As Filed with the Securities and Exchange Commission on September 21, 1998
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
------------------
<TABLE>
<CAPTION>
<S> <C>
FORT JAMES CORPORATION FORT JAMES OPERATING COMPANY
(Exact name of registrant as specified in its charter) (Exact name of registrant as specified in its charter)
Commonwealth of Virginia Commonwealth of Virginia
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
54-0848173 54-1237819
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1650 Lake Cook Road c/o Fort James Corporation
Deerfield, Illinois 60015-4753 1650 Lake Cook Road
(847) 317-5000 Deerfield, Illinois 60015-4753
(Address including zip code, and telephone number, (847) 317-5000
including area code, of each registrant's principal (Address including zip code, and telephone number,
executive offices) including area code, of each registrant's principal
executive offices)
</TABLE>
CLIFFORD A. CUTCHINS, IV, ESQ.
Senior Vice President and General Counsel
Fort James Corporation
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
(847) 317-5000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
------------------
Copies To:
DANIELLE CARBONE, ESQ.
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
(212) 848-4000
------------------
Approximate date of commencement of proposed sale to the public: From time
to time, as determined by market conditions, after this Registration Statement
becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended, other than securities offered only in connection with dividend
or interest reinvestment plans, please check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
====================================================================================================================================
Amount to be Proposed maximum Amount of
Title of each class of securities to be registered registered(1) aggregate offering price(2) registration fee
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Fort James Operating Company Pass Through Certificates $150,000,000 $150,000,000
Fort James Corporation Guaranties(3)................
- ------------------------------------------------------------------------------------------------------------------------------------
Total............................................... $150,000,000 $150,000,000 $45,455
====================================================================================================================================
<FN>
(1)Such amount in U.S. dollars or equivalent thereof in foreign currencies as shall result in an aggregate initial offering
price for all securities of $150,000,000.
(2)Estimated in accordance with Rule 457 solely for the purpose of calculating the registration fee.
(3)No separate consideration will be received for the Fort James Corporation Guaranties.
</FN>
</TABLE>
------------------
The Registrants hereby amend this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrants
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This Prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such state.
PROSPECTUS SUBJECT TO COMPLETION, SEPTEMBER 21, 1998
$150,000,000
PASS THROUGH CERTIFICATES
FORT JAMES OPERATING COMPANY
----------------------
APPLICABLE UNDERLYING PAYMENTS FULLY AND UNCONDITIONALLY
GUARANTEED BY
FORT JAMES CORPORATION
Up to $150,000,000 aggregate public offering price of Pass Through
Certificates (the "Certificates") (or its equivalent (based on the applicable
exchange rate at the time of sale) in one or more foreign currencies or units
based on or related to currencies, including European Currency Units) may be
offered for sale from time to time pursuant to this Prospectus and related
Prospectus Supplements (as defined below). Certificates may be issued in one or
more series in amounts, at prices and on terms to be determined at the time of
the offering. In respect of each offering of Certificates, a separate Fort James
Pass Through Trust for each series of Certificates being offered (each, a "Pass
Through Trust") will be formed, in each case pursuant to a Pass Through Trust
Agreement (the "Basic Agreement"), among Fort James Operating Company (the
"Lessee"), Fort James Corporation ("Fort James" or the "Company") and Wilmington
Trust Company (the "Trustee"), as trustee under each Pass Through Trust, and a
supplement thereto (each, a "Trust Supplement") relating to such Pass Through
Trust to be entered into among the Lessee, Fort James and the Trustee. Each
Certificate in a series will represent a fractional undivided interest in the
related Pass Through Trust and will have no rights, benefits or interests in
respect of any other Pass Through Trust. The property of each Pass Through Trust
will consist of notes (the "Secured Notes") issued on a nonrecourse basis by one
or more owner trustees (each, an "Owner Trustee") of one or more separate owner
trusts (each, an "Owner Trust") in connection with one or more separate
leveraged lease transactions to finance or refinance all or a portion of the
cost of certain real or personal property to be specified in a Prospectus
Supplement, which property may consist of title to, an estate for years or a
leasehold or similar interest in, equipment, manufacturing or production
facilities and other real or personal property or undivided interests therein
(each such specified property, "Leased Property"). Each Leased Property has been
or will be leased or chartered to the Lessee pursuant to separate lease
agreements, sublease agreements, charters or similar agreements (each, a
"Lease"). Although neither the Certificates nor the Secured Notes will be
obligations of, or guaranteed by, the Lessee or Fort James, the amounts
unconditionally payable under the Lease or Leases related to a Pass Through
Trust will be at least sufficient to pay in full when due all payments of
principal and interest and, except in the limited circumstances set forth in the
applicable Prospectus Supplement, premium, if any, due in respect of the Secured
Notes held in that Pass Through Trust. In the case of each Pass Through Trust,
Fort James will fully and unconditionally guarantee to the holders of
Certificates from time to time (each, a "Parent Guaranty") the full and prompt
payment of amounts payable by the Lessee under a related Lease when and as the
same shall become due and payable.
<PAGE>
The specific terms of the particular Certificates in respect of which
this Prospectus is being delivered will be set forth in a supplement to this
Prospectus (each, a "Prospectus Supplement") which will be delivered together
with this Prospectus, and which will include, where applicable, the specific
designation, form, aggregate principal amount, initial public offering price and
distribution dates relating to such Certificates, the currency in which such
Certificates will be payable, and the use of the net proceeds from the offering
of such Certificates. The Prospectus Supplement will also describe the Pass
Through Trust or Pass Through Trusts relating to such Certificates, the Secured
Notes to be purchased by such Pass Through Trust or Pass Through Trusts, each
Leased Property relating to such Secured Notes, the leveraged lease transactions
relating to such Secured Notes and other special terms relating to such
Certificates.
If so specified in a Prospectus Supplement related to an offering of
Certificates, the Trust Property (as defined below) of a Pass Through Trust will
consist of Secured Notes related to Leased Property which are subordinated in
right of payment to other Secured Notes related to the same Leased Property. In
respect of such offering, only Secured Notes having the same priority of payment
may be held in the same Pass Through Trust. In addition, the related Prospectus
Supplement may provide that the Trustees on behalf of the applicable Pass
Through Trusts may enter into an intercreditor or subordination agreement
establishing priorities among series of Certificates or that one or more
payments of interest on the related Secured Notes of one or more series or
distributions made by the Trustee of the related Pass Through Trust will be
supported by a liquidity facility issued by an institution identified in the
related Prospectus Supplement.
Secured Notes may be issued in respect of one or more items of Leased
Property. Secured Notes in respect of a particular item of Leased Property may
be issued in one or more series, each of which may have a different interest
rate and a different final maturity date. For each series of Certificates, the
Trustee will purchase one or more Secured Notes issued with respect to one or
more items of Leased Property such that all of the Secured Notes held in the
related Pass Through Trust will have identical interest rates (in each case
equal to the rate applicable to the Certificates issued by such Pass Through
Trust), and such that the latest maturity date for such Secured Notes will occur
on or before the final distribution date for such Certificates. Interest paid on
the Secured Notes held in each Pass Through Trust will be passed through to the
holders of the Certificates relating to such Pass Through Trust on the dates and
at the rate per annum set forth in the Prospectus Supplement relating to such
Certificates until the final distribution date for such Pass Through Trust.
Principal paid on the Secured Notes held in each Pass Through Trust will be
passed through to the holders of the Certificates relating to such Pass Through
Trust in scheduled amounts on the dates set forth in the Prospectus Supplement
relating to such Certificates until the final distribution date for such Pass
Through Trust. The Secured Notes to be held in a Pass Through Trust will be
secured by (i) an assignment of certain of the issuing Owner Trustee's rights as
lessor or charterer under the Lease relating to the Leased Property to which
such Secured Notes relate, including the right to receive rentals and certain
other payments from the Lessee, (ii) an assignment of certain of such Owner
Trustee's rights under the Parent Guaranty relating to such Leased Property and
(iii) to the extent specified in the applicable Prospectus Supplement, a
mortgage or other security interest in such Leased Property or in construction
contracts or other agreements, collateral accounts or other
2
<PAGE>
security, in each case subject to the rights of the Lessee under the related
Lease and other rights, if any, described in the applicable Prospectus
Supplement.
The Certificates may be sold to or through underwriters, through
dealers or agents or directly to purchasers. See "Plan of Distribution." Each
Prospectus Supplement will set forth the names of any underwriters, dealers or
agents involved in the sale of the Certificates in respect of which that
Prospectus Supplement is being delivered, the proposed amounts, if any, to be
purchased by underwriters and the compensation, if any, of such underwriters or
agents. See "Plan of Distribution" for information concerning secondary trading
of the Certificates.
----------
This Prospectus may not be used to consummate sales of Certificates
unless accompanied by a Prospectus Supplement.
----------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
----------
THE DATE OF THIS PROSPECTUS IS , 1998.
3
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained or
incorporated by reference in this Prospectus or any related Prospectus
Supplement in connection with the Offer contained in this Prospectus and such
Prospectus Supplement and, if given or made, such information or representations
must not be relied upon as having been authorized by Fort James, the Lessee or
any Underwriters, agents or dealers. This Prospectus and any related Prospectus
Supplement do not constitute an offer to sell or solicitation of an offer to buy
securities in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation. Neither the delivery of this Prospectus and any related
Prospectus Supplement nor any sale made hereunder or thereunder shall, under any
circumstances, create an implication that there has been no change in the
affairs of Fort James or any lessee since the date hereof or thereof or that the
information contained herein or therein is correct at any time subsequent to the
date hereof.
TABLE OF CONTENTS
Page
AVAILABLE INFORMATION........................................................5
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE..............................6
FORMATION OF THE TRUSTS......................................................7
OUTLINE OF THE LEVERAGED LEASE STRUCTURE.....................................7
USE OF PROCEEDS..............................................................9
THE COMPANY.................................................................10
THE LESSEE..................................................................11
RATIO OF EARNINGS TO FIXED CHARGES OF FORT JAMES CORPORATION................12
DESCRIPTION OF THE CERTIFICATES.............................................13
DESCRIPTION OF THE SECURED NOTES............................................28
FEDERAL INCOME TAX CONSEQUENCES.............................................33
CERTAIN DELAWARE TAXES......................................................36
ERISA CONSIDERATIONS........................................................37
PLAN OF DISTRIBUTION........................................................37
LEGAL OPINIONS..............................................................39
EXPERTS.....................................................................39
4
<PAGE>
AVAILABLE INFORMATION
Fort James and the Lessee have filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (together
with any amendments thereto, the "Registration Statement") under the Securities
and Exchange Act of 1933, as amended (the "Securities Act"), with respect to
Certificates offered hereby. This Prospectus, which constitutes a part of the
Registration Statement, omits certain information contained in the Registration
Statement as permitted by the rules and regulations of the Commission. For
further information with respect to Fort James, the Lessee or the Certificates
offered hereby, reference is made to the Registration Statement, exhibits,
financial statements, notes and schedules filed as part thereof, which may be
inspected at the public reference facilities of the Commission at the addresses
set forth below. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is made to the exhibit for a
more complete description of the document or matter involved, and each such
statement made herein with respect to such contract, agreement or document shall
be deemed to be qualified in its entirety by such reference.
Fort James is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy and information statements, and other
information with the Commission. Such reports, proxy and information statements,
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the following Regional Offices of
the Commission: Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661; and New York Regional Office, 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can also be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Such information may also be accessed electronically by means of the
Commission's website on the Internet (http://www.sec.gov). Fort James' common
stock is listed on the New York Stock Exchange, and such reports, proxy and
information statements, and other information concerning the Company can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.
No separate financial statements of the Lessee have been included or
incorporated by reference herein. Fort James and the Lessee do not consider that
such financial statements would be material to holders of the Certificates
because (i) all of the voting securities of the Lessee are owned, directly or
indirectly, by Fort James, a reporting company under the Exchange Act and (ii)
the obligations of the Lessee are fully and unconditionally guaranteed by Fort
James pursuant to Parent Guaranties as and to the extent described herein. See
"The Lessee," "Description of the Certificates," and "Parent Guaranties."
5
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the Commission are hereby
incorporated by reference into this Prospectus (File No. 1-7911):
(a) the Annual Report of Fort James on Form 10-K for the
fiscal year ended December 28, 1997;
(b) the Quarterly Reports of Fort James on Form 10-Q for the
quarters ended March 29, 1998 and June 28, 1998; and
(c) the Current Reports of Fort James on Form 8-K dated
February 3, 1998, March 2, 1998, March 9, 1998 and March 24, 1998,
respectively.
All documents filed by the Company pursuant to Sections 13(a), 13(c),
14, or 15(d) of the Exchange Act subsequent to the date of the Registration
Statement on Form S-3 of which this Prospectus is a part and prior to the
effectiveness thereof and prior to the termination of the offering of the
Certificates made hereby shall be deemed to be incorporated by reference into
this Prospectus and to be a part hereof from the respective dates of filing of
such documents. Any statement contained herein or in a document all or any
portion of which is incorporated or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus. As used herein, the terms "Prospectus"
and "herein" mean this Prospectus, including the documents incorporated by
reference, as the same may be amended, supplemented, or otherwise modified from
time to time. Statements contained in this Prospectus as to the contents of any
contract or other document referred to herein do not purport to be complete and
are qualified in all respects by reference to all of the provisions of such
contract or other document.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents referred to above which have been or may be
incorporated in this Prospectus by reference, other than exhibits to such
documents which are not specifically incorporated by reference in such
documents. Requests for such copies should be directed to Celeste Gunter,
Director, Investor Relations, Fort James Corporation, 120 Tredegar Street,
Richmond, Virginia 23219 (telephone (804) 649-4307).
6
<PAGE>
FORMATION OF THE TRUSTS
In respect of each offering of Certificates, a separate Pass Through
Trust for each series of Certificates being offered will be formed pursuant to
the Basic Agreement and a Trust Supplement to be entered into among Fort James,
the Trustee and the Lessee. Following the execution and delivery of a Trust
Supplement, the Trustee, on behalf of the related Pass Through Trust, will
purchase the Secured Notes to be held in such Pass Through Trust having an
interest rate (or, in the case of Secured Notes with a zero coupon, accrual
rate) equal to the interest rate (or accrual rate) applicable to the
Certificates evidencing interests in such Pass Through Trust. The maturity date
of the Secured Notes acquired by a Pass Through Trust will occur not later than
the final scheduled distribution date applicable to the Certificates evidencing
an interest in such Pass Through Trust. The Trustee will distribute all payments
of principal, premium, if any, and interest received by it as holder of such
Secured Notes to the holders of Certificates evidencing an interest in the Pass
Through Trust in which such Secured Notes are held. See "Description of the
Certificates."
OUTLINE OF THE LEVERAGED LEASE STRUCTURE
Unless otherwise specified in the applicable Prospectus Supplement, the
Certificates offered pursuant to any Prospectus Supplement will be issued to
facilitate the acquisition or refinancing by one or more Owner Trustees, each
acting not in its individual capacity (except as expressly set forth in such
Prospectus Supplement) but solely as trustee under a separate trust agreement
(each, an "Owner Trust Agreement") for one or more equity investors (each an
"Owner Participant"), of certain items of Leased Property. Owner Participants
may include affiliates of Fort James. Not later than the delivery date of the
applicable Leased Property to an Owner Trustee, such Owner Trustee will lease or
charter such Leased Property to a Lessee pursuant to a separate Lease. Such
Lessee may initially sublease or subcharter such Leased Property to an affiliate
of Fort James.
The Owner Trustees will obtain a portion of the funding for the Leased
Property from the equity investments of the related Owner Participants, which
will be the beneficiaries of the related Owner Trusts. The Owner Trustee will
obtain the remainder of the funding from the issuance on a nonrecourse basis of
the Secured Notes to be held in the related Pass Through Trusts and, to the
extent set forth in the applicable Prospectus Supplement, additional debt
secured by such Leased Property or other sources. The Secured Notes to be held
in the Pass Through Trusts will be acquired by the Trustee with the proceeds
from the sale of Certificates.
Secured Notes relating to Leased Property will be issued under an
indenture and security agreement or a similar agreement (each, an "Indenture")
with respect to such Leased Property. Each Indenture will be entered into by and
among a financial institution (the "Corporate Indenture Trustee") and, where
required by applicable law, an individual who may be an officer or employee of
the Corporate Indenture Trustee (the "Individual Indenture Trustee"), as
trustees thereunder (the Corporate Indenture Trustee and the Individual
Indenture Trustee, in such capacities, the "Indenture Trustees"), and the
issuing Owner Trustee. No Owner Trustee or Owner Participant will be
7
<PAGE>
personally liable for any amount payable under the related Indenture or the
Secured Notes issued thereunder.
The Secured Notes issued under each Indenture and held in each Pass
Through Trust will be secured by (i) an assignment of certain of the related
Owner Trustee's rights as lessor or charterer under the Lease with respect to
the applicable Leased Property, including the right to receive certain rentals
and other payments from the Lessee, (ii) an assignment of certain of such Owner
Trustee's rights under the Parent Guaranty relating to such Leased Property, and
(iii) to the extent specified in the applicable Prospectus Supplement, a
mortgage or other security interest in such Leased Property, or in construction
contracts or other agreements, collateral accounts or other security, in each
case subject to the rights of the Lessee under the related Lease and other
rights, if any, described in the applicable Prospectus Supplement. (Such
security with respect to each Indenture shall be referred to as the "Indenture
Estate.") Unless otherwise set forth in the applicable Prospectus Supplement,
the Secured Notes issued under an Indenture will not be secured by any of the
Leased Properties securing the Secured Notes issued under any other Indenture
(including any other Leased Properties acquired by the related Owner Trustee)
and will not be cross-defaulted with Secured Notes issued under any other
Indenture (including any other Indenture entered into by such Owner Trustee).
The rents and other amounts payable by the Lessee under the related
Lease will be sufficient to pay in full when due all payments of principal and
interest and, except in the limited circumstances set forth in the applicable
Prospectus Supplement, premium, if any, due in respect of the Secured Notes
issued under the Indenture. The Secured Notes will not be recourse obligations
of any Owner Participant or issuing Owner Trustee, but will be payable solely
from the rents or charter hire and other amounts payable under the Lease of the
Leased Property securing such Secured Notes and amounts realized from the
exercise of the Indenture Trustee's remedies under the Indenture against the
related Indenture Estate. Pursuant to a Parent Guaranty, Fort James will fully
and unconditionally guarantee the full and prompt payments payable by the Lessee
under the related Lease when and as the same shall become due and payable. See
"Description of the Secured Notes."
8
<PAGE>
USE OF PROCEEDS
The Certificates offered pursuant to this Prospectus and a related
Prospectus Supplement will be issued in order to facilitate the financing or
refinancing of all or a portion of the cost of certain Leased Property specified
in such Prospectus Supplement. Except as set forth in a Prospectus Supplement
for a specific offering of Certificates, the proceeds from the sale of the
Certificates will be used by the Trustee or Trustees on behalf of the applicable
Pass Through Trust or Pass Through Trusts to purchase Secured Notes. See
"Description of the Certificates" and "Description of the Secured Notes." In the
event that, at the time Certificates are issued, the Secured Notes to be
purchased by the applicable Pass Through Trust or Pass Through Trusts are not
available for purchase, the proceeds of the sale of such Certificates may be
used by the Trustee to purchase certain limited investments on an interim basis,
as described in the applicable Prospectus Supplement. In such event, any portion
of the proceeds of the sale of such Certificates not used for the purchase of
Secured Notes on or prior to the date set forth in such Prospectus Supplement
will be distributed on a Special Distribution Date (as defined below) to the
applicable Certificateholders, together with interest, but without premium. See
"Description of the Certificates--Delayed Purchase."
9
<PAGE>
THE COMPANY
Fort James is a preeminent worldwide manufacturer and marketer of
paper-based consumer products, including towel and tissue products as well as
disposable tabletop and food service products. The Company's principal towel and
tissue products include bathroom tissue, paper towels, table napkins, boxed
facial tissue and wipers. Disposable tabletop and foodservice products include
paper and plastic cups, paper plates and plastic cutlery. Fort James also
produces and markets paper-based packaging for food and pharmaceuticals and
communications papers.
Fort James is the result of the merger of a wholly owned subsidiary of
James River Corporation of Virginia ("James River") into Fort Howard Corporation
("Fort Howard") in August 1997 (the "Merger"). In connection with the Merger,
James River was renamed "Fort James Corporation."
Fort James' principal U.S. retail tissue brands include QUILTED
NORTHERN bathroom tissue, BRAWNY paper towels, MARDI GRAS printed napkins and
paper towels, VANITY FAIR premium dinner napkins, NORTHERN paper napkins, SOFT'N
GENTLE bath and facial tissue, SO-DRI paper towels and GREEN FOREST recycled
tissue products. The Company's principal retail tabletop brand is its DIXIE
brand of disposable cups and plates. Fort James also believes it is the leading
supplier of private label tissue products and the leading supplier of both
tissue and disposable tabletop products to the growing warehouse club channel.
The U.S. away-from-home channel, where the Company sells its products
to food service, janitorial supply and sanitary paper distributors for use in
restaurants, offices, factories, hospitals, schools and hotels, is also an
important distribution channel for the Company. The Company is a leading
producer of tissue products for the U.S. away-from-home channel and is also one
of the largest producers of disposable cups, plates and related products for the
away-from-home food service industry.
In Europe, sales into retail channels are supported by both branded and
private label products offerings. European branded products include LOTUS
bathroom tissue and VANIA feminine hygiene products, sold primarily in France,
COLHOGAR bathroom tissue, sold in Spain, TENDERLY bathroom tissue, sold in
Italy, and KITTENSOFT and INVERSOFT bathroom tissue, sold in the British Isles.
The Company believes that it is among the lowest-cost producers of
tissue products in North America. The Company believes its cost advantage in
North America is derived from a number of factors, including the size and scale
of certain of its manufacturing plants, the competitive state of its
tissue-making manufacturing assets and the benefits it realizes from the Fort
Howard proprietary deinking technology.
The Company's principal executive offices are located at 1650 Lake Cook
Road, Deerfield, Illinois 60015-4753, telephone (847) 317-5000.
10
<PAGE>
THE LESSEE
The Lessee is a wholly owned subsidiary of Fort James. The Lessee is a
principal operating subsidiary of the Company. The Lessee's offices are located
at 1650 Lake Cook Road, Deerfield, Illinois 60015-4753, telephone (847)
317-5000.
11
<PAGE>
RATIO OF EARNINGS TO FIXED CHARGES OF FORT JAMES CORPORATION
The following table sets forth the ratio of earnings to fixed charges
for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED SIX MONTHS ENDED
----------------- ----------------
12/26/93 12/25/94 12/31/95 12/29/96 12/28/97 6/27/97 6/28/98
-------- -------- -------- -------- -------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of Earnings to Fixed
Charges (unaudited) (1)............... -- (2)(3) -- (2) 1.45x 2.06x 1.64x 2.97x 3.41x
</TABLE>
- -----------------
(1) In computing the ratio of earnings to fixed charges, earnings consist of
income before income taxes, extraordinary items, the cumulative effect of
changes in accounting principles, minority interests, 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. The ratios of earnings to
fixed charges give retroactive effect to the Merger in a transaction
accounted for as a pooling of interests.
(2) For the years ended December 26, 1993 and December 25, 1994, earnings were
inadequate to cover fixed charges; the amounts of the deficiencies of
earnings compared to fixed charges were $2,056.0 million and $84.0 million
for 1993 and 1994, respectively.
(3) Includes a pretax charge of $1.98 billion related to the write-off of
goodwill.
12
<PAGE>
DESCRIPTION OF THE CERTIFICATES
In connection with each offering of Certificates, one or more separate
Pass Through Trusts will be formed and one or more series of Certificates will
be issued pursuant to the Basic Agreement and one or more separate Trust
Supplements will be entered into among Fort James, the Lessee and the Trustee on
behalf of the related Pass Through Trust. The statements made under this caption
are summaries and do not purport to be complete. Reference is made to, and the
summaries are qualified in their entirety by reference to, the detailed
provisions of the Basic Agreement, the form of which has been filed as an
exhibit to the Registration Statement of which this Prospectus is a part and
which will be qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"). The summaries relate to the Basic Agreement to be
entered into and each of the Trust Supplements, the Pass Through Trusts to be
formed thereby and the Certificates to be issued by each Pass Through Trust
except to the extent, if any, described in the applicable Prospectus Supplement.
Reference is also made to, and the summaries are qualified in their entirety by
reference to, the detailed provisions of the form of Parent Guaranty, which has
been filed as an exhibit to the Registration Statement of which this Prospectus
is a part. The Trust Supplement relating to each series of Certificates and the
forms of the related Indenture, Lease, Participation Agreement or similar
agreements will be filed as exhibits to a post-effective amendment to the
Registration Statement of which this Prospectus is a part, a Current Report on
Form 8-K, a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K, as
applicable, to be filed by Fort James with the Commission.
The Certificates offered pursuant to this Prospectus will be limited to
$150,000,000 aggregate public offering price (or its equivalent (based on the
applicable exchange rate at the time of sale) in one or more foreign currencies
or units based on or related to currencies, including European Currency Units).
Certain provisions of the description of the Certificates in this
Prospectus do not necessarily apply to one Certificate of each Pass Through
Trust which may be issued in a denomination of less than $1,000.
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
General
Each Certificate will represent a fractional undivided interest in the
Pass Through Trust created by the Trust Supplement pursuant to which such
Certificate was issued and all payments and distributions shall be made only
from the related Trust Property. The property of each Pass Through Trust (the
"Trust Property") will include the Secured Notes held in such Pass Through
Trust, all monies at any time paid thereon and all monies due and to become due
thereunder and funds from time to time deposited with the Trustee in accounts
relating to such Pass Through Trust. Each Certificate will represent a pro rata
share of the outstanding principal amount of the Secured Notes
13
<PAGE>
held in the related Pass Through Trust and, unless otherwise specified in the
applicable Prospectus Supplement, will be issued in minimum denominations of
$1,000 or any integral multiple thereof. The Certificates do not represent an
interest in or obligation of Fort James, the Lessee, the Trustee, any of the
Indenture Trustees or Owner Trustees in their individual capacities, any Owner
Participant, or any of their respective affiliates. Each Certificateholder by
its acceptance of a Certificate agrees to look solely to the income and proceeds
from the Trust Property as provided in the Basic Agreement and the applicable
Trust Supplement.
No holder of a Certificate issued with respect to a Pass Through Trust
will have any rights, benefits or interests in respect of any other Pass Through
Trust or in the property held by any other Pass Through Trust. All payments and
distributions on the Certificates will be made only from the related Trust
Property, or pursuant to intercreditor, subordination or similar agreements to
which the related Trustee may be a party.
Secured Notes issued under an Indenture may be held in more than one
Pass Through Trust and one Pass Through Trust may hold Secured Notes issued
under more than one Indenture.
Interest will be passed through to Certificateholders of each Pass
Through Trust at the rate per annum payable on the Secured Notes held in such
Pass Through Trust, as set forth for such Pass Through Trust on the cover page
of the applicable Prospectus Supplement.
None of the Basic Agreement, the Indentures nor the Leases will include
financial covenants or "event risk" provisions that would afford
Certificateholders protection in the event of a highly leveraged or other
transaction involving Fort James or the Lessee. The Certificateholders will have
the benefit of a lien on the Leased Property and the other property in each
Indenture Estate securing the Secured Notes held in the related Pass Through
Trust, as discussed under "Description of the Secured Notes--Security."
Reference is made to the Prospectus Supplement that accompanies this
Prospectus for a description of the specific series of Certificates being
offered thereby, including: (1) the specific designation and title of such
Certificates; (2) the Regular Distribution Dates (as defined below) and Special
Distribution Dates (as defined below) applicable to such Certificates; (3) the
currency or currencies (including currency units) in which such Certificates may
be denominated; (4) the specific form of such Certificates, including whether or
not such Certificates are to be issued in accordance with a book-entry system;
(5) a description of the Secured Notes to be purchased by the related Pass
Through Trust, including the period or periods within which, the price or prices
at which, and the terms and conditions upon which such Secured Notes may or must
be redeemed, purchased or defeased in whole or in part, by the Lessee or the
related Owner Trustee or Owner Participant, (6) a description of the related
Leased Property and the rights and interests of the related Owner Trustee, the
Lessee and others therein; (7) a description of the related Indenture, including
a description of the events of default under the related Indenture, the remedies
exercisable upon the occurrence of such events of default and any limitations on
the exercise of such remedies with respect to such Secured Notes; (8) a
description of the related Lease, Owner Trust Agreement and Participation
14
<PAGE>
Agreement, including (a) the names of the related Owner Trustees, (b) a
description of the events of default under the related Leases, the remedies
exercisable upon the occurrence of such events of default and any limitations on
the exercise of such remedies with respect thereto, and (c) the rights of the
related Owner Trustee, if any, and/or Owner Participant, if any, to cure
failures of the Lessee to pay rent under the related Lease; (9) the extent, if
any, to which the provisions of the operative documents applicable to such
Secured Notes may be amended by the parties thereto without the consent of the
holders of, or only upon the consent of the holders of a specified percentage of
aggregate principal amount of, such Secured Notes; (10) the terms of the related
Parent Guaranty; (11) the terms of any intercreditor, subordination or similar
agreement relating to the Certificates or Secured Notes or of any liquidity or
credit facility; and (12) any other special terms pertaining to such
Certificates or Secured Notes, including any modification of the terms set forth
herein.
If any Certificates are denominated in one or more foreign currencies
or currency units, the restrictions, certain United States federal income tax
considerations, specific terms and other information with respect to such
Certificates and such foreign currency or currency units will be set forth in
the applicable Prospectus Supplement.
If any Certificates relate to Secured Notes that were sold at a
substantial discount below the stated principal amount of such Secured Notes,
certain United States federal income tax considerations, specific terms and
other information with respect to such Certificates will be set forth in the
applicable Prospectus Supplement.
Book-Entry Registration
General
If specified in the applicable Prospectus Supplement, the Certificates
issued thereunder will be subject to the provisions described below and under
the caption "--Definitive Certificates." Upon issuance, each series of
Certificates will be represented by one fully registered global certificate.
Each global certificate will be deposited with, or on behalf of, The Depository
Trust Company ("DTC") and registered in the name of Cede & Co. ("Cede"), or its
nominee. No person acquiring an interest in such Certificates ("Certificate
Owner") will be entitled to receive a certificate representing such person's
interest in such Certificates, except as set forth below under "--Definitive
Certificates." Unless and until Definitive Certificates (as defined below) are
issued under the limited circumstances described herein and in the applicable
Prospectus Supplement, all references to actions by Certificateholders shall
refer to actions taken by DTC upon instructions from DTC Participants (as
defined below), and all references herein to distributions, notices, reports and
statements to Certificateholders shall refer, as the case may be, to
distributions, notices, reports and statements to DTC or Cede, as the registered
holder of such Certificates, or to DTC Participants for distribution to
Certificate Owners in accordance with DTC procedures.
DTC is a limited purpose trust company organized under the laws of the
State of New York, a member of the Federal Reserve System, a "clearing
corporation" within the meaning of the New
15
<PAGE>
York Uniform Commercial Code and a "clearing agency" registered pursuant to
section 17A of the Exchange Act. DTC holds securities for its participants ("DTC
Participants") and facilitates the clearance and settlement of securities
transactions between DTC Participants through electronic computerized
book-entries in DTC Participants' accounts, thereby eliminating the need for
physical movement of certificates. DTC Participants include securities brokers
and dealers, banks, trust companies and clearing corporations. Indirect access
to the DTC system also is available to others such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a DTC Participant either directly or indirectly ("Indirect Participants").
