998
Commission file number 0-1051
CONSOLIDATED PAPERS, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-0223100
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
Wisconsin Rapids, Wisconsin 54495
(Address of principal executive offices)
(Zip Code)
715 422-3111
(Registrant's telephone number, including area code)
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 reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock par value $1.00 outstanding July 8, 1998
90,304,744 shares
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
CONSOLIDATED PAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<CAPTION>
As of
June 30 June 30 December 31
1998 1997 1997
(Unaudited) (Unaudited)
ASSETS
<S> <C> <C> <C>
Current Assets
Cash and cash equivalents $ 12,008 $ 16,638 $ 13,169
Receivables (net of reserves of
$6,649 as of June 30, 1998,
$5,767 as of June 30, 1997,
and $6,374 as of December 31,
1997) 156,265 130,709 160,874
Inventories
Finished stock 85,712 49,425 81,858
Unfinished stock 13,221 9,133 10,387
Raw materials and supplies 118,201 88,469 112,801
Total inventories 217,134 147,027 205,046
Prepaid expenses 38,698 40,647 26,506
Total current assets 424,105 335,021 405,595
Investments and other assets 59,184 75,336 61,065
Restricted cash related to leases 434,567 423,474 427,026
Goodwill 143,550 56,847 148,049
Plant and Equipment
Buildings, machinery and equipment 3,335,733 2,313,866 2,929,362
Less: Accumulated depreciation 969,774 828,288 883,265
2,365,959 1,485,578 2,046,097
Land and timberlands 40,227 37,185 39,774
Capital additions in process 183,128 164,885 219,904
Total plant and equipment 2,589,314 1,687,648 2,305,775
$ 3,650,720 $ 2,578,326 $ 3,347,510
LIABILITIES AND SHAREHOLDERS' INVESTMENT
<S> <C> <C> <C>
Current Liabilities
Accounts payable $ 100,117 $ 77,561 $ 92,330
Other 136,883 101,474 117,031
Total current liabilities 237,000 179,035 209,361
Long-term debt 1,085,394 270,553 868,665
Capital lease obligations 463,468 453,266 456,321
Deferred income taxes 318,041 260,383 309,875
Postretirement benefits 159,667 103,475 152,470
Other noncurrent liabilities 30,562 15,078 33,151
Shareholders' Investment
Preferred stock, authorized and
unissued 15,000,000 shares - - -
Common stock, shares issued
90,567,654 as of June 30,
1998, 89,773,382 as of
June 30, 1997, and 90,009,898
as of December 31, 1997 90,568 89,773 90,010
Capital in excess of par value 56,970 40,718 46,400
Accumulated other comprehensive
income (2,574) (2,113) (2,610)
Treasury stock, at cost, 265,702
shares as of June 30, 1998,
48,816 shares as of June 30,
1997, and 278,816 shares as of
December 31, 1997 (7,046) (1,190) (7,370)
Reinvested earnings 1,218,670 1,169,348 1,191,237
Total shareholders' investment 1,356,588 1,296,536 1,317,667
$ 3,650,720 $ 2,578,326 $ 3,347,510
CONSOLIDATED PAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA - UNAUDITED)
Three months ended Six months ended
June 30 March 31 June 30
1998 1997 1998 1998 1997
<S> <C> <C> <C> <C> <C>
Net sales $ 508,437 $ 392,975 $ 517,009 $ 1,025,446 $ 772,816
Cost of goods sold 414,392 322,227 412,882 827,274 637,623
Gross profit 94,045 70,748 104,127 198,172 135,193
Selling, general
and administrative
expenses 25,625 20,700 23,107 48,732 39,819
Income from
operations 68,420 50,048 81,020 149,440 95,374
Interest expense (24,286) (8,934) (24,044) (48,330) (16,762)
Interest income 7,646 6,325 7,633 15,279 12,475
Miscellaneous, net 1,058 1,555 463 1,521 3,159
Total other income
(expense), net (15,582) (1,054) (15,948) (31,530) (1,128)
Income before
provision for
income taxes 52,838 48,994 65,072 117,910 94,246
Provision for
income taxes 21,135 18,618 26,029 47,164 35,814
Net income before
extraordinary item 31,703 30,376 39,043 70,746 58,432
Loss on debt
extinguishment, net
of tax benefit
of $3,069 (4,603) - - (4,603) -
Net income $ 27,100 $ 30,376 $ 39,043 $ 66,143 $ 58,432
Net income per share
before extra-
ordinary item
-basic $ 0.36 $ 0.34 $ 0.43 $ 0.79 $ 0.65
Net income per share
before extra-
ordinary item
-diluted $ 0.36 $ 0.34 $ 0.43 $ 0.79 $ 0.65
Net income per share
-basic $ 0.30 $ 0.34 $ 0.43 $ 0.73 $ 0.65
Net income per share
-diluted $ 0.30 $ 0.34 $ 0.43 $ 0.73 $ 0.65
Average number of
common shares
outstanding 90,248,024 89,649,354 89,838,384 90,044,336 89,575,874
CONSOLIDATED STATEMENTS OF REINVESTED EARNINGS
(DOLLARS IN THOUSANDS - UNAUDITED)
Three months ended Six months ended
June 30 March 31 June 30
1998 1997 1998 1998 1997
<S> <C> <C> <C> <C> <C>
Balance beginning
of period $ 1,211,417 $ 1,157,814 $ 1,191,237 $ 1,191,237 $ 1,148,546
Add: Net income 27,100 30,376 39,043 66,143 58,432
Deduct: Cash
dividends (19,847) (18,842) (18,863) (38,710) (37,630)
Balance end of
period $ 1,218,670 $ 1,169,348 $ 1,211,417 $ 1,218,670 $ 1,169,348
CONSOLIDATED PAPERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS - UNAUDITED)
Six Months Ended
June 30
1998 1997
<S> <C> <C>
Cash Flows from Operating Activities:
Net income $ 66,143 $ 58,432
Depreciation and depletion 89,571 59,039
Amortization of goodwill and intangibles 5,046 2,970
Debt premium amortization ( 6,963) -
Deferred income taxes 11,100 8,428
Earnings of affiliates ( 2,476) ( 2,692)
(Increase) decrease in current assets,
other than cash and cash equivalents ( 19,671) ( 7,414)
Increase (decrease) in current
liabilities, other than current
maturities of long-term debt 24,705 15,279
Increase (decrease) in postretirement
benefits 7,197 4,861
Increase (decrease) in other noncurrent
liabilities (2,589) 1,534
Net cash provided by operating activities 172,063 140,437
Capital expenditures (252,687) ( 98,331)
Other 3,452 ( 4,587)
Net cash (used in) investing activities (249,235) (102,918)
Cash Flows from Financing Activities:
Cash dividends ( 38,710) ( 37,630)
Proceeds from long-term debt 160,000 -
Repayment of long-term debt (143,831) -
Net borrowings under lines of credit
and revolvers 87,100 ( 1,914)
Other 11,452 5,735
Net cash provided by (used in)
financing activities 76,011 ( 33,809)
Net increase (decrease) in cash and cash
equivalents ( 1,161) 3,710
Cash and cash equivalents - beginning of
period 13,169 12,928
Cash and cash equivalents - end of period $ 12,008 $ 16,638
Cash paid during the period for:
Interest $ 39,559 $ 13,495
Income taxes 36,354 14,153
<FN>
Notes to Financial Statements:
1. Reference is made to the Notes to Financial Statements that appear in the
1997 Annual Report on Form 10-K. The basic principles of those notes are
pertinent to these statements.
2. In January 1998, the company completed the exercise of its early purchase
option to buy out an operating lease on production equipment at Lake
Superior Paper Industries by paying $149.3 million in cash and assuming
$120.4 million in debt. This purchase resulted in an increase in fixed
assets in 1998 of $269.7 million. The company had previously purchased a
portion of the equipment in December 1997 by paying $38.9 million in cash
and assuming $30.2 million in debt. The total transaction resulted in an
increase in fixed assets of $338.8 million.
3. In the second quarter 1998, the company recognized a $4.6 million after
taxes, or 6 cents per share - basic, 6 cents per share - diluted,
extraordinary loss. The extraordinary loss was the result of the early
redemption of the company's $143.8 million, face value, term loan assumed as
part of the operating lease buyout on production equipment at Lake Superior
Paper Industries (see Note 2). The loss consisted primarily of a prepayment
penalty and costs associated with the early redemption, net of the write off
of the remaining debt premium and net of income tax benefits of $3.1
million. The redemption of the 12.08% debt was financed with proceeds from
private placement notes with interest rates between 6.93% and 7.30%.
4. The company adopted Statement of Financial Accounting Standards (SFAS) No.
130, "Reporting Comprehensive Income" in the first quarter of 1998. Other
comprehensive income consists solely of the cumulative translation
adjustment and is not material in any period.
5. On April 27, 1998, the board of directors approved a two-for-one stock
split. The split was completed by distributing one additional share of stock
for each share held on the record date of May 8, 1998. All share and per
share data have been restated to reflect the stock split.
* * * * *
The financial information is unaudited. It reflects all adjustments that are,
in the opinion of management, necessary to a fair statement of the results.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Recent Acquisition
Effective October 1, 1997, the company completed the acquisition of Repap USA,
Inc., the holding company for Repap Wisconsin, Inc. and Repap Sales
Corporation, in Kimberly, Wisconsin. The company renamed these operations
Inter Lake Papers, Inc., Inter Lake Wisconsin, Inc. and Inter Lake Sales
Corp., respectively. The operating results of the acquired companies
subsequent to the acquisition dates are included in the Consolidated
Statements of Income. Details of the acquisition are included in Note 2 of
the Notes to Consolidated Financial Statements in the company's 1997 Annual
Report.
Sales and Cost of Sales
Second quarter net sales increased $115 million or 29% and first six months'
net sales increased $253 million or 33% compared with similar periods in 1997.
Second quarter shipments were 549,000 tons, up 23%, and first six months'
shipments were 1,106,000 tons, up 26%, when compared with similar periods in
1997. The increase is primarily due to the October 1997 acquisition.
Net income for the second quarter 1998 before an extraordinary charge of $5
million after taxes was $32 million, or 36 cents per share, which was an
increase compared with $30 million or 34 cents per share, for 1997. After the
extraordinary charge of $5 million, or 6 cents per share, the net income was
$27 million, or 30 cents per share. The extraordinary charge was to refinance
high-cost fixed-rate debt associated with the acquisition of Lake Superior
Paper Industries. The company's earnings per share are reported on a diluted
basis and reflect a two-for-one split of the company's common stock announced
on April 27, with a payable date of May 22.
The groundwood-free coated paper mill, Wisconsin Rapids Division, operated at
89% of capacity for the second quarter and 95% of capacity the first six
months 1998, compared with 100% of capacity for the second quarter and for the
first six months of 1997. The Converting Division, which converts heavier-
weight groundwood-free rolls into sheets, operated at 91% of capacity in the
second quarter of 1998 and at 96% of capacity for the first six months of
1998, compared with 100% for the second quarter and 98% for the first six
months in 1997.
The lightweight groundwood coated paper mills, Biron, Wisconsin River and
Niagara divisions, on a combined basis, operated at 100% of capacity for both
the second quarter and the first two quarters of 1998, compared with 96% of
capacity for the second quarter and 94% for the first two quarters of 1997.
The two smallest groundwood coated paper machines, Nos. 41 and 61, were idle
during the first quarter of 1997. No. 41 paper machine resumed operations on
April 16, 1997, and No. 61 resumed operations on July 7, 1997.
The coated specialty paper division (Stevens Point) operated at 91% of
capacity in the second quarter and 85% of capacity for the first six months
1998, compared with 92% of capacity in the second quarter and 96% of capacity
in the first six months 1997. The reduced operating rates beginning in the
second quarter of 1997 reflect the March 1997 start-up of the No. 35 paper
machine, which increased this mill's available capacity 55%.
