As Filed with the Securities and Exchange Commission on November 18, 1998
Registration No. 333-63905
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
Amendment No. 1
to
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
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FORT JAMES CORPORATION
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia
(State or other jurisdiction of
incorporation or organization)
54-0848173
(I.R.S. Employer Identification No.)
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
(847) 317-5000
(Address including zip code, and telephone number,
including area code, of each registrant's principal
executive offices)
FORT JAMES OPERATING COMPANY
(Exact name of registrant as specified in its charter)
Commonwealth of Virginia
(State or other jurisdiction of
incorporation or organization)
54-1237819
(I.R.S. Employer Identification No.)
c/o Fort James Corporation
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
(847) 317-5000
(Address including zip code, and telephone number, including area code, of each
registrant's principal executive offices)
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
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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. |_|
------------------
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>
PROSPECTUS
$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
<PAGE>
prompt payment ofamounts payable by the Lessee under a related Lease when and as
the same shall become due and payable.
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
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<PAGE>
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.
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 NOVEMBER 18, 1998.
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<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."
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<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, June 28, 1998 and September 27, 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).
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<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
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<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."
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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."
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<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 food service 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.
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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.
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<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 NINE MONTHS ENDED
12/26/93 12/25/94 12/31/95 12/29/96 12/28/97 9/28/97 9/27/98
<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 2.82x 3.48x
<FN>
- -----------------
(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.
</FN>
</TABLE>
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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
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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
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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
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York Uniform Commercial Code and a "clearing agency" registered pursuant to
section 17A of theExchange 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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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.
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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.
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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.
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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.
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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.
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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
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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.
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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.
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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
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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. A Certificate
Owner may elect to include market discount in income currently as it accrues (on
either a ratable or constant interest method), in which case the rule described
below regarding deferral of interest deductions will not apply. This election to
include market discount in income currently , once made, applies to all market
discount obligations acquired on or after the first taxable year to which the
election applies and may not be revoked without the consent of the IRS.
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.
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
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<PAGE>
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. Richards, Layton & Finger, 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 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
36
<PAGE>
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
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.
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<PAGE>
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 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
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<PAGE>
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.
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<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................................... 50,000*
Accountants' fees and expenses.................................... 40,000*
Legal fees and expenses........................................... 250,000*
Blue Sky fees and expenses........................................ 15,000*
Trustee's fees and expenses....................................... 5,000*
Rating Agency fees................................................ 200,000*
Miscellaneous..................................................... 14,545*
-----------
Total.......................................................... $ 620,000
===========
* Estimated and subject to future contingencies.
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,
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<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.
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<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.
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<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.
8.1* Tax Opinion of Shearman & Sterling, counsel for the
underwriters.
8.2* Opinion of Richards, Layton & Finger, counsel for the Trustee.
12* Computation of Ratio of Earnings to Fixed Charges-For
Third Quarter
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 Richards, Layton & Finger -- Included in Exhibit 8.2.
23.3* Consent of PricewaterhouseCoopers LLP, Independent Accountants.
23.4* Consent of Shearman & Sterling, counsel for the underwriters --
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.
** Previously filed.
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.
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<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.
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<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.
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<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
Amendment to the Registration Statement to be signed on its behalf by the
undersigned, hereunto duly authorized, in the city of Deerfield, State of
Illinois, as of November 18, 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 Amendment
to the Registration Statement has been signed by the following persons in the
capacities and as of the dated indicated.
FOR FORT JAMES CORPORATION
SIGNATURE TITLE DATE
--------- ----- -----
* Chairman, President and Chief November 18, 1998
- ---------------------- Executive Officer and Director
Miles L. Marsh
*
- ---------------------- Executive Vice President and Chief November 18, 1998
Ernst A. Haberli Financial Officer (Principal
Financial Officer)
* Senior Vice President and November 18, 1998
- ---------------------- Controller(Principal Accounting
William A. Paterson Officer)
*
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Signature Title Date
--------- ----- ----
* Director November 18, 1998
- -------------------------
Barbara L. Bowles
* Director November 18, 1998
- -------------------------
William T. Burgin
* Director November 18, 1998
- -------------------------
Dr. James L. Burke
* Director November 18, 1998
- -------------------------
Worley H. Clark, Jr.
* Director November 18, 1998
- -------------------------
Gary P. Coughlan
* Director November 18, 1998
- -------------------------
William V. Daniel
* Director November 18, 1998
- -------------------------
Ernst A. Haberli
* Director November 18, 1998
- -------------------------
Robert M. O'Neil
* Director November 18, 1998
- -------------------------
Richard L. Sharp
* Director November 18, 1998
- -------------------------
Anne Marie Whittemore
*By /s/ R. MICHAEL LEMPKE November 18, 1998
------------------------------
R. Michael Lempke
Attorney-in-Fact
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<PAGE>
Pursuant to the requirements of the Securities Act of 1933, this Amendment
to the Registration Statement has been signed by the following persons in the
capacities and as of the dates indicated.
FOR FORT JAMES OPERATING COMPANY
Signature Title Date
--------- ----- -----
* President, Chief Executive Officer November 18, 1998
- -------------------------- and Director (Principal Executive
Ernst A. Haberli and Financial Officer)
* Senior Vice President, Secretary November 18, 1998
- -------------------------- and Director
Clifford A. Cutchins, IV
* Senior Vice President and Director November 18, 1998
- --------------------------
Daniel J. Girvan
* Senior Vice President (Principal November 18, 1998
- -------------------------- Accounting Officer)
William A. Paterson
*By /s/ R. MICHAEL LEMPKE November 18, 1998
------------------------------
R. Michael Lempke
Attorney-in-Fact
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<PAGE>
FORM OF UNDERWRITING AGREEMENT
[$150,000,000]
[Interest Rate] PASS THROUGH TRUST CERTIFICATES, SERIES 1998-A
FORT JAMES OPERATING COMPANY, ISSUER
FORT JAMES CORPORATION, GUARANTOR
UNDERWRITING AGREEMENT
Dated: ______________, 1998
<PAGE>
[Date]
To the Underwriters
Named in Schedule I Hereto
Dear Sirs:
Fort James Operating Company (formerly James River Paper
Company), a Virginia corporation (the "Company"), in connection with the sale
and leaseback of the Company's interest in certain [assets] (the "Assets"),
proposes that [Wilmington Trust Company], as trustee (the "Pass Through
Trustee") under the Pass Through Trust Agreement dated as of [
] (the "Pass Through Trust Agreement"), between the Pass Through
Trustee, the Company and Fort James Corporation, a Virginia corporation, as
guarantor ("Fort James"), issue and sell its pass through trust certificates
(the "Certificates") in the aggregate principal amount and with the interest
rate and final distribution date set forth on Schedule I hereto to the
underwriters named in Schedule II hereto (the "Underwriters"), for whom you (the
"Representatives"), are acting as representatives. If the firm or firms listed
in Schedule II hereto include only the firm or firms listed in Schedule I
hereto, then the terms "Underwriters" and "Representatives", as used herein,
shall each be deemed to refer to such firm or firms.
Fort James and the Company have filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-63905), relating to certain pass through trust certificates,
including the Certificates, and the offering thereof from time to time in
accordance with Rule 415 of the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder (collectively the "Securities
Act"). The registration statement as amended at the date hereof, including the
exhibits thereto and the documents incorporated by reference therein, is herein
referred to as the "Registration Statement". The Registration Statement includes
a basic prospectus referred to below which, as supplemented from time to time,
will be used in connection with all offerings of such pass through certificates.
A prospectus supplement or supplements reflecting the terms of the Certificates,
the terms of the offering thereof and other matters relating to the Certificates
has been prepared and has been or will be filed (or mailed for filing) together
with the basic prospectus referred to below pursuant to Rule 424 under the
Securities Act (such prospectus supplement, in the form first filed on or after
the date hereof pursuant to Rule 424, is herein referred to as the "Prospectus
Supplement" and any such prospectus supplement in the form or forms filed prior
to the Prospectus Supplement is herein referred to as a "Preliminary Prospectus
Supplement"). The basic prospectus included in the Registration Statement and
relating to all offerings of pass through certificates under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus", except that, if such basic prospectus is amended on or prior to
the date on which the Prospectus Supplement is first filed (or mailed for
filing) pursuant to Rule 424, the term "Prospectus" shall refer to such basic
prospectus as so amended and as supplemented by the Prospectus Supplement, in
either case including the documents filed by Fort James with the
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Commission pursuant to the Securities Exchange Act of 1934, as amended, and the
rules and regulations of the Commission thereunder (collectively, the "Exchange
Act"), that are incorporated by reference therein. Any reference herein to the
terms "amendment" or "supplement" with respect to the Registration Statement, to
the Prospectus, any Preliminary Prospectus Supplement or to any preliminary
prospectus shall be deemed to refer to and include any documents filed with the
Commission under the Exchange Act after the date hereof, the date the Prospectus
is filed (or mailed for filing) with the Commission, or the date of such
Preliminary Prospectus Supplement or preliminary prospectus, as the case may be,
and incorporated therein by reference pursuant to Item 12 of Form S-3 under the
Securities Act.
1. Definitions. As used in this Agreement, capitalized terms not
otherwise defined shall have the meanings specified in the Pass Through Trust
Agreement. The terms which follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that
Registration Statement No. 333-63905, any post-effective amendment or amendments
thereto and any Rule 462(b) Registration Statement referred to below became or
become effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Basic Prospectus"
shall mean the prospectus referred to in the immediately preceding paragraph
above contained in Registration Statement No. 333-63905 at its Effective Date.
"Preliminary Final Prospectus" shall mean any preliminary prospectus supplement
to the Basic Prospectus which describes the Certificates and the offering
thereof and is used prior to filing of the Final Prospectus. "Final Prospectus"
shall mean the prospectus supplement relating to the Certificates that is first
filed pursuant to Rule 424(b) after the Execution Time, together with the Basic
Prospectus. "Registration Statement" shall mean the registration statement
referred to in paragraph (a) above, including incorporated documents, exhibits
and financial statements, as amended at the Execution Time (or, if not effective
at the Execution Time, in the form in which it shall become effective) and, in
the event any post-effective amendment thereto becomes effective prior to the
Closing Date (as hereinafter defined), shall also mean such registration
statement as so amended. Such term shall include any Rule 430A Information
deemed to be included therein at the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Regulation S-K" refer to such rules or
regulations of the Commission under the Securities Act. "Rule 430A Information"
means information with respect to the Certificates and the offering thereof
permitted to be omitted from the Registration Statement when it becomes
effective pursuant to Rule 430A. Any reference herein to the Registration
Statement, the Basic Prospectus, any Preliminary Final Prospectus or the Final
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Exchange Act on or before any Effective Date of the Registration Statement or
the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be; and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement,
the Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus
shall be deemed to refer to and include the filing of any document under the
Exchange Act on or before any Effective Date of the Registration Statement or
the issue date of the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, as the case may be, deemed to be incorporated therein
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by reference. Any Registration Statement filed pursuant to Rule 462(b) of the
Securities Act is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement" shall
include the Rule 462(b) Registration Statement. For purposes of this Agreement,
all references to the Registration Statement, any Preliminary Final Prospectus,
the Final Prospectus or any amendment or supplement to the foregoing shall be
deemed to include the copy filed with the Commission pursuant to EDGAR. A
"Non-Delayed Offering" shall mean an offering of securities which is intended to
commence promptly after the effective date of a registration statement, with the
result that, pursuant to Rules 415 and 430A, all information (other than Rule
430A Information) with respect to the securities so offered is required under
the Securities Act to be included in such registration statement at the
effective date thereof. A "Delayed Offering" shall mean an offering of
securities pursuant to Rule 415 which does not commence promptly after the
effective date of a registration statement, with the result that only
information required pursuant to Rule 415 need be included in such registration
statement at the effective date thereof with respect to the securities so
offered. Whether the offering of the Certificates is a Non-Delayed Offering or a
Delayed Offering shall be set forth in Schedule I hereto.
2. Representations and Warranties. Fort James and the Company jointly
and severally represent and warrant to, and agree with, each Underwriter as set
forth below in this Section 2.
(a) If the offering of the Certificates is a Delayed Offering
(as specified in Schedule I hereto), paragraph (i) below is applicable
and, if the offering of the Certificates is a Non-Delayed Offering (as
so specified), paragraph (ii) below is applicable.
(i) Fort James and the Company meet the requirements
for the use of Form S-3 under the Securities Act, and have
filed with the Securities and Exchange Commission (the
"Commission") a registration statement (file number 333-63905)
on such Form, including a basic prospectus, for registration
under the Act of the offering and sale of the Certificates.
Fort James and the Company may have filed one or more
amendments thereto, and may have used a Preliminary Final
Prospectus, each of which has previously been furnished to
you. The registration statement, as so amended, and any Rule
462(b) Registration Statement has become effective and no stop
order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement has been
issued under the Securities Act and no proceedings for that
purpose have been instituted or are pending or, to the
knowledge of Fort James or the Company, are contemplated by
the Commission. The offering of the Certificates is a Delayed
Offering and, although the Basic Prospectus may not include
all the information with respect to the Certificates and the
offering thereof required by the Securities Act to be included
in the Final Prospectus, the Basic Prospectus includes all
such material information required by the Securities Act to be
included therein as of the Effective Date; provided, however,
that neither Fort James nor the Company makes any
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representations or warranties as to (i) that part of the
Registration Statement which shall constitute the Statement of
Eligibility and Qualification (Form T-1) under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act")
of the Trustee or (ii) the information contained in or omitted
from the Registration Statement or the Final Prospectus (or
any supplement thereto) in reliance upon and in conformity
with information furnished in writing to Fort James or the
Company by or on behalf of any Underwriter through the
Representatives specifically for use in connection with the
preparation of the Registration Statement or the Final
Prospectus (or any supplement thereto). Fort James and the
Company will next file with the Commission pursuant to Rules
415 and 424(b)(2) or (5) a final supplement to the form of
prospectus included in Registration Statement No. 333-63905
relating to the Certificates and the offering thereof. As
filed, such final prospectus supplement shall include all
required material information with respect to the Certificates
and the offering thereof.
(ii) Fort James and the Company meet the requirements
for the use of Form S-3 under the Securities Act and have
filed with the Commission a registration statement (file
number 333-63905) on such Form, including a basic prospectus,
for registration under the Securities Act of the offering and
sale of the Certificates. Fort James and the Company may have
filed one or more amendments thereto, including a Preliminary
Final Prospectus, each of which has previously been furnished
to you. Fort James and the Company will next file with the
Commission either (x) a final prospectus supplement relating
to the Certificates in accordance with Rules 430A and
424(b)(2) or (5), or (y) prior to the effectiveness of the
registration statement, an amendment to such registration
statement, including the form of final prospectus supplement.
In the case of clause (x), Fort James and the Company have
included in such registration statement, as amended at the
Effective Date, all material information (other than Rule 430A
Information) required by the Securities Act to be included in
the Final Prospectus with respect to the Certificates and the
offering thereof; provided, however, that neither Fort James
nor the Company makes any representations or warranties as to
(i) that part of the Registration Statement which shall
constitute the Statement of Eligibility and Qualification
(Form T-1) under the Trust Indenture Act of the Trustee or
(ii) the information contained in or omitted from the
Registration Statement or the Final Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to Fort James or the Company
by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation of the
Registration Statement or the Final Prospectus (or any
supplement thereto). As filed, such final prospectus
supplement or such amendment and form of final prospectus
supplement shall contain all Rule 430A Information, together
with all other such required material information, with
respect to the Certificates and the offering thereof.
