SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended: September 28, 1997 Commission File Number: 1-7911
- --------------------------------------------------------------------------------
FORT JAMES CORPORATION
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Virginia 54-0848173
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S.Employer Identification No.
incorporation or organization)
120 Tredegar Street, Richmond, VA 23219
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (804) 644-5411
- --------------------------------------------------------------------------------
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address, and former fiscal year,
if changed since lastreport)
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, and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Number of shares of $.10 par value common stock outstanding as of
October 31, 1997:
208,803,885 shares
<PAGE>
FORT JAMES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
September 28, 1997
TABLE OF CONTENTS
Page No.
PART I. FINANCIAL INFORMATION:
ITEM 1. Financial Statements:
Consolidated Balance Sheets as of
September 28, 1997 and December 29, 1996 3
Consolidated Statements of Operations for the quarters
and nine months ended September 28, 1997 and
September 29, 1996 5
Consolidated Statements of Cash Flows for the
nine months ended September 28, 1997 and
September 29, 1996 6
Notes to Consolidated Financial Statements 7
ITEM 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition 14
PART II. OTHER INFORMATION:
ITEM 1. Legal Proceedings 19
ITEM 2. Changes in Securities 19
ITEM 3. Defaults Upon Senior Securities 19
ITEM 4. Submission of Matters to a Vote of
Security Holders 19
ITEM 5. Other Information 19
ITEM 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 23
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
CONSOLIDATED BALANCE SHEETS
September 28, 1997 and December 29, 1996
(in millions except share data)
September December
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents $34.6 $34.6
Accounts receivable 813.5 781.3
Inventories 843.0 801.6
Prepaid expenses and other current assets 29.1 52.6
Deferred income taxes 106.0 138.5
- ------------------------------------------------------------------------------------------------------------------------------
Total current assets 1,826.2 1,808.6
- ------------------------------------------------------------------------------------------------------------------------------
Property, plant and equipment 7,860.5 7,924.7
Accumulated depreciation (3,139.6) (2,925.4)
- ------------------------------------------------------------------------------------------------------------------------------
Net property, plant and equipment 4,720.9 4,999.3
Investments in affiliates 163.5 154.6
Other assets 471.4 464.4
Goodwill 650.2 730.0
- ------------------------------------------------------------------------------------------------------------------------------
Total assets $7,832.2 $8,156.9
==============================================================================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
CONSOLIDATED BALANCE SHEETS, Continued
(in millions, except share data)
September December
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable $643.6 $607.3
Accrued liabilities 732.8 805.8
Current portion of long-term debt 139.2 128.9
- ------------------------------------------------------------------------------------------------------------------------------
Total current liabilities 1,515.6 1,542.0
- ------------------------------------------------------------------------------------------------------------------------------
Long-term debt 3,879.9 4,305.3
Accrued postretirement benefits
other than pensions 475.1 475.9
Deferred income taxes 725.7 690.5
Other long-term liabilities 254.8 291.7
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities 6,851.1 7,305.4
- ------------------------------------------------------------------------------------------------------------------------------
Preferred stock, $10 par value, 5 million shares authorized, issuable in series;
shares outstanding, September 28, 1997 - 3.5 million and December 29, 1996 -
3.6 million 450.4 738.4
Common stock, $.10 par value, 500 million shares authorized; shares outstanding,
September 28, 1997 -- 208.3 million and
December 29, 1996 -- 188.5 million 20.8 18.9
Additional paid-in capital 2,770.8 2,407.0
Retained deficit (2,260.9) (2,312.8)
- ------------------------------------------------------------------------------------------------------------------------------
Total shareholders' equity 981.1 851.5
- ------------------------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $7,832.2 $8,156.9
==============================================================================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Quarters (13 Weeks) and Nine Months (39 weeks) Ended
September 28, 1997 and September 29, 1996
(in millions, except per share data)
Third Quarter Nine Months
------------------------------------------------------------------------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales $1,825.4 $1,925.9 $5,497.5 $5,921.5
Cost of goods sold 1,270.4 1,358.8 3,834.6 4,258.4
Selling and administrative expenses 277.1 302.5 848.3 954.0
Restructure and other unusual items (income) expense 53.9 (30.3) (3.8) .1
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations 224.0 294.9 818.4 709.0
Interest expense 87.3 102.2 277.6 327.3
Other income, net 11.1 5.0 22.3 12.4
- ------------------------------------------------------------------------------------------------------------------------------------
Income before income taxes, minority interests
and extraordinary item 147.8 197.7 563.1 394.1
Income tax expense 77.3 83.6 244.9 163.2
- ------------------------------------------------------------------------------------------------------------------------------------
Income before minority interests and extraordinary item 70.5 114.1 318.2 230.9
Minority interests (1.8) (.1) (2.6) (2.6)
- ------------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 68.7 114.0 315.6 228.3
- ------------------------------------------------------------------------------------------------------------------------------------
Extraordinary loss on early extinguishment of debt,
net of taxes (45.2) (47.1) (3.3)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income $23.5 $114.0 $268.5 $225.0
====================================================================================================================================
Preferred dividend requirements (8.1) (8.1) (24.4) (43.9)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income applicable to common shares $15.4 $105.9 $244.1 $181.1
====================================================================================================================================
Net income per common share:
Before extraordinary item $.29 $.52 $1.41 $1.02
Extraordinary loss on early extinguishment of debt (.22) (.23) (.02)
- ------------------------------------------------------------------------------------------------------------------------------------
Net income per share $.07 $.52 $1.18 $1.00
====================================================================================================================================
Cash dividends per common share $.15 $.15 $.45 $.45
Weighted average number of common shares
and common share equivalents 209.4 204.1 207.7 181.1
====================================================================================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months (39 weeks) Ended
September 28, 1997 and September 29, 1996
(in millions)
<S> <C> <C>
1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) operating activities:
Net income $268.5 $225.0
Depreciation expense and cost of timber harvested 358.7 379.9
Amortization of goodwill 15.1 15.8
Deferred income tax provision 78.3 58.1
Restructure and other unusual items (3.8) .1
Loss on early extinguishment of debt, net of taxes 47.1 3.3
Undistributed earnings of unconsolidated affiliates 1.4 4.2
Change in current assets and liabilities:
Accounts receivable (109.4) 7.9
Inventories (63.4) 103.6
Prepaid expenses and other current assets 30.8 6.6
Accounts payable and accrued liabilities 13.8 25.6
Foreign currency hedge (31.5)
Other, net (41.1) (26.2)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash provided by operating activities 564.5 803.9
- ------------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) investing activities:
Expenditures for property, plant and equipment (313.5) (328.7)
Cash received from sale of assets 144.3 440.9
Cash paid for acquisitions, net (199.9)
Other, net 13.2 5.9
- ------------------------------------------------------------------------------------------------------------------------------------
Cash used for investing activities (156.0) (81.8)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash provided by (used for) financing activities:
Additions to long-term debt 633.4 3.4
Payments of long-term debt (982.3) (865.1)
Common stock issued, net of offering costs 205.1
Common and preferred stock cash dividends paid (82.4) (69.9)
Premiums paid on early extinguishment of debt (45.5)
Common stock issued on exercise of stock options 68.3 3.9
Other, net (3.4)
- ------------------------------------------------------------------------------------------------------------------------------------
Cash used for financing activities (408.5) (726.0)
- ------------------------------------------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (3.9)
Cash and cash equivalents, beginning of period 34.6 67.0
- ------------------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period $34.6 $63.1
====================================================================================================================================
The accompanying notes are an integral part
of the consolidated financial statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Significant Accounting Policies
Basis of Presentation:
All financial information for Fort James Corporation ("Fort James" or
the "Company") includes the results of James River Corporation of Virginia
("James River") and Fort Howard Corporation ("Fort Howard") for all periods
presented giving retroactive effect to the merger on August 13, 1997 (See Note
2). In the opinion of management, the accompanying unaudited consolidated
financial statements of Fort James contain all adjustments (consisting of only
normal and necessary accruals) necessary to present fairly the Company's
consolidated financial position as of September 28, 1997, and its results of
operations and cash flows for the quarters (13 weeks) and nine months (39 weeks)
ended September 28, 1997, and September 29, 1996. The balance sheet as of
December 29, 1996, was derived from audited financial statements as of that
date. The results of operations for the nine months ended September 28, 1997,
are not necessarily indicative of the results to be expected for the full year.
Derivative Financial Instruments:
The Company's debt structure and international operations give rise to
exposure to market risks from changes in interest rates and foreign currency
exchange rates. To manage these risks, derivative financial instruments may be
utilized by the Company including interest rate swaps, caps and options on its
long-term debt and foreign exchange contracts on certain of its net investments
in foreign operations. The Company does not hold or issue financial instruments
for trading purposes. Occasionally, the Company may terminate a derivative
financial instrument. If an interest rate swap, cap or an option is terminated
because related debt no longer exists, any gain or loss is recognized into
income immediately; otherwise, the gain or loss is deferred and amortized to
interest expense over the remaining periods originally covered by the derivative
contract. If a foreign exchange contract is terminated, the gain or loss is
recognized in a separate component of equity, net of tax, consistent with the
accounting treatment of the hedged item.
Reclassifications:
Certain amounts in the prior year's financial statements have been
reclassified to conform to the current year's presentation including a
reclassification of customer freight charges from net sales to cost of sales.
Reportable segments for all periods have been reconfigured to include bleached
board operations (formerly in the North American Consumer Products segment) in
the Packaging segment and to include the foodwrap operations (formerly in the
Packaging segment) in the North American Consumer Products segment.
Adoption of Accounting Pronouncements:
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is effective for
periods beginning after December 15, 1996, including interim periods. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements, either in the
statement of operations or a separate statement. Additionally, SFAS 130 requires
the display of the accumulated balance of other comprehensive income. On a pro
forma basis, for the quarters and nine months ended September 28, 1997, and
September 29, 1996, comprehensive income is as follows (in millions):
<PAGE>
<TABLE>
<CAPTION>
Third Quarter Nine Months
---------------------------------------------------------------------
1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $23.5 $114.0 $268.5 $225.0
Other comprehensive income, net of tax:
Foreign currency translation (21.0) (2.3) (135.9) (27.2)
Unrealized gain (loss) on securities 9.5 13.9 8.9
- ------------------------------------------------------------------------------------------------------------------------------------
Other comprehensive income (21.0) 7.2 (122.0) (18.3)
- ------------------------------------------------------------------------------------------------------------------------------------
Comprehensive income $2.5 $121.2 $146.5 $206.7
====================================================================================================================================
</TABLE>
In June 1997, the Financial Accounting Standards Board also issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") which is effective for periods beginning after
December 15, 1997, including interim periods after the year of initial adoption.
SFAS 131 establishes standards for the way public companies report information
about operating segments in both interim and annual financial statements,
including related disclosures about products and services, geographic areas, and
major customers. The Company has not determined what, if any, impact SFAS 131
will have on the operating segments reported nor the impact SFAS 131 will have
on the related disclosures.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("SFAS 128"), which is effective for
periods ending after December 15, 1997, including interim periods. SFAS 128
establishes standards for computing and presenting earnings per share ("EPS") by
replacing primary EPS with the presentation of basic EPS and requiring dual
presentation of basic and diluted EPS on the face of the income statement. On a
pro forma basis, for the quarters and nine months ended September 28, 1997, and
September 29, 1996, EPS as reported would have been:
Third Quarter Nine Months
---------------------------------------------
1997 1996 1997 1996
- -------------------------------------------------------------------------------
Basic earnings per share $.08 $.53 $1.21 $1.01
Diluted earnings per share .07 .52 1.18 1.00
- ------------------------------------------------------------------------------
2. Acquisitions and Dispositions
Effective August 13, 1997, in connection with the merger, the Company
issued 104.8 million shares of its common stock for all the outstanding common
stock of Fort Howard. The merger qualified as a tax-free reorganization and has
been accounted for as a pooling of interests. Accordingly, the Company's
consolidated financial statements have been restated for all periods prior to
the business combination to include the combined financial results of James
River and Fort Howard. Net sales, income before extraordinary item and net
income for the individual companies reported prior to the merger are as follows
(in millions):
<PAGE>
<TABLE>
<CAPTION>
Second Quarter Six Months
-------------------------------------------------------------------------------------
1997 1996 1997 1996
------------------- ------------------- -------------------- --------------------
<S> <C> <C> <C> <C>
Net sales
James River $1,412.4 $1,570.2 $2,794.3 $3,125.6
Fort Howard 411.4 402.4 812.2 788.1
Reclassifications 30.5 42.0 65.6 81.9
------------------- ------------------- -------------------- --------------------
Total $1,854.3 $2,014.6 $3,672.1 $3,995.6
=================== =================== ==================== ====================
Income before extraordinary item
James River $90.8 $30.5 $138.3 $51.0
Fort Howard 58.9 36.4 108.6 63.3
------------------- ------------------- -------------------- --------------------
Total $149.7 $66.9 $246.9 $114.3
=================== =================== ==================== ====================
Net Income
James River $90.8 $30.5 $138.3 $51.0
Fort Howard 58.3 33.1 106.7 60.0
------------------- ------------------- -------------------- --------------------
Total $149.1 $63.6 $245.0 $111.0
=================== =================== ==================== ====================
</TABLE>
The consolidated financial information presented above reflects
reclassifications of customer freight expenses and certain trade promotions to
conform the classifications of Fort Howard to those of Fort James. The
conforming of the accounting practices of Fort James and Fort Howard resulted in
no adjustments to net income or shareholders' equity. There were no significant
intercompany transactions between Fort James and Fort Howard.
During the third quarter, the Company expensed merger transaction costs
of $53.9 million in restructure and other unusual items as required under the
pooling-of-interests accounting method. Fort James anticipates that the
integration of James River and Fort Howard will result in restructuring charges
which will be reflected in the consolidated statements of operations of the
Company in the fourth quarter of 1997. The range of restructure charges cannot
be reasonably estimated until an analysis of the newly combined operations is
complete and a detailed restructure plan is developed.
As a part of the Company's ongoing program of timberland divestitures,
on April 29, 1997, pursuant to an offering memorandum dated September 12, 1996,
Fort James completed the sale of approximately 95,000 acres of timberlands
located in Alabama and Mississippi for cash proceeds of $111 million. The
Company recorded a gain of $57.7 million ($35.2 million net of taxes, or $.17
per share) in restructure and other unusual items.
3. Income Taxes
The Company's effective income tax rate was 43.5% for the nine months
ended September 28, 1997, compared to 41.4% for the first nine months of 1996.
The increase in the effective tax rate from the prior year was primarily due to
certain non-tax-deductible merger transaction costs in 1997, partially offset by
the reduced relative size of non-tax-deductible permanent differences to pretax
income.
<PAGE>
4. Inventories
The components of inventories were as follows as of September 28, 1997,
and December 29, 1996 (in millions):
<TABLE>
<CAPTION>
September December
1997 1996
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
Raw materials $174.5 $177.0
Finished goods and work in process 546.6 498.8
Stores and supplies 161.0 160.9
- ----------------------------------------------------------------------------------------------------
882.1 836.7
Reduction to state certain inventories
at last-in, first-out cost (39.1) (35.1)
- ----------------------------------------------------------------------------------------------------
Total inventories $843.0 $801.6
====================================================================================================
</TABLE>
5. Financial Instruments
The Company held $1,138 million and $1,286 million in notional amount
of interest rate swaps with fair value liabilities of $8 million and $15 million
as of September 28, 1997, and December 29, 1996, respectively. In the third
quarter of 1997, the Company entered into $500 million in notional amount of
interest rate swaps to hedge the New Credit Facility (See Note 6). During the
first quarter of 1997, the Company effectively unwound $648 million in notional
amount of interest rate swaps at a cost of approximately $8 million. The cost of
unwinding the interest rate swaps is being amortized to interest expense through
January 1999. The Company is also party to LIBOR-based interest rate cap
agreements which limit the interest cost to the Company with respect to $500
million of floating rate obligations. The fair value of these cap agreements was
$.1 million compared to a carrying value of $5 million as of September 28, 1997.
During the first quarter of 1997, the Company unwound all $470 million
in notional amount of foreign exchange contracts, along with interest rate
agreements, at a cost of $31 million, net of tax benefits. The foreign exchange
contracts were designated as hedges of a portion of the Company's net investment
in its European Consumer Products Business. The net termination cost was
recorded as a component of equity. The Company terminated such contracts prior
to their original expiration in September 1998.
The fair value of the Company's debt was $4,194 million and $4,586
million as of September 28, 1997, and December 29, 1996, respectively. The
estimated fair values of the Company's financial instruments were based on
quoted market prices of comparable instruments and current market rates as of
September 28, 1997, and December 29, 1996, respectively.
<PAGE>
6. Indebtedness
In connection with the merger, Fort James undertook a plan (the "Debt
Refinancing Plan") designed to refinance an aggregate of approximately $2
billion principal amount of debt of Fort James and Fort Howard. The Debt
Refinancing Plan is expected to result in a reduction of interest expense of
approximately $50 million annually. In connection with the Debt Refinancing
Plan, the Company incurred a $47.1 million, net of taxes, extraordinary loss for
prepayment penalties. An additional extraordinary charge of approximately $80
million, net of taxes, is anticipated to be recorded in the fourth quarter on
completion of the Debt Refinancing Plan.
At the time of the merger, as the first step in the Debt
Refinancing Plan, Fort James and Fort Howard entered into a new $2.5 billion
bank credit facility (the "New Credit Facility") and borrowed $666 million
thereunder to replace certain of the pre-merger bank credit facilities. As of
September 28, 1997, the Company had $661 million outstanding under the New
Credit Facility. Additionally, on August 13, 1997, prior to the effectiveness of
the merger, Fort James repurchased and retired $200 million in aggregate
principal amount of its 9.77% Senior Notes due 2014 with proceeds from previous
divestitures and excess cash from operations. As the second step in the Debt
Refinancing Plan, on September 8, 1997, Fort Howard commenced cash tender offers
for approximately $1.47 billion of its outstanding public debt securities and,
upon expiration of the tender offers in the fourth quarter, purchased a total of
$1.28 billion of such debt securities as follows: (i) $89.9 million of 8 1/4%
Senior Notes due 2002, (ii) $395.0 million of 9 1/4% Senior Notes due 2001,
(iii) $559.3 million of 9% Senior Subordinated Notes due 2006 and (iv) $234.2
million of 10% Subordinated Notes due 2003. The tender offers were funded
through a combination of borrowings under the New Credit Facility and the
issuance of $720 million aggregate principal amount of notes. These notes were
issued subsequent to the end of the quarter, on September 29, 1997, as follows:
(i) $100 million 6 1/2% Senior Notes due 2002, (ii) $320 million 6?% Senior
Notes due 2004 and (iii) $300 million 6?% Senior Notes due 2007.
7. Preferred Stock
During the third quarter of 1997, all outstanding shares of the
Company's Series P 9% Cumulative Convertible Preferred Stock, having a face
value of $287.5 million, were converted into approximately 15.3 million shares
of Common Stock. On October 1, 1997, subsequent to the end of the third quarter,
the Company redeemed all outstanding shares of its Series O 8 1/4 % Cumulative
Preferred Stock for a redemption price of approximately $98.1 million. These
actions will reduce aggregate cash dividends by approximately $25 million
annually.
8. Commitments and Contingent Liabilities
Environmental Matters:
Like its competitors, Fort James is subject to extensive regulation by
various federal, state, provincial, and local agencies concerning compliance
with environmental control statutes and regulations. These regulations impose
limitations on the discharge of materials into the environment, including
effluent and emission limitations, as well as require the Company to obtain and
operate in compliance with the conditions of permits and other governmental
authorizations. Future regulations could materially increase the Company's
capital requirements and certain operating expenses in future years.
In December 1993, the U.S. Environmental Protection Agency ("EPA")
published draft rules which contain proposed regulations affecting pulp and
paper industry discharges of wastewater and gaseous emissions, generally
referred to as "Cluster Rules". The final rules are likely to be issued in 1997,
with a nominal compliance date of 2000. These rules may require significant
changes in the pulping and/or bleaching process presently used in some U.S. pulp
mills, including several of Fort James' mills. The implementation of the rules
could increase the Company's capital expenditures between 1998 and 2001. Based
on its evaluation of the rules as they are currently expected to be issued, the
Company believes that capital expenditures of approximately $100 million may be
required to bring Fort James' facilities into compliance. This estimate could
change, depending on several factors, including changes to the proposed
regulations, new developments in control and process technology, and inflation.
In addition, Fort James has been identified as a potentially
responsible party ("PRP"), along with others, at various EPA designated
Superfund sites and is involved in remedial investigations and actions under
federal and state laws. Among these sites, the Company, along with six other
current and former operators of pulp and paper facilities, has been identified
as a PRP by the U.S. Fish and Wildlife Service and other state and federal
agencies, including the EPA, and tribal entities, regarding contamination of the
lower Fox River by hazardous substances. The agencies and tribes seek
restoration of the river and natural resources damages. At this time, the
Company, in conjunction with other PRPs, has agreed to participate in the
funding of remedial studies and a natural resources damages assessment and is
engaged in negotiations with federal and state agencies and tribes to resolve
outstanding claims.
It is Fort James' policy to accrue remediation costs when it is
probable that such costs will be incurred and when they can be reasonably
estimated. As of September 28, 1997, the Company's accrued environmental
liabilities, including remediation and landfill closure costs, totaled $58.3
million. The Company periodically reviews the status of all significant existing
or potential environmental issues and adjusts its accrual as necessary.
Estimates of costs for future remediation are necessarily imprecise due to,
among other things, the identification of presently unknown remediation sites
and the allocation of costs among PRP's. The Company believes that its share of
the costs of cleanup for its current remediation sites will not have a material
adverse impact on its consolidated financial position, but could have a material
effect on consolidated results of operations in a given quarter or year. As is
the case with most manufacturing and many other entities, there can be no
assurance that the Company will not be named as a PRP at additional sites in the
future or that the costs associated with such additional sites would not be
material.
Litigation:
In 1994, Fort James was sued in Morgan County, Alabama, in a class
action and in Bridgeport, Connecticut, by certain former holders of Fort James's
10 3/4% Debentures due October 1, 2018. Most of these Debentures were retired by
means of a tender offer to all holders, which commenced on September 18, 1992.
The remainder was redeemed on November 2, 1992. Merrill Lynch & Co., which acted
as Fort James' dealer manager for the tender, was also named as a defendant in
the Alabama case. In general, the complaints alleged violations of a covenant
prohibiting use of lower cost borrowed funds to redeem the Debentures before
October 1, 1998, and of various disclosure obligations, and sought damages in
excess of $50 million plus punitive damages in excess of $500 million. The
Alabama case was certified as a class action and holders of slightly over
one-half of the Debentures elected not to be part of the class. In June 1997,
the Alabama court granted Fort James summary judgement on the claims, and
dismissed the action. The plaintiffs have appealed to the Alabama Supreme Court.
Fort James believes that the Alabama case is without merit and intends to defend
it vigorously. Most of the holders electing out of the Alabama class were
plaintiffs in the Connecticut case. In May 1996, Fort James settled the claim of
an institutional holder of approximately 16.54% of the Debentures for $425,000
plus reimbursement of attorney's fees, and in October 1997, Fort James settled
all of the claims of the Connecticut plaintiffs, representing 39% of the
Debentures for approximately $980,000 plus reimbursement of attorney's fees.
In May 1997, the Attorney General of the State of Florida filed a civil
action in the Gainesville Division of the United States District Court for the
Northern District of Florida against the Company and eight other manufacturers
of sanitary paper products alleging violations of federal and state antitrust
and unfair competition laws. The complaint seeks civil penalty under Florida law
of $1 million for each alleged violation against each defendant, an unspecified
amount of treble damages and injunctive relief. Additional civil class actions
have been filed in various federal and state courts against the same defendants
alleging violations of federal and state antitrust statutes and seeking treble
damages and injunctive relief. The Judicial Panel for Multidistrict Litigation
has ordered the cases consolidated in the United States District Court at
Gainesville, Florida. State court actions in California and Tennessee with
similar allegations may proceed separately. The litigation is in its earliest
stages. The Company believes that these cases are without merit and intends to
defend the litigation vigorously.
<PAGE>
Although the ultimate disposition of legal proceedings cannot be
predicted with certainty, it is the opinion of the Company's management that the
outcome of any claim which is pending or threatened, either individually or on a
combined basis, will not have a materially adverse effect on the consolidated
financial condition of Fort James but could materially affect consolidated
results of operations in a given quarter or year.
9. Segment Information
Fort James' net sales and income from operations by business segment
were as follows for the quarters and nine months ended September 28, 1997, and
September 29, 1996 (in millions):
<TABLE>
<CAPTION>
Consumer Products
----------------------- Communi- Intersegment
North cations elimination/
America Europe Packaging Papers Corporate Total
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Quarter ended September 1997
Net sales $1,109.2 $438.5 $200.0 $117.8 $(40.1) $1,825.4
Segment results before restructure
and other unusual items 219.9 48.3 22.7 11.0 (24.0) 277.9
Restructure and other unusual items
income (expense) (53.9) (53.9)
_______ _______ _______ _______ _______ _______
Income from operations 219.9 48.3 22.7 11.0 (77.9) 224.0
- ------------------------------------------------------------------------------------------------------------------------------------
Quarter ended September 1996
Net sales $1,086.2 $491.6 $280.0 $116.2 $(48.1) $1,925.9
Segment results before restructure
and other unusual items 217.8 54.5 22.9 4.8 (35.4) 264.6
Restructure and other unusual items
income (expense) (5.8) (4.7) 40.9 (.1) 30.3
_______ _______ _______ _______ _______ _______
Income from operations 212.0 49.8 63.8 4.8 (35.5) 294.9
- ------------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 1997
Net sales $3,313.8 $1,376.5 $595.0 $349.1 $(136.9) $5,497.5
Segment results before restructure
and other unusual items 655.6 153.6 67.7 7.8 (70.1) 814.6
Restructure and other unusual items
income (expense) 57.7 (53.9) 3.8
_______ _______ _______ _______ _______ _______
Income from operations 713.3 153.6 67.7 7.8 (124.0) 818.4
- ------------------------------------------------------------------------------------------------------------------------------------
Nine months ended September 1996
Net sales $3,322.5 $1,498.7 $941.1 $342.2 $(183.0) $5,921.5
Segment results before restructure
and other unusual items 579.6 134.4 76.7 12.2 (93.8) 709.1
Restructure and other unusual items
income (expense) (31.8) (4.7) 37.6 (1.2) (0.1)
_______ _______ _______ _______ _______ _______
Income from operations 547.8 129.7 114.3 12.2 (95.0) 709.0
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
RESULTS OF OPERATIONS
Overview
Fort James reported net income of $23.5 million, or $.07 per share, for
the third quarter ended September 28, 1997, compared with $114.0 million, or
$.52 per share for the same quarter of the prior year. Net sales for the third
quarter were $1,825 million, compared to $1,926 million in the prior year. For
the nine months ended September 28, 1997, net income was $268.5 million, or
$1.18 per share, compared with $225.0 million, or $1.00 per share in 1996. Net
sales for the first nine months of 1997 were $5,498 million compared to $5,922
million in 1996. Fort James net sales and income from operations by business
segment is presented in Note 9 of Notes to Consolidated Financial Statements.
The comparability of these results was impacted by nonrecurring charges,
extraordinary loss on early extinguishment of debt, the 1996 divestitures of the
Flexible Packaging and related Inks divisions, as well as several small domestic
Consumer Products facilities, and the estimated impact of foreign currency
translation.
Items Affecting Comparability
Nonrecurring charges for the quarters and nine months ended September
28, 1997, and September 29, 1996, were as follows (in millions, except per share
amounts):
<TABLE>
<CAPTION>
September 28, 1997 September 29, 1996
------------------------------ ----------------------------------
Net Net
Income Per Income Per
Gross Impact Share Gross Impact Share
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Quarters ended:
Severance costs and asset
write-downs $16.6 $10.4 $.05
Transaction costs $53.9 $53.9 $.25
Net gain on asset divestitures (46.9) (24.2) (.12)
- ---------------------------------------------------------------------------------------------------------------------------
Total (income) expense $53.9 $53.9 $.25 ($30.3) ($13.8) ($.07)
===========================================================================================================================
Nine months ended:
Severance costs and asset
write-downs $47.0 $28.9 $.16
Transaction costs $53.9 $53.9 $.25
Net gain on asset divestitures (57.7) (35.2) (.17) (46.9) (24.2) (.14)
- ---------------------------------------------------------------------------------------------------------------------------
Total (income) expense ($3.8) $18.7 $.08 $.1 $4.7 $.02
===========================================================================================================================
</TABLE>
Net income for the quarters and nine months ended September 28, 1997,
excluding nonrecurring items and extraordinary loss on early extinguishment of
debt, was $122.6 million or $.54 per share, and $334.3 million, or $1.49 per
share, respectively, compared with $100.2 million, or $.45 per share, and $233.0
million, or $1.04 per share in the same periods of 1996. Net sales for the third
quarter and nine months, excluding divested operations and the estimated impact
of foreign currency translation, were $1,880 million and $5,611 million in 1997,
respectively, compared with $1,850 million and $5,537 million for the comparable
periods in 1996.
<PAGE>
North American Consumer Products Business
Operating profits before restructure and other unusual items for the
North American Consumer Products Business, excluding results from divestitures,
increased by 1%, from $218.1 million in the third quarter of 1996 to $219.9
million in the current quarter. Net sales for the quarters increased by 2%,
excluding revenues from divested operations, at $1,109 million in 1997, compared
to $1,086 million in 1996. Third quarter results reflect volume gains of
approximately 2% in the away-from-home tissue markets and benefits of cost
reduction initiatives, partially offset by commercial foodservice volume
declines. The more competitive pricing environment experienced by the
Company in the retail tissue markets is expected to continue for the near term.
For the nine months ended September 28, 1997, operating profits, excluding
divestitures, were $655.6 million, an increase of 13% over the comparable nine
months in 1996. Excluding divestitures, revenues for the first nine months of
1997 increased 1% over the prior year. The increase in profitability for the
first nine months of 1997 as compared to the prior year was also attributable to
strong sales volumes, and reduced wood costs, combined with continued cost
reduction benefits.
European Consumer Products Business
Operating profits decreased 11% for the European Consumer Products
Business to $48.3 million, compared to $54.5 million in the third quarter of
1996 due to the effect of foreign currency translation. Without the foreign
currency effect, operating profits were comparable to prior year reflecting
increased price competition offset by cost reduction benefits. Operating profits
of $153.6 million for this business for the nine months ended September 28,
1997, were 14% above the $134.4 million reported in the prior year. This
improvement in the European Consumer Products Business' operating profits for
the first nine months of 1997 was attributable to a combination of stronger
finished goods volumes of approximately 2% and lower raw material costs and
other cost reductions, partially offset by the strengthening of the U.S. dollar
and lower average pricing. The net impact of foreign currency translation to the
U.S. dollar for the nine months ended September 28, 1997, was a reduction in
profits of approximately 8%. Net sales adjusted for the effects of foreign
currency translation were comparable in both the third quarter and the first
nine months of 1997 and 1996. While finished product sales volumes improved
compared to the first nine months of 1996, revenues continued to be negatively
impacted by the strengthening of the U.S. dollar and a decline in average
pricing.
Packaging Business
Excluding the results attributable to the divested Flexible Packaging
and Inks divisions in 1996, operating profits before restructure and other
unusual items for the Packaging Business decreased by 8% to $22.7 million in the
current quarter from $24.8 million in the third quarter of 1996 while profits
for the first nine months decreased 4% to $67.7 million in 1997 from $70.7
million in the prior year. Net sales, adjusted for the Flexible Packaging and
Inks transactions, were relatively flat in the third quarters at $200 million in
1997 compared to $204 million in the prior year and for the first nine months at
$595 million in 1997 compared to $613 million in 1996. The current quarter's and
nine months' results reflected benefits of increased volumes for folding cartons
and paperboard and cost reductions, offset by lower average selling prices,
increased wastepaper costs and transition costs incurred in connection with new
customers.
Communications Papers Business
Operating profits for the Communications Papers Business increased to
$11.0 million in the current quarter from $4.8 million in the third quarter of
1996. The operating profits for the nine months decreased to $7.8 million from
$12.2 million for the same period in 1996. Net sales for the third quarter were
similar at $118 million in 1997 and $116 million in 1996, while net sales for
the nine months improved 2% to $349 million from $342 million in the prior year.
The current quarter's profits reflected increased volumes, lower wood costs and
cost reduction initiatives, partially offset by lower average selling prices.
<PAGE>
Other Income and Expense Items
General corporate expenses, before restructure and other unusual items,
totaled $24.0 million and $70.1 million in the third quarter and first nine
months of 1997, respectively, compared to $35.4 million and $93.8 million for
the same periods in the prior year. The majority of the decrease was related to
reductions in spending on new integrated management information systems, as
design and installation projects are completed and systems become operational.
Interest expense decreased from $327.3 million to $277.6 million between the
first nine months of 1996 and the first nine months of 1997. This decrease was
attributable to the reduction in average outstanding debt combined with the
initial benefits from the Company's debt refinancing activities in 1997. Other
income increased to $22.3 million in 1997 from $12.4 million in 1996,
principally due to improved earnings of unconsolidated affiliates and gains on
sales of assets. The change in the effective tax rate for 1997 is discussed in
Note 4 of Notes to Consolidated Financial Statements. The extraordinary loss on
early extinguishment of debt of $47.1 million, net of taxes, for the nine months
ended September 28, 1997, primarily relates to the debt refinancings as
described in Note 6 of Notes to Consolidated Financial Statements.
Adoption of Accounting Pronouncement
In June 1997, the Financial Accounting Standards Board issued Statement
No. 130, "Reporting Comprehensive Income" ("SFAS 130") which is effective for
periods beginning after December 15, 1997, including interim periods. SFAS 130
establishes standards for reporting and display of comprehensive income and its
components in a full set of general-purpose financial statements, either in the
statement of operations or a separate statement. Additionally, SFAS 130 requires
the display of the accumulated balance of other comprehensive income. Note 1 of
Notes to Consolidated Financial Statements describes the pro forma impact of
SFAS 130 for the quarters and nine months ended September 28, 1997, and
September 29, 1996.
In June 1997, the Financial Accounting Standards Board also issued
Statement No. 131, "Disclosures about Segments of an Enterprise and Related
Information" ("SFAS 131") which is effective for periods beginning after
December 15, 1997, including interim periods after the year of initial adoption.
SFAS 131 established standards for the way public companies report information
about operating segments in both interim and annual financial statements,
including related disclosures about products and services, geographic areas, and
major customers. The Company has not determined what, if any, impact SFAS 131
will have on the operating segments reported nor the impact SFAS 131 will have
on the related disclosures.
In February 1997, the Financial Accounting Standards Board issued
Statement No. 128, "Earnings per Share" ("SFAS 128"), which is effective for
periods ending after December 15, 1997, including interim periods. SFAS 128
establishes standards for computing and presenting earnings per share ("EPS") by
replacing primary EPS with the presentation of basic EPS and requiring dual
presentation of basic and diluted EPS on the face of the income statement. Note
1 of Notes to Consolidated Financial Statements describes the pro forma impact
of SFAS 128 for the quarters and nine months ended September 28, 1997, and
September 29, 1996.
Year 2000
The Company has developed plans to address the possible exposure
related to the impact on its computer systems of the Year 2000. Key financial
information and operational systems have been assessed, and the Company is in
the process of executing the plans to modify systems prior to December 31, 1999.
The financial impact of making the required system changes has not been and is
not expected to be material to the Company's consolidated financial position or
results of operations.
<PAGE>
FINANCIAL CONDITION
Cash provided by operating activities totaled $564.5 million in the
first nine months of 1997, compared with the $803.9 million provided in the
prior year. This decrease in cash provided by operating activities resulted from
a payment for the unwinding of the Company's foreign currency hedge (See Note 5
of Notes to Consolidated Financial Statements) and increases in accounts
receivable and inventory. Inventory increases occurred in anticipation of the
possible retirement of older, less efficient machines, which is being
considered. The Company's current ratio was 1.2 as of September 28, 1997, and
December 29, 1996. Capital expenditures decreased to $313.5 million for the nine
months ended September 28, 1997, from $328.7 million in the first nine months of
1996 due to divested operations partially offset by spending on a new tissue
machine at the Savannah, Georgia mill scheduled for completion in 1999. The
Company currently anticipates 1997 annual capital spending to approximate $500
million.
Total indebtedness decreased by $415 million from $4,434 million as of
December 29, 1996, to $4,019 million as of September 28, 1997. As of September
28, 1997, the Company had outstanding borrowings of approximately $885 million
supported by revolving credit facilities. These borrowings included $793 million
outstanding under such facilities, $69 million of commercial paper and $23
million of money market notes. Total outstanding debt as of September 28, 1997,
included approximately $1,042 million of fixed rate and $2,977 million of
floating rate obligations. Note 5 of Notes to Consolidated Financial Statements
describes the Company's interest rate swap agreements.
In connection with the merger, Fort James undertook a plan (the "Debt
Refinancing Plan") designed to refinance an aggregate of approximately $2
billion principal amount of debt of Fort James and Fort Howard. The Debt
Refinancing Plan is expected to result in a reduction of interest expense of
approximately $50 million annually. In connection with the Debt Refinancing
Plan, the Company incurred a $47.1 million, net of taxes, extraordinary loss for
prepayment penalties. An additional extraordinary charge of approximately $80
million, net of taxes, is anticipated to be recorded in the fourth quarter on
completion of the Debt Refinancing Plan.
At the time of the merger, as the first step in the Debt
Refinancing Plan, Fort James and Fort Howard entered into a new $2.5 billion
bank credit facility (the "New Credit Facility") and borrowed $666 million
thereunder to replace certain of the pre-merger bank credit facilities. As of
September 28, 1997, the Company had $661 million outstanding under the New
Credit Facility. Additionally, on August 13, 1997, prior to the effectiveness of
the merger, Fort James repurchased and retired $200 million in aggregate
principal amount of its 9.77% Senior Notes due 2014 with proceeds from previous
divestitures and excess cash from operations. As the second step in the Debt
Refinancing Plan, on September 8, 1997, Fort Howard commenced cash tender offers
for approximately $1.47 billion of its outstanding public debt securities and,
upon expiration of the tender offers in the fourth quarter, purchased a total of
$1.28 billion of such debt securities as follows: (i) $89.9 million of 8 1/4%
Senior Notes due 2002, (ii) $395.0 million of 9 1/4% Senior Notes due 2001,
(iii) $559.3 million of 9% Senior Subordinated Notes due 2006 and (iv) $234.2
million of 10% Subordinated Notes due 2003. The tender offers were funded
through a combination of borrowings under the New Credit Facility and the
issuance of $720 million aggregate principal amount of notes. These notes were
issued subsequent to the end of the quarter, on September 29, 1997, as follows:
(i) $100 million 6 1/2% Senior Notes due 2002, (ii) $320 million 6?% Senior
Notes due 2004 and (iii) $300 million 6?% Senior Notes due 2007.
During the third quarter of 1997, all outstanding shares of the
Company's Series P 9% Cumulative Convertible Preferred Stock, having a face
value of $287.5 million, were converted into approximately 15.3 million shares
of Common Stock. On October 1, 1997, subsequent to the end of the third quarter,
the Company redeemed all outstanding shares of its Series O 8 1/4 % Cumulative
Preferred Stock for a redemption price of approximately $98.1 million. These
actions will reduce aggregate cash dividends by approximately $25 million
annually.
As part of the Company's ongoing program of timberland divestitures, on
April 29, 1997, pursuant to an offering memorandum dated September 12, 1996,
Fort James completed the sale of approximately 95,000 acres of timberlands
located in Alabama and Mississippi for cash proceeds of $111 million. The
Company recorded a second quarter after-tax gain of $35.2 million on this sale.
Forward-looking statements in this report are made pursuant to the safe
harbor provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are not guarantees of future performance and are
subject to risks and uncertainties that could cause actual results and Company
plans and objectives to differ materially from those projected. Such risks and
uncertainties include, but are not limited to, general business and economic
conditions; competitive pricing pressures for the Company's products; changes in
raw material, energy and other costs; opportunities that may be presented to and
pursued by the Company; determinations by regulatory and governmental
authorities; the ability to successfully integrate James River and Fort Howard
businesses; and the ability to achieve synergistic and other cost reductions and
efficiencies.
<PAGE>
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS.
None.
Item 2. CHANGES IN SECURITIES.
None.
Item 3. DEFAULTS UPON SENIOR SECURITIES.
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
A Special Meeting of Shareholders was held on August 12, 1997.
Shareholders of record of the Company's Common Stock and its Series P 9%
Cumulative Convertible Preferred Stock at the close of business on June 30,
1997, were entitled to vote at the meeting.
The Shareholders approved i) the issuance of shares of common stock
pursuant to the merger with Fort Howard Corporation, ii) the amendment to the
Articles of Incorporation to increase the number of authorized common shares to
500 million and to change the corporate name to "Fort James Corporation", iii)
the amendment of the Bylaws of the Company to increase the fixed number of board
members to 15 and iv) the amendment to the James River 1996 Stock Incentive Plan
to increase the number of shares available for issuance by eight million and to
provide performance-based awards under such plan. The votes were cast as
follows:
<TABLE>
<CAPTION>
Voted Voted Vote Withheld Broker
For Against or Abstained Non-Votes
- ------------------------------------------------ --------------- ------------- ---------------- --------------
<S> <C> <C> <C> <C>
i) Share issuance 80,341,887 592,687 316,742
ii) Amendment of Articles of Incorporation 79,660,881 1,144,423 446,012
iii) Amendment of Bylaws 79,996,235 789,854 465,227
iv) Amendment of Incentive Plan 74,308,525 6,195,415 747,376
</TABLE>
Item 5. OTHER INFORMATION.
None.
<PAGE>
Item 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits:
The exhibits listed below are filed as part of this quarterly
report. Each exhibit is listed according to the number
assigned to it in the Exhibit Table of Item 601 of Regulation
S-K.
Exhibit Starts
Number on Page
- --------------------------------------------------------------------------------
3(a) James River Corporation of Virginia Amended and
Restated Articles of Incorporation as amended
effective January 4, 1990 - filed herewith. E-1
3(b) James River Corporation of Virginia Articles of
Amendment to the Amended and Restated Articles of
Incorporation Designating the Series O 8-1/4%
Cumulative Preferred Stock ($10.00 par value),
effective October 1, 1992 - filed herewith. E-2
3(c) Articles of Amendment to the Amended and Restated
Articles of Incorporation of James River
Corporation of Virginia Designating the Series P
9% Cumulative Convertible Preferred Stock ($10.00
par value)- filed herewith. E-3
3(d) Articles of Amendment to Amended and Restated
Articles of Incorporation as of August 13, 1997
- filed herewith. E-4
3(e) Amended and Restated Bylaws of Fort James
Corporation as of August 13, 1997 -
filed herewith. E-5
10(a) Stockholders Agreement dated as of August 13, 1997
- filed herewith. E-6
10(b) Registration Rights Agreement dated as of
August 13, 1997 - filed herewith. E-7
10(c) Amended and Restated Employment Agreement, dated
as of June 10, 1997 between James River and Miles
Marsh (incorporated by reference to Exhibit 10.3
to the Company's filing of Form S-4 dated June
26, 1997).
10(d) Amended and Restated Employment Agreement, dated
as of June 10, 1997 between James River and
Michael T. Riordan (incorporated by reference to
Exhibit 10.4 to the Company's filing of Form S-4
dated June 26, 1997).
10(e) Form of Employment Agreement between the
Registrant and executive officers of Fort Howard
(incorporated by reference to Exhibit 10.5 to the
Company's filing of Form S-4 dated June 26,
1997).
10(f) Form of Employment Agreement between the
Registrant and executive officers of the
Registrant (incorporated by reference to Exhibit
10.5 to the Company's filing of Form S-4 dated
June 26, 1997).
<PAGE>
Exhibit Starts
Number Description on Page
- --------------------------------------------------------------------------------
10(g) Fort James Corporation $2,500,000,000 Credit
Agreement dated as of August 13, 1997, amended
and restated October 31, 1997 - filed herewith. E-8
11 Computation of Earnings per Share - filed herewith. E-9
12 Computation of Ratio of Earnings to Fixed Charges -
filed herewith. E-10
27(a) Financial Data Schedules for the nine months
ended September 28, 1997(filed electronically only).
27(b) Financial Data Schedules restated for the nine
months ended September 29, 1996 (filed
electronically only).
<TABLE>
<CAPTION>
(b) Reports on Form 8-K:
During the quarter ended September 28, 1997, and subsequent
thereto, the Company filed the following Current Reports on
Form 8-K:
Date of Report Event Reported
- -------------------------------------------------------------------------------------------------------------------------
<S> <C>
July 2, 1997 The Company filed a Registration Statement on Form S-4 relating to the
proposed merger with Fort Howard Corporation.
July 24, 1997 The Company published a press release announcing its results of operations
for the second quarter and six months ended June 29, 1997.
August 7, 1997 The Company published a press release announcing that the Department of
Justice has completed its regulatory review of the merger of James River
and Fort Howard and will take no action.
August 8, 1997 The Company filed pro forma condensed combined financial information for
James River and Fort Howard for the six months ended June 29, 1997, and June
30, 1996, as well as a condensed combined balance sheet as of June 29, 1997.
August 12, 1997 The Company published a press release announcing the shareholder approval of
the merger with Fort Howard Corporation.
August 13, 1997 The Company filed Fort Howard Corporation consolidated financial statements
as of December 31, 1996, and December 31, 1995, and for each of the years in
the three-year period ended December 31, 1996, and as of June 30, 1997, and
1996, and for the quarters and six months then ended.
</TABLE>
<PAGE>
<TABLE>
<S> <C>
Date of Report Event Reported
- --------------------------------------------------------------------------------------------------------------------------
August 13, 1997 The Company filed a press release announcing the completion of the merger
with Fort Howard Corporation and filed pro forma condensed combined
financial information for Fort James Corporation for the years ended
December 29, 1996, December 31, 1995, and December 25, 1994, and for the six
months ended June 29, 1997, and June 30, 1996, as well as a condensed
combined balance sheet as of June 29, 1997.
August 13, 1997 The Company filed supplemental consolidated financial statements of Fort
James Corporation as of December 29, 1996, December 31, 1995, and June 28,
1997, and for each of the years in the three-year period ended December 29,
1996, and for the quarters and six months ended June 29, 1997, and June 30,
1996.
September 15, 1997 The Company filed the consent of Arthur Anderson LLP relating to the
audited financial statements of Fort Howard Corporation.
October 23, 1997 The Company published a press release announcing its results of operations
for the third quarter and nine months ended September 28, 1997.
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FORT JAMES CORPORATION
By:/s/William A. Paterson
William A. Paterson
Senior Vice President & Controller
(Principal Accounting Officer)
By:/s/Ernst A. Haberli
Ernst A. Haberli
Chief Financial Officer
(Principal Financial Officer)
Date: November 6, 1997
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from Fort James
Corporation's September 28, 1997 supplemental financial statements and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000053117
<NAME> FORT JAMES CORPORATION
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-28-1997
<PERIOD-END> SEP-28-1997
<EXCHANGE-RATE> 1.000
<CASH> 35
<SECURITIES> 0
<RECEIVABLES> 814
<ALLOWANCES> 0
<INVENTORY> 843
<CURRENT-ASSETS> 1,826
<PP&E> 7,861
<DEPRECIATION> 3,140
<TOTAL-ASSETS> 7,832
<CURRENT-LIABILITIES> 1,516
<BONDS> 3,880
0
450
<COMMON> 21
<OTHER-SE> 510
<TOTAL-LIABILITY-AND-EQUITY> 7,832
<SALES> 5,498
<TOTAL-REVENUES> 5,498
<CGS> 3,835
<TOTAL-COSTS> 3,835
<OTHER-EXPENSES> (4)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 278
<INCOME-PRETAX> 563
<INCOME-TAX> 245
<INCOME-CONTINUING> 316
<DISCONTINUED> 0
<EXTRAORDINARY> (47)
<CHANGES> 0
<NET-INCOME> 269
<EPS-PRIMARY> 1.18
<EPS-DILUTED> 1.17
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information from James River Corporation
of Virginia's September 29, 1996 Form 10-Q financial statements and Fort Howard
Corporation's September 30, 1996 Form 10-Q financial statements as restated in
Fort James Corporation's September 28, 1997 Form 10-Q financial statements and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000053117
<NAME> FORT JAMES CORPORATION
<MULTIPLIER> 1,000,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-29-1996
<PERIOD-END> SEP-29-1996
<EXCHANGE-RATE> 1.000
<CASH> 63
<SECURITIES> 0
<RECEIVABLES> 878
<ALLOWANCES> 0
<INVENTORY> 783
<CURRENT-ASSETS> 1,894
<PP&E> 7,804
<DEPRECIATION> 2,849
<TOTAL-ASSETS> 8,212
<CURRENT-LIABILITIES> 1,425
<BONDS> 4,534
0
738
<COMMON> 19
<OTHER-SE> (7)
<TOTAL-LIABILITY-AND-EQUITY> 8,212
<SALES> 5,922
<TOTAL-REVENUES> 5,922
<CGS> 4,258
<TOTAL-COSTS> 4,258
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 327
<INCOME-PRETAX> 394
<INCOME-TAX> 163
<INCOME-CONTINUING> 228
<DISCONTINUED> 0
<EXTRAORDINARY> (3)
<CHANGES> 0
<NET-INCOME> 225
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
</TABLE>
Exhibit 3(a)
JAMES RIVER CORPORATION OF VIRGINIA
AMENDED AND RESTATED ARTICLES OF INCORPORATION
ARTICLE I
NAME
The name of the corporation is James River Corporation of Virginia.
ARTICLE II
PURPOSES AND POWERS
A. Purposes. The purposes for which the Corporation is organized are
to acquire, own, manage and dispose of the capital stock and other securities
of paper manufacturing and all other types of corporations and to render to
such corporations, and to others, such advice and services as may be
permitted by law.
B. Powers. The Corporation shall have those powers conferred by the
laws of the Commonwealth of Virginia. It shall also have the power to
transact any business not prohibited by law or required to be stated in these
Articles of Incorporation.
ARTICLE III
CAPITAL STOCK
A. Authorized Stock. The aggregate number of shares of stock which
the Corporation shall have the authority to issue and the par value per share
are as follows:
Class No. of Shares Par Value
Common 150,000,000 $ .10
Preferred 5,000,000 10.00
B. Preemptive Rights. No holders of any class of stock of this
Corporation shall have any preemptive or other preferential right to purchase
or subscribe to (i) any shares of any class of stock of the Corporation,
whether now or hereafter authorized, (ii) any warrants, rights or options to
purchase any such stock, or (iii) any obligations convertible into any such
stock or into warrants, rights or options to purchase any such stock.
C. Voting Rights. The holders of the Common Stock shall, to the
exclusion of the holders of any other class of stock of the Corporation, have
the sole and full power to vote for the election of directors and for all
other purposes without limitation except only as otherwise provided in any
articles of serial designation applicable to any series of Preferred Stock,
and as otherwise expressly provided by the then existing statutes of the
Commonwealth of Virginia. The holders of the Common Stock shall have one
vote for each share of Common Stock held by them.
D. Preferred Shares Issuable in Series. Authority is expressly vested
in the Board of Directors to divide the Preferred Stock into, and issue same
in, series and, within the following limitations, to fix and determine the
relative rights and preferences of the shares of any series so established,
and to provide for the issuance thereof. Each series shall be so designated
as to distinguish the shares thereof from the shares of all other series and
classes. All shares of the Preferred Stock shall be identical except as to
the following relative rights and preferences, as to which there may be
variations between different series:
E-1
<PAGE>
(i) The rate of dividend, the time of payment, whether dividends
shall be cumulative and if so, the dates from which they shall be
cumulative, and the extent of participation rights, if any;
(ii) Any right to vote with holders of shares of any other series
or class and any right to vote as a class, either generally or as a
condition to specified corporate action;
(iii) The price at and the terms and conditions on which shares may
be redeemed;
(iv) The amount payable upon shares in event of involuntary
liquidation;
(v) The amount payable upon shares in event of voluntary
liquidation;
(vi) Sinking fund provisions for the redemption or purchase of
shares; and
(vii) The terms and conditions on which shares may be converted, if
the shares of any series are issued with the privilege of conversion.