Lake Superior Paper Industries, which manufactures supercalendered printing
papers, operated at 100% of capacity in both the second quarter and first six
months 1998, compared with 100% of capacity in the second quarter and 98% of
capacity in the first six months 1997. The company's supercalendered paper
machine at its Lake Superior Paper Industries facility underwent a 20-day
rebuild in February, which included installation of a gap former, enabling the
machine to produce supercalendered "A Plus" paper grades.
Due to weak recycled fiber market conditions, shipments of recycled fiber made
from postconsumer office wastepaper declined, with operations at 92% of
available capacity during the second quarter of 1998 and 88% of capacity for
the first six months of 1998, compared with 89% during the second quarter of
1997 and 94% for the first six months of 1997. Shipments of paperboard
products decreased 8% compared with year 1997 and corrugated products
decreased by 5% compared with 1997.
Gross profit margins as a percent of net sales increased to 18.5% and 19.3%
for the second quarter and first six months of 1998, compared with 18.0% and
17.5% for the similar periods in 1997. The increase in gross profit margins
were due to productivity and volume improvements which more than offset the
unfavorable product mix and a reduction in lease expense. (See footnote two in
the Notes to Financial Statements.)
Selling, general and administrative expenses as a percent of net sales were
5.0% and 4.8% for the second quarter and first six months of 1998,
respectively, compared with 5.3% and 5.2% for the similar periods in 1997.
Selling, general and administrative expenses are typically considered to be
fixed costs and thus go down as a percent of sales as shipments and revenue
increase.
Other income (expense) increased $15 million in second quarter 1998 and $30
million for the first six months 1998 as compared with similar periods in
1997. Interest expense increased primarily due to the higher debt associated
with the October 1997 acquisition and the Lake Superior Paper Industries
operating lease buyout.
The effective tax rate was 40.0% in 1998,compared with 38.0% for 1997.
Liquidity and Capital Resources
The October 1997 acquisition was accounted for as a purchase and the assets
and liabilities, which have been stated at their fair value, affect the
comparison to prior periods.
On June 30, 1998, the ratio of current assets to current liabilities was
1.8:1, compared with 1.9:1 at June 30, 1997. During the second quarter,
working capital increased by $20 million. Cash and cash equivalents increased
by $2 million and receivables decreased by $3 million. Inventories increased
by $5 million. Prepaid expenses increased by $4 million, primarily due to
higher tax benefits and timings at June 30, 1998. Accounts payable and other
current liabilities decreased by $13 million, due primarily to a decrease in
interest payable and income taxes at June 30, 1998, compared with March 31,
1998.
Early in the first quarter of 1998, the company completed the exercise of its
early purchase option to buy out the equity component of a 1987 leveraged
operating lease on production equipment at Lake Superior Paper Industries.
This transaction required an assumption of $144 million, face value, debt
carrying an annual interest rate of 12.1%. To reduce carrying costs, the 12.1%
interest rate debt was refinanced with $160 million of private placement
notes, bearing interest at a weighted average rate of 7.2%. As a result of
this refinancing, a one-time extraordinary charge to earnings of $4.6 million
after taxes, or 6 cents per share, was recorded in the second quarter of 1998.
The company's long-term debt on the balance sheet increased $11 million during
the second quarter and $217 million during the first six months 1998. The
first half year increase is due primarily to the company's exercise of its
early purchase option to buy out an operating lease on production equipment at
Lake Superior Paper Industries by paying $149 million in cash and assuming
$120 million in debt. The resulting balance sheet long-term funded debt to
capital ratio on June 30, 1998, was 44%, compared with 40% on December 31,
1997, and 17% on June 30, 1997.
Capital expenditures in the second quarter 1998 totaled $52 million compared
with $47 million during the same period in 1997. The major second quarter
1998 expenditures included $12 million of an $86 million paper machine rebuild
at Biron Division, $8 million of $48 million supercalender and woodroom
additions at Niagara Division, $3 million of a $17 million hot-soft calender
addition at Stevens Point Division, and $2 million of a $30 million paper
machine rebuild at Lake Superior Paper Industries. The company expects to
spend a total of $240 million during 1998 for capital additions, not including
$149 million for the lease buyout at Lake Superior Paper Industries.
Year 2000 Compliance
The company continues to assess the impact of the Year 2000 on its operations
using a team of internal staff assisted by outside consultants. The company
has defined a nine-step process toward Year 2000 compliance: (1) planning and
awareness; (2) inventory; (3) triage (assess risks and prioritize efforts);
(4) detailed assessment (identify where failures may occur, determine solution
and plan to repair or replace); (5) resolution (repair, retire or replace non-
compliant systems; create bridges to other systems and perform unit testing);
(6) test planning; (7) test execution; (8) deployment of compliant systems;
and (9) fallout (remove bridges and patches, recertify standards). The
planning and awareness, inventory, and triage stages are largely complete.
The company is now engaged in detailed assessment, resolution, test planning
and, where possible, test execution. Some testing can only occur in the
course of scheduled equipment downtimes. Testing is scheduled to continue
through July 1999.
The company presently estimates that it will spend $20 million to $30 million
to remediate or replace existing business information and manufacturing
systems over the course of this project. Most of these costs are attributable
to remediation or replacement of manufacturing systems. In addition, a
substantial amount of the company's engineering and information technology
efforts will be diverted to Year 2000 projects during this period. The
company's estimate does not include costs for items normally budgeted for
routine upgrades or replacement. The company will refine its cost estimates
as testing proceeds and as additional information on the compliance status of
specific items is received from vendors and others. Decisions will then be
made to modify, replace or remove systems.
While the company believes that its efforts will adequately address its
internal Year 2000 concerns, it is possible that the company will be adversely
affected by problems encountered by key customers and suppliers. The company
has initiated discussions with significant customers, suppliers and financial
institutions in an effort to determine and assess those parties' Year 2000
compliance status. Based upon results of its assessment of suppliers'
compliance status, the company will establish contingency plans which will
principally involve identification of alternative sources of supply. This may
prove difficult, particularly with respect to existing assets which require
repair, upgrade or replacement parts from the original vendor. Also, the
company is concerned about the continued availability of electrical power from
its suppliers. The company purchases approximately 60% of its electrical
power needs. Should the electrical power grid be disrupted as a result of
Year 2000 failures, the company may be forced to curtail operations until the
grid is restored. The company is not likely to develop contingency plans
relating to its customers' compliance status. Should problems arise which
prevent customers from purchasing or using the company's products, the company
would likely take manufacturing downtime and other steps designed to minimize
costs during a period of reduced demand.
The company cannot predict the likelihood of a significant disruption of its
customers' or suppliers' businesses or of the economy as a whole, either of
which could have a material adverse impact on the company.
Notation
Certain statements in Management's Discussion and Analysis in this report may
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Because these forward-looking
statements include risks and uncertainties, actual results may differ
materially from those expressed in or implied by the statements. A discussion
of these risks and uncertainties may be found in the company's 1997 Annual
Report and its Form 10-K Report for the year ended December 31, 1997, under
the heading "Management's Discussion and Analysis - Liquidity and Capital
Resources - Forward-looking Statements".
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K.
(a) Furnish the exhibits required by Item 601 of Regulation S-K.
(4)(c) $160,000,000 Note Purchase Agreement dated May 8, 1998 between
the Registrant and The Prudential Insurance Company of America.
(27) Financial Data Schedule.
(b) Reports on Form 8-K.
There were no reports filed on Form 8-K during the quarter ended
June 30, 1998.
Items 1, 2, 3, 4, and 5 are not applicable and have been omitted.
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.
CONSOLIDATED PAPERS, INC.
Date August 12, 1998
/s/ Richard J. Kenney
By: Richard J. Kenney, Senior Vice President, Finance
Principal Financial Officer
Date August 12, 1998
/s/ Carl R. Lemke
By: Carl R. Lemke
Assistant Secretary
EXHIBIT (4)(c) TO FORM 10-Q
FOR CONSOLIDATED PAPERS, INC.
FOR THE QUARTER ENDED
JUNE 30, 1998
EXECUTION COPY
CONSOLIDATED PAPERS, INC.
231 FIRST AVENUE NORTH
P.O. BOX 8050
WISCONSIN RAPIDS, WICONSIN 54495
$30,000,000 6.93% Senior Notes, Series F, due May 8, 2009
$65,000,000 7.24% Senior Notes, Series G, due May 8, 2018
$65,000,000 7.30% Senior Notes, Series H, due May 8, 2023
NOTE PURCHASE AGREEMENT
DATED AS OF MAY 8, 1998
TO THE PURCHASER LISTED IN
THE ATTACHED SCHEDULE A
Ladies and Gentlemen:
CONSOLIDATED PAPERS, INC., a Wisconsin corporation (the "Company"), agrees
with you as follows:
SECTION 1. AUTHORIZATION OF NOTES
The Company will authorize the issue and sale of (i) $30,000,000 aggregate
principal amount of its 6.93% Senior Notes, Series F, due May 8, 2009 (the
"Series F Notes"; such term to include any notes of the same series issued in
substitution therefor pursuant to Section 13 of this Agreement), (ii)
$65,000,000 aggregate principal amount of its 7.24% Senior Notes, Series G,
due May 8, 2018 (the "Series G Notes"; such term to include any notes of the
same series issued in substitution therefor pursuant to Section 13 of this
Agreement), and (iii) $65,000,000 aggregate principal amount of its 7.30%
Senior Notes, Series H, due May 8, 2023 (the "Series H Notes"; such term to
include any notes of the same series issued in substitution therefor pursuant
to Section 13 of this Agreement). The Series F Notes, the Series G Notes and
the Series H Notes are herein collectively referred to as the "Notes".
The Series F Notes shall be substantially in the form set out in Exhibit 1A,
with such changes therefrom, if any, as may be approved by you and the
Company. The Series G Notes shall be substantially in the form set out in
Exhibit 1B, with such changes therefrom, if any, as may be approved by you and
the Company. The Series H Notes shall be substantially in the form set out in
Exhibit 1C, 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.
SECTION 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.
SECTION 3. CLOSING
The sale and purchase of the Notes to be purchased by you shall occur at the
offices of Prudential Capital Group, Two Prudential Plaza, Suite 5600,
Chicago, Illinois 60601, at 10:00 A.M. Chicago time, at a closing (the
"Closing") on May 8, 1998. At the Closing the Company will deliver to you the
Notes to be purchased by you in the form of a single Note for each series of
Notes to be purchased by you (or such greater number of Notes of each series
to be purchased by you 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 8736-096877 at Wachovia Bank Winston Salem, Winston Salem,
North Carolina, ABA #053100494. 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
reasonable 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.
SECTION 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 reasonable satisfaction, prior
to or at the Closing, of the following conditions:
Section 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.
Section 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 Schedule 5.14), no
Default or Event of Default shall have occurred and be continuing.
Section 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. 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 and the Agreements.
Section 4.4. Opinions of Counsel. You shall have received opinions in form
and substance reasonably satisfactory to you, dated the date of the Closing
(a) from Carl H. Wartman, Esq., General Counsel of 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 request
(and the Company hereby instructs its General Counsel to deliver such opinion
to you) and (b) from Wiley S. Adams, Esq., your 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 request.
Section 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 U, T 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 satisfies the foregoing conditions.
Section 4.6. [Intentionally Left Blank.]
Section 4.7. Payment of Structuring Fee. The Company shall have paid to The
Prudential Insurance Company of America on or before the Closing a structuring
fee in the amount of $50,000.
Section 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 obtained for the Series F Notes, the Series G Notes and the Series H
Notes.
Section 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.
Section 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 counsel, and you and your counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
they may reasonably request.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to you that:
Section 5.1. Organization; Power and Authority. The Company is a
corporation duly organized, validly existing and in good standing 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 Notes and to perform the provisions hereof and thereof.
Section 5.2. Authorization, Etc. This Agreement 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 applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and provided that the availability of equitable
remedies (including, without limitation, specific performance) remains subject
to the discretion of the courts.
Section 5.3. Disclosure. This Agreement 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. Except as expressly described in Schedule 5.3, or in one of
the documents, certificates or other writings identified therein, or in the
financial statements listed in Schedule 5.5, since March 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.