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<PAGE>
(b) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Final
Prospectus (and any supplement thereto) will, comply in all material
respects with the applicable requirements of the Securities Act, the
Exchange Act, and the Trust Indenture Act; on the Effective Date and on
the Closing Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; on the Effective Date and
on the Closing Date the Pass Through Trust Agreement did or will comply
in all material respects with the requirements of the Trust Indenture
Act and the rules of the Commission thereunder; and, on the Effective
Date, the Final Prospectus, if not filed pursuant to Rule 424(b), did
not or will not, and on the date of any filing pursuant to Rule 424(b)
and on the Closing Date, the Final Prospectus (together with any
supplement thereto) will not, include any untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that neither
Fort James nor the Company makes any representations or warranties as
to (i) that part of the Registration Statement which shall constitute
the Statement of Eligibility and Qualification (Form T-1) under the
Trust Indenture Act of the Trustee or (ii) the information contained in
or omitted from the Registration Statement or the Final Prospectus (or
any supplement thereto) in reliance upon and in conformity with
information furnished in writing to Fort James or the Company by or on
behalf of any Underwriter through the Representatives specifically for
use in connection with the preparation of the Registration Statement or
the Final Prospectus (or any supplement thereto). Each Preliminary
Final Prospectus and the Final Prospectus delivered to the Underwriters
for use in connection with the offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to the Commission's Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR") except to the extent permitted by Regulation
S-T.
(c) The Company, Fort James Fiber Company ("FJFC") and Fort
James N.V. (each a "Significant Subsidiary," and collectively the
"Significant Subsidiaries") and Fort James Maine, Inc., are the only
directly-owned "significant subsidiaries" of Fort James (as such term
is defined in Regulation S-X).
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (i) there has been no material adverse change
in the condition, financial or otherwise, or in the earnings or
business affairs of Fort James and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business
(a "Material Adverse Effect"), and (ii) there have been no transactions
entered into by Fort James or any of its subsidiaries, other than those
in the ordinary course of business, which are material with respect to
Fort James and its subsidiaries considered as one enterprise.
5
<PAGE>
(e) This Agreement has been duly authorized, executed and
delivered by Fort James and the Company and constitutes a valid and
binding obligation of Fort James and the Company. The Pass Through
Trust Agreement has been duly qualified under the Trust Indenture Act
and the Pass Through Trust Agreement, the Parent Guaranty (as defined
in the Basic Prospectus) and each other Operative Document to which
Fort James and/or the Company is, or is to be a party, have each been
duly authorized by Fort James and/or the Company, as the case may be,
and, when duly executed and delivered by Fort James and/or the Company,
as the case may be, constitute valid and binding agreements of Fort
James and/or the Company, enforceable against Fort James and/or the
Company in accordance with their terms, subject to (i) bankruptcy,
insolvency (including, without limitation, all laws relating to
fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally, (ii) general
principles of equity (whether considered in a proceeding in equity or
at law), and (iii) public policy considerations, which may limit the
enforceability of certain indemnities and other provisions (clauses
(i), (ii) and (iii) being referred to collectively hereinafter as the
"Enforceability Exceptions"). The enforceability of the Leases may be
limited by applicable law which may affect the remedies provided
therein, which laws, however, do not make such remedies inadequate for
the practical realization of the rights and benefits intended to be
provided thereby.
(f) The Pass Through Trust Agreement has been duly authorized,
and, at the Closing Date, will have been duly executed by the Pass
Through Trustee and, when delivered will constitute the valid and
binding agreement of the Pass Through Trustee in accordance with its
terms, except as such enforceability may be limited by the
Enforceability Exceptions.
(g) The Certificates have been duly authorized and, at the
Closing Date, will have been duly executed by the Pass Through Trustee
and, when authenticated, issued and delivered in the manner provided
for in the Pass Through Trust Agreement and delivered against payment
of the purchase price therefor as provided in this Agreement, will
constitute valid and binding obligations of the Pass Through Trustee,
enforceable against the Pass Through Trustee in accordance with their
terms, subject to the Enforceability Exceptions, and will be in the
form contemplated by, and entitled to the benefits of, the Pass Through
Trust Agreement. The Certificates and the Pass Through Trust Agreement
will conform in all material respects to the respective statements
relating thereto contained in the Basic Prospectus and the Final
Prospectus and will be in substantially the respective forms filed or
incorporated by reference, as the case may be, as exhibits to the
Registration Statement.
(h) The execution, delivery and performance of this Agreement,
the Pass Through Trust Agreement, the Parent Guaranty and each other
Operative Document to which Fort James and/or the Company is, or is to
be a party, by Fort James and/or the Company and the consummation of
the transactions contemplated herein and in the
6
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Registration Statement (including the issuance and sale of the
Certificates and the use of the proceeds from the sale of the
Certificates as described in the Prospectus under the caption "Use of
Proceeds") and compliance by Fort James and the Company with their
obligations hereunder and under the Pass Through Trust Agreement, the
Parent Guaranty, and each other Operative Document to which Fort James
and/or the Company is, or is to be a party, and the Certificates have
been duly authorized by all necessary corporate action and do 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 Fort James or the Significant Subsidiaries 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 Fort James or any of
the Significant Subsidiaries is a party or by which it or any of them
may be bound, or to which any of the property or assets of Fort James
or any Significant Subsidiary is subject (except for such conflicts,
breaches or defaults or liens, charges or encumbrances that would not
result in a Material Adverse Effect), nor will such action result in
any violation of the provisions of the charter or by-laws of Fort James
or any Significant Subsidiary, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, known to Fort
James or the Company having jurisdiction over Fort James or any
Significant Subsidiary or any of their respective 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 Fort James or any subsidiary.
(i) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by Fort James or the Company of their obligation hereunder,
in connection with the offering, issuance or sale of the Certificates
hereunder or the consummation of the transactions contemplated by this
Agreement or for the due execution, delivery or performance of the Pass
Through Trust Agreement, the Parent Guaranty, and each other Operative
Document to which Fort James and/or the Company is, or is to be a
party, by Fort James and/or the Company, as the case may be, 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 or state securities laws and except
for the qualification of the Pass Through Trust Agreement under the
Trust Indenture Act.
(j) Except as disclosed in the Registration Statement
(including the documents incorporated therein by reference), or as
would not, individually or in the aggregate, have a Material Adverse
Effect:
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<PAGE>
(i) Fort James and the Significant Subsidiaries (A)
are in compliance with all, and are not subject to any
asserted liability or, to Fort James or the Company's
knowledge, any liability, in each case with respect to any,
applicable Environmental Laws (as defined below), (B) hold or
have applied for all Environmental Permits (as defined below)
and (C) are in compliance with their respective Environmental
Permits;
(ii) neither Fort James nor any Significant
Subsidiary has received any written notice, demand, letter,
claim or request for information alleging that Fort James or
any of its subsidiaries may be in violation of, or liable
under, any Environmental Law;
(iii) neither Fort James nor any Significant
Subsidiary (A) has entered into or agreed to any consent
decree or order or is subject to any judgment, decree or
judicial order relating to compliance with Environmental Laws,
Environmental Permits or the investigation, sampling,
monitoring, treatment, remediation, removal or cleanup of
Hazardous Materials (as defined below) and, to the knowledge
of Fort James, no investigation, litigation or other
proceeding is pending or threatened in writing with respect
thereto, or (B) is an indemnitor in connection with any
threatened or asserted claim by any third-party indemnitee for
any liability under any Environmental Law or relating to any
Hazardous Materials; and
(iv) none of the real property owned or leased by
Fort James or any Significant Subsidiary is listed or, to the
knowledge of the Company, proposed for listing on the
"National Priorities List" under CERCLA, as updated through
the date hereof, or any similar state or foreign list of sites
requiring investigation or cleanup.
For purposes of this Agreement:
"CERCLA" means Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended as of the date hereof.
"Environmental Laws" means any federal, state, local or foreign
statute, law, ordinance, regulation, rule, code, treaty, writ or order and any
enforceable judicial or administrative interpretation thereof, including any
judicial or administrative order, consent decrees, judgment, stipulation,
injunction, permit, authorization, policy, opinion, or agency requirement, in
each case having the force and effect of law, relating to the pollution,
protection, investigation or restoration of the environment, health and safety
or natural resources, including, without limitation, those relating to the use,
handling, presence, transportation, treatment, storage, disposal, release,
8
<PAGE>
threatened release or discharge of Hazardous Materials or noise, odor, wetlands,
pollution, contamination or any injury or threat of injury to persons or
property.
"Environmental Permits" means any permit, approval, identification
number, license and other authorization required under any applicable
Environmental Law.
"Hazardous Materials" means (a) any petroleum, petroleum by-products or
breakdown products, radioactive materials, asbestos-containing materials or
polychlorinated biphenyls or (b) any chemical, material or other substance
defined or regulated as toxic or hazardous or as a pollutant or contaminant or
waste under any applicable Environmental Law.
3. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, Fort James
and the Company agree to cause the Pass Through Trustee to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Pass Through Trustee, at the purchase price set forth in Schedule I
hereto the principal amount of the Certificates set forth opposite each
Underwriter's name in Schedule II hereto, plus any additional principal amount
of Certificates which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 9 hereof, except that, if Schedule I hereto
provides for the sale of Certificates pursuant to delayed delivery arrangements,
the respective principal amounts of Certificates to be purchased by the
Underwriters shall be as set forth in Schedule II hereto less the respective
amounts of Contract Securities determined as provided below. Certificates to be
purchased by the Underwriters are herein sometimes called the "Underwriters'
Securities" and Certificates to be purchased pursuant to Delayed Delivery
Contracts as hereinafter provided are herein called "Contract Securities".
If so provided in Schedule I hereto, the Underwriters are
authorized to solicit offers to purchase Certificates from the Company pursuant
to delayed delivery contracts ("Delayed Delivery Contracts"), [substantially in
the form of Schedule III hereto but with such changes therein as the Company may
authorize or approve.] The Underwriters will endeavor to make such arrangements
and, as compensation therefor, the Company will pay to the Representatives, for
the account of the Underwriters, on the Closing Date, the percentage set forth
in Schedule I hereto of the principal amount of the Certificates for which
Delayed Delivery Contracts are made. Delayed Delivery Contracts are to be with
institutional investors, including commercial and savings banks, insurance
companies, pension funds, investment companies and educational and charitable
institutions. The Company will enter into Delayed Delivery Contracts in all
cases where sales of Contract Securities arranged by the Underwriters have been
approved by the Company but, except as the Company may otherwise agree, each
such Delayed Delivery Contract must be for not less than the minimum principal
amount set forth in Schedule I hereto and the aggregate principal amount of
Contract Securities may not exceed the maximum aggregate principal amount set
forth in Schedule I hereto. The Underwriters will not have any responsibility in
respect of the validity or performance of Delayed Delivery Contracts. The
principal amount of Certificates to be purchased by each Underwriter as set
forth in Schedule II hereto shall be reduced by an amount which shall bear the
same proportion to the total principal
9
<PAGE>
amount of Contract Securities as the principal amount of Certificates set forth
opposite the name of such Underwriter bears to the aggregate principal amount
set forth in Schedule II hereto, except to the extent that you determine that
such reduction shall be otherwise than in such proportion and so advise the
Company in writing; provided, however, that the total principal amount of
Certificates to be purchased by all Underwriters shall be the aggregate
principal amount set forth in Schedule II hereto less the aggregate principal
amount of Contract Securities.
4. Delivery and Payment. Delivery of and payment for the Underwriters'
Securities shall be made on the date and at the time specified in Schedule I
hereto, which date and time may be postponed by agreement between Fort James,
the Representatives and the Company or as provided in Section 9 hereof (such
date and time of delivery and payment for the Underwriters' Securities being
herein called the "Closing Date"). Delivery of the Underwriters' Securities
shall be made to the Representatives for the respective accounts of the several
Underwriters against payment by the several Underwriters through the
Representatives of the purchase price thereof to the Pass Through Trustee by
wire transfer of immediately available funds to a bank account designated by the
Pass Through Trustee. Delivery of the Underwriters' Securities shall be made at
such location as the Representatives shall reasonably request at least one
business day in advance of the Closing Date and payment for the Certificates
shall be made at the office specified in Schedule I hereto. Certificates for the
Underwriters' Securities shall be registered in such names and in such
denominations as the Representatives may request not less than two full business
days in advance of the Closing Date. Documents required to be delivered on the
Closing Date shall be delivered at the offices of [ ].
Fort James and the Company agree to have the Underwriters'
Securities available for inspection, checking and packaging by the
Representatives in New York, New York, not later than 1:00 PM on the business
day prior to the Closing Date.
5. Agreements. Fort James and the Company agree with the several
Underwriters that:
(a) Fort James and the Company will use their best efforts to
qualify the Pass Through Trust Agreement under the Trust Indenture Act
and to cause the Registration Statement, if not effective at the
Execution Time, and any amendment thereto, to become effective. Prior
to the termination of the offering of the Certificates, the Company
will not file any amendment of the Registration Statement or supplement
(including the Final Prospectus or any Preliminary Final Prospectus) to
the Basic Prospectus (other than (i) subject to Section 5(f), any
prospectus supplement relating to the offering of other securities
registered under the Registration Statement and (ii) other than any
document required to be filed under the Exchange Act that upon filing
is deemed to be incorporated by reference therein, except for such
documents required to be filed during the period from the Execution
Time through the Closing Date) unless Fort James or the Company has
furnished you a copy for your review prior to filing and will not file
any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing
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sentence, Fort James and the Company will cause the Final Prospectus,
properly completed, and any supplement thereto and the Preliminary
Final Prospectus to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence reasonably satisfactory to the
Representatives of such timely filing. Fort James and the Company will
advise the Representatives promptly after it shall receive notice or
obtain knowledge thereof (i) when the Registration Statement, if not
effective at the Execution Time, and any amendment thereto, including
any Post-Effective Amendment, shall have become effective and the Pass
Through Trust Agreement so qualified, (ii) when the Final Prospectus,
and any supplement thereto, and any Preliminary Final Prospectus shall
have been filed with the Commission pursuant to Rule 424(b), (iii)
when, prior to termination of the offering of the Certificates, any
amendment to the Registration Statement, including any Rule 462(b)
Registration Statement, shall have been filed or become effective, (iv)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Final Prospectus or for any additional
information, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose, (vi) of
the receipt by Fort James or the Company of any notification with
respect to the suspension of the qualification of the Certificates for
sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and (vii) during the period when a
prospectus relating to the Certificates is required to be delivered
under the Securities Act, of the mailing or the delivery to the
Commission for filing by Fort James or the Company of any document to
be filed pursuant to the Exchange Act. Fort James and the Company will
use its best efforts to prevent the issuance of any such stop order
and, if issued, to obtain the withdrawal thereof.
(b) If, at any time when a prospectus relating to the
Certificates is required to be delivered under the Securities Act, any
event occurs as a result of which the Final Prospectus as then
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend the Registration
Statement or supplement the Final Prospectus to comply with the
Securities Act or the Exchange Act, Fort James and the Company promptly
will prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 5, an amendment or supplement
which will correct such statement or omission or effect such
compliance.