Prior to the issuance of any shares of a series of Preferred Stock the
Board of Directors shall establish such series by adopting a resolution
setting forth the designation and number of shares of the series and the
relative rights and preferences thereof, to the extent permitted by the
provisions hereof, and the Corporation shall file in the office of the State
Corporation Commission of Virginia articles of serial designation as required
by law, and the Commission shall have issued a certificate of serial
designation.
All series of Preferred Stock shall rank on a parity as to dividends and
assets with all other series according to the respective dividend rates and
amounts distributable upon any voluntary or involuntary liquidation of the
Corporation fixed for each such series, and without the preference or
priority of any series over any other series; but all shares of the Preferred
Stock shall be preferred over the Common Stock as to both dividends and
amounts distributable upon any voluntary or involuntary liquidation of the
Corporation to the extent provided in any articles of serial designation
applicable thereto.
Before the date on which the Board of Directors approved these Amended and
Restated Articles of Incorporation, the Corporation had issued the following
listed series of Preferred Stock, namely, the Series A Cumulative Convertible
Preferred Stock, the Series B Cumulative Participating Preferred Stock, the
Series C Cumulative Participating Preferred Stock, the Series E Cumulative
Preferred Stock, the Series F Cumulative Convertible Preferred Stock, the
Series G $5.40 Cumulative Convertible Preferred Stock, the Series H Preferred
Stock, the Series I $5.85 Cumulative Convertible Preferred Stock, and the
Series J Preferred Stock. On that date all of the shares of each of the
aforesaid series which had been issued had been redeemed, converted or
otherwise acquired by the Corporation and no share of any such series
remained issued and outstanding. Each such series provided that shares of
the series, when purchased, redeemed or otherwise acquired by the
Corporation, would become authorized but unissued shares of Preferred Stock,
undesignated as to series.
On the date of these Amended and Restated Articles of Incorporation there
were issued and outstanding shares of the Series D Cumulative Preferred
Stock, the Series K $3.375 Cumulative Convertible Exchangeable Preferred
Stock and the Series L $14.00 Cumulative Convertible Exchangeable Preferred
Stock. On the date of these Amended and Restated Articles of Incorporation,
there were authorized, but unissued, 150,000 shares of the Series M
Cumulative Participating Preferred Stock. The dates on which each such
series was authorized by the Board of Directors and the preferences, limi-
tations and relative rights of the shares of each such series not otherwise
set forth in these Amended and Restated Articles of Incorporation are set
forth in Articles VII through X hereof.
<PAGE>
On December 14, 1989, the Board of Directors designated 280,000 shares of
the authorized but unissued Preferred Stock as the Series N $14.00 Cumulative
Convertible Exchangeable Preferred Stock. The preferences, limitations and
relative rights of the shares of the Series N Preferred Stock not otherwise
set forth in these Amended and Restated Articles of Incorporation are set
forth in Article XI hereof.
ARTICLE IV
NUMBER OF DIRECTORS
The number of directors shall be as fixed in the bylaws in accordance with
law, and in the absence of a bylaw fixing the number of directors, the number
shall be eight.
ARTICLE V
VOTE TO AMEND OR RESTATE
As to each voting group entitled to vote on an amendment or restatement
of these Articles of Incorporation the vote required for approval shall be
(i) the vote required by the Virginia Stock Corporation Act (as applied
without regard to the effect of clause (iii) of this Article) if the effect
of the amendment or restatement is (a) to reduce the shareholder vote
required to approve a merger, a statutory share exchange, a sale of all or
substantially all of assets of the Corporation or the dissolution of the
Corporation, or (b) to delete all or any part of this clause (i) of this
Article; (ii) the vote required by the terms of these Articles of
Incorporation, as amended or as restated from time to time, if such terms
require the approval of more than a majority of the votes entitled to be cast
thereon by such voting group; or (iii) a majority of the votes entitled to be
cast thereon if neither clause (i) nor clause (ii) of this Article is
applicable.
ARTICLE VI
INDEMNIFICATION AND LIMIT ON LIABILITY
A. Definitions. For purposes of this Article VI the following
definitions shall apply:
(i) "Corporation" means this Corporation only and no predecessor
entity or other legal entity.
(ii) "Expenses" include counsel fees, expert witness fees, and
costs of investigation, litigation and appeal, as well as any amounts
expended in asserting a claim for indemnification.
(iii) "Liability" means the obligation to pay a judgment,
settlement, penalty, fine, or other such obligation, including, without
limitation, any excise tax assessed with respect to an employee benefit
plan.
(iv) "Legal Entity" means a corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise.
(v) "Predecessor Entity" means a legal entity the existence of
which ceased upon its acquisition by the Corporation in a merger or
otherwise.
(vi) "Proceeding" means any threatened, pending, or completed
action, suit, proceeding or appeal whether civil, criminal,
administrative or investigative and whether formal or informal.
<PAGE>
B. Limitation on Liability. In every instance permitted by the Virginia
Stock Corporation Act, as it exists on the date hereof or may hereafter be
amended, the liability of a director or officer of the Corporation to the
Corporation or its shareholders arising out of a single transaction,
occurrence or course of conduct shall be limited to one dollar.
C. Indemnification of Directors and Officers. The Corporation shall
indemnify any individual who is, was or is threatened to be made a party to
a proceeding (including a proceeding by or in the right of the Corporation)
because he is or was a director or officer of the Corporation or because he
is or was serving the Corporation or any other legal entity in any capacity
at the request of the Corporation while a director or officer of the
Corporation, against all liabilities and reasonable expenses incurred in the
proceeding except such liabilities and expenses as are incurred because of
his willful misconduct or knowing violation of the criminal law. Service as
a director or officer of a legal entity controlled by the Corporation shall
be deemed service at the request of the Corporation. The determination that
indemnification under this Paragraph C is permissible and the evaluation as
to the reasonableness of expenses in a specific case shall be made, in the
case of a director, as provided by law, and in the case of an officer, as
provided in Paragraph D of this Article VI; provided, however, that if a
majority of the directors of the Corporation has changed after the date of
the alleged conduct giving rise to a claim for indemnification, such
determination and evaluation shall, at the option of the person claiming
indemnification, be made by special legal counsel agreed upon by the Board of
Directors and such person. Unless a determination has been made that
indemnification is not permissible, the Corporation shall make advances and
reimbursements for expenses incurred by a director or officer in a proceeding
upon receipt of an undertaking from him to repay the same if it is ultimately
determined that he is not entitled to indemnification. Such undertaking
shall be an unlimited, unsecured general obligation of the director or
officer and shall be accepted without reference to his ability to make
repayment. The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent shall not of
itself create a presumption that a director or officer acted in such a manner
as to make him ineligible for indemnification. The Corporation is authorized
to contract in advance to indemnify and make advances and reimbursements for
expenses to any of its directors or officers to the same extent provided in
this Paragraph C.
D. Indemnification of Others. The Corporation may, to a lesser extent
or to the same extent that it is required to provide indemnification and make
advances and reimbursements for expenses to its directors and officers
pursuant to Paragraph C, provide indemnification and make advances and
reimbursements for expenses to its employees and agents, the directors,
officers, employees and agents of its subsidiaries and predecessor entities,
and any person serving any other legal entity in any capacity at the request
of the Corporation, and, if authorized by general or specific action of the
Board of Directors, may contract in advance to do so. The determination that
indemnification under this Paragraph D is permissible, the authorization of
such indemnification and the evaluation as to the reasonableness of expenses
in a specific case shall be made as authorized from time to time by general
or specific action of the Board of Directors, which action may be taken
before or after a claim for indemnification is made, or as otherwise provided
by law. No person's rights under Paragraph C of this Article VI shall be
limited by the provisions of this Paragraph D.
E. Miscellaneous. Every reference in this Article VI to persons who are
or may be entitled to indemnification shall include all persons who formerly
occupied any of the positions referred to and their respective heirs,
executors and administrators. Special legal counsel selected to make
determinations under this Article may be counsel for the Corporation.
Indemnification pursuant to this Article shall not be exclusive of any other
right of indemnification to which any person may be entitled, including
indemnification pursuant to a valid contract, indemnification by legal
entities other than the Corporation and indemnification under policies of
insurance purchased and maintained by the Corporation or others. However, no
person shall be entitled to indemnification by the Corporation to the extent
he is indemnified by another, including an insurer. The Corporation is
<PAGE>
authorized to purchase and maintain insurance against any liability it may
have under this Article VI or to protect any of the persons named above
against any liability arising from their service to the Corporation or any
other legal entity at the request of the Corporation regardless of the
Corporation's power to indemnify against such liability. The provisions of
this Article VI shall not be deemed to preclude the Corporation from entering
into contracts otherwise permitted by law with any individuals or legal
entities, including those named above. If any provision of this Article VI
or its application to any person or circumstance is held invalid by a court
of competent jurisdiction, the invalidity shall not affect other provisions
or applications of this Article VI, and to this end the provisions of this
Article VI are severable.
F. Application; Amendments. The provisions of this Article VI shall
apply to indemnification, advances and reimbursement for expenses made after
its adoption whether arising from conduct or events occurring before or after
such adoption. No amendment, modification or repeal of this Article VI shall
diminish the rights provided hereunder to any person arising from conduct or
events occurring before the adoption of such amendment, modification or
repeal.
<PAGE>
ARTICLE VII
SERIES D CUMULATIVE PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on November 23, 1977, 39,574 shares of Preferred Stock ($10 par
value) constitute a series of Preferred Stock designated as the Series D
Cumulative Preferred Stock (the "Series D Preferred Stock"), the shares of
which have the following voting powers, rights and preferences:
1. Dividends.
(a) The holders of shares of Series D Preferred Stock shall be
entitled to receive, if, when and as declared by the Board of Directors
of the Corporation, out of any funds legally available therefor, cash
dividends at the rate and payable on the dates hereinafter set forth.
The rate of dividends payable on the shares of Series D Preferred Stock
shall be $8.75 per share per annum and no more. Dividends shall be
payable in equal quarterly installments on the first day of each March,
June, September and December of each year, commencing the first day of
March of 1978. Dividends shall be cumulative and accrue on shares of
Series D Preferred Stock from and after the date of issue thereof.
Dividends payable on the first day of March of 1978 and on the date of
any redemption of shares of Series D Preferred Stock pursuant to
paragraph (a) of Section 3 hereof which is not the first day of March,
June, September or December shall be calculated on the basis of a 360-day
year and the actual number of days elapsed.
(b) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless a like proportionate dividend for
the same dividend period (ratably in proportion to the respective annual
dividend rates) shall have been declared and paid upon, or declared and
a sufficient sum set apart for the payment of such dividend upon, all
shares of Series D Preferred Stock outstanding. Unless full dividends,
to the extent that any amount of such dividends payable shall have become
determinable, on all shares of Series D Preferred Stock and any shares of
Prior Stock or Parity Stock for all past dividend periods and the then
current dividend period shall have been declared and paid, or declared
and a sum sufficient for the payment thereof set apart, and all mandatory
sinking fund payments required to be made pursuant to paragraph (b) of
Section 3 hereof have been made in full, no dividend whatsoever (other
than a dividend payable solely in Subordinate Stock) shall be declared or
paid upon, or any sum set apart for the payment of dividends upon, and no
other distribution shall be made upon, any shares of Junior Stock and no
shares of Junior Stock shall be purchased, redeemed or otherwise acquired
for value by the Corporation or by any Subsidiary and no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any such
shares by the Corporation or any Subsidiary.
(c) In addition to the provisions of paragraph (b) of this Section
l, no dividend whatsoever (other than a dividend payable solely in
Subordinate Stock) shall be declared or paid upon, or any sum set apart
for the payment of dividends upon, and no other distribution shall be
made upon, any shares of Junior Stock and no shares of Junior Stock shall
be purchased, redeemed or otherwise acquired for value by the Corporation
or any Subsidiary and no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption
or other acquisition for value of any such shares by the Corporation or
any Subsidiary unless the sum of (w) the amount of such dividends and
distributions subsequent to April 24, 1977 plus (x) the excess of (A) the
amount expended in making, or paid into or set apart or made available
for a sinking or other like fund for, any such purchase, redemption or
the acquisition for value subsequent to April 24, 1977 over (B) the sum
of (i) the net proceeds received from the issuance or sale of Subordinate
<PAGE>
Stock (other than to a Subsidiary) subsequent to April 24, 1977 plus (ii)
the principal amount of any indebtedness of the Corporation (other than
to a Subsidiary) which has been converted into Subordinate Stock
subsequent to April 24, 1977, is less than the sum of (y) $1,000,000 plus
(z) Consolidated Net Income earned after April 24, 1977; provided,
however that the provisions of this paragraph (c) shall not be applicable
in respect of (aa) the payment of any dividend, or the setting apart of
any sum for the payment of any dividend, on any shares of Junior Stock
within 60 days after the valid declaration thereof in compliance with
this paragraph (c), but the amount of all such dividends shall be taken
into account in any computation under clause (w) of this paragraph (c) or
(bb) the acquisition of any shares of Junior Stock by exchanging therefor
solely Subordinate Stock or from the proceeds of a substantially
concurrent sale for cash (other than to a Subsidiary) of Subordinate
Stock, and such shares so acquired by exchange or the amount expended
from such proceeds in making such acquisition shall not be taken into
account in any computation under clause (x) of this paragraph (c). For
the purposes of this paragraph (c), any dividend, distribution, purchase,
redemption or other acquisition paid or made other than in money shall be
valued as of the date thereof at its fair market value.
2. Voting Rights.
(a) The holders of shares of Series D Preferred Stock shall not be
entitled to any vote except to the extent provided herein or that such
holders are afforded a vote by the laws of the State of Virginia in
existence at the time any matter requiring such vote shall arise.
(b) The affirmative vote or consent of the holders of more than
sixty-six and two-thirds percent (66-2/3%), or such greater percentage as
shall at the time be required by law, of the outstanding shares of Series
D Preferred Stock (other than shares owned beneficially by the
Corporation or any Subsidiary), given in person or by proxy, either in
writing or at a meeting called for such purpose at which holders of
shares of Series D Preferred Stock shall vote separately as a class,
shall be necessary to effect any one or more of the following:
(i) Any amendment, alteration or repeal of any of the
provisions of this resolution or any of the other provisions of the
Articles of Incorporation or bylaws of the Corporation which affects
adversely the voting powers, rights or preferences of any shares of
Series D Preferred Stock or the holders thereof, it being understood
that any such amendment, alteration or repeal in order to increase the
number of Directors of the Corporation shall not be deemed to affect
adversely the voting powers, rights or preferences of any shares of
Series D Preferred Stock or the holders thereof;
(ii) The authorization of or the increase in the authorized
number of shares of Prior Stock;
(iii) The issue of shares of Prior Stock or Senior Stock, or the
issue of any debt obligations convertible into Prior Stock or Senior
Stock, if at the time of such issue, after giving effect thereto and
to the application of the proceeds therefrom, (x) the average of
Consolidated Net Income Available for Dividends for each of the two
fiscal years next preceding such issue shall be less than 150% of the
annual dividend requirements on all shares of Prior Stock and Parity
Stock except for (A) the annual dividend requirements on the
Corporation's Series B Cumulative Participating Preferred Stock
pursuant to Section 1 of the articles of serial designation therefor,
as now in effect, (B) the annual dividend requirements on the
Corporation's Series C Cumulative Participating Preferred Stock
pursuant to paragraph (b) of Section 1 of the articles of serial
designation therefor, as now in effect, and (C) the annual dividend
requirements on any other Prior Stock or Parity Stock issued in
<PAGE>
connection with the acquisition by the Corporation of any business,
properties or assets (by way of consolidation, merger, purchase or
otherwise) to the extent of any amount of such annual dividend
requirement that is not a specified dollar amount per share but is
computed by reference to the before or after tax earnings, profits or
income of or the net cash flow or other similar or related measure of
the financial performance of such business, properties or assets so
acquired during periods ending subsequent to the effective date of
such acquisition or (y) Underlying Equity shall be less than the
amount to which the holders of all outstanding shares of Series D
Preferred Stock, Prior Stock and Senior Stock would be entitled upon
the involuntary liquidation, dissolution or winding up of the affairs
of the Corporation;
(iv) Any sale, lease or other disposition of substantially all
of the properties and assets of the Corporation; or
(v) Any consolidation of the Corporation with or any merger of
the Corporation into any other corporation unless the corporation with
which the Corporation is consolidated or into which it is merged shall
have after such consolidation or merger no authorized or outstanding
shares of any class of capital stock ranking senior to or equally with
the Series D Preferred Stock as to dividends or as to rights in
liquidation, dissolution or winding up of the affairs of such
resulting corporation except such class or classes of capital stock
of the same (or a lesser) number of authorized and outstanding shares
having the same voting powers, rights and preferences as the classes
of Prior Stock and Senior Stock of the Corporation immediately
preceding such consolidation or merger and each holder of outstanding
shares of Series D Preferred Stock immediately preceding such
consolidation or merger shall receive or continue to hold the same
number of shares of capital stock in such resulting corporation,
having the same voting powers, rights and preferences as the Series
D Preferred Stock is entitled to.
Notwithstanding the foregoing, without the written consent of each
holder of shares of Series D Preferred Stock outstanding, no amendment,
alteration or repeal of any of the provisions of this resolution or any
of the other provisions of the Articles of Incorporation of the
Corporation shall be made which would:
(aa) decrease the rate of dividends per annum on shares of
Series D Preferred Stock;
(bb) alter the cumulative or preferential nature of the
dividends on shares of Series D Preferred Stock or the date from
which such dividends are cumulative and accrue;
(cc) alter the quarterly dividend payment dates for shares
of Series D Preferred Stock;
(dd) decrease the liquidation prices in the case of
voluntary or involuntary liquidation, dissolution or winding up
of the affairs of the Corporation for shares of Series D Preferred
Stock or affect adversely the rights and preferences of the shares
of Series D Preferred Stock or the holders thereof to receive
payment of such liquidation prices;
(ee) decrease the number of shares of Series D Preferred
Stock required to be redeemed on any sinking fund redemption date
through the operation of the mandatory sinking fund pursuant to
paragraph (b) of Section 3 hereof or the redemption price
<PAGE>
applicable to mandatory redemptions of shares of Series D
Preferred Stock pursuant to such paragraph or otherwise alter any
of the other provisions of this resolution relating to the
mandatory sinking fund except to increase such number of shares
or such redemption price;
(ff) decrease the redemption prices applicable to optional
redemptions of shares of Series D Preferred Stock pursuant to
paragraphs (a) or (c) of Section 3 hereof; or
(gg) decrease the percentage requirement stated in the first
sentence of this paragraph (b) or alter any of the provisions of
this subparagraph including clauses (aa) through (gg) hereof or
the next succeeding sentence.
In addition, without the written consent of each holder of outstanding
shares of Series D Preferred Stock, the Corporation shall not enter into
any plan of exchange of all of the shares of Series D Preferred Stock for
shares of any class of capital stock of any other corporation pursuant to
Section 13.1-69.1 of the Virginia Stock Corporation Act or any similar
provision.
(c) The holders of shares of Series D Preferred Stock shall also
have the right to elect two members of the Board of Directors of the
Corporation at any time six or more quarterly dividends on any shares of
Series D Preferred Stock shall be in arrears and unpaid, in whole or in
part, whether or not declared and whether or not any funds shall be or
have been legally available for the payment thereof, or the Corporation
shall for any four quarterly periods, whether or not consecutive, have
failed to make in full the required mandatory sinking fund payments
pursuant to paragraph (b) of Section 3 hereof.
In the event the holders of shares of Series D Preferred Stock shall
become entitled to elect two Directors as above provided, unless a
regular meeting of the stockholders of the Corporation is to be held
within 60 days thereof for the purpose of electing Directors, the
Corporation shall promptly thereafter cause the number of Directors of
the Corporation to be increased by two, and, within 30 days thereafter,
shall call a special meeting of holders of shares of Series D Preferred
Stock for the purpose of electing such Directors to take place at the
time specified in the notice of meeting, to be not more than 60 days
after such holders become so entitled to elect two Directors and not less
than 10 or more than 50 days after the date on which such notice is
mailed. If such special meeting shall not have been so called by the
Corporation, or such regular meeting shall not be so held, a special
meeting may be called for such purpose at the expense of the Corporation
by the holders of not less than 5% of the outstanding shares of Series D
Preferred Stock. Notice of any such special meeting shall be given by
the person or persons calling the same to the holders of shares of Series
D Preferred Stock by first class mail, postage prepaid, at their last
addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of outstanding
shares of Series D Preferred Stock, voting as a single class, shall elect
two members of the Board of Directors of the Corporation.
If a regular meeting of the stockholders of the Corporation for the
purpose of electing Directors is to be held within 60 days after the time
of the holders of shares of Series D Preferred Stock become so entitled
to elect two Directors, then the holders of shares of Series D Preferred
Stock shall be given notice thereof in the same manner as any other
stockholders of the Corporation entitled to vote thereat, and, at such
regular meeting, the holders of outstanding shares of Series D Preferred
Stock, voting as a single class, shall elect two members of the Board of
Directors.
At each regular or special meeting of the stockholders of the
Corporation called for the purpose of electing Directors of the
Corporation (other than a special meeting of stockholders called to elect
<PAGE>
Directors to fill vacancies created by the resignation, removal or death
of Directors other than Directors elected by the holders of outstanding
shares of Series D Preferred Stock, or any successor of any such
Director, or vacancies arising from an increase in the number of such
other Directors) subsequent to the calling of any such special or regular
meeting at which the holders of shares of Series D Preferred Stock shall
first be entitled to elect two Directors, the holders of outstanding
shares of Series D Preferred Stock, voting as a single class, shall elect
two members of the Board of Directors, and they shall be given notice
thereof in the same manner as any other stockholders of the Corporation
entitled to vote thereat.
Notwithstanding the foregoing provisions of this paragraph (c), at
such time as no dividends on any outstanding shares of Series D Preferred
Stock are in arrears and unpaid, in whole or in part, and all mandatory
sinking fund payments required to be made pursuant to paragraph (b) of
Section 3 hereof have been made in full, the voting power of the holders
of outstanding shares of Series D Preferred Stock shall cease, but always
subject to the same provisions of this paragraph (c) for the vesting of
such voting power upon the occurrence of like arrearages of dividends or
like failures to make mandatory sinking fund payments.
(d) The Directors (and any successor of any such Director pursuant
to paragraph (e) of this Section 2) elected by the holders of outstanding
shares of Series D Preferred Stock shall hold office until their
successors shall be elected; provided, however that their terms of office
shall automatically expire at such time as the voting power of holders of
outstanding shares of Series D Preferred Stock shall cease as provided in
paragraph (c) of this Section 2.
(e) If the office of any Director elected by the holders of
outstanding shares of Series D Preferred Stock (or any successor of any
such Director pursuant to this paragraph (e)) becomes vacant for any
reason, the remaining Director elected by the holders of shares of Series
D Preferred Stock may choose a successor who shall hold office for the
unexpired term in respect of which the vacancy occurred. If there shall
be vacancies in the offices of both Directors elected by the holders of
outstanding shares of Series D Preferred Stock, their successors shall be
elected by the holders of outstanding shares of Series D Preferred Stock
at a special meeting called for such purpose by the Corporation promptly
upon the occurrence of such vacancies, unless a regular meeting of
stockholders is to be held within 60 days thereof for the purpose of
electing Directors, to take place at the time specified in the notice of
meeting, to be not more than 60 days after the occurrence of such
vacancies and not less than 10 or more than 50 days after the date on
which such notice is mailed. If such special meeting shall not have been
so called by the Corporation, or such regular meeting shall not be so
held, a special meeting may be called for such purpose at the expense of
the Corporation by the holders of not less than 5% of the outstanding
shares of Series D Preferred Stock. Notice of any such special meeting
shall be given by the person or persons calling the same to the holders
of the shares of Series D Preferred Stock by first class mail, postage
prepaid, at their last addresses as shall appear on the stock transfer
records of the Corporation. At such special meeting the holders of
outstanding shares of Series D Preferred Stock, voting as a single class,
shall elect two Directors to fill such vacancies.
No Director elected by the holders of shares of Series D Preferred
Stock (or successor of any such Director) shall, during his term of
office, be removed, with or without cause, except upon the affirmative
vote of the holders of a majority of the outstanding shares of Series D
Preferred Stock.
(f) At any special or regular meeting of stockholders at which the
holders of the Series D Preferred Stock are entitled to vote, each
outstanding share of the Series D Preferred Stock shall entitle the
holder thereof to one vote, provided, however that shares then owned
beneficially by the Company or any Subsidiary shall not be entitled to
vote. The presence in person or by proxy of the holders of a majority of
<PAGE>
the outstanding shares of Series D Preferred Stock entitled to vote shall
be required at any such regular or special meeting to constitute a quorum
of such class, and the absence of a quorum of the holders of any other
class of Capital Stock entitled to vote thereat shall not prevent the
holders of outstanding shares of Series D Preferred Stock from electing
two Directors at such meeting. A vote of the holders of a majority of
the outstanding shares of Series D Preferred Stock present in person or
by proxy at any such regular or special meeting at which a quorum is
present shall govern. In the absence of a quorum of the holders of
outstanding shares of Series D Preferred Stock at any such regular or
special meeting, the holders of a majority of the outstanding shares of
Series D Preferred Stock entitled to vote present in person or by proxy
shall have the power to adjourn the election of Directors to be elected
by such class from time to time without notice other than announcement at
such meeting until such quorum shall be present, but any such adjournment
shall not be made beyond the date of the calling of the next regular or
special meeting of the stockholders of the Corporation or special meeting
of the holders of shares of Series D Preferred Stock.
3. Redemption.
(a) The Corporation may, at its option, redeem at any time all, or
from time to time any portion of, the shares of Series D Preferred Stock
outstanding at the applicable redemption prices set forth below per
share:
If redeemed during the twelve months period ending November 30:
Redemption Redemption
Year Price Year Price
1978 $ 108.75 1988 $ 104.15
1979 108.29 1989 103.69
1980 107.83 1990 103.23
1981 107.37 1991 102.77
1982 106.91 1992 102.31
1983 106.45 1993 101.85
1984 105.99 1994 101.39
1985 105.53 1995 100.93
1986 105.07 1996 100.47
1987 104.61
and thereafter at $100 per share, plus in each case dividends accrued to
the date fixed for redemption; provided, however, that no such redemption
may be effected prior to December 1, 1987, directly or indirectly, from
or in anticipation of moneys borrowed by or for the account of the
Company (including, without limitation, moneys borrowed by any
Subsidiary) or from the proceeds of any Sale and Leaseback Transaction or
any issue of Capital Stock (other than Subordinate Stock or Capital Stock
immediately convertible into Subordinate Stock, provided that upon
original issuance of such convertible Capital Stock the price at which it
is convertible into Subordinate Stock shall not exceed 125% of the
average price for the Subordinate Stock in the principal market for such
Subordinate Stock for the preceding 30 trading days or of the book value
per share of such Subordinate Stock (determined as of the date of the
Corporation's most recent audited balance sheet in accordance with
generally accepted accounting principles)) if such borrowed money or such
proceeds from such Sale and Leaseback Transaction has an effective
interest cost to the Corporation, or such Capital Stock has a dividend
<PAGE>
rate or cost to the Corporation, calculated in each case in accordance
with generally accepted financial practice, of less than 8-3/4% per
annum.
(b) As a mandatory sinking fund for the Series D Preferred Stock,
on the first day of March, June, September and December of each year,
commencing December 1, 1982 to and including September 1, 1997, the
Corporation shall redeem 600 shares (or the aggregate number of shares
outstanding if less than such number) of Series D Preferred Stock, and on
December 1, 1997 the Corporation shall redeem 4,000 shares (or the
aggregate number of shares outstanding if less than such number) of
Series D Preferred Stock, at a redemption price of $100 per share plus
dividends accrued to the date fixed for redemption. The dates on which
the Corporation shall be obligated to redeem shares of Series D Preferred
Stock pursuant to the provisions of the immediately preceding sentence
are hereinafter called "sinking fund redemption dates". The mandatory
sinking fund shall be cumulative so that if the Corporation shall fail to
redeem on any such sinking fund redemption date the full number of shares
then so required to be redeemed, the deficiency shall be added to the
number of shares required to be redeemed on the next succeeding sinking
fund redemption date. No optional redemption pursuant to paragraphs (a)
or (c) of this Section 3, nor any purchase or other acquisition, of
shares of Series D Preferred Stock shall entitle the Corporation to a
credit against the number of shares the Corporation shall be obligated to
redeem through the operation of the mandatory sinking fund on any such
sinking fund redemption date; provided, however, that, with the written
consent of a holder of shares of Series D Preferred Stock, the
Corporation shall have the right to apply, as a credit against the number
of shares required to be redeemed from such holder through the operation
of the mandatory sinking fund, any number of shares which the Corporation
may have previously acquired otherwise than through the operation of the
mandatory sinking fund from such holder and not theretofore applied as
such credit.
(c) As and for an optional sinking fund for the Series D Preferred
Stock, so long as there shall be no dividends on Series D Preferred Stock
in arrears and unpaid, in whole or in part, whether or not declared and
whether or not any funds shall be or have been legally available for the
payment thereof, and all mandatory sinking fund payments required to be
made pursuant to the provisions of paragraph (b) of this Section 3 have
been made in full, the Corporation may, at its option, redeem, at a
redemption price of $100 per share plus dividends accrued to the date
fixed for redemption, on any sinking fund redemption date which is the
first day of December, not less than 600 (or the aggregate number of
shares outstanding if, after giving effect to the mandatory sinking fund
requirement, less than such number) nor more than 2,400 shares of Series
D Preferred Stock. The optional sinking fund shall not be cumulative and
to the extent not availed of will terminate.
(d) In case less than all shares of Series D Preferred Stock
outstanding are to be redeemed, not more than 60 days prior to the date
fixed for redemption, the Corporation shall select the shares to be
redeemed. The Corporation shall prorate the total number of shares to be
so redeemed among the holders thereof in proportion, as nearly as may be,
to the number of shares registered in their respective names. In any
such proration, the Corporation shall make such adjustments, reallo-
cations and eliminations as it shall deem proper by increasing or
decreasing or eliminating the number of shares to be redeemed which would
be allocable to any one holder on the basis of exact proration by not
more than 10 shares to the end that the numbers of shares so prorated
shall be integral multiples of 10 shares. The Corporation in its
discretion may determine the particular certificates (if there are more
than one) representing shares registered in the name of a holder which
are to be redeemed.
<PAGE>
(e) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraphs (a), (b) or (c) of this Section
3 notice of redemption shall be given by first class mail, postage
prepaid, to the holders of record of the shares of the Series D Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of divi-
dends accrued to the date fixed for the redemption), the place or places
where certificates representing shares to be redeemed may be surrendered
and the paragraph or paragraphs of this Section 3 pursuant to which the
shares are to be redeemed. In the case of any redemption pursuant to
paragraph (a) of this Section 3 prior to December 1, 1987, the notice
shall demonstrate compliance with the provisions of such paragraph (a).
In case less than all outstanding shares are to be redeemed, the notice
of redemption shall also set forth the numbers of the certificates
representing shares to be redeemed and, in case less than all shares
represented by any such certificate are to be redeemed, the number of
shares represented by such certificate to be redeemed.
(f) If notice of redemption of any shares of Series D Preferred
Stock shall have been duly mailed as hereinabove provided, on or before
the date fixed for redemption the Corporation shall deposit in cash funds
sufficient to pay the redemption price (including dividends accrued to
the date fixed for redemption) of such shares in trust for the benefit of
the holders of shares to be redeemed with any bank or trust company in
the City of Richmond, State of Virginia, or Borough of Manhattan, City
and State of New York, having, or in the case of a Virginia bank or trust
company which is a subsidiary of a bank holding company registered under
the Bank Holding Company Act of 1956, as amended, whose parent holding
company has, capital and surplus aggregating at least $50,000,000 as of
the date of its most recent report of financial condition, named in such
notice, to be applied to the redemption of the shares so called for
redemption against surrender of the certificates representing shares so
redeemed for cancellation. From and after the time of such deposit all
shares for the redemption of which such deposit shall have been so made
shall, whether or not the certificates therefor shall have been
surrendered for cancellation, be deemed no longer to be outstanding for
any purpose and all rights with respect to such shares shall thereupon
cease and determine except the right to receive payment of the redemption
price (including dividends accrued to the date fixed for redemption), but
without interest. Any interest accrued on such funds shall be paid to
the Corporation from time to time. Any funds so deposited and unclaimed
at the end of five years from the date fixed for redemption shall be
repaid to the Corporation free of trust, and the holders of the shares
called for redemption who shall not have surrendered certificates
representing such shares prior to such repayment shall be deemed to be
unsecured creditors of the Corporation for the amount of the redemption
price (including dividends accrued to the date fixed for redemption)
thereof and shall look only to the Corporation for payment thereof,
without interest, subject to the laws of the State of Virginia.
(g) The Corporation shall also have the right to acquire shares of
Series D Preferred Stock otherwise than by redemption pursuant to
paragraphs (a), (b) or (c) of this Section 3 from time to time for such
consideration as may be acceptable to the holders thereof; provided,
however that if full dividends on all outstanding shares of Series D
Preferred Stock for all past dividend periods and the then current
dividend period shall not have been declared and paid or declared and a
sum sufficient for the payment thereof set apart or if all mandatory
sinking fund payments required to be made pursuant to the provisions of
paragraph (b) of this Section 3 have not been made in full, neither the
Corporation nor any Subsidiary shall so acquire any shares of Series D
Preferred Stock except in accordance with a purchase offer made on the
same terms to all holders of outstanding shares of Series D Preferred
Stock.
<PAGE>
(h) Shares of the Series D Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation shall not thereafter be disposed of
as shares of Series D Preferred Stock, but, upon issuance by the State
Corporation Commission of Virginia or any successor thereof of a
Certificate of Reduction, such shares shall become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series D Preferred Stock.
4. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, the holders of shares of the Series D
Preferred Stock then outstanding shall be entitled to be paid in cash out of
the net assets of the Corporation, including its capital, in the case of an
involuntary liquidation, dissolution or winding up of the affairs of the
Corporation, a liquidation price of the $100 per share or, in the case of a
voluntary liquidation, dissolution or winding up of the affairs of the
Corporation, an amount equal to the redemption price that would then be
applicable pursuant to clause (a) of Section 3 hereof, plus, in each case,
dividends accrued to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Common
Stock or any other class or series of Capital Stock ranking as to rights in
liquidation, dissolution or winding up of the affairs of the Corporation
junior to the Series D Preferred Stock, and, after payment to the holders of
shares of Series D Preferred Stock and to the holders of shares of other
classes and series of Preferred Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of Common Stock according to their respective rights. For the
purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of substantially all of the
Corporation's properties and assets shall, without further corporate action,
be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation. In case the net assets of the Corporation are insufficient to
pay to the holders of all outstanding shares of Series D Preferred Stock the
full amounts to which they are respectively entitled, the entire net assets
of the Corporation remaining shall be distributed ratably to the holders of
outstanding shares of Series D Preferred Stock and other classes and series
of Preferred Stock in proportion to the full amounts to which they are
respectively entitled.
5. Definitions. For the purposes of this resolution, the following
terms, unless the context other requires, shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means Capital Stock the holders of which are ordinarily
and generally, in the absence of contingencies, entitled to vote for the
election of a majority of the Board of Directors of the Corporation even
though the right so to vote has been suspended by the happening of such
a contingency.
"Consolidated Net Income" for any period means the amount of net
income (or net loss) of the Corporation and its consolidated
Subsidiaries, excluding the portion thereof, if any, allocable to
minority interests in such Subsidiaries for such period determined in
accordance with generally accepted accounting principles; provided,
however, that there shall not be included in Consolidated Net Income any
net income (or net loss) of any business, properties or assets acquired
after the date of issue of the shares of Series D Preferred Stock (by way
of merger, consolidation, purchase or otherwise) by the Corporation or
any Subsidiary for any period prior to the effective date of such
acquisition, whether such acquisition is accounted for as a pooling or
purchase.
"Consolidated Net Income Available for Dividends" for any period means
Consolidated Net Income, provided, however, that if Prior Stock or Senior
Stock is to be issued as a result of the consolidation with or merger
<PAGE>
into the Corporation or any Subsidiary of another corporation, or the
acquisition by the Corporation or any Subsidiary of substantially all the
properties and assets of another corporation (or division of another
corporation if such division has maintained books and records as an
accounting entity), the Corporation may, but need not, include on a pro
forma basis in the calculation of Consolidated Net Income Available for
Dividends in each of the next two preceding fiscal years the results of
operations, if any, of such other corporation (or such division) for the
periods involved and shall include on a pro forma basis in such
calculations the result of operations of any corporation which was
previously consolidated with or merged into the Corporation or a
Subsidiary and of any other corporation (or division) substantially all
the properties and assets of which were previously acquired by the
Corporation or a Subsidiary for the periods involved if such results were
included on a pro forma basis in any previous calculation.
"Corporation" includes corporations, associations, companies and
business trusts.
"Dividends Accrued" means an amount equal to the rate of dividends on
the shares of Series D Preferred Stock per annum computed from the date
of issue of the shares of Series D Preferred Stock to the date to which
reference is made, whether or not such amount or any part thereof shall
have been declared as dividends and whether there shall be or have been
any funds out of which such dividends might legally be paid, less the
amount of dividends declared and paid and, if any dividends have been
declared but not paid, the amount set apart for the payment of such
dividends.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to the Series D Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends equally
with the Series D Preferred Stock.
"Prior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation prior to the Series D Preferred Stock.
"Sale and Leaseback Transaction" means with respect to any property
and arrangement with any person whereby the Corporation or any Subsidiary
leases from such persons such property (except for a term of not more
than three years by the end of which time it is intended that the use of
such property by the lessee will be discontinued and except for leases of
property by the Corporation from a Subsidiary or by a Subsidiary from the
Corporation or another Subsidiary), which property has been or is to be
sold or transferred by the Corporation or such Subsidiary to such person
with the intention of taking back a lease of such property.
"Senior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation equally with the Series D Preferred Stock.
"Subordinate Stock" means any Capital Stock ranking as to dividends
and as to rights in liquidation, dissolution or winding up of the affairs
of the Corporation junior to the Series D Preferred Stock.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries.
<PAGE>
"Underlying Equity" means as of any time the portion of capital and
surplus of the Corporation (determined in accordance with generally
accepted accounting principles) that all holders of shares of Capital
Stock ranking as to rights in liquidation, dissolution or winding up of
the affairs of the Corporation junior to the Series D Preferred Stock
would be entitled to receive in the event of the involuntary liquidation,
dissolution or winding up of the affairs of the Corporation.
"Voting Stock", as applied to the capital stock of any corporation,
means stock of any class or classes (however designated) having ordinary
voting power for the election of a majority of the members of the board
of directors (or other governing body) of such corporation, other than
stock having such powers only by reason of the happening of a
contingency.
<PAGE>
ARTICLE VIII
SERIES K $3.375 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on October 27, 1986, 2,000,000 shares of Preferred Stock ($10 par
value) constitutes a series of Preferred Stock designated as the Series K
$3.375 Cumulative Convertible Exchangeable Preferred Stock (the "Series K
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series K Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series K
Preferred Stock shall be $3.375 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of February, May, August and November of each year (the "Payment
Dates"), commencing, in the case of any share of Series K Preferred
Stock, on that installment Payment Date which next follows the issuance
thereof. The initial dividend payment will be computed at the annual
rate for the period from the Issuance Date of Series K Preferred Stock to
the first installment Payment Date. Dividends shall be cumulative and
accumulate on the Series K Preferred Stock from and after the Issuance
Date. Dividends payable on the first installment Payment Date following
issuance and on the date fixed for any redemption of shares of Series K
Preferred Stock pursuant to Section C hereof which is not a Payment Date,
shall be calculated on the basis of a 360-day year and the actual number
of days elapsed.
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
K Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series K
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series K Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
K Preferred Stock are not entitled to vote.
<PAGE>
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series K
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series K Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series K Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series K Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series K Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series K Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series K Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series K Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series K Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
<PAGE>
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) The shares of Series K Preferred Stock are not redeemable
prior to November 1, 1988 unless the closing price of the Corporation's
Common Stock on the New York Stock Exchange shall have equalled or
exceeded 150% of the conversion price then in effect for at least 20
trading days within 30 consecutive trading days ending within five
trading days prior to the date notice of redemption is given. With
respect to redemption in that event prior to November 1, 1988 or with
respect to redemption on or after November 1, 1988 the Corporation may at
its option redeem all or any portion of the outstanding shares of Series
K Preferred Stock at a redemption price determined as follows: if
redeemed during the twelve months' period ending October 31 of each of
the following years, at the price per share indicated (in dollars):
Year Price Year Price
1987 $53.3750 1992 $51.6875
1988 53.0375 1993 51.3500
1989 52.7000 1994 51.0125
1990 52.3625 1995 50.6750
1991 52.0250 1996 50.3375
and thereafter at the price of $50 per share, plus in each case Dividends
Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series K
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
<PAGE>
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series K Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series K
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series K Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however that if full dividends on all the outstanding shares of
Series K Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
<PAGE>
acquire any shares of Series K Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series K Preferred Stock.
(6) Shares of Series K Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series K Preferred
Stock not issued on or within 30 days after the Issuance Date shall
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series K Preferred Stock.
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series K Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $50 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
K Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporation
action, be deemed a liquidation, dissolution or winding up of the affairs of
the Corporation. In case the net assets of the Corporation are insufficient
to pay to the holders of the outstanding shares of Series K Preferred Stock
the full amounts to which they are respectively entitled, the entire net
assets of the Corporation remaining shall be distributed ratably to the
holders of the outstanding shares of Series K Preferred Stock, other series
of Preferred Stock and classes of other Parity Stock in proportion to the
full amounts to which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series K Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series K
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series K Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $50 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.75 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price".)
(2) The holder of any outstanding shares of Series K Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series K
<PAGE>
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series K Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series K Preferred Stock. If more than one
share of the Series K Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series K Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series K Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series K Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series K Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series K Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
<PAGE>
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) of each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
<PAGE>
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series K Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series K Preferred Stock.
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series K Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however, that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent charges to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series K Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series K Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series K Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series K Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
<PAGE>
(11) Shares of Common Stock issued on conversion of shares of
Series K Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series K Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
K Preferred Stock.
(12) Shares of Series K Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series K
Preferred Stock.
F. Exchange Provisions.
(1) The Series K Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date beginning November 1,
1988 for Debentures to be issued under the indenture, dated as of October
24, 1986 (the "Indenture"), between the Corporation and Sovran Bank,
N.A., as Trustee. Holders of outstanding shares of Series K Preferred
Stock will be entitled to receive $50 principal amount of the Debentures
in exchange for each share of Series K Preferred Stock held by them at
the time of exchange. At such time (the "Effective Date" of the
exchange), the rights of the holders of Series K Preferred Stock as
stockholders of the Corporation shall cease (except the right to receive
on the date of exchange an amount equal to the amount of accumulated and
unpaid dividends to the date of exchange), and the person or persons
entitled to receive the Debentures issuable upon exchange shall be
treated for all purposes as the registered holder or holders of such
Debentures. The Corporation will give written notice of its intention to
exchange by first class mail, postage prepaid, to each holder of record
of the Series K Preferred Stock no less than 30 nor more than 60 days
prior to the date fixed for the exchange at his last address as shown on
the Corporation's stock transfer records. The notice will set forth the
Effective Date of the exchange and the place or places where certificates
representing shares to be exchanged shall be surrendered. The
Corporation will cause the Debentures to be authenticated on the
Effective Date of the exchange.
Upon surrender of the certificates for any share of Series K Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Time of the
Exchange all shares of Series K Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and determine except
the right to receive $50 principal amount of the Debentures in exchange
for each share of Series K Preferred Stock and (ii) become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series K Preferred Stock.
(2) The Debentures shall bear interest at a rate of 6-3/4% per
annum and shall be convertible at the option of the holder thereof into
shares of Common Stock. The number of shares of Common Stock issuable
upon conversion of each Debenture, the redemption provisions applicable
to the Debentures and the other terms of the Debentures, including the
form thereof, shall be as is set forth in the Indenture.
<PAGE>
G. Definitions. For the purpose of this amendment, the word
"corporation" shall be deemed to include corporations, associations,
companies and business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's 6-3/4% Convertible Subordinated
Debentures due November l, 2016 issued pursuant to the Indenture.
"Dividends Accumulated" means with respect to any shares of Series K
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series K Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series K Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series K Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
<PAGE>
ARTICLE IX
SERIES L $14.00 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on September 18, 1987, 1,000,000 shares of Preferred Stock ($10
par value) constitutes a series of Preferred Stock designated as the Series
L $14.00 Cumulative Convertible Exchangeable Preferred Stock (the "Series L
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series L Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series L
Preferred Stock shall be $14.00 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series L Preferred
Stock, on January 1, 1988. The initial dividend payment will be computed
at the annual rate for the period from the Issuance Date of Series L
Preferred Stock to the first installment Payment Date. Dividends shall
be cumulative and accumulate on the Series L Preferred Stock from and
after the Issuance Date. Dividends payable on the first installment
Payment Date following issuance and on the date fixed for any redemption
of shares of Series L Preferred Stock pursuant to Section C hereof which
is not a Payment Date, shall be calculated on the basis of a 360-day year
and the actual number of days elapsed.
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
L Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series L
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series L Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
L Preferred Stock are not entitled to vote.
<PAGE>
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series L
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series L Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series L Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series L Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series L Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series L Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series L Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series L Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series L Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
<PAGE>
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) The shares of Series L Preferred Stock are not redeemable
prior to October 1, 1989. With respect to redemption thereafter, the
Corporation may at its option redeem all or any portion of the
outstanding shares of Series L Preferred Stock at a redemption price
determined as follows: if redeemed during the twelve months' period
ending September 30 of each of the following years, at the price per
share indicated (in dollars):
Year Price Year Price
1990 $211.20 1994 $205.60
1991 209.80 1995 204.20
1992 208.40 1996 202.80
1993 207.00 1997 201.40
and thereafter at the price of $200 per share, plus in each case
Dividends Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series L
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
<PAGE>
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series L Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series L
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series L Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however, that if full dividends on all the outstanding shares
of Series L Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
acquire any shares of Series L Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series L Preferred Stock.
(6) Shares of Series L Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series L Preferred
Stock not issued on or within 30 days after the Issuance Date shall
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series L Preferred Stock.
<PAGE>
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series L Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $200 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
L Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporation
action, be deemed a liquidation, dissolution or winding up of the affairs of
the Corporation. In case the net assets of the Corporation are insufficient
to pay to the holders of the outstanding shares of Series L Preferred Stock
the full amounts to which they are respectively entitled, the entire net
assets of the Corporation remaining shall be distributed ratably to the
holders of the outstanding shares of Series L Preferred Stock, other series
of Preferred Stock and classes of other Parity Stock in proportion to the
full amounts to which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series L Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series L
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series L Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $200 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.00 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price".)
(2) The holder of any outstanding shares of Series L Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series L
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series L Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
<PAGE>
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series L Preferred Stock. If more than one
share of the Series L Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series L Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series L Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series L Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series L Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series L Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
<PAGE>
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) of each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series L Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series L Preferred Stock.
<PAGE>
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series L Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent charges to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series L Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series L Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series L Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series L Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
(11) Shares of Common Stock issued on conversion of shares of
Series L Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series L Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
L Preferred Stock.
<PAGE>
(12) Shares of Series L Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series L
Preferred Stock.
F. Exchange Provisions.
(1) The Series L Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date beginning October l,
1989 for Debentures to be issued under the indenture, dated as of October
24, 1986 (the "Indenture"), between the Corporation and Sovran Bank,
N.A., as Trustee as supplemented by a First Series Supplement dated as of
September 17, 1987. Holders of outstanding shares of Series L Preferred
Stock will be entitled to receive $200 principal amount of the Debentures
in exchange for each share of Series L Preferred Stock held by them at
the time of exchange. At such time (the "Effective Date" of the
exchange), the rights of the holders of Series L Preferred Stock as
stockholders of the Corporation shall cease (except the right to receive
on the date of exchange an amount equal to the amount of accumulated and
unpaid dividends to the date of exchange), and the person or persons
entitled to receive the Debentures issuable upon exchange shall be
treated for all purposes as the registered holder or holders of such
Debentures. The Corporation will give written notice of its intention to
exchange by first class mail, postage prepaid, to each holder of record
of the Series L Preferred Stock no less than 30 nor more than 60 days
prior to the date fixed for the exchange at his last address as shown on
the Corporation's stock transfer records. The notice will set forth the
Effective Date of the exchange and the place or places where certificates
representing shares to be exchanged shall be surrendered. The
Corporation will cause the Debentures to be authenticated on the
Effective Date of the exchange.
Upon surrender of the certificates for any share of Series L Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Time of the
Exchange all shares of Series L Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and terminate except
the right to receive $200 principal amount of the Debentures in exchange
for each share of Series L Preferred Stock and (ii) become authorized and
unissued shares of Preferred Stock which may be designated as shares of
any other series. No additional shares of Preferred Stock, however, may
be classified as Series L Preferred Stock.
(2) The Debentures shall bear interest at a rate of 7% per annum
and shall be convertible at the option of the holder thereof into shares
of Common Stock. The number of shares of Common Stock issuable upon
conversion of each Debenture, the redemption provisions applicable to the
Debentures and the other terms of the Debentures, including the form
thereof, shall be as is set forth in the Indenture.
G. Definitions. For the purpose of this amendment, the word "corpo-
ration" shall be deemed to include corporations, associations, companies and
business trusts and, unless the context otherwise requires, the following
terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
<PAGE>
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's 7% Convertible Subordinated
Debentures due October 1, 2017 issued pursuant to the Indenture.
"Dividends Accumulated" means with respect to any shares of Series L
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series L Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series L Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series L Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
<PAGE>
ARTICLE X
SERIES M PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on February 9, 1989, 150,000 shares of Preferred Stock ($10 par
value) constitutes a series of Preferred Stock designated as the Series M
Cumulative Participating Preferred Stock (the "Series M Preferred Stock"),
the shares of which have the following voting powers, limitations, rights and
preferences:
A. Dividends and Distributions.
(1) The holders of shares of the Series M Preferred Stock, in
preference to the holders of Common Stock, $.10 par value, of the
Corporation (the "Common Stock") and of any other junior stock, shall be
entitled to receive, if, when and as declared by the Board of Directors
of the Corporation out of funds legally available therefor, quarterly
dividends payable in cash on the fifteenth day (or, if not a business
day, the preceding business day) of January, April, July and October in
each year (each such date being referred to herein as a "Quarterly
Dividend Payment Date"), commencing on the first Quarterly Dividend
Payment Date after the first issuance of a share or fraction of a share
of the Series M Preferred Stock, in an amount per share (rounded to the
nearest cent) equal to the greater of (a) $1 or (b) subject to the
provision for adjustment hereinafter set forth, 1,000 times the aggregate
per share amount of all cash dividends, and 1,000 times the aggregate per
share amount (payable in kind) of all non-cash dividends or other
distributions, other than a dividend payable in shares of Common Stock,
or a subdivision of the outstanding shares of Common Stock (by
reclassification or otherwise), declared on the Common Stock since the
immediately preceding Quarterly Dividend Payment Date or, with respect to
the first Quarterly Dividend Payment Date, since the first issuance of
any share or fraction of a share of the Series M Preferred Stock. In the
event the Corporation shall at any time after the first issuance of any
share or fraction of a share of the Series M Preferred Stock declare or
pay any dividend on Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding
shares of Common Stock (by reclassification or otherwise than by payment
of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount per share to
which holders of shares of the Series M Preferred Stock shall be entitled
under clause (b) of the preceding sentence shall be adjusted by
multiplying the amount per share to which holders of shares of the Series
M Preferred Stock were entitled immediately prior to such event under
clause (b) of the preceding sentence by a fraction the numerator of which
is the number of shares of Common Stock outstanding immediately after
such event and the denominator of which is the number of shares of Common
Stock that were outstanding immediately prior to such event.