Section 5.4. Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 is (except as noted therein) a complete and correct list of
the Company's Subsidiaries, showing, as to each 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 Subsidiary. Schedule 5.4
identifies which Subsidiaries are designated Unrestricted Subsidiaries as
of the date of the Closing.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the
Company or its Subsidiaries have been validly issued, are fully paid and
nonassessable and are owned by the Company or another Subsidiary free and
clear of any Lien (except as otherwise disclosed in Schedule 5.4).
(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.
Section 5.5. Financial Statements. The Company has delivered to you 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 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 and the absence of footnotes).
Section 5.6. Compliance With Laws, Other Instruments, Etc. The execution,
delivery and performance by the Company of this Agreement and the Notes 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 Material 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.
Section 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 the execution, delivery
or performance by the Company of this Agreement or the Notes.
Section 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.
Section 5.9. Taxes. The Company and its 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,
( 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 Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP, or
(iii) for which the Company or a Subsidiary is entitled to be indemnified
(to the extent of such indemnification) by Repap Enterprises, Inc.,
a corporation incorporated under the laws of Canada, pursuant to
the Repap Acquisition Documents.
The Federal income tax liabilities of the Company and its Subsidiaries have
been determined by the Internal Revenue Service and paid for all fiscal years
up to and including the fiscal year ended December 31, 1988.
Section 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 reasonably
be expected to have a Material Adverse Effect. All Material leases are valid
and subsisting and are in full force and effect in all material respects.
Section 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
reasonably be expected to have a Material Adverse Effect.
Section 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 would 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.
(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. The term
"benefit liabilities" has the meaning specified in Section 4001 of ERISA
and the terms "current value" and "present value" have the meanings
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 post-retirement 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 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.
Section 5.13. Private Offering by the Company. Neither the Company nor anyone
acting on its behalf has offered the Notes 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.
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 to the
registration requirements of Section 5 of the Securities Act.
Section 5.14. Use of Proceeds; Margin Regulations. The Company will apply the
proceeds of the sale of the Notes as set forth in Schedule 5.14. 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 5% 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 5% 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.
Section 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 March 31, 1998, since which date there has been no Material
change in the amounts, interest rates, sinking funds, installment 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 the outstanding principal amount of which exceeds
$10,000,000 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.
Section 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.
Section 5.17. Status under Certain Statutes. Except as disclosed in Schedule
5.17, 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 the Federal Power Act, as amended.
SECTION 6. REPRESENTATIONS OF THE PURCHASER
Section 6.1. Purchase for Investment. You 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.
Section 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 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
(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 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
(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.
SECTION 7. INFORMATION AS TO COMPANY
Section 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) an unaudited consolidated balance sheet of the Company and its
Restricted Subsidiaries as at the end of such quarter, and
(ii) unaudited 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, if the Company's Quarterly Report on Form 10-Q provides the
information described in clauses (i) and (ii) of this Section
7.1(a) with respect to the Company and its Restricted Subsidiaries
as a group, 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
Securities and Exchange Commission shall be deemed to satisfy the
requirements of this Section 7.1(a);
(b) Annual Statements - within 105 days after the end of each fiscal year of
the Company, duplicate copies of,
( 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, if the Company's Annual Report on Form 10-K provides the information
described in clauses (i) and (ii) of this Section 7.1(b) with respect to the
Company and its Restricted Subsidiaries as a group, 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 7.1(b);
(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 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 Subsidiary with the Securities and
Exchange Commission;
(d) Notice of Default or Event of Default - promptly, and in any event within
five Business Days after a Responsible Officer becomes 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 Business Days
after a Responsible Officer becomes 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:
( i) with respect to any Plan, any reportable event, as defined in
section 4043(b) of ERISA and the regulations thereunder (except for
any such reportable events which would not reasonably be expected
to have a Material Adverse Effect), 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 Subsidiaries
or relating to the ability of the Company to perform its obligations
hereunder and under the Notes as from time to time may be reasonably
requested by any such holder of Notes.
Section 7.2. Officer's Certificate. Each set of financial statements
delivered to a holder of Notes pursuant to Section 7.1(a) or Section 7.1(b)
hereof shall be accompanied by a certificate of a Senior Financial Officer
setting forth:
(a) Covenant Compliance - the information (including detailed calculations)
required in order to establish whether the Company was in compliance with
the requirements of Section 10.3 through Section 10.12 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 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 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 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.
Section 7.3. Inspection. 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 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 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 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 Subsidiaries), all
at such reasonable times and as often as may be requested.
SECTION 8. PREPAYMENT OF THE NOTES
Section 8.1. Required Prepayments. Except as provided in Section 8.2, the
Company may not prepay the Notes of any series prior to their respective
expressed maturity date. The entire unpaid principal amount of the Series F
Notes shall become due and payable on May 8, 2009. The entire unpaid
principal amount of the Series G Notes shall become due and payable on May 8,
2018. The entire unpaid principal amount of the Series H Notes shall become
due and payable on May 8, 2023.
Section 8.2. 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 of any series, 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, and
accrued interest thereon to the date of prepayment, plus the Make-Whole Amount
determined for the prepayment date with respect to such principal amount. The
Company will give each holder of Notes of each series written notice of each
optional prepayment under this Section 8.2 not less than 30 days and not more
than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes of each
series to be prepaid on such date, the principal amount of each Note held by
such holder to be prepaid (determined in accordance with Section 8.3), 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 with respect to
each series of Notes to be prepaid 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 being so
prepaid a certificate of a Senior Financial Officer specifying the calculation
of such Make-Whole Amount as of the specified prepayment date.
Section 8.3. Allocation of Partial Prepayments. In the case of each partial
prepayment of the Notes of any series, the principal amount of the Notes of
such series to be prepaid shall be allocated among all of the Notes of such
series at the time outstanding in proportion, as nearly as practicable, to the
respective unpaid principal amounts thereof not theretofore called for
prepayment.
Section 8.4. 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.
Section 8.5. 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 of any series 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 of such series 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 30 Business Days. If the holders of more than 51% 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 20
Business Days from its receipt of such 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.
Section 8.6. Make-Whole Amount. The term "Make-Whole Amount" means, with
respect to any Note of any series, 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:
"Called Principal" means, with respect to any Note of any series, the
principal of such Note that is to be prepaid pursuant to Section 8.2 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 of any series, 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 of such series 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 of any series, 0.5% 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 "678" of the Dow Jones
Markets Service Screen (or such other display as may replace page "678"
of the Dow Jones Markets Service Screen) for actively traded US.
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 actively traded US. 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 US. Treasury bill quotations to bond-equivalent yields
in accordance with accepted financial practice and (b) interpolating
linearly between (1) the actively traded US. Treasury security with the
duration closest to and greater than the Remaining Average Life and (2)
the actively traded US. Treasury security with the duration closest to
and less than the Remaining Average Life.
"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.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note of any series, 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 8.2 or 12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note of any series, the date on which such Called Principal is to be
prepaid pursuant to Section 8.2 or has become or is declared to be
immediately due and payable pursuant to Section 12.1, as the context
requires.
SECTION 9. AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
Section 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
Material Adverse Effect.
Section 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.
Section 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 reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
Section 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 or a Subsidiary has
established adequate reserves therefor in accordance with GAAP on the books of
the Company or such Subsidiary or (ii) the nonpayment of all such taxes and
assessments in the aggregate would not reasonably be expected to have a
Material Adverse Effect.
Section 9.5. Corporate Existence, Etc. Subject to Section 10.8, the Company
will at all times preserve and keep in full force and effect its corporate
existence. Subject to Sections 10.8 and 10.9, the Company will at all times
preserve and keep in full force and effect the corporate existence of each of
its Restricted Subsidiaries (unless merged into the Company or a Wholly-Owned
Restricted 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.
SECTION 10. NEGATIVE COVENANTS
The Company covenants that so long as any of the Notes are outstanding:
Section 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 another Restricted Subsidiary), except in the ordinary course of
business and 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.
Section 10.2. Line of Business. The Company will not, and will not permit
any of its Restricted Subsidiaries to, engage in any business if, as a result,
the general nature of the business in which the Company and its Restricted
Subsidiaries, taken as a whole, would then be engaged would be substantially
changed from the general nature of the business in which the Company and its
Restricted Subsidiaries, taken as a whole, are engaged on the date of this
Agreement.
Section 10.3. Minimum Consolidated Net Worth. The Company will not, at any
time, permit Consolidated Net Worth to be less than $1,000,000,000.
Section 10.4. Current Debt. The Company will not at any time permit any
Consolidated Current Debt to be outstanding unless there shall have been
during the immediately preceding 365 days a period of at least 30 consecutive
days on each of which the ratio of (i) the sum of (A) Consolidated Current
Debt plus (B) Consolidated Funded Debt to (ii) the sum of (A) Consolidated
Capitalization plus (B) Consolidated Current Debt shall not have exceeded 0.6
to 1.
For the purposes of this Section 10.4, any Person becoming a Restricted
Subsidiary after the date hereof shall be deemed, at the time it becomes a
Restricted Subsidiary, to have incurred all of its then outstanding Current
Debt.
Section 10.5. Restricted Subsidiary Debt. The Company will not at any time
permit any Restricted Subsidiary to, directly or indirectly, create, incur,
assume, guarantee, have outstanding, or otherwise become or remain directly or
indirectly liable with respect to, any Debt, except:
(a) Debt of a Restricted Subsidiary owed to the Company or to a Wholly-Owned
Restricted Subsidiary;
(b) Debt of a Restricted Subsidiary outstanding on the date hereof and
disclosed in Schedule 5.15 hereto and any extension, renewal,
refinancing, replacement or refunding thereof, provided that, in the case
of any such extension, renewal, refinancing, replacement or refunding,
(i) the principal amount of Debt immediately prior to such extension,
renewal, refinancing, replacement or refunding is not increased and (ii)
immediately after such extension, renewal, refinancing, replacement or
refunding, no Default or Event of Default shall exist;
(c) Debt of a Restricted Subsidiary secured by Liens permitted by Section
10.7(h);
(d) Debt of a Restricted Subsidiary outstanding at the time such Restricted
Subsidiary becomes a Restricted Subsidiary and any extension, renewal,
refinancing, replacement or refunding thereof, provided that (i) such
Debt shall not have been incurred in contemplation of such Restricted
Subsidiary becoming a Restricted Subsidiary, (ii) immediately after such
Restricted Subsidiary becomes a Restricted Subsidiary, no Default or
Event of Default shall exist and (iii) after giving effect to such Debt
and to the concurrent retirement of any other Debt, the Company would be
permitted to incur at least $1.00 of additional Funded Debt under the
provisions of Section 10.6(c) owing to a Person other than a Restricted
Subsidiary, and provided, further, that, in the case of any extension,
renewal, refinancing, replacement or refunding of any such Debt, (i) the
principal amount of Debt immediately prior to such extension, renewal,
refinancing, replacement or refunding is not increased and (ii)
immediately after such extension, renewal, refinancing, replacement or
refunding, no Default or Event of Default shall exist; and
(e) Debt of a Restricted Subsidiary in addition to that otherwise permitted
by the foregoing provisions of this Section 10.5, provided that (i) on
the date the Restricted Subsidiary incurs or otherwise becomes liable
with respect to any such additional Debt and immediately after giving
effect thereto and to the concurrent retirement of any other Debt, no
Default or Event of Default shall exist and (ii) the total amount of all
Debt of the Company secured by Liens permitted by Section 10.7(k) plus
the total amount of all Debt of Restricted Subsidiaries incurred under
this Section 10.5(e) plus the total amount of all Debt of Restricted
Subsidiaries outstanding under Section 10(d) which is guaranteed by the
Company or is otherwise with recourse to the Company shall not at any
time exceed 20% of Consolidated Net Worth, and (iii) after giving effect
to such Debt and to the concurrent retirement of any other Debt, the
Company would be permitted to incur at least $1.00 of additional Funded
Debt under the provisions of Section 10.6(c) owing to a Person other than
a Restricted Subsidiary.
For the purposes of this Section 10.5, any Person becoming a Restricted
Subsidiary after the date hereof shall be deemed, at the time it becomes a
Restricted Subsidiary, to have incurred all of its then outstanding Debt.