(c) As soon as practicable, Fort James will make generally
available to its security holders and to the Representatives an earning
statement or statements of Fort James and its subsidiaries which will
satisfy the provisions of Section 11(a) and Rule 158 of the Securities
Act.
(d) Fort James and the Company will furnish to the
Representatives and counsel for the Underwriters, without charge, five
copies of the Registration Statement
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(including exhibits thereto) and, so long as delivery of a prospectus
by an Underwriter or dealer may be required by the Securities Act, as
many copies of any Preliminary Final Prospectus and the Final
Prospectus and any supplement thereto as the Representatives may
reasonably request. Copies of the Registration Statement and each
amendment thereto, any Preliminary Final Prospectus and the Final
Prospectus furnished to the Underwriters will be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(e) Fort James and the Company will use its best efforts to
qualify the Certificates for sale under the laws of such jurisdictions
as the Representatives may reasonably designate, will maintain such
qualifications in effect so long as required for the distribution of
the Certificates, except that neither Fort James nor the Company shall
be required in connection therewith to qualify as a foreign
corporation, to execute a general consent to service of process in any
state or to otherwise subject itself to taxation (other than stock
transfer taxes) in connection with any such qualification, and will
arrange for the determination of the legality of the Certificates for
purchase by institutional investors.
(f) Except to the extent specified on Schedule I hereto, until
the business date set forth on Schedule I hereto, Fort James and the
Company will not, without the consent of the Representatives, offer,
sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce the offering of, any debt securities issued or
guaranteed by Fort James or the Company (other than the Certificates or
other securities issued in the ordinary course of business).
6. Conditions to the Obligations of the Underwriters. The obligations
of the underwriters to purchase the Underwriters' Securities shall be subject to
the accuracy of the representations and warranties on the part of Fort James and
the Company contained herein as of the Execution Time and Closing Date, to the
accuracy of the statements of Fort James and the Company made in any
Certificates pursuant to the provisions hereof, to the performance of Fort James
and the Company of its obligations hereunder and to the following additional
conditions:
(a) The Registration Statement has become effective and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or threatened; if filing of the Final Prospectus, or
any supplement thereto, is required pursuant to Rule 424(b), the Final
Prospectus, and any such supplement, shall have been filed in the
manner and within the time period required by Rule 424(b).
(b) Fort James and the Company, shall have furnished to the
Representatives an opinion of counsel for Fort James and the Company,
dated the Closing Date, to the effect that:
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(i) Each of Fort James and the Company has been duly
organized and is validly existing and in good standing under
the laws of the Commonwealth of Virginia; each of the
Significant Subsidiaries (except for Fort James N.V., as to
which you are receiving the opinion of Debrauw Blackstone
Westbroek dated February 19, 1998 (the "Debrauw Opinion")) has
been duly organized and is validly existing and, if
applicable, in good standing under the laws of the
jurisdiction of its incorporation; Fort James and each
Significant Subsidiary (except for Fort James N.V., as to
which you are receiving the Debrauw Opinion) has corporate
power and authority to conduct its business as described in
the Final Prospectus; Fort James and each Significant
Subsidiary (other than Fort James N.V., as to which you're
receiving the Debrauw Opinion) is, if applicable, duly
qualified to do business and is, if applicable, in good
standing in each jurisdiction in which it owns or leases a
material amount of real property;
(ii) The authorized capital stock of the Company is
as set forth in the Final Prospectus; and the Certificates
conform to the description thereof contained in the Final
Prospectus;
(iii) The Pass Through Trust Agreement and the
Certificates have been duly authorized; the Pass Through Trust
Agreement has been duly qualified under the Trust Indenture
Act; the Pass Through Trust Agreement has been executed and
delivered by the Pass Through Trustee and constitutes a valid
and legally binding obligation of the Pass Through Trustee
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles; the Certificates have
been duly executed, issued and delivered by the Pass Through
Trustee as provided in the Pass Through Trust Agreement and
when the Certificates have been duly delivered and paid for by
the Underwriters pursuant to this Agreement, in the case of
Underwriters Securities, or by the purchasers thereof pursuant
to Delayed Delivery Contracts, in the case of any Contract
Securities, the Certificates will constitute valid and legally
binding obligations of the Pass Through Trustee entitled to
the benefits of the Pass Through Trust Agreement and
enforceable in accordance with their terms, subject to
bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors'
rights and to general equity principles;
(iv) All of the outstanding shares of capital stock
of the Significant Subsidiaries (except for Fort James N.V.,
as to which you are receiving the Debrauw Opinion) have been
duly authorized and validly issued, are fully paid and
non-assessable and are owned
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beneficially, directly or indirectly, (except as otherwise
stated in the Final Prospectus) by the Company subject to no
perfected mortgage, pledge, lien, encumbrance, charge or
adverse claim and, to the knowledge of such counsel, any other
mortgage, pledge, lien, encumbrance, charge or adverse claim;
(v) Such counsel has been advised by the staff of the
Commission that the Registration Statement has become
effective under the Securities Act; any required filing of the
Basic Prospectus, any Preliminary Final Prospectus and the
Final Prospectus, and any supplements thereto, pursuant to
Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b); and to the best knowledge of
such counsel no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for
that purpose has been issued and no proceeding for that
purpose has been instituted or, to the knowledge of such
counsel, threatened under the Securities Act;
(vi) The Registration Statement, including any Rule
462(b) Registration Statement, and the Final Prospectus, and
any amendment or supplement thereto (other than the financial
statements and other financial data therein, as to which such
counsel need express no opinion), comply as to form in all
material respects with the requirements of the Securities Act
and the Trust Indenture Act and the rules of the Commission
thereunder;
(vii) The descriptions in the Registration Statement
and the Final Prospectus of statutes, legal and governmental
proceedings, contracts and other documents are accurate in all
material respects and fairly represent the information
required to be shown; and such counsel does not know of any
statutes or legal proceedings required to be described as
required, or of any contracts or documents of a character
required to be described in the Registration Statement or
Final Prospectus (or required to be filed under the Exchange
Act if upon such filing they would be incorporated, in whole
or in part, by reference therein) or to be filed as exhibits
to the Registration Statement that are not described and filed
as required;
(viii) This Agreement, any Delayed Delivery
Contracts, the Pass Through Trust Agreement, the Parent
Guaranty and each other Operative Document have been duly
authorized, executed and delivered by Fort James and/or the
Company, as the case may be, and constitute a valid and
legally binding agreement of Fort James and/or the Company
enforceable in accordance with its terms, subject to
bankruptcy, insolvency, reorganization and other laws of
general equity principles, and except that rights to
indemnification or contribution may be limited by Federal or
State securities laws or public policy relating thereto; Fort
James and/or the Company's execution, delivery and performance
of this Agreement, any Delayed Delivery Contracts, the
Certificates, the Pass Through Trust Agreement, the
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Parent Guaranty and each other Operative Document, or the
consummation of the transactions herein contemplated and Fort
James and/or the Company's compliance with its obligations
under this Agreement, the Pass Through Trust Agreement, the
Parent Guaranty, and each other Operative Document to which
Fort James and/or the Company is or is to be a party, and the
Certificates, will not result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, any agreement or instrument known to such counsel
to which Fort James or any Significant Subsidiary is a party
or by which it is bound or to which any of the property of
Fort James or any Significant Subsidiary is subject, Fort
James' or any Significant Subsidiary's Articles of
Incorporation, as amended to date, or by-laws, or any order,
rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over Fort
James Company or any Significant Subsidiary or any of their
respective properties; and no consent, approval, authorization
or order of, or filing with, any court or governmental agency
or body is required for the consummation of the transactions
contemplated by this Agreement or in any Delayed Delivery
Contract, except such as have been obtained under the
Securities Act or the Trust Indenture Act and such as may be
required under state Certificates laws in connection with the
purchase and distribution of such Certificates by the
Underwriters; provided that no opinion is called for with
respect to any such consent, approval, authorization or order
required to be obtained under the Securities Act or the Trust
Indenture Act that have been obtained or as may be required
under state Certificates laws or Blue Sky Laws of the various
states. The form of the Pass Through Trust Agreement, the
Parent Guaranty and each other Operative Document filed as an
exhibit to the Registration Statement conforms to the
descriptions thereof contained in the Prospectus in all
material respects;
(ix) Assuming that the Certificates have been duly
and validly authorized, executed and authenticated in
accordance with the Pass Through Trust Agreement and have been
duly issued and delivered to and paid for by the Underwriter,
the holders of the Certificates are entitled to the benefits
of the Pass Through Trust Agreement;
(x) The statements in the Prospectus under the
caption "Certain Federal Income Tax Consequences" to the
extent that they constitute matters of law or legal
conclusions with respect thereto, have been prepared or
reviewed by such counsel and are correct in all material
respects and such counsel is of the opinion ascribed to it in
the Prospectus under the caption "Federal Income Tax
Consequences";
(xi) Based upon current law, the Pass Through Trust
for federal income tax purposes should be classified as a
grantor trust under subpart E, Part I of Subchapter J of the
Internal Revenue Code of 1986, as amended, and each
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<PAGE>
Certificate holder should be treated as the beneficial owner
of a pro rata undivided interest in each Secured Note and any
other property held in the Pass Through Trust; and
(xii) The Pass Through Trust Agreement has been duly
qualified under the Trust Indenture Act.
Such counsel shall also state that: they have no reason to
believe that at the Effective Date the Registration Statement contained
any untrue statement of a material fact or omitted to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Final Prospectus at the
time the Final Prospectus is issued or at the Closing Date includes any
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and the
documents from which information is incorporated by reference in the
Final Prospectus, when they became effective or were filed with the
Commission, as the case may be, complied as to form in all material
respects with the requirements of the Securities Act and of the
Exchange Act, as applicable; it being understood that such counsel need
express no opinion as to (i) the financial statements or other
financial information included in any of the documents mentioned in
this sentence or (ii) the Statement of Eligibility on Form T-1 of the
Pass Through Trustee.
References to the Final Prospectus in this paragraph (e)
include any supplements thereto at the Closing Date.
(f) The Representatives shall have received the opinion of
Richards, Layton & Finger, counsel to [Wilmington Trust Company] in its
individual capacity ("Wilmington Trust") and in its capacity as the
Pass Through Trustee, to the effect that:
(i) The Certificates have been duly and validly
authorized, executed and authenticated in accordance with the
Pass Through Trust Agreement and have been duly issued and
delivered to, and, assuming that the Certificates have been
paid for by, the Underwriter, the Certificates constitute
valid obligations of the Pass Through Trust entitling the
Certificateholders to the benefits of the Pass Through Trust
Agreement;
(ii) [Wilmington Trust] is a banking corporation duly
incorporated and validly existing in good standing under the
laws of the State of [Delaware], and has the corporate power
and authority under the laws of the State of [Delaware],
individually or as Pass Through Trustee, as the case may be,
to execute, deliver and perform the Pass Through Trust
Agreement and the Participation Agreement;
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<PAGE>
(iii) Assuming the Pass Through Trustee has duly
authorized, executed and delivered the Pass Through Trust
Agreement, the Pass Through Trust Agreement constitutes a
legal, valid and binding obligation of the Company enforceable
against Fort James and/or the Company in accordance with its
terms, except as enforcement thereof may be limited by (i)
bankruptcy, insolvency, moratorium, receivership, fraudulent
conveyance and similar laws relating to or affecting the
rights and remedies of creditors generally and (ii) principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or law);
(iv) [Wilmington Trust] or the Pass Through Trustee,
as the case may be, has duly authorized, executed and
delivered the Pass Through Trust Agreement and the
Participation Agreement and the Pass Through Trust Agreement
constitutes a legal, valid and binding obligation of
[Wilmington Trust] or the Pass Through Trustee, as the case
may be, enforceable against [Wilmington Trust] or the Pass
Through Trustee, as the case may be, in accordance with its
terms, except as enforcement thereof may be limited by (i)
bankruptcy, insolvency, moratorium, receivership, fraudulent
conveyance and similar laws relating to or affecting the
rights and remedies of creditors generally and (ii) principles
of equity (regardless of whether enforcement is considered in
a proceeding in equity or law);
(v) Neither the execution, delivery and performance
by [Wilmington Trust] or the Pass Through Trustee, as the case
may be, of the Pass Through Trust Agreement and the
Participation Agreement, nor the authentication by the Pass
Through Trustee of the Certificates is in violation of the
charter or by-laws of [Wilmington Trust] or of any law,
governmental rule or regulation of the State of Delaware or
the United States governing the banking or trust powers of
[Wilmington Trust] or, to our knowledge, of any indenture,
mortgage, bank credit agreement, note or bond purchase
agreement, long-term lease, license or other agreement or
instrument to which it is a party or by which it is bound or
to our knowledge of any judgment or order applicable to
[Wilmington Trust] or the Pass Through Trustee;
(vi) Neither the authorization, consent or approval
of, the giving of notice to or registration with, nor the
taking of any other action in respect of, any governmental
authority or agency of the State of Delaware or the United
States governing the banking or trust powers of [Wilmington
Trust] is required for the execution, delivery or performance
by the Pass Through Trustee or [Wilmington Trust], as the case
may be, of the Pass Through Trust Agreement or Participation
Agreement; and
(vii) Assuming that (A) the assets are not used in
the State of Delaware and are not physically located in the
State of Delaware at the commencement or termination of, or
during the term of, the Leases, (B) in connection with any
sale
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<PAGE>
of the Assets, the Assets will not be physically delivered in
the State of Delaware and are not shipped from a point within
the State of Delaware to a buyer, and (C) the Pass Through
Trust will not be taxable as a corporation, but, rather will
be classified as a grantor trust under subpart E, Part I of
Subchapter J of the Code for federal income tax purposes, and
(D) the Depository Trust Company is the Certificateholder
holding the Certificates as custodian on behalf of the
Certificate Owners, then under existing Delaware law as of the
date hereof (i) the Pass Through Trust will not be classified
as an association taxable as a corporation for purposes of
franchise and income taxation by the State of Delaware or any
political subdivision thereof; (ii) a Certificateholder will
be treated as owners of an undivided interest in the assets of
the Pass Through Trust for purposes of franchise and income
taxation by the State of Delaware and any political
subdivision thereof; (iii) the Pass Through Trust will not be
subject to taxation or any other governmental fee or charge by
the State of Delaware or any political subdivision thereof;
and (iv) neither the Secured Notes nor the Pass Through
Certificates will be subject to ad valorem taxation or any
other tax on intangible property by the State of Delaware or
any political subdivision thereof; (v) neither the delivery of
the Secured Notes to the Pass Through Trust nor the
acquisition, ownership or disposition of the interest of any
Certificateholder in any Pass Through Certificate will be
subject directly or indirectly to any sales, use or transfer
taxes imposed by the State of Delaware or any political
subdivision thereof; and (vi) a Certificateholder and
Certificate Owner will not be subject to taxation or any
governmental fee or charge by the State of Delaware or any
political subdivision thereof, if the Certificateholders or
Certificate Owners are not residents of the State of Delaware,
or otherwise subject to any tax, governmental charge or fee
imposed by the State of Delaware or any political subdivision
thereof.
(g) The Representatives shall have received from Shearman &
Sterling, counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the
Certificates, the Pass Through Trust Agreement, the Guaranty, each
other Operative Document to which Fort James and/or the Company is, or
is to be a party, any Delayed Delivery Contracts, the Registration
Statement, the Final Prospectus (together with any supplement thereto)
and other related matters as the Representatives may reasonably
require, and such counsel shall have received such papers and
information as they request for the purpose of enabling them to pass
upon such matters.