Certificate Owners that are not DTC Participants or Indirect
Participants but desire to purchase, sell or otherwise transfer ownership of, or
other interests in, the Certificates may do so only through DTC Participants and
Indirect Participants. In addition, Certificate Owners will receive all
distributions of principal and interest from the Trustee through DTC
Participants or Indirect Participants, as the case may be. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, because such payments will be forwarded by the Trustee to Cede, as
nominee for DTC. DTC will forward such payments in same-day funds to DTC
Participants who are credited with ownership of the Certificates in amounts
proportionate to the principal amount of each such DTC Participant's respective
holdings of beneficial interests in the Certificates. DTC Participants will
thereafter forward payments to Indirect Participants or Certificate Owners, as
the case may be, in accordance with customary industry practices. The forwarding
of such distributions to the Certificate Owners will be the responsibility of
such DTC Participants. Unless and until the Definitive Certificates are issued
under the limited circumstances described herein, the only "Certificateholder"
will be Cede, as nominee of DTC. Certificate Owners will not be recognized by
the Trustee as Certificateholders, as such term is used in the Basic Agreement,
and Certificate Owners will be permitted to exercise the rights of
Certificateholders only indirectly through DTC and DTC Participants.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
of the Certificates among DTC Participants on whose behalf it acts with respect
to the Certificates and to receive and transmit to DTC Participants
distributions of principal, premium, if any, and interest with respect to the
Certificates. DTC Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and receive and transmit such payments on behalf of
their respective customers. Accordingly, although Certificate Owners will not
possess the Certificates, the Rules provide a mechanism by which Certificate
Owners will receive payments and will be able to transfer their interests.
Because DTC can only act on behalf of DTC Participants, who in turn act
on behalf of Indirect Participants, the ability of a Certificate Owner to pledge
the Certificates to persons or entities that do not participate in the DTC
system, or to otherwise act with respect to such Certificates, may be limited
due to the lack of a physical certificate for such Certificates.
16
<PAGE>
DTC will take any action permitted to be taken by a Certificateholder
under the Basic Agreement only at the direction of one or more DTC Participants
to whose accounts with DTC the Certificates are credited. Additionally, in the
event any action requires approval by Certificateholders of a certain percentage
of beneficial interest in each Pass Through Trust, DTC will take such action
only at the direction of and on behalf of DTC Participants whose holders include
undivided interests that satisfy any such percentage. DTC may take conflicting
actions with respect to other undivided interests to the extent that such
actions are taken on behalf of DTC Participants whose holders include such
undivided interests.
None of Fort James, the Lessee or the Trustee will have any liability
for any aspect of the records relating to or payments made on account of
beneficial ownership interests in the Certificates held by Cede, as nominee for
DTC, or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
The applicable Prospectus Supplement will specify any additional
book-entry registration procedures applicable to Certificates denominated in a
currency other than United States dollars.
The information in this section concerning DTC and DTC's book-entry
system has been attained from sources that Fort James believes to be reliable,
but neither Fort James nor the Lessee has independently verified such
information or takes responsibility for its accuracy.
Definitive Certificates
Certificates will be issued in fully registered certificated form
("Definitive Certificates") to Certificate Owners or their nominees, rather than
to DTC or its nominee, only if (i) the Lessee advises the Trustee in writing
that DTC is no longer willing or able to discharge properly its responsibilities
as depository with respect to such Certificates and the Trustee or such Lessee
is unable to locate a qualified successor, (ii) the Lessee, at its option,
elects to terminate the book-entry system through DTC or (iii) after the
occurrence of certain events of default or other events specified in the related
Prospectus Supplement, Certificate Owners of Certificates evidencing fractional
undivided interests aggregating not less than a majority in interest in the
related Pass Through Trust advise the Trustee, the Lessee and DTC through DTC
Participants in writing that the continuation of a book-entry system through DTC
(or a successor thereto) is no longer in the Certificate Owners' best interest.
Upon the occurrence of any event described in the immediately preceding
paragraph, the Trustee will be required to notify all Certificate Owners through
DTC Participants of the availability of Definitive Certificates. Upon surrender
by DTC of the global certificates representing the Certificates and receipt of
instructions for re-registration, the Trustee will reissue the Certificates as
Definitive Certificates to Certificate Owners.
Distributions of principal, premium, if any, and interest with respect
to Certificates will thereafter be made by the Trustee directly in accordance
with the procedures set forth in the Basic
17
<PAGE>
Agreement and the applicable Trust Supplements, to holders in whose names the
Definitive Certificates were registered at the close of business on the
applicable record date. Such distributions will be made by check mailed to the
address of such holder as it appears on the register maintained by the Trustee.
The final payment on any Certificate, however, will be made only upon
presentation and surrender of such Certificate at the office or agency specified
in the notice of final distribution to Certificateholders.
Definitive Certificates will be freely transferable and exchangeable at
the office of the Trustee upon compliance with the requirements set forth in the
Basic Agreement and the applicable Trust Supplements. No service charge will be
imposed for any registration of transfer or exchange, but payment of a sum
sufficient to cover any tax or other governmental charge shall be required.
Payments and Distributions
Payments of principal, premium, if any, and interest with respect to
the Secured Notes held in each Pass Through Trust will be distributed by the
Trustee, upon receipt, to Certificateholders of such Pass Through Trust on the
dates and in the currency specified in the applicable Prospectus Supplement,
except in certain cases when some or all of such Secured Notes are in default as
described in the applicable Prospectus Supplement. Payments of principal of, and
interest on, the Secured Notes held in each Pass Through Trust will be scheduled
to be received by the Trustee on the dates specified in the applicable
Prospectus Supplement (such scheduled payments of interest and principal on the
Secured Notes to the Trustee are herein referred to as "Scheduled Payments," and
the dates specified in the applicable Prospectus Supplement for distribution of
Scheduled Payments by the Trustee are herein referred to as "Regular
Distribution Dates"). Each Certificateholder of each Pass Through Trust will be
entitled to receive a pro rata share of any distribution in respect of Scheduled
Payments of principal and interest made on the Secured Notes held in such Pass
Through Trust. The Regular Distribution Dates on which, and the amounts in
which, Scheduled Payments of principal on the Secured Notes held in each Pass
Through Trust are payable will be set forth in the accompanying Prospectus
Supplement.
Payments of principal, premium, if any, and interest received by the
Trustee on account of the redemption or purchase, if any, of any of the Secured
Notes held in a Pass Through Trust, and payments received by the Trustee
following an Event of Default (as defined below) in respect of any of the
Secured Notes held in a Pass Through Trust (including payments received by the
Trustee on account of the purchase by the related Owner Trustees or Owner
Participants of such Secured Notes or payments received on account of the sale
of such Secured Notes by the Trustee) ("Special Payments") will be distributed
on a date or dates described in the accompanying Prospectus Supplement (each, a
"Special Distribution Date"). The Trustee will mail notice to the
Certificateholders of record of the related Pass Through Trust not less than 20
days prior to the Special Distribution Date on which any Special Payment is
scheduled to be distributed by the Trustee in the event the Secured Notes are to
be redeemed or purchased prior to their maturity and, in all other instances, as
soon as practicable after the Trustee has received the Special Payment. The
notice will specify the anticipated Special Distribution Date, the amount of
such anticipated Special
18
<PAGE>
Payment, the reason for the Special Payment and the total amount to be
distributed if such Special Distribution Date is the same date as a Regular
Distribution Date. Each distribution of a Special Payment, other than a final
distribution, on a Special Distribution Date for a Pass Through Trust will be
made by the Trustee to the Certificateholders of such Pass Through Trust on the
record date prior to such Special Distribution Date.
The Basic Agreement requires that the Trustee establish and maintain,
for the benefit of the Certificateholders of each Pass Through Trust, one or
more non-interest bearing accounts (with respect to each such Pass Through
Trust, the "Certificate Account") for the deposit of payments representing
Scheduled Payments on the Secured Notes held in the related Pass Through Trust.
The Basic Agreement also requires that the Trustee establish and maintain, for
the benefit of the Certificateholders of each Pass Through Trust, one or more
non-interest bearing accounts (with respect to each such Pass Through Trust, the
"Special Payments Account") for the deposit of payments representing Special
Payments. Pursuant to the terms of the Basic Agreement, the Trustee is required
to deposit any Scheduled Payments on the Secured Notes held in the applicable
Pass Through Trust received by it in the Certificate Account for such Pass
Through Trust and to deposit any Special Payments so received by it in the
Special Payments Account for such Pass Through Trust. All amounts so deposited
will be distributed by the Trustee on a Regular Distribution Date or a Special
Distribution Date, as the case may be, to the Certificateholders of such Pass
Through Trust.
If any Regular Distribution Date or Special Distribution Date is not a
business day, distributions scheduled to be made on such Regular Distribution
Date or Special Distribution Date may be made on the next succeeding business
day without interest.
Pool Factors
Unless there has been an early redemption, or a purchase of one or more
of the Secured Notes held in a Pass Through Trust by the related Owner Trustee
or Owner Participant after an Indenture Event of Default (as defined below), a
default in the payment of principal in respect of one or more issues of the
Secured Notes held in a Pass Through Trust or certain actions have been taken
following a default thereon, as described in the applicable Prospectus
Supplement, the Pool Factor (as defined below) for each Pass Through Trust will
decline in proportion to the scheduled repayments of principal on the Secured
Notes held in such Pass Through Trust as described in the applicable Prospectus
Supplement. In the event of such redemption, purchase or default, the Pool
Factor and the Pool Balance (as defined below) of each Pass Through Trust so
affected will be recomputed after giving effect thereto and notice thereof will
be mailed to the Certificateholders of such Pass Through Trust. Each Pass
Through Trust will have a separate Pool Factor.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Balance" for each Pass Through Trust indicates, as of any Regular
Distribution Date or Special Distribution Date, the aggregate unpaid principal
amount of the Secured Notes held in such Pass Through Trust on such date plus
any amounts in respect of principal on such Secured Notes held by the Trustee
and not yet
19
<PAGE>
distributed. The Pool Balance for each Pass Through Trust as of any Regular
Distribution Date or Special Distribution Date shall be computed after giving
effect to the payment of principal, if any, on the Secured Notes held in such
Pass Through Trust and the distribution thereof to be made on that date.
Unless otherwise described in the applicable Prospectus Supplement, the
"Pool Factor" for each Pass Through Trust as of any Regular Distribution Date or
Special Distribution Date is the quotient (rounded to the seventh decimal place)
computed by dividing (i) the then outstanding Pool Balance by (ii) the aggregate
original principal amount of the Certificates issued by such Pass Through Trust.
The Pool Factor for each Pass Through Trust as of any Regular Distribution Date
or Special Distribution Date shall be computed after giving effect to the
payment of principal, if any, on the Secured Notes held in such Pass Through
Trust and distribution thereof to be made on that date. The Pool Factor for each
Pass Through Trust will initially be 1.0000000; thereafter, the Pool Factor for
each Pass Through Trust will decline as described above to reflect reductions in
the Pool Balance of such Pass Through Trust. The amount of a Certificateholder's
pro rata share of the Pool Balance of a Pass Through Trust can be determined by
multiplying the original denomination of the holder's Certificate of such Pass
Through Trust by the Pool Factor for such Pass Through Trust as of the
applicable Regular Distribution Date or Special Distribution Date. The Pool
Factor and the Pool Balance for each Pass Through Trust will be mailed to
Certificateholders of such Pass Through Trust on each Regular Distribution Date
and Special Distribution Date.
Reports to Certificateholders
On each Regular Distribution Date and Special Distribution Date, the
Trustee will include with each distribution of a Scheduled Payment or Special
Payment to Certificateholders of the related Pass Through Trust a statement,
giving effect to such distribution to be made on such Regular Distribution Date
or Special Distribution Date, as the case may be, setting forth the following
information (per $1,000 aggregate principal amount of Certificate for such Pass
Through Trust, as to (i) and (ii) below):
(i) the amount of such distribution allocable to principal and
the amount allocable to premium, if any;
(ii) the amount of such distribution allocable to interest;
and
(iii) the Pool Balance and the Pool Factor for such Pass
Through Trust.
So long as the Certificates are registered in the name of Cede, as
nominee for DTC, on the record date prior to each Regular Distribution Date and
Special Distribution Date, the Trustee will request from DTC a Securities
Position Listing setting forth the names of all DTC Participants reflected on
DTC's books as holding interests in the Certificates on such record date. On
each Regular Distribution Date and Special Distribution Date, the Trustee will
mail to each such DTC
20
<PAGE>
Participant the statement described above and will make available additional
copies as requested by such DTC Participant for forwarding to Certificate
Owners.
In addition, after the end of each calendar year, the Trustee will
prepare for each Certificateholder of each Pass Through Trust at any time during
the preceding calendar year a report containing the sum of the amounts
determined pursuant to clauses (i) and (ii) above with respect to
the Pass Through Trust for such calendar year or, in the event such person was a
Certificateholder during only a portion of such calendar year, for the
applicable portion of such calendar year, and such other items as are readily
available to the Trustee and which a Certificateholder shall reasonably request
as necessary for the purpose of such Certificateholder's preparation of its
federal income tax returns. Such report and such other items shall be prepared
on the basis of information supplied to the Trustee by the DTC Participants and
shall be delivered by the Trustee to such DTC Participants to be available for
forwarding by such DTC Participants to Certificate Owners in the manner
described above.
At such time, if any, as the Certificates are issued in the form of
Definitive Certificates, the Trustee will prepare and deliver the information
described above to each Certificateholder of record of each Pass Through Trust
as the name and period of beneficial ownership of such Certificateholder appears
on the records of the registrar of the Certificates.
Voting of Secured Notes
The Trustee, as holder of the Secured Notes held in a Pass Through
Trust, will have the right to vote and give consents and waivers with respect to
such Secured Notes under the related Indenture. The Basic Agreement and related
Trust Supplement will set forth (i) the circumstances in which a Trustee may
direct any action or cast any vote, as the holder of the Secured Notes held in
the applicable Pass Through Trust, in its own discretion, (ii) the Circumstances
in which such Trustee shall seek instructions from the Certificateholders of
such Pass Through Trust and (iii) the percentage of Certificateholders required
to direct such Trustee to take any such action.
Events of Default and Certain Rights upon an Event of Default
The Basic Agreement defines an event of default with respect to a Trust
(an "Event of Default") as the occurrence and continuance of an event of default
under one or more of the related Indentures (an "Indenture Event of Default").
The Prospectus Supplement for a series of Certificates will specify the
Indenture Events of Default under the related Indentures. Certain of the
Indenture Events of Default will arise with reference to events of default under
the relevant Lease (a "Lease Event of Default"). Since the Secured Notes issued
under an Indenture may be held in more than one Pass Through Trust, a continuing
Indenture Event of Default under such Indenture would result in an Event of
Default under each Pass Through Trust holding such Secured Notes. Unless
otherwise provided in a Prospectus Supplement, all of the Secured Notes issued
under the same Indenture will relate only to specified Leased Property, there
will be no cross-collateralization or cross-default provisions in the
Indentures, and events resulting in an Indenture Event of Default
21
<PAGE>
under any particular Indenture will not necessarily result in an Indenture Event
of Default occurring under any other Indentures. If an Indenture Event of
Default occurs in fewer than all of the Indentures related to a Pass Through
Trust, notwithstanding the treatment of Secured Notes issued under any related
Indenture under which an Indenture Event of Default has occurred, payments of
principal and interest on the Secured Notes issued pursuant to any related
Indenture with respect to which an Indenture Event of Default has not occurred
will continue to be made as originally scheduled.
The ability of the applicable Owner Trustee or Owner Participant under
the related Indenture to cure Indenture Events of Default, including Indenture
Events of Default that result from the occurrence of a Lease Event of Default
under the related Lease, will be described in the applicable Prospectus
Supplement.
The ability of the Certificateholders with respect to any one Pass
Through Trust to cause the Indenture Trustee with respect to any Secured Notes
held in such Pass Through Trust to accelerate the Secured Notes under the
related Indenture or to direct the exercise of remedies by the Indenture Trustee
under the related Indenture will depend, in part, upon the proportion between
the aggregate principal amount of the Secured Notes outstanding under such
Indenture and held in such Pass Through Trust and the aggregate principal amount
of all Secured Notes outstanding under such Indenture. If Secured Notes
outstanding under an Indenture are held by more than one Pass Through Trust,
then each Pass Through Trust will hold Secured Notes with different terms from
the Secured Notes held in the other Pass Through Trusts and therefore the
Certificateholders of a Pass Through Trust may have divergent or conflicting
interests from those of the Certificateholders of the other Pass Through Trusts
holding Secured Notes relating to the same Indenture. In addition, so long as
the same institution acts as Trustee of each Pass Through Trust, in the absence
of instructions from the Certificateholders of any such Pass Through Trust, the
Trustee for such Pass Through Trust could for the same reason be faced with a
potential conflict of interest upon an Indenture Event of Default. In such
event, the Basic Agreement will provide that the Trustee will resign as trustee
of one or all such Pass Through Trusts, and a successor trustee will be
appointed in accordance with the terms of the Basic Agreement.
As an additional remedy, if an Indenture Event of Default under an
Indenture shall have occurred and be continuing, the Basic Agreement provides
that the Trustee of a Pass Through Trust holding Secured Notes issued under such
Indenture may, and upon the direction of the holders of Certificates evidencing
fractional undivided interests aggregating not less than a majority in interest
of such Pass Through Trust shall, sell all or part of such Secured Notes for
cash to any person. Any proceeds received by the Trustee upon any such sale
shall be deposited in the Special Payments Account for the Certificateholders of
such series and shall be distributed to the Certificateholders of the related
Pass Through Trust on a Special Distribution Date. The market for Secured Notes
in default may be very limited, and there can be no assurance that they could be
sold for a reasonable price. Furthermore, so long as the same institution acts
as Trustee of multiple Pass Through Trusts, it may be faced with a conflict in
deciding from which Pass Through Trust to sell Secured Notes to available
buyers. If the Trustee sells any such Secured Notes with respect to which an
Indenture
22
<PAGE>
Event of Default exists for less than their outstanding principal amount, the
Certificateholders of such Pass Through Trust will receive a smaller amount of
principal distributions than anticipated and will not have any claim for the
shortfall against Fort James, the Lessee, any Owner Trustee, any Owner
Participant or the Trustee. Furthermore, neither the Trustee nor the
Certificateholders of such Pass Through Trust could take any action with respect
to any remaining Secured Notes held in such Pass Through Trust so long as no
Indenture Events of Default exist with respect thereto.
Any amount, other than Scheduled Payments received on a Regular
Distribution Date, distributed to the Trustee of any Pass Through Trust by the
Indenture Trustee under any Indenture on account of the Secured Notes held in
such Pass Through Trust following an Indenture Event of Default under such
Indenture shall be deposited in the Special Payments Account for such Pass
Through Trust and shall be distributed to the Certificateholders of such Pass
Through Trust on a Special Distribution Date. In addition, if a Prospectus
Supplement provides that the applicable Owner Trustee or Owner Participant may,
under circumstances specified therein, redeem or purchase the outstanding
Secured Notes issued under the related Indenture, the price paid by such Owner
Trustee or Owner Participant to the Trustee of any Pass Through Trust for the
Secured Notes issued under such Indenture and held in such Pass Through Trust
shall be deposited in the Special Payments Account for such Pass Through Trust
and shall be distributed to the Certificateholders of such Pass Through Trust on
a Special Distribution Date.
Any funds representing payments received with respect to any Secured
Notes in default held in a Pass Through Trust, or the proceeds from the sale by
the Trustee of any such Secured Notes, held by the Trustee in the Special
Payments Account for such Pass Through Trust shall, to the extent practicable,
be invested and reinvested by the Trustee in Permitted Investments pending the
distribution of such funds on a Special Distribution Date. "Permitted
Investments" are obligations of the United States maturing in not more than 60
days or such lesser time as is required for the distribution of any such funds
on a Special Distribution Date.
The Basic Agreement will provide that the Trustee of a Pass Through
Trust shall, within 90 days after the occurrence of a default in respect of such
Pass Through Trust, give to the Certificateholders of such Pass Through Trust
notice, transmitted by mail, of all uncured or unwaived defaults with respect to
such Pass Through Trust known to it, provided that, except in the case of
default in the payment of principal, premium, if any, or interest on any of the
Secured Notes held in such Pass Through Trust, the Trustee shall be protected in
withholding such notice if it in good faith determines that the withholding of
such notice is in the interests of such Certificateholders. The term "default"
as used in this paragraph only means the occurrence of an Event of Default with
respect to a Pass Through Trust as described above, except that in determining
whether any such Event of Default has occurred, any grace period or notice in
connection therewith shall be disregarded.
The Basic Agreement contains a provision entitling the Trustee of each
Pass Through Trust, subject to the duty of the Trustee during a default to act
with the required standard of care, to be offered reasonable security or
indemnity by the Certificateholders of such Pass Through Trust before
23
<PAGE>
proceeding to exercise any right or power under the Basic Agreement at the
request of such Certificateholders.
In certain cases, the holders of Certificates of a Pass Through Trust
evidencing fractional undivided interests aggregating not less than a majority
in interest of such Pass Through Trust may on behalf of the holders of all
Certificates of such Pass Through Trust waive any past default or Event of
Default with respect to such Pass Through Trust and its consequences, except (i)
a default in payment of the principal of, premium, if any, or interest on any of
the Secured Notes held in such Pass Through Trust and (ii) a default in respect
of any covenant or provision of the Basic Agreement or the related Trust
Supplement that cannot be modified or amended without the consent of each
Certificateholder of such Pass Through Trust affected thereby. Each Indenture
will provide that, with certain exceptions, the holders of a majority in
aggregate unpaid principal amount of the Secured Notes issued thereunder and
held in a related Pass Through Trust may on behalf of all such holders waive any
past default or Indenture Event of Default thereunder. In the event of a waiver
with respect to a Pass Through Trust as described above, the principal amount of
the Secured Notes issued under the related Indenture held in such Pass Through
Trust shall be counted as waived in the determination of the majority in
aggregate unpaid principal amount of Secured Notes required to waive a default
or an Indenture Event of Default under such Indenture. Therefore, if the
Certificateholders of a Pass Through Trust or Pass Through Trusts waive a past
default or Event of Default such that the principal amount of the Secured Notes
held either individually in such Pass Through Trust or in the aggregate in such
Pass Through Trusts constitutes the required majority in aggregate unpaid
principal amount under the applicable Indenture, such past default or Indenture
Event of Default under such Indenture shall be waived.
Modifications of the Basic Agreement
The Basic Agreement contains provisions permitting Fort James, the
Lessee and the Trustee of each Pass Through Trust to enter into a supplemental
trust agreement, without the consent of the holders of any of the Certificates
of such Pass Through Trust, (i) to provide for the formation of such Pass
Through Trust and the issuance of a series of Certificates, (ii) to evidence the
succession of another corporation to Fort James or the Lessee and the assumption
by such corporation of Fort James' or the Lessee's obligations with respect to
one or more series of Certificates under the Basic Agreement and the applicable
Trust Supplement, (iii) to add to the covenants of Fort James or the Lessee for
the benefit of holders of such Certificates, or to surrender any right or power
in the Basic Agreement conferred upon Fort James or the Lessee, (iv) to cure any
ambiguity or correct or supplement any defective or inconsistent provision of
the Basic Agreement or the applicable Trust Supplement or to make any other
provisions with respect to matters or questions arising under the Basic
Agreement as may be necessary or desirable, provided such action shall not
adversely affect the interests of the holders of such Certificates, or to
correct any mistake, (v) to modify, eliminate or add to the provisions of the
Basic Agreement or the applicable Trust Supplement to the extent as shall be
necessary to continue the qualification of the Basic Agreement (including any
supplemental agreement) under the Trust Indenture Act and to add to the Basic
Agreement such other provisions as may be expressly permitted by the Trust
Indenture Act, (vi) to provide for a successor Trustee or
24
<PAGE>
to add to or change any provision of the Basic Agreement or the applicable Trust
Supplement as shall be necessary to facilitate the administration of the Pass
Through Trusts thereunder by more than one Trustee, (vii) to correct or
supplement the description of any property constituting property of such Pass
Through Trust and (viii) to make any other amendments or modifications to the
Basic Agreement or applicable Trust Supplement, provided such amendments or
modifications shall only apply to Certificates issued thereafter.
The Basic Agreement also contains provisions permitting Fort James, the
Lessee and the Trustee of a related Pass Through Trust, with the consent of the
Certificateholders of such Pass Through Trust evidencing fractional undivided
interests aggregating not less than a majority in interest of such Pass Through
Trust, and, with respect to any Leased Property, with the consent of the
applicable Owner Trustee (such consent not to be unreasonably withheld), to
execute supplemental trust agreements adding any provisions to or changing or
eliminating any of the provisions of the Basic Agreement, to the extent relating
to such Pass Through Trust and the applicable Trust Supplement, or modifying the
rights of the Certificateholders, except that no such supplemental trust
agreement may, without the consent of each Certificateholder so affected
thereby, (a) reduce in any manner the amount of, or delay the timing of, any
receipt by the Trustee of payments on the Secured Notes held in such Pass
Through Trust or distributions in respect of any Certificate related to such
Pass Through Trust, or change the date or place of any payment in respect of any
such Certificate, or make distributions payable in coin or currency other than
that provided for in such Certificates, or impair the right of any
Certificateholder of such Pass Through Trust to institute suit for the
enforcement of any such payment when due, (b) permit the disposition of any
Secured Note held in such Pass Through Trust, except as provided in the Basic
Agreement or the applicable Trust Supplement, or otherwise deprive any
Certificateholder of the benefit of the ownership of the applicable Secured
Notes, (c) reduce the percentage of the aggregate fractional undivided interests
of such Pass Through Trust provided for in the Basic Agreement or the applicable
Trust Supplement, the consent of the holders of which is required for any such
supplemental trust agreement or for any waiver provided for in the Basic
Agreement or such Trust Supplement, or (d) modify any of the provisions relating
to the rights of the Certificateholders in respect of the waiver of events of
default or receipt of payment except to increase the percentage of the aggregate
fractional undivided interests of such Pass Through Trust required for such a
waiver.
Modification of Indenture and Related Agreements
In the event that the Trustee, as the holder of any Secured Notes held
in a Pass Through Trust, receives a request for its consent to any amendment,
modification or waiver under the Lease or other document relating to such
Secured Notes, the Trustee shall mail a notice of such proposed amendment,
modification or waiver to each Certificateholder of such Pass Through Trust as
of the date of such notice. The Trustee shall request instructions from the
Certificateholders of such Pass Through Trust as to whether or not to consent to
such amendment, modification or waiver. The Trustee shall vote or consent with
respect to such Secured Notes in such Pass Through Trust in the same proportion
as the Certificates of such Pass Through Trust were actually voted by the
holders thereof by a certain date. Notwithstanding the foregoing, if an Event of
Default in respect of such
25
<PAGE>
Pass Through Trust shall have occurred and be continuing, the Trustee may in its
own discretion consent to such amendment, modification or waiver, and may so
notify the Indenture Trustee to which such consent relates.
Termination of the Pass Through Trusts
The obligations of Fort James, the Lessee and the Trustee with respect
to a Pass Through Trust will terminate upon the distribution to the
Certificateholders of such Pass Through Trust of all amounts required to be
distributed to them pursuant to the Basic Agreement and the applicable Trust
Supplement and the disposition of all property held in such Pass Through Trust.
The Trustee will send to each Certificateholder of record of such Pass Through
Trust notice of the termination of such Pass Through Trust, the amount of the
proposed final payment and the proposed date for the distribution of such final
payment for such Pass Through Trust. The final distribution to any
Certificateholder of such Pass Through Trust will be made only upon surrender of
such Certificateholder's Certificates at the office or agency of the Trustee
specified in such notice of termination.
Delayed Purchase
A Prospectus Supplement may specify that, pending availability of some
or all of the Secured Notes intended to be purchased with the proceeds of an
issuance of Certificates, such proceeds may, as more fully described in such
Prospectus Supplement, be (a) invested by the Trustee in United States
government obligations or certain other limited investments described in such
Prospectus Supplement ("Specified Investments"), in which event Fort James or
the Lessee would be responsible for paying to the Trustee amounts equal to any
loss on such investments and any deficiency in the earnings of such investments
under the amount scheduled to be distributed on such Certificates in respect of
interest and would be entitled to receive any earnings on such investments in
excess of the amount so needed for distribution on the Certificates, or (b) used
by the Trustee to acquire debt instruments issued on an interim basis by Fort
James or by the Lessee and guaranteed by Fort James, in each case having an
interest rate and payment provisions corresponding to the interest rate and
payment provisions of the Secured Notes intended to be purchased with such
proceeds and requiring repayment to the Trustee at the time the Trustee is to
purchase such Secured Notes. Any such debt instruments will be secured by a
collateral account that may be invested in Specified Investments or by other
security described in the applicable Prospectus Supplement.
To the extent that the full amount of the proceeds from the sale of any
Certificates is not used to purchase Secured Notes on or prior to the date set
forth in the applicable Prospectus Supplement, an amount equal to the unused
proceeds will be distributed by the Trustee to the holders of record of such
Certificates on a pro rata basis on a Special Distribution Date, together with
interest thereon at a rate equal to the rate applicable to such Certificates,
but without premium.
26
<PAGE>
The Trustee
Except as otherwise provided in the Prospectus Supplement, Wilmington
Trust Company will be the Trustee for each of the Pass Through Trusts. With
certain exceptions, the Trustee will make no representations as to the validity
or sufficiency of the Basic Agreement, the Trust Supplements, the Certificates,
the Secured Notes, the Indentures, the Leases or other related documents. The
Trustee shall not be liable with respect to any series of Certificates for any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the holders of a majority in principal amount of outstanding
Certificates of such series. Subject to such provisions, such Trustee shall be
under no obligation to exercise any of its rights or powers under the Basic
Agreement at the request of any holders of Certificates issued thereunder unless
they shall have offered to the Trustee indemnity satisfactory to it. The Basic
Agreement provides that the Trustee in its individual or any other capacity may
acquire and hold Certificates issued thereunder and, subject to certain
conditions, may otherwise deal with Fort James and the Lessee and, with respect
to the Leased Property, with any Owner Trustee and Owner Participant with the
same rights it would have if it were not the Trustee.
The Trustee may resign with respect to any or all of the Pass Through
Trusts at any time, in which event Fort James and the Lessee will be obligated
to appoint a successor trustee. If the Trustee ceases to be eligible to continue
as Trustee with respect to a Pass Through Trust or becomes incapable of acting
as Trustee or becomes insolvent, Fort James and the Lessee may remove such
Trustee, or any Certificateholder of such Pass Through Trust for at least six
months may, on behalf of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of such Trustee and the
appointment of a successor trustee. Any resignation or removal of the Trustee
with respect to a Pass Through Trust and appointment of a successor trustee for
such Pass Through Trust does not become effective until acceptance of the
appointment by the successor trustee. Pursuant to such resignation and successor
trustee provisions, it is possible that a different trustee could be appointed
to act as the successor trustee with respect to each Pass Through Trust related
to a single offering of Certificates. All references in this Prospectus to the
Trustee should be read to take into account the possibility that the Pass
Through Trusts could have different successor trustees in the event of such a
resignation or removal.
The Basic Agreement provides that Fort James or the Lessee will pay the
Trustee's fees and expenses and indemnify the Trustee against certain
liabilities.
27
<PAGE>
DESCRIPTION OF THE SECURED NOTES
The statements made under this caption are summaries and do not purport
to be complete. Such statements are qualified in their entirety by, and
reference is made to, the entire Prospectus and detailed information appearing
in the applicable Prospectus Supplement.
To the extent that any provision in any Prospectus Supplement is
inconsistent with any provision in this summary, the provision of such
Prospectus Supplement will control.