Section 10.6. Incurrence of Funded Debt. The Company will not, directly or
indirectly, create, incur, assume, guarantee, or otherwise become directly or
indirectly liable with respect to, any Funded Debt, except:
(a) Funded Debt evidenced by the Notes and any extension, renewal,
refinancing, replacement or refunding thereof, provided that, in the case
of any such extension, renewal, refinancing, replacement or refunding,
(i) the principal amount of Debt immediately prior to such extension,
renewal, refinancing, replacement or refunding is not increased and (ii)
immediately after such extension, renewal, refinancing, replacement or
refunding, no Default or Event of Default shall exist;
(b) Funded Debt of the Company outstanding on the date hereof and disclosed
in Schedule 5.15 hereto and any extension, renewal, refinancing,
replacement or refunding thereof, provided that, in the case of any such
extension, renewal, refinancing, replacement or refunding, (i) the
principal amount of Debt immediately prior to such extension, renewal,
refinancing, replacement or refunding is not increased and (ii)
immediately after such extension, renewal, refinancing, replacement or
refunding, no Default or Event of Default shall exist; and
(c) Funded Debt of the Company in addition to that otherwise permitted by the
foregoing provisions of this Section 10.6, provided that on the date the
Company incurs or otherwise becomes liable with respect to any such
additional Funded Debt and immediately after giving effect thereto and to
the concurrent retirement of any other Funded Debt, (i) no Default or
Event of Default shall exist and (ii) Consolidated Funded Debt shall not
exceed 60% of Consolidated Capitalization.
Section 10.7. Liens. The Company will not, and will not permit any of its
Restricted Subsidiaries 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 (unless it (i) makes, or causes
to be made, effective provision whereby the Notes will be equally and ratably
secured with any and all other obligations thereby secured, such security to
be pursuant to an agreement satisfactory to the Required Holders and, in any
such case, the Notes shall have the benefit, to the fullest extent that, and
with such priority as, the holders of the Notes may be entitled under
applicable law, of an equitable Lien on such property and (ii) causes to be
delivered to each holder of Notes an opinion of nationally recognized
independent counsel, or other independent counsel satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such
security are enforceable in accordance with their terms and comply with the
terms hereof), except:
(a) Liens for taxes, assessments or other governmental charges which are not
yet due and payable or the payment of which is not at the time required
by Section 9.4;
(b) 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 or the
payment of which is not at the time required by Section 9.4;
(c) 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 (not in excess of $25,000,000), 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;
(d) any attachment or judgment Lien, unless the judgment it secures (i) shall
not, within 60 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been
discharged within 60 days after the expiration of any such stay and (ii)
exceeds $25,000,000;
(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, provided
that such Liens are not, in the aggregate, Material;
(f) Liens on property or assets of the Company or any of its Restricted
Subsidiaries securing Debt owing to the Company or to another Restricted
Subsidiary;
(g) Liens existing on the date of this Agreement and securing the Debt of the
Company and its Restricted Subsidiaries referred to in items B.1, D.1,
D.2, E and F of Schedule 5.15;
(h) any Lien created to secure all or any part of the purchase price, or to
secure Debt incurred or assumed to pay all or any part of the purchase
price or cost of construction, of property (or any improvement thereon)
acquired or constructed by the Company or a Restricted Subsidiary after
the date of the Closing, provided that
( i) any such Lien shall extend solely to the item or items of such
property (or improvement thereon) so acquired or constructed and,
if required by the terms of the instrument originally creating such
Lien, other property (or improvement thereon) which is an
improvement to or is acquired for specific use in connection with
such acquired or constructed property (or improvement thereon) or
which is real property being improved by such acquired or
constructed property (or improvement thereon),
( ii) the principal amount of the Debt secured by any such Lien shall at
no time exceed an amount equal to the lesser of (A) the cost to the
Company or such Restricted Subsidiary of the property (or
improvement thereon) so acquired or constructed and (B) the Fair
Market Value (as determined in good faith by the board of directors
of the Company) of such property (or improvement thereon) at the
time of such acquisition or construction, and
(iii) any such Lien shall be created contemporaneously with, or within
180 days after, the acquisition or construction of such property,
provided that, in the case of the construction or acquisition of
improvements to real property, the land on which such improvements
are located shall not be required to have been acquired within such
180-day period;
(i) any Lien existing on property of a Person immediately prior to its being
consolidated with or merged into the Company or a Restricted Subsidiary
or its becoming a Restricted Subsidiary, or any Lien existing on any
property acquired by the Company or any Restricted Subsidiary at the time
such property is so acquired (whether or not the Debt secured thereby
shall have been assumed), provided that (i) no such Lien shall have been
created or assumed in contemplation of such consolidation or merger or
such Person's becoming a Restricted Subsidiary or such acquisition of
property, and (ii) each such Lien shall extend solely to the item or
items of property so acquired and, if required by the terms of the
instrument originally creating such Lien, other property which is an
improvement to or is acquired for specific use in connection with such
acquired property;
(j) any Lien extending, renewing, refinancing, replacing or refunding any
Lien permitted by paragraph (g), (h) or (i) of this Section 10.7,
provided that (i) the principal amount of Debt secured by such Lien
immediately prior to such extension, renewal, refinancing, replacement or
refunding is not increased or the maturity thereof reduced, (ii) such
Lien is not extended to any other property and (iii) immediately after
such extension, renewal, refinancing, replacement or refunding, no
Default or Event of Default would exist; and
(k) other Liens not otherwise permitted by paragraphs (a) through (j) of this
Section 10.7, securing Debt of the Company or any Restricted Subsidiary,
provided that the total amount of all Debt of the Company secured by
Liens permitted by this paragraph (k) plus all Debt of Restricted
Subsidiaries incurred under Section 10.5(e) hereof plus the total amount
of all Debt of Restricted Subsidiaries incurred under Section 10.5(d)
which is guaranteed by the Company or is otherwise with recourse to the
Company shall not at any time exceed 20% of Consolidated Net Worth, and
after giving effect to such Debt and to the concurrent retirement of any
other Debt, the Company would be permitted to incur at least $1.00 of
additional Funded Debt under the provisions of Section 10.6(c) owing to a
Person other than a Restricted Subsidiary.
For the purposes of this Section 10.7, any Person becoming a Restricted
Subsidiary after the date of this Agreement shall be deemed to have incurred
all of its then outstanding Liens at the time it becomes a Restricted
Subsidiary, and any Person extending, renewing, refinancing, replacing or
refunding any Debt secured by any Lien shall be deemed to have incurred such
Lien at the time of such extension, renewal, refinancing, replacement or
refunding.
Section 10.8. Merger, Consolidation, Etc. The Company will not, and will not
permit any of its Restricted Subsidiaries to, 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 (except
that a Restricted Subsidiary may (x) consolidate with or merge with, or
convey, transfer or lease substantially all of its assets in a single
transaction or series of transactions to, a Wholly-Owned Restricted Subsidiary
or the Company and (y) convey, transfer or lease all of its assets in
compliance with the provisions of Section 10.9), provided that the foregoing
restriction does not apply to consolidation or merger of the Company with, or
the conveyance, transfer or lease of substantially all of the assets of the
Company in a single transaction or series of transactions, to any Person so
long as:
(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 (the "Successor Corporation"), shall be a solvent corporation
organized and existing under the laws of the United States of America or
any State thereof (including the District of Columbia);
(b) if the Company is not the Successor 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 and the Notes (pursuant to such agreements
and instruments as shall be satisfactory in scope and form to the
Required Holders), and the Company shall have caused to be delivered to
each holder of Notes an opinion of nationally recognized independent
counsel, or other independent counsel satisfactory to the Required
Holders, to the effect that all agreements or instruments effecting such
assumption are enforceable in accordance with their terms and comply with
the terms hereof;
(c) immediately after giving effect to such transaction no Default or Event
of Default would exist; and
(d) the Company would be permitted to incur at least $1.00 of additional
Funded Debt under the provisions of Section 10.6(c) owing to a Person
other than a Restricted Subsidiary.
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 10.8 from its liability under this Agreement or the Notes.
Section 10.9. Sale of Assets, Etc.
(a) Sale of Assets, etc. The Company will not, and will not permit any of
its Restricted Subsidiaries to, make any Transfer of property, provided
that the foregoing restriction does not apply to a Transfer if:
( i) the property that is the subject of such Transfer constitutes
either
(A) inventory held for sale, or
(B) equipment, fixtures, supplies or materials no longer required
in the operation of the business of the Company or such
Restricted Subsidiary or that is obsolete,
and, in the case of any Transfer described in the preceding clause (A) or
clause (B), such Transfer is in the ordinary course of business (an "Ordinary
Course Transfer");
( ii) either
(A) such Transfer is from a Restricted Subsidiary to the Company or
a Wholly-Owned Restricted Subsidiary, or
(B) such Transfer is from the Company to a Wholly-Owned Restricted
Subsidiary, or
(C) such Transfer is from the Company to a Restricted Subsidiary
(other than a Wholly-Owned Restricted Subsidiary) or from a
Restricted Subsidiary to another Restricted Subsidiary and in
either case is for Fair Market Value, or
(D) such Transfer is a Transfer pursuant to a Cross-Border Lease,
so long as immediately before and immediately after the consummation of such
transaction, and after giving effect thereto, no Default or Event of Default
exists or would exist (each such Transfer, an "Intergroup Transfer"); or
(iii) such Transfer is not an Ordinary Course Transfer or an Intergroup
Transfer (such transfers collectively referred to as "Excluded
Transfers"), and all of the following conditions shall have been
satisfied with respect thereto (the date of the consummation of
such Transfer of property being referred to herein as the "Property
Disposition Date"):
(A) such Transfer does not involve a Substantial Portion of the
property of the Company and its Restricted Subsidiaries,
(B) in the good faith opinion of the Company, the Transfer (1) is
in exchange for consideration with a Fair Market Value at least
equal to that of the property exchanged, and (2) is in the best
interests of the Company, and
(C) immediately after giving effect to such transaction no Default
or Event of Default would exist.
(b) Debt Prepayment Transfers and Reinvested Transfers.
( i) Debt Prepayment Transfers. Notwithstanding the provisions of
Section 10.9(a), any Transfer shall be excluded for the purposes of
calculating the limitation on Transfers of Property permitted under
Section 10.9(a)(iii) hereof (a "Debt Prepayment Transfer") if the
Company shall
(A) within 60 days of such Transfer, deliver a certificate of an
officer of the Company to each holder of a Note certifying that
the Company elects to treat such Transfer as a Debt Prepayment
Transfer and
(B) apply the Net Proceeds Amount in respect of such Transfer to a
Debt Prepayment Application and/or a Property Reinvestment
Application.
( ii) Reinvested Transfers. Notwithstanding the provisions of Section
10.9(a), any Transfer shall be excluded for the purposes of
calculating the limitation on Transfers of Property permitted under
Section 10.9(a)(iii) hereof (a "Reinvested Transfer") if the
Company shall
(A) within 60 days of such Transfer, deliver a certificate of an
officer of the Company to each holder of a Note certifying that
the Company elects to treat such Transfer as a Reinvested
Transfer and
(B) apply the Net Proceeds Amount in respect of such Transfer to a
Property Reinvestment Application and/or a Debt Prepayment
Application.
If the Company shall elect to treat any Transfer as a Debt Prepayment Transfer
or a Reinvested Transfer and shall fail to apply the Net Proceeds Amount in
respect thereof to a Debt Prepayment Application or a Property Reinvestment
Application, as the case may be, such Transfer shall be deemed to have been
consummated on the date thereof and shall be subject to the provisions of
Section 10.9(a)(iii) as of such date.