(2) The Corporation shall declare a dividend or distribution on
the Series M Preferred Stock as provided in paragraph (1) of this Section
immediately after it declares a dividend or distribution on the Common
Stock (other than a dividend payable in shares of Common Stock); provided
that, in the event no dividend or distribution shall have been declared
on the Common Stock during the period between any Quarterly Dividend
Payment Date and the next subsequent Quarterly Dividend Payment Date, a
dividend of $1 per share on the Series M Preferred Stock shall
nevertheless be payable on such subsequent Quarterly Dividend Payment
Date.
(3) Dividends shall begin to accrue and be cumulative on
outstanding shares of the Series M Preferred Stock from the Quarterly
<PAGE>
Dividend Payment Date next preceding the date of issue of such shares of
the Series M Preferred Stock, unless the date of issue of such shares is
prior to the record date for the first Quarterly Dividend Payment Date,
in which case dividends on such shares shall begin to accrue from the
date of issue of such shares, or unless the date of issue is a Quarterly
Dividend Payment Date or is a date after the record date for the
determination of holders of shares of the Series M Preferred Stock
entitled to receive a quarterly dividend and before such Quarterly
Dividend Payment Date, in either of which events such dividends shall
begin to accrue and be cumulative from such Quarterly Dividend Payment
Date. Accrued but unpaid dividends shall not bear interest. Dividends
paid on the shares of the Series M Preferred Stock in an amount less than
the total amount of such dividends at the time accrued and payable on
such shares shall be allocated pro rata on a share-by-share basis among
all such shares at the time outstanding. The Board of Directors of the
Corporation may fix a record date for the determination of holders of
shares of the Series M Preferred Stock entitled to receive payment of a
dividend or distribution declared thereon, which record date shall be not
more than 60 days prior to the date fixed for the payment thereof.
B. Voting Rights. The holders of shares of the Series M Preferred Stock
shall have the following voting rights:
(1) Subject to the provision for adjustment hereinafter set forth,
each share of the Series M Preferred Stock shall entitle the holder
thereof to 1,000 votes on all matters submitted to a vote of the
shareholders of the Corporation. In the event the Corporation shall at
any time after the first issuance of any share or fraction of a share of
the Series M Preferred Stock declare or pay any dividend on Common Stock
payable in shares of Common Stock, or effect a subdivision or combination
or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of
Common Stock) into a greater or lesser number of shares of Common Stock,
then in each such case the number of votes per share to which holders of
shares of the Series M Preferred Stock shall be entitled shall be
adjusted by multiplying the number of votes per share to which holders of
shares of the Series M Preferred Stock were entitled immediately prior to
such event by a fraction the numerator of which is the number of shares
of Common Stock outstanding immediately after such event and the
denominator of which is the number of shares of Common Stock that were
outstanding immediately prior to such event.
(2) Except as otherwise provided herein or by law, the holders of
shares of the Series M Preferred Stock and the holders of shares of
Common Stock shall vote together as one class on all matters submitted to
a vote of shareholders of the Corporation.
(3) Except as set forth herein, holders of the Series M Preferred
Stock shall have no special voting rights and their consent shall not be
required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for taking any corporate action.
C. Certain Restrictions.
(1) Whenever quarterly dividends or other dividends or
distributions payable on the Series M Preferred Stock as provided in
Section A are in arrears, thereafter and until all accrued and unpaid
dividends and distributions, whether or not declared, on shares of the
Series M Preferred Stock outstanding shall have been paid in full, the
Corporation shall not:
(a) declare, set apart or pay dividends on or make any other
distributions on the Common Stock or any shares of stock ranking
junior (either as to dividends or upon liquidation, dissolution or
winding up) to the Series M Preferred Stock;
(b) declare or pay dividends on or make any other distributions
on any shares of stock ranking on a parity (either as to dividends or
upon liquidation, dissolution or winding up) with the Series M
Preferred Stock, except dividends paid ratably on the Series M
<PAGE>
Preferred Stock and all such parity stock on which dividends are
payable or in arrears in proportion to the total amounts to which the
holders of all such shares are then entitled; or
(c) redeem or purchase or otherwise acquire for consideration
shares of the Series M Preferred Stock, any such parity stock or any
stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) with the Series M Preferred Stock, or set
aside for or pay to any sinking fund therefor.
(2) The Corporation shall not permit any subsidiary of the
Corporation to purchase or otherwise acquire for consideration any shares
of stock of the Corporation unless the Corporation could, under paragraph
(1) of this Section C, purchase or otherwise acquire such shares at such
time and in such manner.
D. Reacquired Shares. Any shares of the Series M Preferred Stock,
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof. All
such shares shall upon their cancellation become authorized but unissued
shares of Preferred Stock, $10 par value, and may be reissued as a new series
or a part of a new series of Preferred Stock, $10 par value, to be created by
resolution or resolutions of the Board of Directors.
E. Consolidation, Merger, etc. In case the Corporation shall enter into
any consolidation, merger, combination or other transaction in which the
shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case the shares
of the Series M Preferred Stock shall at the same time be similarly exchanged
or changed in an amount per share (subject to the provision for adjustment
hereinafter set forth) equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or
exchanged. In the event the Corporation shall at any time after the first
issuance of any share of the Series M Preferred Stock declare or pay any
dividend on Common Stock payable in shares of Common Stock, or affect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise) into a greater or lesser
number of shares of Common Stock, then in each such case the amount set forth
in the preceding sentence with respect to the exchange or change of shares of
the Series M Preferred Stock shall be adjusted by multiplying such amount by
a fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to
such event.
F. Liquidation, Dissolution or Winding Up. Upon any liquidation,
dissolution or winding up of the Corporation, no distribution shall be made
(a) to the holders of shares of Common Stock or of stock ranking junior
(either as to dividends or upon liquidation, dissolution or winding up) to
the Series M Preferred Stock unless, prior thereto, the holders of shares of
the Series M Preferred Stock shall have received an amount per share equal to
the greater of (i) $150,000 or (ii) subject to the provision for adjustment
hereinafter set forth, 1,000 times the aggregate amount to be distributed per
share to holders of Common Stock, plus in each such case an amount equal to
accrued and unpaid dividends and distributions thereon, whether or not
declared, to the date of such payment, or (b) to the holders of stock ranking
on a parity (either as to dividends or upon liquidation, dissolution or
winding up) with the Series M Preferred Stock, except distributions made
ratably on the Series M Preferred Stock and all other such parity stock in
proportion to the total amounts to which the holders of all such shares are
entitled upon such liquidation, dissolution or winding up. In the event the
Corporation shall at any time after the first issuance of any share or
fraction of a share of the Series M Preferred Stock declare or pay any
dividend on Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of
Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of
Common Stock, then in each such case the aggregate amount per share to which
<PAGE>
holders of shares of the Series M Preferred Stock shall be entitled under the
provision of clause (a) of the preceding sentence shall be adjusted by
multiplying the amount per share to which holders of shares of the Series M
Preferred Stock would have been entitled immediately prior to such event
under the provision of clause (a) of the preceding sentence by a fraction the
numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of
shares of Common Stock that were outstanding immediately prior to such event.
G. No Redemption. The shares of Series M Preferred Stock shall not be
redeemable.
H. Amendment. The Amended and Restated Articles of Incorporation of the
Corporation shall not be amended in any manner which would materially alter
or change the powers, preferences or special rights of the Series M Preferred
Stock so as to affect them adversely without the affirmative vote of the
holders of more than two-thirds of the outstanding shares of the Series M
Preferred Stock, voting together as a single voting group.
<PAGE>
ARTICLE XI
SERIES N $14.00 CUMULATIVE CONVERTIBLE EXCHANGEABLE
PREFERRED STOCK
Pursuant to a resolution adopted by the Board of Directors of the
Corporation on December 14, 1989, 280,000 shares of Preferred Stock ($10.00
par value) constitutes a series of Preferred Stock designated as the Series
N $14.00 Cumulative Convertible Exchangeable Preferred Stock (the "Series N
Preferred Stock"), the shares of which have the following voting powers,
limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series N Preferred
Stock shall be entitled to receive, if, when and as declared by the Board
of Directors of the Corporation, out of any funds legally available
therefor, cash dividends at the rate and payable on the dates hereinafter
set forth. The rate of dividends payable on the shares of Series N
Preferred Stock shall be $14.00 per share per annum and no more.
Dividends shall be payable in equal quarterly installments on the first
day of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series N Preferred
Stock, on April 1, 1990. The initial dividend payment will be computed
at the annual rate for the period from the Issuance Date of Series N
Preferred Stock to the first installment Payment Date. Dividends shall
be cumulative and accumulate on the Series N Preferred Stock from and
after the Issuance Date. Dividends payable on the first installment
Payment Date following issuance and on the date fixed for any redemption
of shares of Series N Preferred Stock pursuant to Section C hereof which
is not a Payment Date, shall be calculated on the basis of a 360-day year
and the actual number of days elapsed. Dividends will be payable to
holders of record as they appear on the stock books of the Corporation on
such record dates as shall be fixed by the Board of Directors of the
Corporation (the "Record Dates").
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of Parity
Stock for any dividend period unless all dividends for all past dividend
periods have been declared and paid upon, or declared and a sufficient
sum set apart for the payment of such dividend upon, all shares of Series
N Preferred Stock outstanding.
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series N
Preferred Stock and any outstanding shares of Parity Stock due for all
past dividend periods shall have been declared and paid, or declared and
a sum sufficient for the payment thereof set apart, then, subject to the
rights of holders of shares of previously issued series of Preferred
Stock, (a) no dividend (other than a dividend payable solely in Junior
Stock) shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no other
distribution shall be made upon any shares of Junior Stock; (c) no shares
of Junior Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies shall be
paid into or set apart or made available for a sinking or other like fund
for the purchase, redemption or other acquisition for value of any shares
of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of shares
of Series N Preferred Stock shall not be entitled (a) to vote on any
matter or (b) to receive notice of, or to participate in, any meeting of
stockholders of the Corporation at which the holders of shares of Series
N Preferred Stock are not entitled to vote.
<PAGE>
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series N
Preferred Stock, voting as a separate voting group, shall be required for
the adoption of any amendment to the Articles of Incorporation, or any
bylaw, that materially adversely changes the preferences, limitations and
rights of the Series N Preferred Stock (it being expressly stated that an
increase in the number of Directors of the Corporation is not such an
adverse change, provided that this statement is made as a matter of
clarification and shall not be read as implying that in its absence such
an increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of shares of,
a class of Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the holders of
the outstanding shares of Series N Preferred Stock, voting as a separate
voting group, shall be required for authorization of, or an increase in
the authorized number of shares of, any class of Parity Stock. Except
for cases covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series N Preferred Stock are entitled under
the Virginia Stock Corporation Act to vote as a separate voting group on
an amendment of the Articles of Incorporation, a plan of merger, or a
plan of share exchange, the vote required for the approval of such
amendment shall be a majority of all votes cast on the amendment, plan of
merger or plan of share exchange by the holders of the Series N Preferred
Stock at a meeting at which the holders of a majority of the outstanding
shares of Series N Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series N Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a single
voting group (including a vote of the class of Preferred Stock as a
separate voting group) on any amendment of the Articles of Incorporation,
plan of merger or plan of share exchange, the vote required for the
approval of such amendment, plan of merger or plan of share exchange
shall be a majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the shares included in such
voting group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented in
person or by proxy; provided that if at the time of such vote there shall
be outstanding any share of a series included in such voting group which
under the Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to approve
the amendment, plan of merger or plan of share exchange by such majority
vote, the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of all the
votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of Series N Preferred
Stock shall also have the right, voting together with the holders of any
other outstanding shares of Voting Preferred Stock (as hereinafter
defined) as a separate voting group, to elect two members of the Board of
Directors of the Corporation at any time six or more quarterly dividends
on any shares of Voting Preferred Stock shall be in arrears and unpaid,
in whole or in part, whether or not declared and whether or not any funds
shall be or have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the Series N Preferred Stock
and each other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with other
shares of Voting Preferred Stock) with respect to the election of
directors upon substantially similar arrearages of dividends. In such
event, unless a regular meeting of the stockholders of the Corporation is
to be held within 60 days thereof for the purpose of electing Directors,
the Corporation shall promptly thereafter cause the number of Directors
of the Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
<PAGE>
outstanding shares of Voting Preferred Stock for the purpose of electing
such Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than 50
days after the date on which such notice is mailed. If such special
meeting shall not have been so called by the Corporation, or such regular
meeting shall not be so held, a special meeting may be called for such
purpose at the expense of the Corporation by the holders of not less than
10% of the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the person or
persons calling the same to the holders of the outstanding shares of the
Voting Preferred Stock by first-class mail, postage prepaid, at their
last addresses as shall appear on the stock transfer records of the
Corporation. At any such special meeting the holders of the outstanding
shares of Voting Preferred Stock, voting as a separate voting group with
each share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the stockholders
of the Corporation for the purpose of electing Directors is to be held
within 60 days after the time the holders of the outstanding shares of
Voting Preferred Stock become so entitled to elect two Directors, then
the holders of the outstanding shares of Voting Preferred Stock shall be
given notice thereof in the same manner as other stockholders of the
Corporation entitled to vote thereat; and at such regular meeting, the
holders of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect two
members of the Board of Directors. The right of the holders of the
Voting Preferred Stock, voting as a separate voting group, to elect two
members of the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting Preferred
Stock are in arrears and unpaid, in whole or in part, at which time (i)
the voting power of the holders of the outstanding shares of Voting
Preferred Stock so to elect two directors shall cease, but always subject
to the same provisions of this paragraph (4) for the vesting of such
voting power upon the occurrence of each and every like arrearage of
dividends, and (ii) the term of office of each member of the Board of
Directors who was elected pursuant to this paragraph (4) shall
automatically expire.
C. Redemption.
(1) After December 31, 1991, the Corporation may at its option
redeem all or any portion of the outstanding shares of Series N Preferred
Stock at a redemption price determined as follows: if redeemed during the
twelve months' period ending September 30 of each of the following years,
at the price per share indicated (in dollars):
Year Price Year Price
1992 208.40 1995 204.20
1993 207.00 1996 202.80
1994 205.60 1997 201.40
and thereafter at the price of $200 per share, plus in each case
Dividends Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series N
Preferred Stock are to be redeemed, not more than 60 days prior to the
date fixed for redemption the Corporation shall select the shares to be
redeemed. The Corporation shall select by proration, by lot or otherwise
the shares to be so redeemed among the holders thereof. The Corporation
shall make such adjustments, reallocations and eliminations as it shall
deem proper by increasing or decreasing or eliminating the number of
shares to be redeemed which would be allocable to any one holder on the
basis of exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the numbers of
shares so prorated shall be integral multiples of ten shares. The
<PAGE>
Corporation in its discretion may select the particular certificates (if
there are more than one) representing shares registered in the name of a
holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C, notice of
redemption shall be given by first class mail, postage prepaid, to the
holders of record of the outstanding shares of the Series N Preferred
Stock to be redeemed at their last addresses as shown by the
Corporation's stock transfer records. The notice of redemption shall set
forth the number of shares to be redeemed, the date fixed for redemption,
the applicable redemption price or prices (including the amount of
Dividends Accumulated to the date fixed for the redemption), and the
place or places where certificates representing shares to be redeemed may
be surrendered. In case less than all outstanding shares are to be
redeemed, the notice of redemption shall also set forth the numbers of
the certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be redeemed,
the number of shares represented by such certificate to be redeemed.
(4) If notice of redemption of any outstanding shares of Series N
Preferred Stock shall have been duly mailed as herein provided, on or
before the date fixed for redemption the Corporation shall deposit in
cash funds sufficient to pay the redemption price (including Dividends
Accumulated to the date fixed for redemption) of such shares in trust for
the benefit of the holders of shares to be redeemed with any bank or
trust company in the City of Richmond, State of Virginia, or Borough of
Manhattan, City and State of New York, having capital and surplus
aggregating at least $50,000,000 as of the date of its most recent report
of financial condition, named in such notice, to be applied to the
redemption of the shares so called for redemption against surrender for
cancellation of the certificates representing shares so redeemed. From
and after the time of such deposit all shares for the redemption of which
such deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with respect to
such shares shall thereupon cease and determine except (i) the right to
receive payment of the redemption price (including Dividends Accumulated
to the date fixed for redemption), but without interest, and (ii) in the
case of any such deposit before the date fixed for redemption, the right
to convert such shares into shares of Common Stock, which conversion
right shall continue to be exercisable until, but not after, the close of
business on the date fixed for redemption. Any interest earned on funds
so deposited shall be paid to the Corporation from time to time. Any
funds so deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of trust,
and the holders of the shares called for redemption who have not
surrendered certificates representing such shares prior to such repayment
shall be deemed to be unsecured creditors of the Corporation for the
amount of the redemption price (including Dividends Accumulated to the
date fixed for redemption) thereof and shall look only to the Corporation
for payment thereof, without interest, subject to the laws of the
Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series N Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to time
for such consideration as may be acceptable to the holders thereof;
provided, however, that if full dividends on all the outstanding shares
of Series N Preferred Stock for all past dividend periods shall not have
been declared and paid or declared and a sum sufficient for the payment
thereof set apart, neither the Corporation nor any Subsidiary shall so
acquire any shares of Series N Preferred Stock except in accordance with
a purchase offer made on the same terms to all the holders of the
outstanding shares of Series N Preferred Stock.
(6) Shares of Series N Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series N Preferred
Stock not issued on or within 30 days after the Issuance Date shall
<PAGE>
become authorized and unissued shares of Preferred Stock which may be
designated as shares of any other series. No additional shares of
Preferred Stock, however, may be classified as Series N Preferred Stock.
D. Liquidation. In the event of liquidation, dissolution or winding up
of the affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series N Preferred Stock then outstanding shall
be entitled to be paid in cash out of the net assets of the Corporation,
including its capital, a liquidation payment of $200 per share, plus, in each
case, Dividends Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of Junior
Stock and, after payment to the holders of the outstanding shares of Series
N Preferred Stock and to the holders of shares of other series of Preferred
Stock and classes of other Parity Stock of the amounts to which they are
respectively entitled, the balance of such assets, if any, shall be paid to
the holders of the Common Stock according to their respective rights. For
the purposes of the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other corporation
nor the sale, lease or other disposition of all or substantially all of the
Corporation's properties and assets shall, without further corporate action,
be deemed a liquidation, dissolution or winding up of the affairs of the
Corporation. In case the net assets of the Corporation are insufficient to
pay to the holders of the outstanding shares of Series N Preferred Stock the
full amounts to which they are respectively entitled, the entire net assets
of the Corporation remaining shall be distributed ratably to the holders of
the outstanding shares of Series N Preferred Stock, other series of Preferred
Stock and classes of other Parity Stock in proportion to the full amounts to
which they are respectively entitled.
E. Conversion.
(1) Each holder of any outstanding shares of Series N Preferred
Stock shall have the right, at any time, to convert any of such shares
into shares of Common Stock. Furthermore, as to any shares of Series N
Preferred Stock called for redemption, each such holder shall have the
right at any time prior to the close of business on the date fixed for
redemption (unless default shall be made by the Corporation in the
payment of the redemption price in which case such right of conversion
shall continue uninterrupted) to convert any of such shares into shares
of Common Stock. The number of shares of Common Stock into which each
share of Series N Preferred Stock shall be convertible shall be equal to
the number arrived at by dividing $200 by the conversion price per share
of the Common Stock fixed or determined as hereinafter provided. Such
conversion price shall initially be $40.00 per share, subject to the
adjustments hereinafter provided (such price as adjusted at any time
being hereinafter called the "Conversion Price").
(2) The holder of any outstanding shares of Series N Preferred
Stock may exercise the conversion right provided in paragraph (1) above
as to all or any portion of the shares he holds by delivering to the
Corporation during regular business hours, at the principal office of the
Corporation or at such other place as may be designated in writing by the
Corporation, the certificate or certificates for the shares to be
converted, duly endorsed or assigned in blank or endorsed or assigned to
the Corporation (if required by it), accompanied by (a) written notice
stating that the holder elects to convert such shares and stating the
name or names (with address and applicable social security or other tax
identification number) in which the certificate or certificates for
shares of Common Stock are to be issued and (b) in the case of conversion
after the record date for the payment of dividends on the Series N
Preferred Stock, as determined by the Board of Directors of the
Corporation, but before the next Payment Date, an amount equal to the
full dividend installment to be paid on the next Payment Date
attributable to the shares of Series N Preferred Stock to be converted.
Conversion shall be deemed to have been effected on the date (the
"Conversion Date") when such delivery is made. As promptly as
practicable thereafter the Corporation shall issue and deliver to or upon
the written order of such holder, at such office or other place
<PAGE>
designated by the Corporation, a certificate or certificates for the
number of full shares of Common Stock to which he is entitled and a check
or other order for the payment of cash due with respect to any fraction
of a share, as provided in paragraph (3) below. The person in whose name
the certificate or certificates for shares of Common Stock are to be
issued shall be deemed to have become a stockholder of record on the
Conversion Date, unless the transfer books of the Corporation are closed
on that date, in which event he shall be deemed to have become a
stockholder of record on the next succeeding date on which the transfer
books are open; but the Conversion Price shall be that in effect on the
Conversion Date.
(3) The Corporation shall not issue any fraction of a share upon
conversion of shares of the Series N Preferred Stock. If more than one
share of the Series N Preferred Stock shall be surrendered for conversion
at any time by the same holder, the number of full shares of Common Stock
issuable upon conversion thereof shall be computed on the basis of the
total number of shares of Series N Preferred Stock so surrendered. If
any fractional interest in a share of Common Stock would be deliverable
upon conversion, the Corporation shall make an adjustment therefor in
cash based on the Fair Market Value, on the Conversion Date, of one share
of Common Stock. The "Fair Market Value" of one share of Common Stock,
as used in this Section E shall, if the Common Stock is traded in the
over-the-counter market, be deemed to be the mean between the asked and
bid prices on the date the value is required to be determined, as
reported by NASDAQ or any similar service, and if the Common Stock is
listed and traded on a national stock exchange, be deemed to be the
closing price of the Common Stock for such day derived from the New York
Stock Exchange Composite Tape, or if there be no New York Stock Exchange
Composite Tape, any similar service; provided, however, that if the
Common Stock is not traded on such date, then the Fair Market Value shall
be determined, in the manner hereinabove set forth, on the most recent
preceding business day on which the Common Stock was traded.
(4) The issuance of Common Stock on conversion of outstanding
shares of Series N Preferred Stock shall be made by the Corporation
without charge for expenses or for any tax in respect of the issuance of
such Common Stock, but the Corporation shall not be required to pay any
tax which may be payable in respect of any transfer involved in the
issuance and delivery of shares of Common Stock in any name other than
that of the holder of record on the books of the Corporation of the
outstanding shares of Series N Preferred Stock converted, and the
Corporation shall not be required to issue or deliver any certificate for
shares of Common Stock unless and until the person requesting the
issuance thereof shall have paid to the Corporation the amount of such
tax or shall have established to the satisfaction of the Corporation that
such tax has been paid.
(5) The Conversion Price shall be subject to the following
adjustments.
(a) Whenever the Corporation shall (i) pay a dividend on its
outstanding shares of Common Stock in shares of its Common Stock or
subdivide or otherwise split its outstanding shares of Common Stock,
or (ii) combine its outstanding shares of Common Stock into a smaller
number of shares, the Conversion Price in effect at the effective date
of the happening of such event shall be adjusted so that the holders
of the Series N Preferred Stock, upon conversion of all thereof
immediately following such event, would be entitled to receive the
same aggregate number of shares of Common Stock as they would have
been entitled to receive immediately following such event if such
shares of Series N Preferred Stock had been converted immediately
prior thereto, or if there is a record date in respect of such event,
immediately prior to such record date.
(b) In case the Corporation shall issue rights, warrants or
options to all holders of its Common Stock entitling them (for a
period expiring within 90 days after the record date mentioned below)
<PAGE>
to subscribe for or purchase shares of Common Stock at a price per
share less than the Current Market Value (as hereinafter defined) per
share of Common Stock on the record date mentioned below, the
Conversion Price shall be adjusted so that the same shall equal the
price determined by multiplying the Conversion Price in effect
immediately prior to the issuance of such rights, warrants or options
by a fraction, the numerator of which shall be the number of shares
of Common Stock outstanding at the close of business on the date of
issuance of such rights, warrants or options plus the number of shares
which the aggregate exercise price of the shares of Common Stock
called for by all such rights, warrants or options (excluding any
theretofore exercised) would purchase at such Current Market Value and
the denominator of which shall be the number of shares of Common Stock
outstanding at the close of business on the date of issuance of such
rights, warrants or options plus the number of additional shares of
Common Stock called for by all such rights, warrants or options
(excluding any theretofore exercised). Such adjustment shall be made
whenever such rights, warrants or options are issued and shall be
retroactively effective as of immediately after the record date for
the determination of stockholders entitled to receive such rights,
warrants or options. For the purposes of this Section E(5), the
"Current Market Value" per share of Common Stock on any date shall be
deemed to be the average of the Fair Market Value (as defined in
Section E(3)) on each of the 20 consecutive trading days commencing
40 trading days before such date (a trading day being a day on which
securities are traded in the over-the-counter market or, if the Common
Stock is then listed on any national stock exchange, on such
exchange).
(c) Whenever the Corporation shall make a distribution to
holders of Common Stock of evidences of its indebtedness or assets
(excluding dividends and distributions paid in cash out of funds
available for dividends in accordance with applicable law), or rights,
warrants or options to subscribe for or purchase securities of the
Corporation (other than those referred to in subdivision (b) of this
paragraph (5)), the Conversion Price immediately prior to such
distribution shall be adjusted by multiplying such Conversion Price
by a fraction, (i) the numerator of which shall be the denominator,
hereinbelow described, less the fair value (as conclusively determined
in good faith by the Board of Directors of the Corporation) at the
time of such distribution of that portion of the evidences of
indebtedness, assets, or the rights, warrants or options, distributed
which is applicable to one share of Common Stock, and (ii) the
denominator of which shall be the Current Market Value per share of
Common Stock on the next full business day after the record date fixed
for the determination of the holders of the Common Stock entitled to
such distribution. Such adjustment shall be retroactively effective
as of immediately after such record date.
(6) Notwithstanding any of the foregoing provisions of this
Section E, no adjustment of the Conversion Price shall be made if the
Corporation shall issue (i) Common Stock or rights, warrants or options
to purchase Common Stock pursuant to one or more stock purchase plans,
stock option plans, stock purchase contracts, incentive compensation
plans, or other remuneration plans for employees (including officers) of
the Corporation or its Subsidiaries adopted or approved by the Board of
Directors of the Corporation before or after the adoption of this
resolution or (ii) rights, warrants or options to purchase Common Stock
or other capital stock convertible into Common Stock pursuant to one or
more plans (the "Share Rights Plans") which in connection with certain
acquisitions of an interest in the Corporation may permit the holders of
such rights, warrants or options to subscribe for or to purchase shares
of Common Stock or such other capital stock at a price per share less
than the then Current Market Value per share of Common Stock. The
Corporation shall not adopt any Share Rights Plans unless in connection
therewith the Corporation provides that the holders of Series N Preferred
Stock will be entitled to receive substantially similar rights, warrants
or options upon conversion of Series N Preferred Stock.
<PAGE>
(7) In any case in which this Section E provides that an
adjustment of the Conversion Price shall become effective retroactively
immediately after a record date for an event, the Corporation may defer
until the occurrence of such event (i) issuing to the holder of any
shares of Series N Preferred Stock converted after such record date and
before the occurrence of such event that number of shares of Common Stock
issuable upon such conversion that shall be in addition to the number of
shares of Common Stock which were issuable upon such conversion
immediately before the adjustment in the Conversion Price required in
respect of such event, and (ii) paying to such holder any cash in lieu of
a fractional share pursuant to this Section E.
(8) Anything in this Section E to the contrary notwithstanding, no
adjustment in the Conversion Price shall be required unless such
adjustment would require an increase or decrease of greater than one
percent in such price; provided, however, that any adjustments which by
reason of this paragraph (8) are not required to be made shall be carried
forward and taken into account in making subsequent adjustments. All
calculations under this Section E shall be made to the nearest cent.
(9) Whenever the Conversion Price and subsequent changes to be
made therein are adjusted pursuant to this Section E, the Corporation
shall (i) promptly place on file at its principal office and at the
office of each transfer agent for the Series N Preferred Stock, if any,
a statement, signed by the Chairman or President of the Corporation and
by its Treasurer, showing in detail the facts requiring such adjustment
and a computation of the adjusted Conversion Price, and shall make such
statement available for inspection by stockholders of the Corporation,
and (ii) cause a notice to be mailed to each holder of record of the
outstanding shares of Series N Preferred Stock stating that such
adjustment has been made and setting forth the adjusted Conversion Price.
Unless the change in the Conversion Price is caused as a result of action
described in Section E(5)(a), the statement shall be accompanied by a
letter from the Corporation's independent public accountants stating that
the change has been made in accordance with the provisions of this
Article.
(10) In the event of any reclassification or recapitalization of
the outstanding shares of Common Stock (except a change in par value, or
from par value to no par value, or subdivision or other split or
combination of shares), or in case of any consolidation or merger to
which the Corporation is a party, except a merger in which the
Corporation is the surviving corporation and which does not result in any
such reclassification or recapitalization of the outstanding Common Stock
of the Corporation, or in case of any sale or conveyance to another
corporation of all or substantially all of the property of the
Corporation, effective provision shall be made by the Corporation or by
the successor or purchasing corporation (i) that the holder of each share
of Series N Preferred Stock then outstanding shall thereafter have the
right to convert such share into the kind and amount of stock and other
securities and property receivable, upon such reclassification,
recapitalization, consolidation, merger, sale or conveyance, by a holder
of the number of shares of Common Stock of the Corporation into which
such share of Series N Preferred Stock might have been converted
immediately prior thereto, and (ii) that there shall be subsequent
adjustments of the Conversion Price which shall be equivalent, as nearly
as practicable, to the adjustments provided for in this Section E. The
provisions of this paragraph (10) shall similarly apply to successive
reclassifications, charges, consolidations, mergers, sales or
conveyances.
(11) Shares of Common Stock issued on conversion of shares of
Series N Preferred Stock shall be issued as fully paid shares and shall
be nonassessable by the Corporation. The Corporation shall, at all
times, reserve and keep available for the purpose of effecting the
conversion of the outstanding shares of Series N Preferred Stock such
number of its duly authorized shares of Common Stock as shall be
sufficient to effect the conversion of all outstanding shares of Series
N Preferred Stock.
<PAGE>
(12) Shares of Series N Preferred Stock converted as provided
herein shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No additional
shares of Preferred Stock, however, may be classified as Series N
Preferred Stock.
F. Exchange Provisions.
(1) The Series N Preferred Stock is exchangeable in whole only at
the option of the Corporation on any Payment Date after December 31,
1991, for Debentures to be issued under the indenture, dated as of
October 24, 1986 between the Corporation and Sovran Bank, N.A., as
Trustee as supplemented by a First Series Supplement dated as of
September 17, 1987 and a Second Series Supplement dated as of December 1,
1989 (such indenture as supplemented by the First Series Supplement and
the Second Series Supplement, the "Indenture"). Holders of outstanding
shares of Series N Preferred Stock will be entitled to receive $200
principal amount of the Debentures in exchange for each share of Series
N Preferred Stock held by them at the time of exchange. At such time
(the "Effective Date" of the exchange), the rights of the holders of
Series N Preferred Stock as stockholders of the Corporation shall cease
(except the right to receive on the date of exchange an amount equal to
the amount of accumulated and unpaid dividends to the date of exchange),
and the person or persons entitled to receive the Debentures issuable
upon exchange shall be treated for all purposes as the registered holder
or holders of such Debentures. The Corporation will give written notice
of its intention to exchange by first class mail, postage prepaid, to
each holder of record of the Series N Preferred Stock no less than 30 nor
more than 60 days prior to the date fixed for the exchange at his last
address as shown on the Corporation's stock transfer records. The notice
will set forth the Effective Date of the exchange and the place or places
where certificates representing shares to be exchanged shall be
surrendered. The Corporation will cause the Debentures to be
authenticated on the Effective Date of the exchange.
Upon surrender of the certificates for any share of Series N Preferred
Stock to be exchanged in accordance with the requirements set forth in
such notice, such shares shall be exchanged by the Corporation into
Debentures, as stated above. From and after the Effective Date of the
exchange all shares of Series N Preferred Stock shall, whether or not the
certificates therefor shall have been surrendered for cancellation, (i)
be deemed no longer to be outstanding for any purpose, and all rights
with respect to such shares shall thereupon cease and terminate except
the right to receive $200 principal amount of the Debentures in exchange
for each share of Series N Preferred Stock and the right to received
accumulated and unpaid dividends to the date of exchange and (ii) become
authorized and unissued shares of Preferred Stock which may be designated
as shares of any other series. No additional shares of Preferred Stock,
however, may be classified as Series N Preferred Stock.
(2) The Debentures shall bear interest at a rate of 7% per annum
and shall be convertible at the option of the holder thereof into shares
of Common Stock. The number of shares of Common Stock issuable upon
conversion of each Debenture, the redemption provisions applicable to the
Debentures and the other terms of the Debentures, including the form
thereof, shall be as is set forth in the Indenture.
G. Definitions. For the purpose of this amendment, the word
"corporation" shall be deemed to include corporations, associations,
companies and business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
<PAGE>
"Common Stock" means the Common Stock of the Corporation ($.10 par
value), the voting powers, rights and preferences of which are set forth
in the Articles of Incorporation of the Corporation.
"Conversion Date" is defined in Section E(2) hereof.
"Conversion Price" is defined in Section E(1) hereof.
"Current Market Value" is defined in Section E(5)(b) hereof.
"Debentures" means the Corporation's Second Series 7% Convertible
Subordinated Debentures due October 1, 2017 issued pursuant to the
Indenture.
"Dividends Accumulated" means with respect to any shares of Series N
Preferred Stock, an amount equal to the dividends thereon at the dividend
rate per annum computed from the Issuance Date to the date to which
reference is made, whether such amount or any part thereof shall have
been declared as dividends and whether there shall be or have been any
funds out of which such dividends might legally be paid, less the amount
of dividends declared and paid thereon and, if any dividends thereon have
been declared but not paid, the amount set apart for the payment of such
dividends.
"Fair Market Value" is defined in Section E(3) hereof.
"Indenture" is defined in Section F(1) hereof.
"Issuance Date" shall mean the first date of issuance of any shares
of Series N Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up of the affairs of the
Corporation junior to Series N Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or as
to rights in liquidation, dissolution or winding up the affairs of the
Corporation equally with the Series N Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation and one
or more Subsidiaries. For this purpose, "Voting Stock" means stock of
any class or classes (however designated) having ordinary voting power
for the election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock having
such powers only by reason of the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
Exhibit 3(b)
JAMES RIVER CORPORATION OF VIRGINIA
Articles of Amendment to
the Amended and Restated Articles of Incorporation
Designating the
Series O 8-1/4% Cumulative Preferred Stock ($10.00 par value)
I. The name of the Corporation is James River Corporation of Virginia.
II. Pursuant to Sections 13.1-639 and 13.1-689 of the Virginia Stock
Corporation Act, the Board of Directors of the Corporation on September 8,
1992 duly adopted the following amendment to the Amended and Restated
Articles of Incorporation of the Corporation, adding Article XII thereto
which sets forth the designation and number of shares of a series of
Preferred Stock of the Corporation and certain preferences, limitations and
relative rights thereof and authorized a senior executive officer of the
Corporation to determine the remaining preferences, limitations and relative
rights thereof within limits specifically prescribed by the Board of
Directors and such senior executive officer made such determinations on
September 30, 1992:
Article XII
230,000 authorized but unissued shares of Preferred Stock ($10.00 par
value) are designated as a series of Preferred Stock to be called the Series
O 8-1/4% Cumulative Preferred Stock (the "Series O Preferred Stock"), with
the following voting powers, limitations, rights and preferences:
A. Dividends.
(1) The holders of the outstanding shares of Series O Preferred
stock shall be entitled to receive, if, when and as declared by the
Board of Directors of the Corporation, and when not prohibited by
law, cash dividends at the rate and payable on the dates
hereinafter set forth. The rate of dividends payable on the shares
of Series O Preferred Stock shall be $41.25 per share per annum
(rounded upward to the nearest whole $.01) and no more. Dividends
shall be payable in equal quarterly installments on the first day
of January, April, July and October of each year (the "Payment
Dates"), commencing, in the case of any share of Series O Preferred
Stock, on January 1, 1993. The initial dividend payment will be
computed at the annual rate for the period from the Issuance Date
of Series O Preferred Stock to the first installment Payment Date.
Dividends shall be cumulative and accumulate on the Series O
Preferred Stock from and after the Issuance Date. Dividends
payable on the first installment Payment Date following issuance
and on the date fixed for any redemption of shares of Series O
Preferred Stock pursuant to Section C hereof which is not a Payment
Date, shall be calculated on the basis of a 360-day year and the
actual number of days elapsed. Dividends will be payable to
holders of record as they appear on the stock books of the
Corporation on such record dates as shall be fixed by the Board
Directors of the Corporation (the "Record Dates").
(2) No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any shares of
Parity Stock for any dividend period unless all dividends for all
past dividend periods have been declared and paid upon, or declared
and a sufficient sum set apart for the payment of such dividend
upon, all shares of Series O Preferred Stock outstanding.
E-2
<PAGE>
(3) Unless full dividends (to the extent that the amount thereof
shall have become determinable) on all outstanding shares of Series
O Preferred Stock and any outstanding shares of Parity Stock due
for all past dividend periods shall have been declared and paid, or
declared and a sum sufficient for the payment thereof set apart,
then, subject to the right of holders of shares of previously
issued series of Preferred Stock, (a) no dividend (other than a
dividend payable solely in Junior Stock) shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any
shares of Junior Stock; (b) no other distribution shall be made
upon any shares of Junior Stock; (c) no shares of Junior Stock
shall be purchased, redeemed or otherwise acquired for value by the
Corporation or by any Subsidiary; and (d) no monies shall be paid
into or set apart or made available for a sinking or other like
fund for the purchase, redemption or other acquisition for value of
any shares of Junior Stock by the Corporation or any Subsidiary.
B. Voting Rights.
(1) Except for the voting rights expressly conferred by this
Section B and except to the extent provided by law, the holders of
shares of Series O Preferred Stock shall not be entitled (a) to
vote on any matter or (b) to receive notice of, or to participate
in, any meeting of stockholders of the Corporation at which the
holders of shares of Series O Preferred Stock are not entitled to
vote.
(2) The approval of more than two-thirds of the votes entitled to
be cast by the holders of the outstanding shares of the Series O
Preferred Stock, voting as a separate voting group, shall be
required for the adoption of any amendment to the Articles of
Incorporation, or any bylaw, that materially adversely changes the
preferences, limitations and rights of the Series O Preferred Stock
(it being expressly stated that an increase in the number of
Directors of the Corporation is not such an adverse change,
provided that this statement is made as a matter of clarification
and shall not be read as implying that in its absence such an
increase would institute such an adverse change) or for the
authorization of, or the increase in the authorized number of
shares of, a class of Capital Stock other than Junior Stock and
Parity Stock. The approval of a majority of the votes entitled to
be cast by the holders of the outstanding shares of Series O
Preferred Stock, voting as a separate voting group, shall be
required for authorization of, or an increase in the authorized
number of shares of, any class of Parity Stock. Except for cases
covered by the two preceding sentences of this paragraph (2),
whenever the holders of the Series O Preferred Stock are entitled
under the Virginia Stock Corporation Act to vote as a separate
voting group on an amendment of the Articles of Incorporation, a
plan of merger, or a plan of share exchange, the vote required for
the approval of such amendment shall be a majority of all votes
cast on the amendment, plan of merger or plan of share exchange by
the holders of the Series O Preferred Stock at a meeting at which
the holders of a majority of the outstanding shares of Series O
Preferred Stock are represented in person or by proxy.
(3) Whenever the holders of the Series O Preferred Stock are
entitled under the Virginia Stock Corporation Act to vote together
with the holders of one or more other series of Preferred Stock as
a single voting group (including a vote of the class of Preferred
Stock as a separate voting group) on any amendment of the Articles
of Incorporation, plan of merger or plan of share exchange, the
vote required for the approval of such amendment, plan of merger or
<PAGE>
plan of share exchange shall be a majority of all votes cast on the
amendment, plan of merger or plan of share exchange by the holders
of the shares included in such voting group at a meeting at which
the holders of a majority of the outstanding shares included in
such voting group are represented in person or by proxy; provided
that if at the time of such vote there shall be outstanding any
share of a series included in such voting group which under the
Articles of Incorporation or otherwise under the Virginia State
Corporation Act is not authorized as part of such voting group to
approve the amendment, plan of merger or plan of share exchange by
such majority vote, the vote required for its approval of such
amendment, plan of merger or plan of share exchange shall be more
than two-thirds of all the votes entitled to be cast by such voting
group.
(4) The holders of the outstanding shares of Series O Preferred
Stock shall also have the right, voting together with the holders
of any other outstanding shares of Voting Preferred Stock (as
hereinafter defined) as a separate voting group, to elect two
members of the Board of Directors of the Corporation at any time
six or more quarterly dividends on any shares of Voting Preferred
Stock shall be in arrears and unpaid, in whole or in part, whether
or not declared and whether or not any funds shall be or have been
legally available for payment thereof. For this purpose, "Voting
Preferred Stock" shall mean the Series O Preferred Stock and each
other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with
other shares of Voting Preferred Stock) with respect to the
election of directors upon substantially similar arrearages of
dividends. In such event, unless a regular meeting of the
stockholders of the Corporation is to be held within 60 days
thereof for the purpose of electing Directors, the Corporation
shall promptly thereafter cause the number of Directors of the
Corporation to be increased by two, and, within 30 days thereafter,
shall call a special meeting of the holders of the outstanding
shares of Voting Preferred Stock for the purpose of electing such
Directors to take place at the time specified in the notice of the
meeting, to be not more than 60 days after such holders become so
entitled to elect two Directors and not less than ten nor more than
50 days after the date on which such notice is mailed. If such
special meeting shall not have been so called by the Corporation,
or such regular meeting shall not be so held, a special meeting may
be called for such purpose at the expense of the Corporation by the
holders of not less than 10% of the outstanding shares of any
series of Voting Preferred Stock; and notice of any such special
meeting shall be given by the person or persons calling the same to
the holders of the outstanding shares of the Voting Preferred Stock
by first-class mail, postage prepaid, at their last addresses as
shall appear on the stock transfer records of the Corporation. At
any such special meeting the holders of the outstanding shares of
Voting Preferred Stock, voting as a separate voting group with each
share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the
stockholders of the Corporation for the purpose of electing
Directors is to be held within 60 days after the time the holders
of the outstanding shares of Voting Preferred Stock become so
entitled to elect two Directors, then the holders of the
outstanding shares of Voting Preferred Stock shall be given notice
thereof in the same manner as other stockholders of the Corporation
entitled to vote thereat; and at such regular meeting, the holders
of the outstanding shares of Voting Preferred Stock, voting as a
separate voting group with each share having one vote, shall elect
two members of the Board of Directors. The right of the holders of
the Voting Preferred Stock, voting as a separate voting group, to
elect two members of the Board of Directors of the Corporation
<PAGE>
shall continue until such time as no dividends on any outstanding
shares of Voting Preferred Stock are in arrears and unpaid, in
whole or in part, at which time (i) the voting power of the holders
of the outstanding shares of Voting Preferred Stock so to elect two
directors shall cease, but always subject to the same provisions of
this paragraph (4) for the vesting of such voting power upon the
occurrence of each and every like arrearage of dividends, and (ii)
the term of office of each member of the Board of Directors who was
elected pursuant to this paragraph (4) shall automatically expire.
C. Redemption.
(1) The shares of Series O Preferred Stock are not redeemable
prior to October 1, 1997. The Corporation may, at its option,
redeem shares of Series O Preferred Stock, in whole or in part, at
any time from time to time on or after October 1, 1997 at a
redemption price of $500 per share, plus in each case Dividends
Accumulated to the date fixed for redemption.
(2) In case less than all of the outstanding shares of Series O
Preferred Stock are to be redeemed, not more than 60 days prior to
the date fixed for redemption the Corporation shall select the
shares to be redeemed. The Corporation shall select by proration,
by lot or otherwise the shares to be so redeemed among the holders
thereof. The Corporation shall make such adjustments,
reallocations and eliminations as it shall deem proper by
increasing or decreasing or eliminating the number of shares to be
redeemed which would be allocable to any one holder on the basis of
exact proration, selection by lot or any such other method of
selection by not more than ten shares to the end that the number of
shares so prorated shall be integral multiples of ten shares. The
Corporation in its discretion may elect the particular certificates
(if there are more than one) representing shares registered in the
name of a holder that are to be redeemed.
(3) Not less than 30 nor more than 60 days prior to the date fixed
for any redemption pursuant to paragraph (1) of this Section C,
notice of redemption shall be given by first-class mail, postage
prepaid, to the holders of record of the outstanding shares of the
Series O Preferred Stock to be redeemed at their last addresses as
shown by the Corporation's stock transfer records. The notice of
redemption shall set forth the number of shares to be redeemed, the
date fixed for redemption, the applicable redemption price or
prices (including the amount of Dividends Accumulated to the date
fixed for the redemption), and the place or places where
certificates representing shares to be redeemed may be surrendered.
In case less than all outstanding shares are to be redeemed, the
notice of redemption shall also set forth the numbers of the
certificates representing shares to be redeemed and, in case less
than all shares represented by any such certificate are to be
redeemed, the number of shares represented by such certificate to
be redeemed.
(4) If notice of redemption of any outstanding shares of Series O
Preferred Stock shall have been duly mailed as herein provided, on
or before the date fixed for redemption the Corporation shall
deposit in cash funds sufficient to pay the redemption price
(including Dividends Accumulated to the date fixed for redemption)
of such shares in trust for the benefit of the holders of shares to
be redeemed with any bank or trust company in the City of Richmond,
State of Virginia, or Borough of Manhattan, City and State of New
<PAGE>
York, having capital and surplus aggregating at least $50,000,000
as of the date of its most recent report of financial condition,
named in such notice, to be applied to the redemption of the shares
so called for redemption against surrender for cancellation of the
certificates representing shares so redeemed. From and after the
time of such deposit all shares for the redemption of which such
deposit shall have been made shall, whether or not the certificates
therefor shall have been surrendered for cancellation, be deemed no
longer to be outstanding for any purpose, and all rights with
respect to such shares shall thereupon cease and determine except
the right to receive payment of the redemption price (including
Dividends Accumulated to the date fixed for redemption), but
without interest. Any interest earned on funds so deposited shall
be paid to the Corporation from time to time. Any funds so
deposited and unclaimed at the end of three years from the date
fixed for redemption shall be repaid to the Corporation free of
trust, and the holders of the shares called for redemption who have
not surrendered certificates representing such shares prior to such
repayment shall be deemed to be unsecured creditors of the
Corporation for the amount of the redemption price (including
Dividends Accumulated to the date fixed for redemption) thereof and
shall look only to the Corporation for payment thereof, without
interest, subject to the laws of the Commonwealth of Virginia.
(5) The Corporation shall also have the right to acquire
outstanding shares of Series O Preferred Stock otherwise than by
redemption pursuant to paragraph (1) of this Section C from time to
time for such consideration as may be acceptable to the holders
thereof.
(6) Shares of Series O Preferred Stock purchased, redeemed or
otherwise acquired by the Corporation and shares of Series O
Preferred Stock not issued on or within 30 days after the Issuance
Date shall become authorized and unissued shares of Preferred Stock
which may be designated as shares of any other series. No
additional shares of Preferred Stock, however, may be classified as
Series O Preferred Stock.
D. Conversion.
The holders of shares of Series O Preferred Stock shall not have
any rights to convert such shares into shares of any other class or
series of capital stock of the Corporation.
E. Liquidation.
In the event of liquidation, dissolution or winding up of the
affairs of the Corporation, whether voluntary or involuntary, the
holders of the shares of the Series O Preferred Stock then
outstanding shall be entitled to be paid in cash out of the net
assets of the Corporation, including its capital, a liquidation
payment of $500 per share, plus, in each case, Dividends
Accumulated to the date of payment, and no more, before any
distribution or payment shall be made to the holders of shares of
Junior Stock and, after payment to the holders of the outstanding
shares of Series O Preferred Stock and to the holders of shares of
other series of Preferred Stock and classes of other Parity Stock
of the amounts to which they are respectively entitled, the balance
of such assets, if any, shall be paid to the holders of the Common
Stock according to their respective rights. For the purposes of
the preceding sentence, neither the consolidation of the
Corporation with nor the merger of the Corporation into any other
corporation nor the sale, lease or other disposition of all or
substantially all of the Corporation's properties and assets shall,
<PAGE>
without further corporation action, be deemed a liquidation,
dissolution or winding up of the affairs of the Corporation. In
case the net assets of the Corporation are insufficient to pay to
the holders of the outstanding shares of Series O Preferred Stock
the full amounts to which they are respectively entitled, the
entire net assets of the Corporation remaining shall be distributed
ratably to the holders of the outstanding shares of Series O
Preferred Stock, other series of Preferred Stock and classes of
other Parity Stock in proportion to the full amounts to which they
are respectively entitled.
F. Definitions.
For the purpose of this amendment, the word "corporation" shall be
deemed to include corporations, associations, companies and
business trusts and, unless the context otherwise requires, the
following terms shall have the following meanings:
"Capital Stock" means any capital stock of any class or series
(however designated) of the Corporation.
"Dividends Accumulated" means with respect to any shares of Series
O Preferred Stock, an amount equal to the dividends thereon at the
dividend rate per annum computed from the Issuance Date to the date
to which reference is made, whether such amount or any part thereof
shall have been declared as dividends and whether there shall be or
have been any funds out of which such dividends might legally be
paid, less the amount of dividends declared and paid hereon and, if
any dividends thereon have been declared but not paid, the amount
set apart for the payment of such dividends.
"Issuance Date" shall mean the first date of issuance of any shares
of Series O Preferred Stock.
"Junior Stock" means any Capital Stock ranking as to dividends or
as to rights in liquidation, dissolution or winding up of the
affairs of the Corporation junior to Series O Preferred Stock.
"Parity Stock" means any Capital Stock ranking as to dividends or
as to rights in liquidation, dissolution or winding up the affairs
of the Corporation equally with the Series O Preferred Stock.
"Payment Date" is defined in Section A(1) hereof.
"Record Date" is defined in Section A(1) hereof.
"Subsidiary" means any corporation a majority of the outstanding
Voting Stock of which is owned, directly or indirectly, by the
Corporation or by one or more Subsidiaries or by the Corporation
and one or more Subsidiaries. For this purpose, "Voting Stock"
means stock of any class or classes (however designated) having
ordinary voting power for the election of a majority of the members
of the board of directors (or other governing body) of such
corporation, other than stock having such powers only by reason of
the happening of a contingency.
"Voting Preferred Stock" is defined in Section B(4) hereof.
III. This amendment was adopted by the Board of Directors of the
Corporation without stockholder action and stockholder action was not
required.
September 30, 1992
Exhibit 3(c)
JAMES RIVER CORPORATION OF VIRGINIA
____________________
Articles of Amendment to
the Amended and Restated Articles of Incorporation
Designating the
Series P 9% Cumulative Convertible Preferred Stock
(Par Value $10.00 Per Share)
__________________
I. The name of the Corporation is James River Corporation
of Virginia (the "Corporation").