General
All Secured Notes related to Leased Property and held in a Pass Through
Trust will be issued under an Indenture between the related Owner Trustee of an
Owner Trust for the benefit of the related Owner Participant, and the related
Indenture Trustee. Such Secured Notes will be nonrecourse obligations of the
applicable Owner Trust. Each such Secured Note will be authenticated under an
Indenture by the Indenture Trustee.
With respect to each Leased Property, the related Owner Trustee has
acquired or will acquire such Leased Property and, unless otherwise provided in
the Prospectus Supplement, has granted or will grant a lien on and a security
interest in such Leased Property to the related Indenture Trustee as security
for the payments of the related Secured Notes, and has leased or will lease such
Leased Property to the Lessee pursuant to the related Lease which has been or
will be assigned to the related Indenture Trustee. Pursuant to each such Lease,
the Lessee will be obligated to make or cause to be made rental and other
payments to the related Indenture Trustee on behalf of the related Owner Trustee
in amounts that will be sufficient to make payments of the principal and
interest and, except in the limited circumstances set forth in the applicable
Prospectus Supplement, premium, if any, due in respect of such Secured Notes
when and as due and payable.
Principal and Interest Payments
Interest received by the Trustee on the Secured Notes held in each Pass
Through Trust will be passed through to the Certificateholders of such Pass
Through Trust on the dates and at the rate per annum set forth in the applicable
Prospectus Supplement until the final distribution date for such Pass Through
Trust. Principal received by the Trustee on the Secured Notes held in each Pass
Through Trust will be passed through to the Certificateholders of such Pass
Through Trust in scheduled amounts on the dates set forth in the applicable
Prospectus Supplement until the final distribution date for such Pass Through
Trust.
If any date scheduled for any payment of principal, premium, if any, or
interest with respect to the Secured Notes is not a business day, such payment
will be made on the next succeeding business day without any additional
interest.
28
<PAGE>
Redemption
The applicable Prospectus Supplement will describe the circumstances,
whether voluntary or involuntary, under which the Secured Notes may be redeemed
or purchased prior to the stated maturity date thereof, in whole or in part, the
premium, if any, applicable upon certain redemptions or purchases and other
terms applying to the redemptions or purchases of such Secured Notes.
Security
The Secured Notes to be held in the Pass Through Trusts will be secured
by (i) an assignment by the related Owner Trustee to the related Indenture
Trustee of such Owner Trustee's rights (except for certain rights, including
those described below) under the Lease or Leases with respect to the related
Leased Property including the right to receive payments of rent thereunder, (ii)
an assignment of certain of such Owner Trustee's rights under the Parent
Guaranty relating to such Leased Property, and (iii) to the extent provided in
the applicable Prospectus Supplement, a mortgage or other security interest in
such Leased Property or in construction contracts or other agreements,
collateral accounts or other security, in each case subject to the rights of the
Lessee under the Lease related thereto and other rights, if any, described in
the applicable Prospectus Supplement.
Under the terms of each Lease, the Lessee's obligations in respect of
the related Leased Property will be those of a lessee under a "net lease."
Accordingly, such Lessee will be obligated, among other things, to pay all costs
and expenses of operating and maintaining the Leased Property. With respect to
the Leased Property, the assignment by the related Owner Trustee to the related
Indenture Trustee of its rights under the related Lease will exclude, among
other things, rights of such Owner Trustee and the related Owner Participant
relating to indemnification by such Lessee for certain matters, insurance
proceeds payable to such Owner Trustee in its individual capacity and to such
Owner Participant under liability insurance maintained by such Lessee pursuant
to such Lease or by such Owner Trustee or such Owner Participant, insurance
proceeds payable to such Owner Trustee in its individual capacity or to such
Owner Participant under certain casualty insurance maintained by such Owner
Trustee or such Owner Participant pursuant to such Lease and any rights of such
Owner Participant or such Owner Trustee to enforce payment of the foregoing
amounts and their respective rights to the proceeds of the foregoing. Such
rights excluded from the assignment shall be referred to as "Excepted Payments."
The applicable Prospectus Supplement will specify the required
insurance coverage, if any, with respect to the Leased Property.
Unless otherwise specified in the applicable Prospectus Supplement, the
Secured Notes will not be cross-collateralized and consequently the Secured
Notes issued in respect of any Leased Property will not be secured by any other
Leased Property or the Lease related thereto. Unless and until an Indenture
Event of Default with respect to a Leased Property has occurred and is
continuing, the related Indenture Trustee may exercise only limited rights of
the related Owner Trustee under the related Lease.
29
<PAGE>
Funds, if any, held from time to time by the Indenture Trustee with
respect to any Leased Property, prior to the distribution thereof, will be
invested and reinvested by such Indenture Trustee. Such investment and
reinvestment will be at the direction of the Lessee, as agent for the related
Owner Trustee (except in the case of a related Lease Event of Default under the
applicable Lease) in certain investments described in the related Indenture. The
net amount of any loss resulting from any such investments will be paid by such
Lessee, as agent for such Owner Trustee.
Additional Notes
Under certain circumstances and conditions as described in the
applicable Prospectus Supplement, for the purpose of providing funds to finance
the cost of certain modifications, alterations, additions, improvements or
replacement parts to any particular item of Leased Property, a Lessee may cause
the financing of such additional costs through the issuance and sale by the
Owner Trustee of additional Secured Notes (the "Additional Notes").
The terms, conditions and designations of such Additional Notes will be
set forth in a supplement to the related Indenture. All rent and other amounts
payable by the Lessee under the related Lease will be adjusted to the extent
necessary to provide for rent and other amounts sufficient to provide for the
payment, when due, of all scheduled payments of principal of, premium (except
for those instances where such Lessee shall not be responsible for such
premium), if any, and interest on the Secured Notes, including the Additional
Notes so issued.
Payments and Limitation of Liability
Each Leased Property will be leased by the applicable Owner Trustee to
the Lessee pursuant to a Lease for a term commencing not later than the delivery
date thereof to such Owner Trustee and expiring on a date not earlier than the
latest maturity date of the related Secured Notes, unless previously terminated
as permitted by the terms of such Lease. The basic rent or charter hire and
other payments under each such Lease will be payable by the Lessee in accordance
with the terms specified in such Lease and will be described in the applicable
Prospectus Supplement, and (other than Excepted Payments) will be assigned by
the applicable Owner Trustee under the applicable Indenture to an Indenture
Trustee to provide the funds necessary to pay principal and interest and, except
in the limited circumstances set forth in the applicable Prospectus Supplement,
premium, if any, due in respect of the Secured Notes issued under such
Indenture. In certain cases, the basic rent payments under a Lease may be
adjusted, but each Lease will provide that under no circumstances will the
rental payments which the Lessee is obligated to make or cause to be made be
less than the scheduled payments of principal and interest on the related
Secured Notes. The balance of any basic rent payment under each Lease, after
payment of amounts due on the Secured Notes issued under the Indenture
corresponding to such Lease, will be paid over to the applicable Owner Trustee.
The Lessee's obligation to pay rent and to cause other payments to be made under
each Lease will be general obligations of such Lessee.
30
<PAGE>
Except in certain circumstances involving a Lessee's purchase of Leased
Property and the assumption of the Secured Notes related thereto, the Secured
Notes will not be obligations of, or guaranteed by, the Lessee or Fort James.
None of the Owner Trustees, the Owner Participants or the Indenture Trustees
shall be personally liable to any holder of such Secured Notes for amounts
payable under such Secured Notes, or, except as provided in the Indentures
relating thereto in the case of the Owner Trustees and the Indenture Trustees,
for any liability under such Indentures. Except in the circumstances referred to
above, all amounts payable under any Secured Notes (other than payments made in
connection with an optional redemption or purchase by the related Owner Trustee
or the related Owner Participant) will be made only from the assets subject to
the lien of the related Indenture with respect to such Leased Property or the
income and proceeds received by the related Indenture Trustee therefrom
(including rent payable by the Lessee under the related Lease).
Except as otherwise provided in the related Indentures, no Owner
Trustee shall be personally liable for any amount payable or for any statements,
representations, warranties, agreements or obligations under such Indentures or
under the Secured Notes except for its own willful misconduct or gross
negligence. None of the Owner Participants shall have any duty or responsibility
under the Indentures or under such Secured Notes to the related Indenture
Trustee or to any holder of any such Secured Note.
Merger, Consolidation and Transfer of Assets
The Lessee and Fort James are prohibited from consolidating with or
merging into any other corporation or transferring substantially all of its
assets to another corporation unless the Lessee or Fort James, as the case may
be, is the continuing corporation or, among other things, (a) the successor
corporation shall be a corporation organized and existing under the laws of the
United States or any State or the District of Columbia or, in the case of Fort
James, any other jurisdiction, and (b) the successor corporation shall expressly
assume the due and punctual performance and observance of all the covenants and
conditions of the operative documents to which the Lessee or Fort James, as the
case may be, is a party and which are to be performed thereby.
Defeasance of the Indentures and the Secured Notes in Certain Circumstances
Unless otherwise specified in the applicable Prospectus Supplement, the
applicable Indenture will provide that the obligations of the related Indenture
Trustee and the related Owner Trustee in respect of any series of Secured Notes
issued in accordance with the terms of such Indenture shall be deemed to have
been discharged and paid in full (except for certain obligations, including the
obligations to register the transfer or exchange of Secured Notes, to replace
stolen, lost, destroyed or mutilated Secured Notes and to maintain paying
agencies and hold money for payment in trust) upon the irrevocable deposit with
the related Indenture Trustee of money or certain obligations of the United
States or any agency or instrumentality thereof the payment of which is backed
by the full faith and credit of the United States which, through the payment of
principal and interest in respect thereof in accordance with their terms, will
provide money in an aggregate amount sufficient to pay when due (including as a
consequence of redemption in respect of which notice is given on or prior
31
<PAGE>
to the date of such deposit) principal of, premium, if any, and interest on such
Secured Notes. Such discharge may occur only if, among other things, there has
been published by the Internal Revenue Service a ruling to the effect that
holders of such Secured Notes will not recognize income, gain or loss for
federal income tax purposes as a result of such deposit, defeasance and
discharge and will be subject to federal income tax on the same amount and in
the same manner and at the same time as would have been the case if such
deposit, defeasance and discharge had not occurred.
Upon such defeasance, or upon payment in full of the principal of,
premium, if any, and interest on all Secured Notes issued under any Indenture on
the maturity date therefor or deposit with the applicable Indenture Trustee of
money sufficient therefor no earlier than one year prior to the date of such
maturity, the holders of such Secured Notes will have no beneficial interest in
or other rights with respect to the related Leased Property or other assets
subject to the lien of such Indenture (other than amounts or obligations
deposited to effect such discharge) and such lien shall terminate.
Assumption of Obligations by Lessee
A Prospectus Supplement may specify that, with respect to any Leased
Property and subject to the satisfaction of the conditions described in such
Prospectus Supplement, the Lessee may, upon the exercise of any purchase and
certain other termination options it may have under the related Lease, assume on
a full recourse basis all of the obligations of the related Owner Trustee under
the Indenture with respect to such Leased Property, including the obligations to
make payments in respect of the related Secured Notes. In such event, the Lessee
shall execute a supplemental indenture to the related Indenture (such
supplemental indenture, together with the related Indenture, a "Company
Indenture"). The Parent Guaranty will continue to apply to the Lessee's
obligations. Unless otherwise specified in the applicable Prospectus Supplement,
the Leased Property will continue to be subject to the lien of the Company
Indenture, and the Company Indenture will incorporate certain relevant
provisions of the Lease so terminated, including (among others) provisions
relating to maintenance, possession and use of the related Leased Property,
liens, insurance, possession and events of default.
The Parent Guaranties
As described in the applicable Prospectus Supplement, Fort James will
unconditionally guarantee the full and prompt payment of all amounts payable by
the Lessee under the related Lease when and as such amounts shall become due and
payable. Each Parent Guaranty shall be enforceable against Fort James without
any requirement to enforce a Lease against the Lessee prior to enforcing such
Lease against Fort James. Each Parent Guaranty will be an unsecured obligation
of Fort James.
32
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
The following is a general discussion of the anticipated material
federal income tax consequences of the purchase, ownership and disposition of
the Certificates by a Certificate Owner purchasing Certificates and should be
read in conjunction with any additional discussion of federal income tax
consequences included in the applicable Prospectus Supplement. This summary is
based on laws, regulations, rulings and decisions now in effect, all of which
are subject to change by legislative, administrative or judicial action,
possibly with retroactive effect. The discussion below does not purport to
address federal income tax consequences applicable to particular categories of
investors, some of which (for example, insurance companies, dealers in
securities, banks, tax-exempt organizations and Certificate Owners that hold
Certificates as part of a hedging or conversion transaction or a straddle and
persons whose functional currency is not U.S. dollars) may be subject to special
rules. The Pass Through Trusts are not indemnified for any federal income taxes
that may be imposed upon them, and the imposition of any such taxes could result
in a reduction in the amounts available for distribution to the Certificate
Owners of a Pass Through Trust. In connection with each offering of
Certificates, Fort James and the Lessee will receive an opinion from counsel
specified in the applicable Prospectus Supplement, that, based upon the
applicable law then in effect, the following discussion, as amended or
supplemented by the applicable Prospectus Supplement, properly describes in
general the anticipated principal United States federal income tax consequences
of acquiring, holding and disposing of the Certificates.
INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISORS AS TO THE FEDERAL,
STATE, LOCAL, FOREIGN AND ANY OTHER TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF THE CERTIFICATES, INCLUDING THE ADVISABILITY OF
MAKING ANY ELECTION DISCUSSED BELOW, IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
General
Based upon an interpretation of analogous authorities under currently
applicable law, each Pass Through Trust will be classified as a grantor trust
(and not as an association taxable as a corporation) and each Certificate Owner
will be treated as the owner of a pro rata undivided interest in the Secured
Notes or any other property held in the applicable Pass Through Trust. Each
Certificate Owner will be required to report on its federal income tax return
its pro rata share of the entire income from the Secured Notes and any other
property in the applicable Pass Through Trust, in accordance with such
Certificate Owner's method of accounting. Thus, a Certificate Owner using the
cash method of accounting will take into account its pro rata share of income as
and when received by the Trustee in respect of the applicable Pass Through
Trust, and a Certificate Owner using an accrual method of accounting will take
into account its pro rata share of income as it accrues or is received by the
Trustee in respect of the applicable Pass Through Trust, whichever is earlier.
33
<PAGE>
If a Pass Through Trust will hold more than one Secured Note, a
purchaser of a Certificate will be treated as purchasing an interest in each
Secured Note and any other property in the related Pass Through Trust at a price
determined by allocating the purchase price paid for the Certificate among such
Secured Notes and other property in proportion to their fair market values at
the time of purchase of the Certificate.
Sales of Certificates
A Certificate Owner that sells a Certificate will recognize gain or
loss (in the aggregate) equal to the difference between the amount realized on
the sale (except to the extent attributable to accrued interest, which will be
taxable as interest income) and the Certificate Owner's adjusted tax basis in
the Certificate. Subject to the market discount provisions of the Internal
Revenue Code of 1986, as amended (the "Code") (described below), any such gain
or loss will be capital gain or loss if the Certificate was held as a capital
asset and, if the Certificate was held for more than one year, will be long-term
capital gain or loss. Any long-term capital gains realized generally will be
taxable to corporate taxpayers at the rates applicable to ordinary income and to
certain noncorporate taxpayers at a maximum marginal rate of 20%. Any capital
losses realized will be deductible by a corporate taxpayer only to the extent of
capital gains and by an individual taxpayer only to the extent of capital gains
plus $3,000 of other income.
Market Discount
A purchaser of a Certificate (other than an original purchaser of a
Certificate at the offering price set forth in the applicable Prospectus
Supplement) will be considered to have acquired an interest in a Secured Note
held in the applicable Pass Through Trust at a "market discount" to the extent
the remaining principal amount of such Secured Note allocable to such
Certificate exceeds the purchaser's tax basis allocable to such Secured Note,
unless the excess does not exceed a prescribed de minimis amount. In the event
such excess exceeds the de minimis amount, the Certificate Owner will be subject
to the market discount rules with regard to its interest in the Secured Note.
In the case of a sale or other disposition of indebtedness subject to
the market discount rules, gain, if any, from such sale or disposition must be
treated as ordinary income to the extent such gain represents market discount
that has accrued during the period in which the indebtedness was held. If such
indebtedness is disposed of in a nontaxable transaction, the accrued market
discount (subject to certain exceptions) will be includible in ordinary income
as if the Certificate Owner had sold the Certificate at its then market value.
In the case of a partial principal payment on indebtedness subject to
the market discount rules, such payment must be included in gross income as
ordinary income to the extent such payment does not exceed the market discount
that has accrued during the period such indebtedness was held. The amount of any
accrued market discount later required to be included in income upon a
34
<PAGE>
disposition or subsequent partial principal payment will be reduced by the
amount of accrued market discount previously included in income.
Generally, market discount accrues under a straight line method, or, at
the election of the taxpayer, under a constant interest method. However, in the
case of amortizing obligations, until Treasury regulations are issued, the
explanatory Conference Committee Report to the Tax Reform Act of 1986 (the
"Conference Report") indicates that holders of amortizing obligations with
market discount (that do not also have original issue discount) may elect to
accrue market discount either on the basis of a constant interest rate or as
follows: the amount of market discount that is deemed to accrue is the amount of
market discount that bears the same ratio to the total amount of remaining
market discount that the amount of stated interest paid in the accrual period
bears to the total amount of stated interest remaining to be paid on the
amortizing obligation as of the beginning of such period.
If in any taxable year interest paid or accrued on a loan incurred or
continued to purchase or carry indebtedness subject to the market discount rules
exceeds the interest currently includible in income with respect to such
indebtedness, deduction of the excess interest must be deferred to the extent of
the market discount allocable to the taxable year. The deferred portion of any
interest expense will generally be deductible when such market discount is
included in income upon the sale or other disposition (including repayment) of
the indebtedness.
A taxpayer may elect to include market discount in its gross income
currently. If such election is made, the rules described above regarding the
treatment of certain gain as ordinary income and the deferral of interest
expense will not apply to the taxpayer.
Premium
A Certificate Owner generally will be considered to have acquired an
interest in a Secured Note held in the applicable Pass Through Trust at a
premium to the extent the Certificate Owner's tax basis allocable to such
Secured Note exceeds the remaining principal amount of the Secured Note
allocable to such Certificate Owner's Certificate. In that event, a Certificate
Owner who holds such Certificate as a capital asset may elect to amortize that
premium as an offset to interest income with corresponding reductions in the
Certificate Owner's tax basis in its interest in the Secured Note. This election
is made by claiming the bond premium on the Certificate Owner's tax return.
Generally, if the foregoing election is made such amortization is taken on a
constant yield basis. However, in the case of amortizing obligations, the
Conference Report indicates a Congressional intent that amortization should be
in accordance with the same rules that apply to the accrual of market discount
on amortizing obligations. See "Market Discount."
Under current Treasury regulations, a holder of an obligation that may
be called at a premium prior to maturity generally would not be entitled to
determine the amount of amortizable bond premium by reference to an early call
date, but may be allowed, if an early call occurred, to deduct all or part of
any unamortized bond premium in the year of such call.
35
<PAGE>
Due to the complexities of the amortizable premium rules, particularly
if there is more than one possible call date and the amount of any premium is
uncertain, Certificate Owners are urged to consult their own tax advisors as to
the amount of any such amortizable premium and the advisability of making an
amortization election.
Original Issue Discount
Unless otherwise specified in the applicable Prospectus Supplement,
subject to the aggregation rules discussed below, the Secured Notes will not be
issued with original issue discount. Under the aggregation rules set forth in
the current Treasury Regulations, if one investor purchases Certificates issued
by more than one Pass Through Trust, certain of that investor's interests in the
Secured Notes in those Trusts must in certain circumstances be treated together
as a single debt instrument, which, for purposes of calculating and amortizing
any original issue discount, has a single issue price, maturity date, stated
redemption price at maturity, and yield to maturity. If such aggregation rules
were applicable to an investor, such Secured Notes could be treated with respect
to such investor as having been issued with original issue discount. Generally,
a holder of a debt instrument issued with original issue discount that is not de
minimis must include such original issue discount in income for federal income
tax purposes as it accrues, in advance of the receipt of the cash attributable
to such income, under a method that takes into account the compounding of
interest. Certificate Owners are urged to consult their own tax advisors
regarding the application of the aggregation rules.
Backup Withholding
Payments made on the Certificates, and proceeds from the sale of the
Certificates to or through certain brokers, may be subject to a "backup"
withholding tax of 31% unless the Certificate Owner complies with certain
reporting procedures or is exempt from such requirements. Any such withheld
amounts are allowed as a credit against the Certificate Owner's federal income
tax and may entitle such Certificate Owner to a refund, provided the required
information is furnished to the Internal Revenue Service (the "IRS").
Furthermore, certain penalties may be imposed by the IRS on a Certificate Owner
who is required to supply information but who does not do so in the proper
manner.
CERTAIN DELAWARE TAXES
The Trustee is a Delaware banking corporation with its principal
corporate trust office in Delaware.___________, counsel to the Trustee, has
advised Fort James that, in its opinion, under currently applicable law,
assuming that each Pass Through Trust will not be taxable as a corporation, but,
rather, will be classified as a grantor trust for federal income tax purposes,
(i) the Pass Through Trusts should not be subject to any tax (including, without
limitation, net or gross income, tangible or intangible property, net worth,
capital, franchise or doing business tax), fee or other governmental charge
under the laws of the State of Delaware or any political subdivision thereof,
and (ii) Certificate Owners who are not residents of or otherwise subject to tax
in Delaware will not be
36
<PAGE>
subject to any tax (including, without limitation, net or gross income, tangible
or intangible property, net worth, capital franchise or doing business tax), fee
or other governmental charge under the laws of the State of Delaware or any
political subdivision thereof as a result of purchasing, holding (including
receiving payments with respect to) or selling a Certificate or an interest
therein. Neither the Pass Through Trusts nor the Certificate Owners will be
indemnified for any state or local taxes imposed on them, and the imposition of
any such taxes on any Pass Through Trust could result in a reduction in the
amounts available for distribution to the Certificate Owners of such Pass
Through Trust. In general, should a Certificate Owner or a Pass Through Trust be
subject to any state or local tax which would not be imposed if the Trustee were
located in a different jurisdiction in the United States, the Trustee will
resign and a new trustee in such other jurisdiction will be appointed.
ERISA CONSIDERATIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
Certificates may, subject to certain legal restrictions, be purchased and held
by an employee benefit plan (a "Plan") subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or an individual
retirement account or an employee benefit plan subject to section 4975 of the
Code. A fiduciary of a Plan must determine that the purchase and holding of a
Certificate is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in section 406 of ERISA
or section 4975 of the Code. Employee benefit plans which are governmental plans
(as defined in section 3(32) of ERISA) and certain church plans (as defined in
section 3(33) of ERISA) are not subject to Title I of ERISA or section 4975 of
the Code. The Certificates may, subject to certain legal restrictions, be
purchased and held by such plans.
PLAN OF DISTRIBUTION
Certificates may be sold to one or more underwriters for public
offering and sale by them or to investors or other persons directly or through
one or more dealers or agents. Any such underwriter, dealer or agent involved in
the offer and sale of the Certificates will be named in the applicable
Prospectus Supplement.
The Certificates may be sold at a fixed price or prices, which may be
changed, or from time to time at market prices prevailing at the time of sale,
at prices related to such prevailing market prices or at negotiated prices.
Dealer trading may take place in certain of the Certificates, including
Certificates not listed on any securities exchange. Neither Fort James nor the
Lessee intends to apply for listing of the Certificates on a national securities
exchange. Fort James and the Lessee also may, from time to time, authorize
underwriters acting as their agents to offer and sell the Certificates upon the
terms and conditions as shall be set forth in any Prospectus Supplement. In
connection with the sale of Certificates, underwriters may be deemed to have
received compensation from Fort James and the Lessee in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
Certificates for whom they may act as agent. Underwriters may sell Certificates
to or through dealers, and such dealers may receive compensation in the form of
37
<PAGE>
discounts, concessions or commissions from the underwriters and/or commissions
(which may be changed from time to time) from the purchasers for whom they may
act as agent.
If a dealer is used directly by Fort James or the Lessee in the sale of
Certificates in respect of which this Prospectus is delivered, such Certificates
will be sold to the dealer, as principal. The dealer may then resell such
Certificates to the public at varying prices to be determined by such dealer at
the time of resale. Any such dealer and the terms of any such sale will be set
forth in the Prospectus Supplement relating thereto.
Certificates may be offered and sold through agents designated by Fort
James and the Lessee from time to time. Any such agent involved in the offer or
sale of the Certificates in respect of which this Prospectus is delivered will
be named in, and any commissions payable by Fort James and the Lessee to such
agent will be set forth in, the applicable Prospectus Supplement. Unless
otherwise indicated in the applicable Prospectus Supplement, any such agent will
be acting on a best efforts basis for the period of its appointment.
Offers to purchase Certificates may be solicited directly by Fort James
and the Lessee and sales thereof may be made by Fort James and the Lessee
directly to institutional investors or others who may be deemed to be
underwriters within the meaning of the Securities Act with respect to any resale
thereof. The terms of any such sales will be described in the Prospectus
Supplement relating thereto. Except as set forth in the applicable Prospectus
Supplement, no director, officer or employee of Fort James or the Lessee will
solicit or receive a commission in connection with direct sales by Fort James or
the Lessee of the Certificates, although such persons may respond to inquiries
by potential purchasers and perform ministerial and clerical work in connection
with any such direct sales.
Any underwriting compensation paid by Fort James and the Lessee to
underwriters, dealers or agents in connection with the offering of Certificates,
and any discounts, concessions or commissions allowed by underwriters to
participating dealers, will be set forth in an applicable Prospectus Supplement.
Underwriters, dealers and agents participating in the distribution of the
Certificates may be deemed to be underwriters, and any discounts and commissions
received by them and any profit realized by them on resale of the Certificates
may be deemed to be underwriting discounts and commissions under the Securities
Act. Underwriters, dealers and agents may be entitled, under agreements with
Fort James and the Lessee, to indemnification against and contribution toward
certain civil liabilities, including liabilities under the Securities Act, and
to reimbursement by Fort James and the Lessee for certain expenses.
Underwriters, dealers and agents and their affiliates may engage in
transactions with, or perform services for, Fort James and its subsidiaries from
time to time.
If so indicated in an applicable Prospectus Supplement and subject to
existing market conditions, Fort James and the Lessee will authorize dealers
acting as Fort James' and the Lessee's agents to solicit offers by certain
institutions to purchase Certificates at the public offering price set
38
<PAGE>
forth in such Prospectus Supplement pursuant to Delayed Delivery Contracts
("Contracts") providing for payment and delivery on the date or dates stated in
such Prospectus Supplement. Each Contract will be for an amount not less than,
and the aggregate principal amount of Certificates sold pursuant to Contracts
shall not be less nor more than, the respective amounts stated in such
Prospectus Supplement. Institutions with whom Contracts, when authorized, may be
made include commercial and savings banks, insurance companies, pension funds,
investment companies, educational and charitable institutions and other
institutions, but will in all cases be subject to the approval of Fort James and
the Lessee. Contracts will not be subject to any conditions except the purchase
by an institution of the Certificates covered by its Contracts shall not at the
time of delivery be prohibited under the laws of any jurisdiction in the United
States to which such institution is subject. A commission indicated in the
applicable Prospectus Supplement will be granted to underwriters and agents
soliciting purchases of Certificates pursuant to Contracts accepted by Fort
James and the Lessee. Agents and underwriters will have no responsibility in
respect of the delivery or performance of Contracts.
If an underwriter or underwriters are utilized in the sale of any
Certificates, the applicable Prospectus Supplement will contain a statement as
to the intention, if any, of such underwriters at the date of such Prospectus
Supplement to make a market in the Certificates. No assurances can be given that
there will be a market for the Certificates.
The place and time of delivery for the Certificates in respect of which
this Prospectus is delivered will be set forth in the applicable Prospectus
Supplement.
LEGAL OPINIONS
Unless otherwise indicated in the applicable Prospectus Supplement, the
validity of the Certificates and the Parent Guaranties will be passed upon for
Fort James and the Lessee by Clifford A. Cutchins, IV, Senior Vice President,
General Counsel and Corporate Secretary of Fort James, and for any agents or
underwriters by Shearman & Sterling, 599 Lexington Avenue, New York, New York
10022.
EXPERTS
The consolidated balance sheets of Fort James and subsidiaries as of
December 31, 1997 and December 29, 1996, and the related consolidated statements
of operations, cash flows and changes in capital accounts for each of the three
years in the period ended December 31, 1997, included in Fort James 1997 Annual
Report on Form 10-K, have been audited by PricewaterhouseCoopers LLP,
independent accountants, as set forth in their report thereon included therein,
and incorporated by reference herein. Such consolidated financial statements and
supplemental consolidated financial statements have been incorporated herein by
reference in reliance on such reports given on the authority of such firm as
experts in accounting and auditing.
39
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with the issuance and distribution
of the securities being registered, other than underwriting discounts and
commissions, are set forth in the following table.
Securities and Exchange Commission Filing Fee..................... $ 45,455
Printing and engraving expenses................................... **
Accountants' fees and expenses.................................... **
Legal fees and expenses........................................... **
Blue Sky fees and expenses........................................ **
Trustee's fees and expenses....................................... **
Rating Agency fees................................................ **
Miscellaneous..................................................... **
---------
Total.......................................................... $ **
=========
* Estimated and subject to future contingencies.
** To be provided by amendment
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article 10 of the Virginia Stock Corporation Act (the "VSCA") sets
forth conditions and limitations governing the indemnification of officers,
directors, and other persons of the Registrants.
Fort James' Restated Articles of Incorporation (the "Registrant
Charter") provide as follows:
(a) In every instance permitted by the VSCA, the liability of a
director or officer of Fort James to Fort James or its shareholders arising out
of a single transaction, occurrence or course of conduct is limited to one
dollar.
(b) Fort James will 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 Fort James) because he is or was a director or officer of Fort
James' or because he is or was serving the Fort James or any other legal entity
in any capacity at the request of Fort James while a director or officer of Fort
James, 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 Fort James is deemed service
at the request of Fort James'. The determination that indemnification under this
provision of Fort James Charter is permissible and the evaluation as to the
reasonableness of expenses in a specific case will be made,
II-1
<PAGE>
in the case of a director, as provided by law, and in the case of an officer, as
provided in paragraph (c) below, provided, however, that if a majority of the
directors of Fort James 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, Fort James
will 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 will 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 will not of
itself create a presumption that a director or officer acted in such a manner as
to make him ineligible for indemnification. Fort James 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 (b).
(c) Fort James 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 (b) above, 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 Fort James and, if authorized by
general or specific action of the Board of Directors of Fort James, may contract
in advance to do so. The determination that indemnification under the provisions
described in this paragraph (c) 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 of Fort James, 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 (b) above shall be limited
by the provisions in this paragraph (c).
(d) Every reference in the provisions described above to persons who
are or may be entitled to indemnification includes 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
these provisions may be counsel for Fort James. Indemnification pursuant to
these provisions 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 Fort James and
indemnification under policies of insurance purchased and maintained by Fort
James or others. However, no person will be entitled to indemnification by Fort
James to the extent he is indemnified by another, including an insurer. Fort
James is authorized to purchase and maintain insurance against any liability it
may have under these provisions or to protect any of the persons named above
against any liability arising from their service to Fort James or any other
legal entity at the request of Fort James regardless of Fort James' power to
indemnify against such liability.
II-2
<PAGE>
(e) The provisions described above apply to indemnification, advances
and reimbursement for expenses made after Fort James Charter's adoption whether
arising from conduct or events occurring before or after such adoption. No
amendment, modification or repeal of these provisions will diminish the rights
provided thereunder to any person arising from conduct or events occurring
before the adoption of such amendment, modification or repeal.