Section 10.10. Disposal of Ownership of a Restricted Subsidiary. The Company
will not, and will not permit any of its Restricted Subsidiaries to, sell or
otherwise dispose of any shares of Subsidiary Stock, nor will the Company
permit any Restricted Subsidiary to issue, sell or otherwise dispose of any
shares of its own Subsidiary Stock, provided that the foregoing restrictions
do not apply to:
(a) the issue of directors' qualifying shares by any such Restricted
Subsidiary;
(b) any such Transfer of Subsidiary Stock constituting an Intergroup
Transfer; and
(c) the Transfer of all of the Subsidiary Stock of a Restricted Subsidiary of
the Company owned by the Company and its other Restricted Subsidiaries
if:
( i) such Transfer satisfies the requirements of Section 10.9(a)(iii)
hereof,
( ii) in connection with such Transfer the entire Investment (whether
represented by stock, Debt, claims or otherwise) of the Company and
its other Restricted Subsidiaries in such Subsidiary is sold,
transferred or otherwise disposed of to a Person other than (A) the
Company, (B) another Restricted Subsidiary not being simultaneously
disposed of, or (C) an Affiliate, and
(iii) the Restricted Subsidiary being disposed of has no continuing
Investment in any other Restricted Subsidiary of the Company not
being simultaneously disposed of or in the Company.
Section 10.11. Restricted Payments
(a) Limitation. The Company will not, and will not permit any of its
Restricted Subsidiaries to, at any time, declare or make, or incur any
liability to declare or make, any Restricted Payment unless immediately
after giving effect to such action:
( i) no Default or Event of Default would exist; and
(ii) the Company would be permitted to incur at least $1.00 of
additional Funded Debt under the provisions of Section 10.6(c)
owing to a Person other than a Restricted Subsidiary.
(b) Time of Payment. The Company will not, nor will it permit any of its
Restricted Subsidiaries to, authorize a Restricted Payment that is not
payable within 60 days of authorization.
Section 10.12. Restricted Investments
(a) Limitation. The Company will not, and will not permit any of its
Restricted Subsidiaries to, declare, make or authorize any Restricted
Investment unless immediately after giving effect to such action:
( i) no Default or Event of Default would exist; and
(ii) the Company would be permitted to incur at least $1.00 of
additional Funded Debt under the provisions of Section 10.6(c)
owing to a Person other than a Restricted Subsidiary.
(b) Investments of Restricted Subsidiaries. Each Person which becomes a
Restricted Subsidiary of the Company after the date of the Closing will
be deemed to have made, on the date such Person becomes a Restricted
Subsidiary of the Company, all Restricted Investments of such Person in
existence on such date. Investments in any Person that ceases to be a
Restricted Subsidiary of the Company after the date of the Closing (but
in which the Company or another Restricted Subsidiary continues to
maintain an Investment) will be deemed to have been made on the date on
which such Person ceases to be a Restricted Subsidiary of the Company.
Section 10.13. Designation of Subsidiaries
The Company may designate any Subsidiary to be an Unrestricted Subsidiary and
may designate any Unrestricted Subsidiary to be a Restricted Subsidiary by
giving written notice to each holder of Notes that the Board of Directors of
the Company has made such designation, provided, however, that no Subsidiary
may be designated an Unrestricted Subsidiary and no Unrestricted Subsidiary
may be designated a Restricted Subsidiary unless, at the time of such action
and after giving effect thereto, (i) solely in the case of a Restricted
Subsidiary being designated an Unrestricted Subsidiary, (A) such Restricted
Subsidiary being designated an Unrestricted Subsidiary shall not have any
continuing Investment in the Company or any Restricted Subsidiary and (B) such
designation shall constitute a Transfer of property that is subject to the
restrictions contained in Section 10.9 and (ii) no Default or Event of Default
shall exist.
SECTION 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) the Company defaults in the performance of or compliance with any term
contained in Section 7.1(d) or in Sections 10.3 through 10.13, inclusive;
or
(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 or (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); provided that, no such default shall be
deemed an Event of Default if (x) such default is capable of being cured
but cannot be cured within such 30-day period and (y) the Company is
diligently pursuing such cure and effects such cure within a period of an
additional 30 days after the expiration of such initial 30-day period ;
or
(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 $25,000,000
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 $25,000,000 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
(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 shall not be dismissed within
60 days; or
(i) a final judgment or judgments for the payment of money aggregating in
excess of $25,000,000 are rendered against one or more of the Company and
its Significant Subsidiaries and which judgments are not, within 60 days
after entry thereof, bonded, discharged or stayed pending appeal, or are
not discharged within 60 days after the expiration of such stay; or
(j) 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 ERISA section 4042 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) the aggregate "amount of unfunded
benefit liabilities" (within the meaning of section 4001(a)(18) of ERISA)
under all Plans, determined in accordance with Title IV of ERISA, shall
exceed $25,000,000, (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 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 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(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such
terms in Section 3 of ERISA.
SECTION 12. REMEDIES ON DEFAULT, ETC.
Section 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, any holder
or holders of more than 66-2/3% 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 Note becoming due and payable under this Section 12.1, whether
automatically or by declaration, such Note will forthwith mature and the
entire unpaid principal amount of such Note, plus (x) all accrued and unpaid
interest thereon and (y) in the event of any Note's becoming due and payable
under Section 12.1(b) or Section 12.1(c), 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.
Section 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.
Section 12.3. Rescission. At any time after any Notes have been declared due
and payable pursuant to clause (b) or (c) of Section 12.1, the holders of not
less than 66-2/3% 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 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.
Section 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.
SECTION 13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
Section 13.1. Registration of Notes. The Company shall keep at its principal
executive office a register, by series of Notes, for the registration and
registration of transfers of Notes. The name and address of each holder of
one or more Notes, the series thereof, each transfer thereof and the name and
address of each transferee of one or more Notes of any series 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 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.
Section 13.2. Transfer and Exchange of Notes. Upon surrender of a Note of
any series 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
(i) Exhibit 1A, in the case of a Series F Note, (ii) Exhibit 1B, in the case
of a Series G Note, and (iii) Exhibit 1C, in the case of a Series H Note. 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 shall not be
transferred in denominations of less than $1,000,000, provided that if
necessary to enable the registration of transfer by a holder of its entire
holding of Notes of any series, one Note of the applicable series may be in a
denomination of less than $1,000,000. 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.
Section 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
(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 $10,000,000, 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.
SECTION 14. PAYMENTS ON NOTES
Section 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 Wisconsin Rapids, 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
such jurisdiction or the principal office of a bank or trust company in such
jurisdiction.
Section 14.2. Home Office Payment. 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.
SECTION 15. EXPENSES, ETC.
Section 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 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 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
Subsidiary or in connection with any work-out or restructuring of the
transactions contemplated hereby 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).
Section 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 or the Notes, and the termination
of this Agreement.
SECTION 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.
SECTION 17. AMENDMENT AND WAIVER
Section 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.
Section 17.2. Solicitation of Holders of Notes.
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 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.
Section 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.
Section 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.
SECTION 18. NOTICES
All notices and communications provided for hereunder shall be in writing and
sent (a) by telefacsimile 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
(iii) if to the Company, to the Company at its address set forth at the
beginning hereof to the attention of Vice President, Finance, 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.
SECTION 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.
SECTION 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 Subsidiary
in connection with the transactions contemplated by or otherwise pursuant to
this Agreement, 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 Subsidiary or (d)
constitutes financial statements delivered to you under Section 7.1 that are
otherwise publicly available. You will use your best efforts to 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 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 and this 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.
SECTION 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.
SECTION 22. MISCELLANEOUS
Section 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 limitation, any subsequent holder of a Note) whether so
expressed or not.
Section 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.
Section 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.
Section 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.
Section 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.
Section 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.
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,
CONSOLIDATED PAPERS, INC.
By:___________________________________
Name: Richard J. Kenney
Title: Senior Vice President, Finance
The foregoing is hereby
agreed to as of the date hereof.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:_____________________________
Vice President
SCHEDULE A
PURCHASER SCHEDULE
SERIES F NOTES
CONSOLIDATED PAPERS, INC.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denominations
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $ 30,000,000 $ 30,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the
name of the Company, a reference to "6.93%
Series F Notes due May 8, 2009, Security
No. !INV5986!" and the due date and
application (as among principal, interest
and Make-Whole Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (973) 802-5260
Telecopy: (973) 802-8055
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
180 N. Stetson Street - Suite 5600
Chicago, IL 60601-6716
Attention: Managing Director
Telecopy: (312) 540-4222
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (973) 802-7398
Telecopy: (973) 802-9425
(5) Tax Identification No.: 22-1211670
SCHEDULE A
PURCHASER SCHEDULE
SERIES G NOTES
CONSOLIDATED PAPERS, INC.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denominations
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $ 65,000,000 $ 65,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the
name of the Company, a reference to "7.24%
Series G Notes due May 8, 2018, Security
No. !INV5986!" and the due date and
application (as among principal, interest
and Make-Whole Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (973) 802-5260
Telecopy: (973) 802-8055
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
180 N. Stetson Street - Suite 5600
Chicago, IL 60601-6716
Attention: Managing Director
Telecopy: (312) 540-4222
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (973) 802-7398
Telecopy: (973) 802-9425
(5) Tax Identification No.: 22-1211670
SCHEDULE A
PURCHASER SCHEDULE
SERIES H NOTES
CONSOLIDATED PAPERS, INC.
Aggregate
Principal
Amount of
Notes to be Note
Purchased Denominations
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA $ 65,000,000 $ 65,000,000
(1) All payments on account of Notes held by such
purchaser shall be made by wire transfer of
immediately available funds for credit to:
Account No. 890-0304-391
Bank of New York
New York, New York
(ABA No.: 021-000-018)
Each such wire transfer shall set forth the
name of the Company, a reference to "7.30%
Series H Notes due May 8, 2023, Security
No. !INV5986!" and the due date and
application (as among principal, interest
and Make-Whole Amount) of the payment being made.
(2) Address for all notices relating to payments:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Gateway Center Three
100 Mulberry Street
Newark, New Jersey 07102
Attention: Manager, Investment Operations Group
Telephone: (973) 802-5260
Telecopy: (973) 802-8055
(3) Address for all other communications and notices:
The Prudential Insurance Company of America
c/o Prudential Capital Group
Two Prudential Plaza
180 N. Stetson Street - Suite 5600
Chicago, IL 60601-6716
Attention: Managing Director
Telecopy: (312) 540-4222
(4) Recipient of telephonic prepayment notices:
Manager, Investment Structure and Pricing
Telephone: (973) 802-7398
Telecopy: (973) 802-9425
(5) Tax Identification No.: 22-1211670
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:
"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.
"Agreement" is defined in Section 17.3.
"Business Day" means (a) for the purposes of Section 8.6 only, 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, and (b) for the purposes of any other
provision of this Agreement, any day other than a Saturday, a Sunday or a day
on which commercial banks in New York, New York are required or authorized to
be closed.
"Capital Lease" means, at any time, 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.
"Capital Lease Obligation" means, with respect to any Person and a Capital
Lease, the amount of the obligation of such Person as the lessee under such
Capital Lease which would, in accordance with GAAP, appear as a liability on a
balance sheet of such Person.
"Cash Collateral" means, at any time, all cash and cash equivalents of the
Deposit Subsidiary held in deposit accounts and subject to Liens granted by
the Deposit Subsidiary to secure directly or indirectly all rental and other
obligations of Newco required to be paid by Newco, as lessee, under the Cross-
Border Leases, as amended from time to time, so long as such cash and cash
equivalents do not secure, and are not available to satisfy, any claims of any
creditor of the Company or any Subsidiary of the Company other than claims of
the respective deposit bank arising from the related deposit arrangements,
claims of any issuer of any stand-by letter of credit issued for the account
of the Deposit Subsidiary and for the benefit of the lessors under the Cross-
Border Leases and claims of the lessors under the Cross-Border Leases.
"Closing" is defined in Section 3.
"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" is defined in the introductory paragraph of this Agreement.
"Confidential Information" is defined in Section 20.
"Consolidated Capitalization" means, as of any date of determination, the
total assets of the Company and its Restricted Subsidiaries which would be
shown as assets on a consolidated balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with GAAP, after eliminating
all amounts properly attributable to minority interests, if any, in the stock
and surplus of Restricted Subsidiaries less (i) all Restricted Investments and
(ii) all items which would be included on the liability and equity side of a
consolidated balance sheet of the Company and its Restricted Subsidiaries
prepared in accordance with GAAP, except capital stock of any class,
additional paid-in capital, retained earnings, deferred income taxes, deferred
investment tax credits, and Consolidated Funded Debt.