II. Pursuant to Sections 13.1-639 and 13.1-689 of the
Virginia Stock Corporation Act, the Board of Directors of the
Corporation effective as of June 10, 1994 duly adopted the
following amendment to the Amended and Restated Articles of
Incorporation of the Corporation, adding Article XIII thereto
which sets forth the designation and number of shares of a series
of Preferred Stock of the Corporation and certain preferences,
limitations and relative rights thereof and authorized a senior
executive officer of the Corporation to determine the remaining
preferences, limitations and relative rights thereof within
limits specifically prescribed by the Board of Directors and such
senior executive officer made such determinations on June 21,
1994.
Article XIII
166,667 authorized but unissued shares of Preferred Stock
($10.00 par value) are designated as a series of Preferred Stock
to be called the Series P 9% Cumulative Convertible Preferred
Stock (the "DECS"), with the following voting powers,
limitations, rights and preferences:
A. Dividends. (1) The holders of the DECS shall be
entitled to receive when, as and if declared by the Board of
Directors of the Corporation out of funds legally available
therefor, cumulative preferential dividends from the issue date
of such shares, at the annual rate of $155.25 per share (rounded
upward to the nearest whole $.01), and no more, payable quarterly
for each share held, payable in arrears on the first day of each
January, April, July and October, respectively (each such date
being hereinafter referred to as a "Dividend Payment Date") or,
if any Dividend Payment Date is not a business day, then the
Dividend Payment Date shall be the next succeeding business day;
provided, however, that with respect to any dividend period
during which a redemption occurs, the Corporation may, at its
option, declare accrued dividends to, and pay such dividends on,
the redemption date, in which case such dividends would be
payable on the redemption date in cash to the holders of the DECS
as of the record date for such dividend payment and such accrued
dividends would not be included in the calculation of the related
Call Price (as hereinafter defined). Each dividend on the shares
of the DECS shall be payable to holders of record as they appear
on the stock books of the Corporation on such record dates as
shall be fixed by the Board of Directors of the Corporation. The
first dividend payment shall be for the period from the issue
date of the DECS to and including September 30, 1994 and shall be
payable on October 1, 1994. Dividends (or amounts equal to
accrued and unpaid dividends) payable on the DECS for any period
other than a quarterly dividend period shall be computed on the
basis of a 360-day year of twelve 30-day months.
E-3
<PAGE>
Dividends on the DECS shall accrue (whether or not the
Corporation has earnings, whether or not there are funds legally
available for the payment of such dividends and whether or not
such dividends are declared) on a daily basis from the previous
Dividend Payment Date, except that the first dividend shall
accrue from the date of issuance of the DECS. Dividends
accumulate to the extent they are not paid on the Dividend
Payment Date for the quarter for which they accrue. Accumulated
unpaid dividends shall not bear interest.
(2) No dividend whatsoever shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any
shares of the DECS or Parity Stock for any dividend period unless
all dividends for all past dividend periods have been declared
and paid upon, or declared and a sufficient sum set apart for the
payment of such dividends upon, all shares of the DECS and Parity
Stock outstanding.
(3) Unless full cumulative dividends (to the extent
that the amount thereof shall have become determinable) on all
outstanding shares of the DECS and any outstanding shares of
Parity Stock due for all past dividend periods shall have been
declared and paid, or declared and a sum sufficient for the
payment thereof set apart, then, subject to the rights of holders
of shares of previously issued series of Preferred Stock (a) no
dividend (other than a dividend payable solely in Junior Stock)
shall be declared or paid upon, or any sum set apart for the
payment of dividends upon, any shares of Junior Stock; (b) no
other distribution shall be made upon any shares of Junior Stock;
(c) no shares of Junior Stock or any other series of Preferred
Stock shall be purchased, redeemed or otherwise acquired for
value by the Corporation or by any Subsidiary; and (d) no monies
shall be paid into or set apart or made available for a sinking
or other like fund for the purchase, redemption or other
acquisition for value of any shares of Junior Stock by the
Corporation or any Subsidiary.
(4) Any dividend payment made on the DECS shall be
distributed pro rata to the holders entitled thereto and be
credited first against the earliest accrued but unpaid dividend
due with respect to the DECS.
B. Voting Rights. (1) The holders of shares of the DECS
shall have the right with the holders of the Common Stock to vote
in the election of Directors of the Corporation and upon each
other matter coming before any meeting of the shareholders on the
basis of 85.47 votes for each share held. The holders of the
DECS and the holders of Common Stock shall vote together as a
single voting group except as otherwise set forth herein or as
otherwise provided by law or by the Amended and Restated Articles
of Incorporation of the Corporation.
(2) The approval of more than two-thirds of the votes
entitled to be cast by the holders of the outstanding shares of
the DECS, voting as a separate voting group, shall be required
for the adoption of any amendment to the Articles of
Incorporation, or any bylaw, that materially adversely changes
the preferences, limitations and rights of the DECS (it being
expressly stated that an increase in the number of Directors of
the Corporation is not such an adverse change, provided that this
statement is made as a matter of clarification and shall not be
read as implying that in its absence such an increase would
constitute such an adverse change) or for the authorization of,
<PAGE>
or the increase in the authorized number of shares of, a class of
Capital Stock other than Junior Stock and Parity Stock. The
approval of a majority of the votes entitled to be cast by the
holders of the outstanding shares of the DECS, voting as a
separate voting group, shall be required for authorization of, or
an increase in the authorized number of shares of, any class of
Parity Stock. Except for cases covered by the two preceding
sentences of this subparagraph B(2), whenever the holders of the
DECS are entitled under the Virginia Stock Corporation Act to
vote as a separate voting group on an amendment of the Articles
of Incorporation, a plan of merger, or a plan of share exchange,
the vote required for the approval of such amendment shall be a
majority of all votes cast on the amendment, plan of merger or
plan of share exchange by the holders of the DECS at a meeting at
which the holders of a majority of the outstanding shares of the
DECS are represented in person or by proxy.
(3) Whenever the holders of the DECS are entitled
under the Virginia Stock Corporation Act to vote together with
the holders of one or more other series of Preferred Stock as a
single voting group (including a vote of the class of Preferred
Stock as a separate voting group) on any amendment of the
Articles of Incorporation, plan of merger or plan of share
exchange, the vote required for the approval of such amendment,
plan of merger or plan of share exchange shall be a majority of
all votes cast on the amendment, plan of merger or plan of share
exchange by the holders of the shares included in such voting
group at a meeting at which the holders of a majority of the
outstanding shares included in such voting group are represented
in person or by proxy; provided that if at the time of such vote
there shall be outstanding any share of a series included in such
voting group which under the Articles of Incorporation or
otherwise under the Virginia Stock Corporation Act is not
authorized as part of such voting group to approve the amendment,
plan of merger or plan of share exchange by such majority vote,
the vote required for its approval of such amendment, plan of
merger or plan of share exchange shall be more than two-thirds of
all the votes entitled to be cast by such voting group.
(4) The holders of the outstanding shares of the DECS
shall also have the right, voting together with the holders of
any other outstanding shares of Voting Preferred Stock (as
hereinafter defined) as a separate voting group, to elect two
members of the Board of Directors of the Corporation at any time
six or more quarterly dividends on any shares of Voting Preferred
Stock shall be in arrears and unpaid, in whole or in part,
whether or not declared and whether or not any funds shall be or
have been legally available for payment thereof. For this
purpose, "Voting Preferred Stock" shall mean the DECS and each
other series of Preferred Stock which shall have substantially
similar voting rights (including voting as one voting group with
other shares of Voting Preferred Stock) with respect to the
election of directors upon substantially similar arrearages of
dividends. In such event, unless a regular meeting of the
shareholders of the Corporation is to be held within 60 days
thereof for the purpose of electing Directors, the Corporation
shall promptly thereafter cause the number of Directors of the
Corporation to be increased by two, and, within 30 days
thereafter, shall call a special meeting of the holders of the
outstanding shares of Voting Preferred Stock for the purpose of
electing such Directors to take place at the time specified in
the notice of the meeting, to be not more than 60 days after such
holders become so entitled to elect two Directors and not less
than ten nor more than 50 days after the date on which such
notice is mailed. If such special meeting shall not have been so
called by the Corporation, or such regular meeting shall not be
so held, a special meeting may be called for such purpose at the
expense of the Corporation by the holders of not less than 10% of
the outstanding shares of any series of Voting Preferred Stock;
and notice of any such special meeting shall be given by the
person or persons calling the same to the holders of the
outstanding shares of the Voting Preferred Stock by first-class
mail, postage prepaid, at their last addresses as shall appear on
the stock transfer records of the Corporation. At any such
special meeting the holders of the outstanding shares of Voting
Preferred Stock, voting as a separate voting group with each
share having one vote, shall elect two members of the Board of
Directors of the Corporation. If a regular meeting of the
shareholders of the Corporation for the purpose of electing
Directors is to be held within 60 days after the time the holders
of the outstanding shares of Voting Preferred Stock become so
entitled to elect two Directors, then the holders of the
outstanding shares of Voting Preferred Stock shall be given
notice thereof in the same manner as other shareholders of the
Corporation entitled to vote thereat; and at such regular
meeting, the holders of the outstanding shares of Voting
Preferred Stock, voting as a separate voting group with each
<PAGE>
share having one vote, shall elect two members of the Board of
Directors. The right of the holders of the Voting Preferred
Stock, voting as a separate voting group, to elect two members of
the Board of Directors of the Corporation shall continue until
such time as no dividends on any outstanding shares of Voting
Preferred Stock are in arrears and unpaid, in whole or in part,
at which time (i) the voting power of the holders of the
outstanding shares of Voting Preferred Stock so to elect two
directors shall cease, but always subject to the same provisions
of this paragraph (4) for the vesting of such voting power upon
the occurrence of each and every like arrearage of dividends, and
(ii) the term of office of each member of the Board of Directors
who was elected pursuant to this subparagraph B(4) shall
automatically expire.
C. Redemptions and Conversions.
(1) Mandatory Conversion. On July 1, 1998 (the
"Mandatory Conversion Date"), each outstanding share of the DECS
shall convert automatically (the "Mandatory Conversion") into
shares of Common Stock at the Common Equivalent Rate (as
hereinafter defined) in effect on the Mandatory Conversion Date
and the right to receive an amount in cash equal to all accrued
and unpaid dividends on such DECS (other than dividends declared
for which the record date is before, and the payment date is
after, the Mandatory Conversion Date) to the Mandatory Conversion
Date, whether or not declared, out of funds legally available for
the payment of dividends, subject to the right of the Corporation
to redeem the DECS on or after the Initial Redemption Date (as
hereinafter defined) and before the Mandatory Conversion Date and
subject to the conversion of the DECS at the option of the holder
at any time before the Mandatory Conversion Date. The Common
Equivalent Rate is initially one hundred shares of Common Stock
for each DECS and is subject to adjustment as set forth below.
Dividends on the DECS shall cease to accrue and such shares shall
cease to be outstanding on the Mandatory Conversion Date. The
Corporation shall make such arrangements as it deems appropriate
for the issuance of certificates representing shares of Common
Stock and for the payment of cash in respect of such accrued and
unpaid dividends, if any, or cash in lieu of fractional shares,
if any, in exchange for and contingent upon surrender of
certificates representing the DECS, provided that the Corporation
shall give the holders of the DECS such notice of any such
arrangements as the Corporation deems appropriate and upon such
surrender such holders shall be entitled to receive any dividends
declared and paid on such shares of Common Stock after the
Mandatory Conversion Date. Amounts payable in cash in respect of
the shares of the DECS or in respect of such shares of Common
Stock shall not bear interest.
(2) Redemption by the Corporation.
(a) Right to Redeem. The DECS are not
redeemable by the Corporation before July 1, 1997 (the
"Initial Redemption Date"). At any time and from time
to time on or after the Initial Redemption Date and
before the Mandatory Conversion Date, the Corporation
shall have the right to redeem, in whole or in part,
<PAGE>
the outstanding DECS. Upon any such redemption, the
Corporation shall deliver to the holders of the DECS,
in accordance with the provisions of these Articles of
Amendment, in exchange for each share so redeemed, a
number of shares of Common Stock equal to the greater
of (i) the Call Price (as hereinafter defined) in
effect on the redemption date, divided by the Current
Market Price (as hereinafter defined) of the Common
Stock determined as of the date which is one trading
day before the public announcement by the Corporation
of the redemption or (ii) 85.47 shares of Common Stock,
subject to adjustment to the same extent as the
Optional Conversion Rate (as defined and as set forth
below). The Call Price of each share of the DECS is
the sum of (i) $1,763.81 on and after the Initial
Redemption Date through September 30, 1997; $1,754.11
on and after October 1, 1997 through December 31, 1997;
$1,744.41 on and after January 1, 1998 through March
31, 1998; $1,734.70 on and after April 1, 1998 through
May 31, 1998; and $1,725.00 on and after June 1, 1998
until the Mandatory Conversion Date and (ii) all
accrued and unpaid dividends thereon to the redemption
date (other than dividends for which the record date is
before, and the payment date is after, the redemption
date), subject to the right of the Corporation pursuant
to paragraph A(1) to pay such accrued and unpaid
dividends in cash. The public announcement by the
Corporation of any call for redemption shall be made
before the mailing of the notice of such call to
holders of the DECS as described below. If fewer than
all of the outstanding shares of the DECS are to be
redeemed, shares to be redeemed shall be selected by
the Corporation from the outstanding shares of the DECS
not previously redeemed by lot or pro rata (as nearly
as may be practicable) or by any other method
determined to be equitable by the Board of Directors of
the Corporation in its sole discretion.
(b) Current Market Price. As used in this
paragraph C(2), the term "Current Market Price" per
share of the Common Stock on any date of determination
means the lesser of (i) the average of the Closing
Prices (as hereinafter defined) of the Common Stock for
the fifteen consecutive Trading Days (as hereinafter
defined) ending on and including such date of
determination, and (ii) the Closing Price of the Common
Stock for such date of determination; provided,
however, that, with respect to any redemption of the
DECS, if any event that results in an adjustment of the
Common Equivalent Rate occurs during the period
beginning on the first day of such fifteen-day period
and ending on the applicable redemption date, the
Current Market Price as determined pursuant to the
foregoing shall be appropriately adjusted to reflect
the occurrence of such event.
(c) Notice of Redemption. The Corporation
shall provide notice of any redemption of any shares of
the DECS to holders of record of the DECS to be called
for redemption not less than 15 nor more than 60 days
before the date fixed for such redemption. Such notice
shall be provided by mailing notice of such redemption,
first class postage prepaid, to each holder of record
of the shares of the DECS to be redeemed, at such
holder's address as it appears on the stock register of
the Corporation; provided, however, that neither
failure to give such notice nor any defect therein
shall affect the validity of the redemption of any DECS
to be redeemed.
Each such notice shall state, as appropriate,
the following and may contain such other information as
the Corporation deems advisable:
1) the redemption date;
<PAGE>
2) that all outstanding DECS are
to be redeemed or, in the case of a call for
redemption of fewer than all outstanding
DECS, the number of shares of the DECS held
by such holder to be redeemed;
3) the Call Price, the number of
shares of Common Stock deliverable upon
redemption of each share of the DECS to be
redeemed and the Current Market Price used to
calculate such number of shares of Common
Stock;
4) the place or places where
certificates for such shares are to be
surrendered for redemption; and
5) that dividends on the DECS to
be redeemed shall cease to accrue on such
redemption date (except as otherwise provided
herein).
(d) Deposit of Shares and Funds. The
Corporation's obligation to deliver shares of Common
Stock and provide funds upon redemption in accordance
with this paragraph C(2) shall be deemed fulfilled if,
on or before a redemption date, the Corporation shall
irrevocably deposit with a bank or trust company, or an
affiliate of a bank or trust company, having its
principal office in the United States of America and
having a capital and surplus of at least $50,000,000,
or shall set aside or make other reasonable provision
for the issuance of such number of shares of Common
Stock as are required to be delivered by the
Corporation pursuant to this paragraph C(2) upon the
occurrence of the related redemption (and for the
payment of cash in lieu of the issuance of fractional
share amounts and accrued and unpaid dividends payable
in cash on the shares to be redeemed as and to the
extent provided by this paragraph C(2)). Any interest
accrued on such funds shall be paid to the Corporation
from time to time. Any shares of Common Stock or funds
so deposited and unclaimed at the end of two years from
such redemption date shall be repaid and released to
the Corporation, after which the holder or holders of
such shares of the DECS so called for redemption shall
look only to the Corporation for delivery of such
shares of Common Stock or funds.
(e) Surrender of Certificates; Status. Each
holder of the shares of the DECS to be redeemed shall
surrender the certificates evidencing such shares
(properly endorsed or assigned for transfer, if the
Board of Directors of the Corporation shall so require
and the notice shall so state) to the Corporation at
the place designated in the notice of such redemption
and shall thereupon be entitled to receive certificates
evidencing shares of Common Stock and to receive any
funds payable pursuant to this paragraph C(2) following
such surrender and following the date of such
redemption. In case fewer than all of the shares
represented by any such surrendered certificate are
called for redemption, a new certificate shall be
issued at the expense of the Corporation representing
the unredeemed shares. If such notice of redemption
shall have been given, and if on the date fixed for
redemption shares of Common Stock and funds necessary
for the redemption shall have been irrevocably either
set aside by the Corporation separate and apart from
its other funds or assets in trust for the account of
the holders of the shares to be redeemed or converted
(and so as to be and continue to be available therefor)
or deposited with a bank or a trust company or an
affiliate thereof as provided herein or the Corporation
shall have made other reasonable provision therefor,
then, notwithstanding that the certificates evidencing
any shares of the DECS so called for redemption or
subject to conversion shall not have been surrendered,
the shares represented thereby so called for redemption
shall be deemed no longer outstanding, dividends with
respect to the shares so called for redemption shall
cease to accrue on the date fixed for redemption
(except that holders of the shares of the DECS at the
<PAGE>
close of business on a record date for any payment of
dividends shall be entitled to receive the dividend
payable on such shares on the corresponding Dividend
Payment Date notwithstanding the redemption of such
shares following such record date and before such
Dividend Payment Date) and all rights with respect to
the shares so called for redemption shall forthwith
after such date cease and terminate, except for the
rights of the holders to receive the shares of Common
Stock and funds, if any, payable pursuant to this
paragraph C(2) without interest upon surrender of their
certificates therefor. Holders of shares of the DECS
that are redeemed shall not be entitled to receive
dividends declared and paid on such shares of Common
Stock, and such shares of Common Stock shall not be
entitled to vote, until such shares of Common Stock are
issued upon the surrender of the certificates
representing such DECS and upon such surrender such
holders shall be entitled to receive such dividends
declared and paid on such shares of Common Stock after
such redemption date.
(3) Conversion at Option of Holder. The DECS are
convertible, in whole or in part, at the option of the holders
thereof, at any time before the Mandatory Conversion Date, unless
previously redeemed, into shares of Common Stock at a rate of
85.47 shares of Common Stock for each share of the DECS (the
"Optional Conversion Rate"), subject to adjustment as set forth
below. The right to convert DECS called for redemption shall
terminate at the close of business on the redemption date.
Conversion of shares of the DECS may be effected by
delivering certificates evidencing such shares, together with
written notice of conversion and a proper assignment of such
certificates to the Corporation or in blank, to the office or
agency to be maintained by the Corporation for that purpose, and
otherwise in accordance with conversion procedures established by
the Corporation from time to time. Each conversion shall be
deemed to have been effected immediately before the close of
business on the date on which the foregoing requirements shall
have been satisfied. The conversion shall be at the Optional
Conversion Rate in effect at such time and on such date.
Holders of shares of the DECS at the close of business
on a record date for any payment of dividends shall be entitled
to receive the dividend payable on such shares on the
corresponding Dividend Payment Date notwithstanding the
conversion of such shares following such record date and before
such Dividend Payment Date. The Corporation shall make no other
payment or allowance for unpaid dividends, whether or not in
arrears, on converted shares of the DECS or for dividends or
distributions on the shares of Common Stock issued upon such
conversion.
(4) Common Equivalent Rate and Optional Conversion
Rate Adjustments. The Common Equivalent Rate and the Optional
Conversion Rate shall be subject to adjustment from time to time
as provided below in this paragraph.
(a) If the Corporation shall:
1) pay a dividend or make a
distribution with respect to the Common Stock
in shares of such stock,
2) subdivide or split its
outstanding shares of Common Stock into a
greater number of shares,
3) combine its outstanding shares
of Common Stock into a smaller number of
shares, or
<PAGE>
4) issue by reclassification of
its shares of Common Stock any shares of
Common Stock of the Corporation,
then, in any such event, the Common Equivalent Rate and
the Optional Conversion Rate in effect immediately
before such event shall each be adjusted so that the
holders of any shares of the DECS shall thereafter be
entitled to receive, upon Mandatory Conversion or upon
conversion at the option of the holder, the number of
shares of Common Stock of the Corporation which such
holder would have owned or been entitled to receive
immediately following any event described above had
such shares of the DECS been converted immediately
before such event or any record date with respect
thereto. Such adjustments shall become effective at
the opening of business on the business day next
following the record date for determination of
shareholders entitled to receive such dividend or
distribution in the case of a dividend or distribution
and shall become effective immediately after the
effective date in the case of a subdivision, split,
combination or reclassification. Such adjustments
shall be made successively.
(b) If the Corporation shall, after the date
hereof, issue rights or warrants to all holders of its
Common Stock entitling them (for a period not exceeding
45 days from the date of such issuance) to subscribe
for or purchase shares of Common Stock at a price per
share less than the current market price of the Common
Stock, then in each case the Common Equivalent Rate and
the Optional Conversion Rate shall each be adjusted by
multiplying the Common Equivalent Rate and the Optional
Conversion Rate, in effect immediately before the date
of issuance of such rights or warrants, by a fraction,
of which the numerator shall be the number of shares of
Common Stock outstanding on the date of issuance of
such rights or warrants, immediately before such
issuance, plus the number of additional shares of
Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which the
denominator shall be the number of shares of Common
Stock outstanding on the date of issuance of such
rights or warrants, immediately before such issuance,
plus the number of additional shares of Common Stock
which the aggregate offering price of the total number
of shares of Common Stock so offered for subscription
or purchase pursuant to such rights or warrants would
purchase at such current market price (determined by
multiplying such total number of shares by the exercise
price of such rights or warrants and dividing the
product so obtained by such current market price).
Such adjustments shall become effective at the opening
of business on the business day next following the
record date for the determination of shareholders
entitled to receive such rights or warrants. To the
extent that shares of Common Stock are not delivered
after the expiration of such rights or warrants, the
Common Equivalent Rate and the Optional Conversion Rate
shall be readjusted to the Common Equivalent Rate and
the Optional Conversion Rate, respectively, which would
then be in effect had the adjustments made upon the
issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of
Common Stock actually delivered. Such adjustments
shall be made successively.
(c) If the Corporation shall pay a dividend
or make a distribution to all holders of Common Stock
of evidences of its indebtedness, securities of a
Subsidiary or other assets (excluding any dividends or
distributions referred to in subparagraph (4)(a) above
or any cash dividends other than Extraordinary Cash
Distributions, as defined in subparagraph E(e) below)
or shall issue to all holders of its Common Stock
rights or warrants to subscribe for or purchase any of
its securities (other than those referred to in
<PAGE>
subparagraph (4)(b) above), then in each such case, the
Common Equivalent Rate and the Optional Conversion Rate
shall each be adjusted by multiplying the Common
Equivalent Rate and the Optional Conversion Rate in
effect on the record date mentioned below, by a
fraction of which the numerator shall be the current
market price per share of the Common Stock on the
record date for the determination of shareholders
entitled to receive such dividend or distribution, and
of which the denominator shall be such current market
price per share of Common Stock less the fair market
value as determined by the Board of Directors of the
Corporation, whose determination shall be conclusive,
and described in a resolution adopted with respect
thereto) as of such record date of the portion of the
assets or evidences of indebtedness so distributed or
of such subscription rights or warrants applicable to
one share of Common Stock. Such adjustments shall
become effective on the opening of business on the
business day next following the record date for the
determination of shareholders entitled to receive such
dividend, distribution or issuance. Such adjustments
shall be made successively.
(d) Any shares of Common Stock issuable in
payment of a dividend shall be deemed to have been
issued immediately before the close of business on the
record date for such dividend for purposes of
calculating the number of outstanding shares of Common
Stock under subparagraph (4)(b) above. For purposes of
any computation under subparagraphs (4)(b) and (4)(c)
above, the current market price per share of Common
Stock at any date shall be deemed to be the average of
the daily Closing Prices for the thirty consecutive
Trading Days preceding the date in question; provided,
however, if any event that results in an adjustment of
the Common Equivalent Rate occurs during such thirty-
day period, the current market price as determined
pursuant to the foregoing shall be appropriately
adjusted to reflect the occurrence of such event.
(e) The Corporation shall also be entitled
to make upward adjustments in the Common Equivalent
Rate, the Optional Conversion Rate and the Call Price,
as it in its discretion shall determine to be
advisable, so that any stock dividends, subdivisions of
shares, distribution of rights to purchase stock or
securities, or distribution of securities convertible
into or exchangeable for stock (or any transaction
which could be treated as any of the foregoing
transactions pursuant to Section 305 of the Internal
Revenue Code of 1986, as amended) hereafter made by the
Corporation to its shareholders shall not be taxable.
(f) In any case in which subparagraph (4)(c)
shall require that an adjustment as a result of any
event become effective at the opening of business on
the business day next following a record date and the
date fixed for conversion pursuant to paragraph C(3) or
redemption pursuant to paragraph C(2) occurs after such
record date, but before the occurrence of such event,
the Corporation may in its sole discretion, elect to
defer the following until after the occurrence of such
event: (A) issuing to the holder of any converted or
redeemed shares of the DECS the additional shares of
Common Stock issuable upon such conversion or
redemption over the shares of Common Stock issuable
before giving effect to such adjustment and (B) paying
to such holder any amount in cash in lieu of a
fractional share of Common Stock pursuant to
subparagraph C(1).
(g) All adjustments to the Common Equivalent
Rate and the Optional Conversion Rate shall be
calculated to the nearest 1/1000th of a share of Common
<PAGE>
Stock (or if there is not a nearest 1/1000th of a share
to the next lower 1/1000th of a share). No adjustment
in the Common Equivalent Rate and the Optional
Conversion Rate shall be required unless such
adjustment would require an increase or decrease of at
least one percent therein; provided, however, that any
adjustments which by reason of this subparagraph are
not required to be made shall be carried forward and
taken into account in any subsequent adjustments.
(5) Adjustment for Consolidation or Merger. In case
of any consolidation or merger to which the Corporation is a
party (other than a merger or consolidation in which the
Corporation is the continuing corporation and in which the Common
Stock outstanding immediately before the merger or consolidation
remains unchanged), or in case of any sale or transfer to another
corporation of the property of the Corporation as an entirety or
substantially as an entirety, or in case of any statutory
exchange of securities with another corporation (other than in
connection with a merger or acquisition), proper provision shall
be made so that each share of the DECS shall, after consummation
of such transaction, be subject to (i) conversion at the option
of the holder into the kind and amount of securities, cash or
other property receivable upon consummation of such transaction
by a holder of the number of shares of Common Stock into which
such shares of the DECS might have been converted immediately
before consummation of such transaction, (ii) conversion on the
Mandatory Conversion Date into the kind and amount of securities,
cash or other property receivable upon consummation of such
transaction by a holder of the number of shares of Common Stock
into which such shares of the DECS would have converted if the
conversion on the Mandatory Conversion Date had occurred
immediately before the date of consummation of such transaction,
and (iii) redemption on any redemption date in exchange for the
kind and amount of securities, cash or other property receivable
upon consummation of such transaction by a holder of the number
of shares of Common Stock that would have been issuable at the
Call Price in effect on such redemption date upon a redemption of
such shares immediately before consummation of such transaction,
assuming that the public announcement of such redemption had been
made on the last possible date permitted by the terms of the DECS
and applicable law, assuming in each case that such holder of
Common Stock failed to exercise rights of election, if any, as to
the kind or amount of securities, cash or other property
receivable upon consummation of such transaction (provided that
if the kind or amount of securities, cash or other property
receivable upon consummation of such transaction is not the same
for each non-electing share, then the kind and amount of
securities, cash or other property receivable upon consummation
of such transaction for each non-electing share shall be deemed
to be the kind and amount so receivable per share by a plurality
of the non-electing shares). The kind and amount of securities
into which the DECS shall be convertible after consummation of
such transaction shall be subject to adjustment as described in
subparagraph C(4) following the date of consummation of such
transaction. The Corporation may not become a party to any such
transaction unless the terms thereof are consistent with the
foregoing.
(6) Notice of Adjustments. Whenever the Common
Equivalent Rate and the Optional Conversion Rate are adjusted as
herein provided, the Corporation shall:
(a) forthwith compute the adjusted Common
Equivalent Rate and Optional Conversion Rate in
accordance herewith and prepare a certificate signed by
an officer of the Corporation setting forth the
adjusted Common Equivalent Rate and the Optional
Conversion Rate, the method of calculation thereof in
reasonable detail and the facts requiring such
adjustment and upon which such adjustment is based,
which certificate shall be conclusive, final and
binding evidence of the correctness of the adjustment,
<PAGE>
and file such certificate forthwith with the transfer
agent for the DECS and the Common Stock; and
(b) mail a notice to the holders of the
outstanding shares of the DECS stating that the Common
Equivalent Rate and the Optional Conversion Rate have
been adjusted, the facts requiring such adjustment and
upon which such adjustment is based and setting forth
the adjusted Common Equivalent Rate and Optional
Conversion Rate, such notice to be mailed at or before
the time the Corporation mails an interim statement to
its shareholders covering the fiscal quarter during
which the facts requiring such adjustment occurred, but
in any event within 45 days of the end of such fiscal
quarter.
(7) Notices. In case, at any time while any of the
DECS are outstanding,
(a) the Corporation shall declare a dividend
(or any other distribution) on its Common Stock,
excluding any cash dividends, but including without
limitation any securities of a Subsidiary; or
(b) the Corporation shall authorize the
issuance to all holders of its Common Stock of rights
or warrants to subscribe for or purchase shares of its
Common Stock or of any other subscription rights or
warrants; or
(c) the Corporation shall authorize any
reclassification of the Common Stock of the Corporation
(other than a subdivision or combination thereof) or
any consolidation or merger to which the Corporation is
a party and for which approval of any shareholders of
the Corporation is required (except for a merger of the
Corporation into a Subsidiary solely for the purpose of
changing the corporate domicile of the Corporation to
another state of the United States of America and in
connection with which there is no substantive change in
the rights or privileges of any securities of the
Corporation other than changes resulting from
differences in the corporate statutes of the then
existing and the new state of domicile), or the sale or
transfer of all or substantially all of the assets of
the Corporation; or
(d) there shall be commenced the voluntary
or involuntary dissolution, liquidation or winding up
of the Corporation;
then the Corporation shall cause to be filed at each office or
agency maintained for the purpose of conversion of the DECS, and
shall cause to be mailed to the holders of the shares of the DECS
at their last addresses as they shall appear on the stock
register, at least ten days before the date hereinafter specified
(or the earlier of the dates hereinafter specified, if more than
one date is specified), a notice stating (A) the date on which a
record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be
taken, the date as of which the holders of Common Stock of record
to be entitled to such dividend, distribution, rights or warrants
are to be determined, or (B) the date on which any such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become
effective, and the date as of which it is expected that holders
of Common Stock of record shall be entitled to exchange their
Common Stock for securities or other property (including cash),
if any, deliverable upon such reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up.
The failure to give or receive the notice required by this
subparagraph (7) or any defect therein shall not affect the
legality or validity of any such dividend, distribution, right or
warrant or other action.
(8) Effective Date of Conversion and Redemptions. The
person or persons in whose name or names any certificate or
certificates for shares of Common Stock shall be issuable upon
<PAGE>
any conversion or redemption shall be deemed to have become on
the date of any such conversion or redemption the holder or
holders of record of the shares represented thereby; provided,
however, that any such surrender on any date when the stock
transfer books of the Corporation shall be closed shall
constitute the person or persons in whose name or names the
certificate or certificates for such shares are to be issued as
the record holder or holders thereof for all purposes at the
opening of business on the next succeeding day on which such
stock transfer books are open.
(9) No Fractional Shares. No fractional shares or
script representing fractional shares of Common Stock shall be
issued upon the redemption or conversion of any DECS. In lieu of
any fractional shares otherwise issuable in respect of all the
DECS of any holder which are redeemed or converted on any
redemption date or upon Mandatory Conversion or any optional
conversion, such holder shall be entitled to receive an amount in
cash (computed to the nearest cent) equal to the same fraction of
the (i) Current Market Price in the case of redemption, or (ii)
Closing Price of Common Stock determined (A) as of the fifth
Trading Day immediately preceding the Mandatory Conversion Date,
in the case of Mandatory Conversion, or (B) as of the second
Trading Day immediately preceding the effective date of
conversion, in the case of an optional conversion by a holder.
If more than one share shall be surrendered for conversion or
redemption at one time by or for the same holder, the number of
full shares of Common Stock issuable upon conversion thereof
shall be computed on the basis of the aggregate number of shares
of the DECS so surrendered or redeemed.
(10) Payment of Taxes. The Corporation shall pay any
and all documentary, stamp or similar issue or transfer taxes
payable in respect of the issue or delivery of shares of Common
Stock on the redemption or conversion of the DECS pursuant to
this paragraph C; provided, however, that the Corporation shall
not be required to pay any tax which may be payable in respect of
any registration of transfer involved in the issue or delivery of
shares of Common Stock in a name other than that of the
registered holder of the shares of the DECS redeemed or converted
or to be redeemed or converted, and no such issue or delivery
shall be made unless and until the person requesting such issue
has paid to the Corporation the amount of any such tax or has
established, to the satisfaction of the Corporation, that such
tax has been paid.
(11) Reservation of Common Stock. The Corporation
shall at all times reserve and keep available, free from
preemptive rights, out of the aggregate of its authorized but
unissued Common Stock, for the purpose of effecting any Mandatory
Conversion of the DECS or any conversion of the DECS at the
option of the holder, the full number of shares of Common Stock
then deliverable upon any such conversion of all outstanding
DECS.
D. Liquidation Rights. (1) In the event of the
liquidation, dissolution or winding up of the business of the
Corporation, whether voluntary or involuntary, the holders of the
shares of the DECS then outstanding, after payment or provision
for payment of the debts and other liabilities of the Corporation
and the payment or provision for payment of any distribution on
any shares of the Corporation having a preference and a priority
over the DECS on liquidation, and before any distribution to the
holders of the Common Stock or any other Junior Stock, shall be
entitled to be paid out of the assets of the Corporation
available for distribution to its shareholders, an amount per
share of the DECS in cash equal to the sum of (i) $1,725 per
share plus (ii) all accrued and unpaid dividends thereon to the
date of payment, before any payment shall be made or any assets
<PAGE>
distributed to the holders of Junior Stock. If the amount
available for distribution to the holders of the outstanding
shares of the DECS upon any dissolution, liquidation or winding
up of the Corporation shall be insufficient to pay in full the
liquidation payments payable to the holders of the outstanding
shares of the DECS and any shares of Parity Stock, then the
holders of all such shares of the DECS and the Parity Stock shall
share ratably in such distribution of assets in proportion to the
full amounts to which they are respectively entitled. Except as
provided in this paragraph D, holders of the shares of the DECS
shall not be entitled to any distribution in the event of
liquidation, dissolution or winding up of the affairs of the
Corporation.
(a) For the purposes of this paragraph D, none of the
following shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding up of the Corporation:
1) the voluntary sale, conveyance, lease,
exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or
substantially all of the property or assets of the
Corporation;
2) the consolidation or merger of the
Corporation with or into one or more other
corporations, or other associations;
3) the consolidation or merger of one or
more corporations or other associations with or into
the Corporation; or
4) the participation by the Corporation in
a share exchange.
E. Definitions. As used in these Articles of Amendment
the following terms have the following meanings:
(a) "Common Stock" shall mean any stock of any class
of the Corporation which has no preference in respect of
dividends or of amounts payable in the event of any voluntary or
involuntary liquidation, dissolution or winding up of the
Corporation and which is not subject to redemption by the
Corporation. However, shares of Common Stock issuable upon
conversion of the DECS shall include only shares of the class
designated as Common Stock as of the original date of issuance of
the DECS, or shares of the Corporation of any class or classes
resulting from any reclassification or reclassifications thereof
and which have no preference in respect of dividends or of
amounts payable in the event of any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation and
which are not subject to redemption by the Corporation; provided
that if at any time there shall be more than one such resulting
class, the shares of each such class then so issuable shall be
substantially in the proportion which the total number of shares
of such class resulting from such reclassification bears to the
total number of all shares of all classes resulting from such
reclassification.
(b) "business day" shall mean any day other than a
Saturday, Sunday, or a day on which banking institutions in the
States of New York or North Carolina or the Commonwealth of
Virginia are authorized or obligated by law or executive order to
close or are closed because of a banking moratorium or otherwise;
(c) "Capital Stock" means any capital stock of any
class or series (however designated) of the Corporation.
(d) "Closing Price" on any day shall mean the closing
sale price regular way on such day or, in case no such sale takes
place on such day, the average of the reported closing bid and
<PAGE>
asked prices regular way, in each case on the New York Stock
Exchange (or any successor thereto);
(e) "Extraordinary Cash Distributions" means, with
respect to any cash dividend or distribution paid on any date,
the amount, if any, by which all cash dividends and cash
distributions on the Common Stock paid during the consecutive 12-
month period ending on and including such date (other than cash
dividends and cash distributions for which an adjustment to the
Common Equivalent Rate and the Optional Conversion Rate was
previously made) exceeds, on a per share of Common Stock basis,
10% of the average daily Closing Price of the Common Stock over
such 12-month period.
(f) "Junior Stock" means any Capital Stock ranking as
to dividends or as to rights in liquidation, dissolution or
winding up of the affairs of the Corporation junior to the DECS.
(g) "Parity Stock" means any Capital Stock ranking as
to dividends or as to rights in liquidation, dissolution or
winding up the affairs of the Corporation equally with the DECS.
(h) "Subsidiary" means any corporation a majority of
the outstanding Voting Stock of which is owned, directly or
indirectly, by the Corporation or by one or more Subsidiaries or
by the Corporation and one or more Subsidiaries. For this
purpose, "Voting Stock" means stock of any class or classes
(however designated) having ordinary voting power for the
election of a majority of the members of the board of directors
(or other governing body) of such corporation, other than stock
having such powers only by reason of the happening of a
contingency.
(i) "Trading Day" shall mean a day on which the New
York Stock Exchange (or any successor thereto) is open for the
transaction of business.
(j) "Voting Preferred Stock" is defined in paragraph
B(4) hereof.
III. This amendment was adopted by the Board of Directors of
the Corporation without shareholder action and shareholder action
was not required.
June 23, 1994 JAMES RIVER CORPORATION OF VIRGINIA
By:/s/ Robert C. Williams
Robert C. Williams
Chairman of the Board, President
and Chief Executive Officer
Exhibit 3(d)
JAMES RIVER CORPORATION OF VIRGINIA
ARTICLES OF AMENDMENT TO
THE AMENDED AND RESTATED ARTICLES OF INCORPORATION
I. The name of the Corporation is James River Corporation of Virginia.
II. The Amended and Restated Articles of Incorporation of the
Corporation are amended as follows:
(1) Article I is amended to read as follows:
"The name of the corporation is Fort James Corporation."
(2) Section A of Article III is amended by replacing "150,000
000" with "500,000,000."
III. The amendments set forth in Paragraph II above were proposed by
the Board of Directors of the Corporation (the "Board of Directors") by
resolution adopted at a meeting of the Board of Directors held on May 3, 1997
and were submitted to the shareholders of the Corporation in accordance with the
Virginia Stock Corporation Act; such amendments were considered and voted upon
by the shareholders of the Corporation at a duly called and convened special
meeting of shareholders of the Corporation held on August 12, 1997 at which
special meeting the holders of record as of the close of business on June 30,
1997 of the Common Stock, par value $.10 per share, of the Corporation ("Common
Stock") and the Series P 9% Cumulative Convertible Preferred Stock of the
Corporation ("Series P Preferred Stock," and together with the Common Stock,
"Voting Stock") were entitled to vote as a single class on such amendments; that
a total of 100,918,767 votes were entitled to be cast on such amendments by the
holders of Voting Stock; and that 80,341,887 votes were cast by such holders of
Voting Stock for such amendments and 592,687 votes were cast by such holders of
Voting Stock against such amendments.
IV. Pursuant to Sections 13.1-639 and 13.1-706 of the Virginia Stock
Corporation Act, the Board of Directors by resolution adopted at a meeting of
the Board of Directors on May 3, 1997 adopted the following amendment to the
Amended and Restated Articles of Incorporation of the Corporation to increase
the number of shares of stock designated as the Series M Cumulative
Participating Preferred Stock of the Corporation, effective upon the filing of
these Articles of Amendment:
Article X is hereby amended by deleting from the introductory clause of
Article X the words and figures "a resolution adopted by the Board of
Directors of the Corporation on February 9, 1989, 150,000 shares" and
inserting in lieu thereof the words and figures "resolutions adopted by
the Board of Directors of the Corporation on February 9, 1989 and May 3,
1997, 250,000 shares".
V. The amendment set forth in Paragraph IV above was duly adopted by the
Board of Directors without shareholder action and shareholder action was not
required.
August 13, 1997
JAMES RIVER CORPORATION OF VIRGINIA
By: /s/ Clifford A. Cutchins, IV
Clifford A. Cutchins, IV
Senior Vice President, General Counsel
and Corporate Secretary
E-4
Exhibit 3(e)
AMENDED AND RESTATED
BYLAWS OF
FORT JAMES CORPORATION
(AS OF AUGUST 13, 1997)
ARTICLE I - MEETINGS OF STOCKHOLDERS
Section 1.1 Closing of Transfer Books and Fixing of Record Date. For
the purpose of determining stockholders entitled to notice of, or to vote at,
any meeting of stockholders or any adjournment thereof, or entitled to receive
payment of any dividend, or in order to make a determination of stockholders for
any other proper purpose, the Board of Directors or the Executive Committee
shall fix in advance a date as the record date for any such determination of
stockholders, such date to be not more than 70 days before the meeting or
action. When a determination of stockholders entitled to vote at any meeting of
stockholders has been made as provided in this article, such determination shall
apply to any adjournment thereof, except as is otherwise provided by law.
Section 1.2 Place and Time of Meetings. Meetings of stockholders shall
be held at such place, either within or without the Commonwealth of Virginia,
and at such time, as may be provided in the notice of the meeting.
Section 1.3 Organization and Order of Business. The Chairman of the
Board of Directors (the "Chairman") or, in his absence, the President shall
serve as chairman at all meetings of the stockholders. In the absence of both of
the foregoing officers or if both of them decline to serve, a majority of the
shares entitled to vote at such meeting may appoint any person to act as
Chairman. The Secretary of the Corporation or, in his absence, an Assistant
Secretary, shall act as secretary at all meetings of the stockholders. In the
event that neither the Secretary nor any Assistant Secretary is present, the
Chairman may appoint any person to act as secretary of the meeting.
The Chairman shall have the authority to make such rules and
regulations, to establish such procedures and to take such steps as he may deem
necessary or desirable for the proper conduct of each meeting of the
stockholders, including, without limitation, the authority to make the agenda
and to establish procedures for (i) the dismissal of business not properly
presented, (ii) the maintenance of order and safety, (iii) placing limitations
on the time allotted to questions or comments on the affairs of the Corporation,
(iv) placing restrictions on attendance at a meeting by persons or classes of
persons who are not stockholders or their proxies, (v) restricting entry to a
meeting after the time prescribed for the commencement thereof and (vi) the
commencement, conduct and close of voting on any matter.
Section 1.4 Annual Meeting. The annual meeting of stockholders shall be
held on the third or fourth Thursday in April of each year as set by the Board
of Directors or on such other dates as shall be approved by the Board of
Directors.
E-5
<PAGE>
At each annual meeting of stockholders, only such business shall be
conducted as is proper to consider and has been brought before the meeting (i)
by or at the direction of the Board of Directors or (ii) by a stockholder of the
Corporation who is a stockholder of record of a class of shares entitled to vote
on such business at the time of the giving of the notice hereinafter described
in this Section 1.4 and who complies with the notice procedures set forth in
this Section 1.4. In order to bring business before an annual meeting of
stockholders, a stockholder, in addition to complying with any other applicable
requirements, must have given timely written notice of his intention to bring
such business before the meeting to the Secretary of the Corporation. To be
timely, a stockholder's notice must be given, either by personal delivery or by
United States certified mail, postage prepaid, addressed to the Secretary of the
Corporation at the principal office of the Corporation and received (i) on or
after December 1st of the year immediately preceding the year in which the
meeting will be held and before January 1st of the year in which the meeting
will be held or (ii) not less than 60 days before the date of the annual meeting
if the date of such meeting, as prescribed in these Bylaws, has been changed by
more than 30 days.
Each such stockholder's notice shall set forth as to each matter the
stockholder proposes to bring before the annual meeting (i) the name and
address, as they appear on the Corporation's stock transfer books, of the
stockholder proposing such business, (ii) the class and number of shares of
stock of the Corporation beneficially owned by such stockholder, (iii) a
representation that such stockholder is a stockholder of record and intends to
appear in person or by proxy at such meeting to bring before the meeting the
business specified in the notice, (iv) a brief description of the business
desired to be brought before the meeting, including the complete text of any
resolutions to be presented at the meeting and the reasons for wanting to
conduct such business, and (v) any material interest which the stockholder has
in such business.
The Secretary of the Corporation shall deliver each such stockholder's
notice that has been timely received to the Chairman or a committee designated
by the Board of Directors for review.
Notwithstanding the foregoing provisions of this Section 1.4, a
stockholder seeking to have a proposal included in the Corporation's proxy
statement for an annual meeting of stockholders shall comply with the
requirements of Regulation 14A under the Securities Exchange Act of 1934, as
amended from time to time, or with any successor regulation.
Section 1.5 Special Meetings. Special meetings of the stockholders may
be called by the Chairman, the President or the Board of Directors. Only
business within the purpose or purposes described in the notice for a special
meeting of stockholders may be conducted at the meeting.
Section 1.6 Notice of Meetings. Written notice stating the place, day
and hour of each meeting of stockholders and, in the case of a special meeting,
the purpose or purposes for which the meeting is called, shall be given by mail
not less than ten nor more than 60 days before the date of the meeting (except
when a different time is required in these Bylaws or by law) to each stockholder
<PAGE>
of record entitled to vote at such meeting and to such nonvoting stockholders as
may be required by law. Such notice shall be deemed to be effective when
deposited in the United States mail with postage thereon prepaid, addressed to
the stockholder at his address as it appears on the stock transfer books of the
Corporation.
Notice of a stockholders' meeting to act on (i) an amendment of the
Articles of Incorporation; (ii) a plan of merger or share exchange; (iii) the
sale, lease, exchange or other disposition of all or substantially all the
property of the Corporation otherwise than in the usual and regular course of
business, or (iv) the dissolution of the Corporation, shall be given, in the
manner provided above, not less than 25 nor more than 60 days before the date of
the meeting. Any notice given pursuant to this paragraph shall state that the
purpose, or one of the purposes, of the meeting is to consider such action and
shall be accompanied by (x) a copy of the proposed amendment, (y) a copy of the
proposed plan of merger or share exchange, or (z) a summary of the agreement
pursuant to which the proposed transaction will be effected. If only a summary
of the agreement is sent to the stockholders, the Corporation shall also send a
copy of the agreement to any stockholder who requests it.
If a meeting is adjourned to a different date, time or place, notice
need not be given if the new date, time or place is announced at the meeting
before adjournment. However, if a new record date for an adjourned meeting is
fixed (which shall be done if the meeting is adjourned to a date more than 120
days after the date fixed for the original meeting), notice of such date shall
be given to those persons entitled to notice who are stockholders as of the new
record date, unless a court provides otherwise.
Section 1.7 Quorum and Voting Requirements. Each outstanding share of
common stock shall be entitled to one vote on each matter submitted to a vote at
a meeting of stockholders. Shares of other classes and series shall be entitled
to such vote as may be provided in the Articles of Incorporation.
Shares entitled to vote as a separate voting group may take action on a
matter at a meeting only if a quorum of those shares exists with respect to that
matter. Unless otherwise required by law, a majority of the votes entitled to be
cast on a matter by a voting group constitutes a quorum of that voting group for
action on that matter. Once a share is represented for any purpose at a meeting,
it is deemed present for quorum purposes for the remainder of the meeting and
for any adjournment of that meeting unless a new record date is or shall be set
for that adjourned meeting. If a quorum exists, action on a matter, other than
the election of directors, by a voting group is approved if the votes cast
within the voting group favoring the action exceed the votes cast opposing the
action, unless a greater number of affirmative votes is required by law or by
the Articles of Incorporation. Directors shall be elected by a plurality of the
votes cast by the shares entitled to vote in the election at a meeting at which
a quorum is present unless a different vote in required by the Articles of
Incorporation. Less than a quorum may adjourn a meeting.
Section 1.8 Proxies. A stockholder may vote his shares in person or by
proxy. A stockholder may appoint a proxy to vote or otherwise act for him by
<PAGE>
signing an appointment form, either personally or by his attorney-in-fact. An
appointment of a proxy is effective when received by the Secretary or other
officer or agent authorized to tabulate votes and is valid for 11 months unless
a longer period is expressly provided in the appointment form. An appointment of
a proxy is revocable by the stockholder unless the appointment form
conspicuously states that it is irrevocable and the appointment is coupled with
an interest.
The death or incapacity of the stockholder appointing a proxy does not
affect the right of the Corporation to accept the proxy's authority unless
notice of the death or incapacity is received by the Secretary or other officer
or agent authorized to tabulate votes before the proxy exercises his authority
under the appointment. An irrevocable appointment is revoked when the interest
with which it is coupled is extinguished. A transferee for value of shares
subject to an irrevocable appointment may revoke the appointment if he did not
know of its existence when he acquired the shares and the existence of the
irrevocable appointment was not noted conspicuously on the certificate
representing the shares. Subject to any legal limitations on the right of the
Corporation to accept the vote or other action of a proxy and to any express
limitation on the proxy's authority appearing on the face of the appointment
form, the Corporation is entitled to accept the proxy's vote or other action as
that of the stockholder making the appointment. Any fiduciary entitled to vote
any shares may vote such shares by proxy.
Section 1.9 Waiver of Notice; Attendance at Meeting. A stockholder may
waive any notice required by law, the Articles of Incorporation or these Bylaws
before or after the date and time of the meeting that is the subject of such
notice. The waiver shall be in writing, be signed by the stockholder entitled to
the notice, and be delivered to the Secretary of the Corporation for inclusion
in the minutes or filing with the corporate records.
A stockholder's attendance at a meeting (i) waives objection to lack of
notice or defective notice of the meeting, unless the stockholder at the
beginning of the meeting objects to holding the meeting or transacting business
at the meeting, and (ii) waives objection to consideration of a particular
matter at the meeting that is not within the purpose or purposes described in
the meeting notice, unless the stockholder objects to considering the matter
when it is presented.
Section 1.10 Action Without Meeting. Action required or permitted to be
taken at a stockholders' meeting may be taken without a meeting and without
action by the Board of Directors if the action is taken by all the stockholders
entitled to vote on the action. The action shall be evidenced by one or more
written consents describing the action taken, signed by all the stockholders
entitled to vote on the action, and delivered to the Secretary of the
Corporation for inclusion in the minutes or filing with the corporate records.
Action taken under this section shall be effective according to its terms when
all consents are in the possession of the Corporation. A stockholder may
withdraw a consent only by delivering a written notice of withdrawal to the
Corporation prior to the time that all consents are in the possession of the
Corporation.