Fort James has insurance to indemnify its directors and officers and
the directors and officers of the Lessee, within the limits of Fort James'
insurance policies, for those liabilities in respect of which such
indemnification insurance is permitted under the laws of the Commonwealth of
Virginia.
II-3
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
1.1 Form of Underwriting Agreement for Pass Through
Certificates.
4.1* Form of Pass Through Trust Agreement among Fort James
Corporation, Fort James Operating Company and Wilmington
Trust Company, as Trustee for the Pass Through Trusts.
4.2* Form of Pass Through Certificate --included as part of
Exhibit 4.1.
4.3* Form of Guaranty of Fort James Corporation.
5.1* Opinion of Clifford A. Cutchins, IV, Senior Vice President,
General Counsel and Corporate Secretary of Fort James
Corporation.
5.2 Opinion of ___________, counsel for the Trustee.
8.1 Tax Opinion of Robert A. Imig, Jr., Associate General
Counsel of Fort James Corporation.
12 Computation of Ratio of Earnings to Fixed Charges.
23.1* Consent of Clifford A. Cutchins, IV, Senior Vice
President, General Counsel and Corporate Secretary of Fort
James Corporation--Included in Exhibit 5.1.
23.2 Consent of ___________--Included in Exhibit 5.2.
23.3* Consent of PricewaterhouseCoopers LLP, Independent Auditors.
23.4 Consent of Robert A. Imig, Jr., Associate General Counsel of
Fort James Corporation--Included in Exhibit 8.1
24.1* Power of Attorney--Fort James Corporation.
24.2* Power of Attorney--Fort James Operating Company--Included
in Signatures page.
25 Statement of Eligibility of Pass Through Trustee on Form
T-1.
(b) Financial Statement Schedules
Not Applicable.
* Filed herewith.
ITEM 17. UNDERTAKINGS.
(A) The undersigned registrants hereby undertake:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement;
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events which,
individually or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
II-4
<PAGE>
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent nor more than a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement; and
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (A)(1)(i) and (A)(1)(ii) do not
apply if the registration statement is on Form S-3, or Form S-8, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by Fort James pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(B) Each of the undersigned registrants hereby undertakes that, for
purposes of determining any liability under the Securities Act, each filing of
Fort James's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(C) Each of the undersigned registrants hereby undertakes, if
securities are to be offered pursuant to competitive bidding, (1) to use its
best efforts to distribute prior to the opening of bids, to prospective bidders,
underwriters and dealers, a reasonable number of copies of a prospectus which at
that time meet the requirements of section 10(a) of the Securities Act, and
relating to the securities offered at competitive bidding, as contained in this
registration statement, together with any supplements thereto, and (2) to file
an amendment to this registration statement reflecting the results of bidding,
the terms of the reoffering and related matters to the extent required by the
applicable form, not later than the first use, authorized by the issuer after
the opening of bids, of a prospectus relating to the securities offered at
competitive bidding, unless no further public offering of such securities by the
issuer and no reoffering of such securities by purchasers is proposed to be
made.
II-5
<PAGE>
(D) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the registrants pursuant to the foregoing provisions, or otherwise, the
registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by a registrant
of expenses incurred or paid by a director, officer or controlling person of
such registrant in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with the
securities being registered, the applicable registrant will, unless in the
opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
each registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the city of Deerfield, State of Illinois, as of September
21, 1998.
FORT JAMES CORPORATION
By: /s/ R. MICHAEL LEMPKE
-------------------------------
Name: R. Michael Lempke
Title: Senior Vice President and
Treasurer
FORT JAMES OPERATING COMPANY
By: /s/ R. MICHAEL LEMPKE
-------------------------------
Name: R. Michael Lempke
Title: Senior Vice President and
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the dated indicated.
FOR FORT JAMES CORPORATION
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Chairman, President and Chief September 21, 1998
- ----------------------------------- Executive Officer and Director
Miles L. Marsh
* Executive Vice President and Chief September 21, 1998
- ----------------------------------- Financial Officer (Principal
Ernst A. Haberli Financial Officer)
* Senior Vice President and September 21, 1998
- ----------------------------------- Controller (Principal Accounting
William A. Paterson Officer)
* Director September 21, 1998
- -----------------------------------
Barbara L. Bowles
</TABLE>
II-7
<PAGE>
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
* Director September 21, 1998
- -----------------------------------
William T. Burgin
* Director September 21, 1998
- -----------------------------------
Dr. James L. Burke
* Director September 21, 1998
- -----------------------------------
Worley H. Clark, Jr.
* Director September 21, 1998
- -----------------------------------
Gary P. Coughlan
* Director September 21, 1998
- -----------------------------------
William V. Daniel
* Director September 21, 1998
- -----------------------------------
Ernst A. Haberli
* Director September 21, 1998
- -----------------------------------
Robert M. O'Neil
* Director September 21, 1998
- -----------------------------------
Richard L. Sharp
* Director September 21, 1998
- -----------------------------------
Anne Marie Whittemore
*By /s/ CLIFFORD A. CUTCHINS, IV September 18, 1998
----------------------------------
Clifford A. Cutchins, IV
Attorney-in-Fact
</TABLE>
II-8
<PAGE>
POWER OF ATTORNEY
Know All Men and Women By These Presents that each individual whose
signature appears below constitutes and appoints Clifford A. Cutchins, IV and R.
Michael Lempke, and each of them, such individual's true and lawful
attorneys-in-fact and agents with full power of substitution, for such
individual and in his or her name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
registration statement, any registration statement related to the offering
contemplated by this registration statement and any abbreviated registration
statement in connection with this registration statement pursuant to Rule 462(b)
under the Securities Act of 1933, as amended, and to file the same, with all
exhibits thereto, and all documents in connection therewith, with the Securities
and Exchange Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and every act and
thing requisite and necessary to be done in and about the premises, as fully to
all intents and purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his or her substitute or substitutes, may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
FOR FORT JAMES OPERATING COMPANY
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ Ernst A. Haberli President, Chief Executive Officer September 21, 1998
- ----------------------------------- and Director (Principal Executive
Ernst A. Haberli and Financial Officer)
/s/ Clifford A. Cutchins, IV Senior Vice President, Secretary September 18, 1998
- ----------------------------------- and Director
Clifford A. Cutchins, IV
/s/ Daniel J. Girvan Senior Vice President and Director September 21, 1998
- -----------------------------------
Daniel J. Girvan
/s/ William A. Paterson Senior Vice President (Principal September 21, 1998
- ----------------------------------- Accounting Officer)
William A. Paterson
</TABLE>
II-9
FORT JAMES CORPORATION,
FORT JAMES OPERATING COMPANY
and
WILMINGTON TRUST COMPANY
as Trustee
-----------
PASS THROUGH TRUST AGREEMENT
Dated as of , 1998
-----------
<PAGE>
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
<S> <C>
Section 1.1. Definitions..............................................................2
Section 1.2. Compliance Certificates and Opinions....................................10
Section 1.3. Form of Documents Delivered to Trustee..................................11
Section 1.4. Acts of Certificateholders..............................................12
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF SECURED NOTES
Section 2.1. Amount Unlimited, Issuable in Series....................................13
Section 2.2. Acquisition of Secured Notes............................................15
Section 2.3. Acceptance by Trustee...................................................17
Section 2.4. Limitation of Powers....................................................18
ARTICLE III
THE CERTIFICATES
Section 3.1. Form, Denomination and Execution of Certificates........................18
Section 3.2. Authentication of Certificates..........................................19
Section 3.3. Temporary Certificates..................................................19
Section 3.4. Registration of Transfer and Exchange of Certificates...................19
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.......................20
Section 3.6. Persons Deemed Owners...................................................20
Section 3.7. Cancellation............................................................21
Section 3.8. Limitation of Liability.................................................21
Section 3.9. Book-Entry and Definitive Certificates..................................21
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
Section 4.1. Certificate Account and Special Payments Account........................24
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 4.2. Distributions from Certificate Account and Special Payments Account.....24
Section 4.3. Statements to Certificateholders........................................26
Section 4.4. Investment of Special Payment Moneys....................................26
ARTICLE V
THE GUARANTOR AND THE COMPANIES
Section 5.1. Maintenance of Corporate Existence......................................26
Section 5.2. Consolidation, Merger, etc..............................................27
Section 5.3. Right of Guarantor to Act...............................................27
ARTICLE VI
DEFAULT
Section 6.1. Events of Default.......................................................28
Section 6.2. Incidents of Sale of Secured Notes......................................28
Section 6.3. Judicial Proceedings Instituted by Trustee, Trustee May Bring Suit......29
Section 6.4. Control by Certificateholders...........................................29
Section 6.5. Waiver of Past Defaults.................................................30
Section 6.6. Right of Certificateholders to Receive Payments Not to Be Impaired......31
Section 6.7. Certificateholders May Not Bring Suit Except Under Certain Conditions...31
Section 6.8. Remedies Cumulative.....................................................32
Section 6.9. Undertaking to Pay Court Costs..........................................32
ARTICLE VII
THE TRUSTEE
Section 7.1. Notice of Defaults......................................................32
Section 7.2. Certain Rights of Trustee...............................................32
Section 7.3. Not Responsible for Recitals or Issuance of Certificates................34
Section 7.4. May Hold Certificates...................................................34
Section 7.5. Money Held in Trust.....................................................34
Section 7.6. Compensation and Reimbursement..........................................34
Section 7.7. Corporate Trustee Required, Eligibility.................................36
Section 7.8. Resignation and Removal, Appointment of Successor.......................36
Section 7.9. Acceptance of Appointment of Successor..................................38
Section 7.10. Merger, Conversion, Consolidation or Succession to Business............39
Section 7.11. Maintenance of Agencies................................................39
Section 7.12. Money for Certificate Payments to Be Held in Trust.....................40
Section 7.13. Registration of Secured Notes in Trustee's Name........................40
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
Section 7.14. Representations and Warranties of Trustee..............................41
Section 7.15. Withholding Taxes, Information Reporting...............................41
Section 7.16. Trustee's Liens........................................................42
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.1. Names and Addresses of Certificateholders...............................42
Section 8.2. Preservation of Information, Communications to Certificateholders.......42
Section 8.3. Reports by Trustee......................................................43
Section 8.4. Reports by the Guarantor and each Company...............................43
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.1. Supplemental Agreements With Consent of Certificateholders..............44
Section 9.2. Supplemental Agreements with Consent of Certificateholders..............45
Section 9.3. Documents Affecting Trustee.............................................46
Section 9.4. Execution of Supplemental Agreements....................................46
Section 9.5. Effect of Supplemental Agreements.......................................46
Section 9.6. Conformity with Trust Indenture Act.....................................46
Section 9.7. Reference in Certificates to Supplemental Agreements....................46
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.1. Amendments and Supplements to Indenture and Other Note Documents.......47
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.1. Termination of the Trusts..............................................47
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
ARTICLE XII
MISCELLANEOUS PROVISIONS
<S> <C>
Section 12.1. Limitation on Rights of Certificateholders.............................48
Section 12.2. Certificates Nonassessable and Fully Paid..............................48
Section 12.3. Notices................................................................49
Section 12.4. Governing Law..........................................................50
Section 12.5. Severability of Provisions.............................................50
Section 12.6. Trust Indenture Act Controls...........................................50
Section 12.7. Effect of Headings and Table of Contents...............................51
Section 12.8. Successors and Assigns.................................................51
Section 12.9. Benefits of Agreement..................................................51
Section 12.10. Legal Holidays........................................................51
Section 12.11. Counterparts...........................................................51
EXHIBIT A - Form of Certificate
</TABLE>
<PAGE>
Reconciliation and tie between Pass Through Trust Agreement dated as of ,
1998 and the Trust Indenture Act of 1939. This reconciliation does not
constitute part of the Pass Through Trust Agreement.
Trust Indenture Act Pass Through Trust
of 1939 Section Agreement Section
--------------- -----------------
310(a)(1) 7.7
(a)(2) 7.7
312(a) 3.9; 8.1; 8.2
313 8.3
314(a) 8.4(a)-(c)
(a)(4) 8.4(d)
(c)(1) 1.2
(c)(2) 1.2
(d)(1) 7.12
11.1
(d)(2) 7.12; 11.1
(d)(3) 2.1
(e) 1.2
315(b) 8.3
316(a)(last sentence) 1.1
(a)(1)(A) 6.4
(a)(1)(B) 6.5
(b) 6.6
(c) 1.4(d)
317(a)(1) 6.3
(b) 7.12
318(a) 12.6
<PAGE>
This PASS THROUGH TRUST AGREEMENT, dated as of , 1998,
among Fort James Corporation, a Virginia corporation (the "Guarantor"), Fort
James Operating Company, a Virginia corporation (the "Company"), and Wilmington
Trust Company, a Delaware banking corporation, as Trustee, is made with respect
to the formation from time to time of separate Fort James Corporation Pass
Through Trusts, and the issuance from time to time of separate series of Pass
Through Certificates representing fractional undivided interests in the
respective Trusts.
W I T N E S S E T H:
WHEREAS, from time to time the Guarantor and the Company and the
Trustee may enter into a Trust Supplement (this and certain other defined terms
used herein are defined in Section 1.1) pursuant to which the Trustee shall
declare the creation of a separate Trust for the benefit of the Holders of the
series of Certificates to be issued in respect of such Trust, and the initial
Holders of the Certificates of such series, as the grantors of such Trust, by
their respective acceptances of the Certificates of such series, shall join in
the creation of such Trust with the Trustee;
WHEREAS, all Certificates to be issued in respect of each
separate Trust will be issued as a separate series pursuant to this Agreement,
will evidence fractional undivided interests in such Trust and will have no
rights, benefits or interests in respect of any other separate Trust or the
property held therein;
WHEREAS, from time to time, pursuant to the terms and conditions
of this Agreement with respect to each separate Trust formed hereunder, the
Trustee on behalf of such Trust shall purchase one or more issues of Secured
Notes having the same interest rate as, and final maturity dates not later than
the final Regular Distribution Date of, the series of Certificates issued in
respect of such Trust and shall hold such Secured Notes in trust for the benefit
of the Certificateholders of such Trust;
WHEREAS, to facilitate the sale of Secured Notes to, and the
purchase of Secured Notes by, the Trustee on behalf of each Trust created from
time to time pursuant to this Agreement, the Guarantor and the Company have duly
authorized the execution and delivery of this Basic Agreement and are
undertaking to perform certain administrative and ministerial duties hereunder
and to pay the fees and expenses of the Trustee; and
WHEREAS, this Basic Agreement, as supplemented from time to time,
is subject to the provisions of the Trust Indenture Act of 1939, as amended, and
shall, to the extent applicable, be governed by such provisions;
NOW THEREFORE, in consideration of the mutual agreements herein
contained, and of other good and valuable consideration the receipt and adequacy
of which are hereby acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. (a) For all purposes of this Basic
Agreement, except as otherwise expressly provided or unless the context
otherwise requires:
(1) the terms used herein that are defined in this Article have
the meanings assigned to them in this Article, and include the plural as
well as the singular;
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, or by SEC rule
under the Trust Indenture Act, have the meanings assigned to them
therein;
(3) all references in this Basic Agreement to designated
"Articles", "Sections", "Subsections" and other subdivisions are to the
designated Articles, Sections, Subsections and other subdivisions of
this Basic Agreement;
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Basic Agreement as a whole and not to
any particular Article, Section or other subdivision;
(5) the term "this Agreement" (as distinguished from "this Basic
Agreement") refers, unless the context otherwise requires, to this Basic
Agreement as supplemented by the Trust Supplement creating a particular
Trust and establishing the series of Certificates issued or to be issued
in respect thereof, with reference to such Trust and such series of
Certificates, as this Basic Agreement as so supplemented may be further
supplemented with respect to such Trust and such series of Certificates;
and
(6) unless the context otherwise requires, whenever words
"including", "include" or "includes" are used herein, it shall be deemed
followed by the phrase "without limitation".
(b) For all purposes of this Basic Agreement, the following
capitalized terms have the following respective meanings:
Act: With respect to any Certificateholder, has the meaning
specified in Section 1.4.
Affiliate: With respect to any specified Person, means any other
Person directly or indirectly controlling or controlled by or under
direct or indirect common control with such Person. For the purposes of
this definition, "control", when used with respect to any specified
Person, means the power to direct the management and policies of such
Person,
2
<PAGE>
directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
Agreement: Has the meaning specified in Section 1.1(a)(5).
Authorized Agent: With respect to the Certificates of any series,
means any Paying Agent or Registrar for the Certificates of such series.
Basic Agreement: Means this Pass Through Trust Agreement, as the
same may from time to time be supplemented, amended or modified, but not
as supplemented by any Trust Supplement.
Book-Entry Certificates: With respect to the Certificates of any
series, means a beneficial interest in the Certificates of such series,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.9.
Business Day: With respect to the Certificates of any series,
means any day other than a Saturday, a Sunday or a day on which
commercial banks are required or authorized to close in New York, New
York and, so long as any such Certificate is outstanding, a city and
state in which the Trustee or any related Loan Trustee maintains its
Corporate Trust Office or receives and disburses funds in respect of
such Certificates or the related Secured Notes, as the case may be.
Certificate: Means any one of the certificates executed and
authenticated by the Trustee, substantially in the form of Exhibit A
hereto.
Certificate Account: With respect to the Certificates of any
series, means the account or accounts created and maintained for such
series pursuant to Section 4.1(a) and the related Trust Supplement.
Certificate Owner: With respect to the Certificates of any
series, means, for purposes of Section 3.9, the Person who has a
beneficial ownership interest in a Book-Entry Certificate of such
series.
Certificateholder or Holder: With respect to the Certificates of
any series, means the Person in whose name a Certificate of such series
is registered in the Register for Certificates of such series.
Clearing Agency: Means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934,
as amended.
3
<PAGE>
Clearing Agency Participant: Means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a
Clearing Agency effects, directly or indirectly, book-entry transfers
and pledges of securities deposited with the Clearing Agency.
Company: Means Fort James Operating Company or its successors in
interest pursuant to Section 5.2.
Corporate Trust Office: With respect to the Trustee or any Loan
Trustee, means the office of such trustee in the city at which at any
particular time its corporate trust business in respect of the related
Certificates or Secured Notes, as the case may be, shall be principally
administered.
Cut-off Date: With respect to the Certificates of any series,
means the date designated as such in this Agreement.
Definitive Certificates: With respect to the Certificate of any
series, has the meaning specified in Section 3.9.
Direction: Has the meaning specified in Section 1.4(c).
ERISA: Means the Employee Retirement Income Security Act of 1974,
as amended from time to time, or any successor federal statute.
Escrow Account: With respect to the Certificates of any series,
has the meaning specified in Section 2.2(b).
Escrowed Funds: With respect to any Trust, has the meaning
specified in Section 2.2(b).
Event of Default: Means, in respect of any Trust, the occurrence
of an Indenture Event of Default under any Indenture pursuant to which
Secured Notes held by such Trust were issued.
Fractional Undivided Interest: Means the fractional undivided
interest in a Trust that is evidenced by a Certificate relating to such
Trust.
Guarantor: Means Fort James Corporation, a Virginia corporation,
or its successor in interest.
Holder: See "Certificateholder or Holder".
4
<PAGE>
Indenture: With respect to any Trust, means each of the one or
more separate trust indenture and security agreements or similar
documents described in, or on a schedule attached to, the Trust
Supplement creating such Trust which relates to an issue of Secured
Notes to be held in such Trust; and Indentures means all of such
agreements.
Indenture Event of Default: With respect to any Indenture, means
any Indenture Event of Default (as such term is defined in such
Indenture).
Initial Regular Distribution Date: With respect to the
Certificates of any series, means the first Regular Distribution Date on
which a Scheduled Payment is to be made.
Issuance Date: With respect to the Certificates of any series,
means the date of the issuance of such Certificates.
Lease: With respect to any Secured Note, means any lease between
an Owner Trustee, as the lessor, and a Company, as the lessee, referred
to in the related Indenture, as each such lease may be amended, modified
or supplemented in accordance with its terms; and Leases means all such
Leases.
Letter of Representations: With respect to the Certificates of
any series, means the agreement with the initial Clearing Agency
relating to such Certificates.
Loan Trustee: With respect to any Secured Note or the Indenture
applicable thereto, means the bank or trust company designated as
"Indenture Trustee" under such Indenture, and any successor to such Loan
Trustee as such trustee; and Loan Trustees means all of the "Indenture
Trustees" under the Indentures.
Note Documents: With respect to any Secured Note, means the
related Indenture, Note Purchase Agreement and, if the related Property
is leased to a Company, the related Lease and the related Owner
Trustee's Purchase Agreement.
Note Purchase Agreement: With respect to the Certificates of any
series, means any note purchase, participation, refunding or similar
agreement providing for, among other things, the purchase of Secured
Notes by the Trustee on behalf of the relevant Trust; and Note Purchase
Agreements means all such agreements.
Officer's Certificate: Means a certificate signed, (a) in the
case of any corporation, by the President, any Vice President or the
Treasurer, or (b) in the case of an Owner Trustee or a Loan Trustee, a
Responsible Officer of such Owner Trustee or such Loan Trustee, as the
case may be.
Opinion of Counsel: Means a written opinion of legal counsel who
(a) in the case of counsel for the Guarantor or the Company may be (i)
an attorney who may be employed
5
<PAGE>
by the Guarantor or the Company, (ii) the Guarantor's Legal Department
or (iii) such other counsel designated by the Guarantor or the Company
and (b) in the case of any Owner Trustee or any Loan Trustee may be such
counsel as may be designated by any of them, whether or not such counsel
is an employee of any of them, and who shall be reasonably acceptable to
the Trustee.
Outstanding: With respect to Certificates of any series, means,
as of the date of determination, all Certificates of such series
theretofore authenticated and delivered under this Agreement, except:
(i) Certificates of such series theretofore canceled by
the Registrar or delivered to the Trustee or the Registrar for
cancellation;
(ii) All of the Certificates of such series if money in
the full amount required to make the final distribution with
respect to such series pursuant to Section 11.1 hereof has been
theretofore deposited with the Trustee in trust for the Holders
of the Certificates of such series as provided in Section 4.1
pending distribution of such money to such Certificateholders
pursuant to such final distribution payment; and
(iii) Certificates of such series in exchange for or in
lieu of which other Certificates of such series have been
authenticated and delivered pursuant to this Agreement.
Owner Participant: With respect to any Secured Note, means the
"Owner Participant", if any, as referred to in the Indenture pursuant to
which such Secured Note is issued and any permitted successor or assign
of such Owner Participant; and Owner Participants at any time of
determination means all of the Owner Participants thus referred to in
the related Indentures.
Owner Trustee: With respect to any Secured Note, means the "Owner
Trustee", if any, as referred to in the Indenture pursuant to which such
Secured Note is issued, not in its individual capacity but solely as
trustee; and Owner Trustees means all of the Owner Trustees party to any
of the respective Indentures.
Owner Trustee's Purchase Agreement: With respect to any Secured
Note, if the related Property is leased to a Company, means the
"Participation Agreement" as defined in the related Lease.
Paying Agent: With respect to the Certificates of any series,
means the paying agent maintained and appointed for the Certificates of
such series pursuant to Section 7.11.
6
<PAGE>
Permitted Investments: Means obligations of the United States of
America or agencies or instrumentalities thereof for the payment of
which the full faith and credit of the United States of America is
pledged, maturing in not more than 60 days from the date of purchase
thereof or such lesser time as is necessary for payment of any Special
Payments on a Special Distribution Date.
Person: Means any person, including any individual, corporation,
partnership, limited partnership, limited liability company, joint
venture, association, joint stock company, trust, unincorporated
organization, or government or any agency or political subdivision
thereof.
Pool Balance: With respect to any Trust, means as of any date the
aggregate unpaid principal amount of the Secured Notes held in such
Trust on such date plus the amount of the principal payments on such
Secured Notes held by the Trustee and not yet distributed plus the
amount of any moneys held in the related Escrow Account (other than
earnings thereon). The Pool Balance as of any Regular Distribution Date
or Special Distribution Date with respect to such Trust shall be
computed after giving effect to the payment of principal, if any, on
such Secured Notes and distribution thereof to be made on that date.
Pool Factor: With respect to any Trust, means as of any date the
quotient (rounded to the seventh decimal place, with .00000005 being
rounded upwards) computed by dividing (i) the Pool Balance by (ii) the
aggregate original principal amount of the Certificates issued by such
Trust. The Pool Factor as of any Regular Distribution Date or Special
Distribution Date with respect to such Trust shall be computed after
giving effect to the payment of principal, if any, on the Secured Notes
held in such Trust and distribution thereof to be made on that date.
Postponed Notes: With respect to any Trust or the related series
of Certificates, means the Secured Notes to be held in such Trust as to
which a Postponement Notice shall have been delivered pursuant to
Section 2.2(b).
Postponement Notice: With respect to any Trust or the related
series of Certificates, means an Officer's Certificate of the Company
(1) requesting that the Trustee temporarily postpone purchase of the
related Secured Notes to be held in such Trust to a date later than the
Issuance Date of such series of Certificates, (2) identifying the amount
of the purchase price of each such Secured Note and the aggregate
purchase price for all such Secured Notes, (3) setting forth the reasons
for such postponement and (4) with respect to each such Secured Note,
either (a) setting or resetting a new Transfer Date (which shall be on
or prior to the applicable Cut-off Date) for payment by the Trustee of
such purchase price and issuance of the related Secured Notes, or (b)
indicating that such new Transfer Date (which shall be on or prior to
the applicable Cut-off Date) will be set by subsequent written notice
not less than one Business Day prior to such new Transfer Date.
7
<PAGE>
Property: With respect to any Trust or the related series of
Certificates, means the "Property" as defined in the related Trust
Supplement.
Record Date: With respect to any Trust or the related series of
Certificates, means (i) for Scheduled Payments to be distributed on any
Regular Distribution Date, other than the final distribution, with
respect to such series, the 15th day (whether or not a Business Day)
preceding such Regular Distribution Date, and (ii) for Special Payments
to be distributed on any Special Distribution Date, other than the final
distribution, with respect to such series, the 15th day (whether or not
a Business Day) preceding such Special Distribution Date.
Register and Registrar: With respect to the Certificates of any
series, mean the register maintained and the registrar appointed for
such series pursuant to Sections 3.4 and 7.11.
Regular Distribution Date: With respect to distributions of
Scheduled Payments in respect of any series of Certificates, means each
date designated as such in this Agreement, until payment of all the
Scheduled Payments to be made under the Secured Notes held in the
related Trust has been made or until such Secured Notes have been
prepaid in full.
Request: Means a request by the Company or the Guarantor setting
forth the subject matter of the request accompanied by an Officer's
Certificate and an Opinion of Counsel of the Company or the Guarantor,
as provided in Section 1.2.
Responsible Officer: With respect to any Trustee, any Loan
Trustee and any Owner Trustee, means any officer in the Corporate Trust
Administration Department or similar department of the Trustee, Loan
Trustee or Owner Trustee or any other person customarily performing
functions similar to those performed by the persons who at the time
shall be such officers, respectively, or to whom any corporate trust
matter is referred because of such person's knowledge of and familiarity
with a particular subject.
Scheduled Payment: With respect to any Secured Note held in a
Trust, means any payment (other than a Special Payment) of principal of
and/or interest on such Secured Note due from the obligor thereon, which
installment represents the installment of principal at the stated
maturity of such installment of principal on such Secured Note or the
payment of regularly scheduled interest accrued on the unpaid principal
amount of such Secured Note, or both.
SEC: Means the Securities and Exchange Commission, as from time
to time constituted or created under the Securities Exchange Act of
1934, as amended, or, if at any time after the execution of this
instrument such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act, then the body performing
such duties on such date.
8
<PAGE>
Secured Note: With respect to the Certificates of any series,
means each note, certificate or other instrument issued pursuant to any
Indenture relating to such Certificates.
Special Distribution Date: With respect to the Certificates of
any series, means each date on which a Special Payment is to be
distributed as specified in this Agreement.
Special Payment: With respect to a Special Distribution Date in
respect of the Certificates of any series, means (i) any payment of
principal of, premium, if any, and interest resulting from the
redemption or purchase of a Secured Note held in the applicable Trust,
(ii) any payment of principal of and interest (including any interest
accruing upon default) on, or any other amount in respect of, any such
Secured Note upon an Indenture Event of Default in respect thereof or
upon an acceleration under the Indenture relating thereto, (iii) the
amounts required to be distributed in respect thereof pursuant to the
antepenultimate paragraph of Section 2.2(b), (iv) the amounts required
to be distributed in respect thereof pursuant to the penultimate
paragraph of Section 2.2(b), (v) any Scheduled Payment that is not in
fact paid within five days of the Regular Distribution Date applicable
thereto or (vi) any proceeds from the sale of any such Secured Note by
the Trustee pursuant to Article VI hereof; and Special Payments means
all of such Special Payments.
Special Payments Account: With respect to the Certificates of any
series, means the account or accounts created and maintained for such
series pursuant to Section 4.l(b) and the related Trust Supplement.
Specified Investments: With respect to any Trust, means, unless
otherwise specified in the related Trust Supplement, (i) obligations of
the United States Government or agencies thereof, or guaranteed by the
United States Government, (ii) open market commercial paper of any
corporation incorporated under the laws of the United States of America
or any State thereof rated at least P-2 or its equivalent by Moody's
Investors Service, Inc. or at least A-2 or its equivalent by Standard &
Poor's Ratings Services (including the Trustee if such conditions are
met), (iii) certificates of deposit issued by commercial banks organized
under the laws of the United States or of any political subdivision
thereof having a combined capital and surplus in excess of $500,000,000,
which banks or their holding companies have a rating of A or its
equivalent by Moody's Investors Service, Inc. or A2 or its equivalent by
Standard & Poor's Ratings Services (including the Trustee if such
conditions are met); provided, however, that the aggregate amount at any
one time so invested in certificates of deposit issued by any one bank
shall not exceed 5% of such bank's capital and surplus, (iv) U.S. dollar
denominated offshore certificates of deposit issued by, or offshore time
deposits with, any commercial bank described in (iii) or any subsidiary
thereof and (v) repurchase agreements with any financial institution
having combined capital and surplus of at least $500,000,000 (including
the Trustee if such conditions are met) with any of the obligations
described in clauses (i) through (iv) as collateral; provided further
that if all of the above investments are unavailable, the entire amounts
to be invested may be used to purchase Federal Funds
9
<PAGE>
from an entity described in clause (iii) above; and provided further
that no investment shall be eligible as a "Specified Investment" unless
the final maturity or date of return of such investment is on or before
the Special Distribution Date next following the Cut-off Date for such
Trust by more than 20 days.
Transfer Date: Has the meaning assigned to that term or any of
the terms "Delivery Date", "Funding Date" or "Closing Date" in a Note
Purchase Agreement.
Trust: With respect to the Certificates of any series, means the
related trust created by a Trust Supplement.
Trust Indenture Act: Except as otherwise provided in Section 9.6,
means the Trust Indenture Act of 1939, as amended.
Trust Property: With respect to any Trust, means the Secured
Notes held as the property of such Trust and all monies at any time paid
thereon and all monies due and to become due thereunder, debt
instruments issued by the Guarantor or by the Company (and guaranteed by
the Guarantor) in accordance with the first paragraph of Section 2.2(b),
funds from time to time deposited in the related Escrow Account, the
related Certificate Account and the related Special Payments Account and
any proceeds from the sale by the Trustee pursuant to Article VI hereof
of any such Secured Note.