"Consolidated Current Debt" means, as of any date of determination, the total
amount of all Current Debt of the Company and its Restricted Subsidiaries
outstanding on such date, 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.
"Consolidated Debt" means, as of any date of determination, the total amount
of all Debt of the Company and its Restricted Subsidiaries outstanding on such
date, 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.
"Consolidated Funded Debt" means, as of any date of determination, the total
amount of all Funded Debt of the Company and its Restricted Subsidiaries
outstanding on such date, 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.
"Consolidated Net Assets" means the total assets of the Company and its
Restricted Subsidiaries which would be shown as assets on a consolidated
balance sheet of the Company and its Restricted Subsidiaries prepared in
accordance with GAAP, after eliminating all amounts properly attributable to
minority interests, if any, in the stock and surplus of Restricted
Subsidiaries less (i) all Restricted Investments and (ii) the total
liabilities of the Company and its Restricted Subsidiaries which would be
shown as current liabilities on a balance sheet of the Company and its
Restricted Subsidiaries prepared in accordance with GAAP.
"Consolidated Net Income" for any period means the 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:
(a) the income (or loss) of any Person accrued prior to the date it becomes a
Restricted Subsidiary or is merged into or consolidated with the Company
or a Restricted Subsidiary, and the income (or loss) of any Person,
substantially all of the assets of which have been acquired in any
manner, realized by such other Person prior to the date of acquisition,
(b) the income (or loss) of any Person (other than a Restricted Subsidiary)
in which the Company or any 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,
(c) the undistributed earnings of any Restricted Subsidiary to the extent
that the declaration or payment of dividends or similar distributions by
such Restricted Subsidiary is not at the time permitted by the terms of
its charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to such Restricted
Subsidiary,
(d) any restoration to income of any contingency reserve, except to the
extent that provision for such reserve was made out of income accrued
during such period,
(e) any aggregate net gain (but not any aggregate net loss) during such
period arising from the sale, conversion, exchange or other disposition
of capital assets (such term to include, without limitation, (i) all non-
current assets and, without duplication, (ii) the following, whether or
not current: all fixed assets, whether tangible or intangible, all
inventory sold in conjunction with the disposition of fixed assets, and
all Securities),
(f) any gains resulting from any write-up of any assets (but not any loss
resulting from any write-down of any assets),
(g) any net gain from the collection of the proceeds of life insurance
policies,
(h) any gain arising from the acquisition of any Security, or the
extinguishment, under GAAP, of any Debt, of the Company or any Restricted
Subsidiary,
(i) any net income or gain (but not any net loss) during such period from (i)
any change in accounting principles in accordance with GAAP, (ii) any
prior period adjustments resulting from any change in accounting
principles in accordance with GAAP, (iii) any extraordinary items, or
(iv) any discontinued operations or the disposition thereof,
(j) any deferred credit representing the excess of equity in any Restricted
Subsidiary at the date of acquisition over the cost of the investment in
such Restricted Subsidiary,
(k) in the case of a successor to the Company by consolidation or merger or
as a transferee of its assets, any earnings of the successor corporation
prior to such consolidation, merger or transfer of assets, and
(l) any portion of such net income that cannot be freely converted into
United States Dollars.
"Consolidated Net Worth" means Consolidated Capitalization less (i)
Consolidated Funded Debt and (ii) deferred income taxes and deferred
investment tax credits.
"Cross-Border Leases" means, each of (i) those certain Lease Agreements, each
dated as of May 15, 1996 by and between Newco, as lessee, and an affiliate of
National Westminster Bank PLC, as lessor, (ii) those certain Lease Agreements,
each dated as of May 15, 1996 by and between Newco, as lessee, and an
affiliate of Abbey National Treasury Services PLC, as lessor, (iii) that
certain Lease Agreement, dated as of September 26, 1996, by and between Newco,
as lessee, and an affiliate of National Westminster Bank PLC, as lessor, (iv)
that certain Lease Agreement dated as of September 26, 1996, by and between
Newco, as lessee, and an affiliate of Abbey National Treasury Services PLC, as
lessor, and (v) any sale and lease-back transactions entered into after the
date hereof which are in form and substance substantially similar to the
transactions described in the foregoing clauses (i) through (iv), in each case
as amended from time to time. Each of the "Cross-Border Leases" is herein
individually referred to as a "Cross-Border Lease."
"Cross-Border Lease Debt" means, at any time, that portion of the aggregate
Debt incurred by the Company and/or its Restricted Subsidiaries in respect of
the obligations of the lessee under the Cross-Border Leases equal to the
outstanding amount of the related Cash Collateral, provided that in no event
shall any amount in respect of any Cross-Border Lease be included in the
calculation of such sum unless Newco or the Company have the right to use
(during the term of such Cross-Border Lease), and acquire title to (upon the
expiration of the term of such Cross-Border Lease), the property which is the
subject of such Cross-Border Lease.
"Current Debt" means, with respect to any Person, all Debt of such Person
which by its terms or by the terms of any instrument or agreement relating
thereto matures on demand or one year or less from the date of the creation
thereof and is not directly or indirectly renewable or extendible at the
option of the obligor in respect thereof to a date one year or more from such
date, provided that (a) Debt outstanding under a revolving credit or similar
agreement which obligates the lender or lenders to extend credit over a period
of more than one year and (b) Current Maturities of Funded Debt shall
constitute Funded Debt and not Current Debt, even though such Debt by its
terms matures on demand or one year or less from such date.
"Current Maturities of Funded Debt" means, at any time and with respect to any
item of Funded Debt, the portion of such Funded Debt outstanding at such time
which by the terms of such Funded Debt or the terms of any instrument or
agreement relating thereto is due on demand or within one year from such time
(whether by sinking fund, other required prepayment or final payment at
maturity) and is not directly or indirectly renewable, extendible or
refundable at the option of the obligor under an agreement or firm commitment
in effect at such time to a date one year or more from such time.
"Debt" means, with respect to any Person, without duplication,
(a) its liabilities for borrowed money (whether or not evidenced by a
Security);
(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, without limitation, all liabilities created or
arising under any conditional sale or other title retention agreement
with respect to any such property);
(c) its Capital Lease Obligations;
(d) all liabilities for borrowed money secured by any Lien with respect to
any property owned by such Person (whether or not such Person has assumed
or otherwise become personally liable for such liabilities); and
(e) any Guaranty of such Person with respect to liabilities of a type
described in any of clauses (a) through (d) above.
Debt of any Person shall include all obligations of such Person of the
character described in any of clauses (a) through (e) above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP. Neither the Cross-Border
Lease Debt nor any other Debt, or portion thereof, that has been irrevocably
economically defeased in a manner satisfactory to the Required Holders shall
be included in any calculation of the amount of "Debt" hereunder.
"Debt Prepayment Application" means, with respect to any Transfer of property,
the application by the Company or its Restricted Subsidiaries, within the
twelve-month period following the consummation of such Transfer, of cash in an
amount equal to the Net Proceeds Amount with respect to such Transfer to the
prepayment of the principal of Debt of the Company in accordance with the
terms of any agreement or instrument relating to such Debt (other than Debt
owing to the Company, any of its Subsidiaries or any Affiliate and Debt in
respect of any revolving credit or similar credit facility providing the
Company or any of its 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 payment of Debt the availability of credit under such
credit facility is permanently reduced by an amount not less than the amount
of such proceeds applied to the payment of such Debt).
"Debt Prepayment Transfer" is defined in Section 10.9(b)(i).
"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 that rate of interest that is the greater of (i) 2% per
annum above the rate of interest stated in clause (a) of the first paragraph
of the Notes of the applicable series or (ii) 2% over the rate of interest
publicly announced by Morgan Guaranty Trust Company of New York in New York,
New York as its "base" or "prime" rate.
"Deposit Subsidiary" means any Wholly-Owned Restricted Subsidiary which
(a) was formed by the Company for the sole purpose of holding a portion of
the proceeds received by the Company and/or Newco from one or more sale-
and-leaseback transactions involving the property which is the subject of
any of the Cross-Border Leases, and
(b) has no assets or liabilities other than the cash and cash equivalents
pledged to secure the obligations of Newco under the Cross-Border Leases.
"Disposition Value" means, at any time, with respect to any property
(a) in the case of property that does not constitute Subsidiary Stock, the
book value thereof, valued at the time of such disposition in good faith
by the Company, and
(b) in the case of property that constitutes Subsidiary Stock, an amount
equal to that percentage of book value of the assets of the Restricted
Subsidiary that issued such stock as is equal to the percentage that the
book value of such Subsidiary Stock represents of the book value of all
of the outstanding capital stock of such Restricted Subsidiary (assuming,
in making such calculations, that all Securities convertible into such
capital stock are so converted and giving full effect to all transactions
that would occur or be required in connection with such conversion)
determined at the time of the disposition thereof, in good faith by the
Company.
"Distribution" means, in respect of any corporation, association or other
business entity:
(a) dividends or other distributions or payments on capital stock or other
equity interest of such corporation, association or other business entity
(except distributions in such stock or other equity interest); and
(b) the redemption or acquisition of such stock or other equity interests or
of warrants, rights or other options to purchase such stock or other
equity interests (except when solely in exchange for such stock or other
equity interests) unless made, contemporaneously, from the net proceeds
of a sale of such stock or other equity interests.
"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.
"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.
"Excluded Transfers" is defined in Section 10.9(a)(iii).
"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).
"Funded Debt" means, with respect to any Person, all Debt of such Person which
by its terms or by the terms of any instrument or agreement relating thereto
matures, or which is otherwise payable or unpaid, more than one year from, or
is directly or indirectly renewable or extendible at the option of the obligor
in respect thereof to a date more than one year (including, without
limitation, an option of such obligor under a revolving credit or similar
agreement obligating the lender or lenders to extend credit over a period of
more than one year) from, the date of the creation thereof, provided that
Funded Debt shall include, as at any date of determination, Current Maturities
of Funded Debt.
"GAAP" means generally accepted accounting principles as in effect from time
to time in the United States of America.
"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.
"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 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
(d) otherwise to assure the owner of such indebtedness or obligation against
loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obligor
under any Guaranty, the indebtedness or other obligations that are the subject
of such Guaranty shall be assumed to be direct obligations of such obligor.
"Holder" means, with respect to any Note, the Person in whose name such Note
is registered in the register maintained by the Company 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);
(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 unreimbursed draws under 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.
Neither the Cross-Border Lease Debt nor any other Indebtedness, or portion
thereof, that has been irrevocably economically defeased in a manner
satisfactory to the Required Holders shall be included in any calculation of
the amount of "Indebtedness" hereunder.
"Institutional Investor" means (a) any original purchaser of a Note, (b) any
holder of a Note holding more than 10% 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.
"Intergroup Transfer" is defined in Section 10.9(a)(ii).
"Investment" means any investment, made in cash or by delivery of property, by
the Company or any of its Restricted Subsidiaries in any Person, whether by
acquisition of stock, indebtedness or other obligation or Security, or by
loan, Guaranty, advance, capital contribution or otherwise.
"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 other 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).
"Make-Whole Amount" is defined in Section 8.6.
"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 or the Notes.
"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 ordinary and reasonable out-of-pocket costs and expenses actually
incurred by such Person in connection with such Transfer.
"Newco" means any Restricted Subsidiary named as lessee under one or more of
the Cross-Border Leases.
"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.
"Ordinary Course Transfer" is defined in Section 10.9(a)(i).
"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 other amounts or the distribution of assets upon
liquidation or dissolution of such corporation.
"Property" or "Properties" means, unless otherwise specifically limited, real
or personal property of any kind, tangible or intangible, choate or inchoate.
"Property Disposition Date" is defined in Section 10.9(a)(iii).
"Property Reinvestment Application" means, with respect to any Transfer of
property, the acquisition by the Company or any Restricted Subsidiary, within
the twelve-month period following the date of the consummation of such
Transfer, of operating assets of the Company or any Restricted Subsidiary to
be used in the ordinary course of business of such Person.
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14 issued by
the United States Department of Labor.