If not otherwise fixed pursuant to the provisions of Section 1.1, the
record date for determining stockholders entitled to take action without a
meeting is the date the first stockholder signs the consent described in the
preceding paragraph.
<PAGE>
If notice of proposed action is required to be given to nonvoting
stockholders and the action is to be taken by unanimous consent of the voting
stockholders, the Corporation shall give its nonvoting stockholders written
notice of the proposed action at least ten days before the action is taken. The
notice shall contain or be accompanied by the same material that would have been
required by law to be sent to nonvoting stockholders in a notice of a meeting at
which the proposed action would have been submitted to the stockholders for
action.
Section 1.11 Voting List. The officer or agent having charge of the
stock transfer books of the Corporation shall make, at least ten days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, with the address of and the
number of shares held by each. The list shall be arranged by voting group and
within each voting group by class or series of shares. Such list shall be kept
on file at the registered office of the Corporation, or at its principal office
or at the office of its transfer agent or registrar, for a period of ten days
prior to such meeting and shall be subject to the inspection of any stockholder
at any time during usual business hours. Such list shall also be produced and
kept open at the time and place of the meeting and shall be subject to the
inspection of any stockholder during the whole time of the meeting for the
purposes thereof. The original stock transfer books shall be prima facia
evidence as to who are the stockholders entitled to examine such list or
transfer books or to vote at any meeting of the stockholders. The right of a
stockholder to inspect such list at any other time shall be subject to the
limitations established by law.
If the requirements of this section have not been substantially
complied with, the meeting shall, on the demand of any stockholder in person or
by proxy, be adjourned until such requirements are met. Refusal or failure to
prepare or make available the stockholders' list does not affect the validity of
action taken at the meeting prior to the making of any such demand, but any
action taken by the stockholders after the making of any such demand shall be
invalid and of no effect.
ARTICLE II - DIRECTORS
Section 2.1 General Powers. The Corporation shall have a Board of
Directors. All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the Corporation managed under the direction of,
its Board of Directors, subject to any limitation set forth in the Articles of
Incorporation.
Section 2.2 Number and Term. The number of directors of the Corporation
shall be fifteen. This number may be changed from time to time by amendment to
these Bylaws to increase or decrease by 30 percent or less the number of
directors last elected by the stockholders, but only the stockholders may
increase or decrease the number by more than 30 percent. No decrease in number
shall have the effect of shortening the term of any incumbent director. Each
director shall hold office until his death, resignation or removal or until his
successor is elected.
<PAGE>
Section 2.3 Nomination of Candidates. No person shall be eligible for
election as a director unless nominated (i) by the Board of Directors upon
recommendation of the Nominating Committee or otherwise or (ii) by a stockholder
entitled to vote on the election of directors pursuant to the procedures set
forth in this Section 2.3; provided, however, that no person shall be eligible
to be elected a director after age seventy, except that directors who are
sixty-three or over and serving on February 20, 1997 shall not be eligible to be
elected a director after age seventy-two.
Nominations, other than those made by the Board of Directors, may be
made only by a stockholder who is a stockholder of record of a class of shares
entitled to vote for the election directors at the time of the giving of the
notice hereinafter described in this Section 2.3 and only if written notice of
the stockholder's intent to nominate one or more persons for election as
directors at a meeting of stockholders has been given, either by personal
delivery or by United States certified mail, postage prepaid, addressed to the
Secretary of the Corporation at the principal office of the Corporation and
received (i) on or after December 1st of the year immediately preceding the year
in which the meeting will be held and before January 1st of the year in which
the meeting will be held, if the meeting is to be an annual meeting and clause
(ii) is not applicable, or (ii) not less than 60 days before an annual meeting,
if the date of the applicable annual meeting, as prescribed in these Bylaws, has
been changed by more than 30 days, or (iii) not later than the close of business
on the tenth day following the day on which notice of a special meeting of
stockholders called for the purpose of electing directors is first given to
stockholders.
Each such stockholder's notice shall set forth the following: (i) as to
the stockholder giving the notice (a) the name and address of such stockholder
as they appear on the Corporation's stock transfer books, (b) the class and
number of shares of stock of the Corporation beneficially owned by such
stockholder, (c) a representation that such stockholder is a stockholder of
record and intends to appear in person or by proxy at such meeting to nominate
the person or persons specified in the notice, and (d) a description of all
arrangements or understandings, if any, between such stockholder and each
nominee and any other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made; and (ii) as to each
person whom the stockholder wishes to nominate for election as a director (a)
the name, age, business address and, if known, residence address of such person,
(b) the principal occupation or employment of such person, (c) the class and
number of shares of the Corporation which are beneficially owned by such person,
and (d) all other information that is required to be disclosed about nominees
for election as directors in solicitations of proxies for the election of
directors under the Securities Exchange Act of 1934, as amended, or otherwise by
the rules and regulations of the Securities and Exchange Commission. In
addition, each such notice shall be accompanied by the written consent of each
proposed nominee to serve as a director if elected. Each such consent shall also
contain a statement from the proposed nominee to the effect that the information
about him contained in the notice is correct.
Section 2.4 Election. Except as provided in Section 2.5 of this Article
and in the Articles of Incorporation, the directors shall be elected by the
<PAGE>
common stockholders and preferred stockholders entitled to vote with the common
stockholders at the annual meeting of stockholders, and those nominees who
receive the greatest number of votes shall be deemed elected even though they do
not receive a majority of the votes cast.
No individual shall be named or elected as a director without his prior consent.
Section 2.5 Removal; Vacancies. The stockholders may remove one or more
directors, with or without cause. If a director is elected by a voting group,
only the stockholders of that voting group may vote to remove him. Unless the
Articles of Incorporation require a greater vote, a director may be removed if
the number of votes cast to remove him constitutes a majority of the votes
entitled to be cast at an election of directors of the voting group or voting
groups by which such director was elected. A director may be removed by the
stockholders only at a meeting called for the purpose of removing him and the
notice of the meeting must state that the purpose, or one of the purposes of the
meeting, is removal of the director.
A vacancy on the Board of Directors, including a vacancy resulting from
the removal of a director or an increase in the number of directors, may be
filled by (i) the stockholders, (ii) the Board of Directors or (iii) the
affirmative vote of a majority of the remaining directors though less than a
quorum of the Board of Directors, and may, in the case of a resignation that
will become effective at a specified later date, be filled before the vacancy
occurs but the new director may not take office until the vacancy occurs.
Section 2.6 Compensation. The Board of Directors may fix the
compensation of directors for their services and may provide for the payment of
all expenses incurred by directors in attending regular and special meetings of
the Board of Directors.
Section 2.7 Change of Responsibility. A member of the Board of
Directors who has a significant change in job responsibility or who ceases to
continue to hold the job held at the last Annual Shareholders' Meeting, shall
offer a letter of resignation to the Board of Directors promptly upon such
change of responsibility or job.
ARTICLE III - DIRECTORS' MEETINGS
Section 3.1 Annual and Regular Meetings. An annual meeting of the Board
of Directors, which shall be considered a regular meeting, shall be held
immediately following each annual meeting of stockholders, for the purpose of
electing officers and carrying on such other business as may properly come
before the meeting. The Board of Directors may also adopt a schedule of
additional meetings which shall be considered regular meetings. Regular meetings
shall be held at such times and at such places, within or without the
Commonwealth of Virginia, as the Chairman or, in his absence, the President,
shall designate. If no place is designated, regular meetings shall be held at
the principal office of the Corporation.
Section 3.2 Special Meetings. Special meetings of the Board of
Directors shall be held on the call of the Chairman, the President or any three
<PAGE>
members of the Board of Directors at the principal office of the Corporation or
at such other place as the Chairman, or in his absence, the President, shall
designate.
Section 3.3 Telephone Meetings. The Board of Directors may permit any
or all directors to participate in a regular or special meeting by, or conduct
the meeting through the use of, any means of communication by which all
directors participating may simultaneously hear each other during the meeting. A
director participating in a meeting by this means is deemed to be present in
person at the meeting.
Section 3.4 Notice of Meetings. No notice need be given of regular meetings of
the Board of Directors.
Notice of special meetings of the Board of Directors shall be given to
each director in person or delivered to his residence or business address, or
such other place as he may have directed in writing, not less than 24 hours
before the meeting by mail, messenger, telecopy, telegraph, or other means of
written communication or by telephoning such notice to him. Any such notice
shall set forth the time and place of the meeting and state the purpose for
which it is called.
Section 3.5 Quorum; Voting. A majority of the number of directors fixed
in these Bylaws shall constitute a quorum for the transaction of business at a
meeting of the Board of Directors. If a quorum is present when a vote is taken,
the affirmative vote of a majority of the directors present is the act of the
Board of Directors unless the act of a greater number is required by law, the
Articles of Incorporation or these Bylaws. A director who is present at a
meeting of the Board of Directors when corporate action is taken is deemed to
have assented to the action taken unless (i) he objects at the beginning of the
meeting, or promptly upon his arrival, to holding it or transacting specified
business at the meeting; or (ii) he votes against, or abstains from, the action
taken.
Section 3.6 Waiver of Notice; Attendance at Meeting. A director may
waive any notice required by law, the Articles of Incorporation, or these Bylaws
before or after the date and time stated in the notice, and such waiver shall be
equivalent to the giving of such notice. Except as provided in the next
paragraph of this section, the waiver shall be in writing, signed by the
director entitled to the notice and filed with the minutes or corporate records.
A director's attendance at or participation in a meeting waives any
required notice to him of the meeting unless the director at the beginning of
the meeting or promptly upon his arrival objects to holding the meeting or
transacting business at the meeting and does not thereafter vote for or assent
to action taken at the meeting.
Section 3.7 Action Without Meeting. Action required or permitted to be
taken at a Board of Directors' meeting may be taken without a meeting if the
action is taken by all members of the Board. The action shall be evidenced by
one or more written consents describing the action taken, signed by each
director either before or after the action taken, and included in the minutes or
filed with the corporate records reflecting the action taken. Action taken under
<PAGE>
this section shall be effective when the last director signs the consent unless
the consent specifies a different effective date in which event the action taken
is effective as of the date specified therein, provided the consent states the
date of execution by each director.
ARTICLE IV - COMMITTEE OF DIRECTORS
Section 4.1 Committees. The Board of Directors may create one or more
committees and appoint members of the Board of Directors to serve on them.
Unless otherwise provided herein, each committee shall have two or more members
who serve at the pleasure of the Board of Directors. The creation of a committee
and appointment of members to it shall be approved by the number of directors
required to take action under Section 3.5 of these Bylaws.
Section 4.2 Authority of Committees. To the extent specified by the
Board of Directors, each committee may exercise the authority of the Board of
Directors, except that a committee may not (i) approve or recommend to
stockholders action that is required by law to be approved by stockholders; (ii)
fill vacancies on the Board of Directors or any of its committees; (iii) amend
the Articles of Incorporation without stockholder approval; (iv) adopt, amend,
or repeal these Bylaws; (v) approve a plan of merger not requiring stockholder
approval; (vi) authorize or approve a distribution, except according to a
general formula or method prescribed by the Board of Directors; or (vii)
authorize or approve the issuance, or sale or contract for sale of stock, or
determine the designation and relative rights, preferences, and limitations of a
class or series of stock, except that the Board of Directors may authorize a
committee, or a senior executive officer of the Corporation, to do so within
limits specifically prescribed by the Board of Directors.
Section 4.3 Executive Committee. The Board of Directors shall appoint
an Executive Committee consisting of two or more directors, which committee
shall have all of the authority of the Board of Directors except to the extent
such authority is limited by the provisions of Section 4.2.
Section 4.4 Audit Committee. The Board of Directors shall appoint an
Audit Committee consisting of not less than three directors, none of whom shall
be officers, which committee shall regularly review the adequacy of the
Corporation's internal financial controls, review with the Corporation's
independent public accountants the annual audit and other financial statements,
and recommend the selection of the Corporation's independent public accountants.
Section 4.5 Nominating Committee. The Board of Directors shall appoint
a Nominating Committee consisting of not less than three directors, a majority
of whom shall not be officers or employees, which committee shall recommend to
the Board of Directors the names of persons to be nominated for election as
directors of the Corporation.
Section 4.6 Compensation Committee. The Board of Directors shall
appoint a compensation committee consisting of not less than three directors,
<PAGE>
none of whom shall be officers, which committee shall recommend to the Board of
Directors the compensation of directors and those officers of the Corporation
who are directors, make awards under the Corporation's discretionary employee
benefit plans, and make recommendations from time to time to the Board of
Directors regarding the Corporation's compensation program.
Section 4.7 Committee Meetings; Miscellaneous. The provisions of these
Bylaws which govern meetings, action without meetings, notice and waiver of
notice, and quorum and voting requirements of the Board of Directors shall also
apply to committees of directors and their members.
ARTICLE V - OFFICERS
Section 5.1 Officers. The officers of the Corporation shall be a
Chairman, a Chief Executive Officer, a President, a Secretary, a Chief Financial
Officer, and such additional officers, including Vice Presidents and other
officers, as the Chief Executive Officer or the Board of Directors may deem
necessary or advisable to conduct the business of the Corporation. The Chairman
and the President shall be members of the Board of Directors and one of them
shall be designated as Chief Executive Officer. The Board of Directors shall
also designate those officers who are deemed to be "Executive Officers." Any two
offices may be combined except the offices of President and Secretary.
Section 5.2 Election, Term. Executive Officers shall be elected at each
annual meeting of the Board of Directors and shall hold office, unless removed,
until the next annual meeting of the Board of Directors or until their
successors are elected. All other officers shall be appointed by the Chief
Executive Officer and shall hold office, unless removed, until their successors
are appointed. Any officer may resign at any time upon written notice to the
authority which appointed him.
Section 5.3 Removal of Officers. Officers elected by the Board of
Directors may be removed, with or without cause, at any time by the Board of
Directors. Appointed officers may be similarly removed by the person having the
authority to appoint them.
Section 5.4 Duties of the Chief Executive Officer. The Chief Executive
Officer shall have general charge of, and be charged with, the duty of
supervision of the business of the Corporation. In addition, he shall perform
such duties, from time to time, as may be assigned to him by the Board of
Directors.
Section 5.5 Duties of the Chairman. Unless he declines to serve, the
Chairman shall preside at all meetings of the stockholders and the Board of
Directors and perform such duties, from time to time, as may be assigned to him
by the Board of Directors.
Section 5.6 Duties of the President. The President shall have such
powers and duties as generally pertain to that position and, in the absence of
the Chairman, unless he declines to serve, he shall preside at all meetings of
the stockholders and the Board of Directors. He shall further perform such
<PAGE>
duties as may, from time to time, be assigned to him by the Chief Executive
Officer or the Board of Directors.
Section 5.7 Duties of the Secretary. The Secretary shall have the duty
to see that a record of the proceedings of each meeting of the stockholders and
the Board of Directors, and any committee of the Board of Directors, is properly
recorded and that notices of all such meetings are duly given in accordance with
the provisions of these Bylaws or as required by law; he may affix the corporate
seal to any document the execution of which is duly authorized, and when so
affixed may attest the same; and, in general, he shall perform all duties
incident to the office of secretary of a corporation, and such other duties as,
from time to time, may be assigned to him by the Chief Executive Officer or the
Board of Directors, or as may be required by law.
Section 5.8 Duties of the Chief Financial Officer. The Chief Financial
Officer shall have charge of and be responsible for all securities, funds,
receipts and disbursements of the Corporation, and shall deposit or cause to be
deposited, in the name of the Corporation, all monies or valuable effects in
such banks, trust companies or other depositories as shall, from time to time,
be selected by or under authority granted by the Board of Directors; he shall be
custodian of the financial records of the Corporation; he shall keep or cause to
be kept full and accurate records of all receipts and disbursements of the
Corporation and shall render to the Chairman, the President and the Board of
Directors, whenever requested, an account of the financial condition of the
Corporation; and shall perform such duties as may be assigned to him by the
Chief Executive Officer or the Board of Directors.
Section 5.9 Duties of Other Officers. The other officers of the
Corporation shall have such authority and perform such duties as shall be
prescribed by the Board of Directors or by officers authorized to appoint them
to their respective offices. To the extent that such duties are not so stated,
such officers shall have such authority and perform the duties which generally
pertain to their respective offices, subject to the control of the Chief
Executive Officer or the Board of Directors.
Section 5.10 Voting Securities of Other Corporations. Any one of the
Chairman, the President or the Chief Financial Officer shall have power to act
for and vote on behalf of the Corporation at all meetings of the stockholders of
any corporation in which this Corporation holds stock, or in connection with any
consent of stockholders in lieu of any such meeting.
Section 5.11 Certain Agents. The Chief Executive Officer or such other
officer as he may authorize may from time to time engage employees of
subsidiaries of the Corporation to be agents for the Corporation to perform
staff or operational functions. Such persons may act on behalf of the
Corporation under such titles (including designations as divisional officers) as
may be specified from time to time by the Chief Executive Officer, but no
engagement under this section shall constitute such agent an employee or officer
of the Corporation. Such agents shall perform the duties assigned to them from
time to time by the Chief Executive Officer or by any other officer of the
Corporation authorized to make such assignments. Any such agent may be removed,
<PAGE>
with or without cause, at any time by the Chief Executive Officer. This section
shall not limit the authority any officer or any other employee of the
Corporation may otherwise have respecting the engagement of agents for the
Corporation.
Section 5.12 Bonds. The Board of Directors may require that any or all
officers, employees and agents of the Corporation give bond to the Corporation,
with sufficient sureties, conditioned upon the faithful performance of the
duties of their respective offices or positions.
ARTICLE VI - CERTIFICATES OF STOCK
Section 6.1 Form. Stock of the Corporation shall, when fully paid, be
evidenced by certificates containing such information as is required by law and
approved by the Board of Directors. Certificates shall be signed by the
President or any Vice President and the Secretary or an Assistant Secretary or
the Treasurer or an Assistant Treasurer and may (but need not) be sealed with
the seal of the Corporation. Any such signature may be a facsimile, engraved or
printed, if the certificate is countersigned, manually or by facsimile, by a
transfer agent, or registered by a registrar, other than the Corporation itself
or an employee of the Corporation. In case any such officer or authorized
officer of the transfer agent or registrar who has signed or whose facsimile
signature has been placed upon any such certificate shall have ceased to be such
officer or authorized officer of the transfer agent or registrar before such
certificate is issued, the certificate shall, nevertheless, be valid.
Section 6.2 Lost, Stolen or Destroyed Stock Certificates. The
Corporation may issue a new stock certificate in the place of any certificate
theretofore issued which is alleged to have been lost, stolen or destroyed and
may require the owner of such certificate, or his legal representative, to give
the Corporation a bond, sufficient to indemnify it against any claim that may be
made against it on account of the alleged loss, theft or destruction of any such
certificate or the issuance of any such new certificate.
Section 6.3 Transfer. The Board of Directors may make such rules and
regulations concerning the issue, registration and transfer of certificates
representing the stock of the Corporation as it deems necessary or proper and
may appoint transfer agents and registrars. Unless otherwise provided, transfers
of stock and of the certificates representing such stock shall be made upon the
books of the Corporation by surrender of the certificates for the stock
transferred, accompanied by written assignments given by the owners or their
attorneys-in-fact.
ARTICLE VII - VIRGINIA CONTROL
SHARE ACQUISITION STATUTE
The provisions of Article 14.1 of the Virginia Stock Corporation Act
(ss.13.1-728.1 et seq.) in effect on the 8th day of February, 1990, shall not
apply to the acquisition of shares of this Corporation.
<PAGE>
ARTICLE VIII - MISCELLANEOUS PROVISIONS
Section 8.1 Corporate Seal. The corporate seal of the Corporation shall
be circular and shall have inscribed thereon, within and around the
circumference, "FORT JAMES CORPORATION". In the center shall be the word "SEAL".
Section 8.2 Fiscal Year. The fiscal year of the Corporation shall be
determined in the discretion of the Board of Directors, but in the absence of
any such determination it shall be a fiscal year of either 52 or 53 weeks ending
on the last Sunday in December.
Section 8.3 Constitutive Resolutions. A "Constitutive Resolution" is a
resolution of the Board of Directors which is (i) designated therein as a
"Constitutive Resolution" and (ii) adopted by the unanimous vote of the
directors present and voting if a quorum is present when a vote is taken.
Notwithstanding anything in Section 3.5 or any other provision of these Bylaws
to the contrary, a Constitutive Resolution can only be rescinded, revoked,
amended or modified by the affirmative vote of all the directors then in office
and the quorum of the Board of Directors which shall be present to consider such
action shall be the number of directors then in office.
Section 8.4 Amendments. These Bylaws may be amended or repealed, and
new Bylaws may be made, at any regular or special meeting of the Board of
Directors by a majority of the Board except that action to adopt or amend a
bylaw that changes the quorum or voting requirement applicable to meetings of
the Board of Directors must meet the quorum requirement and be adopted by the
vote required to take action under the quorum and voting requirement then in
effect. Bylaws made by the Board of Directors may be repealed or changed and new
Bylaws may be made by the stockholders, and the stockholders may prescribe that
any Bylaw made by them shall not be altered, amended or repealed by the Board of
Directors.
Exhibit 10(a)
STOCKHOLDERS AGREEMENT
Stockholders Agreement(this "Agreement") dated as of August 13,
1997 among James River Corporation of Virginia, a Virginia corporation (the
"Company"), Morgan Stanley, Dean Witter, Discover & Co. ("MSDWD"), Morgan
Stanley Leveraged Equity Fund II, Inc. ("MSLEF II"), Morgan Stanley Leveraged
Equity Holdings, Inc. ("MSLEH") and Morgan Stanley Equity Investors, Inc.
("MSEI" and, collectively with MSLEF II, MSLEH and MSDWD, the "Stockholders").
WHEREAS, James River Delaware, Inc., a Delaware corporation
and a wholly owned subsidiary of the Company ("Merger Sub"), will be merged (the
"Merger") with and into Fort Howard Corporation, a Delaware corporation ("Fort
Howard"), pursuant to an Agreement and Plan of Merger by and among the Company,
Merger Sub and Fort Howard dated as of May 4, 1997 (the "Merger Agreement");
WHEREAS, the Stockholders and certain of their affiliates will
receive the number of shares of common stock, par value $0.10 per share, of the
Company ("Common Stock"), set forth on Schedule I to this Agreement (the
"Shares") pursuant to the Merger; and
WHEREAS, it is a condition to the obligations of the parties
to the Merger Agreement that this Agreement be executed by the Company
concurrently with the closing under the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereto hereby
agree as follows:
Section 1 . (a) Appointment of Directors. Promptly upon the execution of this
Agreement, the Board of Directors of the Company (the "Board") shall take all
necessary action to increase the size of the Board to fifteen (15) and to
appoint the four (4) persons listed on Schedule 1.05(c) to the Merger Agreement
(which persons shall be reasonably satisfactory to the Company) as directors on
the Board. So long as the Stockholders and their affiliates other than Morgan
Stanley & Co. Incorporated and Dean Witter Reynolds, Inc. (collectively, "MSDW")
beneficially own the requisite number of Shares pursuant to Section 1(b) or (c),
as applicable, the Company shall cause the person(s) designated pursuant to
Section 1(b) or (c) to be appointed or nominated for election as directors on
the Board at each annual meeting thereafter and at each special meeting, if any,
at which directors are being elected.
From and after the effective time of the Merger and until the
date on which the Stockholders and their affiliates other than MSDW no longer
beneficially own at least five million of the then outstanding Shares (the
"Upper Director Threshold"), the Stockholders shall be entitled to designate two
(2) persons reasonably satisfactory to the Company to be nominated for election
as directors on the Board.
(c) From and after the effective time of the Merger and until the date on which
the Stockholders and their affiliates other than MSDW no longer beneficially own
at least two million of the then outstanding Shares (the "Lower Director
Threshold" and, together with the Upper Director Threshold, the "Director
Thresholds"), the Stockholders shall be entitled to designate one (1) person
reasonably satisfactory to the Company to be nominated for election as a
director on the Board.
E-6
<PAGE>
(d) If the number of outstanding shares of Common Stock shall change into a
different number of shares or shall be designated as a different class, by
reason of any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, the number or class of shares required
for purposes of the Director Thresholds shall be correspondingly adjusted
equitably to reflect such stock dividend, subdivision, reclassification,
recapitalization, split, combination or exchange of shares. No shares of Common
Stock acquired after the effective time of the Merger, other than shares
acquired (i) with respect to a Stockholder or an affiliate of a Stockholder
which is a limited partnership, pursuant to a distribution or transfer to the
partners of such a Stockholder or such an affiliate of a Stockholder pursuant to
or otherwise in accordance with its Agreement of Limited Partnership or (ii)
pursuant to any stock dividend, subdivision, reclassification, recapitalization,
split, combination or exchange of shares, shall be included for purposes of
determining whether the Director Thresholds are met.
Section 2 . Certain Notices. One of the Stockholders shall, within ten business
days, notify the Company if the Stockholders and their affiliates other than
MSDW own less than the number of Shares required for purposes of either of the
Director Thresholds.
Section 3 . Miscellaneous. This Agreement shall survive until the Stockholders
and their affiliates other than MSDW no longer beneficially own at least two
million of the then outstanding Shares and shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns.
This Agreement shall be governed by and construed in accordance with the
internal laws of the State of New York. If any provision of this Agreement is
rendered void, invalid or unenforceable by any court of law for any reason, such
invalidity or unenforceability shall not void or render invalid or unenforceable
any other provision of this Agreement. This Agreement may be changed, waived,
discharged or terminated only with the written consent of each party hereto.
This Agreement may be executed in one or more counterparts, and with counterpart
signature pages, each of which shall be an original, but all of which together
shall constitute one and the same Agreement.
Section 4 . Notices. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally, telecopied (which is
confirmed) or mailed by registered or certified mail (return receipt requested)
to the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):
(a) if to any of the Stockholders, to:
Morgan Stanley Capital Partners
1221 Avenue of the Americas
New York, New York 10022
Telecopier No.: (212) 762-6466
Attention: Robert H. Niehaus
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopier No.: (212) 848-7179
Attention: Faith D. Grossnickle, Esq.
(b) if to the Company, to
Fort James Corporation
120 Tredegar Street
Richmond, VA 23219
Attention: Clifford A. Cutchins, IV
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopier No.: 212) 403-2000
Attention: Patricia A. Vlahakis, Esq.
<PAGE>
IN WITNESS WHEREOF, the parties hereto caused this Agreement
to be duly executed by their respective authorized signatories thereunto duly
authorized as of the date first above written.
JAMES RIVER CORPORATION OF VIRGINIA
By /s/ C.A. Cutchins IV
Name: C.A. Cutchins, IV
Title: Sr. Vice President
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By /s/ Robert G. Scott
Name: Robert G. Scott
Title: Chief Financial Officer
MORGAN STANLEY LEVERAGED EQUITY
FUND II, INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
MORGAN STANLEY LEVERAGED EQUITY
HOLDINGS, INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
MORGAN STANLEY EQUITY INVESTORS, INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
<PAGE>
Schedule I
Ownership of Shares
As of The Effective Time
Morgan Stanley, Dean Witter,
Discover & Co. 3,114,373
-------------------------------------------
MSLEF II 2,470,396
-------------------------------------------
MSLEH 3,476,482
-------------------------------------------
MSEI 370,606
-------------------------------------------
Exhibit 10(b)
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of August 13, 1997 (the
"Agreement") among JAMES RIVER CORPORATION OF VIRGINIA, a Virginia corporation
(the "Company") and the parties listed on the signature pages of this Agreement
(each a "Stockholder" and, collectively, the "Stockholders" and, together with
the Company, the "Parties") who will, as of the effective time of the Merger (as
defined below) be holders of shares of common stock, par value $0.10 per share,
of the Company (the "Common Shares") in such number as set forth on Schedule I
to this Agreement.
PRELIMINARY STATEMENTS
WHEREAS, James River Delaware, Inc., a Delaware Corporation
and wholly owned subsidiary of the Company ("Merger Sub") will be merged (the
"Merger") with and into Fort Howard Corporation, a Delaware corporation ("Fort
Howard"), pursuant to an Agreement and Plan of Merger dated as of May 4, 1997 by
and among the Company, Merger Sub and Fort Howard (the "Merger Agreement");
WHEREAS, the Stockholders will receive the Common Shares
pursuant to the Merger; and
WHEREAS, it is a condition to the obligations of the parties
to the Merger Agreement to consummate the Merger that this Agreement be entered
into by the Parties concurrently with the closing under the Merger Agreement.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the Parties hereby agree
as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions. Terms used but not defined herein
are used herein as defined in the Merger Agreement. The following terms, as used
herein, have the following meanings:
(a) the "Commission" means the Securities and Exchange Commission;
(b) "Demand Registration" has the meaning specified in Section 2.02;
(c) "Holder(s)" means the Stockholders and the transferees of Registrable
Securities which are affiliates of such transferring Stockholder or, in
the case of any transfers by AT&T Investment Management Co., a
successor trust or the trust for a successor plan in connection with or
following the reorganization of the pension plans or trust of AT&T
Corp. and Lucent Technologies Inc.;
(d) "Piggyback Registration" has the meaning specified in Section 2.03;
(e) "Pooling Period" means the period commencing at the effective time of
the Merger and continuing until the date on which the Company first
publishes (in the form of a quarterly earnings report, an effective
registration statement filed with the Commission, a report to the
Commission on Form 10-K, 10-Q or 8-K, or any other public filing or
announcement) financial results covering at least 30 days of
post-Merger combined operations;
E-7
<PAGE>
(f) "Registrable Securities" means (i) Common Shares issued or issuable in
the Merger to the Stockholders at the Effective Time and (ii) any
securities issued or issuable in respect of such Common Shares by way
of conversion, exchange, stock dividend, split or combination,
recapitalization, merger, consolidation, other reorganization or
otherwise; and
(g) "Subsidiary" or "Subsidiaries" means any corporation, partnership,
joint venture or other legal entity of which the Company or such other
person, as the case may be (either alone or through or together with
any other subsidiary), owns, directly or indirectly, 50% or more of the
stock or other equity interests the holders of which are generally
entitled to vote for the election of the Board of Directors or other
governing body of such corporation or other legal entity.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.01. Registrable Securities. The registration rights
provided herein apply to Registrable Securities, but with respect to any
particular Registrable Security, only so long as such security continues to be a
Registrable Security. Any Registrable Security will cease to be a Registrable
Security when (i) a registration statement covering such Registrable Security
has been declared effective by the Commission and such Registrable Security has
been disposed of pursuant to such effective registration statement, (ii) it is
sold pursuant to Rule 144 promulgated under the Securities Act (or another
exemption from the registration requirements of the Securities Act), (iii) it
has been otherwise transferred, upon which transfer the Company has delivered a
new certificate or other evidence of ownership for such Registrable Security not
bearing the legend required pursuant to Section 6.09(a) of the Merger Agreement
and it may be resold without subsequent registration under the Securities Act
(or under any appropriate exemption) or any blue sky law then in force or (iv)
it shall have ceased to be outstanding.
SECTION 2.02. Demand Registration. (a) At any time during the
first three years after the Effective Time ("Initial Demand Period"), any Holder
of Registrable Securities may request in writing that the Company register in an
underwritten public offering under the Securities Act, all or part of such
Holder's Registrable Securities (a "Demand Registration") and the Company shall
thereupon promptly use its best efforts to effect, subject to the next sentence
and the provisions of Subsection 2.02(c), such Demand Registration. No Demand
Registration shall be effected until 30 days following the end of the Pooling
Period and the Company shall not be obligated (i) to effect a Demand
Registration in the six-month period following a sale of Registrable Securities
under a previous Demand Registration, (ii) subject to Section 2.04, to effect
more than three Demand Registrations or (iii) to effect a Demand Registration
with respect to less than $25,000,000 in aggregate fair market value of
Registrable Securities or such lesser amount as shall constitute all of the
Registrable Securities then held by the Holders. A request for Demand
Registration will specify the number of shares of Registrable Securities
proposed to be sold. A registration will not count as a Demand Registration
until the registration statement relating thereto has been declared effective by
the Commission.
(b) Promptly (but in no event more than 15 days) after receipt of a request
for registration of Registrable Securities pursuant to Section 2.02(a) hereof,
the Company shall provide notice of such request to all Holders of Registrable
Securities on the books of the Company other than those who made the request
under Section 2.02(a), and each such Holder shall have the right, within a
period of fifteen (15) days after the date of such notice, to request the
Company to include in the offering to which the Demand Registration relates all
or a portion of such Holder's Registrable Securities.
<PAGE>
(c) In the event that the Holders making a request to be included in a Demand
Registration pursuant to Section 2.02(b) together with the Holders who requested
registration of Registrable Securities pursuant to Section 2.02(a) hereof (the
"Participating Holders") have requested registration of Registrable Securities
in excess of the Maximum Demand Amount (as hereinafter defined), if applicable,
each Participating Holder shall have the right to register up to such number of
such Holder's Registrable Securities which bears the same proportion to the
Maximum Demand Amount as all of the Registrable Securities owned by such
Participating Holder bears to the total number of Registrable Securities owned
by all Participating Holders (hereinafter referred to as a Participating
Holder's "Eligible Securities"). To the extent that any Participating Holder
does not elect to have all or part of such Participating Holder's Eligible
Securities included in the offering for which Demand Registration has been made,
the Eligible Securities of the other Participating Holders who elect to
participate in the offering shall be increased pro rata based on the number of
Eligible Securities owned by each.
The "Maximum Demand Amount" means the maximum number of
Registrable Securities that the managing underwriter or underwriters of the
offering advise the Company may be included in such offering without materially
and adversely affecting the success of the offering.
(d) A majority of the Holders participating in the Demand Registration, shall
select the book-running and other managing underwriters in connection with such
offering and any additional investment bankers and managers to be used in
connection with the offering, in each case which are reasonably satisfactory to
the Company.
(e) Notwithstanding any provision of this Agreement to the contrary, if advised
by the managing underwriter or underwriters of an offering of securities for the
account of the Company, the Company shall not be required to effect a separate
registration pursuant to this Section 2.02 during the period starting with the
date of filing by the Company of, and ending on a date 60 days following the
effective date of, a registration statement pertaining to such offering for the
account of the Company; provided that the Company shall actively employ in good
faith all reasonable efforts to cause such registration statement to become
effective as soon as possible thereafter.
SECTION 2.03. Piggyback Registration. If during the Initial
Demand Period the Company proposes to file a registration statement under the
Securities Act with respect to an offering of (or including) Common Shares (i)
for the Company's own account (other than a registration statement on Form S-4
or S-8 (or any substitute form that may be adopted by the Commission)) or (ii)
for the account of any holders of Common Shares other than the Holders, then the
Company shall give written notice of such proposed filing to the Holders as soon
as practicable (but in no event less than 30 days before the anticipated filing
date), and such notice shall offer, subject to the terms and conditions hereof,
the Holders the opportunity to register such Registrable Securities as the
Holders may request, within 15 days after receipt of such notice, on the same
terms and conditions as the Company's or such other holders' shares of Common
Stock (a "Piggyback Registration").
<PAGE>
SECTION 2.04. Reduction of Offering. (a) Notwithstanding
anything contained herein to the contrary, if the managing underwriter or
underwriters of an offering described in Section 2.02 or 2.03 shall advise the
Company that either (i) the size of the offering that the Holders, the Company
and any other persons intend to make or (ii) the combination of securities that
the Holders, the Company and such other persons intend to include in such
offering are such that the success of the offering would be materially and
adversely affected, then:
(A) if the size of the offering is the basis of such
underwriter's advice, the amount of Registrable Securities to be
offered for the account of the Holders shall be reduced in the manner
set forth in Section 2.02(c) to the extent necessary to reduce the
total amount of securities to be included in such offering to the
amount recommended by such managing underwriter or underwriters;
provided, however, that (x) in the case of a Demand Registration, the
amount of Registrable Securities to be offered for the account of the
Holders shall be reduced only after the amount of securities to be
offered for the account of the Company and such other persons has been
reduced to zero and (y) in the case of a Piggyback Registration, if
securities are being offered for the account of persons other than the
Company, then the proportion by which the amount of such Registrable
Securities intended to be offered for the account of the Holders is
reduced shall not exceed the proportion by which the amount of such
securities intended to be offered for the account of such other persons
is reduced; or
(B) if the combination of securities to be offered is the
basis of such underwriter's advice, then
(x) in the case of a Demand Registration, the
Registrable Securities to be included in such offering shall
be reduced as described in clause (A) above (subject to the
proviso in clause (A)(x)) or
(y) in the case of a Piggyback Registration, the
Registrable Securities to be included in such offering shall
be reduced as described in clause (A) above (subject to the
proviso in clause (A)(y); provided, however, that if such
reduction in the number of Registrable Securities would, in
the judgment of the managing underwriter, be insufficient to
eliminate the adverse effect that inclusion of the Registrable
Securities requested to be included would have on such
offering, such Registrable Securities will be excluded from
such offering.
(b) If there is any reduction or exclusion by more than 50% of
Registrable Securities pursuant to Section 2.02(c) or this Section 2.04 in
connection with any registration requested pursuant to Section 2.02(a), such
registration shall not be deemed to be a Demand Registration for the purposes of
determining the maximum number of Demand Registrations the Company is obligated
to effect.
ARTICLE III
REGISTRATION PROCEDURES
SECTION 3.01. Filings; Information. Subject to the limitations in Article
II, whenever the Holders request that any Registrable Securities be registered
pursuant to Section 2.02 hereof:
(a) the Company will as expeditiously as practicable prepare and file with
the Commission a registration statement on any form for which the
Company then qualifies and which counsel for the Company shall deem
appropriate and available for the sale of the Registrable Securities to
be registered thereunder in accordance with the intended method of
distribution thereof, and use its best efforts to cause such filed
registration statement to become and remain effective for a period of
the lesser of 90 days and such period as is necessary to complete such
offering;
<PAGE>
(b) the Company will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the
Holders and each managing underwriter, if any, copies thereof, and
thereafter furnish to the Holders and each such underwriter, if any,
such number of copies of such registration statement, each amendment
and supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein) and the prospectus
included in such registration statement (including each preliminary
prospectus) as the Holders or such underwriter may reasonably request
in order to facilitate the sale of the Registrable Securities;
(c) after the filing of the registration statement, the Company will
promptly notify the Holders of any stop order issued or, to the
knowledge of the Company, threatened to be issued by the Commission and
take all necessary actions required to prevent the entry of such stop
order or to remove it if entered;
(d) the Company will endeavor to qualify the Registrable Securities for
offer and sale under such other securities or blue sky laws of such
jurisdictions in the United States as the Holders or the managing
underwriter, if any, reasonably (in light of the Holders' intended plan
of distribution) requests; provided, however, that the Company will not
be required to (i) qualify generally to do business in any jurisdiction
where it would not otherwise be required to qualify but for this
paragraph (d), (ii) subject itself to taxation in any such jurisdiction
or (iii) consent to general service of process in any such
jurisdiction;
(e) the Company shall, as promptly as practicable, notify the Holders, at
any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales
by an underwriter or dealer, of the occurrence of an event requiring
the preparation of a supplement or amendment to such prospectus so
that, as thereafter delivered to the purchasers of such Registrable
Securities, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, and as
promptly as practicable make available to the Holders and to the
underwriters any such supplement or amendment. The Holders agree that,
upon receipt of any notice from the Company of the happening of any
event of the kind described in the preceding sentence, the Holders
will forthwith discontinue the offer and sale of Registrable
Securities pursuant to the registration statement covering such
Registrable Securities until receipt of the copies of such
supplemented or amended prospectus and, if so directed by the Company,
the Holders will deliver to the Company all copies, other than
permanent file copies then in the Holders' possession, of the most
recent prospectus covering such Registrable Securities at the time of
receipt of such notice. In the event the Company shall give such
notice, the Company shall extend the period during which such
registration statement shall be maintained effective as provided in
Section 3.01(a) hereof by the number of days during the period from
and including the date of the giving of such notice to the date when
the Company shall make available to Holders such supplemented or
amended prospectus;
<PAGE>
(f) the Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
as are reasonably required in order to expedite or facilitate the sale
of such Registrable Securities;
(g) the Company will furnish to the Holders and to each managing
underwriter, if any, a signed counterpart, addressed to the Holders
and each underwriter, of (i) an opinion or opinions of counsel to the
Company (including a "Rule 10b-5" opinion) and (ii) a comfort letter
or comfort letters from the Company's independent public accountants,
each in customary form and covering such matters of the type
customarily covered by opinions or comfort letters delivered to such
parties;
(h) commencing within three months after the effective date of the
registration statement, the Company will make generally available to
its securityholders, as soon as reasonably practicable, an earnings
statement covering a period of 12 months, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
the rules and regulations of the Commission thereunder;
(i) the Company will use its best efforts to cause all Common Shares
(including, without limitation, all Registrable Securities) to be
listed on each securities exchange, if any, or the National Association
of Securities Dealers' interdealer quotation system on which similar
securities issued by the Company are then listed; and
(j) Management of the Company and the Participating Holders will cooperate
in the selling effort, and, if the Participating Holders request, the
Company will coordinate and conduct a "road show" in connection with
such offering.
The Company may require the Holders promptly to furnish in
writing to the Company such information regarding the Holders' plan of
distribution of the Registrable Securities and other information as the Company
may from time to time reasonably request or as may be legally required in
connection with such registration.
SECTION 3.02. Registration Expenses. In connection with any
Demand Registration or Piggyback Registration, the Holders shall be responsible
for any underwriting discounts or commission that may be payable in connection
with the sale of its securities. The Company will pay all other expenses
incurred in connection with such registration, including, but not limited to,
(i) all filing fees with the Commission, (ii) fees and expenses of compliance
with securities or blue sky laws (including reasonable fees and disbursements of
counsel in connection with blue sky qualifications of the securities), (iii)
printing expenses, (iv) the fees and expenses incurred in connection with the
listing of the securities, (v) fees and expenses of counsel and independent
certified public accountants for the Company (including the expenses of any
comfort letters pursuant to Section 3.01(g) hereof) and (vi) the reasonable fees
and expenses of any additional experts retained by the Company in connection
with such registration. The Company shall also pay internal Company expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties) relating to any Demand
Registration or Piggyback Registration.
<PAGE>
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.01. Indemnification by the Company. The Company
agrees to indemnify and hold harmless each Holder, its employees, officers and
directors, and each person, if any, who controls such Holder within the meaning
of either Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any and all losses, claims, damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement or prospectus relating to the Registrable Securities
(as amended or supplemented if the Company shall have furnished any amendments
or supplements thereto) or any preliminary prospectus, or caused by any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, except
insofar as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission based upon
information furnished in writing to the Company by or on behalf of such Holder
expressly for use therein; provided, however, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to the
benefit of any Holder if a copy of the current prospectus was not provided to a
purchaser and such current prospectus would have cured the defect giving rise to
such loss, claim, damage or liability or for any sales occurring after the
Company has informed such Holder under Section 3.01(e) and prior to the delivery
by the Company of any supplement or amendment to such prospectus. The Company
also agrees to indemnify any underwriters of the Registrable Securities, their
officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Holders
provided in this Section 4.01.
SECTION 4.02. Indemnification by the Holders. Each Holder
agrees to indemnify and hold harmless the Company, its officers and directors,
and each person, if any, who controls the Company within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act to the same
extent as the foregoing indemnity from the Company to the Holders, but only with
reference to information furnished in writing by or on behalf of such Holder
expressly for use in any registration statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each Holder also agrees to indemnify and hold harmless
underwriters of the Registrable Securities, their officers and directors and
each person who controls such underwriters on substantially the same basis as
that of the indemnification of the Company provided in this Section 4.02.
Notwithstanding anything to the contrary in this Agreement,
the obligation of each Holder to indemnify according to this Agreement will be
individual to each Holder and will be limited to the net proceeds received by
such Holder from the sale of Registrable Securities pursuant to such
registration statement.
<PAGE>
SECTION 4.03. Conduct of Indemnification Proceedings. In case
any proceeding (including any governmental investigation) shall be instituted
involving any person in respect of which indemnity may be sought pursuant to
Section 4.01 or 4.02, such person (the "Indemnified Party") shall promptly
notify the Person against whom such indemnity may be sought (the "Indemnifying
Party") in writing and the Indemnifying Party, upon the request of the
Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent, or if
there be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment.
SECTION 4.04. Contribution. (a) To the extent any
indemnification by an Indemnifying Party to an Indemnified Party is prohibited
or limited by law, the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and Indemnified Party in connection with the actions which
resulted in such losses, claims, damages or liabilities, as well as any other
relevant equitable considerations. The relative fault of such Indemnifying Party
and Indemnified Party shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue statement
of material fact or omission or alleged omission to state a material fact, has
been made by, or relates to information supplied by, such Indemnifying Party or
Indemnified Party, and such Parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such action. The amount paid
or payable by a Party as a result of the losses, claims, damages or liabilities
referred to above shall be deemed to include any legal or other fees or expenses
reasonably incurred by such party in connection with any investigation or
proceeding.
(b) The Parties agree that it would not be just and equitable if
contribution pursuant to this Section 4.04 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
No person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
<PAGE>
ARTICLE V
COVENANT
SECTION 5.01. The Company shall cause financial results
covering the first full month of post-Merger combined operations to be published
within 90 days after the effective time of the Merger.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. Participation in Underwritten Registrations. No
Holder may participate in any underwritten registered offering contemplated
hereunder unless such Holder (a) agrees to sell its securities on the basis
provided in any underwriting arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms hereof and of such
underwriting arrangements.
SECTION 6.02. Rule 144. The Company covenants that it will use
its best efforts to file any reports required to be filed by it under the
Securities Act and the Exchange Act and that it will take such further action as
the Holders may reasonably request, all to the extent required from time to time
to enable the Holders to sell Registrable Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rule 144
under the Securities Act, as such rule may be amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will promptly deliver to the Holders a written
statement as to whether it has complied with such requirements.
SECTION 6.03. Holdback Agreement. In connection with any
offering in which a Holder participates pursuant to this Agreement, the Company
agrees (i) not to effect any public sale or distribution of any Common Shares,
or any securities convertible into or exchangeable or exercisable for Common
Shares (other than any such sale or distribution of such securities pursuant to
registration of such securities on Form S-4 or S-8 or any successor forms or any
such sale or distribution of such securities in connection with any merger or
consolidation involving the Company or a Subsidiary or the acquisition by the
Company or a Subsidiary of the capital equity or substantially all of the assets
of any other Person), during the 14 days prior to, and during the period
recommended by the underwriter of such offering (but in no event more than 120
days) beginning on, the effective date of any registration statement except as
part of such registration statement and (ii) that any agreement entered into
after the date of this Agreement pursuant to which the Company issues or agrees
to issue any privately placed securities shall contain a provision under which
holders of such securities agree not to effect any public sale or distribution
of any such securities during the periods described in (i) above, in each case
including a sale pursuant to Rule 144 (or any similar provision then in force)
under the Securities Act (except as part of any such registration, if
permitted); provided, however, that the provisions of this Section 6.03 shall
not prevent the conversion or exchange of any securities pursuant to their terms
into or for other securities.
SECTION 6.04. Assignment. The Stockholders shall be entitled
to assign the registration rights granted herein, in whole or in part, to any
transferee of Registrable Securities which is an affiliate of the transferring
Stockholder or, in the case of AT&T Investment Management Co. is a successor
trust or the trust for a successor plan in connection with or following the
reorganization of the pension plans or trust of AT&T Corp. and Lucent
Technologies Inc. provided that such Registrable Securities do not cease being
Registrable Securities pursuant to Section 2.01 upon consummation of such
transfer. Upon such assignment, each reference in this Agreement to the
"Stockholders" or the "Parties" shall be deemed to include the assignee.
SECTION 6.05. Termination. This Agreement shall be terminated
upon the earlier to occur of (i) the sale of all Registrable Securities by the
Holders and (ii) the mutual consent of the Parties; provided, however, that
Article IV shall survive such termination.
<PAGE>
SECTION 6.06. Notices. (a) All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given upon receipt) by delivery in person, by
cable, telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective Parties at the following
addresses (or at such other address for a Party as shall be specified in a
notice given in accordance with this Section 6.06) (with a copy, in each case,
to Shearman & Sterling, 599 Lexington Avenue, New York, NY 10022, Telecopier:
(212) 848-7179, Attention: Faith D. Grossnickle, Esq.):
(a) if to the Company:
Fort James Corporation
120 Tredegar Street
Richmond, Virginia 23219
Telecopier: (804)343-4609
Attention: Clifford A. Cutchins, IV
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Telecopier No.: (212) 403-2000
Attention: Patricia A. Vlahakis, Esq.
(b) if to any of Morgan Stanley, Dean Witter, Discover & Co., Morgan Stanley
Leveraged Equity Fund II,Inc.,Morgan Stanley Leveraged Equity Holdings, Inc.
and Morgan Stanley Equity Investors, Inc.:
c/o Morgan Stanley Capital Partners
1221 Avenue of the Americas
New York, New York 10022
Telecopier: (212) 762-6466
Attention: Robert H. Niehaus
(c) if to Leeway & Co., as Nominee for the Long-Term Investment Trust:
c/o AT&T Investment Management Co.
Rm. lED 189
1 Oak Way
Berkeley Heights, New Jersey 07922-2724
Telecopier: (908) 771-9613
Attention: Lawrence M. Unrein
(d) if to First Plaza Group Trust:
c/o General Motors Investment Management Co.
767 Fifth Avenue
New York, New York 10153
Telecopier: (212) 418-3665
Attention: Margaret M. Eisen
with a copy to:
Mellon Bank, N.A.
1 Mellon Bank Center
Pittsburgh, Pennsylvania 15258-0001
Telecopier: (412) 236-4225
Attention: Laurie A. Adams
<PAGE>
SECTION 6.07. Amendments; Waiver. (a) Subject to the terms of
Section 6.05 hereof, this Agreement may not be amended or modified except by an
instrument in writing signed by, or on behalf of, the Parties; provided,
however, that the Parties may (i) extend the time for the performance of any of
the obligations or other acts of the other Party or (ii) waive compliance with
any of the agreements or conditions of the other Party contained herein. Any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed by the Party to be bound thereby. Any waiver of any term or
condition shall not be construed as a waiver of any subsequent breach or a
subsequent waiver of the same term or condition, or a waiver of any other term
or condition, of this Agreement. The failure of any Party to assert any of its
rights hereunder shall not constitute a waiver of any such rights.
SECTION 6.08. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions set forth in this Agreement is not affected
in any manner materially adverse to any Party. Upon such determination that any
term or other provision is invalid, illegal or incapable of being enforced, the
Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in a mutually
acceptable manner in order that the transactions set forth in this Agreement be
consummated as originally contemplated to the fullest extent possible.
SECTION 6.09. Binding Effect; Benefit. This Agreement shall be
binding upon and shall inure to the benefit of the Parties and their respective
successors and assigns. Notwithstanding anything contained in this Agreement to
the contrary, nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the Parties or their respective successors and
assigns any rights, remedies, obligations or liabilities under or by reason of
this Agreement.
SECTION 6.10. Specific Performance. The Parties agree that
irreparable damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that the Parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity.
SECTION 6.11. Governing Law. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of New York
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in any New York state or federal court.
SECTION 6.12. Headings. The descriptive headings contained
in this Agreement are included for convenience of reference only and shall not
affect in any way the meaning or interpretation of this Agreement.
SECTION 6.13. Counterparts. This Agreement may be executed and
delivered (including by facsimile transmission) in one or more counterparts, and
by the different Parties hereto in separate counterparts, each of which when
executed and delivered shall be deemed to be an original but all of which taken
together shall constitute one and the same agreement.
SECTION 6.14. Waiver of Jury Trial. EACH OF THE COMPANY AND
THE STOCKHOLDERS HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR
OTHERWISE) ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE ACTIONS OF THE
COMPANY OR THE STOCKHOLDERS IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE AND
ENFORCEMENT HEREOF.