Trust Supplement: Means an agreement supplemental hereto pursuant
to which (i) a separate Trust is created for the benefit of the Holders
of the Certificates of a series, (ii) the issuance of the Certificates
of such series representing fractional undivided interests in such Trust
is authorized and (iii) the terms of the Certificates of such series are
established, as such agreement may from time to time be supplemented,
amended or modified.
Trustee: In respect of each Trust, means each of the institution
or institutions executing this Basic Agreement and the applicable Trust
Supplement as Trustee, or its successor in interest, and any successor
trustee appointed as provided herein.:
Section 1.2. Compliance Certificates and Opinions. Upon any
application or request by the Company, the Guarantor, any Owner Trustee or any
Loan Trustee to the Trustee to take any action under any provision of this Basic
Agreement or, in respect of the Certificates of any series, this Agreement, the
Company, the Guarantor, such Owner Trustee or such Loan Trustee, as the case may
be, shall furnish to the Trustee an Officer's Certificate stating that, in the
opinion of the signers, all conditions precedent (including any covenants
compliance with which constitutes a condition precedent), if any, provided for
in this Basic Agreement or, in respect of any Series, this Agreement relating to
the proposed action have been complied with and an Opinion of Counsel stating
that in the opinion of such counsel all such conditions precedent (including any
covenants compliance with which constitutes a condition precedent), if any, have
been complied with, except that in the case of any such application or request
as to which the
10
<PAGE>
furnishing of such documents is specifically required by any provision of this
Basic Agreement or, in respect of any Series, this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Basic Agreement or, in respect of the
Certificates of any series, this Agreement (other than a certificate provided
pursuant to Section 8.4(d)) shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions in this
Basic Agreement or this Agreement relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
Section 1.3. Form of Documents Delivered to Trustee. In any case
where several matters are required to be certified by, or covered by an opinion
of, any specified Person, it is not necessary that all such matters be certified
by, or covered by the opinion of, only one such Person, or that they be
certified or covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other such Persons
as to other matters and any such Person may certify or give an opinion as to
such matters in one or several documents.
Any Opinion of Counsel stated to be based on the opinion of other
counsel shall be accompanied by a copy of such other opinion. Any certificate or
opinion of an officer of the Guarantor or the Company may be based, insofar as
it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or opinion of counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Guarantor or the Company
stating that the information with respect to such factual matters is in the
possession of such Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
as to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Basic
11
<PAGE>
Agreement or, in respect of the Certificates of any series, this Agreement, they
may, but need not, be consolidated and form one instrument.
Section 1.4. Acts of Certificateholders. (a) Any direction,
consent, waiver or other action provided by this Agreement in respect of the
Certificates of any series to be given or taken by Certificateholders may be
embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by an agent or proxy duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required pursuant to this
Agreement, to the Company or any Loan Trustee. Such instrument or instruments
(and the action embodied therein and evidenced thereby) are herein sometimes
referred to as the "Act" of the Certificateholders signing such instrument or
instruments. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of this Agreement
and conclusive in favor of the Trustee, the Guarantor, the Company and the
related Loan Trustee, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of deeds or
administer oaths that the Person executing such instrument acknowledged to him
the execution thereof, or by an affidavit of a witness to such execution sworn
to before any such notary or such other officer and where such execution is by
an officer of a corporation or association or a member of a partnership, on
behalf of such corporation, association or partnership, such certificate or
affidavit shall also constitute sufficient proof of his authority. The fact and
date of the execution of any such instrument or writing, or the authority of the
Person executing the same, may also be proved in any other reasonable manner
which the Trustee deems sufficient.
(c) In determining whether the Certificateholders of the
requisite Fractional Undivided Interests of Certificates of any series
Outstanding have given any direction, consent or waiver (a "Direction"), under
this Agreement, Certificates owned by the Guarantor, the Company, any related
Owner Trustee, any related Owner Participant or any Affiliate of any such Person
shall be disregarded and deemed not to be Outstanding for purposes of any such
determination. In determining whether the Trustee shall be protected in relying
upon any such Direction, only Certificates that the Trustee knows to be so owned
shall be so disregarded. Notwithstanding the foregoing, (i) if any such Person
owns 100% of the Certificates of any series Outstanding, such Certificates shall
not be so disregarded as aforesaid, and (ii) if any amount of Certificates of
such series so owned by any such Person have been pledged in good faith, such
Certificates shall not be disregarded as aforesaid if the pledgee establishes to
the satisfaction of the Trustee the pledgee's right so to act with respect to
such Certificates and that the pledgee is not the Guarantor, or the Company, any
related Owner Trustee, any related Owner Participant or any Affiliate of any
such Person.
12
<PAGE>
(d) The Company may at its option by delivery of an Officer's
Certificate to the Trustee set a record date to determine the Certificateholders
in respect of the Certificates of any series entitled to give any consent,
request, demand, authorization, direction, notice, waiver or other action.
Notwithstanding Section 316(c) of the Trust Indenture Act, such record date
shall be the record date specified in such Officer's Certificate, which shall be
a date not more than 15 days prior to the first solicitation of
Certificateholders in connection therewith. If such a record date is fixed, such
consent, request, demand, authorization, direction, notice, waiver or other
action may be given before or after such record date, but only the
Certificateholders of record of the applicable series at the close of business
on such record date shall be deemed to be Certificateholders for the purposes of
determining whether Certificateholders of the requisite proportion of
Outstanding Certificates of such series have authorized or agreed or consented
to such consent, request, demand, authorization, direction, notice, waiver or
other action, and for that purpose the Outstanding Certificates of such series
shall be computed as of such record date; provided that no such consent,
request, demand, authorization, direction, notice, waiver or other action by the
Certificateholders on such record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Agreement not later than one
year after the record date.
(e) Any request, demand, authorization, notice, direction,
consent, waiver or other action by the Certificateholder of any Certificate
shall bind the Certificateholder of every Certificate issued upon the transfer
thereof or in exchange therefor or in lieu thereof, whether or not notation of
such action is made upon such Certificate.
(f) Except as otherwise provided in Section 1.4(c), Certificates
of any series owned by or pledged to any Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates of such
series.
ARTICLE II
ORIGINAL ISSUANCE OF CERTIFICATES;
ACQUISITION OF SECURED NOTES
Section 2.1. Amount Unlimited, Issuable in Series. (a) The
aggregate principal amount of Certificates that may be authenticated and
delivered under this Basic Agreement is unlimited. The Certificates may be
issued from time to time in one or more series and shall be designated generally
as the "Pass Through Certificates", with such further designations added or
incorporated in such title for the Certificates of each series as specified in
the related Trust Supplement. Each Certificate shall bear upon its face the
designation so selected for the series to which it belongs. All Certificates of
the same series shall be substantially identical except that the Certificates of
a series may differ as to denomination and as may otherwise be provided in the
Trust Supplement establishing the Certificates of such series. Each series of
Certificates issued pursuant to this Agreement will evidence Fractional
Undivided Interests in the related Trust and
13
<PAGE>
will have no rights, benefits or interests in respect of any other Trust or the
Trust Property held therein. All Certificates of the same series shall be in all
respects equally and ratably entitled to the benefits of this Agreement without
preference, priority or distinction on account of the actual time or times of
authentication and delivery, all in accordance with the terms and provisions of
this Agreement.
(b) The following matters shall be established with respect to
the Certificates of each series issued hereunder by a Trust Supplement executed
and delivered by and among the Guarantor, the Company and the Trustee:
(1) the formation of the Trust as to which the Certificates of
such series represent Fractional Undivided Interests and its designation
(which designation shall distinguish such Trust from each other Trust
created under this Basic Agreement and a Trust Supplement);
(2) the specific designation and title of the Certificates of
such series (which title shall distinguish the Certificates of such
series from each other series of Certificates created under this Basic
Agreement and a Trust Supplement);
(3) any limit upon the aggregate principal amount of the
Certificates of such series that may be authenticated and delivered
(which limit shall not pertain to Certificates authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Certificates of the series pursuant to Sections 3.3, 3.4
and 3.5);
(4) the Cut-off Date with respect to the Certificates of such
series and the related Trust;
(5) the Regular Distribution Dates applicable to the Certificates
of such series and the related Trust;
(6) the Special Distribution Dates applicable to the Certificates
of such series and the related Trust;
(7) if other than as provided in Section 3.4 or 7.11(b), the
Registrar or the Paying Agent for the Certificates of such series,
including any Co-Registrar or additional Paying Agent;
(8) if other than as provided in Section 3.1, the denominations
in which the Certificates of such series shall be issuable and, if other
than United States dollars, the currency or currencies (including
currency units) thereof;
(9) the specific form of the Certificates of such series
(including the interest rate applicable thereto) and whether or not
Certificates of such series are to be issued as
14
<PAGE>
Book-Entry Certificates and, if such Certificates are to be Book-Entry
Certificates, the form of Letter of Representations, if any;
(10) a description of the related Secured Notes to be acquired
and held in the related Trust and of the related Property and the
related Note Documents, including whether or not such Secured Notes are
senior or subordinate to any other Secured Notes and if so, the terms
and conditions pursuant to which such Secured Notes are senior to or
subordinate to other Secured Notes or other debt secured by the
Property;
(11) provisions with respect to the terms for which the
definitions set forth in Article I hereof or the terms of Section 9.1
hereof permit or require further specification in the related Trust
Supplement;
(12) any restrictions (including legends) in respect of ERISA;
(13) whether such series will be subject to any intercreditor
agreement, liquidity or credit facility or other agreement or
instrument;
(14) any other terms of the Certificates of such series (which
terms shall not be inconsistent with the provisions of the Trust
Indenture Act), including any terms that may be required or advisable
under United States laws or regulations or advisable in connection with
the marketing of Certificates of such series;
(15) the extent, if any, to which the Guarantor or the Company
may acquire Certificates and deliver such Certificates or cash to the
respective Trusts and obtain the release of Secured Notes held by such
Trusts; and
(16) whether the Certificates are issuable as bearer instead of
registered Certificates or both, and the terms upon which bearer
Certificates may be exchanged for registered Certificates.
(c) At any time and from time to time after the execution and
delivery of this Basic Agreement and a Trust Supplement forming a Trust and
establishing the terms of Certificates of a series, Certificates of such series
shall be executed, authenticated and delivered by the Trustee to the Person or
Persons specified by the Company upon request of the Company and upon
satisfaction of any conditions precedent set forth in such Trust Supplement or
in any other document to which a Trustee is a party relating to the issuance of
the Certificates of such series.
Section 2.2. Acquisition of Secured Notes. (a) Unless otherwise
specified in the related Trust Supplement, on or prior to the Issuance Date of
the Certificates of a series, the Trustee shall execute and deliver the related
Note Purchase Agreements in the forms delivered to the Trustee by the Company.
The Trustee shall issue and sell such Certificates, in authorized denominations
and in such Fractional Undivided Interests, so as to result in the receipt of
15
<PAGE>
consideration in an amount equal to the aggregate purchase price of Secured
Notes to be held in the applicable Trust as specified in the related Note
Purchase Agreements and, concurrently therewith, the Trustee shall purchase,
pursuant to the terms and conditions of such Note Purchase Agreements, the
Secured Notes (except Postponed Notes, if any) at a purchase price equal to the
amount of such consideration so received. Except as provided in Sections 3.3,
3.4 and 3.5 hereof, the Trustee shall not execute, authenticate or deliver
Certificates of such series in excess of the aggregate amount specified in this
paragraph. The provisions of this Subsection (a) are subject to the provisions
of Subsection (b) below.
(b) If on or prior to the Issuance Date with respect to a series
of Certificates the Company shall deliver to the Trustee a Postponement Notice
relating to one or more Postponed Notes, the Trustee shall postpone the purchase
of such Postponed Notes and shall deposit into an escrow account (as to such
Trust, the "Escrow Account") to be maintained as a part of the related Trust an
amount equal to the purchase price of such Postponed Notes (the "Escrowed
Funds"). The Escrowed Funds so deposited shall be (i) invested by the Trustee at
the direction and risk of the Company in Specified Investments or (ii) if
provided in the Trust Supplement relating to such series of Certificates and
subject to the terms and conditions set forth therein, invested in debt
instruments of the Guarantor or the Company (and guaranteed by the Guarantor),
in each case (x) maturing no later than any scheduled Transfer Date relating to
such Postponed Notes, or (y) if no such Transfer Date has been scheduled,
maturing on the next Business Day, or (z) if subsequent to the giving of the
applicable Postponement Notice the Company has given notice to the Trustee that
any Postponed Notes will not be issued, thereafter with respect to the portion
of the Escrowed Funds relating to such Postponed Notes, maturing on or before
the next applicable Special Distribution Date, if such investments are
reasonably available for purchase. The Trustee shall make withdrawals from the
Escrow Account only as provided in this Agreement. Upon request of the Company
on one or more occasions and the satisfaction of the closing conditions
specified in the applicable Note Purchase Agreements on or prior to the related
Cut-off Date, the Trustee shall purchase the applicable Postponed Notes with the
Escrowed Funds withdrawn from the Escrow Account.
The Trustee shall hold all Specified Investments until the
maturity thereof and will not sell or otherwise transfer Specified Investments.
If Specified Investments held in an Escrow Account mature prior to any
applicable Transfer Date, any proceeds received on the maturity of such
Specified Investments (other than any earnings thereon) shall be reinvested by
the Trustee at the direction and risk of, and for the benefit of, the Company in
Specified Investments maturing as provided in the preceding paragraph.
Any earnings on Specified Investments received from time to time
by the Trustee shall be distributed to the Company periodically upon its demand,
or if not so distributed, reinvested by the Trustee in Specified Investments
maturing as provided in the applicable Trust Supplement or in the second
preceding paragraph. The Company shall pay to the Trustee for deposit to the
relevant Escrow Account an amount equal to any losses incurred on such Specified
Investments made at the direction and risk of such Company. On the Initial
Regular Distribution
16
<PAGE>
Date in respect of the Certificates of any series, the Company will pay (in
immediately available funds) to the Trustee an amount equal to the interest that
would have accrued on those Postponed Notes related to such Company, if any,
purchased after the Issuance Date as if such Postponed Notes had been purchased
on the Issuance Date, from the Issuance Date to, but not including , the date of
the purchase of such Postponed Notes by the Trustee, but only to the extent such
accrued interest would be payable on the next succeeding payment date, unless
otherwise specified in the related Trust Supplement.
If, in respect of the Certificates of any series, the Company
notifies the Trustee prior to the applicable Cut-off Date that any Postponed
Notes will not be issued on or prior to such Cut-off Date for any reason, on the
next Special Distribution Date for such Certificates occurring more than 20 days
following the date of such notice, unless otherwise specified in the related
Trust Supplement, (i) the Company shall pay to the Trustee for deposit in the
related Special Payments Account, in immediately available funds, an amount
equal to the interest that would have accrued on the Postponed Notes related to
the Company designated in such notice at a rate equal to the interest rate
applicable to such Certificates from the Issuance Date to, but not including,
such Special Distribution Date and (ii) the Trustee shall transfer an amount
equal to the sum of that amount of Escrowed Funds that would have been used to
purchase the Postponed Notes designated in such notice plus the amount paid by
the Company pursuant to the immediately preceding clause (i) to the related
Special Payments Account for distribution as a Special Payment in accordance
with the provisions hereof.
If, on such Cut-off Date, an amount equal to less than all of the
Escrowed Funds (other than Escrowed Funds referred to in the immediately
preceding paragraph) has been used to purchase Postponed Notes, on the next such
Special Distribution Date occurring more than 20 days following such Cut-off
Date, unless otherwise specified in the related Trust Supplement, (i) the
Company shall pay to the Trustee for deposit in such Special Payments Account,
in immediately available funds, an amount equal to the interest that would have
accrued on such Postponed Notes related to the Company contemplated to be
purchased with such unused Escrowed Funds (other than Escrowed Funds referred to
in the immediately preceding paragraph) but not so purchased at a rate equal to
the interest rate applicable to such Certificates from the Issuance Date to, but
not including, such Special Distribution Date and (ii) the Trustee shall
transfer the sum of such unused Escrowed Funds plus the amount paid by the
Company pursuant to the immediately preceding clause (i) to such Special
Payments Account for distribution as a Special Payment in accordance with the
provisions hereof.
If the Company shall fail to make any payment due under this
Section 2.2, the Guarantor agrees to make such payment in its place.
Section 2.3. Acceptance by Trustee. The Trustee, upon the
execution and delivery of a Trust Supplement creating a Trust and establishing a
series of Certificates, shall acknowledge its acceptance of all right, title,
and interest in and to the Secured Notes to be acquired pursuant to Section 2.2
hereof and the Note Purchase Agreements and shall declare that the Trustee holds
and
17
<PAGE>
will hold such right, title, and interest, together with all other property
constituting the Trust Property of such Trust, for the benefit of all then
present and future Certificateholders of such series, upon the trusts herein and
in such Trust Supplement set forth. By its payment for and acceptance of each
Certificate of such series issued to it under this Agreement, each initial
Certificateholder of such series as grantor of such Trust shall thereby join in
the creation and declaration of such Trust.
Section 2.4. Limitation of Powers. Each Trust shall be
constituted solely for the purpose of making the investment in the Secured Notes
provided for in the related Trust Supplement, and, except as set forth in
Section 2.2(b) or otherwise in this Agreement, the Trustee shall not be
authorized or empowered to acquire any other investments or engage in any other
activities and, in particular, the Trustee shall not be authorized or empowered
to do anything that would cause such Trust to fail to qualify as a "grantor
trust" for federal income tax purposes (including as subject to this
restriction, acquiring any Property by bidding such Secured Notes or otherwise,
or taking any action with respect to any such Property once acquired).
ARTICLE III
THE CERTIFICATES
Section 3.1. Form, Denomination and Execution of Certificates.
The Certificates of each series shall be issued in registered form (except as
otherwise specified in the relevant Trust Supplement) without coupons and shall
be substantially in the form attached hereto as Exhibit A, with such omissions,
variations and insertions as are permitted by this Agreement, and may have such
letters, numbers or other marks of identification and such legends or
endorsements typed, printed, lithographed or engraved thereon, as may be
required to comply with the rules of any securities exchange on which such
Certificates may be listed or to conform to any usage in respect thereof, or as
may, consistently herewith, be prescribed by the Trustee or by the officer
executing such Certificates, such determination by said officer to be evidenced
by his signing the Certificates.
Except as provided in Section 3.9, the definitive Certificates of
such series shall be typed, printed, lithographed or engraved or produced by any
combination of these methods or may be produced in any other manner permitted by
the rules of any securities exchange on which such Certificates may be listed,
all as determined by the officer executing such Certificates, as evidenced by
his execution of such Certificates.
Except as otherwise provided in the related Trust Supplement, the
Certificates of each series shall be issued in minimum denominations of $1,000
or integral multiples thereof, except that one Certificate of such series may be
issued in a denomination of less than $1,000.
The Certificates of each series shall be executed on behalf of
the Trustee by manual or facsimile signature of a Responsible Officer of the
Trustee. Certificates of any series bearing
18
<PAGE>
the manual or facsimile signature of an individual who was, at the time when
such signature was affixed, authorized to sign on behalf of the Trustee shall be
valid and binding obligations of the Trustee, notwithstanding that such
individual has ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such office at the date of such
Certificates. No Certificate of any series shall be entitled to any benefit
under this Agreement, or be valid for any purpose unless there appears on such
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A hereto executed by or on behalf of the Trustee by manual signature,
and such certificate of authentication upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder. All Certificates of any series shall be
dated on the date of their authentication.
Section 3.2. Authentication of Certificates. The Trustee shall
duly authenticate and deliver Certificates of each series in authorized
denominations equaling in the aggregate the aggregate principal amount of the
Secured Notes to be purchased by the Trustee pursuant to the related Note
Purchase Agreements, and evidencing the entire ownership of the related Trust.
Section 3.3. Temporary Certificates. Pending the preparation of
definitive Certificates of any series, the Trustee may execute, authenticate and
deliver temporary Certificates of such series that are printed, lithographed,
typewritten or otherwise produced, in any denomination, containing substantially
the same terms and provisions as set forth in Exhibit A hereto, except for such
appropriate insertions, omissions, substitutions and other variations relating
to their temporary nature as the officer executing such temporary Certificates
may determine, as evidenced by such officer's execution of such temporary
Certificates.
If temporary Certificates of any series are issued, the Trustee
will cause definitive Certificates of such series to be prepared without
unreasonable delay. After the preparation of definitive Certificates of such
series, the temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of such temporary Certificates at the Corporate
Trust Office of the Trustee, or at the office or agency of the Trustee
maintained in accordance with Section 7.11, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates, the
Trustee shall execute, authenticate and deliver in exchange therefor definitive
Certificates of like series, in authorized denominations and of a like aggregate
Fractional Undivided Interest. Until so exchanged, such temporary Certificates
shall in all respects be entitled to the same benefits under this Agreement as
definitive Certificates.
Section 3.4. Registration of Transfer and Exchange of
Certificates. The Trustee shall cause to be kept at the office or agency to be
maintained by it in accordance with the provisions of Section 7.11 a register
(the "Register") for each series of Certificates in which, subject to such
reasonable regulations as it may prescribe, the Trustee shall provide for the
registration of Certificates of such series and of transfers and exchanges of
such Certificates as herein provided. The Trustee shall initially be the
registrar (the "Registrar") for the purpose of registering Certificates of each
series and transfers and exchanges of such Certificates as herein provided.
19
<PAGE>
Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office or such other office or agency, the Trustee shall
execute, authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of like series, in authorized
denominations of a like aggregate Fractional Undivided Interest.
At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of like series, in authorized denominations and
of a like aggregate Fractional Undivided Interest, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office or at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Trustee shall execute, authenticate and deliver the Certificates that the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be duly
endorsed or accompanied by a written instrument of transfer in form satisfactory
to the Trustee and the Registrar duly executed by the Certificateholder thereof
or its attorney duly authorized in writing.
No service charge shall be made to a Certificateholder for any
registration of transfer or exchange of Certificates, but the Trustee shall
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer or
exchange shall be cancelled and subsequently destroyed by the Trustee.
Section 3.5. Mutilated, Destroyed, Lost or Stolen Certificates.
If (a) any mutilated Certificate is surrendered to the Registrar, or the
Registrar receives evidence to its satisfaction of the destruction, loss or
theft of any Certificate, and (b) there is delivered to the Registrar and the
Trustee such security, indemnity or bond as may be required by them to save each
of them harmless, then, in the absence of notice to the Registrar or the Trustee
that such Certificate has been acquired by a bona fide purchaser, the Trustee
shall execute, authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate or
Certificates of like series, in authorized denominations and of like Fractional
Undivided Interest. In connection with the issuance of any new Certificate under
this Section 3.5, the Trustee shall require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Trustee
and the Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this Section 3.5 shall constitute conclusive evidence of the
appropriate Fractional Undivided Interest in the related Trust, as if originally
issued, whether or not the lost, stolen or destroyed Certificate shall be found
at any time.
Section 3.6. Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Guarantor, the Company, the
Trustee, the Registrar, and any Paying Agent of the Trustee may treat the Person
in whose name any Certificate is registered on the Register as the owner of such
Certificate for the purpose of receiving distributions pursuant to
20
<PAGE>
Section 4.2 and for all other purposes whatsoever, and neither the Guarantor,
the Company, the Trustee, the Registrar, nor any Paying Agent of the Trustee
shall be affected by any notice to the contrary.
Section 3.7. Cancellation. All Certificates surrendered for
payment or registration of transfer or exchange shall, if surrendered to any
Person party hereto or any agent of the Trustee other than the Registrar, be
delivered to the Registrar for cancellation. No Certificates shall be
authenticated in lieu of or in exchange for any Certificates cancelled as
provided in this Section, except as expressly permitted by this Agreement. All
cancelled Certificates held by the Registrar shall be destroyed and a
certification of their destruction delivered to the Trustee.
Section 3.8. Limitation of Liability. All payments or
distributions made to Certificateholders of any series under this Basic
Agreement and the related Trust Supplement shall be made only from the Trust
Property of the related Trust and only to the extent that the Trustee shall have
sufficient income or proceeds from such Trust Property to make such payments in
accordance with the terms of Article IV of this Agreement. Each
Certificateholder, by its acceptance of a Certificate, agrees that it will look
solely to the income and proceeds from the Trust Property of the related Trust
to the extent available for distribution to such Certificateholder as provided
in this Agreement.
Nothing in this Agreement shall be construed as an agreement, or
otherwise creating an obligation, of the Guarantor or the Company to pay any of
the principal, premium, if any, and interest due from time to time under the
Secured Notes or in respect of the Certificates. The Guarantor and the Company
are parties to this Agreement solely for purposes of meeting the requirements of
the Trust Indenture Act, and therefore shall not be liable hereunder (except as
otherwise expressly provided herein).
Section 3.9. Book-Entry and Definitive Certificates. (a) Except
for one Certificate of each series that may be issued in a denomination of less
than $1,000, the Certificate of any series may, at the sole option of the
Company, be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates of such series, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Company. In such case, the Certificate of such series delivered to The
Depository Trust Company shall initially be registered on the Register in the
name of CEDE & Co., the nominee of the initial Clearing Agency, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Certificates of such series, except as
provided above and in Subsection (d) below. As to the Certificates of any
series, except with respect to the one Certificate of such series that may be
issued in a denomination of less than $1,000, unless and until definitive, fully
registered Certificates of such series (the "Definitive Certificates") have been
issued pursuant to Subsection (d) below:
(i) the provisions of this Section 3.9 shall be in full force and
effect;
21
<PAGE>
(ii) the Guarantor, the Company, the Paying Agent, the Registrar
and the Trustee may deal with the Clearing Agency for all purposes
(including the making of distributions on the Certificates) as the
authorized representative of the Certificate Owners;
(iii) to the extent that the provisions of this Section 3.9
conflict with any other provisions of this Agreement (other than the
provisions of any Trust Supplement amending this Section 3.9 as
permitted by this Basic Agreement), the provisions of this Section 3.9
shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing
Agency Participants; and until Definitive Certificates are issued
pursuant to Subsection (d) below, the Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit distributions of principal and interest and premium, if
any, on the Certificates to such Clearing Agency Participants;
(v) such Certificates of such series may be transferred in whole,
but not in part, and in the manner provided in Section 3.4 by the
Clearing Agency holding such Certificates to a nominee of such Clearing
Agency or by such Clearing Agency to a successor Clearing Agency
selected or approved by the Company upon notice to the Trustee or to a
nominee of such successor Clearing Agency; and
(vi) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Certificateholders of
such series holding Certificates of such series evidencing a specified
percentage of the Fractional Undivided Interests in the related Trust,
the Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in Certificates of such series and has delivered such
instructions to the Trustee. The Trustee shall have no obligation to
determine whether the Clearing Agency has in fact received any such
instructions.
(b) Except with respect to the one Certificate of each series
that may be issued in a denomination of less than $1,000, whenever notice or
other communication to the Certificateholders of such series is required under
this Agreement, unless and until Definitive Certificates shall have been issued
pursuant to Subsection (d) below, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders of such series
to the Clearing Agency and/or the Clearing Agency Participants, and shall make
available additional copies as requested by such Clearing Agency Participants.
(c) Unless and until Definitive Certificates of a series are
issued pursuant to Subsection (d) below, on the Record Date prior to each
applicable Regular Distribution Date and
22
<PAGE>
Special Distribution Date, the Trustee will request from the Clearing Agency a
securities position listing setting forth the names of all Clearing Agency
Participants reflected on the Clearing Agency's books as holding interests in
the Certificates of such series on such Record Date. The Trustee shall mail to
each such Clearing Agency Participant the statements described in Section 4.3
hereof and will make available additional copies as requested by such Clearing
Agency Participant for forwarding by such Clearing Agency Participant to
Certificate Owners.
(d) If with respect to the Book-Entry Certificates of any series
(i) the Company advises the Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities and the
Trustee or the Applicable Company is unable to locate a qualified successor or
(ii) the Applicable Company, at its option, advises the Trustee in writing of
its election to terminate the book-entry system through the Clearing Agency in
respect of the Certificates or (iii) after the occurrence of an Event of
Default, Certificate Owners of Book-Entry Certificates of such series evidencing
Fractional Undivided Interests aggregating not less than a majority in interest
in the related Trust advise the Company, the Trustee and the Clearing Agency
through the Clearing Agency Participants in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners of such series, then the Trustee shall notify all
Certificate Owners of such series, through the Clearing Agency, of the
occurrence of such event and of the availability of Definitive Certificates.
Upon surrender to the Trustee of all the Certificates of such series held by the
Clearing Agency, accompanied by written registration instructions from the
Clearing Agency for registration of Definitive Certificates in the names of
Certificate Owners of such series, the Trustee shall execute, authenticate and
deliver the Definitive Certificates of such series pursuant to Section 3.4 in
accordance with the instructions of the Clearing Agency. Neither the Guarantor,
the Company, the Registrar, the Paying Agent nor the Trustee shall be liable for
any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such registration instructions. Upon the
authentication and delivery of Definitive Certificates of such series, the
Trustee shall recognize the Persons in whose name the Definitive Certificates
are registered in the Register as Certificateholders hereunder. None of the
Company, the Guarantor and the Trustee shall be liable if the Trustee or the
Company is unable to locate a qualified successor Clearing Agency.
(e) Except as otherwise provided in the related Trust Supplement,
the Trustee shall enter into the applicable Letter of Representations with
respect to such series of Certificates and fulfill its responsibilities
thereunder.
(f) The provisions of this Section 3.9 may be made inapplicable
to any series or may be amended with respect to any series in the related Trust
Supplement.
ARTICLE IV
DISTRIBUTIONS; STATEMENTS TO
23
<PAGE>
CERTIFICATEHOLDERS
Section 4.1. Certificate Account and Special Payments Account.
(a) The Trustee shall establish and maintain on behalf of the Certificateholders
of each series a Certificate Account as one or more non-interest-bearing
accounts. The Trustee shall hold the Certificate Account in trust for the
benefit of the Certificateholders of such series, and shall make or permit
withdrawals therefrom only as provided in this Agreement. On each day when a
Scheduled Payment is made under an Indenture to the Trustee, the Trustee, as
holder of the Secured Notes issued under such Indenture and held in the related
Trust, upon receipt shall immediately deposit the aggregate amount of such
Scheduled Payment in the applicable Certificate Account.
(b) The Trustee shall establish and maintain on behalf of the
Certificateholders of each series a Special Payments Account as one or more
accounts, which shall be non-interest bearing except as provided in Section 4.4.
The Trustee shall hold the Special Payments Account in trust for the benefit of
the Certificateholders of such series, and shall make or permit withdrawals
therefrom only as provided in this Agreement. On each day when one or more
Special Payments (other than a Special Payment that represents the proceeds of
any sale pursuant to Article VI hereof by the Trustee of a Secured Note) are
made under the Indenture to the Trustee, as holder of the Secured Notes issued
under such Indenture and held in the related Trust or pursuant to the
penultimate and antepenultimate paragraphs of Section 2.2(b), the Trustee upon
receipt shall immediately deposit the aggregate amounts of such Special Payments
in such Special Payments Account. Upon the sale of Secured Notes by the Trustee
pursuant to Article VI hereof and the realization of any proceeds thereof, the
Trustee shall deposit the aggregate amount of such proceeds as a Special Payment
in the applicable Special Payments Account.
(c) The Trustee shall present to the Loan Trustee to which a
Secured Note held in a related Trust relates such Secured Note on the date of
its stated final maturity or, in the case of any Secured Note held in a related
Trust that is to be redeemed or purchased in whole pursuant to the relevant
Indenture, on the applicable redemption or purchase date under such Indenture.