"Reinvested Transfer" is defined in Section 10.9(b)(ii).
"Repap Acquisition Documents" means and includes the Repap Purchase Agreement
together with all agreements, exhibits, schedules, annexes and documents
executed or delivered in connection therewith.
"Repap Purchase Agreement" means that certain Stock Purchase Agreement dated
August 8, 1997 between Repap Enterprises, Inc., a corporation incorporated
under the laws of Canada, and the Company.
"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 except the following:
(a) property to be used in the ordinary course of business of the Company and
its Restricted Subsidiaries;
(b) 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 Restricted Subsidiaries or any Person that
concurrently with such Investment becomes a Restricted Subsidiary;
(d) Investments existing on the date of the Closing and disclosed in Schedule
10.12;
(e) Investments in United States Governmental Securities, provided that such
obligations mature within 365 days from the date of acquisition thereof;
(f) Investments in certificates of deposit issued by an Acceptable Bank,
provided that such obligations mature within 365 days from the date of
acquisition thereof;
(g) Investments in commercial paper of an issuer organized and existing under
the laws of the United States of America or any State thereof (including
the District of Columbia) rated "A-1" by S&P and "P-1" by Moody's and
maturing not more than 270 days from the date of creation thereof; and
(h) Investments in addition to those permitted by the foregoing paragraphs
(a) through (g), inclusive, in an aggregate amount at any time
outstanding not to exceed 10% of 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 Restricted Investment is shown on the books of
the Company or any of its Restricted Subsidiaries (or zero if such
Restricted Investment is not shown on any such books); and
(y) either
( i) in the case of any Guaranty of the obligation of any Person, the
amount which the Company or any of its Restricted Subsidiaries has
paid on account of such obligation less any recoupment by the
Company or such Restricted Subsidiary of any such payments, or
(ii) in the case of any other Restricted Investment, the excess of (x)
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 (y) any return of capital by way of distribution
(after income taxes applicable thereto) upon such Restricted
Investment through the sale or other liquidation thereof or part
thereof or otherwise.
As used in this definition of "Restricted Investments":
"Acceptable Bank" means any bank or trust company (i) which is organized under
the laws of the United States of America or any State thereof, (ii) which has
capital, surplus and undivided profits aggregating at least $200,000,000, and
(iii) 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 bank or trust company) shall have been given a rating of "A-" or
better by S&P, "A3" or better by Moody's.
"Moody's" means Moody's Investors Service, Inc.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw Hill, Inc.
"United States Governmental Security" means any direct obligation of, or
obligation guaranteed 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.
"Restricted Payment" means any Distribution in respect of the Company or any
Restricted Subsidiary of the Company (other than on account of capital stock
or other equity interests of a Restricted Subsidiary owned legally and
beneficially by the Company or another Restricted Subsidiary), including,
without limitation, any Distribution resulting in the acquisition by the
Company of Securities which would constitute treasury stock. For purposes of
this Agreement, the amount of any Restricted Payment made in property shall be
the greater of (x) the Fair Market Value of such property (as determined in
good faith by the board of directors (or equivalent governing body) of the
Person making such Restricted Payment) and (y) the net book value thereof on
the books of such Person, in each case determined as of the date on which such
Restricted Payment is made.
"Restricted Subsidiary" shall mean any Subsidiary that is not an Unrestricted
Subsidiary.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Senior Financial Officer" means the chief financial officer, principal
accounting officer, treasurer, controller or comptroller of the Company.
"Series F Notes" is defined in Section 1.
"Series G Notes" is defined in Section 1.
"Series H 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 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 option
or warrants to purchase stock or other Securities exchangeable for or
convertible into stock) of any Subsidiary of such Person.
"Substantial Portion" means, with respect to any Transfer of property, any
portion of property of the Company and its Restricted Subsidiaries, if
(a) the Disposition Value of such property, when added to the Disposition
Value of all other property of the Company and its Restricted
Subsidiaries that was subject to a Transfer (other than an Excluded
Transfer) during the 365-day period ending on and including the Property
Disposition Date of such property exceeds an amount equal to fifteen
percent (15%) of Consolidated Net Assets determined as of the end of the
then most recently ended fiscal year of the Company, or
(b) such property and all other property of the Company and its Restricted
Subsidiaries that was subject to a Transfer (other than an Excluded
Transfer) during the 365-day period ending on and including the Property
Disposition Date of such property accounts, in the aggregate, for more
than fifteen percent (15%) of Consolidated Net Income in respect of the
then most recently ended fiscal year of the Company.
"Successor Corporation" is defined in Section 10.8.
"Swaps" means, with respect to any Person, payment obligations with respect to
interest rate swaps, currency swaps 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.
"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.
"Unrestricted Subsidiary" shall mean any Subsidiary which is designated an
Unrestricted Subsidiary by the Board of Directors of the Company in accordance
with Section 10.13.
"Wholly-Owned Restricted Subsidiary" means, at any time, any Restricted
Subsidiary one hundred percent (100%) of all of the equity interests (except
directors' qualifying shares) and voting interests of which are owned by any
one or more of the Company and the Company's other Wholly-Owned Restricted
Subsidiaries at such time.
SCHEDULE 5.4
ORGANIZATION AND
OWNERSHIP OF SHARES OF SUBSIDIARIES
1. All are corporations unless otherwise noted:
a. Consolidated Water Power Company (Wisconsin) 100%.
b. Newaygo Forest Products Limited (Ontario) 100%.
c. Consolidated Foreign Sales Corporation (Virgin Islands) 100%.
d. LSPI Duluth Corp. (Minnesota) 100%.
e. LSPI Paper Corporation (Minnesota) 100%.
f. Lake Superior Paper Industries (Minnesota joint venture) 100%.
g. LSPI Fiber Co. (Minnesota) 100%.
h. Superior Recycled Fiber Corporation (Minnesota) 100%.
i. Superior Recycled Fiber Industries (Minnesota joint venture) 100%.
j. Consolidated Papers International Leasing L.L.C. (Delaware limited
liability company) 100%.
k. Condepco, Inc. (Delaware) 100%.
l. Inter Lake Papers, Inc. (formerly Repap USA, Inc.) (Wisconsin) 100%.
m. Inter Lake Wisconsin, Inc. (formerly Repap Wisconsin, Inc.) (Wisconsin)
100%.
n. Inter Lake Sales Corp. (formerly Repap Sales Corp.) (New York) 100%.
2. No exceptions.
SCHEDULE 5.5
FINANCIAL STATEMENTS
Consolidated Financial Statements for the years ended December 21, 1997, 1996
and 1995 included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1997.
SCHEDULE 5.14
USE OF PROCEEDS
1. Repayment of a portion of amounts outstanding under existing loans
including The Prudential Insurance Company of America's portion of the
Amended and Restated Financing Agreement dated as of January 1, 1998 among
the several institutions named therein, State Street Bank and Trust
Company of Connecticut, NA, Consolidated Papers, Inc. and Lake Superior
Paper Industries.
2. General corporate purposes.
SCHEDULE 5.15
EXISTING INDEBTEDNESS
(AS OF MARCH 31, 1998)
A. Consolidated Papers, Inc. ("CPI")
Credit Lines Line of Credit Outstandings
1. Bank of New York $ 40,000,000 $ -0-
2. Wachovia Bank, N.A. 150,000,000 -0-
3. Firstar Bank, Milwaukee, N.A. 15,000,000 15,000,000
4. The Bank of Tokyo, Ltd. 15,000,000 11,600,000
5. Wachovia Bank, N.A., as agent 750,000,000 510,000,000
Long-Term Debt
$30,000,000 7.05% Senior Notes due June 30, 2000
$55,000,000 7.40% Senior Notes due June 30, 2005
B. Lake Superior Paper Industries
1. Five separate Facility Leases dated December 31, 1997 between Lake
Superior Paper Industries ("Lake Superior") and First National Bank of
Minneapolis, as Owner Trustee ("Owner Trustee").
2. Guaranty running from CPI dated December 22, 1997 to State Street Bank
and Trust Company of Connecticut, National Association, in its
individual capacity and as Indenture Trustee ("Indenture Trustee"),
the Owner Trustee, and the Loan Participants related to the five
separate Facility leases dated December 31, 1987, between Lake
Superior and the Owner Trustee.
3. Guaranty running from CPI dated December 22, 1997 to the Indenture
Trustee, Owner Trustee, and Mission Funding Delta related to the five
separate Facility leases dated December 31, 1987, between Lake
Superior and the Owner Trustee.
4. Guaranty running from CPI dated January 1, 1998 to the Indenture
Trustee, Owner Trustee, and Papermill Leasing, Inc. related to the
five separate Facility leases dated December 31, 1987, between Lake
Superior and the Owner Trustee.
5. Guaranty running from CPI dated January 1, 1998 to the Indenture
Trustee, Owner Trustee and Bell Atlantic Credit Corporation related to
the five separate Facility leases dated December 31, 1987 between Lake
Superior and the Owner Trustee.
6. Guaranty running from CPI dated January 1, 1998 to the Indenture
Trustee and Resources Capital Investment related to the five separate
Facility leases dated December 31, 1987 between Lake Superior and the
Owner Trustee.
7. Guaranty running from CPI dated January 1, 1998 to the Indenture
Trustee and Joint Ventures Affiliated, Inc. related to the five
separate Facility leases dated December 31, 1987 between Lake Superior
and the Owner Trustee.
C. Stevens Point IRB
1. City of Stevens Point, Wisconsin Tax-Exempt Adjustable Mode Exempt
Facility Revenue Bonds (Consolidated Papers, Inc. Project), Series
1997, in the aggregate principal amount of $5,000,000.)
D. Inter Lake Wisconsin, Inc.
1. 9-1/4% First Priority Senior Secured Notes Due 2002 ($19.5 million).
2. 9-7/8% Second Priority Senior Secured Notes Due 2006 ($1.1 million).
E. Cross-Border Lease Debt (as defined in the Agreement) $30,379,662.
F. Niagara of Wisconsin Paper Corporation Equipment Credit Services lease
agreement dated 12/20/86.
G. $277 million private placement under five separate Note Purchase
Agreements each dated as of October 15, 1997.
SCHEDULE 5.17
STATUS UNDER CERTAIN STATUTES
Consolidated Water Power Company, Niagara of Wisconsin Paper Corporation and
Inter Lake Wisconsin, Inc. (formerly Repap Wisconsin, Inc.) all Wisconsin
corporations and wholly owned subsidiaries of the Company, are subject to
regulation under the Federal Power Act as the owners of licensed hydroelectric
projects. The Wisconsin River Power Company and the Wisconsin Valley
Improvement Company are also subject to the Federal Power Act as the owners of
licensed hydroelectric projects. Consolidated Water Power Company holds
minority interests in both the Wisconsin River Power Company and the Wisconsin
Valley Improvement Company. The Company is subject to regulation under the
Public Utility Holding Company Act as the owner of Consolidated Water Power
Company, but is exempted by virtue of Section 3(a)(2) thereof.
SCHEDULE 10.12
EXISTING INVESTMENTS
Shares Amount1
Consolidated Papers, Inc.
Thiele Kaolin Company 442,240 $ 32,925,820
Forest Insurance Company, Ltd. 33,333 33,333
Consolidated Water Power Company
Wisconsin River Power Company 31,600 5,532,361
Wisconsin Valley Improvement Company 37,252 438,623
1 These amounts are included for reference purposes only and are stated as
of the Closing Date. Retained earnings accruing after the Closing Date
shall be deemed to be incorporated in this Schedule.
[FORM OF SERIES F NOTE]
CONSOLIDATED PAPERS, INC.
6.93% SENIOR NOTE SERIES F, DUE MAY 8, 2009
No. FR-1998-__ May 8, 1998
$[__________]
FOR VALUE RECEIVED, the undersigned, CONSOLIDATED PAPERS, INC. (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Wisconsin, hereby promises to pay to [____________________] or
registered assigns, the principal sum of [______________] DOLLARS on May 8,
2009 with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 6.93% per annum from
the date hereof, payable semiannually, on the eighth day of May and November
in each year, commencing with the May 8 or November 8 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreement referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 8.93% or (ii) 2% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York in
New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with respect
to this Note are to be made in lawful money of the United States of America at
Wisconsin Rapids, Wisconsin or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the
Note Purchase Agreement referred to below.