SECTION 6.15. Entire Agreement. This Agreement (including the
schedules hereto) constitutes the entire agreement among the Parties with
respect to the subject matter hereof and supersedes all prior agreements and
understandings among the Parties with respect thereto. No addition to or
modification of any provision of this Agreement shall be binding upon any Party
unless made in writing and signed by all Parties.
IN WITNESS WHEREOF, the Parties have caused this Agreement to
be executed as of the date first written above by their respective officers
thereunto duly authorized.
JAMES RIVER CORPORATION OF VIRGINIA
By /s/ C.A. Cutchins, IV
Name: C.A. Cutchins, IV
Title: Sr. Vice President
<PAGE>
MORGAN STANLEY, DEAN WITTER,
DISCOVER & CO.
By /s/ Robert G. Scott
Name: Robert G. Scott
Title: Chief Financial Officer
LEEWAY & CO., as Nominee for the Long-Term Investment Trust
Leeway & Co. by State Street Bank & Trust Co. a Partner by
/s/ Lisa Lane
Name: Lisa Lane
Title: Assistant Secretary
FIRST PLAZA GROUP TRUST
By: Mellon Bank, N.A., solely in its capacity
as Trustee for FIRST PLAZA GROUP TRUST (as
directed by General Motors Investment Management
Corporation), and not in its individual capacity
By /s/ Carole Bruno
Name: Carole Bruno
Title: Authorized Signatory
The decision to participate
in this investment, any
representations made herein by the
participant, and any actions taken
hereunder by the participant
has/have been made solely at the
direction of the investment
fiduciary who has sole investment
discretion with respect to this
investment.
MORGAN STANLEY LEVERAGED EQUITY
FUND II, INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
MORGAN STANLEY LEVERAGED EQUITY
HOLDINGS, INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
MORGAN STANLEY EQUITY INVESTORS,
INC.
By /s/ R.H. Niehaus
Name: Robert H. Niehaus
Title: Vice Chairman
ANNEX I
FORT JAMES CORPORATION
$2,500,000,000
CREDIT AGREEMENT
dated as of
August 13, 1997
amended and restated as of
October 31, 1997
CHASE SECURITIES INC.
BT SECURITIES CORPORATION
BANCAMERICA SECURITIES, INC.
NATIONSBANC CAPITAL MARKETS, INC.
AS ARRANGERS
THE CHASE MANHATTAN BANK
AS ADMINISTRATIVE AGENT
E-8
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
Definitions
SECTION 1.01 Defined Terms ........................................... 1
SECTION 1.02 Classification of Loans and Borrowings................... 17
SECTION 1.03 Terms Generally ......................................... 17
SECTION 1.04 Accounting Terms; GAAP .................................. 17
SECTION 1.05 Exchange Rates .......................................... 18
SECTION 1.06 Several Obligations ..................................... 18
ARTICLE II
The Credits
SECTION 2.01 Commitments................................................ 18
SECTION 2.02. Loans and Borrowings ...................................... 19
SECTION 2.03. Requests for Revolving Borrowings ......................... 19
SECTION 2.04. Competitive Bid Procedure ................................. 20
SECTION 2.05. Funding of Borrowings ..................................... 22
SECTION 2.06. Interest Elections ........................................ 23
SECTION 2.07. Termination and Reduction of Commitments .................. 24
SECTION 2.08. Repayment of Loans; Evidence of Debt ...................... 25
SECTION 2.09. Prepayment of Loans ....................................... 25
SECTION 2.10. Fees ...................................................... 26
SECTION 2.11. Interest .................................................. 27
SECTION 2.12. Alternate Rate of Interest ................................ 28
SECTION 2.13. Increased Costs; Illegality ............................... 28
SECTION 2.14. Break Funding Payments .................................... 30
SECTION 2.15. Taxes ..................................................... 31
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of Set-offs 32
SECTION 2.17. Mitigation Obligations; Replacement of Lenders ............ 34
SECTION 2.18 Borrowing Subsidiaries ..................................... 34
SECTION 2.19. Letters of Credit ......................................... 35
ARTICLE III
Representations and Warranties
SECTION 3.01 Organization; Powers ..................................... 38
SECTION 3.02 Authorization; Enforceability ............................ 38
SECTION 3.03 Governmental Approvals; No Conflicts ..................... 38
SECTION 3.04 Financial Condition; No Material Adverse Change........... 39
SECTION 3.05 Properties ............................................... 39
SECTION 3.06 Litigation and Environmental Matters ..................... 40
SECTION 3.07 Compliance with Laws and Agreements ...................... 40
SECTION 3.08 Investment and Holding Company Status .................... 40
SECTION 3.09 Taxes .................................................... 40
SECTION 3.10 ERISA .................................................... 40
SECTION 3.11 Disclosure ............................................... 40
SECTION 3.12 Federal Reserve Regulations .............................. 41
SECTION 3.13 Designated Senior Indebtedness ........................... 41
<PAGE>
ARTICLE IV
Conditions
SECTION 4.01 Effective Date ........................................... 41
SECTION 4.02 Each Credit Event ........................................ 42
SECTION 4.03 Each Borrowing Subsidiary Credit Event.................... 43
ARTICLE V
Affirmative Covenants
SECTION 5.01 Financial Statements and Other Information............... 43
SECTION 5.02 Notices of Material Events............................... 44
SECTION 5.03 Existence; Conduct of Business........................... 45
SECTION 5.04 Payment of Obligations................................... 45
SECTION 5.05 Maintenance of Properties; Insurance..................... 45
SECTION 5.06 Books and Records; Inspection Rights..................... 45
SECTION 5.07 Compliance with Laws..................................... 45
SECTION 5.08 Use of Proceeds and Letters of Credit.................... 45
ARTICLE VI
Negative Covenants
SECTION 6.01 Indebtedness and Preferred Stock of Subsidiaries.......... 46
SECTION 6.02 Liens .................................................... 46
SECTION 6.03 Fundamental Changes ...................................... 47
SECTION 6.04 Transactions with Affiliates ............................. 48
SECTION 6.05 Sale and Lease-Back Transactions ......................... 48
SECTION 6.06 Restrictive Agreements ................................... 48
SECTION 6.07 Borrowing Subsidiaries ................................... 48
SECTION 6.08 Leverage Ratio ........................................... 48
ARTICLE VII
Events of Default..................................................... 49
ARTICLE VIII
The Administrative Agent.............................................. 51
ARTICLE IX
Guarantee............................................................. 52
<PAGE>
ARTICLE X
Miscellaneous
SECTION 10.01 Notices................................................... 54
SECTION 10.02 Waivers; Amendments....................................... 54
SECTION 10.03 Expenses; Indemnity; Damage Waiver........................ 55
SECTION 10.04 Successors and Assigns.................................... 56
SECTION 10.05 Survival.................................................. 58
SECTION 10.06 Counterparts; Integration; Effectiveness.................. 58
SECTION 10.07 Severability.............................................. 59
SECTION 10.08 Right of Setoff........................................... 59
SECTION 10.09 Governing Law; Jurisdiction; Consent to Service of Process 59
SECTION 10.10 WAIVER OF JURY TRIAL...................................... 59
SECTION 10.11 Headings.................................................. 60
SECTION 10.12 Confidentiality........................................... 60
SECTION 10.13 Interest Rate Limitation.................................. 60
SECTION 10.14 Conversion of Currencies.................................. 60
SCHEDULES:
Schedule 1.01(a) -- Alternate Procedures
Schedule 1.01(b) -- Existing Credit Agreements
Schedule 1.01(c) -- Existing Receivables Program Documents
Schedule 2.01 -- U.S. Lenders, U.S. Commitments, Multicurrency
Lenders and Multicurrency Commitments
Schedule 3.06 -- Disclosed Matters
Schedule 6.01(a) -- Existing Indebtedness and Preferred Stock
Schedule 6.02 -- Existing Liens
Schedule 6.06 -- Restrictive Agreements
EXHIBITS:
Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of McGuire Woods Battle & Boothe LLP
Exhibit B-2 -- Form of Opinion of Wachtell, Lipton, Rosen & Katz
Exhibit B-3 -- Form of Opinion of Robert A. Imig, Jr.
Exhibit B-4 -- Form of Opinion of Shearman & Sterling
Exhibit B-5 -- Form of Opinion of McGuire Woods Battle & Boothe LLP
Exhibit B-6 -- Form of Opinion of De Brauw Blackstone Westbroek
Exhibit C -- Form of Opinion of Borrowing Subsidiary's
Counsel
Exhibit D -- Form of Borrowing Subsidiary Agreement
Exhibit E -- Form of Borrowing Subsidiary Termination
<PAGE>
CREDIT AGREEMENT dated as of August 13,
1997, as amended and restated as of October 31, 1997,
among FORT JAMES CORPORATION, the BORROWING
SUBSIDIARIES party hereto, the LENDERS party hereto,
and THE CHASE MANHATTAN BANK, as Administrative
Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms have the meanings specified below
"ABR", when used in reference to any Loan or Borrowing, means that such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate
determined by reference to the Alternate Base Rate.
"Administrative Agent" means The Chase Manhattan Bank, in its capacity
as administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent, a copy of which shall be delivered
to the Company.
"Affiliate" means, with respect to a specified Person, another Person
that directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agreement Currency" has the meaning assigned to such term in Section
10.14.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
greatest of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in
effect on such day plus 1% and (c) the Federal Funds Effective Rate in effect on
such day plus 1/2 of 1%. Any change in the Alternate Base Rate due to a change
in the Prime Rate, the Base CD Rate or the Federal Funds Effective Rate shall be
effective from and including the effective date of such change in the Prime
Rate, the Base CD Rate or the Federal Funds Effective Rate, respectively.
"Alternate Procedures" means, with respect to the Multicurrency Loans
in a specified Committed Currency, any alternate notice, funding or payment
procedures approved by the Administrative Agent, the applicable Borrower and the
Multicurrency Lenders and set forth in Schedule 1.01(a) or in one or more
supplements thereto.
<PAGE>
"Applicable Percentage" of any Lender means (a) in the case of any
determination in respect of the U.S. Commitments or any extension of credit
thereunder, the percentage of the total U.S. Commitments represented by such
Lender's U.S. Commitment, (b) in the case of any determination in respect of the
Multicurrency Commitments or any extension of credit thereunder, the percentage
of the total Multicurrency Commitments represented by such Lender's
Multicurrency Commitment, and (c) in all other cases, the percentage of the
total Commitments represented by such Lender's Commitment. If the Commitments
have terminated or expired, the Applicable Percentages shall be determined based
upon the Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day, with respect to any Eurocurrency
Revolving Loan or with respect to the facility fees payable hereunder, as the
case may be, the applicable rate per annum set forth below under the caption
"Eurocurrency Spread" or "Facility Fee Rate", as the case may be, based upon the
ratings by S&P and Moody's, respectively, applicable on such date to the Index
Debt:
<TABLE>
- ---------------------------------------------------- -------------------------- ===========================
<S> <C> <C>
Index Debt Ratings: Eurocurrency Facility Fee
Spread Rate
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 1
A-or higher by S&P .140% .06%
A3 or higher by Moody's
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 2
BBB+ by S&P .170% .08%
Baa1 by Moody's
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 3
BBB by S&P .185% .09%
Baa2 by Moody's
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 4
BBB- by S&P .225% .10%
Baa3 by Moody's
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 5
BB+ by S&P .350% .15%
Ba1 by Moody's
- ---------------------------------------------------- -------------------------- ===========================
- ---------------------------------------------------- -------------------------- ===========================
Category 6
BB or lower by S&P .500% .25%
Ba2 or lower by Moody's
- ---------------------------------------------------- -------------------------- ===========================
</TABLE>
<PAGE>
For purposes of the foregoing, (i) if either Moody's or S&P shall not
have in effect a rating for the Index Debt (other than by reason of the
circumstances referred to in the penultimate sentence of this definition), then
such rating agency shall be deemed to have established a rating in Category 6;
(ii) if the ratings established or deemed to have been established by Moody's
and S&P for the Index Debt shall fall within different Categories, then (x) if
such ratings shall differ by only one Category, the Applicable Rate shall be
based on the higher of the two ratings and (y) if such ratings shall differ by
two or more Categories, the Applicable Rate shall be determined by reference to
the Category next above that of the lower of the two ratings (with one Category
being above another if the ratings it contains are superior to the ratings in
such other Category); and (iii) if the ratings established or deemed to have
been established by Moody's and S&P for the Index Debt shall be changed (other
than as a result of a change in the rating system of Moody's or S&P), such
change shall be effective as of the date on which it is first announced by the
applicable rating agency. Each change in the Applicable Rate shall apply during
the period commencing on the effective date of such change and ending on the
date immediately preceding the effective date of the next such change. If the
rating system of Moody's or S&P shall change, or if either such rating agency
shall cease to be in the business of rating corporate debt obligations or shall
terminate its rating for reasons outside the control of the Company, the Company
and the Lenders shall negotiate in good faith to amend this definition to
reflect such changed rating system or the absence of ratings from such rating
agency and, pending the effectiveness of any such amendment, the Applicable Rate
shall be determined by reference to the rating most recently in effect prior to
such change or cessation. Notwithstanding the foregoing, until the first
anniversary of the Effective Date, the ratings for the Index Debt shall be
deemed not to be higher than BBB- by S&P and Baa3 by Moody's (with A-/A3 being
the highest such rating and BB/Ba2 being the lowest).
"Assessment Rate" means, for any day, the annual assessment rate in
effect on such day that is payable by a member of the Bank Insurance Fund
classified as "well-capitalized" and within supervisory subgroup "B" (or a
comparable successor risk classification) within the meaning of 12 C.F.R. Part
327 (or any successor provision) to the Federal Deposit Insurance Corporation
for insurance by such Corporation of time deposits made in dollars at the
offices of such member in the United States; provided that if, as a result of
any change in any law, rule or regulation, it is no longer possible to determine
the Assessment Rate as aforesaid, then the Assessment Rate shall be such annual
rate as shall be determined in good faith by the Administrative Agent to be
representative of the cost of such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 10.04), and accepted by the Administrative Agent,
substantially in the form of Exhibit A or any other form approved by the
Administrative Agent and the Company.
"Availability Period" means the period from and including the Effective
Date to but excluding the earlier of the Maturity Date and the date of
termination of all of the Commitments.
"Base CD Rate" means the sum of (a) the Three-Month Secondary CD Rate
multiplied by the Statutory Reserve Rate plus (b) the Assessment Rate.
"Board" means the Board of Governors of the Federal Reserve System
of the United States of America.
"Borrower" means the Company or any Borrowing Subsidiary.
"Borrowing" means (a) Revolving Loans of the same Type, Class and
currency, made, converted or continued on the same date to or by the same
Borrower and, in the case of Eurocurrency Loans, as to which a single Interest
Period is in effect, or (b) a Competitive Loan or group of Competitive Loans of
the same Type made on the same date and as to which a single Interest Period is
in effect.
"Borrowing Date" means any Business Day specified in a notice pursuant
to Section 2.03 or 2.04 as a date on which the applicable Borrower requests
Loans to be made hereunder.
<PAGE>
"Borrowing Request" means a request for a Revolving Borrowing in
accordance with Section 2.03.
"Borrowing Subsidiary" means, at any time, each of (a) Jamont and James
River Services and (b) if designated as a Borrowing Subsidiary by the Company
pursuant to Section 2.18, any other Wholly Owned Subsidiary that is a Foreign
Subsidiary, in each case until such Person has ceased to be a Borrowing
Subsidiary pursuant to Section 2.18.
"Borrowing Subsidiary Agreement" means a Borrowing Subsidiary Agreement
substantially in the form of Exhibit D.
"Borrowing Subsidiary Termination" means a Borrowing Subsidiary
Termination substantially in the form of Exhibit E.
"Business Day" means any day that is not a Saturday, Sunday or other
day on which commercial banks in New York City are authorized or required by law
to remain closed; provided that (i) when used in connection with a Eurocurrency
Loan, the term "Business Day" shall also exclude any day on which banks are not
open for dealings in deposits in the applicable currency in the London interbank
market and (ii) when used in connection with a Multicurrency Loan, the term
"Business Day" shall also exclude any day on which banks in the jurisdiction
where such Loans are being made and where payments thereof are required to be
made are required by law to remain closed.
"Calculation Date" means (a) the last Business Day of each calendar
month and (b) at any time when the sum of the Multicurrency Loan Exposures
exceeds 75% of the total Multicurrency Commitments, the last Business Day of
each calendar week.
"Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other amounts under any lease of (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Change in Control" means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), of shares
representing more than 35% of the aggregate ordinary voting power represented by
the issued and outstanding capital stock of the Company; or (b) occupation of a
majority of the seats (other than vacant seats) on the board of directors of the
Company by Persons who were neither (i) nominated by the board of directors of
the Company nor (ii) appointed by directors so nominated; or (c) the occurrence
of a "change in control" (or similar event, howsoever denominated) under and as
defined in any indenture or other agreement in respect of Material Indebtedness
to which any Borrower is a party.
<PAGE>
"Change in Law" means (a) the adoption of any law, rule or regulation
after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.13(c), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Class", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are U.S. Revolving
Loans, Multicurrency Loans or Competitive Loans. "Code" means the Internal
Revenue Code of 1986, as amended from time to time.
"Commitment" means, with respect to each Lender, such Lender's U.S.
Commitment and Multicurrency Commitment. The initial amount of the total
Commitments is $2,500,000,000. "Committed Currency" means (a) dollars, British
Pounds Sterling, Deutsche Marks, French Francs, Italian Lire, Belgian Francs,
Dutch Guilders and Spanish Pesetas and (b) any other Eligible Currency that
shall be designated by the Company in a notice delivered to the Administrative
Agent and approved by the Administrative Agent and all the Multicurrency Lenders
as a Committed Currency.
"Company" means Fort James Corporation, a Virginia corporation
formerly named James River Corporation of Virginia.
"Competitive Bid" means an offer by a Lender to make a Competitive
Loan in accordance with Section 2.04.
"Competitive Bid Rate" means, with respect to any Competitive Bid, the
Margin or the Fixed Rate, as applicable, offered by the Lender making such
Competitive Bid.
"Competitive Bid Request" means a request for Competitive Bids in
accordance with Section 2.04.
"Competitive Borrowing"means a Borrowing comprised of Competitive Loans
"Competitive Loan"means a Loan in dollars made pursuant to Section 2.04
"Consolidated Net Income" for any period means the amount of net income
(or net loss) of the Company and its consolidated Subsidiaries (giving pro forma
effect, for any period ending prior to the consummation of the Merger, to the
Merger as if it had occurred on the first day of such period, consistent with
the method applied in the pro forma financial statements referred to in Section
3.04(b)), excluding the portion thereof allocable to minority interests, if any,
held by Persons other than the Company or any Wholly Owned Subsidiary in such
consolidated Subsidiaries for such period determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Tangible Assets" means the total assets of the
Company and its consolidated Subsidiaries, less (a) all current liabilities of
the Company and its consolidated Subsidiaries (other than the current maturities
of long-term debt) and (b) all unamortized debt discount and expense,
unamortized deferred charges, goodwill, patents, trademarks, service marks,
trade names, copyrights and other intangible assets.
<PAGE>
"Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
"Default" means any event or condition which constitutes an Event of
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Disclosed Matters" means the actions, suits and proceedings and the
environmental matters disclosed in Schedule 3.06.
"Dollar Equivalent" means, on any date of determination, with respect
to any amount in any Committed Currency, the equivalent in dollars of such
amount, determined by the Administrative Agent pursuant to Section 1.05(a) using
the Exchange Rate with respect to such Committed Currency then in effect.
"dollars"or "$" refers to lawful money of the United States of America.
"EBITDA" means, for any period, Consolidated Net Income for such
period, plus, to the extent deducted in computing Consolidated Net Income for
such period, the sum (without duplication) of (a) income tax expense, (b)
Interest Expense, (c) depreciation and amortization expense, (d) extraordinary
losses, (e) restructuring charges related to the Merger taken in the third and
fourth quarters of 1997 and (f) any other non-cash charges or expenses, minus,
to the extent added in computing Consolidated Net Income for such period, (i)
consolidated interest income, (ii) extraordinary gains and (iii) any other
non-cash income.
"Effective Date" means the date on which the conditions specified in
Section 4.01 are satisfied (or waived in accordance with Section 10.02).
"Eligible Currency" means at any time any currency (other than dollars)
that is freely tradeable and exchangeable into dollars in the London market and
for which an Exchange Rate can be determined by reference to the Reuters World
Currency Page or another publicly available service for displaying exchange
rates.
"Environmental Laws" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"Environmental Liability" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Company or any Subsidiary directly or
indirectly resulting from or based upon (a) violation of any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
<PAGE>
"ERISA Affiliate" means any trade or business (whether or not
incorporated) that, together with the Company, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than a reportable event for which the notice to the PBGC is waived); (b) the
existence with respect to any Plan of an "accumulated funding deficiency" (as
defined in Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Company or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Company or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Company or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Company or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurocurrency", when used in reference to any Loan or Borrowing, means
that such Loan, or the Loans comprising such Borrowing, are bearing interest at
a rate determined by reference to the LIBO Rate.
"Eurocurrency Reserve Percentage" means, with respect to any Lender for
any day that percentage (expressed as a decimal) that is in effect on such day,
as prescribed by any Governmental Authority for determining the reserve, liquid
asset or similar requirement with respect to Eurocurrency Loans for such Lender
that is subject to the rules and regulations of such Governmental Authority.
"Even of Default" has the meaning assigned to such term in Article VII.
"Exchange Rate" means, on any day, with respect to any Committed
Currency other than dollars, the rate at which such Committed Currency may be
exchanged into dollars (and, for purposes of the definition of "Multicurrency
Equivalent" and Section 2.06(e), 2.12(i) or 2.13(g)(ii), the rate at which
dollars may be exchanged into such Committed Currency), as set forth at
approximately 11:00 a.m., London time, on such date on the Reuters World
Currency Page for such Committed Currency or as otherwise determined in
accordance with the Alternate Procedures. In the event that such rate does not
appear on any Reuters World Currency Page, the Exchange Rate shall be determined
by reference to such other publicly available service for displaying exchange
rates as may be agreed upon by the Administrative Agent and the Company, or, in
the absence of such agreement, such Exchange Rate shall instead be the
arithmetic average of the spot rates of exchange of the Administrative Agent in
the market where its foreign currency exchange operations in respect of such
Committed Currency are then being conducted, at or about 10:00 a.m., local time,
on such date for the purchase of dollars (or such Committed Currency, as the
case may be) for delivery two Business Days later; provided that if at the time
of any such determination, for any reason, no such spot rate is being quoted,
the Administrative Agent may use any reasonable method it deems appropriate to
determine such rate, and such determination shall be presumed correct absent
manifest error.
<PAGE>
"Excluded Taxes" means, with respect to the Administrative Agent, any
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of any Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) such recipient's net income (including branch
profits or similar taxes) imposed as a result of a present or former connection
between such recipient and the Governmental Authority imposing such tax (other
than any such connection arising solely from such recipient having executed,
delivered or performed its obligations or received a payment under, or enforced,
this Agreement) and (b) in the case of a Foreign Lender (other than an assignee
pursuant to a request by the Company under Section 2.17(b)), any withholding tax
(other than withholding taxes imposed by a Governmental Authority of Belgium or
any political subdivision thereof) that is imposed on amounts payable to such
Foreign Lender (i) to the extent it is in effect and would apply as of the date
such Foreign Lender becomes a party to this Agreement or (ii) to the extent it
relates to payments received by a new lending office designated by such Foreign
Lender and is in effect and would apply at the time such lending office is
designated, except to the extent that such Foreign Lender (or its assignor, if
any) was entitled, at the time of designation of a new lending office (or
assignment), to receive additional amounts from the applicable Borrower with
respect to such withholding tax pursuant to Section 2.15(a) (other than any
withholding tax imposed on payments (A) by any Borrowing Subsidiary that is
designated after such Foreign Lender becomes a party to this Agreement or
designates a new lending office or (B) by any Borrower from a Payment Location
other than one specifically identified in this Agreement or any schedule hereto
as of the date such Foreign Lender becomes a party to this Agreement or
designates a new lending office), or (iii) that is attributable to such Foreign
Lender's failure to comply with Section 2.15(e).
"Existing Credit Agreements" means the agreements listed on Schedule
1.01(b) and all related guarantees and security documents, if any.
"Existing Receivables Program" means that certain receivables
securitization program conducted pursuant to the Existing Receivables Program
Documents.
"Existing Receivables Program Documents" means the documents listed on
Schedule 1.01(c).
"Federal Funds Effective Rate" means, for any day, the weighted average
(rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds transactions with members of the Federal Reserve System
arranged by Federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financial Officer" of any Person means the chief financial officer,
principal accounting officer, treasurer or controller of such Person.
"Fixed Rate" means, with respect to any Competitive Loan (other than a
Eurocurrency Competitive Loan), the fixed rate of interest per annum specified
by the Lender making such Competitive Loan in its related Competitive Bid.
"Fixed Rate Loan" means a Competitive Loan bearing interest at a Fixed
Rate.
"Foreign Lender" means, with respect to any Loan, any Lender making
such Loan that is organized under the laws of a jurisdiction other than the
Relevant Jurisdiction.
<PAGE>
"Foreign Subsidiary" means any Subsidiary that is not organized under
the laws of any jurisdiction in the United States.
"Fort Howard" means Fort Howard Corporation, a Delaware corporation.
"Fort Howard Bonds" means Fort Howard's (i) 9-1/4% Senior Notes due
2001, in an aggregate principal amount outstanding on the date hereof of
$450,000,000, (ii) 8-1/4% Senior Notes due 2002, in an aggregate principal
amount outstanding on the date hereof of $100,000,000, (iii) 9% Senior
Subordinated Notes due 2006, in an aggregate principal amount outstanding on the
date hereof of $618,097,000, and (iv) 10% Subordinated Notes due 2003, in an
aggregate principal amount outstanding on the date hereof of $298,500,000.
"Fort Howard Subordinated Note Indenture" means the Indenture dated as
of March 15, 1993, between Fort Howard and United States Trust Company of New
York pursuant to which Fort Howard issued its 10% Subordinated Notes due 2003.
"GAAP" means generally accepted accounting principles in the United
States of America.
"Governmental Authority" means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other monetary obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; provided, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"Hedging Obligations" means all obligations of the Company or any
Subsidiary in respect of any Hedging Agreement.
<PAGE>
"Indebtedness" of any Person means, without duplication, (a) all
obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (e) all Indebtedness of others of the type described in the other
clauses of this definition secured by (or for which the holder of such
Indebtedness has an existing right, contingent or otherwise, to be secured by)
any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed; provided that the amount of any
Indebtedness of others that constitutes Indebtedness of such Person solely by
reason of this clause (e) shall not for purposes of this Agreement exceed the
greater of the book value or the fair market value of the property subject to
such Lien, (f) all Guarantees by such Person of Indebtedness of others, (g) all
Capital Lease Obligations of such Person, (h) all obligations, contingent or
otherwise, of such Person as an account party in respect of letters of credit
and letters of guaranty and (i) all obligations, contingent or otherwise, of
such Person in respect of bankers' acceptances. The Indebtedness of any Person
shall include the Indebtedness of any other entity (including any partnership in
which such Person is a general partner) to the extent such Person would under
applicable law or any agreement or instrument be liable therefor as a result of
such Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such Person
shall not be liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
"Index Debt" means senior, unsecured, long-term indebtedness for
borrowed money of the Company that is not guaranteed by any other Person or
subject to any other credit enhancement.
"Information Memorandum" means the Confidential Information Memorandum
of the Company dated July 1997.
"Interest Election Request" means a request by the applicable Borrower
to convert or continue a Revolving Borrowing in accordance with Section 2.06.
"Interest Expense" means, for any period, the interest expense of the
Company and its consolidated Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP (giving pro forma effect, for any
period ending prior to the consummation of the Merger, to the Merger as if it
had occurred on the first day of such period, consistent with the method applied
in the pro forma financial statements referred to in Section 3.04(b)), including
(i) the amortization of debt discounts to the extent included in interest
expense in accordance with GAAP, (ii) the amortization of all fees (including
fees with respect to Hedging Agreements) payable in connection with the
incurrence of Indebtedness to the extent included in interest expense in
accordance with GAAP and (iii) the portion of any rents payable under capital
leases allocable to interest expense in accordance with GAAP.
<PAGE>
"Interest Payment Date" means (a) with respect to any ABR Loan, the
last day of each March, June, September and December, (b) with respect to any
Eurocurrency Loan, the last day of the Interest Period applicable to the
Borrowing of which such Loan is a part and, in the case of a Eurocurrency
Borrowing with an Interest Period of more than three months' duration, each day
prior to the last day of such Interest Period that occurs at intervals of three
months' duration after the first day of such Interest Period, and (c) with
respect to any Fixed Rate Loan, the last day of the Interest Period applicable
to the Borrowing of which such Loan is a part and, in the case of a Fixed Rate
Borrowing with an Interest Period of more than 90 days' duration (unless
otherwise specified in the applicable Competitive Bid Request), each day prior
to the last day of such Interest Period that occurs at intervals of 90 days'
duration after the first day of such Interest Period, and any other dates that
are specified in the applicable Competitive Bid Request as Interest Payment
Dates with respect to such Borrowing.
"Interest Period" means (a) with respect to any Eurocurrency Borrowing,
the period commencing on the date of such Borrowing and ending on the
numerically corresponding day in the calendar month that is one, two, three or
six months thereafter, as the applicable Borrower may elect and (b) with respect
to any Fixed Rate Borrowing, the period (which shall not be less than one day or
more than 360 days) commencing on the date of such Borrowing and ending on the
date specified in the applicable Competitive Bid Request; provided, that (i) if
any Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurocurrency Borrowing only, such next succeeding Business Day would fall
in the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (ii) any Interest Period pertaining to a
Eurocurrency Borrowing that commences on the last Business Day of a calendar
month (or on a day for which there is no numerically corresponding day in the
last calendar month of such Interest Period) shall end on the last Business Day
of the last calendar month of such Interest Period. For purposes hereof, the
date of a Borrowing initially shall be the date on which such Borrowing is made
and, in the case of a Revolving Borrowing, thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.19(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"James River Services" means James River Services S.N.C., a general
partnership organized and existing under the laws of the Kingdom of Belgium (a
"Vennootsehap onder Firmal Societe en Nom Collectif").
"Jamont" means Jamont N.V., a company incorporated under the law of The
Netherlands.
"Judgment Currency" has the meaning assigned to such term in Section
10.14.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to
a Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Company at such time. The LC Exposure of any U.S. Lender at any time
shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the U.S. Lenders and the Multicurrency Lenders.
"Letter of Credit" means any letter of credit issued pursuant to this
Agreement.
<PAGE>
"Leverage Ratio" means, as of the last day of any fiscal quarter of the
Company, the ratio of (a) Total Debt at such date to (b) EBITDA for the period
of four consecutive fiscal quarters of the Company ended on such date.
"LIBO Rate" means, with respect to any Eurocurrency Borrowing for any
Interest Period, the rate appearing on Page 3750 (or, in the case of a
Multicurrency Borrowing, the rate appearing on the Page for the applicable
Committed Currency) of the Dow Jones Service (or on any successor or substitute
page of such Service, or any successor to or substitute for such Service,
providing rate quotations comparable to those currently provided on such page of
such Service, as determined by the Administrative Agent from time to time for
purposes of providing quotations of interest rates applicable to dollar deposits
(or, in the case of a Multicurrency Borrowing, deposits in the applicable
Committed Currency) in the London interbank market) at approximately 11:00 a.m.,
London time, two Business Days prior to the commencement of such Interest
Period, as the rate for dollar deposits (or the applicable Committed Currency)
with a maturity comparable to such Interest Period. In the event that such rate
is not available at such time for any reason, then the "LIBO Rate" with respect
to such Eurocurrency Borrowing (or such Multicurrency Borrowing) for such
Interest Period shall be the rate at which the Administrative Agent is offered
dollar deposits of $5,000,000 (or, in the case of a Multicurrency Borrowing,
deposits in the applicable Committed Currency in an amount the Dollar Equivalent
of which is approximately equal to $5,000,000) and for a maturity comparable to
such Interest Period in immediately available funds in the London interbank
market at approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"Lien" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any of the
foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"Loans" means the U.S. Revolving Loans, the Multicurrency Loans and the
Competitive Loans.
"Margin" means, with respect to any Competitive Loan bearing interest
at a rate based on the LIBO Rate, the marginal rate of interest, if any, to be
added to or subtracted from the LIBO Rate to determine the rate of interest
applicable to such Loan, as specified by the Lender making such Loan in its
related Competitive Bid.
"Margin Stock" has the meaning assigned to such term in Regulation U.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations or condition, financial or otherwise, of the
Company and its Subsidiaries, taken as a whole, or (b) the ability of any
Borrower to perform, or the enforceability against any Borrower of, any of its
obligations under this Agreement or any Borrowing Subsidiary Agreement to which
it is a party.
<PAGE>
"Material Indebtedness" means Indebtedness (other than the Loans and
the Letters of Credit), or obligations in respect of one or more Hedging
Agreements, of the Company and its Subsidiaries in an aggregate outstanding
principal amount exceeding $25,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of the Company or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Company or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.
"Maturity Date" means August 13, 2002.
"Merger" means the merger of James River Delaware, Inc., with and into
Fort Howard, with Fort Howard surviving such merger as a Wholly Owned Subsidiary
of the Company.
"Merger Agreement" means the Agreement and Plan of Merger dated as of
May 4, 1997, among the Company, James River Delaware, Inc., and Fort Howard.
"Moody's" means Moody's Investors Service, Inc.
"Multicurrency Borrowing" means a Borrowing comprised of Multicurrency
Loans.
"Multicurrency Commitment" means, with respect to each Multicurrency
Lender, the commitment of such Lender (expressed in dollars) to make
Multicurrency Loans, expressed as an amount representing the maximum aggregate
Dollar Equivalent of the principal amount of such Lender's outstanding
Multicurrency Loans, as such commitment may be (a) reduced from time to time
pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each Multicurrency Lender's Multicurrency Commitment is set forth on
Schedule 2.01 or in the Assignment and Acceptance pursuant to which such Lender
shall have assumed its Multicurrency Commitment, as applicable. The initial
amount of the total Multicurrency Commitments is $300,000,000.
"Multicurrency Equivalent" means, on any date of determination, with
respect to any amount in dollars, the equivalent in the relevant Committed
Currency of such amount, determined by the Administrative Agent using the
Exchange Rate with respect to such Committed Currency then in effect as
determined pursuant to Section 1.05(a).
"Multicurrency Lenders" means the Lenders designated as such on
Schedule 2.01 and any other Person that shall become a Multicurrency Lender
pursuant to an Assignment and Acceptance, other than any such Person that ceases
to be a Multicurrency Lender pursuant to an Assignment and Acceptance.
"Multicurrency Loan" means a Revolving Loan denominated in a Committed
Currency and made pursuant to Section 2.01(b).
"Multicurrency Loan Exposure" means, with respect to any Multicurrency
Lender at any time, such Lender's Applicable Percentage of the Dollar Equivalent
of the aggregate principal amount of the outstanding Multicurrency Loans.
"Multiemployer Plan" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"New Receivables Financing" has the meaning assigned to such term in
the definition of "Permitted Receivables Financing".
<PAGE>
"Obligations" means the obligations of each of the Borrowing
Subsidiaries under this Agreement and the Borrowing Subsidiary Agreements with
respect to the payment of (i) the principal of and interest on the Loans to each
such Borrowing Subsidiary when and as due, whether at maturity, by acceleration,
upon one or more dates set for prepayment or otherwise and (ii) all other
monetary obligations of each of the Borrowing Subsidiaries hereunder and
thereunder.
"Other Taxes" means any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies arising
from any payment made hereunder or from the execution, delivery or enforcement
of, or otherwise with respect to, this Agreement.
"Participant"has the meaning assigned to such term in Section 10.04(e).
"Payment Location" means an office, branch or other place of business
of any Borrower.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA and any successor entity performing similar functions.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or
are being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that (i) are not
overdue by more than 30 days, (ii) do not in the aggregate materially
detract from the value of the property subject to such Lien or
materially impair the use thereof in the operation of the business of
the Company or any Subsidiary or (iii) are being contested in
compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(d) deposits to secure the performance of bids, trade
contracts, leases, statutory obligations, surety and appeal bonds,
performance bonds and other obligations of a like nature, in each case
in the ordinary course of business, and deposits securing liabilities
to insurance carriers under insurance or self-insurance arrangements;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the ordinary
course of business that do not secure any monetary obligations and do
not materially detract from the value of the affected property or
interfere with the ordinary conduct of business of the Company or any
Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
<PAGE>
"Permitted Receivables Financing" means (a) the Existing Receivables
Program and (b) any extension, renewal or refinancing of the Existing
Receivables Program, or any other financing secured by trade receivables (and
related assets) originated by the Company or any Subsidiary (a "New Receivables
Financing"), provided that (i) the Indebtedness associated with the Existing
Receivables Program and any New Receivables Financing does not exceed in the
aggregate $500,000,000 at any time, (ii) sales of receivables by the Company or
any Subsidiary are made at fair market value, (iii) the interest rate applicable
to any receivables financing shall be a market interest rate (as determined in
good faith by the board of directors of the Company) as of the time such
financing is entered into, (iv) such financing is non-recourse to the Company
and its Subsidiaries except to a limited extent customary for such financings
and (v) the covenants, events of default and other provisions thereof,
collectively, shall be market terms (as determined in good faith by the board of
directors of the Company).
"Person" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
"Plan" means any employee pension benefit plan (other than a
Multiemployer Plan) (i) subject to the provisions of Title IV of ERISA or
Section 412 of the Code or Section 302 of ERISA and (ii) in respect of which the
Company or any ERISA Affiliate is (or, if such plan were terminated, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Preferred Stock" of any Person means any class of capital stock or
other equity interest of such Person that is preferred as to the payment of
dividends or distributions, or as to the distribution of assets upon any
voluntary or involuntary liquidation or dissolution of such Person, over any
other class of capital stock or other equity interest of such Person.
"Prime Rate" means the rate of interest per annum publicly announced
from time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Register" has the meaning set forth in Section 10.04(c).
"Regulation G" means Regulation G of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation T" means Regulation T of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board as from time to time in
effect and all official rulings and interpretations thereunder or thereof.
"Related Parties" means, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
"Relevant Jurisdiction" means (a) in the case of any Loan to the
Company or Fort Howard, the United States of America, and (b) in the case of any
Loan to any other Borrowing Subsidiary, the jurisdiction imposing (or having the
power to impose) withholding tax on payments by such Borrowing Subsidiary under
this Agreement.
<PAGE>
"Required Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Commitments representing more than 50% of the sum of the
total Revolving Credit Exposures and unused Commitments at such time; provided
that, for purposes of declaring the Loans to be due and payable pursuant to
Article VII, and for all purposes after the Loans become due and payable
pursuant to Article VII or the Commitments expire or terminate, the outstanding
Competitive Loans of the Lenders shall be included in their respective Revolving
Credit Exposures in determining the Required Lenders.
"Reset Date" has the meaning set forth in Section 1.05(a).
"Revolving Borrowing" means a Borrowing comprised of Revolving Loans.
"Revolving Credit Exposure" means, with respect to any Lender at any
time,such Lender's U.S.Revolving Credit Exposure and such Lender's Multicurrency
Loan Exposure.
"Revolving Loan" means a U.S. Revolving Loan or a Multicurrency Loan.
"S&P" means Standard & Poor's.
"Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve, liquid asset or similar
percentages (including any marginal, special, emergency or supplemental
reserves) expressed as a decimal established by the Board for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months. The Statutory Reserve Rate shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.
"subsidiary" means, with respect to any Person (the "parent") at any
date, any corporation, limited liability company, partnership, association or
other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership, association or other
entity of which securities or other ownership interests representing more than
50% of the equity or more than 50% of the ordinary voting power or, in the case
of a partnership, more than 50% of the general partnership interests are, as of
such date, owned, controlled or held directly or indirectly by the parent.
"Subsidiary" means any subsidiary of the Company.
"Taxes" means any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
<PAGE>
"Three-Month Secondary CD Rate" means, for any day, the secondary
market rate for three-month certificates of deposit reported as being in effect
on such day (or, if such day is not a Business Day, the next preceding Business
Day) by the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of the
Board, be published in Federal Reserve Statistical Release H.15(519) during the
week following such day) or, if such rate is not so reported on such day or such
next preceding Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York City
received at approximately 10:00 a.m., New York City time, on such day (or, if
such day is not a Business Day, on the next preceding Business Day) by the
Administrative Agent from three negotiable certificate of deposit dealers of
recognized standing selected by it.
"Total Debt" means, at any date, all Indebtedness of the Company and
its consolidated Subsidiaries at such date (other than Indebtedness of the type
described in clause (h) or (i) of the definition of the term "Indebtedness",
except to the extent of any unreimbursed drawings thereunder).
"Transactions" means (i) the Merger and (ii) the execution, delivery
and performance by the Borrowers of this Agreement and any Borrowing Subsidiary
Agreements, the borrowing of Loans and the use of the proceeds thereof and the
issuance of Letters of Credit hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the LIBO Rate, the Alternate Base Rate
or a Fixed Rate.
"U.S. Commitment" means, with respect to each U.S. Lender, the
commitment of such Lender to make U.S. Revolving Loans and to acquire
participations in Letters of Credit hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's U.S. Revolving Credit
Exposure hereunder, as such commitment may be (a) reduced from time to time
pursuant to Section 2.07 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 10.04. The initial
amount of each U.S. Lender's U.S. Commitment is set forth on Schedule 2.01 or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its U.S. Commitment, as applicable. The initial amount of the total U.S.
Commitments is $2,200,000,000.
"U.S. Lenders" means the Lenders designated as such on Schedule 2.01
and any other Person that shall become a U.S. Lender pursuant to an Assignment
and Acceptance, other than any such Person that ceases to be a U.S. Lender
pursuant to an Assignment and Acceptance.
"U.S.Revolving Borrowing" means a Borrowing comprised of U.S. Revolving
Loans.
"U.S. Revolving Credit Exposure" means, with respect to any Lender at
any time, the sum of the outstanding principal amount of such Lender's U.S.
Revolving Loans and its LC Exposure at such time.
"U.S. Revolving Loan" means a Revolving Loan denominated in dollars
and made pursuant to Section 2.01(a).
"Wholly Owned Subsidiary" means a Subsidiary all the capital stock (or
other ownership interests) of which (other than directors' qualifying shares) is
owned by the Company or another Wholly Owned Subsidiary.
"Withdrawal Liability" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
<PAGE>
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
this Agreement, Loans may be classified and referred to by Class (e.g., a
"Revolving Loan") or by Type (e.g., a "Eurocurrency Loan") or by Class and Type
(e.g., a "Eurocurrency Revolving Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
"Eurocurrency Borrowing") or by Class and Type (e.g., a "Eurocurrency Revolving
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phrase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall".
Unless the context requires otherwise (a) any definition of or reference to any
agreement, instrument or other document herein shall be construed as referring
to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference
herein to any Person shall be construed to include such Person's successors and
assigns, (c) the words "herein", "hereof" and "hereunder", and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any particular provision hereof, (d) all references herein to Articles,
Sections, Exhibits and Schedules shall be construed to refer to Articles and
Sections of, and Exhibits and Schedules to, this Agreement and (e) the words
"asset" and "property" shall be construed to have the same meaning and effect
and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
that, if the Company notifies the Administrative Agent that the Company requests
an amendment to any provision hereof to eliminate the effect of any change
occurring after the date hereof in GAAP or in the application thereof on the
operation of such provision (or if the Administrative Agent notifies the Company
that the Required Lenders request an amendment to any provision hereof for such
purpose), regardless of whether any such notice is given before or after such
change in GAAP or in the application thereof, then such provision shall be
interpreted on the basis of GAAP as in effect and applied immediately before
such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
SECTION 1.05. Exchange Rates. (a) Not later than 1:00 p.m., New York
City time, on each Calculation Date, the Administrative Agent shall (i)
determine the Exchange Rate as of such Calculation Date with respect to each
Committed Currency (other than dollars) and (ii) give notice thereof to the
Lenders and the Company. The Exchange Rates so determined shall become effective
on the first Business Day immediately following the relevant Calculation Date (a
"Reset Date"), shall remain effective until the next succeeding Reset Date, and
shall for all purposes of this Agreement (other than Section 2.06(e), Section
2.12(i), Section 2.13(g)(ii), Section 10.14 or any other provision expressly
requiring the use of a current Exchange Rate) be the Exchange Rates employed in
converting any amounts between dollars and Committed Currencies.
(b) Not later than 5:00 p.m., New York City time, on each Reset Date
and each Borrowing Date with respect to Multicurrency Loans, the Administrative
Agent shall (i) determine the Dollar Equivalent of the aggregate principal
amount of the Multicurrency Loans then outstanding (after giving effect to any
Multicurrency Loans made or repaid on such date) and (ii) notify the Lenders and
the Company of the results of such determination.
SECTION 1.06. Several Obligations. The obligations of the Borrowers to
pay the principal of and interest on each Loan are several and not joint, and no
Borrowing Subsidiary shall be liable for the payment obligations of the Company
or any other Borrowing Subsidiary hereunder.
<PAGE>
ARTICLE II
The Credits
SECTION 2.01. Commitments. (a) Subject to the terms and conditions set
forth herein, each U.S. Lender agrees to make U.S. Revolving Loans to the
Company from time to time during the Availability Period in an aggregate
principal amount that will not result in (i) such Lender's U.S. Revolving Credit
Exposure exceeding such Lender's U.S. Commitment or (ii) the sum of the total
U.S. Revolving Credit Exposures plus the aggregate principal amount of the
outstanding Competitive Loans exceeding the total U.S. Commitments.
(b) Subject to the terms and conditions set forth herein, each
Multicurrency Lender agrees to make Multicurrency Loans to any Borrower from
time to time during the Availability Period in an aggregate principal amount
that will not result in (i) the Multicurrency Loan Exposure of any Multicurrency
Lender exceeding such Lender's Multicurrency Commitment or (ii) the sum of the
Multicurrency Loan Exposures exceeding the total Multicurrency Commitments,
provided that the aggregate amount of all Multicurrency Loans denominated in
each of Italian Lire and Spanish Pesetas shall not exceed $25,000,000.
(c) Within the foregoing limits and subject to the terms and conditions
set forth herein, the Borrowers may borrow, prepay and reborrow Revolving Loans.
SECTION 2.02. Loans and Borrowings. (a) Each U.S. Revolving Loan shall
be made as part of a Borrowing consisting of U.S. Revolving Loans made by the
U.S. Lenders ratably in accordance with their U.S. Commitments. Each
Multicurrency Loan shall be made as part of a Borrowing consisting of
Multicurrency Loans denominated in the same Committed Currency and made by the
Multicurrency Lenders ratably in accordance with their Multicurrency
Commitments. Each Competitive Loan shall be made in accordance with the
procedures set forth in Section 2.04. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; provided that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12 and Section 2.13(g), (i) each U.S.
Revolving Borrowing shall be comprised entirely of Eurocurrency Loans or ABR
Loans as the Company may request in accordance herewith, (ii) each Multicurrency
Borrowing shall be comprised of Eurocurrency Loans or, if denominated in dollars
and at the option of the applicable Borrower as specified pursuant to Section
2.03 or 2.06, ABR Loans, and (iii) each Competitive Borrowing shall be comprised
entirely of Eurocurrency Competitive Loans or Fixed Rate Loans as the Company
may request in accordance herewith. Each Lender at its option may make any
Eurocurrency Loan by causing any domestic or foreign branch or Affiliate of such
Lender to make such Loan; provided that any exercise of such option shall not
affect the obligation of any Borrower to repay such Loan in accordance with the
terms of this Agreement.
<PAGE>
(c) At the commencement of each Interest Period for any Eurocurrency
Revolving Borrowing, such Borrowing shall be in an aggregate amount that is at
least $5,000,000 (or the Multicurrency Equivalent thereof) and, in the case of a
Borrowing denominated in dollars, an integral multiple of $1,000,000. At the
time that each ABR Revolving Borrowing is made, such Borrowing shall be in an
aggregate amount that is at least $5,000,000 and an integral multiple of
$1,000,000; provided that an ABR Revolving Borrowing may be in an aggregate
amount that is equal to the entire unused balance of the total U.S. Commitments
or total Multicurrency Commitments, as the case may be, or that is required to
finance the reimbursement of an LC Disbursement as contemplated by Section
2.19(e). Each Competitive Borrowing shall be in an aggregate amount that is at
least $5,000,000 and an integral multiple of $1,000,000. Borrowings of more than
one Type and Class may be outstanding at the same time; provided that there
shall not at any time be more than a total of 25 Eurocurrency Revolving
Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, no Borrower
shall be entitled to request, or to elect to convert or continue, any Borrowing
if the Interest Period requested with respect thereto would end after the
Maturity Date.
SECTION 2.03. Requests for Revolving Borrowings. To request a Revolving
Borrowing, a Borrower shall notify the Administrative Agent of such request by
telephone (a) in the case of a Eurocurrency Borrowing (other than a
Multicurrency Borrowing), not later than 11:00 a.m., New York City time, three
Business Days before the date of the proposed Borrowing, (b) in the case of a
Multicurrency Borrowing, not later than 10:00 a.m., London time, three Business
Days before the date of the proposed Borrowing (or at such other time as shall
be specified in the Alternate Procedures) or (c) in the case of an ABR
Borrowing, not later than 12:00 (noon), New York City time, on the day of the
proposed Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the applicable Borrower. Each such telephonic
and written Borrowing Request shall specify the following information in
compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a U.S.Revolving Borrowing or a
Multicurrency Borrowing;
(iv) if such Borrowing is to be a Multicurrency Borrowing, the
currency thereof, which shall be a Committed Currency;
(v) if such Borrowing is to be denominated in dollars, whether it is
to be an ABR Borrowing or a Eurocurrency Borrowing;
(vi) in the case of a Eurocurrency Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(vii) the location and number of the applicable Borrower's account to
which funds are to be disbursed, which shall comply with the requirements
of Section 2.05.
<PAGE>
If no Class is specified with respect to any dollar denominated Borrowing, the
applicable Borrower shall be deemed to have selected a U.S. Revolving Borrowing.
If no Class is specified with respect to any Borrowing denominated in a
Committed Currency (other than dollars), the applicable Borrower shall be deemed
to have selected a Multicurrency Borrowing. If no Type is specified with respect
to any U.S. Revolving Borrowing selected or deemed selected or a Multicurrency
Borrowing denominated in dollars, then the applicable Borrower shall be deemed
to have selected an ABR Borrowing. If no currency is specified with respect to
any requested Eurocurrency Revolving Borrowing, then the applicable Borrower
shall be deemed to have selected dollars. If no Interest Period is specified
with respect to any requested Eurocurrency Revolving Borrowing, then the
applicable Borrower shall be deemed to have selected an Interest Period of one
month's duration. Promptly following receipt of a Borrowing Request in
accordance with this Section, the Administrative Agent shall advise each Lender
of the details thereof and of the amount of such Lender's Loan to be made as
part of the requested Borrowing.