Section 4.2. Distributions from Certificate Account and Special
Payments Account. (a) On each Regular Distribution Date with respect to a series
of Certificates or as soon thereafter as the Trustee has confirmed receipt of
the payment of the Scheduled Payments due on the Secured Notes held in the
related Trust on such date, the Trustee shall distribute out of the applicable
Certificate Account the entire amount deposited therein pursuant to Section
4.1(a). There shall be so distributed to each Certificateholder of record of
such series on the Record Date with respect to such Regular Distribution Date
(other than as provided in Section 1.1. 1 concerning the final distribution) by
check mailed to such Certificateholder at the address appearing in the Register
such Certificateholder's pro rata share (based on the aggregate Fractional
Undivided Interest in the related Trust held by such Certificateholder) of the
aggregate amount in the applicable Certificate Account.
24
<PAGE>
(b) On each Special Distribution Date with respect to any Special
Payment with respect to a series of Certificates or as soon thereafter as the
Trustee has confirmed receipt of such Special Payment due on the Secured Notes
held in the related Trust or realized upon the sale of any such Secured Notes,
the Trustee shall distribute out of the applicable Special Payments Account the
entire amount deposited therein pursuant to Section 4.l(b) of such Special
Payment. There shall be so distributed to each Certificateholder of record of
such series on the Record Date with respect to such Special Distribution Date
(other than as provided in Section 11.1 concerning the final distribution) by
check mailed to such Certificateholder at the address appearing in the Register
such Certificateholder's pro rata share (based on the aggregate Fractional
Undivided Interest in the related Trust held by such Certificateholder) of the
aggregate amount in the applicable Special Payments Account on account of such
Special Payment.
(c) The Trustee shall, at the expense of the Company, cause
notice of each Special Payment with respect to a series of Certificates to be
mailed to each Certificateholder of such series at its address as it appears in
the Register. In the event of redemption or purchase of Secured Notes held in
the related Trust, such notice shall be mailed not less than 20 days prior to
the date any such Special Payment is scheduled to be distributed. In the case of
any other Special Payments, such notice shall be mailed as soon as practicable
after the Trustee has confirmed that it has received funds for such Special
Payment. Notices mailed by the Trustee shall set forth:
(i) the Special Distribution Date and the Record Date therefor
(except as otherwise provided in Section 11.1),
(ii) the amount of the Special Payment for each $1,000 face
amount Certificate (taking into account any payment to be made by the
Company pursuant to Section 2.2(b)) and the amount thereof constituting
principal, premium, if any, and interest,
(iii) the reason for the Special Payment, and
(iv) if the Special Distribution Date is the same date as a
Regular Distribution Date for the Certificates of such series, the total
amount to be received on such date for each $1,000 face amount
Certificate.
If the amount of premium, if any, payable upon the redemption or purchase of a
Secured Note has not been calculated at the time that the Trustee mails notice
of a Special Payment, it shall be sufficient if the notice sets forth the other
amounts to be distributed and states that any premium received will also be
distributed.
If any redemption or purchase of the Secured Notes held in any
Trust is cancelled, the Trustee, as soon as possible after learning thereof,
shall cause notice thereof to be mailed to each Certificateholder of the related
series at its address as it appears on the Register.
25
<PAGE>
Section 4.3. Statements to Certificateholders. (a) On each
Regular Distribution Date and Special Distribution Date with respect to a series
of Certificateholders, the Trustee will include with each distribution to
Certificateholders of record of the related series on the Record Date with
respect to such Regular Distribution Date or Special Distribution Date a
statement, giving effect to such distribution to be made on such Regular
Distribution Date or Special Distribution Date, as the case may be, setting
forth the following information (per $1,000 face amount Certificate as to (i)
and (ii) below):
(i) The amount of such distribution allocable to principal and
the amount allocable to premium, if any;
(ii) The amount of such distribution allocable to interest; and
(iii) The Pool Balance and the Pool Factor of the related Trust.
(b) Within a reasonable period of time after the end of each
calendar year but not later than the latest date permitted by law, the Trustee
shall furnish to each Person who at any time during such calendar year was a
Certificateholder of record a statement containing the sum of the amounts
determined pursuant to clauses (a)(i) and (a)(ii) with respect to the related
Trust for such calendar year or, in the event such Person was a
Certificateholder of record during a portion of such calendar year, for the
applicable portion of such year, and such other items as are readily available
to the Trustee and that a Certificateholder shall reasonably request as
necessary for the purpose of such Certificateholder's reparation of its Federal
income tax return.
Section 4.4. Investment of Special Payment Moneys. Any money
received by the Trustee pursuant to Section 4.1(b) representing a Special
Payment that is not to be promptly distributed shall, to the extent practicable,
be invested (and reinvested) in, at the written direction of the Company,
Permitted Investments by the Trustee pending distribution of such Special
Payment pursuant to Section 4.2. Any investment (including any reinvestment)
made pursuant to this Section 4.4 shall be in such Permitted Investments having
maturities not later than the date that such moneys are required to be used to
make the payment required under Section 4.2 on the applicable Special
Distribution Date and the Trustee shall hold any such Permitted Investments
until maturity. The Trustee shall have no liability with respect to any
investment made pursuant to this Section 4.4, other than by reason of the
willful misconduct or negligence of the Trustee. All income and earnings from
such investments shall be distributed on such Special Distribution Date as part
of such Special Payment.
ARTICLE V
THE GUARANTOR AND THE COMPANIES
Section 5.1. Maintenance of Corporate Existence. The Guarantor
and the Company, at its own cost and expense, will do or cause to be done all
things necessary to preserve
26
<PAGE>
and keep in full force and effect its corporate existence, rights (charter and
statutory) and franchises, except as otherwise specifically permitted in Section
5.2; provided, however, that neither the Guarantor nor the Company shall be
required to preserve any right or franchise if it shall determine that the
preservation thereof is no longer desirable in the conduct of its business.
Section 5.2. Consolidation, Merger, etc. Neither the Guarantor
nor the Company shall consolidate with or merge into any other corporation or
convey, transfer or lease substantially all of its assets as an entirety to any
Person unless:
(a) the corporation formed by such consolidation or into which
the Guarantor or the Company is merged or the Person that acquires by
conveyance, transfer or lease substantially all of the assets of the
Guarantor or the Company as an entirety shall be organized and validly
existing under the laws of the United States of America or any State
thereof or the District of Columbia or, in the case of the Guarantor,
any other jurisdiction;
(b) the corporation formed by such consolidation or into which
the Guarantor or the Company is merged or the Person that acquires by
conveyance, transfer or lease substantially all of the assets of the
Guarantor or the Company as an entirety shall execute and deliver to the
Trustee an agreement containing an assumption by such successor
corporation or Person of the due and punctual performance and observance
of each covenant and condition to be performed or observed by the
Guarantor or the Company under this Agreement;
(c) the Guarantor or the Company shall have delivered to the
Trustee an Officer's Certificate and an Opinion of Counsel stating that
such consolidation, merger, conveyance, transfer or lease and the
assumption agreement mentioned in clause (b) above comply with this
Section 5.2.
Upon any consolidation or merger, or any conveyance, transfer or
lease of substantially all of the assets of the Guarantor or the Company as an
entirety in accordance with this Section 5.2, the successor corporation or
Person formed by such consolidation or into which the Guarantor or the Company
is merged or to which such conveyance, transfer or lease is made shall succeed
to, and be substituted for, and may exercise every right and power of, the
Guarantor or the Company under this Agreement applicable to the Certificates of
each series with the same effect as if such successor corporation or Person had
been named as the Guarantor or the Company herein.
Section 5.3. Right of Guarantor to Act. The Guarantor shall be
entitled, without further confirmation by the Company, to take, give or make on
behalf of the Company any action, direction or Request under this Basic
Agreement or this Agreement that may be taken, given or made by the Company.
ARTICLE VI
27
<PAGE>
DEFAULT
Section 6.1. Events of Default. If, in respect of any Trust, any
Indenture Event of Default under any related Indenture shall occur and be
continuing, then, and in each and every case, so long as such Indenture Event of
Default shall be continuing, (a) the Trustee may vote all Secured Notes issued
under the relevant Indenture held in such Trust, and upon the direction of the
Certificateholders holding Certificates evidencing Fractional Undivided
Interests in such Trust aggregating not less than a majority in interest in such
Trust, the Trustee shall vote not less than a corresponding majority of such
Secured Notes, in favor of directing the Loan Trustee under such Indenture to
declare the unpaid principal amount of such Secured Notes then outstanding to
which such Indenture Event of Default relates and accrued interest thereon to be
due and payable under, and in accordance with the provisions of, such Indenture,
and (b) the Trustee may in accordance with the provisions of the relevant
Indenture vote such Secured Notes held in such Trust to direct the Loan Trustee
regarding the exercise of remedies provided in such Indenture.
In addition, after an Indenture Event of Default shall have
occurred and be continuing with respect to any Secured Note or Secured Notes
held in a Trust, the Trustee thereof may, subject to Section 6.4, in its
discretion, and upon the direction of the Certificateholders holding
Certificates evidencing Fractional Undivided Interests aggregating not less than
majority in interest in such Trust shall, by such officer or agent as it may
appoint, sell, convey, transfer and deliver such Secured Note or Secured Notes,
without recourse to or warranty by the Trustee or any Certificateholder, to any
Person. In any such case, the Trustee shall sell, assign, contract to sell or
otherwise dispose of and deliver such Secured Note or Secured Notes in one or
more parcels at public or private sale or sales, in accordance with applicable
law, including any applicable securities laws, and the terms of the applicable
Note Documents, at any location or locations at the option of the Trustee, all
upon such terms and conditions as it may reasonably deem advisable and at such
prices as it may reasonably deem advisable, for cash. If the Trustee so decides
or is required to sell or otherwise dispose of such Secured Note pursuant to
this Section, the Trustee shall take such of the actions described above as it
may reasonably deem most effectual to complete the sale or other disposition of
such Secured Note at the best price obtainable under the circumstances.
Notwithstanding the foregoing, the Trustee shall not take any action under this
Section unless, in the reasonable judgment of the Trustee, such action shall not
be adverse to the best interests of the Certificateholders of the applicable
series.
Section 6.2. Incidents of Sale of Secured Notes. Upon any sale of
all or any part of the Secured Notes held in a Trust made either under the power
of sale given under this Agreement or otherwise for the enforcement of this
Agreement, the following shall be applicable:
(1) Certificateholders and Trustee May Purchase Secured Notes.
Any Certificateholder, the Trustee in its individual or any other
capacity or any other Person may bid for and purchase any of such
Secured Notes, and upon compliance with the terms of sale, may hold,
retain, possess and dispose of such Secured Notes in its own absolute
right without further accountability.
28
<PAGE>
(2) Receipt of Trustee Shall Discharge Purchaser. The receipt of
the Trustee or of the officer or agent making such sale shall be a
sufficient discharge to any purchaser for his purchase money, and, after
paying such purchase money and receiving such receipt, such purchaser or
its personal representative or assigns shall not be obliged to see to
the application of such purchase money, or be in any way answerable for
any loss, misapplication or non-application thereof.
(3) Application of Moneys Received upon Sale. Any moneys
collected by the Trustee upon any sale made either under the power of
sale given by this Agreement or otherwise for the enforcement of this
Agreement shall be applied as provided in Section 4.2.
Section 6.3. Judicial Proceedings Instituted by Trustee, Trustee
May Bring Suit. If there shall be a failure to make payment of the principal of,
premium, if any, or interest on any Secured Note held in a Trust when due and
payable, then the Trustee, in its own name, and as trustee of an express trust,
as holder of such Secured Notes, shall be, to the extent permitted by and in
accordance with the terms of the applicable Note Documents, entitled and
empowered to institute any suits, actions or proceedings at law, in equity or
otherwise, for the collection of the sums so due and unpaid on such Secured
Notes and may prosecute any such claim or proceeding to judgment or final decree
with respect to the whole amount of any such sums so due and unpaid.
Section 6.4. Control by Certificateholders. Subject to Section
6.3, the Certificateholders holding Certificates evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the related Trust
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee with respect to such Trust,
or exercising any trust or power conferred on the Trustee under this Agreement,
including any right of the Trustee as holder of the related Secured Notes held
in such Trust provided that:
(1) such direction shall not be in conflict with any rule of law
or with this Agreement or the terms of the applicable Note Documents and
would not involve the Trustee in personal liability or expense,
(2) the Trustee shall not determine that the action so directed
would be unjustly prejudicial to the Certificateholders of such series
not taking part in such direction,
(3) the Trustee may take any other action permitted by this
Agreement deemed proper by the Trustee that is not inconsistent with
such direction, and
(4) if an Indenture Event of Default under a related Indenture
shall have occurred and be continuing, such direction shall not obligate
the Trustee to vote more than a corresponding majority of the related
Secured Notes held by the Trust in favor of directing any action by the
related Loan Trustee with respect to such Indenture Event of Default.
29
<PAGE>
Section 6.5. Waiver of Past Defaults. The Certificateholders
holding Certificates of a series evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the related Trust may on
behalf of all of the Certificateholders of such series waive any past default or
Event of Default hereunder or under the related Trust Supplement with respect to
such series and its consequences or may instruct the Trustee to waive any past
default under any related Indenture or this Agreement or the related Trust
Supplement with respect to such series and its consequences, except a default:
(1) in the deposit of any Scheduled Payment or Special Payment
under Section 4.1 or in the distribution of any payment under Section
4.2 on the Certificates of such series, or
(2) in the payment of the principal of (premium, if any) or
interest on the Secured Notes, or
(3) in respect of a covenant or provision hereof that under
Article IX hereof cannot be modified or amended without the consent of
each Certificateholder holding an Outstanding Certificate of such series
affected.
Upon any such waiver, such default shall cease to exist with
respect to the Certificates of such series and any Event of Default arising
therefrom shall be deemed to have been cured for every purpose in respect of
such series and any direction given by the Trustee on behalf of the
30
<PAGE>
Certificateholders of such series to the relevant Loan Trustee shall be annulled
with respect thereto; but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon. Upon any
such waiver, the Trustee shall vote the Secured Notes issued under the relevant
Indenture held in the applicable Trust to waive the corresponding Indenture
Event of Default (and, if applicable, the corresponding Lease default).
Section 6.6. Right of Certificateholders to Receive Payments Not
to Be Impaired. Anything in this Agreement to the contrary notwithstanding,
including without limitation Section 6.7, the right of any Certificateholder to
receive distributions of payments required pursuant to Section 4.2 on the
applicable Certificates when due, or to institute suit for the enforcement of
any such payment on or after the applicable Regular Distribution Date or Special
Distribution Date, shall not be impaired or affected without the consent of such
Certificateholder.
Section 6.7. Certificateholders May Not Bring Suit Except Under
Certain Conditions. A Certificateholder of any series shall not have the right
to institute any suit, action or proceeding at law or in equity or otherwise
with respect to this Agreement, for the appointment of a receiver or for the
enforcement of any other remedy under this Agreement, unless:
(1) such Certificateholder previously shall have given written
notice to the Trustee of a continuing Event of Default;
(2) the Certificateholders holding Certificates of such series
evidencing Fractional Undivided Interests aggregating not less than 25%
of the related Trust shall have requested the Trustee in writing to
institute such action, suit or proceeding and shall have offered to the
Trustee indemnity as provided in Section 7.2(e);
(3) the Trustee shall have refused or neglected to institute any
such action, suit or proceeding for 60 days after receipt of such
notice, request and offer of indemnity; and
(4) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Certificateholders
holding Certificates of such series evidencing Fractional Undivided
Interests aggregating not less than a majority in interest in the
related Trust.
It is understood and intended that no one or more of the
Certificateholders of any series shall have any right in any manner whatever
hereunder or under the related Trust Supplement or under the Certificates of
such series to (i) surrender, impair, waive, affect, disturb or prejudice any
property in the Trust Property of the related Trust or the lien of any related
Indenture on any property subject thereto, or the rights of the
Certificateholders of such series or the holders of the related Secured Notes,
(ii) obtain or seek to obtain priority over or preference to any other such
Certificateholder of such series or (iii) enforce any right under this
Agreement, except in the manner herein provided and for the equal, ratable and
common benefit of all the Certificateholders of such series subject to the
provisions of this Agreement.
31
<PAGE>
Section 6.8. Remedies Cumulative. Every remedy given hereunder to
the Trustee or to any of the Certificateholders of any series shall not be
exclusive of any other remedy or remedies, and every such remedy shall be
cumulative and in addition to every other remedy given hereunder or now or
hereafter given by statute, law, equity or otherwise.
Section 6.9. Undertaking to Pay Court Costs. All parties to this
Agreement, and each Certificateholder by his acceptance of a Certificate, shall
be deemed to have agreed that any court may in its discretion require, in any
suit, action or proceeding for the enforcement of any right or remedy under this
Agreement, or in any suit, action or proceeding against the Trustee for any
action taken or omitted by it as Trustee hereunder, the filing by any party
litigant in such suit, action or proceeding of an undertaking to pay the costs
of such suit, action or proceeding, and that such court may, in its discretion,
assess reasonable costs, including reasonable attorneys' fees, against any party
litigant in such suit, action or proceeding, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided,
however, that the provisions of this Section shall not apply to (a) any suit,
action or proceeding instituted by any Certificateholder or group of
Certificateholders of any series evidencing Fractional Undivided Interests
aggregating more than 10% of the related Trust, (b) any suit, action or
proceeding instituted by any Certificateholder for the enforcement of the
distribution of payments pursuant to Section 4.2 hereof on or after the
respective due dates expressed herein or (c) any suit, action or proceeding
instituted by the Trustee.
ARTICLE VII
THE TRUSTEE
Section 7.1. Notice of Defaults. As promptly as practicable
after, and in any event within 90 days after, the occurrence of any default (as
such term is defined below) hereunder, the Trustee shall transmit by mail to the
Company, the Guarantor, any related Owner Trustees, the related Loan Trustees
and the Certificateholders holding Certificates of the related series in
accordance with Section 313(c) of the Trust Indenture Act, notice of such
default hereunder known to the Trustee, unless such default shall have been
cured or waived; provided that, in the case of defaults not relating to the
payment of money, the Trustee shall not give such notice until the earlier of
the time at which such default becomes an Event of Default and the expiration of
60 days from the occurrence of such default; provided, however, that, except in
the case of a default in the payment of the principal of (premium, if any) or
interest on any Secured Note, the Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee or a
trust committee of directors and/or Responsible Officers of the Trustee in good
faith determine that the withholding of such notice is in the interests of the
Certificateholders of the related series. For the purpose of this Section in
respect of any Trust, the term "default" means any event that is, or after
notice or lapse of time or both would become, an Event of Default in respect of
that Trust.
Section 7.2. Certain Rights of Trustee. Subject to the provisions
of Section 315 of the Trust Indenture Act:
32
<PAGE>
(a) the Trustee may rely and shall be protected in acting or
refraining from acting in reliance upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Guarantor or the Company
mentioned herein shall be sufficiently evidenced by a Request;
(c) whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officer's Certificate of the
Guarantor or Company, any related Owner Trustee, any related Owner
Participant or any related Loan Trustee;
(d) the Trustee may consult with counsel and the advice of such
counsel or Opinion of Counsel shall be still and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement at the request or
direction of any of the Certificateholders pursuant to this Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the cost, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture or other paper or document;
(g) the Trustee may execute any of the trusts or powers under
this Agreement or perform any duties under this Agreement either
directly or by or through agents or attorneys and the Trustee shall not
be responsible for any misconduct or negligence on the part of any agent
or attorney appointed with due care by it under this Agreement;
(h) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with the
direction of the Certificateholders holding Certificates of any series
evidencing Fractional Undivided Interests aggregating not less than a
majority in interest in the related Trust relating to the time, method
and place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement;
(i) the Trustee shall not be required to expend or risk its own
funds in the performance of any of its duties under this Agreement, or
in the exercise of any of its rights
33
<PAGE>
or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk is not
reasonably assured to it;
(j) except during the continuance of an Event of Default, the
Trustee undertakes and shall be responsible to perform only such duties
as are specifically set forth herein and no implied covenants or
obligations shall be read into this Agreement against the Trustee.
Section 7.3. Not Responsible for Recitals or Issuance of
Certificates. The recitals contained herein and in the Certificates of each
series, except the certificates of authentication, shall not be taken as the
statements of the Trustee, and the Trustee assumes no responsibility for their
correctness. Subject to Section 7.14, the Trustee makes no representations as to
the validity or sufficiency of this Basic Agreement or any Trust Supplement, any
Note Documents, any Note Purchase Agreement, any Secured Notes held in a Trust
or the Certificates of any series, except that the Trustee hereby represents and
warrants that this Basic Agreement or any Trust Supplement has been, and each
Trust Supplement and each Certificate of each series will be, executed and
delivered by one of its officers who is duly authorized to execute and deliver
such document on its behalf.
Section 7.4. May Hold Certificates. The Trustee, any Paying
Agent, Registrar or any of their Affiliates or any other agent, in their
respective individual or any other capacity, may become the owner or pledgee of
Certificates, and subject to Sections 310(b) and 311 of the Trust Indenture Act,
may otherwise deal with the Guarantor, any Company, any Owner Trustee or any
Loan Trustee with the same rights it would have if it were not Trustee, Paying
Agent, Registrar or such other agent.
Section 7.5. Money Held in Trust. Money held by the Trustee or
the Paying Agent in trust hereunder or under any Trust Supplement need not be
segregated from other funds, except to the extent required herein or by law and
neither the Trustee nor the Paying Agent shall have any liability for interest
upon any such moneys except as provided for herein.
Section 7.6. Compensation and Reimbursement. The Guarantor and
the Company agree:
(1) to pay, or cause to be paid, to the Trustee from time to time
reasonable compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law with regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein or in any Trust
Supplement, to reimburse, or cause to be reimbursed, the Trustee upon
its request for all reasonable out-of-pocket expenses, disbursements and
advances incurred or made by the Trustee in accordance with any
provision of this Basic Agreement or any Trust Supplement (including the
reasonable compensation and the expenses and disbursements of its agents
and counsel), except any such expense, disbursement or advance as may be
attributable to its negligence, wilful misconduct
34
<PAGE>
or bad faith or as may be incurred due to the Trustee's breach of its
representations and warranties set forth in Section 7.14;
(3) to indemnify, or cause to be indemnified, the Trustee in its
individual capacity for, and to hold it harmless against, any loss,
liability or expense (other than for or with respect to any tax)
incurred without negligence, wilful misconduct or bad faith, on its
part, arising out of or in connection with the acceptance or
administration of any Trust, including the costs and expenses of
defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder, except
(i) for any such loss, liability or expense incurred by reason of the
Trustee's breach of its representations and warranties set forth in
Section 7.14 or in any Trust Supplement or the Trustee's negligence or
wilful misconduct and (ii) as provided in Section 7.16. The Trustee
shall notify the Guarantor and the Company promptly of any claim for
which it may seek indemnity. The Guarantor or the Company shall defend
the claim and the Trustee shall cooperate in the defense. The Trustee
may have separate counsel with the consent of the Guarantor or the
Company and the Guarantor and the Company will pay the reasonable fees
and expenses of such counsel. Neither the Guarantor nor the Company need
pay for any settlement made without its consent; and
(4) to indemnify, or cause to be indemnified, the Trustee, solely
in its individual capacity, for, and to hold it harmless against, any
tax (other than for or with respect to any tax referred to in the next
paragraph, provided that no indemnification shall be available with
respect to any tax attributable to the Trustee's compensation for
serving as such) incurred without negligence, willful misconduct or bad
faith, on its part, arising out of or in connection with the acceptance
or administration of any Trust, including any costs and expenses
incurred in contesting the imposition of any such tax. The Trustee, in
its individual capacity, shall notify the Guarantor and the Company
promptly of any tax for which it may seek indemnity. The Guarantor or
the Applicable shall, if it so elects, defend against the imposition of
such tax and the Trustee, in its individual capacity, shall cooperate in
the defense. The Trustee, in its individual capacity, may have separate
counsel with the consent of the Guarantor or the Company, and the
Guarantor or the Company will pay the reasonable fees and expenses of
such counsel. Neither the Guarantor nor the Company need indemnify any
taxes paid, in settlement or otherwise, without its consent.
In addition, the Trustee shall be entitled to reimbursement from,
and shall have a lien prior to the Certificates of each series upon, all
property and funds held or collected by the Trustee in its capacity as Trustee
with respect to such series or the related Trust for any tax (including any
taxes based on, or measured by, the income or receipts of such Trust) incurred
without negligence, bad faith or willful misconduct, on its part, arising out of
or in connection with the acceptance or administration of such Trust (other than
any tax attributable to the Trustee's compensation for serving as such),
including any costs and expenses incurred in contesting the imposition of any
such tax. If the Trustee reimburses itself from the Trust Property of such Trust
for any such tax it will within 30 days mail a
35
<PAGE>
brief report setting forth the circumstances thereof to all Certificateholders
of such series as their names and addresses appear in the Register.
As security for the performance of the obligations of the
Guarantor and Company under this Section with respect to each Trust, the Trustee
shall have a lien prior to the Certificates of the related series upon all
property and funds held or collected by the Trustee in its capacity as Trustee
with respect to such Certificates and the related Trust.
Section 7.7. Corporate Trustee Required, Eligibility. Each Trust
shall at all times have a Trustee which shall be eligible to act as a trustee
under Section 310(a) of the Trust Indenture Act and shall have a combined
capital and surplus of at least $75,000,000 (or having a combined capital and
surplus in excess of $1,000,000 and the obligations of which, whether now in
existence or hereafter incurred, are fully and unconditionally guaranteed by a
corporation organized and doing business under the laws of the United States,
any State or Territory thereof or of the District of Columbia and having a
combined capital and surplus of at least $75,000,000). If such corporation
publishes reports of conditions at least annually, pursuant to law or to the
requirements of Federal, State, Territorial or District of Columbia supervising
or examining authority, then for the purposes of this Section 7.7, the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of conditions to be
published.
In case at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 7.7 to act as Trustee of any
Trust, the Trustee shall resign immediately as Trustee of such Trust in the
manner and with the effect specified in Section 7.8.
Section 7.8. Resignation and Removal, Appointment of Successor.
(a) No resignation or removal of the Trustee and no appointment of a successor
Trustee of any Trust pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.9.
(b) The Trustee may resign at any time as trustee of any or all
Trusts by giving written notice thereof to the Guarantor, the Company, the
Authorized Agents, the related Owner Trustees, if any, and the related Loan
Trustees. If an instrument of acceptance by a successor Trustee shall not have
been delivered to the Guarantor, the Company, the related Owner Trustees, if
any, the related Loan Trustees and the Trustee within 30 days after the giving
of such notice of resignation, the Guarantor, the Company or the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
(c) The Trustee may be removed at any time as trustee of any
Trust by Act of the Certificateholders of the related series holding
Certificates of such series evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in such Trust delivered to the
Trustee and to the Guarantor, the Company, the related Owner Trustees and the
related Loan Trustees.
(d) If at any time in respect of any Trust:
36
<PAGE>
(1) the Trustee shall fail to comply with Section 310 of the
Trust Indenture Act after written request therefor by the Guarantor, the
Company or by any Certificateholder of the related series who has been a
bona fide Certificateholder for at least six months; or
(2) the Trustee shall cease to be eligible under Section 7.7 and
shall fail to resign after written request therefor by the Guarantor,
the Company or by any such Certificateholder; or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (i) the Guarantor or the Company may remove the Trustee
of such Trust or (ii) any Certificateholder of the related series who has been a
bona fide Certificateholder for at least six months may, on behalf of himself
and all others similarly situated, petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor Trustee of
such Trust.
(e) If a Responsible Officer of the Trustee shall obtain actual
knowledge of an Avoidable Tax (as hereinafter defined) in respect of any Trust
that has been or is likely to be asserted, the Trustee shall promptly notify the
Guarantor and the Company and any related Owner Trustees and shall, within 30
days of such notification, resign as Trustee of such Trust unless within such
30-day period the Trustee shall have received notice that the Guarantor or
Company in its sole discretion has agreed to pay such tax. Provided that there
is a corporation in a jurisdiction where there are no Avoidable Taxes that is
willing to act as Trustee and is eligible under Section 7.7, the Company shall
promptly appoint a successor Trustee of such Trust in a jurisdiction where there
are no Avoidable Taxes. As used herein, an "Avoidable Tax" in respect of such
Trust means a state or local tax: (i) upon (w) such Trust, (x) such Trust
Property, (y) Certificateholders of such Trust or (z) the Trustee for which the
Trustee is entitled to seek reimbursement from the Trust Property of such Trust,
and (ii) which would be avoided if the Trustee were located in another state, or
jurisdiction within a state, within the United States. A tax shall not be an
Avoidable Tax in respect of any Trust if the Guarantor or the Company or any
Owner Trustee shall agree to pay, and shall pay, such tax.
(f) If the Trustee shall resign, be removed or become incapable
of acting as trustee of any Trust, or if a vacancy shall occur in the office of
the Trustee of any Trust for any cause, the Company shall promptly appoint a
successor Trustee of such Trust. If, within one year after such resignation,
removal or incapability, or other occurrence of such vacancy, a successor
Trustee of such Trust shall be appointed by Act of the Certificateholders of the
related series holding Certificates of such series evidencing Fractional
Undivided Interests aggregating not less than a majority in interest in such
Trust delivered to the Guarantor, the Company, the related Owner Trustees, if
any, the related Loan Trustee and the retiring Trustee, the successor Trustee so
appointed shall forthwith upon its acceptance of such appointment, become the
successor Trustee of such Trust and supersede the successor Trustee of such
Trust appointed as provided above. If no successor Trustee shall have been
37
<PAGE>
so appointed as provided above and accepted appointment in the manner
hereinafter provided, any Certificateholder who has been a bona fide
Certificateholder of the related series for at least six months may, on behalf
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee of such Trust.
(g) The successor Trustee of a Trust shall give notice of the
resignation and removal of the Trustee and appointment of the successor Trustee
by mailing written notice of such event by first-class mail, postage prepaid, to
the Certificateholders of the related series as their names and addresses appear
in the Register. Each notice shall include the name of such successor Trustee
and the address of its Corporate Trust office.
Section 7.9. Acceptance of Appointment of Successor. Every
successor Trustee appointed hereunder shall execute, acknowledge and deliver to
the Guarantor and the Company and to the retiring Trustee with respect to any or
all Trusts an instrument accepting such appointment, and thereupon the
resignation or removal of the retiring Trustee with respect to such Trusts shall
become effective and such successor Trustee, without any further act, deed or
conveyance, shall become vested with all the rights, powers, trusts and duties
of the retiring Trustee; but, on request of the Guarantor, the Company or the
successor Trustee, such retiring Trustee shall execute and deliver an instrument
transferring to such successor Trustee all such rights, powers and trusts of the
retiring Trustee and shall duly assign, transfer and deliver to such successor
Trustee all property and money held by such retiring Trustee in respect of such
Trusts hereunder, subject nevertheless to its lien, if any, provided for in
Section 7.6 and all books and records, or true, correct and complete copies
thereof, held by such retiring Trustee in respect of such Trusts hereunder. Upon
request of any such successor Trustee, the Guarantor, the Company, the retiring
Trustee and such successor Trustee shall execute and deliver any and all
instruments containing such provisions as shall be necessary or desirable to
transfer and confirm to, and for more fully and certainly vesting in, such
successor Trustee all such rights, powers and trusts.
If a successor Trustee is appointed with respect to one or more
(but not all) Trusts, the Guarantor, the Company, the predecessor Trustee and
each successor Trustee with respect to any Trust shall execute and deliver a
supplemental agreement hereto that shall contain such provisions as shall be
deemed necessary or desirable to confirm that all the rights, powers, trusts and
duties of the predecessor Trustee with respect to the Trusts as to which the
predecessor Trustee is not retiring shall continue to be vested in the
predecessor Trustee, and shall add to or change any of the provisions of this
Basic Agreement and the applicable Trust Supplements as shall be necessary to
provide for or facilitate the administration of the Trusts hereunder by more
than one Trustee, it being understood that nothing herein or in such
supplemental agreement shall be construed as an appointment or constitution of
such Trustees as co-Trustees of the same Trust and that each such Trustee shall
be Trustee of separate Trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
38
<PAGE>
Section 7.10. Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any further act on the
part of any of the parties hereto.