This Note is one of a series of 6.93% Senior Notes, Series F, due May 8, 2009
issued in an aggregate principal amount of $30,000,000 (the "Series F Notes"),
together with the 7.24% Senior Notes, Series G, due May 8, 2018 issued in an
aggregate principal amount of $65,000,000 (the "Series G Notes"), and the
7.30% Senior Notes, Series H, due May 8, 2023 issued in an aggregate principal
amount of $65,000,000 (the "Series H Notes"), pursuant to that certain Note
Purchase Agreement, dated as of May 8, 1998 (as from time to time amended, the
"Note Purchase Agreement"), between the Company and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Capitalized terms used herein shall have the
meanings set forth in the Note Purchase Agreement unless defined herein.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any notice
to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-
Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note 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.
CONSOLIDATED PAPERS, INC.
By:____________________________________
Name: Richard J. Kenney
Title: Senior Vice President, Finance
[FORM OF SERIES G NOTE]
CONSOLIDATED PAPERS, INC.
7.24% SENIOR NOTE, SERIES G, DUE MAY 8, 2018
No. GR-1998-__ May 8, 1998
$[__________]
FOR VALUE RECEIVED, the undersigned, CONSOLIDATED PAPERS, INC. (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Wisconsin, hereby promises to pay to [____________________] or
registered assigns, the principal sum of [______________] DOLLARS on May 8,
2018 with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 7.24% per annum from
the date hereof, payable semiannually, on the last day of May and November in
each year, commencing with the May 8 or November 8 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreement referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 9.24% or (ii) 2% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York in
New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with respect
to this Note are to be made in lawful money of the United States of America at
Wisconsin Rapids, Wisconsin or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the
Note Purchase Agreement referred to below.
This Note is one of a series of 7.24% Senior Notes, Series G, due May 8, 2018
issued in an aggregate principal amount of $65,000,000 (the "Series G Notes"),
together with the 6.93% Senior Notes, Series F, due May 8, 2009 issued in an
aggregate principal amount of $30,000,000 (the "Series F Notes"), and the
7.30% Senior Notes, Series H, due May 8, 2023 issued in an aggregate principal
amount of $65,000,000 (the "Series H Notes"), pursuant to that certain Note
Purchase Agreement, dated as of May 8, 1998 (as from time to time amended, the
"Note Purchase Agreement"), between the Company and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Capitalized terms used herein shall have the
meanings set forth in the Note Purchase Agreement unless defined herein.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any notice
to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-
Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note 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.
CONSOLIDATED PAPERS, INC.
By:____________________________________
Name: Richard J. Kenney
Title: Senior Vice President, Finance
[FORM OF SERIES H NOTE]
CONSOLIDATED PAPERS, INC.
7.30% SENIOR NOTE, SERIES H, DUE MAY 8, 2023
No. HR-1998-__ May 8, 1998
$[__________]
FOR VALUE RECEIVED, the undersigned, CONSOLIDATED PAPERS, INC. (herein called
the "Company"), a corporation organized and existing under the laws of the
State of Wisconsin, hereby promises to pay to [_____________________] or
registered assigns, the principal sum of [______________] DOLLARS on May 8,
2023 with interest (computed on the basis of a 360-day year of twelve 30-day
months) (a) on the unpaid balance thereof at the rate of 7.30% per annum from
the date hereof, payable semiannually, on the last day of May and November in
each year, commencing with the May 8 or November 8 next succeeding the date
hereof, until the principal hereof shall have become due and payable, and
(b) to the extent permitted by law on any overdue payment (including any
overdue prepayment) of principal, any overdue payment of interest and any
overdue payment of any Make-Whole Amount (as defined in the Note Purchase
Agreement referred to below), payable semiannually as aforesaid (or, at the
option of the registered holder hereof, on demand), at a rate per annum from
time to time equal to the greater of (i) 9.30% or (ii) 2% over the rate of
interest publicly announced by Morgan Guaranty Trust Company of New York in
New York, New York as its "base" or "prime" rate.
Payments of principal of, interest on and any Make-Whole Amount with respect
to this Note are to be made in lawful money of the United States of America at
Wisconsin Rapids, Wisconsin or at such other place as the Company shall have
designated by written notice to the holder of this Note as provided in the
Note Purchase Agreement referred to below.
This Note is one of a series of 7.30% Senior Notes, Series H, due May 8, 2023
issued in an aggregate principal amount of $65,000,000 (the "Series H Notes"),
together with the 6.93% Senior Notes, Series F, due May 8, 2009 issued in an
aggregate principal amount of $30,000,000 (the "Series F Notes"), and the
7.24% Senior Notes, Series G, due May 8, 2018 issued in an aggregate principal
amount of $65,000,000 (the "Series G Notes"), pursuant to that certain Note
Purchase Agreement, dated as of May 8, 1998 (as from time to time amended, the
"Note Purchase Agreement"), between the Company and the Purchaser named
therein and is entitled to the benefits thereof. Each holder of this Note
will be deemed, by its acceptance hereof, (i) to have agreed to the
confidentiality provisions set forth in Section 20 of the Note Purchase
Agreement and (ii) to have made the representation set forth in Section 6.2 of
the Note Purchase Agreement. Capitalized terms used herein shall have the
meanings set forth in the Note Purchase Agreement unless defined herein.
This Note is a registered Note and, as provided in the Note Purchase
Agreement, upon surrender of this Note for registration of transfer, duly
endorsed, or accompanied by a written instrument of transfer duly executed, by
the registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for a like principal amount will be issued to, and
registered in the name of, the transferee. Prior to due presentment for
registration of transfer, the Company may treat the person in whose name this
Note is registered as the owner hereof for the purpose of receiving payment
and for all other purposes, and the Company will not be affected by any notice
to the contrary.
This Note is subject to optional prepayment, in whole or from time to time in
part, at the times and on the terms specified in the Note Purchase Agreement,
but not otherwise.
If an Event of Default, as defined in the Note Purchase Agreement, occurs and
is continuing, the principal of this Note may be declared or otherwise become
due and payable in the manner, at the price (including any applicable Make-
Whole Amount) and with the effect provided in the Note Purchase Agreement.
This Note 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.
CONSOLIDATED PAPERS, INC.
By:____________________________________
Name: Richard J. Kenney
Title: Senior Vice President, Finance
EXHIBIT 4.4A
FORM OF OPINION OF GENERAL COUNSEL
TO THE COMPANY
The closing opinion of Carl H. Wartman, Esq., General Counsel of the Company,
which is called for by Section 4.4(a) of the Note Purchase Agreement, shall be
dated the date of the Closing and addressed to the Purchasers, shall be
satisfactory in scope and form to the Purchasers and shall be to the effect
that:
1. The Company is a corporation, duly incorporated, validly existing and in
good standing under the laws of the State of Wisconsin, has the corporate
power and the corporate authority to execute and perform the Note
Purchase Agreement and to issue the Notes and has the full corporate
power and the corporate authority to conduct the activities in which it
is now engaged and is duly qualified and is in good standing as a foreign
corporation in each jurisdiction in which the character of the properties
owned or leased by it or the nature of the business transacted by it
makes such qualification necessary.
2. Each [Significant] Subsidiary is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified and is in good standing in each
jurisdiction in which the character of the properties owned or leased by
it or the nature of the business transacted by it makes such
qualification necessary and all of the issued and outstanding shares of
capital stock of each such [Significant] Subsidiary have been duly
issued, are fully paid and non-assessable and are owned by the Company.
3. The Note Purchase Agreement has been duly authorized by all necessary
corporate action on the part of the Company, has been duly executed and
delivered by the Company and constitutes the legal, valid and binding
contract of the Company enforceable in accordance with its terms, subject
to bankruptcy, insolvency, fraudulent conveyance and similar laws
affecting creditors' rights generally, and provided that the availability
of equitable remedies (including, without limitation, specific
performance) remains subject to the discretion of the courts.
4. The Notes have been duly authorized by all necessary corporate action on
the part of the Company, have been duly executed and delivered by the
Company and constitute the legal, valid and binding obligations of the
Company enforceable in accordance with their terms, subject to
bankruptcy, insolvency, fraudulent conveyance and similar laws affecting
creditors' rights generally, and provided that the availability of
equitable remedies (including, without limitation, specific performance)
remains subject to the discretion of the courts.
5. No approval, consent or withholding of objection on the part of, or
filing, registration or qualification with, any governmental body,
Federal or state, is necessary in connection with the execution and
delivery of the Note Purchase Agreement or the Notes.
6. The issuance and sale of the Notes and the execution, delivery and
performance by the Company of the Note Purchase Agreement do not conflict
with or result in any breach of any of the provisions of or constitute a
default under or result in the creation or imposition of any Lien upon
any of the property of the Company pursuant to the provisions of the
Articles of Incorporation or By-laws of the Company or any agreement or
other instrument known to such counsel to which the Company is a party or
by which the Company may be bound.
7. The issuance, sale and delivery of the Notes under the circumstances
contemplated by the Note Purchase Agreement do not, under existing law,
require the registration of the Notes under the Securities Act of 1933,
as amended, or the qualification of an indenture under the Trust
Indenture Act of 1939, as amended.
8. There are no actions, suits or proceedings pending or, to the knowledge
of such counsel, threatened against or affecting the Company or any
[Significant] Subsidiary or any property of the Company or any
[Significant] Subsidiary in any court or before any arbitrator of any
kind or before or by any Governmental Authority either (i) with respect
to the Note Purchase Agreement or the Notes or (ii) that, individually or
in the aggregate, could reasonably be expected to have a Material Adverse
Effect.
9. The issuance of the Notes and the use of the proceeds of the sale of the
Notes in accordance with the provisions of and as contemplated by the
Note Purchase Agreement (including, without limitation, the
representations and warranties set forth in the Note Purchase Agreement)
do not violate or conflict with Regulation U, T or X of the Board of
Governors of the Federal Reserve System.
10. The Company is not an "investment company," or a company "controlled" by
an "investment company," under the Investment Company Act of 1940, as
amended.
The opinion of Carl H. Wartman, Esq., General Counsel of the Company, shall
cover such other matters relating to the sale of the Notes as the Purchasers
may reasonably request. With respect to matters of fact on which such opinion
is based, such counsel shall be entitled to rely on appropriate certificates
of public officials and officers of the Company and representations of the
Purchaser set forth in the Note Purchase Agreement.
EXHIBIT 4.4B
FORM OF OPINION OF COUNSEL
TO THE PURCHASER
The closing opinion of Wiley S. Adams, Esq., counsel to the Purchasers, called
for by Section 4.4(b) of the Note Purchase Agreement, shall be dated the date
of the Closing and addressed to the Purchasers, shall be satisfactory in form
and substance to the Purchaser.
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1998 consolidated balance sheet and the consolidated statements of
income, reinvested earnings and cash flows for the six-month period ended
06/30/98 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1998
<CASH> 12,008
<SECURITIES> 0
<RECEIVABLES> 162,914
<ALLOWANCES> 6,649
<INVENTORY> 217,134
<CURRENT-ASSETS> 424,105
<PP&E> 3,559,088
<DEPRECIATION> 969,774
<TOTAL-ASSETS> 3,650,720
<CURRENT-LIABILITIES> 237,000
<BONDS> 1,085,394
<COMMON> 90,568
0
0
<OTHER-SE> 1,266,020
<TOTAL-LIABILITY-AND-EQUITY> 3,650,720
<SALES> 1,025,446
<TOTAL-REVENUES> 1,025,446
<CGS> 827,274
<TOTAL-COSTS> 827,274
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 48,330
<INCOME-PRETAX> 117,910
<INCOME-TAX> 47,164
<INCOME-CONTINUING> 70,746
<DISCONTINUED> 0
<EXTRAORDINARY> (4,603)
<CHANGES> 0
<NET-INCOME> 66,143
<EPS-PRIMARY> 0.73
<EPS-DILUTED> 0.73
</TABLE>