(h) Fort James and the Company shall have furnished to the
Representatives a certificate or certificates of Fort James and the
Company, signed by the Chairman, Chief Executive Officer, an Executive
Vice President, a Senior Vice President or a Vice President and by the
principal financial or accounting officer or treasurer of each Fort
James and the Company, dated the Closing Date, to the effect that, to
the best of their knowledge, based upon reasonable investigation:
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<PAGE>
(i) the representations and warranties of Fort James
and the Company in this Agreement are true and correct, as if
made at and as of the Closing Date, and Fort James and the
Company has complied with all the agreements and satisfied all
the conditions on their part to be performed or satisfied at
or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceeding
for that purpose has been instituted or is threatened, by the
Commission; and
(iii) since the date of the most recent financial
statements included in the Final Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
or development involving a prospective material adverse change
in the condition (financial or other), earnings, business or
properties of Fort James and the Company and its subsidiaries,
whether or not arising from transactions in the ordinary
course of business, except as set forth in or contemplated in
the Final Prospectus (exclusive of any supplement thereto).
(i) At the Execution Time and on the Closing Date,
PricewaterhouseCoopers LLP shall have furnished to the Representatives
a letter or letters, dated as of the Execution Time and the Closing
Date, in form and substance satisfactory to the Representatives, which
confirms that they are independent certified public accountants with
respect to Fort James within the meaning of the Securities Act and
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and Final Prospectus.
(j) Subsequent to the Execution Time, there shall not have
been any decrease in the rating of any of either Fort James' or the
Company's debt securities by any "nationally recognized statistical
rating organization" (as defined for purpose of Rule 436(g) under the
Securities Act) or any notice given of any intended or potential
decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
(k) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates
and documents as the Representatives may reasonably request.
(l) The Company shall have accepted Delayed Delivery Contracts
in any case where sales of Contract Certificates arranged by the
Underwriters have been approved by the Company.
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If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Underwriters, this
Agreement and all obligations of the Underwriters hereunder may be canceled at,
or at any time prior to, the Closing Date by the Representatives. Notice of such
cancellation shall be given to Fort James and the Company in writing or by
telephone or fax confirmed in writing.
7. Expenses. Whether or not any sale of the Certificates is consummated
(a) Fort James will pay, or cause the Owner Trustee to pay, all expenses
incident to the performance of its obligations under this Agreement and the Pass
Through Trust Agreement, including (i) the preparation, printing and filing of
the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto (including any post-effective
amendment thereto), (ii) the preparation, printing and delivery to the
Underwriters of this Agreement, any Agreement among Underwriters to which Fort
James or the Company is a party, the Pass Through Trust Agreement, the Guaranty
and each of the Operative Documents as may be required in connection with the
offering, purchase, sale, issuance or delivery of the Certificates, (iii) the
preparation, issuance and delivery of the Certificates to the Underwriters, (iv)
the fees and disbursements of Fort James' and the Company's counsel, accountants
and other advisors, (v) the qualification of the Certificates under securities
laws in accordance with the provisions of Section 5(e) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the Underwriters
in connection therewith and in connection with the preparation of the Blue Sky
Survey and any supplement thereto, (vi) the printing and delivery to the
Underwriters of copies of each Preliminary Final Prospectus and of the Final
Prospectus and any amendments or supplements thereto, (vii) the reasonable fees
and expenses of the Pass Through Trustee, including the fees and disbursements
of counsel for the Pass Through Trustee in connection with the Pass Through
Trust Agreement and the Certificates, (viii) any fees payable in connection with
the rating of the Certificates, and (ix) the filing fees incident to, and the
reasonable fees and disbursements of counsel to the Underwriters in connection
with the review by the National Association of Certificates Dealers, Inc. (the
"NASD") of the terms of the sale of the Certificates, which in the case of this
paragraph (ix), shall be paid by the Owner Trustee.
(b) If the sale of the Certificates provided for herein is not
consummated because any condition to the obligations of the Underwriters set
forth in Section 6 hereof is not satisfied, because of any termination pursuant
to Section 10 hereof or because of any refusal, inability or failure on the part
of Fort James or the Company to perform any agreement herein or comply with any
provision hereof other than by reason of a default by any of the Underwriters,
Fort James and the Company jointly and severally will reimburse the Underwriters
severally upon demand for all out-of-pocket expenses (including reasonable fees
and disbursements of counsel) that shall have been incurred by them in
connection with the proposed purchase and sale of the Certificates.
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<PAGE>
8. Indemnification and Contribution. (a) Fort James and the Company
jointly and severally agree to indemnify and hold harmless each Underwriter, the
directors, officers, employees and agents of each Underwriter and each person
who controls any Underwriter within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act as follows: (i) against any and
all losses, claims, damages or liabilities, joint or several, to which they or
any of them may become subject under the Securities Act, the Exchange Act or
other Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement for the
registration of the Certificates as originally filed or in any amendment thereof
(including any post-effective amendment), or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, or
arise out of any untrue statement or alleged untrue statement of a material fact
included in any Preliminary Final Prospectus or the Final Prospectus (or any
amendment or supplement thereto), or the omission or alleged omission therefrom
of a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; (ii)
against any and all loss, liability, claim, damage and expense whatsoever, as
reasonably incurred, to the extent of the aggregate amount paid in settlement of
any litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that any such settlement is effected
with the written consent of Fort James and the Company in the sole discretion of
Fort James and the Company; and (iii) agree to reimburse each such indemnified
party, as incurred, for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that neither Fort James nor the Company
will be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission of a material fact required to
be stated therein or necessary to make the statements therein not misleading in
reliance upon and in conformity with written information furnished to Fort James
or the Company by or on behalf of any Underwriter through the Representatives
specifically for use in connection with the preparation thereof; and provided
further that neither Fort James nor the Company shall be liable in any such case
to any such Underwriter to the extent that any such loss, claim, damage or
liability results from the fact that such Underwriter sold Certificates to a
person to whom there was not given or sent, at or prior to the written
confirmation of such sale, a copy of the Final Prospectus, as then amended or
supplemented (excluding the documents incorporated by reference therein) if Fort
James or the Company has previously furnished copies thereof to such Underwriter
and has otherwise complied with Section 5(b), and if Fort James and the Company
has sustained the burden of proof that, with respect to statements or omissions,
other than those made in reliance upon and in conformity with written
information furnished to Fort James or the Company by or on behalf of any
Underwriter through the Representatives specifically for use in connection with
the preparation of the documents referred to in the foregoing indemnity, such
21
<PAGE>
Final Prospectus, or any amendment or supplement thereto (including the
documents incorporated by reference therein) corrected the untrue statement or
alleged untrue statement or omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading or alleged
omission giving rise to such loss, claim, damage or liability. This indemnity
agreement will be in addition to any liability which Fort James or the Company
may otherwise have.
(b) Each Underwriter severally agrees to indemnify and hold harmless
Fort James and the Company, each of their directors, each of their officers who
signs the Registration Statement, and each person who controls Fort James or the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, to the same extent as the foregoing indemnity from Fort
James or the Company to each Underwriter, but only with respect to untrue
statements or omissions, or alleged untrue statements of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or omissions made in the documents referred to in the foregoing
indemnity in reliance on and in conformity with written information relating to
such Underwriter furnished to Fort James or the Company by or on behalf of such
Underwriter through the Representatives specifically for use in connection with
the preparation of the documents referred to in the foregoing indemnity, and
agrees to reimburse each such indemnified party, as incurred, for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which any Underwriter may
otherwise have.
(c) Promptly after receipt by an indemnified party under this Section 8
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under this
Section 8, notify the indemnifying party in writing of the commencement thereof,
but the failure so to notify the indemnifying party (i) will not relieve it from
liability under paragraph (a) or (b) above unless and to the extent it did not
otherwise learn of such action and such failure results in the forfeiture by the
indemnifying party of substantial rights and defenses and (ii) will not, in any
event, relieve the indemnifying party from any obligations to any indemnified
party other than the indemnification and reimbursement obligations provided in
paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint
counsel of the indemnifying party's choice at the indemnifying party's expense
to represent the indemnified party and any others the indemnifying party may
designate in such proceeding in any action for which indemnification is sought
(in which case the indemnifying party shall not thereafter be responsible for
the fees and expenses of any separate counsel retained by the indemnified party
or parties except as set forth below); provided, however, that such counsel
shall be reasonably satisfactory to the indemnified party. Notwithstanding the
indemnifying party's election to appoint counsel to represent the indemnified
party in an action, the indemnified party shall have the right to employ
separate counsel (including not more than two local counsels), and the
indemnifying party shall bear the reasonable fees, costs and expenses of such
separate counsel if (i) the use of counsel chosen by the indemnifying party to
represent the indemnified party would present such counsel with a conflict of
interest, (ii) the actual or potential defendants in, or targets
22
<PAGE>
of, any such action include both the indemnified party and the indemnifying
party and the indemnified party shall have reasonably concluded that there may
be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, (iii)
the indemnifying party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party within a reasonable
time after notice of the institution of such action or (iv) the indemnifying
party shall authorize in writing the indemnified party to employ separate
counsel at the expense of the indemnifying party. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement. An indemnifying party will not, without the prior written
consent of the indemnified parties, settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding and does not include a
statement as to or an admission of fault, culpability or a failure to act by or
on behalf of any indemnified party.
(d) In the event that the indemnity provided in paragraph (a) or (b) of
this Section 8 is unavailable to or insufficient to hold harmless an indemnified
party for any reason, Fort James, the Company and the Underwriters agree to
contribute to the aggregate losses, claims, damages and liabilities (including
legal or other expenses reasonably incurred in connection with investigating or
defending same) (collectively "Losses") to which Fort James, the Company and one
or more of the Underwriters may be subject in such proportion as is appropriate
to reflect the relative benefits received by Fort James, the Company and by the
Underwriters from the offering of the Certificates; provided, however, that no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such Underwriter has otherwise been required to pay by reason of
any such untrue or alleged untrue statement or omission or alleged omission. If
the allocation provided by the immediately preceding sentence is unavailable for
any reason, Fort James, the Company and the Underwriters shall contribute in
such proportion as is appropriate to reflect not only such relative benefits but
also the relative fault of Fort James, the Company and of the Underwriters in
connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by Fort
James or the Company shall be deemed to be equal to the total net proceeds from
the offering (before deducting expenses) received by the Pass Through Trustee,
and benefits received by the Underwriters shall be deemed to be equal to the
total underwriting discounts and commissions, in each case as set forth on the
cover page of the Final Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by Fort James or the Company on the one hand or
the Underwriters on the other and the parties' relative intent, knowledge,
access to information and
23
<PAGE>
opportunity to correct or prevent such untrue statement or omission. Fort James,
the Company and the Underwriters agree that it would not be just and equitable
if contribution were determined by pro rata allocation (even if the Underwriters
were treated as one entity for such purpose) or any other method of allocation
which does not take account of the equitable considerations referred to above.
Any party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this paragraph (d), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder (other than under this paragraph (d))
or otherwise. Notwithstanding the provisions of this paragraph (d), no person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. For purposes of this Section 8,
each person who controls an Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Exchange Act and each director,
officer, employee and agent of an Underwriter shall have the same rights to
contribution as such Underwriter, and each person who controls Fort James or the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act, each officer of Fort James or the Company who shall have
signed the Registration Statement and each director of Fort James or the Company
shall have the same rights to contribution as Fort James or the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
The Underwriters' respective obligations to contribute pursuant to this
Section are several in proportion to the principal amount of Certificates set
forth opposite their respective names in Schedule II hereto and not joint.
9. Default by an Underwriter. If any one or more Underwriters shall
fail to purchase and pay for any of the Certificates agreed to be purchased by
such Underwriter or Underwriters hereunder and such failure to purchase shall
constitute a default in the performance of its or their obligations under this
Agreement, the remaining Underwriters shall be obligated severally to take up
and pay for (in the respective proportions which the amount of Certificates set
forth opposite their names in Schedule II hereto bears to the aggregate amount
of Certificates set forth opposite the names of all the remaining Underwriters)
the Certificates which the defaulting Underwriter or Underwriters agreed but
failed to purchase; provided, however, that in the event that the aggregate
amount of Certificates which the defaulting Underwriter or Underwriters agreed
but failed to purchase shall exceed 10% of the aggregate amount of Certificates
set forth in Schedule II hereto, the remaining Underwriters shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
Certificates, and if such nondefaulting Underwriters do not purchase all the
Certificates, this Agreement will terminate without liability to any
nondefaulting Underwriter, Fort James or the Company. In the event of a default
by any Underwriter as set forth in this Section 9, the Closing Date shall be
postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Registration Statement
and the Final Prospectus or in any other documents or arrangements may be
effected.
24
<PAGE>
Nothing contained in this Agreement shall relieve any defaulting Underwriter of
its liability, if any, to Fort James or the Company and any nondefaulting
Underwriter for damages occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Representatives, by notice given to Fort James and
the Company prior to delivery of and payment for the Certificates, if after the
Execution Time and prior to such time (a) (i) if there has been, since the time
of execution of this Agreement or since the respective dates as of which
information is given in the Final Prospectus, a material adverse change or any
development involving a prospective material adverse change in the condition,
financial or otherwise, or in the earnings or business affairs of Fort James and
its subsidiaries considered as one enterprise, whether or not arising in the
ordinary course of business, or (ii) if there has occurred any material adverse
change in the financial markets in the United States, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Representatives, impracticable to
market the Certificates, or (iii) if trading in any securities of Fort James or
the Company has been suspended or materially limited by the Commission or the
New York Stock Exchange, or if trading generally on the American Stock Exchange
or the New York Stock Exchange or in the NASDAQ National Market has been
suspended or materially limited, or minimum or maximum prices for trading have
been fixed, or maximum ranges for prices have been required, by any of said
exchanges or by such system or by order of the Commission, the National
Association of Securities Dealers, Inc. or any other governmental authority, or
(iv) if a banking moratorium has been declared by either federal or New York
authorities; and (b) in the case of any of the events specified in clauses
(a)(i) through (iv), such event singly or together with any other such event
makes it in your judgment, impracticable to market the Certificates on the terms
and in the manner contemplated in the Prospectus.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
Fort James, the Company or their officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, Fort
James or the Company or any of the officers, directors or controlling persons
referred to in Section 8 hereof, and will survive delivery of and payment for
the Certificates. The provisions of Sections 7 and 8 hereof shall survive the
termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telecopied and confirmed to them, at the address specified in
Schedule I hereto; or, if sent to Fort James, will be mailed, delivered or
telegraphed and confirmed to it at 1650 Lake Cook Road, Deerfield, Illinois
60015- 4753, telefax number (847) 317-5479, attention of the Senior Vice
President and General Counsel; or if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at
25
<PAGE>
c/o Fort James Corporation, 1650 Lake Cook Road, Deerfield, Illinois 60015-4753,
telefax number (847) 317-5479, attention of the Senior Vice President and
General Counsel.
13. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the officers
and directors and controlling persons referred to in Section 8 hereof, and no
other person will have any right or obligation hereunder.
In all dealings with Fort James and the Company under this Agreement,
you shall act on behalf of each of the several Underwriters, and any action
under this Agreement taken by you or by any one of you designated in Schedule II
hereto will be binding upon all the Underwriters.
14. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York.
26
<PAGE>
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among Fort James, the Company and the several Underwriters. Alternatively, the
execution of this Agreement by Fort James and the Company and its acceptance by
or on behalf of the Underwriters may be evidenced by an exchange of telecopied
or other written communications.
Very truly yours,
Fort James Operating Company
By: _____________________________
Title:
Fort James Corporation
By: _____________________________
Title:
The foregoing Agreement
is hereby confirmed and accepted
as of the date specified in
Schedule I hereto.
The Representatives named in Schedule I hereto of the Underwriters named in
Schedule II hereto.
By: [Morgan Stanley & Co. Incorporated]
By: __________________________________________
Authorized Signatory
For themselves and as
Representatives of the other
Underwriters, named in
Schedule II to the
foregoing Agreement.
<PAGE>
SCHEDULE I
Underwriting Agreement dated:
Registration Statement No. 333-63905
Representatives:
Title, Purchase Price and Description of Certificates:
Title:
Principal amount:
Interest:
Purchase price (including accrued interest, if any):
(i) to Underwriters:
(ii) to Public:
Other provisions:
Closing Date, Time and Location:
(i) Office for Checking Certificates:
(ii) Office for Payment of Certificates:
(iii) Date and Time of Closing:
Type of offering:
Delayed Delivery arrangements: None
Fee:
Minimum principal amount of each contract:
Maximum aggregate principal amount of all contracts:
28
<PAGE>
Date referred to in Section 5(f) after which the
Company may offer or sell debt securities
issued or guaranteed by the Company without
the consent of the Representatives:
Modification of Section 5(f): The parties agree that the
term debt securities does not include, among other
items, bank loans, commercial paper, bid notes, money
market notes, any debt securities with a maturity of
less than two years, leveraged sale leasebacks and
letter of credit arrangements
29
<PAGE>
SCHEDULE II
Principal Amount of
[interest rate] Pass
Through Trust
Certificates, Series
1998-A to
Underwriters be Purchased
$
Total
Total Underwriters:
30
[LETTERHEAD OF SHEARMAN & STERLING]
November 18, 1998
To the Boards of Directors of
Fort James Corporation
Fort James Operating Company
Ladies and Gentlemen:
We are acting as special tax counsel in connection with the
preparation and filing with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended, (the "Securities
Act") of Registration Statement No 333-63905 on Form S-3 (the "Registration
Statement"), first filed with the Commission on September 21, 1998 and amended
on the date hereof. The Registration Statement relates to the registration under
the Securities Act of pass through trust certificates with an aggregate offering
price of up to $150,000,000 (the "Pass Through Certificates") of Fort James
Operating Company ("FJOC"), a corporation organized under the laws of the
Commonwealth of Virginia and a wholly-owned subsidiary of Fort James
Corporation, a corporation organized under the laws of the Commonwealth of
Virginia. 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").
We are of the opinion that, subject to the limitations set forth
therein, the discussion under the caption "Federal Income Tax Consequences"
accurately describes the material United States federal income tax consequences
of the purchase, ownership and disposition of the Pass Through Certificates. The
foregoing opinion is based upon the Internal Revenue Code of 1986, as amended,
Treasury Regulations (including proposed Regulations and temporary Regulations)
promulgated thereunder, rulings, official pronouncements and judicial decisions,
all as in effect on the date hereof and all of which are subject to change,
possibly with retroactive effect, or to different interpretations.
<PAGE>
We hereby consent to the use of this opinion as an Exhibit to the
Registration Statement. In giving such consent, we do not thereby admit that we
come within the category of persons whose consent is required under Section 7 of
the Securities Act or the rules and regulations of the Commission promulgated
thereunder.
Very truly yours,
/s/ SHEARMAN & STERLING
[LETTERHEAD OF RICHARDS, LAYTON & FINGER]
November 18, 1998
Fort James Corporation
Fort James Operating Company
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
Re: Fort James Operating Company-Pass Through Certificates
Ladies and Gentlemen:
We have acted as counsel to Wilmington Trust Company, a Delaware
banking corporation, in its individual capacity ("WTC") and not in its
individual capacity but solely as trustee (the "Pass Through Trustee") of one or
more Fort James Pass Through Trusts, each a common law trust existing under the
laws of the State of Delaware (each a "Trust") to be formed in each case
pursuant to a Pass Through Trust Agreement (each a "Pass Through Trust
Agreement") to be entered into by and between WTC and Fort James Operating
Company (the "Company"). Pursuant to one or more Pass Through Trust Agreements,
one or more Pass Through Trusts will issue up to $150,000,000 aggregate
principal amount of Pass Through Certificates in one or more series to be
registered with the Securities and Exchange Commission under the Securities Act
of 1933, as amended (the "1933 Act"). Capitalized terms used herein and not
otherwise defined are used as defined in the form of Pass Through Trust
Agreement referred to below.
We have examined the following documents which you have furnished to us
and which have been filed as exhibits to the registration statement on Form S-3
(Registration No. 333- 63905) (such registration statement as it may be amended
prior to effectiveness thereof is hereinafter referred to as the "Registration
Statement"):
(a) The form of Pass Through Trust Agreement; and
(b) The form of the Pass Through Certificate (the "Certificates").
For purposes of this opinion, we have not reviewed any documents other
than the documents listed above, and we have assumed that there exists no
provision in any document that
<PAGE>
Fort James Corporation
Fort James Operating Company
November 18, 1998
Page 2
we have not reviewed that bears upon or is inconsistent with the opinions stated
herein. We have conducted no independent factual investigation of our own but
rather have relied solely upon the foregoing documents, the statements and
information set forth therein and the additional matters recited or assumed
herein, all of which we have assumed to be true, complete and accurate in all
material respects.
Based on the foregoing, and upon an examination of such questions of
Delaware law as we have considered necessary or appropriate, we advise you that,
in our opinion, assuming that each Trust will be classified as a grantor trust
under the United States Internal Revenue Code of 1986, as amended, (i) each
Trust 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)
Certificateholders and Certificate Owners that are not residents of or otherwise
subject to tax in Delaware 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 as
a result of purchasing, holding (including receiving payments with respect to)
or selling a Certificate or an interest therein.
We consent to the use and filing of this opinion as an exhibit to the
Registration Statement and to the reference to us under the caption "Certain
Delaware Taxes" in the Prospectus forming part of the Registration Statement. In
giving this consent, we do not thereby admit that we are in the category of
persons whose consent is required under Section 7 of the 1933 Act or the rules
and regulations of the Securities and Exchange Commission.
Very truly yours,
/s/ RICHARDS, LAYTON & FINGER PA
<PAGE>
Fort James
Computation of Ratio of Earnings to Fixed Charges(a)
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Nine months Nine months
ended ended
9/27/98 9/28/97
--------------------------------------------
<S> <C> <C>
Pretax income from continuing operations,
before minority interest $ 623.5 $ 563.1
Add:
Interest charged to operations $ 220.6 $ 277.6
Portion of rental expense representative of
interest factor (assumed to be one-third) 19.9 20.8
--------------------------------------------
Total earnings, as adjusted $ 864.0 $ 861.5
============================================
Fixed Charges:
Interest charged to operations $ 220.6 $ 277.6
Capitalized interest 8.1 7.2
Portion of rental expense representative of
interest factor (assumed to be one-third) 19.9 20.8
--------------------------------------------
$ 248.6 $ 305.6
============================================
Ratio 3.48 2.82
============================================
See accompanying footnote explanations.
</TABLE>
<PAGE>
FORT JAMES CORPORATION
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES(a)
(Dollar amounts in millions)
<TABLE>
<CAPTION>
Fiscal Year Ended
-----------------------------------------------------------
December December December December December
28, 1997 29, 1996 31, 1995 25, 1994 26, 1993
(52 weeks) (52 weeks) (52 weeks) (52 weeks) (52 weeks)
- --------------------------------------- -----------------------------------------------------------
(c) (b, c)
<S> <C> <C> <C> <C> <C>
Pretax income (loss) from continuing
operations, before minority
interests, extraordinary item and
cumulative effect of changes in
accounting principles $267.3 $499.2 $272.2 $(76.7) $(2,042.3)
Add:
Interest charged to operations 360.2 433.6 545.9 547.8 525.8
Portion of rental expenses
representative of interest factor 30.1 25.8 26.0 26.1 20.8
- --------------------------------------- -------- ---------- --------- --------- -----------
Total earnings, as adjusted $657.6 $958.6 $844.1 $497.2 $(1,495.7)
======================================= ======== ========== ========= ========= ===========
Fixed charges
Interest charged to operations $360.2 $433.6 $545.9 $547.8 $525.8
Capitalized interest 11.0 6.6 9.0 7.3 13.7
Portion of rental expense
representative of interest factor 30.1 25.8 26.0 26.1 20.8
Total fixed charges $401.3 $466.0 $580.9 $581.2 $560.3
================================================= =========== =========== ========= ===========
Ratio 1.64 2.06 1.45 -- --
================================================= =========== =========== ========= ===========
<FN>
See accompanying footnote explanations
</FN>
</TABLE>
<PAGE>
2
Exhibit 12 (continued)
FORT JAMES CORPORATION
NOTES TO COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(a) In, computing the ratio of earnings to fixed charges, earnings consist
of income before income taxes, minority interests, extraordinary item,
cumulative effect of changes in accounting principles and fixed charges
excluding capitalized interest. Fixed charges consist of interest
expense, capitalized interest, and that portion of rental expense
deemed representative of the interest factor. Earnings and fixed
charges also include the Company's proportionate share of such amounts
for unconsolidated affiliates which are owned 50% or more and
distributed income from less than 50% owned affiliates.
(b) During 1993, the Company wrote off $1,980.4 million of goodwill which
has been included in the calculation of the ratio of earnings to fixed
charges for this year.
(c) For the following periods, earnings were inadequate to cover fixed
charges, and the amounts of the deficiencies were: year ended December
27, 1992 - $276.4 million; year ended December 26, 1993 - $2,056.0
million; year ended December 25, 1994 - $84.0 million.
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
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 as of December 28, 1997 and
December 29, 1996, and for each of the three fiscal years in the period ended
December 28, 1997, which report is incorporated by reference 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
Chicago, Illinois
November 18, 1998
Registration No.
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939
OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) X
WILMINGTON TRUST COMPANY
(Exact name of trustee as specified in its charter)
Delaware 51-0055023
(State of incorporation) (I.R.S. employer identification no.)
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
(Address of principal executive offices)
Cynthia L. Corliss
Vice President and Trust Counsel
Wilmington Trust Company
Rodney Square North
Wilmington, Delaware 19890
(302) 651-8516
(Name, address and telephone number of agent for service)
FORT JAMES CORPORATION
FORT JAMES OPERATING COMPANY
(Exact name of obligor as specified in its charter)
Commonwealth of Virginia 54-0848173
Commonwealth of Virginia 54-1237819
(State of incorporation) (I.R.S. employer identification no.)
1650 Lake Cook Road
Deerfield, Illinois 60015-4753
(Address of principal executive offices) (Zip Code)
Fort James Operating Company Pass Through Certificates
(Title of the indenture securities)
================================================================================
<PAGE>
ITEM 1. GENERAL INFORMATION.
Furnish the following information as to the trustee:
(a) Name and address of each examining or supervising authority to
which it is subject.
Federal Deposit Insurance Co. State Bank Commissioner
Five Penn Center Dover, Delaware
Suite #2901
Philadelphia, PA
(b) Whether it is authorized to exercise corporate trust powers.
The trustee is authorized to exercise corporate trust powers.
ITEM 2. AFFILIATIONS WITH THE OBLIGOR.
If the obligor is an affiliate of the trustee, describe each
affiliation:
Based upon an examination of the books and records of the
trustee and upon information furnished by the obligor, the obligor
is not an affiliate of the trustee.
ITEM 3. LIST OF EXHIBITS.
List below all exhibits filed as part of this Statement of
Eligibility and Qualification.
A. Copy of the Charter of Wilmington Trust Company, which
includes the certificate of authority of Wilmington Trust
Company to commence business and the authorization of
Wilmington Trust Company to exercise corporate trust powers.
B. Copy of By-Laws of Wilmington Trust Company.
C. Consent of Wilmington Trust Company required by Section 321(b)
of Trust Indenture Act.
D. Copy of most recent Report of Condition of Wilmington Trust
Company.
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Wilmington Trust Company, a corporation organized and
existing under the laws of Delaware, has duly caused this Statement of
Eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in the City of Wilmington and State of Delaware on the 13th day
of November, 1998.
WILMINGTON TRUST COMPANY
[SEAL]
Attest:/s/ Donald G. MacKelcan By:/s/ James P. Lawler
----------------------- --------------------------
Assistant Secretary Name: James P. Lawler
Title: Vice President
2
<PAGE>
EXHIBIT A
AMENDED CHARTER
Wilmington Trust Company
Wilmington, Delaware
As existing on May 9, 1987
<PAGE>
Amended Charter
or
Act of Incorporation
of
Wilmington Trust Company
Wilmington Trust Company, originally incorporated by an Act of the
General Assembly of the State of Delaware, entitled "An Act to Incorporate the
Delaware Guarantee and Trust Company", approved March 2, A.D. 1901, and the name
of which company was changed to "Wilmington Trust Company" by an amendment filed
in the Office of the Secretary of State on March 18, A.D. 1903, and the Charter
or Act of Incorporation of which company has been from time to time amended and
changed by merger agreements pursuant to the corporation law for state banks and
trust companies of the State of Delaware, does hereby alter and amend its
Charter or Act of Incorporation so that the same as so altered and amended shall
in its entirety read as follows:
First: - The name of this corporation is Wilmington Trust Company.
Second: - The location of its principal office in the State of
Delaware is at Rodney Square North, in the City of Wilmington,
County of New Castle; the name of its resident agent is Wilmington
Trust Company whose address is Rodney Square North, in said City.
In addition to such principal office, the said corporation
maintains and operates branch offices in the City of Newark, New
Castle County, Delaware, the Town of Newport, New Castle County,
Delaware, at Claymont, New Castle County, Delaware, at Greenville,
New Castle County Delaware, and at Milford Cross Roads, New Castle
County, Delaware, and shall be empowered to open, maintain and
operate branch offices at Ninth and Shipley Streets, 418 Delaware
Avenue, 2120 Market Street, and 3605 Market Street, all in the City
of Wilmington, New Castle County, Delaware, and such other branch
offices or places of business as may be authorized from time to
time by the agency or agencies of the government of the State of
Delaware empowered to confer such authority.
Third: - (a) The nature of the business and the objects and
purposes proposed to be transacted, promoted or carried on by this
Corporation are to do any or all of the things herein mentioned as
fully and to the same extent as natural persons might or could do
and in any part of the world, viz.:
(1) To sue and be sued, complain and defend in any Court of
law or equity and to make and use a common seal, and alter
the seal at pleasure, to hold,
<PAGE>
purchase, convey, mortgage or otherwise deal in real and
personal estate and property, and to appoint such officers
and agents as the business of the Corporation shall require,
to make by-laws not inconsistent with the Constitution or
laws of the United States or of this State, to discount
bills, notes or other evidences of debt, to receive deposits
of money, or securities for money, to buy gold and silver
bullion and foreign coins, to buy and sell bills of
exchange, and generally to use, exercise and enjoy all the
powers, rights, privileges and franchises incident to a
corporation which are proper or necessary for the
transaction of the business of the Corporation hereby
created.