In case any Certificates shall have been executed or
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such executing or authenticating
Trustee may adopt such execution or authentication and deliver the Certificates
so executed or authenticated with the same effect as if such successor Trustee
had itself executed or authenticated such Certificates.
Section 7.11. Maintenance of Agencies. (a) With respect to each
series of Certificates unless otherwise provided in the applicable Trust
Supplement, there shall at all times be maintained in the Borough of Manhattan,
The City of New York, an office or agency where Certificates of such series may
be presented or surrendered for registration of transfer or for exchange, and
for payment thereof and where notices and demands to or upon the Trustee in
respect of such Certificates or of this Basic Agreement or the related Trust
Supplement may be served. Such office or agency shall be initially at Wilmington
Trust Company, [address to be provided] New York, New York. Written notice of
the location of each such other office or agency and of any change of location
thereof shall be given by the Trustee to the Guarantor, the Company, any Owner
Trustees, the Loan Trustees and the Certificateholders of such series. In the
event that no such office or agency shall be maintained or no such notice of
location or of change of location shall be given, presentations and demands may
be made and notices may be served at the Corporate Trust Office of the Trustee.
(b) There shall at all times be a Registrar and a Paying Agent
hereunder with respect to the Certificates of each series. Each such Authorized
Agent shall be a bank or trust company, shall be a corporation organized and
doing business under the laws of the United States or any state, with a combined
capital and surplus of at least $75,000,000, or a corporation the obligations of
which are guaranteed by a corporation organized and doing business under the
laws of the United States or any state, with a combined capital and surplus of
at least $75,000,000, and shall be authorized under such laws to exercise
corporate trust powers, subject to supervision by Federal or state authorities.
The Trustee shall initially be the Paying Agent and, as provided in Section 3.4,
Registrar hereunder with respect to the Certificates of each series. Each
Registrar shall furnish to the Trustee and the Company, at stated intervals of
not more than six months, and at such other times as the Trustee or the Company
may request in writing, a copy of the Register maintained by such Registrar.
(c) Any corporation into which any Authorized Agent may be merged
or converted or with which it may be consolidated or any corporation resulting
from any merger, consolidation or conversion to which any Authorized Agent shall
be a party, or any corporation succeeding to the
39
<PAGE>
corporate trust business of any Authorized Agent, shall be the successor of such
Authorized Agent hereunder, if such successor corporation is otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the parties hereto or such Authorized Agent or such successor
corporation.
(d) Any Authorized Agent may at any time resign by giving written
notice of resignation to the Trustee, the Guarantor, the Company, any related
Owner Trustees and the related Loan Trustees. The Company may, and at the
request of the Trustee shall, at any time terminate the agency of any Authorized
Agent by giving written notice of termination to such Authorized Agent and to
the Trustee. Upon the resignation or termination of an Authorized Agent or in
case at any time any such Authorized Agent shall cease to be eligible under this
Section (when, in either case, no other Authorized Agent performing the
functions of such Authorized Agent shall have been appointed), the Company shall
promptly appoint one or more qualified successor Authorized Agents, reasonably
satisfactory to the Trustee, to perform the functions of the Authorized Agent
that has resigned or whose agency has been terminated or who shall have ceased
to be eligible under this Section. The Company shall give written notice of any
such appointment made by it to the Trustee, any related Owner Trustees and the
related Loan Trustees; and in each case the Trustee shall mail notice of such
appointment to all Certificateholders of the related series as their names and
addresses appear on the Register for such series.
(e) The Guarantor and the Company agrees to pay, or cause to be
paid, from time to time to each Authorized Agent reasonable compensation for its
services and to reimburse it for its reasonable expenses.
Section 7.12. Money for Certificate Payments to Be Held in Trust.
All moneys deposited with any Paying Agent for the purpose of any payment on
Certificates shall be deposited and held in trust for the benefit of the
Certificateholders entitled to such payment, subject to the provisions of this
Section. Moneys so deposited and held in trust shall constitute a separate trust
fund for the benefit of the Certificateholders with respect to which such money
was deposited.
The Trustee may at any time, for the purpose of obtaining the
satisfaction and discharge of this Agreement or for any other purpose, direct
any Paying Agent to pay to the Trustee all sums held in trust by such Paying
Agent, such sums to be held by the Trustee upon the same trusts as those upon
which such sums were held by such Paying Agent; and, upon such payment by any
Paying Agent to the Trustee, such Paying Agent shall be released from all
further liability with respect to such money.
Section 7.13. Registration of Secured Notes in Trustee's Name.
The Trustee agrees that all Secured Notes to be held in a Trust and Permitted
Investments, if any, shall be issued in the name of the Trustee as trustee for
the applicable Trust or its nominee and held by the Trustee, or, if not so held,
the Trustee or its nominee shall be reflected as the owner of such Secured Notes
or Permitted Investments, as the case may be, in the register of the issuer of
such Secured Notes or Permitted Investments. In no event shall the Trustee
invest in, or hold, such Secured Notes or Permitted Investments in a manner that
would cause the Trustee not to have the ownership interest in
40
<PAGE>
such Secured Notes or Permitted Investments under the applicable provisions of
the Uniform Commercial Code in effect where the Trustee holds such Secured Notes
or Permitted Investments or other applicable law then in effect.
Section 7.14. Representations and Warranties of Trustee. The
Trustee hereby represents and warrants that:
(i) the Trustee is a state chartered banking corporation duly
organized, validly existing, and in good standing under the laws of
Delaware;
(ii) the Trustee has full power, authority and legal right to
execute, deliver, and perform this Basic Agreement and has taken all
necessary action to authorize the execution, delivery, and performance
by it of this Basic Agreement;
(iii) the execution, delivery and performance by the Trustee of
this Basic Agreement (a) will not violate any provision of any United
States or Delaware law or regulation governing the banking and trust
powers of the Trustee or any order, writ, judgment or decree of any
court, arbitrator or governmental authority applicable to the Trustee or
any of its assets, (b) will not violate any provision of the Charter
Documents or by-laws of the Trustee, and (c) will not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on
any properties included in the Trust Property of any Trust pursuant to
the provisions of any mortgage, indenture, contract, agreement or other
undertaking to which it is a party, which violation, default or lien
could reasonably be expected to have an adverse effect on the Trustee's
performance or ability to perform its duties hereunder or thereunder or
on the transactions contemplated herein or therein;
(iv) the execution, delivery and performance by the Trustee of
this Basic Agreement will not require the authorization, consent or
approval of, the giving of notice to, the filing or registration with,
or the taking of any other action in respect of, any United States or
Massachusetts governmental authority or agency regulating the banking
and corporate trust activities of the Trustee; and
(v) this Basic Agreement has been duly executed and delivered by
the Trustee and constitute the legal, valid, and binding agreements of
the Trustee, enforceable against it in accordance with their terms,
provided that enforceability may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws
affecting the rights of creditors generally and (ii) general principles
of equity.
Section 7.15. Withholding Taxes, Information Reporting. As to the
Certificates of any series, the Trustee, as trustee of the related grantor trust
created by this Agreement, shall exclude and withhold from each distribution of
principal, premium, if any, and interest and other amounts due under this
Agreement or under the Certificates of such series any and all withholding taxes
applicable
41
<PAGE>
thereto as required by law. The Trustee agrees to act as such withholding agent
and, in connection therewith, whenever any present or future taxes or similar
charges are required to be withheld with respect to any amounts payable in
respect of the Certificates of such series, to withhold such amounts and timely
pay the same to the appropriate authority in the name of and on behalf of the
Certificateholders of such series, that it will file any necessary withholding
tax returns or statements when due, and that, as promptly as possible after the
payment thereof, it will deliver to each such Certificateholder appropriate
documentation showing the payment thereof, together with such additional
documentary evidence as such Certificateholders of such series may reasonably
request from time to time. The Trustee agrees to file any other information
reports as it may be required to file under United States law.
Section 7.16. Trustee's Liens. The Trustee in its individual
capacity agrees that it will, in respect of each Trust created by this
Agreement, at its own cost and expense (and without right of indemnity
hereunder, including Section 7.6), promptly take any action as may be necessary
to duly discharge and satisfy in full any mortgage, pledge, lien, charge,
encumbrance, security interest or claim ("Trustee's Liens") on or with respect
to the Trust Property of such Trust that is attributable to the Trustee either
(i) in its individual capacity and that is unrelated to the transactions
contemplated by this Agreement, the related Note Purchase Agreements or the
related Note Documents, or (ii) as Trustee hereunder or in its individual
capacity and that arises out of acts or omissions that are not contemplated by
this Agreement.
ARTICLE VIII
CERTIFICATEHOLDERS' LISTS AND REPORTS BY TRUSTEE
Section 8.1. Names and Addresses of Certificateholders. The
Company will furnish to the Trustee within 15 days after each Record Date with
respect to a Scheduled Payment, and at such other times as the Trustee may
request in writing, within 30 days after receipt by the Company of any such
request, a list, in such form as the Trustee may reasonably require, of all
information in the possession or control of the Company as to the names and
addresses of the Certificateholders of such series, in each case as of a date
not more than 15 days prior to the time such list is furnished; provided,
however, that so long as the Trustee is the sole Registrar for such series, no
such list need be furnished; and provided further, however, that no such list
need be furnished for so long as a copy of the Register is being furnished to
the Trustee pursuant to Section 7.11(b).
Section 8.2. Preservation of Information, Communications to
Certificateholders. The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Certificateholders of each
series contained in the most recent list furnished to the Trustee as provided in
Section 7.11(b) or Section 8.1, as the case may be, and the names and addresses
of Certificateholders of each series received by the Trustee in its capacity as
Registrar, if
42
<PAGE>
so acting. The Trustee may destroy any list furnished to it as provided in
Section 7.11(b) or Section 8.1, as the case may be, upon receipt of a new list
so furnished.
Section 8.3. Reports by Trustee. Within 60 days after May 15 of
each year commencing with the first full year following the issuance of any
series of Certificates, the Trustee shall transmit to the Certificateholders of
each series, in the manner provided pursuant to Section 313(c) of the Trust
Indenture Act, a brief report dated as of such May 15, if required by Section
313(a) of the Trust Indenture Act. The Trustee shall also transmit to
Certificateholders such reports, if any, as may be required pursuant to Section
313(b) of the Trust Indenture Act at the times and in the manner provided
pursuant thereto and to Section 313(c) thereof.
Section 8.4. Reports by the Guarantor and the Company. The
Guarantor and the Company shall:
(a) file with the Trustee, within 30 days after the Guarantor or
the Company is required to file the same with the SEC, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the SEC may from time
to time by rules and regulations prescribe) that the Guarantor or the
Company is required to file with the SEC pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934, as amended; or, if
the Guarantor or the Company is not required to file information,
documents or reports pursuant to either of such sections, then to file
with the Trustee and the SEC, in accordance with rules and regulations
prescribed by the SEC, such of the supplementary and periodic
information, documents and reports that may be required pursuant to
Section 13 of the Securities Exchange Act of 1934, as amended, in
respect of a security listed and registered on a national securities
exchange as may be prescribed in such rules and regulations;
(b) file with the Trustee and the SEC, in accordance with the
rules and regulations prescribed by the SEC, such additional
information, documents and reports with respect to compliance by the
Guarantor or the Company with the conditions and covenants provided for
in this Agreement, as may be required by such rules and regulations,
including, in the case of annual reports, if required by such rules and
regulations, certificates or opinions of independent public accountants,
conforming to the requirements of Section 1.2;
(c) transmit to all Certificateholders of each series, in the
manner and to the extent provided in Section 313(c) of the Trust
Indenture Act, such summaries of any information, documents and reports
required to be filed by the Guarantor and the Company pursuant to
subsections (a) and (b) of this Section 8.4, as may be required by rules
and regulations prescribed by the SEC; and
(d) furnish to the Trustee, not less often than annually, a brief
certificate from the principal executive officer, principal financial
officer or principal accounting officer as
43
<PAGE>
to his or her knowledge of the Guarantor's or the Company's compliance
with all conditions and covenants under this Agreement (it being
understood that for purposes of this paragraph (d), such compliance
shall be determined without regard to any period of grace or requirement
of notice provided under this Agreement).
ARTICLE IX
SUPPLEMENTAL AGREEMENTS
Section 9.1. Supplemental Agreements With Consent of
Certificateholders. Without the consent of the Certificateholders of any series,
the Guarantor and the Company (provided that supplemental agreements that only
affect one or more specific Trusts shall only be entered into by the Company for
such Trust or Trusts) may, and the Trustee (subject to Section 9.3) shall, at
any time and from time to time enter into one or more agreements supplemental
hereto, in form satisfactory to the Trustee, for any of the following purposes:
(1) to provide for the formation of a Trust, the issuance of a
series of Certificates and the other matters contemplated by Section
2.1(b); or
(2) to evidence the succession of another corporation to the
Guarantor or the Company and the assumption by any such successor of the
covenants of the Guarantor or the Company contained in this Agreement;
or
(3) to add to the covenants of the Guarantor or the Company for
the benefit of the Certificateholders of any series, or to surrender any
right or power in this Agreement conferred upon the Guarantor or the
Company; or
(4) to correct or supplement any provision or to cure any
ambiguity in this Agreement that may be defective or inconsistent with
any other provision herein or in any Trust Supplement or to make any
other provisions with respect to matters or questions arising under this
Agreement, provided that any such action shall not adversely affect the
interests of the Certificateholders of any series of Certificates
Outstanding or to correct any mistake; or
(5) to modify, eliminate or add to the provisions of this
Agreement to such extent as shall be necessary to continue the
qualification of this Agreement (including any supplemental agreement)
under the Trust Indenture Act, or under any similar Federal statute
hereafter enacted, or to add to this Agreement such other provisions as
may be expressly permitted by the Trust Indenture Act, excluding,
however, the provisions referred to in Section 316(a)(2) of the Trust
Indenture Act as in effect at the date as of which this instrument was
executed or any corresponding provision in any similar Federal statute
hereafter enacted; or
44
<PAGE>
(6) to evidence and provide for the acceptance of appointment
under this Agreement by a successor Trustee with respect to one or more
Trusts and to add to or change any of the provisions of this Agreement
as shall be necessary to provide for or facilitate the administration of
the Trusts hereunder and thereunder by more than one Trustee, pursuant
to the requirements of Section 7.9;
(7) to correct or supplement the description of any property
constituting property of such Trust; or
(8) to make any other amendments or modifications hereto,
provided such amendments or modifications shall only apply to
Certificates of one or more series to be thereafter issued.
Section 9.2. Supplemental Agreements with Consent of
Certificateholders. With respect to each separate Trust and the series of
Certificates relating thereto, with the consent of the Certificateholders
holding Certificates evidencing Fractional Undivided Interests aggregating not
less than a majority in interest in the Trust, by Act of said Certificateholders
delivered to the Company and the Trustee, the Guarantor and Company may (with
the consent of the Owner Trustee, if any, relating to such Certificates, which
consent shall not be unreasonably withheld), and the Trustee (subject to Section
9.3) shall, enter into an agreement or agreements supplemental hereto for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement to the extent applicable to such
Certificateholders or of modifying in any manner the rights and obligations of
such Certificateholders under this Agreement; provided, however, that no such
supplemental agreement shall, without the consent of the Certificateholder of
each Outstanding Certificate of such series affected thereby;
(1) reduce in any manner the amount of, or delay the timing of,
any receipt by the Trustee of payments on the Secured Notes held in such
Trust or distributions that are required to be made herein on any
Certificate of such series, or change any date of payment on any
Certificate of such series, or change the place of payment where, or the
coin or currency in which, any Certificate of such series is payable, or
impair the right to institute suit for the enforcement of any such
payment or distribution on or after the Regular Distribution Date or
Special Distribution Date applicable thereto; or
(2) permit the disposition of any Secured Note in the Trust
Property of such Trust except as permitted by this Agreement, or
otherwise deprive such Certificateholder of the benefit of the ownership
of the Secured Notes in such Trust; or
(3) reduce the percentage of the aggregate Fractional Undivided
Interests of such Trust that is required for any such supplemental
agreement, or reduce such percentage required for any waiver (of
compliance with certain provisions of this Agreement or certain defaults
hereunder and their consequences) provided for in this Agreement; or
45
<PAGE>
(4) modify any of the provisions of this Section 9.2 or Section
6.5, except to increase any percentage required for such consent or
waiver or to provide that certain other provisions of this Agreement
cannot be modified or waived without the consent of the
Certificateholder of each Certificate of such series affected thereby.
It shall not be necessary for any Act of such Certificateholders
under this Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the substance
thereof.
Section 9.3. Documents Affecting Trustee. If in the opinion of
the Trustee any document required to be executed by it pursuant to the terms of
Section 9.1 or 9.2 affects any interest, right, duty, immunity or indemnity in
favor of the Trustee under this Basic Agreement or any Trust Supplement, the
Trustee may in its discretion decline to execute document.
Section 9.4. Execution of Supplemental Agreements. In executing,
or accepting the additional trusts created by, any supplemental agreement
permitted by this Article or the modifications thereby of the trusts created by
this Agreement, the Trustee shall be entitled to receive, and shall be fully
protected in relying upon, an Opinion of Counsel stating that the execution of
such supplemental agreement is authorized or permitted by this Agreement.
Section 9.5. Effect of Supplemental Agreements. Upon the
execution of any supplemental agreement under this Article, this Basic Agreement
shall be modified in accordance therewith, and such supplemental agreement shall
form a part of this Basic Agreement for all purposes; and every
Certificateholder of each series theretofore or thereafter authenticated and
delivered hereunder shall be bound thereby to the extent applicable to such
series.
Section 9.6. Conformity with Trust Indenture Act. Every
supplemental agreement executed pursuant to this Article shall conform to the
requirements of the Trust Indenture Act as then in effect.
Section 9.7. Reference in Certificates to Supplemental
Agreements. Certificates of each series authenticated and delivered after the
execution of any supplemental agreement applicable to such series pursuant to
this Article may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental agreement; and, in such case, suitable
notation may be made upon Outstanding Certificates of such series after proper
presentation and demand.
46
<PAGE>
ARTICLE X
AMENDMENTS TO INDENTURE AND NOTE DOCUMENTS
Section 10.1. Amendments and Supplements to Indenture and Other
Note Documents. In the event that the Trustee, as holder of any Secured Notes in
trust for the benefit of the Certificateholders of any series, receives a
request for a consent to any amendment, modification, waiver or supplement under
any related Indenture or other related Note Document or any related Note
Purchase Agreement, the Trustee shall forthwith send a notice of such proposed
amendment, modification, waiver or supplement, to each Certificateholder of such
series registered on the Register as of such date. The Trustee shall request
from the Certificateholders of such series Directions as to (i) whether or not
to direct the Trustee to take or refrain from taking any action that a holder of
such Secured Note has the option to direct, (ii) whether or not to give or
execute any waivers, consents, amendments, modifications or supplements as a
holder of such Secured Note and (iii) how to vote the Secured Notes if a vote
has been called for with respect thereto. Provided such a request for
Certificateholder Direction shall have been made, in directing any action or
casting any vote or giving any consent as the holder of any such Secured Notes,
the Trustee shall vote or consent with respect to such Secured Note, subject to
Section 6.5, in the same proportion as the Certificates of such series were
actually voted by Acts of Certificateholders delivered to the Trustee prior to
two Business Days before the Trustee directs such action or casts such vote or
gives such consent. Notwithstanding the foregoing, but subject to Section 6.4,
in the case that an Event of Default hereunder with respect to such series shall
have occurred and be continuing, the Trustee may, in its own discretion and at
its own direction, consent and notify the relevant Loan Trustee of such consent
to any amendment, modification, waiver or supplement under the relevant
Indenture or any other related Note Document.
ARTICLE XI
TERMINATION OF TRUSTS
Section 11.1. Termination of the Trusts. In respect of each Trust
created by this Basic Agreement as supplemented by a related Trust Supplement,
the respective obligations and responsibilities of the Guarantor, the Company
and the Trustee created hereby and thereby and such Trust shall terminate upon
the distribution to all Holders of the Certificates of the series of such Trust
and the Trustee of all amounts required to be distributed to them pursuant to
this Basic Agreement and such Trust Supplement and the disposition of all
property held as part of the Trust Property of the related series of such Trust;
provided, however, that in no event shall such Trust continue beyond the final
expiration date determined as provided in such Trust Supplement.
Notice of any termination of a Trust, specifying the applicable
Regular Distribution Date (or applicable Special Distribution Date, as the case
may be) upon which the Certificateholders of the series issued with respect to
such Trust may surrender their Certificates to
47
<PAGE>
the Trustee for payment of the final distribution and cancellation, shall be
mailed promptly by the Trustee to Certificateholders of such series not earlier
than the minimum number of days and not more than the maximum number of days
specified therefor in the related Trust Supplement preceding such final
distribution. Such notice in addition shall specify (A) the Regular Distribution
Date (or Special Distribution Date, as the case may be) upon which the proposed
final payment of the Certificates of such series will be made upon presentation
and surrender of Certificates of such series at the office or agency of the
Trustee therein specified, (B) the amount of any such proposed final payment,
and (C) that the Record Date otherwise applicable to such Regular Distribution
Date (or Special Distribution Date, as the case may be) is not applicable,
payments being made only upon presentation and surrender of the Certificates of
such series at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Registrar at the time such notice is given
to Certificateholders of such series. Upon presentation and surrender of the
Certificates of such series, the Trustee shall cause to be distributed to
Certificateholders of such series amounts distributable on such Regular
Distribution Date (or Special Distribution Date, as the case may be) pursuant to
Section 4.2.
In the event that all of the Certificateholders of such series
shall not surrender their Certificates for cancellation within six months after
the date specified in the above-mentioned written notice , the Trustee shall
give a second written notice to the remaining Certificateholders of such series
to surrender their Certificates for cancellation and receive the final
distribution with respect thereto. In the event that any money held by the
Trustee for the payment of distributions on the Certificates of such series
shall remain unclaimed for two years (or such lesser time as the Trustee shall
be satisfied, after sixty days' notice from the Company, is one month prior to
the escheat period provided under applicable law) after the final distribution
date with respect thereto, the Trustee shall pay to each Loan Trustee the
appropriate amount of money relating to such Loan Trustee and shall give written
notice thereof to the related Owner Trustees, if any, the Guarantor and the
Company.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.1. Limitation on Rights of Certificateholders. The
default or incapacity of any Certificateholder of any series shall not operate
to terminate this Agreement, or the related Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the related Trust, nor otherwise affect the rights, obligations
and liabilities of the parties hereto or any of them.
Section 12.2. Certificates Nonassessable and Fully Paid.
Certificateholders of each series shall not be personally liable for obligations
of the related Trust, the Fractional Undivided Interests represented by the
Certificates of such series shall be nonassessable for any losses or expenses of
such Trust or for any reason whatsoever, and Certificates of such series upon
48
<PAGE>
authentication thereof by the Trustee pursuant to Section 3.02 are and shall be
deemed fully paid. No Certificateholder of such series shall have any right
(except as expressly provided herein) to vote or in any manner otherwise control
the operation and management of the related Trust Property, the related Trust,
or the obligations of the parties hereto, nor shall anything set forth herein,
or contained in the terms of the Certificates of such series, be construed so as
to constitute the Certificateholders of such series from time to time as
partners or members of an association.
Section 12.3. Notices. (a) Unless otherwise specifically provided
herein or in the applicable Trust Supplement with respect to any Trust, all
notices required under the terms and provisions of this Basic Agreement or such
Trust Supplement with respect to such Trust shall be in English and in writing,
and any such notice may be given by United States mail, courier service,
telegram, telex, telemessage, telecopy, telefax, cable or facsimile (confirmed
by telephone or in writing in the case of notice by telegram, telex,
telemessage, telecopy, telefax, cable or facsimile) or any other customary means
of communication, and any such notice shall be effective when delivered or, if
mailed, three days after deposit in the United States mail with proper postage
for ordinary mail prepaid,
if to the Guarantor or any Company, to the Guarantor or the
Company at:
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
Facsimile: (847) 317-5456
Telephone: (847) 317-5000
if to the Trustee, to: Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19870-0001
Attention: Corporate Trust Department
Mary St Amand
Facsimile: (302) 651-8882
Telephone: (302) 651-1428
(b) The Guarantor, the Company or the Trustee, by notice to the
other, may designate additional or different addresses for subsequent notices or
communications.
(c) Any notice or communication to Certificateholders of any
series shall be mailed by first-class mail to the addresses for
Certificateholders of such series shown on the Register kept by the Registrar
and to addresses filed with the Trustee for Certificate Owners of
49
<PAGE>
such series. Failure so to mail a notice or communication or any defect in such
notice or communication shall not affect its sufficiency with respect to other
Certificateholders of such series.
(d) If a notice or communication is mailed in the manner provided
above within the time prescribed, it is conclusively presumed to have been duly
given, whether or not the addressee receives it.
(e) If the Guarantor or the Company mails a notice or
communication to the Certificateholders of such series, it shall mail a copy to
the Trustee and to each Paying Agent for such series at the same time.
(f) Notwithstanding the foregoing, all communications or notices
to the Trustee shall be deemed to be given only when received by a Responsible
Officer of the Trustee.
(g) The Trustee shall promptly furnish the Guarantor and Company
with a copy of any demand, notice or written communication received by the
Trustee hereunder from any Certificateholder, Owner Trustee or Loan Trustee.
(h) The Trustee shall provide to the Guarantor a copy of any
notice or communication it gives to the Company contemporaneously with giving
such notice or communication to the Company.
Section 12.4. Governing Law. THIS BASIC AGREEMENT HAS BEEN
DELIVERED IN THE STATE OF NEW YORK AND THIS BASIC AGREEMENT AND THE CERTIFICATES
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 12.5. Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of this Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or any Trust, or of
the Certificates of any series or the rights of the Certificateholders thereof.
Section 12.6. Trust Indenture Act Controls. This Agreement is
subject to the provisions of the Trust Indenture Act and shall, to the extent
applicable, be governed by such provisions.
50
<PAGE>
Section 12.7. Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 12.8. Successors and Assigns. All covenants, agreements,
representations and warranties in this Agreement by the Trustee, the Guarantor
and the Company shall bind and, to the extent permitted hereby, shall inure to
the benefit of and be enforceable by their respective successors and assigns,
whether so expressed or not.
Section 12.9. Benefits of Agreement. Nothing in this Agreement or
in the Certificates of any series, express or implied, shall give to any Person,
other than the parties hereto and their successors hereunder, and the
Certificateholders of each series, any benefit or any legal or equitable right,
remedy or claim under this Agreement, except as expressly provided in this
Agreement.
Section 12.10. Legal Holidays. In any case where any Regular
Distribution Date or Special Distribution Date relating to any Certificate of
any series shall not be a Business Day with respect to such series, then
(notwithstanding any other provision of this Agreement) payment need not be made
on such date, but may be made on the next succeeding Business Day with the same
force and effect as if made on such Regular Distribution Date or Special
Distribution Date, and no interest shall accrue during the intervening period.
Section 12.11. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
51
<PAGE>
IN WITNESS WHEREOF, the Guarantor, the Company and the Trustee
have caused this Basic Agreement to be duly executed by their respective
officers or authorized representatives, all as of the day and year first above
written.
FORT JAMES CORPORATION
By
--------------------------------------
Title:
FORT JAMES OPERATING COMPANY
By
--------------------------------------
Title:
WILMINGTON TRUST COMPANY
as Trustee
By
--------------------------------------
Title:
<PAGE>
EXHIBIT A
---------
Unless this certificate is presented by an authorized
representative of The Depository Trust Company, a New York corporation ("DTC"),
to Issuer or its agent for registration of transfer, exchange or payment, and
any certificate issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
FORT JAMES CORPORATION 1998-__ PASS THROUGH TRUST
Pass Through Certificate, Series 1998-__
Final Distribution Date: ____________, 20__
evidencing a fractional undivided interest in a trust, the
property of which includes certain secured notes each issued in
respect of a Leased Property leased to Fort James Operating
Company, all of whose obligations are guaranteed by Fort James
Corporation.
Certificate CUSIP No.
No. __ _______________
$_____________ Fractional Undivided Interest
representing ______% of the Trust per $1,000
Reference Principal Amount
THIS CERTIFIES THAT CEDE & CO., as nominee of the Depository
Trust Company, for value received, is the registered owner of a Fractional
Undivided Interest in the amount of ______________________________________
($__________) (the "Reference Principal Amount") in the Fort James Corporation
1998-_ Pass Through Trust (the "Trust") created by ____________________________,
as trustee (the "Trustee"), pursuant to a Pass Through Trust Agreement, dated as
of ____________, 1998 (the "Basic Agreement"), as supplemented by the Pass
Through Trust Supplement No. 1998-__ thereto dated as of ____________, 1998
(collectively, the "Agreement"), among the Trustee, Fort James Corporation, a
Virginia corporation (the "Guarantor") and Fort James Operating Company, a
Virginia corporation (the "Company"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
the Agreement. This Certificate is one of the duly authorized Certificates
designated as "Pass Through Certificates, Series 1998-__" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions, and conditions of the Agreement, to which Agreement the Holder of
this Certificate by virtue of the
<PAGE>
2
acceptance hereof assents and by which such Certificateholder is bound. The
property of the Trust includes certain Secured Notes (the "Trust Property").
Each issue of the Secured Notes is issued in respect of a [Leased Property]
leased to the Company all of whose obligations are guaranteed by the Guarantor.
The Certificates represent fractional undivided interests in
the Trust and the Trust Property, and have no rights, benefits or interest in
respect of any other separate trust established pursuant to the terms of the
Basic Agreement for any other series of certificates issued pursuant thereto.
Subject to and in accordance with the terms of the Agreement,
from funds then available to the Trustee, there will be distributed on each
__________ __ and __________ __ (a "Regular Distribution Date"), commencing on
___________, 199__, to the Person in whose name this Certificate is registered
at the close of business on the 15th day preceding the applicable Regular
Distribution Date, an amount in respect of the Scheduled Payments on the Secured
Notes due on such Regular Distribution Date, the receipt of which has been
confirmed by the Trustee, equal to the product of the percentage interest in the
Trust evidenced by this Certificate and an amount equal to the sum of such
Scheduled Payments. Subject to and in accordance with the terms of the
Agreement, in the event that Special Payments on the Secured Notes are received
by the Trustee, from funds then available to the Trustee, there shall be
distributed on the applicable Special Distribution Date, to the Person in whose
name this Certificate is registered at the close of business on the 15th day
preceding such Special Distribution Date, an amount in respect of such Special
Payments on the Secured Notes, the receipt of which has been confirmed by the
Trustee, equal to the product of the percentage interest in the Trust evidenced
by this Certificate and an amount equal to the sum of such Special Payments so
received. If a Regular Distribution Date or Special Distribution Date is not a
Business Day, distribution shall be made on the immediately following Business
Day with the same force and effect as if made on such Regular Distribution Date
or Special Distribution Date and no interest shall accrue during the intervening
period. The Trustee shall mail notice of each Special Payment and the Special
Distribution Date therefor to the Certificateholder of this Certificate.
Distributions on this Certificate will be made by the Trustee
by check mailed to the Person entitled thereto, without the presentation or
surrender of this Certificate or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Certificate will be made after notice mailed by the Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Certificate at the office or agency of the Trustee specified in such
notice.