SECTION 2.04. Competitive Bid Procedure. (a) Subject to the terms and
conditions set forth herein, from time to time during the Availability Period
the Company may request Competitive Bids for Competitive Loans denominated in
dollars and may (but shall not have any obligation to) accept Competitive Bids
and borrow Competitive Loans; provided that the sum of the total U.S. Revolving
Credit Exposures plus the aggregate principal amount of outstanding Competitive
Loans at any time shall not exceed the total U.S. Commitments. To request
Competitive Bids, the Company shall notify the Administrative Agent of such
request by telephone, in the case of a Eurocurrency Borrowing, not later than
11:00 a.m., New York City time, four Business Days before the date of the
proposed Borrowing and, in the case of a Fixed Rate Borrowing, not later than
10:00 a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that the Company may submit jointly up to (but not more
than) three Competitive Bid Requests on the same day, but a Competitive Bid
Request shall not be made within five Business Days after the date of any
previous Competitive Bid Request, unless any and all such previous Competitive
Bid Requests shall have been withdrawn or all Competitive Bids received in
response thereto rejected. Each such telephonic Competitive Bid Request shall be
confirmed promptly by hand delivery or telecopy to the Administrative Agent of a
written Competitive Bid Request in a form approved by the Administrative Agent
and signed by the Company. Each such telephonic and written Competitive Bid
Request shall specify the following information in compliance with Section 2.02:
(i) the aggregate amount of the requested Borrowing;
(ii) the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a Eurocurrency Borrowing or a
Fixed Rate Borrowing;
(iv) the Interest Period to be applicable to such Borrowing, which
shall be a period contemplated by the definition of the term "Interest
Period"; and
(v) the location and number of the Company's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.05.
Promptly following receipt of a Competitive Bid Request in accordance with this
Section, the Administrative Agent shall notify the Lenders of the details
thereof by telecopy, inviting the Lenders to submit Competitive Bids.
<PAGE>
(b) Each U.S. Lender may (but shall not have any obligation to) make
one or more Competitive Bids to the Company in response to a Competitive Bid
Request. Each Competitive Bid by a U.S. Lender must be in a form approved by the
Administrative Agent and must be received by the Administrative Agent by
telecopy, in the case of a Eurocurrency Competitive Borrowing, not later than
9:30 a.m., New York City time, three Business Days before the proposed date of
such Competitive Borrowing, and in the case of a Fixed Rate Borrowing, not later
than 9:30 a.m., New York City time, on the proposed date of such Competitive
Borrowing. Competitive Bids that do not conform substantially to the form
approved by the Administrative Agent may be rejected by the Administrative
Agent, and the Administrative Agent shall notify the applicable Lender as
promptly as practicable. Each Competitive Bid shall be irrevocable and shall
specify (i) the principal amount (which shall be a minimum of $5,000,000 and an
integral multiple of $1,000,000 and which may equal up to the entire principal
amount of the Competitive Borrowing requested by the Company) of the Competitive
Loan or Loans that the Lender is willing to make, (ii) the Competitive Bid Rate
or Rates at which the Lender is prepared to make such Competitive Loan or Loans
(expressed as a percentage rate per annum in the form of a decimal to no more
than four decimal places) and (iii) the Interest Period applicable to each such
Loan and the last day thereof.
(c) The Administrative Agent shall promptly notify the Company by
telecopy of the Competitive Bid Rate or Rates and the principal amount of the
Competitive Loan or Loans specified in each Competitive Bid and the identity of
the Lender that shall have made such Competitive Bid.
(d) Subject only to the provisions of this paragraph, the Company may
accept or reject any Competitive Bid. The Company shall notify the
Administrative Agent by telephone, confirmed by telecopy in a form approved by
the Administrative Agent, whether and to what extent it has decided to accept or
reject each Competitive Bid, in the case of a Eurocurrency Competitive
Borrowing, not later than 10:30 a.m., New York City time, three Business Days
before the date of the proposed Competitive Borrowing, and in the case of a
Fixed Rate Borrowing, not later than 10:30 a.m., New York City time, on the
proposed date of the Competitive Borrowing; provided that (i) the failure of the
Company to give such notice shall be deemed to be a rejection of each
Competitive Bid, (ii) the Company shall not accept a Competitive Bid made at a
particular Competitive Bid Rate if the Company rejects a Competitive Bid made at
a lower Competitive Bid Rate, (iii) the aggregate amount of the Competitive Bids
accepted by the Company shall not exceed the aggregate amount of the requested
Competitive Borrowing specified in the related Competitive Bid Request, (iv) to
the extent necessary to comply with clause (iii) above, the Company may accept
Competitive Bids at the same Competitive Bid Rate in part, which acceptance, in
the case of multiple Competitive Bids at such Competitive Bid Rate, shall be
made pro rata in accordance with the amount of each such Competitive Bid as
allocated by the Administrative Agent, and (v) except pursuant to clause (iv)
above, no Competitive Bid shall be accepted for a Competitive Loan unless such
Competitive Loan is in a minimum principal amount of $5,000,000 and an integral
multiple of $1,000,000; provided further that if a Competitive Loan must be in
an amount less than $5,000,000 because of the provisions of clause (iv) above,
such Competitive Loan may be for a minimum of $1,000,000 or any integral
multiple thereof, and in calculating the pro rata allocation of acceptances of
portions of multiple Competitive Bids at a particular Competitive Bid Rate
pursuant to clause (iv) the amounts shall be rounded to integral multiples of
$1,000,000 in a manner determined by the Company. A notice given by the Company
pursuant to this paragraph shall be irrevocable.
(e) The Administrative Agent shall promptly notify each bidding Lender
by telecopy whether or not its Competitive Bid has been accepted (and, if so,
the amount and Competitive Bid Rate so accepted), and, upon receipt of such
notice, each successful bidder will thereupon become bound, subject to the terms
and conditions hereof, to make the Competitive Loan in respect of which its
Competitive Bid has been accepted.
(f) If the Administrative Agent shall elect to submit a Competitive Bid
in its capacity as a Lender, it shall submit such Competitive Bid directly to
the Company at least one quarter of an hour earlier than the time by which the
other Lenders are required to submit their Competitive Bids to the
Administrative Agent pursuant to paragraph (b) of this Section.
<PAGE>
SECTION 2.05. Funding of Borrowings. (a) Each U.S. Lender shall make
each Loan to be made by it hereunder on the proposed date thereof by wire
transfer of immediately available funds by 12:00 noon, New York City time, to
the account of the Administrative Agent most recently designated by it for such
purpose by notice to the Lenders. The Administrative Agent will make such Loans
available to the applicable Borrower by promptly crediting the amounts so
received, in like funds, to an account of the Company maintained with the
Administrative Agent in New York City and designated by the Company in the
applicable Borrowing Request or Competitive Bid Request or to such other account
as may be specified by the applicable Borrower in the applicable Borrowing
Request or Competitive Bid Request; provided that ABR U.S. Revolving Loans made
to finance the reimbursement of an LC Disbursement as provided in Section
2.19(e) shall be remitted by the Administrative Agent to the Issuing Bank. Each
Multicurrency Lender shall make each Multicurrency Loan to be made by it
hereunder on the proposed date thereof by wire transfer of such immediately
available funds as may then be customary for the settlement of international
transactions in the applicable Committed Currency, by 11:00 a.m., London time,
to the account of the Administrative Agent most recently designated by it for
such purpose by notice to the Multicurrency Lenders (or by such other time and
to such other account as shall be specified in the Alternate Procedures). The
Administrative Agent will make such Multicurrency Loans available to the
applicable Borrower by promptly crediting the amounts so received, in like
funds, to an account of such Borrower maintained in London (or in such other
city as shall be designated in the Alternate Procedures) and designated by such
Borrower in the applicable Borrowing Request.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing that such Lender will not
make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the applicable
Borrower a corresponding amount. In such event, if a Lender has not in fact made
its share of the applicable Borrowing available to the Administrative Agent,
then the applicable Lender and the applicable Borrower severally agree to pay to
the Administrative Agent forthwith on demand such corresponding amount with
interest thereon, for each day from and including the date such amount is made
available to the applicable Borrower to but excluding the date of payment to the
Administrative Agent, at (i) in the case of such Lender, (x) the Federal Funds
Effective Rate (in the case of a Borrowing in dollars) and (y) the rate
reasonably determined by the Administrative Agent to be the cost to it of
funding such amount (in the case of a Borrowing in a Committed Currency) or (ii)
in the case of such Borrower, the interest rate applicable to the subject Loan.
If such Lender pays such amount to the Administrative Agent, then such amount
shall constitute such Lender's Loan included in such Borrowing.
SECTION 2.06. Interest Elections. (a) Each Revolving Borrowing
initially shall be of the Type specified in the applicable Borrowing Request
and, in the case of a Eurocurrency Revolving Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request (or, in either case, as
deemed specified). Thereafter, the applicable Borrower may elect to convert such
Borrowing to a different Type or to continue such Borrowing and, in the case of
a Eurocurrency Revolving Borrowing, may elect Interest Periods therefor, all as
provided in this Section. A Borrower may elect different options with respect to
different portions of the affected Borrowing, in which case each such portion
shall be allocated ratably among the Lenders holding the Loans comprising such
Borrowing, and the Loans comprising each such portion shall be considered a
separate Borrowing. This Section shall not apply to Competitive Borrowings,
which may not be converted or continued. Notwithstanding any contrary provision
herein, this Section shall not be construed to permit any Borrower to change the
currency or Class of any Borrowing.
<PAGE>
(b) To make an election pursuant to this Section, a Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if such Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
applicable Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to
each resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) if the Borrowing to which such Interest Election Request
applies is denominated in dollars, whether the resulting Borrowing is
to be an ABR Borrowing or a Eurocurrency Borrowing; and
(iv) if the resulting Borrowing is a Eurocurrency Borrowing,
the Interest Period to be applicable thereto after giving effect to
such election, which shall be a period contemplated by the definition
of the term "Interest Period".
If no Interest Period is specified with respect to any requested Eurocurrency
Borrowing, then the applicable Borrower shall be deemed to have selected an
Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the applicable Borrower fails to deliver a timely Interest
Election Request with respect to a Eurocurrency Revolving Borrowing prior to the
end of the Interest Period applicable thereto, then, unless such Borrowing is
repaid as provided herein, at the end of such Interest Period such Borrowing
shall be converted to an ABR Borrowing (unless such Borrowing is denominated in
a Committed Currency other than dollars, in which case such Borrowing shall
become due and payable on the last day of such Interest Period). Notwithstanding
any contrary provision hereof, if an Event of Default has occurred and is
continuing and the Administrative Agent, at the request of the Required Lenders,
so notifies the applicable Borrower and the Company, then, so long as an Event
of Default is continuing (i) no outstanding Revolving Borrowing may be converted
to or continued as a Eurocurrency Borrowing and (ii) unless repaid, each
Eurocurrency Revolving Borrowing shall be converted to an ABR Borrowing at the
end of the Interest Period applicable thereto (and, in the case of a
Multicurrency Borrowing denominated in a Committed Currency other than dollars,
such Borrowing, shall be converted into dollars at the Exchange Rate determined
by the Administrative Agent on the last day of the Interest Period applicable
thereto).
SECTION 2.07. Termination and Reduction of Commitments. (a) Unless
previously terminated, the Commitments shall terminate on the Maturity Date.
<PAGE>
(b) The Company may at any time terminate, or from time to time reduce,
the U.S. Commitments or the Multicurrency Commitments; provided that (i) each
reduction of the U.S. Commitments or the Multicurrency Commitments shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$10,000,000 and (ii) the Company shall not terminate or reduce (x) the U.S.
Commitments if, after giving effect to any concurrent prepayment of the Loans in
accordance with Section 2.09, the sum of the U.S. Revolving Credit Exposures
plus the aggregate principal amount of the outstanding Competitive Loans would
exceed the total U.S. Commitments or (y) the Multicurrency Commitments if, after
giving effect to any concurrent prepayment of the Multicurrency Loans in
accordance with Section 2.09, the sum of the Multicurrency Loan Exposures would
exceed the total Multicurrency Commitments.
(c) Within three Business Days of the establishment of any New
Receivables Financing, the Company shall permanently reduce the U.S. Commitments
in an amount equal to the maximum amount of Indebtedness that may be incurred
under such New Receivables Financing.
(d) The Company shall notify the Administrative Agent of any election
to terminate or reduce the U.S. Commitments or the Multicurrency Commitments
under paragraph (b) of this Section at least three Business Days prior to the
effective date of such termination or reduction, specifying such election and
the effective date thereof. Promptly following receipt of any such notice, the
Administrative Agent shall advise the Lenders of the contents thereof. Each
notice delivered by the Company pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the
Company may state that such notice is conditioned upon the effectiveness of
other credit facilities, in which case such notice may be revoked by the Company
(by notice to the Administrative Agent on or prior to the specified effective
date) if such condition is not satisfied. Any termination or reduction of the
U.S. Commitments or the Multicurrency Commitments shall be permanent. Each
reduction of the U.S. Commitments or the Multicurrency Commitments shall be made
ratably among the U.S. Lenders or the Multicurrency Lenders, as the case may be,
in accordance with their respective U.S. Commitments or Multicurrency
Commitments.
SECTION 2.08. Repayment of Loans; Evidence of Debt. (a) Each Borrower
hereby unconditionally promises to pay on the Maturity Date to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Revolving Loan made by such Lender to such Borrower. The Company
hereby unconditionally promises to pay to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Competitive Loan
made by such Lender on the last day of the Interest Period applicable to such
Loan.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of each Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type (and, in
the case of a Multicurrency Loan, the currency) thereof and the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and payable
or to become due and payable from each Borrower to each Lender hereunder and
(iii) the amount of any sum received by the Administrative Agent hereunder for
the account of the Lenders and each Lender's share thereof.
<PAGE>
(d) The entries made in the accounts maintained pursuant to paragraph
(b) or (c) of this Section shall be prima facie evidence of the existence and
amounts of the obligations recorded therein; provided that the failure of any
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of any Borrower to repay
the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Administrative Agent shall prepare and
deliver to each Borrower, and each Borrower shall execute and deliver to such
Lender, a promissory note payable to the order of such Lender (or, if requested
by such Lender, to such Lender and its registered assigns) and in a form
approved by the Administrative Agent and the Company. Thereafter, the Loans
evidenced by each such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 10.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
SECTION 2.09. Prepayment of Loans. (a) Subject to Section 2.14, any
Borrower shall have the right at any time and from time to time to prepay any
Borrowing of such Borrower in whole or in part, subject to prior notice in
accordance with paragraph (c) of this Section; provided that no Borrower shall
have the right to prepay any Competitive Loan without the prior consent of the
Lender thereof.
(b) If, on the last day of any Interest Period with respect to any
Multicurrency Loan, the Dollar Equivalent of the aggregate principal amount of
the outstanding Multicurrency Loans exceeds the total Multicurrency Commitments,
the Company, on such day, shall cause the Borrowers to prepay one or more
Multicurrency Borrowings in an amount sufficient to eliminate such excess.
(c) The applicable Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a Eurocurrency Revolving Borrowing (other than a Multicurrency
Borrowing), not later than 11:00 a.m., New York City time, three Business Days
before the date of prepayment, (ii) in the case of prepayment of a Multicurrency
Borrowing, not later than 2:00 p.m., London time, three Business Days before the
date of prepayment (or such other applicable time as shall be set forth in the
Alternate Procedures), or (iii) in the case of prepayment of an ABR Revolving
Borrowing, not later than 12:00 (noon), New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date and the principal amount of each Borrowing or portion thereof to
be prepaid; provided that, if a notice of prepayment is given in connection with
a conditional notice of termination of the Commitments as contemplated by
Section 2.07, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.07. Promptly following
receipt of any such notice relating to a Revolving Borrowing, the Administrative
Agent shall advise the Lenders of the contents thereof. Each partial prepayment
of any Revolving Borrowing shall be in an amount that would be permitted in the
case of an advance of a Revolving Borrowing of the same Type as provided in
Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably
to the Loans included in the prepaid Borrowing. Prepayments shall be accompanied
by accrued interest to the extent required by Section 2.11.
<PAGE>
SECTION 2.10. Fees. (a) The Company agrees to pay to the Administrative
Agent for the account of each Lender a facility fee, which shall accrue at the
Applicable Rate on the daily amount of the Commitments of such Lender (whether
used or unused) during the period from and including the date hereof to but
excluding the date on which such Commitments terminate; provided that, if such
Lender continues to have any Revolving Credit Exposure after its Commitments
terminate, then such facility fee shall continue to accrue on the daily amount
of such Lender's Revolving Credit Exposure from and including the date on which
its Commitments terminate to but excluding the date on which such Lender ceases
to have any Revolving Credit Exposure. Accrued facility fees shall be payable in
arrears on the last Business Day of March, June, September and December of each
year and on the date on which the Commitments terminate, commencing on the first
such date to occur after the date hereof; provided that any facility fees
accruing after the date on which the Commitments terminate shall be payable on
demand. The facility fees payable hereunder shall be computed on the basis of a
year of 360 days and shall be payable for the actual number of days elapsed
(including the first day but excluding the last day).
(b) The Company agrees to pay (i) to the Administrative Agent for the
account of each U.S. Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar U.S. Revolving Loans on the average daily amount
of such U.S. Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such U.S.
Lender's U.S. Commitment terminates and the date on which such U.S Lender ceases
to have any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which
shall accrue at the rate or rates per annum separately agreed upon between the
Company and the Issuing Bank on the average daily amount of the LC Exposure
(excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the Effective Date to but excluding the
later of the date of termination of the U.S. Commitments and the date on which
there ceases to be any LC Exposure, as well as the Issuing Bank's standard fees
with respect to the issuance, amendment, renewal or extension of any Letter of
Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the U.S.
Commitments terminate and any such fees accruing after the date on which the
U.S. Commitments terminate shall be payable on demand. Any other fees payable to
the Issuing Bank pursuant to this paragraph shall be payable within 10 days
after demand. All participation fees and fronting fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day).
(c) The Company agrees to pay to the Administrative Agent, for its own
account, fees in the amounts and payable at the times separately agreed upon
between the Company and the Administrative Agent.
(d) All fees payable under paragraphs (a), (b) and (c) above shall be
paid on the dates due, in immediately available funds, to the Administrative
Agent (or to the Issuing Bank, in the case of fees payable to it) for
distribution, in the case of facility fees, to the Lenders. Fees paid shall not
be refundable under any circumstances.
SECTION 2.11. Interest. (a) The Loans comprising each ABR Borrowing
shall bear interest at a rate per annum equal to the Alternate Base Rate.
(b) Except as otherwise specified in the Alternate Procedures with
respect to Multicurrency Loans, the Loans comprising each Eurocurrency Borrowing
shall bear interest at a rate per annum equal to (i) in the case of Eurocurrency
Revolving Loans, the LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate or (ii) in the case of Eurocurrency
Competitive Loans, the LIBO Rate for the Interest Period in effect for such
Borrowing plus the Margin applicable to such Loan.
<PAGE>
(c) Each Fixed Rate Loan shall bear interest at a rate per annum equal
to the Fixed Rate applicable to such Loan.
(d) Notwithstanding the foregoing, if any principal of or interest on
any Loan or any fee or other amount payable by any Borrower hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment (and in
lieu of pre- or post-judgment interest that would otherwise accrue), at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable (or most recently applicable) to such Loan as provided
above or (ii) in the case of any other amount, 2% plus the rate applicable to
ABR Loans as provided above.
(e) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan; provided that (i) interest accrued pursuant
to paragraph (d) of this Section shall be payable on demand, (ii) in the event
of any repayment or prepayment of any Loan (other than a prepayment of an ABR
Revolving Loan prior to the end of the Availability Period), accrued interest on
the principal amount repaid or prepaid shall be payable on the date of such
repayment or prepayment, (iii) in the event of any conversion of any
Eurocurrency Revolving Loan prior to the end of the current Interest Period
therefor, accrued interest on such Loan shall be payable on the effective date
of such conversion and (iv) all accrued interest shall be payable upon
termination of the Commitments.
(f) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.12. Alternate Rate of Interest. If prior to the commencement
of any Interest Period for a Eurocurrency Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable
means do not exist for ascertaining the LIBO Rate for such Interest
Period; or
(b) the Administrative Agent is advised by the Required
Lenders (or, in the case of a Eurocurrency Competitive Loan, the Lender
that is required to make such Loan) that the LIBO Rate for such
Interest Period will not adequately and fairly reflect the cost to such
Lenders (or Lender) of making or maintaining their Loans (or its Loan)
included in such Borrowing for such Interest Period; or
(c) in the case of a Multicurrency Borrowing, the
Administrative Agent determines (which determination shall be
conclusive absent manifest error) that deposits in the applicable
Committed Currency are not generally available, or cannot be obtained
by the Multicurrency Lenders, in the London interbank market;
<PAGE>
then the Administrative Agent shall give notice thereof to the Company and the
applicable Borrower and the Lenders by telephone or telecopy as promptly as
practicable thereafter and, until the Administrative Agent notifies the Company
and the applicable Borrower and the Lenders that the circumstances giving rise
to such notice no longer exist, (i) any Interest Election Request that requests
the conversion of any Revolving Borrowing to, or continuation of any Revolving
Borrowing as, a Eurocurrency Borrowing shall be ineffective, and any
Eurocurrency Borrowing so requested to be continued shall, at the option of the
Company or the applicable Borrower, be repaid on the last day of the then
current Interest Period with respect thereto or shall be converted to an ABR
Borrowing denominated in dollars at the Exchange Rate determined by the
Administrative Agent in accordance with this Agreement on the last day of the
then current Interest Period with respect thereto, (ii) if any Borrowing Request
requests a Eurocurrency Revolving Borrowing, such Borrowing shall be made as an
ABR Borrowing and (iii) any request by any Borrower for a Eurocurrency
Competitive Borrowing or a Multicurrency Borrowing in the affected Committed
Currency shall be ineffective; provided that if the circumstances giving rise to
such notice do not affect all the Lenders, then requests for Eurocurrency
Competitive Borrowings may be made to Lenders that are not affected thereby and,
if the circumstances giving rise to such notice do not affect all applicable
currencies, then requests for Eurocurrency Borrowings may be made in the
currencies that are not affected thereby.
SECTION 2.13. Increased Costs; Illegality. (a) If any Lender shall
determine at any time that it shall be required, by any Governmental Authority
of any jurisdiction of any currency in which any Eurocurrency Loan shall be made
or in which banks are subject for any category of deposits or liabilities
customarily used to fund Eurocurrency Loans in such currency or by reference to
which interest rates applicable to Eurocurrency Loans in such currency are
determined, to maintain reserves in respect of Eurocurrency Loans with respect
to any period when it has a Eurocurrency Loan outstanding hereunder, then such
Lender may require the Company or the applicable Borrower to pay,
contemporaneously with each payment of interest on the Eurocurrency Loans,
additional interest for such period on the related Eurocurrency Loan of such
Lender at a rate per annum equal to the excess of (i)(A) the applicable LIBO
Rate (or such other rate determined pursuant to Section 2.11(d)) divided by (B)
one minus the Eurocurrency Reserve Percentage over (ii) the rate specified in
clause (i)(A) above.
(b) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit extended by, any Lender (except any such
reserve requirement referred to in Section 2.13(a)); or
(ii) impose on any Lender or the London interbank market (or
any other market in which the funding operations of such Lender shall
be conducted with respect to any Committed Currency) any other
condition affecting this Agreement or the Eurocurrency Loans or Fixed
Rate Loans made by such Lender (except any such reserve requirement
referred to in Section 2.13(a));
and the result thereof shall be to increase the cost to such Lender of making or
maintaining any Eurocurrency Loan or Fixed Rate Loan (or of maintaining its
obligation to make any such Loan), or to reduce the amount of any sum received
or receivable by such Lender in respect thereof by an amount deemed by such
Lender to be material, then the Company will pay or cause the applicable
Borrower to pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
<PAGE>
(c) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit held
by such Lender, or the Letters of Credit issued by the Issuing Bank, to a level
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy) by an amount deemed by such Lender or the Issuing Bank, as the case
may be, to be material, then from time to time the Company will pay or cause the
applicable Borrower to pay to such Lender or the Issuing Bank such additional
amount or amounts as will compensate such Lender or the Issuing Bank or such
Lender's or the Issuing Bank's holding company for any such reduction suffered.
(d) A certificate of a Lender or the Issuing Bank setting forth the
amount or amounts necessary to compensate such Lender or the Issuing Bank or
such Lender's or the Issuing Bank's holding company, as the case may be, as
specified in paragraph (a), (b) or (c) of this Section, and setting forth in
reasonable detail the manner in which such amount or amounts shall have been
determined, shall be delivered to the Company and shall be conclusive absent
manifest error. The Company shall pay or cause the applicable Borrower to pay
such Lender or the Issuing Bank the amount shown as due on any such certificate
within 10 Business Days after receipt thereof.
(e) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
that the Company shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 270 days prior to the date that such Lender or the Issuing Bank
notifies the Company of the Change in Law giving rise to such increased costs or
reductions and of such Lender's or the Issuing Bank's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
to such increased costs or reductions is retroactive, then the 270-day period
referred to above shall be extended to include the period of retroactive effect
thereof.
(f) Notwithstanding the foregoing provisions of this Section, a Lender
shall not be entitled to compensation pursuant to this Section in respect of any
Competitive Loan if the Change in Law that would otherwise entitle it to such
compensation shall have been publicly announced or be otherwise known to it
prior to submission of the Competitive Bid pursuant to which such Loan was made.
(g) Notwithstanding any other provision of this Agreement, if, after
the date hereof, (i) any Change in Law shall make it unlawful for any
Multicurrency Lender to make or maintain any Multicurrency Loan or to give
effect to its obligations as contemplated hereby with respect to any
Multicurrency Loan, or (ii) there shall have occurred any change in national or
international financial, political or economic conditions (including the
imposition of or any change in exchange controls) or currency exchange rates
which would make it impracticable for the Multicurrency Lenders holding a
majority in interest of the outstanding Multicurrency Loans denominated in the
affected Committed Currency to make or maintain Multicurrency Loans denominated
in such Committed Currency to, or for the account of, any Borrower, then, by
written notice to the Company and the applicable Borrower and to the
Administrative Agent:
<PAGE>
(i) such Lender may declare that Multicurrency Loans (in the
affected currency or currencies) will not thereafter (for the duration
of such unlawfulness) be made by such Lender hereunder (or be continued
for additional Interest Periods), whereupon any request for a
Multicurrency Borrowing (in the affected currency or currencies) (or to
continue a Multicurrency Borrowing (in the affected currency or
currencies) for an additional Interest Period) shall, as to such Lender
only, be deemed a request for a Eurocurrency Loan denominated in
dollars (or a request to convert a Multicurrency Loan into a
Eurocurrency Loan denominated in dollars on the last day of the then
current Interest Period with respect thereto), unless such declaration
shall be subsequently withdrawn; and
(ii) such Lender may require that all outstanding
Multicurrency Loans (in the affected currency or currencies) made by it
be converted to Loans denominated in dollars, in which event all such
Multicurrency Loans (in the affected currency or currencies) shall be
converted to Loans denominated in dollars as of the effective date of
such notice as provided in paragraph (h) below and at the Exchange Rate
on the date of such conversion.
In the event any Lender shall exercise its rights under (i) or (ii) above, all
payments and prepayments of principal that would otherwise have been applied to
repay the Multicurrency Loans that would have been made by such Lender or the
converted Multicurrency Loans of such Lender shall instead be applied to repay
the Eurocurrency Loans denominated in dollars, as the case may be, made by such
Lender in lieu of, or resulting from the conversion of, such Multicurrency
Loans.
(h) For purposes of this Section, a notice to the Company and the
applicable Borrower by any Lender shall be effective as to each Multicurrency
Loan made by such Lender, if lawful, on the last day of the Interest Period
currently applicable to such Eurocurrency Loan; in all other cases such notice
shall be effective on the date of receipt thereof by the Company and the
applicable Borrower.
SECTION 2.14. Break Funding Payments. In the event of (a) the payment
of any principal of any Eurocurrency Loan or Fixed Rate Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default but excluding any prepayment pursuant to Section 2.05(b)), (b)
the conversion of any Eurocurrency Loan other than on the last day of the
Interest Period applicable thereto, (c) the conversion of any Multicurrency Loan
to a dollar denominated Loan pursuant to Section 2.12(i) or Section 2.13(g)(ii),
(d) the failure to borrow, convert, continue or prepay any Eurocurrency Loan on
the date specified in any notice delivered pursuant hereto (regardless of
whether such notice is permitted to be revocable under Section 2.09(c) and is
revoked in accordance herewith), (e) the failure to borrow any Competitive Loan
after accepting the Competitive Bid to make such Loan, or (f) the assignment of
any Eurocurrency Loan or Fixed Rate Loan other than on the last day of the
Interest Period applicable thereto as a result of a request by the Company
pursuant to Section 2.17, then, in any such event, the Company shall compensate
each Lender for the loss, cost and expense attributable to such event. In the
case of a Eurocurrency Loan, such loss, cost or expense to any Lender shall be
an amount determined by such Lender to be the excess, if any, of (i) the amount
of interest that would have accrued on the principal amount of such Loan had
such event not occurred, at the LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest that would accrue on such principal
amount for such period at the interest rate which such Lender would bid were it
to bid, at the commencement of such period, for a deposit equal to the principal
amount of such Loan (and in the same currency as such Loan) for such period from
other banks in the eurodollar market at the commencement of such period. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this Section shall be delivered to the
Company and the applicable Borrower and shall be conclusive absent manifest
error. The Company shall pay or shall cause the applicable Borrower to pay to
such Lender the amount shown as due on any such certificate within 10 Business
Days after receipt thereof.
<PAGE>
SECTION 2.15. Taxes. (a) Any and all payments by or on account of any
obligation of any Borrower hereunder shall be made free and clear of and without
deduction for any Indemnified Taxes or Other Taxes; provided that if any
Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.15 (a)) the Administrative Agent,
Lender or the Issuing Bank (as the case may be) receives an amount equal to the
sum it would have received had no such deductions been made, (ii) such Borrower
shall make such deductions and (iii) such Borrower shall pay the full amount
deducted to the relevant Governmental Authority in accordance with applicable
law.
(b) In addition, the Borrowers shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Without duplication of any amounts payable by any Borrower under
Section 2.15(a) or Section 2.15(b), the applicable Borrower shall indemnify the
Administrative Agent, each Lender and the Issuing Bank, within 10 Business Days
after written demand therefor, for the full amount of any Indemnified Taxes or
Other Taxes paid by the Administrative Agent, such Lender or the Issuing Bank,
as the case may be, on or with respect to any payment by or on account of any
obligation of such Borrower hereunder (including Indemnified Taxes or Other
Taxes imposed or asserted on or attributable to amounts payable under this
Section 2.15(c)), and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability prepared in good faith and delivered to the Company by a Lender or the
Issuing Bank, or by the Administrative Agent on its own behalf or on behalf of a
Lender or the Issuing Bank, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or
Other Taxes by any Borrower to a Governmental Authority, such Borrower shall
deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
(e) Any Foreign Lender that is entitled to an exemption from or
reduction of withholding tax with respect to payments under this Agreement
pursuant to the law of the Relevant Jurisdiction or any treaty (including any
protocol thereto or official exchange of notes by applicable governmental
authorities with respect thereto) to which the Relevant Jurisdiction is a party
shall deliver to the Company and the applicable Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Company as will permit such payments to be made
without withholding or with a reduced rate of withholding.
<PAGE>
(f) If a Lender, the Issuing Bank or the Administrative Agent receives
a refund from a taxing authority in respect of any Indemnified Taxes or Other
Taxes for which it has been indemnified by a Borrower, or with respect to which
any Borrower has paid additional amounts pursuant to this Section 2.15, it shall
within 30 days from the date of such receipt pay over the amount of such refund
to the applicable Borrower (but only to the extent of indemnity payments made,
or additional amounts paid, by the applicable Borrower under this Section 2.15
with respect to the Indemnified Taxes or Other Taxes giving rise to such
refund), net of all reasonable out-of-pocket expenses of such Lender, the
Issuing Bank or the Administrative Agent and without interest (other than
interest paid by the relevant taxing authority with respect to such refund);
provided, however, that each Borrower upon the request of such Lender, the
Issuing Bank or the Administrative Agent agrees to repay the amount paid over to
such Borrower (plus penalties, interest or other charges) to such Lender, the
Issuing Bank or the Administrative Agent in the event such Lender, the Issuing
Bank or the Administrative Agent is required to repay such refund to such taxing
authority.
(g) Nothing contained in this Section 2.15 shall require any Lender,
the Issuing Bank or Administrative Agent to make available its tax returns or
any other information relating to Taxes or Other Taxes that such Lender, the
Issuing Bank or Administrative Agent deems to be confidential; provided,
however, that any Taxes or Other Taxes shall, to the extent resulting from the
Lender's, the Issuing Bank's or the Administrative Agent's failure to make
available any such tax returns, be deemed to be Excluded Taxes.
SECTION 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. (a) Each Borrower shall make each payment required to be made by it
hereunder (whether of principal, interest or fees or under Section 2.13, 2.14 or
2.15 or otherwise) from a Payment Location in the United States or the United
Kingdom prior to 1:00 p.m., New York City time (or 1:00 p.m., London time, in
respect of principal of or interest on any Multicurrency Loan) (or, in the case
of any Multicurrency Loan, from such other Payment Location or by such other
time as shall be specified in the Alternate Procedures), on the date when due,
in immediately available funds, without setoff or counterclaim. Any amounts
received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made in dollars to the Administrative Agent at its offices at One Chase
Manhattan Plaza, New York, New York (or, in the applicable Committed Currency to
the Administrative Agent at its offices at Trinity Tower, 9 Thomas Moore Street,
London, or at such other offices as shall be specified in the Alternate
Procedures), except payments to be made directly to the Issuing Bank as
expressly provided herein and except that payments pursuant to Sections 2.13,
2.14, 2.15 and 10.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment hereunder shall be due on a day that is not a
Business Day, the date for payment shall be extended to the next succeeding
Business Day, and, in the case of any payment accruing interest, interest
thereon shall be payable for the period of such extension at the same rate then
in effect with respect thereto. All U.S. Revolving Loans and Competitive Loans
hereunder shall be denominated and made, and all payments hereunder in respect
thereof (whether of principal, interest, fees or otherwise) shall be made, in
dollars. All Multicurrency Loans hereunder shall be denominated and made, and
all payments of principal and interest (but not fees, which shall be payable in
dollars) hereunder in respect thereof shall be made, in the applicable Committed
Currencies, except as otherwise expressly provided herein.
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, to pay interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, to pay principal and unreimbursed LC
Disbursements then due hereunder, ratably among the parties entitled thereto in
accordance with the amounts of principal and unreimbursed LC Disbursements then
due to such parties.
<PAGE>
(c) If any Lender shall, by exercising any right of setoff or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans or participations in LC Disbursements
resulting in such Lender obtaining a proportionately greater reduction of its
Revolving Credit Exposure than the reduction obtained by any other Lender, then
the Lender obtaining such greater reduction shall purchase (for cash at face
value) participations in the Revolving Loans and participations in LC
Disbursments of other Lenders to the extent necessary so that the benefit of all
such payments shall be shared by the Lenders ratably in accordance with their
Revolving Credit Exposures; provided that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by any Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to any Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). Each Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against such Borrower rights of setoff and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of such Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Company or the applicable Borrower prior to the date on which any payment is due
to the Administrative Agent for the account of the Lenders or the Issuing Bank
hereunder that such Borrower will not make such payment, the Administrative
Agent may assume that such Borrower has made such payment on such date in
accordance herewith and may, in reliance upon such assumption, distribute to the
Lenders or the Issuing Bank the amount due. In such event, if such Borrower has
not in fact made such payment, then each of the Lenders or the Issuing Bank, as
the case may be, severally agrees to repay to the Administrative Agent forthwith
on demand the amount so distributed to such Lender or the Issuing Bank with
interest thereon, for each day from and including the date such amount is
distributed to it to but excluding the date of payment to the Administrative
Agent, (i) in the case of a Borrowing in dollars or an LC Disbursement, at the
Federal Funds Effective Rate and (ii) in the case of a Borrowing in a Committed
Currency, at the rate reasonably determined by the Administrative Agent to be
the cost to it of funding such amount.
(e) If any Lender or the Issuing Bank shall fail to make any payment
required to be made by it pursuant to Section 2.05(b) or 2.16(d), then the
Administrative Agent may, in its discretion (notwithstanding any contrary
provision hereof), apply any amounts thereafter received by the Administrative
Agent for the account of such Lender or the Issuing Bank, as the case may be, to
satisfy such Lender's or the Issuing Bank's obligations under such Sections
until all such unsatisfied obligations are fully paid.
SECTION 2.17. Mitigation Obligations; Replacement of Lenders. (a) If
any Lender demands compensation or delivers a certificate under Section 2.13, or
if any Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then such Lender shall use reasonable efforts to designate a different lending
office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to Section 2.13 or 2.15, as the case may be,
in the future and (ii) would not subject such Lender to any unreimbursed cost or
expense and would not otherwise be disadvantageous to such Lender. The Company
hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.
<PAGE>
(b) If any Lender demands compensation or delivers a certificate under
Section 2.13, or if any Borrower is required to pay any additional amount to any
Lender or any Governmental Authority for the account of any Lender pursuant to
Section 2.15, or if any Lender defaults in its obligation to fund Loans
hereunder, or if any Multicurrency Lender does not approve any currency as a
Committed Currency, then the Company may, at its sole expense and effort, upon
notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 10.04), all its interests, rights and
obligations under this Agreement (other than any outstanding Competitive Loans
held by it) to an assignee that shall assume such obligations (which assignee
may be another Lender, if a Lender accepts such assignment); provided that (i)
if the assignee is not a Lender, the Company shall have received the prior
written consent of the Administrative Agent (and, if a U.S. Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld,
(ii) such Lender shall have received payment of an amount equal to the
outstanding principal of its Loans (other than Competitive Loans) and
participations in LC Disbursements, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of
such outstanding principal and accrued interest and fees) or the Company (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under Section 2.13 or payments required
to be made pursuant to Section 2.15, such assignment will result in a reduction
in such compensation or payments. A Lender shall not be required to make any
such assignment and delegation if, prior thereto, as a result of a waiver by
such Lender or otherwise, the circumstances entitling the Company or such
Borrower to require such assignment and delegation cease to apply.
SECTION 2.18. Borrowing Subsidiaries. On or after the Effective Date,
the Company may designate any Wholly Owned Foreign Subsidiary as a Borrowing
Subsidiary by delivery to the Administrative Agent of a Borrowing Subsidiary
Agreement executed by such Subsidiary and the Company, and upon such delivery
such Subsidiary shall for all purposes of this Agreement be a Borrowing
Subsidiary and a party to this Agreement. The Company may cause any Borrowing
Subsidiary to cease to be a party to this Agreement by executing and delivering
to the Administrative Agent a Borrowing Subsidiary Termination with respect to
such Subsidiary, whereupon such Subsidiary shall cease to be a Borrowing
Subsidiary and a party to this Agreement. Notwithstanding the foregoing, no
Borrowing Subsidiary Termination will become effective as to any Borrowing
Subsidiary at a time when any principal of or interest on any Loan made directly
to such Borrowing Subsidiary shall be outstanding hereunder; provided that such
Borrowing Subsidiary Termination shall be effective to terminate such Borrowing
Subsidiary's right to make further Borrowings under this Agreement. As soon as
practicable upon receipt of a Borrowing Subsidiary Agreement, the Administrative
Agent shall send a copy thereof to each Lender.
SECTION 2.19. Letters of Credit. (a) General. Subject to the terms and
conditions set forth herein, the Company may request the issuance of Letters of
Credit denominated in dollars for its own account, in a form reasonably
acceptable to the Administrative Agent and the Issuing Bank, at any time and
from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of Letter of Credit application or other agreement
submitted by the Company to, or entered into by the Company with, the Issuing
Bank relating to any Letter of Credit, the terms and conditions of this
Agreement shall control.
<PAGE>
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. To request the issuance of a Letter of Credit (or the amendment,
renewal or extension of an outstanding Letter of Credit) the Company shall hand
deliver or telecopy (or transmit by electronic communication, if arrangements
for doing so have been approved by the Issuing Bank) to the Issuing Bank and the
Administrative Agent (reasonably in advance of the requested date of issuance,
amendment, renewal or extension) a notice requesting the issuance of a Letter of
Credit, or identifying the Letter of Credit to be amended, renewed or extended,
and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire
(which shall comply with paragraph (c) of this Section), the amount of such
Letter of Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuing Bank, the Company also shall submit a
Letter of Credit application on the Issuing Bank's standard form in connection
with any request for a Letter of Credit. A Letter of Credit shall be issued,
amended, renewed or extended only if (and upon issuance, amendment, renewal or
extension of each Letter of Credit the Company shall be deemed to represent and
warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $100,000,000 and (ii) the sum of
the total U.S. Revolving Credit Exposures plus the aggregate principal amount of
outstanding Competitive Loans shall not exceed the total U.S. Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the U.S. Lenders, the Issuing
Bank hereby grants to each U.S. Lender, and each U.S. Lender hereby acquires
from the Issuing Bank, a participation in such Letter of Credit equal to such
U.S. Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each U.S. Lender hereby absolutely and unconditionally agrees to pay
to the Administrative Agent, for the account of the Issuing Bank, such U.S.
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Company on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Company for any reason. Each U.S. Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
<PAGE>
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement
in respect of a Letter of Credit, the Company shall reimburse such LC
Disbursement by paying to the Administrative Agent an amount equal to such LC
Disbursement not later than 12:00 noon, New York City time, on the date that
such LC Disbursement is made, if the Company shall have received notice of such
LC Disbursement prior to 10:00 a.m., New York City time, on such date, or, if
such notice has not been received by the Company prior to such time on such
date, then not later than 12:00 noon, New York City time, on (i) the Business
Day that the Company receives such notice, if such notice is received prior to
10:00 a.m., New York City time, on the day of receipt, or (ii) the Business Day
immediately following the day that the Company receives such notice, if such
notice is not received prior to such time on the day of receipt; provided that
the Company may, subject to the conditions to borrowing set forth herein,
request in accordance with Section 2.03 that such payment be financed with an
ABR U.S. Revolving Borrowing in an equivalent amount and, to the extent so
financed, the Company's obligation to make such payment shall be discharged and
replaced by the resulting ABR U.S. Revolving Borrowing. If the Company fails to
make such payment when due, the Administrative Agent shall notify each U.S.
Lender of the applicable LC Disbursement, the payment then due from the Company
in respect thereof and such U.S. Lender's Applicable Percentage thereof.
Promptly following receipt of such notice, each U.S. Lender shall pay to the
Administrative Agent its Applicable Percentage of the payment then due from the
Company, in the same manner as provided in Section 2.05 with respect to Loans
made by such U.S. Lender (and Section 2.05 shall apply, mutatis mutandis, to the
payment obligations of the U.S. Lenders), and the Administrative Agent shall
promptly pay to the Issuing Bank the amounts so received by it from the U.S.
Lenders. Promptly following receipt by the Administrative Agent of any payment
from the Company pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that U.S. Lenders
have made payments pursuant to this paragraph to reimburse the Issuing Bank,
then to such U.S. Lenders and the Issuing Bank as their interests may appear.
Any payment made by a U.S. Lender pursuant to this paragraph to reimburse the
Issuing Bank for any LC Disbursement (other than the funding of ABR U.S.
Revolving Loans as contemplated above) shall not constitute a Loan and shall not
relieve the Company of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Company's obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuing Bank under a Letter of
Credit against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Company's obligations hereunder. Neither
the Administrative Agent, the Lenders nor the Issuing Bank, nor any of their
Related Parties, shall have any liability or responsibility by reason of or in
connection with the issuance or transfer of any Letter of Credit or any payment
or failure to make any payment thereunder (irrespective of any of the
circumstances referred to in the preceding sentence), or any error, omission,
interruption, loss or delay in transmission or delivery of any draft, notice or
other communication under or relating to any Letter of Credit (including any
document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the
Issuing Bank; provided that the foregoing shall not be construed to excuse the
Issuing Bank from liability to the Company to the extent of any direct damages
(as opposed to consequential damages, claims in respect of which are hereby
waived by the Company to the extent permitted by applicable law) suffered by the
Company that are caused by the Issuing Bank's failure to exercise care when
determining whether drafts and other documents presented under a Letter of
Credit comply with the terms thereof. The parties hereto expressly agree that,
in the absence of gross negligence or wilful misconduct on the part of the
Issuing Bank (as finally determined by a court of competent jurisdiction), the
Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented which appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Issuing Bank may, in its sole discretion, either accept and make payment upon
such documents without responsibility for further investigation, regardless of
any notice or information to the contrary, or refuse to accept and make payment
upon such documents if such documents are not in strict compliance with the
terms of such Letter of Credit.
<PAGE>
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Company by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
such notice shall not relieve the Company of its obligation to reimburse the
Issuing Bank and the U.S. Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
Disbursement, then, unless the Company shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Company reimburses such LC Disbursement,
at the rate per annum then applicable to ABR U.S. Revolving Loans; provided
that, if the Company fails to reimburse such LC Disbursement when due pursuant
to paragraph (e) of this Section, then Section 2.11(d) shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuing Bank,
except that interest accrued on and after the date of payment by any U.S. Lender
pursuant to paragraph (e) of this Section to reimburse the Issuing Bank shall be
for the account of such U.S. Lender to the extent of such payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced
at any time by written agreement among the Company, the Administrative Agent,
the replaced Issuing Bank and the successor Issuing Bank. The Administrative
Agent shall notify the U.S. Lenders of any such replacement of the Issuing Bank.
At the time any such replacement shall become effective, the Company shall pay
all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.10(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
<PAGE>
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Company receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Lenders with LC Exposure representing greater than 50% of
the total LC Exposure) demanding the deposit of cash collateral pursuant to this
paragraph, the Company shall deposit in an account with the Administrative
Agent, in the name of the Administrative Agent and for the benefit of the
Lenders, an amount in cash equal to the LC Exposure as of such date plus any
accrued and unpaid interest thereon; provided that the obligation to deposit
such cash collateral shall become effective immediately, and such deposit shall
become immediately due and payable, without demand or other notice of any kind,
upon the occurrence of any Event of Default with respect to the Company
described in clause (h) or (i) of Article VII. Such deposit shall be held by the
Administrative Agent as collateral for the payment and performance of the
obligations of the Company under this Agreement. The Administrative Agent shall
have exclusive dominion and control, including the exclusive right of
withdrawal, over such account. Other than any interest earned on the investment
of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the Company's risk and expense,
such deposits shall not bear interest. Interest or profits, if any, on such
investments shall accumulate in such account. Moneys in such account shall be
applied by the Administrative Agent to reimburse the Issuing Bank for LC
Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of
the Company for the LC Exposure at such time or, if the maturity of the Loans
has been accelerated (but subject to the consent of Lenders with LC Exposure
representing greater than 50% of the total LC Exposure), be applied to satisfy
other obligations of the Company under this Agreement. If the Company is
required to provide an amount of cash collateral hereunder as a result of the
occurrence of an Event of Default, such amount (to the extent not applied as
aforesaid) shall be returned to the Company within three Business Days after all
Events of Default have been cured or waived.
ARTICLE III
Representations and Warranties
Each Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and the
Subsidiaries is duly organized, validly existing and in good standing, if
applicable, under the laws of the jurisdiction of its organization, has all
requisite power and authority to carry on its business as conducted on the date
hereof and is qualified to do business in, and is in good standing in, every
jurisdiction where such qualification is required, except in each case where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.02. Authorization; Enforceability. The Transactions are
within the Company's (and, as applicable, each Borrowing Subsidiary's) corporate
or partnership powers and have been duly authorized by all necessary corporate
or partnership and, if required, stockholder or partner action. This Agreement
has been duly executed and delivered by the Company and each Borrowing
Subsidiary (other than any Borrowing Subsidiary that has become a party hereto
by executing and delivering a Borrowing Subsidiary Agreement) and constitutes a
legal, valid and binding obligation of the Company and each such Borrowing
Subsidiary, and each Borrowing Subsidiary Agreement (as to which a Borrowing
Subsidiary Termination has not become effective) has been duly executed and
delivered by the Company and the Borrowing Subsidiary party thereto and
constitutes a legal, valid and binding obligation of the Borrowing Subsidiary
thereunder, in each case enforceable in accordance with its terms.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions
(a) do not require any consent or approval of, registration or filing with, or
any other action by, any Governmental Authority, except such as have been
obtained or made and are in full force and effect, except where the failure to
obtain such consent or approval or make such registration or filing could not
reasonably be expected to result in a Material Adverse Effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Borrower or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon any Borrower or its assets, or give
rise to a right thereunder to require any payment to be made by any Borrower,
except that the repayment of Indebtedness under the Existing Credit Agreement of
Fort Howard may constitute or result in a Purchase Termination Event and an
Early Amortization Event under the Receivable Sales Agreement, dated as of
September 28, 1995, among Fort Howard, as seller and servicer, and FHC Funding
Corporation and the related pooling and servicing agreements and trust
certificates (the "FHC Facility") (which means that receivables will no longer
be sold under the FHC Facility and, upon collection of receivables already sold,
the FHC Facility will terminate) and (d) will not result in the creation or
imposition of any Lien on any asset of the Company or any of its Subsidiaries.
<PAGE>
SECTION 3.04. Financial Condition; No Material Adverse Change. (a) Each
of the Company and Fort Howard has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders' equity and
cash flows (i) as of and for the fiscal years ended (A) in the case of the
Company, December 25, 1994, December 31, 1995, and December 29, 1996, reported
on by Coopers & Lybrand L.L.P., independent public accountants, and (B) in the
case of Fort Howard, December 31, 1994, 1995 and 1996, reported on by Arthur
Andersen LLP, independent public accountants, and (ii) as of and for the fiscal
quarter and the portion of the fiscal year ended (A) in the case of the Company,
March 30, 1997, and (B) in the case of Fort Howard, March 31, 1997, in each
case, certified by the appropriate Financial Officer. Such financial statements
present fairly, in all material respects, the financial position and results of
operations and cash flows of the Company and its consolidated Subsidiaries and
Fort Howard and its consolidated subsidiaries, as the case may be, as of such
dates and for such periods in accordance with GAAP, subject to year-end audit
adjustments and the absence of footnotes in the case of the statements referred
to in clause (ii) above.
(b) The Company has heretofore furnished to the Lenders its unaudited
pro forma consolidated balance sheet and statements of income as of and for the
fiscal quarter ended March 30, 1997. Such balance sheet was prepared giving
effect to the Merger as if it had occurred on such date and such other financial
statements were prepared giving effect to the Merger as if it had occurred on
January 1, 1997. Such pro forma financial statements have been prepared in good
faith by the Company, based on assumptions believed by the Company to be
reasonable on the date hereof and at the time made, and present fairly on a pro
forma basis (subject to normal year-end adjustments) the estimated financial
position and operations of the Company and its Subsidiaries as of the dates set
forth above, assuming that the Merger had actually occurred on the dates set
forth above.
(c) Since December 29, 1996, there has been no material adverse change
in the business, assets, results of operations or financial condition of the
Company and its Subsidiaries (including Fort Howard and its subsidiaries), taken
as a whole.
SECTION 3.05. Properties. (a) Each Borrower and its subsidiaries has
good title to, or valid leasehold interests in, all its real and personal
property material to its business, except for defects in title that do not
interfere with its ability to conduct its business as currently conducted or to
utilize such properties for their intended purposes and except for defects
which, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.
(b) Each Borrower and its subsidiaries owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Company and its
Subsidiaries does not infringe upon the rights of any other Person, except for
any such infringements that, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.06. Litigation and Environmental Matters. (a) Except for the
Disclosed Matters, there are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of any
Borrower, threatened against or affecting any Borrower or any of its
subsidiaries (i) as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve this Agreement, any Borrowing Subsidiary Agreement or the
Transactions.
<PAGE>
(b) Except for the Disclosed Matters and except with respect to any
other matters that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, neither any Borrower nor any of
its subsidiaries (i) has failed to comply with any Environmental Law or to
obtain, maintain or comply with any permit, license or other approval required
under any Environmental Law, (ii) has become subject to any Environmental
Liability or (iii) has received notice of any claim with respect to any
Environmental Liability.
SECTION 3.07. Compliance with Laws and Agreements. Each Borrower and
its subsidiaries is in compliance with all laws, regulations and orders of any
Governmental Authority applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect. No Default has occurred and is
continuing.