(2) To insure titles to real and personal property, or any
estate or interests therein, and to guarantee the holder of
such property, real or personal, against any claim or
claims, adverse to his interest therein, and to prepare and
give certificates of title for any lands or premises in the
State of Delaware, or elsewhere.
(3) To act as factor, agent, broker or attorney in the
receipt, collection, custody, investment and management of
funds, and the purchase, sale, management and disposal of
property of all descriptions, and to prepare and execute all
papers which may be necessary or proper in such business.
(4) To prepare and draw agreements, contracts, deeds,
leases, conveyances, mortgages, bonds and legal papers of
every description, and to carry on the business of
conveyancing in all its branches.
(5) To receive upon deposit for safekeeping money, jewelry,
plate, deeds, bonds and any and all other personal property
of every sort and kind, from executors, administrators,
guardians, public officers, courts, receivers, assignees,
trustees, and from all fiduciaries, and from all other
persons and individuals, and from all corporations whether
state, municipal, corporate or private, and to rent boxes,
safes, vaults and other receptacles for such property.
(6) To act as agent or otherwise for the purpose of
registering, issuing, certificating, countersigning,
transferring or underwriting the stock, bonds or other
obligations of any corporation, association, state or
municipality, and may receive and manage any sinking fund
therefor on such terms as may be agreed upon between the two
parties, and in like manner may act as Treasurer of any
corporation or municipality.
(7) To act as Trustee under any deed of trust, mortgage,
bond or other
2
<PAGE>
instrument issued by any state, municipality, body politic,
corporation, association or person, either alone or in
conjunction with any other person or persons, corporation or
corporations.
(8) To guarantee the validity, performance or effect of any
contract or agreement, and the fidelity of persons holding
places of responsibility or trust; to become surety for any
person, or persons, for the faithful performance of any
trust, office, duty, contract or agreement, either by itself
or in conjunction with any other person, or persons,
corporation, or corporations, or in like manner become
surety upon any bond, recognizance, obligation, judgment,
suit, order, or decree to be entered in any court of record
within the State of Delaware or elsewhere, or which may now
or hereafter be required by any law, judge, officer or court
in the State of Delaware or elsewhere.
(9) To act by any and every method of appointment as
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian, bailee, or
in any other trust capacity in the receiving, holding,
managing, and disposing of any and all estates and property,
real, personal or mixed, and to be appointed as such
trustee, trustee in bankruptcy, receiver, assignee, assignee
in bankruptcy, executor, administrator, guardian or bailee
by any persons, corporations, court, officer, or authority,
in the State of Delaware or elsewhere; and whenever this
Corporation is so appointed by any person, corporation,
court, officer or authority such trustee, trustee in
bankruptcy, receiver, assignee, assignee in bankruptcy,
executor, administrator, guardian, bailee, or in any other
trust capacity, it shall not be required to give bond with
surety, but its capital stock shall be taken and held as
security for the performance of the duties devolving upon it
by such appointment.
(10) And for its care, management and trouble, and the
exercise of any of its powers hereby given, or for the
performance of any of the duties which it may undertake or
be called upon to perform, or for the assumption of any
responsibility the said Corporation may be entitled to
receive a proper compensation.
(11) To purchase, receive, hold and own bonds, mortgages,
debentures, shares of capital stock, and other securities,
obligations, contracts and evidences of indebtedness, of any
private, public or municipal corporation within and without
the State of Delaware, or of the Government of the United
States, or of any state, territory, colony, or possession
thereof, or of any foreign government or country; to
receive, collect, receipt for, and dispose of
3
<PAGE>
interest, dividends and income upon and from any of the
bonds, mortgages, debentures, notes, shares of capital
stock, securities, obligations, contracts, evidences of
indebtedness and other property held and owned by it, and to
exercise in respect of all such bonds, mortgages,
debentures, notes, shares of capital stock, securities,
obligations, contracts, evidences of indebtedness and other
property, any and all the rights, powers and privileges of
individual owners thereof, including the right to vote
thereon; to invest and deal in and with any of the moneys of
the Corporation upon such securities and in such manner as
it may think fit and proper, and from time to time to vary
or realize such investments; to issue bonds and secure the
same by pledges or deeds of trust or mortgages of or upon
the whole or any part of the property held or owned by the
Corporation, and to sell and pledge such bonds, as and when
the Board of Directors shall determine, and in the promotion
of its said corporate business of investment and to the
extent authorized by law, to lease, purchase, hold, sell,
assign, transfer, pledge, mortgage and convey real and
personal property of any name and nature and any estate or
interest therein.
(b) In furtherance of, and not in limitation, of the powers
conferred by the laws of the State of Delaware, it is hereby
expressly provided that the said Corporation shall also have the
following powers:
(1) To do any or all of the things herein set forth, to the
same extent as natural persons might or could do, and in any
part of the world.
(2) To acquire the good will, rights, property and
franchises and to undertake the whole or any part of the
assets and liabilities of any person, firm, association or
corporation, and to pay for the same in cash, stock of this
Corporation, bonds or otherwise; to hold or in any manner to
dispose of the whole or any part of the property so
purchased; to conduct in any lawful manner the whole or any
part of any business so acquired, and to exercise all the
powers necessary or convenient in and about the conduct and
management of such business.
(3) To take, hold, own, deal in, mortgage or otherwise lien,
and to lease, sell, exchange, transfer, or in any manner
whatever dispose of property, real, personal or mixed,
wherever situated.
(4) To enter into, make, perform and carry out contracts of
every kind with any person, firm, association or
corporation, and, without limit as to amount, to draw, make,
accept, endorse, discount, execute and issue promissory
notes, drafts, bills of exchange, warrants, bonds,
debentures, and other
4
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negotiable or transferable instruments.
(5) To have one or more offices, to carry on all or any of
its operations and businesses, without restriction to the
same extent as natural persons might or could do, to
purchase or otherwise acquire, to hold, own, to mortgage,
sell, convey or otherwise dispose of, real and personal
property, of every class and description, in any State,
District, Territory or Colony of the United States, and in
any foreign country or place.
(6) It is the intention that the objects, purposes and
powers specified and clauses contained in this paragraph
shall (except where otherwise expressed in said paragraph)
be nowise limited or restricted by reference to or inference
from the terms of any other clause of this or any other
paragraph in this charter, but that the objects, purposes
and powers specified in each of the clauses of this
paragraph shall be regarded as independent objects, purposes
and powers.
Fourth: - (a) The total number of shares of all classes of stock
which the Corporation shall have authority to issue is forty-one
million (41,000,000) shares, consisting of:
(1) One million (1,000,000) shares of Preferred stock, par
value $10.00 per share (hereinafter referred to as
"Preferred Stock"); and
(2) Forty million (40,000,000) shares of Common Stock, par
value $1.00 per share (hereinafter referred to as "Common
Stock").
(b) Shares of Preferred Stock may be issued from time to time in
one or more series as may from time to time be determined by the
Board of Directors each of said series to be distinctly designated.
All shares of any one series of Preferred Stock shall be alike in
every particular, except that there may be different dates from
which dividends, if any, thereon shall be cumulative, if made
cumulative. The voting powers and the preferences and relative,
participating, optional and other special rights of each such
series, and the qualifications, limitations or restrictions
thereof, if any, may differ from those of any and all other series
at any time outstanding; and, subject to the provisions of
subparagraph 1 of Paragraph (c) of this Article Fourth, the Board
of Directors of the Corporation is hereby expressly granted
authority to fix by resolution or resolutions adopted prior to the
issuance of any shares of a particular series of Preferred Stock,
the voting powers and the designations, preferences and relative,
optional and other special rights, and the qualifications,
limitations and restrictions of such series, including, but without
limiting the generality of the foregoing, the following:
5
<PAGE>
(1) The distinctive designation of, and the number of shares
of Preferred Stock which shall constitute such series, which
number may be increased (except where otherwise provided by
the Board of Directors) or decreased (but not below the
number of shares thereof then outstanding) from time to time
by like action of the Board of Directors;
(2) The rate and times at which, and the terms and
conditions on which, dividends, if any, on Preferred Stock
of such series shall be paid, the extent of the preference
or relation, if any, of such dividends to the dividends
payable on any other class or classes, or series of the same
or other class of stock and whether such dividends shall be
cumulative or non-cumulative;
(3) The right, if any, of the holders of Preferred Stock of
such series to convert the same into or exchange the same
for, shares of any other class or classes or of any series
of the same or any other class or classes of stock of the
Corporation and the terms and conditions of such conversion
or exchange;
(4) Whether or not Preferred Stock of such series shall be
subject to redemption, and the redemption price or prices
and the time or times at which, and the terms and conditions
on which, Preferred Stock of such series may be redeemed.
(5) The rights, if any, of the holders of Preferred Stock of
such series upon the voluntary or involuntary liquidation,
merger, consolidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation.
(6) The terms of the sinking fund or redemption or purchase
account, if any, to be provided for the Preferred Stock of
such series; and
(7) The voting powers, if any, of the holders of such series
of Preferred Stock which may, without limiting the
generality of the foregoing include the right, voting as a
series or by itself or together with other series of
Preferred Stock or all series of Preferred Stock as a class,
to elect one or more directors of the Corporation if there
shall have been a default in the payment of dividends on any
one or more series of Preferred Stock or under such
circumstances and on such conditions as the Board of
Directors may determine.
(c) (1) After the requirements with respect to preferential
dividends on the Preferred Stock (fixed in accordance with the
provisions of section (b) of this Article Fourth), if any, shall
have been met and after the Corporation shall have complied with
all the requirements, if any, with respect to the setting aside of
sums
6
<PAGE>
as sinking funds or redemption or purchase accounts (fixed in
accordance with the provisions of section (b) of this Article
Fourth), and subject further to any conditions which may be fixed
in accordance with the provisions of section (b) of this Article
Fourth, then and not otherwise the holders of Common Stock shall be
entitled to receive such dividends as may be declared from time to
time by the Board of Directors.
(2) After distribution in full of the preferential amount,
if any, (fixed in accordance with the provisions of section
(b) of this Article Fourth), to be distributed to the
holders of Preferred Stock in the event of voluntary or
involuntary liquidation, distribution or sale of assets,
dissolution or winding-up, of the Corporation, the holders
of the Common Stock shall be entitled to receive all of the
remaining assets of the Corporation, tangible and
intangible, of whatever kind available for distribution to
stockholders ratably in proportion to the number of shares
of Common Stock held by them respectively.
(3) Except as may otherwise be required by law or by the
provisions of such resolution or resolutions as may be
adopted by the Board of Directors pursuant to section (b) of
this Article Fourth, each holder of Common Stock shall have
one vote in respect of each share of Common Stock held on
all matters voted upon by the stockholders.
(d) No holder of any of the shares of any class or series of stock
or of options, warrants or other rights to purchase shares of any
class or series of stock or of other securities of the Corporation
shall have any preemptive right to purchase or subscribe for any
unissued stock of any class or series or any additional shares of
any class or series to be issued by reason of any increase of the
authorized capital stock of the Corporation of any class or series,
or bonds, certificates of indebtedness, debentures or other
securities convertible into or exchangeable for stock of the
Corporation of any class or series, or carrying any right to
purchase stock of any class or series, but any such unissued stock,
additional authorized issue of shares of any class or series of
stock or securities convertible into or exchangeable for stock, or
carrying any right to purchase stock, may be issued and disposed of
pursuant to resolution of the Board of Directors to such persons,
firms, corporations or associations, whether such holders or
others, and upon such terms as may be deemed advisable by the Board
of Directors in the exercise of its sole discretion.
(e) The relative powers, preferences and rights of each series of
Preferred Stock in relation to the relative powers, preferences and
rights of each other series of Preferred Stock shall, in each case,
be as fixed from time to time by the Board of
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<PAGE>
Directors in the resolution or resolutions adopted pursuant to
authority granted in section (b) of this Article Fourth and the
consent, by class or series vote or otherwise, of the holders of
such of the series of Preferred Stock as are from time to time
outstanding shall not be required for the issuance by the Board of
Directors of any other series of Preferred Stock whether or not the
powers, preferences and rights of such other series shall be fixed
by the Board of Directors as senior to, or on a parity with, the
powers, preferences and rights of such outstanding series, or any
of them; provided, however, that the Board of Directors may provide
in the resolution or resolutions as to any series of Preferred
Stock adopted pursuant to section (b) of this Article Fourth that
the consent of the holders of a majority (or such greater
proportion as shall be therein fixed) of the outstanding shares of
such series voting thereon shall be required for the issuance of
any or all other series of Preferred Stock.
(f) Subject to the provisions of section (e), shares of any series
of Preferred Stock may be issued from time to time as the Board of
Directors of the Corporation shall determine and on such terms and
for such consideration as shall be fixed by the Board of Directors.
(g) Shares of Common Stock may be issued from time to time as the
Board of Directors of the Corporation shall determine and on such
terms and for such consideration as shall be fixed by the Board of
Directors.
(h) The authorized amount of shares of Common Stock and of
Preferred Stock may, without a class or series vote, be increased
or decreased from time to time by the affirmative vote of the
holders of a majority of the stock of the Corporation entitled to
vote thereon.
Fifth: - (a) The business and affairs of the Corporation shall be
conducted and managed by a Board of Directors. The number of
directors constituting the entire Board shall be not less than five
nor more than twenty-five as fixed from time to time by vote of a
majority of the whole Board, provided, however, that the number of
directors shall not be reduced so as to shorten the term of any
director at the time in office, and provided further, that the
number of directors constituting the whole Board shall be
twenty-four until otherwise fixed by a majority of the whole Board.
(b) The Board of Directors shall be divided into three classes, as
nearly equal in number as the then total number of directors
constituting the whole Board permits, with the term of office of
one class expiring each year. At the annual meeting of stockholders
in 1982, directors of the first class shall be elected to hold
office for a term expiring at the next succeeding annual meeting,
directors of the second class
8
<PAGE>
shall be elected to hold office for a term expiring at the second
succeeding annual meeting and directors of the third class shall be
elected to hold office for a term expiring at the third succeeding
annual meeting. Any vacancies in the Board of Directors for any
reason, and any newly created directorships resulting from any
increase in the directors, may be filled by the Board of Directors,
acting by a majority of the directors then in office, although less
than a quorum, and any directors so chosen shall hold office until
the next annual election of directors. At such election, the
stockholders shall elect a successor to such director to hold
office until the next election of the class for which such director
shall have been chosen and until his successor shall be elected and
qualified. No decrease in the number of directors shall shorten the
term of any incumbent director.
(c) Notwithstanding any other provisions of this Charter or Act of
Incorporation or the By-Laws of the Corporation (and
notwithstanding the fact that some lesser percentage may be
specified by law, this Charter or Act of Incorporation or the
ByLaws of the Corporation), any director or the entire Board of
Directors of the Corporation may be removed at any time without
cause, but only by the affirmative vote of the holders of
two-thirds or more of the outstanding shares of capital stock of
the Corporation entitled to vote generally in the election of
directors (considered for this purpose as one class) cast at a
meeting of the stockholders called for that purpose.