The Certificates do not represent an obligation of, or an
obligation guaranteed by, or an interest in, the Guarantor, the Company or the
Trustee or any affiliate thereof. The Certificates are limited in right of
payment, all as more specifically set forth herein on the face
<PAGE>
3
hereof and in the Agreement. All payments or distributions made to
Certificateholders under the Agreement shall be made only from the Trust
Property and only to the extent that the Trustee shall have sufficient income or
proceeds from the Trust Property to make such payments in accordance with the
terms of the Agreement. Each Holder of this Certificate, by its acceptance
hereof, agrees that it will look solely to the income and proceeds from the
Trust Property to the extent available for distribution to such
Certificateholder as provided in the Agreement. This Certificate does not
purport to summarize the Agreement and reference is made to the Agreement for
information with respect to the interests, rights, benefits, obligations,
proceeds and duties evidenced hereby. A copy of the Agreement may be examined
during normal business hours at the principal office of the Trustee, and at such
other places, if any, designated by the Trustee, by any Certificateholder upon
request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Guarantor, the Company and the rights of the
Certificateholders under the Agreement at any time with the consent of the
Holders holding-Certificates evidencing Fractional Undivided Interests
aggregating not less than a majority in interest in the Trust. Any such consent
by the Holder of this Certificate shall be conclusive and binding on such
Certificateholder and upon all future Holders of this Certificate and of any
Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Certificate.
The Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Certificateholders of any of the
Certificates.
As provided in the Agreement and subject to certain
limitations therein set forth, the transfer of this Certificate is registrable
in the Register upon surrender of this Certificate for registration of transfer
at the offices or agencies maintained by the Trustee in its capacity as
Registrar, or by any successor Registrar, duly endorsed or accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Registrar duly executed by the Holder hereof or such Certificateholder's
attorney duly authorized in writing, and thereupon one or more new Certificates
of authorized denominations evidencing the same aggregate Fractional Undivided
Interest in the Trust will be issued to the designated transferee or
transferees.
The Certificates are issuable only as registered Certificates
without coupons in minimum denominations of $1,000 Fractional Undivided Interest
and integral multiples thereof except that one Certificate may be in a
denomination of less than $1,000. As provided in the Agreement and subject to
certain limitations therein set forth, the Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
Fractional Undivided Interest in the Trust, as requested by the
Certificateholder surrendering the same.
No service charge will be made for any such registration of
transfer or exchange, but the Trustee shall require payment of a sum sufficient
to cover any tax or governmental charge payable in connection therewith.
<PAGE>
4
The Guarantor, the Company, the Trustee, the Registrar and any
agent of the Trustee or the Registrar may treat the person in whose name this
Certificate is registered on the Register as the owner hereof for all purposes,
and neither the Guarantor, the Company, the Trustee, the Registrar nor any such
agent shall be affected by any notice to the contrary.
The obligations and responsibilities created by the Agreement
and the Trust created thereby shall terminate upon the distribution to
Certificateholders of all amounts required to be distributed to them pursuant to
the Agreement and the disposition of all property held as part of the Trust
Property.
THE AGREEMENT AND THIS CERTIFICATE SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
Reference is hereby made to the further provisions of this
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Certificate shall not be
entitled to any benefit under the Agreement or be valid for any purpose.
<PAGE>
5
IN WITNESS WHEREOF, the Trustee has caused this Certificate to
be duly executed.
FORT JAMES CORPORATION 1998-__
PASS THROUGH TRUST
By:
------------------------------,
as Trustee
By:
------------------------------
Title:
Dated: ___________, 1998
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to
in the within-mentioned Agreement.
-----------------------------------,
as Trustee
By:
---------------------------------
Authorized Officer
________________________________________________________________________________
FORT JAMES GUARANTY
among
FORT JAMES CORPORATION
and
-----------------------------
Owner Trustee
and
-----------------------------
Indenture Trustee
and
-----------------------------
Pass Through Trustee
and Loan Participant
and
-----------------------------
Owner Participant
-----------------------------
Dated as of _________, 1998
-----------------------------
________________________________________________________________________________
[Leased Property]
________________________________________________________________________________
<PAGE>
FORT JAMES GUARANTY
THIS Guaranty, dated as of ____________, 1998 (together with
any amendments or supplements hereto, this "Guaranty"), by and among FORT JAMES
CORPORATION, a Virginia corporation (together with any successor permitted by
Section 4.1 hereof, the "Guarantor"), and the Owner Trustee, in both its
individual capacity and as Owner Trustee, the Indenture Trustee, in both its
individual capacity and as Indenture Trustee, the Pass Through Trustee, in both
its individual capacity and as Pass Through Trustee and as Loan Participant, and
the Owner Participant (defined below) referred to in the Participation Agreement
described below (collectively, together with each other Indemnitee and their
successors and permitted assigns, the "Beneficiaries" and, individually, a
"Beneficiary").
WITNESSETH:
WHEREAS, Fort James Operating Company, a Virginia corporation
and wholly-owned subsidiary of the Guarantor (together with its successors and
permitted assigns, the "Lessee"), is entering into that certain Participation
Agreement dated as of ____________, 1998 (the "Participation Agreement"), among
the Lessee, the Owner Participant, _____________________, acting not in its
individual capacity except as expressly set forth therein, but solely as Owner
Trustee, ____________________, acting not in its individual capacity except as
expressly provided therein, but solely as Indenture Trustee, and
________________________, acting not in its individual capacity except as
expressly provided therein, but solely as Pass Through Trustee and Loan
Participant; and
WHEREAS, it is a condition precedent to the obligations of
the Beneficiaries to consummate the transactions contemplated by the
Participation Agreement that the Guarantor execute and deliver this Guaranty,
NOW, THEREFORE, in consideration of the premises and of other
good and valuable consideration, the Guarantor does hereby covenant and agree
with the Beneficiaries as follows (capitalized terms used herein (including
those used in the foregoing preamble and recitals) and not otherwise defined
herein having the meanings ascribed to them in Appendix A to the Participation
Agreement):
ARTICLE I
REPRESENTATIONS AND WARRANTIES OF GUARANTOR
Section 1.1. Representations and Warranties of Guarantor.
The Guarantor hereby represents and warrants that:
(a) The Guarantor is a corporation duly organized, validly
existing and in good standing under the laws of the Commonwealth of
Virginia, has the corporate power
<PAGE>
2
and authority to carry on its business as presently conducted, to own
or hold under lease its properties, and to enter into and perform its
obligations under this Guaranty, and is duly qualified to do business
in each jurisdiction in which it has operations or a principal office
and where failure so to qualify could reasonably be expected to
materially adversely affect the financial condition of the Guarantor
and its subsidiaries on a consolidated basis or their business or
operations, or the Guarantor's ability to perform any of its
obligations under this Guaranty.
(b) This Guaranty has been duly authorized, executed and
delivered by the Guarantor and constitutes a valid and binding
obligation of the Guarantor, enforceable against the Guarantor in
accordance with the terms hereof, subject to bankruptcy, insolvency
(including without limitations all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' or lessors' rights generally and is subject
to general principals of equity (whether considered in a proceeding in
equity or at law).
(c) The execution and delivery by the Guarantor of this
Guaranty do not and will not, and the performance by the Guarantor of
its obligations hereunder does not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Guarantor
pursuant to, any obligation, agreement, covenant or condition
contained in any contract, indenture, mortgage, deed of trust, loan or
credit agreement, note, lease or other agreement or instrument to
which the Guarantor is party or by which it may be bound, or to which
any of the property or assets of the Guarantor is subject (except for
such conflicts, breaches or defaults or liens, charges or encumbrances
that would not result in a material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of the
Guarantor and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business (a "Material Adverse
Effect")), nor will such action result in any violation of the
provisions of the charter or by-laws of the Guarantor, or any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court,
domestic or foreign, known to the Guarantor having jurisdiction over
the Guarantor or any of its assets, properties or operations which
would result in a Material Adverse Effect. As used herein, a
"Repayment Event" means any event or condition which gives the holder
of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase redemption or repayment of all or a portion of such
indebtedness by the Guarantor.
(d) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency and no consent of any other Person
(including, without limitation, any stockholder or creditor
<PAGE>
3
of the Guarantor) is necessary or required in connection with the
execution, delivery or performance of this Guaranty, except such as
have been already obtained, and except for such that would not
reasonably be expected to have a Material Adverse Effect or as may be
required under the Securities Act, the Trust Indenture Act or state
securities laws.
(e) Each of the consolidated financial statements of the
Guarantor set forth in its Annual Report on Form 10-K for the year
ended December 28, 1997 and the consolidated financial statements of
the Guarantor set forth in its Quarterly Report on Form 10-Q for each
of the three month periods ended March 29, 1998 and June 28, 1998
fairly presents the consolidated financial position of the Guarantor
and its Subsidiaries as at the respective dates thereof and the
consolidated results of operations and changes in financial position
of the Guarantor and its Subsidiaries for each of the periods covered
thereby (subject, in the case of any unaudited interim financial
statements to changes resulting from normal year-end adjustments) in
conformity with GAAP applied on a consistent basis (except as
disclosed in the notes thereto). Since June 28, 1998, (i) there has
been no Material Adverse Effect, and (ii) there have been no
transactions entered into by the Guarantor or any of its subsidiaries,
other than those in the ordinary course of business, which are
material with respect to the Guarantor and its subsidiaries considered
as one enterprise.
(f) Except as disclosed in the Guarantor's Annual Report on
Form 10-K for the year ended December 28, 1997 or the Guarantor's
Quarterly Report on Form 10-Q for the three month periods ended March
29, 1998 and June 28, 1998, there is no action, suit, investigation or
proceeding pending or, to the Actual Knowledge of the Guarantor,
threatened in writing against the Guarantor or affecting it or its
properties before any Governmental Authority which, individually or in
the aggregate (so far as the Guarantor now can reasonably foresee), is
reasonably likely materially and adversely to affect the consummation
of the transactions under this Guaranty or the ability of the
Guarantor to perform its obligations hereunder or its business or
financial condition.
(g) The Guarantor owns, directly or indirectly, 100% of the
equity interest in the Lessee.
ARTICLE II
GUARANTY OF OBLIGATIONS
Section 2.1. Guaranty of Obligations. (a) The Guarantor
hereby guarantees to each of the Beneficiaries, as primary obligor and not as
surety, the full and prompt payment by the Lessee, when due, whether at the
stated payment date thereof, by acceleration or otherwise, of, and the faithful
performance of and compliance with, all payment obligations of the Lessee under
the Participation Agreement, the Lease and the other Operative Documents owed to
the
<PAGE>
4
Beneficiaries strictly in accordance with the terms thereof, however created,
arising or evidenced, whether direct or indirect, primary or secondary, absolute
or contingent, joint or several, and whether now or hereafter existing or due or
to become due and the full, faithful and timely performance of, and compliance
with, all other obligations of the Lessee owed to the Beneficiaries thereunder
strictly in accordance with the terms thereof, however created, arising or
evidenced, whether direct or indirect, primary or secondary, absolute or
contingent, joint or several, and whether now or hereafter existing or due or to
become due (such payment and other obligations, the "Obligations"). Such
guarantee is an absolute, unconditional, irrevocable, present and continuing
guarantee of payment and performance and not of collectability.
(b) If for any reason any Obligation to be performed or
observed by the Lessee (whether affirmative or negative in character) shall not
be observed or performed strictly in accordance with the terms thereof, the
Guarantor shall perform or observe or cause to be performed or observed each
such Obligation and shall pay the amount of each unpaid Obligation at the place
and to the Person or entity entitled thereto pursuant to the relevant Operative
Documents, as the case may be, regardless of whether or not any Beneficiary or
anyone on behalf of any of them shall have instituted any suit, action or
proceeding or exhausted its remedies or taken any steps to enforce any rights
against the Lessee or any other Person or entity to compel any such performance
or to collect all or any part of such amount pursuant to the provisions of the
relevant Operative Document or at law or in equity, or otherwise, and regardless
of any other condition or contingency. Nothing in this Guaranty shall be
construed to be a guaranty of payment of the Secured Note.
Section 2.2. Nature of Guaranty. The obligations, covenants,
agreements and duties of the Guarantor hereunder shall remain in full force and
effect until the Obligations are finally, indefeasibly and unconditionally paid
and performed in full in accordance with the terms of the Operative Documents
and, to the maximum extent permitted by law, shall in no way be affected or
impaired by reason of the happening from time to time of any other event,
including, without limitation, the following, whether or not any such event
shall have occurred without notice to or the consent of the Guarantor:
(a) the waiver, compromise, settlement, termination or other
release of the performance or observance by the Guarantor or the
Lessee of any or all of their respective agreements, covenants, terms
or conditions contained in this Guaranty, the Participation Agreement,
the Lease and the other Operative Documents;
(b) any failure, omission, delay or lack on the part of the
Beneficiaries to enforce, assert or exercise any right, power or
remedy conferred on the Beneficiaries in the Participation Agreement,
the Lease, the other Operative Documents or this Guaranty, or the
inability of the Beneficiaries to enforce any provision of the
Participation Agreement, the Lease, the other Operative Documents or
this Guaranty for any reason, or any other act or omission on the part
of the Beneficiaries;
<PAGE>
5
(c) the transfer, assignment or mortgaging, or the purported
transfer, assignment or mortgaging, of all or any part of the interest
of the Lessee in the [Leased Property] or the invalidity,
unenforceability or termination of the Participation Agreement, the
Lease or any other Operative Document or any defect in the title of
the [Leased Property] or any part thereof or any loss of possession,
use or operational control of the [Leased Property] or any part
thereof by the Lessee or any Sublessee;
(d) the modification or amendment (whether material or
otherwise) of any obligation, covenant or agreement set forth in the
Participation Agreement, the Lease, or any other Operative Document;
(e) the voluntary or involuntary liquidation, dissolution,
sale of all or substantially all of the assets, marshaling of assets
and liabilities, receivership, conservatorship, insolvency,
bankruptcy, assignment for the benefit of creditors, reorganization,
arrangement, composition or readjustment of, or other similar
proceedings affecting the Lessee or any of its assets or any
allegation or contest of the validity of this Guaranty, the
Participation Agreement, the Lease or any other Operative Document in
any such proceeding;
(f) the surrender or impairment of any security for the
performance or observance of any of the Obligations;
(g) any failure of the Guarantor or the Lessee to perform and
observe any agreement or covenant, or to discharge any duty or
obligation, arising out of or connected with this Guaranty, the
Participation Agreement, the Lease or any other Operative Document or
the occurrence or pendency of any Lease Default or Lease Event of
Default or any proceedings or actions as a result of, or attendant
upon, such Lease Default or Lease Event of Default;
(h) the failure to give notice to the Guarantor or the Lessee
of the occurrence of an event of default under the terms and
provisions of the Participation Agreement, the Lease or the other
Operative Documents;
(i) the disposition by the Guarantor of any or all of its
interest in any capital stock of the Lessee or any change,
restructuring or termination of the corporate structure, ownership or
existence of the Lessee; or
(j) any set-off, counterclaim, reduction, or diminution of
any Obligation, or any defense of any kind or nature whatsoever (other
than performance) which the Guarantor or the Lessee may have or assert
against the Beneficiaries.
<PAGE>
6
Section 2.3. Waivers by Guarantor. The Guarantor waives
notice of the acceptance of and reliance on this Guaranty by the Beneficiaries,
and the Guarantor also waives presentment, demand for payment, protest and
notice of nonpayment or dishonor and all other notices and demands whatsoever.
The Guarantor further waives any right it may have to (a) require the
Beneficiaries to proceed against the Lessee, (b) require the Beneficiaries to
proceed against or exhaust any security granted by the Lessee or the Owner
Trustee or (c) require the Beneficiaries to pursue any other remedy within the
power of the Beneficiaries, and the Guarantor agrees that all of its obligations
under this Guaranty are independent of the Obligations and that a separate
action may be brought against the Guarantor whether or not an action is
commenced against the Lessee under the Operative Documents.
Section 2.4. Subrogation of Guarantor; Subordination.
Notwithstanding any payment or payments made by the Guarantor, the Guarantor
shall not be subrogated to any rights of the Beneficiaries against the Lessee
until all of the Obligations then due shall have been finally, indefeasibly and
unconditionally paid and performed in full. Any claim of the Guarantor against
the Lessee arising from payments made by the Guarantor by reason of this
Guaranty shall be in all respects subordinated to the final, indefeasible,
unconditional, full and complete payment or discharge of all of the Obligations
guaranteed hereby, and no payment by the Guarantor shall give rise to any claim
of the Guarantor against the Beneficiaries.
Section 2.5. Reinstatement. This Guaranty shall continue to
be effective, or be automatically reinstated, as the case may be, if at any time
payment, or any part thereof, made by or on behalf of the Lessee of any of the
Obligations is rescinded or must otherwise be restored or returned by any
Beneficiary for any reason whatsoever, whether upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Lessee, or upon or as a result
of the appointment of a receiver, intervener or conservator of, or trustee or
similar officer for, either of the Lessee or any substantial part of its
property, or otherwise, all as though such payments had not been made.
Section 2.6. Place and Manner of Payments. All payments to be
made by the Guarantor under this Guaranty to a Beneficiary shall be paid to such
Beneficiary at the address provided for in Schedule 2 of the Participation
Agreement or, if no address, at the address and to the account specified in the
notice demanding payment by the Guarantor; provided, however, that the Guarantor
consents to the assignment by the Owner Trust to the Indenture Trustee of the
Owner Trust's right, title and interest in, to and under this Guaranty to the
extent set forth in the Indenture, and agrees to make all payments (other than
Excepted Payments) hereunder directly to the Indenture Trustee until such time
as the Indenture Trustee shall give notice to the Guarantor that the Lien of the
Indenture has been fully discharged, and thereafter to the Owner Trust. The
Guarantor agrees that it will make all payments due hereunder by wire transfer
at or before 12 Noon, New York time, on the date due in immediately available
funds to the party to which such payment is to be made.
<PAGE>
7
ARTICLE III
DEFAULT AND REMEDIES
Section 3.1. Enforcement Provisions. The Beneficiaries shall
have the right, power and authority to do all things, including instituting or
appearing in any suit or proceeding, not inconsistent with the express
provisions of the Operative Documents or this Guaranty, which they may deem
necessary or advisable to enforce the provisions of this Guaranty and protect
the interests of the Beneficiaries. Each and every default in the payment or
performance of the Obligations shall give rise to a separate cause of action
hereunder, and separate suits may be brought hereunder as each cause of action
arises.
Section 3.2. No Remedy Exclusive. No remedy conferred upon or
reserved to the Beneficiaries herein or in the Operative Documents is intended
to be exclusive of any other available remedy or remedies, but each and every
such remedy shall be cumulative and shall be in addition to every other remedy
given under this Guaranty or now or hereafter existing at law or in equity.
Section 3.3. Right to Proceed Against Guarantor. In the event
of a default in any payment or performance of any Obligation owed to a
Beneficiary when and as the same shall become due, whether at the stated
maturity thereof, by acceleration or otherwise, such Beneficiary may proceed to
enforce its rights hereunder and such Beneficiary shall have the right to
proceed first and directly against the Guarantor under this Guaranty without
proceeding against any other Person or exhausting any other remedies which they
may have and without resorting to any collateral security relating thereto. The
provisions of Section 6.7 of the Pass Through Trust Agreement and Section 6.07
of the Indenture shall apply to actions proposed to be commenced hereunder
against the Guarantor by the Certificateholders or by the Pass Through Trustee
in its capacity as Loan Participant.
Section 3.4. Guarantor to Pay Costs of Enforcement. The
Guarantor agrees to pay all costs, expenses and fees properly incurred,
including, without limitation, all reasonable attorneys' fees, which may be
incurred by the Beneficiaries in enforcing or attempting to enforce this
Guaranty or protecting the rights of the Beneficiaries hereunder following any
default on the part of the Guarantor hereunder, whether the same shall be
enforced by suit or otherwise.
Section 3.5. No Waiver of Rights. No delay in exercising or
omission to exercise any right or power accruing upon any default, omission or
failure of performance hereunder shall impair any such right or power or shall
be construed to be a waiver thereof, but any such right and power may be
exercised from time to time and as often as may be deemed expedient.
<PAGE>
8
ARTICLE IV
COVENANTS OF GUARANTOR
Section 4.1. Maintenance of Corporate Existence. So long as
any of the Obligations remain outstanding or any amounts due and owing by the
Lessee with respect thereto remain unpaid, the Guarantor will maintain its
corporate existence and will not merge or consolidate with any other corporation
nor dissolve or otherwise sell or dispose of all or substantially all of its
assets as an entirety, unless the successor or transferee corporation (if other
than the Guarantor) shall expressly assume, in a written instrument delivered to
the Owner Participant, the Owner Trustee, the Indenture Trustee and the Pass
Through Trustee, the punctual performance and observance of all covenants,
conditions and obligations of this Guaranty to be performed by the Guarantor.
Section 4.2. Financial Statements. The Guarantor shall
provide to the Owner Participant and the Indenture Trustee, within 30 days after
the Guarantor is required to file the same with the Securities and Exchange
Commission (the "SEC") or any successor agency, a copy of each annual report and
any amendment to an annual report, filed by the Guarantor with the SEC pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934 (currently Form
10-K), as the same may be amended from time to time, and all financial statement
reports, notices, proxy statements or other documents that are sent or made
generally available by the Guarantor to holders of its registered equity
securities and all regular and periodic reports filed by the Guarantor with the
SEC except for reports on SEC Forms 3, 4 or 5 or any comparable reports and
provided that the Guarantor shall not be required to provide any report or other
document provided for by this Section 4.2 if such document is available through
the SEC's Electronic Data Gathering, Analysis and Retrieval System ("EDGAR").
ARTICLE V
GENERAL
Section 5.1. Benefitted Parties. This Guaranty is entered
into by the Guarantor for the benefit of the Beneficiaries in accordance with
the provisions of this Guaranty and the Operative Documents. This Guaranty shall
not be deemed to create any right in, or to be in whole or in part for the
benefit of, any person other than the Beneficiaries and the Guarantor and their
respective permitted successors and assigns. The Guarantor may not assign any of
its rights or obligations hereunder except in accordance with Section 4.1
hereof.
Section 5.2. Interpretations. The article and section
headings of this Guaranty are for reference purposes only and shall not affect
its interpretation in any respect.
<PAGE>
9
Section 5.3. Entire Agreement; Counterparts; Amendments;
Governing Law; Etc. This Guaranty (a) constitutes the entire agreement, and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof; (b) may be
executed in several counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same instrument; (c) may be
modified only by an instrument in writing signed by the duly authorized
representatives of the parties hereto; and (d) shall be governed in all
respects, including validity, interpretation and effect by, and shall be
enforceable in accordance with, the laws of the State of New York. This Guaranty
shall terminate when the Obligations have been fully, indefeasibly and
unconditionally paid and performed in full.
If any provision of this Guaranty shall be held to be invalid
by any court of competent jurisdiction, the invalidity of such provisions shall
not affect any of the remaining provisions, and any such invalidity in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction. To the extent permitted by applicable law, the parties
hereto hereby waive any provision thereof that renders any term or provision
hereof invalid or unenforceable in any respect.
Section 5.4. Further Assurances. The Guarantor will execute
and deliver all such instruments and take all such actions as the Beneficiaries
may from time to time reasonably request in order fully to effectuate the
purposes of this Guaranty.
Section 5.5. Notices. All notices and other communications in
respect of this Guaranty to the Guarantor or the Beneficiaries shall be given as
provided in the applicable provisions of the Participation Agreement.
Section 5.6. Consent to Jurisdiction. Any legal suit, action
or proceeding arising out of or relating to this Guaranty or any transaction
contemplated hereby may be instituted in any state or Federal court in the
County of New York and State of New York, and the Guarantor to the extent
permitted by applicable law waives any objection which it may now or hereafter
have to the laying of the venue of any such suit, action or proceeding, and
irrevocably submits to the jurisdiction of any such court in any such suit,
action or proceeding.
<PAGE>
10
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to
be executed in its name and behalf and its corporate seal to be affixed hereto
and attested by its duly authorized officers, and the Beneficiaries have
accepted the same, as of the date first above written.
FORT JAMES CORPORATION
By:____________________________________________
Name:
Title:
ACCEPTED:
______________________________________________,
in its individual capacity and as Owner Trustee
By:____________________________________________
Name:
Title:
______________________________________________,
in its individual capacity and as Indenture Trustee
By:____________________________________________
Name:
Title:
______________________________________________,
in its individual capacity and as Pass Through
Trustee under the Pass Through Trust Agreement
and as the Loan Participant
By:____________________________________________
Name:
Title:
<PAGE>
11
________________________________________________,
as Owner Participant
By:______________________________________________
Name:
Title:
[Fort James Corporation Letterhead]
September 18, 1998
Fort James Corporation
Fort James Operating Company
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
Re: Fort James Operating Company
Registration Statement on Form S-3
Ladies and Gentlemen:
I am Senior Vice President, General Counsel and Corporate
Secretary of Fort James Corporation, a corporation organized under the laws of
the Commonwealth of Virginia (the "Company"), and Senior Vice President and
Secretary of Fort James Operating Company, a corporation organized under the
laws of the Commonwealth of Virginia and a wholly-owned subsidiary of the
Company ("FJOC"), and I or attorneys under my supervision have acted as counsel
in connection with the preparation and filing by the Company and FJOC, with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Securities Act"), of a Registration Statement on Form
S-3, as it may be amended (the "Registration Statement"), relating to the
registration under the Securities Act of pass through trust certificates of FJOC
(the "Pass Through Certificates"). The Pass Through Certificates are being
registered for offering and sale from time to time by FJOC in the manner
described in the prospectus contained in the Registration Statement (the
"Prospectus") pursuant to Rule 415 under the Securities Act. Capitalized terms
not otherwise defined herein shall have the meanings ascribed to them in the
Registration Statement.
Each series of Pass Through Certificates will be issued under
a separate Fort James Pass Through Trust (each, a "Pass Through Trust") to be
formed pursuant to the Pass Through Trust Agreement (the "Basic Agreement"), and
a supplement thereto (each, a "Trust Supplement") relating to such Pass Through
Trust, between FJOC, as issuer, the Company as
<PAGE>
Guarantor and Wilmington Trust Company as trustee (the "Trustee"). The property
of the Pass Through Trusts will consist of notes (the "Secured Notes"). With
respect to each series of Pass Through Certificates, the Basic Agreement, the
related Trust Supplement and the related Pass Through Trusts are referred to
herein collectively as the "Pass Through Agreements."
In this capacity, I or attorneys under my supervision have
examined the Registration Statement, the form of Basic Agreement relating to the
Pass Through Certificates, the Form of Pass Through Trust Certificate, the Form
of Guaranty of Fort James Corporation and the originals, or copies, identified
to my satisfaction, of such corporate records of the Company and its
subsidiaries, including FJOC, and other persons, and such other documents,
agreements and instruments, as I have deemed necessary as a basis for the
opinions hereinafter expressed. In my examinations, I have assumed the
genuineness of all signatures, the authenticity of all documents submitted to me
or attorneys under my supervision as originals and the conformity to originals
of all documents submitted to me or attorneys under my supervision as copies
thereof. As to any facts material to the opinions expressed herein which I did
not independently establish or verify, I have relied, without investigation, and
believe that I am justified in relying, upon such statements or representations
of officers and other representatives of the Company, FJOC and others.
For purposes of this opinion, I have assumed that the Pass
Through Agreements will be valid and binding on the Trustee and enforceable
against the Trustee in accordance with its terms.
I am a member of the Bar of the Commonwealth of Virginia. My
opinions set forth below are limited to the laws of the Commonwealth of Virginia
and the federal laws of the United States of America, and I do not express any
opinions herein concerning any other laws.
Based upon and subject to the foregoing, I am of the opinion
that:
With respect to the Pass Through Certificates of each series,
when (i) the Registration Statement and all necessary
post-effective amendments thereto have become effective; (ii)
an appropriate Prospectus Supplement with respect to the Pass
Through Certificates has been prepared, delivered and filed
in compliance with the Securities Act; (iii) any underwriting
agreement with respect to the Pass Through Certificates is
duly executed and delivered by the Company, FJOC and the
other parties thereto, (iv) the directors and appropriate
officers of the Company and FJOC have taken all necessary
corporate action to approve the issuance and terms of the
Pass Through Certificates and related matters; (v) the Pass
Through Agreements are duly authorized, executed and
delivered by each of the parties thereto; and (vi) the
Trustee has duly authorized, executed, issued and
authenticated and delivered the Pass Through Trust
Certificates in accordance with the Pass Through Agreements,
the Pass Through Certificates, when issued and sold in
accordance with the Pass Through Agreements and any related
2
<PAGE>
underwriting agreement, will constitute valid and binding
obligations of the Trustee entitling the holders thereof to
the benefits of the Pass Through Agreements, except as
enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general
principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law).
I hereby consent to the filing of this opinion as an exhibit
to the Registration Statement and to the use of my name therein and in the
related prospectus under the caption "Legal Matters".
Very truly yours,
/s/ Clifford A. Cutchins, IV
Clifford A. Cutchins, IV
3
[PricewaterhouseCoopers LLP Letterhead]
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in this registration statement
on Form S-3 of our report dated February 3, 1998, on our audits of the
consolidated financial statements of Fort James Corporation, which report
is included in the 1997 annual report on Form 10-K. We also consent to the
reference to our firm under the caption "Experts."
PricewaterhouseCoopers LLP
Richmond, Virginia
September 21, 1998
POWER OF ATTORNEY
Know All Men and Women By These Presents that each individual whose
signature appears below constitutes and appoints Clifford A. Cutchins, IV and R.
Michael Lempke, and each of them, such individual's true and lawful
attorneys-in-fact and agents with full power of substitution, for such
individual and in his or her name, place and stead, in any and all capacities,
to sign a Registration Statement on Form S-3 (the "Registration Statement")
relating to Pass Through Trust Certificates of Fort James Corporation (the
"Company") or a subsidiary of the Company and to sign any and all amendments
(including post-effective amendments) to the Registration Statement and any
abbreviated registration statement in connection with the Registration Statement
pursuant to Rule 462(b) under the Securities Act of 1933, as amended, and to
file the same, with all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, as fully to all intents and purposes as he or she might
or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or any of them, or their or his or her substitute
or substitutes, may lawfully do or cause to be done by virtue hereof.
In Witness Whereof, each of the undersigned has executed this Power of
Attorney in the capacities and as of the date indicated.
Signature Title Date
--------- ----- ----
/s/ Miles L. Marsh Chairman and Chief Executive August 20, 1998
- ------------------------ Officer and Director
Miles L. Marsh
/s/ Ernst A. Haberli Executive Vice President and Chief August 20, 1998
- ------------------------ Financial Officer (Principal
Ernst A. Haberli Financial Officer)
/s/ William A. Paterson Senior Vice President and August 20, 1998
- ------------------------ Controller (Principal Accounting
William A. Paterson Officer)
/s/ Barbara L. Bowles Director August 20, 1998
- ------------------------
Barbara L. Bowles
/s/ William T. Burgin Director August 20, 1998
- ------------------------
William T. Burgin
/s/ James L. Burke Director August 20, 1998
- ------------------------
James L. Burke
/s/ Worley H. Clark, Jr. Director August 20, 1998
- ------------------------
Worley H. Clark, Jr.
<PAGE>
Signature Title Date
--------- ----- ----
/s/ Gary P. Coughlan Director August 20, 1998
- ------------------------
Gary P. Coughlan
/s/ William V. Daniel Director August 21, 1998
- ------------------------
William V. Daniel
/s/ Robert M. O'Neil Director August 20, 1998
- ------------------------
Robert M. O'Neil
/s/ Richard L. Sharp Director August 20, 1998
- ------------------------
Richard L. Sharp
/s/ Anne Marie Whittemore Director August 20, 1998
- ------------------------
Anne Marie Whittemore