SECTION 3.08. Investment and Holding Company Status. Neither any
Borrower nor any of its subsidiaries is (a) an "investment company" as defined
in, or subject to regulation under, the Investment Company Act of 1940 or (b) a
"holding company" as defined in, or subject to regulation under, the Public
Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each Borrower and its subsidiaries has timely
filed or caused to be filed all Tax returns and reports required to have been
filed and has paid or caused to be paid all Taxes required to have been paid by
it, except (a) Taxes that are being contested as to the fact or the amount of
liability, the validity of the tax or otherwise in good faith by appropriate
proceedings and for which such Borrower or such Subsidiary, as applicable, has
set aside on its books reserves or other appropriate provisions, if any, as
shall be required in conformity with GAAP or (b) to the extent that the failure
to do so could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. As of the date of the most recent financial
statements reflecting the following amounts, the amount by which the present
value of all accumulated benefit obligations of all underfunded Plans (based on
the assumptions used for purposes of Statement of Financial Accounting Standards
No. 87) exceeds the fair market value of the assets of all such Plans (such
excess being referred to as the "Shortfall") would not reasonably be expected to
result in a Material Adverse Effect if the Company or any Subsidiary was
immediately required to fully fund such Shortfall.
SECTION 3.11. Disclosure. Neither the Information Memorandum nor any of
the other reports, financial statements, certificates or other written
information furnished by or on behalf of any Borrower to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
Borrowing Subsidiary Agreement or delivered hereunder or thereunder, contains
any material misstatement of fact or omits to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that, with respect to projected
financial information, the Borrowers represent only that such information was
prepared in good faith based upon assumptions believed to be reasonable at the
time.
SECTION 3.12. Federal Reserve Regulations. (a) Neither the Company
nor any of the Subsidiaries is engaged principally, or as one of its more
important activities, in the business of extending credit for the purposes of
buying or carrying Margin Stock.
<PAGE>
(b) No part of the proceeds of any Loan will be used, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for any
purpose that entails a violation of, or that is inconsistent with, the
provisions of the Regulations of the Board, including Regulation G, T, U or X.
SECTION 3.13. Designated Senior Indebtedness.The Obligations constitute
"Designated Senior Indebtedness" under and as defined in the Fort Howard
Subordinated Note Indenture.
ARTICLE IV
Conditions
SECTION 4.01. Effective Date. The obligations of the Lenders to make
Loans hereunder shall not become effective until the date on which each of the
following conditions is satisfied (or waived in accordance with Section 10.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this
Agreement signed on behalf of such party or (ii) written evidence
satisfactory to the Administrative Agent (which may include telecopy
transmission of a signed signature page of this Agreement) that such
party has signed a counterpart of this Agreement.
(b) The Administrative Agent shall have received favorable
written opinions (addressed to the Administrative Agent and the Lenders
and dated the Effective Date) of McGuire Woods Battle & Boothe LLP and
Wachtell, Lipton, Rosen & Katz, counsel for the Company, Robert A.
Imig, Jr., Managing Counsel for Fort Howard, Shearman & Sterling,
counsel for Fort Howard, McGuire Woods Battle & Boothe LLP, counsel for
James River Services, and De Brauw Blackstone Westbroek, counsel for
Jamont, substantially in the form of Exhibits B-1, B-2, B-3, B-4, B-5
and B-6, respectively, and covering such other matters relating to the
Borrowers, this Agreement or the Transactions as the Required Lenders
shall reasonably request. The Borrowers hereby request such counsel to
deliver such opinions.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of the Borrowers, the authorization of the Transactions and
any other legal matters relating to the Borrowers, this Agreement or
the Transactions, all in form and substance reasonably satisfactory to
the Administrative Agent and its counsel.
(d) The Merger shall have been consummated in accordance with
the Merger Agreement and applicable law, all requisite Governmental
Authorities and third parties shall have approved or consented to the
Transactions, except where the failure to obtain such approval or
consent could not reasonably be expected to result in a Material
Adverse Effect, and there shall be no governmental or judicial action,
actual or threatened, that has or could have a reasonable likelihood of
restraining, preventing or imposing burdensome conditions on the
Transactions.
<PAGE>
(e) Concurrently with the first Borrowing, the Borrowers shall
have repaid, or made adequate provision to repay, in full the principal
of all loans outstanding, interest thereon and other amounts due and
payable under the Existing Credit Agreements and the Administrative
Agent shall have received duly executed documentation either evidencing
or necessary for (i) the termination of each Existing Credit Agreement,
(ii) the cancelation of all commitments thereunder and (iii) the
release of all Liens granted by any Borrower or any subsidiary thereof
in connection therewith.
(f) The Administrative Agent shall have received a
certificate, dated the Effective Date and signed by the Chairman, the
President, a Vice President or a Financial Officer of the Company,
confirming compliance with the conditions set forth in paragraphs (a)
and (b) of Section 4.02.
(g) The Administrative Agent shall have received all fees and
other amounts due and payable hereunder on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of
all out-of-pocket expenses required to be reimbursed or paid by the
Company hereunder.
The Administrative Agent shall notify the Company and the Lenders of the
Effective Date, and such notice shall be conclusive and binding. Notwithstanding
the foregoing, the obligations of the Lenders to make Loans hereunder shall not
become effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 10.02) at or prior to 3:00 p.m., New York City time, on
February 28, 1998 (and, in the event such conditions are not so satisfied or
waived, the Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make
a Loan on the occasion of any Borrowing, and of the Issuing Bank to issue,
amend, renew or extend any Letter of Credit, is subject to the satisfaction of
the following conditions:
(a) The representations and warranties of the Borrowers set
forth in this Agreement shall be true and correct on and as of the date
of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, except to the extent such
representations and warranties expressly relate to an earlier date in
which case such representations and warranties shall be true and
correct on and as of such earlier date.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such
Letter of Credit, no Default shall have occurred and be continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a representation and warranty by the
Company and the applicable Borrower on the date thereof as to the matters
specified in paragraphs (a) and (b) of this Section.
SECTION 4.03. Each Borrowing Subsidiary Credit Event. The obligation of
each Lender to make Loans hereunder to any Borrowing Subsidiary that becomes a
party hereto after the Effective Date is subject to the satisfaction of the
following conditions:
(a) The Administrative Agent (or its counsel) shall have
received from each party thereto either (i) a counterpart of such
Borrowing Subsidiary's Borrowing Subsidiary Agreement or (ii) written
evidence satisfactory to the Administrative Agent (which may include
telecopy transmission of a signed signature page thereof) that such
party has signed a counterpart of such Borrowing Subsidiary Agreement.
<PAGE>
(b) The Administrative Agent shall have received a favorable
written opinion of counsel for such Borrowing Subsidiary (which counsel
shall be reasonably acceptable to the Administrative Agent),
substantially in the form of Exhibit C, and covering such other matters
relating to such Borrowing Subsidiary or its Borrowing Subsidiary
Agreement as the Required Lenders shall reasonably request.
(c) The Administrative Agent shall have received such
documents and certificates as the Administrative Agent or its counsel
may reasonably request relating to the organization, existence and good
standing of such Borrowing Subsidiary, the authorization of the
Transactions relating to such Borrowing Subsidiary and any other legal
matters relating to such Borrowing Subsidiary, its Borrowing Subsidiary
Agreement or such Transactions, all in form and substance satisfactory
to the Administrative Agent and its counsel.
ARTICLE V
Affirmative Covenants
Until the Commitments have expired or been terminated and the principal
of and interest on each Loan and all fees payable hereunder shall have been paid
in full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, each Borrower covenants and agrees
with the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Company
will furnish to the Administrative Agent and each Lender:
(a) within 105 days after the end of each fiscal year of the
Company, its audited consolidated balance sheet and related statements
of operations, stockholders' equity and cash flows as of the end of and
for such year, setting forth in each case in comparative form the
figures for the previous fiscal year, all reported on by Coopers &
Lybrand L.L.P., or other independent public accountants of recognized
national standing (without a "going concern" or like qualification or
exception and without any qualification or exception as to the scope of
such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and
results of operations of the Company and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied;
(b) within 60 days after the end of each of the first three
fiscal quarters of each fiscal year of the Company, its consolidated
balance sheet and related statements of operations, stockholders'
equity and cash flows as of the end of and for such fiscal quarter and
the then elapsed portion of the fiscal year, setting forth in each case
in comparative form the figures for the corresponding period or periods
of (or, in the case of the balance sheet, as of the end of) the
previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and
results of operations of the Company and its consolidated Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of
footnotes;
<PAGE>
(c) concurrently with any delivery of financial statements
under clause (a) or (b) above, a certificate of a Financial Officer of
the Company (i) certifying as to whether a Default has occurred and, if
a Default has occurred, specifying the details thereof and any action
taken or proposed to be taken with respect thereto, (ii) setting forth
reasonably detailed calculations demonstrating compliance with Sections
6.01, 6.02 and 6.08 and (iii) stating whether any material change in
GAAP or in the application thereof has occurred since the date of the
audited financial statements referred to in Section 3.04(a) affecting
the Company and, if any such change has occurred, specifying the effect
of such change on the financial statements accompanying such
certificate;
(d) concurrently with any delivery of financial statements
under clause (a) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained
knowledge during the course of their examination of such financial
statements of any Default (which certificate may be limited to the
extent required by accounting rules or guidelines);
(e) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and registration
statements (other than the exhibits thereto and any registration
statement or Form S-8 or its equivalent) filed by the Company or any
Subsidiary with the Securities and Exchange Commission, or any
Governmental Authority succeeding to any or all of the functions of
said Commission, or with any national securities exchange, or
distributed by the Company to its stockholders generally, as the case
may be; and
(f) promptly following any request therefor, such other
information regarding the operations, business affairs and financial
condition of the Company or any Subsidiary, or compliance with the
terms of this Agreement, as the Administrative Agent, or any Lender
through the Administrative Agent, may reasonably request.
SECTION 5.02. Notices of Material Events. Promptly upon any Financial
Officer or other executive officer obtaining knowledge thereof, each Borrower
will furnish to the Administrative Agent and each Lender written notice of the
following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority
against or affecting such Borrower or any subsidiary thereof where
there is a reasonable possibility of an adverse determination and that,
if adversely determined, could reasonably be expected to result in a
Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together
with any other ERISA Events that have occurred, could reasonably be
expected to result in liability of the Company and its Subsidiaries in
an aggregate amount exceeding $25,000,000; and
(d) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other executive officer of the Company setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
<PAGE>
SECTION 5.03. Existence; Conduct of Business. Each Borrower will, and
will cause each of its subsidiaries to, do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence and the rights, licenses, permits, privileges and franchises material
to the conduct of its business except, in the case of any such subsidiary that
is not a Borrowing Subsidiary, where the failure to do so could not reasonably
be expected to result in a Material Adverse Effect; provided that the foregoing
shall not prohibit any merger, consolidation, liquidation or dissolution
permitted under Section 6.03.
SECTION 5.04. Payment of Obligations. Each Borrower will, and will
cause each of its subsidiaries to, pay its obligations, including Taxes, before
the same shall become delinquent or in default, except where (a) the failure to
pay such amount could not reasonably be expected to result in a Material Adverse
Effect or (b) the validity or amount thereof is being contested in good faith by
appropriate proceedings and (i) such Borrower or such subsidiary has set aside
on its books reserves or other appropriate provisions, if any, as shall be
required in conformity with GAAP and (ii) the failure to make payment pending
such contest could not reasonably be expected to result in a Material Adverse
Effect.
SECTION 5.05. Maintenance of Properties; Insurance. Each Borrower will,
and will cause each of its subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted, and (b) maintain, with financially sound and
reputable insurance companies (or through a system or systems of self-insurance
in accordance with customary practices for companies in similar businesses),
insurance in such amounts and against such risks as are customarily maintained
by companies engaged in the same or similar businesses operating in the same or
similar locations.
SECTION 5.06. Books and Records; Inspection Rights. Each Borrower will,
and will cause each of its subsidiaries to, keep proper books of record and
account in accordance with GAAP (or, in the case of a Foreign Subsidiary,
generally accepted accounting principles in the jurisdiction of organization of
such Foreign Subsidiary). Each Borrower will, and will cause each of its
subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION 5.07. Compliance with Laws. Each Borrower will, and will cause
each of its subsidiaries to, comply with all laws, rules, regulations and orders
of any Governmental Authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. Use of Proceeds and Letters of Credit. The proceeds of
the Loans will be used only for general corporate purposes. No part of the
proceeds of any Loan will be used, whether directly or indirectly, for any
purpose that entails a violation of any of the Regulations of the Board,
including Regulations G, U and X. Letters of Credit will be issued only to
support obligations of the Company incurred in the ordinary course of business.
<PAGE>
ARTICLE VI
Negative Covenants
Until the Commitments have expired or terminated and the principal of
and interest on each Loan and all fees payable hereunder have been paid in full
and all Letters of Credit have expired or terminated and all LC Disbursements
shall have been reimbursed, each Borrower covenants and agrees with the Lenders
that:
SECTION 6.01. Indebtedness and Preferred Stock of Subsidiaries. No
Borrowing Subsidiary will, and the Company will not permit any Subsidiary to,
create, incur, assume or permit to exist any Indebtedness or Preferred Stock,
except:
(a) Indebtedness (other than the Fort Howard Bonds) and
Preferred Stock outstanding on the date hereof and set forth on
Schedule 6.01(a), and any extensions, renewals and replacements of any
such Indebtedness or Preferred Stock that do not increase the
outstanding principal amount (or, in the case of Preferred Stock,
liquidation value) thereof;
(b) Indebtedness created hereunder;
(c) [Intentionally Omitted];
(d) Indebtedness issued to the Company or any other Subsidiary;
(e) Guarantees of Indebtedness of any other Subsidiary;
(f) Indebtedness (including Capital Lease Obligations)
incurred by any Subsidiary after the Effective Date to finance the
acquisition, construction or improvement of any real property or
equipment, and any extension, renewal or replacement thereof that does
not increase the aggregate outstanding principal amount thereof,
provided that (i) the Indebtedness incurred shall not exceed the lesser
of the cost and the fair market value of the asset financed thereby and
(ii) such Indebtedness is incurred within 180 days after the
acquisition, construction or improvement of the asset financed thereby;
(g) Indebtedness incurred pursuant to any Permitted
Receivables Financing; and
(h) other Indebtedness (including the Fort Howard Bonds) and
Preferred Stock in an aggregate principal amount (or, in the case of
Preferred Stock, liquidation value), when added to the amount of (i)
all Indebtedness secured by Liens permitted by Section 6.02(i) and (ii)
the aggregate amount of cash and cash equivalents securing Hedging
Obligations pursuant to Section 6.02(c), not exceeding 10% of
Consolidated Net Tangible Assets as shown on the most recent
consolidated balance sheet of the Company delivered pursuant to Section
3.04(b), 5.01(a) or 5.01(b), as the case may be.
<PAGE>
SECTION 6.02. Liens. The Company will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or hereafter acquired by it (including any capital stock or
Indebtedness of a Subsidiary), or assign or sell any income or revenues
(including accounts receivable) or rights in respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Company or any
Subsidiary existing on the date hereof and set forth in Schedule 6.02;
provided that (i) such Lien shall not apply to any other property or
asset of the Company or any Subsidiary and (ii) such Lien shall secure
only those obligations which it secures on the date hereof and
extensions, renewals, refinancings and replacements thereof that do not
increase the outstanding principal amount thereof;
(c) Liens on cash and cash equivalents securing Hedging
Obligations; provided that the aggregate amount of cash and cash
equivalents subject to such Liens may at no time exceed $100,000,000;
(d) Liens to secure obligations owing by a Subsidiary to the
Company or to another Subsidiary;
(e) Liens in favor of the United States of America or any
state thereof, or any department, agency or political subdivision of
the United State of America or any state thereof, to secure partial,
progress, advance or other payments pursuant to any contract or
statute;
(f) Liens in favor of any customer arising in respect of
partial, progress, advance or other payments made by or on behalf of
such customer for goods produced for or services rendered to such
customer in the ordinary course of business not exceeding the amount of
such payments;
(g) Liens to secure Indebtedness permitted by Section 6.01(f),
provided that (i) such Liens are incurred within 180 days after such
acquisition (or construction) or are incurred to extend, renew or
refinance Liens incurred within such 180-day period, and (ii) such
Liens do not apply to any other property or assets of the Company or
any Subsidiary;
(h) Liens on accounts receivable financed in connection with
any Permitted Receivables Financing; and
(i) other Liens to secure Indebtedness if the sum of (i) the
aggregate amount of all Indebtedness secured by Liens that would not be
permitted but for this clause (i), plus (ii) the aggregate amount of
cash and cash equivalents securing Hedging Obligations pursuant to
clause (c), plus (iii) the aggregate amount of Indebtedness and
Preferred Stock outstanding under Section 6.01(h) does not exceed 10%
of Consolidated Net Tangible Assets as shown on the most recent
consolidated balance sheet of the Company delivered pursuant to Section
3.04(b), 5.01(a) or 5.01(b), as the case may be.
<PAGE>
SECTION 6.03. Fundamental Changes. (a) The Company will not, and will
not permit any of its Subsidiaries to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or substantially all of its assets (whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing, (i) any Person may merge into the Company in a
transaction in which the Company is the surviving corporation, (ii) any Person
may merge into any Subsidiary in a transaction in which the surviving entity is
a Wholly Owned Subsidiary, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of its assets to the Company or to a Wholly Owned Subsidiary
and (iv) any Subsidiary may merge into or consolidate with another Person, or
may liquidate or dissolve, if the Company determines in good faith that such
merger, consolidation, liquidation or dissolution is in the best interests of
the Company and is not materially disadvantageous to the Lenders; provided that
a Borrowing Subsidiary may not merge, consolidate, liquidate or dissolve unless,
in addition to the foregoing conditions, the surviving entity, or the entity
into which such Borrowing Subsidiary liquidates or dissolves, is or becomes a
Borrower and assumes all the obligations of such Borrowing Subsidiary hereunder
and under its Borrowing Subsidiary Agreement (if any).
(b) The Company will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of the
type conducted by the Company and its Subsidiaries on the date hereof and
businesses reasonably related thereto.
SECTION 6.04. Transactions with Affiliates. The Company will not, and
will not permit any of its Subsidiaries to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Company or such Subsidiary than could
be obtained on an arm's-length basis from unrelated third parties and (b)
transactions between or among the Company and its Wholly Owned Subsidiaries not
involving any other Affiliate.
SECTION 6.05. Sale and Lease-Back Transactions. The Company will not,
and will not permit any of its Subsidiaries to, directly or indirectly, enter
into any arrangement with any Person (other than the Company or a Subsidiary)
whereby it shall sell or transfer any property used in its business, whether now
owned or hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred, unless the Lien attributable to such
transaction would be permitted by Section 6.02.
SECTION 6.06. Restrictive Agreements. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon the ability of any Subsidiary to pay dividends or
other distributions with respect to any shares of its capital stock or other
equity interests or to make or repay loans or advances to the Company or any
other Subsidiary or to Guarantee Indebtedness of the Company or any other
Subsidiary; provided that the foregoing shall not apply to restrictions and
conditions (a) imposed by law or by this Agreement, (b) existing on the date
hereof and identified on Schedule 6.06 (but shall apply to any extension or
renewal of, or any amendment or modification expanding the scope of, any such
restriction or condition) or (c) contained in agreements relating to the sale of
a Subsidiary pending such sale, provided such restrictions and conditions apply
only to the Subsidiary that is to be sold and such sale is permitted hereunder.
SECTION 6.07. Borrowing Subsidiaries. The Company will not cease to
own, directly or indirectly, and Control 100% (other than directors' qualifying
shares) of the ordinary voting power of any Borrowing Subsidiary.
<PAGE>
SECTION 6.08. Leverage Ratio. The Leverage Ratio as of the last day
of any fiscal quarter of the Company will not exceed 3.75 to 1.00.
ARTICLE VII
Events of Default
If any of the following events ("Events of Default") shall occur and be
continuing:
(a) any Borrower shall fail to pay any principal of any Loan
of such Borrower, or the Company shall fail to pay any reimbursement
obligation in respect of any LC Disbursement, in each case when and as
the same shall become due and payable, whether at the due date thereof
or at a date fixed for prepayment thereof or otherwise;
(b) any Borrower shall fail to pay any interest on any Loan of
such Borrower or any fee or any other amount (other than an amount
referred to in clause (a) of this Article) payable by such Borrower
under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of
five Business Days;
(c) any representation or warranty made or deemed made by or
on behalf of the Company or any Subsidiary in or in connection with
this Agreement, any Borrowing Subsidiary Agreement or any amendment or
modification hereof or thereof, or in any report, certificate,
financial statement or other document furnished pursuant to or in
connection with this Agreement, any Borrowing Subsidiary Agreement or
any amendment or modification hereof or thereof, shall prove to have
been incorrect in any material respect when made or deemed made;
(d) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02(a), 5.03 (with respect
to the Company's existence) or 5.08 or in Article VI;
(e) any Borrower shall fail to observe or perform any
covenant, condition or agreement contained in this Agreement or any
Borrowing Subsidiary Agreement (other than those specified in clause
(a), (b), (c), (d) or (m) of this Article), and such failure shall
continue unremedied for a period of 30 days after notice thereof from
the Administrative Agent (given at the request of any Lender) to the
Company;
(f) the Company or any Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become
due and payable;
<PAGE>
(g) any event or condition shall occur that results in any
Material Indebtedness becoming due prior to its scheduled maturity or
that enables or permits (with or without the giving of notice, the
lapse of time or both) the holder or holders of any Material
Indebtedness or any trustee or agent on its or their behalf to cause
any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to (i) secured
Indebtedness that becomes due solely as a result of the voluntary sale
or transfer of the property or assets securing such Indebtedness or
solely as a result of the election of the Company or any Subsidiary to
redeem such Material Indebtedness in accordance with its terms or (ii)
any early termination event under any Hedging Agreement;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation,
reorganization or other relief in respect of the Company or any
Subsidiary or its debts, or of a substantial part of its assets, under
any Federal, state or foreign bankruptcy, insolvency, receivership or
similar law now or hereafter in effect or (ii) the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar
official for the Company or any Subsidiary or for a substantial part of
its assets, and, in any such case, such proceeding or petition shall
continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered;
(i) the Company or any Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or petition described in
clause (h) of this Article, (iii) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Company or any Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the
material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors
or (vi) take any action for the purpose of effecting any of the
foregoing;
(j) the Company or any Subsidiary shall become unable, admit
in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $25,000,000 shall be rendered against the
Company, any Subsidiary or any combination thereof and the same shall
remain unpaid or undischarged for a period of 30 consecutive days
during which execution shall not be effectively stayed, or any action
shall be legally taken by a judgment creditor to attach or levy upon
any assets of the Company or any Subsidiary to enforce any such
judgment;
(l) an ERISA Event shall have occurred that, in the opinion of
the Required Lenders, when taken together with all other ERISA Events
that have occurred, could reasonably be expected to result in liability
of the Company and its Subsidiaries in an aggregate amount that could
reasonably be expected to result in a Material Adverse Effect;
(m) the Company shall fail to observe or perform any covenant,
condition or agreement contained in Article IX, or the guarantee of the
Company hereunder shall not be (or shall be claimed by any Person not
to be) valid or in full force and effect; or
(n) a Change in Control shall occur;
<PAGE>
then, and in every such event (other than an event with respect to any Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Company, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and all
fees and other obligations of the Borrowers accrued hereunder, shall become due
and payable immediately, without presentment, demand, protest or other notice of
any kind, all of which are hereby waived by each Borrower; and in case of any
event with respect to any Borrower described in clause (h) or (i) of this
Article, the Commitments shall automatically terminate and the principal of the
Loans then outstanding, together with accrued interest thereon and all fees and
other obligations of the Borrowers accrued hereunder, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by each Borrower.
ARTICLE VIII
The Administrative Agent
Each of the Lenders and the Issuing Bank hereby irrevocably appoints
the Administrative Agent as its agent and authorizes the Administrative Agent to
take such actions on its behalf and to exercise such powers as are delegated to
the Administrative Agent by the terms hereof, together with such actions and
powers as are reasonably incidental thereto.
The bank serving as the Administrative Agent hereunder shall have the
same rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not the Administrative Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally engage
in any kind of business with the Company or any Subsidiary or other Affiliate
thereof as if it were not the Administrative Agent hereunder.
The Administrative Agent shall not have any duties or obligations
except those expressly set forth herein. Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other implied duties, regardless of whether a Default has occurred and is
continuing, (b) the Administrative Agent shall not have any duty to take any
discretionary action or exercise any discretionary powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or all the Lenders when
required by Section 10.02(b)), and (c) except as expressly set forth herein, the
Administrative Agent shall not have any duty to disclose, and shall not be
liable for the failure to disclose, any information relating to the Company or
any of its Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or all the Lenders
when required by Section 10.02(b)) or in the absence of its own gross negligence
or wilful misconduct. The Administrative Agent shall be deemed not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative Agent by a Borrower or a Lender, and the Administrative Agent
shall not be responsible for or have any duty to ascertain or inquire into (i)
any statement, warranty or representation made in or in connection with this
Agreement or any Borrowing Subsidiary Agreement, (ii) the contents of any
certificate, report or other document delivered hereunder or thereunder or in
connection herewith or therewith, (iii) the performance or observance of any of
the covenants, agreements or other terms or conditions set forth herein, (iv)
the validity, enforceability, effectiveness or genuineness of this Agreement or
any Borrowing Subsidiary Agreement or any other agreement, instrument or
document, or (v) the satisfaction of any condition set forth in Article IV or
elsewhere herein, other than to confirm receipt of items expressly required to
be delivered to the Administrative Agent.
<PAGE>
The Administrative Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. The Administrative Agent
also may rely upon any statement made to it orally or by telephone and
reasonably believed by it to be made by the proper Person, and shall not incur
any liability for relying thereon. The Administrative Agent may consult with
legal counsel (who may be counsel for any Borrower), independent accountants and
other experts selected by it, and shall not be liable for any reasonable action
taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
The Administrative Agent may perform any and all of its duties and
exercise its rights and powers by or through any one or more sub-agents
appointed by the Administrative Agent. The Administrative Agent and any such
sub-agent may perform any and all of its duties and exercise its rights and
powers through their respective Related Parties. The exculpatory provisions of
the preceding paragraphs shall apply to any such sub-agent and to the Related
Parties of the Administrative Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.
Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph, the Administrative Agent may resign at any
time by notifying the Lenders, the Issuing Bank and the Company. Upon any such
resignation, the Required Lenders shall have the right, in consultation with the
Company, to appoint a successor. If no successor shall have been so appointed by
the Required Lenders and shall have accepted such appointment within 30 days
after the resigning Administrative Agent gives notice of its resignation, then
the resigning Administrative Agent may, on behalf of the Lenders and the Issuing
Bank, appoint a successor Administrative Agent which shall be a bank with an
office in New York, New York, or an Affiliate of any such bank. Upon the
acceptance of its appointment as Administrative Agent hereunder by a successor,
such successor shall succeed to and become vested with all the rights, powers,
privileges and duties of the resigning Administrative Agent, and the resigning
Administrative Agent shall be discharged from its duties and obligations
hereunder. The fees payable by the Company to a successor Administrative Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Company and such successor. After the Administrative Agent's
resignation hereunder, the provisions of this Article and Section 10.03 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as Administrative Agent.
Each Lender acknowledges that it has, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.
<PAGE>
ARTICLE IX
Guarantee
In order to induce the Lenders to extend credit hereunder, the Company
hereby irrevocably and unconditionally guarantees, as a primary obligor and not
merely as a surety, the Obligations. The Company further agrees that the due and
punctual payment of the Obligations may be extended or renewed, in whole or in
part, without notice to or further assent from it, and that it will remain bound
upon its Guarantee hereunder notwithstanding any such extension or renewal of
any Obligation.
The Company waives presentment to, demand of payment from and protest
to any Borrowing Subsidiary of any of the Obligations, and also waives notice of
acceptance of its obligations and notice of protest for nonpayment. The
obligations of the Company hereunder shall not be affected by (a) the failure of
any Lender or the Administrative Agent to assert any claim or demand or to
enforce or exercise any right or remedy against any Borrowing Subsidiary under
the provisions of this Agreement or otherwise or (b) any rescission, waiver,
amendment or modification of any of the terms or provisions of this Agreement,
any Borrowing Subsidiary Agreement or any other agreement.
The Company further agrees that its agreement under this Article IX
constitutes a promise of payment when due (whether or not any bankruptcy or
similar proceeding shall have stayed the accrual or collection of any of the
Obligations or operated as a discharge thereof) and not merely of collection,
and waives any right to require that any resort be had by any Lender to any
balance of any deposit account or credit on the books of any Lender in favor of
any Borrower or any other Person.
The obligations of the Company under this Article IX shall not be
subject to any reduction, limitation, impairment or termination for any reason,
and shall not be subject to any defense or setoff, counterclaim, recoupment or
termination whatsoever, by reason of the invalidity, illegality or
unenforceability of the Obligations, any impossibility in the performance of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Company under this Article IX shall not be discharged or
impaired or otherwise affected by the failure of the Administrative Agent or any
Lender to assert any claim or demand or to enforce any remedy under this
Agreement or any other agreement, by any waiver or modification in respect of
any thereof, by any default, failure or delay, wilful or otherwise, in the
performance of the Obligations, or by any other act or omission which may or
might in any manner or to any extent vary the risk of the Company or otherwise
operate as a discharge of the Company or any other Borrower as a matter of law
or equity.
The Company further agrees that its obligations under this Article IX
shall continue to be effective or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any Obligation is rescinded or must
otherwise be restored by the Administrative Agent or any Lender upon the
bankruptcy or reorganization of any Borrower or otherwise.
<PAGE>
In furtherance of the foregoing and not in limitation of any other
right which the Administrative Agent or any Lender may have at law or in equity
against the Company by virtue of this Article IX, upon the failure of any
Borrowing Subsidiary to pay any Obligation when and as the same shall become
due, whether at maturity, by acceleration, after notice of prepayment or
otherwise, the Company hereby promises to and will, upon receipt of written
demand by the Administrative Agent, forthwith pay, or cause to be paid, in cash
the amount of such unpaid Obligation. The Company further agrees that if payment
in respect of any Obligation shall be due in a currency other than dollars
and/or at a place of payment other than New York and if, by reason of any Change
in Law, disruption of currency or foreign exchange markets, war or civil
disturbance or similar event, payment of such Obligation in such currency or at
such place of payment shall be impossible or, in the reasonable judgment of any
applicable Lender, not consistent with the protection of its rights or
interests, then, at the election of any applicable Lender, the Company shall
make payment of such Obligation in dollars (based upon the applicable Exchange
Rate in effect on the date of payment) and/or in New York, and shall indemnify
such Lender against any losses or expenses that it shall sustain as a result of
such alternative payment.
Upon payment by the Company of any sums as provided above, all rights
of Company against any Borrowing Subsidiary arising as a result thereof by way
of right of subrogation or otherwise shall in all respects be subordinated and
junior in right of payment to the prior indefeasible payment in full of all the
Obligations owed by such Borrowing Subsidiary to the Lenders.
ARTICLE X
Miscellaneous
SECTION 10.01. Notices. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to any Borrower, to it in care of the Company at Fort
James Corporation, 120 Tredegar Street Richmond, VA 23219, Attention of
R. Michael Lempke c/o Clifford A. Cutchins, IV (Telecopy No.
(414)435-3703);
(b) if to the Administrative Agent, to The Chase Manhattan
Bank, Agent Bank Services Group, One Chase Manhattan Plaza, 8th Floor,
New York, New York 10081, Attention of Janet Belden (Telecopy No. (212)
552-5658), with a copy to Jonathan Twichell (Telecopy No. (312)
807-4550), and to any other applicable address specified in the
Alternate Procedures;
(c) if to the Issuing Bank, to The Chase Manhattan Bank,
Corporate Banking Department, 1201 Market Street, Wilmington, Delaware
19801, Attention of Michael Handigo (Telecopy No. (302) 428-3390), with
a copy to Janet Belden (Telecopy No. (212) 552-5658); and
(d) if to any Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 10.02. Waivers; Amendments. (a) No failure or delay by the
Administrative Agent, the Issuing Bank or any Lender in exercising any right or
power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Administrative Agent, the Issuing Bank and the Lenders
hereunder are cumulative and are not exclusive of any rights or remedies that
they would otherwise have. No waiver of any provision of this Agreement or
consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be permitted by paragraph (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which given. Without limiting the generality of the
foregoing, the making of a Loan or the issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of such Default at the time.
<PAGE>
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Company, the Borrowing Subsidiaries party hereto and the
Required Lenders or by the Company, the Borrowing Subsidiaries party hereto and
the Administrative Agent with the consent of the Required Lenders; provided that
no such agreement shall (i) increase the Commitment of any Lender without the
written consent of such Lender, (ii) reduce the principal amount of any Loan or
LC Disbursement or reduce the rate of interest thereon, or reduce any fees
payable hereunder, without the written consent of each Lender affected thereby,
(iii) postpone the scheduled date of payment of the principal amount of any Loan
or LC Disbursement, or any interest thereon, or any fees payable hereunder, or
reduce the amount of, waive or excuse any such payment, or postpone the
scheduled date of expiration of any Commitment, without the written consent of
each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a manner
that would alter the pro rata sharing of payments required thereby, without the
written consent of each Lender, (v) change any of the provisions of this Section
or the definition of "Required Lenders" or any other provision hereof specifying
the number or percentage of Lenders required to waive, amend or modify any
rights hereunder or make any determination or grant any consent hereunder,
without the written consent of each Lender, (vi) modify or amend Section 2.15,
(vii) waive Section 4.01(d), or (viii) release the Company from, or limit or
condition, its obligations under Article IX, without the written consent of each
Lender; provided further that no such agreement shall amend, modify or otherwise
affect the rights or duties of the Administrative Agent or the Issuing Bank
hereunder without the prior written consent of the Administrative Agent or the
Issuing Bank, as the case may be.
(c) Notwithstanding Section 10.02(b) (other than the proviso thereto),
the Alternate Procedures may be amended by an agreement or agreements in writing
entered into by the Administrative Agent, the applicable Borrower and the
Multicurrency Lenders. Without limiting the foregoing, the Borrower, the
Administrative Agent and each Multicurrency Lender agree to negotiate in good
faith any requested amendment to the Alternate Procedures that may be necessary
or desirable to comply with local laws or regulations or otherwise to implement
the making and repaying of Multicurrency Loans as contemplated hereby.
SECTION 10.03. Expenses; Indemnity; Damage Waiver. (a) The Company
shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges
and disbursements of counsel for the Administrative Agent, in connection with
the syndication of the credit facilities provided for herein, the preparation
and administration of this Agreement or any Borrowing Subsidiary Agreement and
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing
Bank in connection with the issuance, amendment, renewal or extension of any
Letter of Credit or any demand for payment thereunder and (iii) all reasonable
out-of-pocket expenses incurred by the Administrative Agent, the Issuing Bank or
any Lender, including the fees, charges and disbursements of any counsel for the
Administrative Agent, the Issuing Bank or any Lender, in connection with the
enforcement or protection of its rights in connection with this Agreement or any
Borrowing Subsidiary Agreement, including its rights under this Section, or in
connection with the Loans made or Letters of Credit issued hereunder, including
in connection with any workout, restructuring or negotiations in respect
thereof.
<PAGE>
(b) The Company shall indemnify the Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of this Agreement or any Borrowing Subsidiary Agreement or any
agreement or instrument contemplated hereby or thereby, the performance by the
parties hereto or thereto of their respective obligations hereunder or
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any property owned or operated by the Company or any of its
Subsidiaries, or any Environmental Liability related in any way to the Company
or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing, whether based on
contract, tort or any other theory and regardless of whether any Indemnitee is a
party thereto; provided that such indemnity shall not, as to any Indemnitee, be
available to the extent that such losses, claims, damages, liabilities or
related expenses are determined by a court of competent jurisdiction by final
and nonappealable judgment to have resulted from the gross negligence or wilful
misconduct of such Indemnitee.
(c) To the extent that the Company fails to pay any amount required to
be paid by it to the Administrative Agent under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent such
Lender's Applicable Percentage (determined as of the time that the applicable
unreimbursed expense or indemnity payment is sought) of such unpaid amount;
provided that (i) if the Commitments shall have terminated or expired prior to
the repayment in full of all the Loans, then the payment by the Lenders of such
amounts shall be based upon the then outstanding principal amount of the Loans
of each Lender and (ii) the unreimbursed expense or indemnified loss, claim,
damage, liability or related expense, as the case may be, was incurred by or
asserted against the Administrative Agent in its capacity as such.
(d) To the extent permitted by applicable law, no Borrower shall
assert, and each Borrower hereby waives, any claim against any Indemnitee, on
any theory of liability, for special, indirect, consequential or punitive
damages (as opposed to direct or actual damages) arising out of, in connection
with, or as a result of, this Agreement or any Borrowing Subsidiary Agreement or
any agreement or instrument contemplated hereby or thereby, the Transactions,
any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 10.04. Successors and Assigns. (a) The provisions of this
Agreement shall be binding upon and inure to the benefit of the parties hereto
(including the parties to any Borrowing Subsidiary Agreement) and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that no Borrower may
assign or otherwise transfer any of its rights or obligations hereunder or under
any Borrowing Subsidiary Agreement without the prior written consent of each
Lender (and any attempted assignment or transfer by any Borrower without such
consent shall be null and void). Nothing in this Agreement, expressed or
implied, shall be construed to confer upon any Person (other than the parties
hereto, their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit) and, to the
extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.
<PAGE>
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it); provided that (i) except
in the case of an assignment to a Lender or an Affiliate of a Lender, each of
the Company and the Administrative Agent (and, in the case of an assignment of
all or a portion of a U.S. Commitment or any U.S. Lender's obligations in
respect of its LC Exposure, the Issuing Bank) must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(ii) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $15,000,000 unless each of the Company and the Administrative Agent
otherwise consent, (iii) the parties to each assignment shall execute and
deliver to the Administrative Agent an Assignment and Acceptance, together with
a processing and recordation fee of $2,000, and (iv) the assignee, if it shall
not be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire; provided further that any consent of the Company otherwise
required under this paragraph shall not be required if (i) an Event of Default
under clause (h) or (i) of Article VII has occurred and is continuing with
respect to the Company or (ii) any other Event of Default has occurred and is
continuing with respect to the Company for a period of 30 days. Upon acceptance
and recording pursuant to paragraph (d) of this Section, from and after the
effective date specified in each Assignment and Acceptance, the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Sections 2.13, 2.14, 2.15 and 10.03). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated for purposes of this
Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of
the Borrowers, shall maintain at one of its offices in The City of New York a
copy of each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "Register"). The entries in the Register shall be
conclusive absent manifest error, and the Borrowers, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Company, the Issuing Bank and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
<PAGE>
(e) Any Lender may, without the consent of any Borrower, the
Administrative Agent or the Issuing Bank, sell participations to one or more
banks or other entities (a "Participant") in all or a portion of such Lender's
rights and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (i) such Lender's
obligations under this Agreement shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing
Bank and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any agreement or instrument pursuant to which a Lender sells such a
participation shall provide that such Lender shall retain the sole right to
enforce this Agreement and to approve any amendment, modification or waiver of
any provision of this Agreement; provided that such agreement or instrument may
provide that such Lender will not, without the consent of the Participant, agree
to any amendment, modification or waiver described in the first proviso to
Section 10.02(b) that affects such Participant. Subject to paragraph (f) of this
Section, each Borrower agrees that each Participant shall be entitled to the
benefits of Sections 2.13, 2.14 and 2.15 to the same extent as if it were a
Lender and had acquired its interest by assignment pursuant to paragraph (b) of
this Section. To the extent permitted by law, each Participant also shall be
entitled to the benefits of Section 10.08 as though it were a Lender, provided
such Participant agrees to be subject to Section 2.16(c) as though it were a
Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.14 or 2.15 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Company's
prior written consent. Subject to the immediately preceding sentence, a
Participant that would be a Foreign Lender if it were a Lender shall not be
entitled to the benefits of Section 2.15 unless the Company is notified of the
participation sold to such Participant and such Participant agrees, for the
benefit of the Borrowers, to comply with Section 2.15(e) as though it were a
Lender.
(g) Any Lender may at any time pledge or assign all or any portion of
its rights under this Agreement to any Federal Reserve Bank, and this Section
shall not apply to any such pledge or assignment of a security interest;
provided that no such pledge or assignment of a security interest shall release
a Lender from any of its obligations hereunder or substitute any such assignee
for such Lender as a party hereto.
SECTION 10.05. Survival. All covenants, agreements, representations and
warranties made by the Borrowers herein and in the Borrowing Subsidiary
Agreements and the certificates or other instruments delivered in connection
with or pursuant to this Agreement shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the
Administrative Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid or any
Letter of Credit is outstanding and so long as the Commitments have not expired
or terminated. The provisions of Sections 2.13, 2.14, 2.15 and 10.03 and Article
VIII shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Commitments or the termination of
this Agreement or any provision hereof.
<PAGE>
SECTION 10.06. Counterparts; Integration; Effectiveness. This Agreement
may be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement and any
separate letter agreements with respect to fees payable to the Administrative
Agent constitute the entire contract among the parties relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral or written, relating to the subject matter hereof. Subject to the
provisions of Section 4.01, this Agreement shall become effective when it shall
have been executed by the Administrative Agent and when the Administrative Agent
shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Delivery of an executed counterpart of a signature page
of this Agreement by telecopy shall be effective as delivery of a manually
executed counterpart of this Agreement.
SECTION 10.07. Severability. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 10.08. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other indebtedness at any
time owing by such Lender or Affiliate to or for the credit or the account of
any Borrower against any of and all the obligations of the Company or such
Borrower now or hereafter existing under this Agreement held by such Lender,
irrespective of whether or not such Lender shall have made any demand under this
Agreement and although such obligations may be unmatured. The rights of each
Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 10.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the internal law of the State of New York.
(b) Each Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to this
Agreement, or for recognition or enforcement of any judgment, and each of the
parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New
York State or, to the extent permitted by law, in such Federal court. Each of
the parties hereto agrees that a final judgment in any such action or proceeding
shall be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. Nothing in this Agreement shall
affect any right that the Administrative Agent, the Issuing Bank or any Lender
may otherwise have to bring any action or proceeding relating to this Agreement
against any Borrower or its properties in the courts of any jurisdiction.
(c) Each Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement (including any Borrowing Subsidiaries)
irrevocably consents to service of process in the manner provided for notices in
Section 10.01. Nothing in this Agreement will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
<PAGE>
SECTION 10.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 10.11. Headings. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 10.12. Confidentiality. Each of the Administrative Agent, the
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or the enforcement of rights hereunder,
(f) subject to an agreement containing provisions substantially the same as
those of this Section, to any assignee of or Participant in, or any prospective
assignee of or Participant in, any of its rights or obligations under this
Agreement, (g) with the consent of the Company or (h) to the extent such
Information (i) becomes publicly available other than as a result of a breach of
this Section or (ii) becomes available to the Administrative Agent, the Issuing
Bank or any Lender on a nonconfidential basis from a source other than a
Borrower. For the purposes of this Section, "Information" means all information
received from a Borrower relating to a Borrower or its business, other than any
such information that is available to the Administrative Agent, the Issuing Bank
or any Lender on a nonconfidential basis prior to disclosure by a Borrower;
provided that, in the case of information received from a Borrower after the
date hereof, such information is identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
SECTION 10.13. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
<PAGE>
SECTION 10.14. Conversion of Currencies. (a) If, for the purpose of
obtaining judgment in any court, it is necessary to convert a sum owing
hereunder in one currency into another currency, each party hereto (including
any Borrowing Subsidiary) agrees, to the fullest extent that it may effectively
do so, that the rate of exchange used shall be that at which in accordance with
normal banking procedures in the relevant jurisdiction the first currency could
be purchased with such other currency on the Business Day immediately preceding
the day on which final judgment is given.
(b) The obligations of each Borrower in respect of any sum due to any
party hereto or any holder of the obligations owing hereunder (the "Applicable
Creditor") shall, notwithstanding any judgment in a currency (the "Judgment
Currency") other than the currency in which such sum is stated to be due
hereunder (the "Agreement Currency"), be discharged only to the extent that, on
the Business Day following receipt by the Applicable Creditor of any sum
adjudged to be so due in the Judgment Currency, the Applicable Creditor may in
accordance with normal banking procedures in the relevant jurisdiction purchase
the Agreement Currency with the Judgment Currency; if the amount of the
Agreement Currency so purchased is less than the sum originally due to the
Applicable Creditor in the Agreement Currency, such Borrower agrees, as a
separate obligation and notwithstanding any such judgment, to indemnify the
Applicable Creditor against such loss. The obligations of the Borrowers
contained in this Section 10.14 shall survive the termination of this Agreement
and the payment of all other amounts owing hereunder.
Exhibit 11
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 28, 1997 and September 29, 1996
(in millions, except per share amounts)
Third Quarter Nine Months
---------------------------- ------------------------------
PRIMARY: 1997 1996 1997 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable
to common shares $15.4 $105.9 $244.1 $181.1
==============================================================================================================================
Weighted average number of common
shares and common share equivalents:
Common shares outstanding 191.5 187.2 190.1 179.6
Assumed conversion of convertible preferred stock 15.3 15.3 15.3
Issuable upon exercise of outstanding
stock options and pursuant to a
deferred stock award plan 7.6 8.0 5.8 8.1
Less assumed acquisition of common
shares, using proceeds from stock
options and the impact of a deferred
stock award plan, under the treasury
stock method (5.0) (6.4) (3.5) (6.6)
- ------------------------------------------------------------------------------------------------------------------------------
209.4 204.1 207.7 181.1
==============================================================================================================================
Primary earnings per common share $.07 $.52 $1.18 $1.00
==============================================================================================================================
</TABLE>
E-9
<PAGE>
Exhibit 11 (continued)
<TABLE>
<CAPTION>
FORT JAMES CORPORATION
COMPUTATION OF EARNINGS PER SHARE
For the Quarters (13 Weeks) and Nine Months (39 Weeks) Ended
September 28, 1997 and September 29, 1996
(in millions, except per share amounts)
Third Quarter Nine Months
------------------------------- --------------------------------
FULLY DILUTED: 1997 1996 1997 1996
- ----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net earnings applicable
to common shares $15.4 $105.9 $244.1 $181.1
============================================================================================================================
Weighted average number of common
shares and common share equivalents:
Common shares outstanding 191.5 187.2 190.1 179.6
Assumed conversion of convertible preferred stock 15.3 18.0 15.3
Issuable upon exercise of outstanding
stock options and pursuant to a
deferred stock award plan 7.6 9.3 6.2 8.7
Less assumed acquisition of common
shares, using proceeds from stock
options and the impact of a deferred
stock award plan, under the treasury
stock method (4.9) (7.5) (3.5) (6.8)
- -----------------------------------------------------------------------------------------------------------------------------
209.5 207.0 208.1 181.5
=============================================================================================================================
Fully diluted earnings per common share $.07 $.51 $1.17 $1.00
=============================================================================================================================
</TABLE>
<PAGE>
Exhibit 11 (continued)
FORT JAMES CORPORATION
NOTES TO COMPUTATIONS OF EARNINGS
PER SHARE
Primary earnings per common share is computed by dividing net income, after
deducting dividends on outstanding preferred shares, by the weighted average
number of common shares and dilutive common share equivalents outstanding during
the period. Common share equivalents consist of shares issuable pursuant to
stock options and a deferred stock award plan, and are calculated using an
average market price for the period. Common share equivalents also include the
assumed conversion of the Company's Series P 9 percent Cumulative Convertible
Preferred Stock, if diluted.
Fully diluted earnings per common share is computed using the same method
as for the primary computation except that (i) common share equivalents are
computed using the higher of the market price at the end of the period or the
average market price for the period, and (ii) the average number of common
shares and dilutive common share equivalents outstanding is increased by the
assumed conversion, if dilutive, of the Company's Series K $3.375 Cumulative
Convertible Exchangeable Preferred Stock, its Series L $14.00 Cumulative
Convertible Exchangeable Preferred Stock, its Series N $14.00 Cumulative
Convertible Exchangeable Preferred Stock, and its Series P 9% Cumulative
Convertible Preferred Stock ("Series P").
<TABLE>
<CAPTION>
Exhibit 12
FORT JAMES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in millions)
Fiscal Year Ended
----------------------------------------------------------------------
December December December December December
29, 1996 31, 1995 25, 1994 26, 1993 27, 1992
(52 weeks) (53 weeks) (52 weeks) (52 weeks) (52 weeks)
- ---------------------------------------------------------------------------------------------------------------------------
(d) (c,d) (b,d)
<S> <C> <C> <C> <C> <C>
Pretax income (loss) from continuing
operations, before minority interests,
extraordinary item and cumulative effect
of changes in accounting principles $498.6 $272.2 $(76.7) $(2,042.3) $(252.6)
Add:
Interest charged to operations 433.6 545.9 547.8 525.8 531.3
Portion of rental expense representative
of interest factor (assumed to be one-third) 25.8 26.0 26.1 20.8 21.1
- ---------------------------------------------------------------------------------------------------------------------------
Total earnings, as adjusted $958.0 $844.1 $497.2 $(1,495.7) $299.8
===========================================================================================================================
Fixed charges:
Interest charged to operations $433.6 $545.9 $547.8 $525.8 $531.3
Capitalized interest 6.6 9.0 7.3 13.7 23.8
Portion of rental expense representative
of interest factor (assumed to be one-third) 25.8 26.0 26.1 20.8 21.1
- ---------------------------------------------------------------------------------------------------------------------------
Total fixed charges $466.0 $580.9 $581.2 $560.3 $576.2
===========================================================================================================================
Ratio 2.06 1.45 - - - - - -
===========================================================================================================================
</TABLE>
See accompanying footnote explanations.
E-10
<PAGE>
<TABLE>
<CAPTION>
Exhibit 12 (continued)
FORT JAMES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES (a)
(Dollar amounts in millions)
Nine Months Ended
-----------------------------------------
September 28, September 29,
1997 1996
(39 Weeks) (39 Weeks)
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Pretax income from continuing operations,
before minority interests and extraordinary item $558.3 $393.1
Add:
Interest charged to operations 284.3 334.3
Portion of rental expense representative of
interest factor (assumed to be one-third) 19.4 19.7
- --------------------------------------------------------------------------------------------------
Total earnings, as adjusted $862.0 $747.1
==================================================================================================
Fixed charges:
Interest charged to operations $284.3 $334.3
Capitalized interest 7.2 4.4
Portion of rental expense representative of
interest factor (assumed to be one-third) 19.4 19.7
- --------------------------------------------------------------------------------------------------
Total fixed charges $310.9 $358.4
==================================================================================================
Ratio 2.77 2.08
==================================================================================================
See accompanying footnote explanations.
</TABLE>
<PAGE>
Exhibit 12 (continued)
FORT JAMES CORPORATION
NOTES TO COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(a) In computing the ratio of earnings to fixed charges, earnings consist of
income before income taxes, minority interests, extraordinary item,
cumulative effect of changes in accounting principles and fixed charges
excluding capitalized interest. Fixed charges consist of interest expense,
capitalized interest, and that portion of rental expense (one-third) deemed
representative of the interest factor. Earnings and fixed charges also
include the Company's proportionate share of such amounts for
unconsolidated affiliates which are owned 50% or more and distributed
income from less than 50% owned affiliates
(b) During 1992, the Company initiated a productivity enhancement program and
recorded a $112 million pretax charge which has been included in the
calculation of the ratio of earnings to fixed charges for this year.
(c) During 1993, the Company wrote off $1,980.4 million of goodwill which has
been included in the calculation of the ratio of earnings to fixed charges
for this year.
(d) For the following periods, earnings were inadequate to cover fixed charges,
and the amounts of the deficiencies were: year ended December 27, 1992 -
$276.4 million; year ended December 26, 1993 - $2,056.0 million; year ended
December 25, 1994 - $84.0 million.