(d) Nominations for the election of directors may be made by the
Board of Directors or by any stockholder entitled to vote for the
election of directors. Such nominations shall be made by notice in
writing, delivered or mailed by first class United States mail,
postage prepaid, to the Secretary of the Corporation not less than
14 days nor more than 50 days prior to any meeting of the
stockholders called for the election of directors; provided,
however, that if less than 21 days' notice of the meeting is given
to stockholders, such written notice shall be delivered or mailed,
as prescribed, to the Secretary of the Corporation not later than
the close of the seventh day following the day on which notice of
the meeting was mailed to stockholders. Notice of nominations which
are proposed by the Board of Directors shall be given by the
Chairman on behalf of the Board.
(e) Each notice under subsection (d) shall set forth (i) the name,
age, business address and, if known, residence address of each
nominee proposed in such notice, (ii) the principal occupation or
employment of such nominee and (iii) the number of shares of stock
of the Corporation which are beneficially owned by each such
nominee.
(f) The Chairman of the meeting may, if the facts warrant,
determine and declare to the meeting that a nomination was not made
in accordance with the foregoing
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<PAGE>
procedure, and if he should so determine, he shall so declare to
the meeting and the defective nomination shall be disregarded.
(g) No action required to be taken or which may be taken at any
annual or special meeting of stockholders of the Corporation may be
taken without a meeting, and the power of stockholders to consent
in writing, without a meeting, to the taking of any action is
specifically denied.
Sixth: - The Directors shall choose such officers, agent and
servants as may be provided in the By-Laws as they may from time to
time find necessary or proper.
Seventh: - The Corporation hereby created is hereby given the same
powers, rights and privileges as may be conferred upon corporations
organized under the Act entitled "An Act Providing a General
Corporation Law", approved March 10, 1899, as from time to time
amended.
Eighth: - This Act shall be deemed and taken to be a private Act.
Ninth: - This Corporation is to have perpetual existence.
Tenth: - The Board of Directors, by resolution passed by a majority
of the whole Board, may designate any of their number to constitute
an Executive Committee, which Committee, to the extent provided in
said resolution, or in the By-Laws of the Company, shall have and
may exercise all of the powers of the Board of Directors in the
management of the business and affairs of the Corporation, and
shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it.
Eleventh: - The private property of the stockholders shall not be
liable for the payment of corporate debts to any extent whatever.
Twelfth: - The Corporation may transact business in any part of the
world.
Thirteenth: - The Board of Directors of the Corporation is
expressly authorized to make, alter or repeal the By-Laws of the
Corporation by a vote of the majority of the entire Board. The
stockholders may make, alter or repeal any By-Law whether or not
adopted by them, provided however, that any such additional
By-Laws, alterations or repeal may be adopted only by the
affirmative vote of the holders of two-thirds or more of the
outstanding shares of capital stock of the Corporation entitled to
vote generally in the election of directors (considered for this
purpose as one class).
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<PAGE>
Fourteenth: - Meetings of the Directors may be held outside
of the State of Delaware at such places as may be from time to time
designated by the Board, and the Directors may keep the books of
the Company outside of the State of Delaware at such places as may
be from time to time designated by them.
Fifteenth: - (a) In addition to any affirmative vote required by
law, and except as otherwise expressly provided in sections (b) and
(c) of this Article Fifteenth:
(A) any merger or consolidation of the Corporation or any
Subsidiary (as hereinafter defined) with or into (i) any
Interested Stockholder (as hereinafter defined) or (ii) any
other corporation (whether or not itself an Interested
Stockholder), which, after such merger or consolidation,
would be an Affiliate (as hereinafter defined) of an
Interested Stockholder, or
(B) any sale, lease, exchange, mortgage, pledge, transfer or
other disposition (in one transaction or a series of related
transactions) to or with any Interested Stockholder or any
Affiliate of any Interested Stockholder of any assets of the
Corporation or any Subsidiary having an aggregate fair
market value of $1,000,000 or more, or
(C) the issuance or transfer by the Corporation or any
Subsidiary (in one transaction or a series of related
transactions) of any securities of the Corporation or any
Subsidiary to any Interested Stockholder or any Affiliate of
any Interested Stockholder in exchange for cash, securities
or other property (or a combination thereof) having an
aggregate fair market value of $1,000,000 or more, or
(D) the adoption of any plan or proposal for the liquidation
or dissolution of the Corporation, or
(E) any reclassification of securities (including any
reverse stock split), or recapitalization of the
Corporation, or any merger or consolidation of the
Corporation with any of its Subsidiaries or any similar
transaction (whether or not with or into or otherwise
involving an Interested Stockholder) which has the effect,
directly or indirectly, of increasing the proportionate
share of the outstanding shares of any class of equity or
convertible securities of the Corporation or any Subsidiary
which is directly or indirectly owned by any Interested
Stockholder, or any Affiliate of any Interested Stockholder,
shall require the affirmative vote of the holders of at least two-thirds of the
outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, considered for the purpose of this
Article Fifteenth as one class ("Voting Shares").
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<PAGE>
Such affirmative vote shall be required notwithstanding the fact that no vote
may be required, or that some lesser percentage may be specified, by law or in
any agreement with any national securities exchange or otherwise.
(2) The term "business combination" as used in this
Article Fifteenth shall mean any transaction which is
referred to any one or more of clauses (A) through (E) of
paragraph 1 of the section (a).
(b) The provisions of section (a) of this Article Fifteenth
shall not be applicable to any particular business
combination and such business combination shall require only
such affirmative vote as is required by law and any other
provisions of the Charter or Act of Incorporation of By-Laws
if such business combination has been approved by a majority
of the whole Board.
(c) For the purposes of this Article Fifteenth:
(1) A "person" shall mean any individual firm, corporation or other
entity.
(2) "Interested Stockholder" shall mean, in respect of any business
combination, any person (other than the Corporation or any
Subsidiary) who or which as of the record date for the
determination of stockholders entitled to notice of and to vote on
such business combination, or immediately prior to the consummation
of any such transaction:
(A) is the beneficial owner, directly or indirectly, of more
than 10% of the Voting Shares, or
(B) is an Affiliate of the Corporation and at any time
within two years prior thereto was the beneficial owner,
directly or indirectly, of not less than 10% of the then
outstanding voting Shares, or
(C) is an assignee of or has otherwise succeeded in any
share of capital stock of the Corporation which were at any
time within two years prior thereto beneficially owned by
any Interested Stockholder, and such assignment or
succession shall have occurred in the course of a
transaction or series of transactions not involving a public
offering within the meaning of the Securities Act of 1933.
(3) A person shall be the "beneficial owner" of any Voting Shares:
(A) which such person or any of its Affiliates and
Associates (as hereafter
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<PAGE>
defined) beneficially own, directly or indirectly, or
(B) which such person or any of its Affiliates or Associates
has (i) the right to acquire (whether such right is
exercisable immediately or only after the passage of time),
pursuant to any agreement, arrangement or understanding or
upon the exercise of conversion rights, exchange rights,
warrants or options, or otherwise, or (ii) the right to vote
pursuant to any agreement, arrangement or understanding, or
(C) which are beneficially owned, directly or indirectly, by
any other person with which such first mentioned person or
any of its Affiliates or Associates has any agreement,
arrangement or understanding for the purpose of acquiring,
holding, voting or disposing of any shares of capital stock
of the Corporation.
(4) The outstanding Voting Shares shall include shares deemed owned
through application of paragraph (3) above but shall not include
any other Voting Shares which may be issuable pursuant to any
agreement, or upon exercise of conversion rights, warrants or
options or otherwise.
(5) "Affiliate" and "Associate" shall have the respective meanings
given those terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as in effect
on December 31, 1981.
(6) "Subsidiary" shall mean any corporation of which a majority of
any class of equity security (as defined in Rule 3a11-1 of the
General Rules and Regulations under the Securities Exchange Act of
1934, as in effect in December 31, 1981) is owned, directly or
indirectly, by the Corporation; provided, however, that for the
purposes of the definition of Investment Stockholder set forth in
paragraph (2) of this section (c), the term "Subsidiary" shall mean
only a corporation of which a majority of each class of equity
security is owned, directly or indirectly, by the Corporation.
(d) majority of the directors shall have the power and duty
to determine for the purposes of this Article Fifteenth on
the basis of information known to them, (1) the number of
Voting Shares beneficially owned by any person (2) whether a
person is an Affiliate or Associate of another, (3) whether
a person has an agreement, arrangement or understanding with
another as to the matters referred to in paragraph (3) of
section (c), or (4) whether the assets subject to any
business combination or the consideration received for the
issuance or transfer of securities by the Corporation, or
any Subsidiary has an aggregate fair market value of
$1,000,000 or more.
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(e) Nothing contained in this Article Fifteenth shall be
construed to relieve any Interested Stockholder from any
fiduciary obligation imposed by law.
Sixteenth: Notwithstanding any other provision of this Charter or
Act of Incorporation or the By-Laws of the Corporation (and in
addition to any other vote that may be required by law, this
Charter or Act of Incorporation by the By-Laws), the affirmative
vote of the holders of at least two-thirds of the outstanding
shares of the capital stock of the Corporation entitled to vote
generally in the election of directors (considered for this purpose
as one class) shall be required to amend, alter or repeal any
provision of Articles Fifth, Thirteenth, Fifteenth or Sixteenth of
this Charter or Act of Incorporation.
Seventeenth: (a) a Director of this Corporation shall not be liable
to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a Director, except to the extent such
exemption from liability or limitation thereof is not permitted
under the Delaware General Corporation Laws as the same exists or
may hereafter be amended.
(b) Any repeal or modification of the foregoing paragraph
shall not adversely affect any right or protection of a
Director of the Corporation existing hereunder with respect
to any act or omission occurring prior to the time of such
repeal or modification."
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EXHIBIT B
BY-LAWS
WILMINGTON TRUST COMPANY
WILMINGTON, DELAWARE
As existing on January 16, 1997
<PAGE>
BY-LAWS OF WILMINGTON TRUST COMPANY
ARTICLE I
Stockholders' Meetings
Section 1. The Annual Meeting of Stockholders shall be held on the
third Thursday in April each year at the principal office at the Company or at
such other date, time, or place as may be designated by resolution by the Board
of Directors.
Section 2. Special meetings of all stockholders may be called at
any time by the Board of Directors, the Chairman of the Board or the President.
Section 3. Notice of all meetings of the stockholders shall be
given by mailing to each stockholder at least ten (10) days before said meeting,
at his last known address, a written or printed notice fixing the time and place
of such meeting.
Section 4. A majority in the amount of the capital stock of the
Company issued and outstanding on the record date, as herein determined, shall
constitute a quorum at all meetings of stockholders for the transaction of any
business, but the holders of a small number of shares may adjourn, from time to
time, without further notice, until a quorum is secured. At each annual or
special meeting of stockholders, each stockholder shall be entitled to one vote,
either in person or by proxy, for each shares of stock registered in the
stockholder's name on the books of the Company on the record date for any such
meeting as determined herein.
ARTICLE II
Directors
Section 1. The number and classification of the Board of Directors
shall be as set forth in the Charter of the Bank.
Section 2. No person who has attained the age of seventy-two (72)
years shall be nominated for election to the Board of Directors of the Company,
provided, however, that this limitation shall not apply to any person who was
serving as director of the Company on September 16, 1971.
Section 3. The class of Directors so elected shall hold office for
three years or until their successors are elected and qualified.
Section 4. The affairs and business of the Company shall be managed
and conducted by the Board of Directors.
<PAGE>
Section 5. The Board of Directors shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Board of Directors or the President.
Section 6. Special meetings of the Board of Directors may be called
at any time by the Chairman of the Board of Directors or by the President, and
shall be called upon the written request of a majority of the directors.
Section 7. A majority of the directors elected and qualified shall
be necessary to constitute a quorum for the transaction of business at any
meeting of the Board of Directors.
Section 8. Written notice shall be sent by mail to each director of
any special meeting of the Board of Directors, and of any change in the time or
place of any regular meeting, stating the time and place of such meeting, which
shall be mailed not less than two days before the time of holding such meeting.
Section 9. In the event of the death, resignation, removal,
inability to act, or disqualification of any director, the Board of Directors,
although less than a quorum, shall have the right to elect the successor who
shall hold office for the remainder of the full term of the class of directors
in which the vacancy occurred, and until such director's successor shall have
been duly elected and qualified.
Section 10. The Board of Directors at its first meeting after its
election by the stockholders shall appoint an Executive Committee, a Trust
Committee, an Audit Committee and a Compensation Committee, and shall elect from
its own members a Chairman of the Board of Directors and a President who may be
the same person. The Board of Directors shall also elect at such meeting a
Secretary and a Treasurer, who may be the same person, may appoint at any time
such other committees and elect or appoint such other officers as it may deem
advisable. The Board of Directors may also elect at such meeting one or more
Associate Directors.
Section 11. The Board of Directors may at any time remove, with or
without cause, any member of any Committee appointed by it or any associate
director or officer elected by it and may appoint or elect his successor.
Section 12. The Board of Directors may designate an officer to be
in charge of such of the departments or division of the Company as it may deem
advisable.
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<PAGE>
ARTICLE III
Committees
Section 1. Executive Committee
(A) The Executive Committee shall be composed of not
more than nine members who shall be selected by the Board of Directors from its
own members and who shall hold office during the pleasure of the Board.
(B) The Executive Committee shall have all the powers
of the Board of Directors when it is not in session to transact all business for
and in behalf of the Company that may be brought before it.
(C) The Executive Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members, or at the call of the Chairman of the
Executive Committee or at the call of the Chairman of the Board of Directors.
The majority of its members shall be necessary to constitute a quorum for the
transaction of business. Special meetings of the Executive Committee may be held
at any time when a quorum is present.
(D) Minutes of each meeting of the Executive Committee
shall be kept and submitted to the Board of Directors at its next meeting.
(E) The Executive Committee shall advise and
superintend all investments that may be made of the funds of the Company, and
shall direct the disposal of the same, in accordance with such rules and
regulations as the Board of Directors from time to time make.
(F) In the event of a state of disaster of sufficient
severity to prevent the conduct and management of the affairs and business of
the Company by its directors and officers as contemplated by these By-Laws any
two available members of the Executive Committee as constituted immediately
prior to such disaster shall constitute a quorum of that Committee for the full
conduct and management of the affairs and business of the Company in accordance
with the provisions of Article III of these By-Laws; and if less than three
members of the Trust Committee is constituted immediately prior to such disaster
shall be available for the transaction of its business, such Executive Committee
shall also be empowered to exercise all of the powers reserved to the Trust
Committee under Article III Section 2 hereof. In the event of the
unavailability, at such time, of a minimum of two members of such Executive
Committee, any three available directors shall constitute the Executive
Committee for the full conduct and management of the affairs and business of the
Company in accordance with the foregoing provisions of this Section. This By-Law
shall be subject to implementation by Resolutions of the Board of Directors
presently existing or
3
<PAGE>
hereafter passed from time to time for that purpose, and any provisions of these
By-Laws (other than this Section) and any resolutions which are contrary to the
provisions of this Section or to the provisions of any such implementary
Resolutions shall be suspended during such a disaster period until it shall be
determined by any interim Executive Committee acting under this section that it
shall be to the advantage of the Company to resume the conduct and management of
its affairs and business under all of the other provisions of these By-Laws.
Section 2. Trust Committee
(A) The Trust Committee shall be composed of not more
than thirteen members who shall be selected by the Board of Directors, a
majority of whom shall be members of the Board of Directors and who shall hold
office during the pleasure of the Board.
(B) The Trust Committee shall have general supervision
over the Trust Department and the investment of trust funds, in all matters,
however, being subject to the approval of the Board of Directors.
(C) The Trust Committee shall meet at the principal
office of the Company or elsewhere in its discretion at such times to be
determined by a majority of its members or at the call of its chairman. A
majority of its members shall be necessary to constitute a quorum for the
transaction of business.
(D) Minutes of each meeting of the Trust Committee
shall be kept and promptly submitted to the Board of Directors.
(E) The Trust Committee shall have the power to appoint
Committees and/or designate officers or employees of the Company to whom
supervision over the investment of trust funds may be delegated when the Trust
Committee is not in session.
Section 3. Audit Committee
(A) The Audit Committee shall be composed of five
members who shall be selected by the Board of Directors from its own members,
none of whom shall be an officer of the Company, and shall hold office at the
pleasure of the Board.
(B) The Audit Committee shall have general supervision
over the Audit Division in all matters however subject to the approval of the
Board of Directors; it shall consider all matters brought to its attention by
the officer in charge of the Audit Division, review all reports of examination
of the Company made by any governmental agency or such independent auditor
employed for that purpose, and make such recommendations to the Board of
Directors with respect thereto or with respect to any other matters pertaining
to
4
<PAGE>
auditing the Company as it shall deem desirable.
(C) The Audit Committee shall meet whenever and
wherever the majority of its members shall deem it to be proper for the
transaction of its business, and a majority of its Committee shall constitute a
quorum.
Section 4. Compensation Committee
(A) The Compensation Committee shall be composed of not
more than five (5) members who shall be selected by the Board of Directors from
its own members who are not officers of the Company and who shall hold office
during the pleasure of the Board.
(B) The Compensation Committee shall in general advise
upon all matters of policy concerning the Company brought to its attention by
the management and from time to time review the management of the Company, major
organizational matters, including salaries and employee benefits and
specifically shall administer the Executive Incentive Compensation Plan.
(C) Meetings of the Compensation Committee may be
called at any time by the Chairman of the Compensation Committee, the Chairman
of the Board of Directors, or the President of the Company.
Section 5. Associate Directors
(A) Any person who has served as a director may be
elected by the Board of Directors as an associate director, to serve during the
pleasure of the Board.
(B) An associate director shall be entitled to attend
all directors meetings and participate in the discussion of all matters brought
to the Board, with the exception that he would have no right to vote. An
associate director will be eligible for appointment to Committees of the
Company, with the exception of the Executive Committee, Audit Committee and
Compensation Committee, which must be comprised solely of active directors.
Section 6. Absence or Disqualification of Any Member of a
Committee
(A) In the absence or disqualification of any member of
any Committee created under Article III of the By-Laws of this Company, the
member or members thereof present at any meeting and not disqualified from
voting, whether or not he or they constitute a quorum, may unanimously appoint
another member of the Board of Directors to act at the meeting in the place of
any such absence or disqualified member.
5
<PAGE>
ARTICLE IV
Officers
Section 1. The Chairman of the Board of Directors shall preside at
all meetings of the Board and shall have such further authority and powers and
shall perform such duties as the Board of Directors may from time to time confer
and direct. He shall also exercise such powers and perform such duties as may
from time to time be agreed upon between himself and the President of the
Company.
Section 2. The Vice Chairman of the Board. The Vice Chairman of the
Board of Directors shall preside at all meetings of the Board of Directors at
which the Chairman of the Board shall not be present and shall have such further
authority and powers and shall perform such duties as the Board of Directors or
the Chairman of the Board may from time to time confer and direct.
Section 3. The President shall have the powers and duties
pertaining to the office of the President conferred or imposed upon him by
statute or assigned to him by the Board of Directors in the absence of the
Chairman of the Board the President shall have the powers and duties of the
Chairman of the Board.
Section 4. The Chairman of the Board of Directors or the President
as designated by the Board of Directors, shall carry into effect all legal
directions of the Executive Committee and of the Board of Directors, and shall
at all times exercise general supervision over the interest, affairs and
operations of the Company and perform all duties incident to his office.
Section 5. There may be one or more Vice Presidents, however
denominated by the Board of Directors, who may at any time perform all the
duties of the Chairman of the Board of Directors and/or the President and such
other powers and duties as may from time to time be assigned to them by the
Board of Directors, the Executive Committee, the Chairman of the Board or the
President and by the officer in charge of the department or division to which
they are assigned.
Section 6. The Secretary shall attend to the giving of notice of
meetings of the stockholders and the Board of Directors, as well as the
Committees thereof, to the keeping of accurate minutes of all such meetings and
to recording the same in the minute books of the Company. In addition to the
other notice requirements of these By-Laws and as may be practicable under the
circumstances, all such notices shall be in writing and mailed well in advance
of the scheduled date of any other meeting. He shall have custody of the
corporate seal and shall affix the same to any documents requiring such
corporate seal and to attest the same.
6
<PAGE>
Section 7. The Treasurer shall have general supervision over all
assets and liabilities of the Company. He shall be custodian of and responsible
for all monies, funds and valuables of the Company and for the keeping of proper
records of the evidence of property or indebtedness and of all the transactions
of the Company. He shall have general supervision of the expenditures of the
Company and shall report to the Board of Directors at each regular meeting of
the condition of the Company, and perform such other duties as may be assigned
to him from time to time by the Board of Directors of the Executive Committee.
Section 8. There may be a Controller who shall exercise general
supervision over the internal operations of the Company, including accounting,
and shall render to the Board of Directors at appropriate times a report
relating to the general condition and internal operations of the Company.
There may be one or more subordinate accounting or controller
officers however denominated, who may perform the duties of the Controller and
such duties as may be prescribed by the Controller.
Section 9. The officer designated by the Board of Directors to be
in charge of the Audit Division of the Company with such title as the Board of
Directors shall prescribe, shall report to and be directly responsible only to
the Board of Directors.
There shall be an Auditor and there may be one or more Audit
Officers, however denominated, who may perform all the duties of the Auditor and
such duties as may be prescribed by the officer in charge of the Audit Division.
Section 10. There may be one or more officers, subordinate in rank
to all Vice Presidents with such functional titles as shall be determined from
time to time by the Board of Directors, who shall ex officio hold the office
Assistant Secretary of this Company and who may perform such duties as may be
prescribed by the officer in charge of the department or division to whom they
are assigned.
Section 11. The powers and duties of all other officers of the
Company shall be those usually pertaining to their respective offices, subject
to the direction of the Board of Directors, the Executive Committee, Chairman of
the Board of Directors or the President and the officer in charge of the
department or division to which they are assigned.
ARTICLE V
Stock and Stock Certificates
Section 1. Shares of stock shall be transferrable on the books of
the Company and a transfer book shall be kept in which all transfers of stock
shall be recorded.
7
<PAGE>
Section 2. Certificate of stock shall bear the signature of the
President or any Vice President, however denominated by the Board of Directors
and countersigned by the Secretary or Treasurer or an Assistant Secretary, and
the seal of the corporation shall be engraved thereon. Each certificate shall
recite that the stock represented thereby is transferrable only upon the books
of the Company by the holder thereof or his attorney, upon surrender of the
certificate properly endorsed. Any certificate of stock surrendered to the
Company shall be cancelled at the time of transfer, and before a new certificate
or certificates shall be issued in lieu thereof. Duplicate certificates of stock
shall be issued only upon giving such security as may be satisfactory to the
Board of Directors or the Executive Committee.
Section 3. The Board of Directors of the Company is authorized to
fix in advance a record date for the determination of the stockholders entitled
to notice of, and to vote at, any meeting of stockholders and any adjournment
thereof, or entitled to receive payment of any dividend, or to any allotment or
rights, or to exercise any rights in respect of any change, conversion or
exchange of capital stock, or in connection with obtaining the consent of
stockholders for any purpose, which record date shall not be more than 60 nor
less than 10 days proceeding the date of any meeting of stockholders or the date
for the payment of any dividend, or the date for the allotment of rights, or the
date when any change or conversion or exchange of capital stock shall go into
effect, or a date in connection with obtaining such consent.
ARTICLE VI
Seal
Section 1. The corporate seal of the Company shall be in the
following form:
Between two concentric circles the
words "Wilmington Trust Company"
within the inner circle the words
"Wilmington, Delaware."
ARTICLE VII
Fiscal Year
Section 1. The fiscal year of the Company shall be the calendar
year.
8
<PAGE>
ARTICLE VIII
Execution of Instruments of the Company
Section 1. The Chairman of the Board, the President or any Vice
President, however denominated by the Board of Directors, shall have full power
and authority to enter into, make, sign, execute, acknowledge and/or deliver and
the Secretary or any Assistant Secretary shall have full power and authority to
attest and affix the corporate seal of the Company to any and all deeds,
conveyances, assignments, releases, contracts, agreements, bonds, notes,
mortgages and all other instruments incident to the business of this Company or
in acting as executor, administrator, guardian, trustee, agent or in any other
fiduciary or representative capacity by any and every method of appointment or
by whatever person, corporation, court officer or authority in the State of
Delaware, or elsewhere, without any specific authority, ratification, approval
or confirmation by the Board of Directors or the Executive Committee, and any
and all such instruments shall have the same force and validity as though
expressly authorized by the Board of Directors and/or the Executive Committee.
ARTICLE IX
Compensation of Directors and Members of Committees
Section 1. Directors and associate directors of the Company, other
than salaried officers of the Company, shall be paid such reasonable honoraria
or fees for attending meetings of the Board of Directors as the Board of
Directors may from time to time determine. Directors and associate directors who
serve as members of committees, other than salaried employees of the Company,
shall be paid such reasonable honoraria or fees for services as members of
committees as the Board of Directors shall from time to time determine and
directors and associate directors may be employed by the Company for such
special services as the Board of Directors may from time to time determine and
shall be paid for such special services so performed reasonable compensation as
may be determined by the Board of Directors.
ARTICLE X
Indemnification
Section 1. (A) The Corporation shall indemnify and hold harmless,
to the fullest extent permitted by applicable law as it presently exists or may
hereafter be amended, any person who was or is made or is threatened to be made
a party or is otherwise involved in any action, suit or proceeding, whether
civil, criminal, administrative or investigative (a "proceeding") by reason of
the fact that he, or a person for whom he is the legal
9
<PAGE>
representative, is or was a director, officer, employee or agent of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary or agent of another corporation or of a
partnership, joint venture, trust, enterprise or non-profit entity, including
service with respect to employee benefit plans, against all liability and loss
suffered and expenses reasonably incurred by such person. The Corporation shall
indemnify a person in connection with a proceeding initiated by such person only
if the proceeding was authorized by the Board of Directors of the Corporation.
(B) The Corporation shall pay the expenses incurred in
defending any proceeding in advance of its final disposition, provided, however,
that the payment of expenses incurred by a Director officer in his capacity as a
Director or officer in advance of the final disposition of the proceeding shall
be made only upon receipt of an undertaking by the Director or officer to repay
all amounts advanced if it should be ultimately determined that the Director or
officer is not entitled to be indemnified under this Article or otherwise.
(C) If a claim for indemnification or payment of
expenses, under this Article X is not paid in full within ninety days after a
written claim therefor has been received by the Corporation the claimant may
file suit to recover the unpaid amount of such claim and, if successful in whole
or in part, shall be entitled to be paid the expense of prosecuting such claim.
In any such action the Corporation shall have the burden of proving that the
claimant was not entitled to the requested indemnification of payment of
expenses under applicable law.
(D) The rights conferred on any person by this Article
X shall not be exclusive of any other rights which such person may have or
hereafter acquire under any statute, provision of the Charter or Act of
Incorporation, these By-Laws, agreement, vote of stockholders or disinterested
Directors or otherwise.
(E) Any repeal or modification of the foregoing
provisions of this Article X shall not adversely affect any right or protection
hereunder of any person in respect of any act or omission occurring prior to the
time of such repeal or modification.
ARTICLE XI
Amendments to the By-Laws
Section 1. These By-Laws may be altered, amended or repealed, in
whole or in part, and any new By-Law or By-Laws adopted at any regular or
special meeting of the Board of Directors by a vote of the majority of all the
members of the Board of Directors then in office.
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<PAGE>
EXHIBIT C
Section 321(b) Consent
Pursuant to Section 321(b) of the Trust Indenture Act of 1939, as
amended, Wilmington Trust Company hereby consents that reports of examinations
by Federal, State, Territorial or District authorities may be furnished by such
authorities to the Securities and Exchange Commission upon requests therefor.
WILMINGTON TRUST COMPANY
Dated: November 13, 1998 By:/s/ James P. Lawler
--------------------------
Name: James P. Lawler
Title: Vice President
<PAGE>
EXHIBIT D
NOTICE
This form is intended to assist state nonmember banks and
savings banks with state publication requirements. It has
not been approved by any state banking authorities. Refer
to your appropriate state banking authorities for your
state publication requirements.
R E P O R T O F C O N D I T I O N
Consolidating domestic subsidiaries of the
WILMINGTON TRUST COMPANY of WILMINGTON
- ---------------------------------------------------------- ------------------
Name of Bank City
in the State of DELAWARE , at the close of business on June 30, 1998.
-------------
<TABLE>
<CAPTION>
ASSETS
Thousands of dollars
<S> <C>
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coins...................................232,976
Interest-bearing balances................................................................. 0
Held-to-maturity securities....................................................................... 195,579
Available-for-sale securities....................................................................1,416,957
Federal funds sold and securities purchased under agreements to resell.............................150,100
Loans and lease financing receivables:
Loans and leases, net of unearned income. . . . . . . 3,978,706
LESS: Allowance for loan and lease losses. . . . . . 63,164
LESS: Allocated transfer risk reserve. . . . . . . . 0
Loans and leases, net of unearned income, allowance, and reserve....................3,915,542
Assets held in trading accounts..........................................................................0
Premises and fixed assets (including capitalized leases)...........................................135,596
Other real estate owned............................................................................. 1,696
Investments in unconsolidated subsidiaries and associated companies..................................1,066
Customers' liability to this bank on acceptances outstanding.............................................0
Intangible assets...................................................................................55,759
Other assets.......................................................................................103,586
Total assets.....................................................................................6,208,857
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
LIABILITIES
<S> <C>
Deposits:
In domestic offices...........................................................................................4,568,934
Noninterest-bearing . . . . . . . . 838,655
Interest-bearing. . . . . . . . . . 3,730,279
Federal funds purchased and Securities sold under agreements to repurchase..................................... 418,382
Demand notes issued to the U.S. Treasury.........................................................................99,350
Trading liabilities (from Schedule RC-D)..............................................................................0
Other borrowed money:...........................................................................................///////
With original maturity of one year or less.........................................................524,000
With original maturity of more than one year........................................................43,000
Bank's liability on acceptances executed and outstanding..............................................................0
Subordinated notes and debentures.....................................................................................0
Other liabilities (from Schedule RC-G)........................................................................ 91,728
Total liabilities.............................................................................................5,745,394
EQUITY CAPITAL
Perpetual preferred stock and related surplus.........................................................................0
Common Stock........................................................................................................500
Surplus (exclude all surplus related to preferred stock).........................................................62,118
Undivided profits and capital reserves..........................................................................394,325
Net unrealized holding gains (losses) on available-for-sale securities............................................6,520
Total equity capital............................................................................................463,463
Total liabilities, limited-life preferred stock, and equity capital...........................................6,208,857
</TABLE>
2
